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AVO 2026 Q1 财报电话会议

Operator: Good afternoon, and welcome to the Mission Produce, Inc. Fiscal First Quarter 2026 Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I would like to turn the conference over to Jeff Sonnek, Investor Relations at ICR. Please go ahead. Thank you. Today's presentation will be hosted by Steve Barnard, Chief Executive Officer; John Pawlowski, President and Chief Operating Officer; and Bryan Giles, Chief Financial Officer. Jeff Sonnek: The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We will also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release, which can be found on our Investor Relations website, investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. I will now turn the call over to Steve Barnard, CEO. Steve Barnard: Thank you, Jeff. Last quarter, we shared the news about our leadership transition, and next month, at our annual meeting, that transition becomes official. John steps into the CEO role, and I move to Executive Chairman. So this is my last earnings call in this seat, and I want to take a moment to say how grateful I am. Forty-plus years building this company alongside an incredible team of people. There is nothing else like it. I am proud of what we have accomplished together. With that said, I am even more excited about what is ahead. Between the momentum we are carrying, the pending Calavo acquisition we announced in January, and the team we have in place, Mission Produce, Inc. has never been positioned better. John has brought a level of strategic rigor and global perspective that has elevated this organization, and I have complete confidence in his abilities and vision. I will still be very much involved as Executive Chairman. This company is in my DNA, and that is not going to change. But the future belongs to John and his team, and I cannot wait to watch it unfold. With that context, I will turn it over to John to walk you through the operational and commercial highlights of the quarter. John? John Pawlowski: Thanks, Steve. And on behalf of the entire Mission Produce, Inc. team, thank you. What you have built over four decades speaks for itself, and it is a privilege to carry it forward. I want to use my time today to walk through our first quarter results and the operational progress we are making across the business. I also want to spend some time talking about the future of Mission Produce, Inc., because we have a lot to be excited about. We are off to a strong start in fiscal 2026, and the first quarter is a good illustration of how we are able to manage this business in a shifting supply and price environment. We are a volume-centric business. Volume and per-unit margins are the metrics we manage to. In a quarter in which industry pricing normalized significantly from the elevated levels we experienced over the past year, our team delivered on both of those fronts, and I want to recognize their collaboration which helped drive our results. We grew avocado volumes 14%. We expanded gross margin, and we grew adjusted EBITDA versus the prior-year period. The headline revenue number reflects pricing dynamics that are outside of our control, but the underlying execution was strong, and that is what drives our results. Our commercial teams drove volume growth, improved per-unit margins, and continued to deepen the customer relationships that underpin our business. That is the combination we are always working towards. As expected, Mexican supply was abundant this quarter, with higher yields in the current harvest season versus last year, and our teams programmed that fruit well across our customer base, expanding our reach, strengthening existing partnerships, and leveraging our category management tools to add value for our retail and foodservice customers—precisely what our platform was built to do. The broader demand environment continues to trend in our favor as well, and the structural tailwinds for avocado consumption are real. Domestic GLP-1 penetration continues to accelerate, and the recent inclusion of avocados in the USDA's updated Dietary Guidelines for Americans was a meaningful development, reinforcing what consumers are already telling us day in and day out with their purchasing behavior—that avocados are simply a staple in America's diet. In fact, we are seeing these dynamics play out in syndicated data as well, which showed that household penetration of avocados reached a high watermark of approximately 72% in the fiscal fourth quarter this year. Per capita consumption has nearly tripled over the past two decades, and with the health and wellness trend continuing to accelerate, we see a long runway for category growth that our platform is uniquely positioned to serve. Our International Farming segment plays an important role in driving year-round consumption here in North America and is also helping accelerate the category in emerging growth markets internationally. We have been working hard to maximize returns from our international asset base. For instance, we are focused on driving improved pack house utilization in Peru by running our own blueberry volume and additional third-party fruit through our facilities to generate better overhead absorption all year round. Recently, we also modified a pack line in that same facility to support mangoes as well. These efforts—filling in the seasonal calendar and maximizing the productivity of our Peruvian assets—have been instrumental in helping us deliver more sustainable positive adjusted EBITDA in our International segment during what was historically a seasonally softer quarter. The Blueberry segment itself continues to grow. Revenue was up 12% in the quarter on higher volumes and modestly higher pricing. Per-acre yields on some of our newer acreage impacted profitability, but that is part of the natural maturation process, and we expect yields to improve as those farms reach full productivity. The volumes are building, and we like where this business model is headed, both as a stand-alone category and for what it contributes to our broader platform. It is this sort of thinking that exemplifies our broader strategy and informs our strategic designs for the future of this company—an area that I am especially excited about. When we announced the Calavo acquisition in January, we described it as a unique opportunity to acquire a strategic and synergistic asset—one that strengthens our core avocado business while adding capabilities in prepared foods through an established brand. Two months after announcing that transaction, I am even more confident in this view. To be direct, we believe scaled assets in our space that contain this level of strategic fit are scarce. Calavo was a unique opportunity, and we believe Mission Produce, Inc. is the best-positioned company to unlock value through this combination. This was an absolutely offensive move—an opportunity to accelerate our growth strategy from a position of strength, backed by two straight years of demonstrated execution, robust cash flow generation, and a very strong balance sheet. Integration planning is underway, and deal progress is moving forward. In fact, we recently filed our preliminary proxy for the transaction, which is now under SEC review, and we are advancing the regulatory approval process in both the United States and Mexico. This is all coming together as planned, and we believe the transaction is on track to close during our fiscal third quarter, subject to satisfaction of the closing conditions. On the strategic merits, we continue to believe the combined company will have greatly enhanced supply reliability for all of our customers. Calavo will also bring tomatoes and papayas into our distribution network, which we believe will further enhance the year-round facility utilization goal that I spoke to earlier, while helping reduce the seasonal troughs that have historically been a feature of the produce industry. But it is the prepared foods opportunity that I am particularly excited about. Calavo's guacamole and ready-to-eat product lines sit within a large and growing market, and it is a natural adjacency to our core avocado business. Having spent 20 years in the branded food industry, I have a deep appreciation for leveraging the power of strong execution and category leadership into adjacent business line expansions, and we have a perfect opportunity with an established consumer brand and the operational scale to support its continued growth. We see significant runway to build up this new capability, and one that is genuinely value additive to what Mission Produce, Inc. does today. On synergies, our conviction has only grown as we have started our integration planning. We continue to see at least $25 million of annualized cost synergies achievable within 18 months of close, and we believe, as we have stated earlier, that there is meaningful upside potential to that number as we bring these two platforms together. Importantly, we also believe that this transaction will help create a clear path to delever back to normalized levels within approximately two years of our close, which is a priority for us as we consider our go-forward capital allocation strategy. Stepping back for a moment, on a stand-alone basis, Mission Produce, Inc. has significant runway in front of us, both domestically and internationally. The demand tailwinds I described earlier are durable, and our platform is built to lead category growth along with our customers. Layer on the Calavo acquisition with the expanded North American footprint, the diversified produce portfolio, entry into prepared foods, and cost synergies, and the combined company has the potential to be something truly differentiated in the fresh produce industry. We are building a platform that we believe can drive meaningful EBITDA growth over the next several years through a combination of organic execution and the value we unlock through this combination. Importantly, as we scale this platform and accelerate free cash flow, returning capital to shareholders is part of the equation that we are envisioning. We are actively developing a long-term capital allocation strategy that balances reinvestment in the business with meaningful returns to our shareholders, and we look forward to laying that out alongside our detailed strategic plan at an Investor Day we are planning to hold following the closure of the Calavo acquisition this fall. But I want to be clear. The ambition here is significant, and I believe the foundation we have, combined with the capabilities Calavo brings, gives us a clear and credible path to get there. I will now turn the call over to Bryan for the financial results. Bryan Giles: Thank you, John, and good afternoon to everyone on the call. Fiscal 2026 first quarter revenue totaled $278.6 million, which was down 17% from the prior year and driven by a 30% decrease in pricing given higher industry supply driven by greater availability from Mexico resulting from higher yields in the current harvest season. However, we are pleased to see strong 14% volume growth in the quarter, which, as John mentioned, is the primary focus of our operating strategy. Despite lower revenue, gross profit was consistent with the prior year at $31.6 million in the first quarter, enabling our gross margin to increase 190 basis points to 11.3% compared to the same period last year. As a reminder, profitability in our Marketing and Distribution segment is managed primarily on a per-unit basis, which can lead to volatility in margin percentage when sales prices fluctuate. The increase in margin percentage was primarily driven by improved performance in our Marketing and Distribution segment, reflecting higher avocado volumes and improved per-unit margins compared to the prior-year period. This performance was partially offset by lower gross profit in our Blueberry segment due to lower per-acre yield resulting in higher per-unit fruit production costs. SG&A expense increased $6.9 million, or 31%, compared to the same period last year. The increase was driven entirely by $7.0 million of transaction advisory costs associated with the pending acquisition of Calavo Growers. Excluding transaction advisory costs, SG&A was essentially flat with the prior-year period. Adjusted net income for the quarter was $7.3 million, or $0.10 per diluted share, consistent with prior-year results. Beyond the operating performance, we continued to benefit from a reduction in interest expense, down $0.5 million, or approximately 23% versus prior year, reflecting our continued focus on maintaining a healthy balance sheet and the lower rates we incur on outstanding borrowings. We also realized a significant increase in equity method income to $1.5 million compared to $0.8 million in the prior-year period, driven by strong performance from our joint venture investment in Henry Avocado Corporation. Adjusted EBITDA increased 5% to $18.5 million compared to $17.7 million last year, driven by higher avocado volumes sold and year-over-year improvement in per-unit margins in our Marketing and Distribution segment, partially offset by higher per-unit fruit production costs in our Blueberry segment. Turning now to the segments, our Marketing and Distribution segment net sales decreased 21% to $234.8 million, driven by the avocado pricing dynamics previously described. As we have mentioned, we manage this business primarily to volume and per-unit margins, and on that basis, the segment performed well. Segment adjusted EBITDA increased 33% to $12.9 million, reflecting higher avocado volume sold and solid per-unit margins. In the first quarter, our International Farming results are typically focused on the provision of packing and processing services for our Blueberry segment and for third-party blueberry producers, though this will evolve over time as our operations develop in other areas such as Guatemala. With this seasonality in mind, our International Farming segment total sales increased 15% to $10.6 million. Segment adjusted EBITDA increased $0.5 million, or 28%, to $2.3 million compared to the prior-year period due to improved pack house utilization versus the prior year. As John discussed in his remarks, we are pleased to see the results of improved operating leverage in what has traditionally been a smaller quarter for that segment. In Blueberries, total sales increased 12% to $40.8 million due to increases in average per-unit sales price and volumes sold of 9% and 3%, respectively. Segment adjusted EBITDA decreased to $3.3 million compared to $6.2 million last year. While our volumes were higher, overall yield per hectare was lower than the prior year, which drove up our per-unit production costs. As we have discussed previously, this is part of the natural maturation process for newer acreage, and we expect yields and per-unit cost to improve over time as these farms mature. Shifting now to our balance sheet and cash flow, cash and cash equivalents were $44.8 million as of 01/30/2026, compared to $64.8 million as of 10/31/2025. Net cash used by operating activities was $3.0 million for the quarter, compared to $1.2 million in the prior-year period. The slight increase in cash usage was driven by higher working capital requirements. As a reminder, the first quarter is typically our weakest period for cash generation given the seasonality of our business, and we expect the customary improvement in operating cash flow as we move toward the latter half of our fiscal year. Capital expenditures were $11.9 million for the quarter, compared to $14.8 million for the same period last year, consistent with the anticipated step down we communicated previously. For full fiscal 2026, we continue to expect total capital expenditures of approximately $40.0 million. This setup positions us for accelerated free cash flow generation going forward. Now let me provide some context on our near-term outlook. For 2026, avocado industry volumes are expected to increase by approximately 10% to 15% versus the prior-year period, driven by a larger Mexican crop in the current harvest season. Pricing is expected to be lower on a year-over-year basis by approximately 30% to 35% compared to the $2 per pound average experienced in 2025. While we expect higher volumes, we anticipate contraction in our per-unit margins for the second quarter due to the lower pricing environment, particularly in a setting where we are sourcing primarily from a single origin. The lower price environment is leading to a delayed start of the California harvest season. It is expected to be about a month behind the prior year as growers wait for improved market conditions. This delay reduces our ability to leverage our sourcing capabilities across regions and lowers asset utilization at our California packing facility in Q2 as we await volumes to ramp up. This is expected to result in lower levels of Q2 profitability in our Marketing and Distribution segment versus the prior year. For Blueberries, harvest timing for the 2025/2026 Peruvian blueberry harvest season is accelerated in relation to the prior year, leaving 10% to 15% of the harvest to be sold through in the fiscal second quarter. We expect to see volume reductions from owned farms resulting from earlier pruning and unfavorable weather conditions in the current year, which should translate to lower revenue despite expectations for higher sales prices, as well as create a headwind for our International Farming segment as a result of lower pack house utilization. Blueberries profitability will continue to be impacted by higher costs resulting from lower yields per hectare as we close out the current harvest season in the second quarter. Taking this all together, we anticipate our consolidated adjusted EBITDA performance to be below the prior-year level. Looking ahead, we remain focused on the fundamentals that drive long-term value creation—supporting consumption growth through building volume, strengthening customer partnerships, and maximizing the productivity of our global asset base. The structural tailwinds supporting avocado consumption are accelerating, and our platform is uniquely positioned to capitalize on this sustained category growth. While we will navigate some near-term supply dynamics in Q2, we have great conviction in the underlying strength of our business model and our team that is driving it forward. Combined with the opportunities afforded by the pending Calavo acquisition, Mission Produce, Inc. is building a differentiated platform with significant runway for EBITDA growth and value creation in the years to come. That concludes our prepared remarks. I will now turn the call back to the operator to take us to Q&A. Operator: 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 to remove yourself from the queue. For participants using speaker equipment, you may need to pick up your handset before pressing the star key. Your first question comes from Puran Sharma Stephens with Stephens. Please go ahead. Puran Sharma Stephens: Good afternoon, and thanks for the question, and congrats on putting up those results in this lower pricing environment. I did want to start off by asking about the Calavo acquisition. You have said a lot here in the past few months about it, but in your prepared comments, you said you feel more confident as you have had more time to maybe digest information about the deal. Does that mean that there could be even more upside to your previous comment about having further upside to the $25 million? And then just as a follow-on, could you give us a sense as to what buckets you are tackling? What do you see as lower-hanging fruit and higher-hanging fruit in terms of synergy realization? John Pawlowski: Hi, Puran. This is John. Thanks for the question. I hope you are doing well. In regards to the synergy question, I am going to stick with my comments that I have been making over the last couple of months. We feel, as we have been having conversations with the Calavo team and we are working towards consummating the relationship here and all the different elements that have to happen structurally, really good about the estimate assumptions that we made around that $25 million. The estimates around that $25 million were really built around some core cost structure items, and the buckets that we have been always talking about have been around the operating footprint and how synergistic that operating footprint is, around some duplicate costs in the overall structure, and we feel really good about our ability to execute against cost-related synergies in a very expedited, timely manner. As we think about the buckets for the future, there is a lot of opportunity around how we think about growing together, how we think about engaging with our customers in regards to what we can do around the selling cycle and adding value in regards to how we think about the opportunities, particularly in adjacent spaces to where we are at today. I am not going to give any more color in regards to where I think those go, except to stress that I feel really confident in the word “meaningful,” as I have been, quite frankly, pretty consistent in saying around where we go beyond that $25 million. Puran Sharma Stephens: That is great. I appreciate the color there, John, and hope you are doing well as well. Just as my follow-up here, I wanted to ask about, and this is, I guess, more on Bryan's comments around guidance here. I understand that we are going into a lower pricing environment, higher supply environment relative to last year, and that you would expect your per-unit margins to show some compression in this type of environment. But I just wanted to get a sense of the benefit you would get from the increased volumes. Are you able to give us any color, qualitative or quantitative, into how much fixed cost deleveraging you are like, benefit you would get from the increased volumes? Bryan Giles: Hey, Puran. This is Bryan. The vast majority of the costs, particularly this time of year, in our cost structure are variable in nature. When we are buying third-party fruit, that is by far the most significant item in our cost of goods sold, and even at lower price points, it is still the most meaningful item in there. Our goal is we focus on making margin on a per-unit basis so we can be profitable in times when prices are high or when prices are low. There is no doubt, though, when prices are at the lower end, that it does compress that a bit. It makes it a little more challenging to really sell customers on getting them to pay every dollar for the premium service that we provide. So it creates challenges. It does tighten up a bit. I think when we are in a single-source market like we are today with Mexico and there is ample supply, again, it just makes it more difficult to lean into the advantages that we really have. I do think that, in the lower price environment—I made reference to California getting a little bit later start this year—last year we were in a pricing environment that was more than 2x where we are at today. In the moment, it was meaningfully higher-end price to retail. When I look at where we are at, there is fixed cost overhead that is associated with that facility that we are not able to utilize completely when we are not in the California season, so that year-over-year comp is a little bit difficult. I do not think the general per-unit margins that we are going to generate are going to be dramatically lower than the historical ranges that we have seen. I just think that we have gone through a period of time where we were seeing elevated per-unit margins that were above that normal range. I think that what we are seeing in Q2 is a continuation of what we saw in Q1, which is a bit of a reversion back to the historical levels on per-unit margins. Operator: Next question, Mark Smith with Lake Street Capital Markets. Please proceed. Alex Turnicks: Yeah. Hi, guys. You have got Alex Turnicks on the line for Mark Smith today. Thanks for taking my questions. First one for me: on the Blueberry segment, you mentioned the yield pressure is largely tied to newer acreage maturing. Could you talk about the timeline for those farms reaching full productivity and what normalized margin profile for that business could look like once yields stabilize? John Pawlowski: Hi, Alex. Thanks for the question. I will start and maybe Bryan will jump in. From a technical perspective, what we do on those farms is what we call double-density introduction into the harvest. What we are doing is putting plants—which is a very typical part of the process in blueberries and in many other crops—very tightly close together as they are maturing from, say, year one into year one and a half, when those plants are becoming much more productive and mature, and then you are spreading them out as they get into the later stages of maturity. Sometimes when you do that and you spread them out, you have a little bit less productivity for those first couple of months or first year of the time that that plant is executing against what it is trying to do, and we are in a phase where we just did that in a lot of the portions of our farm. Over the course of the next 12 to 18 months, we should really be reverting back to our traditional margins from a cost structure standpoint as those plants become mature. I would love to tell you it is three months, but it is probably more along the lines of 12 to 18 months until we reach the full zone where we would like to be. Bryan Giles: And I would just build off what John said. There are a couple of metrics we look at. We are certainly looking at cost per hectare planted—we do that for our avocados and our blueberry farms. We are also looking at costs on a per-unit basis. The triangle here for profitability is overall cost incurred, production yield, and sales price, and then we work those three together. Certainly, the cost per unit is driven heavily by the overall costs that we incur as well as that yield number. To the point that John made, we do expect those yields to improve as they mature. Blueberries do get into mature production much faster than an avocado tree does. Many of these plantings where we are seeing the reduced yield this year are plants that are one to two years old, and we would expect them to ramp their productivity very quickly, whereas an avocado tree can take four years before you even get to breakeven production. So it is a meaningful difference. It is a faster ramp. We were planting a fair amount of new acreage in blueberries. We are up over 700 hectares in production today, but of that 700, probably 25% of it is new acreage that was impacted by the spread-out. Certainly, as we go forward, we expect those yields to ramp fairly quickly. We did mention other factors that play into this. The timing of pruning in a harvest season—where we let the seasons run a little bit longer the year before and we ended them in a more normalized time this year—had a nominal impact. We are also, in decisions around pruning, often driven by the weather conditions that exist at any given time. The timing of pruning is going to determine when harvest is going to begin the following season. So we are making decisions that are really in the best long-term interest of the business, and sometimes they do not always align with an individual quarter. Alex Turnicks: Okay. That is really helpful. The last one for me: you touched on the prepared remarks about developing that long-term capital allocation strategy and your plans to discuss that at the Investor Day after the acquisition closes. But just at a high level, how should we think about the balance between reinvestment, deleveraging, and returning capital to shareholders as free cash flow ramps? Bryan Giles: I think we want to stop short of committing to specifics at this point, but this is really a continuation of the messaging we have started to deliver over the last 12 to 18 months, which is initial priority: paying down debt. We have spent two years doing that. With this acquisition, that will ramp back up a little bit again, so we will have a process to bring it back down. But these combined entities are going to create meaningfully more operating cash flow than we did individually, so we feel like we can bring that debt back down in short order. We have already had discussions about consistently returning cash to shareholders, and those discussions are going to continue to happen as we move forward. The message that we would want to deliver right now is that we are committed to a program to look at that balance. We do not know what the figures are going to be at, we do not know when it is going to start, but we understand it matters to us, and we feel that it creates value for our external stakeholders as well. John Pawlowski: I would add to that, Alex, that I think in the past, we have been very clear on our priorities of using our capital, and that they were around debt management as well as investing in the growth of the business. At this time, I think we are pivoting a little on that by starting to say that, as we develop this capital allocation strategy, the return-to-shareholder piece is rising on the priority list for us. I would say that, as a combined entity, as we think about the future, the priorities do not necessarily have to be mutually exclusive. We think that there is opportunity to parallel path that over the course of the next 12 to 18 months, and we will not have to wait for that deleveraging to be able to provide some of that shareholder return. Operator: Ladies and gentlemen, at this time, I am showing no further questions. I would like to end the Q&A session and turn the conference call back over to management for any closing remarks. John Pawlowski: Thanks, everybody. This is John. Thanks for joining us today. I hope you can feel the positive energy that we have here with respect to our future. We believe Mission Produce, Inc. is at a very critical juncture in our journey, and the pending acquisition of Calavo will only serve to accelerate our growth ambitions. We appreciate your interest in Mission Produce, Inc. I want to thank Steve for all his contributions and let him know I look forward to the future together, and we collectively look forward to speaking with you again next quarter. Operator: Ladies and gentlemen, that concludes today's conference call. We thank you for attending. You may now disconnect your lines and have a wonderful day.

28天前Insight Analytics约5分钟阅读

ABX 2025 Q4 财报电话会议

Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to Abacus Global Management, Inc.'s fourth quarter and full year 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the call over to Robert Phillips, Abacus Global Management, Inc.'s senior vice president of Investor Relations and Corporate Affairs. Please go ahead. Robert Phillips: Thank you, operator. And thank you everyone for joining Abacus Global Management, Inc.'s fourth quarter and full year 2025 earnings call. Here with me today are Jay Jackson, Chairman and Chief Executive Officer, Elena Plesco, Chief Capital Officer, and William McCauley, Chief Financial Officer. This afternoon at 4:15 p.m. Eastern Time, Abacus Global Management, Inc. released its fourth quarter and full year 2025 results. This afternoon's call will allow participants to ask questions about our results. Before we begin, Abacus Global Management, Inc. refers participants on this call to the investor webpage ir.abacusgm.com, for the press release, investor information, and filings with the SEC for a discussion of the risks that can affect the business. Abacus Global Management, Inc. specifically refers participants to the presentation furnished today on Form 8-Ks with the Securities and Exchange Commission, and to remind listeners that some of the comments today may contain forward-looking statements and as such will be subject to risks and uncertainties, which if they materialize, could materially affect results. For more information on the risks, uncertainties, and assumptions relating to forward-looking statements, please refer to Abacus Global Management, Inc.'s public filing. During the call, we will reference certain non-GAAP financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under U.S. generally accepted accounting principles or GAAP. Please see our public filings for additional information regarding our non-GAAP financial measures, including references to comparable GAAP measures. I will now turn the call over to Jay Jackson, Chief Executive Officer. Jay Jackson: Thank you, Rob, and good afternoon, everyone. Abacus Global Management, Inc. closed the year by delivering another exceptional quarter, our eleventh consecutive quarter of beating consensus. Today, I want to walk you through how we are executing against our vision and what the path forward looks like grounded, not in projections, but in what I would call our proof point: a track record of consistent, measurable outperformance. Eleven quarters ago, we made specific commitments to our shareholders about how we would scale the business. Every quarter since, we have delivered. Let me put that in concrete terms. We have exceeded guidance and beaten consensus every single quarter. Over that span, we have tripled adjusted net income and adjusted EBITDA, expanded margins from 48% to 60%, and grown our asset base more than 35-fold, from under $100 million to nearly $3.6 billion. We have executed disciplined capital allocation with ROE and ROIC consistently at 20% or higher. These are not aspirational figures, they are results, consistently delivered, independently verified, and compounding quarter after quarter. That track record is precisely why you should have confidence in what comes next. Today, we are initiating our full year 2026 outlook for adjusted net income of $96 million to $104 million. This range implies another year of exceptional double-digit growth, up to 22%, compared to full year 2025 adjusted net income of $85.7 million. This guidance is built on the same execution discipline that has defined every quarter of our public history. Before I walk through our next set of goals, I want to ground this discussion in what makes the Abacus Global Management, Inc. business model fundamentally differentiated. First, our assets are mortality-driven and completely uncorrelated to macro markets. They exhibit what we call positive theta, positive accretion over time. As the insured ages and mortality probability increases, asset value naturally appreciates. There is no interest rate sensitivity, no credit cycle dependency, and no reliance on market sentiment. Second, Abacus Global Management, Inc. is a data-driven business that is insulated from AI disruption, and in fact, positioned to benefit from it. We own proprietary mortality data that AI platforms need to source. As AI adoption accelerates, we become a more valuable data provider, not a displaced one. Third, our assets are backed by regulated A-rated insurance carriers, providing certainty of payment upon maturity. These are contractual obligations from some of the most creditworthy institutions in the financial system. Fourth, they are self-liquidating. Unlike real estate and private equity, we do not need to find a buyer or manufacture an exit. The asset matures by design. Fifth, typical unlevered, uncorrelated returns range from 8% to 12% with limited downside risk, a profile that is exceptionally rare in today's environment. This is why institutional capital continues to flow into the space. The return profile is predictable, durable, and genuinely diversifying. During periods of market uncertainty, our origination business actually accelerates because we provide liquidity to policyholders when they need it most. In 2025 alone, Abacus Global Management, Inc. paid nearly a quarter of $1 billion to policyholders. Here is the broader reality. There is approximately $5 trillion in permanent life insurance outstanding in the United States today. Roughly 75% of policies held by individuals 65 lapse without ever paying a claim. Most policyholders do not realize that life insurance is personal property with meaningful market value, often worth significantly more than surrender value. Millions of Americans unknowingly walk away from six- and seven-figure assets simply because they do not know an active secondary market exists. That is a massive, structurally underserved addressable market. And that is exactly what Abacus Global Management, Inc. was built to capture. So where are we going? Today, I am laying out the path from where we are now, a company that has tripled its revenue over the last two years, to become a mid-cap company, specifically a business operating at approximately $450 million in EBITDA with 70% recurring revenue over the next five years. For those newer to the Abacus Global Management, Inc. story, our strategy is built on four integrated verticals, each one feeding and strengthening the others, creating a flywheel where we control the entire asset value chain. Vertical one, Abacus Life Solutions, the foundation. Abacus Life Solutions is our origination engine and foundation of the entire platform. In a highly regulated industry, we have established ourselves as a clear market leader. In Q4 alone, we deployed a record $230 million of capital, bringing our full year 2025 deployment to over $580 million. Working with 78-plus institutional partners and over 30,000 financial advisers, we expect this momentum to continue accelerating in 2026. This segment delivers consistent, realized earnings while feeding the asset pipeline across all four verticals. Critically, it also generates approximately 10,000 excess leads per month, individuals seeking insurance-related advice who do not qualify for our core business but represent significant wealth management opportunities. That organic lead flow is the engine powering our private wealth vertical, without the expensive customer acquisition costs typical of the industry. Vertical two, Abacus Asset Group, the growth engine. Our asset group is the primary growth engine. We now manage over $3 billion in fee-paying AUM across our longevity funds and ETFs. In 2025, we generated nearly $34 million in management fees, and our longevity funds alone have attracted $630 million in capital inflows. Our new longevity interval fund, which we expect to launch this year, along with our asset-based finance strategy, are creating clear, executable pathways to reach $5 billion in fee-paying AUM by year-end 2026. This is not a stretch target. It is a natural extension of the institutional demand we are already seeing. Vertical three, data and technology are competitive moat. Our data and technology division, now operating as Abacus Intel, continues to grow at strong multiples, adding another durable leg to our recurring revenue strategy. Our flagship product, mVerify, has achieved 4x growth and now tracks nearly 3 million lives, an over 300% year-over-year increase, across 100-plus institutional systems, delivering 97% coverage with less than 1% error rate. To put this in perspective, government mortality systems such as Social Security can lag by up to nine months and carry lower accuracy. Our system identifies mortality events in approximately 48 hours with near complete accuracy. That data advantage is a genuine competitive moat. It enhances our underwriting, asset management, and wealth management capabilities simultaneously. Let me be clear how we leverage AI. We are not using AI to manage portfolios. We are using AI and large language models to aggregate, structure, and interpret health and medical data from policyholders and direct consumers. The result? Broader datasets delivered in usable, summary formats that accelerate underwriting, enhance fraud prevention, and optimize pension liability analysis faster than traditional methods. We are targeting over $3 million in technology revenue for 2026, with significant M&A upside as we expand into insurance, pension, and mortgage verticals. Today, we are already monetizing this data externally, packaging mortality analytics for state pension funds and generating recurring SaaS-like revenue streams. Vertical four, Abacus Wealth Advisors is our client-facing distribution channel, and we expect dramatic acceleration in 2026. Our team build-out and acquisition strategy are ahead of schedule. Over time, we expect private wealth to represent approximately 30% of our recurring revenue mix, supported by organic lead flow from our core business, not expensive external acquisition. And already putting that strategy into action. In a recent development, Abacus Global Management, Inc. has agreed to deploy approximately $50 million to acquire a minority position in Manning & Napier, a proven wealth advisory platform with over $18 billion in AUM, more than fifty years of trusted investment management, and historical EBITDA in excess of $25 million. This investment creates compelling, mutually reinforcing synergies across three dimensions: converting Abacus Global Management, Inc.'s existing policyholder relationships into managed wealth accounts in the Manning & Napier platform, sourcing new life insurance policies through Manning & Napier's adviser network, and accelerating distribution of Abacus Global Management, Inc.-related alternative investment products to Manning & Napier's client base. This investment represents a defining moment in Abacus Global Management, Inc.'s evolution from a life solutions originator to a fully integrated, longevity-focused alternative asset management platform. Combined with our proprietary LifeArc data and actuarial capabilities, the partnership completes the Abacus Global Management, Inc. flywheel, connecting our life solutions origination engine, our growing asset group, and now a dedicated wealth distribution channel. We are not simply acquiring a minority stake. We are building a longevity-focused wealth ecosystem that we believe will generate significant and durable value for our shareholders. With all four verticals now in place and executing, let me walk you through what the long-term financial picture looks like. This is illustrative, but it is grounded in the same execution discipline that has defined the past eleven quarters. Here is the pathway. Our 2028 milestones are targeting EBITDA growth to $250 million while maintaining approximately 50% margins, supported by $30 billion in total AUM. Recurring revenue divisions from 16% of revenue today to 60% of our total revenue mix. As we execute this shift, we align significantly closer to a peer set that commands materially higher valuations, and we expect that valuation gap to narrow accordingly. Our 2030 milestones: EBITDA approaches $450 million supported by $50 billion in AUM, recurring revenue divisions represent 70% of total revenue. That is an approximate 14x increase in AUM and a 3.5x increase in EBITDA from today, while maintaining approximately 50% EBITDA margins throughout. Our long-term goal is to extend this trajectory, and we are looking at approximately $2.5 billion in revenue, $1.5 billion in EBITDA, and roughly $150 billion in assets under management. These targets are not aspirational. They are backed by live pipelines, executed contracts, and the same underwriting discipline this team has demonstrated for two decades. Before I turn it over to Elena, I want to touch on capital allocation because it is central to how we create shareholder value. We deploy capital where risk-adjusted returns are highest, whether it is acquiring policies, funding asset management growth, or repurchasing shares. Following our Q3 earnings, we announced a $10 million buyback program. Most recently, we authorized an additional $20 million share repurchase program on top of that, in addition to paying a dividend derived from our recurring net income. This capital return to shareholders through both dividends and share repurchases reflects our continued confidence in the trajectory of this business. When the market presents opportunities to buy our own stock at, we believe, a significant discount to intrinsic value, we act. When policy acquisition spreads are attractive, we deploy there. It is dynamic, it is disciplined, and it is designed to maximize long-term shareholder value. I also want to address our securitization strategy because it represents an important lever for scaling capital efficiency. In October, we launched our inaugural securitization. That transaction was fundamentally about education, getting institutions, rating agencies, and market participants comfortable with the asset class and its structural characteristics. The underlying asset in our securitizations is a life insurance policy issued by an A-rated carrier that is cash reserved with a default ratio of near zero. This is a consistent, high-quality asset that institutions want to own. And critically, the yield is uncorrelated, mortality-driven, not debt-driven, like traditional private credit. That uncorrelated return profile is exactly what institutional portfolios are seeking in today's environment of elevated rates and credit uncertainty. Securitization creates additional financing and distribution channels, particularly with banks and insurance companies, while improving our capital efficiency and scalability. We expect this pattern to grow into a meaningful and recurring channel going forward. I will now turn the call over to Elena Plesco to walk through our investment performance and detailed KPIs, and then over to William McCauley for the financials. Elena Plesco: Thanks, Jay. I want to use my time today to walk through the current investment environment, how our balance sheet performed, and how we are continuing to build Abacus Global Management, Inc. as a durable, scalable investment platform with growing fee-related earnings, one where we see a clear path for recurring revenue to grow from approximately 16% of total revenue today to 70% over the next five years. We ended 2025 in an environment that reinforces the core thesis behind everything we do at Abacus Global Management, Inc. Traditional asset classes, equities and fixed income, have become increasingly correlated. As a result, institutional allocators are actively searching for return streams that behave differently. That search is structural, not cyclical. It is driven by pension funds, insurance companies, and endowments that need to meet long-duration liabilities with assets that are not tied to the same macro forces. Longevity-linked and asset-backed strategies fit squarely in that gap. Our returns are driven by actuarial outcomes and contractual cash flows, not by market sentiment or broader economic cycles. And it is why institutional demand for our strategies continues to grow. Turning to the performance of our balance sheet. For Q4, our annualized portfolio turnover was 2.6x, above our long-term target of 1.5x to 2.0x, driven by meaningful capital inflows into our longevity-based funds and execution of our first securitization. What matters most is what that number represents: a disciplined, repeatable cycle of originating at attractive cost basis, adding value through underwriting and seasoning, and monetizing at the right time. During Q4, the policies we sold were held for an average of 116 days compared to 269 days for policies still on our balance sheet. Over the last two quarters, we have acquired a larger than usual number of policies referencing an older insured population. We did not deem those assets to need incremental seasoning. Thus, a portion were also sold last quarter. The economics support that. Our average realized gain was 27% for the quarter and 32% for the full year. These margins reflect rigorous origination, accurate actuarial targets, and patience, while exceeding our target of 20%. Portfolio quality continues to be strong. Assets seasoned beyond 365 days had a weighted average life expectancy of 45 months and a weighted average insured age of 88 years, versus 49 months and 86 years for last quarter, respectively. These positions reflect conviction in our underwriting, and we expect them to generate attractive returns as they continue to season. During Q4, we deployed $230.7 million in capital off our balance sheet, bringing full year deployment to $580.8 million, up 82% year over year. Our origination platform reviewed more than 10,000 qualified policies during the year, and we remain highly selective. Our close rate of 12% vis-à-vis qualified policies reflects the selectivity we apply at the front end, which is ultimately what protects margins over time. As we enter 2026, our capital deployment pipeline is robust. Our longevity business remains the core of Abacus Global Management, Inc. At the same time, one of my priorities since joining has been to expand on that foundation in ways that are deliberate and additive. We launched our asset-based finance strategy led by Monty Cook, our head of private credit. Monty and I have partnered on strategies like this over a decade, and we designed our ABF strategy specifically to leverage what Abacus Global Management, Inc. already does well. Asset-based finance involves lending against or investing in pools of tangible and financial assets. Insurance-related structures, equipment, receivables, consumer credit, and other contractual cash flows. These investments generate current income, offer structural downside protection, and exhibit low correlation to traditional markets. What makes our positioning distinct is the intersection of three things. First, our longstanding relationships with insurance carriers and institutional investors, both clients of our longevity platform and natural allocators to asset-backed strategies. Second, over two decades of experience structuring and managing complex, data-driven asset pools where performance depends on granular analytics and disciplined risk selection. And third, our proprietary technology, including the actuarial modeling and insurance analytics infrastructure we have built through Abacus Intel, which gives us a differentiated risk assessment framework we intend to bring to ABF from day one. This is not a departure from our strategy. It is an extension of the same origination philosophy: identifying contractual, asset-based cash flows where we have a structural or informational edge, applied to a broader opportunity set. Asset-based finance is a $22 trillion market, and we believe this strategy will be a critical part of our AUM expansion story. When I step back and look at the business today, the story is straightforward. We have a core origination engine in Web Solutions that continues to perform at a high level, supported by disciplined underwriting and consistent monetization. On top of that, we are developing a scalable asset management platform designed to generate growing fee-related earnings for our longevity funds, ETFs, the ABF strategy, and continued expansion of our distribution capabilities. As of year-end, fee-paying AUM was approximately $3.3 billion and management fee revenue was $33.8 million. We are targeting more than $5 billion in fee-paying AUM by 2026, and we see a path to $50 billion by 2030. That trajectory is driven by three things: continued expansion of our existing strategies, the launch of new strategies like asset-based finance, and the strategic expansion of our wealth management and advisory capabilities. Growing fee-related earnings is a central priority, and it goes hand in hand with growing AUM. As we scale fee-paying assets across our strategies, we generate contractual, high-margin management fee income without requiring additional balance sheet capital. I mentioned at the top we see recurring revenue growing to 70% of total revenue over the next five years. That shift is intentional, and it is the single most important strategic objective for the company. It is about building a fee-related earnings base on top of a proven origination engine and positioning Abacus Global Management, Inc. to be evaluated the way other scaled alternative asset managers are evaluated. We are executing on this deliberately, step by step, with a long-term perspective, and we believe that approach will continue to create value for our shareholders. With that, I will turn it over to William McCauley. Thank you, Elena, and hello, everyone. William McCauley: As Jay mentioned, we closed out 2025 with another exceptional quarter of revenue growth and profitability. Our performance continues to be driven by the strength of our highly efficient origination while we also remain focused on expanding our verticals that we believe will contribute significant earnings growth over time. In 2025, capital deployed increased 82% to $230.7 million compared to $126.5 million in the prior year. As of 12/31/2025, supported by continued policy origination and capital deployment, Abacus Global Management, Inc. holds 804 policies with a balance sheet value of $469.8 million. Total revenue in the fourth quarter grew 116% to $71.9 million compared to $33.2 million in the prior year period. Our growth was primarily driven by strong performance in Life Solutions, higher asset management fees, and contributions from our technology services business. We continue to see substantial growth from within our asset management segment as we expand our product offerings and the demand for uncorrelated assets increases. For the full year 2025, revenue increased 110% to $235.2 million compared to $111.9 million in the prior year. Our Life Solutions segment continues to generate revenue growth at an impressive rate while we focus on diversifying our revenue mix moving forward into 2026 and beyond. Turning to expenses, total operating expenses excluding unrealized gains and losses from changes in the fair value of debt were approximately $41.1 million for 2025 compared to $45.5 million in the prior year. The year-over-year decrease was primarily driven by a drop in non-cash stock-based compensation partially offset by an increase in SG&A expenses. The increase in SG&A expenses is related to the acquisitions at 2024 and in mid-2025, along with increased marketing spend to strengthen our growth profile. On an adjusted basis, excluding non-cash stock compensation, business acquisition costs, amortization, and change in fair value of warrant liability, net income for 2025 grew 71% to $23 million compared to $13.4 million in the prior year. For the full year 2025, adjusted net income grew 84% to $85.7 million compared to $46.5 million in the prior year. Adjusted EBITDA for the quarter grew 132% to $38.6 million compared to $16.6 million in the prior year. Adjusted EBITDA margin was 54% for the quarter compared to 50% in the prior year. And for the full year 2025, adjusted EBITDA increased 115% to $132.6 million compared to $61.6 million for the prior year. Adjusted EBITDA margin for 2025 was 56% compared to 55% for the prior year. We are committed to growing the business responsibly, which is demonstrated in our ability to grow both revenue and EBITDA by over 100% while maintaining our EBITDA margins. GAAP net income attributable to stockholders for the quarter was $7.2 million compared to a net loss of $18.3 million in the prior year, primarily driven by the increase in revenue from our Life Solutions and asset management segments along with a decrease in SG&A expenses. Turning to our balance sheet metrics. For the full year 2025, adjusted return on equity and adjusted return on invested capital were both at 20%, underscoring our highly profitable business model. As of 12/31/2025, the company had cash and cash equivalents of $38.1 million, balance sheet policy assets of $469.8 million, and outstanding long-term debt of $405.8 million. As Jay mentioned in his remarks, in an effort to provide more insight into our business, we are initiating our full year 2026 outlook for adjusted net income to be between $96 million and $104 million. This range implies growth of up to 22% compared to full year 2025 adjusted net income of $85.7 million. In summary, we are very pleased with our strong performance in 2025 as we delivered exceptional top-line growth and significantly expanded profitability on an adjusted basis and maintained our EBITDA margin. We remain highly enthusiastic about the growth opportunities ahead and are well positioned to execute on our long-term plans. I will now turn it back to our CEO, Jay Jackson, for closing comments. Jay Jackson: Thanks, Bill. Let me close with this. We have conviction in our business model, we have confidence in our execution, and we have clarity on the path forward. The current market environment is playing directly to our strengths, and eleven consecutive quarters of outperformance are the proof. We recognize the disconnect between our fundamentals and our current valuation, but also view it as one of the most compelling opportunities in front of us. As we have discussed with our investors over the past several months, the challenge is not performance, it is perception. The real opportunity lies in helping the investment community fully understand what Abacus Global Management, Inc. is today, a data-driven platform operating across life insurance, asset management, technology, and wealth management, with a recurring revenue model, institutional-grade assets, and a track record that stands on its own. We are addressing that gap as it continues to close through transparent communication, proactive investor engagement, and relentless execution across every vertical of our business. That is our mandate for the next two to three years: continue delivering results while closing the education gap in the broader investment community. We are confident that as understanding deepens, the valuation will follow. Our dividend and expanded share repurchase programs send an unambiguous message. We have the financial strength, the cash flow generation, and the conviction to invest aggressively in growth while simultaneously returning meaningful capital to our shareholders. We do not ask investors to choose between growth and returns. We are delivering both. As we look ahead, our priorities remain clear and unchanged: deliver strong, consistent financial performance, deepen institutional adoption of longevity-based assets, educate the market on the massive, structurally underserved opportunity in front of us, and create enduring, compounding value for every shareholder. I am proud of what this team has built. The results speak for themselves. Our job now is to keep delivering. We will now open for questions. Operator: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. First question comes from Patrick Davitt with Autonomous Research. Please go ahead. Patrick Davitt: Hi. Good afternoon, everyone. You mentioned in the deck that you expect to do another securitization in the first half, and I think you said last quarter you could have done a bigger one. So could you expand on how the investor demand side of the equation has evolved since then? And what that could mean for the size and frequency of these going forward. Thank you. Jay Jackson: Sure. Thank you, Patrick. The demand has continued to be there and, in fact, increase, and we are in, you know, process in Q1 of measuring that demand against building another product to put out via a securitization. And, you know, within that process, I think the demand has met or exceeded our expectations. And particularly in this market, right, one of the things we found really interesting is that with some of the recent volatility in the markets, the underlying asset that we have has actually increased in demand. But to couple that, or to go with that, it is interesting too. You know, we have seen uptick in origination as well. So as individuals may seek capital from their life insurance policies, you know, we are kind of seeing a positive response. So I think with the markets as they are today, you know, relatively around some uncertainty and some volatility, that has presented, I think, more opportunity for us to potentially do something even more sizable. We are still targeting first half versus Q1, but, you know, we feel pretty good about the outcome there. Patrick Davitt: Is it fair to assume it could be bigger than the first one just based on what you said last quarter or too early to say? Jay Jackson: That is yes. I think that is certainly the goal, and the target would be bigger. The first one was $50 million, and,you know, as we look forward, whether that is $100 million or larger, you know, those are some of the areas that we are targeting. And, you know, the demand is certainly there. I would add one thing as well. Whether it is in the securitization, which is great, you know, overall, I, you know, I like to point you to the fund flow. You know, if we look at, you know, the new inflows for, you know, Q4 that we reported, I mean, north of over $400 million should also give you a pretty good indication of the demand that we are seeing for the underlying asset. Patrick Davitt: Yep. And as a follow-up, I have a question on capital. I think you might have answered this in point two on Slide seven, but wanted to hear it from you. Before the stock sell-off last year, you know, episodic equity raises were a more consistent part of the growth algorithm. So now that your stock price has recovered, is that something we should keep in mind? Or do you think that the organic capital generation has kind of reached an escape velocity in terms of being able to address Life Solutions growth without equity raises. Jay Jackson: Yeah. We do not have any intent to put out more equity to fund balance sheet purchases related to policy purchases. You know, for us, you know, we are beating that velocity, and, again, driven by the demand for the asset from our own funds as well. So, you know, we are in a really good spot here and, you know, expect that to continue. And that is why when we put out our guidance for 2026, we are what we believe to be very optimistic. And so we expect that to continue. And from a fund flow perspective and what drives those capital needs, we are in a great spot here, and there is not any need to go to equity markets. Operator: The next question comes from Crispin Love with Piper Sandler. Please go ahead. Crispin Love: Thank you. Good afternoon, everyone. Appreciate taking my question. So on capital deployed, definitely a big quarter there, $230 million. I think that is 125%-plus growth versus just last quarter. And while Life Solutions revenue was strong, and, of course, it matched that growth too, can you walk through that a little bit? Did it come at a lower margin and how was that capital deployed different than past quarters? Just curious if there is any major differences. Jay Jackson: Right. No. There was not anything different. Now there was some, when we look at that gross capital number, you know, there was I think it was $408 million total of gross inflows. One thing that, yeah, you are right to pick up on at least from, you know, how we break that down, there was a little over $100 million that just on the ETF side. So, you know, that would contribute to typically those ETFs have a lower management fee as well as additional recurring revenue fees just in general. And so then when we then look at just the longevity market asset, or just in general inflows, you know, those were higher than Q3. You know, I think what we saw there was that it is some of it is just allocating that capital during the quarter. Right? And so you did see that we also had some excess cash there as we were, you know, finishing out the quarter. And so I think that, you know, those will kind of couple themselves together again a little more closely as we get into, you know, Q1, Q2. But, otherwise, you know, it was really successful. We were able to put a large piece of that capital to work, effectively right away. We are meeting certainly the demand that we have with our origination, and you saw a pretty significant uptick in capital deployed as well, which we were, you know, I think one of the highlights of the quarter is when you look at the capital deployed number of over $230 million. Crispin Love: Great. Thank you, Jay. No. That makes a lot of sense on the ETF side. And then you have talked about five-year path to $450 million adjusted EBITDA. I think you had a little over $130 million in 2025. So if I am doing the math right, I think that is compounding adjusted EBITDA about 28% per year. Can you just discuss how you expect to get there? Is that all organic? Are there acquisitions involved? And then is asset management the overwhelming driver of that growth? Jay Jackson: For sure. And I am glad you asked that because, you know, one of the things we highlighted in the call here was that if you look back over the last three years and I sat back with most of our shareholders and said we expect a 3x growth top and bottom line, you probably would not have taken us very seriously. And yet here we are again looking forward three and five years out with similar aspirations. And that is why we put that illustrative target out there, and partly driven by a couple of things. One, let us not forget we do have a massive addressable market with the underlying Life Solutions business. But even beyond that, when you look at some of the key drivers there, absolutely, it is driven by asset management. It is driven by wealth management. And, you know, there is a blend of organic as well as acquisition. And when I think about the acquisition piece, you know, we highlighted a minority investment in just a terrific firm, a fifty-year firm, in Manning & Napier, where, you know, culturally, you know, we see things a lot of the same way. And that is a first entry point for us. And I think when you start to look at the synergies that we are going to, that we have with that firm already and some of the things I believe we are going to be able to do to jointly grow together, things like, you know, increasing assets under management for both parties by having both a distribution agreement and, you know, being able to monetize the lead generation that we are able to generate from our platform through Manning is incredibly exciting. And I think when you look then at the growth of our business and how we are able to achieve these growth numbers, it is what we are doing really well going forward is capitalizing on the life cycle of our clients. And we are generating significant value for them in both policy purchases and policy payouts. And now we are going to monetize that over time. And so, you know, the growth of this asset driven by our data, specifically longevity and lifespan data and how that applies to financial planning, yes, we are very excited about how that growth is going to continue. And now looking forward, I also think that, you know, it is, as I said in prior calls, we saw both ways from a build-it and buy-it. So I think we will see some of that happen internally. And then, in addition to that, you know, finding phenomenal companies that we can invest in such as Manning & Napier and continue that growth. Crispin Love: Great. Thank you, Jay. Appreciate taking my questions. Operator: The next question comes from Andrew Scott Kligerman with TD Cowen. Please go ahead. Andrew Scott Kligerman: So maybe kind of further to the earlier capital question. In terms of equity issuance, would the founding holders have any appetite to do it this year, or do they have more of a sense that they want to wait and see if the price stabilizes? What is the thinking there? And just further elaborating on that question as well. In terms of capital demands, it sounds like you did a really interesting acquisition with Manning. What is the pipeline like there? Is there, you know, any way, Jay, that you could kind of size it to get a sense that, you know, maybe you might need to issue equity to do some of the deals. It sounds like they have all been very impactful. Jay Jackson: Sure. Thank you for that. Good questions. We will start with the initial question related to, you know, we are predominantly insider-owned. So we remain that way. Myself and three other partners and as well as a large shareholder, the five of us own about 58%, almost 60%, of the outstanding shares. I think it is a fair question. You know, just because we have seen a recent performance in the stock price, I would just like to highlight that when you look at the valuation of our business, it is why we are buying back our stock because we still feel it is dramatically undervalued on a comparative basis. I mean, when you look at businesses on an equivalent basis that have put up these types of numbers in 2025, they do not trade at single-digit multiples. Yet here we are. And I think that when you look at this from a perspective of how we feel about the stock, just look at the numbers we put out, some of these targets for 2028. Again, they are illustrative, but, you know, we are talking about effectively 2x over the next three years just in EBITDA while maintaining similar margins. So I think, you know, over time, you know, we have got a business here where some of the founding members have held their shares for 22 years. And I think that as you, you know, at a thoughtful basis, if we were to ever do anything, it would be something that would be to meet excess demand for the stock. And if that were to happen, you know, we would certainly consider that as those folks are thinking about things like retirement and other things. And this happens in all companies. Right? Like, you know, as people kind of age up, you want to be able to do this in an organized way. What I can assure you is that if there were to be a consideration related to some equity being sold by insiders, it would be in a controlled fashion. It would be in an organized fashion. And but to highlight even more so, let us look at the numbers where we are today. There is not a huge incentive for us to do that. Right? Like, you know, we see a lot of runway left here, and we think that we should be taking advantage of that. The second part of your question was what our pipeline looked like. And yeah. You know, you bring up an interesting point as we evaluate, and we have spoken about this for a year, about opportunities that we think would be really good fits both culturally and financially for Abacus Global Management, Inc. where you can find true synergies. Right? Like, let us take a quick look at the Manning & Napier opportunity. This is a strategic alliance where we are going to help generate new private wealth clients through our own client base. Secondly, we are going to source new policies from their current client base. So that feeds the origination machine. Right? And then we are looking at our own asset management portfolios. These are terrific alternative asset management funds that are now going to be available to Manning & Napier clients. Those are the types of successes that we want to point to and why these synergies we think would be very appealing. In addition to that, are there other firms that might meet that type of description? Of course, there are. And,you know, we are engaged in those kinds of conversations, but it has got to be accretive to shareholders. Right? Both financially as well as synergies. And, you know, there are firms out there. We are just very, very patient, very diligent. But I can tell you that there is a pipeline, and we are excited about it. How would we use capital to best fill that pipeline or to work through that pipeline? I think that, you know, we would use the best resources possible to us. If it were equity, I think it would be a blend of equity and really smart debt structuring. But there are a lot of options open to us. Let us keep in mind, we have a very profitable balance sheet. And we can utilize that capital in the most strategic way that we think will drive long-term returns. And that is what we were saying earlier. Right? Like, we want to use the capital in the best way possible, whether that is buybacks, whether that is buying policies, or whether that is acquisitions or investments. And I think that, you know, Q4 and 2025 and what we are putting out for 2026 demonstrates that. Andrew Scott Kligerman: That was helpful, Jay. And then on the KPIs, I mean, the turnover ratio at 2.6, terrific. Number of days the policy held 116, terrific again. I mean, really good changes there. Kind of curious on the days held 269, which upticked a little bit. What is kind of the backdrop to that? Why holding those policies a little bit longer? Jay Jackson: Yeah. And if you compare it to the prior quarter, we had held some policies a little bit longer to maximize revenue. And for us, it is simply about managing the best opportunistic return that we can. And so many times when you see that movement a little bit, whether held slightly longer or not, it is a smaller percentage of the book, but that is an aging part of the book, and you want to maximize returns. I think that you can look in the Q this quarter and even the K, and you will see things like maturations. These are matured contracts where we were able to effectively collect on the entire claim. And in those circumstances, those returns are substantially higher. So, you know, some of those contracts are best seasoning whether that is an additional quarter or not, and some are best to be optimized within that quarter. So, you know, it is a very thoughtful strategy of looking at it going, do I pick up an ROE of, let us say, 20 or do I hold this for maybe something larger another quarter? And in Q3, what you saw was those trade spreads went up pretty high. That was one of the KPIs that you had not mentioned yet, but the KPI was 37% in Q3 and then, you know, 26% in Q4. And I think that, you know, you are going to see some of that, and that is part of just being really good stewards of capital and maximizing returns. Operator: The next question comes from Timothy D'Agostino with B. Riley Securities. Please go ahead. Timothy D'Agostino: Congrats on the year. I guess focusing on Abacus Intel quickly. You had mentioned in your prepared remarks about how governments are using the data. And on Slide 19, you kind of lay out 100-plus governments and union systems. But you also talked about, and I can see in the slide, the market opportunities, whether that be TPA, pension funds, insurance, mortgage lenders. I guess what I am trying to understand is, with this data and advocacy, how do you provide value to those different opportunities and why they would want to partner with you. I guess trying to get an overall kind of high-level understanding of why Abacus Intel can provide value to these opportunities. Jay Jackson: Sure. I mean, at a high level, when you look at pension funds, for example, one of the resources that Abacus Global Management, Inc. provides is called mVerify, or mortality verification. We are able to verify when a mortality occurs in the United States within 48 hours with nearly 100% accuracy, around 97%. And that is incredibly valuable data for a pension fund, so they no longer continue to make those pension fund payments. Therefore, you know, what that really helps is them manage their own balance sheet much stronger because they do not have money going out that is really hard to reclaim. And then you can apply that against different types of agencies, right, to have a better understanding from an insurance company point of view, you know, how their mortality curves might adjust based on real-time mortality information. The reason why that is so valuable is that it is really hard to get that information from other sources. Even the Social Security Administration, you know, that can take months, if not years, to get that data. And most of the time, it is not very accurate. It is, you know, half as accurate. So, you know, that is where those sources of demand are. You know, we have been speaking to even larger institutions, and as we look into 2026, we expect the Abacus Intel business to continue to grow. I would add one piece that is really valuable. We use that data. Right? It helps us build better prediction models around our own investments. So, you know, being able to capitalize and understand how longevity and how that life arc of an individual is managed. Right? One of the things we started saying is that lifespan is not a straight line, it is an arc of possibilities. We have a program coming out called LifeArc, which that LifeArc program helps us better understand what someone’s mortality distribution curve looks like. And we are going to apply that LifeArc to financial services. Right? If the number one fear is running out of money in retirement, should not people have a better understanding of how long they are going to be in retirement, and capitalizing on that longevity and health data? And that is the type of data that I think, in a much larger scale, that Abacus Intel is going to play a major part in. Timothy D'Agostino: Okay. Great. Thank you so much for the color. It is super helpful. Then I guess, a quick second question for me. In the third quarter earnings presentation for the Abacus Asset Group, you have laid out $4 billion-plus in fee-paying AUM by year-end 2026. That number is obviously, or your guide has increased to $5 billion for year-end 2026. Is that primarily due to the capital inflows you saw in Q4 2025, that $275 million, or was there something else? Just trying to understand what gives you confidence in increasing that number between the earnings calls. Thank you. Jay Jackson: Sure. Yeah. Thank you for asking. And yes, it is driven by what we deem to be visible demand. And so when we see the type of demand that we saw in Q4, then we are looking at the demand in 2026 and match that with, you know, a keen understanding that when you have volatile markets, demand increases for this kind of asset, gave us a lot of comfort around increasing that number. And then you tie into not just new funds, products, and the rollout of additional potential securitizations. We feel comfortable around that number. Timothy D'Agostino: Okay. Great. Thank you so much, and congrats on the year again. Jay Jackson: Thank you. Operator: The next question comes from Michael John Grondahl with Northland Securities. Please go ahead. Michael John Grondahl: Hey, guys. Congratulations. And just wanted to circle back to the capital deployed, $230 million. I think you did that securitization late October. Was any of the $230 million for the securitization you have already done, and is any of that can be broken out for a future securitization? Any way to think about that? Jay Jackson: The second part of that question—sorry, Mike. You cut out a little bit on my line. Michael John Grondahl: Any of the $230 million that can be used in a future securitization. Are you able to bifurcate it in that way? Jay Jackson: Yeah. No. The way to look at it is that, yes, in Q4, when we are looking at total capital deployed, that would include the $50 million that we had in the securitization. But in addition to that, it was still a record quarter for us. Yeah. Right? And I think that is part of the power of the securitization. Right? Like, you know, you just kind of have this really consistent model that you can deploy capital with at a very effective and cost-effective structure. As far as bifurcating that capital deployed into additional securitizations, I would just kind of point to our balance sheet at this point, which is, you know, north of $450 million of policies on the balance sheet. And we have excess capacity to do additional securitization. So I think that we are really well positioned as we look forward to additional securitizations. We already have the inventory built up on our balance sheet for that. Michael John Grondahl: Got it. Great. And then just one more. With Manning & Napier, does that sort of replace your ABX Wealth Adviser strategy? There was some thought that you would be hiring some of your own advisers and grow it out that way. How do we think about it now? Jay Jackson: Yeah. I think it certainly complements everything that we thought we were going to do. And I think just one big takeaway here is, you know, we definitely walked before we ran here. Right? You know, we made, I feel like, a very thoughtful, intelligent, conservative investment into a well-established firm to really take a moment and show that, and demonstrate that, the model that we are putting together for our wealth management division is executable. And I think that is just so valuable in the way that we structured this initially. So, you know, this investment makes a ton of sense for us. How we might move forward with our own advisers within that platform, I think it makes sense for us at this point to focus on the investment that we made and prove that that is successful and show some wins and successes, and then we will continue to build the platform from there. But, you know, make no mistake. This is going to be an important platform for us on a go-forward basis because if you think about it, it feeds so many other things. Right? It feeds origination. It feeds asset management. It feeds the Abacus Intel from the longevity data. So, you know, I think it is a really important stage for our growth, and this is just the first step. Michael John Grondahl: Thanks a lot, guys. Good luck in 2026. Operator: This concludes the question and answer session. I would like to turn the conference back over to Jay for any closing remarks. Please go ahead. Jay Jackson: Well, thank you to all of our shareholders. 2025 was a year in which I believe that we solidified our shareholder base, solidified our story and our communication, and solidified our growth. And we are in a position where, looking forward, as great as the last two and three years have been, we are excited about the next three years. And we hope that when you start to see these numbers and see the direction of where this company is headed, and where we can achieve with the foundation of our business, we are excited about what the next three years can bring to us and our shareholders as well. So thank you all. We look forward to answering any additional questions. Please feel free to reach out to our IR department if you have any additional questions. And we look forward to another great quarter. The conference has now concluded. Operator: Thank you for attending today's presentation. You may now disconnect.

28天前Insight Analytics约5分钟阅读

MLYS 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the Mineralys Therapeutics, Inc. Fourth Quarter and Full Year 2025 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Dan Ferry of LifeSci Advisors. Please go ahead. Dan Ferry: Thank you, operator. I would like to welcome everyone joining us today for our fourth quarter and full year 2025 conference call. This afternoon, after the close of market trading, we issued a press release providing our fourth quarter and full year 2025 financial results and business updates. A replay of today's call will be available on the Investors section of our website approximately one hour after its completion. After our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings, including our Annual Report on Form 10-Ks and subsequent filings. Please note that these forward-looking statements reflect our opinions only as of today, March 12, 2026. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. I will now turn the call over to Jon Congleton, Chief Executive Officer of Mineralys Therapeutics, Inc. Jon Congleton: Thank you, Dan. Afternoon, everyone, and welcome to our fourth quarter and full year 2025 financial results and corporate update conference call. I am joined today by Adam Levy, our Chief Financial Officer, Doctor David Rodman, Chief Medical Officer, and Eric Warren, our Chief Commercial Officer. I will begin an overview of the business, our clinical programs, and recent milestones, followed by Adam, to review our fourth quarter financial results before we open up the call for your questions. We are pleased to have this opportunity to provide a corporate update. As this call comes on the heels of our announcing the FDA's acceptance of the NDA for lorundestat, the treatment of adult patients with hypertension in combination with other antihypertensive drugs. In connection with the acceptance, the FDA assigned a PDUFA target action date of December 22, 2026. This NDA submission followed a successful clinical program which culminated in the completion of five positive clinical trials that consistently demonstrated clinically meaningful blood pressure reduction, 24-hour control, and a favorable safety profile. This comprehensive data set has generated broad interest across the medical community, underscoring the significant clinical need in uncontrolled and resistant hypertension and the desire for innovative solutions that help patients meet their blood pressure goals. The NDA includes the positive data from the LAUNCH-HTN and ADVANCE-HTN pivotal trials, as well as the proof-of-concept trial EXPLORER-CKD and our open-label extension trial TRANSFORM-HTN. Each of these trials demonstrate that lorundestat maintains a durable and clinically meaningful response across diverse patient populations, a key consideration for its potential as a new treatment for patients with hypertension. Uncontrolled and resistant hypertension remain unmet needs affecting over 20 million people in the United States and attributed to nearly 700,000 deaths per year. As we have noted previously, roughly 30% of all hypertension patients have dysregulated aldosterone. We are progressively seeing research and updated guidelines that highlight the need to identify and address aldosterone dysregulation in these patients. Our clinical data highlight the differentiated value of targeting aldosterone with an aldosterone synthase inhibitor like lorundrostat, especially when compared to current third- and fourth-line treatment options. To catalyze the successful launch of lorundestat, we have begun market access planning and payer engagement to ensure the value proposition of lorundestat is understood and appreciated. We have also expanded our medical communications efforts, which will include increased peer-reviewed publications, a larger presence at scientific meetings, and an expanded team of field-based medical science liaisons which will support broader data dissemination for this potentially transformative therapy. These activities are intended to drive a rapid uptake of lorundrostat and feed into potential partnering opportunities. I would now like to briefly touch on the other development activities we are pursuing to enhance and extend the lorundrostat profile into hypertension with comorbid conditions, which are largely driven by inadequately controlled blood pressure and dysregulated aldosterone. Earlier this week, we issued a press release announcing the top-line results of our exploratory trial EXPLORER-OSA. This four-week trial, which enrolled 48 participants, evaluated the safety and efficacy of lorundestat in participants with moderate to severe obstructive sleep apnea and hypertension. This trial enrolled a high-risk population with an average body mass index of 38, an average apnea-hypopnea index, or AHI, of 48, and baseline systolic blood pressure of 142 millimeters of mercury. While lorundestat did not demonstrate clinically meaningful difference relative to placebo on the primary endpoint, AHI, the trial did show clinically meaningful reductions in blood pressure and a favorable safety profile in this population with difficult-to-control hypertension. In the pre-planned parallel-arm analysis of the first period, the trial demonstrated an 11.1 mmHg blood pressure reduction with lorundrostat and a 1.0 mmHg reduction with placebo at four weeks. There was a 6.2 mmHg placebo-adjusted reduction in blood pressure in the crossover analysis. Lorundrostat demonstrated a favorable safety profile and was well tolerated, with no serum potassium excursions above 5.5 millimoles per liter. Our analysis is ongoing for other endpoints in the trial, and will be reported in future publications or medical meetings. Our clinical development strategy has been and will continue to be focused on generating a comprehensive dataset that reflects the complexities that physicians face when treating their hypertension patients. We remain focused on fulfilling our mission to develop lorundrostat, a potential best-in-class therapy for patients with uncontrolled or resistant hypertension. We believe the strength of the lorundrostat data generated to date and the significant clinical needs for uncontrolled and resistant hypertension offer substantial opportunity as we prepare for the upcoming milestones. We are continuing to evaluate further clinical development for lorundrostat in comorbidities and other potential indications. We will keep you informed on our progress as appropriate. I will now turn the call over to Adam to review our financial results for the fourth quarter and full year 2025. Adam Levy: Thank you, John. Good afternoon, everyone. Today, I will discuss select portions of our fourth quarter and full year 2025 financial results. Additional details can be found in our Form 10, which will be filed with the SEC today, March 12. We ended the year with cash, cash equivalents, and investments of $656,600,000 as of 12/31/2025, compared to $198,200,000 as of 12/31/2024. We believe that our cash, cash equivalents, and investments will be sufficient to fund our planned clinical trials and regulatory activities as well as support corporate operations into 2028. R&D expenses for the year ended 12/31/2025 were $132,000,000, compared to $168,600,000 for the year ended 12/31/2024. R&D expenses for the quarter ended 12/31/2025 were $24,400,000, compared to $44,600,000 for the quarter ended 12/31/2024. The annual decrease in R&D expenses was primarily driven by a $49,300,000 reduction in preclinical and clinical costs largely attributable to the conclusion of lorundrostat’s pivotal program in 2025. The annual decrease was partially offset by increases of $9,900,000 in compensation expenses resulting from headcount growth, higher salaries and accrued bonuses, and increased stock-based compensation, as well as $3,000,000 in clinical supply and manufacturing and regulatory costs. G&A expenses were $38,600,000 for the year ended 12/31/2025, compared to $23,800,000 for the year ended 12/31/2024. G&A expenses were $13,900,000 for the quarter ended 12/31/2025, compared to $7,200,000 for the quarter ended 12/31/2024. The annual increase in G&A expenses was primarily attributable to $8,900,000 in higher compensation expense driven by headcount growth, higher salaries and accrued bonuses, and increased stock-based compensation. The annual increase was further attributable to $5,300,000 in higher professional fees and $600,000 in other general and administrative expenses. Total other income, net, was $16,000,000 for the year ended 12/31/2025, compared to $14,600,000 for the year ended 12/31/2024. Total other income, net, was $6,000,000 for the quarter ended 12/31/2025, compared to $2,800,000 for the quarter ended 12/31/2024. The annual increase was primarily attributable to higher interest earned on investments in money market funds and U.S. Treasuries, resulting from higher average cash balances invested during the year ended 12/31/2025. Net loss was $154,700,000 for the year ended 12/31/2025, compared to $177,800,000 for the year ended 12/31/2024. Net loss was $32,200,000 for the quarter ended 12/31/2025, compared to $48,900,000 for the quarter ended 12/31/2024. The annual decrease was primarily attributable to factors impacting our expenses described earlier. With that, I will ask the operator to 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 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. Our first question will come from Michael DiFiore with Evercore ISI. Michael DiFiore: Congrats on all the continued progress. Two commercial questions for me. Now that the potential launch of lorundrostat is roughly six months behind your direct competitor, what are you hoping to learn from this competitive launch that would optimize the success of lorundrostat’s launch? And second, can you offer any additional color on the prelaunch payer interactions you have been having? Have there been any unexpected changes in anticipated coverage, etc.? Thank you. Jon Congleton: Yeah, Mike. Thanks for the questions. We are obviously excited about the timeline we are on now. The Day 74 letter giving us the PDUFA date; we clearly see a significant market opportunity here with, as we stated before, about 20 million patients in the United States alone dealing with uncontrolled and resistant hypertension. We are obviously aware that AstraZeneca potentially is going to be launching in the second quarter. I think there will be some interesting things to identify as far as how they think about pricing and their footprint in the space. But fundamentally, we think this is a large market opportunity. There is certainly room for two novel therapeutics in what I think may be a transformative class overall. We clearly are very bullish on the profile that we have seen with lorundrostat with its best-in-class profile. As it relates to some of the dialogues that we have had with payers, we continue to feel bullish as it relates to access, particularly where we have targeted lorundrostat use. That is that third line or later. We think resistant is the natural opening space, and with experience, both from a physician standpoint and demand growing into the third-line usage. I think it is also important to point out, and I talked about it in my opening remarks, the comprehensive nature of the data set that we have built. When we think about resistant hypertension patients, it is rare that they are isolated to only be dealing with elevated blood pressure. There are so many comorbidities these patients are dealing with. Certainly, that is why we did the EXPLORER-CKD study. That is why we did the EXPLORER-OSA study. Even though we did not achieve a benefit on AHI, we know there is significant overlap, about 50% overlap, with resistant hypertension and OSA. Being able to show the kind of robust, safe benefit we have on blood pressure in this population, we think will have a significant translation into reduced cardiovascular risk for these patients. Michael DiFiore: Thanks so much. Thanks, Mike. Operator: And our next question comes from Richard Law with Goldman Sachs. Richard Law: Congrats on the PDUFA date and getting the NDA accepted. A couple of questions from me. So when you look at the results from the Phase II OSA study, do you think the design limited lorundrostat’s potential to show benefit in the AHI primary endpoint? I mean, the study was much shorter than the historical MRA studies with only four weeks, and you allowed CPAP and PAP use. And then the study population was also different from MRA trials. So it is not clear to me the study duration and design tested lorundrostat’s effects one way or the other. How confident are you on the finding, and where do you go from here with regards to OSA? And then I have a follow-up. Jon Congleton: Yeah, Rich. Let me give you some opening thoughts, and I will turn it to Dave. As I noted, the reason we did this study was because we think it is important for the prescribers who are going to be utilizing lorundrostat to have a clear sense of both efficacy and safety within these complex patients. Being able to show a really robust reduction in BP and doing so safely in these patients that clearly are high risk, particularly the ones we studied in EXPLORER-OSA with the BMI over 38, with AHI over 48, when severe OSA is ticked off above 30. These are patients that have a pretty high cardiovascular risk when you compound that with elevated blood pressure. For us, it was an important study to complete. Again, we believe that we are going to be able to operate with our existing label within this population, just given the fact that they have uncontrolled hypertension and elevated cardiovascular risk. I will have Dave talk about some of the design features and his thoughts. David Rodman: Thanks for the question, Rich. Good thoughts. I have a couple of things I want to say. First of all, was it long enough? It is unclear. It could have taken longer than the four weeks, but I think there is probably a major interaction between that and the actual study population demographics. In other words, we saw these people were extremely obese. They had extremely high AHIs, close to 50, and their BMIs were 38 on average. Their AHI was 48. BMI of 38. So we think the mechanism here is you are fluid overloaded; when you lay down, the fluid goes up into the veins of the neck, and that further obstructs the airway. In this population, there is so much extra adipose tissue that it may be that that compartment is already obstructing the airway enough just from that structural piece that you would not see any more with decreasing volume. So I think the thing to look at going forward, should we want to answer the question, is take a more representative population similar to the ones that were used in studies like eplerenone and spironolactone and test it again. But I want to make a different point, if you could just give me a minute, which is this: we did this because we wanted to know about AHI mainly because that is the easier way to register a drug if you want to claim treatment of OSA, but that is not necessarily our objective. Our objective is to know whether we are going to have a benefit on long-term outcomes in patients with OSA. And the interesting point is if you make AHI less than five with CPAP, it does not reduce your blood pressure and there is no compelling evidence that it makes your long-term cardiovascular outcomes any better. So it is really simply a way to look at the regulatory effect. On the other hand, the reduction in blood pressure we saw is comparable to, or predicts rather, and the agency gives you sort of the claim for improved outcomes. And at the 10 mmHg that we saw in the point estimate analysis, that has been shown to have about a 17% incidence of reduced coronary heart disease, 27% of stroke, and 28% of heart failure. So what we learned here was that we have the potential to be disease-modifying in sleep apnea. And as John mentioned, we can get to that point with the label we have or we are going to have already for treatment of uncontrolled or resistant hypertension; it has been reported that 80% of these patients have uncontrolled or resistant hypertension. So that is the long and the short of it. We do not need to prove it works in AHI because our objective is not to make a therapy for upper airway obstruction. It is to make a therapy that makes these people live longer, better lives. Richard Law: Okay. Got it. And then just for my second question, I know you guys are still exploring the partnership with the PDUFA date now set in December, which is about nine months from now. Can you discuss what kind of commercial capability you have been building, and how large is the commercial team now, and what commercial hires are you still holding back while you are continuing to explore the partnership? And then is there any urgency to build a full commercial capability now in case a partnership may not occur until after the PDUFA date? Thank you. Jon Congleton: Yeah. Thanks, Rich. I will take you back five years ago. We have always made discrete investment choices that support this molecule and put it in its best position to deliver value for the most appropriate patients possible. And so early days, it was CMC. That was ClinPharm. Where we are at now is we are making those right investment choices, and we began this late last year, as you are aware. We are continuing that now to ensure that we are preparing the market, and so that is why Eric and his team are beginning to have dialogues with payers. It is why we are expanding our medical affairs capabilities for continued data dissemination. We have just a wealth of clinical data that we accumulated last year and even as recently as the EXPLORER-OSA that we are going to continue to put in the public forum via medical meetings and publications. We are expanding our MSL team. I do not want to give numbers, Rich, other than to say we are continuing to do everything we can to ensure a rapid uptake on the potential approval of lorundestat for uncontrolled and resistant hypertension. And I think fundamentally, that is the right thing for us to do because it also becomes very informative and potentially catalyzes those partnering dialogues. And we have heard that from potential partners, that we need to make sure we are continuing to invest in this asset so upon approval it does have a rapid uptake and a rapid launch. Richard Law: Got it. Thank you. Thanks, Rich. Operator: We will go next to Seamus Fernandez with Guggenheim Partners. Seamus Fernandez: Thanks. So just to follow up on the commercial side of things, can you help us understand what you believe the number of reps would be to launch lorundrostat effectively versus AstraZeneca? And do you envision having a differentiated approach to market that Astra—if there is a differentiated approach, what would that be? Jon Congleton: Yeah. I am not going to give you a specific number, Seamus, and we are continuing to evaluate that. As you have heard us say before, when we look at where we have developed this molecule, third line or later, and in the United States who prescribes there, it is about 60,000 physicians that are responsible for half of the scripts third line or later. So that is kind of a broad way to look at the market. I do not want to give too much on our intended commercial strategy, but I will say that if you look at the comprehensive dataset that we have—ADVANCE-HTN confirmed hypertension (that was the study we did with the Cleveland Clinic), EXPLORER-CKD that looks at hypertension and comorbid chronic kidney disease, then if you look at the OSA population, the data that just came out of the EXPLORER-OSA—that is going to begin to inform how we think about subsegments of physicians that are treating specific types of hypertension with related comorbidities. And so we will begin to look at the broad IMS data, but then also in the context of these subsegments we think can give us rapid uptake within the resistant hypertension population, and then with experience, move rapidly into third line as well. Seamus Fernandez: Great. And then maybe just as a follow-up. Is there kind of a timing-related dynamic? How much of a derisking event, not just for Mineralys Therapeutics, Inc., but perhaps for strategics, would you say the availability of the assignment of a PDUFA date actually is, broadly speaking? Jon Congleton: Yeah. I think each step along this journey offers a level of derisking and a level of increasing value. That began last year with the readout of ADVANCE and LAUNCH. It continued with the submission of the NDA last year. I think the Day 74 both acceptance of and PDUFA date for lorundrostat further derisks the molecule and brings value nearer term. Maybe related to that, when is an ideal time to identify a partnership? I think that these partnerships have a life of their own, a timeline of their own. Our goal is to really identify a means to generate the greatest value with lorundrostat, which means getting the molecule in front of the most appropriate patients in the United States and, in due course, outside of the United States. So those are all of the things that go into the calculus as we think about maximizing the value of lorundrostat through partnering. Great. Thanks so much. Thanks, Seamus. Operator: Moving next to Jason Gerberry with Bank of America. Jason Gerberry: Just wanted to quickly follow up on the payer access discussions. I think the comment was maybe favorable access with a certain segment of payers. So I was wondering if you can expand upon that a little bit, just to get a sense of your confidence in breadth of quality coverage, 3L+ as I guess you have articulated in the past. And then one CFO question here. Just from an R&D perspective, thinking about 2026 R&D relative to 2025, should we be thinking about, I do not know, cash burn mitigation effort? Or is 2025 a good run rate for the company? And then last one for me is just on the OUS regulatory submissions—apologies if I missed this in past commentary from you guys—but is that in any way gated at all by the partnership discussions? If you can give us a sense of when you anticipate the OUS submissions. Jon Congleton: Yeah. Thanks. Let me maybe give some quick thought on payer, and then I will have Eric add some additional color. We have done a great deal of research in this area—obviously, probably one of the most critical vectors to ensure that we get lorundrostat to the appropriate patients with as few barriers as possible. I think we continue to feel very strong about the value proposition of lorundrostat, the need specifically in the resistant hypertension population, and so we believe that both the combination of appropriate price and rebate is going to create that access. But Eric, I do not know if you want to add some additional thoughts. I know your team continues to work aggressively on this. Eric Warren: Yeah. And, Jason, I am just back from a large payer conference in Orlando, PCMA. The team was engaging Medicare as well as commercial payers. I will say we are on their radar. They are very well aligned with the positioning that John spoke of, and we are now in the midst of scheduling these pre-approval information exchange, or PIE, discussions. So we have got a favorable footprint and interaction cadence with payers. Jon Congleton: And, Jason, I think to your second question, Adam, want to add some thoughts? Adam Levy: Yeah. So, Jason, we have not intended to give guidance on R&D, but I can tell you that in 2025, we were running a number of trials. We had LAUNCH-HTN, ADVANCE-HTN, EXPLORER-CKD for part of that year, EXPLORER-OSA, plus the open-label extension. So it was a heavy lift on R&D for us in 2025. When you roll into 2026, we have been wrapping up the costs on the OSA trial. We still have the open-label extension running. There may be other R&D that we decide to do this year, but I would expect that there is less R&D activity in 2026 than we had in 2025, at least with current or existing plans. Does that help? Jason Gerberry: Okay, thanks, John. Jon Congleton: And, Jason, to your last question, if I recall it right—ex-US and how do partnerships play within that? As we have spoken about in the past, our goal is certainly to try to get lorundrostat to as many patients in the United States as well as outside of the United States as appropriate. We know there are some complexities right now between MFN and tariffs that we are continuing to evaluate. Partnering may play a role in that, and it may play a role beyond just a co-promotion. This is where co-development becomes an interesting opportunity. I think David and his team have done such an excellent job of characterizing lorundrostat not just in hypertension but in so many of these related comorbidities. That creates an opportunity for us to assess what is the appropriate way to introduce lorundrostat outside of the United States. Is it as a monotherapy, as potentially a fixed-dose combination strategy? Those are still things we are evaluating, and once we have made a solid plan relative to that, we will certainly be communicating that. Thanks, Jason. Operator: Moving on to Annabel Samimy with Stifel. Annabel Samimy: Hi. Thanks for taking my question. Just a little bit more on the commercial side. Maybe you can help. I know it is probably too early to talk about pricing. But is there any scenario where your competitor can angle for third line while you are putting yourself in fourth line first? Are you thinking about the possibility of using pricing as a competitive lever? And what kind of things do you need to do to get yourself into third line? And then as a follow-up to that, just with EXPLORER-CKD and EXPLORER-OSA, are you actually seeking to put it in the label as a differentiating feature or just have the data available for presentation and publication? Thanks. Jon Congleton: Yeah. I think it is too early to give you too much specificity on pricing. I cannot really speak to where AstraZeneca may go from a pricing or line-of-treatment approach. I can tell you, as Eric alluded to and I did in my prior comments, that based on the research we have done with payers right now, the value proposition of lorundrostat certainly resonates fourth line, with some payers even third line. I think it is going to be, as I noted, a beachhead at fourth line. That is clearly where there is unmet need. That is clearly where the value resonates. With experience and demand, I think that begins to open up third line. We have talked in the past, Annabel, that as a guidance or a frame for pricing, we have always directed to probably more of an SGLT2-branded price point, Entresto price point, broadly at a WAC, but have not guided as it relates to rebates. To your second question, as I noted in my prepared remarks, we do anticipate having EXPLORER-CKD as part of the NDA application. That will be part of a negotiation as to what portion of that data may be reflected within the label. We believe that the blood pressure reduction data from EXPLORER-CKD is informative for prescribers. That will be part of our positioning from a negotiation standpoint. EXPLORER-OSA was not part of the original NDA application. That may be part of continued safety updates, but the actual data was not available at the time the NDA submission was made. But we do think both of those trials will be very informative to the medical community. We will be using medical meetings, publications, and our medical science liaison team to certainly convey the important messages contained within both of those studies. Annabel Samimy: Okay. And is there any possibility to share other comorbidities you might be interested in exploring that could be particularly impacted by hypertension-lowering agents? Jon Congleton: Yeah. I think I would go a little deeper than hypertension agents—specifically driven conditions. When we talk about 30% of hypertension patients have dysregulated aldosterone, I think by extension that goes into other conditions like CKD, like OSA, as David has spoken about before. Heart failure, we have mentioned, is a place where clearly aldosterone plays a significant role in the risk profile of those patients. There are some other indications that we continue to look at that we have not really spoken about yet, but as I said in a previous response to a question, we believe that there are significant opportunities. Some of those are ones that we would pursue on our own. I think some of those others are ones that we have thought about having partnering involvement with. But at this stage, lorundrostat is extremely well characterized for what it does to aldosterone, how it safely addresses that, and it opens up a lot of other opportunities. As we solidify those development plans, we will be sure to convey those to the market. Okay. Thank you. Thanks, Annabel. Operator: And our next question will come from Mohit Bansal with Wells Fargo. Mohit Bansal: Great. Thank you very much for taking my question and congrats on all the progress. Just one question. Just trying to double-click on the 60,000 prescriber number, John, you mentioned. Wondering, is this primary care heavy, or are these specialists that you would be targeting? And then what is the sort of role direct-to-consumer marketing-type of mechanism could play for a market like this? Thank you. Jon Congleton: Yeah. Mohit, I think it is important that there are two vectors that Eric and his team are looking at, and it is the broad prescriber data that everybody can look at, the IQVIA data, and that is where the 60,000 as a broad target comes from. It is about a 60/40 split, primary care/specialty, the bulk of the specialty being cardiologists. But then there is another vector that we are looking at, and that is for those resistant hypertension patients with comorbidities, who is managing those patients? So hypertension and CKD, hypertension and OSA, confirmed hypertension, and even the Black or African American population because we know we have done a considerable job to make sure we have proper representation within our clinical trials. And so we are taking the broad macro data from a prescribing standpoint, but also informing that with primary market research to see where are the true targets that can really ensure that we are getting lorundrostat as rapidly to as many appropriate patients as possible. And I am sorry, I think you had a second part of your question, Mohit. Mohit Bansal: Yeah. Thank you for this. The second part was more about the direct-to-consumer marketing sort of mechanism—what sort of a role it could play for a company like yours? Jon Congleton: Yeah. I do not know that we are in a position quite yet to talk about the consumer strategy, but obviously, we want to be speaking to patients, reiterating the importance of getting their blood pressure under control, seeking different means to do that, whether it is diet, exercise, or therapeutics, and the benefits specifically of lorundrostat, particularly if they have overlapping comorbidities where we have data that can speak to the opportunity for lorundrostat to help them get to goal and subsequently have hopefully longer lives and better lives. Very helpful. Thank you. Thanks, Mohit. Operator: We will go next to Rami Katkhuda with LifeSci Capital. Rami Katkhuda: Hey guys, thanks for taking my questions as well. I guess I know it was a small study, but did you observe any differential treatment effects in blood pressure reductions or AHI across any kind of key subgroups in EXPLORER-OSA? I guess a particular focus in those receiving and not receiving CPAP? Then maybe secondly, I know you touched upon potential future indications. Is the goal to be first in class for those indications, or are they large enough, similar-type indications, where it does not matter? David Rodman: Thanks, Rami. So we are in the midst of examining deeper into the data, and one of the things we are doing right now is looking at your question of subsets. You are right, it is a small trial, so it will be hypothesis-generating more than proving hypotheses, but that is still really useful. And we intend to present that kind of analysis at future publications and meeting presentations, so just stay tuned for that. In terms of the CPAP, about a third of the subjects, or a quarter, were on CPAP, and we did not see any difference between those groups. But again, they are pretty small numbers, so I do not want to hang my hat on that. Jon Congleton: Yeah. And, Rami, to your follow-up question as it related to—would you repeat it for me one more time? I want to make sure I address it specifically. Rami Katkhuda: Yeah. I just wanted to see if those indications—the goal is to be first in class there, or could you pursue larger indications? I know you mentioned heart failure—are they large enough to encompass multiple winners here in the ASI class? Jon Congleton: Yeah. I think what our intent is is to not be a follower. And what do I mean by that? We know that dapagliflozin is going to be generic potentially this year. I think some of what is being done with the ASIs tends to be more life-cycle management combined with an SGLT2. I do not know that we are looking to, frankly, get into that mud fight. I think there is going to be ample opportunity, and with the data that we have, for physicians to use lorundrostat with the SGLT2 of choice if patients have an overlapping comorbidity like CKD with their hypertension. As I noted in a previous response, we know that dysregulated aldosterone plays a significant role across the spectrum of cardiorenal metabolic disorders. That is what is informing how we think about where is the white space, where is the opportunity, for us to take what we believe to be the best-in-class aldosterone synthase inhibitor—either alone or in some distinct combinations—bringing forward solutions for those patients. Got it. Thank you very much. Operator: And going next to Dennis Ding with Jefferies. Dennis Ding: Hi. Thank you for taking our questions. This is Georgia Bank on the line for Dennis Ding. Maybe a little bit more on the potential partnerships and if you could talk about what an ideal partnership looks like in terms of capabilities and also creative deal structuring. Obviously, the commercial infrastructure is important, but what other nuances are important to you? Maybe in terms of R&D funding or bigger indications and payer relationships? I know that you mentioned that there is opportunity in pursuing some indications on your own and others maybe partnering on. Any color there would be helpful. Thank you. Jon Congleton: Thanks, George. It is a good question, and I will repeat what I have said in the past. We would love to find a partner that sees the opportunity with lorundrostat the way we do. And how is that? That is with the best-in-class aldosterone synthase inhibitor in the near term generating significant value for patients, for physicians, and for the health care community at large and helping to control uncontrolled and resistant hypertension; then also, more broadly, fully realizing the value of the asset from a development standpoint. So co-development—I am not going to talk about what kind of deal structures that would look like—but really extending the value of lorundrostat beyond hypertension and some of its related comorbidities. And then within that becomes addressing the complexity that exists just right now with branded assets that you want to get into the hands of patients outside of the United States. And so what has been informing the dialogues that we have had is finding a partner that thinks more holistically about the opportunity. As we have stated before, lorundrostat has excellent IP out to 2035; patent term extension, probably to 2039. There is a significant time period there to fully realize the value of this asset and bring that value to patients. Got it. Appreciate it. Thank you. Thanks, Georgia. Operator: And this concludes our question-and-answer session. I would like to turn the floor back over to Jon Congleton for closing comments. Jon Congleton: Thank you, operator. We believe the strength of the clinical results for lorundrostat show the potential benefit for uncontrolled and resistant hypertension and those related comorbidities. This is an exciting time for our team, the patients with hypertension who may benefit from treatment with lorundrostat, the physicians and researchers that have worked so hard in support of bringing lorundrostat through our clinical trial program, and our shareholders. We look forward to sharing updates with you in the coming quarters, and with that, I will say thank you, operator, and thank you to everyone for joining us today. We will now close the call. Operator: Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines, and have a wonderful day.

28天前Insight Analytics约5分钟阅读

LQMT 2025 Q4 财报电话会议

Operator: Good afternoon. Welcome to the Liquidmetal Technologies, Inc. Fiscal Year 2025 Conference Call. My name is Michelle, and I will be your conference operator this afternoon. Joining us on today's call is Mr. Tony Chung, Liquidmetal Technologies, Inc.'s Chief Executive Officer. Before we proceed, I would like to provide the company's safe harbor statement with important cautions regarding forward-looking statements made during this call as follows. All statements made by management during this call that are not based on historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, those made by Mr. Chung regarding the company's cash, revenue outlook, and technology development. While management has based any forward-looking statements made during the call on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events that are subject to a number of risks, uncertainties, and other factors, many of which are outside of the company's control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the Risk Factors in the company's Annual Report on Form 10-K for the year ended 12/31/2025. Accordingly, you should not place any reliance on forward-looking statements as a prediction of actual results. The company disclaims any intention and undertakes no obligation to update or revise any forward-looking statements. You are also urged to carefully review and consider the various disclosures in the company's Annual Report on Form 10-K for the year ended 12/31/2025, as well as other public filings with the SEC since such date. I would also like to remind everyone that this call will be available for replay starting later this evening via a link available in the Investor Relations section of the company's website at www.liquidmetals.com. I would now like to turn the call over to the company's Chief Executive Officer, Mr. Tony Chung. Sir, please go ahead. Tony Chung: Thank you, operator. And thank you to our investors for participating in today's call. As a reminder, please supplement the information provided during today's call with the financial statements and disclosures in our Form 10-K filed earlier today to get the latest full overview of our company operations. For today's call, I would like to provide more clarity on our company's pivotal events that occurred during 2025, especially as it relates to our Asia operation, and how these events tie into the overall future and vision for the company. If you have kept up with our press releases and blogs during 2025, we announced that our Chairman, Professor Lugee Li, was appointed as the head of our Asia operations and also announced our new manufacturing operations in Hangzhou, China. To illustrate the significance of these events, let me provide some historical perspective on our Chairman and how his involvement in amorphous alloys brought the technology to where it is today. Professor Li is a Chinese-born businessman, materials scientist, entrepreneur, and philanthropist, best known as the founder and former Chairman of Dongguan Eontec in China. Eontec is a manufacturing powerhouse which specializes in manufacturing advanced light alloy materials, including magnesium and aluminum, for the automotive industry. With his technical and academic foundation in materials and industrial design, Professor Li has been involved with research, industrialization of new materials, and precision manufacturing. He founded Eontec in 1993 and took the company public on the Shenzhen Exchange in 2012. Shortly thereafter, Professor Li became very interested in a revolutionary new material, amorphous alloys, and devoted a part of Eontec operations for the development and production of this intriguing new material. In 2014, he spun off a company from Eontec called Yeehaw Metal, which happens to be our current outsourced contract manufacturer, that was fully devoted to amorphous alloy manufacturing. While he was developing Yeehaw's manufacturing technology in China, Professor Li also set his sights on having a global presence for this new technology. In 2016, he took another major step towards control by taking a significant stake in Liquidmetal Technologies, Inc. to become our Chairman and to solidify his leadership in this industry. With his experience in advanced materials, precision die casting, and industrial transformation, he devoted himself fully to the development of amorphous alloy technology by, one, focusing on manufacturing technologies at Yeehaw; two, developing the worldwide amorphous alloy brand with Liquidmetal Technologies, Inc.; to complete the ecosystem for taking amorphous alloy technology to the masses. Since Professor Li's involvement with us, Liquidmetal Technologies, Inc.'s business model was to maintain our intellectual property, focus on sales, and outsource all manufacturing to Yeehaw. This model has served us well as it allowed us to conserve cash while allowing the manufacturing technology for amorphous alloys to mature and advance. While it is common knowledge that outsourcing manufacturing is an effective solution to allow expert manufacturers like Yeehaw to do what they do best and for companies like Liquidmetal Technologies, Inc. to focus on sales, the long-term drawback to this business model would be that the manufacturing advancements and know-how would be owned by the third-party manufacturer. You could say that we might face the same dilemma as America as a whole faces today, and that when we allow ourselves to utilize outsourced manufacturing overseas, we could end up losing our competitive edge. With the new opportunities in consumer products and physical AI, also known as humanoid robots, it is an optimal time for Liquidmetal Technologies, Inc. to itself advance amorphous alloy technology by venturing into our own manufacturing operations. As such, we are devoting our resources to creating new process know-how related to alloy, tooling design, injection molding conditions, post-processing steps, and other manufacturing processes for advancement. In that regard, we have developed and built our newly designed machine called Liquid Morphium that utilizes advanced injection molding technology. This new machine incorporates years of machine technology experience with a focus on part quality and cost reduction and will be part of the lineup for our new Hangzhou manufacturing plant. As a natural output of our R&D efforts on our Liquid Morphium platform and other advancements in manufacturing, we will develop new intellectual property all our own, which is why we announced recently that we have established a new IP holding company called Liquid Morphium LLC, all in the name of increasing the value of our company. Another benefit to manufacturing in-house is that we will have better cost control to allow for higher gross margin once scale is reached. We will also have the ability to price strategically for high-value applications. While capital expenditures will be higher upfront, unit economics will improve at scale for the long term, increasing the value of the company as a whole. One of the most vital aspects of making advancements in manufacturing is that our efforts will immediately attract established tier-one manufacturing companies that would want to partner with or invest into Liquidmetal Technologies, Inc. to further jointly develop amorphous alloy technology. As we devote more of our resources to R&D and technology advancements, Liquidmetal Technologies, Inc. ultimately increases its value by making it an attractive target for collaboration. This is a very significant component of our future success in that access to global customers will be significantly accelerated through collaborations with these tier-one manufacturing companies. In essence, we view manufacturing as a critical step in increasing the value of the company and broadening our appeal with other established manufacturing companies to better position the company for success. Our renewed focus on manufacturing makes sense overall, but many have asked how our in-house manufacturing venture will affect the relationship we have with Yeehaw Metal. In the short term, our relationship with Yeehaw will not change, and they will continue to be our outsourced contract manufacturer. For the long term, however, we view Yeehaw as a collaborator and an outsourcing partner. For amorphous alloy technology to be widely accepted as a viable solution for various applications, the market needs multiple sources of manufacturers to mitigate risks of relying on a single source. There are plenty of opportunities for both Liquidmetal Technologies, Inc., Yeehaw, and perhaps even other manufacturing companies to succeed together, whereby customers can order parts directly from either Yeehaw or Liquidmetal Technologies, Inc. We also envision outsourcing orders to each other to manage volume production. We note that Yeehaw has already achieved tier-one vendor status for a global mobile device company, as well as all the mobile device companies in China. To our benefit, we are currently working together to build out the supply chain even further and look forward to collaborating and building the amorphous alloy manufacturing ecosystem together. In summary, I view our new venture into manufacturing as a natural progression of our journey to make amorphous alloy technology available to the masses. Our focus on advancing manufacturing technology for quality parts and cost reduction will allow us to increase the value of our company by, one, developing an arsenal of new IP; two, reducing costs to attract well-established customers to adopt our technology; and three, fostering joint venture collaborations with tier-one manufacturing vendors who already have ties with global customers. Of course, we have Professor Li, who has divested his ownership and roles at Eontec and Yeehaw and is now free to fully devote himself to the success of Liquidmetal Technologies, Inc. He has a proven track record of building manufacturing operations from scratch and is proactively managing and operating our Hangzhou manufacturing plant through the mobilization of his network of collaborators, who were carefully cultivated during his tenure at Eontec. Looking into our future sales opportunities, we believe that there is unlimited potential. We have completed prototypes for one of the top-tier mobile device companies and are working towards designing production parts. We have made inroads into the medical device space with our current production orders. As announced in our recently updated website, we have highlighted the opportunities with foldable phone hinges and physical AI, and our foray into manufacturing will allow us to take full advantage of these opportunities ahead. Let us now switch gears and quickly go over the financial results for 2025. We ended 2025 with revenues of about $800,000 and a net loss of $2,400,000, with our EBITDA being about negative $1,800,000. We ended the year with about $20,000,000 of readily available liquid cash and investments. Our corporate office building has a market value that is more than double the current book value of $7,000,000, which may also be accessible for future operating needs if necessary. We are well positioned to fund our growth for the foreseeable future and have no going concern issues. In closing, we are in 2026. Our Hangzhou manufacturing plant buildout is progressing smoothly, and we hope to be fully operational toward 2026. We are aggressively pursuing sales opportunities in consumer products, physical AI, and the medical industry and working closely with tier-one manufacturers to transition their current products to Liquidmetal Technologies, Inc. applications. We will keep investors informed as these developments progress, and we look forward to announcing good news in the near future. Thank you for your time, and with the Lunar New Year upon us, I wish everyone good luck for 2026. I will now hand things over back to the operator. Operator: Thank you, Mr. Chung. At this time, this concludes today's call. You may now disconnect. Everyone, have a great day.

28天前Insight Analytics约5分钟阅读

CAPR 2025 Q4 财报电话会议

Operator: Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics, Inc. fourth quarter and full year 2025 conference call. At this time, all participants are in a 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 may be recorded today, Thursday, 03/12/2026. I would now like to turn the conference over to CFO, Anthony J. Bergmann, for the forward-looking statement. Please go ahead, sir. Anthony J. Bergmann: Thank you, and good afternoon, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. Statements may include statements regarding, among other things, the safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, and our financial position, and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change above a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. With that, I will turn the call over to Linda, CEO. Linda Marbán: Good afternoon, everyone, and thank you for joining us on Capricor Therapeutics, Inc.’s quarterly conference call. For our investors, collaborators, the team here at Capricor Therapeutics, Inc., and especially the Duchenne muscular dystrophy patient community, thank you for your continued support and belief in our mission. We entered 2026 with a clear focus as we work to advance Garamia cell for potential approval for Duchenne muscular dystrophy in the United States. As we announced earlier this week, we were very pleased to report that the U.S. Food and Drug Administration has stated that our response to our complete response letter is complete and has therefore been accepted, our previously submitted biologics license application, or BLA, for review. The agency assigned a PDUFA target action date of 08/22/2026. Clearly, this represents a significant regulatory milestone for Capricor Therapeutics, Inc., of course, for all of those who have DMD. The BLA seeks full approval of deramycin. While we have not yet had detailed label discussions with the FDA, our goal will be to position deramycin to treat as many eligible patients as possible, consistent with the clinical data generated over more than a decade of development where both skeletal and cardiac muscle function have shown stabilization. If approved, deramycin has the potential to become the first therapy designed to address both skeletal and cardiac disease manifestations of Duchenne muscular dystrophy. We believe that distinction is highly meaningful, particularly given that cardiomyopathy remains one of the most serious and life-limiting aspects of this disease. Our highest priority as an organization is execution, working closely with the FDA, preparing for a potential commercial launch, and continuing to build the capabilities required of a world-class commercial-stage biotechnology company. We believe the strength of our data, our manufacturing readiness, as well as strong balance sheet position us well for this next phase of growth. Our current corporate mission is to build an infrastructure to launch and commercialization of deramycin as well as to expand our pipeline to treat other indications. Now let me turn to a brief summary of the HOPE-3 trial, the top-line results of which were released in late 2025 and is one of the strongest data sets generated in this disease to date. The entire HOPE-3 data set was submitted to the FDA as the response to our CRL and was contained in our CSR. These data will now serve as the foundation for potential approval as well as for the preparation for commercial launch. For those of you who have not been following our story, here is a brief recap of the HOPE-3 clinical trial. HOPE-3 is a pivotal Phase 3 multicenter, randomized, double-blind, placebo-controlled study evaluating deramycin in the treatment of Duchenne muscular dystrophy cardiomyopathy. The study enrolled 106 patients and met its primary efficacy endpoint on the Performance of the Upper Limb, otherwise known as the PUL, as well as all Type 1 error-controlled secondary endpoints. The key secondary endpoint of left ventricular ejection fraction showed a 91% slowing of disease progression in all evaluable patients regardless of cardiac disease status and importantly achieved statistically significant results. Furthermore, the results were even stronger in specific patients with a diagnosis of cardiomyopathy, achieving a p-value of 0.01. Over the last decade, it has become apparent that cardiomyopathy is one of the leading causes of mortality in Duchenne, and stabilizing cardiac function has remained a major unmet need with current guideline-directed care to include standard cardiac medications which are somewhat effective but do not work long term and certainly are not addressing some of the root causes of the cardiac dysfunction. The statistically and clinically significant preservation of left ventricular ejection fraction in patients treated with deramycin observed in HOPE-3 underscores the potential of deramycin to address the DMD-associated cardiomyopathy. In addition to the earlier reporting of the positive top-line results which I just highlighted, yesterday, we presented additional data from the HOPE-3 trial in a late-breaking oral presentation at the 2026 Muscular Dystrophy Association Clinical and Scientific Conference. This data was of great significance not only from a clinical trial perspective, but to the patient community because it highlights the effectiveness of deramycin in multiple endpoints, all pointing to the direction of stabilization of the disease process associated with DMD. I would like to provide a few highlights here. One of the most important was an improvement in a direct activity of daily living and one that is also correlated with quality of life. We show that there was a statistically significant improvement in a measure of upper limb function analyzed in a home-based setting using a validated and published patient-reported outcome measure, the DVA, or Duchenne Video Assessment. The DVA was developed by frustrated caregivers and professionals who were concerned that clinic-based assessments did not tell the whole story, especially in a pediatric population. So they developed a DVA to track their sons at home. The measure we specifically used was called EAT 10 BITE, and it is manifest exactly as it sounds and represents not only the ability to self-feed, but also to move one's arm between table and mouth. Caregivers would video their sons during the task at prescribed times post-infusion of daratumumab and then the videos were analyzed by a core lab and scored based on ability and compensatory measures. The DVA assessment of E10 BITE supports the clinic-based measure of the Performance of the Upper Limb and is supportive of the observed efficacy of deramycin that we have seen clinically. These data will also support payer discussions as it is a measure of feels, functions, survives. We also showed images of the hearts of a treated patient as opposed to a placebo patient in the analysis of cardiac fibrosis. This is measured by MRI, using a dye called gadolinium that can distinguish between healthy tissue and scar tissue. The data showed that there was significant reduction in fibrosis in the hearts of those that were treated with deramycin compared to placebo. For cardiologists, this is one of the most encouraging aspects of the HOPE-3 data because there is the aggregation of scar that ultimately leads the heart to fail and life to end for those with DMD. These data will also be used in our labeling negotiations. It is important to begin treating the fibrosis as soon as it is evident, which can be many years before there are functional implications. Remember, the heart is a terminally differentiated organ, so once a cardiomyocyte is lost, it cannot be easily replaced. Therefore, preservation of functional muscle and attenuation of fibrosis is one of the main goals in treating Duchenne cardiomyopathy. We were delighted to share these results with the Duchenne community as one of only four late-breaking presentations at the Muscular Dystrophy Association Conference yesterday in Orlando. The full HOPE-3 dataset has now been submitted for publication in a major peer-reviewed academic journal. One of the most important features of deramycin is, of course, its safety profile. To date, we have completed more than 800 intravenous infusions of deramycin across multiple clinical studies, and the therapy continues to demonstrate a consistent safety profile. There is evidence of long-term safety in our open-label extension studies. Some of our young men participating in our HOPE-2 open-label extension study have been receiving continuous infusions for up to five years, and with over 100 patients in our collective open-label extension studies at the time. Deramycin offers the potential opportunity for functional stabilization and also a well-tolerated safety profile. Taken together, we believe deramycin will become an important and foundational therapy for the treatment of Duchenne muscular dystrophy. We believe the HOPE-3 results provide compelling evidence supporting deramycin's potential benefit in Duchenne and further strengthen our confidence in the therapeutic profile of this product candidate. The consistency of the data across both cardiac and skeletal muscle-related measures supports our view that deramycin may offer a differentiated and meaningful therapeutic approach for patients living with this devastating disease. Turning now to the regulatory pathway, following receipt of the complete response letter in July 2025, we were able to complete our response based on the results from the already completed HOPE-3 trial. Through both formal and informal interactions with the FDA, we aligned that the HOPE-3 data would be sufficient to support resubmission and we have now submitted that dataset in its entirety. The FDA classified the submission as a Class II resubmission and assigned a PDUFA target action date of August 22, 2026. Importantly, at this stage, the FDA has not identified any potential review issues in its communication to the company, which we view as encouraging. We also expect to be eligible to receive a priority review voucher upon approval of daratumumab. As these vouchers are transferable and can be monetized through sale, they represent a potential source of meaningful capital that could further strengthen our financial position as we execute on our strategy. At the same time, we continue to make meaningful progress operationally. Our in-house GMP manufacturing facility located in San Diego successfully completed its FDA pre-license inspection in connection with the BLA review process last year. All Form 483 observations were addressed, and the facility is operational and positioned to support a potential initial commercial launch. That facility can meet the commercial demand of approximately 250 patients per year. However, our current plan is to begin stockpiling commercial doses as soon as we finalize our label with the FDA. In addition, we are now well underway with an expansion to the second floor of that same facility, which will add approximately six additional clean rooms. At full capacity, this expansion is expected to support treatment of approximately 2,500 patients per year or roughly 10,000 doses annually. Our current projections are that the new facility will come online and be able to support commercial manufacturing in late 2027. Commercial readiness activities are also continuing to advance. We are cognizant that the DMD community is anxiously waiting for approval and launch. Due to the unmet need and our desire to have product to those who need it, our hiring plan is based on preparing across key areas relevant to launch including patient support, market access, reimbursement planning, and physician education. Capricor Therapeutics, Inc. is at a transformational point, and as a result, we are not simply preparing for only the launch of deramycin for DMD, we are building to operate as a world-class commercial biotech company. That means maintaining a disciplined approach to execution, investing in our pipeline, and ensuring that our infrastructure can support both potential commercialization for DMD and beyond. On the scientific front, we continue to strengthen the foundation supporting geromycel. In the fourth quarter of last year, we published a peer-reviewed paper in Biomedicine describing germany cells' anti-fibrotic and immunomodulatory mechanisms of action including the release of exosomes and soluble factors that suppress fibrotic gene expression. These findings were reproduced across more than 100 manufacturing labs supporting the biologic, consistency, and potency of the product. As we move toward approval in Duchenne, we are also beginning to lay the groundwork for potential expansion into other diseases, focusing initially on Becker dystrophy while engaging with regulatory authorities in Europe and Japan with the goal of bringing deromyosil to as many patients as possible globally. Please stay tuned for more updates on this as we move through 2026. Now let me turn briefly to our exosome platform. The Phase 1 COVID vaccine study under Project NextGen with the National Institutes of Allergy and Infectious Diseases remains underway. Preliminary results indicate the Stealth X vaccine has been well tolerated and demonstrated a favorable safety profile across all doses tested thus far. However, limited neutralization was observed in early results at the tested dose levels, which may reflect prior vaccination or infection in trial participants. Preclinical data in naive and primed animal models continue to support the of the Stealth X COVID vaccine. Final results from the trial, the cellular response data, are expected in 2026. NIAID has requested exploration of expanded dosing range at higher dose levels and the potential use of adjuvants. At this time, we are evaluating how these options may fit with our broader pipeline development strategy and will provide additional updates as they become available. Importantly, this program demonstrated the safety of Stealthex exosomes and supported the continued development of our broader engineered exosome delivery platform. It also enables us to expand our manufacturing capabilities to support future exosome programs. We are continuously advancing our StealthX platform, focusing on muscle targeting and capable of delivering multiple payloads including siRNA, proteins, small molecules. The platform is being applied across several therapeutic programs currently progressing toward IND-enabling studies with a target IND filing in 2027. From a financial perspective, we ended last year in a very strong position. As of 12/31/2025, our cash position was approximately $318,000,000. This balance was significantly strengthened in the fourth quarter through a successful financing completed in late December, which included participation from dozens of new institutional healthcare-focused investors who we believe share our long-term vision for the company. Based on our current operating plan, we believe this capital is sufficient to support the business into 2027. Importantly, this outlook does not include any additional sources of capital including potential product revenue, or the potential monetization of a priority review voucher should we receive one upon approval. Earlier this week, Capricor Therapeutics, Inc.’s common stock was approved for uplisting to the NASDAQ Global Select Market, NASDAQ's highest listing tier. We believe this milestone further enhances our visibility within the institutional investment community as we move into what we believe could be a transformational period for the company. Overall, we believe Capricor Therapeutics, Inc. enters this next chapter from a position of strength with our BLA under review, positive pivotal clinical trial data, manufacturing commercial readiness underway, additional pipeline opportunities beyond geramycin, and the capital required to execute on our priorities. Most of all, we remain focused on what matters most, bringing forward a potentially transformative therapy for patients and families affected by Duchenne muscular dystrophy. With that, I will now turn the call over to AJ to review the financial results. AJ? Anthony J. Bergmann: Thanks, Linda. For a brief overview of our financial position, which Linda summarized somewhat a moment ago, cash, cash and marketable securities totaled approximately $3,181,000,000 as of 12/31/2025, compared to approximately $151,500,000 as of 12/31/2024. In December 2025, we completed a public offering resulting in net proceeds of $162,000,000, and in addition, the company drew down approximately $75,000,000 under our ATM program in December 2025. Revenue for 2025 was $0 compared to approximately $11,100,000 for 2024. Revenue for the full year ended 12/31/2025 was also $0 compared to approximately $22,300,000 for the full year ended 12/31/2024. As a reminder, our prior year revenue was primarily derived from the ratable recognition of our upfront and developmental milestone payments under our U.S. distribution agreement with Nippon Shinyaku, all of which has now been fully recognized and was recognized as of 12/31/2024. Total operating expenses for 2025 were $29,200,000 compared to approximately $18,800,000 for 2024. Total operating expenses for the full year ended December 2025 were approximately $108,100,000 compared to approximately $64,800,000 for the full year ended 12/31/2024. The year-over-year increase was primarily driven by continued investment in clinical, regulatory, and manufacturing activities as well as infrastructure expenditures supporting our Duchenne program. Net loss for 2025 is approximately $30,200,000 compared to a net loss of approximately $7,100,000 for 2024, and net loss for the full year ended December 2025 was approximately $105,000,000 compared to a net loss of approximately $40,500,000 for the full year ended December 2024. Based on our current operating plan, as Linda mentioned a moment ago, our financial resource—we believe our available cash, cash equivalents, and marketable securities—will be sufficient to fund anticipated operating expenses and capital expenditures into 2027, and this expectation does exclude potential milestone payments under our agreements with Nippon Shinyaku as well as any strategic uses of capital that are not included in our current base case assumptions. And with that, we are ready to open the line up for questions. Operator: Thank you. We will now open for questions. Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Ted Tenthoff from Piper Sandler. Your line is now open. Edward Andrew Tenthoff: Hi, guys. Sorry about that. I was on mute. So firstly, congrats on all the really exciting progress, you know, this year, this week. Great to see you down at MDA, excited about some new data coming out of that, and, obviously, the BLA acceptance. Are you guys anticipating any AdCom, anything along those lines? And what commercial prep are you doing in preparation for potential deramycin approval? Thank— Linda Marbán: Hi, Ted. I have to say it was great to see you in Orlando and, you and I have been tracking each other for more than a decade on this. And so I am very proud of what we are accomplishing together. Thank you so much for your years of good support. To answer your question, in terms of an AdCom, I have been getting a lot of questions about that. Certainly, they have not made any moves towards that at this point. I do not think anybody has had an AdCom in about a year. And I do not know if they are going to be putting one in place. I think with the departure of Vinay Prasad, it is a little bit up in the air as to what is happening within CBER and what their manifest will be. Either way, we will be prepared. Good news about the HOPE-3 data is it is so very strong. That I really would be delighted whether I presented at an AdCom or we directly to PDUFA without it. In terms of your second question, in terms of commercial readiness, look, deromyophil has been in development for a long time. This data is extraordinary. Skeletal and cardiac disease attenuation and even improvement in those with cardiomyopathy and a product that is very safe and can be foundational and used with pretty much anything else that we can think of that is approved or coming along for DMD. So we are going to be building our own commercial program to support NS at this point. So that we make sure that everything from market access, payers, and all of the other aspects of commercial planning is done with the same precision that we have done the development of deromyosil to this point. Edward Andrew Tenthoff: That is great. And one quick clarification, if I may. When it comes to the actual label, I know this is something that will be negotiated later in the review process. Do you believe the current label would be for the original cardiomyopathy, DMD cardiomyopathy submission, or would this be now for DMD more broadly? Just appreciate any clarity on that. Thanks. Linda Marbán: Thanks, Ted. So I think this, again, is the biggest question that we all have. We have broached this with FDA both in formal and informal meetings, really since the issuance of the CRL last July. They have been relatively noncommittal, saying that they will discuss it during labeling. We certainly believe that the data supports a label both for DMD in terms of some the skeletal muscle ramifications related primarily, I would guess, to upper limb loss, which starts very young, and/or to the treatments and attenuation of Duchenne cardiomyopathy. So that is our plan internally. Obviously, we will keep the street updated as we enter into those conversations with FDA. Currently, we believe that that would be the best path forward both for the therapeutic and also for the regulatory pathway. Edward Andrew Tenthoff: Great. Thanks. Well, either way, a big win. For the boys and for Capricor Therapeutics, Inc. Thanks so much. Linda Marbán: Thanks, Ted. Operator: Our next question comes from the line of Leland James Gershell from Oppenheimer. Your line is now open. Leland James Gershell: Thank you for taking our question and appreciate the updates yesterday at MDA. Just wanted to ask, could you, Linda, refresh us on the import of the two different cohorts of HOPE-3 as you had material that was made at two different facilities. I think in the past, you had said that Cohort B had been more of a regulatory focus. Just wondered where we stand today in terms of how the FDA will consider those two different cohorts and, you know, in the context of the pooled analysis, as they go through their review? And also wanted to ask if you have any expectation around the timing that we should see a peer-reviewed publication of the HOPE-3 data? Thank you. Linda Marbán: Well, thanks, Leland. Yeah, I have not thought about the two cohorts in a while, so the FDA has not mentioned it in any conversation since probably 2024 when we decided to, under their recommendation, file the biologic license application for the cardiomyopathy based on the HOPE-2, HOPE-2 OLE and natural history data. You know, they then agreed that we would pair Cohort A and Cohort B and consider them as one trial because of the nonclinical comparability of the product. So they have not talked about it, and we have not talked about it. They have all of the raw data now. The good news is, and what I feel very confident in is that Cohort B, independent of Cohort A, was statistically significant in both skeletal muscle performance, Performance of the Upper Limb, and in the cardiomyopathy ejection fraction. That would be the more important cohort to look at because that was what their question was originally—was that product comparable. It certainly is comparable in terms of its biologic activity. So we will keep everybody updated if there are any more questions on the cohorts, but as far as we know, they consider one clinical trial, one cohort, and the manufacturing facility here in San Diego passed PLI, so we are manufacturing ready. In terms of an update on an academic publication, I know you are an academic scientist as well as I was, and we both know that one of the reasons people are in academia is because time is not of essence. So, you know, the academic review is ongoing and we will keep the community updated as soon as it is ready to be published or published. Leland James Gershell: Great. Thanks very much. Linda Marbán: Thanks, Leland. Operator: Our next question comes from the line of Joseph Pantginis from H.C. Wainwright. Your line is now open. Joseph Pantginis: Hey there. Thanks for taking the question. So two questions, if you do not mind, Linda. So first, I know you have not had labeling discussions yet, but could you just sort of describe a before and after snapshot of—did you have prior labeling discussions ahead of the CRL? And how you think that may be similar or different. And then second, and this is strictly from a devil's advocate standpoint, could you envision any scenario where this might be a conditional approval? Linda Marbán: So I can answer your second question first because it is easy. No. There is no way this would be a conditional approval. There would be no need for a confirmatory trial on a randomized, double-blind, placebo-controlled trial that has primary and key secondary and Type 1 error-controlled endpoints. I cannot imagine any scenario what they would make it conditional upon. But I will keep you updated on that. In terms of labeling conversations, we did not get that far before the CRL was issued. Last time was actually right before we would have begun them. So we do not have clarity there. The only tea leaves I can read is that they knew that HOPE-3 was powered and primary efficacy endpoint was Performance of the Upper Limb. They knew that we had filed a cardiomyopathy BLA under the existing data. When they gave the CRL and then we had the Type A meeting, they wanted to see the HOPE-3 data unaltered in terms of its primary. So we believe that they will consider both the skeletal muscle aspects of the disease as well as the cardiomyopathy in the labeling. I suppose, you know, they can ask for anything. It is the FDA. And so we will keep the street informed as we get information ourselves. My current belief is that the data is very strong. It supports labeling for both cardiomyopathy and skeletal muscle myopathy, and that is what we are planning for internally at this point. Joseph Pantginis: Appreciate the comments, and here is to the end of the potential FDA drama. Operator: Our next question comes from the line of Kristen Brianne Kluska from Cantor. Your line is now open. Kristen Brianne Kluska: Hi, everyone. Thanks for taking the questions, and nice to spend time with the broad Capricor Therapeutics, Inc. team this week in Orlando. So with the Class II resubmission, can you just help us understand what parts of the review are going to be new versus what parts are already considered checked off with the first process—so, for example, like on manufacturing, mid and late-cycle review meetings, etc.? And then just on capacity, wanted to confirm in your prepared remarks you said it could support 250 patients per year, with potential stockpiling, but then you are expanding to reach 2,500 patients per year. What will you need to show to the FDA to get the expansion up and running? Like, is there any comparability work or runs that you have to do to show them it is the same material, etc.? And then last question for me just on MDA. Obviously, a lot of doctors there. We talked to plenty ourselves, but curious what your takes were from these communications. This is really your big showing of the HOPE-3 data since it came out in December. So curious what the feedback is. Were there people even that were skeptical in the past that, now that you have this data, were willing to take a closer look? Anything you could share would be really helpful. Thanks again. Linda Marbán: Yeah. So thanks. So this is obviously our first go-around with the CRL and a resubmission. What I can tell you is that we know the manufacturing facility passed pre-licensing inspection. All 483s were signed off on, and so we are good to go there. We anticipate there will be several CMC-related questions that come across as we go through this resubmission process just because there were a few loose ends, none of them that were areas that would be a major concern or slow things down. They just want clarification. We think that the nonclinical and other aspects of the BLA have already been signed off on, so we do not anticipate any changes there. Obviously, the only thing that was really cited in this complete response letter that was now officially resubmitted was the HOPE-3 data. So we assume that clinical and stats will be the focus of the new review. Yeah. So, we very strategically built the new clean rooms in the same building as the 250-capacity clean room. So it does reduce the regulatory requirements if it is on the same street address as the original facility. You obviously have to demonstrate, you know, in PPQ runs that the product is the same and passes all of your requirements. I think they come and do another inspection, but they would be slated to do an inspection in early 2027 anyway. As part of, you know, there is general maintenance on manufacturing plants. So I am not anticipating a long run-in terms of getting approval of the site based on sort of those components or that situation. But we will obviously keep you updated as to how that goes. I know Marty Makari has spoken publicly, and I know Vinay Prasad prior to his exit also spoke publicly that they were thinking they would reduce the number of PPQ runs that are necessary from three to one, which, obviously, if that actually is put into place, could significantly reduce the time that a manufacturing facility would need to come online. So we are going very fast and anticipate getting those doses out to commercial community as quickly as the FDA will allow us. Yeah, thanks, Kristen. And let me just say it was wonderful to see you in Orlando, and I appreciate you turning out and spending some time with our team. The event we hosted was exactly what I had hoped for, which is that physicians and investors and patients and everybody could be together to learn about dirhamia cell. And you are correct. You did speak to physicians who I think are echoing now what you just alluded to, which is that the HOPE-3 data has solidified belief in this product across physicians, across patients, really across the entire community. It is, you know, I have said now a few times, randomized, double-blind, placebo-controlled, hits primary endpoint, hits secondary endpoints, hits Duchenne video assessments, which went along with the Performance of the Upper Limb, as I said in prepared remarks. And so yes, I think physicians who before were hopeful are now convinced and looking forward to putting their patients on. We are getting a lot more questions about prescribing availability, launch than we ever have. So we are on fire here getting this product ready for approval and for launch. Kristen Brianne Kluska: Thanks, Linda. Linda Marbán: Thanks, Kristen. Operator: Our next question comes from the line of Madison El-Saadi from B. Riley Securities. Your line is now open. Madison El-Saadi: Hi, Linda and team. Congratulations on the data, and thanks for taking our question. Your partner has previously said that they expect to transition all clinical trial patients to commercial drug within one quarter of launch. So should we think of these, call it, 100 patients as kind of the base case for how many patients may be treated with deromyosil in 2026, assuming approval? And then to follow that, as you know, there are 7,000 to 8,000 DMD boys, maybe more, with cardiomyopathy, and just given the data we saw in this subgroup, you know, it is hard to imagine there being a circumstance in which a patient does not go on this drug. I guess, how do you scale beyond the 2,500 capacity? Is that something you guys are thinking about? What would it cost—do you have the cash? Maybe if you could just kind of help illustrate what that road map may look like. Thanks. Linda Marbán: Yeah. Madison, thanks so much, and also great seeing you in Orlando. Thanks for making the trip. Always great to spend time together. So in terms of the OLE patients, yes, we have over 100 OLE patients on daratomycinol now. They all will be anxious to continue. We have seen that from the HOPE-2 OLE guys that have gone on for years. We anticipate all of them wanting to come over to commercial product. We have not figured out a launch date yet, we just got the PDUFA date. So I do not want to give a year or a timeline as to when, but yes, we will transfer all of them over as seamlessly as possible. That is why we are focusing internally on access at this point so that that can happen seamlessly. There are, Madison, a lot of young men that have been waiting in the wings for deramycin that did not qualify for our trials for whatever reason. And I am getting a lot of calls now from—so we will prioritize getting geromyosil to any and all of those that need or as quickly as possible. And I will say that that is my mandate and why we are taking on manufacturing as aggressively as we are. To that end, pertinent to your question, yes, we are now poised and, in fact, ready to go forward with another manufacturing build-out in San Diego County very close to our current footprint that will be able to accommodate many more thousands of patients per year. We wanted to make sure that we completed our response. We want to make sure that we are proceeding well towards PDUFA before we invest that capital. But we now have internal confidence that that will happen. So we are actively planning to expand manufacturing to accommodate the needs of any and all of those that would like to have it. At diromycin. Madison El-Saadi: Got it. Thanks. Linda Marbán: Thanks, Madison. Operator: Our next question comes from the line of Catherine Clare Novack from Jones Trading. Your line is now open. Catherine Clare Novack: Hi. Good afternoon. Thanks for taking my question. One thing we heard over and over at the meeting was about how patients with DMD do better with earlier intervention. Just thinking about how you can make the case based on HOPE-III that it is a benefit to treat, you know, even before the development of cardiomyopathy, thinking that, you know, since virtually all DMD patients will eventually develop cardiomyopathy, and not thinking of it as then a separate indication, but as part of DMD as a whole. You know, what in the application supports that? And then can you remind us of the status of the European rights deal with NSF? Linda Marbán: Yeah. Thanks. You know, we, of course, are laser focusing on those younger kids and those earlier in the disease process. As we have said and sort of have been stating for a long time, it is very safe. The infusion protocol is really easy. Even a little guy could sustain it very well. And, yes, the data that we have seen has been highly supportive of starting as young as possible. Getting a prevention label is very difficult until you can show prevention, which takes years. We are comfortable right now with the treatment of cardiomyopathy. The good news is because these kids now, most of them start getting MRI at a very young age. As soon as they see one segment of scar, the cardiologists want to get them on deromyophil, and so that will be a way that we will get more and more active in sort of the younger kids and moving towards that prevention target. Of course, if they go on for the attenuation of skeletal muscle function myopathy, then we will be able to track their hearts and be able to ultimately—physicians will use it with skeletal muscle as well as cardiomuscle myopathy independent of progression of the disease. So we have been negotiating with NS Pharma for a while for rights to Europe. Honestly, we have not been focusing on it internally. There was clearly a lot going on here with the CRL and getting the HOPE-3 data ready and submitted. And now that we have a PDUFA date, and I feel like we are on a good pathway there, we can take a little bit of a breath and start focusing on our outside-of-U.S. activities. They do have the rights to Japan, so we are going to start working with PMDA and getting that going in 2026. And then in terms of Europe, we are evaluating those now, and we will see sort of where the road map takes us. And we will provide updates as they become available. Catherine Clare Novack: Got it. Thank you. It was great seeing you and great hearing all these updates. Looking forward to the year. Linda Marbán: It was great to see you as well. Stay well, and see you soon. Operator: Our next question comes from the line of Gubalan Pachayapan from ROTH Capital. Good afternoon, team, and thanks for taking our questions. So a couple from us. Your line is now open. Gubalan Pachayapan: Firstly, you mentioned the Duchenne Video Assessment. Can you maybe tell us how many patients were included in the deramio cell arm and how many in the placebo arm? And also related to that, can you also comment on the inter-rater reliability of DVA? Because it is my understanding that it is rated by both caregivers and professionals. And then is there a reason why the sample size is low for the late gadolinium enhancement secondary endpoint? And maybe one last question from me. So the most recent PRV, as you probably know, was sold for a very high price of $205,000,000. And we are also aware that there is a new sunset date, which is 09/30/2029. But do you think because the new sunset date is a little longer than three years from now, this is going to ease up some pressure from the buyers—maybe that could impact the price that you will be selling your PRV for? Any thoughts on that? Thank you. Linda Marbán: That is right. So the DVA is actually a qualified and validated assessment tool that has been published, and not only been used by us but by others and not only by those with Duchenne muscular dystrophy but in other disease states. So it really is quite rigorous in its measurements. The recorders, or the video takers, are trained in how to do it, what to do, then they are sent to a facility where they are read by a blinded, trained reader and the data is then delivered blinded to the company and ultimately treated like any other data set. So it really is highly valuable data that is collected in a home-based setting. In terms of the number of patients, that were in the DVA was about 50 patients in each group, so 50 in the treatment and 50 in the placebo group. Yeah. So, we added LGE measurement for Cohort B only. When we were designing Cohort A, there had been some press around gadolinium and the fact that it might aggregate in the brain, especially of young children, and could be a safety—so we decided not to look at scar in Cohort A. During the time between Cohort A and the initiation of Cohort B, that was considered not to be a safety risk. And the value of the data collected would be highly necessary to sort of show the correlation between function and scar. The data is beautiful, and having been somebody that has worked in MRI for many decades, I am really excited by this data as are the cardiologists. So it is only those in Cohort B that were eligible for the gadolinium enhancer, and then they also had to have certain levels of kidney function. So that is why those numbers are relatively small. But that dataset is small but mighty. Yeah. If I had a crystal ball, I would be a really wealthy woman. But all that being aside, I do not know. I certainly know that PRVs tend to be valuable. It really depends on how motivated the buyer is to get it when they come available, and we certainly are going to get the maximum price for our PRV should we be able to receive one. Gubalan Pachayapan: Alright. Congratulations. Thank you. Thanks. Operator: Our next question comes from the line of Matthew J. Venezia from Alliance Global Partners. Your line is now open. Matthew J. Venezia: Hi, guys. Congrats on the progress, and thanks for my questions. First, I think I asked this question about six months ago, but how have the conversations at the FDA with you guys changed, if at all, since being—Prasad left the agency once again? And another talking about the age of the patient, it seems to be a drug where early intervention and a disease where early intervention is paramount to treatment. Do you expect a specific age on your label? Do you expect that to come up in labeling discussions with the FDA? I know, like, you guys had four plus on their label. But is that something that you expect to be ironing out with the FDA in your labeling discussions? And just the final question, the StealthX platform—is there a specific time within second quarter when we can expect P1 trial results, or is that kind of just up to NIAID? Linda Marbán: Thanks, Matthew. Good to talk to you. So far, nothing. We got our letter reopening the file, setting our PDUFA date, and that was almost in conjunction with his leaving. So, really, we have had no change in any interaction whatsoever at this point. Yeah. I do not know. We did not ever have a four plus. I do not know who that was. That was not us. Age is a possibility. We have treated down to age eight in our clinical trials. So we have not gone younger than that. We do not know, again. You know, I know everybody is hypothesizing about labeling discussions to build their models, and I certainly am doing the same myself. I do not know if there will be an age cutoff or a function cutoff. As soon as we have clarity, though, we will let you know. I would say in building your models that the youngest we have actually treated to this point are those that are ambulant and down to age eight. Yeah. It is—I was just going to say you take the words from my mouth. It is an NIAID situation, so that data trickles in really slowly. We are super anxious to see the cellular response. We are really interested to see if there is a T-cell response. COVID is kind of a crazy virus to try and get on top of these days because pretty much everybody is either had it or been vaccinated multiple times. And so we are looking forward to seeing that data to continue to work with NIAID. But most importantly, and I will take—thank you so much for asking me—we are very excited about our pipeline right now. We now have the opportunity to deploy on it. We were able to build out manufacturing for this vaccine. We know how to do it now. We know how to, you know, load the exosomes, target the exosomes. And so while the vaccine program is important, it really was that learning experience that is now driving us towards a therapeutic exosome platform, and stay tuned for more information on that as we progress through 2026. Matthew J. Venezia: Alright. Wonderful. Thank you, guys. Again, and congrats on the progress. Linda Marbán: Thanks. Operator: I will now turn the call back to Capricor Therapeutics, Inc. management for closing remarks. Please go ahead. Linda Marbán: Thank you so much for joining us today. Thank you for those of you that attended the Muscular Dystrophy Association and took some time to be with Capricor Therapeutics, Inc. at that event. I will say that it gave me incredible joy and pride to be at that event and see how prominently Capricor Therapeutics, Inc. was featured at MDA, but also in the hearts and minds of those with DMD. We really feel like we have the opportunity now to meaningfully improve their lives and look forward to continue on that journey with them and with all of you. So we look forward to seeing you out in the community, and thank you so much. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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VUZI 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. Our conference will begin momentarily. Please continue to hold. Once again, greetings and welcome to the Vuzix Corporation Fourth Quarter and Full Year Ended December 31, 2025 Financial Results and Business Update conference call. At this time, participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. I would like to turn the floor over to Edward McGregor, Director of Investor Relations at Vuzix Corporation. Mr. McGregor, you may begin. Edward McGregor: Thank you, Operator, and good afternoon, everyone. Welcome to the Vuzix Corporation 2025 Fourth Quarter and full year ending December 31 financial results and business update conference call. With us today are Vuzix Corporation CEO, Paul J. Travers, and CFO, Grant Neil Russell. Before I turn the call over to Paul, I would like to remind you that on this call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements during the question and answer session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, as well as changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management's estimates as of today, March 12, 2026. Vuzix Corporation assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its final 2025 results and filed its Form 10-K with the SEC. So participants in this call who may not have already done so may wish to look at those documents as the company will provide a summary of the results discussed on today's call. Today's call may include certain non-GAAP financial measures. When required, reconciliation to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in the company's Form 10-K annual filing at sec.gov. It is also available at vuzix.com. I will now turn the call over to Vuzix Corporation CEO, Paul J. Travers, who will give an overview of the company's operating results and business outlook. Paul will then turn the call over to Grant Neil Russell, Vuzix Corporation's CFO, who will provide an overview of the company's fourth quarter and full year financial results, after which we will move on to the Q&A session. Paul J. Travers: Thank you, Ed. And thanks to everyone for joining us today. 2025 was an important year for Vuzix Corporation as we strengthened our financial discipline, improved the balance sheet, and sharpened the company's focus around our OEM and waveguide businesses. As we enter 2026, Vuzix Corporation is moving forward with a clear strategy focused on the areas where we can create the greatest long-term value. Our strategy is built directly on the core technologies, products, and capabilities we have developed over many years. Vuzix Corporation established its position through two closely connected strengths: advanced waveguides and enterprise smart glasses products. Together, those capabilities helped us develop deep technical know-how, real customer experience, and market credibility while also opening doors with larger organizations seeking a partner that understands not just optics, but the full product, deployment, and support equation. That foundation remains highly valuable and we are now building on it in a more focused and strategic way. Going forward, our branded enterprise smart glasses products business remains important and has room for lots of growth over the next five years. It gives us credibility. It gives us real-world customer insight. It helps validate use cases and open doors. But increasingly, we see it more as a strategic enabler for the larger opportunities ahead. Our long-term growth strategy is centered around our engineering services, which has expanded into two growth engines for the company: OEM products and waveguides, including the engineering services needed to support them both. The first leg of this strategy is growing our OEM products business across enterprise, defense and security agencies, and over time, the broader consumer markets where Vuzix Corporation can deliver complete smart glasses solutions as well as key optical components. The second leg of the strategy is capitalizing on our waveguide technology. Our scalable, cost-effective production of advanced waveguides positions Vuzix Corporation to play a central role in the next generation of AI- and AR-enabled smart glasses. These two growth engines are closely linked. Our OEM business is built on our core waveguide design and manufacturing technology, as well as the credibility we have earned over many years in enterprise smart glasses. Companies do not simply see Vuzix Corporation as an optic company with interesting IP. More and more, they see us as a partner that understands how these products need to work in the real operating environments, how customers use them, how they get deployed, and what it takes to support them successfully once they are. We believe that credibility is helping create pull for our OEM opportunities that develop around customized solutions for large-scale enterprises. And once we are in those discussions, we quickly see what differentiates Vuzix Corporation is our waveguide design know-how, high-volume manufacturing capabilities, and of course, our decades of making smart glasses products that we have developed and offered. This strategic shift also affects how we think about our own branded products. Historically, Vuzix Corporation had designed, built, and sold branded enterprise smart glasses. Going forward, we expect to be more selective in how we invest in that business. Rather than broadly funding entirely new enterprise product lines based primarily on our own market assumptions, we expect a greater portion of future product activity to be driven and funded by OEM customer demand. This demand for specialized AI smart glasses solutions in some cases will result in Vuzix Corporation branded offerings where appropriate. We believe our OEM business will become significant and will result in a more efficient and higher-probability path to growth as smart glasses technology continues to rapidly evolve. Expect our award-winning Ultralight platform, especially the Ultralight Pro, to be an important driver of that effort. The enterprise, along with the defense and security agency segments, are already taking shape, with active customer programs underway and visible demand emerging. In the enterprise OEM area, for instance, we are currently under contract with multiple large brands to develop custom smart glasses devices. One example is with a leading auto manufacturer to design a waveguide-based smart glasses solution for widespread use on their factory floors. We expect a derivative of this solution could carry the Vuzix Corporation brand to ultimately be sold into other enterprise market opportunities. Another good example of our expanding enterprise OEM business is Amazon. What began around maintenance use cases in distribution centers using off-the-shelf smart glasses is expanding, with a purpose-built pair of AI-driven smart glasses into additional areas that include server farms, warehousing, and robotics-related applications. We believe this kind of expansion in use cases is important because it shows how a single customer deployment can broaden into multiple operational areas over time, creating a deeper and more strategic relationship. On the defense and security agencies OEM side, we continue to see engagement growth, both in the number of active programs and in the maturity of those discussions. Importantly, this is no longer just early-stage outreach. We now have a mix of activity that includes active deliveries, contracted programs, proposal-stage opportunities, and additional programs that should expand over time. Collins Aerospace is a good example of that progress. We have started receiving production orders, giving us a solid proof point that our defense-related efforts with waveguides and projection engines are translating into real business. Beyond Collins, we are now actively engaged in opportunities with multiple government agencies, traditional defense contractors, and emerging new defense players. Overall, we believe our position in defense and government is substantially stronger today than it was a year ago, with a broader opportunity set and clearer paths to opportunities that should ultimately result in production programs. We also believe geopolitics is beginning to change how defense and security agencies think about wearable technology. For example, the battlefield and the broader security environments are evolving quickly. Drones have rapidly become a critical operational tool, and smart glasses are becoming an increasingly useful interface for helping operators see, control, coordinate, and respond in real time. More broadly, secure information access, situational awareness, and AI delivered through wearable displays are becoming increasingly relevant across defense, homeland security, and public safety use cases. We believe this shift in thinking will become an important driver of long-term demand for smart glasses and related head-worn systems. And that brings me to waveguides. During 2025, we completed the second and third tranches of Quanta's investment, bringing their total strategic investment in Vuzix Corporation to $20 million. That was important not only because of capital for our growth, but because it provided meaningful third-party validation of our waveguide roadmap, manufacturing capabilities, and our ability to support future smart glasses programs at scale. It is very clear that the main reason Quanta invested in Vuzix Corporation is to gain access to our high-volume waveguide manufacturing design capabilities. That said, Quanta is also interested in Vuzix Corporation's smart glasses industry expertise. That is another key strategic prize they gained access to with their investments. We also continued to strengthen our display ecosystem relationships. These relationships matter because the more third-party display partners we can support, the more ways we have to embed our waveguides into wearable products. Our recent collaborations with TCL, CSOT, Safflex, Himax, Avogent, and others matter because the industry increasingly recognizes that success in AI glasses and AR glasses will require the right combination of waveguides, display performance, manufacturability, and cost. Those pieces have to work together. We believe Vuzix Corporation is one of the few companies that can not only supply waveguides that are uniquely optimized for a given display, but also help design, develop, and build full smart glasses products and system solutions from the ground up. We believe our waveguide business represents the largest long-term opportunity for Vuzix Corporation. As display-based smart glasses become a true mass-market computing platform over time, advanced waveguides will become one of the key enabling technologies. In that scenario, the ultimate unit opportunity for waveguides could potentially be enormous. That is why scale matters. That is why manufacturability matters. And that is why Quanta matters. The waveguide market will not be won by having a good lab prototype. It will be won by having technology that performs, can be produced reliably, and can be cost-competitively priced now and more so in the future as volumes ramp. Vuzix Corporation has spent years building toward exactly that value proposition. We believe the broader consumer smart glasses market is now entering an important new phase. Much of the recent growth and attention has been driven by Meta, and that has been positive for the industry because it has helped to validate demand and increase awareness. But we are also starting to see the early signs of a broader market forming with additional technology and eyewear players intending to bring products, platforms, and ecosystem support into the category. On the Vuzix Corporation branded enterprise side, enterprise markets are becoming more mature and more ROI-driven. Customers are increasingly focused on implementing solutions that improve workflow efficiency, enable AI-driven hands-free operation, enhance safety, and produce measurable business value. Our enterprise products continue to demonstrate that Vuzix Corporation understands real workflows, real customers, and their real deployment challenges in maintenance, logistics, warehousing, inspection, and other industrial settings. We will continue to support and monetize the M400 platform and the recently introduced LX1 to the market. To be clear though, the maturity of the enterprise space is providing revenue, but more importantly, opening doors for Vuzix Corporation OEM solutions. Going forward, to support our business, we are allocating a majority of our planned resource and R&D spend toward waveguides, Quanta-related programs, DoD efforts, and funded OEM programs. This is intentional. We are putting our time, money, and talent behind the areas where we believe Vuzix Corporation has its strongest leverage and clearest strategic advantage. I would like to remind everyone that Vuzix Corporation has stayed in this market and continued building when many others, including better-funded players, have stepped back, stumbled, or disappeared. Over that time, we have continued innovating, serving customers, advancing our waveguides and manufacturing capabilities, and building what we believe is a very meaningful intellectual property position: more than 500 patents and patents pending worldwide. That investment in innovation represents a significant asset for the company. The smart glasses market is now moving in a direction that we believe increasingly values exactly those kinds of capabilities. AI is making smart glasses more practical. Customers are becoming more specific about what they need, and waveguide manufacturability and protected enabling technologies are becoming more central to success, not less. We believe that the perseverance Vuzix Corporation has shown over these many years has positioned the company to create meaningful long-term value for our shareholders. With that, I will turn the call over to Grant for the financial overview. Grant? Grant Neil Russell: Thank you, Paul. As Ed mentioned, the Form 10-Ks we filed this afternoon with the SEC offer a detailed explanation of our annual financials. I am just going to provide you with a bit of color on some of the full-year as well as quarterly numbers. For the fourth quarter ended December 31, 2025, we reported $2.2 million in total revenues as compared to $1.3 million for 2024, an increase of 76%. The revenue increase was primarily due to higher unit sales of our M400 smart glasses as well as significantly higher engineering services sales. For the full year ended December 31, 2025, Vuzix Corporation reported $6.3 million in total revenues as compared to $5.8 million for the prior year, an increase of 9%. Product sales increased by 4% year over year on greater unit sales of our M400 products. Sales of engineering services for the year ended December 31, 2025 were $1.6 million as compared to $1.3 million in 2024, an increase of 27%. For the full year ended December 31, 2025, there was an overall gross loss of $1.1 million as compared to a loss of $5.6 million in 2024. The reduced gross loss for 2025 was primarily a function of significantly lower inventory obsolescence reserves that were included in cost of sales in 2024. Research and development expenses for 2025 rose 31% to $12.6 million as compared to $9.6 million in 2024. The increase was primarily due to a $2.6 million increase in external development costs on our new LX1 smart glasses, which did not begin shipping until early 2026, and our waveguide products, and a $700,000 increase of depreciation expense related to underutilized new manufacturing equipment still being optimized before they are placed into full service, partially offset by a $900,000 decline in non-cash stock-based compensation expense due to the completion of the 2024 voluntary salary reduction program. For the fourth quarter ended December 31, 2025, research and development expenses were $4.5 million as compared to $2.0 million in 2024. The increase was largely driven by higher new product development costs related to the completion of the LX1. Sales and marketing costs for all of 2025 fell to $5.5 million from $8.2 million in 2024, a reduction of $2.7 million or 33%. The most significant factors for these expense reductions included a $1.2 million net decrease in bad debt expense, an $800,000 decrease in cash salary and benefits-related expenses driven by headcount decreases, and a $500,000 decrease in non-cash stock-based compensation expense, primarily due to the completion of the 2024 voluntary salary reduction program for equity. For December, sales and marketing expenses were $1.4 million as compared to $2.0 million in 2024. The decreases were primarily driven by a $400,000 reduction in bad debt expense and a $200,000 decrease in stock-based compensation expense. General and administrative expenses for the full year of 2025 decreased 32% to $11.6 million as compared to $17.2 million in 2024. The bulk of this decrease was due to a $4.9 million decline in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the company's original LTIP, which was canceled on June 16 after shareholder approval. For the fourth quarter ended December 31, 2025, general and administrative expenses were $2.3 million as compared to $4.3 million in the 2024 fourth quarter. The decrease was primarily driven by a decline in non-cash stock-based compensation expense. For the fourth quarter ended December 31, 2025, the net loss attributable to common shareholders was $8.7 million, or $0.12 per share, as compared to a net loss of $13.7 million, or $0.16 per share, for 2024. For the full year ended December 31, 2025, the net loss attributable to common shareholders was $32.3 million, or $0.42 per share, as compared to a net loss of $73.5 million, or $1.08 per share, for the full year of 2024. The decreased net loss was in large part attributable to a $30.1 million impairment loss that was recorded in 2024. Excluding this impairment write-off, overall net loss for 2025 still improved by over $11 million versus the 2024 year. We also ended the year with a stronger balance sheet. Our cash position as of December 31, 2025 was $21.2 million versus $18.2 million as of December 31, 2024. We ended 2025 with a net working capital position of $22.3 million and no current or long-term debt outstanding. Inventory levels improved, with our net inventory declining to $2.2 million as of December 31, 2025, as compared to $4.8 million at the end of 2024. Net cash flows used in operating activities declined to $8.8 million for the year ended December 31, 2025, as compared to $23.7 million for 2024, a decrease of $14.9 million. For all of 2025, we raised $24.4 million from financing activities that consisted of $10.0 million of additional investments by Quanta Computer, and $14.3 million of net proceeds received from equity sales under our ATM program during the year. Cash used for investing activities in 2025 was $2.6 million, down modestly from $2.9 million in 2024. Overall, we continue to control and reduce our operating expenses where possible. Following a 36% reduction in our cash expenses in 2024 resulting primarily from headcount reductions, we held our cash expense growth to just 4% in 2025 despite new product development spending and better positioning ourselves for general business growth in 2026. We remain confident that management's plans, along with potential further equity sales under our ATM program—of note, we raised an additional $6.0 million to date thus far in 2026—provide the company with more than adequate resources to move forward with its operating plan well through into 2027. With that, I would like to turn the call back over to the Operator for Q&A. Operator: Thank you. I will be conducting a question and answer session. We will now open for questions. Our first question today is coming from Christian Schwab from Craig-Hallum. Your line is now live. Christian Schwab: Great. Thank you. Hey, Paul, can you just give us an idea of what you expect for 2026? I know we have this movement in Amazon for purpose-built glasses. It sounds like numerous different opportunities within the defense industry and, you know, hopefully, eventually Quanta bringing a more meaningful program to the business. Can you give us an idea of what the range of outcomes for 2026 revenue would be and where you think the most significant portion of that revenue will come from? Paul J. Travers: I hate saying it this way, but I will spitball a little bit here for you, Christian. You should see the OEM, and in particular, alongside it the waveguide business, start to climb quarter after quarter throughout the year. And you should see it surpass the revenues on the enterprise, the pure Vuzix Corporation branded enterprise side of our business, before the year is up. So an exciting piece of our business right now. It is pretty amazing how the rate of new programs that we are bidding on and that we are winning are coming in the front door. So from that side, exciting stuff. Amazon is multiple different areas and it is a custom-built OEM-style device. This large car company, we expect, should be rolling in through to production by the end of this year also. You guys know we put press releases out about Collins, and they are in with Vuzix Corporation right now. And there is more than a handful of others that are in the queue. Some of these guys could represent some really significant business for Vuzix Corporation, well beyond what 2025's numbers were in the entire enterprise space. But it is going to grow through the year, we expect. Yes, you should see us stepping forward each and every quarter, but it is bumpy, the business, as you guys all know. So it is hard for us to predict exactly, other than to say that it is impossible to miss the fact that there is a wave of OEM business that is coming for Vuzix Corporation. Christian Schwab: And following up upon that, when can we see additional orders, whether they start small in 2026 and meaningfully expand in 2027? Would you anticipate throughout the course of the year that we could have, you know, three to six announcements regarding orders and go-to-market, with production in 2026? Or is that yet to be seen? Paul J. Travers: I think you would be seeing something like that, Christian. And I think you will also see some press releases announcing some great business partnerships that have developed that will not yet be product revenue-generating but will be the beginnings of it through the engineering services and work that needs to get done to get it to that point. So there is a lot. It should be an exciting year from the perspective of new business opening up for Vuzix Corporation. Christian Schwab: Great. No other questions. Thank you. Operator: You are welcome, Christian. Thank you. We have actually reached the end of our question and answer session. I would like to turn the call back over for any further or closing comments. Paul J. Travers: Thank you very much, Kevin, and thank you, everyone, for joining us today. We believe that Vuzix Corporation is entering 2026 with a very clear path to value creation through our OEM programs, the defense and government opportunities, and advanced waveguide technologies, supported by the enterprise smart glasses foundation we have built over many years. We strive to invest where our advantages are the strongest. We have strengthened strategic relationships. We have improved the structure of the business, and we believe the value we have built is becoming clearer both operationally and strategically. Still work to do, clearly, but we are encouraged by where we stand and by the direction we are heading. Thank you again for your continued support, and we look forward to updating you again next quarter and as 2026 unfolds. 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.

28天前Insight Analytics约5分钟阅读

SKIN 2025 Q4 财报电话会议

Operator: Good day, and welcome to The Beauty Health Company 2025 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then two. Please note this event is being recorded. I will now turn the conference over to Mr. Norberto Aja, Investor Relations. Please go ahead. Norberto Aja: Thank you, Operator, and good afternoon, everyone. Thank you for joining The Beauty Health Company's fourth quarter 2025 conference call. We released our results earlier this afternoon via an earnings press release, which can be found on our corporate website at beautyhealth.com. Joining me on the call today is The Beauty Health Company's Chief Executive Officer, Pedro Malha, along with our Chief Financial Officer, Michael Monahan. Before we begin, I would like to remind everyone of the company's safe harbor language. Management may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including guidance and underlying assumptions. Forward-looking statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially. Listeners are cautioned not to place undue reliance on forward-looking statements. For further discussion of risks related to our business, please refer to the risk factors contained in the company's filings with the SEC. This call will present non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is in the earnings press release furnished to the SEC and available on our website. Following management's prepared remarks, we will open the call for a question-and-answer session. I will now turn the call over to our CEO, Pedro Malha. Please go ahead, Pedro. Pedro Malha: Good afternoon, everybody, and thank you for joining us today. The Beauty Health Company has built one of the most recognized platforms in professional skin health, and my first five months with the company have reinforced my conviction in the long-term opportunity ahead of us. But before we review the quarter, I would like to share a few observations here. My background is in global medtech businesses built around differentiated technology and disciplined commercial execution to drive growth. And what attracted me to The Beauty Health Company was the opportunity to bring the same model to the company. The foundation is already in place. We have a globally recognized brand, we have a large installed base of systems placed with providers around the world, and we operate a consumables model that, when executed well, generates meaningful operating leverage. So our task now is straightforward: to unlock the full economic potential of these assets. That means strengthening the commercial engine behind the platform with greater discipline and operating rigor consistent with established medtech companies. It all begins with activating the installed base, improving utilization, reinforcing the economics of our providers, and continuing to invest in clinically meaningful innovation. But before discussing the progress we are making, I think it will be useful to step back a little and look at the broader market. First, the fundamentals of the aesthetic category remain strong. Research shows that consumers continue to invest in their skin even when they pull back in other areas. Skin health is increasingly becoming a lifestyle category, one that is built around prevention, routine care, and clinically proven outcomes. We have seen this evolution before in areas like oral health or wellness, where treatments that once happened occasionally became part of everyday consumer behavior. We believe skin health is following a similar trajectory, which can make the long-term opportunity for this category significant. The market itself has expanded dramatically. According to industry data, the U.S. medspa market has grown from roughly 1,600 locations in 2010 to more than 13,000 today. At the same time, the consumer has evolved. We are seeing broader demographics entering the category: men, Gen Z, and younger consumers are engaging with treatments earlier. Today's consumers are seeking outcomes that look healthy, natural, and authentic. Also, consumers are more informed than ever before. They understand ingredients, treatment mechanisms, and outcomes. They are not simply purchasing a brand; they are looking for results. Providers have evolved as well. They are more focused on return on investment and are increasingly building treatment protocols that combine multiple modalities to deliver better clinical outcomes. Taken together, we believe that all of these trends are well aligned with our core product strengths. HydraFacial treatments are noninvasive, clinically credible, and repeatable. They also serve as an accessible entry price point for consumers into the aesthetic category, which helps to bring new patients into providers’ practices and creates opportunities for additional procedures. HydraFacial is also uniquely versatile. The treatment works across genders, ages, and skin types—a combination that very few technologies in the medical aesthetic space can match. Because our treatment is repeatable and easy to integrate, it also fits naturally into preventive skin health routines and combination protocols, which is exactly where the market is moving. So The Beauty Health Company is uniquely positioned at the intersection of clinical skin health and consumer aesthetics. However, our commercial model was built for an early phase of the market, one where the category was newer, competition was lighter, and placing devices was the primary growth driver. That playbook worked well for a long time, but markets mature, and we need to evolve our model ahead of that curve and shift it from a model of device placement to a model of device utilization, which is where we believe the long-term growth of the business is. Over the past year, the company strengthened its balance sheet, improved its cost structure, and restored financial discipline across the organization. Our fourth quarter results reflect that progress. At the same time, we hold the view that these results do not yet reflect the full potential of The Beauty Health Company. What they do demonstrate is that the foundation of the business has stabilized. For the fourth quarter, total revenue was $82.4 million, representing a decrease of 1.3% compared to the prior-year quarter, a meaningful improvement from the double-digit decline we experienced in Q3. Consumables revenue increased to $57.7 million from $56.7 million in the prior year, representing growth of 1.7% year over year and reinforcing the resilience of our recurring revenue model. Device revenue was $24.7 million, still down 7.9% year over year, but performance improved meaningfully here relative to the third quarter. These numbers still reflect some pressure in the capital equipment segment, which is consistent with the broader macroeconomic environment. That said, the trend is moving in the right direction, and the improvement we saw from the prior quarter is an encouraging sign that the capital equipment business is stabilizing. Adjusted gross margin expanded to 67.4%, while GAAP gross margin expanded to 64.4%, driven primarily by a favorable mix shift towards consumables revenue. Additionally, profitability improved significantly. Adjusted EBITDA was $15 million in the fourth quarter compared to $9 million in last year’s quarter, representing approximately 700 basis points of margin expansion. For the full year, adjusted EBITDA increased to $45.1 million compared to $12.3 million in the prior year—again, a significant improvement. So the results for this quarter highlight two important characteristics of our model. First, this business has meaningful operating leverage. Second, that leverage responds directly to disciplined execution. Operationally, we placed more than 1,000 devices in the quarter and ended the year with over 36,000 systems in our global installed base. That installed base is the strategic core of this company, and it represents a recurring revenue infrastructure that is already in place. While this base has already been built, we think it remains underutilized. We believe that even modest improvements in utilization can drive significant consumables revenue and margin expansion. So our job now is to unlock the full productivity of that installed base. Now, looking ahead, the message here is that we remain optimistic about the category in which we operate. Demand for non- or minimally invasive science-based treatments continues to grow globally. The market is shifting away from procedures driven primarily by short-term trends toward outcomes-driven protocols. The market is also shifting from individual treatments toward combination therapies and from soft marketing claims toward more clinically validated results. These trends favor companies with scale, clinical credibility, stronger provider education, and durable recurring economics, which is exactly where The Beauty Health Company is positioned. At the center of our strategy is a powerful commercial model. Our brand credibility drives consumer demand. Consumer demand drives patient traffic into providers’ practices. Patient traffic drives higher treatment utilization per device. Utilization drives consumables revenue, which is our margin engine. For providers, this generates additional revenue and motivates them to expand, upgrade, and deepen their relationship with us. Utilization is the center of gravity, and we believe that when utilization improves, it creates positive momentum across the model. To accelerate this flywheel, we are focused on three priorities: first, salesforce excellence; second, marketing discipline; and third, focused innovation. Starting with salesforce excellence, historically much of our commercial success was relationship-driven. That worked well in the early stages of the company, but the next phase of growth requires a much more structured, disciplined commercial approach. We are now transitioning to a value-based selling model, one where our teams clearly demonstrate how HydraFacial drives revenue, patient demand, and attractive returns for provider practices. That also means sharpening our clinical economic differentiation, improving how we segment and prioritize accounts, and implementing more structured sales plans. These plans focus not only on acquiring new practices but also on expanding utilization across our installed base and reactivating low-utilization accounts. We are also deploying stronger commercial tools and analytics so we can track activation, utilization, and retention across the installed base in real time. This gives us better visibility into performance and allows us to manage the business with greater precision. Second, marketing discipline. Our marketing strategy needs to be more focused on demand generation that directly supports provider growth. We are refining the positioning of HydraFacial as a clinical-grade skin health platform—one that is supported by science, outcomes, and stronger provider education. At the same time, we are activating an underleveraged asset in our portfolio, SkinStylus. It is a strong technology in the growing microneedling category that historically has never received the commercial focus it deserves, and we see a meaningful opportunity to expand its role within providers’ practices. We are also expanding consumer demand generation programs designed to bring new patients into providers’ offices and strengthen the economic value proposition for these providers. Additionally, we recently brought in a new Brand and Clinical Strategy Office with deep medtech experience to lead our brand and marketing strategy and strengthen the clinical positioning of our technology. Third, focused innovation. Innovation will remain disciplined and targeted at opportunities that strengthen our platform. This includes the development of a next-generation HydraFacial system designed to drive upgrades across the installed base and expand our market share. We are also investing in a much more selective portfolio of clinically backed boosters designed to increase booster attachment rates, improve provider economics, and expand treatment protocols. If we look back, HydraFacial has historically been viewed primarily as a single treatment, but we see it differently. We see HydraFacial as the foundation of a broader skin health platform—one that integrates devices, boosters, protocols, and complementary technology into a comprehensive ecosystem for providers and customers. We are also exploring selective commercial and technology external partnerships aimed at broadening our product ecosystem and enlarging our relationship and offering to providers. All in all, we believe that taken together, these initiatives will strengthen the installed base, expand HydraFacial’s role in providers’ practices, and accelerate the compounding economics of our model. This means that we will shift from a single-product company to a skin health platform. For that reason, 2026 will be an execution year, focused on stabilization and investment into the next phase of growth. With the operational changes that we are implementing, we expect to return to growth in 2027 and accelerate beyond that as innovation and product launches scale. The Beauty Health Company has one of the largest installed bases in the aesthetics industry, one of the most recognized brands in skin health, a proven device-plus-consumables model, and a global commercial infrastructure across North America, Europe, and Asia Pacific. These are proven and durable advantages. Our task now is to match those advantages with the commercial discipline and operating rigor of a best-in-class medtech company. Before I turn it over to Michael, let me quickly frame our expectations for the year. 2026 is likely to come in modestly below the prior year, but as our initiatives take hold, we expect momentum to build through the second half, positioning the company to exit 2026 on a stronger trajectory and setting the stage for returning to growth in 2027. I will now turn the call over to Michael Monahan to walk you through the financials and our 2026 guidance in more detail. Michael? Michael Monahan: Good afternoon, everyone. Key financial metrics for 2025 reflected meaningful improvement. Our global footprint surpassed 36,000 systems. We increased our adjusted gross margins from 62% to over 68%, and GAAP gross margins increased from 54.5% to 65.3%. We grew adjusted EBITDA from $12.3 million to $45.1 million, or 268%. We generated over $37 million in operating cash flows, and we strengthened our balance sheet by proactively restructuring our debt. Because of this, we exited 2025 a stronger company than we were a year earlier. These improvements did not happen overnight and are the result of the hard work of our dedicated teams. As we continue to stabilize the company and prepare to return to growth, we believe we are positioned to drive improved profitability and increased margins in the future. For the full 2025 fiscal year, net sales were $300.8 million compared to $334.3 million in 2024. Consumables revenue totaled $212.7 million, while device revenue was $88.1 million. We ended the year with an installed base of over 36,000 systems globally, which remains the foundation of our recurring consumables revenue model. We delivered adjusted EBITDA of $45.1 million, representing a significant improvement from $12.3 million in the year prior. The year-over-year change was driven by our continued focus on expense discipline and sustained margin improvement, demonstrating the operating leverage of our business model. On the balance sheet, we ended the year with approximately $232.7 million in cash, cash equivalents, and restricted cash compared to approximately $370.1 million at the end of 2024, representing a 37% decrease. The year-over-year change was primarily driven by the repurchase of convertible senior notes during 2025 which, along with the refinancing of our notes, significantly strengthened our capital structure and extended our debt maturity profile. For the fourth quarter, net sales were $82.4 million, a slight decrease of approximately 1.3% compared to the previous year. The year-over-year decline primarily reflects lower delivery system sales. We placed 1,032 delivery systems during the quarter compared to 1,087 units in the prior-year period. GAAP gross margin was 64.4% in the fourth quarter compared to 62.7% in Q4 of last year. The improvement in gross margin was primarily driven by lower inventory-related charges and a favorable mix shift towards consumables, partially offset by lower average selling prices on equipment. As planned, we successfully sold through the majority of our Elite FRC devices during the quarter, which are sold at a lower ASP than our new Syndeo devices. Adjusted gross margin was 67.4% in the fourth quarter versus 67.1% in the prior year. We continued to manage costs tightly throughout the quarter, with GAAP total operating expenses coming in at $52.9 million in Q4, down from $59.5 million in the prior year. Selling and marketing expenses declined to $23.5 million, reflecting lower headcount and disciplined spend management. Research and development expense was $1.7 million, up modestly year over year, reflecting professional services related to early-stage product investments. General and administrative expense declined to $27.7 million, driven primarily by cost controls, lower bad debt expense, and reduced expenses resulting from our shift from direct to distributor distribution in China. As a result, adjusted EBITDA for the quarter came in much stronger than the prior year at $15 million compared to $9 million in Q4 of last year. Net loss for the quarter improved to $8.1 million compared to a net loss of $10.3 million in the prior year. Moving to guidance, 2026 projections reflect the execution priorities Pedro outlined earlier. For the full year, we expect revenue in the range of $285 million to $305 million with positive adjusted EBITDA of $35 million to $45 million. At the midpoint, this implies revenue broadly consistent with 2025 when normalizing for our go-to-market change and softness in China, with a more back-half-weighted cadence as execution initiatives take hold. We believe this is the appropriate framing for 2026 given the work underway to strengthen the commercial foundation of the business, including sales execution, installed base activation, and targeted investments in marketing, education, and innovation. From a cadence perspective, we currently expect 2026 to be modestly below the prior year. This expectation reflects continued macro pressure in capital equipment, increased competitive activity that has lengthened the device sales cycle, the transition work underway within our sales organization, and ongoing adjustments in certain international markets, including China. It is also worth noting that fourth quarter results typically benefit from year-end ordering patterns, which do not repeat in the first quarter. As these actions take hold, we expect improving momentum in the second half, with the business exiting 2026 on a stronger underlying trajectory than where we began. We believe these actions will strengthen the underlying productivity of our installed base and reinforce the durability of our recurring consumables model, positioning the company for a return to growth in 2027. For the first quarter of 2026, we expect revenue of $63 million to $68 million and positive adjusted EBITDA of $3.5 million to $5.5 million. As a reminder, the first quarter is historically our lowest revenue quarter due to seasonal dynamics, including increased sales and marketing activity early in the year and typical ordering patterns among providers. Overall, our outlook reflects a disciplined approach, prioritizing operational execution while investing in long-term growth. With that, I will turn the call back to Pedro. Pedro Malha: Thanks, Michael. To close, our fourth quarter reflects meaningful structural progress in margins, profitability, balance sheet strength, and in the operating foundations of the business. Key characteristics that make The Beauty Health Company a compelling long platform remain unchanged: the scale, the brand equity, a recurring revenue model with operating leverage, and a global distribution. What is changing is the disciplined operational focus we are bringing to those assets. We believe that as utilization improves and innovation strengthens the platform, the compounding economics of this business will become increasingly visible. We expect 2026 to be the year we demonstrate that operationally, and 2027 is when we expect that progress to translate into sustainable revenue growth. We look forward to updating you on our progress in the next quarter. I will now turn the call back to the Operator for questions. Thank you. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We will now pause momentarily to assemble our roster. The first question will come from Alan Gong with J.P. Morgan. Please go ahead. Alan Gong: Hi, thanks for taking the question. So I guess my first is going to be on the guide. I think following, you know, you have been taking the last couple of years to really stabilize the underlying Syndeo business, and I understand that you are doing a pretty substantive overhaul of the underlying sales organization. But when I look at your outlook for next year, despite the fact that you have another year of, you know, sales declines on tap, it looks like you are still expecting to generate pretty good adjusted EBITDA. So just help me to right-set expectations for these investments into the sales force and this overhaul with being able to drive continued leverage. Pedro Malha: I will just—thanks for the question. So I will just summarize back on what we are guiding here. On revenue at the midpoint, we are expecting to be flat year on year once you normalize, actually, most for the China transition, and that is pretty intentional, the guide, because in the end, we view 2026 as an execution year. On adjusted EBITDA, that number means that at the midpoint of the guidance, this will be slightly below 2025 largely because of the reinvestment that we are doing into the business with an increase in R&D for basically fueling future innovation. So the expectation, and Michael alluded to this, is that, all in, the first half of the year we expect to be down mid-single digits, and in the second half, we expect to be flat. Without APAC, which is majorly a China impact here, the first half is expected to be down low single digits and the second half to be positive low single digits in terms of growth. The main drivers are actually both consumables and devices here as we ramp up towards the back half of the year. Michael, I do not know if you want to— Michael Monahan: Sure, Alan. I can add if you also wanted to know where, in the middle of the P&L, how we are thinking about the guide on the gross margin side. I would expect we modeled in gross margin for the full year to be relatively consistent with where we have been in 2025. The team has made a lot of improvements on the cost side of the business to get leverage within overall gross margin. We expect that to continue for the full year of 2026. On the OpEx side of the business, as you mentioned, we still are driving savings and cost efficiencies through the G&A line of the business, but we are reinvesting that back into the R&D line of the business into innovation for new products into the future. Alan Gong: Got it, thanks. And then I guess just on the underlying—I know you called out continued challenges on the capital side, but you clearly had a very, very strong systems placement performance to close out the year. So when we think about the underlying assumptions for the market, especially given all the volatility from a broader macro perspective, can you just help us with your underlying assumptions for trends throughout the year and in first quarter? Pedro Malha: Sure. So in terms of the overall, I will say end consumer signals that we are basing ourselves into, our data shows that the consumer is still spending but is being more select in choosing treatments that deliver clinically proven results at an accessible—we can call it accessible—price point. That actually is exactly the space that HydraFacial occupies. The aesthetics category has been pressured and has been pressured for the last couple of years, and this is mainly due to the tightness of credit and the capital spending decisions taking longer because of that. If these conditions improve, then we can see procedure volume pick up, and after that, we typically see device placements pick up as well. Our ability to return to growth is not relying on a change in these macro trends. Rather, it hinges on our ability to execute on our strategy. If you wanted to go down and dip a little bit to a lower level, in terms of the provider trends that are shaping this market: in the medical segment, which, by the way, is 70% in the U.S. of our business, medical spas occupy a large percentage of that segment and continue to be the engine of this market. We believe that this engine will continue to grow because they are indeed using HydraFacial as a way to bring patients in and upselling them into higher-ticket treatments. Plastic surgeons seem to be losing some traction, and dermatologists are more stable, but this is driven more by the specific patient skin treatments needed rather than just pure discretionary spending. At the high end, the more invasive side of aesthetics seems to be softening, while the noninvasive skin quality treatments like ours are holding up. If you look at the nonmedical segment, which is 30% of our business and includes day spas and single-room estheticians, we see that playing out more stable throughout the year. Operator: The next question will come from Oliver Chen with TD Cowen. Please go ahead. Jonah: Hi, this is Jonah on for Oliver. Thank you for taking our question. Would love to get additional color just around the churn trend that you saw in the quarter, and what is baked in, in terms of the trend rate in your guide? And how do you anticipate tackling the churn rate throughout the year? Another question is you mentioned men and Gen Z are the newer customers. How are you repositioning your marketing messaging, if at all, to target those new customers? Appreciate the color there. Thank you so much. Pedro Malha: No problem. Michael will take the first part of that question. I will take the second. Michael Monahan: Sure. Thanks for the question. Churn was a little bit higher than usual for the full year 2025, but it improved in Q4 both year over year and sequentially from what we saw in Q3. In the fourth quarter, it was about 1.1%. When you look versus the year prior, as I said, it was a little bit higher than that. In Q3, it averaged around 1.8%. So we are moving in the right direction. The driver of the churn is mostly our smaller accounts that do not have a business development manager assigned to them. We began over the last few months restructuring our inside sales and customer service teams to better meet the needs of these accounts. Our focus in 2026 is to potentially improve in that area. The guide, however, assumes that we will hold churn on a year-over-year basis flat, so our hope is that there is upside to the guide that we gave in that particular line item. Pedro Malha: In terms of segments that are moving in our way, as I mentioned in my initial remarks, the strategy is based on three assets. We have a great brand, a very large installed base, and a razor-razorblade model that basically means that every device we place can become an annuity from high-margin consumables that potentially can last many years. Our job as different customers and segments get into the fold is to unlock the full potential of these assets. To support this strategy, we have a market that is moving in various ways our way. As I mentioned, the medspas continue to grow. There is a set of new demographics entering the category, and we are building and addressing their needs and specific concerns in terms of skin health. We are seeing more and more consumers getting into treatments earlier in age, and they want to treat skin very much like a lifestyle routine, which is definitely positioning HydraFacial and The Beauty Health Company well to take advantage of this shift. We are indeed moving towards much more of an outcome-driven protocol, combination therapies, clinically validated results, which is exactly us. All in all, as more consumers and more demographics expand into the category, we are very well positioned to be at the forefront and to offer the exact solution that they are looking for. Operator: The next question will come from Susan Anderson with Canaccord Genuity. Please go ahead. Alex Legg: Hi, good afternoon. Alex Legg on for Susan. Thanks for taking our question. You hinted that you have a potential new system in the works as a focus of your innovation. Is there a timeline that you are targeting for that launch, if you are able to talk about it? And then what type of additional services would that system potentially offer? Pedro Malha: Thank you. Sure. Let me bring you back into our innovation strategy and the initiatives that we have to support that same strategy. We are improving—let me start by saying that we are improving the discipline around new product launches, period. We are not going to go and chase trends. Instead, we are going to invest in and launch products, technologies, and solutions that materially add value to our providers, that are differentiated versus our competitors, that provide outcomes consumers want, and that are accretive financially to our business in terms of margin. That is the framework we are using for innovation. Now, when it comes to the next-gen HydraFacial, the goal here is to build one that will give our existing more than 36,000 providers a compelling reason for upgrade and new providers a compelling reason to get into the HydraFacial universe. I do not want to go too much into the specific features of the next-gen HydraFacial device at this moment, but what I can tell you and commit is that we will launch a device that will materially advance the value proposition and the return on investment of HydraFacial to our providers. In terms of timeline, we are right now at the early stages of development, but the plans are to launch the next gen of HydraFacial in 2028, and we will keep you updated as we get closer to those timelines. Alex Legg: Thanks, Pedro. That is pretty exciting. And then just thinking longer term about sales between consumables and new device placements. Right now, it is around 70% consumables, 30% new devices. Is that the rate that we should think about it? Is there a different target that you are thinking about longer term? Thank you. Michael Monahan: We are not in a position to give a target right now. Our expectation is that as we move through not just this year and into next year, we return to device growth. We have not been able to give the specifics outside of focusing on growing both of those categories into the future. Later in the year and into next year, we will continue to provide updates on where we think that can be. Operator: The next question will come from Jon Block with Stifel. Please go ahead. Joseph Federico: Hey, everyone. Joe Federico on for Jon Block. Maybe just to dig a little bit deeper into the consumables performance in the quarter. EMEA has been pretty strong in terms of consumable sales over the past three or so quarters and in the back half of the year off of more difficult comps as well. Can you just give us some color on what is driving that? Is it just a healthier end market, or is there any sales execution drivers that can be replicated in some of the other regions? Any thoughts would be helpful. Pedro Malha: Sure, Joe. Overall, at the highest level in terms of the full-quarter performance, on consumables we grew low single digits compared to negative substantial growth in Q3. For the full year, we grew as well low single digits, but booster sales grew much more, and that is an important point—high single digits. If you want to break that out by region, in the U.S., looking at the larger provider groups and dermatology practices, both of these are growing, while small independent providers are still under pressure. You touched on a good point, which was EMEA, and within EMEA specifically, Germany is performing exceptionally well. The only pressure that we saw in the quarter when it comes to consumables performance was coming from China, as a direct result of the China transition. If you add this to the underlying trends driving this consumables demand, the core demand is still there. Consumers continue to prioritize our treatments as part of their skin health routine and also because of our price position versus other aesthetic treatments. The average spend per treatment in the U.S. in consumables is up 10% year over year, driven by our premium boosters and the strategy of the booster. Michael Monahan: If I could just add one thing additionally to that, EMEA was a little bit different than the other regions last year because they launched five new boosters throughout the year. Some of them got regulatory approval later. These were boosters that launched earlier in the Americas, and the booster growth that we saw there really demonstrates the power of innovation in this business. When you can launch new, innovative products, that can actually drive demand. Within EMEA, we saw that not just in the direct markets but also in the distributor channel, where we saw really good consumables and specifically booster growth. Joseph Federico: Okay, that is really helpful color. Thank you. And then maybe just a follow-up on guidance. The Q1 2026 revenue guidance at the midpoint implies a more sequential decline than we have seen over the past handful of years. The past couple of quarters’ actual performance has come in pretty solidly ahead of guidance and expectations. Should we assume any more conservatism to the guidance going forward, or is there a specific reason to point to for a more pronounced decline in Q1 quarter over quarter? Michael Monahan: The Q1 midpoint does assume a decline in the mid-single digits. It is primarily due to softness in the APAC region and equipment softness in the Americas. That is reason number one. The second point is on consumables revenue for Q1. We are projecting that to be lower year over year on a consolidated basis for a couple of reasons. First, distributor orders that came in in Q4—there is some timing a lot of times that happens with the distributor channel—they came in strong at the end of the quarter, so we are factoring in a bit of a decline in Q1 just due to timing. Also, overall, as Pedro mentioned, we are seeing lower Signature treatments due to macro pressures. Even though consumers who are coming in to get treatments are electing more boosters than they have in the past, which is driving up the overall treatment, we factored in that lower consumables revenue and treatments into the first quarter. I would suggest the way we guide is towards the midpoint, so we do not really factor in deliberate conservatism. That is what we are seeing in the business. We are obviously always striving to do as best we can, and if we can outperform, we will certainly do so. Joseph Federico: Great. Thank you for taking the questions. Operator: The next question will come from Bruce Jackson with The Benchmark Company. Please go ahead. Bruce Jackson: Looking at the strength in consumables this quarter, was there anything going on in terms of average selling price increases or additional upselling? Can you provide any color on that? And then given the importance of the boosters, what is the anticipated launch cadence for 2026? Pedro Malha: Bruce, in terms of the boosters themselves, roughly they are about a fifth of the treatments. A fifth of the treatments use a booster, and we are seeing that ratio keep improving. For Q4, booster revenue was up 7% year on year, driven by the clinically proven Hydrophillic and HydroLoc boosters launched in the medical channel. Providers and consumers saw the results, and that was a major engine of growth for boosters. This speaks exactly to the strategy that we are putting forward, which is we are going to be over-indexing in launching clinically differentiated boosters with a very disciplined cadence. We are also equipping providers with impactful marketing tools and continuing to invest in education. We are going to amp the post-sales onboarding, making sure that every provider knows how to maximize their return on investment. Finally, we are going to invest our marketing into driving consumer mindshare and investing in the brand. That is the backdrop of the Q4 performance—mainly heavy on the way boosters are taking share out of the main treatments. In terms of 2026, yes, we just spoke that Q1 will be pressured modestly with a modest decline versus prior year, but as Michael said, that is largely driven by the APAC region, the majority due to the change in China. As the year progresses, in terms of consumables, we expect to see modest growth in the Americas to happen. Operator: The next question will come from John-Paul Wollam with ROTH Capital Partners. Please go ahead. John-Paul Wollam: Great. I appreciate you guys taking my questions. If we could maybe start on the consumables side. I think April would have been kind of the first promo or busy season for consumables following the price increase. Just curious if you can talk about reception to the pricing increase and what that means for whether price might be a lever going forward. And just as a follow-up there, when you think about consumable utilization between your best partners and your worst, what is separating them? What does that difference look like? Michael Monahan: I can speak to a couple of those questions. On the price increase, we did the price increase on consumables at the beginning of Q3, so the third quarter was the first quarter where you saw the impact. We did a 5% increase, and we really did not have a lot of complaints or pushback on that. So far, that has been very successful for us. Going forward, the sales and marketing team continue to evaluate the overall pricing strategy. We do not have any plans at this point to make any changes, but we will keep you posted if anything changes there. Pedro Malha: I will just chime in in terms of what we see being the reasons why boosters get higher attachment rates in certain specific segments of customers versus others. Our data shows that a provider who understands how to use a booster uses roughly three times as many boosters as one that does not. That is exactly why we are investing in marketing and investing in education to these providers. John-Paul Wollam: Understood. And maybe, Michael, for you as a follow-up, as we think about OpEx—and you have done such a great job managing expenses—understanding the need to invest from here, but just curious as you think about some offsets to the investment: where are you in terms of maybe centralizing some international double costs, whether that is accounting, finance, anything of that nature? Are there still offsets that you see in terms of the OpEx line for the upcoming investments? Michael Monahan: Yes. In terms of shared service centers, we are creating them. That has been a process ongoing over the last year and will continue. We are continuing to see two things: we are making investments in the back-end system infrastructure that enables us to manage the global business effectively through shared service centers, which is helping us with cost. We expect that to be finalized more so by the end of this year. We made a lot of progress in some of the global entities the past year, and we have a few more to do this year and will continue to do that. Our guide this year assumes that G&A as a whole is stable to slightly up, and then there is additional reinvestment back into R&D. Over the long term, there is opportunity to continue to gain efficiencies in this business. Most importantly, when you look at the overall OpEx, there is a huge opportunity as we return to growth to get leverage out of that fixed-cost infrastructure going forward. As we continue to get more focused on system innovation and processes—we have done a lot of work there—we are positioning the company, in our view, to start to have a lot more of that gross profit drop down to adjusted EBITDA when we return to growth. John-Paul Wollam: Really helpful. Thanks, and best of luck going forward. Operator: This will conclude our question-and-answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect. Pedro Malha: Goodbye.

28天前Insight Analytics约5分钟阅读

LMNR 2026 Q1 财报电话会议

Operator: Good afternoon, everyone, and welcome to Limoneira Company’s First Quarter Fiscal Year 2026 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. It is now my pleasure to introduce your host, John Mills with ICR. Thank you. You may begin. Great. Thank you. Good afternoon, everyone, and thank you for joining us for Limoneira Company’s First Quarter Fiscal Year 2026 Conference Call. John Mills: On the call today are Harold Edwards, President and Chief Executive Officer, and Greg Hamm, Chief Financial Officer. By now, everyone should have access to the First Quarter Fiscal Year 2026 earnings release, which went out today after the market close. If you have not had a chance to view the release, it is available on the Investor Relations portion of the company’s website at limoneira.com. This call is being webcast, and a replay will be available on Limoneira Company’s website as well. Before we begin, we would like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company’s control, and could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks detailed in the company’s Forms 10-Q and 10-K filed with the SEC and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events, or otherwise. Please note that during today’s call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira Company’s ongoing results of operations, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also within the company’s earnings release and in today’s prepared remarks, we include adjusted EBITDA and adjusted diluted EPS, which are non-GAAP financial measures. A reconciliation of adjusted EBITDA and adjusted diluted earnings per share to the most directly comparable GAAP financial measures is included in the company’s press release, which has been posted to its website. I will now turn the call over to the company’s President and CEO, Harold Edwards. Harold Edwards: Thanks, John, and good afternoon, everyone. Our first quarter results reflect the strategic transformation we have been executing to position Limoneira Company for sustainable long-term value creation. While the cadence of lemon sales will shift due to our return to Sunkist, with the first and second quarters expected to have lower sales and the third and fourth quarters higher, we are pleased that fresh utilization improved in the first quarter. Even though we incurred some specific costs, which we believe are nonrecurring during this transition quarter, the strategic foundation we have built is now delivering measurable results, and we remain firmly on track to achieve our Fiscal 2026 objectives, including our annual volume guidance for lemons and avocados. I would like to add a little more color on the costs reflected in our first quarter results. We experienced $2.5 million in specific expenses, which consisted of $1.0 million in packing house repairs that we recovered from insurance proceeds in the second quarter, $0.5 million in costs related to the closing of our Chilean farming operations, and $1.0 million in foreign exchange fluctuation on the receivables from the sale of the Chilean farming assets. Adjusted net loss was a $0.48 loss per diluted share and includes approximately $0.06 per share of loss related to the packing house repairs and closing the Chilean farming operations. Additionally, we are expecting another $1.4 million of insurance proceeds in the second quarter. Looking beyond these items, our underlying business performance demonstrates the strength of our strategic repositioning. Our Sunkist partnership is functioning as planned, our avocado operations continue to expand, and our asset monetization initiatives are progressing on schedule. The strategic initiatives we began implementing were driven by a clear assessment of market realities. We took decisive action to reduce our exposure to volatile lemon pricing while building sustainable competitive advantages. In 2025, we accelerated this work by reducing future costs to position us for stronger Fiscal 2026 results. In Fiscal 2026, we expect the enhancements we are making to our cost structure will generate $10 million in selling, general, and administrative savings compared to Fiscal 2025. Importantly, Sunkist provides enhanced customer access to premium accounts and major U.S. retailers through a full-category citrus offering. This positions us to deliver comprehensive solutions for retail buyers while removing pricing pressure from the marketplace and strengthening both our packing margins and grower partner relationships. Another key initiative involved expanding our avocado production. Today, we have 1,600 acres planted, with only 800 acres currently bearing fruit. The additional 800 acres will begin bearing fruit over the next two to four years, representing a near 100% increase in our avocado production capacity. California avocados command premium pricing due to superior quality. Our strategic location provides logistical advantages to the highest per capita consumption markets in the Western United States. Our strategic initiatives extend well beyond agriculture. We have our planned 50/50 organic recycling joint venture with Agerman that we expect to process 300,000 tons of organic waste annually and contribute to EBITDA when the facility becomes operational in Fiscal 2027. We also have our real estate development project, Harvest at Limoneira. We continue to expect future proceeds from Harvest, Limoneira Lewis Community Builders 2, and East Area 2 to total $155 million over the next five fiscal years. Phase 3 of the project consists of approximately 550 home lots and 300 apartments, plus we have 35 acres of East Area 2 Medical Pavilion development that we believe could begin to be monetized in Fiscal 2026. Additionally, we have Lincodelmar, our 221-acre agricultural infill property in the City of Ventura, California, which represents a strategic asset with potential for residential development and significant long-term value creation. We are also unlocking value by divesting nonstrategic assets and monetizing our water rights to fuel this transformation and strengthen our balance sheet. We are now advancing the monetization of our Windfall Farms vineyard in Paso Robles and our Argentina agricultural assets, with Windfall Farms completion targeted by the end of Fiscal 2026. Our water monetization strategy is also progressing well. Following last year’s $1.7 million realization from Santa Paula Basin water rights sales, we are actively working to realize meaningful value from our Class 3 Colorado River water rights and Santa Paula Basin conserved pumping rights. These water assets represent high-value nonoperational resources that we can convert to cash while maintaining our agricultural operations. The proof points are clear. Our cost structure is dramatically improved, customer access enhanced, our product mix is optimized, and our asset base is being monetized. These are strategic initiatives that we believe will drive financial results throughout Fiscal 2026. In summary, our First Quarter Fiscal 2026 results reflect the company in transition, absorbing specific costs while building the foundation for sustained profitability. The strategic initiatives we have implemented are now delivering tangible financial benefits. We anticipate you will see these improvements on a sequential basis this year, as we expect our second quarter to show improvement compared to the first quarter and our third and fourth quarters being the strongest periods of the year. We have transformed our cost structure, focused our revenue streams, optimized our asset base, and positioned ourselves for sustainable EBITDA growth. The Limoneira Company of today is a fundamentally stronger company, more focused and better positioned for long-term value creation. We look forward to demonstrating continued progress throughout Fiscal 2026. Now I would like to officially introduce Greg Hamm as our new Chief Financial Officer. I have had the privilege to work with Greg for over 22 years at Limoneira Company since he was hired in 2004. He previously served as our Vice President and Corporate Controller since 2008. Greg succeeds Mark Palamountain, who served as our Chief Financial Officer since 2018 and was instrumental in our strategic transformation. As part of our commitment to succession planning, we identified Greg as a candidate for Chief Financial Officer, and we have worked closely with him over the years to prepare him for this role. I will now turn the call over to Greg for the financial results. Greg Hamm: Thank you, Harold. Greg Hamm: And good afternoon, everyone. I am pleased to be speaking with you today as Limoneira Company’s Chief Financial Officer. I have had the privilege of working alongside this talented team for a number of years. This marks my first earnings call in this role, and I am pleased to share our financial results with you. As Harold mentioned, we are executing a significant transformation that we believe positions Limoneira Company for sustainable long-term value creation. Let me walk you through the financial details of our first quarter performance and explain how our strategic initiatives are ready to deliver measurable results. Before diving into specifics, I want to remind everyone that our business is best viewed on an annual basis due to its seasonal nature. With our transition to Sunkist, our quarterly rhythm has fundamentally shifted. Under our partnership with Sunkist, the first and second quarters are now our seasonally softer periods, while the third and fourth quarters will be stronger. As we move through Fiscal 2026, you will see this new cadence taking shape. Let me walk you through our revenue performance for the first quarter. Total net revenues were $18.2 million compared to $34.3 million in 2025. Agribusiness revenues totaled $16.8 million compared to $32.9 million in the prior-year first quarter. The year-over-year decrease in total net revenue reflects the strategic transition to Sunkist for lemon sales and marketing and the resulting shift in quarterly sales cadence, as well as exiting our brokerage business in the first quarter of Fiscal 2026 and farm management business during Fiscal 2025, which further contributed to the year-over-year revenue decrease. Other operations revenue was $1.4 million and essentially flat compared to the prior-year quarter. Fresh packed lemon sales were $11.9 million compared to $21.2 million in the same period last year. We sold approximately 681,000 cartons of U.S.-packed fresh lemons at an average price of $17.41 per carton, compared to 1,147 cartons at $18.44 per carton in the prior-year first quarter. The decrease in volume was entirely related to the change in cadence under the Sunkist agreement. It is important to note that per-carton prices for Fiscal 2026 are now net of the Sunkist marketing fee. Brokered lemons and other lemon sales were $1.0 million compared to $2.2 million in 2025, reflecting the transition of brokerage operations to Sunkist. There was no avocado revenue in 2026, compared to $162,000 in the prior-year period due to harvest timing. Orange revenue was $10,000 compared to $1.6 million in the same period last year, reflecting the sale of our Chilean agricultural properties and the transition of brokerage operations to Sunkist. Specialty citrus, wine grape, and other revenues were $700,000 in 2026 compared to $500,000 in 2025. There was no farm management revenue in 2026, compared to $1.2 million in the prior-year period due to the termination of our farm management agreement effective 03/31/2025. Total costs and expenses in the first quarter were $28.8 million, down 27% from $39.7 million in 2025. The decrease was primarily driven by reduced agribusiness volumes and the elimination of citrus sales and marketing costs following the transition to Sunkist, which resulted in lower agribusiness costs and a meaningful decrease in selling, general, and administrative expenses. Operating loss for 2026 was $10.6 million compared to an operating loss of $5.3 million in the prior-year period. The increase in operating loss was primarily due to decreased agribusiness revenues, as well as $1.0 million in packing house repairs, $500,000 of costs related to closing Chilean farming operations, and $1.5 million of gain on sales of water rights in Fiscal 2025. Additionally, total other expenses for Fiscal 2026 include $1.0 million in foreign exchange fluctuations on the receivables from the sale of our Chilean farming assets. Excluding these items, our underlying operational performance reflects the cost improvements we have been implementing. Net loss applicable to common stock after preferred dividends was $9.6 million, or $0.53 per diluted share, for 2026, compared to a net loss of $3.2 million, or $0.18 per diluted share, in 2025. On an adjusted basis, adjusted net loss for diluted EPS in 2026 was $8.5 million, or $0.48 per diluted share, compared to an adjusted net loss of $2.5 million, or $0.14 per diluted share, in the prior-year period. A full reconciliation is provided in our earnings release. Non-GAAP adjusted EBITDA was a loss of $7.7 million in 2026 compared to a loss of $2.3 million in the same period last year. A reconciliation of net loss attributable to Limoneira Company to adjusted EBITDA is also provided in our earnings release. Again, I want to emphasize that these first quarter results reflect the new seasonal cadence under our Sunkist partnership. The specific expenses mentioned, and the strategic investments we are making, position the company for improved performance throughout the remainder of Fiscal 2026. Operator: Turning to our balance sheet, we remain— Greg Hamm: —in a solid position to execute on our strategic initiatives. Long-term debt as of 01/31/2026 was $89.9 million compared to $72.5 million at the end of Fiscal 2025. Our net debt position was $88.0 million at quarter end after accounting for $1.3 million of cash on hand. Let me provide more detail on the financial impact of our strategic initiatives, particularly our Sunkist partnership. We expect to realize approximately $10.0 million in total annual selling, general, and administrative savings for Fiscal 2026. These are real, tangible cost reductions that will flow through our P&L this fiscal year and position us for improved profitability as our revenue cadence normalizes in the second half of the year. In summary, while our first quarter results reflect the new seasonal cadence and specific expenses, the underlying operational improvements are substantial. The 27% reduction in costs year over year demonstrates our disciplined execution. We have clear visibility into $10.0 million of selling, general, and administrative savings benefiting Fiscal 2026 through the Sunkist partnership, which fundamentally improves our cost structure. I will now turn the call back to Harold to discuss our Fiscal 2026 outlook and longer-term growth pipeline. Operator: —and longer term growth pipeline. Harold Edwards: Thank you, Greg. Looking at the remainder of Fiscal 2026, we expect this period to be when our strategic transformation begins delivering measurable financial results. We anticipate you will see these improvements on a sequential basis this year, as we expect our second quarter to show improvement compared to the first quarter and our third and fourth quarters being the strongest periods of the year. We ended this year with approximately $10.0 million in cost-saving initiatives based primarily on the benefits of our Sunkist partnership, which will be visible in our Fiscal 2026 results through improved cost structure and enhanced customer relationships. Our avocado expansion continues on schedule with significant production increases expected in Fiscal 2027 as our nonbearing acreage matures. For full-year Fiscal 2026, we are reiterating the following guidance: fresh lemon volumes of 4.0 to 4.5 million cartons and avocado volumes of 5.0 to 6.0 million pounds. Beyond our core operations, we have several additional value-creation opportunities progressing. Our real estate pipeline remains strong, with $155 million in expected total proceeds over the next five fiscal years. The Limco Del Mar entitlement process represents another significant real estate development opportunity, and our planned organic recycling joint venture is expected to contribute meaningful EBITDA when the facility becomes operational in Fiscal 2027. We have built a more resilient business model that is less dependent on commodity lemon pricing while creating multiple engines for profitable growth. We will now open for questions. Operator: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Our first question comes from Puran Sharma with Stephens. Your line is now live. Puran Sharma: Good afternoon, and thanks for the question. This is Adam Shepherd on for Puran. On the $10 million in expected SG&A savings this year, I think you mentioned $10 million was to be realized this year. I was going to ask about how much would be visible in the first half versus the back half, and if that ramp kind of implies there might be a higher-than-$10 million run rate exiting the year. And then if there are any offsets to keep in mind as the Sunkist transition fully ramps, that would be great. Thanks. Harold Edwards: Those are great questions, Adam. Thank you. I think that you will see we had some lingering or dragging costs from Fiscal 2025 that entered into 2026. So while we were pleased with our cost reduction, we think our run rate was slightly behind in Q1 versus what you will see in Q2, Q3, and Q4. The actual reduction is not going to be linear, so you will see it move around, and we have also tried to be conservative in our estimates. I think at the end of the year, though, you will see a total reduction of $10 million from the SG&A overhead line item. As it relates to whether you will see a faster or higher run rate at the end of the fiscal year, I would not expect it. I think you will get to the end of the year and then see much more of a fixed overhead as we enter 2027. Greg Hamm: I agree. It is not tied to volume. It is more of a steady savings throughout the year. Puran Sharma: Okay. Great. Thank you. And then switching over to avocados for my follow-up, are you able to just give us an update on weather conditions, how the trees are looking—just color around that would be great too. Harold Edwards: Sure. It has been pretty much an idyllic winter in California. It really never got cold, which is fantastic, and the winds, which can oftentimes be a real problem for holding fruit on the trees, have been moderate. The young trees look fantastic. We are actually entering a week here—it is March 12 today—of potentially record heat levels, which will not harm the trees. It will actually accelerate fruit growth, but also the bloom and the flower on the trees for next year’s crop setting. We have had really good rain conditions this year. You know, a normal year of rain in this part of the world is about 17 inches a year. To date, we have received almost 25 inches in nice, steady, warm rains, and that has allowed us to realize good fruit growth. So there is good, big fruit hanging on the trees for this year, and it looks like the flowering and the blooming set for next year with the avocados looks as good as it can right now. So we feel like it has been almost idyllic weather conditions to set us up for a strong 2027 with avocados. Puran Sharma: Okay. Great. Thank you very much. Thank you. Thank you. Operator: Our next question comes from Mark Smith with Lake Street Capital. Your line is now live. Harold Edwards: Hey guys. Similar to the last question, just wanted to talk around pricing around lemons, weather impact—anything that you are seeing there. I will start with avocados, Mark. Thanks for the question. So Mexico has an extraordinarily large crop this year, and through the last three months of weekly shipments, we have seen some of the highest weekly shipments coming into the United States from Mexico. Conventional wisdom was always that the U.S. consumed about 60 million pounds a week. The last week saw 75 million pounds of fruit from Mexico come into the U.S. The good news is that fruit is all being consumed, but the issue is that with that much fruit coming in, it is putting downward pricing pressure on avocados right now. Size 48s are going for about $1.00 a pound right now, and 60s are going for about $1.05 to $1.10. So, ironically, the smaller sizing fruit is more valuable right now. As you see Mexico’s crop tapering off, I would expect pricing to buoy a little bit here in California—maybe $1.10 to $1.20—but right now, you are seeing pricing on the low end because of how much fruit is in the marketplace. Again, it is great news that the fruit is being consumed. You are seeing per capita consumption growing when you see pricing this low as it works its way through the supply chain and consumers are able to access fruit more readily and less expensively. So that should set us up for a pretty strong environment in 2027. As it relates to lemons, we started out Q1 with pricing that was similar to 2025 in Q1, and then the market became supplied and full, and we have seen lower pricing for lemons. Greg, do you want to maybe comment on lemon pricing? Greg Hamm: We ended up at $17.42 for this quarter versus $18.44, and Sunkist charges $0.60 a carton, so you take that into account, and then coming into February, it softened up to around $16. Harold Edwards: Which is not as low as it was last year, but I predict this is probably the trough for pricing, and it will start picking back up again as we head towards May. And, Mark, the other comment I would make on that pricing is that a lemon is not a lemon is not a lemon, because buried into that average pricing is a product mix factor—how much of your valuable fancy fruit, how much of your middle-range choice fruit, and how much of your standards actually got sold fresh. The comment that we made earlier about a much higher percentage of fresh utilization in the first quarter meant that a lot of the standards, which before—like last year—went to juice, actually made it to the fresh market. So the total impact is it drags your average price down, but your units are much higher, and throughout the course of the full season, that should work itself out in a very positive way for us, if that makes sense. So while it seems like it is very, very low pricing on half the fruit, we sold a significantly higher amount of volume fresh in the first quarter than we saw last year, and that bodes very well for the rest of the year for us. Mark Smith: Perfect. Harold Edwards: Last question for me was just as we look at certain markets in the West with drought conditions and low snowpack, does this create opportunities for monetization of some of these water assets? Any update you can give us on how that process is going would be great. Thanks, Mark. That is a great question. I am glad we get to talk about it just a little bit. The two most opportunistic situations we have with our water assets are related to our conserved water in the Santa Paula Water Basin, and not much to report there other than that there remains demand for that water. As you probably remember, we sold water last year at $30,000 an acre-foot and did that as a placeholder to show the potential value that could be created as more and more of that conserved water is made available into the marketplace in Santa Paula. The real opportunity right now—and I am sure this is what most people are focused on; we certainly are—is what is going on on the Colorado River. For background, as you may recall, we have Class 3 Colorado River water rights. There are seven states now that are negotiating who gets what in terms of a new water accord that is put on the Colorado River. The Department of the Interior and the Bureau of Reclamation have mandated that one-third of the consumptive use of the Colorado River be cut, and so now each of the seven states who derive benefit off the river today are negotiating who gets what and what kind of cuts need to be made. The reality is that the actual agreements for future water use have not been reached. There continues to be quite a bit of turmoil between the states, and there has been an inability, at least to this point, to come up with an agreement for each of the seven states that is satisfactory. With that being said, the amount of cuts that need to come off the river put Limoneira Company’s water rights off the Colorado River into a position of being very valuable. How they monetize at this point is still a little bit unclear, although we do believe that there will be long-term fallowing programs that we will be positioned to our advantage. We do expect to announce programs in the near term that we will be able to take advantage of, that will bring value and allow that water from the Colorado River to be monetized in the near term. Nothing specific to report at this time; however, I would say that I would hope that by the next time we talk, at the conclusion of the second quarter, we will have specifics that we can address and speak to about the monetization of our Colorado River water rights. Operator: Excellent. We have reached the end of the question-and-answer session. I would now like to turn the call back over to Harold Edwards for closing comments. Harold Edwards: Great. Thank you very much for all of your questions and your interest in Limoneira Company. Operator: Have a great day. Thank you. Harold Edwards: This concludes today’s conference. You may disconnect your lines— Operator: —at this time, and we thank you for your participation. Greetings, and welcome to Limoneira Company’s First Quarter 2026 Financial Results Conference Call. At this time, participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. It is now my pleasure to introduce your host, John Mills with ICR. Thank you. You may begin. John Mills: Great. Thank you. Good afternoon, everyone, and thank you for joining us for Limoneira Company’s First Quarter Fiscal Year 2026 Conference Call. On the call today are Harold Edwards, President and Chief Executive Officer, and Greg Hamm, Chief Financial Officer. By now, everyone should have access to the First Quarter Fiscal Year 2026 earnings release, which went out today after the market closed. If you have not had a chance to view the release, it is available on the Investor Relations portion of the company’s website at limoneira.com. This call is being webcast, and a replay will be available on Limoneira Company’s website as well. Before we begin, we would like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company’s control, and could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks detailed in the company’s Forms 10-Q and 10-K filed with the SEC and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether a result of new information, future events, or otherwise. Please note that during today’s call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira Company’s ongoing results of operations, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also within the company’s earnings release and in today’s prepared remarks, we include adjusted EBITDA and adjusted diluted EPS, which are non-GAAP financial measures. A reconciliation of adjusted EBITDA and adjusted diluted earnings per share to the most directly comparable GAAP financial measures is included in the company’s press release, which has been posted to its website. I will now turn the call over to the company’s President and CEO, Harold Edwards. Harold Edwards: Thanks, John, and good afternoon, everyone. Our first quarter results reflect the strategic transformation we have been executing to position Limoneira Company for sustainable long-term value creation. While the cadence of lemon sales will shift due to our return to Sunkist, with the first and second quarters expected to have lower sales and the third and fourth quarters higher, we are pleased that fresh utilization improved in the first quarter. Even though we incurred some specific costs, which we believe are nonrecurring during this transition quarter, the strategic foundation we have built is now delivering measurable results, and we remain firmly on track to achieve our Fiscal 2026 objectives, including our annual volume guidance for lemons and avocados. I would like to add a little more color on the specific costs reflected in our first quarter results. We experienced $2.5 million in specific expenses, which consisted of $1.0 million in packing house repairs that we recovered from insurance proceeds in the second quarter, $0.5 million in costs related to the closing of our Chilean farming operations, and $1.0 million in foreign exchange fluctuations on the receivables from the sale of the Chilean farming assets. Adjusted net loss was a $0.48 loss per diluted share and includes approximately $0.06 per share of loss related to the packing house repairs and closing the Chilean farming operations. Additionally, we are expecting another $1.4 million of insurance proceeds in the second quarter. Looking beyond these items, our underlying business performance demonstrates the strength of our strategic repositioning. Our Sunkist partnership is functioning as planned, our avocado operations continue to expand, and our asset monetization initiatives are progressing on schedule. The strategic initiatives we began implementing were driven by a clear assessment of market realities. We took decisive action to reduce our exposure to volatile lemon pricing while building sustainable competitive advantages. In 2025, we accelerated this work by reducing future costs to position us for stronger Fiscal 2026 results. In Fiscal 2026, we expect the enhancements we are making to our cost structure will generate $10 million in selling, general, and administrative savings compared to Fiscal 2025. Importantly, Sunkist provides enhanced customer access to premium accounts and major U.S. retailers through a full-category citrus offering. This positions us to deliver comprehensive solutions for retail buyers while removing pricing pressure from the marketplace and strengthening both our packing margins and grower partner relationships. Another key initiative involved expanding our avocado production. Today, we have 1,600 acres planted, with only 800 acres currently bearing fruit. The additional 800 acres will begin bearing fruit over the next two to four years, representing a near 100% increase in our avocado production capacity. California avocados command premium pricing due to superior quality, and our strategic location provides logistical advantages to the highest per capita consumption markets in the Western United States. Our strategic initiatives extend well beyond agriculture. We have our planned 50/50 organic recycling joint venture with Agerman that we expect to process 300,000 tons of organic waste annually and contribute to EBITDA when the facility becomes operational in Fiscal 2027. We also have our real estate development project, Harvest at Limoneira. We continue to expect future proceeds from Harvest, Limoneira Lewis Community Builders 2, and East Area 2 to total $155 million over the next five fiscal years. Phase 3 of the project consists of approximately 550 home lots and 300 apartments. Plus, we have 35 acres of East Area 2 Medical Pavilion development that we believe could begin to be monetized in Fiscal 2026. Additionally, we have Lincodelmar, our 221-acre agricultural infill property in the City of Ventura, California, which represents a strategic asset with potential for residential development and significant long-term value creation. We are also unlocking value by divesting nonstrategic assets and monetizing our water rights to fuel this transformation and strengthen our balance sheet. We are now advancing the monetization of our Windfall Farms vineyard in Paso Robles and our Argentina agricultural assets, with Windfall Farms completion targeted by the end of Fiscal 2026. Our water monetization strategy is also progressing well. Following last year’s $1.7 million realization from Santa Paula Basin water rights sales, we are actively working to realize meaningful value from our Class 3 Colorado River water rights and Santa Paula Basin conserved pumping rights. These water assets represent high-value nonoperational resources that we can convert to cash while maintaining our agricultural operations. The proof points are clear. Our cost structure is dramatically improved, our customer access enhanced, our product mix is optimized, and our asset base is being monetized. These are strategic initiatives that we believe will drive financial results throughout Fiscal 2026. In summary, our First Quarter Fiscal 2026 results reflect the company in transition, absorbing specific costs while building the foundation for sustained profitability. The strategic initiatives we have implemented are now delivering tangible financial benefits. We anticipate you will see these improvements on a sequential basis this year, as we expect our second quarter to show improvement compared to the first quarter and our third and fourth quarters being the strongest periods of the year. We have transformed our cost structure, focused our revenue streams, optimized our asset base, and positioned ourselves for sustainable EBITDA growth. The Limoneira Company of today is a fundamentally stronger company, more focused and better positioned for long-term value creation. We look forward to demonstrating continued progress throughout Fiscal 2026. Now I would like to officially introduce Greg Hamm as our new Chief Financial Officer. I have had the privilege to work with Greg for over 22 years at Limoneira Company since he was hired in 2004. He previously served as our Vice President and Corporate Controller since 2008. Greg succeeds Mark Palamountain, who served as our Chief Financial Officer since 2018 and was instrumental in our strategic transformation. As part of our commitment to succession planning, we identified Greg as a candidate for Chief Financial Officer, and we have worked closely with him over the years to prepare him for this role. Now let me turn it over to Greg for the financial details, and then we will take your questions. Greg Hamm: Thank you, Harold. Greg Hamm: And good afternoon, everyone. I am pleased to be speaking with you today as Limoneira Company’s Chief Financial Officer. I have had the privilege of working alongside this talented team for a number of years. This marks my first earnings call in this role. I am pleased to share our financial results with you. As Harold mentioned, we are executing a significant transformation that we believe positions Limoneira Company for sustainable long-term value creation. Let me walk you through the financial details of our first quarter performance and explain how our strategic initiatives are ready to deliver measurable results. Before diving into specifics, I want to remind everyone that our business is best viewed on an annual basis due to its seasonal nature. With our transition to Sunkist, our quarterly rhythm has fundamentally shifted. Under our partnership with Sunkist, the first and second quarters are now our seasonally softer periods, while the third and fourth quarters will be stronger. As we move through Fiscal 2026, you will see this new cadence taking shape. Let me walk you through our revenue performance for the first quarter. Total net revenues were $18.2 million, compared to $34.3 million in 2025. Agribusiness revenues totaled $16.8 million compared to $32.9 million in the prior-year first quarter. The year-over-year decrease in total net revenue reflects the strategic transition to Sunkist for lemon sales and marketing and the resulting shift in quarterly sales cadence, as well as exiting our brokerage business in 2026 and farm management business during Fiscal 2025, which further contributed to the year-over-year revenue decrease. Other operations revenue was $1.4 million and essentially flat compared to the prior-year quarter. Fresh packed lemon sales were $11.9 million compared to $21.2 million in the same period last year. We sold approximately 681,000 cartons of U.S.-packed fresh lemons at an average price of $17.41 per carton, compared to 1,147 cartons at $18.44 per carton in the prior-year first quarter. The decrease in volume was entirely related to the change in cadence under the Sunkist agreement. It is important to note that per-carton prices for Fiscal 2026 are now net of the Sunkist marketing fee. Brokered lemons and other lemon sales were $1.0 million compared to $2.2 million in 2025, reflecting the transition of brokerage operations to Sunkist. There was no avocado revenue in 2026 compared to $162,000 in the prior-year period due to harvest timing. Orange revenue was $10,000 compared to $1.6 million in the same period last year, reflecting the sale of our Chilean agricultural properties and the transition of brokerage operations to Sunkist. Specialty citrus, wine grape, and other revenues were $700,000 in 2026 compared to $500,000 in 2025. There was no farm management revenue in 2026 compared to $1.2 million in the prior-year period due to the termination of our farm management agreement effective 03/31/2025. Total costs and expenses in the first quarter were $28.8 million, down 27% from $39.7 million in the first quarter of Fiscal 2025. The decrease was primarily driven by reduced agribusiness volumes and the elimination of citrus sales and marketing costs— Operator: —following the transition to Sunkist, which resulted in lower agribusiness costs— Greg Hamm: —and a meaningful decrease in selling, general, and administrative expenses. Operating loss for 2026 was $10.6 million compared to an operating loss of $5.3 million in the prior-year period. The increase in operating loss was primarily due to decreased agribusiness revenues, as well as $1.0 million in packing house repairs, $500,000 of costs related to closing the Chilean farming operation— John Mills: —and $1.5 million of gain on sales of water rights— Greg Hamm: —in Fiscal 2025. Additionally, total other expenses for Fiscal 2026 includes $1.0 million in foreign exchange fluctuations on the receivables from the sale of our Chilean farming assets. Excluding these items, our underlying operational performance reflects the cost improvements we have been implementing. Net loss applicable to common stock after preferred dividends was $9.6 million, or $0.53 per diluted share, for 2026, compared to a net loss of $3.2 million, or $0.18 per diluted share, in 2025. On an adjusted basis, adjusted net loss for diluted EPS in 2026 was $8.5 million, or $0.48 per diluted share, compared to an adjusted net loss of $2.5 million, or $0.14 per diluted share, in the prior-year period. A full reconciliation is provided in our earnings release. Non-GAAP adjusted EBITDA was a loss of $7.7 million in 2026 compared to a loss of $2.3 million in the same period last year. A reconciliation of net loss attributable to Limoneira Company to adjusted EBITDA is also provided in our earnings release. Again, I want to emphasize that these first quarter results reflect the new seasonal cadence under our Sunkist partnership. The specific expenses mentioned, and the strategic investments we are making, position the company for improved performance throughout the remainder of Fiscal 2026. Turning to our balance sheet, we remain in a solid position to execute on our strategic initiatives. Long-term debt as of 01/31/2026 was $89.9 million compared to $72.5 million at the end of Fiscal 2025. Our net debt position was $88.0 million at quarter end after accounting for $1.3 million of cash on hand. Let me provide more detail on the financial impact of our strategic initiatives, particularly our Sunkist partnership. We expect to realize approximately $10.0 million in total annual selling, general, and administrative savings for Fiscal 2026. These are real, tangible cost reductions that will flow through our P&L this fiscal year and position us for improved profitability as our revenue cadence normalizes in the second half of the year. John Mills: In summary— Greg Hamm: —while our first quarter results reflect the new seasonal cadence and specific expenses, the underlying operational improvements are substantial. The 27% reduction in costs year over year demonstrates our disciplined execution. We have clear visibility into $10.0 million of selling, general, and administrative savings benefiting Fiscal 2026 through the Sunkist partnership, which fundamentally improves our cost structure. Now I would like to turn the call back to Harold to discuss our Fiscal 2026 outlook and longer-term growth pipeline. Thank you, Greg. Looking at the remainder of Fiscal 2026, we expect this period to be when our strategic transformation begins delivering measurable financial results. We anticipate you will see these improvements on a sequential basis this year, as we expect our second quarter to show improvement compared to the first quarter and our third and fourth quarters being the strongest periods of the year. We ended this year with approximately $10.0 million in cost-saving initiatives based primarily on the benefits of our Sunkist partnership, which will be visible in our Fiscal 2026 results through improved cost structure and enhanced customer relationships. Our avocado expansion continues on schedule with significant production increases expected in Fiscal 2027 as our nonbearing acreage matures. For full-year Fiscal 2026, we are reiterating the following guidance: fresh lemon volumes of 4.0 to 4.5 million cartons and avocado volumes of 5.0 to 6.0 million pounds. Beyond our core operations, we have several additional value-creation opportunities progressing. Our real estate pipeline remains strong, with $155 million in expected total proceeds over the next five fiscal years. The Limco Del Mar entitlement process represents another significant real estate development opportunity, and our planned organic recycling joint venture is expected to contribute meaningful EBITDA when the facility becomes operational in Fiscal 2027. We have built a more resilient business model that is less dependent on commodity lemon pricing while creating multiple engines for profitable growth. Operator, we will now open for questions. Thank you. At this time, we will be conducting a question-and-answer session. Operator: If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 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. Our first question comes from Puran Sharma with Stephens. Your line is now live. Puran Sharma: Good afternoon, and thanks for the question. This is Adam Shepherd on for Puran. On the $10 million in expected SG&A savings this year, I think you mentioned $10 million was to be realized this year. I was going to ask about how much would be visible in the first half versus the back half, and if that ramp kind of implies there might be a higher-than-$10 million run rate exiting the year. And then if there are any offsets to keep in mind as the Sunkist transition fully ramps, that would be great. Thanks. Harold Edwards: Those are great questions, Adam. Thank you. I think that you will see we had some lingering or dragging costs from Fiscal 2025 that entered into 2026. So while we were pleased with our cost reduction, we think our run rate was slightly behind in Q1. The actual reduction is not going to be linear versus what you will see in Q2, Q3, Q4, so you will see it move around, and we have also tried to be conservative in our estimates. I think at the end of the year, though, you will see a total reduction of $10 million from the SG&A overhead line item. As it relates to whether you will see a faster or higher run rate at the end of the fiscal year, I would not expect it. I think you will get to the end of the year and then see much more of a fixed overhead as we enter 2027. Greg Hamm: I agree. It is not tied to volume. It is more of a steady savings throughout the year. Puran Sharma: Okay. Great. Thank you. And then switching over to avocados for my follow-up, are you able to just give us an update on weather conditions, how the trees are looking—just color around that would be great too. Harold Edwards: Sure. It has been pretty much an idyllic winter in California. It really never got cold, which is fantastic, and the east winds, which can oftentimes be a real problem for holding fruit on the trees, have been moderate. The young trees look fantastic. We are actually entering a week here—it is March 12 today—of potentially record heat levels, which will not harm the trees. It will actually accelerate fruit growth, but also the bloom and the flower on the trees for next year’s crop setting. We have had really good rain conditions this year. You know, a normal year of rain in this part of the world is about 7 inches a year. To date, we have received almost 25 inches in nice, steady, warm rains, and that has allowed us to realize good fruit growth. So there is good, big fruit hanging on the trees for this year, and it looks like the flowering and the blooming set for next year with the avocados looks as good as it can right now. So, we feel like it has been almost idyllic weather conditions to set us up for a strong 2027 with avocados. Mark Smith: Okay. Great. Puran Sharma: Thank you very much. Thank you. Thank you. Operator: Our next question comes from Mark Smith with Lake Street Capital. Your line is now live. Harold Edwards: Hey, guys. Similar to the last question, just wanted to talk around pricing around lemons, weather impact—anything that you are seeing there. I will start with avocados, Mark. Thanks for the question. So Mexico has an extraordinarily large crop this year, and through the last three months of weekly shipments, we have seen some of the highest weekly shipments coming into the United States from Mexico. Conventional wisdom was always that the U.S. consumed about 6 million pounds a week. The last week saw 75 million pounds of fruit from Mexico come into the U.S. The good news is that fruit is all being consumed, but the issue is that with that much fruit coming in, it is putting downward pricing pressure on avocados right now. Size 48s are going for about $1.00 a pound right now, and 60s are going for about $1.05 to $1.10. So, ironically, the smaller sizing fruit is more valuable right now. As you see Mexico’s crop tapering off, I would expect pricing to buoy a little bit here in California—maybe $1.10 to $1.20—but right now, you are seeing pricing on the low end because of how much fruit is in the marketplace. Again, it is great news that the fruit is being consumed. You are seeing per capita consumption growing when you see pricing this low as it works its way through the supply chain and consumers are able to access fruit more readily and less expensively. So that sets us up for, you know, a pretty strong environment in 2027. As it relates to lemons, we started out Q1 with pricing that was similar to 2025 in Q1, and then the market became supplied and full, and we have seen lower pricing for lemons. Greg, do you want to maybe comment on lemon pricing? Greg Hamm: We ended up at $17.42 for this quarter versus $18.44, and Sunkist charges $0.60 a carton, so you take that into account, and then coming into February, it softened up to around $16. Harold Edwards: Which is not as low as it was last year, but I predict this is probably the trough for pricing, and it will start picking back up again as we head into—towards May. And, Mark, the other comment I would make on that pricing is that a lemon is not a lemon is not a lemon, because buried into that average pricing is a product mix factor—how much of your valuable fancy fruit, how much of your middle-range choice fruit, and how much of your standards actually got sold fresh. The comment that we made earlier about a much higher percentage of fresh utilization in the first quarter meant that a lot of the standards, which before—like last year—went to juice, actually made it to the fresh market. So the total impact is it drags your average price down, but your units are much higher, and throughout the course of the full season, that should work itself out in a very positive way for us. If that makes sense. So while it seems like it is very, very low pricing on half the fruit, we sold a significantly higher amount of volume fresh in the first quarter than we saw last year, and that bodes very, very well for the rest of the year for us. Mark Smith: Perfect. And— Harold Edwards: —last question for me was just as we look at, you know, certain markets in the West with drought conditions and low snowpack, does this create opportunities for monetization of some of these water assets? Any update you can give us on how that process is going would be great. Thank—yeah. Thanks, Mark. That is a great question. I am glad we get to talk about it just a little bit. So the two most opportunistic situations we have with our water assets are related to our conserved water in the Santa Paula Water Basin, and not much to report there other than that there remains demand for that water. As you probably remember, we sold water last year at $30,000 an acre-foot and did that as a placeholder to show the potential value that could be created as more and more of that water that is conserved is made available into the marketplace in Santa Paula. The real opportunity right now, and I am sure this is what most people are focused on—we certainly are—is what is going on on the Colorado River. For background, as you may recall, we have Class 3 Colorado River water rights. There are seven states now that are negotiating who gets what in terms of a new water accord that is put on the Colorado River. The Department of the Interior and the Bureau of Reclamation have mandated that one-third of the consumptive use of the Colorado River be cut, and so now each of the seven states who derive benefit off the river today are negotiating who gets what and what kind of cuts need to be made. The reality is that the actual agreements for future water use have not been reached. There continues to be quite a bit of turmoil between the states, and there has been an inability, at least to this point, to come up with an agreement for each of the seven states that is satisfactory. With that being said, though, the amount of cuts that need to come off the river put Limoneira Company’s water rights off the Colorado River into a position of being very, very valuable. How they monetize at this point is still a little bit unclear. Although we do believe that there will be long-term fallowing programs that will be positioned for our advantage, and we do expect to announce programs in the near term that we will be able to take advantage of, that will bring value and allow that water from the Colorado River to be monetized in the near term. So nothing specific to report at this time; however, I would say that I would hope that by the next time we talk, at the conclusion of the second quarter, we will have specifics which we can address and speak to about the monetization of our Colorado River water— Mark Smith: Excellent. Puran Sharma: Thank you. Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Harold Edwards for closing comments. Harold Edwards: Great. Thank you very much for all of your questions and your interest in Limoneira Company. Have a great day. Thank you. This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.

28天前Insight Analytics约5分钟阅读

ZDGE 2026 Q2 财报电话会议

Operator: Good day, ladies and gentlemen, and welcome to Zedge, Inc.'s earnings conference call for 2026. During management's prepared remarks, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the appropriate key. After today's presentation by Zedge, Inc.'s management, there will be an opportunity to ask questions. To ask a question, please press star then 1 on your touch-tone phone. To withdraw your question, please press star 2. I will now turn the call over to Brian Siegel. The floor is yours. Brian Siegel: Thank you, operator. During today's call, Jonathan Reich, Zedge, Inc.'s Chief Executive Officer, and Yi Tsai, Zedge, Inc.'s Chief Financial Officer, will discuss Zedge, Inc.'s financial and operational results that were reported today. Any forward-looking statements made during this conference call during the prepared remarks or in the question-and-answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results in the future to differ materially from those discussed on today's call. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Zedge, Inc.'s periodic SEC filings. Zedge, Inc. assumes no obligation to update any forward-looking statements or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that our earnings release is available on the Investor Relations page of the Zedge, Inc. website and has also been filed on Form 8-K with the SEC. Finally, on this call, we will use non-GAAP measures. Examples include non-GAAP EPS, non-GAAP net income, and adjusted EBITDA. See our earnings release for an explanation of our use of these non-GAAP measures. I will now turn the call over to Jonathan Reich. Jonathan Reich: Thank you, Brian, and good afternoon, everyone. Let me start with what stood out to me this quarter. The quality of our monetization continues to improve, and this is leading to record results. We achieved record levels of revenue and average revenue per monthly user in our seasonally strongest quarter, driven by continued advertising optimization, record active subscription numbers, and record Zedge Premium GTV. What that tells me is that the investments we have made in optimizing our ad inventory and subscription offerings continue to pay off. Although MAU contraction remains, we are focused on acquiring higher value users and monetizing our audience more effectively. That makes the core marketplace more resilient and durable. Turning to innovation, starting with DataSeeds. It remains early, and we are excited about this market and its incredible growth potential. The appetite for AI training data is virtually insatiable, and we are productizing offerings we believe can meet the needs of model builders and doing so intelligently and cost effectively. This is in contrast to the many venture-funded startups in this market, many of which are overcapitalized and burning money like there is no tomorrow. Data is the fuel that powers AI models, and we do not believe this is a bubble. Our challenge is in making the right bets, continuing to grow our library of relevant content, and executing well in a rapidly developing market. We are witnessing continued inbound interest and have started building an outbound pipeline. Some of our customers have returned, placing new, larger orders after proving that we were able to meet their highly discerning needs with high-quality outcomes. Enterprise customers tend to scale relationships over time based on consistent and reliable performance. Our operational focus is on building a high-quality outbound pipeline and on better qualifying inbound requests. Not every opportunity converts, and not every deal is feasible. Being selective, focusing on those needs that we can meet, and executing well on the opportunities we pursue is critical to building long-term credibility in the enterprise market. In addition, we are building an off-the-shelf, or OTS, catalog to drive down cost and accelerate order delivery. Our production cloud is growing as well, with a set of vetted production teams that we can call on to create datasets as needed. Revenue remains lumpy at this stage, but engagement trends are encouraging. Our priority is building the infrastructure, supply depth, and operational rigor required to support larger, more consistent opportunities over time without getting too far ahead of ourselves and hurting profitability. Our innovation team is humming. We recently launched two more alpha products, bringing us halfway toward our goal of introducing up to six this fiscal year. As expected, not every initiative will make the cut, but we learn from each new launch. Syncat, our first release under the product innovation team framework, did not deliver the KPIs we were shooting for, and we are ceasing development of this product. Our framework is simple: prequalify, develop rapidly, test quickly, measure objectively, and invest in the winners. Adopting this operating mentality is challenging and requires great discipline and the ability to avoid getting attached to a product because of personal affinities. Turning to Emojipedia, we continue to face structural headwinds tied to the evolving field of search, and we recorded a non-cash impairment this quarter to reflect the likely impact of these changes. The business remains profitable, and the cost structure, which had always been efficient, is aligned accordingly. GuruShots appears to be stabilizing and is being operated conservatively following last year's restructuring as we evaluate longer-term options. From a capital allocation standpoint, we generated solid free cash flow even after investing in DataSeeds, TapeDeck, and other innovation priorities. Cash strengthened to $19,100,000 with zero debt. Our free cash flow yield remains in the double digits, and we are now paying a quarterly dividend while continuing to invest in innovation and repurchasing shares when the market conditions are right. Stepping back, our priorities are straightforward: strengthen monetization in the marketplace, build DataSeeds deliberately, and expand our innovation pipeline in a disciplined way. We believe that balance positions us well for the remainder of fiscal 2026. With that, I will turn it over to Yi. Yi Tsai: Thank you, Jonathan. Total revenue for the second quarter was $8,300,000, up 18.3% from last year. Remember, historically, Q2 is our seasonally strongest quarter due to the holidays. There are a couple of items of note in the quarter's results. First, Zedge Marketplace revenue was up over 21% year over year, driven by strong advertising CPMs and subscription revenue. Consistent with Jonathan's comments earlier and on our last call, Emojipedia was a significant drag on top-line growth, and, when combined with year-over-year declines at GuruShots, was a material drag on our overall revenue growth rate. That said, GuruShots continues to stabilize on a sequential basis. Advertising revenue was up 18.3% for the quarter as strong growth in the Zedge Marketplace was offset by lower ad revenue at Emojipedia. Zedge Plus subscription revenue increased 33% year over year, and our net active subscriber base grew 49%, reaching nearly 1,200,000 subscribers. We continue to optimize our subscription plans and are seeing the benefits of those changes. Deferred revenue, which primarily represents subscription-related revenue, reached $6,000,000, up 5% sequentially and 39% year over year. This is an important metric as it reflects future revenue that essentially carries a 100% gross margin. Zedge Premium GTV was up 15.7% from the year-ago quarter, and op amount increased 47.6%, continuing the shift toward higher value users and improved monetization efficiency. This quarter, note that our digital goods and services revenue includes contributions from both GuruShots and DataSeeds, with a vast majority being generated by GuruShots at this stage, as we recognized minimal DataSeeds revenue in the quarter. We expect to see DataSeeds increase its contribution in 2026. Cost of revenue was 6.8% of revenue, which was up from 6.4% last year due to the reduction in partner discounts from Google Cloud Services as well as the introduction of TapeDeck licensing fees and DataSeeds production costs. SG&A decreased about 6% to $6,700,000 for the quarter. This reflects the net savings from our restructuring, partially offset by investment in ramping DataSeeds and TapeDeck. GAAP loss from operations was $2,900,000 compared to a loss of $2,200,000 last year. This quarter, we took a $3,700,000 asset impairment charge related to Emojipedia, while last year we had $1,300,000 in restructuring charges. GAAP net loss and loss per share were $2,300,000 and $0.18 compared to a loss of $1,700,000 and a loss per share of $0.12 last year. On a non-GAAP basis, net income was $800,000 and EPS was $0.06 compared to a loss of $200,000 and a loss per share of $0.01 last year. Cash flow from operations was $900,000 and free cash flow was $800,000 for the quarter. Adjusted EBITDA for the quarter was $1,100,000 versus -$100,000 last year. From a liquidity perspective, we ended the quarter with $19,100,000 in cash and cash equivalents and no debt. In addition to our dividend payouts, we still have about $500,000 available under our current buyback authorization. I want to point out one item as we look to our Q3. Last year, we had a one-time benefit to revenue of $450,000 related to an integration bonus from an ad partner that will not repeat this year. Thank you for listening to our second-quarter earnings call. We look forward to updating you again soon when we report results for 2026. Operator, please open the line for questions. Thank you. Operator: Ladies and gentlemen, we will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the star key. To withdraw your question, please press star 2. At this time, we will pause momentarily to assemble our roster. Our first question is coming from Allen Klee with Maxim Group. Your line is live. Allen Klee: Yes. Hi. Nice quarter. For DataSeeds, could you walk us through how you think about, as you get these, how long you think it takes to be able to deliver on a win, and how is this considered from a margin perspective potentially when it scales? And anything else related to the pipeline and the size of orders that might be in the pipeline? Thank you. Jonathan Reich: Hi, Allen. Thank you. A couple of different observations about DataSeeds. As we have said in the past, DataSeeds is a B2B offering, and from what we have seen, the progression of a deal depends on how well a proof of concept goes. If we deliver well according to spec in the time frames that we are given, the customer has interest in coming back to us. The growth of those deals is very much dependent on what the customer needs, whether it is a custom-made deal or whether it is an off-the-shelf deal. And we are still in the midst of refining that process to make sure that we are investing our resources in the right area with the right data, with the right prospects, and so on and so forth. In terms of margins, thus far, the margins have been attractive. We do have target margins, but margins are also dependent on what type of deal it is. Off the shelf will command a lower margin than custom made by and large, and, depending on whether or not there is a middleman—meaning a marketplace that is involved—that also impacts margin. So these are all variables that are being considered by us as we further invest in expanding this business. Allen Klee: Okay. And last quarter, I think you mentioned you were—so this makes perfect sense with you guys on photos with your having GuruShots. Did you also, I think, mention you might be looking at other types of data, and how are you thinking about that now? Jonathan Reich: Yes. We are focusing on multimodal data. That can be images, audio, and/or video. So we are focused on each of those verticals in terms of actual data. The typical entry point is based upon our reputation and business in the image space, but we have already completed one proof of concept on the video side, and we are speaking to several prospects about some audio work. Allen Klee: That is great. On your alpha product launches, you mentioned you launched two more to get to four out of six. Is there anything you can comment on the two new ones? Jonathan Reich: The two new ones literally are fresh out of the starting gate. What I can comment on thematically is these are being built off of a foundation that continues to evolve such that we can build things in a much more modular fashion, allowing us to accelerate and get stuff out the door sooner rather than later. We also are expanding and monetizing not only through subscription, which was Syncat-related, but also through advertising. And the refinement that we have in terms of even selecting what to produce next is continuing to improve. We have run stage-gate tests against a cohort of different ideas that we have researched using various industry tools, measuring where there is traction in the market, market sizing, and then taking a look at things like conversion rates and cost for acquisition, amongst other KPIs. After we have analyzed that data across a cohort of different ideas, we will select two winners, and then we start the development process. The goal is ultimately to have a foundation which allows for very fast turnaround so that we can build in a modular fashion as opposed to having to start from scratch every time we go out with a new app. Allen Klee: Right. And you are still seeing good momentum on subscription revenues. Is anything different in what is driving that, or the same trends? Jonathan Reich: What is driving it is really our ongoing investment in optimizing our subscription offering and trying to find those pockets of prospective subscribers that will be attracted to what we have to offer. Allen Klee: In terms of Zedge Marketplace, that is also doing very well. Talk a little bit about what has been driving that? Jonathan Reich: It goes without saying, our fiscal Q2 overlaps with year-end advertising spend. Furthermore, we have been doing a lot of work on the data science side in order to better segment users and optimize their performance from a monetization perspective. Allen Klee: And in terms of your active users, what is your strategy there on trying to increase that? Jonathan Reich: We have three tracks underway. Number one is marketing—primary marketing mechanisms that we have not used in the past, let us just say influencer marketing. Number two is we are testing new product features and capabilities that will draw back users on a daily basis. Just by way of example, we are going to be testing the notion of offering alarms such that you can wake up in the morning to an alarm, and a user would need to interact with the app in order to say the alarm is off. So product features. And then the third is that we have a data science project that we have initiated to help us better isolate prospective new users that we can bring into the app based upon the wonders of data science. Allen Klee: That is great. The marketplace where you are offering independent music makers royalties—could you talk a bit about how that is progressing? Jonathan Reich: Sure. First of all, as an aside, there was a really fantastic article that came out in Billboard magazine over the course of the last couple of days featuring TapeDeck and really touting the value that TapeDeck brings to the world of indie music. In terms of the actual product itself, the KPIs are trending in the right direction. We are slowing down in terms of ongoing product development and focusing our efforts more closely on expanding our music catalog. The need to find and build a music catalog that will be attractive to users, that is material in size, provides variety, and exposes users that are hyper-fans to their respective indie musicians is table stakes for the success of that business. That is where we are shifting our focus to because most of the product needs are completed at least for this phase of the rollout. Allen Klee: To what extent is discovery important for the success of this—as maybe people do not know the particular artist—and then if they can find him or her, they might get excited? How do you engage that, or how do you think about that? Jonathan Reich: Discovery is obviously important, and if one opens up the TapeDeck app, they can search their artists who will come back. If their artist is not there, it will recommend alternative artists, genres, and so on and so forth that align to that style. But what we have also started to do is to work directly with artists that are within TapeDeck in terms of promoting the app to their fan base. Allen Klee: Okay. Sounds good. Thank you so much. Operator: Thank you. As a reminder, ladies and gentlemen, if you have any questions, please press the appropriate key. As we have no further questions, this will conclude our question-and-answer session and our conference call. We thank you for attending today's presentation, and you may now disconnect.

28天前Insight Analytics约5分钟阅读

ULTA 2025 Q4 财报电话会议

Leila: Good afternoon, everyone. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to Ulta Beauty, Inc.'s fourth quarter and fiscal 2025 earnings call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley F. Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, you may begin. I am so sorry, everyone. I am going to have to take that back again. One moment, please. At this time, I would like to welcome you to Ulta Beauty, Inc.'s fourth quarter and fiscal 2025 earnings call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley F. Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, please proceed. Kiley F. Rawlins: Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty, Inc.'s results for the fourth quarter and fiscal 2025. Hosting our call today are Kecia L. Steelman, Chief Executive Officer and Chris Del Orfus, Chief Financial Officer. During today's webcast, a presentation is being displayed live and will be posted to our website at ulta.com/investor shortly after the webcast concludes. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, factors identified in the earnings release and in our most recent 10-Ks and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit your time to one question with no more than one follow-up question. As always, the IR team will be available for any follow-up questions after the call. I will now turn the call over to Kecia. Kecia L. Steelman: Thank you, Kiley, and good afternoon, everyone. I am excited today to be joined by Ulta Beauty, Inc.'s new CFO, Chris Del Orfus. Welcome, Chris. We are so thrilled to have you as a part of the team. As I reflect in the past twelve months, I am incredibly proud of the Ulta Beauty, Inc. team and all we have accomplished. We closed the year strong, delivering full-year financial performance ahead of our plans while making important guest-facing investments to position our business for future growth. For the year, we grew net sales by nearly 10%, to $12.4 billion, delivered operating income of $1.5 billion or 12.4% of sales, and EPS of $25.64. Today, I will start by briefly highlighting our fourth quarter and holiday performance and then discuss our full-year performance and the progress we made against our Ulta Beauty unleashed strategy before sharing more details on our plans and priorities for fiscal 2026. Our team stayed focused on executing and caring for our guests, delivering stronger-than-expected fourth quarter sales, and continued market share gains in mass and prestige beauty. Successful events fueled all of our performance including Black Friday and Cyber Monday, along with key post-holiday events like our fan favorite Love Your Skin and Jumbo Love promotions. Holiday served as a culmination of our efforts to advance the business throughout 2025. We developed a thoughtful cross-functional holiday strategy supported by outstanding in-store and digital execution, bold and relevant marketing campaigns and activations, and compelling holiday assortment and gift sets. Guest engagement was high, and many guests leaned into the convenience of our omnichannel buy-anywhere, fulfill-anywhere capabilities during the busy holiday season. Our store and digital teams executed with excellence, delivering record-breaking holiday performance. We introduced a fun holiday marketing campaign focused on the Twelve Days of Giftmas featuring celebrity brand founders, which drove meaningful gains in awareness and brand love scores. We drove comp growth across all categories and made gifting easy with a curated and powerful holiday assortment, impactful newness, and a leading fragrance offering. Our relentless commitment to operational excellence had store teams quickly restocking after high-volume holidays to serve guests and maximize selling opportunities, while our supply chain teams leveraged recent distribution center upgrades to increase our delivery speed to guests. Turning to our full-year performance, fiscal 2025 was a year of strategic investment and deliberate transformative change for Ulta Beauty, Inc. Change that challenged us to sharpen our focus, strengthen our capabilities, and position our business for sustainable, profitable growth in the rapidly evolving beauty market. We began the year with a clear vision on how we intend to unleash the power of our model, build on our foundational advantages, and reassert our leadership position in beauty through the execution of our Ulta Beauty unleashed strategy, with a clear focus on three priorities: driving core business growth, scaling new businesses, and realigning our foundation for the future. Paired with the collective commitment and agility of our teams, we turned vision into reality and made exceptional progress across each pillar of our strategy, reigniting our growth, strengthening our core, and delivering better-than-planned financial performance. Let me briefly highlight the advancements we made during the quarter. We elevated our execution and more consistently delivered a differentiated omnichannel guest experience, further solidifying Ulta Beauty, Inc. as the unmatched beauty destination for all guests. This came to life through a recommitment to best-in-class execution and stronger merchandise in-stock, incremental investments in payroll hours to support the guest experience, more than 100,000 in-store events which included brand launches, brand education, and celebrity appearances, and highlighted our differentiated in-store experience, ongoing digital upgrades that added guest-friendly features like Replenish and Save and Wish List, and expanded convenience through features like Split Card, and increased personalization through the power of AI in our automated marketing engine that delivered relevant, dynamic, and timely content across the customer journey. We strengthened and modernized our assortment and merchandising strategy, accelerating pipeline momentum and delivering a powerful wave of newness that included more than 100 new brands this year, including Moroccanoil, Amika, Medicube, Isima, Drake's Better World Fragrance, and Tir Tir among many more. Key elements that supported our merchandising evolution included thoughtful, purposeful collaboration with our brand partners to fuel the innovation pipeline with new products like Fenty's Diamond Collection and Morphe eyeshadow palettes, a new elevated go-to-market approach that established tighter collaboration between our merchandising, marketing, and store teams and helped drive operational excellence, marketing leadership, and compelling merchandising innovation, a bold new marketing strategy with reimagined events like our Only at Ulta event, which highlighted our differentiated exclusive assortment, and powerful cultural activations like our sponsorship of the Cowboy Carter tour in conjunction with Beyoncé's Sacred Hair Care launch, and elevating our brand-building capabilities enabling us to build stronger portfolios of exclusive brands and products that drive meaningful differentiation and new member acquisition. Noteworthy successes in 2025 include Sacred, which became our largest prestige hair care launch in history; prestige skincare K-Beauty brand Peach & Lily; influencer-founded makeup brand DIBS; and Gen Z's most loved fragrance brand NOISE. We built and expanded into new growth channels through our international expansion beyond the U.S. with nearly 100 stores in five countries. This included our acquisition of Space NK, a luxury beauty retailer operating more than 80 stores in the U.K. and Ireland, the opening of nine stores in Mexico via our joint venture partner Grupo Axo, and the opening of two stores in the Middle East through our franchise partner Alshaya. Our newly launched marketplace, a curated online offering that allows guests to explore a complementary array of beauty, wellness, and lifestyle products on ulta.com and our app; the assortment includes more than 200 established and emerging brands and 5,000 SKUs. Our wellness initiative included the addition of nearly 30 new brands in our core wellness assortment and nearly 40 new brands in our marketplace assortment, along with an expanded store presence in more than 400 stores. And new UB Media capabilities like the addition of connected TV and streaming audio products that drove engagement and incremental ad revenue. We made notable progress aligning our foundation to support future growth through important leadership changes to ensure our team was positioned to meet the needs of our evolving business, and ongoing cost optimization efforts, including investment in AI and automation, like testing new conversational AI capabilities for our guest services team, which streamline and increase resolution efficiency and quality, as well as the implementation of an AI-powered order management system to optimize fulfillment across our network, enabling our expansion of ship-from-store and reducing out-of-stocks and markdown risk. Finally, and perhaps most importantly, we reignited our culture and reinvigorated our brand, and our guests, associates, and brand partners took notice. We did this through decisive organizational changes that accelerated decision-making and aligned teams and resources around guest-centric goals; adopting a winning mindset as we stacked key successes and built momentum throughout the year, we steadily reignited our collective spirit or as I like to say, we got our swagger back; and a new marketing brand equity campaign, Beauty Happens Here, and bold and fresh marketing activations which placed Ulta Beauty, Inc. at the center of exciting cultural moments like Lollapalooza and Coachella; and a renewed enthusiasm for the magic of our mission to bring the power of beauty to life for all ages and all life stages. By nearly all measures of success, our team delivered against our plans. During fiscal 2025, we drove 5.4% comparable sales growth and positive comp growth across all categories. We strengthened conversion in stores, increased transactions, and drove improving NPS scores. We grew our loyalty program by 5% to a record 46.7 million active members, driven by strong growth in reactivated members and strong retention of existing members. We gained market share in both mass and prestige beauty. We delivered greater app engagement with approximately 60% of online sales made through the app and drove active app users up 15% year over year. And we drove significant EMV and reached record levels of unaided awareness. While the guest-facing investments we made this year pressured profitability, the steady progress and results driven in fiscal 2025 reinforce our expectations that these investments position us to return to sustainable, profitable growth and to deliver against our long-term financial targets in fiscal 2026 and beyond. Before I turn to our plans and priorities for 2026, let me first touch on our view of the consumer, the current beauty landscape, and our expectations going forward. Throughout 2025, we closely monitored consumer behavior and observed continued resilience, a strong focus on value and affordability, and increasing discernment in spending decisions. At the same time, engagement with the beauty category remained healthy, and the landscape remained competitive. We expect these themes to continue into fiscal 2026, though we are increasingly mindful of rising global conflicts that could impact economic conditions. Absent increased broader macro disruption for the year, our expectation for the beauty category growth is in line with the average historical growth rate with expected growth in the 2% to 4% range. As we turn to fiscal 2026, the Ulta Beauty unleashed strategy will continue to guide our priorities as we build on the successes of fiscal 2025. Chris will highlight our financial outlook, but let me touch on our priorities and plans for 2026. First, our core business in the U.S., which now includes more than 1,500 stores and a robust digital offering, is our top priority and we continue to see significant opportunity to unlock further growth. In 2026, we will continue to enhance our brand-building efforts to further elevate and differentiate our assortment, strengthen our position as the retailer of choice to launch, build, scale, and globalize across the full low-to-luxury portfolio. We will continue to strengthen our appeal to meet guests' evolving beauty needs with innovative and relevant newness like the record-breaking launch of Rare Beauty by Selena Gomez and the exclusive launch of Balmain's new scent, Dustin de Balmain. We will continue to invest in the heart of our experience—our stores—to extend our competitive advantage and capture key growth opportunities. We will build on our progress across our digital platforms with new capabilities and stronger guest engagement through personalization, as we leverage greater automation and real-time content to tailor the guest experience and provide even more value to our loyal members. And we are pleased to announce today an expanded strategic integration with TikTok. Next week, we will launch Ulta Beauty, Inc. on TikTok Shop where guests can purchase immediately as they engage with content from Ulta Beauty, Inc. and our brands on the platform. We are excited about the opportunities both social and AI-enhanced commerce platforms are providing us to bring our undeniably Ulta Beauty, Inc. experience and assortment to life. We will initially launch with a thoughtfully curated assortment of only adult brands which will add another exciting tool to our brand-building playbook. Next, in order to maximize key incremental growth opportunities and remain resilient in a rapidly changing world, we will work to scale our new businesses. We intend to continue our international expansion in the U.K., in Mexico, in the Middle East, through our existing partners. We will thoughtfully expand our wellness and marketplace assortment to drive new member acquisition and spend per member and add new UB Media capabilities to collectively fuel incremental profit growth. Finally, turning to our third area of focus, aligning our foundation for the future by optimizing our way of working and streamlining our cost structure. In 2026, we plan to continue our supply chain transformation efforts with the rollout of increased automation in existing facilities and start-up construction of a new regional distribution center in the Northwest later this year that will expand network capacity and increase fulfillment speed. We plan to invest in systems and processes to drive sales and inventory through new merchandising transformation efforts. And we will continue to further our mission to support human possibility by expanding our AI capabilities to support the guest experience, drive associate productivity, and empower smarter decision-making. Beauty is deeply personal, and we believe leveraging new AI capabilities will enable us to deliver relevance, inspiration, and expertise seamlessly across the guest beauty journey. Powered by our loyalty ecosystem, rich first-party data, and convenient omnichannel footprint, we are engaging with industry leaders to explore how we can further leverage AI to amplify what makes Ulta Beauty, Inc. distinct. All of these efforts will support our ongoing cost optimization efforts to fuel investment and support profitable growth. As we close out a strong fourth quarter in a transformative year, I want to thank our associates, guests, brand partners, and shareholders for their continued trust and partnership. As I reflect on my first year as CEO, I am proud of the progress that we made to deliver on our commitments, strengthen our strategic position, and invest in capabilities that will drive our next phase of growth. We are optimistic about the opportunities ahead while remaining mindful and cautious as we navigate an environment with ongoing global uncertainty and potential economic volatility. Looking forward, we will control what we can control, put our prior strategic investments to work as we focus on strong execution, innovation that creates real value for our guests, and disciplined, returns-driven capital allocation. I am excited about what the future holds for Ulta Beauty, Inc. We have ambitious plans, and I am confident that we have the right team, the right model, the right strategy, and the swagger to continue to win in the beauty category and create value for our shareholders. I will now turn it over to Chris to cover some of the specific financial results and our 2026 outlook. Chris? Chris Del Orfus: Thanks, Kecia, and good afternoon, everyone. Before I discuss our recent financial results and our outlook for fiscal 2026, let me first say how excited I am to join Ulta Beauty, Inc. Over the last three months, I have enjoyed getting to know the Ulta Beauty, Inc. team and gaining a deeper appreciation for the company's strategic positioning, financial strengths, and its strong people-focused culture. Ulta Beauty, Inc. is a beloved brand operating in an attractive and resilient category. Our Ulta Beauty unleashed strategy is fueling market share growth, driving guest engagement, and furthering our differentiation in a competitive category. We have more than 60,000 talented associates who bring our brand to life and serve our guests with passion and commitment every day. We have strengthened our foundation, invested in key capabilities, and maintained a solid financial foundation with strong operating cash flow that enables value creation and also provides us with financial flexibility to pursue growth opportunities and weather dynamic macro environments. I am excited and optimistic about the future of Ulta Beauty, Inc., and I am energized to serve as a strategic partner to Kecia and the rest of the executive team to ensure we build on our momentum with a strong focus on driving long-term sustainable growth and maximizing value creation. So with that, let us get into our results. Starting with the quarter, net sales for the quarter increased 11.8% to $3.9 billion compared to $3.5 billion last year. During the quarter, we opened five new and remodeled 18 Ulta Beauty, Inc. stores. We also opened two new and relocated one Space NK store. For the year, we opened a total of 63 net new stores, relocated six stores, and remodeled 42 stores, in line with our previously provided guidance. We ended the year with 1,505 Ulta Beauty, Inc. stores and 86 Space NK stores. Comparable sales for the period increased 5.8% driven by a 4.2% increase in average ticket and a 1.6% increase in transactions. Looking at the cadence of sales through the quarter, comp sales were fairly consistent, reflecting both a strong holiday season and the lapping of softness in January. I would note that we did see some impact from the weather at the end of January this year. From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce sales delivering mid-teen growth and comp stores increasing sales in the low single-digit range. Turning now to sales by category. The skincare and wellness category increased to 24% of sales and the makeup category decreased to 35% of sales, primarily reflecting the impact of Space NK which has a higher mix of skincare sales than our Ulta Beauty, Inc. business. Fragrance was the strongest performing category again this quarter, delivering double-digit comp growth fueled by newness from established brands including YSL and Prada as well as exclusive brands such as NOISE, SNF, and Summer Mink by Drake, coupled with strong performance of holiday gift sets. New co-branded TV campaigns, expanded space in stores, and better in-stocks successfully positioned Ulta Beauty, Inc. as the fragrance destination this holiday season. The hair care category delivered its best comp performance this year with comp growth for the quarter in the high single-digit range, primarily driven by strong performance from new brands including Amika and Moroccanoil and exclusive Sacred, which continued to build sales momentum after a fantastic launch in April. The skincare and wellness category delivered mid single-digit comp growth driven by prestige skincare and wellness. K-Beauty brands Medicube, Anua, and Peach & Lily and new brands, Dermatology and Personal Day, drove strong guest engagement, while highly giftable launches from Therabody, Nodpod, and Saje, which is exclusive to Ulta Beauty, Inc., delivered strong growth in wellness. We took market share in the makeup category with low single-digit growth in total supported by positive comps in both mass and prestige makeup. Mass makeup growth was driven by compelling newness from brands like L'Oréal, Morphe, and Ulta Beauty Collection, while prestige beauty benefited from newness from Kylie Cosmetics and MAC. Finally, services delivered mid single-digit comp growth driven by increases in salon and specialty services, including ear piercing and makeup services. Gross margin for the quarter decreased 10 basis points to 38.1% of sales. The decrease was primarily due to channel mix and deleverage of store fixed costs and other revenue. These headwinds were mostly offset by lower inventory shrink and leverage of supply chain fixed costs, reflecting efficiencies from our supply chain optimization efforts. Our team's relentless focus on reducing inventory shrink has delivered meaningful benefits every quarter this year. Our investments in fixtures and process improvements, targeted efforts in high-risk markets, and focused associate training have resulted in shrink reductions across every category. Moving to expenses, SG&A increased 23% to $1.0 billion. SG&A growth was primarily driven by higher incentive compensation, including rewarding our frontline and field associates reflecting strong financial performance versus our targets this year, compared to lower incentive comp in fiscal 2024. The impact of Space NK and investments we made to support our Ulta Beauty unleashed strategy also contributed to SG&A growth. Excluding the impact of incentive compensation and Space NK, SG&A growth for the quarter was about 17%. As a percentage of sales, SG&A increased 230 basis points to 25.7%. Consistent with our investment strategy, expenses deleveraged across most components of SG&A with the exception of store payroll and benefits which were approximately flat as a percentage of sales. Operating profit was $477 million or 12.2% of sales, and diluted earnings per share for the quarter was $8.01 per share. Now to recap fiscal 2025, on a full-year basis, net sales increased 9.7% or $1.1 billion to $12.4 billion. Comp sales increased 5.4% driven by a 3.3% increase in average ticket and a 2% increase in transactions. Gross margin increased 30 basis points to 39.1% of sales. The increase was primarily due to lower inventory shrink and higher merchandise margin, which were partially offset by channel mix and the deleverage of other revenue. SG&A expense increased 17.4% to $3.3 billion. The growth was primarily driven by higher incentive compensation, the impact of Space NK, and investments we made to support our Ulta Beauty unleashed strategy. Excluding the impact of incentive compensation and Space NK, SG&A growth for the year was about 13%. Operating profit was $1.5 billion or 12.4% of sales, and diluted EPS increased 1.2% to $25.64 per share, above our previously provided guidance. Moving to the balance sheet and our capital deployment strategies, we ended the year with $494 million in cash and short-term investments and $62 million in short-term debt, primarily related to Space NK. Total inventory increased 10.8% to $2.2 billion, primarily reflecting additional inventory to support new brands, the acquisition of Space NK, and the impact of 60 net new Ulta Beauty, Inc. stores. The increase also reflects inventory investments in key categories to improve in-stock levels and support strategic growth opportunities. Our business generated more than $1.5 billion in cash from operations for the year, which supported reinvestment of $435 million in capital expenditures and $890 million in share repurchases. To summarize our fiscal 2025 performance, the strategic investments and actions taken as part of the Ulta Beauty unleashed strategy enabled us to accelerate top-line growth, capture market share faster than expected, and ultimately exceed the commitments we made at the start of the year. I want to express my sincere gratitude to our teams for delivering this outperformance and positioning us well as we enter fiscal 2026. As we look to fiscal 2026, we are focused on expanding our market share, driving returns from the investments we have made over the last few years, and importantly, returning to profitable growth. Our 2026 plan is aligned to our long-term targets and reflects several key financial goals anchored in our value creation principles, including disciplined cost management which helps fuel investment to support a strong growth profile. For the year, we anticipate net sales will increase between 6% to 7% with comp sales growth between 2.5% and 3.5%. We are planning on operating profit to grow in line or faster than net sales, and we expect diluted EPS will increase more than operating profit. For modeling purposes, we expect net sales will be between $13.1 and $13.2 billion, primarily driven by comp sales growth and the impact of 50 to 60 net new company-operated stores. Overall, we are planning stronger sales growth in the first half of the year as we benefit from the acquisition of Space NK and lap easier comp growth comparisons in the first quarter. We expect gross margin will be approximately flat as benefits from higher merchandise margin driven primarily by greater inventory productivity will likely be offset by deleverage of store fixed costs and other revenue. We will continue to invest in growth opportunities, but we are planning SG&A growth to be in line with to slightly below net sales growth and significantly lower than fiscal 2025, enabled by productivity programs and disciplined investment prioritization. Keep in mind, we expect to realize double-digit SG&A growth in 2026 as we will not lap the acquisition of Space NK and the annualization of investments until 2026. We expect operating profit will increase between 6%–9% resulting in operating margin being flat to up 20 basis points. Primarily reflecting the anticipated pace of SG&A growth, we expect operating profit growth will be stronger in the second half of the year. We expect these plans, combined with the ongoing efforts to enhance inventory productivity, will continue to generate strong operating cash flow which will enable reinvestment to support future growth and also support our intent to return approximately $1.0 billion of capital to shareholders through our stock repurchase program. We expect capital expenditures for the year will be between $400 million and $450 million, primarily to expand and refresh our store portfolio as well as investments in digital and information technology capabilities and supply chain optimization to support the guest experience and drive further operational productivity. Reflecting these assumptions, we anticipate diluted EPS will be between $28.05 and $28.55 per share, representing growth between 9.4%–11.4%, respectively, including the impact of share repurchases and an assumed tax rate between 24.2%–24.4%. In closing, the execution of our Beauty unleashed strategy in 2025 enabled us to accelerate top-line growth and deliver stronger performance than planned. Building on this foundation, we have developed a plan for fiscal 2026 that delivers against our long-term financial targets, including market share expansion, profitable growth, and strong cash generation which support attractive EPS growth and compelling value creation. I will now turn the call over to our operator to moderate the Q&A session. Leila: We will now open for questions. To join the queue to ask a question, please press 5 on your telephone. Again, that is 5 on your telephone to ask a question. Please limit to one question before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Your first question will come from Christina Kattai with Deutsche Bank. Christina Kattai: Hi, good afternoon. Thank you for taking the question. I wanted to start by asking on the composition of the comp. Can you talk about pricing and what you are seeing from the brands? Because the 4.2% ticket was very strong. On the other hand, transactions decelerated, especially when looking on a two-year stack. Maybe can you touch on the dynamics there and just how you are thinking about it in 2026 as it unfolds? Thank you. Kecia L. Steelman: Hi, Christina. Thanks for the question. You know, we see pricing increases every year. They typically impact about 10% to 15% of the overall assortment. And we are really planning for normalized pricing environments in fiscal 2026. You know, we will continue to work with our brand partners and navigate potential pricing increases, but we are not seeing or hearing anything that is outside of the normal territory. Christina Kattai: Okay. And then just a question on SG&A. It came in a little bit higher. Can you maybe touch on how much of that was incremental marketing and how you are thinking about the wraparound effect of that in 2026? And then as we think about the, you know, if you could touch on the promotional backdrop in beauty across the industry. Just what are you seeing with the cost of customer acquisition? We would love to get your thoughts there. Thank you. Kecia L. Steelman: Chris, why do you not start? Chris Del Orfus: Yes. So regarding SG&A, obviously, we were pleased with the performance in Q4 and the ability to over-deliver both sales and EPS above the high end of our guidance. We also delivered our operating at the high end of our guidance. So if you think about it, we over-delivered sales above the high end of our guidance by about $85 million, and we had flow-through of EPS upside similar to our margin rate. So we did make some investments in SG&A in between there. A few things I would point to. One, we had to absorb higher incentive comp on the over-performance. The second thing to note is, of course, there are some variable costs that are attributed to the increased sales, for example, increased tasking in stores. In addition to that, we did make some investments to support the outperformance and growth, most notably marketing, some media investments, not only help 2025, but position us nicely as we look into 2026. So we are definitely pleased with how we finished 2025, and we think that positions us as we move into 2026 as you can see from the guidance we provided. Kecia L. Steelman: Yes. And then just a little bit on promotionality. We do not have any plans to accelerate promotion, but we recognize that the environment is competitive, it is dynamic, and there is an increased focus right now out there on value. But, you know, it is one of the levers that we can pull into. And, you know, with us having such a strong loyalty base, our investments that we have made in personalization, along with other ways that we have invested to really be relevant and top of mind for that guest, we currently do not have any elevated promotionality built into the current plan or in the guidance. Christina Kattai: That is great. Best of luck. Kecia L. Steelman: Thank you. Leila: Your next question will come from Christopher Michael Horvers with JPMorgan. Christopher Michael Horvers: Thanks, and good evening, everybody. I just want to jump back on your comments earlier about the backdrop, Kecia. In a 2% to 4% industry growth, is that a deceleration versus 2025? And then to what extent are you baking in the geopolitical backdrop? Obviously, a lot changed in the past two weeks. You know, did you take that into account when you were thinking about the sales outlook for the year and including your own share gains? Kecia L. Steelman: Yes. Let me—thanks, Chris, for the question. You know, it is very close to 2025. We—you know, the comp guidance really reflects a normalization and a fact that, you know, we are going to be increasingly having some challenging comps as we move through the year. We have, you know, adjusted for dynamic operating environments. We are staying really focused on controlling what we can control. You know, just a little color on how we looked at when we were building, you know, the 2.5%–3.5%, there were really four areas that we looked at. The first was really on consumer demand. You know, we are cautious about how the consumer demand could evolve given the macro pressures and rising conflicts, but, you know, beauty has been a resilient category to these macro pressures. So we see that beauty engagement is going to continue to be healthy in 2026. The second—I touched on this just earlier about the promotional environment. There are no plans for us to accelerate promotion, but, you know, it is going to be competitive out there. And, you know, I want to continue to focus on driving share and growth, and we are going to stay close to it, but we always want to look at market share and top-line healthy growth as a measure to our success. And then pricing, you know, I talked on that. We do not see anything that is going to be out of the ordinary within pricing. And then, you know, the growth of the category is between that 2% to 4%. But just as a quick reminder, you know, we are going against some easier comps in the first half versus the second half of this year, and we are just continuing to focus on controlling what we can control and making sure that we have a plan that gives us the ability to continue to take share and to build a strategy around numbers that we feel like, you know, regardless of the economic environment that we can continue to hit. Christopher Michael Horvers: Got it. And then, I guess, you launched Rare Beauty to start the year. And so can you talk about what the early response is to Rare Beauty? How should we size it in terms of an analog? Is this something like Kylie? Is this something like when you launched Fenty? Typically, you talked about, you know, 25% to 30% of sales growth is newness. How should we think about Rare, you know, relative to that number and relative to other analogs when you launched some significant brands? Thanks so much. Kecia L. Steelman: Absolutely. So, you know, just to maybe start with your last point, when you look at 2025, you are right. Twenty percent to 30% of our growth is coming from newness. We were a little on that higher end of the scale in 2025. So we are closer to that 30%. You know, Rare, well, it came out of the gates very strong and we are thrilled because it, you know, makeup having this halo impact in makeup is fantastic for us. It is one brand and we carry, you know, 600 brands in the assortment. What we are—what I can share about quarter-to-date trends so far is that we are pleased with February. We are still early in the quarter and, you know, we do have easier compares as I mentioned, you know, earlier in Q&A that we are going against easier numbers in the first half comp. But, you know, we have this embedded already in our guidance of the 2.5% to 3.5%. But, yes, we were thrilled with what we saw with Rare coming out of the gate strong. You know, Lauren and team had done a great job with newness and the cadence of newness in 2025. We like what we see with the cadence of newness in 2026. But, you know, it is one brand. It does not change the entire course of our business at the same time. Hopefully, that answered your question. Christopher Michael Horvers: Understood. Thanks so much. Leila: Your next question will come from Sydney Wagner with Jefferies. Sydney Wagner: Hi. Thanks for taking our question. Can you just give us a little bit more of an update on what you are seeing in terms of the competitive environment? We have seen some pushing from mass retailers into prestige. I am just curious what you think about are the most important elements of the business to maintain your competitive moat in the category, and what helps you continue to win new brands? Thank you. Kecia L. Steelman: Thanks for the question, Sydney. You know, beauty has always been a competitive category. But, you know, I would say that this is what we do. This is what Ulta Beauty, Inc. is about. We cover everything from low to lux and everything in between. And when you add wellness into this mix, you know, we are a trusted, you know, location with expertise that is broad in a curated assortment, with our leading loyalty program, with this omnichannel activation that we are continuing to invest in. You know, we just announced today about our TikTok, which I think is going to be another quiver for us to continue to engage with new guests. You know, we just are leaning into what makes us different which again I do believe it is that low to lux with services and wellness all captured into it. We have been talking a little bit more about leaning into our brand-building capabilities. We are bringing, you know, an elevated focus on how do we continue to engage with newness and exclusivity which continues to, you know, separate us from everyone else. But, again, you know, a lot of people want to get into beauty because it is an attractive category because of the margins, etc. But this is what we do, and we are just going to double down on the strength and the power of this model. The Ulta Beauty unleashed plan, I could not be more pleased with how we were performing against the plan in 2025. We are just going to continue to double down and really start to reap the reward of the investments that we made in 2025 and harvest that in 2026. And I would just say, you know, stay tuned. We are pleased with the progress we have made and I feel like we are focused on the right strategies for us to continue to be a share gainer in the future. Leila: Next question will come from Oliver Chen with TD Cowen. Oliver Chen: Hi, Kecia and Chris. As we think about makeup next year, what do you see happening relative to mass and prestige? And is the comp going to be pretty modest in makeup and outperform in fragrance? The related product question is K-Beauty and wellness. I know you have a lot of really good talent in wellness and you are thinking about that category more dramatically. Does that—when you put that space in, you know, how does it interplay with the categories that currently exist? And K-Beauty might be a massive megatrend, so would love your take. And Chris, a follow-up: On the comp store sales guidance, what do you need to leverage your fixed costs? And, historically, it has been higher than mid single digits, but what should we know in terms of deleverage on the 2.5% to 3.5%? And then your promotional question on guidance, were you saying promos this year ahead will be flat to last year, or are you giving yourself some breathing room to have higher promos than last year? Although I know you are working on many efficiencies around simplified, better promotions. Thank you. Kecia L. Steelman: Alright. Well, thanks, Oliver. I will start. Yes. You know, we are focused on everything from low to lux and everything in between. I think it gives us a strategic advantage that we do carry across all price points, especially if there could be potential pressures on the consumer's wallet in the future. In regards to K-Beauty and wellness, one of the things that I am very pleased with is that Lauren and team are working on SKU rationalization and making sure that, you know, unproductive SKUs—that we are really leveraging and bringing in both wellness and K-Beauty. One of the things that we are really focused on is this authenticity and quality of the brands. You see a lot of K-Beauty in and out, and it is almost like fashion that you see. We are really leaning into, at Ulta Beauty, Inc., the efficacy of the products and making sure that the products really give the results. We want to do all of the research for the guests. So when they come in, they buy K-Beauty products that are known and trusted, that they actually work, and that has been working really well for us. And I would say that same philosophy is true for wellness. One of the things that I am very excited about is in regards to our marketplace. And if you think about marketplace, you think about it as mezzanine into our existing store. So it is a complementary assortment that does not, you know, take away from what you could buy in store today, but it is, you know, another item that you could add to your basket. So we are taking that approach really from end to end with K-Beauty, with wellness, with marketplace, and everything from low to lux and everything in between. Chris Del Orfus: Yes. On the store fixed cost and the deleverage, maybe what I would share is, one, as you heard, we are planning gross margin flat year over year. So we have multiple levers that we use to try and manage that. So we see opportunity in merchandise margin. We are continuing to drive supply chain optimization as well and we will still continue to benefit from shrink. I think the other thing I would point to is the new stores is obviously still an important component to driving growth. And what we are also doing is we are rolling out new store formats, a smaller format this past year, about 25% of our stores with that new format. In 2026, we expect more like 15% to be the small store format. So it is not just about driving top line, it is also about how we execute putting new stores in market. And we think that will be an element that helps us. The deleverage there is really modest and manageable, and we will manage things holistically across gross margin. Leila: Your next question will come from Susan Anderson with Canaccord Genuity. Susan Anderson: Hi. Thanks for taking my questions. I was wondering maybe if you could talk about the timing of the new DC in the Northwest. And I guess how should we think about the cost there? And then I do not know if I missed this or not, but maybe if you could talk about too, just the drivers of the op margin being better in the back half. Is that just when the efficiencies start to roll in, I guess? And then are you guys assuming, like, gross margins pretty flattish throughout the quarters? Kecia L. Steelman: Yes. Thanks for your question, Susan. I will start, and then I will kick it over to Chris. You know, when we talked about the new DC, it will not be up and functioning until 2027, but these things take a while to, of course, get out of the ground, especially when you are building from ground level up. We have those dollars built into our CapEx plan. So they are both in the long-term algorithm and what we are expected to spend is already in this year's guidance too with the cost to get that building started. And then, Chris, I will turn it over to you. Chris Del Orfus: Yes. So on the progression of operating margin, the primary driver is—right—we are absorbing Space NK. So you have that impact. Really SG&A. There are two key factors. First of all, in the first half of the year all the way up until Q3. The second one is the annualization of the investments we made in the back half of 2025. Then as you move into the second half, you cycle over those. And in addition, especially with Space NK, right, the holiday season, it tends to be higher sales, and you should get the leverage from the SG&A there. So those are the key drivers. Our productivity was active in 2025 and will progress throughout the year. I would more point to those two factors as the big factors that impact the timing of operating margin first half versus second half. Susan Anderson: Okay. Great. Thanks for the details. Good luck with the year. Leila: Your next question will come from Katharine Amanda McShane with Goldman Sachs. Katharine Amanda McShane: Hi, good afternoon. Thanks for taking our question. So our question centered around SG&A as well. Totally understand the different laps that we are encountering here in 2026. But if we were just to focus on how you are spending around marketing, I know that was part of the Unleashed plan to spend more on marketing. Could you maybe talk a little bit more about plans for that, just how the dollars look maybe versus what you spent in 2025? And what that could look like going forward. Chris Del Orfus: You know, so we would not share that level of detail, but what I could share is a couple things. One is our SG&A growth profile, right, that we outlined was either in line with sales to slightly below sales. Again, that does include us absorbing Space NK and the annualization of investments. We have been very targeted with our investment priorities. And so one of the top areas that we have continued to prioritize is personalization, which will certainly be a core part of our marketing investment. So we are still investing to grow within that plan in addition to having the carryover investment that we put into place in 2025. I will also point to—you heard me say, in Q4, we did invest on the upside sales performance. That did include some marketing and media that we have some benefit as we rolled into 2026. So we feel really good that we actually have a very disciplined approach on SG&A. We are prioritizing growth investments in key areas and making intentional choices of where not to invest, and certainly marketing and personalization remains our high priority. Leila: Thank you. Your next question will come from Mark R. Altschwager with Baird. Mark R. Altschwager: Good afternoon. Thank you for taking my question. First, just following up on the comp guide, the 2.5% to 3.5%—that is a touch below the long-term framework. So I was hoping you could just give us a little bit more detail on the factors driving that. Just conservatism to begin the year or just anything you are seeing in the environment that is leading you to take a more cautious approach to that today. Kecia L. Steelman: Well, I will say that our initial plan is, you know, and I shared this in the comments, Mark, that, you know, we want to be a market share gainer. So we are looking at that as we are planning—we built this plan is that we do not want to cede market share. So, you know, I think that this plan we feel is a thoughtful plan that is one that we can, you know, continue to build the expense portfolio around. If there is potential upside, I am going to love that. We have had, you know, this last year, we had a strategy that was working. It was laid out well. We outperformed our initial guidance that we shared in 2025. And we beat and erased throughout the year. And we exceeded on all metrics. You know, I am confident that we have got a plan for 2026 that allows us to hit our targets and continue to invest in the business. It will allow us to continue to be a share gainer and be, you know, I would say fiscally responsible in our investments. Some of the, you know, numbers that Chris shared, we are getting some of our expense rates in line. We have been in this heavy, heavy investment cycle for many years, and it is time for us to start to reap some of the rewards of those investments, and that is what this plan is allowing us to do. Mark R. Altschwager: Makes a lot of sense. And then, Kecia, just to follow up, wondering if you could share any more learnings you have had so far on Space NK, and any update to how you are thinking about unit growth there and geographic expansion to new markets? Thank you. Kecia L. Steelman: Yes. Thanks, Mark. Well, what I will say is that we are pleased with the performance. They have a nice growth in sales. We feel great about the growth strategy. You know, I do not want to give—I am not going to give specifics on where we see the growth, but we view this asset as additive to our core business. We see opportunities to really leverage each other's strengths—access to new brands, clienteling strategies, loyalty programs—and there is the ability for us to continue to grow in a nice market of the U.K. for us. So, you know, it is still a little early to say, like, how we feel like we can totally unlock the entire—all the value in Space NK, but we like what we are seeing so far and we are really pleased with the acquisition. Acquisition. Thank you. Leila: Your next question will come from Olivia Tong with Raymond James. Olivia Tong: Great. Thanks. You have talked in the past about leveraging investments. So can you talk about the level of investment spend for 2026, the initiatives that you have planned this year versus last year, where that leverage is coming from? And then as you look at the margin improvement, what do you think is the right level longer term now that the business is on a better track? What is the right investment level to get back to sort of a steady-state comp growth more in line with the long-term algo? That is my first question. And then the second one is just around the consumer environment being a challenging—you know, new challenges to the consumer environment that we perhaps did not have a couple of weeks ago. And can you talk about your flexibility and the flexibility in the model to make potential pivots, adjustments if necessary? You know, you have obviously done a lot to promotional cadence, but it seems like the state of the consumer is evolving. Just wanted to get a little bit more detail on that. Thank you. Chris Del Orfus: So maybe I will start with the second part of your first question on how we think of margin. Look. What I would share is the way we think of this is we are looking to deliver consistent, profitable growth. To maximize value creation, what we want to do is maximize profit growth. Margin is a part of that, of course. But I can do that driving incremental top line or through margin leverage. So every year—and this is what is reflected in our current guide—we will have a plan that has a strong productivity goal that is going to fuel targeted and high-ROI investments in a disciplined way. So it will not be at the expense of margin. If I see investment opportunities throughout the year, as Kecia said, if we have upside and can increase our operating profit in the current year while continuing to also support future growth momentum, you get a double benefit and can do that preserving margin. That is what I will do. And that will support kind of consistency of growth and then a flywheel of value creation. With that said, again, every year we will have an element of leverage that we are building into our plan. And we can, as we move throughout the year, figure out how to best optimize profit growth within that while maintaining discipline on margin. So that is what you see embedded in our plan this year. I did talk about—you asked about how much investment. It is hard to answer because we have said we would grow SG&A in line with sales to slightly below. But the product of the investments in there is actually more than that because we do have productivity initiatives. Supply chain optimization, in particular, has been positive for us. We are focused on inventory productivity, among other things. So we feel really good about the areas that we are investing in this year and the guide that we set up within that framework that is in line with our long-term value creation algorithm and basically being a compounder of double-digit earnings growth. Kecia L. Steelman: Yes. I would just add that, you know, we have the leadership and the team in place that can and will pivot as needed. The fact that we do carry low to lux, it gives us the ability to also flex as the consumer, you know, flexes with us. And we have better insights into the category and can leverage AI to make really good strategic business decisions to help us drive this business. You know, while it is a competitive environment, we are playing to win and to continue to take share. Olivia Tong: Great. If I could follow up on some of the newer categories—health and wellness, marketplace, international. How do you think about further expansion in year two on those and adjustments that you need to make in year two and the level of investment in those initiatives going forward. Kecia L. Steelman: Well, on international expansion, you know, we are planning on continuing to open stores in our partnership with Grupo Axo and with Alshaya. You know, right now, we are looking at this as more of an asset-light approach on how we can continue to grow globally. And, you know, it is an important category for us because we do want to be a global beauty retailer. We are making smart decisions on investment categories like wellness, and there was the opportunity for us to continue to leverage SKU rationalization to have more productive items that are in our store. Four-wall productivity is something that Chris and I are really leaning into. We want to make sure that we are leveraging that fixed cost base of our 1,500 stores out there to continue to drive profit through the stores and through our P&L. So, you know, we are making good business decisions with a strategic lens that have both, you know, short-term and long-term implications on how we can really optimize this model. Alright. Well, with that, I think that that would be the last question that we had. I just want to thank everyone for joining us today. I want to thank our associates once again for delivering against our ambitious plans for 2025 and for their dedication in representing the Ulta Beauty, Inc. brand to our guests each and every day. We are confident in our strategy, we are focused on operational excellence, and committed to delivering sustainable growth even in this dynamic environment. We look forward to updating you on our progress on the next earnings call on June 2. I want to thank you all and have a great evening. Thank you. Leila: Thank you for joining. This concludes today's call. You may now disconnect.

28天前Insight Analytics约5分钟阅读

BEAT 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the HeartBeam, Inc. Fourth Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, today's conference is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call today and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results crossed the wire this afternoon and is available in the Investor Relations section of our company's website, heartbeam.com. Your hosts today, Robert P. Eno, Chief Executive Officer; Timothy Cruickshank, Chief Financial Officer; and Brian Humbarger, Chief Commercial Officer, will present results of operations for the fourth quarter ended 12/31/2025. I will now turn the call over to HeartBeam, Inc. Chief Executive Officer, Robert P. Eno. You may begin, sir. Robert P. Eno: Thank you, operator. The topics we will cover on today's call are listed on the slide. We will start with an overview of the HeartBeam, Inc. system, the core technology in our platform. Brian Humbarger, our new Chief Commercial Officer, will provide an overview of our limited commercial launch. We will then provide updates on heart attack detection. We will unveil the working prototype of our 12-lead patch and provide the latest on our AI initiatives, followed by the financial results. We will end with Q&A. I also want to note that this presentation, as well as an updated company presentation, will be available in the investor portion of the HeartBeam, Inc. website. Before we dive into updates since our last call in November, I want to remind everyone about our initial product, the HeartBeam, Inc. system and our platform technology. HeartBeam, Inc. is dedicated to developing groundbreaking ECG technology for patients to use at home to allow them to feel confident about their heart health. HeartBeam, Inc. has developed the first-ever portable, cable-free ECG that can synthesize a 12-lead ECG. Our unique IP-protected approach captures the heart's electrical signals in three dimensions, or non-coplanar directions, and synthesizes the signal into a 12-lead ECG. The system is designed to be easy to carry and easy for patients to use at the time of symptom onset anywhere, anytime. The technology is supported by an on-demand cardiologist who can interpret the clinical-grade ECG and triage patients appropriately to ensure timely care. In December, we achieved a major milestone when HeartBeam, Inc.'s 12-lead synthesis software received FDA 510(k) clearance for arrhythmia assessment. This clearance, combined with the foundational 510(k) clearance for the HeartBeam, Inc. system itself in December 2024, validates the unique approach of our technology and provides the basis for a limited, or initial, commercial launch. Just to note that in November, we received a not substantially equivalent, or NSE, letter from the FDA, but we immediately engaged with the agency and were able to get the NSE overturned in two and a half weeks, resulting in the FDA clearance in December. This rapid turnaround is a testament to our regulatory team and the willingness of the FDA to work with us productively to achieve a solution. HeartBeam, Inc.'s technology is a true platform. The core of this system is our signal collection technology, which captures the heart's electrical signals in three axes—left and right, up and down, and into the body. These 3D signals can be converted into a familiar 12-lead waveform. This core technology can be applied to multiple form factors. As I noted, we have our two FDA clearances on the HeartBeam, Inc. system—the credit-card-size form factor—and we are embarking on a launch of that system. In the background, we also have been developing a second form factor, an on-demand 12-lead extended-wear patch. We believe that this patch can disrupt the ambulatory cardiac monitoring market, a $2 billion revenue market with established reimbursement that consists of the long-term continuous monitor and the mobile cardiac telemetry, or MCT, segments. We are unveiling the details of our 12-lead patch for the first time today. The technology in these two form factors has the potential to enable a full range of 12-lead ECG capabilities, including the currently cleared arrhythmia assessment and future indications—heart attack detection and personalized AI algorithms. We will discuss our progress toward heart attack detection and personalized AI algorithms today. We want to provide updates on our progress on all four of our major initiatives. First, Brian will give an overview of our limited commercial launch. Then I will provide updates on heart attack detection. We will unveil our 12-lead patch, and I will provide the latest on our AI efforts. I will now turn the call over to Brian Humbarger, who joined HeartBeam, Inc. in January as our Chief Commercial Officer. Brian has over 25 years’ experience commercializing novel medical technologies, including leading the commercial efforts at HeartFlow, AliveCor, and Echo. I am thrilled to have Brian lead our commercial efforts. Brian? Brian Humbarger: Thank you for the introduction, Rob. I am truly honored to be joining the HeartBeam, Inc. team at such a pivotal moment for the company. In my first few weeks, I have had the opportunity to travel across the country and witnessed firsthand the strong demand among both patients and physicians for a wireless personal 12-lead ECG platform. The enthusiasm for this level of clinical insight delivered in such an accessible form factor is unmistakable. For our initial commercial launch, we are focusing on concierge and preventive cardiology practices where we expect, based on early engagements, strong traction. Coming on board, my objectives were clear: prove there is a willingness to pay for the technology and show evidence of demand. In addition to what we are highlighting today, I am seeing excitement that is leading to HeartBeam, Inc. building a robust pipeline of accounts that are getting in line to deploy our technology. Today, more than 1,500,000 Americans already pay out of pocket for concierge medicine. Many of these patients spend between $3,000 and $10,000 per year on proactive health care. We have conducted extensive market research with high-net-worth individuals and concierge physicians. High-net-worth individuals are highly likely to adopt advanced health technology and show a strong willingness to pay for the HeartBeam, Inc. system, which combines 12-lead capabilities with access to cardiology expertise. And importantly, physicians and concierge practices are highly likely to recommend HeartBeam, Inc. to their patients. Our target price per patient is $500 to $1,000 per year. This is a small fraction of what concierge patients are currently spending for their memberships. Our launch strategy starts with a very focused rollout in concierge cardiology and executive health, which is a small subset of the 1,500,000 concierge patients. These practices typically serve between 400 to 4,000 patients and are concentrated in key markets like New York, South Florida, Dallas, and Southern California. We are encouraged by these opportunities, and we expect to engage them with a very targeted commercial team. They also tend to be physician-owned and highly innovative in adopting new technologies. Even capturing a relatively small portion of this market can create meaningful early revenue for HeartBeam, Inc. In fact, we believe breakeven could be achieved within this segment alone. Once we validate adoption and refine our implementation model, we then go deeper into the broader concierge market. Beyond the concierge market, there are expansion opportunities in the larger patient-pay segment, including direct primary care practices, telehealth networks, and eventually national health care organizations. This approach allows us to prove the model in a concentrated market first, and then scale. We have a clear plan for commercialization. We are in the exciting position of introducing groundbreaking technology, and we do not expect demand to be a limiting factor. But as we build this market, we will be measured and take a staged approach. As we introduce HeartBeam, Inc., we will be validating a premium value proposition and refining our systems and processes in 2026. 2027 will be all about scaling revenue. Our business model is designed to scale efficiently. Rather than selling directly to individual patients, we will partner with medical practices. One relationship with a practice can result in hundreds or even thousands of patients enrolling, 70% adoption within accounts, and a payback period of just three to five months on initial onboarding costs. We believe that we can reach cash flow breakeven at roughly 30,000 patients. A key part of our launch strategy is partnering with leading cardiology and concierge practices that want to deeply integrate HeartBeam, Inc. into their care models. We are thrilled to have our first commercial customer, ClearCardio, who will be an excellent early adopter partner. ClearCardio serves a highly engaged premium patient population in markets such as Dallas and New York and are expanding into additional East and West Coast markets this year. Their patients already participate in advanced cardiovascular screening and ongoing monitoring, which makes them an excellent fit for HeartBeam, Inc.’s at-home 12-lead ECG technology. Our goal with partnerships like this is to go deep with adoption in the practice. Our launch strategy is laid out here. We will start with a small number of practices like ClearCardio. We will partner with these practices and drive deep patient adoption and engagement. This will give us the proof points we need, such as white papers and testimonials, to allow us to expand to a larger number of practices. And now I will hand it back to Rob. Thanks so much, Brian. Robert P. Eno: With the 12-lead synthesis software clearance, we are embarking on the product launch. But our opportunity is much greater than that. As I mentioned earlier, we have core technology that powers two form factors—the card and the patch—and enables multiple 12-lead applications. So next, I would like to discuss our efforts on heart attack detection. As we discussed previously, one of the major problems in cardiology is that there is no good way for patients who experience chest pain to know if they are having a heart attack. Patients wait an average of three to four hours before seeking care, and every 30 minutes of delay increases the risk of death by 7.5%. The 12-lead ECG is the standard for heart attack detection, but traditional 12-lead ECGs have 10 wired electrodes that need to be placed by a technician and are not applicable for home use. This is a major problem, with 20 million people in the U.S. at risk of a heart attack, including 8 million who have had a previous heart attack. HeartBeam, Inc.’s technology has the potential to address this major need. We have multiple proof-of-concept studies showing that the HeartBeam, Inc. ECG is similar to a standard 12-lead ECG in detecting heart attacks. An important point about this effort is that it is the same HeartBeam, Inc. system that we are launching with an expanded indication. We announced last week that we have started patient enrollment in the ALIGN ACS study, a European pilot study comparing the HeartBeam, Inc. ECG to a standard 12-lead ECG in detecting heart attacks. The study is conducted in the emergency room, enrolling patients who arrive with chest pain. This will allow the study to enroll much more rapidly than a study that prescribed devices to patients and waited for them to have events. We expect the study to complete by the end of 2026. And that study will inform the design of our FDA pivotal study. Our core technology powers two form factors. So far, we have spoken about the HeartBeam, Inc. system with its credit-card-size ECG collection device. But we have been working behind the scenes on the development of our second form factor, and we are excited to unveil that here today: an on-demand 12-lead patch. We believe that the HeartBeam, Inc. 12-lead patch can disrupt the ambulatory cardiac monitoring market. This market consists of patches that are worn for up to 30 days and continually record the patient's heart rhythms. This is a rapidly growing $2 billion revenue market with existing reimbursement. It consists of two segments, long-term continuous monitors and mobile cardiac telemetry, or MCT. These devices are one to three leads and are limited to arrhythmia detection and monitoring. HeartBeam, Inc. has developed an on-demand 12-lead patch and has produced a working prototype of the device. It functions just like existing patches, continually recording the patient's heart rhythms with a single lead. But using HeartBeam, Inc.’s patented core technology, a patient simply places two fingers on the front of the device to record a clinical-grade 12-lead ECG. This has the potential to bring better diagnostic capabilities and even ischemia detection to the patch segment. The device integrates into existing workflows and leverages the existing reimbursement. We believe this will be the best-in-class patch. We have recently completed a third-party market research survey which clearly demonstrates the potential of the product. Eighty-six percent of physicians said they would shift a portion of their patches to the 12-lead patch. On average, they said they would shift 61% of their patch prescriptions. This implies the potential to shift fully half of the market. In addition, 94% of the physicians said they would shift a portion of other cardiac monitoring devices such as Holter monitors. Many Holter monitors are 12-lead but use traditional wired electrodes, so are not practical for extended use. The market research also showed that the 12-lead patch could grow the patch market. Patients who feel cardiac symptoms do not know if they are experiencing arrhythmias or ischemia. They just know that something does not feel right. If there was an on-demand 12-lead patch, 64% of physicians said they would prescribe more patches, with an average increase of 45%. This implies that the market as a whole could grow immediately by 30%. Here is a video of the HeartBeam, Inc. patch in action. Please note, those of you who are dialed into the call will not hear the audio, so experience approximately a minute of silence. Unknown Executive: Introducing the HeartBeam, Inc. 12-lead ECG patch. The HeartBeam, Inc. extended-wear patch continuously monitors heart rhythms using a single-lead ECG, helping detect arrhythmias as they occur. When symptoms arise or when prompted by the HeartBeam, Inc. app, patients can instantly capture a clinical-grade 12-lead ECG. With a simple touch of the integrated finger electrodes, the system activates a full 12-lead ECG recording. The recording is transmitted in near real time, enabling physicians to review detailed cardiac data and make more informed clinical decisions. HeartBeam, Inc.: Continuous monitoring. On-demand clinical insight wherever patients are. Robert P. Eno: That is the HeartBeam, Inc. 12-lead patch. I am incredibly proud of our technical team, led by our founder, Branislav Vajdic, who have progressed the development of the device to this stage. We have a prospective clinical study underway on the device, and we look forward to providing more details soon. We will continue to engage with interested parties in the possibility of partnering to bring the 12-lead patch to market, and we are excited for these conversations to advance now that we have completed the working prototype of the patch. The final of our strategic initiatives is AI, which can be applied to both the card and the patch form factors. Our 3D signal collection and 12-lead synthesis provide valuable information for physicians, but we are developing AI algorithms that can provide deeper insights. Deep learning algorithms are applied to standard 12-lead ECGs today and are one of the most powerful use cases of AI in medicine. There are dozens of AI algorithms applied to 12-lead ECGs that can screen for asymptomatic diseases and predict the onset of disease across a number of conditions. But these algorithms are locked in the hospital. They require that the patient undergo a standard 12-lead ECG. HeartBeam, Inc. has the potential to take deep learning algorithms to the patient, applying them every time a patient takes a reading with the HeartBeam, Inc. device. This could allow for more robust performance, more personalized risk assessments, and greater predictive power. Expanding beyond symptom-driven assessments such as arrhythmia and heart attack detection to disease prediction and ongoing management can open up new markets and has the potential to enable new reimbursement pathways. HeartBeam, Inc. has assembled a top AI team led by Lance Myers, the former head of AI at Google Verily. And just this week, we announced a strategic collaboration with Mount Sinai. This will combine our expertise and our signal collection technology with Mount Sinai's expertise in clinically annotated ECG data. We are very excited about the potential of this collaboration and the benefits to patients of bringing these advanced algorithms to the HeartBeam, Inc. device. One of the initial focuses of the joint effort will be an algorithm to help physicians in the assessment of heart attacks. In addition, there are plans for a series of wellness and clinical algorithms, including screening and prediction. We have made a lot of progress in months, and we have plans to advance all four of these initiatives significantly this year. Here are the major milestones we have planned across our limited commercial launch, heart attack detection, the 12-lead patch, and AI. We have already achieved significant milestones on each initiative. For the limited commercial launch, after receiving the clearance of the 12-lead synthesis software in December, we hired Brian as our CCO and we have signed our initial collaboration agreement with ClearCardio. For heart attack detection, we initiated the ALIGN ACS pilot study in Europe. We have completed development of the working prototype of the 12-lead patch, are conducting clinical studies, and are continuing discussions with potential partners. And finally, in the area of AI, we signed a collaborative agreement with Mount Sinai. In the interest of time, I will not go through every milestone listed on this page, but we expect an exciting year of progress on all fronts. I will now turn the call over to Timothy Cruickshank for the financial results. Timothy Cruickshank: Great. Thanks, Rob. I will briefly review some key financial highlights for the quarter and the year ended 12/31/2025. Our results continue to reflect strong financial discipline as we advance key milestones while maintaining a highly capital-efficient operating model. For the full year 2025, net loss was $21,000,000, or $0.62 per basic and diluted share. And for the fourth quarter, net loss was $5,300,000, or $0.15 per share, which was directly in line with expectations. Importantly, a meaningful portion of that net loss relates to non-cash expenses, primarily stock-based compensation. So as a result, net cash used in operating activities was less than $14,000,000 for the full year, and just $2,900,000 for the fourth quarter, representing a 3% decrease year over year and a 30% decrease compared to the same quarter last year. We believe this reflects our continued focus on maintaining a lean organization, carefully pacing investments that support both commercialization and the continued development of our R&D pipeline. Cash and cash equivalents and restricted cash combined totaled $4,400,000 at 12/31/2025. We have demonstrated access to capital markets, and we continue to have multiple vehicles available for capital, including our shelf registration and at-the-market facility, as well as continued support from long-term stakeholders who believe strongly in the company's trajectory. So looking ahead to 2026, when we look at our cash flow, we expect baseline operating cash outflows to remain at approximately that $14,000,000 level. And then we have a cost-effective rollout for our commercial launch as we continue to maintain a heavily variable cost structure for additional R&D initiatives. So combining those, the incremental investments tied to the milestones Rob outlined on the earlier slide add just $3,000,000 to $5,000,000 to our cost profile. This is prior to factoring in potential cash receipts from customers and implies gross operating cash outflows of approximately $17,000,000 to $19,000,000 for 2026. 2025 was a transformative year for the company, highlighted by FDA 510(k) clearance for our 12-lead ECG synthesis software, which meaningfully de-risked the business. And we now enter 2026 with a commercial product, a strong development pipeline, and a disciplined operating model and cost structure. We look forward to updating you all on our continued progress. With that, I will turn the call back over to Rob in his closing summary. Robert P. Eno: Thanks, Tim. To summarize, 2025 was a pivotal year for HeartBeam, Inc., and we expect 2026 to be one of significant advancement on multiple fronts. The FDA clearance of our 12-lead synthesis software was a major milestone for the company. With that clearance behind us, we are beginning our limited commercial launch. Brian clearly laid out the opportunity and our strategy. We are building a new market, and we want to be smart in how we are rolling out the product. We are focusing on signing practices that see value in the technology and want to drive deep adoption with their patients. We are excited to have ClearCardio be the first of these early practices. We expect to take the proof points from the early experience to drive wider adoption. We have made significant strides on heart attack detection, with enrollment underway on ALIGN ACS, the pilot study on the HeartBeam, Inc. system compared to a standard 12-lead ECG in detecting heart attacks. This study is taking place in emergency rooms, which should lead to rapid enrollment, and the study will inform our FDA pivotal study. On this call, we unveiled the HeartBeam, Inc. on-demand 12-lead patch. We have been working hard on this second form factor for some time, and now have a fully working system that is currently being used in clinical trials. We believe that this is disruptive to the existing patch market, and the market research indicates it can drive significant market share shifts and grow the market. We are in discussions with potential partners. Finally, our AI efforts have taken a major step forward with the strategic collaboration we just announced with Mount Sinai. By joining forces, we believe we can accelerate bringing advanced algorithms to the HeartBeam, Inc. system. As Tim noted, we have made significant progress by maintaining strong financial discipline. We are excited about the major milestones we have achieved and the opportunities in front of us across multiple fronts. We thank you all for attending. We will now open for questions. Operator? Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And today's first question comes from Kyle Bauser with ROTH Capital Partners. Please proceed. Kyle Bauser: Great. Thanks for taking my questions, and congrats on all the updates. A lot going on. Rob, maybe starting with some of the initiatives. So for the ALIGN pilot study, a really nice trial design. It obviously makes enrollment about as straightforward as you could ask for, and also appreciate the updates on the patch initiatives. Can you talk a little bit more about the timeline for both of these? I know things are underway. And as you learn more, it will kind of inform future studies, but just trying to get a sense of kind of the cadence of, you know, what are the milestones needed to hit and the timelines associated with those? Robert P. Eno: Sure, Kyle. Yeah. I can talk at a high level. It is obviously still early. So for heart attack detection, as I said, we have started the ALIGN ACS pilot study. That is on the order of about 100 patients, and as you suggested, because it is done in emergency rooms where there are many patients per day showing up with chest pain, it should enroll rapidly. The study design is basically the patients, when they come in, they get a 12-lead ECG. Then they are waiting for the next step. They then get enrolled. They will get another 12-lead ECG and our device very close in time, and we compare both of those to the discharge diagnosis, trying to show that we are comparable in terms of the accuracy of detecting a heart attack with the symptoms, history, and the ECG. We are expecting that it will enroll quickly. We are saying by the end of Q3 is our expectation. And we also said that that is going to inform the pivotal study. So there will be a pivotal study needed for FDA. We have had early discussions with them. We need to continue to have discussions. And, obviously, this study design and results will inform the pivotal study. So in general, it is the pilot study followed by the pivotal study and then the regulatory review. We have not finalized what the regulatory path will be. So that will be forthcoming—both the timelines and the official path—as we get further in our discussions with FDA. And we will keep you posted on that. And as far as the patch goes, a couple of things on that. What we know is that we expect, although we have not vetted it fully, we expect it will be a 510(k) because we have predicates of our HeartBeam, Inc. system with its 12-lead synthesis as a 510(k) now, and then the patch product are 510(k). So those get combined together. As far as the go-to-market strategy and the timelines, still to be determined. We have the ability to bring that to market ourselves, but as I have mentioned, we think if we are able to combine with a partner, we may be able to get this in the hands of more patients quickly. So we are having those discussions. And based on that, we will have a better sense of how the timelines lay out. Kyle Bauser: Got it. I appreciate that. And then maybe next for Brian, welcome to the team. Thanks for the thoughts on the commercialization strategy. You talked about the importance of anchor accounts to drive things like white papers and testimonials. Just kind of curious. What does the account pipeline look like? And how many anchor accounts would you expect to have kind of up and running over, call it, the next six months or so? Brian Humbarger: Yeah. Thanks for the welcome, and great question. So, you know, going back to what we laid out before, we are being very focused and strategic in our entry to the market. So you talk about the 5,000,000 patients today that are paying for some sort of concierge or preventive medical care. Within that, about a million and a half are kind of in this concierge space that are really focused on a higher level. And then where we are really entering the market is that 10% of that—the top 10%. It is about 150,000 patients. They are really concentrated in three or four geographies throughout the United States. The reason we are focusing on those is really because there is a strong willingness to pay by that patient population. It is more of a premium patient population, as well as because of the type of concierge—the cardiology concierge and the executive concierge—there is a very high-touch patient-physician relationship there. And so with that, we are hyper-focused. We really feel that focusing in that area—it is a very target-rich environment. We do not see or feel that there is going to be a lack of demand. As I mentioned before, only, you know, 20% of that population alone could take us to a breakeven point. It is a very large market. It is going to really inform us on what we need to go to scale and move forward. So, you know, to answer your question, what we are looking at is really focusing on several accounts in the first couple quarters here so that we can validate our premium value proposition, and then really start to scale after that. The bottom line is we do not need to have very many accounts to do that, and we do not think that the timeline is going to be very long for us to be able to execute. What we really want to do is make sure that we are focusing on the right people, we are driving deep adoption, we are validating, then we can go out and replicate it. Timothy Cruickshank: And I might just add, that was really great, Brian. I think if you think about what our goals are for this initial rollout, these initial accounts have between 400 to 4,000 patients. It is all about proving—the number one metric we have is proving we can go deep into these accounts efficiently. And so it is less about the number of accounts early days and more about proof points of going deep into them for adoption. When we get that, that gives us the blueprint to start to go after that larger 1,500,000 patient population, which has large chains that have, you know, hundreds of thousands of patients within them. So, you know, we want to get the proof points of efficient, deep adoption, and then we can take that blueprint to these larger, more margin-focused chains that have hundreds of thousands of patients and start to scale that way. Kyle Bauser: Sure. Yep. No. I appreciate that. And, Tim, maybe just on OpEx, I think you said $17,000,000 to $19,000,000 for the full year in terms of kind of the cash outflows. In terms of R&D, given all the exciting initiatives going on, how should we think about this line item kind of trending, or the cadence? Is it at similar levels each quarter? Is it stepping up slightly? Any color here would be helpful. Timothy Cruickshank: Yeah. The first half of this year, it steps up slightly because of the clinical trials enrollment there as well as these advanced developments we have on the patch. So when you compare it to Q4 and quarterly numbers, it is a slight step up in the first half of the year, but then goes back down to kind of the levels they are at now by the time you get to the second half of the year. We have been really effective at having milestone-based expenditures. So, you know, we are able to keep our kind of baseline $14,000,000, which a big chunk of that is R&D. The reason our OpEx does not go up tremendously this year is because some of that from last year switched off as we hit milestones, and now we are basically just replacing existing cost with, you know, new focuses on these milestones. So, you know, you think about the $17,000,000 to $19,000,000 overall in cash outflow. It is about $1,500,000 total over the course of the year incremental for R&D initiatives, with most of that—some of that—happening in the first half of the year, you know, slightly more than half on a prorated basis. Kyle Bauser: Okay. Got it. Excellent. Congrats again on all the updates, and thanks for taking my questions. Robert P. Eno: Thanks, Kyle. And the next question comes from Bill Sutherland with The Benchmark Company. Please proceed. Bill Sutherland: Thank you. Afternoon, everybody, and congrats on all the progress. Brian, I was curious on this focus that you have initially on the top 10% inside the concierge practices. Is this something you expect will probably be the focus for well into 2027 before you, you know, feel like you have got everything you need to kind of broaden? Brian Humbarger: Yeah. Thanks, Bill. Good question. Again, I think that we are going to be able to validate very quickly this model. I do not think it is, you know, we have full intentions of kind of expanding into that 1,500,000 patient slice of the pie, if you will, before 2027. Again, the reason we are focusing on these cardiology concierge groups and the executive health groups is it is a very, very target-rich environment. But also, these are practices that are owned by the physicians, and the pathway to contracting—the sales cycle—is not really with bureaucracy, which helps us get to the patients quicker. They have very, very high levels of patient engagement. And these practices specifically, Bill, are looking at—the feedback we are getting from them is that they want all of their patients in their practice to have this device. Right? So it is not being selective. We are going after that 10% because the profile of that customer is so aligned with what we are doing that when we walk in, they say we want every patient in our practice to have this, not trying to carve out there is just a specific type of patient. So I think we are going to be able to learn again with a limited number of accounts and a limited amount of time, and then based on that playbook we are putting together, I think we are going to be able to start expanding into these other market opportunities very quickly. Robert P. Eno: And I would add it is probably—you know, it is hard to predict because it is going to be kind of a gradual transition—whether we are into this larger group, you know, in 2026 or into early 2027. But, you know, Brian is going to continue to build the funnel with lots of interested accounts. And then, as he described, as we show the proof points from the deep adoption, then that should accelerate into this next wave so that it kind of comes in parallel. Bill Sutherland: And does the pricing include the reader service that you have contracted? Brian Humbarger: Yes. The pricing that we have laid out, the $500 to $1,000—and there is a range and variables that impact that—but that does include the reading service. Bill Sutherland: Gotcha. And so really no plan then and no need to think about reimbursement codes for this. Is that true? Robert P. Eno: Yeah. I can take that one. Sure. You know, I think we have said before—now all three of us on this call, with Brian and I both working together at HeartFlow and Tim at ImpediMed—we have all gone through the reimbursement journey with previous companies. And, you know, it is powerful. It takes some time. One of the things I love about what we are doing is we have got optionality. So we obviously—not to deviate too hard—but on the patch, you know, that is an existing reimbursed market. On the card, what we are excited about, as Brian laid out, is we have significant patient-pay opportunities starting with concierge and going beyond that. So we do not think we necessarily need to get reimbursement codes right away, but it is clearly part of our vision. And I think the way to think about it: as we get more use cases that demonstrate the value to the health care system—and I think heart attack detection is a really big one given the clinical and cost-effectiveness benefits—the work we are starting to do now will pay off there, whether that is in a value-based care world of ACOs and Medicare Advantage and demonstrating the advantages of having this product, or, you know, into CPT codes. So that is definitely part of the strategy, but what we like is that we can expand and believe we can get to cash flow positive without having to even have the reimbursement kick in, but that becomes a whole second wave on top of this. Timothy Cruickshank: Yeah. Bill Sutherland: Yeah. Sounds great. Thanks. Thanks to you all. Appreciate it. Robert P. Eno: Thanks, Bill. And your next question comes from Yi Chen with H.C. Wainwright. Please proceed. Eduardo (for Yi Chen, H.C. Wainwright): Hi. This is Eduardo on for Yi. Congrats on the year and the quarter. I wanted to ask a question again on the ALIGN ACS study. Just curious what kind of accuracy you think would be sufficient to kind of move forward with the pivotal study. And I know that you conducted previous studies looking at infarction more in the context of screening at home. And I am just kind of curious how you envision both the trials and utilization to get conducted—if you kind of still envision the card being used at home for screening and go/no-go to the ER or kind of using it in the emergency room per se. Robert P. Eno: Yeah. Thanks, Yi. Appreciate it. Really great question. Good to clarify. So the use case for heart attack detection is still at home. We just have this, you know, I think quite interesting study design that is going to allow for quicker enrollment. Basically, the way to think about it is, you know, when a patient would have chest pain at home, it is basically the same decision and the same information as when they show up at the emergency room. You would have our device, we would have the ability to have the ECG, and they report their symptoms through our app. And then you have their history. And those are the three factors that would happen in the first 10 minutes before troponins and other imaging tests are done. So that is why we can use that environment and say if we are able to show similar accuracy to the 12-lead ECG in that, then that should be an analog for this information that would be there at home. As far as the accuracy—so, yeah, we have done two studies, and we have looked at them both with the synthesized 12-lead and the core 3D output. And what we showed in those study designs similar to this, that when we look at the accuracy of the 12-lead and our device compared to the hospital discharge diagnosis, we are just trying to show that we are similar to the 12-lead. There are going to be times when the ECG alone is not enough, but we are expecting to be at the same level as accuracy. So it is less about the number. It is more about how close we come to the 12-lead ECG. If we show that we are similar, the argument is that same information we showed in the emergency room—that is everything the physician in our reader service would have when the patient does this at home. So that is the way that the trial is designed and what we are thinking about—that validating really the home use of it. That makes sense? Eduardo (for Yi Chen, H.C. Wainwright): Yeah. Yeah. I guess agreement with the 12 leads. And I guess naturally, I get there is some wiggle room. Right? Like, if you are using this in a screening context, you do not need it to be as good. You just need—like, the negative predictive value is really important there. You can forego the soft false positives. Robert P. Eno: Yeah. So, right, a couple of key points. Right? Obviously, what we will be arguing is, you know, we want to show, and the initial studies have shown, that, you know, within the margin of error, we are similar to a 12-lead ECG. A couple of key points. One is what our previous studies—our proof-of-concept study—showed is that for both the standard 12-lead and for ours, when you look at the difference between a baseline asymptomatic and the event ECG, that actually increases the accuracy by about 20 points. We have that by definition in our system for every patient. If you were to show up in an emergency room as an unknown patient, you would not have that comparator. So that is one kind of advantage that we have that, you know, we think helps in terms of the accuracy. The other thing is the way we are viewing this in discussions with FDA is very much a rule-in device. What we want to do is attack that three- to four-hour delay that comes from indecision or patients being in denial, and in a sense, reduce the time to taking a first action. So the way that we are thinking about it is if the physicians notice in the ECG, the comparative ECG, they will tell the patient, you really need to call 911 and get in. But if they do not notice a difference, it could be a number of things. So the response—the physicians will drive the response. But they are going to say something along the lines of, you know, you should follow standard of care; if there are significant symptoms or they continue, you should call 911. So the focus really is speeding up the time and getting patients into the system. Eduardo (for Yi Chen, H.C. Wainwright): Got it. That is really helpful. And then maybe another one on commercial strategy. I guess there are two here. I am curious about any interest in looking at profit-sharing models. Right now, how much of that $500 to $1,000 subscription is going to the provider versus you all, and would you be interested in looking at, you know, more generous profit-sharing models as you expand to maybe less premium concierge services? Just kind of a little color and ideation there. Robert P. Eno: Yeah. Maybe, Brian, I will start, and you feel free to add in because I know you are five, six weeks in. But it is a great question. What we believe from what Brian laid out is that these practices have aligned incentives. They want to get new technology to their patients. They want to differentiate their practice. They want to drive engagement. But we also think there may be—and this is what Brian is learning now—there may be an economic incentive as well if there is sharing in the economics that makes sense. So as Brian is talking to practices, you know, we are talking list prices and having certain, you know, ways that we can work with them along those lines. Brian, do not know if you want to give any more detail on that or what your thinking is along those lines. Brian Humbarger: Yeah. I think you outlined it very well. We are really focused on that portion of, you know, the $500 to $1,000 that we are talking about. This is a subscription model. It is a model that practices are used to, and we are really focused on that. I think that, to Tim's point earlier, as we continue to expand out and scale, there may be optionality for different, you know, things—like things that you are discussing there. But for right now, we are going after kind of those opportunities that, you know, we can have a very easy engagement with the practices in general. And, again, I know I have emphasized it many times, but the ones that we are focused on and the ones that are really kind of building our backlog right now, it is strong willingness to pay by the patients or the practice, and the doctors are highly motivated to recommend it to their patients. So that is our starting point, and then we will move from there. Eduardo (for Yi Chen, H.C. Wainwright): Got it. That is really helpful. And then if we could have a final one—just any thoughts on telehealth providers. It actually seems well aligned with the kind of services and devices you are providing, and they are seeking to differentiate. I think LifeMD just announced a cardiologist telehealth service launch. Kind of curious on your thoughts there, the potential to target that commercial segment. Robert P. Eno: Yeah. Brian, you can take that one too. Brian Humbarger: Yeah. So, you know, I think it is a great question, and it just kind of reinforces the fact that we are really on the right areas. You know, I mentioned before, I have been fortunate to travel and be in several geographies over the last few weeks and meet with many, many cardiologists. And the great thing about the HeartBeam, Inc. system is the ability to pull it out of your pocket and demo it and show the clinicians how to use it. What is absolutely clear is that our ability to provide clinical-grade 12-lead ECG—there has been nothing like it on the market before. So when we see other companies that are out there that are doing telehealth cardiology or, you know, working in the same type of environment, it is encouraging because it kind of validates that there is a big need. But what we get excited about is that we are really the only technology out there that can deliver the clinical-grade ECG that is the gold standard in the hospital, but put it in the patient's hands. And so, yeah, I think there are going to be lots of opportunities for things like that. And I, you know, we have already started to see different companies and potential partnerships where they may have used a consumer-grade product in the past, but it has really never met the expectations of what they have needed clinically. And, you know, having this 12-lead synthesized ECG is really a game changer, and I think we are going to continue to see a lot of interest as we move forward. Eduardo (for Yi Chen, H.C. Wainwright): Great. Thanks so much for taking the questions. Robert P. Eno: Thanks, Yi. The next question is from Leo Carpio with Joseph Gunnar. Please proceed. Leo Carpio: Good afternoon, gentlemen. Just a couple of quick wrap-up questions. Regarding the Mount Sinai relationship you announced, can you give us a little background in terms of how that came about, who approached who, and what was the selling point in terms of pivoting to form this alliance? And then the follow-up question being, are you looking at other similar-type alliances with other major cardio hospitals and teaching hospitals across the U.S.? Robert P. Eno: Sure. Yeah, great question. We have known the Mount Sinai folks for a while. The original connection was from one of our great board members, Ken Nelson, who was close to the physicians there and is kind of a leader in this field. And there are a number of key physicians. One of them, Josh Lampert, actually presented on our AI algorithms at a few conferences and so has been an adviser to us. Vivek Reddy has been on our medical advisory board. So it is a relationship we have had for a while and really have, you know, great mutual respect, I believe. And then what we were able to do is realize things were aligned enough that we wanted to get a deeper type of relationship. And what I see, you know, at a high level, as I laid out: we obviously have great expertise in AI algorithms, and they do as well. They really see us as really the only way to get these algorithms that are based on 12 leads out to patients at homes. They are very excited about that. And for us, a group like them has this tremendous—in addition to their capabilities, they have a tremendous amount of 12-lead ECG data that is annotated, tied to the diseases and the outcomes. So it becomes a perfect combination. On your second question, you know, we really believe this partnership is a great one, but we are always looking for like-minded partners. We definitely get approached a lot. If there is a like-minded partner that we think we can really find a way to advance this whole area with, you know, that is one of the beauties of something where we believe that we are creating a new market. There are lots of opportunities for collaboration. So definitely open to that if there are other things that seem like they meet the right criteria. Leo Carpio: Okay. And then just a classification question. You said that for the new indications that you are pursuing, you are probably able to go through the 510(k) process. Is that correct? Robert P. Eno: So I said for the patch our read is that it is likely a 510(k) because our 12-lead system is a 510(k) and patches are 510(k)s. We have not determined, or really have not gotten, a regulatory read for the pathway for heart attack detection. You know, could be a 510(k), could be a de novo. There is uncertainty there, and part of our discussions with FDA will be to really fine-tune that. As we learn more, we will certainly keep everybody informed with that as well as the timing of the clinical trials and the overall, you know, expectation for clearance. Leo Carpio: Alright. Thank you, and congrats on the quarter. Robert P. Eno: Thanks so much. At this time, I would like to turn the floor over to the team at HeartBeam, Inc. to address any questions submitted through the webcast. Robert P. Eno: We have a number of great webcast questions. Unknown Executive: Unfortunately, we have time to take only a couple. So the first question is, will you need a sales team to market the device, or will that be done from within the group? Robert P. Eno: Brian, do you want to take that one quickly? Brian Humbarger: Yeah. Absolutely. So initially, as I mentioned, we are focusing on a very strategic set of accounts. I think initially the reason that we are doing that is because we have the ability to focus with a lean team and execute very well on it. As we continue to scale, we will look at a few major areas for sales operations and implementation. Implementation is going to be critical to our overall success in growth and adoption. I anticipate that in the near term, and sometime in 2026, we will probably expand the team out to three to five additional folks on the commercial team that are a mixture of sales and implementation. I think, again, what plays very well for us is that many of these target accounts that we are focused on are located in the same geographies. So it really puts us in a good position to be lean, be focused, and scale very efficiently. Unknown Executive: Next question asks, what is the excitement level among cardiologists who have been able to use or be educated on the HeartBeam, Inc. system? Robert P. Eno: Brian, do you want to take that as well? Talk about your recent experience? Brian Humbarger: Absolutely. I touched upon it a little bit before, but again, I have had experience in this space for quite some time, and coming to HeartBeam, Inc., you know, my expectations were really, you know, based off of my experience in the past with other single-lead or three- or six-lead ECG systems. Personally seeing the 12-lead synthesized results is incredible. And each physician—I just was at a meeting yesterday with a physician down in Florida—and being able to demo the RPM system and immediately see the 12-lead that was taken in a 30-second time period, which traditionally has to be done in an office with a machine, the reaction is almost universal across the board. Number one, the quality of these tracings is phenomenal. The accuracy and the clarity of the P waves, which is extremely important to these clinicians, is phenomenal. And, again, this is really, really a game changer for the cardiologist. For them to be able to see not just a sliver of the information that they are looking for with ECGs from, you know, prior technologies, but seeing the entire picture of the heart is really exciting. So the excitement is palpable, and we are, you know, each day that goes by that we get a chance to get in front of physicians and them communicating with their patients, it is truly unbelievable. Unknown Executive: And that concludes our webcast Q&A. Operator, Robert P. Eno: Thank you. I would now like to turn the call back over to Mr. Eno for closing remarks. Thank you, operator. I would like to thank everyone for joining the earnings call today. We look forward to continuing to update you on our ongoing progress and growth, and I know we could not get to all the questions, but if we were unable to answer yours, please reach out to MZ Group, our IR firm, and they will be more than happy to assist. Thanks again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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HBIO 2025 Q4 财报电话会议

Operator: Good day, and welcome to the Fourth Quarter and Full Year 2025 Harvard Bioscience Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Taylor Krafchik, Senior Vice President at Ellipsis TA. Please go ahead. Taylor Krafchik: Thank you, operator, and good morning, everyone. Thank you for joining the Harvard Bioscience Fourth Quarter and Full Year 2025 Earnings Conference Call. Leading the call today will be John Duke, President and Chief Executive Officer; and Mark Frost, Chief Financial Officer. In conjunction with today's call, we have provided a presentation that will be referenced during our remarks that is posted to the Investor Relations section of our website at investor.harvordbioscience.com. Please note that statements made in today's discussion that are not historical facts, including statements on management, expectations or future events or future financial performance are forward-looking statements and are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the current views of Harvard Bioscience management and Harvard Bioscience assumes no obligation to update or revise any forward-looking statements. Actual results may differ materially from those expressed or implied. Please refer to today's press release, the Harvard Bioscience Form 10-K, which we expect will be filed within 24 hours of this call and other filings with the Securities and Exchange Commission for additional disclosures on forward-looking statements and the risks, uncertainties and contingencies associated therewith. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to our financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered as a substitute. Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I will now turn 8:03 AM the call over to John. John, please go ahead. John Duke: Thanks, Taylor, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings call. On today's call, I'll review our recent actions, provide a brief overview of our fourth quarter financial results and then discuss our priorities and outlook for 2026. 2025 was a pivotal year of foundation building. Over the past 8 months, we improved our financial flexibility, took action to reorganize operations and clarified our long-term strategic direction. To recap, we took several key actions to improve the health of the business. In December, we completed our comprehensive refinancing. This transaction extended our debt maturity to 2021. We reduced annual debt service to $5 million, generating $3 million in annual cash savings and strengthen liquidity and financial flexibility. Shortly thereafter, we announced a strategic consolidation of our manufacturing footprint with the phased closure of the Holliston facility and consolidation into Minneapolis and European centers of excellence. This is expected to generate $3 million in savings in 2027 and $4 million of savings thereafter. Since June, we have strengthened our governance by appointing 4 new Board members and we are in the process of establishing a product and Scientific Advisory Board of experienced industry leaders. We also further solidified our executive leadership as we officially named Mark Frost as Chief Financial Officer. As many of you know, Mark is an experienced CFO and has held that role with several public companies. While we have more work to do, these actions are structural improvements to simplify our operating model and provide the foundation required to scale our business. All of these actions were driven to take -- to drive improved financial results, which is what we saw in the fourth quarter. Revenue of $23.7 million was above the midpoint of our guidance range. Gross margin of 60% at the high end of guidance and adjusted EBITDA of $3.8 million, reflecting 27% year-over-year growth. The drivers of this performance were favorable mix shift toward higher-margin product lines, benefits from cost reductions, disciplined expense management and sharpened operational execution. We exited the year a leaner and more focused organization with a fortified balance sheet and a clear path to drive sustainable growth. Since I joined as CEO, I've spent considerable time engaging with customers, partners and employees. What became clear is the life science industry is undergoing a fundamental shift. Drug development remains inefficient, nearly 90% of candidates that succeed in animal models ultimately fail in human trials. Researchers, regulators and biopharma customers -- companies are increasingly embracing new approach methodologies or NAMS to improve translational relevance. Harvard Bioscience is uniquely positioned to bridge this gap. We're evolving from a traditional life science tools provider into a leading enabler of translational science, connecting in vivo and in vitro research and helping customers generate more predictive human relevant data earlier in the development cycle. This represents an evolution for a company's products into the $10 billion translational science market. To capitalize on this opportunity, we are focused on executing against our 4 priorities. First, leading the translational science bridge. We are strengthening our position at the intersection of preclinical and organoid-based research. Our gold standard telemetry capabilities provide a natural extension into organoids and 3D biology platforms; second, accelerating high-margin innovation. Our new product innovation or NPI pipeline is centered on scalable, differentiated platforms such as SoHo telemetry, BTX for bioproduction, Mesh MEA and Incub8. These platforms modernize preclinical and translational workflows and reinforce our evolution into a platform-based technology provider. Third, expanding consumables and recurring revenue. Today, approximately 55% of revenue is recurring. We are intentionally prioritizing higher-margin consumables, service and software to improve revenue visibility, increase gross margins and create a more durable and predictable business model. This mix shift is already contributing to margin expansion as evidenced by our Q4 performance and our outlook for 2026. And fourth, operational excellence and disciplined growth. Finally, we remain laser-focused on cost discipline and operational efficiency. The manufacturing consolidation and refinancing enabled us to improve profitability, fund innovation and continued deleveraging over time. Looking ahead, we are introducing full year guidance for 2026 that forecast low single-digit growth in revenue and high single-digit growth in adjusted EBITDA, which will be driven by higher-margin NPI growth as we focus on the translational science market. We continue to monitor NIH funding timing and global macro conditions. We believe our cost structure and diversified geographic footprint put us in a position to manage volatility. 2025 was a strategic reset and 2026 will be a year of top and bottom line growth. With a technically deep global team, a refreshed board, improved financial flexibility and a focused translational science strategy, Harvard Bioscience is well positioned to create long-term shareholder value. I want to thank our employees for their dedication, our customers for their trust and our shareholders for their continued support. With that, I'll turn the call over to Mark to review the financial results and outlook in more detail. Mark Frost: Thank you, John. I'll start my comments with our fourth quarter 2025 financial results. The details of which can be found in our Form 10-K, which we expect to be filed within the next 24 hours and in the earnings presentation that we posted to our IR site. Starting on Slide 4 of the presentation. Revenue was $23.7 million, just above the midpoint of our $22.5 million to $24.5 million guidance and below the $24.6 million we reported in the fourth quarter of 2024. The government shutdown of 43 days impacted our ability to overachieve within the quarter. Gross margin of 59.7% was at the high end of our 58% to 60% guidance range and is up 260 basis points from 57.1% in the fourth quarter of 2024. This is the highest gross margin we recorded over the last 7 quarters. We continue to improve our gross margin returns based on cost actions we took at the end of 2024 and in 2025 as well. As well As the increasing benefit we are receiving from higher-margin NPI revenue. Operating income of $1.7 million was up from flat last year, and adjusted operating income of $3.3 million was up from $2.5 million last year. The improvement in GAAP and adjusted operating income was primarily from cost reductions in manufacturing and SG&A. Now adjusted EBITDA was up 27% year-over-year to $3.8 million in the fourth quarter driven by cost reductions, including decreased costs related to manufacturing and SG&A headcount as well as expense management. Now moving to Slide 5 for full year results. Revenue of $86.6 million was down from $94.1 million, primarily from the impact of tariffs and the delayed NIH funding. Tariff impact started to subside later in the year while NIH funding delays continued to impact timing of some orders, in particular, our preclinical telemetry products. Gross margin of 57.7% was down from 58.2% last year due to lower revenue in 2025, but a larger margin impact was partially offset by our cost actions in manufacturing. Operating income of negative $48.6 million was down from negative $6.2 million last year, adjusted operating income of $6.2 million was up from $5.3 million last year. The GAAP difference stems from the goodwill impairment we took earlier in the year and the improvement in adjusted operating income was due to cost reductions improved expense management and favorable mix of higher-margin products. Now adjusted EBITDA increased 12.5% to $8.1 million from $7.2 million in 2024, as mentioned, due to cost reductions, improved expense management and strong execution throughout the year. Now looking at Slide 6, I will outline the revenue results for the quarter and year by product family and region. Overall revenues in the fourth quarter were up 15% sequentially and down 3% year-over-year. Full year revenue was down 8% year-over-year. Geographically, quarter 4 revenues in the Americas were down 2%, year-over-year, driven by lower pharma sales for preclinical and lower academic sales in CMT. Full year revenues in the Americas were down 7% year-over-year, driven primarily by academic sales. In Europe, quarter 4 revenues were down 12% year-over-year due to lower academic sales. Full year revenues in Europe were down 6% year-over-year due to distribution and academic sales. And in China and the Asia Pacific, Quarter 4 revenues were up 10% year-over-year, thanks to growth in preclinical distribution. Full year revenues in China and Asia Pacific were down to lower distribution revenue. And I'll now move to Slide 7 to discuss further financial metrics. GAAP EPS in quarter 4 was negative $0.06 compared to flat last year and quarter 4 adjusted EPS was flat compared to $0.06 last year. As I've mentioned in the past, the differences between GAAP EPS and adjusted EPS are typically the impact of stock compensation, amortization and depreciation. These differences between net loss and adjusted EBITDA are highlighted in the reconciliation tables on Slide 10 and are all noncash items. For the full year, GAAP loss per share was $1.28 compared to negative $0.28 in 2024. Adjusted loss per share was negative $0.02 compared to adjusted earnings per share of $0.03 in 2024. The majority of the higher GAAP loss was from the goodwill charge we took in the first quarter. Now cash flow from operations ended the year at $6.7 million, up from $1.4 million at the end of 2024. The significant improvement in the year is due to disciplined working capital management improved operating income and our efforts on payroll tax refunds. Net debt is down $1.8 million from last year to $31.4 million reflecting payments made on our prior syndicated debt facility as well as additional liquidity we gained as part of the new agreement. Now as John discussed in the fourth quarter, we were pleased to announce the completion of our debt refinancing with a structured deal. The deal completed repayment of our prior credit facility, extended the maturity of our debt and enhance our financial flexibility as we work to position the company for growth, including reducing our debt service in the first 2 years by $3 million. Full details on the deal can be found in our December 17 press release and accompanying SEC filing. Now another significant accomplishment during 2025 was the successful remediation of material weaknesses in the one significant deficiency. This is another step in building the foundation of a healthier business. I'll now move to Slide 9 to discuss our outlook for the first quarter and full year 2026. Now first, a few call-outs. We are introducing full year guidance as we are taking a more long-term oriented view of the business and helping us manage our broader expectations as we go through the year. We are also introducing adjusted EBITDA guidance on both a quarterly and a full year basis. This is a key metric for us and is one that we believe helps demonstrate our core operating performance. This metric is also linked to a key covenant in our recently structured debt agreement that we thought would be helpful for investors to have visibility. We were reporting GAAP and adjusted gross margin in 2026 due to the restructuring impact from our manufacturing consolidation. Now lastly, with the expected growth in the business in 2026, we have reinstated bonuses and merit-based compensation for our employees, which was suspended in 2025 due to macro headwind impacts. This reinstatement will have an impact on our year-over-year adjusted EBITDA comparison, which is already built into our full year guidance. We appreciate our employees and all their hard work as they have supported us through a difficult time for the business. With that, let's dive into the outlook. In the first quarter, we expect revenue between $20 million and $22 million, adjusted gross margin between 57% and 59% and adjusted EBITDA between $1 million and $2.2 million. I would note that Q1 of last year only saw minimal impact from NIH challenges. For the full year 2026, we expect revenue growth of 2% to 4%, gross margin of 58% to 60% and adjusted EBITDA growth of 6% to 10%. Additional color is we expect revenue to ramp throughout the year on a year-over-year percentage basis, supported by stronger NPI revenue. Now to sum up the performance, we're pleased with the fourth quarter and believe the improvements we've made to date with our operational efficiency sets us up well for the future with streamlined costs and a focus on high-margin products in an emerging market. We expect to realize increased profitability going forward, and we're proud to have been able to demonstrate a glimpse of that in the year where macro conditions were challenging. Lastly, I'm excited to have been appointed CFO on a permanent basis and look forward to continuing to work with John, the Harvard Bioscience team, our board, engaging further with our customers and investors. To that point, we will be attending the KeyBanc Healthcare Forum next week and I look forward to seeing some of you there. I'll now turn the call back to our operator to take questions. Operator? Operator: [Operator Instructions] Our first question comes from Paul Knight with KeyBanc Capital Markets. Paul Knight: Regarding the NIH, that was finally approved February 3 or so. How quickly do you think that approval turns into a better academic environment for you? John Duke: Yes, Paul, thanks for the question. As you could imagine, it would love for it to turn into a better academic environment in 1 day. We have, as you know, about 20 salespeople in North America who call on biopharma as well as academic customers. And from what we have heard is there was a lot of grant submissions, which were waiting to be approved. And we expect to start to see a positive impact both towards the end of Q1 as well as going into Q2. Paul Knight: And NIH is what about 40% of the company now? . Mark Frost: No, I'll clarify. It is about -- NIH revenue is about 20% of our U.S. revenue, Paul. And one point I'll just build on John's point is we are a build-to-order business. So we're starting to see improvement in orders, but in order to get the revenue, it actually needs to come in, in the first half of the quarter. So most of the benefit will start seeing probably in second quarter from the NIH release. Paul Knight: Yes. Okay. And then I know BTX and Mesh MEA or some of your key products. Could you talk about your growth there? And specifically, what's your expected growth for these focused businesses in 2026. John Duke: Yes. So you are correct. They are a key part of our NPI, and we expect both of them to grow in double digits this year. Paul Knight: Okay. And then that schedule, is there a quarterly paydown you're targeting? Or what do you want to do? . John Duke: A quarterly pay down. Could you clarify, Paul? Paul Knight: Pay down your debt this year? Or are you... Mark Frost: Yes. No, the structure of the deck was structured in a couple of ways. One, to allow us flexibility that there's no amortization in the first 2 years of the deal. We also, Paul, have the ability to convert term loan A to an ABL, which will give us likely a lower interest rate and more flexibility. And then the Term Loan C is structure that potentially could be converted to equity, which will reduce -- which would deleverage us in the future. Operator: Our next question comes from Bruce Jackson with StoneX. Bruce Jackson: We got a nice pop in the Asia Pac revenue this quarter. I was wondering if -- and you've had some issues in the past with Asia Pac. Is this the sign of a turnaround? Can you tell us a little bit about what your expectations are for 2026? Mark Frost: Yes. It's a good question, Bruce. You're well aware last year when the tariffs hit, the China business ground to a halt. And we started to definitely see improvement. And those orders came in and were filled in, in the fourth quarter. So we had a fair amount of catch-up, not fully. So our expectation is we will get back to a normal cadence in Asia, notwithstanding, obviously, if there's further news on the tariff front that changes that situation, Bruce. . Bruce Jackson: Okay. Got it. And then last quarter, you spoke about a backlog. Have you seen any changes in that during the fourth quarter? Mark Frost: Yes. We actually ended up the year, Bruce, with the highest backlog we've had in over 2 years, and we've continued to maintain that. So yes, we're pretty positive of where we are on our backlog. Bruce Jackson: Okay. And then last question around the pharmaceutical biotech CRO side of the business. How would you characterize that business? We've been hearing that, for example, some of the large cap pharma companies are kind of back to normal while some of the smaller biotech type companies are not due to the uncertainty around the pharmaceutical reimbursement. Where are you seeing the demand right now for your products on the pharmaceutical drug development side of the business? John Duke: So Bruce, thanks for asking that. year-to-date, we are seeing that portion of the market, the pharma and biotech, that business is up. And we expect that to continue which clearly factored into our guidance for the year. Operator: I'm showing no further questions. This does conclude the question-and-answer session, and you may now disconnect. Everyone, have a great day.

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GPGI 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the GPGI, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker host for today, Sean Mansouri, Investor Relations for GPGI. Please go ahead. Sean Mansouri: Good morning, and welcome to GPGI's conference call today. where we will review GPGI's fourth quarter 2025 financial results. With me on the call are the business leaders from GPGI, Resolute Holdings, CompoSecure and Husky. We will begin with prepared remarks and then open the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements about our growth strategy, customer demand, our ability to maintain existing and acquire new customers; implementation of the Resolute operating system and our guidance for 2026, as well as other statements regarding our plans and prospects. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our annual report on Form 10-K and other reports filed with the SEC which are available on the Investor Relations section of our website and on the SEC's website at sec.gov. Please note that effective as of February 28, 2025, and the date of the spin-off of Resolute Holdings management and as a result of the management agreement between Resolute Holdings management and GPGI's fully owned subsidiary, GPGI Holdings LLC, the results of operations of GPGI Holdings and the operating companies, which are its subsidiaries are not consolidated in the financial statements of GPGI and instead are accounted for under the equity method ofaccounting. For more information about our financial presentation, please see our annual report on Form 10-K. In the earnings release we issued earlier today, and in the discussion on today's call. We also present non-GAAP financial measures to help investors better understand our operating performance. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP measures is available in our press release and earnings presentation available on the IR section of our website. Thank you. And with that, let me turn the call over to Executive Chairman, Dave Cote. David Cote: Good morning, everyone. Before we get into the fourth quarter and full year results, I want to begin with a more detailed overview of what we are building at GPGI to provide more context on the platform and our objectives going forward. Now this is going to be a longer introduction than you can expect in the future as we want to clearly articulate our strategy and structure on this first earnings call as GPGI. There will also be longer presentations from each business for the same reason than you will see in the future. GPGI is a diversified multi-industry platform that was purpose-built to acquire and operate companies that hold great positions in good industries, representing the acronym behind our new name. Following the completion of our acquisition of Husky, GPGI now owns 2 high-quality, market-leading businesses with best-in-class financials and durable growth profiles. Importantly, we believe Compo and Husky have opportunities to benefit from the systematic deployment of the Resolute operating system, ROS. And that work is already underway at both businesses. Our vision for the GPGI platform is to help Compo, Husky and businesses we may acquire in the future, achieve their full potential by combining GPGI's permanent capital base with the systematic deployment of the Resolute operating system and implementation of a high-performance culture. This idea to marry permanent capital with superior operating practices began years ago when Tom and I first partnered together and ultimately acquired Vertiv. With the creation of GPGI, we are now refining this approach and believe it represents a needed innovation in the marketplace that is well positioned today and for the future. Going to Slide 5. We have our business leaders on the call today, and you will hear directly from both the Compo and Husky teams regarding their respective businesses. Before getting there, I want to highlight how we think about GPGI's long-term growth algorithm. Specifically, we're focused on delivering mid- to high single-digit annual organic growth, over 100 basis points of annual margin expansion through the deployment of ROS, double-digit plus annual EBITDA growth and 90% to 100% free cash flow conversion over time. The plan is simple. We intend to grow GPGI's earnings and cash flow faster than the market to deliver superior durable through-the-cycle returns for our investors. That is the whole point of GPGI. On Slide 6, which you have seen before, we outlined the relationship between GPGI and Resolute Holdings. They are intentionally inextricably linked. The success of Resolute Holdings is tied to the success of GPGI. We designed the structure to empower the leadership teams of each acquired business to operate with all the benefits of permanent capital but without the constraints that often come with a bureaucracy of typical public company corporate infrastructure. This allows us to help with the efficient implementation of ROS M&A strategy and capital allocation without distracting leadership teams at each business. A final point. I've mentioned on previous calls how confusing the accounting we are required to use is. To keep it simple, you should evaluate GPGI's performance by looking at the core non-GAAP operating results, which includes the deduction from the management fee paid to Resolute. GPGI is the operating company. Conversely, RHLD's results reflect that same management fee income less its own operating expenses. It is the asset management company. It really is pretty simple, entirely complexified by the accounting were required to use. Moving to Slide 7. The value creation playbook at GPGI marries disciplined underwriting from a permanent capital base with operating excellence to drive superior performance. We do this by relentlessly implementing the Resolute operating system, developing a truly high-performance culture at each business and investing with discipline in assets that meet our tried and true 6 investment criteria. We have a structural advantage for acquisitions. And on the right side, you can see it works. The Resolute operating system with a high-performance culture applied to businesses that have a great position in a good industry works quite effectively. The strategy is not new. It's one we have consistently deployed and delivered across multiple public companies over the years. Turning to Slide 8, establishing a high-performance culture is central to the value creation process. A high-performance culture does not just happen. It involves people and process. It starts with everyone focusing on what is right for the customer. Every company talks about the customer, but few focus their entire culture on it. I will not go through each item on the page. It involves starting with the customer than aggressively setting expectations making strategy and people daily instead of annual activities, regularly measuring performance and providing candid and direct feedback. These are the process pillars of how cultures begin to transform. These are the tools that help foster high-performance cultures and teams, which in turn are what ultimately deliver results. We are intentionally embedding these norms across GPGI and view a high-performance culture as foundational to maximizing the potential impact of ROS in each business. When everyone across the business buys in, that's attitude, and fully applies these ROS principles to good businesses, that's aptitude. This is how we achieve performance and deliver results and at altitude. It is not just about a great attitude. You have to have something fundamentally strong to apply it to. Hence, the need for GPGI, great positions in good industries. Moving to Slide 9. The Resolute operating system is our proprietary approach to operating businesses. It's an adaptation of the Toyota production system. It really comes down to 3 areas of focus: growing sales, controlling costs and generating the cash necessary for seat planning and delivering returns for investors. Starting with growing sales. Our approach is centered around our customers, delivering end-to-end commercial excellence and continuing to innovate on new products and services that meet and exceed customer demand. This strategy is made possible by a capital structure that allows us to prioritize investments in R&D for new products and services and provide support to the go-to-market functions to appropriately cover the markets we serve. On the cost side, we worked diligently to identify and implement robust reporting around fixed and variable costs to drive efficiencies and ensure our fixed costs stay flat or grow much slower than sales. The fall-through of the variable margin rates in our businesses is impressive. So being able to retire fixed cost growth relative to sales growth enables a huge amount of flexibility for us. Taken together, we improved cash generation with greater profitability, which allows us to invest more back into the business to drive more innovation and growth, while concurrently being able to deliver returns for investors. The flywheel begins spinning when these investments drive growth that delivers increasing profit through necessary cost controls, which in turn enables more investment growth than profits. This is the add of making the right decisions for each business today and for the long-term at the same time. Some might even call it winning now, winning later. Shifting to Slide 10. I want to spend some time on how we think about implementing ROS in our underlying businesses. ROS is the operational cornerstone of every GPGI business, and it consists of 3 phases. We start with a period of seed planting where we laid the foundation for excellence. This represents the time immediately after we acquire a business where monthly growth days and deployment of our playbook of best practices across all functions begins. The second phase is where we continue making strategic investments to catalyze growth and innovation, implement lean principles and firm up cultural change from top to bottom. The third phase is where everything comes together in a culture of continuous improvement powers the flywheel necessary for a long-term compounding. The key is that ROS is not a one-and-done activity. It is a daily mindset for sustaining performance over time, and it's in every function. We are just beginning this journey with Husky, and while we are encouraged by our early efforts, there remains significant opportunity to continue the work underway at both Compo and Husky. Starting on Slide 11 to demonstrate how an operating transformation begins. We have a case study compiled on CompoSecure's performance since we got involved. From the time we made our initial investment in the company, we deployed ROS to catalyze growth, control costs and make strategic investments in the business. Over the past 5 quarters, you can see these efforts are beginning to take hold and drive a phased inflection in financial performance. We're pleased with this early progress at Compo, but also know there is a lot more to achieve there over time. However, the inflection in performance you've been able to see, both top and bottom line performance is what cultural transformation paired with the deployment of the operating system is designed to do. This is the same approach we are taking at Husky, and we know that deploying ROS consistently across each business, while helping to cultivate a high-performance culture is a winning formula. And one we will apply to all GPGI businesses. With that, I'll turn it over to Tom Knott, our Chief Investment Officer, to review our investment philosophy. Thomas Knott: Thanks, Dave. I want to begin this section about our investment philosophy by explaining how we think about acquisitions. Fundamentally, we view acquisitions as opportunities and are focused on using the same discipline that we have used in the past for every opportunity we evaluate in the future. Deals must make sense, both in terms of business quality and in terms of valuation. We built GPGI to encourage the discipline, specifically because we have no deployment targets or timing pressure to acquire new businesses. We are very enthusiastic about the 2 businesses we currently own and believe in the opportunity to deliver strong organic top and bottom line performance with a continued focus on ROS implementation and cultural transformations underway at each company. This is where we focus much of our day-to-day efforts and having good businesses with rich organic opportunities ahead is a great place from which to operate. While we are constantly evaluating potential investment opportunities for GPGI, we will only acquire additional platform businesses if they solidly meet our 6 investment criteria and if they can be acquired at a fair price. Today, we do believe GPGI is uniquely positioned as a structurally advantaged acquirer of the increasing number of high-quality private businesses that need to access the public markets and that can benefit from our operating system. This universe consists of family-owned businesses, noncore divisions of public companies and a significantly growing number of businesses owned by private equity firms. We are confident in our platform's ability to offer superior outcomes for each of these different types of businesses. but we see the largest opportunity today among private equity firms that need to monetize their investments to return capital to their investors. Specifically, we are confident that our platform can deliver transactions that result in a win-win for both GPGI and a selling private equity firm that is superior relative to a traditional IPO. The list of large, high-quality private equity-owned businesses that need to reach the public market is growing, and as a result, our platform is well positioned as a unique solution. This paired with the excellent organic prospects for CompoSecure and Husky allows us to be selective as we evaluate potential businesses to add to the GPGI platform in the future. Wrapping up my comments with Slide 13. I believe it is important to again review the 6 investment criteria we use to evaluate businesses. It is how we look at companies, and it's important to discuss so that investors and potential sellers know what is important to us. As we have said before, we want GPGI to be an aspirational home for market-leading businesses, which must operate in a good industry, have a great position in that industry, differentiate with technology, can grow both organically and inorganically and have the potential for significant margin expansion. This list is what we measure for each potential acquisition and it's one that we will remain consistent in applying. From Dave's time at Honeywell to my involvement with Myriam to our partnership on Vertiv, CompoSecure and now with Husky, this approach is proven and serves as a highly effective screen for selecting high-quality businesses that can generate superior investor returns. With that, I will turn the call over to Graham Robinson, the CEO of CompoSecure. Graham Robinson: Thank you, Tom. As announced in January, I recently joined as President and Chief Executive Officer of CompoSecure. In my short time here, it has become quickly evident that this is the most dynamic and compelling business that I have been involved with. The company has already proven its strategy with a differentiated value proposition, and we are now in a position to accelerate growth with disciplined execution. I am delighted to lead our expanding teams on this journey. Turning to Slide 16. We delivered strong organic growth and profitability in the fourth quarter and for fiscal year 2025, driven by disciplined execution, operational focus, and the continued support from the Resolute team and the Board on our strategic initiatives. Mary Holt, our CFO, will go into more detail on the quarter later. But I would note Net sales increased to $462.1 million in fiscal year '25, up 9.9%. We also delivered strong operating performance as pro forma adjusted EBITDA increased to [indiscernible] million in fiscal year '25, up 23.5%. As Tom mentioned, implementation of the revenue operating system at CompoSecure [indiscernible] real inflection in financial performance. With that, let me take a step back and talk about where CompoSecure sits in the market today for those who are new to [indiscernible] [indiscernible] going to Slide 17. CompoSecure is the go premium entertainment cards with over 200 active made programs. We rent 9 of the top 10 U.S. additions, along with our growing rest of disruptive context. Our leadership position is reinforced by 1,000 design and utility patents and 25 years of technical expertise, we have built a unique, competitive mode that combines proprietary design, engineering and scaled manufacturing capabilities will enable us to deliver high-quality metal cards at scale. In 2025, we shipped more than 30 million cards to our customers. Moving to Slide 18. Our business is much, much more than making the metal card. We deliver a tire value proposition to our customers. As a pioneer of metal cards, we uniquely understand evolving customer needs. -- and use that understanding to inform our customer-centric innovation, coupled with our advanced manufacturing capabilities and integrated authentication capabilities with -- we are a trusted partner for issuers as they launch their signature core programs. Turning to Slide 19, where we speak about the industry. Our offerings are in mission-critical but low-cost component of the overall value proposition for payment card programs. Launching a metal card enhances brand loyalty and delivers accelerated returns through higher acquisition, customer acquisition, spending and retention, resulting in significant ROI for our customers. Our products elevate our customers' position and deliver measurable financial impact by enriching their programs while driving differentiation and positioning their cards at top of wallet. Importantly, metal cars remain significantly underpenetrated at less than 1% of all cards ship globally. When combined with our expectation of low double-digit growth for the premium car segment globally, this creates a long runway for growth and continued share gains versus plastic cards. On Slide 20, this brings me to the strength of our model and industry. We're seeing continued adoption of payment cards globally, increasing the total addressable base of cards in circulation. Additionally, the new users in international markets and the Fintech segment, are launching their first metal card programs and existing customers are expanding their programs through tiering to further drive improved customer acquisition spend and retention, which also needs to higher ASPs. According to industry data, credit and debit card in circulation, including plastic cards, have grown at approximately 8% over the past 5 years. And CompoSecure is well positioned to further capture field within that expanding. All of this supports a durable recurring revenue model as new cards are introduced, reissued, refreshed and upgraded over term. In addition to our core offering, CompoSecure is extending its technology leadership through its Oculus platform a multifactor authentication and digital asset storage solution that embeds secure login technology directly into metal cards. Instead of relying on passwords, which can be lost or compromised, [indiscernible] seamlessly integrates 3 secure elements. One, phone biometrics; two, a pin; and thirdly, a metal card. This makes it ideal for high-security applications like logging into financial accounts or safeguarding sensitive digital information. While the platform was originally designed to protect digital assets its broader applications now include passwordless login, identity verification and transaction approvals, especially in environments where both security and simplicity are critical. This represents a natural adjacency for CompoSecure. We are leveraging our expertise in secure physical products and trusted issuer relationships to expand into authentication use cases. In 2025, [indiscernible] continued to scale and is now a growing contributor to revenues and cash flows, reinforcing our belief that this platform can be a long-term value creator. So when you step back, we have a core metal card platform with structural growth tailwinds, and we are extending that platform into adjacent authentication opportunities through Arculus. Going to Slide 22. While we often talk about new program wins, a significant portion of our growth is supported by the installed base of metal cards already in circulation. Approximately 75% of our revenue is recurring, driven by replacement and reissuer cycles. Over the past 4 years, we have shipped approximately 123 million metal cards. That growing installed base creates a predictable stream of replacement volume over time. As metal cards in circulation continue to scale, this recurring component of our revenue base will grow alongside it. This is an important flywheel and structural [indiscernible] of our model, which provides strong visibility into our future growth. On Slide 23. In addition to that recurring foundation, organic growth is also driven by continued innovation and customer wins. There is incredible innovation and engineering complexity behind our products. Our cards integrate secure elements near field communication capabilities and layered material construction, all of which require advanced manufacturing. That technical differentiation is a key reason why we continue to secure high-profile customer wins. This includes recent wins with Wells Fargo Autograph, Bilt's re-launch of a tiered portfoliosn and Citi's American Airlines Centennial card among others, these recent wins underscore the strength of our customer relationships, the breadth of demand for differentiated premium car solution. and the value we deliver to use tissues. With that overview, let me hand the call over to our CFO, Mary Holt, to review our financial results. Mary Holt: Good morning, everyone. Let's turn to our financial performance. In the fourth quarter, CompoSecure delivered non-GAAP net sales of $117.7 million up approximately 17% compared to prior year, reflecting strong domestic demand and continued momentum across our core customer base. Non-GAAP gross margins in the fourth quarter reached 55.7%, up approximately 360 basis points from last year, as we continue to benefit from the implementation of the Resolute operating system which has led to increased discipline across manufacturing, sourcing and end-to-end execution. Pro forma adjusted EBITDA for the quarter increased approximately 41% to $43 million, while pro forma adjusted EBITDA margin increased approximately 640 basis points to 36.5%. This performance highlights the operating leverage in our business and the continued benefits from driving operational efficiencies. For full year 2025, CompoSecure once again delivered across the board. Non-GAAP net sales were up approximately 10% year-over-year to approximately $462 million. Non-GAAP gross margin improved approximately [ 20% ] and up 420 basis points to 56.3%, and pro forma adjusted EBITDA increased approximately 24% to $171 million, with pro forma adjusted EBITDA margins expanding more than 400 basis points to 36.9%. Let me hand it back to Graham to close out the CompoSecure section. Graham Robinson: Thank you, Mary. Looking ahead, I am very encouraged by where CompoSecure stands. Entering 2026, we see continued strength in our core metal card business, supported by a healthy pipeline. We also expect Arculus to remain an important growth range as adoption broadens across authentication and payment adjacent use cases. Equally important, we see significant opportunities to continue improving execution and margins as the Resolute operating system becomes further embedded across the organization. Some of those gains will continue to flow through to profitability, and some will be strategically invested to support sustained growth. In closing, CompoSecure has a strong position, a compelling value proposition and a proven ability to translate growth into cash flow and earnings. I am excited to lead this business into its next phase and deliver long-term value for investors. I'll now pass the call back to Tom. Thomas Knott: Thanks, Graham. Before we get to the Husky results, I'm excited to introduce Rob Domodossola as the new President and CEO of Husky. Rob brings a long and tremendously successful Husky career to the position and his background in technology, engineering, sales and marketing adds a lot to our increased growth focus. Rob has 30 years of dedicated service to Husky, having joined in 1996 and most recently serving as the President of Systems and Tooling. Throughout his career, Rob has demonstrated exceptional leadership across multiple divisions, including President of Rigid Packaging, President of Medical and Specialty Packaging Systems and Vice President of Engineering and Business Development. He is admired internally and externally for his relentless commitment to the customer, and we could not be more excited about working with him in this new role. Rob, over to you. Unknown Executive: Tom, thanks for the kind words. I'm really excited and honored to serve as only the fourth CEO in Husky's 70-year history. What's company on Husky for the past 3 years is our passion for innovation with an 18- to 24-month cadence of new product launches that kept us in the lead. Our deep customer intimacy, investments in our go-to-market approach that has strengthened our customer loyalty, while helping us diversify our customer base and our desire and capability to serve our customers anywhere in the world, 24/7, and now with the capital structure that Resolute brings and the Resolute operating system, which is essentially a playbook for commercial excellence, we can leverage these core competencies and develop new capabilities for growth. I'm really excited about Husky's prospects. For those who are new to Husky, Slide from 6 captures who we are and white Husky is such an attractive addition to the GPGI platform. We certainly hold great positions in a good industry and are the global leader in highly engineered injection molding systems and related aftermarket services. Husky has a global recognized brand with a long-standing reputation for manufacturing best-in-class systems over 70 years. We primarily serve attractive food, beverage and medical packaging end markets and have a large installed base with approximately 65% of our sales coming from reoccurring high-margin aftermarket parts and services. Now if we turn to Slide 27. Husky has a leading competitive position derived from its mission-critical products and a long-standing track record that creates a durable competitive advantage. We have an installed base of approximately 13,500 total systems that drive high recurring revenues from aftermarket parts, tooling and services. Our installed base is well distributed globally, and we benefit from growth in both developed as well as emerging markets. Husky is the global leader in PT markets across both new systems as well as aftermarket [Audio Gap] Operator: [Operator Instructions] Unknown Executive: Okay. Sorry about that. I'll continue here. Husky maintains its market leadership position because we have the premium product offering in our markets. We deliver our customers the lowest cost of ownership enabled by the fastest cycle times, the highest quality, the lowest energy consumption and the highest output in the industry. Our customer base is large and diverse with no significant customer concentrations. And we have an excellent tension rate with customers who come back to us to purchase new systems year after year. Now to help contextualize our business, Slide 28 shows how we deliver end-to-end solutions to customers. Given our legacy of innovation and close connectivity with customers, we clearly understand emerging customer needs and use this knowledge to develop customer-centric innovations with a proven product market fit. We are a trusted partner to our customers and advise them on unpackaged design material selection, and we even designed their factories to noise throughput. Our advanced manufacturing capabilities across a global footprint gives us the ability to meet demand across markets and meet stringent customer tolerance at scale, while our 24/7 remote learning solutions help customers significantly increase their overall equipment performance to drive improved business outcomes. Taken together, our offering support customers along every step of their product ownership journey. Turning to Slide 29. We operate in a large and growing industry, characterized by a cyclical customer demand. The industry has supported strong growth for years, and we believe the fundamentals are firmly in place to continue that for a long time to come, especially when it comes to growing awareness of PET superior material properties. It has a superior carbon footprint. It has regulatory push for plastic circularity and there's growing adoption for recycled plastics and packaging. Growth in PET beverage demand is the underlying secular trend driving market for Husky's equipment. It's hard to imagine the future without a lot more PET bottles as work continues to urbanize and demand for safe, affordable, convenient packaged beverage continues to grow. Importantly, PET has demonstrated a consistent share gain over other substances. We tend -- we expect to continue. PET's peer to glass to aluminum and to paper with lower overall production costs, stronger performance characteristics and it's 100% recyclable over and over again from bottle to bottle. Husky's certain systems are capable of processing up to 100% recycled PET, positioning the business to benefit from global regulatory initiatives that increasingly favor higher recycle content. Overall, Husky is well positioned to capitalize on favorable long-term demand drivers across its key end markets. Moving to Slide 30. We A key differentiator for our business is our remote monitoring capability called [indiscernible] Elite. It's an internally developed technology that enables us to remotely monitor the health of our customers' equipment in real time, optimize system performance and proactively inform our customers of operational challenges or were in terror before any downtime happens. Husky machines sit at the core of our customers' operations and typically runs close to 24/7 and with our highest output machines producing approximately 1 billion preforms per year, meaning any downtime or performance segregation can materially impact our customers' unit economics. Advantage+Elite has -- Advantage+Elite increased uptime and overall performance of our customer systems and deliver significant value. This has resulted in increased adoption since we first launched it back in 2019. And we see tremendous white space as we look to connect the rest of our existing installed base. We expect these growth initiatives to accelerate service contract revenues, while also supporting incremental spare part sales through proactive identification of maintenance needs, which increases customers' uptime. Going to Slide 31. Our global installed base and rising content per system drive high-margin reoccurring aftermarket revenue streams that underpins our organic growth. For each new system sale, we expect to generate about 2 to 3x the initial sale value in aftermarket products and services over the life cycle of the system. While our equipment can run for over 20 years, and it does, and we generally view the economic life of a system being approximately 15 years. And with more than 50% of our installed base over 15 years old, we're excited by the favorable demand dynamics this creates for upcoming replacement cycles. Our technology focus results in constant improvements, so machine today is significantly more productive than one say from 10 years ago. Importantly, this aftermarket revenue stream has demonstrated resilience across economic cycles and carries higher margins than new system sales. As the installed base continues to expand, increase a self-reinforcing flywheel that supports durable long-term aftermarket growth. Now Slide 32 outlines our key organic growth drivers and how we plan to capture the significant white space ahead. We delineate growth opportunities by new markets and through capturing share within our existing installed base. The 4 primary pillars of our growth include: one, expanding share in our core PET markets through stronger sales execution continued technology differentiation and asset renewal to support recycled PET regulatory requirements; two, by leveraging our brand and engineering capabilities to grow our install base beyond PET with new products, particularly across packaging systems, beverage closure systems and medical end markets; three, by capturing the full aftermarket opportunity with our own installed base and finally, by becoming the digital leader in our industry through Advantage+Elite. We are already leveraging sales in Resolute tools from the Resolute operating system to execute against each 1 of these initiatives, deliver growth and drive collaboration across go-to-market, finance and operational functions. We remain excited about the opportunities ahead of us. And with that, I'll turn it over to John Linker, Husky's CFO, to wrap up the Husky section. Unknown Executive: Thanks, Rob. Closing out with Slide 33, we cover Husky's financial performance for the fourth quarter and full year 2025, noting that the business combination closed after the quarter end in January 2026. Net sales increased to $521 million in the fourth quarter, up over 6% from prior year, primarily from volume and also a small tailwind from FX. Fourth quarter volume growth came primarily from China, India, Europe and Latin America, while North America and the Middle East were flat and Africa declined. Net sales increased to approximately $1.57 billion for full year 2025, up 5% from 2024, again, due to volume with a small tailwind from FX. Full year 2025 volume growth was driven by strength in Europe, Latin America, the Middle East and India, while China declined due to a tough year-over-year comp. However, the momentum in sales growth was offset by margin compression in both the fourth quarter and full year 2025. Margins were adversely impacted by 3 primary drivers unique to 2025 that we have confidence will not recur going forward. First, from a product mix standpoint, we delivered higher sales growth in new system sales versus aftermarket. This transient mix brought down blended margins in 2025, but it also means that we're seeing an acceleration in new systems demand, which grows the installed base and drives margin accretive aftermarket sales in future periods. Second, we made strategic investments in sales force coverage, service contract labor and new product prototyping to support long-term value growth in future periods. Lastly and most acutely in the fourth quarter, we faced variable cost inefficiencies in labor and overhead as we ramp the organization to deliver the record level of sales throughput. With respect to ongoing investments, particularly now as a GPGI company, we are focused on catalyzing sales growth, improving profitability through operational efficiencies and accelerating new product introductions. All of these initiatives are being enabled by the significantly enhanced capital structure under GPGI and operating focus and expertise from Resolute paired with the long-standing culture of innovation at Husky that is no longer capital constrained. We are firmly in the early stages of implementing the Resolute operating systems, and we are encouraged by initial progress, and we're confident in our ability to return to margin expansion in 2026. I'll now turn it back to Tom to discuss GPGI's guidance. Thomas Knott: Thanks, John. Let's go to Slide 35, where we address our pro forma forward guidance for fiscal year '26. We are encouraged by the trends we see at both businesses and are introducing a guidance range for fiscal year '26 that represents this, while also accounting for the dynamic macroeconomic and geopolitical backdrop. We currently expect non-GAAP net sales of approximately $2.18 billion to $2.23 billion, pro forma adjusted EBITDA of approximately $620 million to $650 million and pro forma adjusted free cash flow of approximately $325 million to $375 million. The midpoint figures represent 8.5% non-GAAP net sales growth approximately 17% adjusted EBITDA growth and approximately 29% adjusted EBITDA margins. We expect continued momentum at both businesses in fiscal year '26. At CompoSecure, increasing adoption of metal payment cards and ongoing share gains are driving new program launches and expanding cards in circulation, creating meaningful opportunities with both new and existing customers. At Husky, pipeline activity is building with continued strength expected in higher growth emerging markets alongside growth in North America supported by aftermarket performance and packaging systems demand. across both businesses, new product introduction, targeted investments and improved go-to-market execution are expected to catalyze growth. On the margin side, we expect to drive margin expansion through organic sales growth cost savings through operational efficiencies and realizing fixed cost leverage. We are deploying the Resolute operating system and are investing in R&D, commercial excellence and operational improvements at both Husky and CompoSecure. In terms of cadence through the year, we anticipate GPGI revenue growth and margin expansion to accelerate in the second half versus the first half, with growth in the first half anticipated to be mid-single digits year-over-year expanding to double-digit year-over-year growth in the second half. Margins are expected to be relatively flat in the first half of the year, with margin declines at Husky in the first quarter. as key investments and in-flight operational improvement initiatives at Husky take time to be fully realized. These costs will offset anticipated margin expansion that CompoSecure early in fiscal year '26, but will contribute to margin expansion that is expected in the second half and the full year. Concluding my comments on Slide 36, we provide a summary of our pro forma financial metrics for fiscal year '26 and the supplemental bridge for pro forma adjusted free cash flow. We are enthusiastic about the opportunities ahead for CompoSecure and Husky and view 2026 as a foundational year of cultural change ROS implementation and strategic seed planting that gives us confidence in delivering best-in-class top line growth, margin expansion and free cash flow generation. With that, I'll hand the call back to Dave for some closing remarks. David Cote: Well, as I said at the beginning, the formation of GPGI establishes the foundation for a best-in-class diversified compounder that we believe can be a home for market-leading businesses and best-in-class operators. We have a proven value creation plan that implements our operating system to catalyze organic growth, improve margins. It builds a high-performance culture and brings rigorous discipline around capital allocation to pursue accretive inorganic growth. We are operating from a position of strength. The opportunity ahead is substantial, and we're focused on building upon our momentum to deliver long-term value for our investors. So with that, I'd like to open up the call for Q&A. Operator: [Operator Instructions] Our first question coming from the line of Moshe Orenbuch with TD Cowen. Moshe Orenbuch: Great. I was hoping you could talk a little bit on the Campo secure side. about the factors that could drive the difference in terms of your range of expectations for revenue, what sorts of things it take to get to the higher end of that? And I've got a follow-up, if that's okay. Graham Robinson: So as we look at the CompoSecure business, the key drivers that we look at in terms of growth are what we do in terms of our core business, our core card payment business, how we drive growth internationally and how we ramp up our Arculus business overall. Those 3 factors really drive what will influence the range in terms of our outcomes. Moshe Orenbuch: Okay. And maybe as part of the guidance, you talked about getting leverage down to about 3x on an adjusted basis. Could you talk about kind of how that -- how you think about that level, like what that means? Is that insufficiently improved to think about other actions? Or how do you think about that level for the -- by the end 2026? Thomas Knott: Yes. Moshe, this is Tom. Thanks for the question. We would expect total leverage to be below 3x. We talked about it pretty consistently. I think Dave and I don't like worrying about debt or cash. And so -- you can expect us to continue moving that lower. We're certainly not afraid of leverage in the context of where it is now. We think the business is incredibly durable, both on the demand side and in the cash generation side. But you're going to see us bring that down to below 3x. I think that would be pretty comfortable and normal place for us to operate on a go-forward basis. Operator: Our next question coming from the line of Reggie Smith with JPMorgan. Reginald Smith: You guys typically, I guess, disclosed card shipments in the U.K. So I guess we can look for. But I was curious, I really would love to dig into the margin expansion -- gross margin expansion you've seen this year of Compo. And specifically, if you can kind of break that down or break that out between maybe increases in price per car versus reductions and COGS itself per card. And then maybe if you could highlight 2 or 3 things operationally that you did that made those gross margins so strong this year? And then I have one follow-up. Mary Holt: Right. Thanks for the question. So if you think about the implementation of the ROS operating system, that is really lended to lean principles being deployed throughout the organization. And as we've talked about before, having a focus on yields. So when I think about our margin expansion, there is a favorable price mix impact in the 2025 results -- but there's also a pretty healthy impact from yields. So I think if you think of those 2 things together, those are really the things that drove our gross margin expansion, again with ROS helping drive the improved yields? Reginald Smith: Yes. Is there a way to frame that? Maybe 1/3, 2/3, like how should we think about those 2 different components. Mary Holt: I don't think we're going to get into that level of detail here, but just rest assured that we are going to continue to focus on our margin expansion for '26 and have a number of terrific programs lined up to ensure that we continue to drive the operational efficiencies. Reginald Smith: And then my last question, and it really just came to me as you guys were talking, listening to your ROS system. I was curious are there any plans to possibly just license it out to other companies rather than acquire them? And then secondarily, I wanted to give you guys a chance to kind of address, I guess, the questions and concerns that may relate to potential conflict of interest between RHLD and GPGI shareholders and how you guys are managing those confidence. Jonathan Wilk: Well, the first question is no. The second one, I don't see a conflict. So I mean, the 2 are inextricable. So the success of RHLD comes from the success of GPGI. So I don't see a conflict, Tom. I don't know... Reginald Smith: No, I think maybe I can be more specific. So I guess the concern is that RHLD is compensated on EBITDA. And I guess, presumably, shareholders are driven by EPS. And so there's, I guess, a leverage in interest costs and is -- so directionally, yes... Jonathan Wilk: I guess I mean you rephrase the question, but the answer is still the same is there's no conflict there. This is -- they're tied together. The success of one depends on the success of the other. And we're very focused on the success of GPGI because that's, again, as we've said many times, the foundation of everything we see as a success at RHLD, GPGI has to be the foundation for that. We've got a lot of money invested in GPGI. We want to see it grow and be successful. That's where we apply ROS. That's where we work on growing sales, EBITDA and cash flow because that's the foundation for RHL. So I'm hard for us to see any kind of conflict. Reginald Smith: I appreciate that. I only ask because if we get the question from investors, and I wanted you to be able to address it. Jonathan Wilk: Yes, it's -- we've got -- I have to say we have gotten the question before, -- it didn't make sense then, it doesn't make sense now. So I think that's [indiscernible] you have to go back to everyone is to say, okay, we'll point out what the conflict is. And sometimes they say, "Well, get paid in RHL because of the EBITDA, it's okay." But if EBITDA is going down in GPGI, that means it will be going down for RHL, so how is that a conflict or a potential problem? It's not. The 2 are tied and we get paid based upon the success of GPGI. So I would tell -- [indiscernible] an interesting question, but no, we're not relevant a year ago when it was asked and it's not relevant now. Operator: Next question in queue coming from the line of Jacob Stephan with Lake Street Capital Markets. Jacob Stephan: Congrats on getting the deal closed in Q1 here. Maybe just to start out, obviously, margins -- gross margins have improved pretty significantly at Compo. I'm wondering what kind of opportunity you're seeing at Husky? Is it similar to the operating structure in COGS that you see at Campo and maybe how it differs from a margin improvement perspective over the next year or so. Thomas Knott: I would say the answer is yes, and I will let Rob explain how. Unknown Executive: The single biggest -- this is John speaking. The single biggest unlock that we have at Husky is really accelerating the organic volume growth. This is a business that has performed very well and historically in margins, but as not outgrown the market in terms of volume and with our very high variable contribution margins, given our cost structure, if we can accelerate volume growth as sort of embedded in the guidance that Tom described, that alone drops through very meaningfully to the bottom line. Aside from that, the Resolute operating system brings great discipline around the cost side of business, both on direct and indirect costs, and we've got a good pipeline of cost savings programs that are in place to drive cost out of the business, and that's well underway and good visibility there. And then I'd say the other side of things is more on the pricing and commercial excellence side. That is an area where we've already been working with the Resolute team to make sure that we're optimizing price and the right products and regions that will drive the balance between volume and pricing to drop through to margins. So I mean, those are the big buckets that I would see at Husky, but Rob,any comment. Unknown Executive: Yes. Maybe just add some color to that too, John. One of the biggest initiatives this year for growth is in our aftermarket tooling business. We ran a pilot campaign last year to recapture share in emerging markets, and it was exceptional. So we're doubling down on that at the same time, using the Resolute operating system, we think there's tremendous opportunity to improve our cost competitiveness to make us even more competitive while maintaining and improving margins. But I think those are the biggest drivers. Jonathan Wilk: I would just say generally, and we put the little bit of case study in for Compo, which you've been able to see. I think every business we look at has the same fundamentals in terms of the opportunity where we focus on sales, focus on controlling cost and focusing on reinvesting and marrying all those 3 together with an appropriate capital structure allows us to really get after that, and you're going to see the same thing at Husky. So I think just as a general view, -- that's as simple as it is, which we're focused on the top line, we're focused on getting after the cost of the fall through, as John mentioned, on variable margins, gives us the flexibility to keep investing and Husky particularly has tremendous opportunities on the R&D side, given the tech for a company that it is and the capabilities it brings to its customers. So we're quite excited about it. Jacob Stephan: Okay. Got it. Very helpful. Obviously, with the cash flow profile changing pretty significantly. I'm wondering from a capital allocation perspective, does it make sense to be repurchasing shares at this point? Or how do you kind of think through just what your priorities are? Unknown Executive: Yes. And our first priorities, we've said several times hasn't changed, and that's to pay down debt. That's going to be our focus. Operator: Thank you. And' there are no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

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XNET 2025 Q4 财报电话会议

Operator: Welcome, ladies and gentlemen, and thank you for your patience. You have joined Xunlei's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions]. Please be advised that this conference is being recorded. I would now like to turn the call over to the host, Investor Relations Manager, Ms. Luhan Tang. Please go ahead. Luhan Tang: Good morning, everyone, and thank you for joining Xunlei's Q4 and Fiscal Year 2025 Earnings Conference Call. With me today are Jinbo Li, Chairman and CEO; Eric Zhou, CFO; and Lee Li, Vice President of Finance. Our IR website has our earnings press release, a supplement our prepared remarks during the call. Today's agenda includes our prepared opening remarks from Chairman and CEO, Mr. Jinbo Li on Q4 operational highlights; followed by CFO, Eric Zhou's presentation of financial results, details of Q4 and the fiscal year before we open up the floor to your questions in the Q&A session. Please note that this call is recorded and can be replaced on our Investor Relations website at ir.xunlei.com. Before we get started, I would like to take this opportunity to remind you that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations under existing market conditions that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those maintained in the forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligations to update any forward-looking statements, except as required under abdicate laws. This call will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in the U.S. dollars unless otherwise stated. Now the following is prepared statements by Mr. Jinbo Li, Chairman and CEO of Xunlei Limited. Good morning, and good evening, everyone. Thank you all for joining us today. we're extremely pleased to wrap up 2025 with exceptional fourth quarter and full year operating results, which not only met, but exceeded our expectations and demonstrated the strong momentum of our strategic transformation. 2025 has been a year of remarkable growth, strategic refinement and value creation that marked by robust performance across all core business segments, successful strategic transactions and significant progress in optimizing our business portfolio. A key milestone of our success for the year is the consistent double-digit growth across our major business lines, a testament to the effectiveness of our ecosystem-driven strategy, our focus on core competencies and our ability to adapt to evolving market dynamics. Now I'd like to share with you detailed insight about our operations in Q4 2025 and full fiscal year, which underscore the strength of our business model and success of our strategic initiatives. First, our subscription business continues to serve as a stable core asset and reliable growth driver for the company, demonstrating strong resilience and growth momentum. In the fourth quarter, we generated $42.1 million in subscription revenue, representing a solid 22.4% year-over-year increase. For the full year 2025, subscription revenue reached $154.8 million, up 15.8% from 2024. This sustained growth is underpinned by 2 key pillars: First, our deeply integrated business ecosystem continue to deliver value as the high proportion of paying subscribers opting for our premium subscription business, which integrates Internet browsing, high-speed downloading tools, expansive storage and value-added features to enhance user engagement and retention. And second, our strategic alliance with leading mobile manufacturers and platform partners expanded our user reach, enabling us to tap into a new user group and drive organic growth. Moving forward, we will continue to integrate advanced features, optimize our product experience and expand our market presence to drive further growth in our subscription business. Next, our cloud computing business achieved a turnaround and delivered significant growth in 2025. In Q4, cloud computing revenue was $46.1 million representing an increase of 102.7% year-over-year. For the full year, cloud computing revenues reached $137.4 million, up 31.4% from 2024. This growth was driven by the increased demand for our cost-effective solutions. As you might learn from our announcement last week, we realigned and strengthened our strategic focus and sold 50% of our stake in OneThing, the operating entity of our cloud computing business. We believe that the equity divestiture will support business optimization and leverage our partners' expertise to advance OneThing's edge computing and CDN services. Meanwhile, Xunlei will reallocate its resources to core growth drivers, subscription and overseas live streaming, while retaining a minority stake in OneThing to capture future upside, if any. We believe that the transaction will have no significant negative impact on our core operations, cash flows or profitability. And instead, it may improve our capital efficiency and strategic clarity in the long run. Our live streaming and other Internet value-added services has emerged as a key growth engine, delivering rapid growth in 2025. In Q4, this segment generated $55.1 million in revenue, representing a 102.8% year-over-year increase. For the full year, live streaming and other IVAS revenues reached $170.2 million, a remarkable 97.5% increase from 2024. This exceptional growth validates our strategic pivot in late 2023 to exit low-margin volatile domestic market and focus on high-growth emerging regions such as Southeast Asia and the Middle East and North Africa. By leveraging our strength in product refinements, user engagement and monetization, we have achieved significant growth in our overseas audio live streaming business. Additionally, the integration of Hupu, which we acquired in 2025, generated synergies to our business, with Hupu contributing to our advertising revenue through its vibrant and highly engaged community, Reviewing our overall financial performance for 2025. We delivered substantial results across the board. Total revenues for Q4 2025 reached $143.3 million, a 17% year-over-year increase, reflecting the strong growth of all our core business segments. For the full year 2025, total revenue hit $462.4 million, representing a 42.5% increase from 2024. This robust revenue growth is a clear indication of the success of our strategic transformation, which has focused on strengthening core businesses, optimizing product portfolio and exploring high-growth opportunities. Additionally, our investment in Arashi Vision has generated significant unrealized capital gains and may further enhance our financial strength and capital flexibility. To conclude, 2025 has been a transformative year for Xunlei, marked by strong financial performance, successful strategic transactions and significant progress in our core businesses. We have demonstrated our ability to adapt to market changes, optimize our portfolio and drive growth through strategic focus and innovation. With our clear strategic direction, strong business momentum and enhanced captive flexibility, we believe we are well positioned to capitalize on market opportunities and deliver sustained growth in 2026 and beyond. And we remain committed to create long-term value for our shareholders. With that, I will now pass the call over to Eric. Eric will give a detailed review of our Q4 and fiscal year financial results. Eric Zhou: Thank you, Luhan. Thank you all for participating in Xunlei's conference for today. I will now walk you through our financial results for the fourth quarter and the full fiscal year of 2025. . Let's begin with the fourth quarter of 2025 results. Total revenues for the fourth quarter were $143.3 million. This represents an increase of 17% compared to the same period last year. This growth was primarily driven by higher revenue from our cloud computing and live streaming businesses. Looking at our revenue streams in more details. Revenues from subscriptions reached at $42.1 million, up 22.4% year-over-year. This increase was mainly due to higher demand for our subscription services. Revenues from and other were $55.1 million, up 102.8% year-over-year. This significant growth was driven by the expansion of audio live streaming business as well as growth in our advertising business, largely resulting from our acquisition of Hupu. Revenues from cloud computing were $46.1 million, up 102.7% year-over-year. This increase was due to greater demand for our major -- from our major customers for cloud computing services. Moving to costs and profitability. Cost of revenues were $80.8 million, representing 56.4% of our total revenues. This compares to $40.4 million or 47.9% of total revenues in the same period of 2024. The increase was mainly due to higher revenue sharing costs for live streaming business and increased bandwidth costs associated with higher demand for our cloud computing services. Gross profit for the quarter was $61.7 million, an increase of 41.5% year-over-year. Gross profit margin was 43% compared to 51.7% in the fourth quarter of 2024. While gross profit dollars increased driven by our subscription and overseas audio live streaming business, the margin decreased. This was primarily because a larger portion of our revenue now comes from our overseas audio live streaming and cloud computing business, which carries lower gross profit margins, while the proportion of revenues from our higher-margin subscription business decreased. Turning to operating expenses. expenses were $21.9 million or 15.3% of total revenues, up from $18.7 million last year. The increase was primarily due to higher labor costs. Sales and marketing expenses were $23.2 million or 16.4% of total revenues, up from $12.5 million. This was driven by the expansion of marketing campaigns for our subscription and overseas audio live streaming business. G&A expenses were $12.4 million or 8.6% of total revenues compared to $12.1 million last year. The slight increase was due to higher legal expenses during the quarter. As a result, operating income was $4.7 million, which is a significant improvement from an operating loss of $20.5 million in the same period of last year. The turnaround was primarily due to the absence of a goodwill impairment charge of approximately $20.7 million that were incurred in the fourth quarter of last year. Net loss for the quarter was $228.9 million compared to a net loss of $9.9 million in the same period last year. The increase in net loss was primarily due to other losses net, which totaled $232.6 million. This compares to other income of $1.5 million last year. The change was mainly due to a decrease in the fair value of our long-term investment in Russia-Beijing following its IPO in June 2025. On a non-GAAP basis, which excludes the impact of share-based competition and certain other items, net income for the fourth quarter was $4.8 million compared to $11.3 million in the same period of 2024. Diluted loss per ADS was $3.64 compared to a loss of $0.16 in the fourth quarter of 2024. Non-GAAP diluted earnings per ADS were $0.08 compared to $0.18 in the same period last year. Turning to our balance sheet. As of December 30, 2025, we had cash, cash equivalents and short-term investments of $305.4 million. This compares to $284.1 million as of September 30, 2025. The increase was mainly due to the net cash inflow from operating activities and an increase in proceeds from bank borrowings. Now let's move to our full year 2025 financial results. For the full year, total revenues were $462.4 million, an increase of 42.5% compared to the previous year. This growth was attributable to revenue increase across all of our major business segments. Breaking down the full year results subscription revenues were $154.8 million, up 15.8% year-over-year driven by increased demand. Revenues from live streaming and other IVAS were $117.2 million, an increase of 97.5% year-over-year primarily due to the growth of our overseas audio live streaming business and advertising business following the Hupu acquisition. Cloud computing revenues were $137.4 million, up 31.4% year-over-year due to increased demand for our services. Cost of revenues for the year were $242.9 million, representing 52.5% of total revenues. This compares to $155.6 million or 48% of our total revenues in 2024. The increase was mainly due to higher demand for car computing services and increased revenue sharing costs from the expansion of overseas audio live streaming business. Gross profit for the year was $217.5 million, an increase of 29.8%. Gross profit margin was 47% compared to 51.7% in the previous year. The increase in gross profit dollars was driven by our subscription and large streaming businesses, partially offset by a decrease in gross profit from cloud computing. The margin declined similar to the quarter reflects a shift in revenue mix towards our lower-margin oversea audio live streaming and cloud computing businesses. Looking at full year operating expenses, expenses were $18 million or 17.3% of our total revenues, up from $71.6 million last year, primarily due to higher labor costs. Sales and marketing expenses were $86.3 million or 18.7% of total revenues, up significantly from $44.8 million. This was driven by expense marketing campaigns for our subscription and live streaming businesses as well as higher labor costs. G&A expenses were $44.9 million or 9.7% of total revenues compared to $45.8 million last year. Operating income for the year was $6.6 million, a significant improvement from an operating loss of $15.7 million in 2024. This was primarily due to the increase in gross profit and the absence of the onetime goodwill impairment we recorded at the end of 2024. Net income for the year was approximately $1.05 billion compared to $0.7 million in the previous year. This large increase was primarily driven by higher gross profit and other income during the year. On a non-GAAP basis, net income was $18.5 million in 2025 compared to $23.9 million in 2024. Diluted GAAP earnings per ADS were $16.56 compared to $0.02 in the previous year. Non-GAAP diluted earnings per ADS were $0.30 compared to $0.38 in the previous year. Our year end cash position remains strong. As of December 31, 2025, we had cash, cash equivalents and short-term investments of $305.2 million compared to $287.5 million at the end of 2024. The increase was mainly due to net cash inflow from operating activities and proceeds from bank borrowings, partially offset by the payment of the acquisition of Hupu. Finally, a quick update on our share buybacks. As of December 31, 2025, we had spent approximately $1 million to repurchase about 435,000 ADAs during 2025. Since the inception program on June 4, 2024, we have spent a total of about $6.5 million on share buybacks. This concludes our prepared remarks for today. Operator, we are now ready to open the line for the questions. Operator: [Operator Instructions]. And now we're going to take our first question, and it comes for an of [ Dante ] from [indiscernible] Retail Investor. Unknown Analyst: [Foreign Language] Luhan Tang: The investor asks what our for the cash consideration obtained from the transaction? Jinbo Li: [Foreign Language] Luhan Tang: [Interpreted] So Jinbo Li answering, we're going to use the cash consideration for the development of the company's core businesses. specifically including the R&D in technology as well as the integration of upgrades for our products. For example, the cloud acceleration and overseas audio live streaming businesses. Besides that, we also will use the money on the market expansion and brand promotion aimed at increasing the market share of our products and at the same time, optimize the company's operating capital structure and enhance overall operational liquidity. Thank you. Unknown Analyst: [Foreign Language] Luhan Tang: So he's asking if the Cloud related quality to Xunlei and why you are selling the stake to them? Jinbo Li: [Foreign Language] Luhan Tang: [Interpreted] So to answer this question, Mr. Jinbo Li says, so Kingsoft Cloud is not the only one option that we were looking for. In the past 2 years, we have been looking for the buyers and we did a lot of market research, and we finally decided to choose a Kingsoft software cloud for the 2 reasons. One is it has the maximum return for Xunlei. And the second reason is because Kingsoft Cloud has advantage in the cloud infrastructure and the cloud technology R&D and industry solutions. So they will offer support for OneThing business development and the contribution to the enhancement for the OneThing's market competitiveness and operating performance in the future. Operator: [Operator Instructions] Luhan, please be advised we have another line to asking the question. And if you don't mind, please can you announce these participants? Luhan Tang: Sure. [Foreign Language]. Please go ahead to ask your question. Operator: My apologies, this person just put his name in Mandarin, so therefore, I cannot even pronounce his name. Luhan Tang: Yes. I try to speak Mandarin to her, I guess. [Foreign Language] Operator: My apologies, dear participants with e-mail if you would like to ask a question, please a question. My apologies, there are no questions from these lines. [Operator Instructions]. Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks. My apologies, now we have another question to come through. Would you like to take it? Jinbo Li: Yes, please. Operator: And the question comes from the line of [ Jeff Shang ] from [ Stonehill ] Capital Management. Unknown Analyst: I just wanted to quickly ask Mr. Jinbo Li, what is the company's plan and the Board's plan with the ArachiVision stake once the lockup expires? And how should shareholders think about potential shareholder return and the size of potential shareholder return? Luhan Tang: [Foreign Language] Jinbo Li: [Foreign Language] Luhan Tang: [Interpreted] So Mr. Jinbo Li answered the first question about how we -- after this invest, how are we going to allocate the funds. He said we intend to allocate the funds towards the R&D of emerging technologies and also the exploration for the new business initiatives and may create the initiatives that create significant value for the company. At the same time, we will also assess all the physical options to reward shareholders. We will determine the the pace of divesting from based on the company's business solvent and also the capital market condition at the time. We'll have a lot of options to choose from. So please stay tuned for the disclosure during that time. He actually answered the question about the return. He said we will please stay tuned for the further disclosure during the time. Operator: [Operator Instructions] And now we're going to take another question, and the question comes from line of [ Fujitsu Sihon ]. Luhan Tang: We cannot hear you. Operator: There is no answer from this line. Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks. Eric Zhou: Okay, operator. We conclude prepared remarks for the conference call. And we are -- I think that's all for today. And for any callers, if you have any questions feel free to contact us. Okay now we can close the conference. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

28天前Insight Analytics约5分钟阅读

GAMB 2025 Q4 财报电话会议

Operator: Greetings. Welcome to Gambling.com Group Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the call over to your host, Peter McGough, Senior VP of Investor Relations and Capital Markets. Please go ahead. Peter McGough: Hello, everyone, and welcome to gambling.com Group's Fourth Quarter 2025 Results Call. I am Peter McGough, Senior VP of Investor Relations and Capital Markets, and I'm joined by Charles Gillespie, Gambling.com Group's Co-Founder and Chief Executive Officer; Kevin McCrystle, Co-Founder and Chief Operating Officer; and Elias Mark, Chief Financial Officer. This call is being webcast live through the Investor Relations section of our website at gambling.com/corporate/investors and the downloadable version of the presentation is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact Investor Relations support by e-mailing investors@gdcgroup.com. I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Some important factors that could cause such differences are discussed in the Risk Factors section of the Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. During the call, there will also be a discussion of non-IFRS financial measures A description of these non-IFRS financial measures was included in the press release issued earlier this morning, and reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website. I'll now call -- turn the call over to Charles. Charles Gillespie: Good morning, and thank you for joining our fourth quarter 2025 conference call. We generated record fourth quarter revenue of $46.2 million, up 31% year-over-year adjusted EBITDA rose 5% year-over-year to $15.5 million. Our Sports Data Services business grew 29% sequentially and 440% year-on-year in the fourth quarter to $11.8 million and accounted for 26% of total revenue, the highest percentage yet, grew 15% sequentially from the third quarter and 4% year-over-year. While the previously discussed challenges with search rankings persisted in the fourth quarter, this was offset by growth in revenue, not dependent on organic search referrals, which exceeded revenue from SEO-related sources for the first time. We have scaled non-SEO marketing revenue quickly in the second half of 2025 and continue to expect increasing revenue from these channels going forward. This strategy has made marketing revenue more diversified and less volatile at the price of somewhat lower margins. For the full year, revenue and adjusted EBITDA were up 30% and 19%, respectively, and we produced $36.3 million in adjusted free cash flow. Looking ahead to 2026, we expect revenue to be in the range of $170 million to $180 million and adjusted EBITDA to be in a range of $50 million to $80 million -- sorry, $50 million to $58 million. This represents modest top line growth, but a year-on-year decrease in adjusted EBITDA. Behind these headline numbers are two different businesses. We have a thriving high-growth sports data services business, which will grow revenue in the high teens and see margin expansion. We also have our marketing business where it is no secret that revenue from SEO has been under pressure. Given the dramatic changes to the media and digital landscape, as a result of the rise of artificial intelligence, we are actively reinventing our marketing business to build a more intimate relationship with our end users. This will involve scaling our CRM platform, offering more interactive and gamified content and expanding our engaged social media audience. Even while we are reinventing the marketing business this year, it will continue to generate significant cash flow. Despite recent challenges and perceptions, this is still a very valuable, very profitable business and even considering margin compression from our traffic diversification strategy. We are encouraged by the return to year-over-year growth in the fourth quarter despite the pressures that continue to impact SEO revenue. The market expectations for the future of this business are plainly not accurate. Non-SEO revenue continues to scale ahead of expectations as evidenced by our cost of sales growth for the fourth quarter. Q4 is the first quarter where more than half of our revenue came from sources not dependent on SEO. As we continue to diversify our increased focus on e-mail, social media, paid and partnership channels will contribute more revenue as we move through 2026. We also continue to make progress in scaling our CRM activities to engage and cross-sell our customer base. The final and perhaps most interesting piece of our transformation strategy for the marketing business, is the new product we expect to launch this spring. While I would love to share more details about this project today, we are not going to share any further information for competitive reasons until the launch. Our annual themes for the past several years have all been AI related and our team is early adopters and fully embracing the power of these new tools available to them including 24/7 Agentic workflows. While the advances in artificial intelligence over the last several years have been incredible, the acceleration in tools like Claude code since January has been breathtaking. We continue to prioritize leveraging AI tools to increase our execution velocity across all teams and functions within the group. Turning to our exciting sports data services business. Enterprise Data Solutions will continue to be the fastest-growing part as we further grow our customer base, rapidly expand our product offering and ramp up the offering in new geographies around the world. As a rising challenger in the sports data services space, we are highly valued by our diversified group of customers, growing quickly, and our team is executing at a higher velocity than our peers in terms of product creation, innovation and delivery. Given our pace of execution, I expect us to continue to take meaningful market share. With the rapid evolution of prediction markets, the potential customer base for our sports and odds data services is expanding quickly. We have established ourselves as early as one of the most interesting sources of data on prediction market exchanges and have already made great inroads to selling our odds data to both retail and institutional clients who are trading on these exchanges as well as helping service the exchanges themselves with both data and marketing. There has been some concern that regulated sports books are losing market share to protection markets and that has resulted in a negative sentiment, which seems to have been applied more broadly. To be clear, Gambling.com Group is a net beneficiary of the emergence of this new category as it is expanding our TAM, both on data and marketing. While marketing revenue from prediction markets is still small, we have an obvious opportunity to scale up in this category and help consumers navigate all of their new options. We see a great opportunity to expand our data and trading solutions business by servicing more exchanges, liquidity providers, financial institutions and funds of all styles as prediction markets continue to evolve beyond sports, and more and more players look to be involved. OpticOdds is our brand for enterprise data solutions, and it already has great penetration with U.S. operators. We remain less well known outside the U.S. but are working rapidly to adapt our services to the needs of operators across the many attractive markets, particularly in Europe, where we operate. In order to better service global operators, we are expanding our coverage deeper and wider to 25 stores and 5,000 leagues and tournaments. The two main levers for growth, we are focusing on for 2026 are servicing operators in Europe with better coverage within existing products and selling additional new and innovative products to our U.S. clients such as AI-driven pricing and real-time settlement. Beyond Europe and the U.S., there is no shortage of additional growth opportunities to target in due time. Our solutions are not inhibited by legacy architecture as we already have what we consider to be the state-of-the-art technology for odds data, odds related risk management and bet settlement among other current offerings. We will introduce exciting new platform and product enhancements this year for enterprise customers that will further position OpticOdds as the leading end-to-end data solution for global sportsbook operators. On the consumer side of our sports data business, OddsJam, we will be adding functionality for our subscribers in both prediction markets and [ Sportsbooks ]. Over the course of the year, we will introduce product enhancements for consumers active on prediction markets, including real-time recommendations from Pro traders and arbitrage solutions that offer risk-free bets to help better find value across our industry-leading breadth of markets. For consumers active on [ Sportsbooks ], new enhancements will include a simplified Sharp money tool and a low-cost introductory plan that helps educate the player and then allows us to upsell them into a higher cost plan. I think this gives you a good sense of the focus we are placing on our sports data services business, to be the key driver of our growth and increasingly the driver of shareholder value for [ GAM ] going forward. As reported in December, we have fixed the contingent consideration from the acquisition which enabled us to restructure our internal team to be better focused on source data services. With the earnout payment amounts fixed, we are now able to better align our teams to leverage the strengths of the talented team at OddsJam and OpticOdds to better support RotoWire, the third pillar of our sports data services business, which continues to have substantial growth opportunities with the right product and marketing optimizations. With that, let me turn the call over to Elias for his review of the fourth quarter and full year financial details and more details on our guidance for 2026. Elias Mark: Thank you, Charles. Fourth quarter revenue grew 31% year-over-year to a Q4 record of $46.2 million and full year revenues rose 30% to $165 million. Data revenue grew 440% to $11.8 million in the fourth quarter and subscription revenue was 26% of total revenue, inclusive of revenue share arrangements in our marketing business recurring revenue was 47% of total fourth quarter revenue. For the full year 2026, data revenue grew 392% in GAAP terms and 27% on a pro forma basis to $41.1 million. As previously highlighted, our marketing business has been impacted by low quality search results in the gaming space. Such dynamics still remain volatile as the trend improvements we saw in November have not carried through more recently. As a result, [ NDCs ] of 98,000 were down 32% year-over-year. Despite that impact, marketing revenue rose 4% year-on-year as our traffic diversification efforts picked up speed in the quarter, and we generated a majority of revenue from sources other than organic sale referrals for the first time. Gross profit increased 19% year-over-year to $39.3 million. Cost of sales of $6.9 million compares to cost of sales of $2.2 million in the year ago period, primarily reflecting costs associated with our traffic diversification strategy for the marketing business. Gross profit margin was 85% compared to 94% in the year ago period. Operating expenses adjusted for acquisition and restructuring-related expenses and noncash fair value movements and impairment charges for the quarter grew 32% to $26.9 million. This growth is primarily associated with added head count from the acquisitions in 2025 and higher marketing costs associated with diversification in the marketing business. Headcount outside of the acquired businesses were flat year-over-year. Noncash fair value movements in the quarter of $18.5 million related to the previously announced early termination of the Odds Holdings earnout period. As a result, we will not incur any future fair value movements related to Odds Holdings. Noncash impairment charges of $14 million related to changes in future cash flow expectations from websites targeting the [ Finnish ] market following recent regulatory changes. Adjusted EBITDA was $15.5 million and the adjusted EBITDA margin was 33% compared to $14.7 million and 42% in the year ago period. The lower margin reflects the higher cost of sales and marketing expenses associated with our diversification strategy. Adjusted net income of $12.2 million and adjusted net income per share of $0.30 for the fourth quarter were flat compared to the year ago period despite the impact of increased interest expense. Adjusted free cash flow in the fourth quarter was NOK 7.5 million, reflecting adverse working capital movements from timing differences. For the full year, adjusted free cash flow was $36.3 million and that included tax payments of a one-off nature of $5.6 million related to IP tranches. During the fourth quarter, we drew down $38 million on our credit facility revolver. We paid deferred consideration of $33.6 million related to Odds Holdings, and we've repaid $2.8 million on our term loan. As of December 31, we had total cash of $15.8 million and $123.6 million of borrowings outstanding and $32.5 million of undrawn facilities on our Wells Fargo credit [ facility ]. We continue to produce strong free cash flow that will allow us to both delever and continue to invest in our organic growth initiatives. During the fourth quarter, we repurchased 110,000 shares. In total, for 2025, we repurchased 672,000 shares for a total consideration of $5.6 million. and we continue to have $14.4 million remaining with our share buyback authorization. We continue to invest in product development and diversification strategies that we believe will power growth in coming years. while prioritizing cost control and leveraging AI in our work processes to drive efficiency gains via automation. This morning, we introduced our 2026 full year guidance for revenue to be in the range of $170 million to $180 million. And adjusted EBITDA to be in a range of $50 million to $58 million. We expect revenue growth to reflect continued strong growth in data services driven by Forest Data enterprise services. Our revenue and EBITDA expectations are negatively affected by continued poor organic search dynamics and regulatory headwinds. In the U.K. for a higher-than-expected increase in gaming duty impact player values and volume. And in Europe, where new regulations in Finland will curtail performance marketing. The adjusted EBITDA margin indicated by this guidance, around 30% for the full year is expected to be lower in the first half of the year and higher in the second half of the year. This reflects the continued investments that we're making to diversify our marketing business. The investments in our sports data services product enhancements and the investments needed for the development and rollout for our new products that we plan to launch and for which we expect only marginal revenue contributions for this year. Operator, we will now open the floor for questions. Operator: [Operator Instructions] Our first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Ryan Sigdahl: Sticking on kind of the guidance to end Elias, it's U.K. tax increases going to effect in April. Thoughts on the market on what you're seeing. I guess, the thought is what we're hearing as Tier 2, Tier 3 operators kind of the long tail might get squeezed out of the market. That's typically a better opportunity for you guys relative to the big top heavy ones. So curious, I guess, how you've pivoted your strategy or plan to pivot your strategy, really the nuances within the U.K.? And then kind of last point on that, if you're willing to break out kind of the challenges in rank order within the guidance in your performance marketing from the U.K. versus Finland versus Google and search. Charles Gillespie: Ryan. We've got Kevin here, the Group COO, who's probably best positioned to give you some color on the U.K. market. Kevin McCrystle: Ryan, nice to finally be on this call. we are starting to see the impact and have seen the impact of the U.K. market changes. It's a mix of a few different things. There will be some brands that leave the market. But overall, there's really -- there's like hundreds of brands in the market. So some leave, it's still a very robust market. We've always done well with the challenger brands, which there will still be enough of the market going forward. Our strategies in the market will still persist and work really well. We think, if anything, it will be more of an opportunity for us if some competitors do decide to exit the market as well. There's potentially some opportunity for pricing to go down a little bit, but these traffic struggles that we've seen a little bit have also impacted the operators, and there are some brands that we expect actually may need to increase pricing, though the macro forces will force it down for some of the top brands in the market as well. Ryan Sigdahl: Maybe, Elias, if you can comment on the guidance and kind of rank order of challenges within that. And then I do have a follow-up. Elias Mark: Yes, sure. So if we look at the change in our internal outlook, this is entirely due to two factors affecting the marketing business, as we said. And what has really changed since our November call, if these new regulatory headwinds in the U.K. and Finland. But we have also -- what we've also seen is that some of the positive trends that we referenced in -- at the end of October and beginning of November has not carried through. So there is continued search for utility. It's hard to pinpoint an exact term the impact of each of these because there is an element of correlation, but what has materially changed in the macro environment since we last reported is the regulatory headwinds in the U.K. and Finland that we already see impact us. Ryan Sigdahl: Helpful. Second question... Elias Mark: I can just add that was not changed in our outlook is sports data services where we continue to expect a very healthy high teens growth driven by the acceleration on the enterprise side. Ryan Sigdahl: Good segue. That's my second question is on OpticOdds specifically the data services. Curious where you're seeing the most success and where you expect to see the most success in '26 in your guidance, if that's upselling. You mentioned more sports expanding the platform and seemingly upselling your existing customers there? Or is it land and expand with new customers, whether that's prediction markets or other geographies? And then kind of also on OpticOdds I just curious the company's mindset to guarantee an earn out early based on an EBITDA figure for 2026. Kevin McCrystle: Ryan, Kevin here again. I can take that. This is obviously an exciting area of our business. Growth is -- a lot of our growth will be driven by optical or enterprise product in the sports fee services space. For that, we have around 300 active customers on recurring long-term contracts, and there's about 100 new clients in the pipeline. Importantly, 70% of which are international. In 2025, revenue per client was up 50%, and we onboarded 29 new clients in Q4 alone. Going forward, there's a focus on both increasing revenue per client and converting that sales pipeline to add more customers. We do have a handful of revenue share deals and these can be materially more lucrative than fixed fees, which is a clear area of focus going forward. Prediction markets are also important here. They've unleashed a Cambrian explosion of entrepreneurial activity with new faces from traditional tech and finance now entering the space and we are supporting all manner of market participants with high-quality data. The prediction market data in the OpticOdds API comes pre-mapped to existing betting markets. Beyond optic though, just sticking on prediction markets for a second there, prediction markets are also an opportunity for consumer product innovation on OddsJam. In terms of the ending the earn-out, we did want to fix the remaining contingent consideration. But beyond that, it really offers a great opportunity to allow better alignment between OpticOdds, OpticOdds and the rest of our group, notably RotoWire, which we're already seeing on some good results from. Operator: Our next question comes from the line of Jeffrey Stantial with Stifel. Jeffrey Stantial: Maybe starting off on Elias' answer just before on guidance. So it sounds like the main delta is relative to how you laid it out back in November is primarily regulation and then a little bit of the Google search rankings not improving the way that you expected. I guess maybe we'll stick with Kevin for this one. Can you talk about more sort of the AI sort of headwinds? What have you been seeing in real time over the last few months in terms of LLMs taking share or Google AI [ summer ] is taking share? Just sort of how has that evolved over the last few months because it seemed to be sort of left out when talking about potential guidance headwinds or at least revisions relative to the prior? Kevin McCrystle: Yes. I think you need to kind of take two lenses on that. Our referrals from LLM are up substantially quarter-over-quarter, and that's something we expect to see going forward. So that's a positive trend. On a macro lens, it doesn't appear yet that that's eating at Google at the moment. The issues we're seeing are more so with Google itself. And as we noted, that November ranking rebound has not quite persisted. With Google, there's two core challenges. One is offshore spam. This is particularly in international markets, this channelization issue due to kind of overly burdensome regulations. And two, negative SEO attacks, which is something we haven't really discussed before. These are both unique to online gambling with search they seem to monitor it a bit less than some others, and there's very aggressive competitors. Spammers continue to win a cat and mouse game with Google and Google has been slow to react to the current wave. Historically, they were very quick to react, Hence, our guidance on short-term recovery. They may have taken their eye off the ball with some of their focus on other endeavors besides search but negative SEOs when competitors use third parties to manufacture signals that degrade sites overall authority and we've been getting those attacks. It's difficult to identify who's sponsoring them. Google is still incentivized to fix this. It's a search quality issue for their end users after all. So we do expect change to come, but it hasn't happened yet. Charles Gillespie: Jeff, just to add, I think an interesting way to frame this is to look at the second order effects of AI, right? Like everybody looks at Google, and thanks AI LLM, so nobody is using Google Search anymore. That's totally not true. You just look at the Google results and the search revenue results, Google Search is working better than it's ever worked. But with this new AI world, the spammers are able to put out more span that's higher quality than ever by using AI and Google itself is, of course, very focused on its own AI future and thus not policing the search results in the same -- with the same vigor that they used to from our perspective. So it is AI related but not in the way that people assume. Jeffrey Stantial: That's a really interesting point for info initial color. Kevin, maybe turning more to sort of capital allocation and strategy. It looks like your stock is now trading about on my math 4x your trailing 12-month free cash flow, which to us really seems quite remarkable and grounded more narrative than any sort of reality. Recognize that you can't talk specifics or get [indiscernible] book. Charles, I'm just curious like internally, what is the dialogue around sort of strategic optionality if you do see the market continue to dislocate seemingly entirely on narrative? Charles Gillespie: Yes look, we -- I think the short-term priority is to use our cash to delever somewhat there's plenty of upside to our 2026 guidance if a few things fall in place, so we could find ourselves in a position where we are generating margins, which are closer to the historical margins in which case buyback to be back on the table. Obviously, at the current level buybacks are incredibly attractive, but we want to delever before we really focus on buybacks. So we have a buyback program in place, and we will I'd love to be in a position this year to use that. Longer term, I think we need to evaluate all of our options. But plan A at this point is to make the stock work. We're here. We're a listed company in the United States. We do have a great business. We're caught up in a lot of the same narrative challenges as other companies at the moment. But we're still here, and we plan to make it work. Operator: Our next question comes from the line of Barry Jonas with Truist Securities. Barry Jonas: Charles, I'm curious to get your thoughts on the [ Genius Legends ] deal and if you see any implications for, I guess, how you think about your strategy? Charles Gillespie: Barry, look, Legend is one of the great online gambling affiliate businesses. It's a very direct comp to our marketing business. I've known the founder at [ Kisber ] for many years, and I take my hat off to them on a very impressive transaction with [ Genius ], and we wish them all very well going forward. A lot of former [ Legend ] staff work again and vice versa. All in gambling affiliate world is quite small. Their strongest asset is definitely [ covers.com ], which, of course, is a great site. We went up against them to acquire it many years ago. And unfortunately got outbid, but there is vastly more to [ Legend ] than just [ covers.com ]. They operate a long list of assets in a variety of markets around the world. The transaction certainly highlights the synergies between sports data and marketing assets. I'm pursuing the same strategy as [ Mark lock ], but in reverse. We started with marketing, and we see sports data services as extremely interesting. A lot of revenue there. And potential advantages to come at it with fresh technology without having tied ourselves up with very large contractual obligations to leagues with official data agreement. So we think sports services is obviously our future, and that's that we've made. We're just kind of doing it in the opposite order. Otherwise, competition is great, and we look forward to being what [ Genius ] will do with [ Legend ]. Barry Jonas: Sounds great. And then just as a follow-up, Charles, I would love to get your high-level thoughts on the potential for new [ iGaming ] legalization from here? And I guess with that, is [ Maine or Alberta ] embedded in the guidance to any degree? [ Maine ] is tiny, and they're just going to have a couple of operators. So that's completely immaterial. The non-Ontario Canada is a gray market where a lot of people are already active. So [ Alberta ] will be helpful because it will -- it looks like it will be a dynamic market, multiple operators similar to Ontario. So that's positive because you'll have more marketing dollars going into it, but it's not going to make a material difference. In the states, we've got our eyes on Virginia. They -- it looked like they might legislate this year. Now it's looking like next year. Massachusetts in Illinois have bills alive for [ iGaming ]. New York [ iGaming ] seems slightly more likely than it did previously. I understand that some of the union opposition has been addressed, and they're not fighting it as hard. That would obviously be a big one and would be material. Operator: Our next question comes from the line of David Katz with Jefferies. David Katz: Charles, you mentioned earlier the version of a new product for marketing that is not discussable for competitive reasons, which is completely understandable. But maybe just talking around it a little bit on the degree to which you're rolling that out is impacting the EBITDA guidance for this year? And what the variability in that impact, if there is any, might be, but not for it, would EBITDA be up and if we could put any specificity around that. That would be helpful. Charles Gillespie: Yes. Thanks for not trying to get me to reveal the GC details, David. Yes, Elias, do you want to quantify a high level what that looks like? Elias Mark: Yes. I mean we have included both CapEx and OpEx related to this new product. It's not of the magnitude that you would have otherwise led to adjusted EBITDA growth, but it's certainly added OpEx and CapEx. That's included with very limited revenue assumptions. Charles Gillespie: Couple of millions sort of thing. David Katz: Understood. And if we think about what its revenue benefit is presumably, there is some revenue for it in the guide for this year. Maybe, again, just talking around it a bit how you see like what you think this product will do for you. Just so we can help think about including that in your multiple, which I think my colleagues address pretty well before? Charles Gillespie: Yes. It's going to produce not a lot of revenue this year, call it $1 million, just round numbers to keep it simple. The story is really going to be about 2027 and 2028. It is incredibly strategic for us. It solves a couple of key objectives for us. It built -- helps us build that much closer relationship with our end users. It leverages the power of our marketing business. it's clever. And I think everyone's going to like it, and that's part of the reason why we're keeping the cards close to the vest at this point. But yes, it will really start to make a difference in '27 and '28. This year is getting it live, laying the groundwork, putting the rails in place and then the real benefits will come next year. But it's something that we can use our marketing business to grow, and we can -- and it will also have substantial benefits that flow back into the marketing business. It's going to take the marketing business, it's going to completely change the narrative on the marketing business. Operator: Our next question comes from the line of Mike Hickey with StoneX Group. Michael Hickey: Just a couple of questions. Charles, you mentioned that there was a path to upside, I guess there's always a path to upside but you seemed excited versus your '26 guide. So what are the catalysts, I guess, that are most identifiable to you to drive upside to numbers in '26? Charles Gillespie: Definitely SEO improving whenever we have kind of a challenging SEO environment, we make forecast end up being too pessimistic. And when SEO is flying, we end up being too optimistic. But Sports Data Services definitely has a real potential to outperform non-SEO also has real potential to outperform. A lot of the stuff we're doing, including the new product I just talked about with David, these are new initiatives, right? So when we forecast this stuff, we got to be conservative, right? We're not going to just put a forecast on the table, which is too aggressive for something which is fundamentally relatively new inside the business. But our non-SEO initiatives are obviously succeeding. That's been driven more revenue in Q4 than SEO for the first time. There's certainly potential for that outperform. You've got CRM, which is scaling up paid media, which is scaling up. We've got quite a few levers which could result in outperformance. But we are also very conscious of putting out numbers that we can hit even if none of those things outperform. Michael Hickey: Do you feel like in this environment, you did a couple of extra layers of conservatism on your [ '26 ] spot. I know it's second half weighted, but just given the volatility, the challenges in the Surat, do you feel like you sort of kitchen sink this a bit. Charles Gillespie: That's the idea, Mike. We want to be pretty conservative. Michael Hickey: Yes. All right. Last question, obviously, a lot to digest in '26, a lot of change in the industry and in your company. Charles, Kevin, when you look longer term, the best you can, thinking sort of '27, '28. Can you just sort of give us the vision that you see the growth opportunity? And also how M&A could eventually fit back into the picture as you look to sort of develop and grow your data business, which has been a role of exception and shining star here. Charles Gillespie: Yes. If you look at '27 and '28, marketing is going to return to growth. That narrative is going to change. It's going to become a more interesting business just in terms of the pure numbers and the and the story as a result of all of the different things we're doing to the marketing business the clear path for growth for Sports Data Services, obviously also means that that's going to continue to grow faster than marketing. So that's 26% of group revenue in Q4. That will keep ticking higher. But we do expect to grow revenue in the marketing business as well. So it's not going to -- or a services isn't going to it's not going to be 50% of group revenue anytime soon. But when you look at '27, '28 in we see these businesses thriving being AI-enabled and highly efficient. And it's one thing to make a business AI proof that something else to make it a major beneficiary of AI, right? And if you look at our sort data services business, it's not SaaS. It's fundamentally a data, which is not easy to get your hands on. Our customers could use quad code and try to create similar software to get their hands on that data. But the reality is, is we spend an enormous amount of money on compute just to aggregate that data. And some of that data only comes because of [ GAN's ] very long relationship with major operators in the industry. So it's not economical or logical for any of our clients to try to do that themselves. So it's a perfectly defensible business in a world that's AI first and data quality, unique data sets in the world of AI or where the value is going to accrue. Kevin McCrystle: If you also look a little bit longer term, AI, using AI internally and kind of all the things we do will help us execute at a higher velocity generally and will mean that over the kind of long-term we don't expect significant cost increase overall across the business. And so those costs can stay stable as revenue continues to grow, which will, in the long run, improve margins. Operator: Our next question comes from the line of Chad Beynon with Macquarie. Chad Beynon: We just returned from a very well-attended annual [ iGaming ] conference, and it seems like prediction market certainly overtook the preponderance of conversations and sessions. And I know there were a few there that actually believe predictions could be bigger than sports betting in a few years. Not sure if that's hyperbole or if there's really data supporting that. But given the difficult legal situation and definition going on? How are you guys thinking about just investing time, money more into predictions if some of these views end up being true in a few years? Charles Gillespie: Chad, the more people I talked to in the industry and the smartest people I talked to you in the industry are the most comfortable with the future of prediction markets from a legal perspective. It does feel like that that's not going away. I mean, I think it will ultimately go to the Supreme Court. But I think the case from the [ CFTC ] that this is well within their mandate is going to survive. I think the end user interest and the public interest in this is also the genie's out of the bottle. It's very clear that there is demand for this and people like the product. So I think it's here to stay. When this category first came out, I was like, "Oh, this is betting exchanges from the U.K. ", and that fairs an okay business, but it's not -- it didn't kind of fulfill its ultimate promise that everyone in the industry thought it would. You could also apply the metaphor for poker, right? It's poker boomed until the sharks ate all the fish. So -- are those -- what lessons can we learn from that? And are they applicable here to prediction markets? And my first gut instinct was they are applicable. But as we've gotten deeper into this, and I've seen so many start-ups and entrepreneurs and people thinking critically about it. And it really is where the energy is at the moment. It feels like in the industry. So I think I don't think those lessons from poker and European betting exchanges are directly applicable. And I it's a distinctly American products, Americans grow up, trading stocks, thinking about the stock market, buying and selling. That is not the same outside the U.S. So there's some specifically American characteristics to it, which I think will give it a bright future. Chad Beynon: And then just thinking about maybe the SEO part of the business or maybe even including the non-SEO. CPAs versus rev share, I know there was discussions in prior quarters that this mix could change, and that could impact the near-term financials how did this change in '25? And then as we think about '26, do you think there should be any adjustment in terms of those proportions for the marketing business? Charles Gillespie: Chad. Yes, we did see our percentage of rev share go up on the marketing business. Overall -- for the overall group, rev share was around 25% of revenue, which is up from historical levels, a lot of historical basis from online casinos, which you can do rev share, but it's not necessarily more lucrative than revenue share does tend to work better for sports betting. And as we do more in sports betting revenue share makes sense, we are increasingly putting more users through revenue share deals. They do take longer to play out, though, to get the full lifetime value. You're not going to see in month 1, a CPA is much more valuable. And in month 6, the CPA is probably still more valuable. So it takes a little longer to see that play out. In the U.S. market, we have been moving more to revenue share. That's done okay, but we see pockets overall, where it's worked really well. And we have really complex machine learning that optimizes our ad tech to kind of figure out the right deal for the right market to push to users. And we don't necessarily have a strategic view that we'd rather move to revenue share, though, obviously, that's great. We do want to maximize the value per user. And so that's how we think about it. Operator: Our next question comes from the line of Clark Lampen with BTIG. William Lampen: I think I have a couple for Elias here. I guess, in light of the shift in strategic priorities, which you guys have talked about already in the importance of the subscription and OddsJam businesses on a go-forward basis, I wanted to see if it's possible for you guys to help us think about how much of the 2026 EBITDA that you're forecasting at this stage is a function of those businesses? I think our sense is that, that revenue stream has a 40% to 50% margin profile, curious if that's accurate, I guess, for question one. And then question two, when we think about, I guess, sort of compounding this or feeding into the decision to sort of shift focus and priorities right now, the delta between the SEO and non-SEO businesses? I know you mentioned that this is going to be a drag in the first half of the year. Is it possible to give us a sense for how different as a result of traffic acquisition costs, the margin profile of those operations are. Elias Mark: Yes. So it's -- we don't break out segments to EBITDA. But the way we think about it internally is about contribution margin. If we look at our sports data, this has a higher contribution margin on a run rate basis. The contribution margins are well over 50%, and they are expanding as revenue scales faster and costs in contrast, the contribution from our marketing business, still high, but it's sub 50%, and it has been declining as a result of our strategy of channel diversification. But it's as Charles said, before it continues to, and it will continue to produce very healthy cash flows even with a little bit of margin contraction. Kevin McCrystle: Clark, Kevin here. SEO has very high margins. So almost any other channel is going to have slightly lower margins than that. We've been investing heavily into non-SEO channels. We've seen e-mail, social LLM referrals, all up between 50% and 500% in Q4 versus Q3, just to give a little perspective on that. But there's a mix of margin across channels. And additionally, there is some upfront investment, specifically around content and product and at times, access to various communities. But we do see that margin improving on nonovertime specifically related to the CRM activity. The CRM really ties together all the channels. creates a new growth flywheel from consistent customer engagement, and that is pretty much all margin CRM. So as we kind of engage more users get them into our funnel, over time, that's an opportunity to improve margins. Elias Mark: And that's also just finished at -- that's also why we are guiding towards a slightly lower margin in H1 than we are it takes a little bit of time to scale and as we scale the incremental margins from these new channels improved. Operator: Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Gillespie for any final comments. Charles Gillespie: Thanks, everybody, for joining us today. We look forward to another year of growth, and we look forward to updating everyone on our Q1 results in May. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

28天前Insight Analytics约5分钟阅读

JG 2025 Q4 财报电话会议

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.

28天前Insight Analytics约5分钟阅读

YMM 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, good day, and welcome to Full Truck Alliance's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead. Mao Mao: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. . The general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining update on the call from FTA finish management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Tai, our Chief Financing and Investment Officer. We will open the call to questions following a brief of the opening remarks from Mr. Zhang. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir. Hui Zhang: [Foreign Language] Mao Mao: [Interpreted] Hello, everyone. Thank you for joining us today for our fourth quarter and fiscal year 2025 earnings conference call. In the fourth quarter of 2025, amid a complex market environment, we continue to energize our ecosystem by elevating user experience and strengthening protection mechanisms for both shippers and truckers driving solid business growth across the board. Total fulfilled orders reached 63.9 million for the quarter representing a year-over-year increase of 12.3% and full year total fulfilled orders reached 236 million, up 19.8% year-over-year. Notably, full year orders fulfilled for cold chain logistics grew by nearly 30% year-over-year. Hui Zhang: [Foreign Language] Mao Mao: [Interpreted] In terms of operational performance, key metrics across all business lines improved steadily in the fourth quarter. On the shipper side, our targeted user acquisition strategy and refined membership system gained momentum. Average monthly active shippers reached 3.28 million in the fourth quarter and 3.14 million for the full year 2025 marking year-over-year increases of 11.6% and 18.6%, respectively, demonstrating parallel improvements in both shipper base and user stickiness. For truck users, we continue to optimize the trucker credit rating system and protection mechanisms, maintaining the 12-months rolling active trucker space at a high level and the next month retention rate for truckers who responded to orders above 85%, further strengthening the overall reliability and quality of our truckers network. Our AI-powered heavy truck feed delivered by Giga AI is now operating commercially in the express delivery and fast freight factors. We also piloted AI assistant capabilities for shippers to further enhance fulfillment efficiency during the quarter. Moving forward, we will continue to accelerate the integration of AI technologies and applications across our transactions and fulfillment processes. Hui Zhang: [Foreign Language] Mao Mao: [Interpreted] Now turning to our financial performance. We remain focused on enhancing operating efficiency to strengthen profitability Net revenues reached RMB 12.49 billion for full year 2025 million, up 11.1% year-over-year. Furthermore, our revenue mix continued to improve with transaction service revenues of RMB 5.32 billion for the full year, growing by 38.2% year-over-year. On the bottom line, we achieved a net income of RMB 4.46 billion for the full year, up 42.8% year-over-year. On a non-GAAP basis, adjusted net income reached RMB 4.79 billion for the full year, up 19.3% year-over-year, underscoring our high-quality profitability and increasing economies of scale. Hui Zhang: [Foreign Language] Mao Mao: [Interpreted] Looking ahead, Full Truck Alliance will consistently elevate user experience for both shippers and truckers and fully integrate AI across the logistics value chain, creating greater value for the industry while delivering long-term returns to shareholders and users. Thank you all once again. That concludes our opening remarks. We would now like to open the call to Q&A. Operator, please go ahead. Operator: [Operator Instructions] Today's first question comes from Ronald Keung with Goldman Sachs. Ronald Keung: [Foreign Language] So looking back at 2025, then the company faced a number of external challenges and also made several strategic adjustments. So as we look into 2026, what -- can you share your overall strategic power. Chong Cai: [Foreign Language] Mao Mao: [Interpreted] 2025 was a year marked by both external challenges and proactive transformation for our business -- during the year, we made significant progress in strengthening platform governance, improving operational efficiency and further optimizing our user structure and monetization quality -- at the same time, we steadily advanced our strategic initiatives in areas such as autonomous driving and overseas markets. Throughout the year, we focused on enhancing the user experience and returning to our core principle of being truly user-centric. Our goal is to build a platform that both shippers and truckers can trust. While some of these investments may not yield immediate measurable returns, we firmly believe that both healthy balanced music ecosystem will serve as a foundation for our large sustainable growth. That kind of ecosystem value is something that I think we can reflect. Ronald Keung: [Foreign Language] Mao Mao: [Interpreted] As we move into 2026, we will focus on advancing high-quality growth and intelligent transformation across 3 areas. First, we are shifting our focus from skill-driven growth to a model that balances both scale and quality. While scale remains important for long-term sustainable development. Our priority is to foster a mutually beneficial relationship between this and the platform. we are raising ecosystem standards to ensure more complete and standardized transactions greater protection for freight payment and higher user satisfaction. With the first phase of our ecosystem governance initiatives now largely complete, most fake accounts and low-quality orders have been cleared from the platform. As a result, the platform is operating on a much healthier footing giving us the confidence to further strengthen fulfillment quality and support more sustainable growth going forward. Building on this foundation, we are also continuing to improve the credit rating mechanisms for both shippers and truckers, for example, through systems such as shipper rating scores and trucker behavior scores, we are gradually establishing a more robust 2-sided evaluation framework. This helps regulate user behavior at the source, curb noncompliant connections while also incentivizing high-quality users, ultimately creating a more virtuous cycle between shipper fulfillment efficiency and trucker earnings. Ronald Keung: [Foreign Language] Mao Mao: [Interpreted] Second, we are evolving from an information matching platform into an AI-driven intelligent infrastructure -- over the years, we have accumulated a large volume of authentic transaction data and build a highly active user base. which together provided a strong foundation for this transformation. Going forward, we will further leverage these strengths to advance grade our AI capabilities across key areas, including matching efficiency, credit assessment and dynamic pricing. In doing so, we aim to extend our platform's value beyond simply connecting supply and demand and enabling a more intelligent and efficient transaction process. . Chong Cai: [Foreign Language] Mao Mao: [Interpreted] Third, while maintaining steady growth in our core business, we are laying the ground for additional growth drivers. We remain confident in the profitability of our mature business. Building on this foundation, we are advancing initiatives in areas suggest overseas expansion and autonomous driving in a disciplined manner to support our growth over the next 3 to 5 years. Operator: And our next question today comes from Eddy Wang at Morgan Stanley. Eddy Wang: [Foreign Language] I have 2 questions related to AI. The first 1 is that the AI technology is advancing rapidly and the rise of the AI agent is gaining significant attention how might this trend affect freight matching platforms such as FTA? And how do you plan to respond to the potential disruption that or agents could bring to the traditional platform model. And the second question is, can management share how AI is being applied across the company? And what's the key developments in the fourth quarter? And what is your plan for the... Chong Cai: Thank you, Eddy. This is Simon here. I'll take over from ours. There has been a lot of discussion around the AI topic recently. We have been closely monitoring and evaluating applications. Let me start with our fourth -- we see AI not as a threat to our business, but that's to enhance our capabilities. For the road freight industry in which FDA operates, the emergence of AITs can significantly lower the barriers for shippers to find available carrier capacity, reduce manual costs in the matching process and improve both matching accuracy and fulfillment rates. These changes will meaningfully improve efficiency across the entire industry. We believe this transformation will create significant opportunities for us to capture additional market shares as transactions migrate from highly fragmented offline markets, including ad hoc and relationship-based trucking networks onto our platform. In our view, AI presents more opportunities than challenges for our platform for AI models to deliver meaningful results in the highly long standardized freight matching market. They must rely on large volumes of authentic, high-frequency closed loop transaction data. This includes data such as quotes completed transactions, cancellations, fulfillment records, dispute resolutions, credit behaviors and verified logistics address database. These data sets are the results of many years of operational experience and data accumulation on our platform. Let's take pricing as example first. In long-haul freight market, competitive real-time freight rates are not publicly available. The effective transaction price for each route and time period is influenced by multiple factors, including capacity availability, backhaul demand, trucker preferences and delivery time requirements. These dynamic pricing signals can only be formed and validated within the real transaction network. On our platform, truckers must complete real name registration and facial verification before logging into our app and accessing shipment information. Negotiations between shippers and truckers are conducted through our in-app messaging tools and protected communication channels. While external AI tools, if there's any, let the basic data set to perform accurate pricing. Second, in the long-haul freight matching business, where fulfillment standards are high-end operational processes are complex, transactions involving far more than simply matching information. The capability to execute this SKU is critical. While external AI tools may help a shipper quickly obtain a price quote or even contact several truckers automatically moving our shipment from posting to final delivery requires much more than prices. Effective fulfillment depends on robust platform services and dispatch capabilities, including understanding which truckers are reliable on specific routes, their likelihood of cancellation, how trucking capacity fluctuates during different time periods and maintaining a complete operational assistance from other placement to settlement to protect the interest of both shippers and truckers. In addition, long-haul freight operations frequently involve exceptions and nonstandard situations. These may include specific vehicle requirements, trucks, equipment with gates or refrigeration units. Last mile delivery address -- last-minute delivery address changes adjustments to cargo volume, highway closure and damage disputes after delivery, handling this situation requires well-established platform rules to determine responsibilities extensive historical data to assess reliability and responsive dispatch network capable of quickly arranging alternatives when disruptions occur. These are not capabilities that a stand-alone generative AI model can deliver on its own. They are built on years of operational experience and data accumulation and are precisely where our core competitive advantage lies. In addition, our platform connects a large number of shippers and truckers and through years of operation has formed a stable transaction network and credit system. Truckers and shippers not only rely on the platform to obtain orders and capacity but also depend on the platform for credit evaluation fulfillment protection, dispute resolution and dispute resolution mechanisms. This long-term accumulation of trust and ecosystem relationships is something that a stand-alone AI agent application would find difficult to replicate. Given these structural characteristics, we believe that as AI technology continues to mature, our competitive advantages will become even more pronounced. The reason is very straightforward. The more capable AI becomes, the more it depends on real transaction data and the stronger the resulting network effects. We're actively integrating AI capabilities across multiple aspects of our platform, including matching, dispatching, pricing, risk management and customer service. As mention becomes more efficient fulfillment become more reliable and exceptional handling becomes faster and more effective. Both truckers and shippers will naturally prefer to transact on our platform. This, in turn, leads to continued data accumulation and ongoing model improvement, which further strengthens our network effects and the moat around our platform. Overall, we are very optimistic about the industry transformation and the opportunities brought by the AI era, and we are fully prepared to embrace the opportunities and challenges that come with this technological shift. For us, AI represents a capability upgrade rather than a disruption to our business model. We will leverage AI capabilities to capture the broader industry opportunities it creates making our platform more efficient and improving the user experience for both shippers and truckers. At the same time, these capabilities will further strengthen our network effects, thereby reinforcing our long-term competitive advantage in the road freight market. To address your second question on our plan for AI for 2026. Yes. As I discussed earlier on the -- on our view on AI, let me walk through the progress we made over the past quarter and our plan onwards. During the fourth quarter, our AI initiatives progress from the experimental phase to broader deployment. We're currently building an AI agent framework that covers key scenarios across our platform, including shippers, dispatch operations and customer service gradually embedding AI capabilities throughout the entire transaction workflow. Starting with the user side, our focus from shippers is simplified shipping shipment posting an automated dispatch. In the fourth quarter, we launched an AI-empowered assistant that enables shippers to submit shipping requests through a simple voice input via a floating entry point in the app. The AI can then handle the entire workflow, including freight listing, trucker screening, price negotiation and order matching significantly streamlining what previously required multiple manual steps. This capability is particularly beneficial for direct shippers as it lowers the barriers to posting shipments and improved shipping efficiency helping the platform better attract and retain SME shippers. This solution also supports vcom-based shipment posting as well as API integration delivering meaningful efficiency improvements for enterprise customers that require system integration. Our pilot results so far demonstrate the effectiveness of our AI-powered dispatch system. First, AI-driven dispatch has attracted a large number of valid trucker bids, reflecting that more accurate matching is increasing truckers' willingness to accept orders. And second, the vast majority of completed transactions are now processed entirely through automated workflows and the need for manual intervention continues to decline. Compared to traditional freight listing, AI-driven dispatch is delivering superior outcomes in both transaction efficiency and fulfillment rates. In short, the AI assistant is helping shippers reduce the time required to find truckers and helping truckers improve order pickup efficiency and enhancing overall matching quality across the platform. Internally, AI has been integrated into our customer service operations, significantly improving response times and processing efficiency while also enhancing overall service stability. Looking ahead to 2026, AI will continue to serve as a core technology foundation for improving efficiency and enhancing user experience across FTA platform. As our models continue to evolve and data advantages deepen, we expect AI to unlock additional value in areas such as matching efficiency and operational cost optimization becoming an increasingly important driver of our medium long-term growth. Thank you. Operator: And our next question comes from Brian Gong at Citi. Brian Gong: [Foreign Language] I will translate it myself. With respect to the capital allocation, how does management prioritize among investments in core business growth, new initiatives and the shareholder returns. Thank you. Chong Cai: Thank you, Brian. Our approach to capital allocation is guided by a very clear principle and that is to delivering sustainable returns to shareholders while maintaining healthy growth in our core business. We remain firmly committed to this objective and committed to creating long-term value for our shareholders. In 2025, we continue to deliver our commitment to returning value to shareholders through both dividends and share repurchases. Over the course of the year, we distributed approximately USD 200 million in cash dividend under our semiannual dividend policy. In addition, we continue to implement our share repurchase program to further optimize our capital structure. Since the beginning of 2025, we have repurchased approximately USD 52.4 million worth of our shares, demonstrating management's confidence in the company's long-term value. . In addition, in January 2026, we announced a medium- to long-term shareholder return plan. For 2026, we plan to return approximately USD 400 million to shareholders and today, we also announced a dividend of approximately USD 87.5 million for the first quarter. To support the shareholder return commitments, we must continue to strengthen our core business while identifying new growth drivers to sustain strong cash generation. As you know, long-term freight matching remains our primary source of cash flow and profitability and forms the foundation for our long-term competitive advantage. Looking ahead, we will continue to invest in user acquisition, technology upgrades, product innovations and ecosystem development to support a steady and sustainable growth of our core business. With respect to strategic investments in new initiatives, including overseas expansion and autonomous driving, we emphasize a disciplined approach characterized by controlled pacing, manageable cash outflows and measurable milestones. We will not pursue high-risk asset heavy expansion Instead, we will advance these initiatives in a measured manner with the evaluation of expected returns and progress at each stage. These investments are intended to build long-term growth capacity and further strengthen our competitive moat rather than pursuing short-term scale. Overall, we believe that the core business growth, investment in new initiatives and shareholder returns are not mutually exclusive objectives. We will strive to maintain a dynamic balance between growth and shareholder returns while preserving strategic flexibility. Operator: And our next question today comes from Thomas Chong at Jefferies. Thomas Chong: [Foreign Language] We have seen the fulfilled orders grew by 12.3% year-on-year in Q4 and both ways is slowing down. Was this mainly driven by the ecosystem governance initiatives? How long do we expect this impact to last? And what is our outlook for order volume in 2026. Chong Cai: Thomas, that's a very good question. Let me first clarify the reasons behind the slowdown in order volume growth during the fourth quarter. The slowdown was primarily driven by the ecosystem governance initiatives, we proactively implemented on platform rather than any significant change in underlying freight demand. This round of ecosystem governance primarily focused on 3 areas. First, we addressed misclassified carpooling orders where Full Truck shipments were posted as less-than-truckload orders. which can compromise transportation safety and fulfillment experience. And second, we strengthened rename verification requirements for both truckers and shippers which resulted in the removal of a number of fake or noncompliant accounts. Thirdly, we implemented a systematic measures to curb freight with selling and other irregular transaction activities. These issues had accumulated over time, and we were beginning to -- and we're beginning to affect the platform -- and fulfillment liability. Therefore, we believe it was both necessary and time to address -- through focus governance work. These government measures primarily affected low-quality orders with limited monetization potential. During the initial phase of the governance initiatives, some of the misclassified car pooling orders have shifted back to the full load product -- full truckload product while others have temporarily moved to offline channels. We view this as a normal structural adjustment. From a revenue perspective, these orders historically contributed only a small portion of the platform's revenue. And in fact, transaction service revenue, as you can see, still grew by nearly 3% year-over-year in the fourth quarter, which clearly demonstrate that the ecosystem governance has not affected the platform's core monetization capability. Based on the results achieved so far, the governance initiatives have delivered meaningful improvements, for example, the resale and trading of trucker accounts on third-party platforms have been nearly eliminated, and the trucker vehicle verification rate is now close to 100%. In addition, freight reselling activities in January decreased significantly compared with the end of third quarter and customer complaint rates have continued to decline. At the same time, trucker engagement has remained stable with the rolling 12-month active trucker base, maintaining at a high level and the next month's retention rate for truckers responding to others exceeding 85%. The principal measures under the round of governance have been largely completed, and the main impacts have been fully reflected. Real name verification has been fully implemented freight reselling is now managed under a normalized framework and misclassified car pooling orders have been structurally addressed through product rules. As we move to 2026, our focus will shift from targeted governance campaigns to continuous optimization. We will leverage credit scoring and algorithm model to safeguard the long-term health of the ecosystem and placing greater emphasis on balancing growth pace and operational quality. In the near term, we do not expect to carry out another large-scale governance campaign. Based on our operating data so far into the year in 2026, sequential order growth has already shown clear signs of recovery. Looking ahead to the full year as the impact of governance initiatives continue to diminish, the share of direct shippers continue to increase and matching efficiency further improves, we remain cautiously optimistic about steady order growth on our platform in 2026. Thank you. Operator: Our next question comes from Ritchie Sun at HSBC. Ritchie Sun: [Foreign Language] My first question is about the fulfillment rates. So how did the fulfillment rate perform in fourth quarter? And what is the outlook for this metric. And secondly, in terms of the commission revenue growth is nearly a 30% year-on-year growth in fourth quarter despite slower order growth. So what were the key drivers behind this? And what is the outlook for this set metric going forward? Chong Cai: Thank you, Ritchie, for your question. fulfillment rate. In the fourth quarter, the overall fulfillment rate reached 42.7%, representing a year-over-year increase of more than 5 percentage points, and it also set a new record. Notably, the average fulfillment rate for the mid- and low frequency direct shippers approach 65%. This is a key metric we monitor closely. And as this segment represents a higher quality source of freight demand. Several factors drove the improvement in the fulfillment rate. First, we implemented systematic optimization to our cancellation policy. Historically, arbitrary cancellations by both truckers and shippers weighted heavily on fulfillment rate. In the fourth quarter, we introduced 2 key measures. We increased the cost of unjustified cancellations by imposing behavioral restrictions on users with frequent cancellations. And we also upgraded our credit scoring system. The evaluation framework shifted from a primary focus on transaction frequency to a more holistic assessment of behavior quality with greater emphasis on fulfillment rate user ratings and complaint rates. These adjustments are designed to encourage more consistent and responsible transaction behavior among both truckers and shippers. Secondly, the continued improvement in our user mix also contributed to the higher fulfillment rate. In the fourth quarter, fulfillment orders from direct shippers accounted for 55% of total fulfilled orders up from the previous quarter. And direct shippers generally have higher expectation for fulfillment reliability and a stronger commitment to execute so the increase in your share directly supported the improvement in the platform's overall fulfillment performance. Thirdly, ongoing product enhancement also contributed to the improvement. In the fourth quarter, we continue to iterate on the new freight zone and introduce a secondary confirmation step for shipment posting, which improved fulfillment rates for newly listed shipments. At the same time, upgrade to our matching algorithm and more refined operations significantly accelerated truckers' response times, supporting a steady increase in transaction conversion rates. Looking ahead, as our credit scoring system, continues to improve, the base of direct shippers expand and low-quality freight listings are further phased out. We expect fulfillment performance to maintain a steady upward trend. This will not only enhance the user experience, but also support further monetization of the platform. Regarding your second question on commission revenue growth. In the first -- in the fourth quarter, transaction service revenue reached approximately RMB 1.49 billion. That's a year-over-year increase of around 28%. Despite the moderation in order volume growth, revenue maintained a relatively strong growth momentum primarily driven by 2 factors. The first driver was the continued increase in commission penetration. In the fourth quarter, commission penetration rate reached 88.6%, up roughly 6 percentage points year-over-year. The number of cities covered by the transaction covered by the commission model reached 273 effectively achieving nationwide coverage across major freight markets. This improvement reflects the platform's continued progress in identifying high-quality freight demand, ensuring fulfillment reliability and enhancing merchant efficiency, enabling the commission model to be applied to a broader range of orders. The second driver was the improvement in monetization per order. Q4 average monetization per order reached RMB 26.3 million, this reflects the effectiveness of our refined tiered operating strategy by offering differentiated services tailored to different shipper segments, we improved monetization efficiency and overall profitability while safeguarding the interest of truckers. Looking ahead, we remain confident in the continued growth of our transaction service revenue. There's room to further optimize both commission penetration and monetization per order. At the same time, continued enhancement of our trucker membership program will help ensure a stable supply of high-quality trust transportation capacity and further strengthening the foundation for transaction service revenue growth. Going forward, we will continue to refine our commission structure and operational strategies without compromising user experience to support more stable and sustainable long-term growth in this particular revenue stream. Thank you. Operator: And our next question comes from Wenjie Zhang with CICC. . Wenjie Zhang: [Foreign Language] I'll translate for myself. My question is about Credit Solutions business within value-added services. I wonder what's related to the progress of this business. Chong Cai: Thank you. In the fourth quarter, amid an evolving regulatory environment, we continue to advance our credit solutions with a focus on compliance, risk management and business model transformation and maintain a steady pace of development. As of the end of the fourth quarter, we completed the transition to interest rates of 26% or below for both existing and newly issued loans, reflecting our proactive alignment with regulatory guidance and commitment to compliance. While this adjustment created some short-term pressure on revenue, we believe it will support a more robust and sustainable financial services framework over the long term and lay a stronger foundation for our future growth. In terms of asset quality, our overall risk exposure remains manageable. Since mid-last year, regulatory changes across the credit industry have led to fluctuations in credit risk and our credit business has also been affected. . In the fourth quarter, the 90-day delinquency ratio reached 2.9%. In response, we proactively tightened our risk management measures by raising credit approval thresholds for both new and existing users and implementing earlier interventions through model optimization and a more tiered risk control framework. As a result, our outstanding loan balance remains at a healthy level, and the overall risk exposure is well contained. Looking ahead, while some volatility may persist in the coming months, we expect asset quality to gradually improve with the overall NPL ratio stabilizing and beginning to decline in the second half of this year. In terms of our business model, we are proactively transitioning towards a more asset-light approach. We have established partnerships with multiple banks and financial institutions and are increasingly originating loans through guarantee backed and facilitation models. This approach allows us to significantly reduce the use of our own capital while maintaining service coverage and improving capital efficiency and better managing risk exposure. As a result, we are building a more balanced and sustainable risk return profile for our credit business. And overall, we will continue to prioritize compliance, maintain disciplined risk management and support our core business through our credit operations. Going forward, we will balance growth and risk while further improving asset quality and expanding penetrations across operational scenarios. This will help ensure that our Credit Solutions business develops in a more sustainable manner as the regulatory environment continues to evolve. Thank you. Operator: And our next question comes from Yuan Liao with CITICS. Yuan Liao: [Foreign Language] Management share us what progress have you met in your overseas business so far. And so what are the trends for your city expansion and your strategic priorities for 2026. And is there any time line for your monetization of your overseas business? Chong Cai: Thank you. Our overseas business is an important part of our mid- to long-term growth. We're building our international operations under the Q move brand, and we are currently in the model validation and capability replication stage. In terms of our market selection logic, the emerging markets, we're targeting share key trails large road freight volumes, low level of digitalization, highly fragmented truckers and the shipper base, large information gaps and high reliance on traditional broker models. This is very much like China over a decade ago. And much like China over a decade ago when we first started our business. . This makes our domestic experience and capability is highly transferable allowing us to replicate our model in those markets with minimal learning curves. We are pursuing a asset-light and localized approach advancing investments gradually as we validate the business model and team capabilities, leveraging our technology and operational know-how to drive platform rollouts. QMove is already integrating fragmented local trucking capacity in select markets and steadily building user network on both the trucker and shipper side. The priority for 2026 remains deepening our presence in existing markets while expanding into new ones in a disciplined manner. We will first focus on boosting network density and user engagement in established countries while gradually advancing city expansions in markets that are operationally ready and steadily broadening the platform's reach. We maintain a pragmatic flexible attitude toward regarding the pace of the monetization emerging market, digital freight platforms typically progress to user acquisition, network formation and efficiency improvement before reaching stable commercialization. With timing varying by market, our priority is to grow the platform network and expand our user base sustainably rather than simply pursue early monetization at the expense of long-term growth. And in summary, we remain confident the long-term growth potential of these emerging markets whose digital transformation is expected to follow a path very similar to China's road logistics industry. We'll continue expanding overseas in a disciplined, steady manner and gradually move towards commercialization as the operating model matures. Thank you. Operator: Thank you. And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments. Mao Mao: Thank you once again for joining us today. If you have any further questions, please feel free to contact FTA directly or reach out to TPG. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day.

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FUTU 2025 Q4 财报电话会议

Operator: Hello, ladies and gentlemen. Welcome to Futu Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief Staff to CEO, Head of Strategy and IR at Futu. Please go ahead, sir. Daniel Yuan: Thanks, operator, and thank you for joining us today to discuss our fourth quarter and full year 2025 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which, by their nature, are not certain and are outside of the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report. With that, I will now turn the call over to Li. Li will make his comments in Chinese, and I will translate. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] Thank you all for joining our earnings call today. In 2025, we delivered another year of strong client acquisition, adding more than 950,000 menu funded accounts and surpassing our full year guidance by 19%. Total funded accounts reached around $3.4 million, up 40% year-over-year. We remain confident in our ability to acquire 800,000 net new funded accounts in 2026, supported by strong bottom-up growth opportunities across both our established markets and newer ones. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] And the robust growth in funded accounts in 2025 was broad-based, driven primarily by solid client additions from Hong Kong and Malaysia. In 2025, net new funded accounts in Hong Kong recorded high double-digit year-over-year increase as we continue to extend our market leadership on top of a high market share. Significant share gain was also observed in Malaysia, and we expect this momentum to continue given our competitive product offering and growing brand trust. In Japan, cumulative app downloads as of November last year crossed 2 million, further solidifying our position as the #1 foreign securities firm. Momo was also the most downloaded trading app in Australia in 2025. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] In the fourth quarter, we added roughly 230,000 net new funded accounts, down 8% quarter-over-quarter, but up 9% year-over-year. While client growth in Hong Kong moderated sequentially following a sharp downturn in the local stock market, net new funded accounts in Japan and Malaysia recorded double-digit sequential growth, underpinned by strong client interest in U.S. stock trading and our superior U.S. stock offerings. In the U.S., we rolled out another round of off-line marketing campaign highlighting key features for active traders. During the quarter, the number of auction contracts traded at, stock and crypto training volume in the U.S. market all posted double-digit sequential growth. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] In the fourth quarter, net asset inflow remained strong. The mark-to-market losses on clients' Hong Kong stock holdings weighed on overall client assets. Total client assets were HKD 1.23 trillion at quarter end, up 66% year-over-year and flat quarter-over-quarter, with Hong Kong and Singapore saw rising net outside flow contribution from high net worth clients. While in the U.S., average client assets recorded the fastest sequential increase among all regions. Underpinned by heightened U.S. stock margin trading activity, margin financing and securities lending balance expanded 7% sequentially to HKD 67.7 billion as of quarter end. A number of popular Hong Kong IPOs during the quarter further contributed to the increased use of leverage driving a double-digit sequential rise in daily average margin balance. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] Total trading volume climbed to a record HKD 3.98 trillion, up 38% year-over-year and 2% quarter-over-quarter. The U.S. equity markets featuring numerous investment themes in 2025 and and we've observed our clients diversify and beyond large technology names into a broader range of sectors and across the AI value chain. As a result, U.S. stock trading turnover was up 17% sequentially to HKD 3 trillion in the fourth quarter. Hong Kong stock trading volume contracted 31% quarter-over-quarter to HKD 821 billion, as investor appetite to China technology stocks weighed the market correction in the second half. This decline was partially offset by elevated trading interest in gold and other precious metals related names. Crypto trading volume remained resilient at approximately HKD 20 billion despite market headwinds, with crystal penetration among trading clients rising across Hong Kong, Singapore and the U.S. During the quarter, we expanded our crypto offerings by adding more than 10 points in both Singapore and the U.S. and further enrich to our market data and information around crypto. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] Both management client assets reached HKD 179.6 billion, up 62% year-on-year and 2% sequentially. In response to growing client demand for portfolio diversification, we broadened our portfolio suite across key markets. In Hong Kong, we enhanced our lineup of high dividend funds and further lower the minimum investment threshold for structure product, making them more accessible to retail investors. In Singapore, we introduced more Singapore equity funds as well as for duration volume funds. In Malaysia, we launched sari-compliant bold tracker funds, which were met with strong demand from local investors. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] During the quarter, we streamlined Airstar Bank's account opening processes and launched mutual funds and insurance products in the banking app. A desktop version was also introduced to clients with a seamless cross-platform experience. On the internal fund, we strengthened Airstar Bank's compliance and risk management capabilities by developing an anti-money laundering system and AI-powered fraud detection infrastructure. Looking ahead, we'll continue to enhance the technology infrastructure and user experience while exploring synergies between Airstar Bank and the group as we advance toward a comprehensive one-stop financial services platform in Hong Kong. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] At quarter end, we have 600 IPO distribution in our clients, a 24% year-over-year increase. In 2025, we reinforced our standing as the leading online broker for Hong Kong IPO distribution and subscription. In 2025, we provided investment banking services to over half of the newly listed Hong Kong Board Company, with full year subscription amount on our platform, representing 49% of the total public offering subscription amount. The number of Hong Kong IPO subscribers on our platform grew nearly 5x year-over-year. In the fourth quarter, we assumed the role of overall coordinators for a number of high-profile Hong Kong IPOs, including those of Technology and. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] Next, I'd like to invite our CFO, Author, to discuss our financial performance. Arthur Chen: [Foreign Language] Thank you, Hua and Daniel. Please allow me to walk you through our financial performance in the fourth quarter. All the numbers are in Hong Kong dollars, unless otherwise noted. Total revenues were HKD 6.4 billion, up 45% from HKD 4.4 billion in the fourth quarter of 2024. We concluded another strong year with full year revenue growing HKD 22.8 billion, up 68% year-over-year. Brokerage commission and handling charge income was HKD 2.8 billion, up 35% year-over-year and down 5% Q-o-Q. Total trading volume grew both year-over-year and a Q-o-Q basis, while blended commission rates moderate as clients trade more higher-priced U.S. stocks and options during the quarter. Interest income was HKD 3 billion, up 50% year-over-year and the flat Q-Q. The year-over-year increase was driven by higher interest income from security borrowing and lending business, banking deposits and margin financing. On a sequential basis, interest income remained stable as higher interest income from banking deposits and margin financing was offset by lower interest income from security borrowing and the lending business. Other income was HKD 630 million, up 79% year-over-year and 42% Q-o-Q. The year-over-year increase was primarily attributable to higher fund distribution service income and IPO subscription service charge income. The Q-over-Q increase was mainly driven by higher enterprise public relationship service charge income and IPO subscription service charge income. Our total cost was HKD 729 million, a decrease of 6% from HKD 776 million in the fourth quarter of 2024. Brokerage commission and handling charge expenses was HKD 141 million, up 26% year-over-year and down 12% Q-over-Q. Both the year-over-year and Q-over-Q movement were roughly in line with the change of brokerage commission and handling charge income. The interest income were HKD 437 million, down 15% year-over-year and 8% Q-o-Q. Both the year-over-year and Q-o-Q decrease was mainly due to lower interest expenses associated with our security borrowing and letting business. Processing and servicing costs was HKD 150 million, flat year-over-year and down 6% Q-o-Q. The Q-o-Q decrease was mostly driven by the sequential decrease in cloud service fees. As a result, total gross profit was HKD 5.7 billion, an increase of 56% from HKD 3.7 billion in the fourth quarter of 2024. Gross margin was 88.7% as compared to 82.5% in the fourth quarter of 2024. Operating expenses were up 9% year-over-year and down 8% Q-o-Q to HKD 1.6 billion. R&D expenses was HKD 507 million, up 27% year-over-year and down 12% Q-o-Q. The year-over-year increase was mainly due to an increase in R&D headcount to support crypto and AI-related initiatives. The cumulative decrease was largely attributable to bonus accrual made in previous quarters. Selling and marketing expenses was HKD 507 million, up 9% year-over-year and down 13% Q-o-Q. The year-over-year increase was in line with the growth of our new -- net new fund accounts and the Q-o-Q decrease was largely attributable to sequential lower new client additions and to a less extent, the decrease in client acquisition costs. G&A expenses were HKD 549 million, down 5% year-over-year and flat Q-o-Q. The year-over-year decrease was primarily due to the lower professional service expenses compared to the year ago quarter. As a result, income from operations increased 87% year-over-year and 6% Q-o-Q to HKD 4.1 billion. Operating margin increased to 64.4% from 50% in the fourth quarter of 2024, mostly due to strong top line growth and operating leverage. Our net income increased by 80% year-over-year and 5% Q-o-Q to HKD 3.4 billion. Net income margin expanded to 52.3% in the fourth quarter as compared to 42.2% in the same quarter last year. Our effective tax rate for the quarter was 16.3%. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead. Operator: [Operator Instructions] We will now take the first question from the line of Peter Zhang from JPMorgan. Peter Zhang: [Foreign Language] This is Peter Zhang from JPMorgan, and many thanks for giving me the opportunity to ask questions and congratulations on the results. I have 2 questions. My first question is on the -- among the first quarter business trend. I'm wondering whether management can give us some color on the fee income growth, net asset inflow and trading velocity in the first quarter year-to-date? And also, how about the commission fee rate trend in 2026? My second question is regarding the trading volume breakdown particularly for the U.S. trading volume. This maybe because in the past few years, some investors may view Futu as stock to China. And some investors think that our clients trade a lot Chinese AR stocks. But I guess given that we have very successful overseas expansion, the trading volume mix may change over time. So I'm wondering whether management can give us some color on the breakdown of your U.S. stock trading volume into Chinese ADI and other stock. Arthur Chen: [Foreign Language] Let me just do the translation for your second question, I will do the answers regarding the Chinese ADR contribution for our U.S. stock trading volumes in the latest quarter, this portion is less than 10%. And even we compare with the third quarter last year, the number was still roughly around 10%. So I think structure-wise, the contribution from Chinese ADRs to our overall U.S. stock has been gradually decreased. I will now hand over to my colleague, Daniel, who will answer your first question. Daniel Yuan: [Foreign Language] So based on the trends we have seen year-to-date, we expect net new funded accounts and trading volume to be flattish quarter-over-quarter. And we've seen very strong bottom activities from our clients. So we expect a double-digit sequential increase in net asset inflows, and we expect the quarterly net asset inflow in the first quarter to be the highest quarterly number. And mark-to-market impact had -- was pretty strong, and it was pretty negative quarter-to-date. So we expect, all in all, total client assets to increase modestly by the end of the first quarter. Thank you. And in terms of commissions -- blended commission rate, so far, I think we are seeing flattish Q-on-Q blended commission rate. Thanks. Operator: We will now take the next question from the line of Emma Xu from Bank of America Securities. Emma Xu: [Foreign Language] The first one is about the crypto business. So what are the latest developments in the crypto-related business after the relaxation of Hong Kong's regulatory policies in February this year? What new products have been launched? And what is the current implementation status and performance? The second question is about the AI. What specific empowerment that AI currently bring to your business? Will AI bring challenges to some business or put pressure on given the SLI model of your business? Arthur Chen: [Foreign Language] In terms of the crypto development, I think in the first -- in Hong Kong, we are still waiting for the Hong Kong regulators for our VAT license approvals. We are very confident in the near future, we can get this license. And after the launch of the VAT piece, hopefully, we can, in the near future, Futu can start to provide our traditional clients for crypto trading on the back of the margin using their stock for the margins. And also, we will provide taking service for them as well. In the future, we also wish to provide a crypto service to our high net worth clients alongside with the service to our institution clients for the one-stop solutions. And then in the past one quarter, we further enriched our product offering trading different tokens in Singapore and in the U.S. And at the same time, as we've mentioned in the opening remarks, in Hong Kong, Singapore and the U.S., the number of clients trading for the cryptos all include a double-digit increase, and the penetration rate for these [indiscernible] trading crypto also increased a lot to the latest high single-digit and low teen levels. We think this penetration rate can continue to grow in the foreseeable future. Thank you. Leaf Li: [Foreign Language] Daniel Yuan: [Interpreted] So AI is the company level of strategic priority at Futu. We've actually started AI assessments in 2022 and over the past few quarters, we have ramp up AI investment by deeply integrating AI capabilities into our product experience and internal operations. We now leverage AI to enhance the efficiency with which our clients discover investment opportunities and gather information. Our AI-generated daily and weekly reports automatically filter and key insights, cover over 20 types of market data, including technical indicators, patterns and loads and these offer better timeliness and broader content coverage compared to our peers. Furthermore, AI power's summaries of earnings reports and news has also significantly improved client efficiency and gathering information. In the fourth quarter, we launched AI which allows users to generate quantitative trading strategies using simple natural language. This feature has been very well received by the advanced traders on our platform, lowering the barrier to creating professional investment strategy. We have also expanded the asset classes coverage of our AI chatbot and AI analysis. So for the open it's quite popular recently. We now offer access through our open API. We've actually started developing open API in 2014 has been optimizing that experience ever since. And we've also supported skills that are accessible to open as well. So thanks to the years of development and accumulation and market data information in the trading infrastructure as well as our execution and clearing capabilities as well as our determination to embrace AI and our capabilities and leveraging AI to empower our business. We believe Futu will stay as a leading player in the AI era. Thank you. Operator: We will now take the next question from the line of Chiyao Huang from Morgan Stanley. Chiyao Huang: [Foreign Language] So the first question is regarding the HKD 800,000 guidance on new founded accounts, which is a very strong number. And considering the rising market volatility year-to-date, I'm just wondering what will be the main drivers and the main areas that the management sees has larger potential to help achieve this target, especially including any new markets that we are targeting? Second question is regarding the Airstar Bank. Just wondering what's the long-term planning -- strategic planning for the bank's positioning in the market? What kind of differentiation will be there compared to other virtual bank and the traditional banks? And do we have a time line of the product pipelines? Over time, what would be the expected revenue structure for Airstar Bank will be more balance sheet business or more fee income business in wealth management? Arthur Chen: [Foreign Language] For the first question, for our 800 fund accounts, this number we have already in that one new markets, we will have potential to enter into in 2026. Despite the year-to-date, there is some market volatility arising from geopolitical tensions and a lot of macro headwinds, our client acquisitions run rate still remain very robust, and we are very confident to achieve these targets towards the end of this year. Then for the Airstar Banks, we will continue to focus how to generate meaningful synergies between Airstar banks and the Futu existing business. As Leaf mentioned in the opening remarks in the fourth quarter and also in the next couple of quarters, our most work in Airstar Bank will center around in 2 aspects, externally is to upgrade the user experience and internally, we will further to enrich the infrastructure. On the -- in the external side, we have already launched some new wealth management products in Airstar Bank app. Like mutual funds and insurance products, there will be more wealth management-related products to be launched in the app in the next couple of quarters. Then internally, we further to enhance the compliance and the risk controls, a lot of proprietary developed products to enhance the business efficiency and the lower operating cost for the banks. In the long run, we think the revenue stream will be more schooled to these fee income arising from the wealth management and associated activities supplement by some balance sheet expansion business. But having said that, this is a very long-term targets for revenue generation. So in the near term, we will still continue to focus the 2 aspects I mentioned before. Thank you very much. Operator: We will now take the next question from the line of You Fan from CICC. You Fan: [Foreign Language] This is You Fan from CICC, and I have 2 questions. The first one is about the user regional breakdown. We still see strong customer growth we've captured despite the market downturn. So what's the regional breakdown of our existing and also the new paying clients? And the second question is about AUM. How much is from client net asset inflow and how much from market-to-market depreciation? And what is the regional breakdown of the client asset? Arthur Chen: [Foreign Language] For the contribution of the fourth quarter net add, Malaysia and Hong Kong collectively contribute over 50% of new client adds in the fourth quarter. Then other remaining markets like U.S., Singapore and Japan, their contribution rate is in the percentage of 10% to 20%. And as the year ends, the fund accounts in the universe of our overseas brand moomoo has already increased to 55% of total group fund accounts. Among them the contribution from Singapore and the U.S. was most. And for the second question regarding the new net asset flow inflows in the fourth quarter. The Q-on-Q basis, the net asset inflows have some moderations in the fourth quarter. But on the absolute levels, it remains in a very high levels, the momentum keeps very strong, but you can imagine in the fourth quarter, Hong Kong market got a lot of retreat. For instance, Hansa Index down 5% Q-o-Q and Hansa Tech Index, down 15% Q-o-Q. Therefore, we got some negative impact from the market-to-market loans, which almost fully offset the net asset inflows in the fourth quarter. And at year-end, Hong Kong remains the largest in terms of clients' assets AUM breakdown, followed by Singapore and some new markets like Japan and the U.S. the contribution, we see a very good momentum to increase. Thank you very much. Operator: We will now take the next question from the line of Leon Qi from CLSA. Leon Qi: [Foreign Language] I will briefly translate my questions into English. This is Leon Qi from CLSA and congrats again on very strong fourth quarter results. I have 2 questions today. First one is actually a follow-up on our new markets this year. Is it possible for management to give us some clues in terms of our rationale of entering these new markets? Is it going to replicate one of our existing markets? Is the significance mostly on new paying clients or any new strategy in terms of products, et cetera. So if it is possible for management to share with us some clues of entering market this year? The second question is actually a bit operational. We just want to understand the reasons behind the very resilient quarterly net asset inflow. In particular, in Hong Kong, we do understand that high net worth clients a few years ago. How do we evaluate the performance of our relationship managers for these high net worth clients, is net client inflow, a major metric that we actually look at or we actually look at other metrics such as total assets, new funded accounts or even metrics such as the performance of client assets or the number of different products that our clients hold. So this kind of operational metrics will be very helpful for us. Arthur Chen: [Foreign Language] Regarding the first question for this new market, it is still too early to share the exactly the market name, given that we are still in the process of the license applications, but we think this market will be in the universe of Asia. Then for the second question for the certain performance measurements for our internal colleagues regarding the high net worth clients. As you said, the new asset inflow is definitely one factor of the -- of our overall metrics which is very comprehensive and also outline is to care about the clients like and values. Therefore, the net asset inflows and also including the clients' total asset retention rate all these factors into this metrics. Thank you. Operator: We will now take the next question from the line of Cindy Wang from China Renaissance. Yun-Yin Wang: [Foreign Language] Congrats for the great fourth quarter results. So I have 2 questions here. First, for your new funding accounts target HKD 800,000 in 2026, could you break down the expected contributions from Hong Kong and overseas market? And what is the expected average customer acquisition cost for the whole year? Second is quarter-to-date, we saw a strong market really starting in January, but followed by recent stock market volatility due to geopolitical risk. So based on investors' trading activity on your platform, could you provide some guidance on trading volume, trading velocity and margin financing and security spending demand trend in first quarter? Arthur Chen: [Foreign Language] In terms of the breakdown of the new fund account targets for 2026, we think largely it will be the same stock contributions from different markets in 2025. And Hong Kong will continue to be a very strong contributor in terms of the geographic locations. Then for the cap, our initial objective for this year's cap will be around 25,000 to 30,000 -- sorry, 250,000 to -- sorry, HKD 2,500 to HKD 3,000 considering the uncertainty of this year's market volatility. And also, there will be some fund loaded cost in this new market expansion, as I mentioned before. Therefore, there we want to leave some flexibility in the CAC objective. But year-to-date, we think the CAC acquisition situations remain very robust and CAC for the first 2 months, I think will be in the low end or even lower than the range I mentioned before. Daniel Yuan: [Foreign Language] So in the first quarter, quarter-to-date, the market has been quite volatile, and we've seen our clients engaging very actively with the market. We expect the first quarter's total trading volume to be flattish during the quarter. So it's going to stay at the historic high that we've seen in the fourth quarter last year. And when the market experienced a pullback, we've seen lots of activities from our clients. We're expected a sequential increase in our margin financing and securities lending balance. And as we shared earlier, net asset inflow is also very strong, and we expect a historic high quarterly net asset inflow in the first quarter. Thank you. Operator: We will now take the next question from the line of Zoey Zong from Jefferies. Yi Zong: [Foreign Language] This Zoey from Jefferies. I have 2 questions. First, could you please elaborate on the competitive landscape in Hong Kong? And how do we see the market share momentum in Q4 and recently in Q1? And second, in November last year, we announced a share repurchase program of up to [ USD 800 million ] till December '27, could you please give us an update on the progress? And how should we expect the pace in the next 2 years? Arthur Chen: [Foreign Language] Regarding share buyback programs, so far, in the fourth quarter, actually, we have not conducted any share buyback within this [ 800 million ] share buyback programs, which will cover toward the end of 2027. So we will continue to closely work the market conditions and looking for potential market opportunities to come up with share buyback program, which is more preemptive. Thank you. Daniel Yuan: [Foreign Language] So we haven't seen any incremental changes in terms of the competitive landscape in Hong Kong. We think our performance in Hong Kong is still influenced by the overall market sentiment. And in the fourth quarter due to the sharp pullback of the Hong Kong stocks, the Hong Kong retail investors had -- was overall quite bearish about the market. So our client acquisition decelerated sequentially of the very active Hong Kong IPO market to some extent listed investor sentiment. And just looking back at 2025, Hong Kong contributed the highest number of net funded accounts within the Food Group and the net funding accounts achieved high double-digit year-over-year increase. So we're able to extend our leadership and further solidified our leadership on top of a very high market share. And we not only saw very strong client growth in 2025, we also saw very strong net asset inflow. And we've seen a higher percentage of contribution in terms of net asset inflow from our high net worth claims, which was largely due to a growing portfolio of wealth management products and our more professional -- in our image of a professional finance platform, thanks to the series of brand initiatives that we carried out and lots of investment forms and lectures that we did throughout the year. And we think that very strong performance in Hong Kong 2025 really speaks to our assessment of the market potential earlier. We believe that Hong Kong has huge headroom to growth for us in terms of both client numbers and client assets. And looking to [ 2026 ], we'll continue to enhance our product capabilities. We'll continue to invest in brand building, and we are very optimistic about the long-term growth opportunity in Hong Kong. Thank you. Operator: We will now take -- sorry, I would like to hand back over to the speakers for closing remarks. Daniel Yuan: That concludes our call today. On behalf of the Futu management team, I would like to thank you for joining us. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you, and goodbye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.

28天前Insight Analytics约5分钟阅读

VRA 2026 Q4 财报电话会议

Operator: Greetings, and welcome to the Vera Bradley Fourth Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Dely, Chief Administrative Officer [ for very ]. Thank you. You may begin. Mark Dely: Good morning, and welcome, everyone. We'd like to thank you for joining us for today's call. Some of the statements made during our prepared remarks and in response to your questions may constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release and the company's most recent Form 10-K filed with the SEC for a discussion of known risks and uncertainties. Investors should not assume that the statements made during the call will remain operative at a later time. We undertake no obligation to update any information discussed on today's call. I'll now turn the call over to Vera Bradley's Chairman and Chief Executive Officer Ian Bickley. Ian? Ian Bickley: Good morning, everyone, and thank you for joining us for Vera Bradley's Fourth Quarter and Full Year 2026 Earnings Call. Before I begin discussing our quarterly results and continued transformation progress, I want to share some important leadership news that reflects the Board's confidence in our strategic direction and the momentum we are building. I am pleased to announce that the Board of Directors has named me as Vera Bradley's permanent Chief Executive Officer in addition to my current role as Chairman of the Board, transitioning from my role as Executive Chairman. Additionally, our Chief Financial Officer, Martin Layding, will be expanding the scope of his responsibilities as Chief Operating and Financial Officer. I want to express my sincere gratitude to our Board of Directors for their support, confidence and this tremendous opportunity to lead Vera Bradley into its next chapter of growth. This leadership transition reinforces the Board's belief in our existing strategies under Project Sunshine and validates that we are on the right path forward. I remain confident that with the right focus, effort and execution we have a tremendous opportunity to increase market share and return the business to growth by reengaging our loyal customer base while also expanding our reach and relevance to new customer segments. In addition to my appointment to the permanent CEO seat and Martin's added role as COO. Over the past few months, we have added new leadership talent across all key customer-facing functions including merchandising, marketing, digital commerce, wholesale and stores. This was achieved through a combination of new external leadership appointments as well as internal promotions of top talent, demonstrating our commitment to the path of continued progress in reinvigorating and reimagining the iconic Vera Bradley brand. I'm also pleased to report that the fourth quarter marks our first quarter of profitability in over a year. We are stabilizing our business gaining better visibility to the underlying growth and efficiency opportunities and beginning to make meaningful progress on our transformation journey. Looking to FY '27, we are planning our sales to be between $255 million and $270 million. The Board's decision to formalize our leadership structure at this pivotal moment underscores the collective confidence in our transformation plans and ability to deliver long-term sustainable results. Over the past quarter, we have remained focused on delivering Project Sunshine which anchors on reclaiming Vera Bradley's joyful optimism and acts as our North Star, bringing creative energy to how we work within functions and across the Vera Bradley team. It is leading us to new ideas for products, marketing and channels, transforming how we work with each other and encouraging us to think differently about our operations. At the same time, we have been addressing past missteps with urgency and implementing comprehensive changes across the business and organization, demonstrating the focus and agility of our team. To remind you, the 5 strategic pillars under Project Sunshine are: first, sharpening our brand focus through product relevance and storytelling. Second, resetting our go-to-market approach with data-led insights. Third, rewiring our digital ecosystem across all touch points. Fourth, implementing [ outlet 2.0 ] for a more brand-enhancing retail experience. And fifth, reimagining how we work with new capabilities and organizational alignment. Before updating you on our progress across these 5 pillars, I would like to provide a few fourth quarter highlights that clearly demonstrate continued sequential improvement and measurable progress towards our goal of achieving long-term sustainable growth and profitability. For the fourth quarter, we achieved strong sequential improvement in our Direct channel registering a revenue decline of 2.6% compared to the prior year, 270 basis points of progress from Q3 and nearly 1,400 basis points from Q2. The Q4 Direct channel top line results represent our third consecutive quarter of sequential improvement. And I'm pleased to report that our fiscal '27 Q1 Direct channel revenue is tracking positive marking a significant milestone in the stabilization of our business. While we have work to do, this performance is building confidence in our teams and reinforces that the direction we are taking is beginning to resonate with our consumers. Overall sales for the fourth quarter were down 1.7% versus Q4 of the prior year. benefiting from positive year-over-year indirect channel revenue growth of just under 5%. Our indirect channel growth was driven by a large wholesale order from an upcoming spring collaboration which we're very excited about and will be able to announce shortly. During the quarter, we also successfully and intentionally leveraged holiday traffic to clear through the discontinued product from last year's Project Restoration while rebuilding our assortment of hero products, including the original 100 bag, iconic heritage prints and select IP including Snoopy and Lilo and Stitch. We continue to see strong consumer acceptance to the strategic reinvestment in our cotton-based assortment and in our brand channels, we experienced a second consecutive quarter of strong double-digit positive comp growth, further validating that we're moving the overall product assortment in the right direction. In our outlet channel, a more impactful and better executed end of season sale in January drove clearance and successful sell-through of discontinued and aged products. At the same time, customers responded positively to the return of classics and handbags, including the triple zip, glenna and [ Vera ] franchise as well as the giftability of our Cody collection. We are also encouraged by the positive response we are seeing to the first deliveries of new spring/summer product that flowed into our stores at the end of January. For the quarter, comparable sales declined by less than 1% and when we account for the negative impact of winter storm firm during the last week of January, our comparable sales were essentially flat. As I mentioned, this marks our first quarter of achieving profitability in over a year with net income of $2.5 million and an EPS of $0.09, a positive year-over-year swing of $0.28. Our bottom line disciplined cost management, while our overall results demonstrate that we are stabilizing the business gaining better visibility and beginning to make meaningful progress on our transformation journey. Martin will provide greater detail, but through an improvement in product acceptance, continued inventory management efforts and disciplined pricing and promotional strategies while delivering smart value to our customers, we generated year-over-year gross margin expansion of approximately 100 basis points. We also managed our SG&A spend prudently with total costs down more than $10 million to the prior year or a favorable decline of 22%. From a cash flow perspective, we generated $17 million in operating cash flow in Q4. This strong cash flow generation allowed us to pay off our ABL facility, further strengthening our balance sheet and providing additional financial flexibility as we continue executing Project Sunshine. While we recognize there's still significant work ahead, these early wins give us confidence that our focused approach to product innovation brand storytelling and operational excellence is moving Vera Bradley in the right direction. The sequential improvement we've achieved across multiple quarters, combined with our return to profitability this quarter, validates that Project Sunshine is gaining traction and positioning us for long-term sustainable growth, profitability and cash flow generation. I want to personally thank our entire team for their disciplined execution, agility and commitment to operational excellence during the all-important holiday season, which allowed us to achieve these results. Now for an update on our Project Sunshine strategic initiatives. First up, sharpening our brand focus. As I've discussed on prior calls, we lost track of what made Vera Bradley special and unique and what customers love about us. We became indistinguishable from other brands and over reliant on promotions, sharpening our brand focus has been all about bringing our unique and distinctive brand positioning to life through our products, marketing and storytelling and where consumers can find our products. Since I joined in my executive chair role, roughly 8 months ago, our #1 focus has been on improving the product. This is an effort that doesn't happen overnight but our Q4 results are testament to the early success we're experiencing. We are seeing strong initial indicators of our product strategies effectiveness and our continued momentum in Q4 was fueled in part by the return of discontinued styles that our customers had been asking for. This 20% of the assortment that we were able to influence this quarter delivered encouraging results, validating our merchandising approach. The great news is that through a combination of reintroduced styles and high demand coupled with newly designed products, the team has successfully influenced approximately 80% of the spring assortment and is generating positive customer response and early sales momentum. The assortment changes we have made remain anchored in the brand attributes, which are core to our DNA. Vera Bradley is feminine, creative, cheerful, whimsical, joyful, fun, colorful, approachable, high-quality and smart value. To support the significant progress we have made on the product assortment during the past 8 months, we are now putting increased focus on storytelling through an enhanced social-first marketing strategy to engage both our existing customers and new audiences. From a creative standpoint, under new marketing leadership and leveraging our core brand attributes, we have shot a new spring campaign that reflects our return to joyful optimism and authentic Vera Bradley roots. This refresh creative is being deployed across our website and e-mail marketing with a major social media push that just began last week. Our marketing strategy has been focused on 3 key priorities: channel optimization, refined messaging and enhanced media efficiency. Despite reducing overall marketing spend year-over-year, we achieved strong performance across multiple metrics, return on ad spend improved meaningfully, e-mail open rates increased, and we successfully scaled our paid social programs while maintaining consistent returns. In addition to product and marketing, we have also been focused on our channels of distribution in order to sharpen our brand focus and amplify our messaging. Let me first spend a moment on our wholesale strategy and partnerships. As I've stated before, while the overall landscape of wholesale partners has evolved, we believe that rebuilding the wholesale channel with the right partners will be a key component of our success in regaining brand relevance and market share. Under new wholesale leadership that has recently joined, we are building a tiered strategy with focus on key retailers, strategic collaborations and specialty accounts. In the meantime, we are thrilled about a large wholesale order that shipped late in Q4 for a very exciting upcoming collaboration, which we will be able to announce soon. We are also seeing recognition of the brand momentum by some leading retail accounts. For Back to School, we will launch a focused Vera Bradley capsule collection in [ 89 ] Nordstrom doors and on nordstrom.com. Let me also spend a moment discussing our IP partnerships, which remain an important driver of brand heat and commercial success. And as we engage both new customers and repeat purchasers looking to collect items. Our strategy is to focus on fewer, more impactful and qualitatively executed IP launches going forward. The success of this strategy was evidenced by our Peanuts, Lilo and Stitch and recent Winnie the Pooh collaborations, which achieved excellent social media engagement and strong product sell-through, some of the best results we have ever had. Second, resetting our go-to-market approach. As previously shared, we have been fundamentally updating our go-to-market approach to deliver what our customers truly need and value working across 6 critical areas. More focused investments into bigger product ideas and [ hero ] styles, alignment of our channel assortment strategy, integrated social-first marketing to support our big ideas in moments like Back to School, better planning and inventory management capabilities to improve terms, stronger pricing and promotion governance to protect margins and enhanced analytics and business intelligence capabilities to inform data-driven decisions. Our goal has been to rebuild the engine that turns our creativity into commercial results and to work in a more integrated and agile manner. In Q4, we saw several examples of this newly new approach positively impacting our business performance. The team began the process of coming together cross-functionally and scrutinizing how we work from product development to buying, to marketing and executing strategies in our channels, ensuring the right products to reach our customers through their preferred shopping channels. We have now integrated consumer insights into this process with the implementation of various customer ethnographies, segmentation focus groups and quantitative analyses that are informing product development to address our customers' needs and wants more effectively going forward. Operationally, we were much more agile, reacting to our data to adjust promotions, marketing and digital communications to meet real-time customer needs, improving gross margin year-to-year and enabling reductions in overall inventory. For Q1, we have developed a streamlined promotional plan that is more focused and less complex to execute that we believe will lead to further gross margin improvements. We also began to impact the business upstream with a new creative team quickly conceiving and executing this spring's campaign with an on-location shoot at dramatically lower cost than historic levels. and producing recognizable and relatable campaign imagery to which our customers have positively responded. We are excited about these early achievements and optimistic about the impact that our integrated approach will continue to have on the business in the year ahead. Moving to our third pillar, rewiring our digital ecosystem. As previous -- as mentioned previously, our digital commerce business across owned sites and third-party marketplaces is already a very important business for Vera Bradley, both in terms of the business size and overall profitability. However, our various digital platforms, there has not been a cohesive customer journey for Vera Bradley customers. During Q4, we took the important step of consolidating the P&L of all our digital platforms, including DTC e-commerce and third-party marketplace operations, and we are currently recruiting a new Head of Digital Commerce to lead this integrated function. At the same time, while taking these important strategic steps, we made significant enhancements to our e-commerce platform with improved site navigation and a better overall customer experience. Our data-driven approach to pricing and promotions has enabled us to operate with lower promotional intensity while maintaining strong customer engagement. Additionally, we deployed enhanced digital capabilities that are driving customer engagement, early results also show strong adoption of our streamlined checkout process, which is contributing to improved conversion rates. Fourth, Outlet 2.0. As a reminder, our Outlet 2.0 initiative represents a fundamental shift in how we approach our outlet channel. Outlet 2.0 is designed to elevate customer experience while maintaining our smart value proposition and reaching customers where we currently do not have brand stores. The enhancements included a curated more focused assortment with an initial 35% SKU reduction, strategically adding new brand products from our heritage and select IP collections. We have introduced elevated visual merchandising elements, including mannequins, light boxes and brand fixtures that hero our signature color, pattern and lifestyle stories. Our enhanced selling experience incorporates updated training, improved in-store tools for selling and personalization. This transformation moves us from a discount-focused model to a smart value curated experience that reinforces brand equity while driving conversion and profitability. Building on the pilot that we launched during the holiday season, we have been taking a disciplined test and learn approach. So far, in addition to the positive qualitative feedback from our customers and employees, we have seen measurable improvements in retail KPIs, including overall sales, conversion rate, average spend and gross profit per visitor versus a control group of stores. This tells us that the Outlet 2.0 experience is engaging consumers in a more meaningful way with the brand. We are continuing to monitor and track these results while also refining the Outlet 2.0 pilot with a view to rolling out additional stores in the near future. And last but not least, reimagining how we work, streamlining our organization while building and investing in new capabilities. rebuilding Vera Bradley for long-term sustainable growth and profitability has required us to make tough decisions to reduce personnel costs. At the same time, reimagining how we work is not only about cutting costs. but also about redesigning our organization to be future fit, building new capabilities and making significant investments in our talent. To date, this has been most pronounced across our customer-facing product, marketing and commercial functions, which are vital to reinvigorating the relevance of our brand and driving brand heat. In addition to the appointment of a new Chief Brand Officer in October, we have now also appointed new leaders across merchandising, marketing, stores wholesale and a soon to be appointed new head of Digital Commerce. We have strategically strengthened our team through a combination of internal promotions and strategic external hires with particular focus on roles that directly impact the customer experience across all touch points. To sum up, we remain confident that the 5 strategic pillars we are pursuing under Project Sunshine are the right initiatives to revitalize the Vera Bradley brand, expand market share and return the business to long-term sustainable growth, profitability and cash flow. To execute these plans, we have been building a best-in-class team with relevant experience that will allow us to move quickly to win in the marketplace. We are reimagining how we work, building a culture of performance, agility, accountability and strong cross-functional collaboration, leveraging data-driven insights to make smart decisions. We are still in the very early stages of our transformation, but remain encouraged by the results we achieved in Q4, the stabilization of our business, the greater visibility we have to the underlying opportunities and the strong belief in alignment, our entire team and Board of Directors has behind our transformation plans. As the newly appointed CEO, Vera Bradley, I am extremely excited about the opportunity to lead us into the future and write the next chapter of this iconic and storied brand. With that, I will turn the call over to Marty for a detailed financial review, and then we'll be happy to take your questions. Martin Layding: Thanks, Ian. Good morning, everyone, and thank you for joining us. I have a few brief comments to make about our performance for the quarter. Before I begin, I want to thank the Board for their unwavering support and confidence in entrusting me with expanded operational responsibilities. Our focus remains on transforming our operational processes to deliver enhanced business performance and greater efficiency across the organization. For the sake of clarity, all of the numbers I am discussing today are non-GAAP and exclude the charges outlined in today's press release, the complete detail of items are excluded from the non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP can be found in that release. For the fourth quarter of fiscal 2026, our consolidated revenues totaled $84.9 million compared to $86.4 million in the prior year fourth quarter. Net income from continuing operations for the fourth quarter totaled $2.5 million or $0.09 per diluted share compared to a net loss from continuing operations of negative $5.4 million last year or negative $0.19 per diluted share. In terms of segment performance, Vera Bradley Direct segment revenues for the current year fourth quarter totaled $74.5 million a 2.6% decrease from $76.5 million in the prior year fourth quarter. Comparable sales declined 0.7%, which represents a sequential comparable sales improvement in each quarter of the current fiscal year, our original 100 handbag heritage prints, along with leveraging holiday promotional activity resulted in positive brand comps and overall positive growth versus last year. Total revenues year-over-year were also impacted by 2 store openings -- new store openings, 13 store closures since the prior year fourth quarter and negatively impacted by approximately $0.4 million due to the temporary store closures associated with [ winter storm firm ] in week 52. Vera Bradley Indirect segment revenues for the fourth quarter totaled $10.4 million, a 4.9% increase from $9.9 million in the prior year fourth quarter. The increase was driven by a large wholesale spring collaboration to be announced in the future date. Fourth quarter gross margin totaled $40.5 million or 47.8% of net revenues compared to $40.4 million or 46.8% of net revenues in the prior year. The increase in year-over-year margin rate resulted from lower promotional activity in outlet channels, A favorable adjustment to the Q3 inventory reserve and freight cost savings, partially offset by sell-through of project restoration inventory as part of clearance and incremental duty costs. SG&A expense totaled $37.3 million or 43.9% of net revenues compared to $47.9 million or 55.4% of net revenues for the prior year fourth quarter. The $10.6 million decrease in expenses was primarily due to continued cost reduction initiatives, reduction in phasing of marketing expenses during the year and reduced lease costs. Fourth quarter operating income from continuing operations totaled $3.6 million or 4.2% of net revenue compared to an operating loss from continuing operations negative $7.3 million or negative 8.5% of net revenues in the prior year. We continue to be pleased with our operational performance, demonstrating increased levels of agility as we react to changes in the marketplace, enabling us to take advantage of opportunities, thus improving our sell-through of age inventory through more focused strategies and tactics. Now turning to the balance sheet. Cash and cash equivalents at the end of the quarter totaled $18.5 million. Cash flow for the year while negative $11.9 million has significantly improved from FY '25 to negative $46.9 million. We had no borrowings on our ABL facility at year-end. Fourth quarter inventory decreased year-over-year by nearly 17% to $76 million compared to $91.4 million at the end of fourth quarter last year. Tariffs increased year-end inventory value by approximately $4.2 million. Excluding tariff impact, inventory dollars would have decreased over approximately 22% versus last year. Our inventory turns were 1.6%, improved from 1.5% from fiscal year '25. We recognize that this is a key measure we need to improve on while also reducing our overall level of inventory in FY '27. In FY '27, we will begin experimenting with new strategies to improve our responsiveness to our consumers when sell-through is ahead of expectations while looking for opportunities to continue ourselves down a project restoration inventory thus improving our net working capital position and inventory productivity overall. As Ian mentioned, we are providing some guidance for fiscal year 2027. For fiscal year '27, we plan for sales to be in the range of $255 million to $270 million as we continue to focus on stabilizing the direct business and rebuilding our wholesale business under new leadership while at the same time, placing less emphasis on liquidation channels. It is important to note that we will not be holding our annual outlook sale in the first quarter as we focus on the inventory for our stores and look to elevate the overall customer and brand experience for this event, which we hope to bring back and better in the future. Further, due to our continued operational focus in fiscal 2027, we expect to see year-over-year rate improvement in both gross profit and SG&A, enabling operating loss improvement of 40% or better compared to an adjusted operating loss of $21.7 million in fiscal 2026. In closing, I want to reiterate that we are encouraged by the progress we have made throughout fiscal 2026, we have significantly improved our operational efficiency, reduced our cost structure and strengthened our balance sheet. While we still have work ahead of us, we are confident in our strategic direction and our ability to drive sustainable, profitable growth over time. Now I'll open the call to your questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Eric Beder with SCC Research. Eric Beder: Congratulations on the appointments and the strong Q4 results. When we look at it, I know you continue to make progress, when should we feel that the product flows and kind of the product mix is where you want it to be? I know you've worked through kind of prior -- some of the [ prior manages ] pieces. How should we be judging what we're seeing as we go to the stores and beyond through this year? Ian Bickley: I'll begin. Thanks, Eric, first of all, and appreciate the comments. Obviously, this is a really exciting opportunity. And delighted to have a chance to step into this role. I think pretty consistent with what we have said before. We -- our impact on product has gradually improved over time, right, in terms of what we could impact. As I mentioned in the call, about 80% of what is in there for spring/summer, we've been able to impact. I think to fall winter we basically have a blank sheet of paper and everything that is there, we will have been able to impact. And additionally, we are continuing to learn from the product that has flowed in already in terms of the decisions that we've made. With that said, as you are well aware, we are still managing through and balancing some overhang of inventory from Project Restoration, a lot of the discontinued and aged products. So I think this is going to continue to be a path that we're going to have to navigate through over the next 6 to 12 months. And I think overall, I really do think that we need to look at fiscal '27 still as a year of both stabilization of the business, but also a year where we are continuing to build the strong foundation that we believe are going to lead the business to growth in FY '28 and beyond. Eric Beder: Great. And when you think about the future, some of the shifts going on in terms of stores, other pieces. Where should we be thinking about the [ death and where ] the focuses are going to be on this force versus the digital versus the other pieces? And how the store flows can kind of look going forward? Ian Bickley: Yes. No, I think it's a great question. Obviously, let's not downplay the digital business because it is a very important part of our business today. It is an important source of profitability. And it is an important way in which we can reach consumers, especially new consumers when our retail and outlet fleet may not be optimized in the way that we would like it to be. But with respect to the brick-and-mortar, I think first of all, we're going to continue to leverage the fleet that we have and optimize the productivity of that business. That's a big reason for Outlet 2.0 because the majority of our fleet today is outlet stores, which is sort of a -- which is a legacy that we have inherited. But these stores are, as you know, very productive. They get incredibly high foot traffic and the majority of them are located in centers where there are also luxury brands and other premium accessible luxury brands. And so there's a very high-quality footfall and eyeballs that we get. So our -- it is important for us to be the best that we can be in those outlet centers because that's where we're getting the majority of the retail footfall visibility today. In terms of the brand stores, this for us is an opportunity. And as we get more confident about the performance of the product. And as you know, we're now really going to step into a much higher here with the marketing now that we're feeling good about the product pipeline, this is going to be something we're going to be looking at very carefully in terms of where we could selectively open new brand stores in pockets which would make sense for [ us and where we don't ] have coverage. And I would say the last piece of this is going to be the wholesale channel, which for us is going to be a very important channel that we need to focus on and rebuild because one of the things we hear from many of our consumers when we do research is they don't know where to find us. And in many of these sort of more affluent areas, we don't have brand stores. And so I think we also have an opportunity with our wholesale accounts to develop the business there. So focusing on key retailers specialty accounts, in particular, this is a way to -- for us to broaden awareness and reach and fill in some of the gaps that we don't have with our own fleet. And so I think all boats will rise. Eric Beder: Great. We -- so your [ 7 ] Outlet 2.0, do you think you'll open any more of them in 2026? Or should we be thinking about it as another year of kind of increasing the experimentation with the group? Ian Bickley: I can't say that definitively. I think you meant when we opened anything in FY '27, right, this fiscal year? Eric Beder: Yes. FY '26. Ian Bickley: Yes, yes. No worries. But look, I think if I had to place a bet, I would say we are inclined to do a few more Outlet 2.0 stores this fiscal year. I think there are just some opportunities to refine what we do in Outlet 2.0 and also to think about where are going to be the best places for us to do it. Eric Beder: Again, congratulations and look forward to '26. Operator: And this -- we have reached the end of the question-and-answer session. And this also concludes today's conference call. You may disconnect your lines at this time, and we do thank you for your participation. Have a great day.

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TIC 2025 Q4 财报电话会议

Operator: Hello, and welcome to the TIC Solutions Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Andrew Shen, Director of Investor Relations. Thank you. You may begin. Andrew Shen: Thank you, operator. Good morning, everyone, and thank you for joining the call. Joining me this morning is Tal Pizzey, our Chief Executive Officer; Ben Heraud, our President and Chief Operating Officer; Kristin Schultes, our Chief Financial Officer; and Robbie Franklin, Executive Chairman. As disclosed in our earnings release, we would like to acknowledge the planned leadership transition we announced this morning. Ben Heraud has been appointed Chief Executive Officer effective March 31, 2026, succeeding Tal Pizzey. Tal will continue to serve on our Board of Directors and act as an adviser to Ben through and following the transition to ensure continuity. We will provide additional context during our prepared remarks. I would now like to remind you that certain statements in the company's earnings press release and on this call are forward-looking statements that are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other measures that are not historical facts. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, March 12, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our fourth quarter financial performance on the Investor Relations page of our website @ticsolutions.com. Our comments today will also include non-GAAP financial measures and other key operating metrics. The required reconciliations of non-GAAP financial metrics can be found in our press release and in our presentation. For the purpose of this call, we refer to our segments as Inspection and Mitigation, or I&M, Consulting Engineering or CE, and Geospatial or GEO. Any reference to combined results reflects a non-GAAP combined view of legacy Acuren and legacy NV5 for comparability. More details on the calculations of the combined results are included in the presentation. Let me outline the flow of today's prepared remarks. Tal will provide opening comments. Ben will review our operating priorities and segment performance. Kristin will cover our financial results, integration progress and our 2026 outlook. Robbie will conclude with strategic priorities and capital allocation. It's now my pleasure to turn the call over to Tal. Talman Pizzey: Thank you, Andrew. Good morning, everyone. This morning, we announced the planned leadership transition that has been contemplated as part of our broader succession planning process. After nearly 4 decades with the business, including serving as Chief Executive Officer, I will be transitioning from the CEO role as I prepare for retirement. I will continue to serve on the Board and act as an adviser to Ben and his team to ensure a seamless transition. Since joining Acuren in 1987, it has been a privilege to help build this organization. We entered the public markets and completed the combination with NV5 create TIC Solutions a $2 billion revenue company. Ben has been deeply involved in shaping the combined operating model since the NV5 combination closed in August. He understands the platform, the culture and the priorities ahead. I have full confidence in his leadership as the company moves into this next chapter. With that, I will turn the call over to Ben. Benjamin Heraud: Thank you, Tal. I'm excited to step into the CEO role on March 31 and to build on the strong foundation we have established across both legacy organizations. Since joining TIC Solutions in August, my priority has been sharpening our commercial execution across the platform. That starts with aligning leadership around clear growth priorities, strengthening account management processes and accelerating cross-segment collaboration. We are driving greater consistency and pricing and utilization. Before joining TIC Solutions, I served as CEO of NV5 and previously as COO. I joined NV5 through the acquisition of Energenz, a business I co-founded and spent more than a decade building and scaling engineering and commissioning operations across global markets. That experience in building commercial teams, improving operating rigor and driving prudent capital allocation informs how I approach this next chapter. 2025 marked an important step change for TIC Solutions. We completed the combination, rebranded and established a scale TIC, Engineering and Geospatial platform positioned for the next phase of growth. On a combined basis, in 2025, we grew revenue approximately 4% to $2.1 billion, representing our highest combined full year revenue. We delivered approximately $312 million of adjusted EBITDA and 14.8% adjusted EBITDA margin for the full year. We now operate at meaningful scale with a diversified end market mix and a recurring revenue base anchored in compliance and essential services that positions us well for durable growth. We have an incredible opportunity ahead to expand margins and compound earnings through focused execution of our strategy. And as we move into 2026, our priorities are clear. First, we will accelerate organic growth across the platform with a particular focus on cross-selling and deeper client engagement across our segments. We see a meaningful opportunity to expand share of wallet with key infrastructure, industrial, utilities, data center and government clients by leveraging our combined capabilities. Second, we are focused on strengthening organizational alignment and cultural cohesion across TIC, so we retain our great talent and deploy our resources and capital to the highest return opportunities. Finally, we'll drive margin expansion through prudent cost management, service mix improvement and utilization improvements as we scale. We're beginning to see tangible cross-selling traction across the platform. For example, we're in late-stage negotiations on a multiyear bridge infrastructure engagement. The scope brings together drone-based LiDAR mapping and modeling, engineering oversight and design review, both access and inspection capabilities, allowing the client to execute a long-term inspection and maintenance solution. This is a good example of how we can serve as a multidisciplined provider across the asset life cycle, which we believe is a differentiator in the market. In this example, we expect opportunities to expand and scope over time, including additional inspection work and analytics services. This project is emblematic of the sizable market opportunity ahead for this integrated offering. Our revenue base remains anchored in recurring and repeat compliance-driven inspection, Engineering and Geospatial activity. We believe the diversified nature of our portfolio provides enhanced stability and performance greater flexibility and capital allocation. Diving into segment performance, CE continued to perform well. Activity in data centers, infrastructure, engineering, building planning and design and specialty services such as the development of digital twins remains healthy. Results were supported by ongoing infrastructure investment and grid hardening and modernization programs. These programs are typically embedded within multiyear capital plans rather than short cycle activity. Data center revenue increased meaningfully year-over-year, reaching nearly $70 million in 2025, more than doubling versus the prior year. We continue to see strong momentum with line of sight to nearly $100 million of data center revenue supported by contracted backlog and programmatic client engagements. Within data centers, our work expands building systems design commissioning and power-related scopes, including mechanical, electrical, bioprotection, substation, peer review and digital modeling services. Our mix reflects a broader life cycle position. We support hyperscale and colocation clients from early stage engineering and design through commissioning and operational optimization, increasing scope density per site and supporting repeat deployment across multiphase campus relationships. We also recently secured a U.S.-based I&M engagement within the data center vertical, extending our inspection capabilities into the mission-critical space. The scope involves radiographic testing of critical mechanical systems. The engagement demonstrates the applicability of our advanced NDT capabilities within the data center ecosystem. We continue to deepen relationships with global hyperscale clients and as we expand service rep within existing accounts, we expect to continue gaining market share. GEO delivered steady growth and strong margins, supported by utility demand, healthy fleet utilization and increasing contribution from analytics and software services. During the quarter, the federal funding lapse slowed certain procurement and approval processes, which affected timing of work in select programs. The impact was limited to award and approval pacing, and there were no material cancellations. We expect execution timing and visibility to improve as we progress through the year. In February, we announced GEO Agent, our proprietary AI-enabled geospatial platform, and we expect to begin rolling it out to clients in the coming weeks. GEO Agent is designed to integrate with clients' existing systems record and over time, it should improve processing efficiency, automate key workflows and enable higher-value analytics. We expect it to support faster delivery times and incremental analytics services over time while operating within client environments and established workflows. Year-end backlog within CE and GEO was $1.07 billion, up about 10% from approximately $970 million last year. In I&M, Lower volumes were concentrated in the Gulf Coast, primarily due to LNG construction timing and slower chemical activity, along with a few site losses amid elevated competition. Competitive intensity in the region remained elevated during 2025, and we stayed disciplined on pricing while tightening account coverage and improving staffing and resource deployment. LNG-related demand has increased globally and we believe the impact in our second half results reflect timing between major construction phases rather than demand deterioration. We have strengthened regional leadership in the Gulf Coast and made targeted leadership additions with an inspection of litigation to drive operating consistency, commercial focus and improved resource deployment. We remain focused on margin quality, and we continue to pursue work that meets our margin thresholds. We maintain pricing integrity even when competitors were more aggressive, and we will not trade long-term economics for short-term volume. Our embedded run and maintain programs and call-out activity grew in the year. This recurring and repeat revenue base provides meaningful visibility and resiliency across cycles. This growth was offset by declines in the timing and scale of outages and capital projects. To strengthen execution we refined the I&M operating model during the quarter by reorganizing the segment into economically meaningful operating regions with clear P&L ownership. We also streamlined support function and improved indirect cost management to reduce duplication and improve coordination. We are tightening utilization management, asset deployment and cost oversight. On the commercial side, we are reinforcing structured account and pipeline management discipline across our largest customers with compensation frameworks aligned to growth and renewal performance. Collectively, these actions are intended to improve execution consistency and support margin progression in 2026. We plan to host an Investor Day in May to outline our longer-term growth strategy, margin trajectory and capital allocation framework, including additional detail on our updated I&M operating framework. Across TIC Solutions, this quarter's performance reinforces the benefits of scale and diversification in our business. We believe that this positions the company for continued growth and margin progression. And with that, I'll turn the call over to Kristin to review the financial details for the full year and fourth quarter 2025, provide an update on integration and offer context for our 2026 outlook. Kristin Schultes: Thank you, Ben, and congratulations. Good morning, everyone. On a combined basis, full year revenue grew 4.4% on a constant currency basis or 3.6% as reported to $2.1 billion after FX headwinds in the year. Full year combined adjusted gross profit was $794 million, with adjusted gross margin of 37.6%, up 14 basis points. In I&M, revenue was approximately $1.1 billion for 2025, roughly flat for the year with growth in industrial, midstream, wind and automotive, offset by localized softness in the Gulf Coast. I&M full year adjusted gross margin was 27.8% compared to 28.5% in the prior year. On a combined basis, CE revenue was $714 million, up roughly 8% against 2024, lifted by infrastructure and data center tailwinds. CE's full year adjusted gross margin was 47.0% and up 150 basis points against 45.5% in the prior year driven by data center growth and real estate transaction work. On a combined basis, Geospatial revenue was $298 million, up roughly 6% against 2024, driven by strong commercial demand as well as broadening analytics and software sales. Geospatial's full year adjusted gross margin was 51.5% compared to 53.6% in the prior year, driven by mix and utilization. Now shifting to our fourth quarter results. Total revenue was $508 million, reflecting a full quarter of NV5 contribution. On a combined basis, this was roughly flat year-over-year, with growth in CE and GEO offset by I&M. Adjusted gross profit for the quarter was $197 million, up 8% from the combined $183 million. Adjusted gross margin was 38.8%, up 277 basis points from the combined margin of 36.0% in the prior year period. This performance represented margin expansion on a dollar and percentage basis across all 3 segments. In I&M, revenue was $258 million in the fourth quarter, down 2% driven by lower outage and capital project spending. Adjusted gross margin was 28.2% for the quarter compared to 26.1% in the prior year period. The over 200 basis point margin improvement reflects favorable mix, including higher call-out activity as well as improved execution. On a combined basis, CE contributed fourth quarter revenue of $181 million, up 2%. CE's adjusted gross margin was 46.9% in the quarter up 150 basis points against 45.4% in the prior year period, driven by infrastructure and data center tailwinds. On a combined basis, GEO contributed fourth quarter revenue of $70 million, up 2%, with growth impacted due to the federal funding lapse. GEO's adjusted gross margin of 57.2% in the quarter improved against 50.0% in the prior year period, reflecting favorable project mix and strong operational execution. The margin improvement in each of our 3 segments in the quarter demonstrates real momentum as we start 2026. Adjusted SG&A for the quarter was $124 million or 24.4% of revenue reflecting the inclusion of NV5 operations, which carry a higher SG&A ratio. In the near term, we are attacking the elevated SG&A levels through the announced integration program as well as our commercial excellence initiatives. Adjusted EBITDA for the fourth quarter was $76.4 million, representing an adjusted EBITDA margin of 15.0% compared to $40.7 million in the prior year period. The full year combined adjusted EBITDA was $312 million, representing an adjusted EBITDA margin of 14.8%. We improved cash conversion during the year, supported by lower DSO and tire working capital management. Operating cash flow as reported for the year was $95 million, reflecting only a partial year contribution from NV5. Capital expenditures for the full year totaled $34 million or 2.2% of revenue. On a combined basis, CapEx was $56 million or 2.7% of revenue reflecting our low capital intensity and asset-light business. Moving now to an overview of our balance sheet and capital resources. As of year-end, we had total liquidity of $551 million, including approximately $440 million of cash and cash equivalents and $111 million of available capacity under our revolving credit facility. Total term loan debt was approximately $1.6 billion. Our balance sheet is in a solid position, and we remain focused on generating free cash flow to achieve our long-term net leverage ratio target of below 3x. In October, we completed a $250 million private placement of 20.8 million shares of common stock and prefunded warrants to an existing shareholder. The transaction strengthened our balance sheet and provided additional flexibility to fund growth opportunities and to deleverage. Turning to integration. We transitioned to the execution phase of the integration program toward the end of the fourth quarter. We remain on track to execute on the $25 million of cost synergies that we've committed to delivering. We anticipate roughly half of the annualized cost savings to be realized during 2026. And we expect to reach full synergy run rate by mid-2027. To ensure disciplined execution, our integration management office has clear ownership across key functional work streams with defined milestones to track delivery and cost capture while ensuring operational stability. We are also focused on communication, incentive alignment and cultural integration as we bring the organizations together. Now turning to our outlook. For the full year 2026, we expect revenue in the range of $2.15 billion to $2.25 billion and adjusted EBITDA in the range of $330 million to $355 million. At the midpoint, this implies approximately 4% revenue growth over our 2025 combined baseline of $2.1 billion. Meaningful year-over-year growth in adjusted EBITDA is expected to be driven by commercial focus and partial realization of our cost synergies, along with the operating model refinements and I&M that Ben discussed earlier. By segment, on a combined basis, we expect growth in CE and GEO to outpace growth in I&M for the full year. Please note that our 2026 adjusted EBITDA guidance reflects an $8 million investment related to compensation alignment actions at NV5. Specifically, we made a decision to reclassify the short-term incentive program at NV5 from stock-based compensation to cash compensation, which all else equal, reduces adjusted EBITDA beginning in 2026, thus impacting our guidance framework. This important change reflects an integrated market-based compensation structure at TIC. We are excited to announce this to our team, and we believe this will help retain and attract top talent as we continue to grow. We expect typical seasonality in 2026, consistent with the combined profile of our business. First quarter adjusted EBITDA typically represents roughly 15% to 18% of full year EBITDA. In line with historical patterns. The first quarter is generally the lightest quarter of the year, and we expect activity levels and margins to improve with performance weighted towards the second and third quarters. As you think about the first quarter, based on what we see today and our internal planning assumptions, we imply revenue in the range of $470 million to $485 million and adjusted EBITDA of $55 million to $60 million. From a cash flow perspective, we expect healthy free cash flow conversion from adjusted EBITDA. In 2026, we expect net interest expense of $95 million to $105 million, cash taxes in the range of $20 million to $30 million and capital expenditures between $60 million to $70 million. We also expect working capital to be a modest use of cash as we see growth this year. Taken together, these items frame our expected free cash flow generation for 2026. We are excited to be filing our first 10-K as a combined company. I want to thank our teams across the organization for the care, commitment and TIC first mindset that they've demonstrated through this period of change. Many leaders within our businesses have taken on additional responsibilities to move this forward and the integration momentum and progress we've made reflects the pride and ownership our teams bring to the table every day. With that, I'll turn the call over to Robbie to discuss our long-term strategy and capital allocation priorities. Robert Franklin: Good morning, and thank you, Kristin. I also want to thank our investors for your continued engagement and support. Before I outline our strategic priorities, I want to reiterate the Board's confidence in Ben's leadership and thank Tal for his decades of service. With integration underway, TIC Solutions is a unified platform with meaningful scale across inspection, engineering and geospatial analytics. Our revenue base is anchored in nondiscretionary maintenance, regulatory compliance, utility programs and long-cycle investment across critical industries. We support our clients from planning and design through commissioning, maintenance, compliance and asset optimization. Our team combined field data collection with design, analysis and digital capabilities that enhance reliability and reduce operational risk. Our capital allocation framework is disciplined. We will prioritize deleveraging towards our long-term target, reinvest organically in the highest return areas of our business and pursue selective tuck-ins and larger acquisitions that enhance capability, geography or technical depth at attractive returns. This week, our Board authorized a $200 million share repurchase program, which we may use opportunistically based on market conditions. With scale, diverse end markets and resilient revenue characteristics, we believe TIC Solutions is positioned to compound earnings and cash flow over time. 2026 is a critical year for TIC Solutions. We are laser-focused on execution and delivering on the targets we have shared with the investor community. We are encouraged by our early results to start the year and have confidence in our team's ability to drive top and bottom line growth. And with that, I'll turn the call back to Ben for -- to close our prepared remarks. Benjamin Heraud: Thank you, Robbie. As we close, I want to frame where we are going. 2025 was a pivotal year for TIC Solutions. We successfully brought together 2 scaled organizations, strengthened the balance sheet and advanced integration while continuing to deliver for our clients without disruption. The structural tailwinds in our markets remain intact, including infrastructure reinvestment, grid modernization, increasing technical and regulatory complexity and the continued expansion of mission-critical facilities. As we move into 2026, we are focused on accelerating growth by increasing share of wallet, expanding cross-selling across our segments and scaling our account coverage, while strengthening how we work together and reinforcing a common culture. That focus supports continued margin progression and cash generation while maintaining balance sheet strength, which will ultimately drive shareholder returns. I want to take a moment to recognize our teammates across TIC Solutions, they've handled a period of significant change with discipline and focus while staying committed to delivering for our clients every day. Thank you. With that, operator, we're ready to open the line for questions. Operator: [Operator Instructions] Our first questions come from the line of Chris Moore with CJS Securities. Unknown Analyst: This is Will on for Chris. Can you talk a little bit more about the integration process in a little more detail? Are there specific milestones you're looking to reach in 2026? Kristin Schultes: Yes. Thank you for the question. I will tell you that we are -- I am extremely proud of the team and the momentum that we have so far, a high degree of confidence in our ability to execute on this. Right now, I would tell you that some of our focus areas have been around communications and culture, which is incredibly important, especially during leadership transitions. We're working through compensation studies and alignment and choosing system implementation partners. So if you think about our commitment of $25 million of savings and capturing half of that this year, think about that as roughly 60% headcount and the rest non-headcount. And the team is meeting weekly on individual milestones and on track, we're ahead of schedule. Unknown Analyst: That's super helpful. And then on the top line, can you talk more about the biggest potential synergies and go-to-market strategies? And what are you hearing from customers? Is there any cross-selling opportunities that you're seeing that you weren't thinking about initially? Benjamin Heraud: Yes. Thanks, we touched on it on the call, but we have some really exciting developments and opportunities that are coming through the cross-selling program. Been really pleased with how the segments have been coming together and exploring ideas with their clients. We have a lot of white space between the businesses that create opportunity. But just pointing to that recent win and inspection mitigation within the data center space, that's really exciting, that's completely new to inspection of mitigation. So to be able to get that exposure to that market where we're seeing a lot of tailwinds is exciting. And then on the infrastructure side of things, we're able to really service the full life cycle of any kind of asset now with our capabilities from planning and design, consulting and engineering through I&M, it's driving opportunity for us to service our clients in new ways. So we're seeing a lot of upside. It does take time to get these wins in play. We're going to put these ideas in front of our clients and give it to a contract, but very pleased with the progress that we're seeing so far. Operator: Our next questions come from the line of Brian Biros with Thompson Research Group. Unknown Analyst: This is Chris calling in for Brian. A couple of questions on end markets. It seems fair to say that some of the smaller exposure categories are the fastest-growing. In your release and prepared comments, you called out significant organic growth in data centers, and we know that aerospace is another fast-growing end market. Both of these, of course, are higher-margin businesses. Where do you think these businesses could be in the next 12 to 24 months? And could they represent a double-digit percentage of sales? Benjamin Heraud: Yes. I mean in terms of organic growth, we sort of we've doubled the data center business over the last 12 months, and we're continuing to see -- be on track for continued significant growth. Related to that is power delivery and the the demand that data centers are putting on the grid. We're very, very well positioned to exploit that also with our technical capabilities in that space, along with infrastructure and general and the demand that we're seeing there. So some good end markets. Data centers will continue to grow and outpace certain parts of the business, especially as we layer in new services and increase our revenue per megawatt. Kristin Schultes: Chris, I would just add that we're really excited about with the combination of the businesses is the more diversified platform. And really, we see all of our end markets is having tailwinds. So yes, there are pockets of outsized or outpaced growth. But in general, we're really optimistic about all of our end markets. Benjamin Heraud: Yes, probably a good indicator of that. The backlog being up 10% year-on-year. Unknown Analyst: Yes. Fantastic. And then can you talk a little bit about your expectations on the inspection side for the energy and oil end markets? I know they can be somewhat lumpy quarter-to-quarter with the chemical market pressure and how oil and gas is performing, but how should we think about that end market into 2026. Benjamin Heraud: Yes. I mean we have good visibility on the business. A very large percentage of it is planned outages and run and maintain year-on-year as we look at the number of sites that we're working on, that's similar. And in a lot of cases, the contracts have a longer time line. So we have good visibility there. Operator: Our next questions come from the line of Tomo Sano with JPMorgan. Tomohiko Sano: Could you talk about the EBITDA margins in the latest 2026 guidance. IC is lower than what was indicated in your prior outlook given the considerations of the stock comp to cash comp, I get that, but what other reasons for this more vicious margin outlook compared to what you guided 3 months ago, please? Kristin Schultes: Yes. Thank you. So you're spot on the previous range was 15.5% to 16.5% and have been adjusted by the stock compensation investment that we've decided to make. We think this is best for the business in the long term and really drive the integration of the team and provides market-based compensation for our team. So we feel that that's the right decision from there. And from there, we've given a nice framework for our 2026 guidance, both on revenue and adjusted EBITDA on a consolidated basis. Demonstrating dementing growth on the top line as well as margin expansion coming from improved execution across all 3 segments as well as the planned cost synergy realization. Tomohiko Sano: And follow up on CEO transitions. Could you elaborate on the timing and the rationale for this transition? And should we expect any changes in strategies or execution, please? Robert Franklin: It's Robbie. The transition sort of contemplated from the onset, when we bought Acuren helping the business for a very long time, and we wanted to create an environment where he could execute and really have its fingerprints on what the combined TIC Solutions entity would look like. And we also -- we had Ben who was already CEO of NV5, new the business, but we wanted to give him sort of the period to learn about Acuren and sort of the inspection side of the business. So in terms of timing, we feel like this is sort of the right transition time as we build. As we build sort of this unified culture. So pretty consistent with sort of our original thinking. And the Board and the entire team is very supportive of sort of this path. Operator: Our next questions come from the line of Alex Rago with Texas Capital. Unknown Analyst: Thank you very much. More broadly, can you address the current situation in the Middle East and the rise in oil prices and how that could impact your business or some of your customers' decisions? Benjamin Heraud: Yes. So the Middle East is a relatively small piece of our business, around 1%. So it's relatively immaterial, like now the impacts that we're seeing are minimal on the business there. As far as the price of oil and the impact on the business, we could see some additional work around pipelines. It's good for our oil sands business. And the refinery side of the business is relatively stable. So I mentioned earlier the good line of sight that we have with the run and maintain business. And right now, the outlook looks good. Unknown Analyst: Very helpful. And then as it relates to revenue guidance, which just kind of 2% to 7% growth rate, can you talk about the primary variables that could cause this to be either kind of closer to the high end or the low end? Kristin Schultes: Yes. So from a 2026 perspective on the top line, I would tell you we have a high degree of confidence in this and it was a very thoughtful approach that we did to the budgeting process this year down to the division level and a bottoms-up approach. And given the tailwinds we have in our business, we feel very confident in our ability to deliver against that. Operator: Our next questions come from the line of Harold Antor with Jefferies. Harold Antor: This is Harold Antor on for Stephanie Moore. So a quick question. Just on the pricing front, could you remind us what pricing rack historically, how it trended in the quarter? Just give me we're more disciplined and what, as you focus on the margin profile we want to walk away from some businesses. And then I guess, do you see that you guys are better positioned to be more aggressive on pricing, just given you provide the full suite of products and services today versus mostly competitors we can't compete on our phone. Benjamin Heraud: Yes. So we mentioned some of the work that we've done around the organization of our inspection and mitigation business in the U.S. that has offered us an opportunity to be more competitive on our pricing and go after more of the work in that space. A lot of the work that we price is more on a value proposition, fixed fee kind of work and we continue to see good momentum there. I would also just point back to the backlog being up 10% and the sales being very positive through the first part of this year already. And yes, just -- I mean, you mentioned the mix of work. And if we think of this opportunity to work through the life cycle of an asset, we are very sticky with our clients -- we have very strong relationships and our ability to work through the entire life cycle of an asset keeps us very sticky with those assets and clients. Kristin Schultes: And Harold, on the pricing, I think also I would just remind you to point back to our Q4 results, gross margin dollars and percentages were up across all 3 of our segments. We feel really good about that heading into 2026. And if you combine that with some of the operational initiatives under Ben's leadership, high confidence. Harold Antor: Yes. And then just to piggyback on an earlier question, Ben, I think you highlighted that you see a line of sight of $100 million in data center revenue. Just wanted to get a sense, is that a '27 event? Is that a '28 event? Or is that just -- is that a longer-term event? Just wanted to get a sense of the timing on that. Benjamin Heraud: It's '26 line of sight. So we have a very strong backlog, particularly to that, and we have multiyear programs, some extremely resource constrained area of the business where we have very strong relationships with the hyperscalers. So we see over the next 12 months line of sight to those numbers. Harold Antor: And then I could squeeze in 1 more just on capital allocation that you guys focused did the buyback. So should we be thinking more of the capital being deployed and buy backs? Or do you expect to do a little bit more on tuck-in side, any organic growth implementation investments that you could provide a little bit more color, that would be great. And that's all for me. Benjamin Heraud: So on capital allocation, we have a robust tuck-in line that we're going to continue to execute on. But we thought, as a Board, it was prudent have the flexibility to have a buyback program in place given where market conditions are. And frankly, there's no better acquisition than your own stock at the right levels. So we have a very opportunistic view on how we approach ,but there is no question we're continuing with in pipeline because it creates a more robust a more robust operating profile and allows us to new geographies and new service lines, which are critical to sort of our investment thesis. Kristin Schultes: Harold, I would just add that on our -- on the tuck-in side that Robbie mentioned, I'm really proud of the team's ability to continue maintaining focus on the broader integration with the merger, but also remain focused on the importance of the small tuck-in strategy that we have that's been largely successful for us. So we completed 3 small tuck-ins during the quarter and the combined business together at 12% for the full year, and that's across all 3 segments. So we're excited to continue that into the New Year. Operator: [Operator Instructions] We have reached the end of our question-and-answer session. I would now like to hand the call back over to Ben Heraud for any closing comments. Benjamin Heraud: Thank you all for your questions. I just wanted to reemphasize our strategic priorities to drive shareholder value. One, we need to accelerate our organic growth, and we will. Two, we're going to strengthen our organizational alignment and cultural cohesion. And three, drive margin expansion. Finally, I want to thank our investors for their continued support and partnership. We look forward to updating you on our next quarter. Thank you all, and have a good day. Operator: Thank you, ladies and gentlemen. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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