加载中...
共找到 25,610 条相关资讯
The Middle East conflict and oil supply disruption are pressuring markets and testing investor confidence. Credit spreads, inflation expectations, and rate cut assumptions are challenged, but aren't flashing warning signals yet.
Operator: Greetings, and welcome to the Dollar Tree Q4 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Daniel Delrosario, Senior Vice President, Investor Relations and Treasurer. Daniel, please go ahead. Daniel Delrosario: Good morning, and thank you for joining us to discuss Dollar Tree's fourth quarter fiscal 2025 results. With me today are Dollar Tree's CEO, Mike Creedon; and CFO, Stewart Glendinning. Before we begin, I would like to remind everyone that some of the remarks that we will make today about the company's expectations, plans and future prospects are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by our forward-looking statements. For information on the risks and uncertainties that could affect our actual results, please see the Risk Factors, Business and Management's Discussion and Analysis of Financial Condition and Results of Operations section in our Annual Report on Form 10-K filed on March 16, 2026, our most recent press release and Form 8-K and other filings with the SEC. We caution against reliance on any forward-looking statements made today, and we disclaim any obligation to update any forward-looking statements, except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in today's earnings release available on the IR section of our website. These non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, we will refer to our financial results on a GAAP basis. Additionally, unless otherwise stated, all discussions today refer to our results from continuing operations, and all comparisons discussed today for the fourth quarter of fiscal 2025 are against the same period a year ago. Please note that a supplemental slide deck outlining selected operating metrics is available on the IR section of our website. Following our prepared remarks, Mike and Stewart will take your questions. [Operator Instructions] And with that, I'll turn the call over to Mike. Michael Creedon: Thanks, Daniel. And before I begin, I want to welcome you in your new role and congratulate you. We're excited to have you stepping into this next chapter with us. I look forward to working closely together as we continue sharpening our execution and communicating our story with clarity and discipline. Good morning, everyone. I'd like to use my time today to step back and frame what this quarter represents, more importantly, what it tells us about the underlying trajectory of the Dollar Tree business. At Investor Day, we laid out a clear road map for Dollar Tree, expanding and modernizing our assortment through multi-price, strengthening operational execution and managing costs with agility while driving disciplined capital allocation. The fourth quarter is an important proof point that those strategic pillars are translating into measurable results. We delivered 9% revenue growth in the fourth quarter with a comp of 5%. The comp performance reflected continued ticket growth and expected decline in traffic, strong seasonal execution and high discretionary engagement with the customer. As we exit fiscal 2025, we're doing so from a stronger earnings base than we contemplated at Investor Day, reflecting the operational progress made in the back half of the year and positive customer response to our expanded assortment and value offering. The fourth quarter included approximately 40 basis points of comp headwind from 2 winter storm events late in January that led to widespread store closures. We don't typically call out weather as those impacts tend to normalize over time, but the severity of these storms makes it appropriate to address. At the peak of the disruptions, nearly half of our store fleet was impacted by closures. The team executed our storm playbook effectively, prioritizing safety, maintaining operational control and reopening stores quickly for the communities that we serve. Despite the headwind from the January storms, comparable sales were still at the midpoint of our outlook range, supported by improved mix and strong seasonal demand. Year-end holiday performance was especially strong, reinforcing customer engagement. Importantly, these results reflect more than just quarterly momentum. They demonstrate the continued progress we are making across the business. In 2025, we made strong progress on our transformation initiatives. We completed the sale of Family Dollar, continued to test, learn and sharpen our multi-price and merchandising strategy, modernized key operational capabilities and laid the groundwork for sustained execution against our long-term algorithm. What we built this year is a stronger foundation for the next phase of growth. We are now, once again, a focused single-banner enterprise: Dollar Tree. We successfully navigated unprecedented tariff volatility and demonstrated the flexibility we've gained for responding to future macroeconomic factors via our multi-price assortment. We scaled multi-price with discipline, expanding assortment breadth, increasing sales productivity in converted stores and broadening our addressable market while preserving price leadership. We demonstrated measurable progress against strengthening our store standards. That's meaningful change for a 9,000-plus store system and validates our strategy, reinforcing that disciplined execution, clear priorities and operational focus are translating into stronger fundamentals and a durable long-term growth plan. Over the past 3 months, we've seen an acceleration in Dollar Tree household growth. Dollar Tree U.S. households reached a record 102 million, adding 6.5 million net new households in Q4, which represents a meaningful acceleration versus Q3. The growth in households continues to be broad-based and accelerated sequentially. As we shared with you at Investor Day, increasing trip frequency is a significant opportunity where even modest gains in annual visits translate into meaningful incremental sales. Taken together, the data shows multi-price and assortment expansion are not just driving spend; they are expanding Dollar Tree's addressable market. Let's turn now to comp. The 5% comp in the quarter was ticket driven, with average unit retail increasing to approximately $1.51 versus $1.34 last year. Mix was a key driver in the quarter. Discretionary categories outperformed consumables, with multi-price driving outsized strength in seasonal, party and toys. Multi-price was also a tailwind to our Christmas performance, driving strong engagement across seasonal and discretionary categories. Expanded price bands and a more relevant assortment increased category breadth and gifting choice, driving basket expansion. Stores with more mature, multi-price assortments delivered stronger seasonal demand and higher average tickets, reinforcing the incremental nature of the strategy. We see discretionary outperformance as an indicator of customer receptivity to expanded value, with shoppers gravitating toward broader assortments and higher-value options. As we have underscored in the past, Dollar Tree maintains laser focus on real-time quantitative benchmarking of the value in our stores versus the competition. On an aggregate basis, our relative value proposition was even stronger as we exited 2025 than when we entered and versus our historical average. This is, of course, after pricing actions in response to tariffs and increased multi-price penetration. I'd also like to highlight that, on average, the relative value of our multi-price offerings is even higher than that of our entry-price SKUs. Gross margin performance continues to improve, supported by favorable mix, freight moderation and disciplined mark-on management, even as we absorbed higher markdowns and continue to manage tariff volatility. Robust comp and margin performance, coupled with an incredible and expanding value proposition for our customers reflect the strength and durability of Dollar Tree's fundamentals. Let me turn to multi-price, which is a core pillar of our growth strategy and central to how we are expanding the business. In Q4, multi-price represented approximately 16% of total sales. Over the course of the year, we rolled out roughly 2,400 additional in-line 3.0 multi-price stores, bringing the total to approximately 5,300 locations. While the distinction between our different store formats is becoming less pronounced as multi-price elements are integrated across all stores, our in-line multi-price stores continue to deliver meaningfully higher sales productivity than legacy formats, reinforcing the structural productivity benefits of the model as we scale. By maintaining $1.25 leadership and introducing more price points, we've increased flexibility, improved relevance and deepened basket potential through complementary new offerings, delivering thrill of the hunt wow value. Approximately 85% of our opening price point assortment is $2 and below. And more than 80% of the assortment is unique to Dollar Tree, reinforcing the differentiated, discovery-driven nature of our model. We remain in the early innings of Dollar Tree's multi-price evolution. The results we have achieved to date give us building excitement on the opportunity ahead. I'd like to take a moment to discuss traffic trends at Dollar Tree. Traffic declined in the quarter, in line with our expectations. I want to zoom out now and share how we're currently thinking about traffic more broadly. As we shared at Investor Day, everything we're doing is deliberate, from how we're modernizing pricing to how we're strengthening execution across the fleet. With that context, let me put our traffic trends in perspective. We have successfully worked through the restickering process. It is now largely behind us. That process was a system-wide reset, new signage, improved price clarity and assortment updates designed to modernize the shopping experience. We've only adjusted pricing twice in our history: first, breaking the dollar in 2022; and second, targeted price actions in response to tariffs in 2025. Historically, with pricing resets at Dollar Tree, while overall comp sales remain robust, there is a temporary mix shift in the same-store sales composition between traffic and ticket. What we're seeing today is directionally consistent with that pattern. That being said, as we look at the data, we see a traffic trend that is above prior reset levels, outperforming our historical experience. Importantly, we were more strategic and deliberate with our assortment during our current price adjustment cycle. As Stewart will outline in more detail shortly, our 2026 outlook reflects an expectation for a more balanced contribution from traffic and ticket. In fact, we saw sequentially improving traffic in Q4 and we're pleased with our quarter-to-date trend. Larger picture, what matters most is how customers are behaving during a pricing transition. If engagement were deteriorating, we would expect to see pressure first in discretionary and impulse categories. Instead, in Q4, discretionary outperformed, seasonal was strong and multi-price adoption increased. That is the profile of a customer who is engaging and responding to expanded assortment and incremental value. Let me shift to execution. This is where we've made some of the most important progress. Operational metrics are improving across the fleet. Since midyear 2025, we've seen improvement in store-level performance indicators. For example, on a net basis, more than 1/3 of our stores have improved against our internal operating standards, driving greater consistency across the fleet. Importantly, stores that perform at the highest levels across key operational indicators are outperforming the fleet with higher levels of comp and profitability. This reinforces a simple principle. When store leadership is stable, schedules are optimized, shelves are stocked and processes are consistent, stores perform better. We've made tangible progress filling store manager vacancies, reducing turnover and minimizing early closes and late openings. Retail is local, and it's won store by store. That strengthening foundation extends beyond the 4 walls of the store and into our broader supply chain and inventory discipline, which I'll touch on next. The foundation of our business is getting stronger, and that improvement is particularly visible in our supply chain. We're raising the bar across the organization and we're seeing strong delivery from our supply chain team as service levels, in-stock metrics and inventory discipline continue to improve. As we shared at Investor Day, those gains are driving greater operating efficiency including higher throughput per distribution center and improved shipping productivity and giving us confidence in our expectations. We also navigated meaningful cost volatility this year. Tariff expense increased substantially year-over-year. As we've discussed, we continue to actively deploy the 5 mitigation levers we've historically used to manage cost headwinds, including supplier negotiations, product reengineering, country-of-origin shifts, assortment adjustments and targeted pricing actions, all to maintain strong profitability while preserving value for our customers. Gross margin expanded despite this volatile tariff backdrop. We managed corporate expenses with discipline, are rightsizing the organization post separation, improved free cash flow and returned significant capital to shareholders. This is a structurally stronger enterprise than it was 12 months ago. When I step back, what I see is a resilient, high-quality business that has navigated through a period of unprecedented change while advancing a broad set of strategic initiatives. At Investor Day, we laid out a clear set of assumptions and a path forward. And in the back half of the year, we outperformed the earnings expectations embedded in that framework. That performance reinforces both the resiliency of the model and the early progress we're making against the plan we shared with you. We're exiting the year with an expanded, more relevant assortment driven by disciplined multi-price execution, a stronger customer connection and accelerating household growth, improved store operations and greater consistency across the fleet and agile cost management in a volatile environment, supported by supply chain excellence and disciplined financial management. That combination positions us well going forward. In summary, Dollar Tree today is simpler, more focused and structurally stronger than it was a year ago. We're confident in the durability of this model and in the direction we are heading. With that, I'll turn it over to Stewart to walk through the financial details. Stewart Glendinning: Thank you, Mike, and good morning, everyone. For the fourth quarter of fiscal 2025, Dollar Tree delivered strong results, extending the momentum we've built throughout the year. Comparable sales increased 5%, gross margin expanded 150 basis points and adjusted diluted earnings per share increased 21% year-over-year. I'll walk through the key drivers for the quarter, and then we can discuss our outlook. Fourth quarter net sales increased 9% to $5.5 billion, driven by a 5% increase in comparable store sales and a 4% contribution from net new store growth. As expected, comps were driven by a 6.3% increase in average ticket, reflecting strong holiday performance. Traffic was down 1.2%. By category, consumables increased 3.6%, while discretionary delivered a 6.2% comp, with notable strength in Christmas party, paper and toys on the back of an enhanced multi-price assortment. Gross margin expanded 150 basis points year-over-year driven primarily by higher merchandise margin, lower freight costs, favorable mix toward higher-margin discretionary categories and occupancy leverage. These benefits were partially offset by tariffs and higher markdowns. Moving down the P&L. Dollar Tree segment adjusted SG&A delevered 170 basis points year-over-year, primarily driven by higher store payroll and general liability claims. We absorbed approximately $30 million for restickering costs in Q4, bringing the full year total to approximately $100 million. As I'll discuss momentarily, we will cycle the majority of these costs in the current fiscal year. Adjusted corporate SG&A net of $23 million of TSA income was $138 million, down 3% year-over-year and leveraged 40 basis points. We continue to make progress on this line item and remain on track toward our longer-term target of corporate SG&A at approximately 2% of sales by fiscal 2028. Taken together, adjusted operating margin expanded 20 basis points to 12.8% and adjusted operating income dollars increased 11% year-over-year. Below the operating line, net interest expense was in line with our expectations, while the effective tax rate and average diluted share count were modestly favorable. During fiscal 2025, we returned significant capital to shareholders through share repurchases, reducing shares outstanding by approximately 8% year-over-year. Turning to the balance sheet. Inventory was down 7% versus the prior year, while sales increased 9%, resulting in a favorable inventory-to-sales spread. Our continued focus on improving inventory turns supports fresher assortments for our customers, working capital efficiency and stronger free cash flow generation. We ended the quarter with $718 million in cash and no commercial paper outstanding. We generated over $1.2 billion in cash from operations and invested $264 million in capital expenditures, resulting in free cash flow in the quarter of approximately $970 million. For the full year, we generated more than $1 billion in free cash flow. During the quarter, we repurchased 2.2 million shares for $232 million. For fiscal 2025, we deployed nearly $1.6 billion towards share repurchases at an average price of $91. Subsequent to quarter-end, we repurchased approximately $190 million of stock. We ended the year with a strong liquidity position and remain well positioned to fund growth and return capital to shareholders. Our capital allocation priorities remain unchanged: first, invest in the business to support growth; second, maintain a strong and flexible balance sheet; and third, return excess capital to shareholders. Before reviewing our outlook, I want to briefly address the tariff environment. We have considered all of the recent changes. And while there may be some upside, we remain cautious because of the potential for further near-term changes and because of the potential for negative freight and other costs related to the conflict in the Middle East. It is also important to note that our current inventories have capitalized the tariff rates in place before the recent Supreme Court decision, and those costs will flow through the financials over the next quarter or so. As a result, any potential benefits will come after that. Turning to our outlook for fiscal 2026. We expect net sales in the range of $20.5 billion to $20.7 billion, reflecting comparable store sales growth of 3% to 4%. We expect diluted earnings per share in the range of $6.50 to $6.90, which is consistent with our Investor Day framework and represents high-teens earnings growth for the year. We expect top line growth to be driven by continued multi-price expansion, improved space productivity and assortment optimization, new store openings and improving store conditions. Our full year comp outlook assumes a positive contribution from traffic. As previously shared, we are targeting approximately 400 gross new store openings and 75 closings. We expect gross margin to be roughly flat, driven by improved markdown performance, partially offset by higher freight costs. We continue to deploy our 5 merchant levers to mitigate tariffs and other cost-related headwinds. With respect to SG&A, we plan to tightly manage store labor while continuing to support improved store conditions. We're also taking actions to rightsize our corporate cost structure, keeping us on track to achieve our longer-term SG&A targets, including corporate SG&A of approximately 2% of sales by fiscal 2028. For 2026, we see corporate SG&A in the range of $470 million to $490 million net of TSA. Overall, our outlook reflects modest SG&A leverage as we continue to manage operating costs tightly. For modeling purposes, let me walk through the key items we expect to lap this year. In the second, third and fourth quarters, we will lap the stickering and price implementation costs incurred in 2025. In total, these costs were approximately $100 million, spread relatively evenly across those 3 quarters. As the TSA winds down this year, we anticipate roughly $70 million of TSA income in fiscal 2026 weighted towards the first 3 quarters of the year. Putting it all together, we expect year-over-year operating margin expansion to be the greatest in the second and third quarters of the year. Below the operating line, we expect net interest and other income of approximately $85 million, an effective tax rate of 25.4% and a diluted share count of approximately 199 million shares, which does not assume any additional share repurchases. Our balance sheet remains strong, and we're well positioned to continue returning capital to shareholders. In fiscal year 2026, we expect CapEx in the range of $1.1 billion to $1.2 billion, which represents a slight year-over-year decrease in capital intensity driven by normalizing supply chain spend. Lastly, on the cash flow statement, we expect to utilize our NOL balance to generate roughly $165 million of cash tax benefits. Turning to the first quarter. We expect net sales in the range of $4.9 billion to $5 billion, reflecting comparable store sales growth of 3% to 4%. Adjusted diluted earnings per share are expected to be in the range of $1.45 to $1.60. In closing, we remain focused on disciplined execution of our Dollar Tree strategy and on delivering against our long-term earnings growth targets. We are encouraged by the progress we've made strengthening our fundamentals, improving store execution and driving a more productive and relevant assortment for our customers. In 2025, we returned a record amount of capital to shareholders. With a strong balance sheet and multiple levers to drive growth, we believe we are well positioned to deliver consistent profitable growth and to create long-term value for our shareholders. With that, I'll turn the call back over to Mike. Mike? Michael Creedon: Thanks, Stewart. Over the past year, we have simplified the enterprise and sharpened our focus on what matters most: building a stronger stand-alone Dollar Tree. We're scaling multi-price with discipline, the assortment is more relevant, customer engagement is higher and converted stores are delivering improved productivity. Execution is improving across the business. Store performance is strengthening. The supply chain is operating with greater stability and efficiency is increasing across the fleet. At Investor Day, we laid out a clear road map, disciplined growth, stronger returns and a structurally more productive enterprise. In 2025, we delivered a financial performance that exceeded our Investor Day outlook. As we exit 2025, our strategy is translating into measurable progress. Dollar Tree is simpler, more focused and better positioned for the future. The fundamentals are strengthening, the organization is aligned, and we are confident in our ability to deliver sustainable, profitable growth over the long term. Thank you. And with that, we're ready to take your questions. Operator: [Operator Instructions] Our first question today is coming from Matthew Boss from JPMorgan. Matthew Boss: Congrats on a nice quarter. So Mike, could you provide some additional color on your monthly comp cadence in the fourth quarter and elaborate on what you saw in traffic? Just what you think were the key drivers? And then quarter-to-date, could you speak to how the comp is trending relative to the 3% to 4% guidance? Michael Creedon: Yes. Thanks, Matt. Let me just start by saying we were pleased with the 5% comp in Q4. And it would have been higher if not for some of the weather events that I spoke about at the end of January. If I look at the quarter by month, December was our strongest month on the back of a really exciting multi-price led Christmas. I would say November was a very close second. And then January, of course, experienced a significant impact from the storms. Now within those monthly comps, we were excited because we saw traffic improve sequentially as the quarter unfolded. P12 better than P11, P11 better than P10. And really, it wasn't until the end of January that we saw that disruption. In terms of the start to the year, the quarter-to-date trend, as I said in the script, we're pleased with what we're seeing. Relative to the 3% to 4% guidance for the first quarter, we feel comfortable. Let's remember, Easter is earlier this year, and historically, that's been a headwind for the business. And we've, of course, tried to account for that in the comp guide. So overall, we feel good about our comp trend, and we like where we've started quarter-to-date. Matthew Boss: Great. And then as a follow-up for Stewart. On gross margin, can you speak to some of the puts and takes within the outlook for roughly flat? And then additionally, just how should we think about potential upside from tariff changes? And when could that flow through? Stewart Glendinning: Yes. Look, I'll start by saying that 2025 was a pretty strong performance. I mean we were up 59 basis points in the year. I think that's a big increase. You'll also notice the guidance that I've given you is now tighter than the plus/minus 50 bps I was sort of going into the year with because we have, in some places, a better view and, in some places, more volatility. But let me give you a little bit of perspective. So guidance is to keep that better performance versus last year, flat in this year. I think that's a good starting point. If you look forward, we've done a stronger job of buying. You'll keep in mind that now sort of tariffs have settled in, our teams have that chance to get out and employ the 5 levers. Multi-price mix is helping. And we've seen strong performance in our supply chain from a productivity perspective. All these things are setting up positively for next year. On the offset side, I did call out last quarter that we expected to see some reversion in freight, and freight was a big benefit last year, absolutely. We're hanging on to that benefit in other ways, but freight is likely to come back to be more expensive this year. And certainly, with the current fuel prices, there's going to be some volatility in fuel. On the tariff side, we are paying slightly lower tariffs at the moment, although the administration has pointed out that they expect to get back to where we were. And so we've taken that into account as we planned this year. And while there might be some small upside in the early days, although keep in mind, because of the cycle of our inventory, it will take about 4 months as the inventory cycles through before we start seeing the benefit of that. But I think some of the benefit of the tariff might be offsetting to some of the fuel increases we're seeing. And on fuel, we'll have to see what that looks like for the rest of the year. So overall, we think we've given some strong guidance, and we expect to deliver it this year. Operator: Next question today is coming from Seth Sigman from Barclays. Seth Sigman: I wanted to follow up on traffic. Can you just elaborate on how you think that plays out through this year? Specifically, when do you think traffic could actually inflect positively? And maybe you could also elaborate on that point that your experience this time around regarding elasticity has been maybe better than the past. Michael Creedon: Yes. Sure, Seth. I really look at traffic with 2 lenses. One is the lens of today. We saw the restickering we had to do in Q3. That continued in Q4. You see that in how the costs played out. And that restickering, it's not a onetime disruption, it's kind of that disruption throughout the quarters. That's disruptive to our people, in the store, our associates, but also to the customer. That's now behind us. And what I'm pleased with is that we continue to improve in the traffic as you look throughout the quarter. So when you look at, like I said, P12 was better than P11 and P11 better than P10. As we got away from those restickering, we really saw that improvement. And then the second lens is the historical lens. We've only taken price twice in our 40-year history. And so when I go back to break the dollar, you can go back and look, the traffic declined 4% and was negative for more than a year. We look now and say, okay, we're down 1%. So it just hasn't fallen as much, and we expect that duration to be shorter as well. So a more muted response for a shorter duration. And why? Because we were more strategic this time around in where we took price, before the entire store went up, leaving a good percentage of the store just not at value and so our merchants had to go work that through buying cycles and get back in line. This time around, you were able to be more strategic. And as a result, we were sharper on the pricing and we've seen a more softer response in terms of the -- not declining as much. Seth Sigman: Okay. Great. Very helpful. And then, Stewart, for you, on the SG&A outlook, I guess that's one of the big changes versus 2025. There are a lot of moving pieces and things that you're lapping from last year. Can you just frame the leverage that you're expecting to get here on SG&A on an underlying basis? And how are you thinking about some of the SG&A investments going forward? And just ultimately, what do you see as the drivers of operating leverage here? Stewart Glendinning: Great. Thanks, Seth. Let's take this in 2 pieces because I think it's helpful to look first at the segment SG&A and then to look separately at corporate SG&A. First of all, we said last year, we were going to go aggressively at expense, and we wanted to see ourselves driving leverage, and that has remained the goal. And I think we did a good job in 2025 of bringing those corporate SG&A costs down. But let me start with the segment. I mean on the segment last year, we did have higher wages and some investment in hours, which we called out this time last year. Those were -- that was money that was well spent because we started to see improvement in our stores and we saw a much bigger comp. If you think about the other big item, which we'll cycle this year, it was about $100 million, which related to all of the stickering and the price resets, so that won't recur this year. If you pull out the $100 million, all of our efforts have been focused around managing the rest of the SG&A costs on our payroll, which is about 2/3 of our total SG&A. We've done a good job of planning this year. We're implementing new workforce management software, and we expect to keep a lid on our increases. So if you take into account the small investments, I'd say, small investment in marketing, on an underlying basis, you'll see a very small amount of leverage or flat. And that is a big difference to prior years. On corporate SG&A, as you know, of course, we're driving that down, and you will see absolute leverage on corporate SG&A as we continue to take those numbers lower. Operator: Our next question is coming from Rupesh Parikh from Oppenheimer. Rupesh Parikh: So I was hoping you can help us to understand how your team is thinking about the impacts to your business related to higher gas prices on the consumer front, some of the raw material impacts and higher freight costs. And I think it would also be helpful to hear how your team is quantifying the impact of higher diesel prices. And finally, I just want to get a sense of [ your team's ] spot exposure and whether the latest higher level of energy prices have been factored into your guidance? Michael Creedon: Yes. Sure, Rupesh. Why don't I -- I'll take the consumer piece and then I'll let Stewart talk to the P&L. Higher prices at the pump impact all households. And so what we see is in the middle to higher income households, we see accelerated trade-in. So those customers are turning towards Dollar Tree. And then our core customer, the lower-income shopper, our pack sizes are what really help them stretch their paycheck and make their budgets work for them. So the price impacts everyone, but for us, Dollar Tree is really that key tool that helps them manage their budgets and deal with these higher prices. And when you look back and see, I mentioned this in the press release, for 20 years, Dollar Tree has been posting positive comps. There's a lot of economic cycles in those 20 years. And the one constant is that Dollar Tree continues to be the answer across all income levels as people help live and celebrate their lives. Stewart? Stewart Glendinning: Yes. So on diesel prices, and we obviously have a very close watch on this and we know exactly by increase how much that's affecting the P&L, I think we plan in the short run here, as I mentioned in the answer to the earlier question, we'll have some offset in the short run between diesel increases and some of the tariff benefits. We also will employ the 5 levers. If this looks like it's going to go longer, then we've got other actions we can take. I've been quite clear, I think last quarter in pointing out that we manage to a margin, we buy to a margin. And any of these kinds of price increases that we see, if we think they're going to be permanent or long-lasting, we're going to be taking other operating decisions and choices to try to drive -- to drive out that increase. Rupesh Parikh: Great. And then my follow-up question, just going back to Q4, I think it would also be helpful if you can provide more color on the Q4 gross margin and also on the 170 basis points of SG&A deleverage that we saw. Stewart Glendinning: Well, Q4 margin was heavily influenced by a much lower freight costs. And again, that was something we saw throughout the year. We were pleased with that benefit. I think it's a good thing, actually we're hanging on to that benefit in the following year's margin guidance, notwithstanding the potential reversion in freight costs. But there are other drivers also. And I mentioned those, we continue to see sourcing improvements as our merchants have had more time to wrestle with the higher costs coming through from tariff and inflation. And of course, we've had favorable mix from multi-price, which has been helpful to us. On the supply chain, as we actually saw Q4 was strong performance in productivity there as our warehouses work aggressively to be more efficient. And we shared some of that at our Investor Day. We're starting to see that come to fruition. The SG&A pressure in the quarter was the same story as it was in the last 3 quarters of the year, which was really all of the onetime stickering costs, which we don't expect to repeat this year. We did see a continuation of higher insurance and general liability costs, but those broadly, they're smaller costs. They don't move the P&L around as much. Operator: Our next question today is coming from Bobby Griffin from Raymond James. Robert Griffin: I guess, Mike, I want to start on multi-price points. If you could speak a little bit about those higher price points, and more importantly, what you're seeing at the level of productivity gains out of those stores? And then taking that a step further, just as multi-price point mixes up or continues to mix up, how are you in the team looking at where you stack up competition-wise on those new or higher price points? And can you tie that back into what we're talking about with traffic and your confidence there? Michael Creedon: Yes, absolutely. Thanks. We continue to see really strong customer acceptance for multi-price, particularly in that $3 to $5 range where the assortment expansion is driving incremental demand rather than substitution. And multi-price is improving store productivity. With higher sales per square foot and larger basket sizes in those converted stores, the broadened assortment and the increased relevance really both benefits the customer. And then in terms of our associates, it's fewer things to put on the shelf. And so there's some nice productivity and our stores love it. The ones that haven't been converted can't wait to be converted. And I want to be clear though that this is not simply about raising prices. This is about us having better items, larger pack sizes, the right pack sizes and categories that just weren't available to us at a strict dollar or even $1.25 price point. So even at those higher price points, we remain incredibly competitive with a better assortment. And in fact, in multi-price, our value proposition is significantly better than anyone we see in terms of mass or grocery or other alternatives. So as a result of that, we're just not seeing resistance from the customers. Instead, and you saw this in the great household growth, we're seeing customers come to Dollar Tree. And that accelerated household growth in Q4 is just a great proof point of that relevance and that incremental benefit to the customer. I really look and say multi-price items deliver an incredible relative value, while the entry price point continues to be what drives people as a destination to Dollar Tree. And our customers are telling us, they're telling us with their footsteps to the store and with their baskets. And we believe, as I mentioned, when we get their frequency up, that's when you really start to see that traffic take off. But right now, I love where we're at in terms of more and more households finding Dollar Tree and finding this incredible assortment. Robert Griffin: And maybe just a quick follow-up for Stewart. Just on -- I appreciate the comments on the SG&A. Maybe can we go back on the corporate SG&A. I think the guide is maybe modestly higher than what we would imply coming out of the Investor Day at the midpoint. So can you talk about that and just kind of the glide path back to 2%, what the timing there? Has anything changed? Stewart Glendinning: So let's start with the 2%. We're still pushing for 2% by '28, and we think that's reasonable. In terms of the actual guide of $470 million to $490 million, we had targeted $470 million at Investor Day. So we're still at the bottom -- the strong part of the guide is still a possibility. I think it's important to just recognize that we finished 2025 in a really powerful way. We started the year with $660 million of SG&A. We anticipated $95 million of TSA. We only got $55 million. We only got $55 million out of the $95 million. So we had to go out and cut a lot of costs just to get to the number. And actually, what happened, we actually over-delivered. So we ended up being -- instead of being at $565 million, we were $35 million better. So a good result in 2025. In 2026, similarly, we think that those TSA numbers will be slightly lower, and we're actively removing cost. But against the $500-and-some million, we finished up with $530 million, we start with $15 million of inflation. So we've got to pull out the inflation, then take out the next chunk of costs. So I think we're doing a good job. And I would also say, by the way, that while we're pulling out that cost, we're continuing to invest in the business. And so think about -- we're spending in the back office money on various IT investments to try to automate tasks, which will allow us to flatten out that SG&A curve as we move forward. So all in all, on track for the 2%. Our organization is structurally simpler. And we're going to keep pulling out costs. I think we're going to meet the guide. Operator: Next question is coming from Michael Lasser from UBS. Michael Lasser: If we look at your guidance, there's a fairly narrow range for your top line expectations for 2026, yet there's a pretty wide range for your earnings expectations for this year. And that's despite what seems like a decent amount of flexibility between the restickering costs fading away, some relief on the tariff side. So, a, what is going to drive you to the top end of your earnings expectation for the year versus the bottom end? And b, if we look at that wide range, coupled with the fourth quarter that just was basically in line with what you expected despite a slightly better comp, are you still at the point where it's difficult to have a full handle on managing the profitability of the business? And at what point do you think you have more visibility into that outlook? Stewart Glendinning: Yes. Well, thanks, Michael. I think, look, when you look at the guide, I mean, there's still $200 million, of course, of revenue separating those 2. I understand the point about what that looks like below. There are a lot of moving parts, both in margin, I mentioned, of course, roughly flat. We're dealing with tariffs, we're dealing with freight. So these are some of the things that might pull us down. What could pull us up, freight ends up being better, the war in the Middle East ends quickly and we end up being positive there. And of course, if we do see a more powerful return of traffic in the back part of the year, all of those things should be a help to us. Multi-price from a mix standpoint is beneficial. So we obviously have planned for a level of multi-price. We'd like to see that working in our P&L. When you get down into the SG&A lines, we've given you some spread, obviously, on the corporate SG&A side. And on the segment SG&A, I think the risk there is related mostly to utilities and to general liabilities. The wage number is so big, I mean, 2/3 roughly of our SG&A, that small movements there can have big impacts on the bottom line. So I think those are the big moving pieces. Michael Lasser: Okay. It was interesting that you did not mention the prospect of reinvestment either within the stores or within the merchandising, especially if you see traffic that does not meet your expectations. So, a, how have you factored in reinvestment back into the business? Is that going to be more or less static? And b, have you already seen traffic turn positive such as that gives you confidence that there is the right level of investment in the business today? Stewart Glendinning: Yes. Thanks, Michael. Let me talk about investment. I think we've actually had quite a good deal of investment in the business. And we've spoken at Investor Day to investments in CapEx to redo stores. Our merchants now are on top of the changes coming out of tariffs and, of course, have been investing appropriately and ensuring that we have the right level of value. And as I mentioned in one of the earlier questions, we're investing in a number of back-office systems to help manage our SG&A. So I think that's the right level of investment. On the top line side, we spoke at Investor Day about marketing. We have injected a small amount of marketing investment this year. We think it's going to have a good strong return. And so I would say there's a great deal of reinvestment being made in the business to ensure the flywheel is accelerated. Mike, maybe you want to talk to traffic. Michael Creedon: Yes. Michael, I mean, we're confident in what we're seeing both in the sequential improvement we saw in Q4, despite that significant -- remember, almost half of our stores were closed for multiple days as we ended the year. And then we're pleased with what we're seeing to start the year. And yet in your mind, you're still saying, okay, I've got an earlier Easter, which is still ahead of us and we have a very robust Q2 last year that was very strong. But absent all that, the sequence, the start to the year, the earlier Easter, the Q2, I look at the full year and say we expect a meaningful contribution from both traffic and ticket to our year. Everything we laid out at Investor Day is really working for us and I'm incredibly confident about the full year. Operator: Our next question is coming from Edward Kelly from Wells Fargo. Edward Kelly: I just wanted to follow up on store standards. I was curious if you could just take a step back and maybe assess where you stand there, as part of this, issues like in-stocks, price clarity, cleanliness, et cetera. Is there still work to do here? And if so, can you do that in the context of tightly managing SG&A? Michael Creedon: Yes. Thanks, Ed. First of all, we've been on this gold path for a while now. And when I first got here, it was whack-a-mole, you improve one store, another one would break, almost in that ratio. And the work that the team has done and the acceleration we've seen in the last 6 months, that -- remember that number I said, net 1/3 of our stores have improved. So instead of you fix one, you break one, it's you fix several, one might go backwards. And so we're really seeing an overall improvement, and in a quarter, to net improve 1/3 of your stores, that's real meaningful progress. And I think that's showing up in the comp. And then we're talking to our customers every week. We have our receipt-based surveys. We scrape websites, thousands and thousands of feedback every single week. We're seeing those improve every single month. And that's a testament to the store standards. And then the work in the supply chain that Roxanne and the team have done is the flow to the stores is much better, so you're not kind of choking out a backroom. We're much more even in our flow. And as a result, the appearance on the shelf and the in-stock is much better. You do those things well, and it's much easier to maintain the front room and keep the price clarity really clear. So I'm excited by the progress. I'm excited that we seem to have reached that point where we've started to accelerate the improvement. And as I look forward, you're always going to be managing the fact that there are some stores that might not be where you want them to be, but the overall level of the stores has moved to the right on our scale and the number of stores improving is far exceeding the ones that are declining. And it just makes it much more manageable. And on the whole, the appearance to the customer is that much stronger. So I'm really excited about the work that Jocy and the team have done and the progress that they're making. And more importantly, the accelerated progress I'm seeing. Edward Kelly: Okay. And then just as a follow-up, could you speak to what you're seeing in UPT? Did that essentially kind of mirror what's been happening on the traffic side? And then what's the expectation there as you think about '26? Michael Creedon: Yes. So we look at it and say, traffic's important to us, ticket's important to us. We want to make sure we complete the shop. And so when I look at the relevance of the assortment, and being able to have a real gift to give, which is why we've made the investment in toys and you see how the Toyland for us is improving. Those units are important. And so we're seeing, with multi-price, yes, you'll see a unit decline because of the higher price. But what's the basket look like and what's really the relevance of that basket? And that's what we're seeing improving and that's what we really are hearing from our customers that they love. Operator: Next question is coming from Paul Lejuez from Citigroup. Paul Lejuez: Curious if you could talk about the inventory number. Can you talk about inventory in units compared to that dollar number that you reported? Also what the plan is for F '26? Start there. Stewart Glendinning: Yes. So look, let's start with the fact that 2025 was a really good performance. I said at the beginning of the year that I thought there was improvement in terms of cycles. I think our merchant and supply chain teams did an excellent job of managing that, down 9% in inventory and up -- or sorry, down, I think, 7% in inventory, up 9% in sales. This is a good -- really good result. So when you talk about units, actually, it's quite interesting. I haven't given any data, but I will say that the units actually are even lower, and that's because that's reflecting the fact that we've got a lot more multi-price items there, and therefore, we're handling fewer units. We expect, by the way, that, that has a positive impact on labor pressure in our stores. For 2026, we haven't given any sort of balance sheet guidance, but you can expect that we will continue to focus aggressively on managing that inventory so that we've got balance sheet efficiency and higher returns on the capital invested in our business. Paul Lejuez: Stewart, can you frame that inventory units just given the higher tariff costs built in? I think, obviously earlier Easter, higher price point, what does that number look like in units? Stewart Glendinning: Yes, sorry. Finish the question, forgive me. Paul Lejuez: I just also wanted to ask what you built in for shrink this year. Stewart Glendinning: So let me take both of those. First, again, I'm not giving you a number on the units. I'm just telling you that the unit performance was even better than the overall performance in dollars. And so you can take that as an added positive. In terms of shrink, we're optimistic about this year in shrink. We think that 2025 -- or 2026, forgive me, is the year in which we expect to start to flatten that shrink results. So that's where we sit currently. The changes we're making are the right changes, and we expect that the increases we saw last year will be blunted this year. Operator: Our next question today is coming from John Heinbockel from Guggenheim. John Heinbockel: My question, can you talk about traffic by cohort, maybe annual visits? When you think about the new households that have come in, the average household, maybe -- and then maybe your best ones right, and you frame that opportunity? And then what will drive that? I think about MPP, right? And does discretionary drive that in the 3, 4 key holidays? And then consumable, right, cooler, the rest of the year? How do you think about MPP's role in that improvement? Michael Creedon: Yes, John, thanks. We grew households across all income cohorts. So you saw that accelerated rate, and that wasn't just higher income. That was across all income levels, we saw our household penetration increase. And so when I look at it and say, you look at the traffic drivers, it's not that one income group is accelerating and one is declining. That's not what we're seeing. We're seeing growth in household growth across all the income levels. The higher income does skew higher multi-price, no doubt about it. And they do drive discretionary, and so -- and they are our fastest growing in terms of the household penetration. So we're definitely seeing an acceleration in trade-in. But our core customer, lower income, that represents half of our business. We're still growing that household and they are still loving what they find in multi-price. So yes, consumables are a big driver that -- not a stock up, but that kind of in between, our pack sizes are a great fit for them. We see that, but we really see the relevance increasing across every income level. Operator: We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. Michael Creedon: Thanks, operator. I appreciate it. And thanks to everyone for joining us today. We appreciate your time and engagement, and look forward to updating you again when we get together next quarter. Thank you. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
Operator: Good morning, and welcome to Bitcoin Depot Inc.'s fourth quarter and full-year 2025 conference call. My name is John, and I will be your operator today. Before this call, Bitcoin Depot Inc. issued its financial results in a press release. A copy will be furnished in a report on Form 8-K filed with the SEC and will be available in the Investor Relations section of the company's website. Joining us on today's call are Bitcoin Depot Inc.'s CEO, Scott Buchanan, and CFO, David Gray. Following their remarks, we will open the call for questions. Before we begin, Cody Slach from the Gateway Group will make a brief introductory statement. Mr. Slach, please proceed. Cody Slach: Thank you, operator. Good morning, everyone. Before management begins their formal remarks, we would like to remind everyone that some statements we are making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a few factors, many of which are beyond our control, that could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the SEC. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to, risks and uncertainties identified under the caption Risk Factors in our recent filings. You may get Bitcoin Depot Inc.'s SEC filings for free by visiting the SEC website at sec.gov. I would like to remind everyone this call is being recorded and will be available for replay via a link in the Investor Relations section of Bitcoin Depot Inc.'s website. A supplemental earnings presentation highlighting our performance has also been made available on our IR website. I will now turn the call over to Bitcoin Depot Inc.'s CEO, Scott Buchanan. Scott Buchanan: Thanks, Cody, and good morning, everyone. Thank you for joining us today. 2025 was a strong year for Bitcoin Depot Inc. with growth across the majority of our key operating and financial metrics and meaningful progress executing on our long-term strategy. While our fourth quarter results declined year over year, this was primarily driven by recently enacted state regulations that introduced transaction size caps and, to a lesser extent, enhancements to our compliance standards that modestly impacted transaction activity. Importantly, we view both developments as constructive for the long-term health, credibility, and sustainability of the digital asset industry. As the largest operator in North America, with one of the most robust compliance programs, Bitcoin Depot Inc. is best positioned to navigate this evolving regulatory environment. We ended the fourth quarter with approximately 9,700 active machines, reflecting both organic growth and targeted acquisitions. In October, we completed the transition of the assets acquired from National Day Bitcoin ATM to our operating platform, adding more than 500 kiosks to our network. We also expanded through new retail partnerships, including GPM Investments, a subsidiary of Arco Corp., placing our kiosks in 188 initial locations with one of the country's largest convenience store operators. Additionally, we announced a new partnership with Wild Bill Tobacco, launching with a pilot installation in 10 stores and the opportunity to expand across a portfolio of more than 250 locations. Subsequent to quarter end, we acquired the assets of Instant Coin Bank, further strengthening our presence across the South Central United States. Relocation remains an important lever in our growth playbook. By continuously evaluating kiosk-level performance, we can redeploy machines into higher-traffic, higher-conversion locations, improving unit economics without incremental capital investment. On the regulatory front, we expect continued activity at the state level in 2026. While jurisdictions may introduce additional transaction limits or enhanced consumer protection requirements, we believe these measures ultimately raise industry standards and reinforce the advantages of scale, compliance infrastructure, and regulatory engagement, areas where Bitcoin Depot Inc. has led for years. Building on our previously announced first-transaction ID verification in February, we extended identity verification requirements for returning users, adding an additional layer of oversight and real-time transaction monitoring. These measures strengthen our consumer protection, deter bad actors, and further differentiate Bitcoin Depot Inc. as a trusted, compliant platform as the industry matures. Earlier this month, we announced the acquisition of Cut, a peer-to-peer social betting platform that enables users to wager directly against one another across sports, entertainment, and user-generated events. This acquisition marks our entry into the P2P social betting market and reflects our broader strategy to thoughtfully diversify beyond Bitcoin ATMs by leveraging our existing payment infrastructure, compliance capabilities, and consumer engagement expertise. To add to this diversification strategy, just last week, we announced the launch of ReadyBox, a standalone business advance platform providing working capital solutions to small businesses, gig workers, and independent contractors. ReadyBox offers advances ranging from $500 to $2,000 in its initial rollout across select states. Importantly, this platform operates independently from our Bitcoin kiosk business, while leveraging the same compliance, underwriting, and payment infrastructure that underpins our core operation. Together, Cut and ReadyBox represent important steps in our evolution from a single-product operator into a broader fintech platform. Both initiatives leverage our core strengths—compliance, payment, risk management, and customer trust—while expanding our addressable market and creating new, scalable revenue streams. I will now turn the call over to our CFO, David Gray, to walk you through our financial results in more detail. David? David Gray: Thanks, Scott, and good morning, everyone. Jumping right into our results for the fourth quarter, revenue in the fourth quarter was $116,000,000 compared to $136,800,000 in the prior-year period, reflecting the impact of recently enacted state regulations and enhanced compliance standards. For the full year, revenue increased 7% to $615,000,000, driven by kiosk expansion and continued growth in median transaction size. In fact, at the end of 2025, installed kiosks were 9,721, up 15% from 2024. Median transaction size also grew to $400, up 43% from 2024. We now also define lifetime value, which measures the average cumulative dollar value of all purchases users acquired from inception through the most recent quarter. Users who have completed at least one transaction between 2016 and 12/31/2025 have transacted a total of $5,311 on average. This is up 5% from the previous year. Gross profit in 2025 was $15,300,000 compared to $23,500,000 in 2024. Fourth-quarter gross margin was 13.2% compared to 17.2% last year, primarily reflecting lower revenue volume in the quarter. For the full year, gross margin expanded 300 basis points to 17.2%, demonstrating the underlying operating leverage in our model. Total operating expenses were $21,400,000 compared to $15,000,000 in last year's fourth quarter, with the increase due to higher legal and incentive compensation-related expenses. For the year, total OpEx was up 7% to $72,100,000 due to the higher legal expenses. GAAP net loss for 2025 was $24,900,000 compared to net income of $5,400,000 for 2024. 2025 included an $18,500,000 accrual for an arbitration judgment liability. Net loss attributable to common shareholders in 2025 was $21,000,000, or -$2.80 per share, compared to a net loss of $6,600,000, or $2.54 per share, in last year's fourth quarter. GAAP net income for the year was down slightly to $5,100,000 compared to $7,800,000 in 2024. Adjusted EBITDA in the fourth quarter was $1,600,000 compared to $13,000,000 in the prior year, reflecting lower revenue and higher operating expenses. For the full year, adjusted EBITDA increased 42% to $56,400,000, underscoring the strength of our operating model over a full-cycle view. Now turning to our balance sheet and cash flow, cash, cash equivalents, and cryptocurrencies as of 12/31/2025 increased to $76,600,000, compared to $31,000,000 at the end of 2024. During the fourth quarter, we completed a $15,000,000 registered direct offering of our Class A common stock, which we are using for general corporate purposes. We generated $34,000,000 of cash from operating activities in 2025, compared to $22,500,000 last year, an increase of 51%. Debt, including a term loan, finance leases, and profit share arrangements, was $62,500,000 at quarter end compared to $60,900,000 at the end of 2024. Of the total debt balance, $18,000,000 is our term loan, and $40,000,000 is comprised of profit-sharing liabilities. As a reminder, these profit share arrangements contain an upfront lump-sum payment to the company by our partners in exchange for a portion of future profits generated from a specified group of kiosks for a specified period of time. Because we continue to operate and typically retain title to the machines, we must account for these arrangements as debt under U.S. GAAP. We currently do not anticipate further expansion of the profit share program moving forward. Now turning to our outlook, given the dynamic regulatory environment Scott discussed, 2026 is likely to be a challenging year for our core BTM business, where we expect revenue to decline between 30% to 40% year over year as the industry resets and adapts to a changing landscape. We will be focused on cost containment and fleet optimization to adapt to these changes, while also working to scale our recently acquired P2P betting platform and newly launched merchant cash advance products. However, we do not expect these to have a material impact on our overall revenue in the current year. Thank you for joining us today and for your continued interest in Bitcoin Depot Inc. We appreciate your support and look forward to keeping you updated as we continue to build a compliant, diversified fintech platform designed for long-term growth. With that, I will turn it over to the operator to take questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your questions, simply press star 1 again. Our first question comes from the line of Michael Anthony Colonnese from H.C. Wainwright. Please go ahead. Michael Anthony Colonnese: Thank you for taking my questions. And Scott, congratulations, Don, on the new role with Pharma. Well deserved. First question for me, I was wondering if you could unpack the 2026 revenue guidance a bit. Just trying to get a better sense of the underlying kiosk growth assumption embedded in the outlook. And, David, you touched on this a bit that the Cut acquisition is not going to be a material contributor, but it would just be great to get a better idea as to what that revenue contribution from Cut could look like for 2026. Scott Buchanan: Yeah. Hey, Mike. This is Scott. Thank you for the question. For the core BTM business, I mean, the revenue decline obviously is a big range that David gave, and that is largely because we do not know exactly what regulatory changes will happen this year. Right? We know states will pass additional measures that will limit the economics in those states, but we do not know how many states or exactly what bills will pass. So that is our best estimate at this point in terms of what the revenue decline could be. In terms of number of kiosks, that will likely stay flat or down slightly depending on how we want to handle relocations for states that pass particularly negative bills. But it will really just depend on what specifically gets done during this year, and we will continue to update guidance as we have better clarity on that throughout the year. David Gray: On Cut, Cut is a relatively small business. We think we can accelerate the growth substantially by investing more into their marketing and engineering teams. They have had a very small team prior to us acquiring them, and we think there are a lot of quick wins we can get there. As far as a specific revenue forecast, we do not have that, but revenue will definitely be below $5,000,000 for Cut this year. Michael Anthony Colonnese: Got it. Very helpful, Scott. Appreciate that. And how do you guys envision the new Bitcoin ATM regulations that have been passed and ones that are to be passed at the state level changing the M&A landscape from here? Obviously, you guys have been acquisitive in the past. Can we expect Bitcoin Depot Inc. to be more acquisitive this year given some of the changes to the laws? Scott Buchanan: Potentially. Again, it will really depend on what exactly passes and how the rest of the industry reacts to those regulatory changes. We have kind of been opportunistic in the way we approached M&A, where if we have seen some smaller competitors that are struggling to comply with these challenging regulations from an engineering and operating standpoint, it has been us an ability to buy these at attractive valuations. We are not going out and hunting to acquire people in the space, but if there are attractive opportunities out there, we are going to be strategically acquisitive. So it could happen, but it is not like we are actively trying to roll up the entire industry right now. We really want to see how everyone else reacts to the changes and how well they can comply and how that affects all of our volume going forward. Operator: And if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. Our next question comes from the line of Patrick Joseph McCann with Noble Capital Markets. Patrick Joseph McCann: Hey, good morning. Thanks for taking my questions. Just have a couple here. First, both with regard to regulations, I guess, with regard to 2026 and what you are seeing there in terms of which states are in the process of passing regulations and which ones, you know, recently did. I was wondering if, you know, by the end of 2026, do you have a sense of where the regulatory landscape will settle for the—you know, for your largest states? I guess, you know, really, my question is, will—do you believe you will be at a point where many of your largest states will have gone through the regulatory changes, or maybe how much more disruption or meaningful disruption would you expect that would still be ahead in terms of states that have not yet gotten around to this? Scott Buchanan: Yeah. I think a great question. Thank you, Pat. I think in 2026, we will have seen 80% to 90% of the states decide where their stance is on this from a regulatory standpoint, at least initially. So 2027 should be much, much less activity. There could be some revisions to existing states with bills in 2027 as they kind of learn more and see what the impact is of what they passed initially. But, generally, I would say by the end of 2026, we will have clarity on which states are going to regulate them now. Patrick Joseph McCann: Great. That is helpful. And then my other question is really just a follow-up. With the regulatory actions going on in the states, I was just wondering how that affects your view of the markets. Are those going to be having similar issues or similar developments, or do those become more appealing now? Has that changed or maybe accelerated your ambitions in the international markets at all? Scott Buchanan: I do not know that we have seen changes internationally anywhere like what we are seeing in the U.S. So we are still actively working on two more countries currently that we would hope to launch in either late Q1 or early Q2. We are still actively working on international expansion, and we still have high hopes for that being a successful path for us. But, again, it will depend on each jurisdiction. Right? Like, there are still so few kiosks in most of these countries that these countries probably have not even thought about regulating the industry. And so we will just have to pay close attention as we are going into these spaces on how they view the industry once there starts to be a meaningful number of kiosks in those countries. Operator: At this time, that concludes our question-and-answer session. I will now turn the call back over to Scott Buchanan for closing remarks. Scott Buchanan: Thank you, everybody, for joining the call today. We look forward to keeping you updated on our progress throughout the year. Operator: Thank you for joining us today for Bitcoin Depot Inc.'s fourth quarter call. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Telos Corporation Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Allison Phillipp. Please go ahead, ma’am. Allison Phillipp: Good morning. Thank you for joining us to discuss Telos Corporation's fourth quarter 2025 financial results. With me today is John B. Wood, Chairman and CEO of Telos Corporation; G. Mark Bendza, Executive Vice President and CFO of Telos Corporation; and Mark D. Griffin, Executive Vice President of Security Solutions. Let me quickly review the format of today's presentation. Mark will begin with remarks on our fourth quarter 2025 results and 2026 outlook. Next, John will follow up with concluding commentary. We will then open the line for Q&A, where Mark Griffin, Executive Vice President of Security Solutions, will also join us. The fourth quarter financial results were issued earlier today and are posted on the Telos Corporation Investor Relations website and this call is being simultaneously webcast. Additionally, we have provided presentation slides on our Investor Relations website. Before we begin, I want to emphasize that some of our statements on this call, including all of those relating to 2026 company performance, plans, and operations, are forward-looking statements and are made under the safe harbor provisions of the federal securities laws. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ for various reasons, including the factors described in today's financial results summary and comments made during this conference call and in our SEC filings. We do not undertake any duty to update any forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are supplemental and clarifying measures to help investors understand Telos Corporation’s financial performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or in isolation from, GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our fourth quarter results summary and on the Investor Relations portion of our website. Please also note that financial comparisons are year over year unless otherwise specified. The webcast replay of this call will be available on our company website under the Investor Relations link. With that, I will turn the call over to Mark. G. Mark Bendza: Thank you, Allison, and good morning, everyone. We have a lot of good news to share again this quarter. We are pleased to report another strong quarter and an exceptional finish to an incredibly strong 2025. Before turning to the slides, let me highlight three key takeaways for the quarter and the year. First, we delivered significant revenue growth and exceeded our guidance across key financial metrics every quarter, including the fourth quarter. Second, our continued focus on disciplined program execution, rigorous operating expense management, and working capital efficiency drove strong operating leverage, excellent incremental adjusted EBITDA margins, and robust cash flow. Third, we returned capital to shareholders through share repurchases. Looking ahead, large programs in Telos ID continue to ramp, and earlier this month, we expanded the confidential IT security work that we are performing for the federal government. Given this momentum, we remain well positioned for another year of double-digit revenue growth, adjusted EBITDA margin expansion, strong cash flow, and additional share repurchases in 2026. Our board of directors recently increased our share repurchase authorization from $50,000,000 to $75,000,000 to support our capital deployment activity. With that overview, let us turn to slide three. We delivered another quarter of strong execution and exceeded our guidance across key metrics. Revenue increased 77% year over year to $46,800,000, exceeding our guidance range of $44,000,000 to $46,300,000. This performance was primarily driven by strong execution in Telos ID and the ramp of large programs. We expect large programs in Telos ID to continue growing into 2026. As we continue to scale the business, our focus remains on program execution combined with operating expense management. During the fourth quarter, we approved a company-wide restructuring plan designed to further streamline operations and position the company for additional growth and adjusted EBITDA margin expansion in 2026. As a result of these actions, we expect adjusted operating expenses to decline in 2026, even as revenue continues to grow at a double-digit rate. The restructuring plan resulted in a $1,500,000 charge during the quarter, including approximately $500,000 recorded in cost of sales. Separately, our review of intangible assets resulted in a $14,900,000 noncash goodwill impairment within the Secure Networks segment. This charge represents a full write-off of the segment's goodwill and reflects the decline in contract backlog as several large programs reached their natural completion in recent periods. Secure Networks represents a meaningful portion of our business development pipeline and we continue to pursue new contracts in that segment. In total, these items resulted in a $16,400,000 charge in the quarter. Turning to gross margins, GAAP gross margin for the quarter was 35%. Excluding the $500,000 charge included in cost of sales, gross margin was 36%, while cash gross margin was 41.9%. Both metrics exceeded our guidance range, primarily reflecting performance in Telos ID. As a reminder, due to the diversity of our revenue streams, gross margins will naturally fluctuate depending on the mix of revenue recognized in a given quarter. Turning to operating expenses and adjusted EBITDA, our focus on expense management translated into strong overall profitability. Adjusted operating expenses came in approximately $1,000,000 better than our guidance assumptions. As a result of better-than-expected revenue, cash gross margin, and operating expenses, adjusted EBITDA exceeded the high end of our guidance range. Adjusted EBITDA was $7,300,000, compared to our guidance range of $4,000,000 to $5,700,000. Adjusted EBITDA margin was 15.6%. Turning to cash flow, strong cash generation remains a priority. Operating cash flow in the quarter was $8,000,000. Free cash flow was $6,300,000, representing a free cash flow margin of 13.4%. This performance reflects the success of our company-wide working capital initiatives as well as our revenue growth and gross margin profile. Our strong cash generation, when combined with our highly liquid balance sheet, provides flexibility to invest in growth initiatives while also continuing to return capital to shareholders. Let us now turn to slide four for a brief recap of our year-over-year performance for the full year 2025. We delivered an exceptional year in 2025 despite the challenging macro environment within the U.S. federal government. Revenue increased 52% to $164,800,000. Growth was driven by new program wins in both 2024 and 2025, as well as the continued ramp of our TSA PreCheck program. At the same time, we significantly improved the efficiency of our operating model. Cash operating expenses declined by $8,000,000, or nearly 12%, reflecting the impact of the expense management initiative we launched at the end of 2024. As a result, adjusted EBITDA was $18,100,000, representing a $27,800,000 improvement year over year. Adjusted EBITDA margin expanded nearly 20 percentage points to 11%, and incremental adjusted EBITDA margin was 49.1%. In other words, for every dollar of revenue growth, the company generated more than $0.49 of additional adjusted EBITDA. Cash generation also improved significantly. Free cash flow was $21,300,000, representing a $61,000,000 improvement year over year, and free cash flow margin was 12.9%. Finally, we returned significant capital to shareholders. During the year, we deployed $13,600,000 to repurchase approximately 4.3% of our outstanding shares at an average price of $4.38 per share. Our capital allocation priorities remain consistent: investing in organic growth, maintaining a liquid balance sheet, and returning capital to shareholders. With that, let us turn to slide five to discuss our outlook for 2026. As we enter 2026, we expect the continued ramp of large programs and recent new business to drive another year of strong growth, adjusted EBITDA margin expansion, and robust cash flow. For the year, we forecast revenue to grow 14% to 21% year over year to a range of $187,000,000 to $200,000,000. Substantially all of our forecast represents revenue from existing programs. The revenue range is primarily driven by the third-party hardware and software component of our IT GEMS program as well as the confidential IT security work that we are performing for the federal government. We forecast cash gross margin of approximately 37% to 39.5%, lower than 2025 primarily due to revenue mix and the timing of certain prepaid expense recognition in cost of sales. We forecast cash operating expenses to be approximately $1,500,000 to $4,000,000 lower year over year, reflecting the benefits of the expense management plan approved in the fourth quarter. Based on these assumptions, we forecast adjusted EBITDA of $20,600,000 to $28,000,000, representing an adjusted EBITDA margin of 11% to 14%. Lastly, we forecast another year of robust cash flow and share repurchases. Turning to the first quarter, we forecast revenue to grow 44% to 47% year over year to a range of $44,000,000 to $45,000,000. We forecast cash gross margin to be over 39%. We forecast cash operating expenses to be approximately $1,000,000 lower year over year, reflecting the expense management plan approved in the fourth quarter. We forecast adjusted EBITDA of $4,500,000 to $5,000,000, representing an adjusted EBITDA margin of 10.2% to 11.1%. Lastly, we forecast another quarter of strong cash flow. With that, I will turn it over to John for concluding commentary. John B. Wood: Thanks, Mark. Before I wrap up, I want to spend a few minutes on where we are as a business and where we are headed. As Mark noted, 2025 was an exceptional year financially, but the numbers reflect something much more fundamental, and that is the investments we have made in our people, our systems, and our customer relationships are paying off. Our 90% of total revenue, and the momentum there is strong. Let me touch on a few areas. Starting with Xacta, our cyber governance, risk management, and compliance platform continues to be the standard for the most security-conscious organizations in the world. Demand for automated GRC solutions is growing as our customers recognize the value in incorporating machine-readable data sets for more actionable compliance and risk information on a continuous or ongoing basis. We are well positioned to capture that demand. During the year, we launched Xacta AI, bringing meaningful AI-driven risk and compliance insights to our customers' complex environments. Our AI integration within the Xacta platform focuses on a novel and secure approach to utilize highly contextualized and enriched datasets, resulting in high-confidence, risk-focused recommendations and insights. Xacta AI saves customers time and effort by delivering expert-level guidance related to a customer's specific circumstances and their risk tolerance. To date, 400 Xacta AI licenses have been sold to two major federal government customers, and the new prospect response has been very positive. We see Xacta AI as a meaningful differentiator as we compete for new business in 2026 and beyond. Our Telos ID business remains a significant growth driver. Our TSA PreCheck enrollment program ramped nicely throughout the year, supported by strong travel demand. We also continue to expand our broader identity and biometric portfolio, including ID vetting and aviation channeling services. Enrollment is a scale business, and our biometric solutions now process millions of identity transactions annually across the nation. We are pleased with the progress we are making and have the potential for additional growth in these areas. Beyond these programs, earlier this month, we expanded the confidential IT security work that we are performing for the federal government. Now turning to the broader market, over 90% of our revenue comes from governments here and around the world. Our customer base spans the Department of War, the intelligence community, Department of Homeland Security, multiple civilian agencies, and the Five Eyes Nations. These customers are funded to address enduring national security and compliance missions. Cybersecurity, identity verification, and secure communications are not discretionary line items for these organizations. They are indeed mission critical. We recognize that the federal spending environment is receiving heightened scrutiny and we are monitoring it closely. However, in general, the programs we support continue to be well funded, operationally essential, and in many cases tied to mandated security and compliance requirements. That gives us confidence in the durability of our revenue base. Our growth opportunities and pipeline are driven by strategic positioning and well-funded national security priorities, including the ever-changing cybersecurity threat environments, digital enterprise solutions, and modernization of core infrastructures. Our pipeline remains strong at over $4,200,000,000. We have seen a shift in awards to the right as a result of the government shutdown, funding constraints, and a more detailed review from the government of submitted bids. We expect additional award decisions on previously submitted bids over the course of 2026. With that, I would like to wrap up on slide number six. In summary, 2025 was a transformational year for Telos Corporation, marked by strong revenue growth, significant adjusted EBITDA margin expansion, and a dramatic improvement in cash generation. We successfully executed on large programs and secured new business. At the same time, our continued focus on cost management and working capital efficiency enabled us to convert growth into meaningful improvements in profitability and cash flow. Importantly, we also returned capital to shareholders through our share repurchase program while maintaining a highly liquid and flexible balance sheet. As we enter 2026, the continued ramp of large programs and recent new business positions us well for another year of double-digit revenue growth. At the same time, the expense management plan approved in the fourth quarter enables us to drive further operating leverage and adjusted EBITDA margin expansion as we scale. In short, we believe our strong program execution and expense discipline are creating a business that is increasingly profitable, cash generative, and positioned for long-term value creation for our customers and our shareholders. With that, we are happy to take questions. G. Mark Bendza: Operator, please open the line for Q&A. Thank you. Operator: Thank you. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question is going to come from the line of Zachary Cummins with B. Riley Securities. Your line is open. Please go ahead. Zachary Cummins: Hi. Good morning, Mark and John. Congrats on the strong results to end the year. Mark, maybe just starting with the initial guidance for the year. It sounds like it is largely driven by expansion with existing programs. So can you talk about what is going on in the pipeline—like a few opportunities maybe were pushed to the right—in terms of does that provide potential upside versus the initial guidance, or what are some of the puts and takes when we think about your initial outlook? G. Mark Bendza: Yes. So let me start, and maybe I will turn it over to Mark Griffin for his comments on the pipeline. First, we are very encouraged by how our existing programs have evolved since November when we originally indicated $180,000,000 of revenue in 2026. As I said in the script, we have grown the confidential IT work that we were performing for the federal government. That is something that we started back in the third quarter of last year. That body of work continues to expand with the federal government, so that is a very encouraging development. Second, our IT GEMS program continues to ramp and will continue to ramp into 2026. There are revenue streams within that program that we had a partial year of revenue last year, so we are going to have full annualization this coming year in 2026. Based on orders that we have received in that program since November, we are getting more and more visibility into how 2026 is shaping up for that program. So that is trending extremely well also. Lastly, on TSA PreCheck, transaction volumes have been trending very well for us since November as well as market share gains. So we have improved our outlook for that program as well. The good news, as you said, is that $187,000,000 to $200,000,000 is primarily a function of existing programs and there is very little contingency in terms of additional new business go-get to achieve those numbers. Regarding the pipeline, I will turn it over to Mark. Mark D. Griffin: Hello, Zach. As John mentioned, there is a significant value in the pipeline. The analysis that we have done to date indicates about 20% of that value is in the first half of this year. That gives us a good line of sight on additional opportunity that we would then also bring into the year. It is a mixture of the pipeline across the different business lines. The majority is still within Security Solutions but supported by Secure Networks as well. So we are very bullish on the pipeline right now with a good chunk of it in the first half of this year from an award point of view. Zachary Cummins: Understood. And just my one follow-up question for Mark is around your gross margin assumptions for this year. I think you outlined it a bit in your script, but can you give us the key puts and takes on why we are seeing a little bit of compression in the assumed gross margin this year versus 2025? G. Mark Bendza: Yes. Historically, if you look back over the last five years, our weighted average gross margins are typically in the upper 30s. That is what you are seeing for 2026. The year-over-year dilution in 2026 is really driven by a few key things. First, the third-party hardware and software on our IT GEMS program represents the lowest margin of revenue streams in our portfolio. That revenue stream is growing year over year, and so you are going to see some dilutive impact from the growth of that lower-margin revenue stream. Second, as we discussed in prior periods, we have some expenses on our TSA PreCheck program—actually, pretty meaningful expenses on the TSA PreCheck program—that were prepaid over the last few years, and now that expense is being compressed and recognized through the P&L and through cost of sales in a relatively short period of time, especially in 2026. So we are getting some artificial gross margin pressure from that GAAP accounting phenomenon. That alone is a couple hundred basis points into 2026. Third, the rest of the portfolio is actually accretive year over year. Gross margins are expanding in the rest of the portfolio once you normalize for those two items that I just mentioned. I will also point out that although cash gross margins are forecasted to contract in 2026, adjusted EBITDA margins are forecasted to expand, and that is a function of top-line growth and lower OpEx all lining up nicely to drive adjusted EBITDA margin expansion. Zachary Cummins: Understood. Thanks for taking my questions, and best of luck with the rest of the quarter. G. Mark Bendza: Thanks, Zach. Operator: Thank you. One moment for our next question. Our next question comes from the line of Matt Cliche with Needham and Company. Your line is open. Please go ahead. Matt Cliche: Hey. Good morning, guys. This is Matt Cliche over at Needham. Thanks for taking our questions. When we think about the strong revenue performance and guide for next year, is there any sort of framework you can provide on how much Xacta is contributing or the size of the cohort that will come up for renewal in 2026? G. Mark Bendza: So our renewal rates are excellent, Matt. We experience, I would say, very little to no revenue loss in a typical year on Xacta renewals, generally speaking, year to year. So as we forecast from one year to the next, renewals tend to be a very low variable for us as we forecast our revenues in a typical year. Matt Cliche: Okay. Great. And then what exactly are you seeing in terms of Xacta AI attach rates or momentum? What are you hearing from the agency side? John B. Wood: Matt, you were breaking up a little bit, but I believe your question was what are we seeing in terms of Xacta AI demand, attach rate, and volume of conversations with new prospective customers. Our plan is to go after existing customers who already use Xacta to start with, and there we are in the tens of millions of dollars of opportunities—several tens of millions of dollars of opportunities. I think our customers are really excited because if they are able to see the kind of outcomes that we have seen in our testing, then they could see as much as a 90% reduction in the time and effort it takes to get to an Authority to Operate. Matt Cliche: That is great. Thank you so much. Sorry for the connectivity issues there too. John B. Wood: No problem. Thanks for your question. Operator: Thank you. One moment for our next question. Our next question comes from the line of Rudy Kessinger with D.A. Davidson. Your line is open. Please go ahead. Rudy Kessinger: Hey, guys. Thanks for taking my questions, and apologies if this might have been asked. I had to drop off for a bit here and jump back on. In the 2026 guide, the revenue growth, how much of that revenue growth is tied to the one large DMDC contract? G. Mark Bendza: The one large CNBC contract—I would say relative to the $180,000,000 that we mentioned in November, it is roughly a third of the improvement from the November outlook. Rudy Kessinger: Okay. That is a good way to think about it, I think. So there certainly is some new business win contribution in there. Okay. And then for this year, as you look at the pipeline—realistic pipeline that you could potentially win this year in terms of revenue contribution this year or into 2027—what does that pipeline look like today, and how many large highly likely deals do you have in that pipe? Mark D. Griffin: Hey, Rudy. In 2026, we have, supposed to be awarded in 2026, about 64 opportunities that are supposed to hit. Thirty-four of those, as I mentioned, are in the first half of the year, representing about 20% of the value of the pipeline. So we expect most of that is going to hit by the June timeframe, and based on the timing of that and the rollout of that, you are probably talking about some modest revenue in 2026 but then ramping and building in 2027 as well. Rudy Kessinger: Okay. And then last one for me. Clearly, the expense discipline has been great to see and the improved EBITDA margins as well. At the same time, gross margin, even your cash gross margin, continues to come under pressure. It is going to come down again this year as well. What strategies do you have in place to maybe help put a floor in that cash gross margin? Do you think that range you gave this year can be a floor? And how should we think about that line longer term? G. Mark Bendza: Yes. Some of the commentary I have made in the past, and I will reiterate today, is that we do have a lot of different revenue streams and a lot of different margin profiles. Quarter to quarter, year to year, total company gross margins will fluctuate based on mix. The margins that we are guiding for 2026, on the surface, are in line with where margins have been over the last five or six years. Keep in mind, as I mentioned earlier, there are about 200 basis points of more accounting-oriented year-over-year dilution associated with that compressed expense recognition, which is well in excess of actual cash expense in cost of sales. If you adjust for that, we are still in that low 40s cash gross margin. So I think we are in a really good spot. In terms of the recent dilution that we have seen over the last few quarters associated with the IT GEMS revenue mix, I would say this year, we should pretty much be at the full dilutive effect. Does that help to answer your question? Rudy Kessinger: Yes. Yes, it does. Thank you. Operator: Okay. Thank you. I am showing no further questions at this time, and I would like to hand the conference back over to John Wood for any further remarks. John B. Wood: Thank you very much. I want to thank our shareholders for your ongoing support. With robust and recession-resistant markets, well-funded customers, and a decades-long track record of serving the world's most security-conscious organizations, Telos Corporation has a really strong foundation for the future. So, again, thank you. This concludes today's Allison Phillipp: conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.
Operator: Good day. And thank you for standing by. Welcome to the OPAL Fuels Inc. Fourth Quarter and Full Year 2025 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker for today, Todd M. Firestone, Vice President, Investor Relations. Please go ahead. Todd M. Firestone: Thank you, and good morning, everyone. Welcome to the OPAL Fuels Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. With me today are our Co-CEOs, Adam J. Comora and Jonathan Gilbert Maurer, as well as Kazi Kamrul Hasan, OPAL Fuels Inc.’s Chief Financial Officer. OPAL Fuels Inc. released financial and operating results for the fourth quarter and full year 2025 this morning, and those results are available on the Investor Relations section of our website at investors.opalfuels.com. The presentation and access to the webcast for this call are also available on the website. After completion of today’s call, a replay will be available for 90 days. Before we begin, I would like to remind you that our remarks and answers to your questions contain forward-looking statements, which involve risks, uncertainties, and assumptions. Forward-looking statements are not a guarantee of performance, and actual results could differ materially from what is contained in such statements. Several risk factors that could cause or contribute to such differences are described on slides 2 and 3 of our presentation. These forward-looking statements reflect our views as of the date of this call, and OPAL Fuels Inc. does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this call. Additionally, this call will contain discussion of certain non-GAAP measures. A definition of non-GAAP measures used and a reconciliation of these measures to the nearest GAAP measures are included in the appendix of the release and presentation. Adam will begin today’s call by providing an overview of the quarter’s results and recent highlights. Jonathan will then give a commercial and business development update, after which Kazi will review financial results. We will then open the call for questions. I will now turn the call over to Adam J. Comora, Co-CEO of OPAL Fuels Inc. Adam J. Comora: Good morning, everyone, and thank you for participating in OPAL Fuels Inc.’s Fourth Quarter and Full Year 2025 Earnings Call. We are pleased to be here today and look forward to discussing our 2025 results, our outlook and plans for 2026, and the current macro and regulatory environment. Starting with full-year and fourth-quarter results, we are pleased the year ended strongly and adjusted EBITDA finished at $90.2 million, within our guidance. On the surface, 2025 adjusted EBITDA was a flat year versus 2024; however, production grew 28%, which was masked in our financial results by several factors, including 22% lower RIN prices. Despite the macro headwinds faced by our Fuel Station Services segment throughout 2025, we are pleased we achieved strong growth in the segment. I will offer some high-level thoughts here at the top of the call regarding outlook for 2026, and Kazi will share more details later. For RNG production outlook in 2026, we continue to be encouraged by our improved operations team, new opportunities to improve gas collection, and greater efficiencies at our plants, all driving incremental production growth from our existing assets. For our Fuel Station Services segment, we are beginning to see improving macro conditions and other factors that could make 2026 an inflection point for new fleet adoption of CNG and RNG in heavy-duty trucking. It is important to note that these business development activities would not necessarily have a direct benefit to 2026 financial results. It typically takes us about a year to build a fueling station and begin selling fuel. So for 2026, this segment will still be feeling the effects of the sluggish 2025 business development activity, but we are hopeful new fleet deployments will begin setting the segment up for stronger growth in 2027 and beyond. I do want to comment on some policy developments as well. As many of you likely saw, on February 25, the EPA sent to OMB the final SET rule with updated 2026 and 2027 RVO targets. The rule is expected to be released shortly. Although we have seen strengthening bipartisan support of RNG, with proactive, positive tax policy from the Republican-led House and Senate—specifically, the extension of the 45Z tax credit through 2029—in our view, the cellulosic category within the RFS has not been as much a focus for policymakers as liquid agricultural biofuels. That being said, we do believe the recent relative stability in the D3 RIN market will continue and could have an upward bias with the broader biofuels complex. I also want to comment on our new $180 million preferred stock facility provided by Fortistar. The additional capital from this facility can be targeted for incremental infrastructure investments across the RNG value chain. Our vertically integrated business model—from producing RNG to providing access to transportation fuel offtake for CNG and RNG—drives advantaged project returns relative to market peers and helps unlock the value of OPAL Fuels Inc.’s project opportunities. In closing, I would remind listeners, since going public nearly four years ago, our compounded annual growth rate for RNG production and adjusted EBITDA is 32% and 22%, respectively. We are excited about where OPAL Fuels Inc. is positioned. Our integrated model is resilient, and our results demonstrate the value of controlling the product we sell from production through dispensing to our customers. I will now turn the call over to Jonathan. Jonathan Gilbert Maurer: Thank you, Adam, and good morning, everyone. 2025 and early 2026 were important periods for OPAL Fuels Inc. from an operational standpoint as well as in strengthening our capital structure and positioning the company for the next phase of growth. Recently, we successfully completed a $180 million Series A preferred facility, which allowed us to fully repay an existing $100 million preferred investment and further strengthen the company’s liquidity position. In addition, we drew approximately $128 million under our senior secured credit facility, which provides improved visibility to execute on our project portfolio. On the upstream side, our focus remains on improving performance across our existing operating assets while advancing the next wave of RNG projects currently in construction and development. Production from facilities commissioned late in 2024 significantly increased during 2025 and sets up a stronger 2026 operating position when compared to this time last year. I want to highlight that our upgraded operating teams have done well in bringing efficiencies to drive higher production. Despite an extraordinarily cold winter resulting in difficult operating conditions, same-facility sales growth has been meaningful, and we expect this trend to continue. Also contributing to our 2026 production growth is a full year of operations at our Atlantic facility, which came online in late 2025 and is performing well, ramping quicker compared with recent project experience, driven by higher gas flows at the landfill, allowing us to operate at higher production levels entering 2026. Looking ahead, we continue to progress our projects in construction, as we expect them to contribute to the next phase of growth for the company. On the downstream side, we continue to expand our Fuel Station Services platform, which supports RNG and CNG fueling infrastructure for heavy-duty trucking fleets. At year-end, we have grown to 61 OPAL Fuels Inc.-owned stations. While the trucking and logistics sector experienced macro softness during 2025, market fundamentals stabilized and have improved entering 2026. These improving macro fundamentals are supporting a reengagement by fleets on their deferred truck purchases. OPAL Fuels Inc. believes CNG and RNG are garnering more attention as a replacement for diesel due to lower and more stable fuel costs, regulatory clarity regarding combustion engines, and long-term tailwinds from sustainability initiatives. Many fleet operators remain highly focused on fuel cost stability and carbon reduction, and RNG and CNG continue to be among the most practical solutions for large-scale heavy-duty fleet decarbonization. As a reminder, CNG and RNG are fueling only 2% of the heavy-duty trucking market and represent a large growth opportunity. Our downstream platform provides critical services and infrastructure for the fleets as they transition. Expanding this infrastructure also supports the long-term economics of our RNG production platform by providing direct access to transportation fuel markets. While large-scale deployments will take time to fully translate into financial results, the work we are doing today is positioning OPAL Fuels Inc. for meaningful growth in this segment over the coming years. We continue allocating capital to the Fuel Station Services segment, positioning OPAL Fuels Inc. to deliver on our 2026 operating plan and beyond. I will now turn the call over to Kazi to discuss the quarter’s financial performance. Kazi? Kazi Kamrul Hasan: Thank you, Jonathan, and good morning to everyone joining today’s call. This quarter showed continued operational progress across the platform. This morning, we issued our earnings press release, posted an updated investor presentation on our website, and filed our Form 10-Ks. Before walking through the details, I would frame our financial performance around three key points. First, the resilience of our earnings despite commodity headwinds in 2025. Second, continued operational growth across both our RNG and Fuel Station Services platforms. And third, the strengthening of our liquidity and capital position to support disciplined growth in 2026 and beyond. Our 2025 results demonstrate the strength of our platform. In the fourth quarter, revenue was $99.8 million and adjusted EBITDA was $34.2 million, compared with $80.0 million and $22.6 million in the same period last year, driven primarily by increased production and recognition of 45Z tax credits. For the full year, OPAL Fuels Inc. generated adjusted EBITDA of $90.2 million, essentially flat year over year despite declining environmental credit prices. D3 RIN pricing declined roughly $0.70—equivalent to approximately $33 million in adjusted EBITDA—with our realized RIN price averaging $2.45 in 2025 compared to $3.13 in 2024. This decline offset much of our operational progress achieved during the year. I would also remind listeners that the ISCC pathway, which expired in November 2024, contributed in excess of $10 million to adjusted EBITDA in 2024. Operational growth across the platform helped offset these headwinds. RNG production reached 4.9 million MMBtu in 2025, representing 28% growth year over year, with fourth-quarter production exceeding 1.3 million MMBtu, up approximately 24% from 2024. As recently commissioned facilities moved through their first full year of operation—including a full year of Atlantic in 2026—we began to see the benefits of scale and EBITDA flow-through embedded in the platform. Our Fuel Station Services segment continues to strengthen the stability of our earnings mix. In 2025, segment EBITDA increased to $46.7 million from $38.4 million in 2024, 22% higher than 2024. Although this segment exhibited strong growth in 2025, it was below our guidance, primarily due to deferred investment decisions by our fleet partners regarding new stations and new truck purchases. This quarter’s results also reflect the restatement of our G&A presentation, where facility-specific G&A is now allocated to operating segments rather than corporate. We restated 2024 for comparability and will apply this approach going forward, as we believe it better reflects segment economics. Turning to liquidity and capital deployment, we ended the year with $184 million of total liquidity, including approximately $30 million of cash and short-term investments, $138 million of undrawn capacity under our term facility, and $16 million of revolver availability. Capital expenditures and investments in joint venture projects for the quarter were approximately $16 million, primarily related to new RNG facilities and OPAL Fuels Inc.-owned fueling stations, and $90 million for full-year 2025. In 2025, we monetized approximately $43 million of investment tax credits. Our current liquidity is further bolstered by the recent closing of the $180 million Series A preferred facility, operating cash flow, and drawdown of the remaining $128 million of availability under our term loan facility. Looking ahead, we are providing 2026 adjusted EBITDA guidance of $95 million to $110 million, representing approximately 14% growth at the midpoint compared to 2025. We expect RNG production between 5.4 million and 5.8 million MMBtu, representing more than 14% growth versus 2025, driven primarily by improved performance from our existing asset base, continued ramp of recently commissioned projects, and marginal contributions from projects entering service during 2026. Our guidance also considers what has been a challenging winter to start 2026. Additionally, we are assuming approximately $15 million to $20 million of 45Z credits during the year. Stepping back, our financial strategy remains clear. We are focused on growing operating and free cash flow and allocating capital within the capacity of our operating cash flow, balance sheet strength, and access to capital markets. OPAL Fuels Inc. is generating an increasingly balanced and durable earnings base, with the flexibility to accelerate growth where returns justify it. With that, I will turn the call back over to Jonathan for closing remarks. Jonathan? Jonathan Gilbert Maurer: In closing, we remain well positioned for continued disciplined execution of our strategic growth objectives and the expansion of OPAL Fuels Inc.’s vertically integrated platform. I will now turn the call over to the operator for Q&A. Thank you all for your interest in OPAL Fuels Inc. Operator: Thank you. As a reminder, if you would like to ask a question, please press 11 on your telephone. You will hear that automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. Our first question for today will be coming from the line of Derrick Whitfield of Texas Capital. Your line is open. Derrick Whitfield: Good morning, all, and congrats on a strong year-end update. Adam J. Comora: Thanks, Derrick. Thanks, Derrick. Good morning. Derrick Whitfield: Starting with liquidity and your growth outlook on slide six. With the preferred financing behind you, could you speak to what the next phase of growth looks like for OPAL Fuels Inc. beyond the projects that are currently in your development queue? And if you could also just comment on how much CapEx is required to bring those projects in your development queue online. Adam J. Comora: Yes, thanks, Derrick. This is Adam here. I will maybe start, and then if Kazi or Jonathan want to fill in. I think most, or hopefully most, saw that we updated our liquidity position on March 10 and currently have about $160 million of liquidity available to complete the projects that we had noted that are in construction. It is about 2.8 million MMBtu of in-construction projects, and some Fuel Station Services fueling stations as well. In addition to that liquidity position to complete what we have announced, we have also got $60 million unused drawn capacity on the preferred facility, plus operating cash flows that continue to grow and are also available for new capital deployment. We have a number of robust project opportunities between new biogas rights, conversion projects on our renewable power, and what we are really getting excited about is allocating more capital to the Fuel Station Services business. If you just look at what is in construction today and what that could contribute to EBITDA and cash flow, we always talk about rough guidance of $20 per MMBtu of EBITDA and cash flow from RNG production. If you do the math on what we have in construction and earmarked with that $160 million of liquidity that is available today, based on how these things come out of the gates, that could be another 2.0 million of production in the early days of production. We think we are in a really good spot to grow our EBITDA and operating cash flow from what we have announced so far. We have a number of projects on the upstream side that we think are really good candidates to deploy and invest capital. We are always going to be mindful of our balance sheet and making sure that our liquidity and leverage ratios stay lockstep with the cash flow generation of the business. You should expect us to talk about some new projects on the RNG production side, and we are really hopeful and optimistic that a larger part of our capital will be getting deployed into fuel stations. I know there will be some questions later on fleet conversions and what our outlook is there. You should think about OPAL Fuels Inc. as a growth company. If you look at our four-year track record, we think we have the capital in place and operating cash flow to continue to grow in those sorts of fashions as you look at us over the next several years. Derrick Whitfield: Great. And then maybe perhaps for Jonathan. You have accomplished a nice increase in your inlet utilization levels in 4Q. Could you speak to some of the drivers and also highlight where you expect utilization levels to level out based on some of the capture opportunities Adam referenced in his prepared remarks. Jonathan Gilbert Maurer: Sure, and thanks for the question. We are really proud of the team that we have been building on the operations side. We have been growing our capabilities both on the upstream and downstream side, and I think this is reflected over the course of the year in terms of the operations of these projects, which we measure through the efficiency and availability of the projects, which has increased over the course of 2025 from the roughly 70% level closer to the 80% level now that we are seeing. So really strong kudos to the team for doing that. In terms of where we are headed with it and what the possibilities are, you really see the opportunity for continued improvement there, and we think about kind of an 85% to 86% utilization level as something that ought to be readily achievable. In certain instances, we are able to keep that as well. You combine that utilization with our open and growing landfills that our projects are located on, as well as the headroom for additional capacity—the projects are larger than the amount of gas coming out. As a result, we see growth not only from operating the projects better but also from the growth in the gas. That gives us a lot of optimism in 2026. You have hit on a focus of ours this year. We are going to be very focused on growing that utilization, growing the gas, and resulting in better output per project—for each of the projects and for the whole portfolio in total. We are looking forward to that. Thanks. Derrick Whitfield: That is great, guys. Sounds like it is very capital-efficient growth for you in 2026. Operator: Thank you. One moment for the next question. Our next question is coming from the line of Matthew Blair of TPH. Your line is open. Matthew Blair: Thank you, and good morning, everyone. Maybe just to stack on to the last question, are there any specific examples of things that you are changing going forward to help improve operations, and are there any specific assets where you are really looking to improve the overall utilization? And then also, I think there was a comment that most of the growth is coming from the existing asset base, but just want to check, are Cottonwood and Burlington still expected to start up in 2026? I guess the idea would be that due to the ramp process that probably would not help out too much on 2026; that would really help out more in later years. Is that the right way to think about it? Thank you. Jonathan Gilbert Maurer: Yep. Thank you very much. First off, most of the growth in output that we are looking forward to this year is coming from the same-store sales. We have really incorporated very little from those projects into our guidance. While we do continue to focus on those projects in construction and bringing them online, as I said, I think our focus really is on operating efficiencies and availabilities for our existing projects. In terms of some specific examples, some of our projects, for example, have no nitrogen rejection units associated with them. In projects like that, we are focused on tuning gas to a higher quality—higher methane and lower amounts of nitrogen and oxygen. For other ones with nitrogen rejection, we are focused on increasing the amounts of the gas there. In terms of the teams themselves, we are really focused on training across the platform in each of the units. These are process-driven projects, and the processes require a balance across the quality of the gas, the quantity of the gas, the membrane CO2 rejection, the nitrogen rejection, PSAs, etc. Balancing that has been a bit of a learning process for the team over the last couple of years. That is why we are seeing the continued improvement there. Other projects that are closer to, or at, their nameplate capacity, in terms of gas, we are focused on improving the quality of the inlet gas so that for every unit of gas that comes in, if you have more methane in that unit of gas, then you will have greater output. We are focused on those aspects as well, and we just see that focus continuing during the course of the year with our output increasing. Adam J. Comora: I would just add there, this is Adam. There are no significant delays in either of those two projects. We just think it is best to be conservative in terms of the exact timing and the exact ramp. So we have focused our guidance around just improving the operations at the existing facilities. Matthew Blair: Okay. Sounds good. Thanks for the color. And then could you talk about the relationship going forward with NextEra? They called the preferred, but I think they also have an equity ownership in OPAL Fuels Inc. and then a fairly extensive commercial relationship with you. Is anything changing on those fronts? Adam J. Comora: I will take that one. NextEra has been a terrific partner of ours for a long period of time, and we do still work with them quite closely on that environmental credit trading agreement that you referenced. They still are 50% owners in our Noble and Pine Bend projects. We continue to work with NextEra, continue to view them as a good partner. We advocate side by side with them on a lot of key issues and do not see anything really materially changing from that perspective at this point. Matthew Blair: Sounds good. Thank you. Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Ryan James Pfingst of B. Riley Securities. Your line is open. Ryan James Pfingst: Just curious about a KPI you have referenced in the past. Do you have a goal for how much MMBtu capacity you would like to place into construction in 2026? Adam J. Comora: This is Adam here, and I appreciate the question. We do see a significant, strong pipeline of new project opportunities to place into construction, both from new greenfield biogas rights that we have secured and also renewable power conversion projects, which we have a few sizable ones in our portfolio. As I was trying to reference in an earlier question, we also see other opportunities in our Fuel Station Services segment to invest in fuel stations. We also see opportunistic M&A opportunities, and we will continue to invest capital in our business, being mindful of our balance sheet strength and liquidity. We feel that as we are allocating capital across those different segments, different opportunities may not be all on the production side. They may be in these other areas of our business, which, by the way, there are so many reasons why we like the Fuel Station Services segment—diversity of earnings stream, open-ended growth opportunity where we think diesel-to-CNG could be a really interesting, large growth potential, and a little diversity away from some of the regulatory policy out there. We do not think it is wise just to talk about one segment for where we are investing capital. We do expect to put more RNG projects into construction. We have a large RNG production growth profile just from what we have announced already. That is how we are thinking about it, but you should expect us to continue to invest in production assets. Ryan James Pfingst: Appreciate that color. And it leads up to my follow-up, which is around CapEx, and that number for 2026 looks like $154 million this year. Curious if you could give us a sense of the breakdown between RNG projects and fuel stations there. Kazi Kamrul Hasan: Let me give you a bit of a carryover from what Adam just mentioned. The $154 million primarily includes most of the committed construction projects we have and a little bit of committed downstream dispensing station investments as well. So the lion’s share is production, and a smaller part is dispensing stations. I want to reiterate that, as you have heard from Adam, we would prefer not to provide guidance specifically around where we are going to make the most of our investments. Every investment will be competing for the dollar that is available from our capital, operating cash flow, and the future capital availability from the capital markets. We are going to be a little bit more judicious, so that is where I am going to end it. Operator: Thank you. One moment for the next question, please. The next question will be coming from the line of Adam Samuel Bubes of Goldman Sachs. Your line is open. Adam Samuel Bubes: Hi. Good morning. It sounds like you are seeing some green shoots in Fuel Station Services, but as you alluded to, because of the lag, it is maybe a 2027 story. What level of growth are you embedding in guidance for Fuel Station Services in 2026? And is low 20s the right way to think about margins in that segment on a sustained basis, or are there any levers for margin expansion? Adam J. Comora: Adam, this is Adam here. A couple of things. Yes, you are correct; there is always, just like on our RNG project investments that take 18 months or so on average, when you invest the capital and when you start recognizing revenues, EBITDA, and cash flow. Fuel Station Services has a slightly shorter cycle when we invest in new fuel stations, but we really think of 2026 as the business development activity that sets the stage for future growth. So in 2026, we are not anticipating the same levels of growth in Fuel Station Services that we have experienced after the next several, but we are really excited about some of those green shoots. We can go into what those macros are, where we see them alleviating, and some interesting market structure dynamics that we think we are breaking through there. As for margin expansion, from a margin perspective, it is a higher-margin business when we own fuel stations and dispense RNG at those stations versus typical construction and service margins. We do anticipate, as we own more fueling stations, that the margins will naturally move higher in that segment, and that is where we see a lot more of the growth coming. Kazi Kamrul Hasan: When we do the Fuel Station Services capital investments, we definitely rely on a base level of dispensing volume, but in more cases than not, we see embedded growth in fuel dispensing—similar to the growth we have in production on the upstream side. We also see the throughput going through these stations in the downstream side as well. There are similar types of growth embedded there, and we do expect that to be realized. Adam J. Comora: You should also understand that there is certain inter-segment tightening in the dispensing market, which also assists in margins on the Fuel Station Services side. Adam Samuel Bubes: And then maybe as the natural follow-up there, based on your conversations with customers and what you are seeing in the macro environment, what is giving you that underlying confidence and visibility for a potential inflection in 2027 and the potential rise in natural gas vehicle adoption? Adam J. Comora: I appreciate that question. It is something that I think about quite a bit as I look both to the U.S. market and what is happening overseas in places like China, which, by the way, I think is deploying about 30,000 natural gas engines, the X15, each year. China is on a path to have its heavy-duty trucking move up to 20% to 25% of its fuel mix. We have not gotten there yet in the U.S. We are at about 2%, which is really interesting when you think about it, given the position the U.S. has in natural gas as a commodity and the low cost and stable nature of that versus diesel and oil. Specifically in 2025, there were macro headwinds that were affecting some of our largest customers in the logistics and trucking space—tariffs, a continued freight recession, some overhang on combustion engines, and initial testing of the X15-liter engine. All of those factors delayed some investment decisions, either around deferred new truck purchases or new station purchases. As we are now moving into 2026, a lot of those fleets have started acclimating to the macro environment and started thinking about new truck purchases and reengaging. You have now moved through the X15 testing phase, so fleets are more comfortable with the technology and the performance. The volatility and absolute price that folks are starting to see in diesel and oil are really making natural gas a lot more attractive, and then you layer in the fact that it also assists those that are thinking about their sustainability metrics or emissions profiles. It is really setting up for what we think are investment decisions here in 2026 around this technology. CNG and RNG have proven themselves as something that works for fleets. Those are some of the things that have either alleviated or are new potential positive macros with what we have seen with diesel and oil prices. One thing that is interesting about the U.S. versus China is the market structure. Here in the U.S., you still have to work through not only the engine price, the OEMs, and the dealerships in order to get that product to market. We are encouraged that a lot of those things are starting to break through. One other interesting one here in the U.S. I will touch on is fuel surcharges, where the economics look good on paper, and then fleets have to think about how to deal with fuel surcharges and make sure that it does not disrupt how they are doing business. We are seeing movement across that whole spectrum of either macros or market structure here, and we are cautiously optimistic that the business development activity will accelerate in 2026 and then really provide some visibility into 2027 and beyond. Adam Samuel Bubes: Very interesting. Thanks so much. Operator: Thank you. If you would like to ask a question, please press 11 on your telephone. One moment for the next question. Our next question is coming from the line of Betty Zhang of Scotiabank. Your line is open. Betty Zhang: Thanks. Good morning. Thanks for taking my question. In your opening remarks, you mentioned the RFS. I just wanted to get your take on the cellulosic side. Do you expect any impacts on D3 RINs, and what are your expectations there? Adam J. Comora: I appreciate that question. This is Adam again. As we had noted and people probably saw, the EPA did send their final rule over on 2026–2027 to OMB, and we hope that recent geopolitical events do not slow down the process, as we have seen a little bit of an oil price shock and that sort of thing. We hope that the EPA still sticks to ordinary course of business timing and it gets released pretty soon. What I would say about the cellulosic category is we feel really good about the bipartisan support that we have in Congress as it pertains to tax policy and how they view RNG in the spectrum of smart or pragmatic policy on where folks should invest. I would say it still feels like the cellulosic category is not getting the same level of attention as liquid agricultural biofuels, where it seems apparent there is clear focus to support those areas and really lean in. From the cellulosic category, it is not a lean-out; it is not a lean-in; it is business as usual. I do not think we are really expecting any real surprises there, and we think the cellulosic category remains stable. As I said in the prepared remarks, there could be an upward bias in the cellulosic category with the entire biofuels complex. It just does not feel like it is the area of focus, and there are other areas where the EPA may be trying to emphasize. Betty Zhang: Great. Appreciate the detailed answer. For my follow-up, I wanted to ask on 2026 EBITDA guidance. Would you be able to share a bit more color between your different segments? Adam J. Comora: I am going to pass it over to Kazi in a moment here. We are not giving specific segment guidance because that will also be driven by where we invest capital and that sort of thing. One thing I do want to caution folks about is the challenging operating environment that we have experienced so far in the first quarter. I know there is another wave of storms that is rolling through right now. It was factored into our guidance, but there was a challenging start to the year with the snowstorms, which impact production a little bit and impact operating costs a little bit. We do not give specific quarterly guidance; I just wanted to caution folks on the first quarter. I will pass it over to Kazi. Kazi Kamrul Hasan: Thanks, Adam. This is a great question. As Adam noted, we have had a hard winter. Obviously, it is going to have an impact on our upstream production and likely on how much we are dispensing through our dispensing network, too. For the year, think about the growth we have seen on upstream production—similar type of growth we can expect. Downstream, 2026, as Adam mentioned, is going to be a more pivoting year. Most likely, the growth would be more around 2027 or onwards. I will stay away from giving you specific guidance, but you can look at our existing breakdown; that should give you an understanding of what we are adding. Operator: Thank you. I am not showing any more questions in the queue. I would like to turn the call back over to Adam J. Comora for closing remarks. Please go ahead. Adam J. Comora: We appreciate everybody logging in today for their interest in OPAL Fuels Inc., and we look forward to sharing more updates in the future. Operator: This does conclude today’s programming. Thank you all for joining. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Science Applications International Corporation's Fourth Quarter Fiscal Year 2026 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to John Raviv, Vice President of Investor Relations. Please go ahead. John Raviv: Good morning, and thank you for joining Science Applications International Corporation's Fourth Quarter Fiscal Year 2026 Earnings Call. My name is John Raviv, Vice President of Investor Relations, and joining me today to discuss our business and financial results are Jim Reagan, our Chief Executive Officer, and Prabhu Natarajan, our Chief Financial Officer. Today, we will discuss our results for the quarter that ended January 30. Please note that we may make forward-looking statements on today's call that are subject to known and unknown risks and uncertainties that could cause results to differ materially from statements made on this call. I refer you to our SEC filings for a discussion of these risks. In addition, we will discuss non-GAAP financial measures and other metrics, which we believe provide useful information for investors. These non-GAAP measures should be considered in addition to and not a substitute for financial measures in accordance with GAAP. A more fulsome explanation of these measures can also be found in our SEC filings. It is now my pleasure to turn the call over to our CEO, Jim Reagan. Jim Reagan: Thank you, John, and thanks to everyone for joining our call. I am happy to be here as CEO, and I am grateful to our board, to our team, and to all of our stakeholders for the faith that they have put in me to continue the critical work of sharpening our focus, strengthening our execution, and driving better results. After a thorough search for a permanent CEO by a leading executive search firm, the board concluded that, among other things, maintaining continuity and leadership, along with deep industry knowledge, was essential to Science Applications International Corporation's long-term success. After careful consideration, they selected me for the role. And, honestly, when I stepped in as interim CEO in October, I did not expect to enjoy the role as much as I have. One of the most rewarding aspects has been working alongside an outstanding team supporting critical customer missions and creating value for our stakeholders. This includes my partnership with our CFO, Prabhu Natarajan, whose leadership has been invaluable. So while accepting the permanent role was not my original intention, I am humbled and honored to have this opportunity. Since joining the board in 2023, my appreciation for Science Applications International Corporation's past achievements, current strengths, and future potential grew even deeper with a career focused on operational excellence and value creation across this industry. I am excited to continue building on our strong foundation to deliver meaningful results to all of our stakeholders. FY 2027 is a year of commitment. We are committed to our strategy to align and focus the portfolio. We are committed to improving our internal processes and external results. And as always, we are committed to serving our customers' most important missions, including elevated operational tempo around the globe. The tragic reality of war underscores the importance of mission expertise and customer intimacy that companies like Science Applications International Corporation have cultivated over many years. It also demands that our industry continue to invest and innovate to deliver capabilities and capacity. This is what we have done for decades and this is what we will continue to do. Science Applications International Corporation's legacy of innovation and commitment to high-value customer priorities are valuable assets. At times, we may have struggled to convert these assets into consistent performance. But we are making discrete changes across the company to improve our results. I want to focus briefly on business development, where we recently hired a seasoned Chief Growth Officer to the leadership team to prioritize BD and drive higher win rates for recompetes and new business. This involves being selective as we approach cost-plus, less-differentiated work. And it means leaning into the pursuit of opportunities where we have a greater right to win and higher rates of customer retention. This is addition by subtraction. Being selective in some areas frees up resources to pursue others. This means that we are going to be more focused with our bidding in FY 2027 and we are now aiming for $25 billion to $28 billion of submissions where we expect to support our dual goals of growing the top line and improving margin. The team is also performing well on our existing book of business, removing indirect costs, and achieving higher growth in higher-margin programs. This supports double-digit margins going forward. And as I said last quarter, we are committed to building on this progress in three ways. First, sharpening our focus on execution to increase capacity for investment in the business. Second, more efficiently deploying our financial resources to drive growth. And third, prioritizing yield and bid quality across our business development function, which, taken together, enables us to inject speed and innovation into our core capabilities to drive better growth and continued margin expansion. Turning to results, as we discussed in our preannouncement last month, fourth-quarter revenue was below our initial expectations largely due to procurement delays and customer disruptions as the environment continues to be uneven. However, I am encouraged by our margin performance despite this top-line choppiness, with FY 2026 margin of 9.7%. And we see improvement ahead as we guide to 10 adjusted EBITDA margin at the midpoint for FY 2027, the first time the company is guiding to double-digit margin on a full-year basis. Cash flow continues to be exceptional, thanks to efforts across the organization. And despite revenue finishing about 5% below our initial guidance from last year, our free cash flow exceeded our guidance by 10%. This demonstrates strong execution as well as the resilience of our business model. We expect another year of organic contraction in FY 2027, largely due to recent recompete losses in the large enterprise IT market. While we are encouraged to hear senior leaders emphasize fixed price, outcome-oriented contracting, we have yet to see these laudable goals translate into reality evenly across our customers as some continue to use acquisition approaches where it is hard to differentiate. Instead, we are focused on opportunities where clients establish clear outcomes that enable Science Applications International Corporation to deliver innovation and measurable value throughout the life of the program. Across our civilian enterprise IT portfolio, these principles have driven stronger performance and elevated win rates. Our successful work with Treasury, Commerce, Transportation, and the State of Texas demonstrates our cost-effective strategy for modernizing and supporting vital networks. By continually evaluating new technologies and delivering enhancements, we sustain long-term partnerships like the State Department's Vanguard program, which we have supported for fifteen years. Looking ahead, we are collaborating with clients to pilot and implement AI-powered agents to stabilize and secure critical networks. The speed of these innovations is essential for helping our customers address the evolving threat landscape and meet affordability objectives. While this large enterprise IT market has weighed on our results, it is a shrinking piece of the pie, from 17% of company revenues in FY 2025 to an expected 10% in FY 2027. And we have good visibility into most of this remaining portfolio. It includes the tCloud takeaway, has four years of performance remaining, and includes the Vanguard program, which is performing exceptionally well. These are both fixed-price or T&M enterprise IT contracts, the kind of work where we can differentiate and have the greater right to win. In the meantime, we continue to be excited about what made Science Applications International Corporation great to begin with: delivering innovative science, technology, and engineering solutions in support of the security of the United States and its allies. For instance, our GMAS program sustains and upgrades radar critical to homeland defense. Our DHS work delivers integrated hardware and software solutions to help secure the border. Our JRE data link router provides real-time battlespace awareness. Our recent COBRA and TENCAP HOPE awards support multi-domain warfighting by enabling rapid technology insertion, integration, and innovation. And our munitions programs enhance combat capability and capacity. These are all customer priorities for securing the present and winning the future. We are also investing in areas with the highest and clearest demand signals, whether it is expanding production capacity on key programs or investment for greater innovation and differentiation. We are currently engaging with customers at the highest levels to increase our throughput across multiple efforts. And our continued focus on executing against the $100 million in cost reduction targets is expected to provide us with operational and financial flexibility to continue to invest in areas with the greatest return potential while continuing to improve our margins. Our recently announced enterprise transformation initiative is the first time the company has done a bottoms-up review of its processes and procedures since the split in 2013. We have some of our best people committed to this project, which should result in a more efficient Science Applications International Corporation, with increased investment capacity to support innovation, growth, and margins. We are also encouraged that we will be making this journey in a supportive budget environment marked by large appropriations already in place with expectations for further budget growth ahead. I can speak for our board in saying that we see significant opportunity to drive value for our shareholders, create greater opportunities for our employees, and most importantly, continue the mission of supporting our customers and our country. I will now turn the call over to Prabhu. Prabhu Natarajan: Thank you, Jim, and good morning to those joining our call. My comments today will focus on a review of our fourth quarter and full year results, our outlook for FY 2027, and the meaningful opportunities we see to create value for shareholders. Turning to slide four, our fourth-quarter results were consistent with the update we provided on February 11. We reported fourth-quarter revenue of $1.75 billion, representing an organic contraction of approximately 6% due primarily to a $60 million year-over-year reduction of low-margin revenue from the Cloud One program we no-bid and a $45 million headwind related to a nonrecurring software license sale in the prior-year fourth quarter. Full-year revenue of $7.26 billion declined approximately 3% organically primarily due to our decision to no-bid low-margin Cloud One revenue, which was an approximately $200 million headwind for the year. We reported adjusted EBITDA of $181 million in the quarter, resulting in a margin of 10.3%, which reflects strong program execution and recently enacted cost-efficiency efforts. This performance contributed to full-year margin of 9.7%, which is roughly 20 basis points ahead of the guidance we provided last quarter. We continue to see meaningful opportunities to improve margins in the near future while also investing to drive innovation and growth. Adjusted diluted earnings per share was $2.62 in the quarter, and $10.75 for the year, and benefited from stronger margins and a favorable tax rate which offset lower revenues. Free cash flow was $336 million in the quarter, and resulted in full-year free cash flow of $577 million, a robust result as we remain focused on maintaining our peer-best cash conversion and deploying the capital to maximize long-term value for all stakeholders. Turning to slide six, I want to put the fiscal year 2026 results in context. It was a year of multiple disruptions, including internal leadership changes, budget headwinds, and significant customer workforce impacts. While we saw top-line pressure, we are proud of the team's resilience and hard work to achieve robust margins and cash flow. Our reported EBITDA at year-end was 2% below our initial guidance last year, and free cash flow was better than our initial guidance. We see similar dynamics compared to the initial FY 2026 targets we shared about three years ago. As Jim said, these results demonstrate the resilience of our business model and the enduring nature of our mission work, although we know we have work to do to improve growth. Turning to slide seven, we are reaffirming the guidance for fiscal year 2027 we provided on February 11. As we indicated at that time, we expect total revenue in a range of $7.0 billion to $7.2 billion, representing organic contraction of 2% to 4%. The year-over-year decline is driven mainly by recompete losses, which we have previously discussed. Collectively, we expect these programs to represent a headwind of approximately $400 million in FY 2027. We expect to partially offset this headwind with the continued ramp-up of new business wins from FY 2025 and FY 2026. Our guidance for adjusted EBITDA in a range of $705 million to $715 million reflects margins between 9.9% to 10.1%, representing a year-over-year increase at the midpoint of approximately 30 basis points. And we are executing our cost-efficiency efforts which we believe can drive upside to our margin outlook. We have also begun a multiyear enterprise transformation journey to unlock significant value and eliminate burdensome and outdated business processes to create a more agile organization focused on innovation, speed, and growth. We will provide an update on our Q2 call relative to progress on this initiative. Our adjusted diluted earnings per share guidance of $9.50 to $9.70 is unchanged from our previous FY 2027 guidance last quarter with the lower top line offset by a decline in our share count. We are maintaining our guidance for free cash flow of at least $600 million, which will translate into over $14 of free cash flow per share. As we have previously highlighted, our FY 2027 guidance reflects approximately $70 million in nonrecurring cash tax benefits from recent legislation. Even without this benefit, in FY 2028, we expect to generate at least $530 million in free cash flow, or approximately $13 of free cash flow per share. As Jim indicated, we recognize the significant value-creation potential that exists based on our ability to deliver more sustained revenue growth in the future. As a result, I want to discuss some of the key risks and opportunities moving forward. As I mentioned, our guide for an organic revenue decline assumes that our recompete losses are only partially offset by the continued ramp on previously won work. There are several large wins ramping at a slower rate than we expected, likely due to budget uncertainty and the lingering effects of a more resource-constrained customer procurement function. Total revenue from these programs was $350 million in FY 2026, and we are assuming $500 million in FY 2027 based on reasonable assumptions. This compares to a potential run rate in excess of $800 million based on contract value and period of performance. While there is potential downside, should some of this ramp not materialize, we believe that on balance, the upside scenario is more likely over the next twelve to eighteen months based on customer demand and supportive budgets. This could be a meaningful tailwind. In addition, our strong pipeline and alignment with customer priorities, which we expect to be well funded in a trillion-dollar-plus defense budget, are strong indicators of future growth. As we previously said, outside of our cost-plus enterprise IT work, our win rates on both recompetes and new business are in line with or higher than industry standards. Turning to slide eight, our pipeline and submission goals are more focused on these higher-return efforts, reflecting initial results of our renewed BD discipline. While submission levels are lower than our previous target, we view them as sufficient to achieve our goals. And we expect trailing book-to-bill to improve over the course of the year as we play more offense than defense this year on our captures. We recognize that an increasingly favorable budget backdrop is only relevant if we can improve enterprise-wide performance, focus on the markets where we have the strongest right to win, and deliver for our customers. The leadership that Jim has provided in these areas and his emphasis on focus and accountability across the company has had tangible results over the past several months. I am confident that our efforts will continue to translate into significant value creation for our shareholders in the coming years. With that, I will turn the call over for Q&A. Operator: And wait for your name to be announced. To withdraw your question, please press 11 again. In the interest of time, we ask that you limit yourself to one question and one follow-up. Our first question comes from Jeremy Jason on behalf of Citi. Jeremy Jason: Hi, this is Jeremy Jason on John Gaudin. Team, I just want to kind of hit things off by saying, Jim, congrats on your role. I just want to ask, now that you have moved from the interim role to the permanent one, what is the single most significant sort of portfolio pivot you believe is required to align the company with the next roughly ten years of government budget priorities? And more importantly, what is the message you want to say to the investor base who are trying to bridge that between your experience and the specific issues like recompetes have hampered growth in recent years? Jim Reagan: Yeah. Well, thanks for your kind words, Jason. I think that for, first of all, the moment that I stepped from being an interim to being the permanent person in charge, it was pretty amazing how my perspective changed from managing the day to day and being focused on getting our business development function back in gear, which is still a focus of mine, but adding to that the need to reassess our strategy, which is a process that we normally undertake during the summertime and I am actively engaged in right now. I think it might be premature for me to announce any strategic pivots other than a couple of notes that are probably worth providing for you. First of all, the first thing that I think that we needed to do, and I think of it as a bit of a pivot, is to get focused on those areas where we have the right to win and those areas where customer retention is the reward for innovation and strong performance. And the thing that we have been seeing over the last year has been the things that are more commoditized where you are not only finding it more difficult to differentiate and keep customers but it is also more difficult to get paid for the hard work that we do. On some of the more vanilla enterprise IT, things are things that we want to continue doing to the extent we have got it, but also to deemphasize it as kind of a strategic imperative. So that, I think, is the first epiphany that it did not take very long for me and Prabhu to wrap our heads around. I think that the next thing is to start moving into some pretty hard focus on realizing the benefits of the business model we acquired with SilverEdge. We think that the things that we have acquired from them on the intellectual property side as well as some of the capabilities that we have to serve our intelligence customers with AI enablement in classified networks is something that we think is extensible beyond the customers that they brought with them, and we are working to leverage that. Probably have more to talk about in terms of any further strategic pivots as we work through the strategy process through the season. Probably you are going to get that. I am not interested. Okay. Thanks. Appreciate it, Jason. Thank you so much. Operator: Our next question comes from Jonathan Siegman with Stifel. Sebastian Rivera: Hey. Good morning. This is actually Sebastian Rivera on for Jonathan Siegman. Congrats to Jim as well on the full-time position now. I guess we would love to kind of hear your thoughts regarding the FY 2027 guidance, roughly $35 million of CapEx here. I get it does not suggest too much change relative to last year, and I believe that FY 2026 number was about $4 million lower than the year prior. And I guess would have thought the changed environment today kind of creates incremental opportunities to invest, but we would love to get your thoughts there. Jim Reagan: Sure. And appreciate the question, Sebastian. Because, you know, with what we have today in hand, we think that the CapEx is adequate to meet the current demand signals that we have on programs that require production capacity that largely exists in a number of our, for the programs where we actually make things. But I think that in Prabhu's remarks, he mentioned that we have a flexible business model, and we are in active discussions with customers about what they might see as the need to ramp up production on certain programs. And to the extent that we get the demand signals, which, by the way, I have talked to senior leadership at the Department of War. They understand very clearly that industry, when they receive demand signals, they could pivot. We are no exception. To the extent that we get demand from customers to ramp up production of certain weapons capabilities, we are prepared to increase the plant capacity, increase space, spend money on tooling, to meet those demands. The revenue and the take rate on those is not reflected in the guide today. But to the extent that there is any reason to update it in future, we will certainly let you know. But so I think that the short answer to your question, Sebastian, is we have a business model, and we are prepared to flex it. And we are prepared to spend more money on additional capacity to the extent that our customer comes to us and asks for it. Prabhu Natarajan: Hey, Sebastian. Prabhu here. Thank you for the question. I think the only thing that I would add to Jim's response is that we are investing where we see clear demand signals. And we are engaging with customers at their highest levels on some of these opportunities. I would also think of the $100 million cost reductions as freeing up capacity for investment that may not show up in CapEx necessarily, but it does provide us some ammunition to be able to invest in some differentiation as we go to market in a handful of areas. Finally, I would also say that investment takes many forms. We actively think of the investments that we make to include the time we spend with customers, helping understand needs, shaping solutions to fit the needs, and then actually actively investing in a business development and capture function that allows us to be more differentiated when we offer, I think, real solutions. We are also investing—SilverEdge is a classic example of investing a couple hundred million off our balance sheet to be able to fund, to bring some real new capabilities into the organization. And I think finally, but certainly not the least important of which, is we are actively building capabilities, whether that is mission labs, or our Mission Data Platform, or our classified. There are areas that show up beyond a CapEx line that we are investing in. And finally, I would foot-stomp the fact that we are investing in some really key talent, and Jim talked about the Chief Growth Officer we brought to the company. But we are investing in some real talent inside the organization, refreshing our org structure. And so our investment has taken multiple forms. But we are very comfortable that we are investing in line with the signals that we are getting, and we are frankly not waiting for contracts to start the investment. We are trying to get ahead of where the needs are going to be so that we can be ready for when those things show up in a pipe somewhere. So thank you for the question. Sebastian Rivera: Thank you. Very helpful. I just a quick— Operator: Our next question comes from Gavin Parsons with UBS. Thank you. Good morning. Gavin Parsons: Good morning. Jim, I mean, you have been sharpening the BD process for a few months now. I know that is ongoing. How long does that take you to build momentum and actually start converting that to revenue and how much opportunity is there on a shorter-term basis to drive maybe some OCG growth? Jim Reagan: Yeah. It is a great question, Gavin. I think that there is kind of two elements to that answer. The first one is to say that, as you know, the sales cycle in this business, converting a proposal into revenue, can take a painfully long period of time in some cases, not in all. I think that to the extent that our team is able to move the needle on win rates on work that is already in production in the proposal shop and build some more innovation, perhaps even some more discipline around how the finished product comes out, that can move the needle on win rates within six months. I think it is probably worth noting that while we were disappointed by the outcome on a couple of these large recompetes during the year, our win rates on new work in the year, but the most recent quarters, has been in line with our expectation and industry averages. So I think that we are really pleased with that and with, you know, less exposure in FY 2027 to the large recompetes like we had some significant exposure last year. I feel really good about our ability to achieve the kind of book-to-bill that we need to get us back on a growth trajectory after we have lapped out the impact of these losses that we have recently experienced. I think that the last comment that I would have, and Prabhu might want to amplify on this as well, is that one of the things that I think that we are doing really well already is ensuring that the spend and investment on capture and winning work is focused on the $28 billion or so of opportunities that we have the greatest opportunity to win, to differentiate, to drive margin improvement in the business, in addition to whatever margin improvement we are going to be seeing out of the business initiatives that we have been outlining. This year, we have called it addition by subtraction earlier, and what that really means is that focusing on the things that will drive higher win rates and higher opportunities to retain customers for longer. Prabhu Natarajan: Thank you, Jim. Hey, Gavin. Appreciate the question. Maybe a couple of data points on the guide itself. We are right now assuming about a 2% to 3% OCG in our current baseline guide for fiscal 2027. That is consistent with our 2% to 3% last year, which was the lowest of the five years that I have been here. So while we are not expecting things to get better, we do not expect things to get worse either on those, and therefore, on balance, I would say bias to the upside to the extent that the enacted budget translates into tangible procurement action over the course of the next three quarters or so. I think, as Jim said, I would foot-stomp the fact that our win rates on non-enterprise IT work—some of the work we do on the engineering side as well as the mission IT side—our win rates on new have approached 50% or more at various points over the last couple of years. So our win rates really demonstrate, I think, that we have the right to win in these areas. And I think just as importantly, our recompete win rates on noncommoditized enterprise IT is sort of in that 85% to 90% range. So good win rates outside of the commoditized enterprise IT work and, again, while it does not help lose these recompetes, the reality is I think there is very little of that left in the portfolio at this point. As we said in the prepared remarks, about 10% left of revenues from large, I would say, cost-plus EIT work. And so I do think that on balance, we are probably at the other side of this slope here. And given that we have about 5% of recompete headwinds, with the $400 million or so that we disclosed, the reality is the absence of this headwind going into next year is going to be a tailwind in and of itself. So again, I think we feel good about where the positioning is. None of this matters. None of what I say matters unless we execute well, and this is a message internally as well as externally. But we have got to keep every recompete that comes our way. And we have to keep up the win rates on new, and that is where the focus is for the team. Gavin Parsons: Thank you for that. Operator: Our next question comes from Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Morning, guys. Thank you. Congrats, Jim and to Joe as well. Maybe two questions if I could start. The first question would be just on the, you know, what do you think on the enterprise IT work? And I know Prabhu did a good job of this at conference, so thank you, Prabhu, for that. Like, what changed? Was it a Science Applications International Corporation decision? Did the competitive landscape change? And then as we think about the $25 billion pipeline, how do we think about Science Applications International Corporation getting on the offensive? Jim Reagan: I will start. I think Prabhu might amplify on my enterprise IT answers. I think that what we have seen is increasingly customers—there is a handful of our customers that are buying based on what I might say is kind of more of a cookie-cutter recipe for what they are looking for, where it is heavily embedded with network management, network uptime, help desk support, things that are harder to differentiate than in the things that blend more of a mission focus in with the IT side. Think about on the—maybe one of the more toward mission IT, it is probably supporting networks that support the warfighter and networks that blend multiple areas of information and synthesize it into a pane of glass for people that do mission planning. Those are the things that we think that we can continue to excel at or earn our share on recompetes and new work. So I think that when we stepped back and took a hard look at different flavors of enterprise IT work, that gave us some greater visibility into the kind of things that we would continue to pursue, continue to win, and the things that we are probably going to deemphasize in our pipeline going forward. Probably everything, Dan. Yeah. Prabhu Natarajan: Sheila, a couple of things I would probably want to add. I think the recognition that, you know, being selective on, I would say, cost-plus enterprise IT was sort of a conclusion we came to over the course of the last several months. I think, if you looked at the track record of where our largest recompete challenges have been, and it does not take a bunch of research to get to NASA Aegis, parts of Cloud One, U.S. CENTCOM, Army RITS, I think the common thread line running through all of these is that it is very hard to differentiate on predominantly cost-plus work where it is very hard to separate yourself from the competition. And sometimes the magic is in how one writes a proposal more than what the delivery on the ground looks like. So I think it is just a recognition that we have come to. We also had perhaps more of that enterprise IT work in our pipeline five years ago than we do today. So that has been a gradual evolution. Our decision to consciously no-bid $200 million of compute and store as part of Cloud One—candidly, we contracted 3%. All of that 3% was related to one decision to no-bid that Cloud One contract. That was a recognition that we communicated externally that, you know, that is not the kind of work we want to be doing long term as we think about focusing the resources of the company into meaningful areas that will truly, I would say, restore and reassess the legacy of this company. So I think it is an evolution of what we have come to in terms of our own portfolio. Broadly speaking, I would say if you looked at competitors and where win rates are for enterprise IT versus non-enterprise IT work, you will see some of the same, I am going to say, volatility in recompete win rates within our competitors. I think the reality was we had more of it than perhaps others, but you should expect to see some of the same volatility. And then finally, on the pipeline question, the only thing I would add to the comment that we are playing more offense than defense is the fact that our pipeline is inflecting to higher levels of non-EIT work, mission work, engineering work, and more of our opportunities on our submits this year and next year are more towards the takeaway side than the recompete side. Our largest single recompete coming up is our Vanguard Department of State program that we are feeling really good about. Had it for fifteen years. We have done it for fifteen years, and candidly, I think that is our sentiment underlying the narrative that we get to play a little bit more offense this year than we have had the luxury of the last couple of years. Thanks, Sheila. Operator: Our next question comes from Gautam Khanna with TD Cowen. Gautam Khanna: Good morning and congratulations, Jim. And John and Joe. I wanted to just ask, within the midpoint of the guidance, maybe if there is any parameter you could tell us on how much you have to quite go get. You know, you told us about on-contract growth, but based on the backlog you have today, how do you get to—what do you still need to bid and turn, if you will, in the year? And then if you could just remind us of when the year-over-year headwinds on the $400 million of recompete losses abates, you know, when is the last quarter that that becomes the headwind, that one moves out of the numbers? Thank you. Prabhu Natarajan: Hey, Gautam. Prabhu here. Thank you for the question. I will take the guidance one. In terms of the negative two to negative four of contraction, as I said earlier, we are assuming nominal amounts of OCG, 2% to 3% of OCG, and not a ton in the way of new business go-get. And so I think very much focused on what is within our control this year, and not a lot of assumptions built in around what we need to win in order to actually get to the guide that we have out there. So I think there is always going to be a mix of some recompetes and new that is in the mix in the business. Our backlog is sufficient with our trailing twelve-month book-to-bill of 1.1. I think the backlog exists for us to get to the guide without a lot of heroics this year. But that is how we wanted to position the conversation coming into this fiscal year compared to perhaps last year where we had a little more in the way of go-gets and, of course, we had a tremendous amount of disruption from those and other procurement disruptions over the course of the year. So I think it is very much a guide that we have control over, that the team is fully committed to, and does not take a ton of heroics for us to get to over the course of the year. But candidly, that means we just have to put our head down and execute every single quarter. In terms of the headwinds, on a quarterly basis, I think I would say it is fair to assume that the headwinds are going to persist with us for all four quarters of the year. I think that is probably the most sensible way to think about it. Naturally, there will be some changes over the course of the quarter as we lap on some programs and lapped into some other programs. But the reality is you should assume that there is about four quarters of headwinds and that Q1 of next year is probably going to be the cleanest quarter on a compare basis. Gautam Khanna: Terrific. Thank you. Alright. Goodbye. Operator: Our next question comes from Colin Canfield with Cantor Fitzgerald. Colin Canfield: Hey, thank you for the question. Maybe focusing on FAR 3.0. If you could talk a little bit about federal acquisition regulation and essentially what you are hearing in terms of kind of the next set of objectives look like, what that means for Science Applications International Corporation, and any sort of timing around outcomes. Thank you. Jim Reagan: Sure. I had the chance to meet with a senior Department of War official about that just this past Friday, along with some other CEOs in a small forum. And I think that, first of all, there is tremendous urgency that we have not seen in decades around procurement reform in general, including updates and upgrades to the FAR. There is a lot that I think we can expect to see stripped down and stripped out, and some new provisions put in there are going to be really aimed at improving speed and throughput from the defense industrial base. I think that with that said, there is going to be some spotty implementation. And there is a large acquisition community that needs to be retrained, needs to be upskilled, reskilled. But in the meantime, when the need exists, I think that our customer in the building is going to be relying on things like OT, OTAs, other innovative contracting vehicles, including the use of commercial pricing and commercial contracting mechanisms to get what they need done faster. That said, we do have a commercial operating segment that is available, and we are actively using it to bid some of these things that the customer is needing. We have made some changes in our own procurement and contracting organization to be ready to meet the requirement for speed. And we have an internal initiative aimed at not just handling it from the procurement side, but also how we bid differently. And that is one thing that our new Chief Growth Officer is actively engaged at so that we can meet the customer demand when they bring it to us. Colin Canfield: Got it. Got it. And then maybe as you think about kind of your future as a hardware integrator, can you just perhaps talk about kind of your relationship and your opportunity set across the branches? We have seen obviously a lot of capital start to flow into VC-developed products, but not as much focus on kind of the integration of all of the capabilities. Right? There are the leading players, but you still have a lot of stuff that is kind of series B, series C, that fundamentally will need something like Science Applications International Corporation's kind of acquisition pipeline or the creds around national security and the cleared folks. So can you just maybe talk about, within that context so far, how you think about Science Applications International Corporation's ability to go and integrate a lot of these kind of earlier-stage products? Thank you. Prabhu Natarajan: Hey, Colin. Prabhu here. I will take that one. I think you are hitting on something that is incredibly important. The strength of the total defense industrial base is going to be relevant and necessary to deliver what the warfighter needs. And so I think there are folks like Science Applications International Corporation that are in the ecosystem that have for decades brought evolving capabilities to the warfighter because we have an acute understanding of how the mission works. And I do not think that that demand signal is going to look any softer in the next five years. So we are actively partnering with venture companies. We have a venture program that we are very proud of, that we actively bring capabilities, integrate them in the number of hardware-software integration centers we have across the country, whether that is Huntsville, or Charleston in South Carolina, or in Crane, Indiana, where we do a tremendous amount of hardware and software integration, and we are just getting better at that kind of work. And there is a decent chunk of it in our pipeline, and so I do think that we have the sort of mission set, if you will, where our expertise and our mission and our domain understanding is going to be critical as we graduate more of these smaller companies into the larger ecosystem. So we are looking forward to partnering with them. And, as you know, this is how this business, this industry, has evolved over the last, I would say, fifty years, and I do not expect the next twenty or thirty to look any different. I think, to be fair, some of the new entrants have put, I think rightfully so, pressure on the incumbents to deliver faster, better capability, and at cheaper prices. I think that competition is a good thing. So we are looking forward to it, and we are doing a really nice job integrating some really good capability into the ecosystem. Colin Canfield: That is great color, Prabhu. Thank you. Prabhu Natarajan: You bet. Operator: Our next question comes from Tobey Sommer with Truist. Tobey Sommer: Thanks. You mentioned the evaluation that you have ongoing is the first, I think, bottoms-up evaluation on processes and so forth since the split, but the company has been trying to address these issues for a number of years. Maybe the process is different this time, but the pursuit is an ongoing one. How do you manage the culture and the morale when you are sort of reexamining something that has been kind of a focal point? And do you envision any changes in compensation as being helpful in achieving your end? Jim Reagan: Toby, I appreciate that question. I think at least once or twice every week, I get an email from one of our 23,000 employees applauding what we are doing and giving me some real-life examples of things that we could do differently to help them get their jobs done easier. Sometimes they are seemingly mundane, but still important. Some of them are things that I would not have been made aware of had someone not sent me an email directly. And I look at that. I read it. I send it to the team in the program office that is running this. So I would say that the employees are saying, finally, we are doing some things to get some of the gunk out of the system. Gunk is a technical term for me on this, and we are definitely working hard in getting this program to get things working better, faster, more efficient, not just for our internal teams, but it also will translate into gains for our customers as we are able to be a bit more nimble. So I would say that there is tremendous receptivity to this, and I think that it is going to allow us to make decisions faster, get stuff done faster, but also take a lot of the cost that is going to fall out of that and reinvest it into the things that we have been talking about in terms of growth. I think that we have the capability with that to add more account management teams, people who are walking the halls of the building, to bring new ideas to customers and increase the daily communication about what we need to do to help them be more successful. And with that, I think it is probably one of the most important things that we are going to get done this year. Operator: Our next question comes from Noah Poponak with Goldman Sachs. Noah Poponak: Hey, good morning, everyone. Morning, Don. Is it possible to give us the details of recompetes of size that you have in your fiscal 2027 and fiscal 2028, just kind of cover the next two years, which programs, when, and how big are they for you now in revenue? Prabhu Natarajan: Hey, Noah. Prabhu here. I will take the first stab at this. I think, you know, if I think about significant programs, as you know, with 10% to 20% of the business comes up for recompete every year. So if I think about the largest recompetes out there, Department of State Vanguard is the single largest program that is going through a recompete cycle in fiscal 2027. Okay? And that program, as we know, the scope of the program is increased. We are on year fifteen of that program, and we have been qualified to bid and compete for work on four of the five workstreams. The one workstream that we chose not to bid because it would have created the OCI for us for the other four workstreams. So that is the single largest recompete that we have. Beyond that, we always have programs that are in the, I am going to say, $75 million to $150 million range. Let us call it 1% or 2% a year. We always have one or two of those every year, but in reality, we are also bidding a multiple of that in the form of takeaway opportunities in the pipeline. So I tend to not think of those actively as, you know, sort of significant recompete risk. I think the reality is the way we are approaching this, Noah, is keep as much of the work share on Vanguard as possible, hopefully even eke out a little gain there. But our baseline assumption right now for this year is that we have accommodated all kinds of contingencies into the minus two to minus four. But Vanguard is probably the only one that is worth calling out right now. Noah Poponak: When will you be recompeting that? And can you size it for us approximately annual revenue for you? Prabhu Natarajan: Yeah. So we will be going through a recompete cycle on Vanguard. Again, it is going to go by workstream to workstream. There are four workstreams that will get recompeted over the course of this year. We are the incumbent. We will be competing for all four. We have been qualified to compete, and we are in the down-selected category. And so it is unlikely to materialize in terms of impacts to revenue anytime, I would say, safely in the first half of this year. If anything, we may have some nominal impacts in the second half. But I say nominal. So more of the impacts, if we were to be in an unfortunate position of not keeping most of that work, most of that impact will be felt next year and not this year. So that is how I would probably preface it. Noah Poponak: Okay. And then would it be possible to talk about how the funding environment has evolved year to date? I know that is a short-term question. Maybe it gets into splitting hairs. But just given the, as you described, the funding of obligated dollars has been slow and choppy and uneven. In January, it sounded like some in the industry saw that getting better. I am just curious if that improved through the quarter or got worse through the quarter? Is it better or worse today or the same versus how the year ended? Prabhu Natarajan: Yeah. I am going to say, the health warning here is that whatever I say now is probably going to be OBE probably at the end of the week. But here is what we have seen. I think it is true that January for outlays was better than the preceding three months for sure. I think on outlays, as you know, there is probably about a three-month lag between outlays and revenue performance. So a good January month on outlays means that April, May should look healthier than it would have looked otherwise. I think the more important milestone that we are tracking to is a milestone in the second quarter of our fiscal year, sort of the June, July, August timeframe. Certainly, June or July, if you look at where the agencies are relative to their—relative comparing outlays to the appropriations or the budget amounts, I think that will tell us if we are going to see a year-end flush in terms of money that needs to be spent before the end of the government fiscal year. So that is probably the clearest goalpost that we would say is out there. But in reality, we do think that the appropriations have to get spent; therefore, the money will have to come. I think for us, it is very much a question of timing and how quickly is the spigot going to open up. And this is where the constraints on the government procurement functions have been difficult to size and estimate. But hopefully, things get better here, certainly in the second half, from the summertime through the end of the fiscal year, Noah. Then perhaps, an immediate change in the first quarter of this fiscal year for us. Noah Poponak: I understand. Okay. Thank you. Operator: I am showing no further questions in queue at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the WaterBridge Infrastructure LLC fourth quarter 2025 results earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. I will now hand the call over to Mae Herrington, Director of Investor Relations. Please go ahead. Mae Herrington: Good morning, everyone, and thank you for joining WaterBridge Infrastructure LLC's Fourth Quarter and Fiscal Year 2025 Earnings Call. I am joined today by our Chief Executive Officer, Jason Long, our Chief Operating Officer, Michael Reitz, and our Chief Financial Officer, Scott McNeely. Before we begin, I would like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC. I would also like to point out that our investor presentation and today's conference call will contain discussions of non-GAAP financial measures we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation. Prior to the closing of WaterBridge Infrastructure LLC's initial public offering on 09/18/2025, WaterBridge Infrastructure LLC completed the successful combination of its legacy entities WaterBridge Equity Finance LLC, WaterBridge NDB Operating LLC, and Desert Environmental LLC. Full year 2025 key operational metrics discussed today are presented on a combined basis, and full year 2025 financial results discussed today are presented on a pro forma basis in accordance with Article 11 of Regulation S-X, assuming the combination and the IPO had occurred on 01/01/2024. I will now turn the call over to our Chief Executive Officer, Jason Long. Jason Long: Thank you, Mae, and good morning, everyone. 2025 was a transformative year for WaterBridge Infrastructure LLC as we completed our upsized and highly successful IPO in September, bringing to market the largest pure-play water infrastructure network in the United States. To begin today, I am proud to announce that our fourth quarter and full year 2025 results continue to demonstrate strong operations with fourth quarter produced water volumes up to 2,600,000 barrels per day and full year combined volumes averaging 2,400,000 barrels per day, representing 15% year-over-year growth compared to combined 2024 volumes. Our volume growth is combined with continued rate improvements to contribute to full year 2025 pro forma revenues of $790,000,000, a 19% annual increase compared to pro forma 2024 revenues. Shortly, Chop will walk us through how we plan to continue our operational and commercial momentum in 2026, and then Scott will translate that into details for our 2026 guidance. But first, I want to walk through some context of the business today. WaterBridge Infrastructure LLC provides innovative and full cycle produced water solutions to E&Ps and is well positioned to meet evolving industry needs via our produced water handling capacity of more than 5,000,000 barrels per day of produced water handling capacity across over 2,600 miles of integrated pipeline to twelve produced water handling facilities. With this extensive produced water handling and supply network, and deep operational and geological expertise in the Delaware Basin, the most prolific oil and natural gas basin in North America, we are well positioned to be a sought-after partner for years to come. Our value proposition of providing innovative, geologically focused, technologically advanced solutions for our E&P partners has translated into a strong track record of growth as demonstrated by our more than 22% CAGR in produced water handling volume since 2022. Due to the significant remaining inventory of low breakeven locations, produced water volumes continue to grow alongside and even recently outpacing oil volume growth in the Delaware Basin, where the water-to-oil ratios are among the highest in the U.S. Our permanent integrated water infrastructure network is strategically located to meet this need, and we anticipate continued revenue growth in the coming years. To meet that growth, we continue to dedicate significant capital to high-return organic growth projects and pipelines in the basin, focusing on long haul and out-of-basin solutions for New Mexico customers as they continue to increase operational focus in a high-return, high-inventory Northern Delaware Basin. The strong demand and positive response we received during the open season for the first phase of the Speedway Pipeline Project led us to continue those discussions with customers via the recently announced Speedway Phase Two pipeline. As a long-term flow assurance partner of choice in the basin, we expect to continue dialogues with existing and new customers in the region to ensure that we can expand water infrastructure capacity in step with their development needs. With that, I will turn it over to our COO, Michael Reitz, to talk about operational momentum and priorities for 2026. Michael Reitz: Thanks, Jason. At the operational level, we continue to prioritize delivering critical flow assurance for our customers through unparalleled pore space access as well as our advanced technology and measurement systems. Our continued execution is reflected in our produced water handling volume growth and in the fourth quarter, we achieved a single day record of 2,900,000 barrels per day water handling. In 2025, we achieved 99.7% operational uptime with measurement variance of less than 1% across our system, driven by our proprietary forecasting capabilities and real-time measurement and monitoring technologies. Commercial efforts continue to advance meaningfully. In 2025, we brought high-value new infrastructure online and expanded existing facilities across our network, enabling 15% year-over-year combined volume growth. In particular, we brought the Kraken project online, representing an initial capacity of approximately 450,000 barrels per day. This project will continue to drive volume growth in 2026 with a midyear minimum volume commitment (MVC) increase. As previously announced, this project includes a ten-year MVC from BPX to support its long-term development plans in the region. We also meaningfully advanced the development of our Speedway Project, which will provide produced water transport and handling in the Northern Delaware Basin, connecting oil and gas development to out-of-basin pore space owned by Landbridge on the Central Basin Platform. Phase One was oversubscribed, and we anticipate the project to be put into service in the middle of this year with the bulk of key contracts and MVCs going into effect in the third quarter. The first phase of Speedway is expected to drive volume growth in 2026 and beyond, as it continues to ramp through 2028. Speedway's Phase Two open season was launched in February 2026, and demand is already outperforming expectations. We also anticipate being able to accelerate some early Phase Two projects into 2026, which represents an opportunity to leverage recently constructed Phase One assets, unlocking operational synergies and subsequently providing an incremental EBITDA contribution in 2027. The success of the Speedway project emphasizes the continued benefits from our synergistic relationship with Landbridge, which not only provides critical access to underutilized high-quality pore space, but also continues to expand its surface and subsurface portfolio, subsequently derisking future needs. Access to pore space through Landbridge and other large strategic landowner relationships is a key differentiator for WaterBridge Infrastructure LLC and a critical component of the reliable, redundant flow assurance solution that we provide our customers. Finally, we expect to begin construction on the previously announced new Devon project in 2026, and we will continue to execute incremental high-return capital projects to meet the existing customer demand throughout our infrastructure footprint. With that, I will turn things over to our CFO, Scott McNeely, for an update on our financial results and formal 2026 guidance. Scott McNeely: Thank you, Chop, and good morning to everyone on the call today. We entered 2026 with significant commercial momentum, having realized major successes in 2025 with our IPO, the launch of Kraken, and the success of the Speedway Phase One project, all while executing on record water handling volumes for the full year as Jason and Chop mentioned. In the fourth quarter, our first full quarter as a publicly traded company, we achieved record revenue of $208.9 million, up 2% compared to the pro forma third quarter revenue. Fourth quarter net loss was $13.6 million and adjusted EBITDA for the quarter came in at $103.8 million with a 50% adjusted EBITDA margin. For the year, we delivered pro forma revenue of $790,000,000, representing 19% year-over-year pro forma revenue growth. Full year pro forma net loss was $58.1 million. Full year adjusted EBITDA was $402.8 million, a 16% year-over-year increase. In Q4, we further optimized our balance sheet by closing on an inaugural $1.425 billion senior unsecured notes offering, which will help WaterBridge Infrastructure LLC capitalize on the many compelling opportunities before us. We ended the year with total liquidity of $527 million, including $52 million of cash and cash equivalents and $475 million undrawn under our new $500 million secured revolving credit facility. Our covenant net leverage ratio was 3.3 times at the end of the year, and we remain committed to our long-term goal to be under three times levered. Capital expenditures in the fourth quarter were $89.2 million, mainly driven by spending on the development of Speedway Phase One and continued expansion projects on our Stateline systems as we continue to grow our footprint with high-quality assets. Our disciplined capital allocation framework allows us to effectively deploy free cash flow and manage our top priorities, which includes, first, prioritizing high-return capital projects building out our water infrastructure network, and maintaining our commercial relationships. This also includes selective strategic acquisitions. Second, maintaining a conservative balance sheet and prudent capital structure to ensure maximum financial flexibility over time. And finally, returning capital to shareholders through opportunistic share repurchases and dividends. This quarter, we declared an inaugural quarterly dividend of $0.50 per share. As anticipated, we are initiating annual guidance this quarter. For full year 2026, we expect produced water handling volumes of 2,500,000 to 2,700,000 barrels per day, driven by the midyear BPX Kraken MVC increase and Speedway Phase One. We also expect CapEx to be between $430,000,000 and $490,000,000. Importantly, our expectations for Speedway Phase One CapEx have not materially changed. This guide contemplates approximately $100,000,000 of newly sanctioned CapEx attributable to the incremental Speedway Phase Two projects Chop discussed as well as other commercial projects throughout our acreage. Finally, we expect 2026 adjusted EBITDA between $420,000,000 and $460,000,000, representing 9% annual adjusted EBITDA growth. This is expected to be weighted towards the second half of 2026 following the Kraken MVC increase and initiation of Speedway Phase One. With our ongoing commercial success and in anticipation of Speedway Phase Two, expectations for 2027 are meaningfully higher than previously contemplated. To conclude, we are proud to have delivered a strong year of growth and look forward to continuing to deliver for our customers in 2026 and beyond as we meet the increasing demand for produced water handling across the Delaware Basin and innovate for the future. We will now open for questions. Operator? Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Derrick Whitfield of Texas Capital. Your line is open. Derrick Whitfield: Good morning all, and congrats on a strong 4Q. Hey, good morning, Jack. Wanted to start with your 2026 produced water handling volumes guidance of 2,500,000 to 2,700,000 barrels per day. In our view, it seems that you have baked some degree of conservatism in your plan relative to where you exited the year. Could you speak to when this activity projection was assessed and what price forecast is assumed, and finally, highlight any timing considerations that could place you on the upper side of your forecast. Scott McNeely: Thanks for the question, Derrick. I would answer it in two different ways. First, we had a very strong fourth quarter. Volumes came in and we exited the year in that position of strength, which is what we wanted to see, and so we feel really good stepping into 2026. I would say the second piece, when we worked through budgeting for this year, like many others did so at the end of 2025, we were just in a very different macro environment than we are in today. The bulk of the volume that is baked into the guidance is informed by producer feedback that was provided when oil was in the mid to high fifties. Where we are sitting today, it is just a drastically different environment, and as such, we think that there is a lot of upside, particularly in the back half of the year, if the current macro backdrop holds. I think we feel really good about the conservatism baked into the guidance. Again, we did that by design, but the world we are living in today is very different than the one we were living in when we received that producer input. I think as a result, it has a lot more upside now than we would have expected to see back in Lexington. Derrick Whitfield: And then for my follow-up, I wanted to shift over to the Devon and Caterra merger and think through that for a bit. With the understanding that clearly, the merger is not final, it would seem logical to us that the consummation of that merger could present incremental growth opportunities for WaterBridge Infrastructure LLC. Based on past discussions with both counterparties, do you see or expect to see greater opportunity from the Caterra side of the house based on your working relationship with Devon? I know that Caterra's Franklin Mountain asset literally sits on top of Project Speedway. Scott McNeely: It is a great observation. We are obviously excited for the Devon team and the Kotera team. They are going to be stepping out of the merger in a very strong position. We have a great relationship with the Devon team with a lot of the folks that we work with day to day as part of that new management team, so I think we are excited to step into conversations with them about what is next for their plans. We have had great relationships with Kotera in the past as well, and so I think a lot of those, we hope, will obviously continue to accrue to our benefit. Stepping out of this, we are excited. The combined company is going to be a great one in the Delaware Basin. We are excited to work for them. We are excited to deliver our part in enabling what is next for their company. Derrick Whitfield: Thanks. Great update. Scott McNeely: Thanks, Derrick. Operator: Your next question comes from the line of Elias Jossen of JPMorgan. Your line is open. Please go ahead. Elias Jossen: Thanks, everyone. Wanted to start on the acceleration of growth project opportunities you alluded to. I think you talked about some opportunities to accelerate in 2026, leveraging some of the ongoing construction. Can you just speak more specifically to the magnitude of that, help us understand what the kind of 4Q exit rate might look like, and the overall framing you see for 2027? Thanks. Scott McNeely: Yeah, hey, Elias. Appreciate the question. We are in a really great spot right now where we have received a number of inbound inquiries and are working through a number of different commercial discussions, which is ultimately what sparked the announcement around Speedway Phase Two. In addition to that, we also have just several commercial projects that are fairly firmed up at this point that will serve somewhat as the foundation for Speedway Phase Two as well. We added another $100,000,000 to capital expectations for this year. That is still somewhat front-weighted for the year, but the bulk of that extra $100,000,000 is going to be tied to these new projects that will serve as the foundation for Speedway Two. There is a smaller amount, I am not going to quantify it, but we will say a smaller amount, which is going to be related to the Devon projects. If you recall, Devon has an MVC with us that comes online in 2027. We are just accelerating the construction of that infrastructure by a few months, and it is really just to derisk, effectively, that construction phase, and as a result of that, we expect just a little more cash to go out the door at the end of this year versus 2027. No real change in the scope of that project, but recognizing the fact that cash may leave the system a little bit earlier than we were thinking, by design, just to derisk the development there. Elias Jossen: Thanks. And then shifting to the capital allocation philosophy subsequent to the growth project spend. It seems like there might be a bit of a free cash flow inflection as you get Speedway Two in service and, I guess, the Devon project as well, as that spend comes to a conclusion at 2027. Maybe 2028 looks more like an inflection on free cash flow. So how do you think about what the capital allocation framework looks like at that point? Scott McNeely: It is a great question. Like we said during the IPO process, we will continue to prioritize these higher return organic growth projects. You look at Kraken, you look at Speedway, we would expect for Speedway Phase Two to be incredibly attractive from a return standpoint. That will continue to be the most accretive use of the cash flow that we are generating as a business, and I do not expect that to change. We aim to continue finding creative ways to generate those same kinds of returns. Beyond that, we will continue to explore M&A. It does need to compete with the organic growth projects that we are working through as we think through our capital allocation framework, but to the extent there is an opportunity that checks all of those boxes on a risk-adjusted basis, we would absolutely be open to pursuing M&A as another way to continue to feed growth to the company. Lastly, we think through balance sheet management and return of capital. Making sure that we work through this growth while keeping the balance sheet healthy is a top priority. Staying kind of at mid threes at max during growth is something we are comfortable with, but getting sub three times is certainly a medium-term goal for us. Beyond that, initiating this first dividend, we are not looking to overly lean into dividends here, particularly through this growth phase, but there is potential for those to grow going forward depending on other competing uses of capital. Likewise, we could potentially explore buybacks in the future when it makes sense in the context of other capital allocation options we have as well as the float and the float dynamics at the time. Elias Jossen: Great. Thanks very much. Scott McNeely: Yeah. Thanks, Elias. Operator: Your next question comes from the line of John McKay of Goldman Sachs and Company. Your line is open. Please go ahead. John McKay: Hey, guys. Thank you for the time. Maybe I will go back to the first one around the 2026 guide. I appreciate the comments, but I wanted to follow up. When you are talking about it potentially being conservative, how much is that based on maybe comments that the higher oil deck will incentivize new activity versus just saying, hey, we are baking a little bit of wiggle room into these numbers? Are you expecting activity to pick up at this higher deck because we are generally not seeing it elsewhere? Scott McNeely: Hey, John. Good question. The conservatism was really in the context of what was a high $50 oil environment when we worked through that budget. When I think through the conservatism today, I would make the argument that it is that much more conservative given the context of where WTI is at and expectations through year end. We have certainly heard some initial chatter on thoughts from producers, although most of that was really around the thought process of, is this a short-term blip, or do we expect to see a more enduring elevation of WTI through year end? Over the last couple of weeks, the market certainly seems to think that WTI is going to stay escalated at least to a certain extent through year end at this point, as we have seen the backwardation start to fall off slightly. It is too early to aggregate feedback from producers and producer reaction just yet, but what was a conservative outlook in a high $50 oil environment, I think, is again very conservative now, particularly in the context of the strip through year end. To the extent producers are able to capitalize on that, I would expect some of them will, although, as we all know, there are different idiosyncrasies with different producers out there. All that to say, we have much stronger tailwinds now than we had in late 2025 as it relates to the macro backdrop. John McKay: Thanks for that. And maybe just a quick follow-up on Speedway Two. I know the open season closes next month. Can you walk us through expectations for reaching FID? And then on the CapEx for this year, how much are total project CapEx? Or maybe if you are able to compare it to what the build for Phase One looked like. Thanks. Scott McNeely: We have gotten a few of the core commercial deals we expect to be part of Phase Two buttoned up at this point. That is why the CapEx is incorporated in the budget now. Those are projects that we will pursue regardless of the outcome of the broader Phase Two process, and I want to make that perfectly clear that this is not speculative CapEx that is built into the budget. These are discrete projects that we expect great returns from even on a stand-alone basis, although they could serve as the commercial foundation for broader Phase Two. It is too early to say exactly what the aggregate capital spend or returns will look like on the broader Phase Two, but I would expect those to be fairly in line with what we saw for Phase One, if not slightly more attractive, just depending on how the dust settles. John McKay: Cool. Sounds good. Looking forward to Thursday. Thanks. Scott McNeely: Yeah. Thanks, John. Operator: If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Your next question comes from the line of Theresa Chen of Barclays. Your line is open. Please go ahead. Theresa Chen: Hi there. On the topic of Speedway and the commercial development momentum that you have seen to date, is there a possibility or likelihood at this point for Phase III? Is there a likelihood that you will loop the 30-inch system given the demand for the egress? Scott McNeely: Hey, Theresa. Appreciate the question. The short answer is yes. We see a lot of demand throughout New Mexico, Eddy and Lea County, and expectations certainly have not dropped. They are growing rapidly as developers look for water solutions out of what is a very challenged environment, and we are obviously positioned to deliver that. Timing of that will ultimately be driven by the outcome of commercial discussions for Phase Two and when initial operating capability is going to be needed for Phase Three. We are having all those discussions now. What is exciting, if you look at Kraken, you look at Speedway Phase One, you look at Devon coming online, we have already set the stage for what is great growth exiting 2026, 2027, 2028. These new commercial projects plus Speedway Phase Two are only going to further bolster the back half of 2027 stepping into 2028. As you allude to, there is a need for Speedway Phase Three. There is a need for more water takeaway. We see fantastic growth over the next several years, and we are working very diligently to ensure that we are being thoughtful around the underwriting, we are derisking those projects with MVCs, and we are setting ourselves up for long-term derisked growth. Theresa Chen: Got it. And on that note of just persistent tightness in supply and demand for water takeaway, what are you seeing in the evolution of rates at this point? What is the going rate at this juncture as you try to commercialize the second phase of Speedway in addition to future organic endeavors versus your legacy in the $0.60 per barrel-ish rate? Michael Reitz: Thanks, Theresa. This is Chop. Rates are increasing over time, as you would expect, as capital needs for these projects increase over time. We are seeing more demand and rates increasing along with that demand. Scott McNeely: Relative to the mid-$0.60 kind of average that we had through the middle of last year, these new rates—Kraken, Speedway, some of these others that we are working through and talking through—are meaningfully higher. To Chop's point, some of that is to underwrite the capital coming out of New Mexico, and some of that is just a reaction by the market to the supply-demand economics for water takeaway. Theresa Chen: Thank you. Scott McNeely: Yeah. Thanks, Theresa. Operator: Your final question comes from the line of Kevin MacCurdy of Pickering Energy Partners. Your line is open. Please go ahead. Kevin MacCurdy: Hey. Good morning. Maybe to follow up on the question about rates. Your 2026 EBITDA guidance was in line with expectations, but maybe on slightly lower volumes than anticipated. So are we right to think that margins will be a little bit higher in 2026 compared to what we saw in 2025? And if so, any comments you can provide on the near-term driver of that? Scott McNeely: Hey, Kevin. Good question. Yes is the answer. As we see Kraken step up, we see Speedway come online, and we see some of these other new commercial projects come online, we would expect the higher unit-level revenue from those contracts to continue to drive margin expansion across the system. We would expect that trend to continue going forward for all the reasons I just walked through with Theresa. Kevin MacCurdy: Thanks for that answer. And then I appreciate your comments on what you are seeing on the ground in terms of activity pickups, or not seeing so far yet. I am curious what your capacity is to handle more produced water volumes in both the short and the near term. You did 2,900,000 barrels in the fourth quarter. Is that kind of a near-term cap, or could you go even higher? Scott McNeely: We could go even higher than that. There are some regional dynamics that are involved. The system obviously is not wholly fungible from any other point of the system, so the operational realities come into the mix. The point I would make is you look through our average of roughly 2,600,000 barrels a day against our peak of 2.9 million. It is a real reflection of the criticality of having infrastructure of scale in place today. These producers are working through much larger well pads that bring on much higher peaks, and you have to have the operational expertise and the infrastructure already in place that can accommodate those peaks and do so with the certainty that is needed by these E&P operators. There is a real competitive moat that is introduced as a result of that. When you look forward to 2026 and you think through our ability to capture the upside potential, I would argue we already have those assets in hand to do quite a bit of that today, and that is before we bring Speedway online midyear, which only gives us an additional asset to continue to capture what we would expect to see as some upside coming out of New Mexico in today's commodity price environment. We feel very good about being well positioned through the year, hopefully to continue to enable some of the E&P development, particularly in the back half of this year that is resulting from the macro evolution we have seen over the last couple of months. Kevin MacCurdy: Thank you, and congratulations on the quarter. Scott McNeely: Yeah. Thanks, guys. Operator: There are no further questions at this time. I will now turn the call to Scott McNeely, Chief Financial Officer, for closing remarks. Scott McNeely: Thank you, operator, and thanks to everyone for joining us today. Again, we are very happy with how we exited the year and how we are stepping into 2026. We feel like there is a lot of upside for us in 2026 stepping into 2027. As I mentioned, there are a lot of commercial opportunities out there for us to continue to pursue and drive growth. As always, please feel free to reach out to our team here if there are any questions. Otherwise, we hope everyone has a great week and we look forward to staying synced up. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Assertio Holdings, Inc. Fourth Quarter and Full Year 2025 Results Conference Call. 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 that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you. I would now like to turn the conference over to Daniel Santos with Longacre Square Partners. You may begin. Daniel Santos: Thank you. Good afternoon, and thank you all for joining us today to discuss Assertio Holdings, Inc.'s fourth quarter 2025 financial results and business update. The news release covering our results for this period is now available on the Investor page of our website at investor.assertiotx.com. I would encourage you to review the release and tables in conjunction with today's discussion. Please note that during this call, management will make projections and other forward-looking statements regarding our future performance. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in this afternoon's press release as well as Assertio Holdings, Inc.'s filings with the SEC. These and other risks are more fully described in the risk factors section and other sections of our Annual Report on Form 10-Ks and in our Form 10-Q filings. Our actual results may differ materially from those projected in the forward-looking statements, Assertio Holdings, Inc. specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. With that, I will now turn the call over to Mark L. Reisenauer, Chief Executive Officer. Please go ahead. Mark L. Reisenauer: Well, thank you to everyone for joining us today. Before we dive into our fourth quarter and full year 2025 results, I want to take a moment to share three early observations from my time as CEO and provide some color on where I see opportunities ahead. Since I became CEO in October, I have had the opportunity to meet with team members at every level of our organization and several things have come into focus for me. First, I believe we have a significant revenue opportunity in our core asset, Robodon, which is reflected in our 2026 guidance. Second, we have an experienced commercial operation with strong market access, sales, and contracting capabilities that we can leverage to bring other products to market successfully. And third, our prior strategy of acquiring on-market specialty products is no longer capital efficient or a sustainable strategy to fuel growth. Now let me expand on those points a little bit. Since we acquired Movadon in 2023, the team has worked to streamline our organization, consolidating regulatory, distribution, and contracting functions and bringing Robodon manufacturing under our consolidated commercial label to drive operational efficiencies. With that integration fully complete in Q4 2025, we have positioned the product for commercial success, including maintaining a leading market share position. As we explained last quarter, as part of this Robodon integration and transition to a new distribution partner, we pulled forward two quarters of demand to ensure uninterrupted patient supply during the transition. Regular sales of the newly labeled ROBODON are expected to begin in the second quarter 2026, after which we expect continued demand growth and an acceleration in sales compared to the prior year, which AJ will discuss in more detail when he goes over our 2026 guidance. Given that our IP protect goes out to 2039, we continue to view Rolledon as a long-term revenue opportunity and as such, we will prioritize implementing a meaningful life cycle management strategy. Rovodon is a great example of what is possible with strong commercial execution. We see significant opportunities leveraging the commercial organization we have built around Rolvodon to bring other products to market. Our team has broad capabilities across marketing, sales, market access, and distribution, which we can leverage to maximize access and reach of other products in the oncology market. Paul has already led the organization through most of the heavy lifting and our focus now is on finding the right products to acquire and grow. Which brings me to my third point, our strategy. Historically, Assertio Holdings, Inc. has pursued a strategy of acquiring on-market specialty products. While these assets can provide immediate cash flow, competition for these opportunities has intensified in recent years, and acquisition prices have increased. This approach has delivered some successes for the company, including roll it down. However, it has also highlighted the importance of being disciplined in how we allocate capital and commercial resources. For example, while SYMPAZAN continues to serve patients with a differentiated formulation, the returns on our investments to grow the product have been lower than expected. As a result, we do not believe that further incremental investment behind the asset is warranted relative to other higher growth opportunities for capital deployment. That experience reinforces our focus on being highly selective pursuing assets where our commercial platform can drive attractive and sustainable returns. With this in mind, let us talk about where Assertio Holdings, Inc. goes from here. The core of our strategy will continue to be ensuring the success of Rolledodon, and leveraging the operational efficiencies we have built around it through our integration efforts. In the near term, that means we will focus on driving Rovodon sales growth and in implementing a comprehensive LCM strategy to maximize our long-term opportunity. On the BD side, going to be much more focused on finding opportunities that leverage our existing Robotron footprint and capabilities. Expanding our presence in oncology is a natural next step for us. We see multiple pathways to growth, through targeted business development including individual product acquisition, commercialization agreements, licensing or technology agreements, and or potential business combinations. We will be disciplined in our approach, and focus on both on-market and development stage assets that meet our investment and return criteria. We do not have anything to announce on this front yet, but we continue to search to see what opportunities are available. I am proud to say we are entering this next phase from a position of strength with a solid balance sheet, and a core asset with meaningful runway ahead. Before I turn it over to Paul, I want to thank our team for their hard work and for embracing recent changes with enthusiasm and focus. It makes a difference and it reinforces my confidence in what we can deliver going forward. With that, I will turn it over to Paul, who can provide an update on our portfolio and operations. Thank you, Mark. From a commercial and operations perspective, our focus over the past year has been to align our commercial resources to optimize cash flow from our tail assets while continuing to support the growth of Robodon. Starting with Robodon, the integration of the product from Spectrum into the Assertio platform is now complete. And we will continue to integrate the remaining products in our portfolio during 2026. For Rovodon, this included transitioning the product onto the Assertio label and fully integrating the commercial operational, and market access infrastructure required to support the product going forward. Importantly, this transition has been seamless from both customer and patient perspective, which was a top priority for our organization. During the fourth quarter, we saw the expected pull through of the large purchases that were executed in the third quarter and those dynamics are progressing as planned. From a demand perspective, Robonaut continues to perform well, particularly within the community oncology clinic segment where we maintain strong share. Since the product launched in late 2022, we have continued to see new accounts begin purchasing Robodon each quarter which reinforces our confidence that there remains opportunity to further expand awareness and utilization. To support the next phase of growth, we have also executed a number of personnel and process enhancements across the organization. These changes are designed to further strengthen our community oncology focus, expand our reach with key clinics, and improve the coordination between our field teams market access capabilities. We believe these adjustments position us well to continue expanding Rolled On's presence within our target accounts. At the same time, we remain disciplined in how we manage the remainder of our portfolio. Our approach is to optimize the cash flow generated by our tail assets while prioritizing commercial investment behind Rovodan and other future growth opportunities. Let me now spend a moment to the commercial capabilities we build and how they position Assertio to bring additional product to market. Over the past few years, we have developed a focused commercial platform centered on the community oncology channel. Our field organization includes a national team of corporate account managers engaging with clinics across the country working directly with providers and practice administrators, to encourage product awareness and adoption. That effort is complemented by a national accounts team dedicated to contracting with group purchasing organizations and aggregators which enables us to efficiently expand access across large networks of oncology practices. We also have significant expertise in trade and distribution and maintain strong relationships with distributors, GPOs, aggregators, and clinic customers which helps ensure efficient product flow and broad market access. Supporting the field organization is a fully integrated patient services infrastructure including both the hub services platform and field reimbursement specialists who work with providers to help navigate coverage and reimbursement processes and support patient access to therapy when it is prescribed. Taken together, these capabilities create a scalable commercial infrastructure that we believe can support not only our current portfolio, but also additional assets in the future. As we look ahead, we believe this platform positions Assertia well to incubate and commercialize additional products that fit within our existing commercial footprint. Overall, we believe the operational progress we have made over the past year strengthens the foundation of the business well to both continue growing Rovodon and thoughtfully expand the portfolio over time. With that, I will now pass the call over to AJ, who will cover the financial results. AJ? Thanks, Paul. I will now walk through our financial results for the fourth quarter and full year 2025. Total product sales in the fourth quarter were $12.8 million compared to $29.6 million in the prior year. Ajay Patel: Primarily driven by the timing of channel inventory associated with the previously disclosed Rovodon sell-in. While Rovodon net sales products were minimal at $0.4 million in the fourth quarter, down from $15.4 million in the prior year quarter, underlying demand for ROVEDON remained stable, and our 2026 outlook expect growth strong. We growth in half beginning in the second quarter with newly labeled Robodon. SYMPAZAN sales were $3.1 million in the fourth quarter, up from $2.5 million in the prior year, reflecting higher volume and a favorable payer mix. Indocin sales in the fourth quarter were flat year over year at $5.5 million, as higher net pricing offset expected volume pressure from generic competition. Gross margin improved to 75% compared to 61% in the prior year, primarily driven by a higher mix of Indocin sales and the prior year inventory write-downs not repeating. Turning to operating expenses. Reported SG&A expenses were $13.1 million, down from $21.4 million in the prior year, reflecting lower legal expenses following completion of litigation-related initiatives as well as reduced personnel cost following restructuring actions taken in the fourth quarter. GAAP net income for the fourth quarter was a loss of $11.9 million compared to a loss of $10.5 million in the prior year, and adjusted EBITDA for the fourth quarter was negative $4.1 million compared to a positive $3.4 million in the prior year. As of 12/31/2025, cash, cash equivalents, and short-term investments totaled $63.4 million compared to $93.4 million at 09/30/2025. This decrease primarily reflects a temporary increase in net working capital associated with the Rovodan sell-in. Specifically, this was driven by an expansion of accounts receivable due to extended terms required to complete the sell-in as well as an increase in accrued rebates as that inventory pulls through the channel. We expect this working capital variability to continue through the first quarter as these balances are settled. However, we anticipate that working capital and cash flows will return to normalized levels by April, aligning with the expected start of newly labeled Rovodon sales in the second quarter. Now on to full year results. Total product sales were $117.1 million, above the high end of the updated guidance range we provided last quarter. Rovodon sales were $68.2 million, up from $60.1 million in the prior year. Indocin net product sales were $18.9 million for 2025, reflecting expected volume and pricing impacts from generic competition. Gross margin was 70% in 2025, up from 68% in the prior year, primarily due to prior year inventory write-downs and step-up amortization expenses not repeating. Full year adjusted EBITDA was $22.7 million, up from $18.3 million in 2024, driven primarily by lower SG&A expenses and favorable gross margin. I will conclude with our outlook for 2026. For fiscal 2026, we are initiating revenue guidance in the range of $110 million to $125 million and adjusted EBITDA guidance between $28 million and $40 million. As we look at our fiscal 2026 revenue guidance of $110 million to $125 million, it is important to understand the underlying dynamics of our primary growth driver, Rovodanz. While we expect natural declines in our legacy tail assets, our strategic focus for 2026 is maximizing Rovodan sales to offset these headwinds. The guidance range reflects varying scenarios, specifically regarding pricing, gross to net, and volume acceleration. At the upper end of the range, we anticipate favorable market dynamics and increased market share. For comparison purposes, it is important to note that our fiscal 2025 reported Rovodon revenue included approximately five quarters of wholesaler shipments due to the Q3 sell-in. In fiscal 2026, our reported figures will reflect three quarters of wholesaler shipments as regular sales of the newly labeled Rovodon are expected to begin in the second quarter. On a normalized quarterly basis, we expect growth in Wobadon ex-factory wholesaler shipments driven by higher end customer demand volume. Our fiscal 2026 total revenue guidance reflects underlying revenue growth in Robodon. At the midpoint of our guidance range and above, we expect Robodon's revenue growth to fully offset the year-over-year reduction in Rovodan shipment quarters and the anticipated declines in our tail assets. Turning to profitability. We are forecasting fiscal 2026 EBITDA, adjusted EBITDA, between $28 million and $40 million. This represents year-over-year expansion in margin compared to our results in fiscal 2025. This step change in profitability is driven by two primary levers: high-margin revenue growth, Lovedon's growth is highly accretive. Our strategy has a direct fall-through effect on margins. Furthermore, we believe we can capture additional volume through our existing commercial infrastructure without requiring incremental OpEx. Structural cost savings. We are realizing the full-year benefits of several key initiatives. These include reduced year-over-year litigation expenses, the successful decommercialization of OTREXUP, and a leaner personnel structure following our Q4 restructuring activities. As we move through the year and gain greater visibility following the resumption of Wilbodon sales, we look forward to providing updates on our progress and our potential to perform towards the upper end of the range. With that, I will turn the call back to Mark. Mark L. Reisenauer: To wrap up, as I highlighted earlier, we believe Assertio Holdings, Inc. is operating for position of strength. Robodon remains a significant long-term opportunity with meaningful runway ahead, supported by the commercial platform we have built and our strong relationships across the community oncology market. At the same time, we are taking a disciplined approach to capital allocation, and business development, as we evaluate opportunities that can leverage our existing capabilities and drive sustainable growth. Overall, our focus remains clear. Execute on the growth potential of Rolvsodon, leverage our commercial infrastructure, and create long-term value for patients and shareholders. With that, I will turn the call back over to the operator so we can begin to answer questions. Thank you. Operator: And we will now open for questions. If you have dialed in and would like to ask a question, please press 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 and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one and one follow-up. Again, it is star one to join the queue. And our first question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is open. Thomas Flaten: Hey, good afternoon. I appreciate you guys taking the questions. Back to the strategic priority of focusing on the oncology space, maybe you could help us understand a little bit better what types of assets you are looking at. Are you looking for commercial assets, you know, primarily supportive care? Would you do therapeutic? Any interest in taking onboard pipeline projects? And, obviously, there would be an implication that there would be some R&D spend, but maybe a little bit more detail on that would be super helpful. Mark L. Reisenauer: Sure. Thanks for the question, Thomas. So in terms of the scope of what we would be looking for in the oncology space, I think maybe some additional criteria that we would use as we evaluate, I think it would be on-market, certainly, it would be late-stage development past proof of concept. Certainly, we would be looking at therapeutics. Primarily. And I think that is probably a good starting point of how we are looking at the oncology opportunity. Thomas Flaten: And just to follow on from that then, with the current commercial infrastructure you have in place, are there any incremental investments that you see being required to bring on board the types of products you want? For example, expanding the sales or do you feel that the commercial infrastructure today is plenty attractive enough for potential partners? Mark L. Reisenauer: Yeah. That was it would be a small increment most likely in terms of what we already have. I think we have a great base, but it would be a small incremental investment likely as we bring an investment on. Got it. Appreciate that. Thank you. Operator: And our next question comes from the line of Nazibur Rahman with Maxim Group. Your line is open. Nazibur Rahman: Hi, everyone. Congrats on the progress. Thanks for taking my questions. Just especially one with a follow-up. Considering what Robonaut's growth been the last couple years in 2024 and 2025 of sales, what kind of gives you confidence in this guidance and growth considering that a lot of that was really occur over three quarters. Could you talk a little bit more about the initiatives you plan on implementing in 2026 to sort of reach that growth level? And is part of that is there a plan to sort of expand away from the community setting or are you just planning on, I guess, further penetrating with the community setting at this point? Mark L. Reisenauer: You, Nas, for your questions. I will kick it off, and then I will turn it over to Paul for some additional color commentary. But the first part of your question, what gives us confidence in the growth. If you look at demand growth, in 2025 full year, it was 32% year over year compared to 2024. So you know, independent of the sell-in, the underlying demand growth for the year was still strong. And we would expect that continued demand growth, maybe not that same level, but certainly we will continue to add new accounts in 2026. Much like we have done in 2025. Your second question as it related to if you could repeat it again, that is because you were breaking up a little bit. Sorry. Just gonna keep setting. Yeah. Is there a plan to sort of expand away from resetting at this point? I believe this is the discussed or talked about before, or is the plan to currently just continue to further penetrate within the community setting? Yeah. Okay. Thank you. It is that is much clearer now. The plan would be to continue to focus on the community Medicare Part D setting. We have a very high market share there. We are a leader in that space, and we think there is further room to grow. We will also continue to evaluate some of the other segments and make targeted investments if we think they are warranted. But the growth, we believe, continues to come primarily from the area where we already have a leading market share. And I do not know if there is anything, Paul, that you would want to add. Paul Schwichtenberg: No. I think that covers it. I think the growth we are gonna achieve is gonna be through new accounts. We have seen growth every quarter since we launched the product. And we do see new opportunities out there to win some additional accounts, which is gonna drive a lot of the growth. And then I you are right, Mark. The focus is really gonna be on the community oncology space, Medicare Part B. Having said that, I would say, you know, we are open to other opportunities if the opportunities present themselves. But right now, that is gonna be the focus. Operator: And our next question comes from the line of Scott Henry with Alliance Global Partners. Your line is open. Scott Henry: Thank you, and good afternoon. I want to dig in a little bit on Rolvodan just to fully understand. So in '5, you sold into the channel because you were switching labels, which caused Q4 to be virtually nothing. And it sounds like I would love to hear what your thoughts are for Q1. I do not think it is going to meaningful. But now you are switching to the second version. So my question is, will there be any stocking of the relabeled product? Or would you expect revenues to simply reflect demand in 2026? Just trying to get a sense of what the levers are that are setting you up for for pretty good number. For 2026. Paul Schwichtenberg: Yeah, Scott. I will this is Paul here. I will the question. So right now, we are expecting a relatively smooth transition from the old label to the new label. What I mean by that that the product that we shipped at the end of the third quarter is getting pulled through in demand in the fourth quarter and will continue to be pulled through in the, 2026. And then at that point, we will shift over to the new label and there will be a transition, to kind of building the channel with that new label. And that is really gonna start in the second quarter in earnest of 2026. If that addresses your question. Scott Henry: Well, the question is when when an account switches to the new label, will they fill in some inventory, or will they just basically be replacing the old version with the new version on kind of a steady state basis? It is really very specific to expect channel inventory to build in 2026? Paul Schwichtenberg: We do not expect channel inventory to build, and I would say it is generally speaking, we expect that the quarterly demand will be generally aligned with the quarterly shipments in 2026. Scott Henry: Okay. That is great and particularly helpful. And then on EndoSyn, looked like a pretty good quarter in '25. Within your guidance, how do you think about that product? You down marginally, down substantially? Just because 2025 shaped up pretty good for the second half for Indocent. Ajay Patel: Yeah. Thanks, Scott. This is AJ. I can take that one. Yeah. You are absolutely right. We especially like, you know, the fourth quarter results of it. Obviously, we we we are always cognizant that it it is not it is competing in a highly competitive landscape with the generic, competitors. Obviously, the Indocin is not protected so we do not have visibility direct visibility into one new generics will enter. However, from our market intelligence, we we are, expecting at least one additional generic in 2026. So naturally, we are expecting a decline in that tail asset, as I had kind of said in my guidance commentary. Therefore, we do expect a year over year decline in that. What we will try to manage is, you know, as as we have been doing since it went generic, in '23 is to try to maximize the profitability from that product. Scott Henry: Okay. And, AJ, since I got you on the line, that $13 million in SG&A in Q4 looks pretty lean relative to past quarters. How reflective do you think that quarterly rate is going forward? I know there is a lot of onetime events that work their way in there, but I mean, does that $13 million seem representative to you? Ajay Patel: Yeah. The $13 million will have had kind of some onetime benefits as well from the restructuring activities we took. However, we do generally see a step down in the adjusted SG&A figures when you look at it, excluding stock compensation, D&A, etcetera. We do see a step down from 2025 to 2026, especially given the derisking from a litigation expense perspective. Though trucks have commercialization and some of the personnel we do estimate that to be at least in the range of $3 million to $5 million on an year-over-year basis. Scott Henry: K. And if I could just slip in one final question. I apologize if I went over the limit. For Mark, I think it is a good observation that assets are pricey right now and probably a good idea not to be a buyer in an environment like that. But the flip side of that coin is if if assets are expensive, perhaps you want to be a seller. So would you consider divesting assets or even, you know, putting the company up for sale? I mean, I know you will always consider that as a public company, but I wanted to get your thoughts on that. Thank you. Paul Schwichtenberg: Sure. Thank yeah. Thanks for the extra question, Scott. We will let it slide this time. I am just kidding. The question about would we consider divesting, that is something we do continuously. I would say, Scott. We are always evaluating whether an asset makes sense with us or would it do better with, you know, another company. So that is a continuous process, and I would expect we would evaluate that as we have always done throughout the year. But no specific plans currently. Scott Henry: Okay. And I assume that would be that would include evaluating selling the company as a whole as well. Correct? Paul Schwichtenberg: I think well, as a public company, obviously, that can always happen. And so do not think that is something we are necessarily actively doing, but it is as a public company, that can happen at any time. Scott Henry: Okay. Well, thank you for taking the questions, and congratulations on the strong outlook for next year. Paul Schwichtenberg: Thanks, Scott. Operator: And our final question comes from the line of Raghuram Selvaraju with H. C. Wainwright. Your line is open. Raghuram Selvaraju: Thanks very much for taking my questions and congratulations on all the recent progress. I was wondering if you could just give us some more granularity regarding the underlying expectations concerning the top end of your 2026 guidance. Specifically as this pertains to Rovidone net sales? You know, can you give us some more information with respect to that and, also, if you could give us a sense of how you are thinking about the long-term future of the product and what you anticipate potential achievable peak annual sales in the US could be, you know, a couple years down the road. And then also with respect to possible BD activities, when you think about potential products within the on domain that could be synergistic with or readily combinable with rolvidone when you think about how your sales and marketing infrastructure is set up to promote that product. Can you give us any additional context around which specific subcategories of the oncology space would likely make the most sense to look for complementary assets to Rovidar. Thank you. Ajay Patel: Thanks, Ram, for the question. Let me take the first half, and then I will let Mark answer the second part of your question. A guidance perspective, we do not typically give out kind of product-level guidance. But, obviously, as you think about our range and you have seen our fiscal 2025 results, directionally, the way you should kind of think about it is we are expecting, as I said in my commentary, year-over-year growth on Rovodan. It is just gonna be a reflection of, you know, what is the magnitude of that growth. And as the year progresses, especially with the launch of the newly labeled product in the second quarter, we hope to provide a little more granularity on that. But, generally, what we are targeting at the midpoint of the range and above is the year-over-year growth should more than offset the degradation we expect in our tail assets, specifically Indocin, and then, additionally, it should more than offset combined with the shipment quarter differences we had year on year. So that is generally how we are thinking about it. I think our long-term potential on, rolvidone, as we have indicated in the past, there is, you know, strong optimism that, capabilities of that product does have potential to reach, you know, exceed $100 million. We have looked at various ranges above that. You know, there are opportunities to reach $100 million to $130 million. And even beyond that. But, generally, we are at least from a step approach is targeting for it to reach above $100 million is kind of the near-term, optimism we have in the next few years. Raghuram Selvaraju: Just very quickly, I wanted to get some quick clarity on one thing you said, AJ. Is it correct to assume that even the upper end of your guidance assumes some degree of degradation, erosion, in indocent sales relative to 2025. Is that a correct assumption? Ajay Patel: That is a correct assumption. Mark L. Reisenauer: Thank you. Paul Schwichtenberg: Yes. And then just to cover off on your last question, what specific subcategories might we look at in the oncology space that would be logical given our existing footprint? And I let me start first with the footprint, and then I will go to the subcategory. So the footprint we have in the community oncology space, which is actually, by the way, where most cancer patients are treated, is actually great place for any therapeutic, whether it is for liquid tumors or solid tumors. So I think that is one of the benefits of our existing footprint. The community oncology space those physicians do treat all types of cancers. So from our standpoint, then what that translates to is a therapeutic compound that could be for liquid or solid tumors. I think that is the simplest way to think about it. Thank you. Operator: And ladies and gentlemen, that concludes our question and answer session as well as today's call. We thank you for your participation, and you may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Aurora Mobile Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Christian Arnell. Please go ahead, sir. Christian Arnell: Thank you. Hello, everyone, and thank you for joining us today. Aurora Mobile's earnings release was distributed earlier today and is available on the IR website at ir.jiguang.cn. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer; Mr. Shan-Nen Bong, Chief Financial Officer; and Mr. Guangyan Chen, General Manager. Following their prepared remarks, they will be available to take your questions and give you answers during the Q&A session that follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements made within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions, which are difficult to predict and may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties and/or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. With that, I'd now like to turn the conference over to Mr. Luo. Please go ahead. Weidong Luo: Thanks, Christian. Hi, everyone. Welcome to Aurora Mobile's 2025 Fourth Quarter Earnings Call. Before I comment on our Q4 results, I would like to remind everyone that we have uploaded the quarterly earnings day on our IR website. You may reference the deck as we proceed with the call today. I'm truly excited about the various things that are going here at Aurora Mobile. Revenue is surging and our financials are as strong as ever. By the end of this call, I trust you will agree with me, our 2025 and Q4 numbers are truly exceptional. As we have done in the past, when looking at the fourth quarter and the year as a whole, a single phase comes to mind a year of pure brilliance. Why? Because we recorded first ever full year net GAAP profit in our history. Not only that, but we achieved 3 consecutive quarters of non-GAAP profit leading to this quarter, which just as importantly achieved quarterly revenue exceeding RMB 100 million mark. It's been a truly historic year. Let me now dive deeper into the outstanding work and numbers that make this success possible. Firstly, the group's revenue this quarter surged to RMB 105.2 million, representing a remarkable double-digit 13% year-over-year and 16% sequential growth. This performance brought through the guidance we shared in our Q3 earnings call. Secondly, our global flagship product, EngageLab continued to fire on all cylinders, winning new customers across the globe. This momentum drove EngageLab's ARR for December 2025 to a record high of USD 10 million, representing 186% year-over-year growth. Further, gross profit grew by 23% year-over-year and by 9% quarter-over-quarter. This is the highest gross profit we have seen over the past 16 quarters. Last but not least, we delivered another standout quarter on cash management. Net operating cash inflow hit RMB 35.1 million, the highest we have seen since Q4 of 2020. With so many record highs this quarter, I am incredibly proud of what our team has managed to accomplish. It's truly gratifying to share these results with you today, and it was driven by our strategy, hard work and passion, not by luck. Everyone in Aurora Mobile for the effort and energy toward our collective growth day in and day out, 2025 stands as one of our most successful year-to-date, the result of true commitment and strong execution. With that said, the work is not done. The solid foundation we have built over the past few years position us to achieve even great things. I sincerely believe we are ready to seize the next wave of global opportunities and our track record proves we can. As we move into 2026, we will continue on our expansion path with the same discipline and focus we show in the past years, enhancing our products and services, accelerating growth and maintaining strong financial management. I am optimistic of what 2026 will bring. The path ahead is rich with opportunities and our brightest moments are still to come. After a year of pure brilliance, I think for 2026 is clear growth acceleration. Now let me share more on the individual business performance. Our total Q4 group revenue has exceeded RMB 100 million mark for the first time in history since the transition to pure SaaS business model. It has grown both year-over-year and quarter-over-quarter. In particular, the lion's share of year-over-year revenue was contributed by strong numbers from developer subscription services. Our solid execution in 2025 across different markets provided an excellent platform to drive our top line performance. In this quarter, both developer subscription services and vertical application record solid acceleration with double-digit year-over-year revenue growth. Developer Services revenue, which consists of subscription services and Value-Added Services delivered strong performance with 7% growth year-over-year and 18% growth quarter-over-quarter. Subscription revenue performed well, increasing by 13% year-over-year and 7% quarter-over-quarter. Value-Added Services revenue grew by an impressive 101% quarter-over-quarter, but decreased 13% year-over-year. Our core business developer subscription services gave a revenue of RMB 61.9 million, representing growth of 13% year-over-year and 8% quarter-over-quarter. The year-over-year revenue growth was mainly driven by increase in both customer number and ARPU. In this quarter, subscription revenue both for the RMB 60 million 1 quarter revenue mark and reached its highest level in history. Now it's time for what many of you have been waiting for, an update on our global flash product, EngageLab, which continued its remarkable growth trajectory quarter after quarter since it was launched. First, EngageLab's ARR has achieved a new and important milestone, USD 10 million as of December 2025. Following triple-digit growth in Q3, we record 186% year-over-year ARR growth this quarter. Secondly, we delivered another very strong quarter of EngageLab. Cumulative signed contract value amount to RMB 157 million by the end of Q4 of 2025. In Q4 alone, we signed up more than RMB 29 million worth of new contracts. This, in our view, is simply outstanding. We expect this revenue growth momentum to continue for the next 24 months. Thirdly, we secured new wins from global customers across all corners of the world. Our number of customers increased by 142% year-over-year to reaching 1,641. Our global go-to-market initiatives are proving highly effective in driving this growth. Fourthly, our EngageLab products and services are now sold to customers in more than 70 different countries and regions globally. We expanded our footprint into 18 new countries in Q4 alone. Ultimately, the rollout of EngageLab into global market has been a resounding success. Looking back to 2025, we are immensely pleased with the expansion of our global flash product. We have come a long way since we launched EngageLab in Q4 of 2022. In a nutshell, EngageLab provides a suite of products and services for omnichannel infrastructure, helping our customers to strengthen engagement with their users in an efficient and effective manner. The customers of EngageLab are from various industry verticals with no specific industry concentration risk. The very strong numbers we have recorded in 2025 have given us great confidence in the acceleration profit of this business. Historical 2025 numbers aside, in the beginning from 2026, we have seen healthy signs from the overseas markets in terms of potential needs and customers. Let me also touch on the excellent partners we have globally. As of December 2025, within our EngageLab ecosystem, we have 17 partners in different countries and regions. These partners are selected to strengthen, rigorous and often multistage process. We think that our representative in different markets, which means we have high expectation of the contribution from this partner in overseas market in the future. They are another important driver of our sustainable long-term growth. We will continue to work and engage with more local partners to better utilize their resource and local networks. Within subscription revenue, some of the notable wins in this quarter include but are not limited to Kimi large language model, J&T Express, Citibank and China Unicom. Value-Added Services revenue were RMB 14.2 million, up 101% quarter-over-quarter. The solid revenue quarter-over-quarter growth was mainly due to the significant increase in spend by advertisers. The traditional quarterly online shopping festival in Q4 also contributed to significant revenue growth sequentially. Now let me pass the call over to Shan-Nen, who will take you through the metrics of vertical applications and financial performance for this quarter. Take it away. Shan-Nen Bong: Thanks, Chris. And next, I'll go over the revenue for vertical application that includes financial risk management and market intelligence. Overall, Vertical Applications had a good quarter where revenue grew both year-over-year and quarter-over-quarter. And within vertical application, financial risk management recorded a strong 43% growth in revenue year-over-year and 12% quarter-over-quarter. Financial Risk Management delivered another excellent performance. We recorded robust revenue growth of 43% year-over-year and 11% quarter-over-quarter. Notably, this segment achieved revenue of more than RMB 22 million in each of the 4 quarters in 2025. In particular, the strong year-over-year performance was driven by impressive 20% in customer number growth and a 20% increase in ARPU. The customers that we signed up or renewed in Q4 include, but not limited to ChongXiing, Xiao, Chengduinhang and many more licensed credit or financial institutions throughout China. Market Intelligence revenue, on the other hand, decreased by 24% year-over-year and 3% quarter-over-quarter due to the continued weak market demand for Chinese APP data. This result is in line with our expectation. Next, I'll go over some of the profit and loss items. Our gross profit delivered another exceptional quarter, growing 23% year-over-year and 9% quarter-over-quarter. The RMB 69.7 million gross profit we had also was the highest gross profit recorded among any of the past 16 quarters. In this quarter, our revenue grew 13% year-over-year, yet our gross profit grew by 23% year-over-year. Notably, we saw this trend in Q3 as well. This tells a clear story. We are strengthening our ability to generate high-quality revenue with higher margins. Our strong gross profit number has proven instrumental in bringing us to a full year profitability in 2025. On net profit, after 3 consecutive profitable quarters, we have landed ourselves in a new territory, our first ever full year GAAP net profit for 2025. This is a great way for us to conclude our brilliant Q4 and full year 2025 story on a high note. On to operating expenses. Q4 operating expenses was at RMB 68.2 million, up 13% year-over-year and 6% quarter-over-quarter. Overall, we are pleased with the trending of OpEx to support revenue and profitability growth. I'll now dive deeper into the individual OpEx category. R&D expenses increased 16% year-over-year to RMB 28.3 million, mainly due to the higher staff costs and associated expenses. Technical service fee also contributed to the year-over-year increase in R&D expenses. Selling and marketing expenses increased by 16% as well year-over-year and to RMB 28.4 million, mainly due to the higher sales commission in line with the revenue growth and cash collection recorded in this quarter. Marketing expenses for investment in global business expansion also contributed to the year-over-year increase in SMS -- in selling and marketing expenses. G&A expenses remained flat at RMB 11.4 million, representing no change from the same quarter of last year. Next, I will share 3 very important KPIs that we closely monitor. Our net dollar retention rate, NDR, a commonly used KPI for SaaS companies stood at 103% for our core developer subscription business for the trailing 12-month period ended December 31, 2025. This is the second consecutive quarter where the NDR number has exceeded the 100% threshold. We are proud of this number as this demonstrates how our SaaS business model is widely accepted by the market. Customers have increased their spending on our platform over time. Secondly, another financial KPI for tracking the performance of SaaS company is the total deferred revenue. This represents cash collected in advance from customers for future contract performance, which exceeded the historical high we had last quarter and stood at RMB 178.7 million in Q4 of 2025. This historical high deferred revenue balance is a hallmark of high-quality, scalable business. It signifies strong customer loyalty, predictable future revenues, healthy cash flow and an effective sales strategies. Thirdly, we continue to maintain a healthy level of AR turnover days at 37 days. This number is simply fantastic. It shows we are collecting cash quickly and effectively. And this has really improved our financial liquidity while mitigating the risk of bad and doubtful debts. And there was no shortcut to achieving this. It was simply due to the result of our team's diligence, hard work and timely effort to engage with customers. On to the cash flow. We recorded yet another great number this quarter. For the quarter ended December 31, we recorded net operating activity cash inflow of RMB 35.1 million. This exceeds the last quarter and is now our best quarterly cash flow result since Q4 of 2020. Another metric to share with you, between the years, our cash and cash equivalent balance has increased by RMB 53.8 million. It represents a whopping 45% increase to RMB 173 million as of December 31, 2025. This reflects not only the significant step-up in our financial results, but also a meaningful improvement in the overall quality of our operations. Now let me take a few minutes here to recap. As you have heard Chris mention a year of pure brilliance at the beginning of this call. And throughout the entire 12 months of 2025, we have been operating under a high level of focus and rigor together with financial discipline. Our financial profile has fundamentally improved and moving in the right direction. And we closed a very strong and exceptional fiscal 2025. The numbers we have presented today speak for themselves. And this quarter, we achieved many historical milestones. Each one, a strong statement about the exceptional 2025 we have had and each one building momentum as we look forward to the next 12 months ahead of 2026. First, we achieved our very first full year GAAP net profit in history. Number two, the group quarterly revenue exceeded RMB 100 million mark, a historical first since we transitioned to the pure SaaS business model. Third, our core developer subscription business achieved a record of RMB 61.9 million in revenue this quarter, breaking through the RMB 60 million threshold for the first time. Our flagship product, EngageLab, continues to shine. Our EngageLab business reached another very important key milestone, ARR of USD 10 million in December 2025. This represents a stunning 186% of year-over-year growth. Number five, gross profit grew significantly at 23% year-over-year and the highest it has been for the past 16 quarters. Number six, operating activities brought in a net cash flow of RMB 35.1 million. Our net dollar retention, NDR, for core developer service surpassed 100%, reaching 103%. The 2025 numbers demonstrate our excellent execution. We have exceeded most, if not all, of our targets. With this in mind, Chris and I believe we are exceptionally well positioned to continue this momentum into 2026. Now let's turn to the business outlook. Based on the current available information, the company sees the 2026 full year revenue guidance to be in the range of RMB 450 million to RMB 480 million, representing a very solid and strong growth of 20% to 28% year-over-year compared to 2025. And the above outlook is based on current market conditions and reflects the company's current and preliminary estimate of the market and operating conditions and the customer demand, which are all subject to change. Lastly, before I conclude, I'll give a quick update on the share repurchase plan. In this quarter ended December 31, 2025, we repurchased 73,000 ADSs. Cumulatively, we have repurchased a total of 400,000 ADS since the start of our repurchase program. And this concludes our prepared remarks. We're happy to take your questions now. Operator, please proceed. Operator: [Operator Instructions] And our first question is going to come from Calvin Wong with Spica Capital. Calvin Wong: First of all, congrats to you guys for delivering a year of pure brilliant financials today. Both the Q4 and the full year 2025 numbers have been very, very impressive. One question for me, if I may. Can the management shed some light on the top 3 things that you have done well to deliver this set of such good financials. Shan-Nen Bong: Calvin, good to hear from you, and thanks for the kind words. Let me take this question. Yes, we are very proud of ourselves to be able to share such a wonderful set of financials earlier on during the call. And to get to where we are, it is by no means easy, and we work very hard and smart to navigate the volatile business environment globally. As on the 3 things that we have done well, let me have a go. First, it has to be the courage to venture outside our comfort zone. And looking back in 2022, when the idea of going overseas was first brought up by Chris as the next important strategic initiative for Aurora Mobile. At that time, I think we didn't have any single overseas employees nor did we have any partners outside of China. But then forward-looking vision was a brief one. So making -- I think making the right decision to go overseas would be my #1 thing that we have done right. If we did not make such brave or bold decision, we will not have this conversation today. And secondly, making the monumental shift of the product service offering outside of China is another game changer. We will not be as successful as we are today if we're simply making slip service of going overseas. Over the course of the past, I think, 2 to 3 or 3 to 4 years, we have made considerable amount of investment and resources to actually having a brand-new EngageLab product, specifically for our overseas market with its own distinct spec and features for global customers, along with the overseas data centers catering for the needs of our global customers. If you were lazy or took a shortcut of simply using what we had before in China for overseas market, it will not work. The third factor would be the commitment to excel throughout the organization to support this going overseas initiative that Chris brought up. When we started, there was no how to go overseas guide book to show us the way. We took the hard way by figuring out all ourselves and doing it all ourselves. I still remember at the early stage when we started EngageLab, Chris and I were standing at our booth in Singapore Tech Expo to introduce EngageLab and to answer questions from potential customers, and we have since come a long way. Just to recap, looking back, one, we made the right decision to venture overseas. Two, we make serious commitment in terms of investment in the right product offering. Third, the entire organization was in sync and aligned to this strategic initiative. And this took us back a little bit to the memory lane. I hope I answered your question, Calvin. Operator: And our next question will come from Jack Sun with Gelonghui Research. Jack Sun: I'm Jack Sun from Gelonghui Research. Congratulations to the management team on another quarter with good numbers. in particular, a full year GAAP net profit is a really great turning point. My question for the management is, how should we look at Aurora's financials for the first quarter of 2026 and beyond? Shan-Nen Bong: Jack, thanks for the question. And you're right, we have a great 2025 when we achieved our very first GAAP profit for the year. And equally important was the spectacular Q4 numbers that we have presented earlier today. And in Q4, our total revenue exceeded RMB 100 million and go through the revenue guidance we have provided in Q3 and marking the best quarter revenue in our history. And of course, you heard about the fact that our global flagship product, EngageLab continues its great acceleration path. All the KPIs we have achieved has done through meaningful and significant growth year-over-year and quarter-over-quarter, be it ARR, customer numbers, total contract value signed or revenue recognized, they just exceeded all our internal targets. And of course, all these were the fruit of a hard labor that we started 3 years back. Results like this will not happen overnight or over 1 quarter. And we sowed the seeds of EngageLab growth when we committed to venture overseas in late 2022. We invested the appropriate resources in terms of capital and infrastructure with a balance of ensuring expansion without blinding spending for sake of spending. And now that we have laid a solid foundation for EngageLab, the growth prospect is very certain. We have presented and delivered such sequential growth without fear in the past. If I may summarize on how one should view Aurora Mobile, you can think of our business as, one, we have proven to be able to achieve full year net profit with positive cash inflow. Two, domestic business continued its solid and relatively stable growth. Three, our global flagship product, EngageLab will provide the lion's share of the growth momentum for the next 3 years. Four, our AI strategy will provide the next phase of growth momentum. And thus, we -- management as a whole are very confident on the business prospects in 2026 and beyond. And I hope this answers your question, Jack. Operator: And I'm showing no further questions at this time. I would now like to turn the call back over to Christian for closing remarks. Christian Arnell: Thank you, everyone, for joining the call tonight. If you have any further questions or comments, please don't hesitate to reach out to the Jiguang IR team. This concludes the call. Have a great evening or morning. Thank you. Operator: This does conclude the conference call. Thank you for participating, and you may now disconnect.
Operator: Greetings, and welcome to HF Foods Group Inc. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jon DeDomenico with ICR. Thank you, Jon. You may begin. Jon DeDomenico: Hello, everyone. Welcome to HF Foods Group Inc.'s 2025 Earnings Conference Call. Joining me on today's call are Felix Lin, the company's President and Chief Executive Officer, and Paul McGarry, the company's Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on management's current beliefs and expectations about future events, which are subject to several known and unknown risks and uncertainties. If you refer to HF Foods Group Inc.'s earnings release, as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements. The company undertakes no obligation to update or revise these forward-looking statements in the future. In these remarks, the company will make several references to non-GAAP financial measures, including adjusted EBITDA and non-GAAP diluted earnings per share. We believe that these measures provide investors with a useful perspective on the underlying growth trend of the business and have included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. I will now turn the call over to Felix. Felix Lin: Hello, everyone. Welcome to HF Foods Group Inc.'s 2025 earnings call. I will provide a business update, and Paul will speak to our 2025 financial results. Then we will open up the line for Q&A. It is no secret that 2025 brought headwinds for the broader foodservice industry in terms of tariff pressure and lower foot traffic. But against this backdrop, we drove meaningful continuous momentum for our business. Net revenue increased 2.2% year over year to $1.23 billion, and gross profit increased 1.2% to $207.6 million. Also notably, adjusted EBITDA increased 6.9% year over year. We made meaningful progress on our long-term transformation plan with respect to sales operations, digital infrastructure, and facilities upgrades. On sales operation, we have consolidated two sales call center operations into one as of late December 2025. This consolidation provides us better control over the overall sales process and improved customer service while maintaining the distinct connection we have with our customers through our understanding of their business language and product needs. This will reduce costs while further strengthening our competitive positioning. On digital transformation, we completed the full ERP implementation across all of our distribution centers. The new system will enable us to achieve higher levels of purchasing and operational efficiencies over time. I would like to note that as part of this implementation, we re-categorized many of our SKUs, which drives some variability in our year-over-year sales by category. You will see clean comparisons once we lap the implementation in the second half of 2026. I am also happy to announce that with the implementation of the new ERP system, we have fully remediated IT general controls-related deficiencies as of year-end 2025. This is a significant milestone. On facilities, the renovation of our Charlotte location is largely complete with final permits imminent. We expect Charlotte to be operational in 2026, which will shorten our seafood distribution routes in the Southeast. Phase one construction of our new state-of-the-art Atlanta DC has been completed, becoming operational in January 2026. We plan to kick off phase two cold storage capacity expansion in Atlanta to launch in 2026. Once complete, our cold storage capacity in the Atlanta market will have almost doubled, expanding from 10,000 square feet to 20,000 square feet. We see cross-selling as a major organic growth playbook and expect the Atlanta facility to be a cornerstone of our cross-selling strategy in the Southeast in the future. Between the Southeast and Midwest, there is several hundred million dollars worth of organic growth opportunity as we continue to invest and expand capacity. In September, we announced the acquisition of our Chicago warehouse. This strategic acquisition advances HF Foods Group Inc.'s ongoing transformation plan to improve operational efficiency, reduce costs, and strengthen organic growth through cross-selling opportunities. Acquiring the facility enables us to exit the lease agreement early, improve operating expense, and invest to grow additional capacity and drive consolidation opportunities. These exciting infrastructure investments reflect our ongoing commitment to optimizing our distribution network and creating a stronger foundation for sustainable growth. Based on current trends, we expect 2026 to be like 2025, with low single-digit growth on the top line as well as the bottom line for both adjusted EBITDA and gross profit. This also reflects our strategy to ramp up cross-selling opportunities over time, focusing on increasing our share of customers’ wallet size and combating competitive pricing pressure in the short term. While we continue to navigate macro headwinds, including tariff pressures and shifts in consumer spending behaviors, our transformation initiatives are paving the way for continued growth and improvement. We remain extremely confident in our long-term growth strategy and are committed to our capital investment plans as we continue our growth momentum in 2026 and beyond. M&A remains a core pillar of our growth strategy. HF Foods Group Inc. is the only scale foodservice provider in the Asian market in the United States, and we believe we are the strategic acquirer of choice within our space. We are focused on expanding our geographic footprint in high-potential markets, capturing operational synergy, broadening our customer base, and enhancing our product and service capabilities. We remain disciplined but optimistic about M&A opportunities in 2026 and are actively evaluating opportunities for potential sellers who understand our unique position. We believe our proven abilities to successfully navigate the tariff landscape position us uniquely to identify and execute attractive tuck-in acquisitions that will benefit from our operational expertise and scale. I want to emphasize the significant runway ahead of us. We operate in a $50 billion addressable market, and at just over a billion dollars in net revenue, we are the largest player in the Asian specialty space. No one, whether larger or smaller competitors, is better positioned than HF Foods Group Inc. to capture this opportunity in the coming years. Now over to you, Paul, our CFO, to walk you through more detail of the financial performance for the year. Paul McGarry: Thanks, Felix. I will now review our results for the year ended 12/31/2025 versus 2024. Net revenue for the year increased 2.2% to $1.23 billion from $1.20 billion in the prior year. The increase was primarily attributable to volume growth and pricing improvement in seafood and meat and poultry, and volume growth in commodity, partially offset by volume decreases within other categories. Gross profit increased by 1.2% to $207.6 million for the year compared to $205.2 million in 2024. The increase was attributable to an increase in net revenue, partially offset by increased costs. Gross profit margin decreased slightly to 16.9% compared to 17.1% in 2024. Distribution, selling, and administrative, or DS&A, expenses increased by $3.7 million to $201.8 million for the year, primarily due to increases in depreciation, occupancy, and nonrecurring transformation expenses, partially offset by a decrease in professional fees. DS&A expenses as a percentage of net revenue remained relatively consistent at 16.4% in 2025, compared to 16.5% in the prior year. Adjusted EBITDA increased 6.9% to $45 million for the year compared to $42 million in 2024. Total interest expense increased slightly to $11.5 million in 2025 compared to $11.4 million in the prior year. Net loss attributable to HF Foods Group Inc. was $38.8 million compared to a net loss of $48.5 million in 2024. The year-over-year improvement was primarily driven by a lower goodwill impairment charge and improved operating results. These favorable items were partially offset by the absence of the prior year gain on lease guarantee liability termination and by the year-over-year change in fair value of interest rate swaps. Importantly, following the 2025 impairment, we have no remaining goodwill, so this item will not affect results going forward. Adjusted net income attributable to HF Foods Group Inc. increased $2.9 million, or 20.9%, to $16.9 million compared to $14 million in the prior year period. Loss per share improved to $0.73 compared to a loss of $0.92 in the prior year period. Adjusted earnings per share increased to $0.32 compared to $0.26 in the prior year period. To summarize, 2025 was a year of steady progress in a challenging operating environment. We delivered year-over-year growth in net revenue, expanded adjusted EBITDA, and continued to invest in the infrastructure and systems that support more scalable, efficient execution going forward. Importantly, we finished the year having completed our ERP rollout across the network and remediated our IT general control deficiencies while also advancing key facility initiatives like Atlanta and Charlotte and positioning the business for improved operating leverage. As we move into 2026, we remain focused on disciplined execution, driving operational efficiency, supporting organic growth through cross-selling and network optimization, and maintaining prudent capital deployment. With the transformation foundation now largely in place, we believe we are well positioned to sustain momentum while remaining selective and strategic in pursuing tuck-in M&A that strengthens our footprint and capabilities. I will now hand it back to Felix for closing remarks. Felix Lin: Thanks, Paul. As we look ahead to 2026 and beyond, I want to emphasize our commitment to the comprehensive transformation initiatives that are reshaping HF Foods Group Inc. 2025 was a year of strategic investment for HF Foods Group Inc., and the investments we are making in our facilities, digital infrastructure, and operations will establish a strong foundation for our next phase of growth. While short-term uncertainties persist, we remain focused on our long-term strategic objectives. Our investments in digital transformation and infrastructure are strategically designed to drive organic growth through cross-selling opportunities while positioning us to complement this expansion with targeted M&A initiatives. Our key competitive advantages stem from the growing demand for authentic Asian cuisine and our unmatched position as a leading nationwide Asian specialty distributor. We are methodically building the infrastructure, systems, and capabilities needed to fully capitalize on these strategic advantages. As we move forward, we will continue to identify and implement additional efficiency measures while maintaining our commitment to service excellence and sustainable growth. Thank you for your continued support as we execute our strategic transformation. We look forward to sharing our progress with you on our next call. I will now hand over to the operator for live Q&A. Operator: Thank you. We will now open for questions. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment while we poll for questions. Our first question comes from the line of Daniel Scott Harriman with Sidoti & Company. Please proceed. Daniel Scott Harriman: Hey, guys. Good afternoon. Thank you for taking my questions. And Paul, congratulations on the official title. Felix, congratulations on great execution for the year despite, you know, the noticeable headwinds. But I am just curious to start off, moving beyond 2025, can you talk a little bit about the biggest opportunities you see to drive incremental organic growth, particularly around cross-selling and expanding product availability across the customer base? And then secondly, just curious to hear a little bit more about how the operational initiatives implemented in 2025 are beginning to impact the day-to-day execution across the business. Felix Lin: Hi, Daniel. I appreciate the question. I think the biggest opportunity is going to be around cross-selling with respect to the Southeast. We just moved into our new facility that is effectively twice as big as the older facility in Atlanta, and we started to acquire some new accounts within the region. But I think we are still going through a ramp-up phase here. As I noted earlier, it is going to take a little bit of time to complete ramp-up of the volume and utilize the space, and second phase of our freezer construction is going to start here in 2026. So likely, it is going to be the second half before we see some meaningful incremental frozen seafood volume come into play for the Southeast market for us. And then fast forward, we also announced the acquisition of our Chicago facility, so the investments going in in 2026 as well are prepping us for meaningful cross-selling organic growth in the Midwest region in 2027 and beyond. Operator: Thank you. Our next question comes from the line of William Joseph Kirk with ROTH Capital Partners. Please proceed. Nick (for William Kirk, ROTH Capital Partners): Hey, this is Nick on for Bill. Thanks for taking the questions. First from me on February traffic, it was weaker last year. Just wondering if you could comment on the year-over-year change you saw this year just lapping that softer comp, and whether you have seen more or less traffic year to date would also be helpful. Thank you. Felix Lin: Yes, sure. With respect to February and Q1, obviously, we are still in the middle of it, but I do see that there have been a lot of good initiatives put in place, specifically even starting in late Q3 in 2025. We have been working with a handful of strategic vendors to run promotional campaigns where the vendors are the ones that are providing initiatives on the table for our customers and our sales team to go out and drive new product growth or push out additional volume. So that has been very impactful for us in the second half of 2025, and we are seeing that in the first quarter of the year as well. So I do see perhaps there is going to be some meaningful uptick from a volume standpoint so far in Q1 versus 2025. Nick (for William Kirk, ROTH Capital Partners): Understood. I appreciate that. Second for me on the IEPA tariffs, do you have an estimate as to what you paid? Are you taking any action to get that money back? And what would you do with that capital if you did manage to get any capital back there? Thank you. Felix Lin: Yes. I think it is still too early to say exactly how much refund is going to be available. As you might recall, not 100% of the tariffs were part of the IEPA. There were some other tariff measures that the administration had put in place last year, and it is also a reflection of the industry that we are in. Largely, the supplier network, the supply chain itself, is made up of brokers. And in the past year, even prior to Liberation Day, we had really effectively negotiated with a large number of our overseas vendors for them to absorb quite a bit of the tariff impact. So we are still assessing the situation and keeping it very, very close. I think in the coming months here, perhaps in the next quarterly earnings call, there might be a little bit more information for us to offer. Nick (for William Kirk, ROTH Capital Partners): Great. That is it for me. I will pass it on. Thank you. Operator: Thank you. There are no further questions at this time. I would like to turn the call back over to Felix for any closing remarks. Felix Lin: Overall, I think 2025 was a great year of strategic investment for the company, and we made some pretty good strides here in terms of our overall three-to-five-year transformation plan. So we look forward to 2026. 2026 is going to be a continuation of the momentum that we have built on 2025 results. And again, M&A is going to be a huge part of our business, so that is where we are going to spend a lot of our time, thoroughly evaluating all the inbound calls that we have been getting on M&A and making some impact there, and then at the same time, continuing to improve our operational efficiency. We appreciate everyone continuing to follow the HF Foods Group Inc. story and the support, and look forward to updating everyone here in the coming quarters. Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good afternoon, ladies and gentlemen. Thank you for joining us today. Welcome to The Arena Group Holdings, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. I would now like to turn the conference over to Morgan Fitzgerald, Investor Relations, Social Media. Ms. Fitzgerald, you may begin the conference. Thank you. Morgan Fitzgerald: Hosting the call today are Paul Edmondson, Chief Executive Officer, and Geoffrey Wait, Principal Financial Officer. Before we begin, I would like to note that some of the comments made during this call may include forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, future revenues, market growth, capital requirements, product introductions and expansion plans, and the adequacy of the company's funding. The company cautions investors that any forward-looking statements made in this call, or that the company may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to, the company. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond the company's control or ability to predict. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. The company disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. In addition, reference will be made to the non-GAAP financial measure, adjusted EBITDA. Information regarding reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon and can also be found on our Investor Relations website at investors.thearenagroup.net. With that, I would like to turn the call over to CEO, Paul Edmondson. Paul, the call is yours. Paul Edmondson: Thank you for joining us today to discuss our results from the fourth quarter and full fiscal year 2025. We are proud to report our 2025 results with $286,000,000 of income from continuing operations. We reduced our debt by $23,500,000 while our cash balance grew nearly $6,000,000 to $10,300,000. Before we get into the details, I want to highlight the broader industry dynamics that have shaped the digital publishing landscape. The recent search algorithm updates have introduced fluctuations in traffic patterns across the digital media industry, impacting not only The Arena Group Holdings, Inc., but virtually all major publishers. We view these changes favorably as a catalyst for innovation and growth. We believe our team has responded with agility and determination, implementing robust strategies to optimize our content for the evolving landscape while simultaneously accelerating our efforts to diversify revenue streams. We are actively expanding our direct audience engagement, strengthening partnerships, and investing in alternative channels that are less reliant on algorithmically driven traffic. These initiatives are already yielding positive momentum, and we expect them to drive sustainable growth going forward. We are more confident than ever in our ability to outperform the market. Our disciplined operational model, ongoing cost optimization, and strategic investments in technology and product have positioned us to capitalize on emerging opportunities. We believe our diversified business model not only mitigates risk, but also sets the stage for long-term value creation. As the industry evolves, The Arena Group Holdings, Inc. stands ready to lead, innovate, and deliver exceptional results for our shareholders. Now, Geoffrey Wait, our Principal Financial Officer, will walk you through our financial results from Q4 and the 2025 fiscal year. Geoffrey Wait: Thanks, Paul, and good afternoon, everyone. Revenue was $28,200,000 in 2025 compared to $36,200,000 in 2024. Q4 2025 revenue was impacted by extensive user experience testing impacting ads and the ongoing traffic fluctuations. Our net income this quarter was $5,300,000, or 18.8% of revenue, compared to $6,900,000, or 19.1% of revenue, in the same period a year ago. Adjusted EBITDA was $10,100,000, or 35.8% of revenue, virtually unchanged from the EBITDA margin in Q4 2024. Our excellent margin retention reflects the efficiency of our entrepreneurial publishing model and variable cost structure and our ability to drive profit across a variety of traffic scenarios. This profit performance enabled us to generate $13,100,000 of cash from operating activities and accelerate momentum on our debt reduction initiatives through a $13,000,000 repayment of our term loan made in 2025. Overall, 2025 proved to be transformation in terms of our operations and results. Full-year revenue for fiscal 2025 was $134,800,000 compared to $125,900,000 in 2024. Non-advertising revenue increased more than $21,000,000 over 2024 as a result of our continued focus on reducing our reliance on external traffic referral sources. Advertising revenue represented just 64% of our total revenue in 2025 compared to 74% in 2024. Additionally, income from continuing operations was $28,600,000 for the year, up from a loss of $7,700,000 in FY 2024, and net income was $124,900,000 in 2025, including income from discontinued operations of $96,300,000. This is compared to a loss of $100,700,000 in 2024, including a loss from discontinued operations of $93,000,000. Adjusted EBITDA improved to $51,500,000, or 38.2% of revenue, in 2025 compared to $27,000,000, or 21.4% of revenue, in 2024. These results reflect the successful execution of our strategic initiatives to diversify revenue and optimize costs. By scaling our entrepreneurial publishing model and emphasizing high-margin non-advertising revenue streams, we have fundamentally reshaped our profitability profile. We believe this transformation demonstrates our ability to adapt to industry changes and positions us for continued financial strength and resilience. I would also like to highlight the continued improvements on our balance sheet. Debt reduction was a key focus throughout 2025, and we repaid $23,500,000 in principal between our revolver and term loan, and we also increased our cash balance by $6,000,000 to $10,300,000. Despite the industry fluctuations, we remain confident in our ability to generate positive cash flow in 2026. With that, I will turn the call back over to Paul to discuss our operations in more detail. Paul Edmondson: Thanks, Jeff. One key detail to note is our continued evolution, not only as a publisher, but in our broader identity. We are no longer just a publishing company. We are a brand, data, and IP company. With the addition of ShopHQ's first-party customer data, combined with the considerable reach of the brands, like Parade on the Street, we are creating a closed-loop ecosystem. We can identify high-intent audiences and serve them products directly with our content. We are using data signals from our audiences across our network to inform the types of products we offer on ShopHQ, so it is truly a flywheel to convert our readers to shoppers. ShopHQ has been a vital piece of the content-to-commerce puzzle. Additionally, following the October acquisition of Linde Sports, the digital platform was successfully relaunched, contributing to a broader sports ecosystem and immediate gains in high-intent sports betting and preview content. Not only do we have intentional content across our various properties, but the launch of Encore has united first-party data across all 40-plus brands, connecting user behavior directly to commerce outcomes and providing advertisers with high-conversion, brand-safe inventory. Looking forward to 2026, we remain focused on diversifying our revenue, paying down debt, and maintaining a disciplined approach to capital management, including M&A, in order to remain profitable and continue our growth trajectory throughout the year and thereafter. We truly believe the future is bright for The Arena Group Holdings, Inc., and are excited to continue our growth story. With that, I will turn the call back to the operator for Q&A. Thank you. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 2 to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Ryan Myers with Lake Street Capital. Please proceed with your question. Ryan Myers: Hey, guys. Thanks for taking my questions. First one for me here, I know it is difficult to predict, just given some of the traffic volatility that you have seen. But can you maybe talk about what you have seen so far here in the '6? And then how you guys are thinking about that through the rest of this year, and maybe how we should be thinking about that as well? Paul Edmondson: Hey, Ryan. This is Paul. Thanks for the question there. Yes. So traffic and those various sources of algorithmic audience have been more volatile. There have been more what we call core updates, or however they get announced online through the various sources. We have seen a real mix. Some of the properties are doing really well. Other ones are seeing some more of the volatility that comes with it. We feel like right now, the base level in Q1 is going to be fairly—we feel like that is our base for how we are thinking about the business going forward. It is always hard to predict exactly what is going to happen, but we do really focus on what we control. We run a lot of continued tests, focus on the monetization, and really have kept a lean cost structure so we can adapt to pretty much any environment as it comes. Ryan Myers: Okay. Got it. And then that sort of leads me into my next question. Obviously, nice to see the margins hold up despite where the revenue is coming in at. But how should we think about where you expect the margins to trend here in 2026 as you invest in some of these other non-advertising revenue line items? Does that change the margin structure at all? Any commentary on how you are thinking about that in '26 would be helpful. Geoffrey Wait: Hi, Ryan. This is Jeff. Thanks for that question. So as we think about moving into 2026 and beyond, as I mentioned in the call, we have reduced our reliance on advertising revenues from 74% down to 64%. Our intention in 2026 is to continue driving that number down, and we would like to get it below 50%. As we do that, I do expect some favorable impact to our margin. But also, as our ShopHQ business grows, being a commercial business where we provide inventory, that has a little bit of a different margin profile as well. So overall, I expect those two factors to offset a little bit and intend to deliver a similar margin profile to what we have seen in 2025. Ryan Myers: Okay. Great. Thanks for taking my questions, guys. Operator: Thank you. Our next question comes from the line of Jonathan Old with Longmeadow Investors. Please proceed with your question. Jonathan Old: Thanks, gentlemen. Appreciate the call. I am curious if you are still seeing maybe an acquisition or two a quarter. Does that cadence still hold, or are the internal dynamics that you are focused on taking priority? Geoffrey Wait: Thanks, Jonathan. That is another good question. As we think about capital allocation as we continue into 2026, in 2025, we made a lot of progress on the debt and paying down the debt. In 2026, we want to focus on accelerating the growth of the company. So in order to do that, I do anticipate we will continue at a one to two tuck-in media acquisition per quarter cadence as we have in the past. But we are also interested in exploring other opportunities as well that will especially speed up the changes I have talked about in moving from an advertising revenue-only business to an ad revenue supported by other revenue streams business. Jonathan Old: Okay. And I assume you are still under the debt structure. Stock buybacks are on the back burner until you get—maybe you can update us on where a refinancing might stand. Geoffrey Wait: Yes, it is a great question. This all ties together into our general approach to capital allocation. We announced our share repurchase program in July, and we have not yet completed any share repurchases. In advance of completing a debt refinance, we believe the most prudent use of our capital has been to do value-add M&A as well as to reduce our debt profile, and that is what you saw us do throughout 2025. We do see asset prices in our sector at favorable levels where we believe we can do value-accretive M&A that generates significant long-term returns for the company and for our shareholders. We want to maintain some dry powder and balance sheet flexibility to act on those opportunities as they come up in the market. So a share repurchase remains an important tool in our toolbox, but I do think there are a few other things that we want to prioritize first. Jonathan Old: Got it. What is your expectation, if you have any, on the timing of the refinancing, or do you have no rush at this point? Geoffrey Wait: We continue to— in 2025, we made a great deal of progress solidifying our financial position. We grew earnings; we reduced our leverage. Based on our full-year numbers, we are below two times. This gives us a pretty good level of confidence that we are refinanceable in the current market. We have had several productive conversations over the last few months, but we are being intentionally disciplined. We do not want to close the first deal that comes to us; we want to secure the right deal. Specifically, we are looking for a solution that gives us long-term operational flexibility, and we are focused on quality and fit over speed. I do not have a specific timeline to share right now, but we will continue to provide further updates as we move towards the definitive agreement that aligns with our strategic goals. Jonathan Old: Great. Thanks very much. I appreciate the color. Operator: Thank you. With that, ladies and gentlemen, that does conclude our question-and-answer session. I would now like to turn the floor back over to Paul Edmondson for closing remarks. Paul Edmondson: Thank you. Thank you, everybody, for joining our call today. We appreciate everybody tuning in, and we look forward to giving updates for the full 2026 and to a good, strong year. Thank you. Operator: With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time. Have a wonderful day.
Operator: Greetings. Welcome to the RF Industries, Ltd. First Quarter Fiscal 2026 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 conference, please press 0 on your telephone keypad. As a reminder, this conference call is being recorded. Now I would like to turn the call over to our host, Donni Case, Investor Relations. Please go ahead. Donni Case: Thank you, Tom, and good afternoon, everyone, and welcome to the RF Industries, Ltd. First Quarter Fiscal 2026 earnings conference call. With me today are RF Industries, Ltd.’s Chief Executive Officer, Rob Dawson; President and COO, Ray Bibisi; and CFO, Peter Yin. We issued our press release after the market today, and that release is available on our website at rfindustries.com. I want to remind everyone that during today's call, management will be making forward-looking statements that involve risks and uncertainties. Please note that information on this call today may constitute forward-looking statements under the Securities Exchange laws. When used, the words “anticipate,” “believe,” “expect,” “intend,” “future,” and other similar expressions identify forward-looking statements. These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties. Actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include the risks and uncertainties discussed in the company's reports on Form 10-K and 10-Q and other filings with the SEC. RF Industries, Ltd. undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout the call, we will be discussing certain non-GAAP financial measures. Today's earnings release and related Current Report on Form 8-Ks describe the differences between our GAAP and non-GAAP reporting. With that, I will turn the conference over to Rob Dawson, Chief Executive Officer. Go ahead, Rob. Rob Dawson: Thank you, Donni. Good afternoon, everyone, and welcome to our First Quarter Fiscal 2026 conference call. I will lead off with highlights from the quarter, Ray will provide a progress report on sales and operations, and Peter will cover our financial results before we open the call to your questions. I am pleased to report that we are off to a great start in fiscal 2026. Net sales were $19 million in the quarter. This was just shy of our record first quarter last year in absolute numbers, but for totally different reasons. Last year in fiscal Q1, we had a large project that created a welcome anomaly and produced increased sales in what is historically a seasonally softer period. Net sales for Q1 this year, however, reflected a far greater diversity of products, customers, and end markets, which I believe will set the stage for upcoming quarters. That said, for me, the big takeaway for this quarter was the meaningful expansion in profitability. Compared to the first quarter last year with similar net sales, gross profit margin improved 250 basis points to 32.3%. Operating income tripled to $177,000, and adjusted EBITDA increased—would not be positive if I said decreased. Increased—EBITDA increased 22% to nearly $1.1 million. To our long-term shareholders, thank you for your patience and confidence we would deliver on what we promised: a more diversified sales base and increased profits from our significant operating leverage. What is exciting to me is that our entire team is feeling the momentum. And in our business, momentum does not just happen. It is earned when strategy and execution move together in lockstep. Over the past few years, we have worked hard to reach this inflection point where we have a clear line of sight to scale both our business and profitability. As you saw in our earnings press release, I would also like to note that momentum has produced a huge increase in our backlog, which currently stands at $18.6 million. That is an increase of over $6 million since we last reported earnings in mid-January when the backlog was $12.4 million. Now I will share specifics on why our business model and strategy are working, and why we believe it is sustainable. First, we have worked our way up the food chain with the largest communications companies in the country. We are no longer just a vendor, but a solutions provider with a portfolio of technology-forward products and solutions that address many applications within telecom. This expanded access and our high-value product portfolio led to new opportunities that in some cases fall squarely into the operating budgets versus the CapEx spend. This makes us far less reliant on the cyclical Tier 1 wireless capital spending and aligns RF Industries, Ltd. to participate more consistently in the year-round maintenance and replacement schedule that is critical to maintaining network quality and integrity. Next, our state-of-the-art systems like direct air cooling and small cell are gaining traction. Our DAS systems are especially adaptable to many applications in new end markets. Equipment at the edges of networks requires temperature control to operate efficiently, and our DAC’s ability to lower energy costs by up to 75% while being rugged and easy to maintain delivers a compelling customer proposition. We are serving an impressive and growing customer list here. These solutions have opened doors to many new customers and markets. We are now reinforcing our presence in new verticals such as wireline, cable, and edge data centers. We believe that we have identified a significant unmet need at the edge of the network, close to where data is generated and consumed. While most know that hyperscale data centers require massive cooling systems, we believe that the small buildings, cabinets, enclosures at the edges of networks are just as important, and our DAC systems provide a powerful and cost-efficient solution. Additionally, our custom cabling solutions team is engineering, producing, and delivering high-quality mission-critical solutions to customers across several markets including industrial, communications, and aerospace, where we continue to win repeat orders from a leader in this market. The strong performance and commitment to innovation and quality from our team continues to add to our credibility and reputation. We refined our go-to-market strategy to specifically target new markets for RF Industries, Ltd. Our sales team is doing a terrific job of developing relationships in our target markets that have opened doors and elevated our opportunity set. Our customer roster is amazing. It includes a host of well-known names. For competitive reasons, we generally do not name customers. But our client list certainly makes the team proud. Ray will talk more about our go-to-market progress and operations in his remarks shortly. Structurally, our company is in great shape. Our team has done an outstanding job in diversifying our supply chain with redundant manufacturing sources, both international and domestic, that feed into our U.S. production operations. This allows us to flex up for more demand without incurring any material increase in overhead or CapEx. This capital-light approach has been a big factor in increasing our operating leverage. Financially, RF Industries, Ltd. is also in good shape. We significantly improved our free cash flow over the past several quarters, reflecting our operational execution, margin expansion, and tighter capital discipline. Last year, we renegotiated our revolving credit facility with improved terms, which should drive significant annual savings. All of this has allowed us to greatly reduce our net debt. While fiscal 2025 was a breakout year for RF Industries, Ltd., our team is even more excited about 2026. We feel confident that we can execute against our strategic priorities and, similar to the trajectory in 2025 and supported by the large increase in our backlog, with what we know today, we expect revenue growth to accelerate in the back half of the year. Finally, I want to thank the RF Industries, Ltd. team that continues to execute and deliver great results. Thank you to our customers for allowing us to partner with you, and to our shareholders for your support. With that, I will turn the call over to Ray. Ray Bibisi: Good afternoon, everyone. As Rob highlighted, the momentum we are feeling across this organization is real, and it is earned. I would like to take a few minutes to walk you through how we are actively managing the key levers across our business to drive growth, reduce vulnerability, and create lasting shareholder value. I will take you through sales, product management, engineering, and operations, and the levers driving our strategy forward. Let me begin with the commercial momentum and market position. With the focus and execution of our team, we can maintain momentum even when specific opportunities take longer to close—something that in prior years could have had a significant impact on quarterly results. This resilience comes directly from the diversification we have deliberately built across markets, product areas, and customers, which allows us to manage possible softness or delays in one area with strength in others. Revenue and bookings are, without question, the scoreboard, but they do not tell the whole story. Equally important is how we achieve these results. A big part of that answer is diversification. As Rob mentioned, this diversification is real, and it is working. Today, we are actively serving and winning business across aerospace, telecommunication, industrial, medical, data centers, and government and military markets, amongst others. And the strength of that diversification showed in Q1, where strong performance in our custom cable segment helped offset timing delays in integrated systems. This is not accidental. It is the result of our strategic and deliberate effort to broaden RF Industries, Ltd.’s addressable market and reduce concentration risk. We are also seeing a resurgence in previously delayed opportunities, which is strengthening both our pipeline and our backlog. This improved visibility gives us real confidence heading into upcoming quarters and positions us well to capture growth, manage risk, and continue building sustained shareholder value. Turning to engineering and product management, this is an area of significant focus and investment for us, and one where I believe the work we are doing today will be a key differentiator for RF Industries, Ltd. going forward. We remain focused on delivering high-value, high-quality solutions that address evolving customer needs. By streamlining our development process and prioritizing high-impact projects, we are driving towards faster time to market and more predictable revenue streams. Close collaboration between product management, engineering, and sales ensures that our innovation aligns tightly with market demands. This allows us to respond quickly to shifts in customer requirements and capture new opportunities as they emerge. During the quarter, we continued to advance our new product roadmap through development, quality qualification, and gate stages. Our work on small cell configurations resulted in meaningful bookings this quarter, demonstrating how close collaboration between engineering, product management, and sales translates into revenue. Our engineering team is building solutions designed not just for today's requirements, but for where our customers are headed. That forward-looking mindset is what we believe will make RF Industries, Ltd. the trusted partner of choice across the markets that we serve. A good example of this is our thermal cooling solutions, which are gaining traction in edge data center and industrial applications. This demonstrates our ability to anticipate customer needs and leverage core capabilities across diverse end markets. Operations is a key differentiator for us, and I want to be clear about how seriously we take it. Across all areas of our business, we are enhancing process efficiency, improving visibility, and reinforcing execution discipline. This ensures that we can scale quickly, maintain consistent quality, and protect margins as demand grows. Aligning our resources tightly with our strategic priorities creates the foundation for predictable, sustainable performance even as we manage multiple moving parts across the portfolio. On the supply chain side, we have taken deliberate steps to strengthen supplier relationships, improve inventory position, and reduce single-source dependencies where possible. And as the tariff environment continues to evolve, be assured that we have a close eye on the impact and continue to proactively take steps to mitigate risk. This is not new work; it is an effort we have been advancing for some time. In this quarter alone, we continued the ongoing strategic qualification of alternative suppliers in different regions and the proactive repositioning of our supply chain to reduce exposure. Based on this, we executed supplier transitions of certain key component categories. We will continue this disciplined approach as the trade environment evolves, all aimed at making our operation more resilient and our customer commitments more reliable. These are not one-time actions. They reflect a sustained commitment to running a leaner, more agile organization. Collectively, the levers we are pulling across the organization—diversified revenue streams, disciplined operations, and market-driven innovation—work together to reduce vulnerability and create opportunity. This approach allows us to manage risk while capitalizing on new opportunities. Importantly, it positions the company to convert pipeline and backlog momentum into measurable performance gains without compromising margin or operational integrity. In closing, I would categorize Q1 2026 as a quarter of meaningful progress made during a period when customers and markets were still settling into the new year. We are executing with discipline while preparing to capture the opportunities ahead. Our diversified portfolio, operational focus, and innovation mindset create a unique platform for growth, reducing vulnerability, and delivering shareholder value. We are confident in our ability to deliver results and unlock the full potential of our business across all segments. I will now turn the call over to Peter to walk you through the financial results. Peter? Peter Yin: Thank you, Ray, and good afternoon, everyone. As Rob mentioned, we are pleased with our first quarter results. First quarter sales were relatively flat at $19 million compared to $19.2 million year over year. As expected, sales were down 16% from $22.7 million on a sequential basis, reflecting our seasonally slow first quarter. Our gross profit margin increased 250 basis points to 32.3% from 29.8% year over year. This improvement reflected our team's strong execution to drive price realization and operational efficiencies while also focusing on cost control. As a result of this, we see improved operating income, consolidated net loss, non-GAAP net income, and adjusted EBITDA. First quarter operating income was $177,000, up from the $56,000 we reported last year. First quarter consolidated net loss was $50,000, or $0.00 per diluted share, and our non-GAAP net income was $659,000, or $0.06 per diluted share. This compares to a net loss of $245,000, or $0.02 per diluted share, and a non-GAAP net income of $397,000, or $0.04 per diluted share in 2025. First quarter adjusted EBITDA was $1.1 million, or 5.6% of net sales, compared to adjusted EBITDA of $867,000, or 4.5% of net sales in Q1 2025. We continue our focus on delivering adjusted EBITDA of 10% or greater as a percentage of net sales. Moving to the balance sheet. As of 01/31/2026, our balance sheet remains healthy with a total of $5,100,000 of cash and cash equivalents and working capital of $14,600,000. Our current ratio was approximately 1.8 to 1 with current assets of $33,000,000 and current liabilities of $18,400,000. As of 01/31/2026, we had borrowed $7,100,000 from our revolving credit facility as we continue to manage our working capital to strengthen our liquidity and overall capital position. Our net debt was reduced by $4,800,000 compared to Q1 2025 and down $744,000 compared to Q4 2025. Our inventory remained relatively consistent at $13,800,000 compared to $13,700,000 last year, reflecting a prudent approach to inventory management that balances discipline with customer demand. Moving on to our backlog. As of January 31, our backlog stood at $14,400,000 on bookings of $17,900,000. As of today, our backlog currently stands at $18,600,000. While we are pleased with the increase since quarter end, as I have mentioned before, our backlog is a snapshot in time and it can vary based on when orders are received and when orders are fulfilled. We view backlog as a general gauge of health. We know that it can swing significantly between reporting periods and, therefore, may not accurately indicate our near-term sales outlook. Overall, we are excited to start fiscal 2026 with an upbeat quarter that builds upon the operational momentum that we achieved in fiscal 2025. We are heads down on execution, and we believe we are well positioned for the periods ahead. With that, we will now open for questions. Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to join the queue to ask a question at this time, please press 1 on your telephone keypad. We do ask if listening on speakerphone this afternoon that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press 1 on your keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question today is coming from Josh Nichols from B. Riley Securities. Josh, your line is live. Please go ahead. Matthew: Hi. This is Matthew on for Josh. Thanks for taking my questions. I guess to start off, coming off of breakout fiscal 2025, with revenue up 24%, you ended the year with a double-digit EBITDA margin. I am wondering, how are you thinking about the full year growth trajectory for fiscal 2026, and where do you see the most meaningful drivers? Rob Dawson: Thanks for the question. I think, as I tried to share in my comments, we expect the trajectory of growth to be the similar sort of quarter-to-quarter movement as we had last year. And it is important to note last year, our first quarter was actually a few hundred thousand dollars larger than our second quarter. So I think this year, we expect to be more sequential in the growth that we have and sort of our normal trajectory starting with Q1, which is always seasonally an interesting quarter to navigate. So we expect to accelerate through the year. The backlog increase is obviously a nice sign to show the support of that—that it is not just words, but we are actually seeing the orders and the items that have been in our pipeline for some time starting to print through as actual orders and going into our system with timing and an expected time frame for shipment. So we expect to accelerate in Q2 versus Q1, and then we think it is going to continue going from there, similar to what we saw last year. The drivers of that really are across the various product lines. Our diversity, I think, is starting to not just print through as Ray talked about in some detail, but it really helps to smooth out the interesting periods where there may not be projects in one market that are seasonally driven or CapEx driven. We are starting to see that get a little more consistent throughout the year. And with that, the product lines that are coming from different customers in different markets give us a lot of comfort that the pistons can all be running at different speeds and paces, but it will start to smooth out those results, make them predictable, and make it much easier to manage the supply chain and give us some visibility certainly as we get into the later part of the year. Matthew: Excellent. Thank you. And gross margin came in especially strong this quarter. I am wondering how durable are the factors driving that improvement, and how should we see that flowing throughout the rest of the year? Rob Dawson: Great question on gross margin. The big thing for us is sales compared to last year's first quarter were roughly flat—down a little bit, not surprising—but with that, our margins went up almost three full points, which is great to see. And I think there were a lot of questions on the last earnings call about how sustainable the 30-plus margins are. We feel pretty good about those and our ability to stay there. The things that have gotten us consistently above that 30% level really are things like being good at pricing for the value that we believe we are providing to our customers. The mix of products a lot of times helps us—some of our items have a higher value maybe than the historical, more fragmented product lines that we are selling. And then lastly, the higher the sales number, the better those are going to be. We have a pretty simple P&L when you break it down with a lot of operating leverage below the line that is largely driven by what happens on the top line and then the gross margins that go along with it based on pricing and mix and just overall efficiency of building things. Matthew: Got it. And you mentioned the backlog, how it bounced post quarter. It is sitting around $18,600,000 today, and that is mainly a timing thing based on contracts. But I am wondering if you can give us an idea on the composition of that backlog and what is driving most of that replenishment, especially after the quarter? Rob Dawson: Sure. The backlog usually has a pretty healthy mix of different items in it. I think the increase that we have seen is especially healthy. You have four different pretty significant product lines across several customers. So we are seeing it in our integrated systems and our custom cabling, which are the two areas that we expect larger percentage growth than what we get out of our interconnect products. Those are largely distribution-friendly on the interconnect side, and we expect growth there, but a lot of times those are not project-based and things that are going to show up in a backlog increase. They may come and go in a short period of time. So the increases we have seen—you have some small cell in there, you have some DAC thermal cooling, you have some custom cabling in the aerospace market, you have some custom cabling in the industrial market—where we continue to see some great blue-chip customers ordering from us that have been with us for years. So it is a good healthy mix across the different product lines that drove that increase in backlog. Matthew: Great. I guess just one last question, mainly regarding DAC thermal cooling. I am wondering if there is an update on how that is progressing in terms of customer interest in the NEMA 4 product. Rob Dawson: Thanks for that. The DAC thermal cooling product is one that we have seen significant growth. We saw significant growth in 2025 compared to prior years, so we continue to see that trajectory increase. And we are seeing a lot of interest. We are starting to see customers making installations and trials to see how well it works in their various systems. In a lot of cases, these are edge data center applications. The systems are performing great, whether that is the NEMA 4 or some of the other versions. We are basically producing exactly what we say we are going to do—significant savings—and the equipment runs flawlessly without having to use air conditioning all the time, which is expensive and high maintenance as well. We are seeing some early stages of newer in cable and edge data centers that are new markets for us or new customers for us. I expect that will be a meaningful part of our growth, not only later this year, but in subsequent years. Matthew: Got it. Great. That was it for me. Thanks for taking my questions. Rob Dawson: Thanks, Matt. Operator: Thank you. And as a reminder, if anyone would wish to ask a question at this time, you may press 1 on your keypad to join the queue. Once again, that will be 1 to join the queue to ask a question. And there are no further questions in queue at this time. I would now like to turn the floor back to Rob Dawson for closing remarks. Rob Dawson: Thank you, Tom. I appreciate it. I was hoping for a lot more because I have a lot of other answers, but I will save those for the next call. I want to thank everyone for participating in today's call. We appreciate your support and look forward to sharing our progress on our Q2 earnings call in June. Have a great day. Operator: Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.
Operator: Good day, and thank you for standing by. Welcome to Semtech Corporation's fourth quarter and fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Mitchell J. Haws, Senior Vice President of Investor Relations for Semtech Corporation. Please go ahead. Mitchell J. Haws: Thank you, and welcome to Semtech Corporation's fourth quarter and fiscal year 2026 financial results conference call. Participants on today's conference call are Hong Q. Hou, our President and Chief Executive Officer, and Mark Lin, our Executive Vice President and Chief Financial Officer. Before we begin, I would like to highlight upcoming investor events, including the Optical Fiber Communications Conference starting tomorrow and the ROTH Technology Conference on March 23. Today after market close, we released our unaudited results for the fourth quarter and fiscal year 2026, which are posted along with our earnings call presentation to our investor relations website at investors.semtech.com. Today's call will include various remarks about future expectations, plans, and prospects, which comprise forward-looking statements. Please refer to today's press release and see slide two of the earnings presentation as well as the Risk Factors section of our most recent Annual Report on Form 10-K for a number of risk factors that could cause our actual results and events to differ materially from those anticipated or projected on today's call. You should consider these risk factors in conjunction with our forward-looking statements. We will refer primarily to non-GAAP financial measures during today's call. We will also be referring to results for fiscal 2026 unless otherwise noted. Please see today's press release and slide three of the earnings presentation for information regarding notes on our non-GAAP financial presentation. The press release and earnings presentation also include reconciliations of our GAAP and non-GAAP financial measures. With that, I will turn the call over to Hong. Hong Q. Hou: Thank you, Mitch. Good afternoon to all of you joining today. Semtech Corporation closed fiscal year 2026 with significant momentum, achieving a record $1,050,000,000 in net sales, a milestone that reflects the progress we have made and the trajectory we believe lies ahead. We drove strong sequential and year-over-year revenue and earnings growth. We advanced our data center road map to capture compelling design win opportunities and continued to optimize our product portfolio, all while executing on the R&D and expense initiatives we believe position Semtech Corporation for an exciting next chapter. Looking at Q4, net sales were $274,400,000, up 3% sequentially and up 9% year over year. For the year, revenues were $1,050,000,000, representing annual growth of 15% driven by continued strength in our data center and the LoRa portfolios. Adjusted diluted earnings per share were $0.44, up 10% year over year. For fiscal year 2026, adjusted diluted earnings per share were $1.71, growth of 94% over the prior year. In addition to delivering strong revenue and earnings growth, portfolio optimization remains a key focus of execution. As announced earlier this month, we acquired HIFU Corporation, which represents an important strategic building block for Semtech Corporation. HIFU is a California-based manufacturer of high-efficiency indium phosphide-based optoelectronic devices, including gain chips and CW laser chips that are critical components in the optical transceivers powering today's data centers. Put simply, HIFU makes the light-emitting building blocks that sit at the heart of high-speed optical interconnects. The strategic rationale is straightforward. As data center architectures evolve to 1.6T and 3.2T, the complexity of optical interconnect increases dramatically. By bringing HIFU's proven indium phosphide laser technology together with Semtech Corporation's industry-leading TIAs and laser drivers, we can co-develop and co-optimize performance across the laser, modulator, and driver interface, and increase Semtech Corporation's content opportunity from high single-digit dollars in an 800G module to about $80 in a 3.2T module. We believe this combination will result in a more integrated, more efficient chipset, one that reduces system power consumption and gives the hyperscaler a differentiated solution for high-bandwidth optical transceiver modules. We have developed a comprehensive investment plan for the Alhambra, California facility to expand domestic capacity and accelerate product development. Integration of HIFU into Semtech Corporation operations is underway, with the transaction expected to be accretive to non-GAAP diluted earnings per share within the first year. We are genuinely excited about the people and technology joining Semtech Corporation, and we see significant untapped potential for high-efficiency lasers in different interconnect applications. Finally, we continue to make progress on the divestiture of the cellular module business, and we are increasingly encouraged by the level of interest and engagement. We remain confident this business represents a compelling opportunity for the right buyer, and we remain focused on bringing this process to a successful conclusion. Now let me move to a discussion of our end markets. For Q4, infrastructure net sales were $86,300,000, up 11% sequentially and up 25% year over year, strongly supported by our data center business. For fiscal 2026, infrastructure net sales were $310,000,000, growth of 27% over the prior year. For Q4, net sales of data center were a record $63,000,000, up 12% sequentially and up 26% year over year, benefiting from strong demand for our broad portfolio, including our market-leading FiberEdge ICs, whose net sales set another record. In Q4, we also started shipping into LPO transceivers, with revenues in line with the outlook we provided on the last quarter's earnings call. In fiscal 2026, our data center revenues were a record $223,000,000, representing annual growth of 58%. Our optical and copper product alliances are firmly established with hyperscalers as a differentiated and high-performance offering. Power efficiency has become one of the defining constraints of the modern AI infrastructure. As hyperscalers measure data center capacity in megawatts, the ability to move data faster while consuming less power at the networking layer is no longer just a differentiator; it is an enabler. Our analog solutions address this directly, enabling operators to scale next-generation architectures at 800G, 1.6T, and eventually 3.2T. Demand for 800G PIA solutions remains strong and broad based, with increasing momentum throughout 2026. At 1.6T, we are engaged across a wide range of transceiver programs and expect volume ramps to build as hyperscalers roll out their new XPU and switch platforms using reduced-power 1.6T transceivers throughout the year. On LPO, design wins with several leading U.S. hyperscalers validated our TIA and driver solutions in 800G transceivers. We are very excited to be a member of the new XPO MSA, to define specifications and enable high-bandwidth, high-density, low-power switches. By combining with a low-loss copper interconnect, such as flyover wires or linear re-driven PCB traces, some hyperscalers are becoming increasingly bullish on 1.6T LPO instead of using LRIs for the first layer of the scale-up fabrics. We continue to expand our LPO IC portfolio, with 1.6T LPO drivers and TIAs expected to come to market this year. In supporting further proliferation of low-power linear optics, Semtech Corporation, along with other industry leaders, is developing NPO, our Near Package Optics MSA, for low-power, high-density, high-bandwidth solutions. Successful deployment of 800G LPO transceivers gives hyperscalers confidence in NPO as the next evolution of optical solutions. We are excited by the increased content available to Semtech Corporation in NPO deployments. Active copper cable, or ACC, continues to gain significant traction. Customers evaluating ACC against the incumbent solutions are seeing compelling performance advantages in the form of robust link margin and transformative power savings versus DSP-based solutions. Alongside our cable solutions, customers are increasingly evaluating our copper linear equalizers for onboard integration to enhance signal integrity across high-speed links, an opportunity we are confident will convert into design wins over the coming quarters. One of these use cases is active backplane using CopperEdge ICs, which our cable partners will demonstrate at OFC. Finally, we co-authored the ACC MSA, helping establish ACC technology as the leading solution for low-power and high-performance copper links. Members of the MSA span IC, XPU, and cable suppliers, all in partnership with major hyperscalers. We believe the ACC MSA accelerates the adoption curve for the entire industry. By establishing common specifications, we reduce fragmentation, lower deployment risk for hyperscalers, and make it easier for the ecosystem to develop around ACC as a standard, not just a proprietary solution. That is good for customers, and it is good for Semtech Corporation. We look forward to seeing many of you at OFC starting tomorrow. This year, we are showing live demos across several of our key product areas. They tell a clear story about where Semtech Corporation is positioned in the data center interconnect market. Starting with copper, we are demonstrating 1.6T ACCs running live traffic to NVIDIA's 224G SerDes. We are also showing next-generation 448G per-channel CopperEdge chips. As AI clusters scale, the demand for low-power and low-latency copper interconnect continues to grow, and we think we are very well positioned to lead the market. On the optical side, we will be demonstrating NVIDIA's 1.6T DR4 transceivers powered by Semtech Corporation TIAs and laser drivers running live in NVIDIA's switch platform. We will also be demonstrating a 1.0T Ethernet switch running live traffic over both single-mode and multimode fibers, supporting FR4, LR4, and LPO configurations across the Broadcom Tomahawk 6 platform, all built on Semtech Corporation silicon. We are thrilled to demonstrate the breadth of our optical portfolio across a multivendor ecosystem. We will also be demonstrating our next-generation 448G per-channel modulator drivers and TIAs, addressing increasing bandwidth demand to support future-generation AI workloads. We are also showcasing our indium phosphide CW laser and gain chip technology for tunable laser applications with outstanding power efficiency, over-temperature performance, and far-field beam profile—products from our HIFU acquisition. Across copper and optical, and both near-term and next-generation, OFC gives us a tremendous opportunity to show Semtech Corporation’s position across the full hyperscale interconnect stack. We believe we are positioned for multiyear growth opportunities supported by our expanded portfolio. We expect to start shipping CopperEdge for the 1.6T ACC hyperscaler deployment this quarter, with demand accelerating throughout the year. We also expect FiberEdge design wins for 1.6T transceivers, with a significant ramp in the second half of the year. Additional revenue drivers in the near future are expected from additional design wins for ACC at other hyperscalers, linear equalizers onboard across multiple customers, gain chips and CW lasers in transceivers, and our market-leading 400G FiberEdge and CopperEdge products for 3.2T interconnect solutions. Given the breadth of our data center portfolio and design-in traction across an expanding set of customers, we expect data center year-over-year revenue growth this fiscal year to exceed 50%. Now moving to our high-end consumer end market. Net sales for Q4 were $36,600,000, down 13% sequentially and up 3% year over year. Net sales for fiscal year 2026 were $155,100,000, up 5% year over year, driven by both our TVS and PerSe product portfolios. Our consumer TVS revenue continues to ramp well ahead of handset volume growth, and we expect another year of revenue and design win momentum. We expect consumer TVS revenues to increase next quarter, a function of improved seasonality and share gains at a leading handset manufacturer. In addition, PerSe continues to broaden its design win footprint, with adoption expanding across smart glasses and smartphone platforms, supporting both current and upcoming product launches. The integration of the force sensing portfolio is progressing well, with initial product shipments already underway. Customer engagement and design win activities continue to build, and we are increasingly optimistic about the cross-selling opportunities this combination unlocks across our combined customer base. Moving to our industrial end market. Q4 industrial net sales were $151,000,000, up 3% sequentially and year over year, with another solid quarter for LoRa. For the full year, industrial revenue was $584,000,000, 13% growth over the prior year. LoRa-enabled net sales were $39,600,000, in line with Q3 and up 7% year over year, supported by continued expansion across several application verticals such as smart utilities, smart building, smart city, and asset management. For the full year, LoRa revenues were $156,000,000, representing full-year growth of 34%. We had a strong presence at CES this year, showcasing new LoRa application use cases. Four themes highlighted in our presence: EdgeAI integration, multiprotocol connectivity, global network expansion, and the convergence of the industrial and the consumer IoT—together reflecting a technology that is broadening its reach across a growing range of markets. EdgeAI emerged as another defining trend, as sensors increasingly process data locally for latency, privacy, and bandwidth reasons. Our collaboration with an ecosystem partner demonstrated how LoRaWAN and EdgeAI work together to enable predictive maintenance in industrial environments. Demand for a solution that combines LoRa with multiprotocol flexibility is accelerating. In order to facilitate LoRa+ adoption, we recently signed an agreement with a technology partner to support software development to activate and support other protocols. We are rolling out Z-Wave first, with Zigbee and Thread and Matter to follow. We expect beta units will be available to deployment partners in Q2 of this year. As multiprotocol smart home and security solutions scale, the market's move toward single-SKU solutions is exactly what LoRa+ is designed to address, reducing complexity for customers while expanding our addressable markets. Customers who purchase our LoRa+ transceivers now get relatively free access to an SDK and development tools—silicon and software together from a single source. Additionally, Amazon and Ring announced a new line of LoRa-powered sensors spanning security, safety, and home control applications, all operating on Amazon Sidewalk. Ring plans to launch this product in the U.S. in March, followed by expansion across Canada, Mexico, Europe, Australia, and Japan. This demonstrates LoRa's readiness for mass-market consumer adoption at Amazon's scale—a significant evolution from its industrial and commercial roots. The ecosystem continues to scale, now spanning over 125,000,000 LoRaWAN connected devices across 70 countries—well beyond early adoption and into mainstream deployment. With LoRa technology, we now have established three pillars of low-power connectivity: LoRaWAN, LoRa+ with multiple protocols, and Amazon Sidewalk. With these growth vectors, we believe LoRa's long-term growth rate to be approximately 20% and quarterly sales to range from $35,000,000 to $45,000,000. Our IoT Systems and Connectivity business recorded Q4 net sales of $89,900,000, up 2% sequentially and down 3% year over year. For fiscal 2026, revenues were $354,000,000, up 9% compared to last year. We continue to bring products to market that address gaps in how industrial customers connect to remote infrastructure. In Q4, we launched the AirLink RX-400 and the EX-400. These industrial products are the first rugged 5G RedCap routers purposely built for mission-critical industrial deployments. These routers deliver 5G performance with less than one watt of idle power—roughly one-tenth the draw of standard 5G equipment—making solar and battery-backed deployments practical for the first time. This allows our utility, oil and gas, and transportation customers to operate in remote locations where grid power is not always available. Customer engagement at Distributech in February reinforced our conviction that this product is well timed to address a real market need. Looking back on fiscal 2026, I am proud of what the team accomplished. We delivered strong revenue and earnings growth through disciplined execution, a differentiated portfolio, and a relentless focus on the customers and markets where Semtech Corporation can win. This was not just a strong year financially; it was a year in which we fundamentally strengthened Semtech Corporation’s foundation. Looking at where we stand today, I am more confident than ever in our positioning. The AI data center buildout is one of the most significant infrastructure investments in a generation, and we believe Semtech Corporation is well positioned with a broad, purpose-built portfolio of solutions designed for 1.6T and 3.2T eras. We believe continued investment in our core assets through R&D and acquisitions helps to ensure we are not just keeping pace with next-generation technology; we are helping to define it. And, importantly, we now have the financial flexibility to diligently evaluate and pursue the strategic investments that will accelerate our P&L. We enter fiscal 2027 with momentum, a clarity of purpose, and a stronger Semtech Corporation than we have had in years. I want to thank our employees, our customers, and our shareholders for their continued confidence in us. We are just getting started, and the opportunities ahead have never been more compelling. Our key focuses for fiscal year 2027 include: one, accelerating business growth by supporting customer ramps with sufficient availability and strong operational metrics as we compete in a capacity-constrained environment; two, intensifying R&D investment to add new drivers and solution differentiation while maintaining diligent governance of R&D investment with the goal of driving customer wins and delivering strong financial returns; three, transforming Semtech Corporation by strengthening our winning culture and making major progress in portfolio optimization. With that, I will now turn the call over to Mark for additional details on our financial results and our outlook for fiscal 2027. Mark? Mark Lin: Thank you, Hong. For Q4, we recorded our eighth consecutive quarter of net sales growth, with record net sales of $274,400,000 above the midpoint of our outlook, up 9% year over year. For the fiscal year, net sales were $1,050,000,000, up 15% year over year. Net sales trends by end market, reportable segment, and geographic region are included in the accompanying earnings presentation. Adjusted gross margin was 51.6%, above the midpoint of our outlook. Total Semiconductor Products gross margin was 61.7%, up 40 basis points sequentially and up 350 basis points year over year. Total Semiconductor Products gross margin was above the high end of our outlook range, the result of favorable mix from our LoRa and data center portfolio. We expect gross margin contributions from new data center products from our copper and optical 1.6T portfolio ramping in the second half of this year will be accretive to both our Semiconductor Products and Signal Integrity Products gross margin. IoT Systems and Connectivity gross margin was reflective of mix-related net sales growth in cellular modules, with Q4 at 31.6%. Adjusted net operating expenses were $91,500,000, slightly above the midpoint of our guidance range. Adjusted operating income was $50,000,000, adjusted operating margin was 18.2%, adjusted EBITDA was $57,400,000, and adjusted EBITDA margin was 20.9%, with all of these metrics above the midpoint of our guidance range. Reflective of capital structure changes, Semtech Corporation was in a net interest income position in Q4 at $100,000, which reflects a sizable change from the $11,200,000 of net interest expense reported a year ago. For fiscal year 2026, adjusted net interest expense was $11,500,000 compared to $70,600,000 in fiscal year 2025. We recorded adjusted diluted earnings per share of $0.44, above the midpoint of our guidance, and full-year adjusted diluted earnings per share was $1.71. Operating cash flow for Q4 was $61,500,000, sequentially up 30% from $47,500,000 and up 84% from $33,500,000 a year ago. Free cash flow for Q4 was $59,100,000, sequentially up 32% from $44,600,000 and up 91% from $30,900,000 a year ago. Operating cash flow and free cash flow for the standalone fourth quarter each exceeded the amounts reported for all of fiscal year 2025, driven by improvements in both our capital structure and operating performance. Strong cash flow generation has allowed us the operational flexibility to invest in R&D projects as well as to invest strategically via tuck-ins. The increased R&D investment in our core data center, LoRa, and sensing portfolio has yielded strong returns. Aggregate consideration for the force sensing portfolio we acquired in October 2025 and the laser and gain chip business we acquired in March 2026 is less than the free cash flow we generated in Q4. I believe our balancing of R&D spending, along with prudent use of capital for capacity expansion and acquisitions, positions us to generate meaningful long-term returns for our shareholders. We ended Q4 with a cash and cash equivalents balance of $195,200,000, and debt was $503,000,000, unchanged from last quarter. Our adjusted net leverage ratio was 1.3 as of the close of Q4, down sequentially from 1.5 and down year over year from 2.3. Now turning to our outlook for the first quarter of fiscal year 2027. We currently expect net sales of $283,000,000 plus or minus $5,000,000, up 13% year over year at the midpoint. We expect net sales from our infrastructure end market to increase sequentially, supported by projected sequential data center growth of 12%, including initial CopperEdge production shipments supporting a hyperscaler at the tail end of the quarter. We expect net sales from our high-end consumer end market to increase about 9% sequentially or about 13% year over year, benefiting from improved seasonal trends, market share gain in our TVS products, and contributions from the force sensing portfolio we acquired in the fourth quarter. We expect net sales from our industrial end market to be about flat, with LoRa increases offsetting decreases in IoT Systems and Connectivity. Based on expected product mix and net sales levels, we expect adjusted gross margin to be 52.8%, plus or minus 50 basis points. Our gross margin outlook for Total Semiconductor Products is expected to be 60.4%, plus or minus 50 basis points, down 130 basis points sequentially and including initial ramp costs from the HIFU acquisition. Adjusted net operating expenses are expected to be $96,900,000, plus or minus $1,000,000, resulting in adjusted operating margin at the midpoint of 18.6%. Included in the higher first-quarter adjusted operating expense outlook are R&D costs associated with the addition of the force sensing business, along with increased investment in support of our growing data center portfolio, including the HIFU acquisition. We have demonstrated strong returns on our R&D investment and expect incremental returns from these investments. Adjusted EBITDA is expected to be $59,500,000, plus or minus $3,000,000, resulting in adjusted EBITDA margin at the midpoint of 21%. We expect adjusted interest and other expense, net, to be approximately $500,000. We expect an adjusted normalized income tax rate of 27% for all of fiscal year 2027, an increase from 15% in fiscal year 2026, due to a geographical shift in pretax profits. These amounts are expected to result in adjusted diluted earnings per share of $0.45, plus or minus $0.03, based on a weighted average share count of 96,600,000 shares. Mitchell J. Haws: Thank you, Mark. We can now turn the call back to the operator for the question and answer session. Operator: Thank you. We will now be conducting a question-and-answer session. One moment while we poll for questions. Our first question is from Sean O'Laughlin with TD Cowen. Sean O'Laughlin: Hey, guys, congrats on the solid results and continuing on your strategy. I wanted to ask a question on the HIFU acquisition. I think the strategic rationale laid out is pretty straightforward, but wondering if you could expand on the initial applications you are targeting. It sounds like mostly transceiver side. And then, maybe more importantly, where are you for the indium phosphide-based product in the qualification or design cycles at some of your customers? And what should be our expectations for when some of that starts to fold into the model in a material way? Hong Q. Hou: Thank you, Sean, for the question. So the HIFU initial product right now in production is a gain chip used in tunable lasers. Those are the high-end lasers to support the transmission over 80 kilometers, 40 kilometers for metro and data center interconnect applications. By leveraging about four decades of laser design experience, they have been the leading supplier for gain chips for ILA. This is a product already in volume production, and demand is increasing. Right now, it is capacity limited. So this product, for fiscal 2027, probably will be contributing roughly about a high-teen level of revenue. But we are adding capacity as we speak. In the second week as a proud owner of this asset, we have also demonstrated—will showcase tomorrow at OFC—the intensity-modulated direct drive lasers, our CW lasers used in optical transceivers. This laser is really well designed to support high conversion efficiency; for example, wall-plug efficiency at room temperature is 42%. That is much higher than a typical about 25%. And our temperature performance is outstanding, and the far-field beam profile is outstanding. So that makes it much easier to couple into single-mode fiber or silicon photonics waveguide. We do not have enough capacity right now to support the industry demand. After the announcement, you can just imagine we got multiple customers reaching in and asking for samples. So we will be able to provide samples to the key customers to support the evaluation while we are building capacity to support future growth. As for putting it in the model, probably once we have a better understanding on the equipment lead time and the capacity, in a future period, we will provide more guidance on the revenue contribution from CW lasers. Right now, we are planning to intercept at 3.2T transceivers; of course, it can support 1.6T transceivers as well. Sean O'Laughlin: Great, thanks, and I appreciate all the color there. If I could just ask a real quick follow-up, maybe for Mark on that topic: How should we be thinking about the CapEx line as you talk about capacity expansions at Alhambra? I guess maybe Hong alluded to the answer to this question in his previous comment about understanding equipment lead times, but everybody in the indium phosphide industry seems to be ramping capacity, and are you guys, for lack of a better term, at the back of the line there? Hong Q. Hou: So the CapEx intensity is moderate, and the fab already has the key capabilities. Right now, we just need to selectively add capacity in some areas. The whole industry is ramping up, and epi equipment, fab equipment is in high demand as well. But we will be very creative in combining the new and used market to look at the fab and test equipment. The intensity, I would say, of the CapEx can be easily supported with, say, for example, one quarter of the free cash flow as we have demonstrated in the past quarter. Mark Lin: Yes, Sean. And the ramp is over multiple quarters, but I think Semtech Corporation's world-class operations team is on it. We really had the planning during diligence. And the other good news is all of this CapEx, I believe, qualifies for Section 48 investment tax credit of 35%, and then there are some additional government grant programs that are available, especially to strengthen U.S. semiconductor manufacturing capacity. Sean O'Laughlin: Thanks, guys. Hong Q. Hou: Thank you. Operator: Our next question is from Tore Egil Svanberg with Stifel. Tore Egil Svanberg: Yes, thank you, Hong, Mark, congrats on the results. So my first question is on CopperEdge. As that business now starts to ramp in fiscal 2027, can you give us any sense for how big that could be, maybe tens of millions of dollars? And if you cannot give us the size, perhaps you could at least give us the mix between actual ACC cables versus linear equalizers. Hong Q. Hou: Tore, thank you for the question. We are supporting the ramp. We are getting forecasts and we are getting the materials ready. As we gave the guidance in our prepared remarks, toward the end of this fiscal quarter in the April time frame we will start shipping to the cable manufacturers who are our direct customers to support rack-level volume ramp in the middle of the year. So everything is on schedule. As for the mix between DAC and ACC, they are in the process right now of doing this rack-level testing and system validation. We will be getting a better idea probably in a month or two on the support. But we are getting the long-range forecast so that we can get wafer starts in the fab and prepare the material readiness. As I indicated, that is a very key focus for our operations. So at this point, it is still too early to tell. But as for linear equalizer onboard, there are multiple customers supporting our activities, and based on the level of engagement, I do believe some of those will be getting qualified within the coming quarters. Just on the linear equalizer and the ACC side, the MSA establishment with 12 founding members is tasked and at work already, starting to draft the specifications. This is still the early stage of ACC. Different customers are experiencing different performance. It is very important to have this MSA, to draft the specifications, and to educate the industry on what to expect with a certain level of reach, gauge, and data rate. With the common understanding of MSA, I believe this technology is going to proliferate much faster. We have already seen other hyperscalers lining up to get their racks designed by using ACC. Tore Egil Svanberg: That is very helpful. Thank you. And as my follow-up, and maybe more of a clarification question: You talked about LoRa growing 20% longer term, but then you talked about a $35,000,000 to $45,000,000 quarterly run rate. You just did $40,000,000. So what exactly is that $35 to $45 range? Are you expecting some volatility this year? If you could just clarify what you meant by that. Thank you. Hong Q. Hou: Thank you, Tore. Historically, we have been seeing the overall trend of LoRa revenue increasing, but quarter to quarter it is a little bit bumpy due to the project-based deployment of demand. That is why we give a range of plus or minus $5,000,000. But you see that sliding scale continue to go up with the center point. I have never been this excited about our LoRa strategy. With dual-band to increase the bandwidth to address EdgeAI applications, with LoRa+ to really get multiple applications in one SKU with the software and hardware all supported by us, and with Amazon Sidewalk and the mass market, we have multiple growth drivers. That is why we have conviction that a 20% growth rate is very doable. When we can help the ecosystem adopt the LoRa+ protocol faster, we expect the growth rate to accelerate. Tore Egil Svanberg: Very clear. Thank you. Mark Lin: Thank you. Operator: Our next question is from Christopher Rolland with Susquehanna. Christopher Rolland: Hey, guys. Thank you for the question. I guess my first one is on the indium phosphide laser acquisition. First, a clarification: This is all going to be internally manufactured materials? Just wanted to clarify that. And secondly, if you can talk about maybe your go-to-market strategy here, maybe even some revenue synergies with some of your other parts. Are you going to kind of bundle this with FiberEdge? Are you going to perhaps go direct to hyperscalers? How are you going to approach this market? Thank you. Hong Q. Hou: Thank you, Chris. Those are very good questions. To answer your first question, yes, the fab we acquired is vertically integrated. Namely, we do the epi growth of epi wafers, we process wafers, we test internally, and we do use the ecosystem on backend packaging to increase capacity. The lasers involve a multi-step regrowth process, so we do that internally; that is how we are able to get the performance in conversion efficiency and over-temperature performance. As for your second question, go-to-market strategy, you are absolutely right. The transition from 100G per lane to 200G per lane already puts so much stress on the ecosystem, really challenging the device designers with the performance margin. And when we evolve the data rate to 400G per lane, there is not a lot of margin to give. So the co-development and co-optimization is key in order to get the best electronic component with the best optoelectronic component. Now we own two sides of the equation, so we will be able to mix and match to provide the best integrated solution. When we have that, we will provide the chipsets with a reference design to our customer base. This way, we help accelerate time to market for them, and in return we make our components more sticky. Using our electronic components—like a TIA, a laser driver, a modulator driver—together with our optical components, you will pretty much get a guarantee to work to deliver 400G performance. That is why we are saying the major inflection point is 3.2T transceiver modules. It could be earlier than that. Christopher Rolland: That is great. That is a fantastic strategy. One question I get from investors is around the eventuality of CPO, particularly for scale. Jensen here at GTC was talking a little bit about the coexistence of both copper and optical in the rack. But some pushback I get from investors is around the role of copper the closer that optical moves to the ASIC. Obviously, you are expanding your market with lasers here into the CPO world. But perhaps you could also address that pushback on copper—where you see copper playing a role not only in the next two years, but all the way through 2030, for example, even as you move CPO to the ASICs? Hong Q. Hou: Great. Thank you, Chris. I listened to Jensen's call as well. Basically, what I was trying to say over the last year, he clarified so well. Copper scale-up is always going to be there, and CPO scale-up is only going to make more sense in multirack systems. For example, he was talking about Alravan and NVL576 across eight racks. Because you are using active copper cable, it is very hard to get eight racks all point-to-point interconnected. So you use the first opportunity, the signal out of the XPU, to convert into optical. Optical can interconnect within a rack and also interconnect between racks. The same thing for the Tiber platform; he was talking about NVL1152. That is also an eight-rack system on the NVLink 144. In those, the CPO scale-up makes sense. In general, copper scale-up is going to be the mainstream and primarily used within a rack. The CPO scale-up is going to be used in multiple racks. So do not put a terminal value on copper yet. The industry also is formulating NPO, Near Package Optics. It is a complement to CPO. CPO is one company thing, but NPO can define a specification to have specific geometry, layout at the I/O pinout, and keepout zone to leverage the entire ecosystem's innovation to make it more scalable and more affordable. In CPO, we may not have much content in there except for lasers. But in NPO, we will be all over the place—with laser drivers, TIAs, and lasers, and even silicon photonics modulators, as I have mentioned. That is a very natural expansion of our portfolio by internal development. Christopher Rolland: Thanks. Hong Q. Hou: Thank you. Operator: Our next question is from Tristan Gerra with Robert W. Baird. Tristan Gerra: Hi, good afternoon. You have talked about the rising interest from hyperscalers about LPOs. Could you talk about the recent Arista XPO announcement and what it does to the LPO ecosystem and any way to quantify what the ramp is going to look like medium term and when you expect the big inflection point in LPO revenue? Hong Q. Hou: Great. Thank you, Tristan. Arista just released that MSA. We are a very active member of the MSA. XPO defines a high-density, low-power, and high-reliability MSA for front-panel switches. For example, to keep the same rails, they will be able to collapse the form factor from essentially 4RU into 1RU without giving up any capacity. It basically removes the packaging overhead. Because liquid cooling is available, they can develop the cold plate so that there is a gradient between the optical transceivers. That is just great and really builds upon the confidence in LPO and upon the innovation from the entire ecosystem with multiple module manufacturers. NPO, on the other hand, is a little bit more involved because that involves the development of common specifications on geometry, key parts on the I/Os, and the shoreline configurations. Essentially, NPO is, in a way, XPO onboard. XPO is just a high-density package on the front panel of the box. In both configurations, we are going to have a lot of content in there—again, the lasers, the modulator drivers, the modulators themselves, and TIAs. We welcome this type of MSA. It is really going in our direction. Tristan Gerra: Okay, that is great color. And then for my follow-up, you have mentioned in the past some ACC opportunities onboard. Could you provide maybe a little bit more feedback on what exactly is the use case for that and how meaningful that could get over time? Hong Q. Hou: The CopperEdge and linear equalizer onboard—our customers are defining five or six different use cases, all to utilize the redrive capability to extend the link and improve the link budget. It can be on the switch, on the merchant GPU board, on the ASIC board of hyperscalers. It can also be on the backplane, in an active backplane, by our cable partners. Mark Lin: Great. Hong Q. Hou: Thank you very much. Mark Lin: Thank you. Tristan Gerra: Mhmm. Operator: Our next question is from Nathaniel Quinn Bolton with Needham & Company. Nathaniel Quinn Bolton: Hi, this is Robert on for Quinn here. Congrats on the quarter. You have been active in doing acquisitions and have expressed intent to increase R&D with some of your capital up to this point, but any updates on potential divestitures? Last we heard, ongoing and, you know, roughly in the third or fourth inning. So any update on that process would be great. Mark Lin: Yeah, Robert, thanks for calling in. I am not really good at sports analogies, but I think that we are making good progress. I am optimistic about a good conclusion. At this point, I would say that maybe incremental from last quarter, the interested parties are spending some dollars on external consultants—so financial due diligence—and on legal costs. So we are at that stage. When there is additional skin in the game, I think that does point toward a successful conclusion of the cellular module divestiture in the near term. Nathaniel Quinn Bolton: Thanks. And just as a follow-up, it sounds like there are many tailwinds coming across for LPO as well as copper, and last week we heard them ramping kind of in a similar time frame this year. Can you just refresh that for us? It sounds like ACCs could be ramping a little earlier now. And then, which do you see as the larger revenue opportunity over the coming twelve months? Hong Q. Hou: Robert, we gave the timeline. ACC ramp is on time, on schedule, and then the 1.6T FiberEdge product. Beyond that, as I said, could be ACC with other hyperscalers, linear equalizer onboard, and the lasers and 400G. We like them all. At this point, it is too early to call which one is the bigger opportunity, but we like them all and they are going to be contributing in pretty significant ways. Nathaniel Quinn Bolton: Sounds great. Thanks, guys. Mark Lin: Thank you. Operator: Our next question is from Joseph Moore with Morgan Stanley. Joseph Moore: Great, thank you. You talked about 1.6T starting to grow in your TIA business and other places. Can you talk about the line of sight that you have to 800G still growing? I assume it is still growing for now and you are layering in the higher speeds on top of it. How long will that persist and at what point do they start transitioning over more? Hong Q. Hou: That is right. Joe, we did mention in the prepared remarks that 800G is the foundation. The growth is strong, demand is strong, and broad based. That is a given. That goes very strong, at least throughout fiscal 2027. As the industry rolls out new XPUs and all the I/Os go to 200G, they are going to evolve into 1.6T, and in low-power 1.6T optics we are actually very well positioned, even better than 800G. Joseph Moore: Okay. Thank you. Hong Q. Hou: Thank you. Operator: Our next question is from Craig Andrew Ellis with B. Riley. Craig Andrew Ellis: Yes, thanks for sneaking me in, and guys, congratulations on both the execution and a really strategic-looking acquisition. Hong, I think near the end of your prepared remarks, you commented that you thought data center year-on-year revenue this year could be up around 50%. One, just confirming that I heard that right. And two, can you help us understand what the biggest growth drivers are or rank the growth drivers that you see driving that degree of growth? Hong Q. Hou: Thank you, Craig. Yes, you heard it right. Year over year, we expect data center revenue to grow 50% this year. The drivers are ACC with a hyperscaler, 1.6T FiberEdge in the second half of the year, and then there might be even linear equalizer onboard contributing to the growth. Craig Andrew Ellis: That is helpful. Thank you. And then, Mark, congratulations on the strength—and you too, Hong—on the strength in semis gross margin and what we are seeing in Signal Integrity. It is really nice to see those mid-to-high sixties levels reattained. The comments on accretive second-half products—are we signaling that gross margin for the segment could start with a seven handle later this year or next year, or would you still expect to be in the sixties? Mark Lin: The new products that we introduced do have accretive gross margins. I am very pleased with that. It is a great return on the R&D that we put into the products. They do contribute to growing gross margin. But we still also have other products, at 800G. I am not expecting it to be in the sevens, but firmly in this ZIP code. Craig Andrew Ellis: Well, congratulations on where it is. Thanks, guys. Mark Lin: Thank you. Operator: Our next question is from Cody Grant Acree with Benchmark. Cody Grant Acree: Thanks, guys, for taking my question. Maybe just following up on Craig's question, you did not mention LPOs among the drivers of that 50% data center growth. Any reason for leaving that out? And maybe can you just talk about the breadth of the expansion of your engagements with ACC and LPOs over the last few months and how you expect those to progress over the course of the year? Mark Lin: Thank you. Hong Q. Hou: Cody, yes, the LPO continues to grow, and as we said, in Q4 we delivered just as we gave the guidance—mid-single-digit—and signaled the first ramp. It continues to ramp on LPO, but we have them in the FiberEdge product category, so it is included in there. The LPO adoption is proliferating, and that also builds the confidence for this XPO and NPO strategy. ACC is also getting more and more accepted by the industry. I mentioned that one hyperscaler starts ramping midyear, and more hyperscalers are embracing ACC as well. Linear equalizer with multiple customer engagements has been going really strong. I believe that we not only have growth drivers lined up for this year, but have multiple growth drivers lined up for future periods beyond fiscal 2027. Cody Grant Acree: Thanks for that color. Mark, any thoughts on your OpEx trends for the year? Mark Lin: Yes. I am pleased that we are able to have the flexibility to invest in the business. Our outlook for next quarter in OpEx growth is really R&D. I believe we have demonstrated strong returns on investment, and our investment in R&D certainly yields stronger returns than interest expense, for example. But we do remain disciplined in our R&D investments, focusing on our core data center portfolio, on LoRa, and on PerSe. The two recent acquisitions do add some incremental R&D, but these are in our core portfolios. Cody Grant Acree: Alright. Great. Thanks, guys. Mark Lin: Thank you. Thanks, Cody. Operator: Our last question is from Scott Searle with ROTH Capital Partners. Scott Searle: Hey, guys. Thanks for sneaking me in under the wire. Just real quick on LoRa, wondering if you could provide a little bit more color. In the past, China was such a big percentage in the mix. I am wondering how it was in the quarter and the pipeline of opportunities there. We continue to diversify away from the Chinese marketplace. And as part of that, Sidewalk has cropped up from time to time as being a large opportunity. It has been, I think, slow to date. I am wondering if you could calibrate when we might start to see that contributing in a more meaningful fashion. And as a follow-up, just on the protection and sensing side, I think you indicated that there was a large win that kicks into the first quarter. I wondered if you could just clarify that and provide any additional color. Thanks. Hong Q. Hou: Thank you. LoRa right now is broad based across multiple regions. China certainly is a good driver. In Europe and in North America, the growth is equally strong. It is all benefited from multiple growth drivers out there. Sidewalk certainly had a little bit of a false start several years ago, but at CES in January they had over 10 product demos, all embedded with LoRa chips inside. They are going to start deploying in March in North America and have a clear plan to proliferate into other countries. We will see this time, but that can be a pretty significant opportunity for Semtech Corporation. I will let Mark address the TVS question. Mark Lin: Yes, so TVS—we are seeing growth above, let us say, a proxy of handset unit volumes. We have a number of good design wins in TVS, and there is also a little bit of a geopolitical tailwind that we believe is sustainable over a number of quarters that is leading to our better-than-seasonal guide for Q1. Scott Searle: Great. Thanks so much. Nice job on the quarter. Thanks, guys. Hong Q. Hou: Thank you. Operator: I would now like to hand the call back over to Mitchell J. Haws for any closing remarks. Mitchell J. Haws: That concludes today's call. Thanks to all of you for joining us today. We look forward to seeing you at various investor events over the coming weeks and at OFC starting tomorrow. Thank you. Operator: We thank you again for your participation. You may now disconnect your lines.
Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Please standby. Your meeting is about to begin. Good afternoon, and welcome to Getty Images Holdings, Inc.'s fourth quarter and full year 2025 earnings conference call. Today's call is being recorded. We have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Steven Kanner, Vice President of Investor Relations and Treasury at Getty Images Holdings, Inc. Thank you. You may begin. Good afternoon. Steven Kanner: And thank you for joining our fourth quarter and full year 2025 earnings call. Joining me on today's call are Craig Peters, Chief Executive Officer, and Jennifer Leyden, Chief Financial Officer. Before we begin, we would like to note that due to the ongoing regulatory review process, we will not be able to comment on the fourth quarter 2025 Shutterstock operating results. We appreciate your understanding. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks, uncertainties, and assumptions which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are highlighted in the forward-looking statements section of today's press release and in our filings with the SEC. Links to these filings and today's press release can be found on our Investor Relations website at investors.gettyimages.com. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA less CapEx, and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they represent our operational performance and underlying results of our business. Reconciliations of GAAP to non-GAAP measures, as well as a description, limitations, and rationale for using each measure, can be found in our filings with the SEC. After our prepared remarks, we will open the call for your questions. With that, I will hand the call over to our Chief Executive Officer, Craig Peters. Craig Peters: Thanks, Steven, and thanks to everyone for taking the time to join us today. I will touch on Q4 and the full year 2025 business performance and progress before Jennifer takes you through the full results in more detail and our 2026 outlook. I want to start by speaking to the big picture. 2025 was the thirtieth anniversary for Getty Images Holdings, Inc., and it was a strong year for the company. We delivered record revenue with growth across creative and editorial. We strengthened our recurring revenue base and expanded our long-term partnerships. In a year marked by volatility in the broader market, our performance demonstrates the durability of our business model. Powered by high-quality content, deep customer relationships, exclusive partnerships and access, and a diversified revenue mix. For the full year, we delivered revenue of $981,300,000. Again, that is a record, representing year-on-year growth of 4.5% or 3.8% on a currency-neutral basis. We delivered adjusted EBITDA of $320,900,000 and a margin of 32.7%. Both revenue and adjusted EBITDA are well above the high end of our guidance. In the fourth quarter, we grew revenue to $282,300,000, representing a year-over-year increase of 14.1% or 12.7% on a currency-neutral basis. The top-line performance was accompanied by strong profitability, with adjusted EBITDA rising to $104,100,000, up 29.1% reported and 27.2% on a currency-neutral basis, at a margin of 36.9%. Within the quarter, we delivered across all revenue categories. We executed really well across the quarter to deliver a solid foundation of revenue. On top of this foundation, we secured two significant multiyear licensing agreements. In the core, one deal is with a major social platform that included display rights of our pre-shot visual content across creative and editorial. The other deal is with a large AI company, covering use of our data and creative content. Both agreements include meaningful accelerated revenue components, but they also add downstream recurring revenue streams, which are additive to our core. Throughout 2025, we continued to invest in and benefit from our unique assets: award-winning talent, prestigious partnerships, unparalleled access, deep expertise across our teams, exclusive contributors, comprehensive coverage and archive, long-standing customer relationships, and a high-quality ecommerce offering. These are the foundations of our durable business and what sets Getty Images Holdings, Inc. apart in terms of our offering and our results. We renewed key partnerships with organizations such as AFP, NASCAR, and the NHL. We increased our total annual subscription revenues to more than 54%. We grew Unsplash Plus by more than 30% to more than 50,000 subscribers. We grew custom content by more than 20% and tapped into new growth opportunities in video and custom AI training sets. We executed new foundational recurring licensing models through integration of our content into large language models and social media. Unique capabilities of Getty Images Holdings, Inc. were on display at the Milano Cortina 2026 Olympic Winter Games last month. I had the true privilege of witnessing our unparalleled operation: 120 photographers, editors, and editorial operational experts who leverage deep sports knowledge and proprietary technology to capture and distribute more than 6,000,000 images, many of those reaching the customer before the broadcast reaches its audience. Our team continues to push creativity boundaries, using new techniques and technologies to produce truly original imagery. One standout example featured photographers shooting with vintage Graflex cameras, echoing the equipment used when Cortina last hosted the games in 1950, and our customers loved it. Combine this with our rich archive, and Getty Images Holdings, Inc. provides our customers with all they needed to tell powerful editorial and commercial stories about these games. Our commercial team was on the ground, delivering best-in-class service to the International Olympic Committee and its family of partners and sponsors, including Allianz, Airbnb, Coca-Cola, Procter & Gamble, Visa, AB InBev, and Samsung Electronics, to name a few. Events like the Winter Games continue to demonstrate why global partners rely on Getty Images Holdings, Inc. content and solutions to support them in achieving their strategic storytelling aims, and why our editorial business remains a durable and essential revenue driver. In product, we remain focused on making it even easier for our customers to discover our high-quality content. As you will recall, we previously invested in machine learning capabilities that enable natural language search across our creative library. We are now extending those capabilities to our editorial offering, with testing producing promising results thus far. These investments not only improve customer experience, they reinforce our long-term competitive advantage and support stable recurring revenue across our subscription and enterprise customer base. To update on the merger, the transaction is now cleared without condition in all jurisdictions except for the UK. In its Phase 2 interim report, the CMA, the UK regulatory body reviewing the transaction, narrowed their concern to the UK editorial market. We vigorously disagree that this transaction would have any negative impact on the UK editorial market. In fact, we believe this will benefit UK customers. With that said, we are pragmatic given the extremely limited importance of Shutterstock editorial to this overall transaction. As a result, we offered the CMA remedies that we believe more than address their concerns and could be quickly executed post-closing. Subsequent to our submission of proposed remedies, we were disappointed to learn the CMA was extending their timeline to deliver the report by an additional eight weeks. We now expect a decision in June. With all that said, we enter 2026 in our thirty-first year with momentum coming out of 2025, a strong pipeline of long-term deals, and a continued customer demand for high-quality coverage and visual content. Our diversified revenue base, premium content and services, and trusted brands position us to perform consistently, even as the broader market experiences lack of variability. We remain focused on delivering our differentiated offering which makes Getty Images Holdings, Inc. the partner of choice, now and into the future. I am more excited than ever for what lies ahead. I will now turn the call over to Jennifer Leyden to take you through the more detailed financials. Jennifer Leyden: With both revenue and adjusted EBITDA landing well above the high end of our guidance, we ended 2025 with incredible momentum and a reaffirmation of the strength of our business and the value of visual content. Q4 revenue was $282,300,000, up 14.1% or 12.7% on a currency-neutral basis. Full-year revenue of $981,300,000 was up 4.5% or 3.8% on a currency-neutral basis. As Craig just mentioned, this full-year revenue performance is a new record. This is the highest annual reported revenue this company has seen in its over thirty years of existence, a fantastic achievement that is a testament not only to the power of our content, but also to the hard work and dedication of our employees across this business. Q4 results include approximately $40,000,000 of revenue recognized from the two new multiyear licensing agreements Craig mentioned. In accordance with generally accepted accounting principles, or GAAP, these deals had heavier accelerated revenue recognition in the quarter, with revenue allocated across creative, editorial, and other revenue, as a result of the content included in those deals. However, these deals combined have a total deal value of approximately $65,000,000, spanning the multiyear life of the agreements. These deals have combined cash impacts which create a future revenue stream beyond Q4 of $15,000,000 in 2025, $20,000,000 in 2026, and the balance then spread evenly across the remainder of the deal terms. Given the magnitude of these deals and the accelerated revenue recognition in Q4, there is impact across most of the financial metrics we typically comment on each quarter. I will do my best to highlight wherever there was an especially material impact. Also included in our results are certain other impacts of revenue recognition timing, which reduced Q4 revenue growth by approximately 170 basis points; however, increased the full-year growth rate by 160 basis points. Excluding the impact of the two large deals and other timing elements, Q4 and full-year revenue would have been down 0.7%, or 2.1% currency neutral, and down 1.4%, or 2.0% currency neutral, respectively. While our agency business remains challenged as expected, both corporate and media returned to growth in the fourth quarter with good momentum as we exited the year. Corporate was particularly strong with growth over 25% in Q4, fueled by gains across most of our sub-industry segments and benefiting from the impact of those two larger multiyear deals. Media was in low single-digit growth in Q4, including positive performance in our Broadcast and Production segment, which was the segment weakened most by the dual Hollywood strikes as well as the LA fires. Geographically, the Americas region, which is where the majority of the revenue from the two large deals was recorded, was up 20.8% in Q4 on a currency-neutral basis. EMEA was up 6.1%, and APAC was down 13% due primarily to challenges in the agency business. Annual subscription revenue grew 1% year on year and was essentially flat on a currency-neutral basis, with Premium Access, our largest subscription, up 4.1% in Q4, or 5.3% currency neutral. Annual subscription revenue was 48.6% of total revenue in Q4, compared to 54.9% in the prior year, with that step back due to the fact that neither of the two large deals are included in subscription revenue. So we see a formulaic step back here only. This is not in any way an indication of the health of our subscription base. In fact, excluding impact from those deals, annual subscription revenue mix was 56.6%, meaningfully up from 54.9% in Q4 2024. Active annual subscribers totaled 278,000 in the Q4 LTM period, compared to 314,000 in the comparable 2024 period. The decline was driven by iStock, where we continue to see some impact from the June 2025 discontinuation of our free trial customer acquisition program. However, Getty Images Holdings, Inc.'s annual subscriber counts remain stable and we continue to see Unsplash Plus subscriber counts grow. The annual subscription revenue retention rate was 89.9% for the Q4 LTM period, compared to 92.9% in the corresponding 2024 period. The year-on-year decline primarily reflects the absence of major political, sporting, and certain one-time events that boosted à la carte subscriber spend in 2024. Paid downloads were 92,100,000, and our video attachment rate was 15.9% in Q4 LTM, both metrics relatively flat to the prior-year period. Q4 creative revenue was $149,000,000, up 4.6% year on year and 3.1% on a currency-neutral basis. The increase was primarily driven by the impact of the accelerated revenue from the two larger deals, but also reflects growth across Premium Access, Unsplash Plus, and custom content. These favorable impacts outweighed a continuation of challenging agency trends, which were a drag on creative, with agency declining 16% in Q4. For the full year, creative revenue was $556,900,000, up 0.7% or 0.2% currency neutral. Q4 editorial revenue was $109,400,000, up 21.4% year on year and 19.9% on a currency-neutral basis. All four editorial verticals—news, sport, entertainment, and archive—were in year-on-year growth, even while up against the challenging year-on-year compare driven by the 2024 election year. This strong editorial performance was driven in part by contribution from the two large deals as well as strong growth in assignments, which were up 20.1% year on year or 18.3% currency neutral. For the full year, editorial revenue was $369,600,000, an increase of 6.9% or 6.1% currency neutral with, again, growth across all four verticals, reflecting our outstanding coverage of more than 160,000 events annually and authentic historical visual content that only Getty Images Holdings, Inc. can deliver. Q4 other revenue was $23,900,000, an increase of $9,100,000 from Q4 2024, primarily due to the impact from the two large deals. For the full year, other revenue was $54,800,000, up 35.2% on a reported and currency-neutral basis. Revenue less our cost of revenue as a percentage of revenue was strong at 74.8%, compared with 73.5% in Q4 2024, and for the full year, 73.4% up from 73.1% in 2024, with the year-on-year increase due largely to product mix. Q4 SG&A expense was $111,600,000, up $6,100,000 year on year, with our expense rate decreasing to 39.5% of revenue from 42.7% last year, with the rate favorability driven by strong revenue performance. For the full year, SG&A increased by $8,200,000 to 42.4% of revenue, down from 43.4% last year, with that decrease in rate again primarily driven by the increase in revenue. Excluding stock-based compensation, SG&A was $107,100,000 in the quarter, up $6,000,000 year on year due primarily to approximately $2,500,000 of professional fees tied to the acceleration of our SOX compliance efforts and higher incentive compensation expense tied to strong financial performance. As a percentage of revenue, adjusted SG&A decreased to 37.9% of revenue from 40.9% of revenue in Q4 2024. For the full year, adjusted SG&A increased by $13,200,000 to $399,100,000, or 40.7% of revenue, compared to 41.1% of revenue in the prior year. For the full year, SG&A included $7,800,000 of SOX acceleration costs as expected and $9,900,000 of fees related to our ongoing AI litigation. Q4 adjusted EBITDA was $104,100,000, up 29.1% or 27.2% on a currency-neutral basis. Adjusted EBITDA margin was 36.9%, compared to 32.6% in Q4 2024. For 2025, adjusted EBITDA was $320,900,000, up 6.9% reported and 5.8% on a currency-neutral basis. Adjusted EBITDA margin was 32.7%, compared to 32% in 2024. Excluding the impact of accelerated SOX compliance costs and litigation costs, our full-year adjusted EBITDA margin would have been 34.5%. These outstanding profitability results reflect not only our record revenue performance, but also our company's long-standing demonstrated ability to manage costs and maintain fiscal discipline. CapEx was $13,000,000 in Q4, a decrease of $2,100,000 year over year. CapEx as a percentage of revenue was 4.6% compared to 6.1% in the prior-year period, with that rate favorability due not only to the decreased spend, but also to strong Q4 revenue delivery. For the full year, CapEx was $59,500,000, up $2,100,000 year over year, representing 6.1% of revenue, consistent with last year and within our expected range of 5% to 7% of revenue. Adjusted EBITDA less CapEx was $91,100,000 in Q4, up 39.1% or 38.3% on a currency-neutral basis. Adjusted EBITDA less CapEx margin was 32.3% compared to 26.5% in Q4 2024. For the full year, adjusted EBITDA less CapEx was $261,300,000, an increase of 7.6% or 7% currency neutral. Free cash flow was $7,700,000 in Q4, compared to $24,600,000 in Q4 2024. The decrease in free cash flow reflects higher cash interest expense of $45,100,000 in Q4, an increase of $22,400,000 over the prior year. Cash taxes paid in the quarter were $11,900,000, down from $13,300,000 in Q4 2024. For the full year, we generated $5,700,000 in free cash flow, compared with $60,900,000 in 2024, with that full-year decrease primarily driven by an increase in cash paid for merger-related expenses. We finished the year with $90,200,000 of balance sheet cash, down $31,000,000 from Q4 2024 and down $19,400,000 from 2025. The decrease in cash year on year is due to $45,700,000 of merger-related expenses, including $12,500,000 in Q4, as well as $36,400,000 of refinancing-related fees paid during the year, with $19,600,000 paid in the fourth quarter. As of December 31, we had total debt outstanding of $2,010,000,000, which included $628,000,000 of 10.5% senior secured notes issued in Q4 to fund our pending merger, with the proceeds held in escrow; $540,000,000 of 11.25% senior secured notes; €497,000,000 term loan, converted using exchange rates as of 12/31/2025 with an applicable rate of 7.94%; $295,000,000 of 14% senior unsecured notes; $40,000,000 of USD term loan at an 11.25% fixed rate; and $5,000,000 of 9.75% senior unsecured notes. We also have a $150,000,000 revolver that remains undrawn, giving us access to $240,200,000 of total liquidity as of December 31. Our net leverage was 4.0x at the end of Q4, compared to 3.97x in 2024. Considering the foreign exchange rates, applicable interest rates, and mandatory amortization on our debt balances as of December 31, our estimated cash interest for 2026, net of interest earned on cash held in escrow, is $188,000,000. Please note the first cash interest payment related to the $628,000,000 of merger financing currently held in escrow is due in May 2026, and the full-year 2026 cash interest estimate includes a second payment due on the merger outside end date of October. In summary, we are incredibly proud to have closed the year with a financial performance that meaningfully exceeded our guidance and reflects the value we continue to provide for our customers. We look forward to building on this momentum in 2026, with the added tailwind of a strong editorial events calendar, which culminated with us doing what we do best at the Winter Olympics. With that, let's turn to our full-year outlook for 2026. We anticipate revenue of $948,000,000 to $988,000,000, down 3.4% to up 0.6% year over year, and down 4.5% to up 0.5% currency neutral. Embedded in this guidance is an assumption for FX rates with the euro at 1.17 and the GBP at 1.34, which implies a tailwind on revenue of $11,200,000, of which approximately $7,500,000 is expected in the first quarter. We expect adjusted EBITDA of $279,000,000 to $295,000,000, down 12.9% to 8.1% year over year, and down 13.9% to 9.1% currency neutral. Included in the adjusted EBITDA expectations is a similar cadence for estimated FX impact, with an approximate $3,600,000 tailwind in 2026, of which approximately $2,200,000 is expected in the first quarter. Please note the anticipated decline in revenue and adjusted EBITDA is entirely attributable to the timing of revenue recognition for the two large multiyear licensing agreements signed in 2025. This accelerated revenue impact creates a challenging comparison for 2026 and more than offsets the anticipated tailwind, especially in Q4, from the even-year editorial calendar. Excluding the $40,000,000 of accelerated revenue recognized in Q4, our full-year 2026 revenue outlook would reflect expected growth up 0.7% to 4.9% year over year, or down 0.5% to up 3.7% currency neutral, and our adjusted EBITDA would be down 2.4% to up 2.9%, or down 3.6% to up 1.7% currency neutral. So the emphasis here is that absent the impact of those challenging year-on-year comps, our core business is indeed expected to be in growth. On the cost side, our guidance includes approximately $5,600,000 in one-off increases in SG&A for continued SOX compliance acceleration efforts. Please note, all other merger-related costs are excluded from this guidance, as they are considered one-time in nature and, therefore, are excluded from adjusted EBITDA. Finally, any potential broader impacts which may result from global macroeconomic conditions remain unknown and may not be fully reflected in this guidance. With that, operator, please open the call for questions. Operator: We will now open for questions. Thank you. If you would like to ask a question, please press star then 1 on your keypad. To leave the queue at any time, press 2. Once again, please press star then 1 to ask a question. Our first question comes from Ron Josey with Citi. Ron Josey: Great. Thanks for taking the question. Maybe, Craig and Jennifer, talk to us a little bit more about the licensing deals. Clearly, these had a lot of impact on the quarter. Pretty exciting to hear about who you are partnering with. So we would love to hear more insights on just the business applicability of it and how you are thinking about these licensing deals longer term. Do we expect more to come? And then on the side of the business, Jennifer, you laid out some great examples as to why subscribers did what they did, but can you just help us a little bit more on how active annual subs declined as much as they did? And then a little bit more on retention rates, please? Thank you. Craig Peters: Great. I will take the first round and then pass to Jennifer on the subs question. So on the deals, I cannot go into—obviously, there is confidentiality associated with those agreements, so I cannot give you much more detail here. But what I think is interesting to me is it speaks to really two elements: the relevance of our content on social media, and that being a driver of one of those deals, both on the creative and the editorial side of things, and the relevance of our content through large language models, again both creative and editorial. And so as this world continues to evolve and move forward, it reinforces something I have said for a long time: people are still going to need high-quality pre-shot content. They are still going to need a window into the world that we cover on an editorial basis. They are still going to care about what has happened and celebrate the past, and they are going to continue to reach audiences in an impactful way, in an authentic way. So we will be talking probably a little bit more about these deals in the future. I would say I continue to see a lot of opportunity across those two spheres, and we are focused on delivering more deals within those two spaces. Again, we know that there is demand for our content within those spaces. So, yes, I think we will see more of that as we go forward. Hopefully, we will not put Jennifer through too many gyrations on having to speak to with and without those numbers given the acceleration, but they are good things to have at the foundation of this business, and they speak to the long-term demand. Jennifer, do you want to pick up on the sub side of things? Jennifer Leyden: Yes, sure. So for the step back in active annual subscribers, that is almost entirely due—Ron, you might recall—we ended our free trial client acquisition program back in June 2025. So we are still sort of cycling through the impact of exiting that program. So that decline is really attributable to that change and ceasing that program. On the revenue retention rate, the step back there is sort of a few different individually smaller items that are really driving that decrease. So there is a difference year on year just in terms of the editorial event revenue, and when you get some of those big events, those are cycles where you see subscribers spend outside of their subscription. So the decrease in that editorial event revenue has an impact on that expansion of subscription spend outside of the subscription that is driving a bit of a decline there. There are several events—one-off events, some of them in the entertainment space—where we would have gotten one-off licensing deals that, again, drive that spend outside of the subscription for an annual subscriber. So that is a bit of a drag there year on year. And then to the extent we still have growth in our smaller ecommerce subscriptions, which we do, even with that free trial program being ended, those do come with lower revenue retention rates, so that continues to be a bit of a downward impact on that annual revenue retention rate. So there are a few items in there. We still believe that this rate will come back into the low to mid-90s, as we have said. When that will be, it is likely to be—we will start seeing that once we fully cycle through the one-year anniversary of that. More likely is when we really should fully cycle out of that impact of the free trial exit, so call that sometime Q2, Q3. Craig Peters: Thanks, Jennifer. I would just add to Jennifer's comments that the renewals that we are seeing, Ron, both from a volume and a revenue renewal rate, are entirely consistent. So you are just seeing some mix changes within the business and then some spend outside of the subscriptions, but the retention rate of these customers across Unsplash and iStock and Getty Images Holdings, Inc. has been really consistent and predictable, and so that is another real positive sign for the business. Operator: Thank you. We will move next to Alex Levine with Benchmark. Alex Levine: Hi, Craig and Jennifer. This is Alex on for Mark. Thanks for taking the questions. For 2026 revenue guidance, can you qualify the mix of licensing for training purposes relative to licensing display for LLMs, and whether it is recurring revenue from deals struck in 2025 converting to new deals in the pipeline? And essentially, whether either of those are baked into the 2026 guide. Thank you. Jennifer Leyden: Yes, I can take that. So I think, first, just to make sure we are clear here, the two large deals that we talked about quite a bit—with and without on this call—those are not the pure data licensing deals that you might be thinking of, some that we have mentioned in prior quarters. So I just want to make that clear that there is a mix there. We cannot quantify going forward in 2026 where we would see that revenue land, whether it is data licensing, display, broader licensing. So that is just not something we have baked into guidance with any specificity at this point. Broadly speaking, when we think about that bucket of other revenue where there are traditional data licensing deals, we still expect that to be low single-digit percentages of total revenue. You know, as Craig mentioned at the top, there is a pipeline. There will be more of these types of deals that we see in Q4 into 2026, but nothing meaningfully baked in there for specific new deals going forward. We do have—you know, we mentioned for those two large deals that we recognized $40,000,000 in Q4—the total deal value across the two of those is $65,000,000, so there will be an impact in 2026, roughly $10,000,000 of recurring revenue just from those deals. And then we have a bit of revenue forward from some of the other deals we booked, you know, smaller deals in 2025 and 2024 as well. Alex Levine: Thank you. Super helpful. And then last question: just roughly what percent of your exclusive editorial content remains untouched by LLMs for training purposes? Craig Peters: I wish I could really answer that, Alex. We do not license out our editorial content in any way, shape, or form with respect to AI training. So that is a decision that we have made within the editorial business. I will not go into all the details of why that is the case, but as an editorial outlet, we feel it is within our rights to cover the world, but not necessarily be licensing the likeness of other individuals and property and IP out into the AI space. But that said, as we have referenced before, our site has been scraped by AI entities that are trying to obfuscate that from us. And there are third-party datasets that have been constructed around our imagery. And our imagery sits all over the Internet, demonstrated by, you know, that large social media—our content is everywhere, and so it can be picked up even away from our site where we do not have visibility. So I cannot give you that answer in a level of specificity. But what I can say is that we are seeing more AI entities that are looking to do the right thing by licensing content. Again, that is not our editorial content; that is our creative content. But we are really enthusiastic about the large language models looking to leverage our content in their product experience, and we are excited about social media looking to do the same. Alex Levine: Very helpful. Thank you, guys. Operator: Thank you. And this concludes our Q&A session. I will now turn the meeting back to Steven Kanner for closing comments. Steven Kanner: Thank you again for joining us today and for your continued interest in our company. As always, our team is available to follow up on any additional inquiries you may have after the call. We look forward to staying connected and updating you on our progress in the quarters ahead. Have a great rest of your day. Operator: This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Good afternoon, and welcome to the Peraso Inc. Fourth Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded today, Monday, 03/16/2026. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead. Jim Sullivan: Good afternoon, and thank you for joining today's conference call to discuss Peraso Inc.'s fourth quarter and full-year 2025 financial results. I am Jim Sullivan, CFO of Peraso Inc., and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release and a related Form 8-K, which was filed with the Securities and Exchange Commission. The press release and Form 8-Ks are available on Peraso Inc.'s website at www.perasoinc.com under the Investor Relations section. There is also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on the Investor Relations website. As a reminder, comments made during today's conference call may include forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. Peraso Inc. advises caution in reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross profit, adjusted EBITDA, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, cash flows, or other financial items, including anticipated cost savings, as well as any statements concerning the expected development, performance, and market share or competitive performance of our products or technologies, and any statements related to future financing arrangements or capital transactions and the evaluation or pursuit of strategic alternatives. All forward-looking statements are based on information available to Peraso Inc. on the date hereof. These statements involve known and unknown risks, uncertainties, and other factors that may cause Peraso Inc.'s actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Peraso Inc.'s public filings with the Securities and Exchange Commission. Peraso Inc. 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. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP. With respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, severance costs, amortization of intangible assets, and the change in fair value of warrant liabilities. These non-GAAP financial measures, definitions, and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8-Ks which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available on the Investor page of our website. I will now turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron? Ron Glibbery: Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you joining today's conference call. We closed out 2025 with a solid fourth quarter that was in line with our guidance range and supported by continued year-over-year growth in millimeter wave product shipments. For the full year, revenue from our millimeter wave products grew approximately six-fold compared to 2024. Together with healthy gross margins, and our disciplined approach to expense management, this contributed to a meaningful improvement in our bottom line results for the year. I continue to be pleased with our team's execution over the past several. The year-over-year expansion in millimeter wave revenue underscores the growing commercial traction of our 60 gigahertz solutions in multiple targeted end markets. It also reflects a combination of increased product shipments as well as the ramp of newly secured design wins across both new and existing customers. Notably, we have achieved this while maintaining tight control over operating expenses. Turning to slide four. Fixed wireless access remains our largest and longest served end market. Not only was it the primary driver for our millimeter wave revenue growth in 2025, but we believe that fixed wireless access will continue to be a sizable ongoing market opportunity for our 60 gigahertz millimeter wave technology. We saw a broad recovery in customer demand and order trends throughout the year, which included notable traction for our fully integrated Dune platform as well as our prospective 60 gigahertz millimeter wave modules. Specific to our Dune platform, we have seen sustained uptake by customers for deployments of high-speed wireless broadband in dense urban environments. The fundamental performance benefits of the integrated platform, including lower cost deployment, low power, long range, and point-to-point-to-point capabilities, continue to resonate with a growing list of wireless Internet service providers that span North America as well as Africa. More broadly, I want to briefly reiterate two significant fixed wireless access customer wins that we secured in 2025. First, in July, we announced that Tachyon Networks had selected Peraso Inc.'s prospective modules for their latest outdoor 60 gigahertz gigabit wireless solution, supporting up to 48 client connections per sector and targeted for cost-effective deployments in both dense urban and rural environments. Then in September, we announced our renewed collaboration with Wheeling to accelerate cost-effective deployments of a multi-gigabit mesh architecture for business and consumers in dense urban neighborhoods across multiple major U.S. cities. We believe these customer wins position us well for continued growth over coming years. Most recently, in early March at Mobile World Congress, MicroSeq launched its next-generation 60 gigahertz wireless NRA point-to-point product incorporating Peraso Inc. technology. Given this customer's substantial market share of wireless Internet service providers globally, we believe this product launch has the potential to reinforce our position as a leading provider of 60 gigahertz semiconductors for the fixed wireless access market. Today, we continue to support a wide span of ongoing proof of concepts utilizing Peraso Inc.'s 60 gigahertz technology with a diverse group of wireless Internet service providers. If additional proof of concepts are converted into deployments, we would expect incremental production orders to support sustained year-over-year growth of the millimeter wave product revenue. Moving to slide five. Beyond fixed wireless access, we have continued to see increased market awareness of 60 gigahertz technology extending to additional end markets, most notably tactical communications. In fact, 2025 marks a significant step forward for Peraso Inc. as we successfully transitioned an initial prospective customer engagement on a conceptual military defense application from an emerging adjacent opportunity to what we now view as a definitive new market vertical with high growth potential. In April, we achieved the first major milestone toward commercialization within the tactical communications market. This was highlighted by our announced contract to incorporate Peraso Inc.'s 60 gigahertz wireless technology into a leading specialized defense contractor's innovated and first-of-its-kind deployable system solution for enhanced situational awareness on the battlefield. We delivered initial production shipments in support of our joint solution with this defense customer in June. And then we were pleased to report in November the successful completion of initial field trials. Notably, this initial customer engagement has served to further validate the robust performance of our technology, while also demonstrating why our millimeter wave solutions are particularly well suited for these environments. Traditional wireless communications are highly susceptible to NME detection and jamming. In contrast, 60 gigahertz millimeter wave can offer stealthy communication characteristics thanks to narrow beamforming, dynamic beam steering, and oxygen attenuation. These characteristics are designed to provide low probability of detection, low probability of interception, and strong anti-jamming characteristics, all while operating in an unlicensed frequency band and avoiding interference with licensed spectrum. Today, the jointly developed solution for enhanced situational awareness is undergoing additional planned field trials with our lead defense contractor. The collective feedback from these trials has been consistently positive and we continue to believe this solution and partnership could represent a meaningful long-term revenue opportunity for Peraso Inc. Having said that, the progress we achieved over the past year established a strong foundation for broader engagement with our lead customer and for an expanded presence in the tactical communications market. Earlier this month, we were pleased to both name Intact as our lead defense contractor customer and also announced that Intact selected Peraso Inc.'s 60 gigahertz millimeter wave technology for use in its next-generation drone identification friend-or-foe system. Given the significance of this latest win, and new application for our technology, I will turn to the next slide to review additional details. To further highlight this recent win and its validation of our 60 gigahertz millimeter wave technology for mission-critical defense applications, I want to briefly talk about the capabilities that we are enabling for Israeli defense contractor customer. Intact selected Peraso Inc. technology to serve as the core communications back for its next-generation drone identification friend-or-foe system, engineered specifically for highly contested electronic warfare environments. With the rapid proliferation of drones on the battlefield, secure identification systems are becoming essential to prevent friendly fire incidents and enable safe coordination between unmanned and manned forces. This innovative platform enables secure, real-time, mutual authentication between friendly drones and ground forces, allowing counter-drone systems and battlefield operators to rapidly distinguish friend from foe in today's increasingly crowded skies. A fundamental characteristic of our 60 gigahertz millimeter wave technology is its secure and directional communications channel. Additionally, our beamforming wireless transceivers deliver low-power links with extremely low probability of detection, all of which makes our technology ideal for dense battlefield environments where traditional radio frequency signals can easily be jammed and or compromised. Lastly, I want to emphasize that this recently announced mile is a result of an ongoing multi-project collaboration with Intact over the past two years, during which we have consistently demonstrated the readiness of Peraso Inc.'s millimeter wave technology to enable diverse mission-critical military communications applications. Turning to slide seven. While fixed wireless access and tactical communications remain our primary focus area, we continue to see compelling incremental opportunities in adjacent markets. Many of these adjacent market opportunities originate with a prospective customer approaching us looking for a solution and the significant versatility of our 60 gigahertz millimeter wave technology allows us to solve connectivity challenges they have not been able to overcome using traditional wireless technology. One example that I highlighted on a previous conference call was our first ever production shipment around 60 gigahertz millimeter wave's unique combination of multi-gigabit data rates for high-resolution video streaming, ultra-low latency for real-time performance, and exceptional power efficiency, which is critical for battery-operated edge AI devices. To highlight another recent milestone, during the fourth quarter, we announced our collaboration with Bayer Wertz. We are supplying our latest 60 gigahertz perspective modules to power their BX60 platform, enabling multi-gigabit wireless connectivity, specifically designed for robotaxi fleet vehicles and physical AI applications. This partnership directly addresses one of the biggest bottlenecks in autonomous vehicle operations, the need to rapidly offload terabytes of telemetry and high-resolution camera data when vehicles return to depots for charging, while simultaneously delivering software updates. Conventional Wi-Fi and 5G solutions can easily become oversaturated under these demands. The VX60 system delivers breakthrough performance, supporting up to 1 terabyte of data transfer per vehicle per hour, which we believe can surpass the capabilities of traditional alternatives. As I stated in our announcement, this is exactly the kind of challenge our 60 gigahertz products were designed to solve. Autonomous vehicles and the AI systems that power them process tremendous amounts of data and require immense bandwidth, and that is what our technology does extremely well. This robotaxi application could represent one of the largest scale uses of our millimeter wave solutions to date and further validates the unique value we bring to customers across diverse edge AI applications. Buyerworks and its robotaxi platforms are a perfect example of how adjacent opportunities expand our served addressable market and help diversify our revenue base beyond fixed wireless access and tactical communications. In closing, we are encouraged by the growing market awareness of 60 gigahertz wireless technology and its unique ability to deliver high bandwidth and secure connectivity in congested operating environments. Our focus for 2026 remains on broadening our customer base and pipeline of design wins across fixed wireless access and tactical communications while selectively pursuing high-growth opportunities in adjacent markets such as edge AI. Combined with our ongoing commitment to disciplined expense management, we believe we are well positioned to deliver continued year-over-year growth in millimeter wave revenue in our operating results over the coming year. Lastly, before turning the call over to Jim, I want to acknowledge a unique challenge that we recently became aware of and which we now anticipate to have a negative impact on our top-line results for the first quarter. Due to an unexpected delay in the receipt of key materials from one of our Asia-based suppliers, which as of today we believe is stuck in customs, we are unlikely to be able to fulfill a significant order that was previously scheduled for shipment during the first quarter. Although we do expect to fulfill this order during the second quarter, the delayed shipment is anticipated to result in more than $500,000 impact on our anticipated revenue for the first quarter. While we are clearly disappointed by the delayed shipment, I want to emphasize that this is largely reflective of a temporary supplier logistics issue and we remain optimistic about the future prospects of Peraso Inc.'s overall business. With that, I will hand the call over to Jim to review the financials and provide our revenue outlook for the first quarter. Jim Sullivan: Thank you, Ron. Turning now to the results for 2025. Total net revenue for the fourth quarter was $2,900,000 compared with $3,200,000 for the prior quarter and $3,700,000 for 2024. Full-year 2025 net revenue was $12,200,000 compared with $14,600,000 in the prior year. Product revenue in the fourth quarter was $2,800,000 compared with $3,100,000 in the prior quarter and $3,700,000 in 2024. The decrease in product revenues for 2025 from the comparable period of 2024 was primarily attributable to the reduction in shipments of memory IC products due to previously announced end of life of the products. This was partially offset by a year-over-year increase in shipments of millimeter wave products in 2025. Full-year 2025 product revenue was $11,800,000 compared with $14,200,000 in 2024. Specific to sales of millimeter wave products, revenues were $2,400,000 in 2025 compared with $3,000,000 in the prior quarter and $200,000 in 2024. Total sales of millimeter wave products for full-year 2025 increased to $9,100,000 from $1,300,000 in 2024. GAAP gross margin was 52.2% in the fourth quarter, down from 56.2% in the prior quarter and compared with 56.3% in the year-ago quarter. GAAP gross margin for full-year 2025 was 58.0%, compared with 51.7% in the prior year. The increase in GAAP gross margin for full-year 2025 compared with 2024 was primarily attributable to increased millimeter wave margins due to increased shipments, and an increase in memory IC product margins due to reduced amortization expense related to intangible assets, which were fully amortized as of 12/31/2024. On a non-GAAP basis, gross margin for the fourth quarter was 52.2%, compared with 56.2% in the prior quarter and compared with 71.6% in 2024. Full-year 2025 non-GAAP gross margin was 58.0%, compared with 67.2% in 2024. The decreases in non-GAAP gross margin for the fourth quarter and full-year 2025 compared with the comparable periods of 2024 were primarily attributable to reduced shipments of our memory IC products. GAAP operating expenses for 2025 were $2,800,000 compared with $3,000,000 in the prior quarter, and $3,700,000 in 2024. GAAP operating expenses for full-year 2025 were $11,800,000 compared with $20,000,000 in the prior year. The decrease in operating expenses on a GAAP basis from the comparable period of 2024 was primarily attributable to reduced stock-based compensation expense and amortization expense related to intangible assets fully amortized in 2024, as well as a $2,300,000 decrease in severance and software license obligation costs. Non-GAAP operating expenses, which exclude stock-based compensation, severance costs, and amortization of intangible assets, were $2,700,000 in the fourth quarter compared with $2,900,000 in the prior quarter and $3,200,000 in 2024. Non-GAAP operating expenses for full-year 2025 were $11,300,000 compared with $14,900,000 in 2024. The decrease in operating expenses on a non-GAAP basis for full-year 2025 compared with 2024 was primarily attributable to a $1,800,000 decrease in software license obligation costs, and the benefits realized from previously implemented cost reductions and ongoing cost containment initiatives. GAAP net loss for 2025 was $1,200,000, or a loss of $0.13 per share, compared with a net loss of $1,200,000, or a loss of $0.17 per share in the prior quarter, and compared with a net loss of $1,600,000, or a loss of $0.37 per share in the same quarter a year ago. Full-year 2025 GAAP net loss was $4,800,000, or a loss of $0.67 per share, compared with a net loss of $10,700,000, or a loss of $3.57 per share in 2024. Non-GAAP net loss, which excludes stock-based compensation, amortization of intangibles, severance costs, and changes in fair value of warrant liabilities, for 2025 was $1,200,000, or a loss of $0.13 per share. This compared with a non-GAAP net loss of $1,100,000, or a loss of $0.15 per share in the prior quarter, and a net loss of $500,000, or a loss per share of $0.13 in the same quarter a year ago. Full-year non-GAAP net loss for 2025 was $4,300,000, or a net loss of $0.60 per share, compared with a net loss of $5,100,000, or a net loss of $1.71 per share in 2024. The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for 2025 was approximately 9,200,000 shares. Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock-based compensation, amortization of intangible assets, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $1,100,000 in 2025, compared with negative $1,000,000 in the prior quarter and negative $400,000 in 2024. Full-year 2025 adjusted EBITDA was negative $4,000,000 compared with negative $4,500,000 in 2024. With regard to the balance sheet, as of 12/31/2025, the company had approximately $2,900,000 of cash, compared with $1,900,000 as of 09/30/2025. The net increase of approximately $1,000,000 in the company's cash balance for the fourth quarter reflected approximately $2,100,000 in net proceeds from sales under the company's at-the-market offering program during the fourth quarter. As of today's call, the company has approximately 12,000,000 shares of common stock and exchangeable shares outstanding. As previously disclosed, the company has been exploring potential strategic alternatives, including a merger, sale of assets, or other similar transaction, as well as various potential sources of additional capital. Aside from confirming that the strategic review process continues to be ongoing, in coordination with the company's financial adviser, there are no related updates to share on today's call from what we have previously disclosed. Now turning to our outlook. We remain optimistic about the breadth of customer engagements for our millimeter wave solutions across fixed wireless access, tactical military communications, and other markets. However, as Ron previously discussed, a large order that was previously planned for shipment in the first quarter is now expected to be shipped in 2026. Given the size of the order, this delay is expected to have a meaningfully negative impact on our revenue forecast for the first quarter. Unrelated to this order, overall visibility into future demand is lower due to a combination of irregular order patterns from our fixed wireless access customers in addition to having multiple new customers that have yet to establish observable order patterns. Based on revenue recognized year to date, and assuming no contribution from the previously mentioned delayed order shipment, the company currently expects total net revenue for the first quarter of 2026 to be approximately $1,200,000. This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the Q&A session. Operator: Thank you. We will now open for questions. At this time, we will be conducting a question and answer session. You may press star one to ask a question. You may press two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question today is coming from David Williams from Benchmark. David, your line is live. David Williams: Hey. Good afternoon, gentlemen. Thanks so much for taking my questions, and congratulations on the progress. Ron Glibbery: Thanks, Dave. David Williams: Maybe, Ron, first, if you think about that Intact deal, when should we think about the revenues from that beginning to start coming in? And is there any way to size the total revenue opportunity for what you see in front of you here now? Ron Glibbery: Good question. I mean, really, that revenue is comprised of two components. One is what we call nonrecurring engineering, which is NRE, of course, a onetime payment, and the other is what we call production revenue. We are seeing, I would say, 90% NRE right now, 10% product revenue. I am not sure, Dave. We have not split it out specifically. Maybe I will leave it to Jim to explicitly talk about it. But we see the real shift to what I would call production revenue. As a matter of fact, I just spoke with them earlier today. The real production is going to shift to be in the second half of 2026. So that is what we are looking at right now. We do expect more nonrecurring engineering revenue. Primarily, it is just really adapting this. One of the primary goals for us is getting the power consumption down, which has taken a lot of effort. But I would say right now, the meaningful revenue is 90% what we call NRE, and in 2026, that will shift into product revenue, and we have real visibility into that. Sorry. Are you still there? David Williams: Yeah. Sorry about that. Thanks for the color. I could not get my phone off mute. Ron, you also talked about the adjacent market opportunities and clearly a lot of benefits there. Is there a way to quantify the number of customers that you are in active conversations with? And maybe provide a little color on the different segments where you think that could move quickly into an order or potentially production? Ron Glibbery: So, the number of customers there, we are really looking at maybe on the order of three to five. But the difference is they are really more household names, I would say. Again, confidentiality prevents me from explicitly saying, but certainly Fortune 100 companies, if you will. The feedback to us is the sooner, the better. Take the robotaxi situation, for example. Again, these vehicles collect information all day long. They get back, they have to recharge, they have one hour to download a terabit of data, and then go down to the data center and process it, and then send new algorithms back up to the vehicle. Now if it was just one vehicle, that is one thing. But if it is 100 vehicles, for example, the real challenge is the aggregate throughput here, not just one vehicle, but hundreds of vehicles. To answer your question, this customer would take our existing silicon. I could see us being in production at the end of this year, frankly. But we could even see ourselves going into next-generation chips with this customer because the feedback from the customer is the demand is limitless. So we are really hoping that we can get these devices into production later this year, early 2027. Now the other thing I will mention is, I really want to shout out to this customer that we did a press release with called Barworks. They have a very sophisticated software solution that we have been working on for several years, frankly, probably three or four years, and they are a key partner for us. I think what we have done a very good job of is those partnerships where we do not have to invent the entire system, and we work with smart partners to facilitate some of these opportunities. That is a good example of how I would summarize the demand for very high data rate systems and doing that in a congested environment. Our existing silicon addresses that, and I could see us get into production at the end of this year and into 2027. I hope that answers your question. David Williams: It does. Thanks again. And let me ask one more question if you do not mind. Just given the state of current affairs and the current conflict, I am curious if you are seeing inbound interest there. It seems like the technologies that we are using today could do some advancing. It seems like you might have a solution that could be very beneficial for us, especially on the drone application. Are you seeing that, and can you talk about your go-to-market strategy in that market? How you are going to the market, if you are waiting for those to come to you, and that development there? Thanks. Ron Glibbery: I have to say when we did the last press release last week with our drone partner, it was a company in Israel called Intact, and Intact, again, a value-added partner who has developed, in conjunction with us, this friend-or-foe identification system. One of the main evolutions we have seen in warfare over the last two years is this idea of drone swarm and the sky is getting cluttered with drones. Militaries need to identify friend or foe, and they do not want to be shooting their own drones out of the sky. Alternatively, they do not want drones shooting their own people on the ground. That is the real traction. I mean, this really started out as an infantry solution, but clearly, drone interest has exploded here. Without getting into detail, we are definitely seeing an explosion—no pun intended—of interest in terms of that solution for friend-or-foe identification, which is a classic problem, frankly. But we have come a long way in solving that. David Williams: Thanks, and best of luck. Ron Glibbery: My pleasure. Operator: Thank you. Once again, it will be star one if you wish to ask your question today. The next question will be from Kevin Liu from K. Liu and Company. Kevin, your line is live. Kevin Liu: Hi. Good afternoon, guys. Maybe just starting with your—just wanted to start with your FWA business. You talked about the resurgence you saw in sales to customers last year. As you talk to them, where do you think inventory levels are with those customers, and when would you expect to see more growth or a return of orders from those folks? Got it. And just with respect to that large order you referenced, I am curious if the delay in timing from Q1 to Q2 impacts order patterns for the remainder of this year, or was this a fairly significant order that would cover the full year anyway? Ron Glibbery: Frankly speaking, we were hoping for this large shipment in Q1 with MicroTig. For many of our customers, we are expecting to see those orders get replenished in Q3 and Q4, so we are standing by for that. I would say, for many of our customers, that is the timing we are looking for. Obviously, it is almost Q2 now, so we expect to see those orders come through in Q2 and Q3 and the rest of this year. It will just get into queue and make an orderly push with our orders for the rest of the year. I think it will have an impact, but we are only looking at a couple of weeks, so it is not going to be an extremely material impact. We are looking at probably two to three weeks in terms of our order pipeline throughout the year. Kevin Liu: Understood. With some of these newer opportunities you are winning, particularly with Intact, is there any increase in investment you plan to make either on the R&D side or elsewhere, and how might the ramp-up affect your gross margins as those move to production? Ron Glibbery: We have had a policy over the last couple of years, Kevin, to charge the customer. We do not make a lot of profit on the engineering, but our view is if the customer wants the solution, they have to pay for it. We are not in a position to really bet on the come. These projects, I would say, almost universally, the customer is making a significant contribution to the engineering and the R&D effort. I see that continuing. We are just not in a position where we can really bet on the come. It also validates the market because if the customer is financing that, he believes in the market himself. That is our operating strategy right now, and we see ourselves continuing with that. Jim Sullivan: Yeah. And, obviously, that is funding our R&D expense and personnel costs, etcetera. Also, we generally come out of it with another product or another version of the product to bring to market. If the NRE combined with production orders are large enough, in some cases, the customer has exclusivity, although we work with the customer on that because they also want to see us sell it elsewhere to bring down pricing, rather than just to them. If they do not hit numbers, etcetera, then we address it. That is the other area where we work on expanding our product portfolio with contribution from a customer, which is worthwhile. Kevin Liu: Okay. Appreciate all the color there. It sounds like there is a lot of good traction in some of these new markets, so good luck as you make your way through the year. Jim Sullivan: Thank you. Operator: Thank you. I show there are no further questions in the queue at this time. We will conclude today's conference call. Thank you for your participation, and you may now disconnect. Ron Glibbery: Thank you very much, everyone. Bye-bye.
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Playboy, Inc.'s fourth quarter and full year 2025 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. This conference is being recorded today, Monday, 03/16/2026, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Playboy, Inc.'s Chief Executive Officer, Ben Kohn, and Chief Financial Officer and Chief Operating Officer, Marc Crossman. I would like to remind you that the information discussed today is qualified in its entirety by the Form 8-K and Form 10-K, filed today by Playboy, Inc., which may be accessed on the SEC's website and on Playboy, Inc.'s website. Please note that statements made during this call, financial projections, and other statements that are not historical in nature may constitute forward-looking statements. Such statements are made on the basis of Playboy, Inc.'s views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update them. Forward-looking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecast, including those risks set forth in the SEC filings and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. In addition, throughout today's call, the company may refer to Adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. A reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Playboy, Inc. Investor Relations website. At this time, I would like to turn the call over to Chief Executive Officer Ben Kohn. Ben, the floor is yours. Ben Kohn: Thank you, operator, and thank you to everyone for joining us today. Welcome to our fourth quarter and full year 2025 earnings conference call. I am pleased to share that we have made meaningful progress across all four pillars of our strategy, delivered strong financial results including our fourth consecutive quarter of positive Adjusted EBITDA, and made two senior hires who will be instrumental in driving our next phase of growth. Let me walk you through what we have accomplished and where we are headed. 2025 was a defining year for Playboy, Inc. We completed a strategic transformation that has fundamentally repositioned the company for sustainable, profitable growth. We exited the year with four consecutive quarters of positive Adjusted EBITDA, reduced debt by $58 million since 2024, as well as defined the pathway to reduce debt by a further almost $52 million through our UTG China deal. We built a clear, diversified platform around four pillars: media and experiences, licensing, hospitality, and our Honey Birdette direct-to-consumer business. Every part of this business is now oriented towards high margins, recurring revenue, and brand-led growth. We are actively investing in the business across two key areas: content and media to drive audience growth, subscription revenue, and experiences, and building out our digital and hospitality footprint. To execute on these priorities, we recently made two critical senior hires: David Miller as President, Media and Brand, and Philip Picardi as Chief Brand Officer and Editor in Chief, both world-class leaders with deep experience scaling iconic media brands. Additionally, our UTG China partnership, which we expect to close as early as this week, will further accelerate our deleveraging and provide flexibility to invest in growth. There is a generational white space in the men's lifestyle category. Young men are consuming content at record volumes but remain underserved by sophisticated, trusted voices. No one can match Playboy, Inc.'s 72-year legacy of speaking credibly about relationships, intimacy, and culture. And because women are at the center of our brand, our message connects with men through women, not in opposition to them. That positioning directly supports every pillar of our strategy. Let me walk you through our progress. Pillar one, media and experiences. Content is our brand marketing. It drives relevancy, it expands our audience, and creates IP we monetize across the ecosystem. Under Philip Picardi's leadership as our new Chief Brand Officer and Editor in Chief, we are rebuilding our editorial engine with high-quality journalism and photography across our core authority areas: relationships, dating, intimacy, and modern masculinity, with expansion into entertainment, sports, gaming, and fashion. We are also rebuilding our website from the ground up, with a full relaunch expected later this year. The new digital platform will be the hub for a subscription-based revenue model. Free content drives top-of-the-funnel audience growth, while premium content and experiences sit behind the paywall, creating predictable recurring revenue. The magazine remains the top-of-funnel differentiator. Being featured in it captures creators and celebrities whose content powers our social channels and drives audience growth. The magazine relaunch is going exceptionally well. We will feature a major female music star with over 70 million Instagram followers as our newest cover feature, which underscores the caliber of talent that wants to be associated with the Playboy, Inc. brand today. These magazine-related brand initiatives serve as the top of our funnel, driving massive awareness and engagement that we then convert downstream. We have over 25 million social followers generating billions of impressions annually. The Playmate Search has been the standout, with tens of thousands of creators entering, mobilizing their followings, and producing daily user-generated content that reduces our production costs while keeping channels active. Each month, we will feature a Playmate of the Month, launch her across our social channels, and then drive our audience behind our paywall. Converting free engagement into paying subscribers is proving to be a scalable recurring revenue mechanism. Paid voting, which we successfully launched in Q4, has multimillion-dollar potential and significant room to grow. On the programming side, we are developing original content inspired by historic franchises like the Playboy Interview and Playboy After Dark, including a feature film with Hefner Capital and a television adaptation of the great playmoocer, structured as a licensing revenue and profit share to keep us asset-light. Beyond film and television, we are building out virtual audio and video content that will live on our owned platforms and be distributed across third-party channels, creating new monetization pathways through advertising, sponsorships, and paid subscriptions. The content strategy works hand in hand with our events and experiences business, and we can continue converting lifestyle aspiration into participation revenue through curated experiences: Midsummer Night's Dream parties, poker and golf tournaments, and more. Collectively, our media and experiences pillar is being built to generate revenue across advertising, sponsorships, paid voting, subscriptions, and events and experiences—multiple streams from a single content investment. Pillar two, licensing. Licensing is the most predictable, highest-margin part of our business. We generated over $46 million in licensing revenue in fiscal year 2025, over 38% of total revenue and a 90% gross margin. 90% of that revenue was guaranteed through contractual commitments, and we have over $343 million in unrecognized future revenue. The most significant development is our partnership with UTG Brands Management Group. In February 2026, we announced the sale of 50% of our China licensing business to UTG for $122 million in total cash: $45 million purchase price, $67 million in guaranteed minimum distributions over the next eight years, and $10 million in brand support payments. This partnership delivers immediate balance sheet improvement, with almost $52 million earmarked for debt reduction, and is immediately accretive to earnings while we retain 50% ownership with profit share upside. Looking ahead, we see significant white space in EMEA, Latin America, and APAC. Playboy, Inc.'s global recognition far exceeds its licensing penetration, with our digital licensing anchored by the $20 million per year annual minimum guarantee by Borg strategic partnership. Going forward, we are being more selective in our licensing approach, focusing on fewer, bigger, higher-quality partners who can drive meaningful scale and strengthen the brand in the marketplace. This disciplined strategy improves the quality of licensed products, supports pricing power, and enhances our long-term contractual value. Licensing gets stronger with increased brand awareness, which is exactly what our media pillar delivers. And with David Miller now overseeing both media and licensing, we have the leadership alignment to fully capitalize on that strategy. Pillar three, hospitality. Over 72 years, Playboy, Inc. has owned and licensed 45 clubs across nine countries. We are now relaunching membership clubs, starting with our Miami Beach club, as a new mansion. We have signed a non-binding letter of intent to raise capital from third parties for the build-out and have selected a highly experienced hospitality operating partner to bring this vision to life. This structure limits capital for Playboy, Inc. while allowing us to participate through licensing, membership revenue, and brand association. We are making meaningful progress and are excited about the potential for this concept to become an exciting pillar of our business moving forward. Pillar four, Honey Birdette. The Honey Birdette story is about brand health and cash flow, and Q4 delivered strong results. Sales grew 9% year over year on a reported basis, with full-price sales up 21%. Gross product margin expanded to 77.8%, up 140 basis points, driven by our focus on full-price selling and more disciplined discounting. Retail was a standout channel, up 17% like-for-like with every market positive. The UK led at 36% and the USA at 21% growth. Digital grew 7%, with the US up 16% and average order value lifted 7% across all regions. In mid-October, we launched the Honey Club, our loyalty program, which has already reached approximately 80,000 members. The combination of a healthier retail base and growing digital channel positions Honey Birdette for durable, profitable growth. We believe this asset could serve as a strong monetization opportunity down the line, helping us to further delever. In summary, 2025 was the year we completed Playboy, Inc.'s transformation into a focused, high-margin, asset-light platform. The cultural moment is ours. Our licensing foundation is robust, Honey Birdette is profitable and accelerating, and we have the strategy and brand equity to execute. I would now like to turn the call over to Marc to walk through some key financial details. Marc Crossman: Thank you, Ben. Revenue increased to $34.9 million as compared to $33.5 million in 2024. The increase reflects the continued strength in the company's global licensing business, further supported by strong Honey Birdette performance. Operating expenses excluding impairments decreased to $32.2 million as compared to $37.9 million in 2024. The decrease was due primarily to a 15% reduction in selling and administrative expenses as a result of the company's continuing effort to improve operational efficiency, including converting its adult business from an operating model into a licensing model. It is important to note that selling and administrative expenses in 2025 were burdened with approximately $1.2 million of transaction expenses related to the UTG transaction, as well as $2.1 million of additional brand marketing expense. Net income increased to $3.6 million, or $0.03 per share, a significant improvement as compared to a net loss of $12.5 million, or a net loss of $0.15 per share, in 2024. The improvement reflects higher gross margins, the company's continued focus on cost management, as well as ongoing deleveraging efforts and a benefit from income taxes. Adjusted EBITDA increased to $7.1 million, representing our fourth consecutive quarter of positive Adjusted EBITDA, compared to an Adjusted EBITDA loss of $0.1 million in 2024. Excluding litigation expenses, Adjusted EBITDA would have been $8.0 million in the fourth quarter. On the balance sheet, we reduced senior debt by nearly $58 million to approximately $160 million from 2024. With the UTG transaction, almost $52 million of proceeds will go towards further debt reduction, and we expect the transaction to be immediately accretive, including the anticipated reduction in interest expense. This completes my prepared comments. Let me turn the call back to Ben for closing remarks. Ben Kohn: Thank you, Marc. We have built a focused, financially disciplined platform that is generating positive Adjusted EBITDA, aggressively paying down debt, and executing across all four pillars of our business. The UTG China partnership, which we expect to close as early as this week, validates the enormous on-top value of the Playboy, Inc. brand globally. It delivers $122 million in contracted cash payments, with nearly $52 million earmarked for debt reduction, and is immediately accretive to earnings. Beyond the financial impact, it gives us a world-class operating partner in the largest consumer market in the world and the flexibility to continue investing in growth. We are investing in this business with conviction. We made two transformational senior hires in David Miller and Philip Picardi. We are rebuilding our website and digital platform from the ground up. We are developing original audio and video content. And we have built a subscription and membership revenue model that we believe can scale significantly. Our magazine relaunch is generating real cultural momentum. Our newest cover star, a major female musician with over 70 million Instagram followers, is a testament to the caliber of talent that wants to be part of the Playboy, Inc. brand. On the hospitality side, we have selected an operating partner for our Miami Beach membership club and are making meaningful progress towards bringing that vision to life. On licensing, we are being more disciplined and selective, focusing on bigger, higher-quality partners who can drive scale while strengthening the brand. We are entering 2026 with momentum, conviction, and a clear line of sight into the value we can create for shareholders. Every pillar of this business is executing, and I firmly believe we have the team, the strategy, and the brand equity to deliver sustainable, long-term value to my fellow shareholders. With that, operator, let's open the line for questions. Operator: Thank you, sir. We will now begin the question and answer session. If you have a question, please press the star followed by the one on your touch-tone phone. If you would like to withdraw your question, please press the star followed by the two. If you are using speaker equipment, you will need to lift the handset before making your selection. I will now pause as we assemble a queue. Our first question comes from the line of James Heaney with Jefferies. Please proceed with your question. James Heaney: Yeah, great. Thanks for the question. Could you just talk about the rebuild of your website? Curious what are some of the objectives that you hope to achieve from that relaunch and how big of a focus will monetization be as part of the strategy? Ben Kohn: Hey, James. It is Ben Kohn. Thanks for the question. You know, our website today is dated. Our single goal on the website is brand. Second goal is monetization, which will be a short follow-up from that. And so what that website is going to be is a digital hub for all of our content and the subscription or membership offering that we have begun to roll out with the last issue of the magazine: $79 on a digital basis, $149 on digital plus print. We will look to expand that membership offering moving forward, meaning we will continue to add utility or more opportunities with that membership, including the opportunity to participate in Playboy events. And so we are excited by it. We have hired a great digital agency to help us with it. And with David and Philip on board, I would think that there will be a much improved consumer experience really focused on conversion, and we now have the data tools to help us with that. James Heaney: That is great. And maybe just another question. I think you spoke on the last call and obviously came up again today about taking the Playboy, Inc. brand back to its roots this year. Can you just talk about some of the ways in which you are repositioning the brand and so far how that is resonating with the target audience of sort of 18- to 40-year-old males? Thank you. Ben Kohn: Look, the brand is resonating well. Not getting into any of the specifics yet because we are testing a ton of content out there, but we are seeing meaningful engagement in the content that we are producing. And we are using the data to inform our content strategy moving forward. As we talked about in previous calls, we did hire a brand agency. We spent about six months last year working with that brand agency, really looking at what consumers thought about the brand, internal voices as well. And what that led us to is really taking Playboy, Inc. back to its roots, really being that modern guide for everything worth wanting. And we are doing that through the voice of women as we mentioned in the prepared remarks. And it starts with the Playmate. So the Playmate, obviously one of the best brand ambassadors you can have. We did that last year with the contest. Tens of thousands of women registered. They brought us hundreds of thousands of users. That is our top of the funnel. We have now signed a deal with Propagate to turn that into a television show. But think about Playboy, Inc. really returning to its roots of what made the company famous in the fifties and sixties and seventies. James Heaney: Great. Thank you so much. Ben Kohn: Thank you. Thank you. Operator: Our next question comes from the line of Alex Saffirame with Lucid Capital Markets. Please proceed with your question. Alex Saffirame: I wanted to ask about the Honey Birdette business. It looks like a really strong fourth quarter, both on the top line and in terms of gross margin. Can you talk about what is driving that? I know in the past, you said that you have had much more success with full-price selling and pulling back on the discounting. Have you continued to see strong full-price sell-through? And then just year to date, any comments on how the Valentine's Day season went for the brand? Marc Crossman: Sure, Alex. Good to speak to you. We will start with the first part of that question. From a full-price standpoint, our business is firing on all cylinders. Really, what we are seeing too is we have put a 10% price increase in place. This was right around when the tariffs went into effect, and what we have seen is there has been zero pushback from the customer, and that is really what has helped lift our margin. So it is coming from two places. One is price increase, and the second is pulling away from the sale periods. In terms of the Valentine's Day, I cannot give you the exact numbers, but it was our best Valentine’s Day that we have ever had. We were less promotional and were able to move full-price goods at very pace. It was up year over year. Ben Kohn: Yeah, Alex, I will just add to that too. As we look into 2026, obviously we have talked previously about raising some equity to grow the business. But given where we are as a company as well, we are putting some money into the growth there. We think there is a huge opportunity to expand the store footprint in the United States where we see massive AOV, and we are seeing growth on the digital side as well. So we will continue to expand the business as long as we own it. We think its management team has done a great job with the product, and it is definitely resonating with the consumer. Alex Saffirame: Okay. That is really helpful. And then I know you guys have done some kind of small-scale testing of ways to kind of excite the Honey Birdette business from what you are doing with Playboy, promotions for merchandise, things like that. Has that kind of moved the needle? Is there any kind of takeaways from that in ways that you could really help to cross-market the brands? Ben Kohn: That is a great question. We are launching a Playboy capsule collection by Honey Birdette, and there might or might not be a paid voting contest tied to that as well as we think through the marketing angle of that, coming up here shortly. Alex Saffirame: Okay. That is really interesting. Thank you guys very much. Ben Kohn: Thank you, Alex. Operator: Thank you. And this concludes our question and answer session. I will now hand the call back to Chief Executive Officer Ben Kohn for his closing remarks. Ben Kohn: Thank you, operator, and thank you to everyone for joining us today. 2025 was a year of transformation, and the results speak for themselves. As we move into 2026, we are executing with discipline and urgency across all four pillars. We appreciate your continued support and look forward to updating you on our progress in the months to come. If you have any further questions, please feel free to reach out to our IR firm, MZ Group, and we would be happy to answer them. Thank you. Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.
Operator: Thank you for standing by, and welcome to Kyntra Bio, Inc.’s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 1-1 on your telephone. To remove yourself from the queue, you may press 1-1 again. I would now like to hand the call over to Gaia Vasiliver-Shamis with LifeSci Advisors. Please go ahead. Gaia Vasiliver-Shamis: Thank you, operator. Good afternoon, everyone. Thank you for joining today to discuss Kyntra Bio, Inc.’s fourth quarter and full year 2025 financial and business results. I am Gaia Vasiliver-Shamis from LifeSci Advisors. Joining me on today’s call are Thane Wettig, Chief Executive Officer; David DeLucia, Chief Financial Officer; and Carol Gaddum, Vice President of Product Development. Following the prepared remarks, we will open the call to your questions. I would like to remind you that remarks made on today’s call include forward-looking statements about Kyntra Bio, Inc. Such statements may include, but are not limited to, collaboration with AstraZeneca and Astellas, financial guidance, the initiation, enrollment, design, conduct, and results of clinical trials, regulatory strategies and potential regulatory results, research and development activities, commercial results and results of operations, risks related to our business, and certain other business matters. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in Kyntra Bio, Inc.’s filings with the SEC, including our most recent Form 10-K and Form 10-Q. Kyntra Bio, Inc. does not undertake any obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. The press release reporting the company’s financial results and business updates and a webcast of today’s conference call can be found on the Investors section of Kyntra Bio, Inc.’s website at www.kyntrabio.com. With that, I would like to turn the call over to the CEO, Thane Wettig. Thane? Thane Wettig: Thank you, Gaia. Good afternoon, everyone, and welcome to our fourth quarter and full year 2025 earnings call. On today’s call, I will provide an update on the continued progress with FG-3246, a potential first-in-class antibody drug conjugate targeting CD46, and its companion PET imaging agent, in metastatic castration-resistant prostate cancer, as well as the path forward for roxadustat as a potential treatment for anemia due to lower-risk myelodysplastic syndromes. Then, David DeLucia, our CFO, will review the financials, after which we will open the call for your questions. On slide three, I would like to start by highlighting the transformational year we had in 2025. We completed the sale of FibroGen China to AstraZeneca, paid off our senior secured term loan, and extended our cash runway into 2028. This enabled us to start the phase 2 trial for FG-3246/FG-3180 in the post-ARPI, pre-chemo setting in metastatic castration-resistant prostate cancer, where we are actively enrolling patients at multiple sites in the U.S. We recently reported the top-line results presented at ASCO GU from the investigator-sponsored trial of FG-3246 in combination with enzalutamide in mCRPC, and we remain on track to report the interim results from our ongoing phase 2 monotherapy trial of FG-3246 and FG-3180 in 2026. We also made important progress with roxadustat, with the submission of the phase 3 protocol in lower-risk myelodysplastic syndromes, and the receipt of Orphan Drug Designation for MDS. We expect feedback on the phase 3 trial design from the FDA in the coming weeks, with the aim of initiating the phase 3 trial in the second half of this year. We began 2026 rejuvenated, rebranding FibroGen to Kyntra Bio, Inc. to better reflect the momentum and energy of a company focused on oncology and rare disease. We remain confident that with our mid- and late-stage assets, simplified capital structure, and upcoming catalysts across both clinical programs, we are well positioned to create meaningful therapeutic options for patients and significant value for shareholders. Moving to our FG-3246 and FG-3180 program in mCRPC. Slide five summarizes the high unmet need in late-stage prostate cancer. Approximately 290,000 men are diagnosed with prostate cancer each year in the U.S., with about 65,000 drug-treatable patients with metastatic disease that has become castration resistant. This group of patients has a grim five-year survival rate of 30%, underscoring the significant opportunity for new life-extending treatments. We believe FG-3246 could be this new treatment option and estimate the total addressable market to be well over $5 billion annually in the U.S. alone. Slide six depicts the novelty of CD46, a tumor-selective target that has several distinguishing features. First, CD46 is upregulated during tumorigenesis and helps tumors evade complement-dependent cytotoxicity. Second, its expression is also upregulated in the progression from localized castration-sensitive prostate cancer to metastatic castration-resistant prostate cancer, and further overexpressed following treatment with androgen signaling inhibitors. Notably, CD46 is highly expressed in mCRPC tissues, with lower interpatient variability and higher median expression compared with PSMA, making it an attractive non-PSMA therapeutic target. Turning to slide seven. FG-3246 is our potential first-in-class ADC in development for mCRPC. The ADC combines the YS5 antibody with an MMAE payload to specifically target the tumor-selective epitope of CD46, whose expression is limited in normal tissue. FG-3246 represents an androgen receptor–agnostic approach, clinically differentiating it from other prostate cancer treatments currently in development, many of which target PSMA. The companion PET imaging agent, FG-3180, utilizes the same YS5 targeting antibody as FG-3246 and is also under clinical development with its own IND. We believe that having a patient selection biomarker would not only allow us to better enrich the patient population in a future phase 3 trial, it can also enable differentiation of FG-3246 in the prostate cancer treatment paradigm. In addition, FG-3180 could represent an important commercial opportunity as a companion diagnostic to FG-3246, similar to the existing PSMA PET agents, which generated revenue of almost $2 billion in 2025. Slide eight highlights the design of the investigator-initiated phase 1b/2 trial of FG-3246 in combination with enzalutamide in mCRPC for which top-line results were presented at the recent ASCO GU meeting. These results, shown on slide nine, demonstrated encouraging antitumor activity with seven months of median radiographic progression-free survival in biomarker-unselected patients across the entire cohort of 44 patients. Importantly, in patients who have progressed on one prior ARPI, the combination of FG-3246 and enzalutamide achieved a median rPFS of 10.1 months and demonstrated a PSA50 response of 40%. Notably, on slide 10, higher tumor uptake of FG-3180 was associated with PSA50 response, underscoring the potential for FG-3180 as a PET imaging biomarker for patient selection. On the right-hand part of the slide is an example of a PET image from the IST captured after treatment with FG-3180 highlighting significant CD46-expressing tumors. The table on the left shows the correlation between tumor uptake and PSA50 response. Patients with a higher average maximum standardized uptake value, or SUV, of a target lesion when normalized to the SUV of the blood pool demonstrated a trend to greater response to FG-3246 as measured by PSA50 versus those with a lower SUV, with a nominal p-value that just missed being statistically significant. This data demonstrates for the first time an association between CD46 expression and response to FG-3246. Further evaluation of FG-3180 is an important part of the ongoing phase 2 monotherapy trial. Finally, on slide 11, the combination of FG-3246 and enzalutamide had a similar safety profile to what was observed in the FG-3246 phase 1 monotherapy trial. Importantly, the incidence of grade 3 or greater neutropenia was substantially reduced with the utilization of G-CSF prophylaxis compared to the phase 1 monotherapy trial. This approach is an important design element of our ongoing phase 2 monotherapy trial. In summary, the results of the IST provide us with key insights that further validate design elements in our ongoing phase 2 monotherapy trial, which we believe has the potential to improve upon the median rPFS observed in the phase 1 monotherapy trial, which I will cover in greater detail next. Briefly on slide 12, we recap the top-line results of the phase 1 monotherapy study of FG-3246, which we believe are competitive when compared to other approved and investigational treatments. These results demonstrated a median rPFS of 8.7 months in patients with mCRPC that were heavily pretreated and were not biomarker selected. PSA reductions of greater than 50% in this population were achieved in 36% of these patients. Moving to slide 13. Based on the phase 1 monotherapy results, we initiated the FG-3246 phase 2 monotherapy dose optimization trial in September. We plan to enroll 75 patients in the post-ARPI, pre-chemo setting across three dose levels to determine the optimal dose for phase 3 based on efficacy, safety, and PK parameters. It is important to note that FG-3180 will be an integral part of the study as we seek to further explore what was demonstrated in the phase 1b/2 combination trial and determine whether there is further correlation between CD46 expression and response to the ADC in this all-comers phase 2 trial. An interim analysis of the open-label phase 2 trial is planned for 2026. It will include PSA50, ORR, safety, PK, and exposure–response data. Importantly, we expect mature rPFS data to become available in 2027 as patients continue on their treatment with FG-3246 and the trial progresses toward completion. On slide 14, I would like to highlight three important steps we have taken with the design of the ongoing phase 2 monotherapy trial, which were further validated with the IST results, as we aim to improve upon the 8.7 months of median rPFS demonstrated in the phase 1 monotherapy trial. First, leveraging earlier evidence of an exposure–response relationship, the phase 2 study is using three of the highest doses from the phase 1 dose-escalation and expansion study. Second, primary prophylaxis with G-CSF is utilized to mitigate neutropenia, which was successfully demonstrated in the phase 2 portion of the recently disclosed IST. The mitigation of neutropenia could enable more consistent exposure to the ADC, with fewer dose interruptions or adjustments early in the course of treatment, which could extend the duration of therapy and potentially enhance the efficacy of the ADC. Third, we are enrolling healthier patients in earlier lines of therapy versus the median five prior lines of therapy in the phase 1 trial. The 10.1 months of median rPFS demonstrated in the IST in patients who progressed on only one prior ARPI underscores the potential of FG-3246 in this patient population. Together with the insights from the IST results, we believe that these design elements have the potential to improve upon the phase 1 results and achieve a median rPFS of 10 months or greater, which we believe is the benchmark for commercial competitiveness. Slide 15 highlights the recent and upcoming catalysts for the FG-3246 and FG-3180 program. We are actively enrolling patients and are on track to report the interim results from the phase 2 monotherapy trial in 2026. FG-3246 targets a novel epitope on prostate cancer cells with first-in-class potential, given there are no other CD46-targeted projects in clinical development and no non-PSMA approaches in mid- to late-stage development with a companion PET imaging approach. Targeting CD46 with FG-3246 has already demonstrated promising early efficacy signals with an acceptable safety profile both in monotherapy and combination settings. We have a well-designed phase 2 monotherapy trial in the post-ARPI, pre-chemo setting in mCRPC to further attempt to build upon the 8.7 months of median rPFS demonstrated in the phase 1 trial. We are looking forward to the interim readout later this year and will update you as the program progresses. Turning now to roxadustat. Slide 18 highlights the unmet need and the potential for roxadustat in the approximately 49,000 patients with anemia associated with lower-risk MDS in the U.S. alone. Current treatments, as measured by transfusion independence, are effective in less than 50% of patients. With no oral options currently on the market or in late-stage development, a significant opportunity exists to offer a potential new treatment that is durable, with convenient oral administration to patients across multiple lines of therapy. Moving to slide 19, I would like to quickly highlight the data from a post hoc analysis of a subgroup of patients with anemia of lower-risk MDS who entered the phase 3 MATTERHORN study of roxadustat with a high transfusion burden. In this analysis, using the International Working Group definition for high transfusion burden of four or more RBC units in two consecutive eight-week periods, roxadustat showed a meaningful treatment effect, with 36% of patients achieving transfusion independence for at least eight weeks versus only 7% in the placebo group, with a nominal p-value of 0.041. These results are highly similar to the pivotal trial results for the two most recently approved therapies for anemia associated with lower-risk MDS. Based on these results, as we turn to slide 20, our target indication for roxadustat is in patients with lower-risk MDS who are refractory to or ineligible for prior ESA treatment, where we believe roxadustat has the potential to elevate the standard of care across multiple treatment lines. In addition, we believe we have an opportunity to demonstrate efficacy across both RS-positive and RS-negative patients. When looking at the prevalence of the disease, RS-negative patients make up more than 50% of patients in lower-risk MDS. There is a great opportunity to potentially move upline and help these patients, given that luspatercept is not approved in the second-line setting in RS-negative patients. Moving to slide 21. After aligning with the FDA last summer on design elements of a phase 3 trial, we submitted the final protocol to the FDA and expect to receive their feedback in the coming weeks. We are currently exploring the opportunity to develop roxadustat internally or with a strategic partner and aim to initiate this study in 2026. To summarize on slide 22, there is significant opportunity for roxadustat in anemia associated with lower-risk MDS with no other oral treatments currently available or in late-stage development. With roxadustat being granted orphan drug designation, we believe that a minimum of seven years of regulatory exclusivity combined with an attractive market opportunity and efficient commercial model represents a substantial economic opportunity for roxadustat in anemia associated with lower-risk MDS. With that, I will now turn the call over to David to discuss the company’s financials. David? David DeLucia: Thank you, Thane. For the fourth quarter of 2025, total revenue was $1,300,000 compared to $3,100,000 for the same period in 2024. For full year 2025, total revenue was $6,400,000 compared to $29,600,000 for full year 2024. Now moving down the income statement. Total operating costs and expenses for the fourth quarter of 2025 were $14,800,000 compared to $10,300,000 for the fourth quarter of 2024. Total operating costs and expenses for full year 2025 were $52,300,000 compared to $180,000,000 for full year 2024. R&D expenses for the fourth quarter of 2025 were $7,300,000 compared to $6,900,000 in the fourth quarter of 2024, and R&D expenses for full year 2025 were $23,500,000 compared to $95,700,000 in full year 2024. SG&A expenses for the fourth quarter of 2025 were $7,300,000 compared to $8,300,000 in the fourth quarter of 2024. SG&A expenses for full year 2025 were $27,700,000 compared to $49,300,000 in full year 2024. During the fourth quarter of 2025, we recorded a net loss from continuing operations of $14,600,000, or $3.61 net loss per basic and diluted share, as compared to a net loss of $8,700,000, or $2.15 per basic and diluted share, for the fourth quarter of 2024. During full year 2025, we recorded a net loss from continuing operations of $58,200,000, or $14.40 net loss per basic and diluted share, as compared to a net loss of $153,100,000, or $38.26 per basic and diluted share, for full year 2024. Now shifting towards cash. As of December 31, 2025, we reported $109,400,000 in cash, cash equivalents, investments, and accounts receivable. We expect the company to have a cash runway into 2028. In summary, 2025 was a transformational year for the company. We have taken important steps to reduce our fixed cost infrastructure to maximize our cash runway and enable investment in our U.S. pipeline opportunities. Thank you, and I will now turn the call back over to Thane. Thane Wettig: Thank you, David. We are well capitalized to support multiple clinical milestones into 2028 and remain laser focused on advancing FG-3246 and its companion FG-3180 program, with expected interim analysis from the phase 2 monotherapy trial in 2026. We look forward to finalizing the phase 3 protocol for roxadustat in MDS and are targeting initiation of the trial in 2026. In summary, 2025 was a transformational year for us on multiple fronts, and we are excited for the opportunities ahead. I would now like to turn the call over to the operator for Q&A. Operator: Thank you. To remove yourself from the queue, you may press 1-1 again. Our first question comes from the line of Andy Hsieh of William Blair. Your line is open, Andy. Andy Hsieh: Thanks for taking our question. Two for us, if you do not mind. One has to do with maybe the imaging of CD46 opportunity. Maybe if you can paint a picture for us just in the context of having PSMA imaging agents on the market now for three-plus years. Where would you think that this would fit in, and also the corresponding commercial opportunity? So that is question number one. Question number two, for the SUV data, obviously very provocative having a correlation there. So if you think about it as a patient selection opportunity, can you help us think about some of this KOL feedback that talks about SUV potentially as a way to enrich patients who will most likely benefit, but on the other hand, there are also KOLs who talk about low-SUV patients who also can benefit. So maybe help us understand those two arguments in the field. Thank you so much. Thane Wettig: Yes, thanks, Andy. I appreciate the question. I will go ahead and kick it off, and then I am going to ask Carol to add to it. So first, related to imaging and CD46 and how that would compare and contrast to PSMA agents, which have been on the market, to your point, for three-plus years, and by the time we would make it to market, obviously several years beyond that, and also around the commercial opportunity, and then kind of potential sequencing, which I think was maybe part of your question. So, clearly, if we were able to make it to market, you know, Pluvicto in this post-ARPI, pre-chemo setting, we would anticipate being pretty well entrenched there. And as I am sure you know, Andy, because you cover the space, in order for a patient to be prescribed Pluvicto, they have to undergo a treatment with a PSMA PET imaging agent, undergo a PET scan, and be positive, show positive uptake of PSMA PET. We would anticipate the same thing for our CD46 PET agent. And so the great thing is that Pluvicto and the products from Lantheus and Telix have created the playbook, and we are trying to run that exact same playbook. And so we would anticipate that if FG-3246 makes it to market, that the FDA would label FG-3246 fairly similarly to how Pluvicto was labeled: that patients must undergo treatment with a CD46 PET imaging agent and be positive for CD46. And so we would think it would be in a similar sort of way. As it relates to commercial opportunity, clearly, we do not have the kind of expertise in this space that companies like Telix and Lantheus have. So as we further characterize the CD46 PET agent through the course of the phase 2 trial, we will be further evaluating what role Kyntra Bio, Inc. should play versus what role, perhaps, strategic partners play in the further development. But we think we are pretty well set as it relates to the phase 2 portion of the program. Carol, let me turn it over to you, and you can add to that. Carol Gaddum: Yes, thank you for the question, Andy. We are very clear on the fact that we will be in a world where there are multiple PET agents available for these patients, and our clinical development strategy for this companion diagnostic needs to be designed in a way to address the questions around sequencing and when to use and when it is justified. We believe that with the differentiation that our ADC offers in patients with CD46 positivity, that would justify a PET scan and hence would provide this displacement in the treatment algorithm. But it is something that we are keenly aware of and raises the bar for development strategies in this space given the coexistence. I wanted to talk on your second question. Thane Wettig: Yes, go ahead. Okay, your second question around SUV, Carol Gaddum: is a really good one. The phase 2 is designed for us to understand how we define CD46 positivity. And that might be based on SUV, but might also be based on something else, as we know, as you mentioned, that the field is also keen on looking at metrics outside of SUV. So maybe a bit early to comment on that. We will look at that as part of the phase 2. That is the clear benchmark that we need to hit before we can take this into a phase 3: to define positivity and the right metric. Thane Wettig: So let me just add a couple more comments. First, Andy, going back to that first question. Let us say that a patient is prescribed Pluvicto, the RLT, after showing positivity for PSMA PET, and they ultimately progress on it. We would then know, with a non-PSMA approach focused on CD46, we would then think it is highly possible for a patient to then be treated with a CD46 PET agent, undergo a scan, and if they show positivity for CD46, then be prescribed FG-3246. So that is how we also tend to think about it from a sequencing perspective. Andy Hsieh: That is super helpful. Look forward to the second-half update. Thank you. Operator: Thank you. Our next question comes from the line of Matthew Keller of H.C. Wainwright. Please go ahead, Matthew. Matthew Keller: Hey, good afternoon, and thanks for taking the questions. Two from me, if that is okay. The first one on the 3246 program, and this is a bit of a point of clarification. But based on these really positive ARPI results, based on more efficacy seen in earlier stage of treatment, I was wondering, and I just want to be clear, are we expecting the balance of patients in the IST and the monotherapy study to be about the same? Or do you think there might be a difference with recruitment or the line of treatment you are thinking of recruiting? And then my second question on the roxa program, I wonder if you have any updates on the maturity level of potential partnering or BD efforts there? Thanks. Thane Wettig: Yes, thanks, Matt, for the questions. I will take the first one and then ask Carol to add anything else that might be relevant, and then I will handle the roxadustat question as well. First, in terms of the ARPI efficacy, the balance of patients from the recently disclosed IST versus the ongoing phase 2 monotherapy: there were about 60% of patients from the IST that had progressed on two or more ARPIs, about 40% of patients who had progressed on only one ARPI. In our phase 2 monotherapy, patients will have only progressed on one prior ARPI and be in the pre-chemo setting. And so that is, I think, a pretty important differentiator. So 100% of our patients in the phase 2 monotherapy trial will have progressed on one prior ARPI, whereas in the IST, about 40% of patients had progressed on only one, and 60% had progressed on two or more. Carol, anything to add to that? Carol Gaddum: The only thing to add here is that the setting that we are looking at is really that established by PSMA-4. So it is looking for efficacy benchmarks. That is really what we are targeting. So it is post one prior ARSI. Thane Wettig: And then, Matt, as it relates to the roxadustat question, we are not going to comment on the specifics of where we are with respect to that effort. Where we say we are evaluating the opportunity to develop it internally versus potentially having some sort of a collaboration with a strategic, we are continuing to explore both paths, but we are not at a place right now where we can comment further on that. Yep. No. Makes sense. Thanks again, guys. Great. Thank you, Matt. Appreciate the continued coverage. Matthew Keller: Thank you. Operator: Our next question comes from the line of Chen Lin of Lin Asset Management. Your line is open, Chen. Chen Lin: Hi. Thank you for taking my questions. Actually, most of my questions have already been answered. I am just curious about roxadustat. You know, the FDA is supposed to give feedback in 30 days, given its orphan status. Why there seems to be a delay of the acceptance of the IND? Thane Wettig: Yes, thanks, Chen. When we submitted the protocol to the FDA right before Christmas, we let the FDA know that we were not going to be imminently starting the phase 3 trial. And so what typically happens is when a company is geared up to start the phase 3 and they submit the final protocol, the FDA typically gets back within 30 days. The FDA knew that they had a little bit more time. And so, what they had signaled to us was 60 to 90 days. And we are right in that 60 to 90 day period right now. And so when we say that we expect feedback in the coming weeks, that is based upon the guidance that had been provided from the FDA when we had submitted the protocol right before the holidays. Chen Lin: Okay. Great. Thank you. Good luck. Operator: Thank you. I would now like to turn the conference back to Thane Wettig for closing remarks. Sir? Thane Wettig: Thank you, and thank you for joining us for today’s fourth quarter and full year earnings call, and we appreciate your interest in Kyntra Bio, Inc. Enjoy the rest of your day. Thanks, everybody. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the DocGo Inc. Fourth Quarter and Full Year 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on March 16, 2026. I would now like to turn the conference over to Mr. Mike Cole, Vice President, Investor Relations. Please go ahead. Thank you, operator. Mike Cole: Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements made in this conference call other than statements of historical fact are forward-looking statements. The words “may,” “will,” “plan,” “potential,” “could,” “goal,” “outlook,” “design,” “anticipate,” “aim,” “believe,” “estimate,” “expect,” “intend,” “guidance,” “confidence,” “target,” “project,” and other similar expressions may be used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance, and we cannot assure you that we will achieve or realize our plans, intentions, outcomes, results, or expectations. Forward-looking statements are inherently subject to substantial risks, uncertainties, and assumptions, many of which are beyond our control, and which may cause our actual results or outcomes or the timing of results or outcomes to differ materially from those contained in our forward-looking statements. These risks, uncertainties, and assumptions include, but are not limited to, those discussed in Risk Factors and elsewhere in DocGo Inc.’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, our earnings release for this quarter, and other reports and statements filed by DocGo Inc. with the SEC, to which your attention is directed. Actual outcomes and results or timing of results or outcomes may differ materially from what is expressed or implied in these forward-looking statements. In addition, today’s call contains references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the earnings release and the Current Report on Form 8-K, which is posted on our website, docgo.com, as well as filed with the SEC. Information contained in this call is accurate as of only the date discussed. Investors should not assume that statements will remain relevant and operative at a later time. We undertake no obligation to update any information discussed in this call to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events, except to the extent required by law. At this time, it is now my pleasure to turn the call over to Mr. Lee Bienstock, CEO of DocGo Inc. Lee, please go ahead. Lee Bienstock: Thank you, Mike. And thank you all for joining us. Today, we announced a strong close to the year, reporting $74.9 million in fourth quarter revenue and an adjusted EBITDA loss of $11.6 million. While our revenue exceeded expectations and enabled us to beat the top end of our revenue guidance, our adjusted EBITDA loss was slightly greater than expected, largely due to costs associated with the final wind down of our migrant-related programs in the fourth quarter, which we do not expect to recur going forward. Additionally, on the back of new customer expansions and improved hiring rates, we are increasing 2026 revenue guidance to $290 million to $310 million compared to our previous guidance of $280 million to $300 million and, when combined with our cost efficiency initiatives, we are now expecting an adjusted EBITDA loss of $5 million to $10 million compared to our previously projected adjusted EBITDA loss of $15 million to $25 million. I would like to take a few minutes and cover the details driving this improved outlook. First, we are seeing an absolutely stellar performance from our virtual care offering, SteadyMD. During the fourth quarter, SteadyMD exceeded $8 million in revenue for the first time in its history, beating the previous quarterly high by approximately $1 million. As we did not acquire SteadyMD until late October, we recorded $6.1 million in DocGo Inc.’s fourth quarter results. At the same time, SteadyMD’s full-year over-year gross margin improved from approximately 30% to 37%, with additional gains expected in 2026. Our integration efforts remain on track, and we are aiming to consolidate provider networks so that SteadyMD clinicians will be able to provide care for patients across DocGo Inc.’s mobile health offerings by the end of the second quarter. For the full year 2025, SteadyMD exceeded 4 million patient interactions consisting of approximately 3 million lab orders and 1 million synchronous and asynchronous telehealth visits. That compares to approximately 2.5 million patients in 2024, which consisted of approximately 2 million lab orders and 500,000 synchronous and asynchronous telehealth visits. The fourth quarter performance was exceptional, and we anticipate this strong growth to continue, driven by the recent announcement of major customer expansions to meet the needs of our customers’ branded GLP-1 weight loss programs. Second, we are seeing considerable improvement in our hiring rates to support strong demand in our medical transportation segment, allowing us to outsource fewer rides and recognize the associated revenue. I want to be clear. We still have considerable work to do, but we have filled 206 EMT and paramedic roles out of the 546 that were open at the end of last quarter. In Q4, we saw overtime rates in this segment in the teens, above our target in the mid-single digits. We are seeing this overtime rate gradually decline as hiring continues to improve, which we expect will provide some additional margin improvement potential as we progress through the year. I am extremely enthusiastic about progress we are making to bring the doctor’s office into the patient’s living room and the continued strength in key view metrics across our business. For example, when we compare our Q4 2025 metrics to Q4 2024, medical transportation trips increased 11%, healthcare-in-the-home visits were up 113%, mobile phlebotomy visits were up 16%, remote patients monitored increased 16%, and telehealth and lab orders were up 50%. We also continued expanding our care gap closure programs with one of our top 10 national insurance payer customers to provide annual preventative exams in the state of Kentucky, which is expected to launch later this month. We are working with this payer across California, New Mexico, and now Kentucky. For our Care Gap Closure program as a whole, we saw a 12% sequential gain in the number of assigned lives, increasing from 1.3 million last quarter to over 1.45 million currently. As we grow our business with insurance payers, we continue to refine our approach to care delivery in a manner that drives efficiency and maintains our exceptionally high customer satisfaction rate, which was measured at an NPS score of 92 as of March 1. To that end, we are planning to leverage SteadyMD’s clinical network to provide the virtual portions of our visits starting in Q2, and we continue expanding our use of AgenTeq AI and workflow automation for administrative and patient support functions. While we will continue to invest in this business, we expect that level of investment to decline considerably as early markets mature and become more self-sustaining, reducing the cash outlay in 2026. Our goal is to grow this business, which we believe has significant future strategic value, in an efficient manner that both minimizes investment and supports our goal of achieving profitability in 2026. Our remote patient monitoring business was another bright spot during the fourth quarter, generating record revenue of $4.0 million and $830,000 in adjusted EBITDA for the period. This performance was driven by a 16% increase in the number of patients monitored when compared to the same period in 2024, with strong growth in our virtual care management offering. We are seeing substantial margin gains in this business as greater economies of scale are achieved, and we expect continued improvements in profitability over the balance of 2026. Additionally, we launched our efficiency innovation portfolio in Q4. This is a collection of more than a dozen projects designed to increase and create more operating leverage in our P&L. These projects span our medical transportation, mobile health, and corporate segments, and are anticipated to deliver approximately $5 million to $6 million of savings in 2026 and approximately $20 million to $24 million of savings in 2027, when we experience the full annual benefit of these projects. Central to this work is our use of technology, which has always been a focus and key differentiator for DocGo Inc. We have already incorporated AgenTeq patient outreach into our proprietary Dara ordering and routing platform, and we introduced automation into our pre-billing function to increase efficiency. We are planning to expand these initiatives and bring others online in the coming months. I look forward to sharing more about these efforts on future calls. We shared in our earnings release earlier today that DocGo Inc. has initiated a process to explore a range of strategic alternatives designed to maximize shareholder value. We make no assurance that this process will yield positive results or that any transaction may be identified or undertaken. Finally, I am often asked when DocGo Inc. will achieve profitability, and I always say it is a confluence of three key components: our top-line revenue, our gross margin, and our SG&A. With regards to revenue, we continue to see strong demand for our services and top-line growth across our volume metrics. Our gross margin is improving due to our progress in hiring and reducing our overtime costs. And we expect our SG&A to improve as our efficiency innovation portfolio projects take shape and make a real impact. At this time, I will now hand it over to Norm to review the financials. Norm, please go ahead. Norman Rosenberg: Thank you, Lee, and good afternoon. Total revenue for Q4 2025 was $74.9 million compared to $120.8 million in Q4 2024. The year-over-year revenue decline was entirely due to the wind down of migrant-related projects. Removing migrant-related revenues from both periods, we saw a revenue increase of 11% year over year in Q4. For the full year, total revenue amounted to $322.2 million in 2025 compared to $616.6 million in 2024. Medical transportation services revenue increased to $50.2 million in Q4 2025 from $49.1 million in transport revenues that we recorded in Q4 2024. Revenues were driven higher by gains in both large and small U.S. markets, with some of the strongest growth in markets like New York, Texas, and Tennessee. Mobile health revenue for Q4 2025 was $24.8 million, down from $71.8 million in the fourth quarter of last year, driven by the wind down of migrant revenues. Included in this year’s amount was approximately $7.4 million in migrant-related revenues. Non-migrant mobile health revenues increased by 47%, driven by increases in care gap closures, remote patient monitoring, and mobile phlebotomy, and by the inclusion of two months of revenues from SteadyMD, which we acquired on October 20. Adjusted EBITDA for Q4 2025 was a loss of $11.3 million compared to adjusted EBITDA of $1.1 million in Q4 2024. For the full year, the adjusted EBITDA loss was $28.6 million in 2025 compared to adjusted EBITDA of $60 million in 2024. The adjusted gross margin, which removes the impact of depreciation and amortization and is the measure of margins that we track most closely, was 32.5% in Q4 2025 compared to 33.5% in Q4 2024. During 2025, adjusted gross margins for the medical transportation segment were 32.8% compared to 30.1% in 2024 and the highest gross margins that we have seen in that segment since 2024. Despite these improvements, medical transportation gross margins are still being restrained by higher-than-planned effective hourly wages for field labor. As we pointed out on the last call, our transportation business has been running at the highest utilization rates that we have seen, leading to higher overtime rates. Overtime accounted for about 13% of hourly wages in Q4 and has been running between 11%–13% for the past several quarters. However, we took solid strides toward increasing our field headcount in Q4 2025, and we would expect the overtime rate to trend lower in 2026, closer to the sub-10% overtime rates that we saw in 2024. This should provide a lift to transportation gross margins in 2026. Mobile health segment adjusted gross margin was 31.8% versus 35.9% in 2024. As we completed the wind down of migrant-related programs, we experienced significantly lower gross margins in that area, which were below 20% for the quarter. We expect that mobile health segment gross margins will improve in 2026 in the absence of these wind down costs and with greater relative contributions from higher-margin service lines such as remote patient monitoring, mobile phlebotomy, and virtual care. There were several nonrecurring noncash items that had a large impact on our GAAP results this quarter, so I would like to spend some time reviewing. Within the operating expense category, we incurred noncash charges due to the write-down of intangible assets and goodwill. The write-downs are driven by the persistent gap between the carrying value of our assets and our market cap. We began this process in the third quarter when we wrote down the goodwill and intangible assets relating to our clinical staffing business. Even after these write-downs, entering Q4, there was still a significant amount of goodwill and intangible assets on our balance sheet, primarily due to the acquisitions we have completed over the past four years. Throughout the fourth quarter, our market capitalization remained well below our net asset value, requiring us to consider adjusting the valuation of all of our intangible assets and goodwill in an attempt to narrow this gap in accordance with ASC 350 and ASC 360. At year end, we have now written down all the intangible assets and goodwill to zero. This resulted in a total goodwill impairment of $49.5 million and an impairment of intangible assets of an additional $22.6 million in the fourth quarter. Along these lines, within the other expense category, we impaired the entire carrying value of an equity investment into a health care company we made in previous years, which had an impact of $5 million in other expense. It is important to note that these write-downs are all accounting-driven and noncash in nature. In no way do they reflect a change in the company’s outlook regarding the future prospects or profitability of any of these underlying business lines. At year end, our total cash and cash equivalents, including restricted cash and investments, was $68.3 million, down from $95.2 million as of September 30, 2025. The largest factor in the decline in cash was the acquisition of SteadyMD in October. We paid $12.5 million in cash for SteadyMD and incurred additional transaction-related costs of approximately $1.5 million. Our cash balance at year end was lower than we had expected due to the delay in collecting migrant-related accounts receivable owed by New York City’s Department of Housing Preservation and Development, which we had expected to see during the fourth quarter, coupled with an ongoing operating loss. With further operating losses expected during 2026, and several growth-related initiatives requiring working capital, we would expect further declines in cash in the near term, creating potential working capital pressure during 2026. To mitigate this, we are highly focused on reducing cash utilization and operating costs, particularly at the corporate level. We are also working with our current credit line provider to remedy issues related to certain financial covenants, which may increase borrowing costs while providing us with greater flexibility. Turning to 2026, as Lee mentioned in his comments earlier and as we pointed out in our press release, we have updated and increased our guidance for 2026 based upon what we have seen in the first two-plus months of the year and the positive volume trends across most of our business lines. We now see full-year revenues in the range of $290 million to $310 million, up from the range of $280 million to $300 million that we had shared back in November. This does not include any revenues from migrant-related projects and represents 15% to 23% growth over 2025 base revenues. We anticipate a full-year adjusted EBITDA loss in the range of $5 million to $10 million compared to our prior guidance of a loss of $15 million to $25 million. In addition to the increased revenue outlook, we have several cost-cutting initiatives underway that we are addressing with the efficiency innovation portfolio efforts that Lee previously outlined, which we believe can accelerate our pathway to profitability. We continue to expect to achieve profitability on an adjusted EBITDA basis in the back half of this year. At this point, I would like to turn the call back to the operator for Q&A. Operator, please proceed. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. And your first question comes from the line of Pito Chickering from Deutsche Bank. Please go ahead. Pito Chickering: Hey, good afternoon, guys, and thanks for taking my question. I guess, just to lead off here, you talked about doing a formal process on a strategic alternative. Can you give us any color on sort of, you know, what the process entails and any color on how it is going so far? Lee Bienstock: Hi, Pito. Absolutely. Thanks for the question. So we have engaged an investment bank to run a formal process with the goal of maximizing shareholder value. We cannot share more at this time as we are in the process. But, of course, as things progress, if they do progress, we will share more at that time. Pito Chickering: Okay. Fair enough. I figured as much, but I had to ask here. Can you split up the improvement in your 2026 guidance in both revenues and EBITDA from upside from SteadyMD or improvements in mobile health or transportation or SG&A? Just any color because you raised revenues by $10 million and adjusted EBITDA by $10 million to $15 million. Lee Bienstock: Absolutely. Thanks for that question as well, Pito. So we are seeing increased volumes, particularly in our medical transportation segment. We have also made progress on EMS staffing. Those are the two key components really for the increased revenue outlook of about $10 million. We are seeing additional upside in SteadyMD, and those, I would say, are the primary drivers of our increased guidance. Both volumes in SteadyMD are up significantly as well as our ability to fulfill the volumes that we have seen in the medical transportation segment with additional hiring that we have been successful with. We still have some additional room to run on the staffing. That is going to be a continued focus for us on the EMS side. But that has really been the driving factor of the revenue guide increase. On the EBITDA side, it really is a factor of, A, the revenue increase provides more gross profit dollars. We are also seeing gross margin improve with reduced overtime that Norm pointed out. And so we see gross margin improve as we start the year here and as we progress because we have been able to staff more efficiently and drive that overtime rate down. And then, again, we are also very focused on reducing SG&A by another 10% to 15% from recent levels with some of these efficiency innovation portfolio items that we have already kicked off. These are areas where we are working to automate many of the functions in billing and dispatch, where we can utilize perhaps fewer staff members but leverage automation to make us more efficient. And we have already kicked that off. I mentioned pre-billing is an area where we have already made that automation process improvement, and there are going to be other areas as we progress throughout the year here as we use technology to become more and more efficient and take cost out of the business. That is what is really driving the EBITDA outlook improvement. Norm, anything to add? Norman Rosenberg: Yeah. I mean, I would just say that when we look at the gross margin, the exit rate of gross margin in the fourth quarter or so, we showed it was around 32.5% to 33% on a blended adjusted basis. But, in reality, there were a couple of things that were holding us back in the fourth quarter that have already improved here in the first two, two and a half months of the year. Number one is on the transport side. As Lee mentioned, there is the overtime rate, which cannot be overstated in terms of the impact that having a higher overtime rate has on your overall gross margins. It raises your effective hourly rate. If we look at the fourth quarter, the effective hourly rate for field labor was probably the highest that we have seen. And it has since moderated along the lines of having your overtime rate come down from, like, 13% closer to the 10% area that we had seen in 2024. So that is one driver. The other part of it is when we look at the mobile health gross margins, on its way out, the migrant revenue came in at a much, much lower gross margin level than it had. It had traditionally been running in the 35% to 38% gross margin range, then in the third quarter of last year, it ran in maybe the higher mid-twenties, and then under 20%. And it is a little bit of a stranded cost thing, but it is more a matter of just having people on staff till the end of the year. Some of those projects ended midway through the month of December, and you are left with a little bit of cost. Those costs are all gone. There is not going to be any of that in Q1 along with those revenues. So when we think of the exit rate and then we think of what we had pegged the gross margin at, our original guidance, especially in the first half of the year, we think we are running at a level that is somewhat above. Pito Chickering: Okay. Excellent. And then last question here. You talked about sort of free cash flow pressures in 2026, potentially covenants. Can you please quantify what free cash flow generation or if free cash flow declines will be during 2026? And then any color on how we start and end the year? And just to be very clear, does that include or not include collections in the rest of the migrant business? Norman Rosenberg: Okay. So a little bit to unpack there, so we will do it in order. The first thing to point out, and we did talk about it here in our prepared comments, our cash balance at year end was lower than what we had pegged it to be. And that is simply because there is about $20 million in those migrant receivables. The last piece of it—we have collected 97% of everything up until now—that did not come in during the fourth quarter. That still has not come in yet in the first quarter. I believe that a good chunk of that is imminent. By that, I mean I still think that some of it is going to come in during the first quarter even though there are only about a couple of weeks to go. So it is pretty imminent. The rest will come in the second quarter, maybe the third quarter. But we expect to collect all of it. So when I look out a few months, I would not expect there to be any net difference. But that is $20 million of receivables, or $20 million of cash, that I would have expected, when we last spoke in November of last year, to have had in the door and in the bank by the end of the year. So that is one factor. But, getting to your other question very clearly, it does not change—our outlook has not changed as to the ultimate collectability of that money. I am just looking at a cash balance that is somewhat lower than it had been before. We do have working capital requirements. As Lee mentioned, we are bringing on a lot of new people on the EMT side. So you bring on an EMT, you start to pay them, you get them out in the field working on the truck, they do more volumes, and then those are typically paid within, you know, 80 to 90 days. So you have your typical growth working capital needs there as well. So that is really what we are talking about. As far as the line of credit is concerned, we have your typical covenant or adjusted EBITDA covenant, and it is no secret we have been running at an EBITDA-negative level for a good few quarters. So that is one of those things that we need to work through with them. We are in the process of working with our credit line provider in terms of how they interpret that and those kinds of adjustments to make sure that that line of credit remains available to us. We have not drawn down on it since we paid it back in August. But it will be nice to know it is there. Certainly nice to know it is there. So that is a big part of it. As far as—I want to avoid, I think I have learned my lesson—I want to avoid looking into the crystal ball and talking about exactly how much cash will be there at what date. But just to give you an idea of the trend, as we mentioned, I think the next couple of quarters, where we expect negative EBITDA, at least in Q1 and Q2, and into Q3, that will probably result in a somewhat lower cash balance. But, again, it depends on the timing of the payment of the remaining migrant receivables. When they come in, that will cover up the loss. And, technically, that could keep us at a somewhat flat level. So all of it really depends on the timing of that and the timing of some of the payments that we make. But then as we get towards the back part of the year, and we are looking at relatively small EBITDA losses or even positive EBITDA numbers as we get to the back end of the year, then we should see a plateauing of that particular cash balance. Pito Chickering: Great. Thanks so much. Operator: Thank you. And your next question comes from the line of Ryan MacDonald from Needham & Company. Please go ahead. Ryan MacDonald: Hi. Thanks for taking my questions. Maybe, Lee, just on the payer business first. Obviously, some great momentum there in terms of covered lives that you continue to grow, the expansion into Kentucky as well. And I think earlier this year, at your conference, you were talking about sort of a pipeline of two to four more incremental payers that you could sign on within the first half of this year. Just any update on what that pipeline looks like and if that is being factored into even the increased top-line outlook, if at all, that you set today? Lee Bienstock: Absolutely, Ryan. Thanks for the question. Great to hear from you. So the forecast that we have, the forecast that we shared today, is consistent with what we shared in our previous call. We continue to see momentum in this business. The number of visits is up significantly. As we mentioned, the number of lives and patients that are being referred to us by the payers is up. And we continue to balance scaling that business with the investment we are making in that business. And that is the key factor there. I think the reason why I was excited to share the expansion into a new state by a payer we are already working with in two other states is that it is a great harbinger for us that the value we are providing to our partners is there. They are looking to us to expand and provide that value to additional patients in other states. And that is a good indicator to us that, of course, patients and the partners we are working with are deeply valuing the services we are providing. And so that makes us very, very excited. And, of course, we see it every day when we go visit patients and see the impact we are making. So the momentum we are seeing. We are really focused on making sure that we are growing efficiently, that we are continuing to scale while balancing the investment rate we are making in this business so that we could achieve really critical mass in the markets we are in and be very selective about whatever markets we expand to, primarily with existing customers of ours. So that is the focus. I think you will see us visit in the patients’ homes about 200,000 patients this year across our mobile lab and care-in-the-home business. Care gap, transition management, primary care is another big focus of ours where we are seeing good progress. We always endeavored when we entered this business to not only close care gaps but provide longitudinal preventative care. That is when you can really impact the cost of care and improve health outcomes, so we are seeing great progress there as well. So that is what the forecast consists of. Of course, if we sign additional contracts, we will announce those and then adjust accordingly as we go throughout the year. Ryan MacDonald: Excellent. Appreciate it. Norm, obviously, there are a lot of moving parts at the gross margin level this year with some of the migrant revenues coming off, reduction in overtime rates, also integrating SteadyMD to the point where you can start doing more of the mobile health visits through that platform in the second quarter. Can you just give us a sense of, implied in the forecast, where you are thinking in terms of gross margins at each segment level and on the overall level as you are thinking about the 2026 guide? Lee Bienstock: Thanks. Norman Rosenberg: Sure. So, at the risk of sounding redundant like everybody else in the world, we do expect sequential gross margin gains as we go through the year. That is the first thing I will point out. On a full-year basis, we would expect the blended gross margin to come in right about 33%, so that will be a little bit of a pickup. On the transport side, last quarter our adjusted gross margin was, I think, 32.8%. I will always be clear about it: there is a certain limit to where gross margins go. I think that once we get to a point where we would have gross margins on the transport side of 34.5% or 35%, we would probably end up seeing that scale back a little bit. So I would say that on the transport side, that number is going to be hopefully somewhat higher than, a little bit north of, 33% as we go through the full year. And I can point to certain markets where we are certainly expecting a turnaround, and there are one or two markets that are currently holding us back that we have already seen some improvement in Q1. So that is the transport side. On mobile health, a lot of it is going to come down to mix. We have the health plan provider care-in-the-home business, which is a relatively lower margin than what we see otherwise. But then the mobile phlebotomy business comes in at a high margin. SteadyMD comes in at a pretty high margin, but we have talked about how they have had to rapidly expand, so you might even see a period of time where SteadyMD margins are taking a little bit of a step back along with some growth that is above plan. But then you have your remote patient monitoring business, which is chugging along, increasing both on a year-over-year and a sequential basis, and the margin is hanging in there, north of 50%. So we would like to see mobile health margins get back to, let us say, a 35% blended level for the year, and that would sort of get you that 33% for the full year. Ryan MacDonald: Awesome. Appreciate all the color there. I will hop back in the queue. Operator: Thank you. And your next question comes from the line of David Larsen from BTIG. Please go ahead. David Larsen: Hi. Can you talk about, for the 2026 guide, the different sort of revenue components? In the past, you have disclosed it by division—transport, municipalities, health systems, payers—or also by RPM, virtual primary care. Any of those details by division would be very helpful. Thank you. Lee Bienstock: Absolutely, Dave. Thanks for the question. So I think if we take the midpoint of our updated guidance—call it $300 million as the midpoint—we are expecting now that transport is going to come in somewhere around $215 million. We think there is some additional upside there if we continue to make progress on the staffing. And on the mobile health side, it continues to be in that $85 million to $88 million of projected revenue. The mobile health side, if you remember, consists of no population health municipal revenue, does not include any migrant revenue, of course, for 2026, and also, we continue to point out that if we will do municipal or population health revenue, we are going to report on that as a separate item. So it really does consist on the mobile health side of our SteadyMD acquisition, which is the virtual care side; the care-in-the-home portfolio that I was describing; the mobile labs; the care gap; the primary care; and the patient monitoring, along with some of the staffed clinics that we do. That is really the component pieces. I would say that we shared in previous calls that SteadyMD is in the $25 million to $30 million range. As Norm pointed out, we think there is upside to that plan, given the progress that we are making now that we have spent more time with that business, having acquired it in October. And we are continuing to integrate and infuse them into the company and all the opportunities that the company is seeing. And so I would say that is the mix. You have that SteadyMD acquisition that is coming really into full bloom as we integrate it, and that mobile health collection of businesses is in the $85 million to $88 million of revenue, of which none of that is migrant or municipal or population health in nature. David Larsen: That is very helpful. Thank you. And then can you talk about the cross-selling effort? I would imagine from a health plans perspective, care gap closures are enormously helpful. How frequently would you be able to add in remote patient monitoring and then assign a primary care doctor, or you have a mobile lab service? Can you talk about the cross-sell and upsell growth potential? Thank you. Lee Bienstock: Yeah. That is a great question. I am so glad you asked it because that is often something that I think is really an untapped opportunity for us. I think we have done some of it, and I can give some examples in a minute. But I think that remains a very big opportunity for the company, one that we have made some progress on, but there is clearly more opportunity that we can leverage as we really refine our portfolio of services. I think 2025 was a year where we established a great portfolio of services on the mobile health and medical transportation side. It is very clear what our value is. Patients love it. And now we can start to think about how we cross-sell and provide those services to patients on a broader basis, particularly because our two main customer segments are really the two customer segments you want to have in health care. We work directly with large health systems and hospitals, and then the payers. And so we are excited about being at the center of that. The payers and the hospitals are really where the vast majority of touch points and cost is coming from in the system that we are contracting with and partnered with in that space. So I will give you a few examples. One area that we are really enthused about is our ability to take a care gap patient and turn them into a preventative, primary, longitudinal care patient. So we go and we may close the care gap for a diabetes patient or do a screening of some sort. We find that many of those patients do not have a primary care provider or know who that primary care provider is; over 70% of the time would opt for us to be that primary care provider. So we are starting to add that aspect of our services as we go into care gap and then primary care. The other piece I will just flag also—you mentioned the mobile labs—we are working with some of the hottest consumer healthcare companies in the space, the wearable space, where they are now offering lab orders, and they are integrating your lab results into their consumer apps for their wearables. And right now, they are driving patients to patient service centers, but we have partnerships with a lot of the labs. Perhaps we can go to the homes of those patients as an upsell, as a more convenient option than driving them to the patient service center—so going into the home and providing mobile labs as an example. And we continue to think that the opportunity that we have where we are bedside at discharge is a very key moment in a patient’s journey. When the patient is being discharged by the hospital and our EMS teams are there transporting the patients, and we are bedside at discharge, we continue to think that is a crucial moment in the healthcare journey. And so what can we do to bridge the discharge from the hospital to the home? We think we have a big role to play in that as we continue to build out the capabilities and continue to work with our amazing partners. So those are some of the areas that we are excited about, and that is why I am giving such a long, detailed answer about it because I think it is an additional area of opportunity that is in front of the company as we go forward here. David Larsen: Thanks very much. I will hop back in the queue. Operator: And your last question comes from the line of Sarah James from Cantor Fitzgerald. Please go ahead. Sarah James: Thank you. I appreciate the commentary that you have made so far on some of the moving pieces in 2026 with migrant costs being concluded in 2025 and the improvement you have already seen year to date in EMS labor. But I am wondering if you could put that altogether with what you are planning on the SG&A efficiency side and give us a view of how we should think about EBITDA cadence throughout the year. So I guess based on what you are doing on the SG&A side, is it a ratable improvement for the year? Should the year be really back-end loaded, or how should we think about that? Lee Bienstock: Yeah. Thanks, Sarah, for the question. I think, as Norm mentioned, we see most of the adjusted EBITDA loss focused on the first half of the year, and as we turn the corner to the second half of the year, we turn to profitability. I think the big components really are in reducing corporate expenses, both in the headcount side as well as some of the vendors that we work with on the corporate side. We have already undertaken a lot of that work, and so that is a factor. And then on the efficiency side, the charge I have really given to the team is to find a way to make us more efficient, use technology, automate, standardize processes at the company where the patient and the customer do not feel it. They do not know that we are being more efficient. The service levels that they have come to love remain as high as ever. The patient experience that the patients absolutely love—I mentioned the Net Promoter Score of 92—stays as delightful of a patient experience as you can have in a patient’s home when they are in need of healthcare, to maintain that high bar but at the same time remove cost. And the way to do that is to use technology and to automate. And so I mentioned an example of the pre-billing process. In the past, we had our dispatchers and we had members of our team doing the pre-billing component to ensure, of course, that the patient had insurance, that we were going to be able to collect, as an example, the medical transportation trip. Now we are working to automate that, and we feel like we have built something that can automate that process and then, of course, free up our people to do other work or perhaps allow us to be just as efficient and productive with fewer people. And that really is a driving function. So we are really looking at areas where we are using human labor today but it can be automated, it can be standardized. And those are the areas that we are using technology to build out. Another great example I have been using is when we first started engaging with the patient lists that the payers are providing us for care gap services, we were making phone calls for all those patients—myself included. I did a bunch of those calls. It is quite good, I might add, engaging with the patients. But now we are automating a large portion of it. We are automating a large portion of it with text. We are automating a large portion of it with AgenTeq AI. And we are doing more with fewer resources. And so those are really the areas we are focused on. We are very enthused by the progress we are seeing. That AgenTeq AI patient engagement solution is already live. It has been running for months now. That automation of the pre-billing is set to go live. We have been testing it for months now. And so these are the areas that we are really going to push forward on to drive efficiency and ultimately remove costs from the business that we know is crucial. And so that is really where we set out. We really worked on it toward the end of last year. And we are starting to see it come to fruition as we kicked off 2026. Sarah James: Great. Very helpful. Thank you. Operator: Thank you. Your next question comes from the line of David Crossman from Stifel. Please go ahead. David Crossman: Lee, maybe you could help us better understand your expectations for the cadence of mobile growth as 2026 progresses? And maybe if you could in your response help us better understand what visibility you have today and what the pipeline may look like, including how you leverage the success you are having with this one particular payer and care gap closure into marketing that to some of the other payers. Lee Bienstock: Absolutely. Thanks, David, for the question. So, as we mentioned on our last call, we are really taking the approach to set guidance based on what we have today—the contracts we have today, the staff we have today, the volumes we have today—and then, of course, if we are able to add to that with new contracts, new expansions, additional staff, then we would update as we went along. And so we are taking that same approach this quarter. This is based on the staff we have today, how much progress we are making on the staffing—there is still more progress to be made. This includes the contracts we have today. It does not include any wins that are projected to come, but rather what we already have in-house today. So in terms of visibility, this is the full visibility that we have. It is the contracts that we have with the staff we have today in the mix of the business right now with the customers we already have. So that is the key component. I think we really project that the mobile health business will grow as we go throughout the year. There is no one quarter where we hit some inflection point. It really is going to be a linear build on the mobile health side because, as I mentioned, it is including all the contracts we already have today. I think what you are seeing on the mobile health side is about a 40% year-over-year growth from 2025 to 2026. Now, of course, that does include a full year of SteadyMD revenues, which we acquired, as we mentioned, in October. If you exclude SteadyMD from both periods, we have about 10% to 15% year-over-year growth as well. So what we are going to be focused on this year is integrating SteadyMD, utilizing them across the DocGo Inc. platform so that we are utilizing SteadyMD’s clinician base to oversee the visits that are happening in the patients’ homes with our mobile health clinicians in the homes and then, of course, enabling them to grow as well. But that is basically what we see is a linear growth on mobile health as we go throughout the year. Of course, if we were to win a new contract, that would maybe introduce a step function into the growth rate, but it is based on what we have today—that is the visibility aspect to your question. David Crossman: Okay. Great. Thank you for that. And just a quick one for you, Norm. I think you said you expect to get another chunk of cash from HPD at some point, perhaps even before the end of the month. Any sense for what the gating items are to getting paid at this point, or has it just been typical administrative delays in getting the final payments? Any sense for whether there is any risk to the $20 million? I think in your press release you said you expect to get fully paid, but just thought I would ask the question. Norman Rosenberg: Yeah. And, sure, David. It is a good question. And just to set the table, we are in touch with them on a pretty frequent basis. I have a counterpart there. There are about half a dozen people here who are in touch with their counterparts. I speak to them weekly. What has been going on is that, as the administration has transitioned, first of all, people have been a little bit busy. But beyond that, they are going through an audit—not just for the payable to us, but really for everything that HPD has done with all the different vendors that they have. And they brought in one of the Big Four accounting firms, in a consulting capacity, that was doing an audit for them across the board and looking at the stuff that they already paid, looking at the stuff that was already open—kind of routine type of process. But I would say that that payment was held hostage, if you will, by that particular audit that went on for quite a few months. That audit has been wrapped up. The findings are now being put together on paper. And that is why I think that we should find out really within days of what they are going to pay us in an initial wave of funding. And then, of course, if there is some stuff where they require additional information, all of which we have, we would provide that and continue that process going. So that was the big gating item there—really getting that audit done that took at least, I would say, two to three months, maybe more, to get complete. David Crossman: Got it. Great. Thanks very much. Operator: Thank you. And there are no further questions at this time. I will now hand the call back to Mr. Lee Bienstock for any closing remarks. Lee Bienstock: Wonderful. Thank you so much for everyone joining us today, and we are looking forward to speaking with you again soon. Take care. Operator: And this concludes today’s call. Thank you for participating. You may all 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 AEye, Inc. fourth quarter 2025 earnings conference call. 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, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star then 1 again. I would now like to turn the conference over to Keaton Olson, Investor Relations Manager. You may begin. Keaton Olson: Good afternoon, and thank you for joining AEye, Inc.'s fourth quarter 2025 earnings call. I am Keaton Olson, Investor Relations Manager for AEye, Inc. And with me today are Matt Fisch, Chief Executive Officer, and Conor Tierney, Chief Financial Officer. Earlier today, AEye, Inc. announced its financial results for the fourth quarter and full year ended December 31, 2025. A copy of the press release is available in the Investor Relations section of the company's website. Before we begin, today's discussion may include forward-looking statements as defined in securities laws and regulations of the United States with reference to future events, operating results, or performance and are based on our current expectations and assumptions. Any forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances. Our actual results may differ materially from those contemplated by these forward-looking statements. You can find more information about the risks, uncertainties, and other factors in the reports AEye, Inc. files from time to time with the Securities and Exchange Commission, including in the most recent periodic report. The statements to be made today are as of today only. AEye, Inc. does not intend to update any forward-looking statements regardless of any new information, future developments, or otherwise, except as may be required by law. In addition, we will be discussing non-GAAP financial measures on this call, which we believe are relevant in assessing the financial performance of the business. These measures are presented as supplemental information only and should not be considered a substitute for financial information presented in accordance with GAAP. You can find reconciliations of these metrics to the most directly comparable GAAP measures within the press release. I will now turn the call over to Matt. Matt Fisch: Thank you, Keaton. And thank you all for joining our fourth quarter and full year 2025 earnings call. 2025 marked an important year for AEye, Inc. as we continued building the foundation for commercial scale. Over the course of the year, we expanded our customer base, increased engagement activity, and delivered revenue growth as customers progress through their evaluation cycle. At the same time, we significantly strengthened our balance sheet, ending the year with nearly $87 million in cash, and we believe we are funded well into 2028. Importantly, we are also seeing broader market interest, including new RFIs, new strategic partnerships, and additional autonomous trucking evaluations. We began 2025 with a plan to demonstrate that our technology, business model, and balance sheet all position us as one of the most innovative companies in the LiDAR industry. And we executed against the key milestones we set out for the year. With momentum in our business accelerating each quarter, throughout the year, we made continuous progress against our growth strategy, including launching multiple products: Optus, our fully integrated physical AI solution, and Stratos, that firmly sets the industry bar for detection range. Executing on our commercialization strategy, keeping our spending under rigorous control while investing in sales, marketing, and operations, and we built a financial foundation that offers the long-term stability that partners in our sector look for. We believe AEye, Inc. is emerging as a differentiated provider in long-range LiDAR, with capabilities that address some of the most challenging perception problems in autonomy. The LiDAR sector has undergone significant consolidation over the past several years, and AEye, Inc. has emerged from this period with a stronger balance sheet, a capital-light operating model, and a growing commercial pipeline. Our Apollo sensor with near-infinite software programmability and a 1-kilometer detection range is driving increased engagement with a growing set of prospective customers. We are also advancing several commercial discussions that stem from successful POCs, which are creating clear pathways toward higher-volume programs. In defense and aviation, we are now engaged across multiple opportunities, including repeat business with an existing defense customer. We are also supporting programs in UGV, UAV, and counter-detection applications, where our long-range performance and ability to tune scan patterns in software are particularly valuable. We have seen this momentum translate into concrete activity. We have received multiple new RFQs, and we entered a new strategic partnership with a distributor which strengthens our positioning and helps unlock opportunities outside of the United States. Taken together, these developments validate the inroads we have made in sectors where our performance advantages matter most. We are also seeing promising traction in commercial and ground mobility, including early conversations in long-haul trucking and rail where long-range sensing and software-defined field-of-view control are increasingly important for next-generation safety systems. In the transportation and infrastructure sectors, our momentum is equally strong. As announced in June, we were selected by a major global transportation OEM for a program representing a $30 million revenue opportunity. We are now in the first stage of deployment, and based on the current outlook from the customer, we expect to enter a broader phase of deployment in 2026. We recently completed a successful Intelligent Transportation System POC in Australia and are now discussing commercial terms. Multiple smart intersection deployments are in progress across the U.S., and we also signed an LOI with an ITS solutions provider which we expect will unlock opportunities in Korea and the broader APAC region. These engagements reinforce the strength of our diversified go-to-market strategy and support our expectation that non-automotive will be a meaningful contributor to near-term revenue. This increased deal flow is feeding directly into our POC and quoting pipeline, and we expect this level of activity to continue throughout the year as our technology becomes increasingly visible across strategic markets. As these engagements progress, we expect to see increased conversion into deployment phases, which is where revenue can begin to scale. CES 2026 served as a barometer of strong market interest, and as a result, we generated over 130 high-quality leads across automotive, trucking, and a broader set of physical AI-driven markets. The physical AI market is estimated to represent a $5 billion market today and, according to a recent analysis by Barclays, a potential trillion-dollar opportunity by 2035. AEye, Inc.'s software-defined LiDAR architecture positions us as a core enabling layer of this emerging ecosystem. The launch of Stratos, our ultra long-range third-generation LiDAR sensor, sets the tone with its unprecedented detection range at a disruptive price point. Stratos is not merely an addition to our portfolio; it is a value multiplier for our software-defined architecture. By delivering a 1.5-kilometer detection range and resolution greater than twice that of our flagship Apollo sensor, Stratos redefines the boundaries of high-performance sensing while maintaining a form factor automotive OEMs can fit behind a windshield. By preserving a 500-meter range even when placed behind glass, we offer OEMs a streamlined packaging solution that simplifies weather mitigation and avoids the aesthetic compromises required when employing roof-mounted sensors. Apollo and Stratos are built around a 1550-nanometer architecture which allows higher power transmission while remaining eye safe. The result is improved long-range detection and more reliable classification of low reflectivity objects at distance—capabilities that are increasingly important for applications such as highway autonomy, industrial automation, and defense. Through our global tier-one manufacturing partner, Lite-On, we have secured dedicated manufacturing capacity of 60,000 Apollo units annually. Our supply chain is globally diversified, giving us the flexibility and resiliency to mitigate geopolitical risk and shifting trade policy. Our tech stack was derived from off-the-shelf components from the telecom industry, allowing us to compete on cost while providing mass manufacturability and high performance to customers. Our partnership with NVIDIA remains a cornerstone of our automotive and industrial market opportunity. We have demonstrated Apollo LiDAR integrated with NVIDIA's next-generation DRIVE AGX Thor platform, the future centralized brain of NVIDIA-equipped autonomous vehicles. This helps ensure compatibility with leading autonomous compute platforms and meets rigorous standards and transparency with regard to sensor performance. I am also very excited to confirm that we are joining the NVIDIA HALOS AI Systems Inspection Lab, which bolsters our commitment to build products that meet the safety and robustness requirements of the automotive industry. Beyond automotive, our Optus platform powered by NVIDIA Jetson Orin is transforming legacy infrastructure. By providing a turnkey vision-to-action pipeline, we are delivering real-time detection and analysis to sectors that lack the resources to build their own AI perception stack. We have expanded this ecosystem through strategic partnerships with software partners like FlashEye for ITS, airport security, and other applications; BlueBand for smart city traffic management; Black Sesame Technology for high-speed rail; and, most recently, VuRun for dynamic perception required by moving vehicles such as rail and truck. Together, these partnerships are turning technological opportunity into actionable revenue pipelines today. I will now turn the call over to Conor Tierney, who will review our fourth quarter results and our uniquely strong capital position in the performance LiDAR sector. Conor Tierney: Thank you, Matt. We closed the year with strong commercial momentum. In Q4, we shipped the highest number of Apollo units in our history, demonstrating increased customer readiness and execution capability. Customer traction also continues to deepen. Since our last earnings call, our active customer count has grown from 12 to 16. Active engagements are up over 40%, and active quotes are up more than 30% quarter over quarter. We are seeing broad activity across both automotive and non-automotive opportunities. Repeat business amongst customers is emerging as a bright spot, reinforcing product-market fit and validating the performance advantages of our architecture. While we are in the early stages of this revenue ramp, our underlying metrics provide clear visibility into future growth. Fourth quarter GAAP operating expenses were $8.3 million, up from $7.8 million in 2025, primarily due to increased engineering spend and one-time payroll costs. Fourth quarter non-GAAP operating expenses were $7.5 million, an increase of $1.4 million compared to the prior quarter of $6.1 million, primarily driven by the same cost drivers just discussed. We reported a GAAP net loss of $7.3 million, or $0.17 per share, in the fourth quarter, compared to a GAAP net loss of $9.3 million, or $0.30 per share, in 2025. The decrease was primarily due to smaller changes in the fair value of our convertible note and warrants, as we fully repaid the note in the fourth quarter and had fewer outstanding warrants this quarter. These decreases were partially offset by the increased costs noted earlier. On a non-GAAP basis, our net loss was $6.8 million, or $0.15 per share, compared to a non-GAAP net loss of $5.4 million, or $0.17 per share, in the prior quarter. The increase in non-GAAP net loss was driven primarily by increased contract development expenses and one-time payroll costs. Excluding net financing proceeds, fourth quarter cash burn increased to $7.5 million from $6.4 million in 2025, primarily related to increased engineering costs, professional services, and insurance premiums, as well as purchases of certain long-lead components. During the fourth quarter, we raised an additional $10 million, which included funding from a well-known institutional investor. By leveraging tier-one manufacturing partners instead of making heavy investments in internal infrastructure, we continue to maintain the lowest burn rate amongst our peers. We ended the year with cash, cash equivalents, and marketable securities of $86.5 million. This war chest provides us with an operational runway well into 2028. And importantly, we have simplified our capital structure. We have fully repaid our 2025 convertible note and eliminated legacy warrants associated with our convertible notes, leaving AEye, Inc. virtually debt free, establishing the company as a reliable long-term partner for leading automotive OEMs and high-performance industrial partners demanding multiyear production cycles. Moving on to our cash burn outlook on Slide 8. We expect full-year 2026 cash burn to be within the range of $30 million to $35 million, reflecting increased investment in sales and marketing to support our go-to-market efforts, scaling our operational capabilities, and executing on customer deployments as we transition from evaluation into commercial programs. Apollo continues to be the foundation of our competitiveness and growth strategy. Apollo's core architecture, paired with software flexibility, allows us to rapidly tailor performance, field of view, and feature sets without requiring a hardware redesign. This scalability is central to our rapid roadmap expansion, which enables us to continue to lead the high-performance market at significantly lower development costs. A prime example is Stratos, which leverages Apollo's core architecture and software definability to allow us accelerated access to a broader set of customers. Stratos demonstrates how we can keep development costs low while maintaining the performance profile that differentiates us, and this approach is resonating strongly with OEMs and industrial customers who require flexibility without sacrificing capability. We expect 2026 to show increasing momentum towards our revenue generation inflection point as our technical engagements begin to translate into volume commitments and a durable revenue ramp. Apollo's differentiated performance and software-defined flexibility continue to deepen engagements across markets, while our capital-light model and cost-competitive tech stack allow us to scale efficiently and maintain one of the most attractive cost structures in the industry. I will now hand it back to Matt to wrap things up. Matt Fisch: Thank you, Conor. As we enter 2026, we believe AEye, Inc. is positioned on a much stronger foundation than a year ago. Our customer base is growing, engagement activity continues to increase, and our balance sheet provides the runway needed to execute our strategy. The focus now is converting these engagements into deployments and building a durable revenue ramp. We look forward to updating you on our progress throughout the year. Operator, we are now ready to open the floor for questions. 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 would like to withdraw your question, simply press star then 1 again. 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. Again, press star then 1 to join the queue. First comes from the line of Poe Fratt with Alliance Global Partners. Your line is open. Poe Fratt: Yeah. Good afternoon, Matt. Good afternoon, Conor. Hey, can you just talk about the big jump in your customer base this quarter? I think you mentioned it jumped to 16, and can you give me any more detail on your pipeline, if you will? You are talking about a lot more engagement. If you can give us a little more color on that, that would be helpful. Matt Fisch: Hey, thanks, Po. This is Matt, and I will take that, and happy 2026 to you. Thank you for joining us. I hope you got a strong impression from the script earlier that there is a lot going on at the company right now, and the 16 active customer number that we talked about is really reflective of our growing activity and growing business opportunity in our non-automotive pipeline. If you take that 16 and now you start looking back upstream, we really saw a sizable jump not just in customer interest but the number of outbound proposals to customers. These translate into this increased customer base and really look at this as a feeder from these proof-of-concept projects. We have a lot more in the pipe coming behind these. By the way, across all the market segments we mentioned in the call, the interest is very broad across the market segments. And so, what we can expect to see going forward is a corresponding jump in the number of customers—in other words, the number of paid POC projects. Poe Fratt: Okay. Great. And then are there any new developments on the NVIDIA partnership? And then can you talk about how you see that adding value in 2026 and beyond? Matt Fisch: Yeah. So, first and foremost, I think you saw the press release earlier. Our relationship with NVIDIA continues to deepen, and there were two things that we spoke about in the call earlier. Number one, let us start chronologically with our work with NVIDIA during CES. I believe at CES we were the only LiDAR vendor to show Apollo integrated with NVIDIA's DRIVE AGX Thor platform. That platform is their latest and greatest autonomous platform for ADAS and autonomous driving, and we are out there on the cutting edge showing that with Apollo. And secondly, there was an announcement earlier: we have joined the HALOS AI Lab with NVIDIA. I think the way to look at this is it shows NVIDIA's interest in our strength and our commitment to the automotive process. There is an unbelievable amount of rigor—functional safety and all these kinds of things—and this partnership deepening with NVIDIA with HALOS really increases our momentum and our commitment to the quality, safety, and readiness that are required. Certainly, in our opinion, it shows NVIDIA's continued broadening interest in Apollo and the products we have here at AEye, Inc. Poe Fratt: Okay. And then you said you were at CES. Can you talk about any pull-through that you see from being at that conference? Matt Fisch: It was incredibly positive for us, Po. Conor and I were both there personally. We had a full team on the floor at CES, and the amount of interest in LiDAR, in my view, is off the charts. There were two or three days in a row where it was hard to even leave our booth because we had people backed up. The OEMs are back out on the floor, and I am talking about automotive OEMs and also, in particular, trucking OEMs. Even though they may not have had large booths at the conference, their ADAS teams and their engineering leaders and purchasing leaders were definitely out on the floor, and we could see a huge spike and jump in interest, especially in auto OEM passenger vehicle market and trucking. I think there was one thing that really stood out to me above and beyond that, as we were approached by the leaders of these organizations who were really asking about readiness for mass manufacturability. And I think this is where our partnership at Lite-On really struck a positive chord. In fact, we had our partner Lite-On there at the conference, and we felt that the OEMs were really impressed by our approach—using a seasoned tier-one automotive supplier to supply into this market—and it really helped increase our credibility. Conor Tierney: I would just add to what Matt said there. Aside from the traction in automotive and trucking, we walked away with something like 130 leads out of the event, and even with some of those leads right now, they are maturing into evaluations. So this is feeding directly into our funnel and actually feeding downstream in terms of POC momentum. I think that was a great outcome all in all. Poe Fratt: Great, Conor. And then, Matt, you emphasized the balance sheet not only cleaned up with the converts and some of the legacy warrants gone, but you have a cash runway into 2028. Can you talk about your capital raising? Should you be pretty quiet for 2026, or what is your capital strategy or capital-raising strategy as we look at 2026? Matt Fisch: Yeah. Sure. We will have Conor jump in on that one. Conor Tierney: It is a great question. What I would say is we are well capitalized at this point. You mentioned the fact that we had about $87 million in cash, and that really gives us enough runway well into 2028, assuming we maintain a similar burn rate to what is projected in 2026. What I would say is the question is not really when we will raise capital; it is more about strategic optionality. And what I mean by that is we are really pushing commercial traction this year. We have a number of opportunities. You can see the strength in the pipeline, the momentum, the increase in quoting activity and POCs. And so we will be out evaluating opportunities for growth, and if that is in the company’s best interest and delivers shareholder value, then that is something that we may consider. Poe Fratt: Great. That is helpful. Thank you, both Matt and Conor. Conor Tierney: Thanks, Po. Desiree: Our next question comes from the line of Greg Musnier with Kingswood Capital Partners. Your line is open. Greg Musnier: Yes, thank you. Two quick questions. What kind of CapEx range are you modeling for 2026? Matt Fisch: Over to you, Conor. Conor Tierney: We have not given specific guidance on that, Greg. What I would say, it should be relatively low—probably under the $1 million range. So not a huge amount, and that is purely because of our business model, this capital-light business model. We are working with our contract manufacturer and their tier-one partner, Lite-On, so they really do bear the brunt of a lot of that heavy capital investment. That is one of the upsides of our business model. Greg Musnier: Sure. And when you look at your existing and new customers that you are adding, the current systems you are delivering to them, can you give us some idea of the percentage split between hardware and software and how that may change over time? Thanks. Matt Fisch: That is for you as well, Conor. Thanks. Conor Tierney: What I would say is we are probably predominantly hardware-based right now because this is really about selling sensors. We have started to shift into the software piece with Optus, and that is where we think we can add a lot of value going forward, and we are starting to see some revenue there. But I would say the vast majority of it is still hardware revenue. One thing that I am really enthusiastic about is, because of the software definability of the sensor and the flexibility, what we are seeing is there are opportunities to upsell for customization. This could be working with—we will take the defense industry as an example—upselling on customizations to enhance range or to enhance certain feature sets. There is a lot of flexibility there. I think we are really just scratching the surface in terms of the revenue-generating opportunities there. Greg Musnier: Thank you. I have no other questions. Desiree: Next question comes from the line of Richard Shannon with Craig-Hallum. Your line is open. Richard Shannon: Well, hi, Matt and Conor. Thanks for letting me ask a couple of questions here. Apologies—jumped on the call a little late here. The flight was delayed here today. I think there was an earlier question that I sort of missed the answer on that, so I hope this is not a repeat. But your announcement today, coincident with the earnings, about the partnership with NVIDIA and this HALOS ecosystem—would love to understand what application or application sets this is addressing. How does it overlap or extend what you have been doing with NVIDIA to date? And I know at points in the past you talked about NVIDIA’s Hyperion platform. Is this any relationship to that as well? Matt Fisch: Thanks, Richard. Just a quick recap from earlier: this is a deepening and broadening of the relationship with NVIDIA. Specifically, it is targeted at the automotive space. One of the things we are collaborating with NVIDIA on through HALOS is increasing—or bolstering—our commitment to robustness, functional safety, resiliency, and reliability in the automotive space. So yes, it is really positioned under the broader umbrella of Hyperion, and it is yet another box checked on the level of rigor that is required to be ready for automotive shipments. Richard Shannon: Okay. Thanks for that. I guess my second question is—I cannot remember which one of you made the comment in the prepared remarks—but your nice win you talked about last summer, the $30 million global transport win, you talked about a pickup in the second half of the year. I would love to get a sense of what that really means, if you have any way you can quantify what kind of magnitude we are talking about. And then, ultimately, do you see the $30 million eventually being realized within that three-year time frame that I think you are expecting? Matt Fisch: Yes. I am going to start this one off, and I will hand the quantitative piece over to Conor. As you well know, it is not a commodity off-the-shelf technology, and it just takes time for an OEM in this space to properly test and evaluate. As they gain more confidence in their use case, they will do broader and broader deployments. It builds over time. That is why the process is stretched out over two to three years here, which really has to do with the newness of the technology and the need for the OEM to start in a modest way and then expand their deployments over time. Conor, why do you not comment on a little more detail on the quantitative part of it? Are you there, Conor? Richard Shannon: For what it is worth, I do not hear him on here. Do you hear him, Matt? Matt Fisch: No. I can hear you, Richard. Again, why do I not pick it up, and if we get Conor back—But, look, the short answer is— Conor Tierney: I am back online here. Sorry, Richard. What I would say is there is an assumption that it is going to contribute some revenue in 2026. As Matt alluded to, we are really going through the validation steps right now, and we expect, obviously, the back half of this year to do some initial deployments. I do not think we are going to see a meaningful amount of revenue until probably 2027. But that said, there will be some contribution, and that is baked into the cash guidance numbers that we gave. Richard Shannon: Okay. Perfect. I will ask one more question and jump out of the line here. Regarding both Optus and Stratos—I am going to ask a two-part question. The first part is backward-looking, and the second part is forward-looking. In terms of backward-looking, were any of the customers that you gained—the 16 you mentioned—related to Optus and Stratos in 2025? And then how should we think about milestones or the number of customers you might be expected to gain in 2026 from both Optus and Stratos? I would be particularly interested in Stratos given what looked like some great performance metrics—love to hear some comments on both. Thank you. Matt Fisch: Sure. I think Conor touched on this a little bit earlier. Let us hit Optus first. The numbers we talked about earlier absolutely include Optus numbers. As Conor mentioned earlier, we have a modest portion of the revenue driven by software today, but we do expect that to grow over time. On the Stratos side, it is definitely also baked into what we talked about earlier in terms of active customers and POCs. I will say a little bit more about it. If you think about those really high-speed applications that you might see in defense, or you are attached to a vehicle that is moving very quickly, and also something like a locomotive or a long train that carries a lot of weight and needs extreme stopping distance, I would say those are most definitely related to our inspiration to build a product like Stratos. I would expect it to be expanding later this year and into next year as well, but we will let Conor comment on any specifics. Conor Tierney: I think that is correct. We only truly launched Stratos in January, so we are still at the early stages of the opportunities there. What I would say is most of the sales in 2025 were driven by Apollo and Optus. The opportunities were pretty broad. They were a mix of defense-related opportunities and ITS applications, so a wide variety of sectors, including rail, as Matt mentioned. What we are really seeing is some common denominators there. Range is obviously critical, but the software definability piece is really resonating. In some sectors, that is a must-have—the flexibility to be able to tune and change scan patterns. It really gives us an edge on legacy sensing modalities such as radar and camera and even traditional fixed LiDAR-type scanners. We are very enthusiastic coming into 2026 now that we have Stratos in the portfolio as well. That is going to open up a lot of other opportunities for us too. Richard Shannon: Okay. Perfect. That is all for me, guys. Thank you. Desiree: Next question comes from the line of Casey Ryan with WestPark Capital. Your line is open. Casey Ryan: Thank you. Hi, Matt, Conor. Great update. I was hoping to go back to the future a little bit and just wonder if you would comment a little bit about automotive. I think we are hearing there is some reset in the thinking about LiDAR and automotive, with L3 plans being recast. Do you see that benefiting you as those solutions are rethought at a lot of the major OEMs? Matt Fisch: Sure. Happy to take that one, Casey. Good to hear from you again. I will start with CES this year, and that kind of bleeds into Q4 as well. The OEM guys are back. If anything, the interest level we are seeing has jumped. Over the last few months, we have seen two RFIs inbound in that space. If anything, activity has increased. We are not fully dependent or solely dependent on the automotive industry—we are diversifying nicely—but I would say the interest and engagement levels have gone up over the last few months. The thing that I really like about it is, as we are having these conversations, those OEMs are leading with, “We are thinking about getting more serious and going more broadly—do you really have the manufacturing chops to deliver in mass production?” This is where our relationship with Lite-On has really paid dividends in those conversations. I would say interest level up. Casey Ryan: Terrific. And then one second question on automotive. Do you see L3, L4, L5 roadmaps across both propulsion types? It feels like a lot of the early ADAS stuff was done on EV platforms, but there is no tech reason why they cannot be done on ICE vehicles as well. Have you seen that proposed for both types of vehicles moving forward? Matt Fisch: In general, we do not have that level of visibility necessarily. This is sensitive OEM roadmap stuff, but the technology is surely agnostic—that much we know. To your question about L3 and L4, in the OEM piece it is a lot about L3, and then we have seen coming out of the trucking space from CES especially a lot of interest in the L4 space, but the technology is agnostic. Casey Ryan: Okay. Great. And then, with this new long-range product, are there opportunities—especially in trucking or, as you mentioned, train and rail—where you have made some traction on the short range and now, prior to having a long-range sensor, maybe they were using someone else, but maybe you are getting two opportunities instead of one? Matt Fisch: It is great that you mentioned that. I will give you an example from a conversation that came out at CES. As the trucking guys are getting out there on the road and getting some miles under their belt, they are finding new use cases that are being exposed. For example, you have a truck that is pulling off on the side of the freeway. It has to merge safely back into traffic, and that involves looking backwards and to the side. That is where we are seeing a demand for a medium-range LiDAR that became known to us at CES through this trucking OEM visit. Apollo was a really good fit for those medium-range applications. So, definitely interest there in the Apollo solution for things like that. Casey Ryan: Okay. Terrific. And then just the last question, because I know we have covered a lot of the financial questions. What are your thoughts about others in the LiDAR space now combining cameras into their solutions and potentially setting themselves up to integrate multiple sensors? What are your thoughts about the product roadmap? Does that matter? Is that people future-proofing, or is that not that important today in today’s market? You are making great progress. Matt Fisch: One of the things we are seeing with our pipeline growth is the new use cases that LiDAR is enabling. We are focused on building great LiDAR and LiDAR that is really easy to integrate. As you know, in the case of Optus, for those customers who cannot build their own AI layer, that integrates very simply and easily. For us, it is about the magic that LiDAR unlocks in terms of new use cases and new levels of perception that camera does not provide today, and we are incredibly busy with that alone. Casey Ryan: Okay. Terrific. Thank you. That is it for my questions. That is a fantastic update today. Thanks. Conor Tierney: Thanks, Casey. Matt Fisch: See you, Casey. Thank you. Desiree: And again, if you would like to ask a question, press star then the number 1. There are no further questions at this time. I would like to turn the call over to Matt Fisch for closing remarks. Matt Fisch: I just want to take a moment to thank everybody for joining us today. We really enjoyed the dialogue and are grateful for all of you following our journey as things are really starting to get exciting here. We look forward to updating everybody next quarter. Thank you, and have a great evening. Desiree: Ladies and gentlemen, that concludes today’s call. Thank you all for joining in. You may now disconnect.
Operator: Good day, everyone, and welcome to the Kaltura, Inc. Fourth Quarter and Full Year 2025 Earnings Call. All material contained in the webcast is the sole property and copyright of Kaltura, Inc., with all rights reserved. For opening remarks and introductions, I will now turn the call over to Erica L. Mannion at Sapphire Investor Relations. Please go ahead, Erica. Erica L. Mannion: Thank you, operator, and good afternoon. I am joined by Ron Yekutiel, Kaltura, Inc.’s Co-Founder, Chairman, President, and Chief Executive Officer, and Liron Sharon, Executive Vice President of FP&A and Interim Principal Financial Officer. Ron will provide a summary of the results for the fourth quarter ended December 31, 2025, along with a business and strategy update. Liron will then review financial results for the quarter and full year 2025, as well as the company's outlook for the first quarter and full year 2026. We will then open the call for questions. Please note that this call will include forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding Kaltura, Inc.’s expected future financial results, management's expectations, and plans for the business, including our pending acquisition of PathFactory and upcoming product launches, and our expectations around capabilities and benefits of our AI technologies. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward-looking statements can be found in the Risk Factors section of Kaltura, Inc.’s Annual Report on Form 10-K for the year ended 12/31/2024 and other SEC filings, including our Annual Report on Form 10-K for the fiscal year ended 12/31/2025 to be filed with the SEC. Any forward-looking statements made during this conference call, including responses to your questions, are based on current expectations as of today, and Kaltura, Inc. assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Please note, we will be discussing non-GAAP financial measures, adjusted EBITDA and adjusted EBITDA margin, during this call. For a reconciliation of adjusted EBITDA to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at investors.kaltura.com. Now I would like to turn the call over to Ron. Ron Yekutiel: Thank you, Erica, and thanks everyone for joining us on the call this afternoon. Today, we reported total revenue of $45,500,000 for Q4 2025 and subscription revenue of $42,700,000. We posted a record adjusted EBITDA of $6,300,000, representing our tenth consecutive quarter of adjusted EBITDA profitability. This brought full-year 2025 adjusted EBITDA to $18,600,000, a 150% year-over-year increase and materially above our original guidance of 100% growth. We are pleased with the continued improvement in our operating efficiency while advancing our long-term strategic positioning. New subscription bookings in the fourth quarter were at the highest level of 2025. We closed two seven-digit and fifteen six-digit new deals across industries including technology, financial services, healthcare, manufacturing, education, and media and telecom. We also closed seven AI-related deals for Content Lab and Genie, reflecting continued customer interest in our automation and personalization capabilities. Gross retention in the fourth quarter was also stronger than in any previous quarter in 2025, and we concluded the year as expected with the highest EENT growth retention level in five years. Our market leadership was once again recognized by tech analysts in the past quarter, this time by Frost & Sullivan in their 2025 Global Enterprise Video Platform Radar research, where they also cited our advanced AI capabilities and early move into agentic AI. In other exciting news, earlier today, we announced that we entered into a definitive agreement to acquire PathFactory. This acquisition remains subject to customary closing conditions. PathFactory is a provider of AI-driven content journey orchestration and conversation automation. The company helps enterprises understand user context and intent and automatically assemble and sequence personalized visual experiences designed to improve engagement and outcomes. PathFactory serves over 100 enterprise customers including global brands such as NVIDIA, Cisco, AVEVA, Palo Alto Networks, and LG. The company was recently recognized as a leader in the Q4 2025 Forrester Wave report on conversation automation solutions for B2B. The report acknowledged PathFactory’s unique approach of leveraging generative AI and content intelligence to help B2B go-to-market teams create personalized self-service B2B buying journeys. The other recognized leaders in this Wave were Qualified, that was recently acquired by Salesforce for over $1,000,000,000, and 6sense, whose last funding round was at a reported valuation of over $5,000,000,000. PathFactory adds an important layer of agentic, journey-level intelligence to our platform. While Kaltura, Inc. has long powered rich media creation, management, and experience delivery at enterprise scale, and ESof AI, which we acquired last quarter, enriched our real-time conversational capabilities and content creation with avatars, PathFactory will bring the ability to understand what each user is trying to accomplish and the most impactful, personalized sequence of content delivery and interaction accordingly. To date, PathFactory’s primary applicability has been in improving B2B top-of-funnel marketing conversion by supporting account-based marketing motions (ABM) with insights, personalized customer microsites, and chat agents. We plan to continue supporting this valuable use case and to gradually expand its applicability to additional B2B and B2C customer experience use cases, including bottom-of-funnel marketing, sales enablement, customer and partner enablement, onboarding and support, as well as employee and learner experiences such as internal communication, training, and education. Organizations are producing more content and engaging users across more channels, and particularly in the age of agentic AI, are increasingly seeking systems of engagement that move beyond static, one-size-fits-all digital experiences to deliver personalized, contextual, interactive, and conversational experiences at scale. Our expanded platform is well aligned with this shift. With a combination of Kaltura, Inc., ESof, and PathFactory, we believe we will have in place the required pillars to complete our long-discussed, multiyear evolution from a video platform to an agentic visual experience platform that specializes in harnessing AI-powered video and rich media to drive engagement and business outcomes. Within this expanded platform, Kaltura, Inc. provides the video-enriched media foundation—creation, management, governance, and delivery at enterprise scale—including AI-based rich media repurposing and personalized conversational delivery through Kaltura Genie. ESof added avatar-based content creation and real-time, multimodal, photorealistic conversational interaction with Genie in over 30 languages, including screen and camera comprehension. And PathFactory will boost Genie’s “brains” by adding to it agentic journey intelligence, understanding user context and intent, and orchestrating personalized engagement paths. Our combined platform therefore evolves beyond serving as the backbone of video experiences to becoming a comprehensive enabler of rich, multimodal, agentic, conversational digital experiences that are hyper-personalized, contextual, outcome-oriented, and deeply integrated into enterprise workflows. Following the ESof and contemplated PathFactory acquisitions—two very meaningful steps in our long-planned evolution to become a full AI-infused agentic digital experience platform—we intend to formally update our mission statement from powering any video experiences for any organization, to powering rich, agentic digital experiences across organizational journeys for customers, employees, learners, and audiences. PathFactory is a revenue-generating business with a current annual revenue run rate in the teens of millions, and a professional team across North America and India. In addition to meaningfully strengthening our strategic evolution into an agentic digital experience platform, we believe there is an immediate opportunity of cross-selling our respective offerings to our customer bases and great value in expanding our enterprise customer footprint and employee talent base in the marketing technology and customer experience domains. Under the terms of the acquisition agreement and subject to customary closing conditions, we expect to acquire PathFactory for approximately $22,000,000 in cash. We believe we have sufficient cash available to execute on our goals, and we believe we will continue generating cash in 2026 and beyond. For further details, please refer to today's acquisition press release. Moving to the product front, we announced last week the general availability of our agentic avatars. Since acquiring ESof, we have migrated their code base to Kaltura, Inc.’s enterprise-grade infrastructure and further strengthened its robustness, scalability, and security. We have continued enhancing the core AI models and integrating the conversational avatars with Kaltura’s Genie product, enabling both to operate across our experience products and embeddable video players. This allows interactive, contextual conversations to occur anywhere using text, video snippets, flashcards, and avatars. Throughout 2026, we plan to continue enhancing avatar quality, enriching the generative content that can be presented during conversation, expanding integrations with third-party systems, and strengthening our agentic brain through deeper understanding of user context and intent powered by PathFactory technology. We also announced last week the general availability of our Avatar SDK, which enables ISVs, system integrators, and in-house development groups to leverage our text-to-video and audio-to-video models and connect them to their own RAG pipelines, agentic logic, databases, and enterprise systems. Over the course of the year, we plan to expand the SDK with additional APIs and developer tools. Today, we are pleased to announce the launch of a beta program for our Avatar Video Creation Studio. This solution enables customers to easily create avatar-based and avatar-narrated videos on demand at scale. These prerecorded avatars can also come to life in real time upon request, transforming into an interactive conversational avatar to respond to users’ questions about the recorded video-related topics. Customers can apply for the beta program through our website. We plan to make this offering generally available in the upcoming second quarter. For all three of these new products, we are also developing self-serve versions targeting smaller organizations, departments within larger enterprises, content creators, and individual developers. We believe these versions will also support an expansion of our channel sales. In parallel with the initial commercialization of these offerings, our sales team has been trained on the new go-to-market motions and are already in discussions with various prospective launch partners spanning across a wide array of industries and use cases, including agentic marketing, sales, customer care, field services, training, teaching, internal communications, and recruiting. Since the commercial activity associated with these new offerings did not impact 2025, which we are reporting today, we will share more concrete information about these activities in our next earnings call. As a reminder, we expect to begin recognizing revenue from these products in the second half of the year. In 2026, we believe AI is reshaping the market in ways that structurally favor our platform. AI strengthens each layer of what we do. First, we are deeply embedded in mission-critical enterprise workflows and business processes across marketing, training, compliance, education, communications, and media delivery. These are governed, integrated, and operationally critical environments with high switching costs. AI enhances these workflows by making them more intelligent and automated; it does not replace them. Second, we manage large volumes of rich media assets, metadata, and behavioral engagement data for our customers that carry a high migration cost. With the addition of PathFactory, we expect to further expand our ability to generate insights and understand user context and intent. In the age of AI, longitudinal data and intent intelligence become increasingly valuable assets that enable more precise personalization and orchestration and that are harder to switch away from and replicate. Third, AI expands how we create and monetize value. Personalized content generation, dynamic journey orchestration, and conversational engagement lend themselves naturally to usage-based and outcome-oriented pricing models, not just seat-based pricing, and platforms that help drive meaningful engagement can benefit from organic growth and high net dollar retention. Fourth, AI is synergistic across all layers of our platform: content creation, content management and intelligence, and agentic experiences. Insights generated in one layer can power new content, new experiences, and new conversations in another. This creates a flywheel effect. Existing data fuels richer experiences and real-time content generation. Those experiences generate new behavioral insights, and those insights further enhance personalization and automation. Finally, because we provide a unified digital experience platform that consolidates multiple use cases and buyers, rather than a single point solution, AI amplifies our platform advantage rather than fragmenting it. In short, we believe AI is a structural tailwind for our strategy and an amplifier of our competitive moat as a provider of rich, personalized, agentic digital experiences at scale. With that foundation in place, let me outline our anticipated growth drivers for the year ahead fueling what, how, and to whom we sell. First, platform expansion. The integration of rich media, conversational AI, and journey orchestration into a unified agentic digital experience platform is positioned to expand our addressable market and strengthens our competitive position. We believe we are differentiated by the breadth and depth of our content creation, management, and agentic experience offerings; by our API-driven flexibility; by our ability to consolidate multiple use cases on one platform; and by our proven track record of powering complex enterprise-scale deployments. Second, broader applicability. Our expanded platform addresses a significantly wider range of use cases across customers, employees, learners, and audiences. Many of these use cases are more mission-critical and can generate tangible ROI through cost and labor efficiencies and revenue uplift. Examples include performing and supporting tasks and roles of marketers, sellers, customer support representatives, field agents, recruiters, educators, health professionals, and financial advisors. In certain cases, this also expands our reach into industries where we have historically been less active. Third, install base upsell. Our base of over 800 large enterprise customers represents a substantial cross-sell and upsell opportunity. Our new capabilities leverage the deep workflow integration, enterprise trust, and significant content repositories we already manage for these organizations, creating meaningful expansion potential. Fourth, new customer acquisition. Agentic conversational experiences represent a fast-emerging category generating strong market interest. Unlike the more mature video segment where vendor consolidation limited new vendor adoption, this evolving category creates opportunities to engage new prospects. To support these opportunities, we are increasing our outbound go-to-market efforts. Fifth, channel and down-market expansion. Our new content creation and agentic offerings are well suited for self-serve PLG models targeting SMEs, SMBs, enterprise departments, and developers, as well as expanded channel partnerships including co-sellers, resellers, OEMs, and marketplace partners. We plan to grow these motions throughout the year. Sixth, PathFactory cross-sell. We believe there are meaningful opportunities to introduce broader Kaltura, Inc. capabilities into PathFactory’s customer base of over 100 enterprises, while also enhancing the value delivered to our existing customers through journey orchestration and intent intelligence. Seventh, competitive landscape. We believe recent consolidation activity in the video market may create additional displacement opportunities, positioning Kaltura, Inc. as a stable, innovation-driven alternative in both the traditional video and emerging agentic engagement categories. Lastly, eighth, while M&T revenue in 2026 is expected to still decline year over year because of last year’s heightened churn, we believe that M&T net bookings will improve this year compared to last, fueled by both lower gross churn and higher new bookings. We believe this will generate sequential quarterly M&T revenue growth in 2027. In summary, 2025 was a year of operational strengthening and strategic transformation. We materially improved our adjusted EBITDA results while working on two strategic acquisitions we believe significantly expand our long-term opportunity. We are entering 2026 with an evolved mission and are excited by the expanded product suite and broader market opportunity across use cases, industries, and customer segments that our two complementary strategic acquisitions will bring to the table. We plan to deepen engagement with existing customers, expand into new accounts, extend our reach down market, and leverage channel partnerships, all while strengthening our competitive positioning in our traditional video market, including regrowing our M&T business. We see 2026 as a transition year, and we expect revenue contribution from our new portfolio to begin in the second half of the year with a stronger impact in 2027. We are tapering our adjusted EBITDA profitability and cash flow from operations growth for this year in support of acquisition costs, integration efforts, and related growth investments—though both metrics are forecasted to remain in the teens—and in light of higher FX headwinds that are affecting our operating costs. We continue to be committed to carefully balancing growth and profitability to maximize long-term shareholder value. To that end, we are reiterating our goal of achieving double-digit revenue growth in a Rule of 30 profile by 2028 or sooner. Lastly, we continue to progress in our CFO search and succession process and will provide updates as appropriate. In the meantime, our finance organization continues to operate under the strong leadership of our Executive Vice President of Finance and Interim Principal Accounting Officer, Mrs. Claire Rochstein, and our Executive Vice President of FP&A and Interim Principal Financial Officer, Mrs. Liron Sharon. I would like to thank both for their leadership. With that, I will turn it over to Liron to review our financial results in greater detail and discuss our 2026 guidance. Liron? Liron Sharon: Thanks, Ron, and hello to everyone on the call today. In the fourth quarter, we exceeded once again the midpoint of our guidance across subscription revenue, total revenue, and adjusted EBITDA, and delivered through disciplined execution a record level of both adjusted EBITDA and non-GAAP net profit. We also posted, as forecasted, a sequential quarterly growth in our new subscription bookings and the highest gross retention level of 2025. Total revenue for the quarter ended 12/31/2025 was $45,500,000, up 4% sequentially, almost flat year over year, and above the midpoint of our guidance range of $45,000,000 to $45,700,000. Subscription revenue was $42,700,000, up 2% sequentially, down 2% year over year, and above the high end of our guidance range of $41,600,000 to $42,300,000. Professional services revenue was $2,900,000 for the quarter, up 31% year over year and consistent with our previously forecasted increase. On a segment basis, EENT total revenue increased 4% year over year in the fourth quarter, while M&T total revenue declined 12% year over year due to the elevated churn experienced earlier in the year, as discussed on prior calls. GAAP gross profit for the fourth quarter was $33,000,000, up 7% sequentially and 2% year over year. Gross margin was 72% compared to 71% in Q4 2024. Subscription gross margin was 78%, up from 77% in Q4 2024. Total operating expenses for the quarter were $32,100,000, compared to $36,100,000 in 2024, representing an 11% year-over-year reduction. Adjusted EBITDA for the quarter was a record $6,300,000, above the high end of our guidance range of $4,200,000 to $5,200,000. This represents a year-over-year increase of $3,600,000 compared to $2,700,000 in 2024, effectively more than doubling our adjusted EBITDA results year over year. GAAP net loss for the quarter was $600,000, or $0.00 per diluted share, representing a $6,000,000 year-over-year improvement. Non-GAAP net profit for the quarter was a record $5,200,000, or $0.03 per diluted share, representing an improvement of $4,900,000 year over year. Remaining performance obligations, or RPO, were $166,300,000, representing a 4% sequential increase and a 6% year-over-year decrease. We expect to recognize 64% of this amount as revenue over the next twelve months. Historical comparison RPO figures have been adjusted as discussed in our previous earnings call. Annualized recurring revenue in the fourth quarter was $168,200,000, down 3% year over year. Net dollar retention was 97%, unchanged sequentially and compared to 103% in the same quarter last year. For the full year ended 12/31/2025, total revenue was $180,900,000, up 1% year over year. Subscription revenue was $171,900,000, up 3% year over year. Professional services revenue was $8,900,000, down 19% year over year, consistent with the expected trends we discussed on previous earnings calls. On a segment basis, EENT total revenue increased 4% year over year, while M&T total revenue declined 7% due to elevated churn, as previously discussed. Net dollar retention for 2025 was 100%, consistent with 2024 levels. While flat overall, this reflects improved net retention in EENT offset by lower net retention in M&T. GAAP gross profit for 2025 was $127,700,000, up 7% year over year, representing a gross margin of 71%, up from 67% in 2024. Subscription gross margin improved to 77%, up from 75% in 2024. Adjusted EBITDA for 2025 was a record $18,600,000, representing more than 150% year-over-year growth compared to $7,300,000 in 2024. This performance, together with our improved expense discipline and margin profile, reflects our continued focus on operating efficiency. GAAP net loss for 2025 was $12,100,000, or $0.08 per diluted share, an improvement of $19,200,000 compared to a net loss of $31,300,000, or $0.21 per diluted share, in 2024. For the full year 2025, non-GAAP net profit was a record $11,500,000, or $0.07 per diluted share, reflecting a $16,200,000 improvement from a non-GAAP net loss of $4,700,000, or $0.03 per diluted share, in 2024. Moving to the balance sheet and cash flow, we ended the fourth quarter with $62,800,000 in cash and marketable securities. Net cash provided by operating activities was $3,600,000 in the quarter, compared to $4,300,000 in Q4 2024. For the full year 2025, net cash provided by operating activities was $14,500,000 compared to $12,200,000 in 2024. I will now turn to our outlook for Q1 2026 and for the full fiscal year ending 12/31/2026. For Q1 2026, we expect subscription revenue between $41,200,000 and $42,000,000, total revenue between $42,600,000 and $43,400,000, and adjusted EBITDA between $2,300,000 and $3,300,000. We expect a similar seasonal level of negative cash flow from operations as in the first quarter of last year. Our Q1 guidance incorporates a short-term EENT revenue headwind due to a large customer that shifted priority and budget from conducting large virtual events to many smaller ones, which are planned to be conducted with us later in the year. The guidance also incorporates a first-quarter year-over-year M&T revenue decline in the mid to high teens due to the aggregate effect of last year’s higher churn. We expect an improvement in the following quarters. For the full year 2026, we expect subscription revenue between $172,500,000 and $175,500,000, and total revenue between $181,200,000 and $184,200,000. We are expecting subscription and total revenue to pick up gradually throughout the year. We expect EENT to post a higher year-over-year growth rate compared to 2025, fueled by contribution from the PathFactory customer base and from our new product portfolio, which we expect would affect 2026. That said, given the early stage of our new product commercialization, we have thoughtfully assumed that the more meaningful growth acceleration from them will occur in 2027. We expect to still post M&T year-over-year revenue declines this year due to the elevated churn in 2025, but forecast to achieve both higher M&T new bookings and retention this year, which, as Ron mentioned, is expected to regenerate sequential quarterly M&T revenue growth in 2027. As for our bottom-line figures this year, our 2026 adjusted EBITDA guidance and cash flow from operations forecast thoughtfully incorporate the expected impact of the PathFactory acquisition and related integration and investment and our continued commitment to carefully balance growth and profitability to maximize long-term shareholder value. It also incorporates increased FX headwinds affecting operating costs. Accordingly, we are providing the same annual adjusted EBITDA guidance range that we originally provided for 2025, which is between $12,700,000 and $14,700,000. We also forecast that we will generate low double-digit cash flow from operations this year, with most of it generated in the second half of the year, consistent with historical trends. As Ron mentioned, we remain committed to achieving a Rule of 30 combination between double-digit revenue growth and adjusted EBITDA margin by 2028 or sooner. With that, we will open the call for questions. Operator? Operator: Thank you. We will now be conducting a question-and-answer session. You may press 2 if you would like to move your question from the queue. One moment please while we poll for questions. Our first question is coming from Matt Cavanagh from Needham & Company. Your line is now live. Matt Cavanagh: Hi, thanks for the question, and congratulations on today’s results and announcements. Starting out with the PathFactory acquisition, could you expand a little bit about the sales synergy and cross-selling abilities you might expect to see now with both ESof and PathFactory under the platform, along with the core Kaltura, Inc. products? Ron Yekutiel: Yeah, 100%. Love to do that, and thank you everybody for joining. So let us talk about PathFactory and the reasons for the acquisition. So we have been communicating to the market all along the need to evolve from video into a full CX, DX digital experience platform, where the market is bigger, the growth is faster, the multiples are higher. And we believe that the advent of AI is enabling that. The ability to create real-time videos and to turn that into conversational avatars, conversational videos, enables us to close the flywheel effect—create content on the fly, manage it on the fly, engage people on the fly, and move from static experiences into dynamic, engaging experiences. So that was the impetus of the general move, and we brought in ESof to double down on the ability to create these agents, immersive agents. As we have said, they have added the eyes and ears and mouth to our Genie and then, of course, the face. So why did we move on and do this additional move into PathFactory? PathFactory, from a product perspective, adds a few things. They add content intelligence, understanding the content itself; they enable us to add multiple assets and not just video assets. We can go beyond video—talk about documents and files—and connect it to third-party CRMs, marketing automation platforms, DAMs, etc. Very importantly, they have user analysis, user intent, user understanding. Our system has been basically a content management system for video, and now we have a user understanding. And that is key because we need to serve the right content to the right people at the right time in the right context. And so what they are able to do is to provide orchestration for user journeys. Right now, they have been identified as one of the top providers in this space. I will say about it a few things. They have been working mainly on top-of-the-funnel B2B marketing, but we are going to take it to the bottom of the funnel to address SDRs, like Qualified is, and other CX customer experiences like customer and partner onboarding, training, customer care—later take the same technology to deliver paths for learning and internal use. And so right now, they are also able not just to provide the orchestration, but pipeline and revenue attribution, and they are also connected to their own applications that they have developed for chat-based interfaces and stuff of that nature. So that enables us—before I talk about how and what we are going to sell—to appreciate that we are entering deeper into a market of conversation automation solutions in the B2B front, but later across the board. Forrester, in their Q4 2025 report, had identified them as leaders alongside Qualified, that was just acquired for $1,500,000,000 by Salesforce, of course, and 6sense, whose last valuation from a long time ago had been at $5,000,000,000. So they are in a good neighborhood, and this strengthens our position in that market. That is a big market. I would assume twice the size of our current market, and also, based on our analysis, growing very fast—unlike the traditional video market. It is an interesting market. And that adds up to another element before I answer the specific question about sales. We have just gone deeper into the ability to add brains to our agents, not just, quote unquote, good looks, so that they can deliver the right content at the right time while you are teaching, learning, marketing, selling, etc. We have done that at the same time as we have just launched our VOD avatar that takes us deeper to content creation, aligned with companies like Synthesia that are also reportedly valued at $4,000,000,000. So I think that movement from just content management and video experiences towards content creation and towards real-time conversational technology with brains and agentic logic behind it turns us into the full digital experience platform that we have been waiting to turn. To the question of cross-sell and upsell, maybe that now becomes clear through my statement here. So first, they themselves have about 400 customers, of which 100 are large enterprises like Cisco, NVIDIA, MetLife, LG. About 10 of them only are overlapping from the big guys. That means there are a lot of folks that are not. We have had great calls with a bunch of them, and they have expressed a lot of excitement about this combination. They understand the synergy. There are, to their statements, even active RFPs running for avatars. They have been talking to us about the opportunity to displace other video vendors, because you would want to have a full end-to-end connection in the new agentic world between the medium that is engaging and the logic that is used towards that medium, and the actual conversation technology. So it all comes very much together. So now, again, later we could talk more about guidance. I have been careful assuming when and if and how we start making a lot of money from this synergy, but we do believe that, a) we could take this and sort it into our products, get a significant bump in value and revenue within a combined product, and b) that we could very well go back to their customers and upsell them and support them with the Kaltura, Inc. products. Let me know if you have any more specific questions about the cross-sell/upsell opportunities. Matt Cavanagh: That is great, Ron. Thank you so much. Just touching on what you mentioned at the end there, on your 2026 outlook, could you talk a little bit more about the puts and takes that went into the assumptions there? Ron Yekutiel: Yeah. Happy to do that. From a top line, bottom line, both— Liron Sharon: Yes, that would be great. Matt Cavanagh: Thank you. Okay. Ron Yekutiel: So look. Generally speaking, we are looking at a year in which we expect gross retention to be better because we all knew media and telecom in the past year was not good—by the way, EENT was fine. But if we improve M&T, the gross retention is going to get better. Bookings, we believe, will pull up. Again, we are hoping for this to be as early as possible, but we are assuming it is going to be mostly in the second half of the year, in line with both the PathFactory synergies as well as with our own product releases. And while we have just started putting them out, we have some good pilots and excitement and interest, which we will share more about. We did say last time—we are seeing yet again now—we expect that to start pulling up more in the second half of the year. When you think about the revenue guidance that we have set, we are guiding at a similar kind of level that was expected, but we are hopefully coming at it very carefully, given the amount of changes that are happening so early in the year—following one acquisition, creating another one, yet to see exactly when it will close, hopefully quickly—and so we want to make sure that we are able to achieve the numbers that we were discussing. And I think at the end of the day, to your question about the pluses and minuses, I think that we are still seeing some of the headwinds come from M&T’s last year performance that are going to cause double-digit decline this year because of the delay between net bookings in M&T and how they impact revenue. We did say we expect this year for net bookings to start pulling up, for that to affect sequential growth in 2027, but for 2026, it is a headwind on the revenue side. And then from core EENT, again, there is some growth, but most of it is pegged towards the new stuff, and that is going to come in the second half. And lastly, PathFactory—as mentioned, their run rate is in the teens—and we do not know when they are going to come in, in the middle of the year or in the second quarter, early or later in the second quarter. So we have to be careful in our assumptions. We do assume it is in the second quarter, maybe earlier within that quarter—we will see—but given that, we have put a certain amount that we feel comfortable should be reasonable, and that is what brought it all together. So that is for the top line. I will say from a bottom line—just to remind all of us—last time, after the acquisition of ESof, we reduced what we had planned. So even going before, we increased dramatically our adjusted EBITDA year—more than 150% growth—much more than we said; we said we were going to double, we delivered on it. Originally, we said we were going to continue to pull it up, but that was before we decided to go and do these two acquisitions and go for the bigger market, bigger opportunity. Again, we could tick along and have a bit more profit and not put the engine in place to be able to become an exciting company again, or we could do the moves that we have just done now over the last couple of acquisitions to take us there. So we have tapered down the expectations. The last time we reduced it, we said, look, it is a function of a few things: it is both the ESof acquisition costs and investments, it is the lower M&T results, it is the higher FX because of the Israeli shekel. And now we have come to do another readjustment and, again, we are looking at the PathFactory integration investment and additional FX cushion that continued to go the other way on the Israeli shekel. So between all of them, we have come with the exact same guidance we did last year. To remind you, we started with that guidance and ended up far higher. Maybe that will happen this year, maybe not. We would like to stick to our guidance and see where things go. There is still a question on the revenue; there is a question on the cost; there is integration of companies. We believe we have been thoughtful, and we hope to be able to over-deliver, but let us wait and see where we get to. And, ultimately, to the extent that there will be any upside on the bottom line, it could be driven by the top side with higher revenue, because there are a lot of things that are pulling the revenue, as I noted earlier, but also maybe better FX. Let us wait and see. So that is my two cents about both top and bottom line. Matt Cavanagh: Very perfect, thank you. And just lastly for me, could you share an updated view on how you are seeing the competitive landscape and how these recent acquisitions are further differentiating Kaltura, Inc. from your competitors? Ron Yekutiel: By design, we are gradually moving and expanding—I would not say moving because we are both in the other market and the new market—into a larger and more exciting market. So let me be clear. In the world of pure video experiences, we had another research done in Q4 that had put us throughout the far-right corner as the best product in its case. We also think that the recent consolidation that has taken place in our traditional market would enable us to be even better competitively positioned, let alone with the rest of what we just said now. When we talk to our own customers, there is a lot of synergy with the new products that we offer now that our existing video competitors do not—around the agentic experiences, but also around content creation. And therefore, we think that given both their consolidation as well as the improved amount of offerings that we have, we could do better within our classic core market in selling more of our current product and adding—or not adding—some of these new things. But I think the bigger point here is that we are now gradually moving to the point that we are not a video technology company. Differentiated by the richness of the media that we provide—and video is a core key piece of it; it will continue to be a core key piece of it—it becomes more a means than an end, in the sense that what we offer is agentic digital experiences in real time that are able to deliver conversational agents that are performing tasks that otherwise just humans would do. And, again, I do not think they are going to replace them. I think they are going to augment them. I think they are going to boost them. I think they are going to support them. This is something completely different. Now, when we reach out to our own customers, there is a lot of excitement—much more than previously—because video has been relatively similar in recent years, and this is at the hype level of “Oh my God, I want to use this. This is exciting.” And plus, this is a ticket for us to get to a lot more new logos. In recent years, it has been harder in our industry because people have kept to their own vendors even if there was a better solution. This opens the door for a completely different conversation and one that is synergistic and complementary. So in short, I think that, a) we are going to be better positioned to compete with our existing, quote unquote, competitors, but also, b) we are expanding to now be in the same neighborhood the bigger companies that are valued higher, that are in faster-growing markets, are in. I mentioned Qualified. You can look at PathFactory—it is put on the same report as they are, right by them, as a leader. You could also look, like I said, at Synthesia. I am not suggesting that one-to-one we have the same product set, that we are going to do the same growth, that we have the same revenue, but when you look at the products we just released and the ones that are just now in beta, and appreciate our advantages in entering that market, then you would appreciate that we have not only the ability to create avatar-based videos, but they can come to life and become conversational. That is new. They are connected to our platform so that you can connect that to any other video experience and management, and that is the opposite direction that companies like Synthesia are working hard to do. So that is powerful. We have our existing 800 enterprise customers to upsell this to, and so there are a lot of things that are helping us to come from a place that has been relatively flattish to something that we believe—and we hope, and again, we have been very thoughtful and careful, and will continue to be—could potentially gradually increase our growth. And that is the strategy. Matt Cavanagh: That sounds great. Well, thank you so much, Ron. That is it for me today. Ron Yekutiel: Thank you so much, Matt. Operator: Thank you. We have reached the end of our question-and-answer session. I will turn the floor back over for any further or closing comments. Ron Yekutiel: So thank you all for joining today. First, to start a fresh year, thank you all for your continued support and trust, and I wish upon all of us a great fiscal year and a great year altogether filled with financial success, but also some more peace, hopefully around us and around the world. I am looking forward to following up with each of you that wants to reach out. Have a beautiful day. Take care. Bye-bye. Operator: Thank you. That does conclude today's teleconference webcast. You may disconnect your lines at this time. Have a wonderful day. We thank you for your participation today. Good day everyone, and welcome to the Kaltura, Inc. Fourth Quarter and Full Year 2025 Earnings Call. All material contained in the webcast is the sole property and copyright of Kaltura, Inc., with all rights reserved. For opening remarks and introductions, I am now going to turn the call over to Erica L. Mannion at Sapphire Investor Relations. Please go ahead, Erica. Erica L. Mannion: Thank you, operator, and good afternoon. I am joined by Ron Yekutiel, Kaltura, Inc.’s Co-Founder, Chairman, President, and Chief Executive Officer, and Liron Sharon, Executive Vice President of FP&A and Interim Principal Financial Officer. Ron will provide a summary of the results for the fourth quarter ended 12/31/2025, along with a business and strategy update. Liron will then review financial results for the quarter and full year 2025, as well as the company's outlook for the first quarter and full year 2026. We will then open the call for questions. Please note that this call will include forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding Kaltura, Inc.’s expected future financial results, management's expectations, and plans for the business, including our pending acquisition of PathFactory and upcoming product launches, and our expectations around capabilities and benefits of our AI technologies. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward-looking statements can be found in the Risk Factors section of Kaltura, Inc.’s Annual Report on Form 10-K for the year ended 12/31/2024 and other SEC filings, including our Annual Report on Form 10-K for the fiscal year ended 12/31/2025 to be filed with the SEC. Any forward-looking statements made during this conference call, including responses to your questions, are based on current expectations as of today, and Kaltura, Inc. assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Please note, we will be discussing non-GAAP financial measures, adjusted EBITDA and adjusted EBITDA margin, during this call. For a reconciliation of adjusted EBITDA to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at investors.kaltura.com. Now I would like to turn the call over to Ron. Ron Yekutiel: Thank you, Erica, and thanks everyone for joining us on the call this afternoon. Today, we reported total revenue of $45,500,000 for Q4 2025, and subscription revenue of $42,700,000. We posted a record adjusted EBITDA of $6,300,000, representing our tenth consecutive quarter of adjusted EBITDA profitability. This brought full-year 2025 adjusted EBITDA to $18,600,000, a 150% year-over-year increase and materially above our original guidance of 100% growth. We are pleased with the continued improvement in our operating efficiency while advancing our long-term strategic positioning. New subscription bookings in the fourth quarter were at the highest level of 2025. We closed two seven-digit and fifteen six-digit new deals across industries including technology, financial services, healthcare, manufacturing, education, and media and telecom. We also closed seven AI-related deals for Content Lab and Genie, reflecting continued customer interest in our automation and personalization capabilities. Gross retention in the fourth quarter was also stronger than in any previous quarter in 2025, and we concluded the year as expected with the highest EENT growth retention level in five years. Our market leadership was once again recognized by tech analysts in the past quarter, this time by Frost & Sullivan in their 2025 Global Enterprise Video Platform Radar research, where they also cited our advanced AI capabilities and early move into agentic AI. In other exciting news, earlier today, we announced that we entered into a definitive agreement to acquire PathFactory. This acquisition remains subject to customary closing conditions. PathFactory is a provider of AI-driven content journey orchestration and conversation automation. The company helps enterprises understand user context and intent and automatically assemble and sequence personalized visual experiences designed to improve engagement and outcomes. PathFactory serves over 100 enterprise customers including global brands such as NVIDIA, Cisco, AVEVA, Palo Alto Networks, and LG. The company was recently recognized as a leader in the Q4 2025 Forrester Wave report on conversation automation solutions for B2B. The report acknowledged PathFactory’s unique approach of leveraging generative AI and content intelligence to help B2B go-to-market teams create personalized self-service B2B buying journeys. The other recognized leaders in this Wave were Qualified, that was recently acquired by Salesforce for over $1,000,000,000, and 6sense, whose last funding round was at a reported valuation of over $5,000,000,000. PathFactory adds an important layer of agentic journey-level intelligence to our platform. While Kaltura, Inc. has long powered rich media creation, management, and experience delivery at enterprise scale, and ESof AI, which we acquired last quarter, enriched our real-time conversational capabilities and content creation with avatars, PathFactory will bring the ability to understand what each user is trying to accomplish and orchestrate the most impactful personalized sequence of content delivery and interaction accordingly. To date, PathFactory’s primary applicability has been in improving B2B top-of-funnel marketing conversion by supporting account-based marketing motions (ABM) with insights, personalized customer microsites, and chat agents. We plan to continue supporting this valuable use case and to gradually expand its applicability to additional B2B and B2C customer experience use cases, including bottom-of-funnel marketing, sales enablement, customer and partner enablement, onboarding and support, as well as employee and learner experiences, such as internal communication, training, and education. Organizations are producing more content, engaging users across more channels, and particularly in the age of agentic AI, are increasingly seeking systems of engagement that move beyond static, one-size-fits-all digital experiences to deliver personalized, contextual, interactive, and conversational experiences at scale. Our expanded platform is well aligned with this shift. With a combination of Kaltura, Inc., ESof, and PathFactory, we do believe we will have in place the required pillars to complete our long-discussed multiyear evolution from a video platform to an agentic visual experience platform that specializes in harnessing AI-powered video and rich media to drive engagement and business outcomes. Within this expanded platform, Kaltura, Inc. provides the video-enriched media foundation—creation, management, governance, and delivery at enterprise scale—including AI-based rich media repurposing, and personalized conversational delivery through Kaltura Genie. ESof added avatar-based content creation and real-time, multimodal, photorealistic conversational interaction with Genie in over 30 languages, including screen and camera comprehension, and PathFactory will boost Genie’s brain by adding to it agentic journey intelligence—understanding user context and intent, and orchestrating personalized engagement paths. Our combined platform therefore evolves beyond serving as the backbone of video experiences to becoming a comprehensive enabler of rich, multimodal, agentic conversational digital experiences that are hyper-personalized, contextual, outcome-oriented, and deeply integrated into enterprise workflows. Following the ESof and contemplated PathFactory acquisitions—two very meaningful steps in our long planned evolution to become a full AI-infused agentic digital experience platform—we intend to formally update our mission statement from powering any video experiences for any organization, to powering rich, agentic digital experiences across organizational journeys for customers, employees, learners, and audiences. PathFactory is a revenue-generating business with a current annual revenue run rate in the teens of millions and a professional team across North America and India. In addition to meaningfully strengthening our strategic evolution into an agentic digital experience platform, we believe there is an immediate opportunity of cross-selling our respective offerings to our customer bases and great value in expanding our enterprise customer footprint and employee talent base in the marketing technology and customer experience domains. Under the terms of the acquisition agreement and subject to customary closing conditions, we expect to acquire PathFactory for approximately $22,000,000 in cash. We believe we have sufficient cash available to execute on our goals and we believe we will continue generating cash in 2026 and beyond. For further details, please refer to today's acquisition press release. Moving to the product front, we announced last week the general availability of our agentic avatars. Since acquiring ESof, we have migrated their code base to Kaltura, Inc.’s enterprise-grade infrastructure and further strengthened its robustness, scalability, and security. We have continued enhancing the core AI models and integrating the conversational avatars with Kaltura’s Genie product, enabling both to operate across our experience products and embeddable video players. This allows interactive, contextual conversations to occur anywhere using text, video snippets, flashcards, and avatars. Throughout 2026, we plan to continue enhancing avatar quality, enriching the generative content that can be presented during conversation, expanding integrations with third-party systems, and strengthening our agentic brain through deeper understanding of user context and intent powered by PathFactory technology. We also announced last week the general availability of our Avatar SDK, which enables ISVs, system integrators, and in-house development groups to leverage our text-to-video and audio-to-video models and connect them to their own RAG pipelines, agentic logic, databases, and enterprise systems. Over the course of the year, we plan to expand the SDK with additional APIs and developer tools. Today, we are pleased to announce the launch of a beta program for our Avatar Video Creation Studio. This solution enables customers to easily create avatar-based and avatar-narrated videos on demand at scale. These prerecorded avatars can also come to life in real time upon request, transforming into an interactive conversational avatar to respond to users’ questions about the recorded video-related topics. Customers can apply for the beta program through our website. We plan to make this offering generally available in the upcoming second quarter. For all three of these new products, we are also developing self-serve versions targeting smaller organizations, departments within larger enterprises, content creators, and individual developers. We believe these versions will also support an expansion of our channel sales. In parallel with the initial commercialization of these offerings, our sales team has been trained on the new go-to-market motions and are already in discussions with various prospective launch partners spanning across a wide array of industries and use cases, including agentic marketing, sales, customer care, field services, training, teaching, internal communications, and recruiting. Since the commercial activity associated with these new offerings did not impact 2025, which we are reporting today, we will share more concrete information about these activities in our next earnings call. As a reminder, we expect to begin recognizing revenue from these products in the second half of the year. In 2026, we believe AI is reshaping the market in ways that structurally favor our platform. AI strengthens each layer of what we do. First, we are deeply embedded in mission-critical enterprise workflows and business processes across marketing, training, compliance, education, communications, and media delivery. These are governed, integrated, and operationally critical environments with high switching costs. AI enhances these workflows by making them more intelligent and automated; it does not replace them. Second, we manage large volumes of rich media assets, metadata, and behavioral engagement data for our customers that carry a high migration cost. With the addition of PathFactory, we expect to further expand our ability to generate insights and understand user context and intent. In the age of AI, longitudinal data and intent intelligence become increasingly valuable assets that enable more precise personalization and orchestration, and that are harder to switch away from and replicate. Third, AI expands how we create and monetize value. Personalized content generation, dynamic journey orchestration, and conversational engagement lend themselves naturally to usage-based and outcome-oriented pricing models, not just seat-based pricing, and platforms that help drive meaningful engagement can benefit from organic growth and high net dollar retention. Fourth, AI is synergistic across all layers of our platform: content creation, content management and intelligence, and agentic experiences. Insights generated in one layer can power new content, new experiences, and new conversations in another. This creates a flywheel effect. Existing data fuels richer experiences and real-time content generation. Those experiences generate new behavioral insights, and those insights further enhance personalization and automation. And finally, because we provide a unified digital experience platform that consolidates multiple use cases and buyers, rather than a single point solution, AI amplifies our platform advantage rather than fragmenting it. In short, we believe AI is a structural tailwind for our strategy and an amplifier of our competitive moat as a provider of rich, personalized, agentic digital experiences at scale. With that foundation in place, let me outline our anticipated growth drivers for the year ahead fueling what, how, and to whom we sell. First, platform expansion. The integration of rich media, conversational AI, and journey orchestration into a unified agentic digital experience platform is positioned to expand our addressable market and strengthens our competitive positioning. We believe we are differentiated by the breadth and depth of our content creation, management, and agentic experience offering; by our API-driven flexibility; by our ability to consolidate multiple use cases on one platform; and by our proven track record of powering complex enterprise-scale deployments. Second, broader applicability. Our expanded platform addresses a significantly wider range of use cases across customers, employees, learners, and audiences. Many of these use cases are more mission-critical and can generate tangible ROI through cost and labor efficiencies and revenue uplift. Examples include performing and supporting tasks and roles of marketers, sellers, customer support representatives, field agents, recruiters, educators, health professionals, and financial advisors. In certain cases, this also expands our reach into industries where we have historically been less active. Third, install base upsell. Our base of over 800 large enterprise customers represents a substantial cross-sell and upsell opportunity. Our new capabilities leverage the deep workflow integration, enterprise trust, and significant content repositories we already manage for these organizations, creating meaningful expansion potential. Fourth, new customer acquisition. Agentic conversational experiences represent a fast-emerging category generating strong market interest. Unlike the more mature video segment where vendor consolidation limited new vendor adoption, this evolving category creates opportunities to engage new prospects. To support these opportunities, we are increasing our outbound go-to-market efforts. Fifth, channel and down-market expansion. Our new content creation and agentic offerings are well suited for self-serve PLG models targeting SMEs, SMBs, enterprise departments, developers, as well as expanded channel partnerships including co-sellers, resellers, OEMs, and marketplace partners. We plan to grow these motions throughout the year. Sixth, PathFactory cross-sell. We believe there are meaningful opportunities to introduce broader Kaltura, Inc. capabilities into PathFactory’s customer base of over 100 enterprises, while also enhancing the value delivered to our existing customers through journey orchestration and intent intelligence. Seventh, competitive landscape. We believe recent consolidation activity in the video market may create additional displacement opportunities, positioning Kaltura, Inc. as a stable, innovation-driven alternative in both the traditional video and emerging agentic engagement categories. Lastly, eighth, while M&T revenue in 2026 is expected to still decline year over year because of last year’s heightened churn, we believe that M&T net bookings will improve this year compared to last, fueled by both lower gross churn and higher new bookings. We believe this will generate sequential quarterly M&T revenue growth in 2027. In summary, 2025 was a year of operational strengthening and strategic transformation. We materially improved our adjusted EBITDA results while working on two strategic acquisitions we believe significantly expand our long-term opportunity. We are entering 2026 with an evolved mission and are excited by the expanded product suite and broader market opportunity across use cases, industries, and customer segments that our two complementary strategic acquisitions will bring to the table. We plan to deepen engagement with existing customers, expand into new accounts, extend our reach down market, and leverage channel partnerships, all while strengthening our competitive positioning in our traditional video market, including regrowing our M&T business. We see 2026 as a transition year; we expect revenue contribution from our new portfolio to begin in the second half of the year with a stronger impact in 2027. We are tapering our adjusted EBITDA profitability and cash flow from operations growth for this year in support of acquisition costs and integration efforts and related growth investments—though both metrics are forecasted to remain in the teens—and in light of higher FX headwinds that are affecting our operating costs. We continue to be committed to carefully balancing growth and profitability to maximize long-term shareholder value. To that end, we are reiterating our goal of achieving double-digit revenue growth in a Rule of 30 profile by 2028 or sooner. Lastly, we continue to progress in our CFO search and succession process and will provide updates as appropriate. In the meantime, our finance organization continues to operate under the strong leadership of our Executive Vice President of Finance and Interim Principal Accounting Officer, Mrs. Claire Rochstein, and our Executive Vice President of FP&A and Interim Principal Financial Officer, Mrs. Liron Sharon. I would like to thank both for their leadership. With that, I will turn it over to Liron to review our financial results in greater detail and discuss our 2026 guidance. Liron? Liron Sharon: Thanks, Ron, and hello to everyone on the call today. In the fourth quarter, we exceeded once again the midpoint of our guidance across subscription revenue, total revenue, and adjusted EBITDA, and delivered through disciplined execution a record level of both adjusted EBITDA and non-GAAP net profit. We also posted, as forecasted, a sequential quarterly growth in our new subscription bookings and the highest gross retention level of 2025. Total revenue for the quarter ended 12/31/2025 was $45,500,000, up 4% sequentially, almost flat year over year, and above the midpoint of our guidance range of $45,000,000 to $45,700,000. Subscription revenue was $42,700,000, up 2% sequentially, down 2% year over year, and above the high end of our guidance range of $41,600,000 to $42,300,000. Professional services revenue was $2,900,000 for the quarter, up 31% year over year and consistent with our previously forecasted increase. On a segment basis, EENT total revenue increased 4% year over year in the fourth quarter, while M&T total revenue declined 12% year over year due to the elevated churn experienced earlier in the year as discussed on prior calls. GAAP gross profit for the fourth quarter was $33,000,000, up 7% sequentially and 2% year over year. Gross margin was 72% compared to 71% in Q4 2024. Subscription gross margin was 78%, up from 77% in Q4 2024. Total operating expenses for the quarter were $32,100,000, compared to $36,100,000 in 2024, representing an 11% year-over-year reduction. Adjusted EBITDA for the quarter was a record $6,300,000, above the high end of our guidance range of $4,200,000 to $5,200,000. This represents a year-over-year increase of $3,600,000 compared to $2,700,000 in 2024, effectively more than doubling our adjusted EBITDA results year over year. GAAP net loss for the quarter was $600,000, or $0.00 per diluted share, representing a $6,000,000 year-over-year improvement. Non-GAAP net profit for the quarter was a record $5,200,000, or $0.03 per diluted share, representing an improvement of $4,900,000 year over year. Remaining performance obligation, or RPO, were $166,300,000, representing a 4% sequential increase and a 6% year-over-year decrease. We expect to recognize 64% of this amount as revenue over the next twelve months. Historical comparison RPO figures have been adjusted as discussed in our previous earnings call. Annualized recurring revenue in the fourth quarter was $168,200,000, down 3% year over year. Net dollar retention was 97%, unchanged sequentially and compared to 103% in the same quarter last year. For the full year ended 12/31/2025, total revenue was $180,900,000, up 1% year over year. Subscription revenue was $171,900,000, up 3% year over year. Professional services revenue was $8,900,000, down 19% year over year, consistent with the expected trends we discussed on the previous earnings calls. On a segment basis, EENT total revenue increased 4% year over year, while M&T total revenue declined 7% due to elevated churn as previously discussed. Net dollar retention for 2025 was 100%, consistent with 2024 levels. While flat overall, this reflects improved net retention in EENT offset by lower net retention in M&T. GAAP gross profit for 2025 was $127,700,000, up 7% year over year, representing a gross margin of 71%, up from 67% in 2024. Subscription gross margin improved to 77%, up from 75% in 2024. Adjusted EBITDA for 2025 was a record $18,600,000, representing more than 150% year-over-year growth compared to $7,300,000 in 2024. This performance, together with our improved expenses discipline and margin profile, reflects our continued focus on operating efficiency. GAAP net loss for 2025 was $12,100,000, or $0.08 per diluted share, an improvement of $19,200,000 compared to a net loss of $31,300,000, or $0.21 per diluted share, in 2024. For the full year 2025, non-GAAP net profit was a record $11,500,000, or $0.07 per diluted share, reflecting a $16,200,000 improvement from a non-GAAP net loss of $4,700,000, or $0.03 per diluted share, in 2024. Moving to the balance sheet and cash flow, we ended the fourth quarter with $62,800,000 in cash and marketable securities. Net cash provided by operating activities was $3,600,000 in the quarter, compared to $4,300,000 in Q4 2024. For the full year 2025, net cash provided by operating activities was $14,500,000 compared to $12,200,000 in 2024. I will now turn to our outlook for Q1 2026 and for the full fiscal year ending 12/31/2026. For Q1 2026, we expect subscription revenue between $41,200,000 and $42,000,000, total revenue between $42,600,000 and $43,400,000, and adjusted EBITDA between $2,300,000 and $3,300,000. We expect a similar seasonal level of negative cash flow from operations as in the first quarter of last year. Our Q1 guidance incorporates a short-term EENT revenue headwind due to a large customer that shifted priority and budget from conducting large virtual events to many smaller ones, which are planned to be conducted with us later in the year. The guidance also incorporates a first-quarter year-over-year M&T revenue decline in the mid to high teens due to the aggregate effect of last year’s higher churn. We expect an improvement in the following quarters. For the full year 2026, we expect subscription revenue between $172,500,000 and $175,500,000, and total revenue between $181,200,000 and $184,200,000. We are expecting subscription and total revenue to pick up gradually throughout the year. We expect EENT to post a higher year-over-year growth rate compared to 2025, fueled by contribution from the PathFactory customer base and from our new product portfolio, which we expect would affect 2026. That said, given the early stage of our new product commercialization, we have thoughtfully assumed that the more meaningful growth acceleration from them will occur in 2027. We expect to still post M&T year-over-year revenue declines this year due to the elevated churn in 2025, but forecast to achieve both higher M&T new bookings and retention this year, which, as Ron mentioned, is expected to regenerate sequential quarterly M&T revenue growth in 2027. As for our bottom-line figures this year, our 2026 adjusted EBITDA guidance and cash flow from operations forecast thoughtfully incorporate the expected impact of the PathFactory acquisition and related integration and investment and our continued commitment to carefully balance growth and profitability to maximize long-term shareholder value. It also incorporates increased FX headwinds affecting operating costs. Accordingly, we are providing the same annual adjusted EBITDA guidance range that we originally provided for 2025, which is between $12,700,000 and $14,700,000. We also forecast that we will generate low double-digit cash flow from operations this year, with most of it generated in the second half of the year, consistent with historical trends. As Ron mentioned, we remain committed to achieving a Rule of 30 combination between double-digit revenue growth and adjusted EBITDA margin by 2028 or sooner. With that, we will open the call for questions. Operator? Operator: Thank you. We will now be conducting a question-and-answer session. You may press 2 if you would like to move your question from the queue. One moment please while we poll for questions. Our first question is coming from Matt Cavanagh from Needham & Company. Your line is now live. Matt Cavanagh: Hi. Thanks for the question, and congratulations on today’s results and announcements. Starting out with the PathFactory acquisition, could you expand a little bit about the sales synergy and cross-selling abilities you might expect to see now with both ESof and PathFactory under the platform, along with the core Kaltura, Inc. products? Ron Yekutiel: Yeah, 100%. Love to do that, and thank you everybody for joining. So let us talk about PathFactory and the reasons for the acquisition. So we have been communicating to the market all along the need to evolve from video into a full CX, EX, DX digital experience platform, where the market is bigger, the growth is faster, the multiples are higher. And we believe that the advent of AI is enabling that. The ability to create real-time videos and to turn that into avatars, conversational videos, enables us to close the flywheel effect—create content on the fly, manage it on the fly, engage people on the fly, and move from static experiences into dynamic, engaging experiences. So that was the impetus of the general move, and we have brought in ESof to double down the ability to create these agents, immersive agents. As we have said, they have added the eyes and ears and mouth to our Genie and then, of course, the face. So why did we move on and do this additional move into PathFactory? PathFactory, from a product perspective, adds a few things. They add content intelligence, understanding the content itself; then they are enabling us to add multiple assets and not just video assets. So we can go beyond video—talk about documents and files—and connect it to third-party CRMs, marketing automation platforms, DAMs, etc. Very importantly, they have user analysis, user intent, user understanding. We—our system—had been basically a content management system for video; now we have a user understanding. And that is key because we need to serve the right content to the right people at the right time in the right context. And so what they are able to do is to provide orchestration for user journeys. Right now, they have been identified as one of the top providers in this space. I will say about it a few things. They have been working mainly on top-of-the-funnel B2B marketing. But we are going to take it to the bottom of the funnel to address SDRs like Qualified is, and other CX customer experiences like customer and partner onboarding, training, customer care; later take the same technology to deliver paths for learning and internal use. And so right now, they are also able not just to provide the orchestration, but pipeline and revenue attribution, and they are also connected to their own applications that they have developed for chat-based interfaces and stuff of that nature. So that enables us—before I talk about how and what we are going to sell—to appreciate that we are entering deeper into a market of conversation automation solutions in the B2B front, but later across the board. Forrester, in their Q4 2025 report, identified them as leaders alongside Qualified, that was just acquired for $1,500,000,000 by Salesforce, of course, and 6sense, whose last valuation from a long time ago had been at $5,000,000,000. So they are in a good neighborhood, and this strengthens our position in that market. That is a big market. I would assume twice the size—or doubling the size—of our current market. And also, based on our analysis, growing very fast unlike the traditional video market. It is an interesting market. And that adds up to another element before I answer the specific question about sales. We have just gone deeper into the ability to add brains to our agents, not just, quote unquote, good looks, so that they can deliver the right content at the right time while you are teaching, learning, marketing, selling, etc. We have done that at the same time that we have just launched our VOD avatar that takes us deeper into content creation, aligned with companies like Synthesia that are also reportedly valued at $4,000,000,000. So I think that movement—just content management and video experiences—towards content creation and towards real-time conversational technology with brains and agentic logic behind it turns us into the full digital experience platform that we have been waiting to turn. To the question of cross-sell and upsell, maybe that now becomes clear through my statement here. So first, they themselves have about 400 customers, of which 100 are large enterprises like Cisco, NVIDIA, MetLife, LG. About 10 of them only are overlapping from the big guys. That means there are a lot of folks that are not. We have had great calls with a bunch of them, and they have expressed a lot of excitement about this combination. They understand the synergy. There are, to their statements, even active RFPs running for avatars. They have been talking to us about the opportunity to displace other video vendors, because you would want to have a full end-to-end connection in the new agentic world between the medium that is engaging and the logic that is used towards that medium and the actual conversation technology. So it all comes very much together. So now, again, later we could talk more about guidance. I have been careful assuming when and if and how we start making a lot of money here from this synergy. But we do believe that, a) we could take this and sort it into our products, get a significant bump in value and revenue within a combined product, and b) that we could very well go back to their customers and sell them and support them with the Kaltura, Inc. product. Let me know if you have any more specific questions about the cross-sell/upsell opportunities. Matt Cavanagh: That is great, Ron. Thank you so much. Just, yeah, touching on what you have mentioned at the end there, on your 2026 outlook, could you talk a little bit more about the puts and takes that went into the assumptions there? Ron Yekutiel: Yeah. Happy to do that. Yeah. From a top line, bottom line, both. Liron Sharon: Yes. That would be great. Matt Cavanagh: Thank you. Okay. So look. Ron Yekutiel: For generally speaking, we are looking at a year in which we expect gross retention to be better because we all knew media and telecom in the past year was not good. By the way, EENT was fine. But if we improve M&T, the gross retention is going to get better. Bookings, we believe, will pull up. Again, we are hoping for this to be as early as possible, but we are assuming it is going to be mostly in the second half of the year, in line with both PathFactory synergies as well as with our own product releases. And while we have just started putting them out, we have some good pilots and excitement and interest, which we will share more about. We did say last time—we are seeing yet again now—we expect that to start pulling up more in the second half of the year. When you think about the revenue guidance that we have set, we are guiding at a similar kind of level that was expected, but we are hopefully coming at it very carefully given the amount of changes that are happening so early in the year—following one acquisition, creating another one, yet to see exactly when it will close, hopefully quickly—and so we want to make sure that we are able to achieve the numbers that we were discussing. And I think at the end of the day, to your question about the pluses and minuses, I think that we are still seeing some of the headwinds come from M&T’s last year performance that are going to cause double-digit decline this year because of the delay between net bookings in M&T and how they impact revenue. We did say we expect this year for net bookings to start pulling up, for that to affect sequential growth in 2027. But for 2026, it is a headwind on the revenue side. And then from core EENT, again, there is some growth, but most of it is pegged towards the new stuff, and that is going to come in the second half. And lastly, PathFactory—as mentioned, their run rate is in the teens—and we know when they are going to come in: in the middle of the year or in the second quarter, or early or later in the second quarter. So we have to be careful in our assumptions. We do assume it is in the second quarter, maybe earlier within that quarter, we will see. But given that, we have put a certain amount that we feel comfortable should be reasonable, and that is what brought it all together. So that is for the top line. I will say from a bottom line—just to remind all of us—last time after the acquisition of ESof, we reduced what we had planned. So even going before, we have increased dramatically our adjusted EBITDA year—more than 150% growth—much more than we said; we said we were going to double, we delivered on it. Originally, we said we were going to continue to pull it up, but that was before we decided to go and do these two acquisitions and go for the bigger market, bigger opportunity. Again, we could stick along and have a bit more profit and not put the engine in place to be able to become an exciting company again. Or we could do the moves that we have just done now over the last couple of acquisitions to take us there. We have tapered down the expectations. The last time we reduced it to somewhere around, we said, look, it is a function of a few things. It is both the ESof acquisition costs and investments. It is the lower M&T results. It is the higher FX because of the Israeli shekel. And now we have come to do another readjustment. And once again, we are looking at the PathFactory integration investment and additional FX cushion that continued to go the other way on the Israeli shekel. So between all of them, we have come with the exact same guidance we did last year. To remind you, we started with that guidance and ended up far higher. Maybe that will happen this year, maybe not. We would like to stick to our guidance and see where things go. There is still a question on the revenue. There is a question on the cost. There is integration of companies. We believe we have been thoughtful, and we do hope to be able to over-deliver, but let us wait and see where we get to. And, ultimately, to the extent that there will be any upside on the bottom line, it could be driven by the top side with a higher revenue, because there are a lot of things that are pulling the revenue, as I noted earlier. But also maybe better FX. Let us wait and see. So that is my two cents about both top and bottom line. Matt Cavanagh: Very perfect. Thank you. And just lastly from me, could you share an updated view on how you are seeing the competitive landscape and how these recent acquisitions are further differentiating Kaltura, Inc. from your competitors? Ron Yekutiel: We are moving—gradually moving and expanding, I would not say moving because we are both in the other market and the new market—into a larger and more exciting market. So let me be clear. In the world of pure video experiences, we had another research done in Q4 that had put us throughout the far-right corner as the best product in its case. We also think that the recent consolidation that has taken place in our traditional market would enable us to be even better competitively positioned, let alone with the rest of what we just said now. When we talk to our own customers, there is a lot of synergy with the new products that we offer now that our existing video vendors—competitors—do not, around the agentic experiences but also around content creation. And therefore, we think that given both their consolidation as well as the improved amount of offerings that we have, we could do better within our classic core market in selling more of our current product and adding—or not adding—some of these new things. But I think the bigger point here is that we are now gradually moving to the point that we are not a video technology company. We offer agentic digital experiences in real time that are able to deliver conversational agents that are performing tasks that otherwise just humans would do. And, again, I do not think they are going to replace them. I think they are going to augment them. I think they are going to boost them. I think they are going to support them. This is something completely different. Now, when we reach out to our own customers, there is a lot of excitement—much more than previously—because video had been relatively similar in recent years, and this is at the hype level of, “Oh my God, I want to use this.” So this is exciting. And plus, this is a ticket for us to get to a lot more new logos. In recent years, it has been harder in our industry because people have kept to their own vendors even if there was a better solution. This opens the door for a completely different conversation and one that is synergistic and complementary. So in short, I think that, a) we are going to be better positioned to compete with our existing, quote unquote, competitors, but also, b) we are expanding to now be in the same neighborhood the bigger companies that are valued higher, that are in faster-growing markets, are in, and I mentioned Qualified. You can look at PathFactory—it is put on the same report as they are, right by them, as a leader. And you could also look, like I said, at Synthesia. I am not suggesting that one-to-one we have the same product set, that we are going to do the same growth, that we have the same revenue, but when you look at the products we just released and the ones that are just now in beta, and appreciate our advantages in entering that market, then you would appreciate that we have not only the ability to create avatar-based videos, but they can come to life and become conversational. That is new. They are connected to our platform so that you can connect that to any other video experience and content management—that is the opposite direction that companies like Synthesia are working hard to do. So that is powerful. We have our existing 800 enterprise customers to upsell this to. And so there are a lot of things that are helping us come from a place that has been relatively flattish to something that we believe—and we hope, and again, we have been very thoughtful and careful and will continue to be—could potentially gradually increase our growth, and that is the strategy. Matt Cavanagh: That sounds great. Well, thank you so much, Ron. That is it for me. Ron Yekutiel: Thank you so much, Matt. Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over for any further or closing comments. Ron Yekutiel: So thank you all for joining today. First, start of a fresh year, thank you all for your continued support and trust, and I wish upon all of us a great fiscal year and a great year altogether filled with financial success, but also some more peace, hopefully around us and around the world. I am looking forward to following up with each of you that wants to reach out. Have a beautiful day. Take care. Bye-bye. Operator: Thank you. That does conclude today's teleconference webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.