AI Investor Insight

KMX 2026 Q2 财报电话会议

Operator: To all sights on hold, we do appreciate your patience and ask that you continue to stand by. To all sites on hold, we do appreciate your patience and ask that you continue to stand by. Go outside on hold. We do appreciate your patience and ask that you continue to stand by. To all sites on hold, we do appreciate your patience and ask that you continue to stand by. Please standby, your program is about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Fiscal Year 2026 CarMax Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Lowenstein, Vice President, Investor Relations. Please go ahead. David Lowenstein: Thank you, Nikki. Good morning, everyone. Thank you for joining our fiscal 2026 second quarter earnings conference call. I'm here today with Bill Nash, our President and CEO, Enrique Mayor-Mora, our Executive Vice President and CFO, and Jon Daniels, our Executive Vice President, CarMax Auto Finance. Bill Nash: Let me remind you our statements today that are not statements of historical fact including, but not limited to, statements regarding the company's future business plans, prospects, and financial performance are forward-looking statements we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current knowledge, expectations, and assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, we disclaim any intent or obligation to update them. For additional information on important factors and risks, that could affect these expectations, please see our Form 8-K filed with the SEC this morning, our annual report on Form 10-K for fiscal year 2025, and our quarterly reports on Form 10-Q previously filed with the SEC. Please note, in addition to our earnings release, we have also prepared a quarterly investor presentation and both documents are available on the Investor Relations section of our website. Should you have any follow-up questions after the call, please feel free to contact our investor relations department at (804) 747-0422 extension 7865. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-ups. Bill? Bill Nash: Thank you, David. Good morning, everyone, and thanks for joining us. Today, I want to start with our priorities. While our second quarter results fell short of our expectations, we remain focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth for years to come. We have a differentiated and best-in-class omnichannel customer experience and are focused on maximizing that advantage by driving operational efficiency and sharpening our go-to-market approach. With this mindset, our key priorities include, first, focusing on price and selection. This includes maintaining competitive prices while minimizing macro factor impact and having the cars consumers are looking for at CarMax's high-quality standards. Second, driving consumer awareness of our differentiated experience. This includes not only our new brand campaign "Wanna Drive," but also enhancing the conversion waterfall from web traffic all the way to the ultimate buy and/or sell decision. Third, delivering incremental SG&A reductions of at least $150 million over the next eighteen months. This will be broad-based, and it includes leveraging technology to drive efficiencies and our net promoter score to new heights. And finally, generating additional profit through components of our diversified business. This includes increasing CAF penetration and profitability in a responsible and thoughtful way. It also includes pursuing other opportunities across our business to drive incremental flow through to our bottom line. We are already making progress across these fronts and are confident in our strategy and our earnings model, which will produce high teen EPS growth with mid-single-digit retail unit growth. During our first quarter call, I mentioned that we saw an increase in sales volume in March and April due to the tariff speculation. This impacted our performance in the second quarter in two ways. First, we ramped our inventory ahead of the second quarter to support this growth. Across May through June, we saw about a $1,000 in depreciation, which negatively impacted our price competitiveness and our sales. Second, while hard to quantify, we believe there was a pull forward of demand in the first quarter. In the second quarter, we responded by lowering retail margin to drive sell-through, and we intentionally slowed buy to balance our inventory with sales. This strategy has worked as both price competitiveness and inventory position have improved since that time and have put us in a better position for the third quarter. During the quarter, we delivered total sales of $6.6 billion, down 6% compared to last year, reflecting lower volume. In our retail business, total unit sales declined 5.4%, and used unit comps were down 6.3%. Pressured performance across our age zero to five inventory were partially offset by increased sales in older, higher mileage vehicles. Average selling price was $26,000, a year-over-year decrease of approximately $250 per unit. Second quarter retail gross profit per used unit was similar to last year but down approximately $200 from the first quarter. The sequential decline was more than twice our historical average, reflecting the actions that I mentioned earlier. We will continue to focus on maintaining our price competitiveness. And we remain disciplined yet nimble in leveraging selection and margins to drive sales. Wholesale unit sales were down 2.2% versus the second quarter last year. Average wholesale selling price increased approximately $125 per unit to $7,900 and wholesale gross profit per unit was historically strong and similar to last year. We bought approximately 293,000 vehicles during the quarter, down 2% from last year. We purchased approximately 262,000 vehicles from consumers with more than half of those buys coming through our online instant appraisal experience. With the support of our Edmond sales team, we sourced the remaining 31,000 vehicles through dealers which is slightly up from last year. This quarter's outperformance is a direct result of a decision to pull back offers to rightsize inventory. We are no longer intentionally slowing buy and expect to see year-over-year improvement in the third quarter. At the August, we launched our new "Wanna Drive" brand positioning campaign that brings to light our unique omnichannel experience. Our net promoter score is the highest it's been since we rolled out our digital capabilities nationwide. Driven by record high satisfaction among customers purchased online as well as those using our omnichannel experience. "Wanna Drive" spotlights this unique offering, empowering customers to buy their way, with the clarity, confidence, and control to navigate the journey on their terms. "Wanna Drive" appears across TV, streaming, social, digital, and audio and represents the first phase of a sustained multiphase strategy. This approach, we will complement with increased advertising spend, demonstrates our commitment to long-term brand investment that supports our growth objectives. As previously discussed, we've been focused on driving SG&A efficiencies. We're pleased with our progress so far and have line of sight to at least an incremental $150 million in SG&A reductions over the next eighteen months. This does not impact our growth strategy as we will continue to invest in initiatives that position us for the future. Later, Enrique will comment on the anticipated scope of our efforts and the likely timing. At this time, I will now turn the call over to John to provide more detail on CarMax Auto financing and our continuing focus on full credit spectrum expansion. Jon Daniels: Thanks, Bill, and good morning, everyone. During the second quarter, CarMax Auto Finance originated over $2 billion resulting in sales penetration of 42.6% net of three-day payoffs, which was 60 basis points above last year. Weighted average contract rate charged to new customers was 11.2% versus 11.4% last quarter, and reflects downward rate testing executed within the quarter. While CAF's full quarter increase in penetration appears modest, we believe the tariff pull forward in Q1 negatively impacted CAF share during the early part of the quarter. Since the beginning of the fiscal year, we have made underwriting adjustments that translate to 100 to 200 basis points of growth but the full realization of this growth can be impacted by noncontrollable factors, such as customer credit mix and partner lender behavior. It is important to note that more than half of the impact from these adjustments comes from recaptured Tier one segments but with additional criteria overlaid to reduce risk. While the remainder comes from within the top half of the tier two space, which we have been testing over the past year. Third party Tier two and Tier three penetration in the quarter combined for 23.8% of sales versus 24.4% last year as CAF growth had an impact on partner volume. CAF income for the quarter was $103 million, down $13 million from FY 2025. Net interest margin on the portfolio was 6.6%, up over 50 basis points from last year and relatively in line with last quarter. GAAP's loan loss provision of $142 million results in a total reserve balance of $507 million or 3.02% of managed receivables exclusive of auto loans held for sale. Of the $142 million, $71 million is attributed to new originations within the quarter, while the remaining $71 million is an adjustment to the loss expectation of the existing portfolio. Also of note, was seen in the first quarter, there was a reduction on the required provision stemming from $16 million in the reserve allocated to loans booked prior to Q2 now classified as held for sale. The primary driver of the $71 million adjustment on the existing portfolio comes from additional losses anticipated within the 2022 and 2023 vintages. Recall, these customers have been the most impacted by the convergence of rapidly increasing vehicle prices and broader inflation. Despite the observed worsening, these vintages still remain highly profitable, an estimated lifetime profit of $1,500 per unit versus $1,800 contemplated at origination. Additionally, they continue to shrink in size and contribution to the overall portfolio as they are replaced with more recently originated Tier one receivables at significantly lower loss rates. Note that 2024 and 2025 post contraction vintages continue to be right in line with our original loss expectations. Regarding the funding aspect of our full spectrum efforts, yesterday, we closed our 25-B transaction, our second non-prime securitization of the year. This was upsized to $900 million in total notes and for the first time, included the sale of most of the residual financial interest in the transaction to third-party investors, thus resulting in off-balance sheet treatment. We expect the gain on sale to be approximately $5 million to $30 million in third quarter income. We also expect to receive approximately $40 million to $45 million in additional CAF income related to servicing fees and the retained beneficial interest over the life of the transaction. As a reminder, going forward, there will be no loss allowance or provision for this pool of loans. Now I'd like to turn the call over to Enrique to discuss our second quarter financial performance in more detail. Enrique Mayor-Mora: Thanks, John, and good morning, everyone. Second quarter net earnings per diluted share was $0.64 versus $0.85 a year ago. The decrease was driven primarily by lower volume and the CAF loss provision adjustment. Total gross profit was $718 million, down 6% from last year's second quarter. Used retail margin of $443 million decreased by 8% with lower volume and relatively stable per unit margins. Retail gross profit per used unit was $2,216 in line with historical average. Wholesale vehicle margin of $137 million decreased by less than 1% from a year ago with lower volume partially offset by a slight increase in per unit margins. Wholesale gross profit per unit was $993. Other gross profit was $138 million, down 4% from a year ago. This was driven primarily by EPP, decreased by $6 million driven by lower retail unit volume. Service recorded a $4 million margin, reflecting a small improvement over last year's quarter. Continued efficiency and cost coverage improvements were partially offset by the deleverage inherent in the lower year-over-year second quarter sales. On the SG&A front, expenses for the second quarter were $601 million, down 2% from the prior year, driven primarily by lower stock-based compensation. Continue to realize expense savings, but they were offset by cost pressures in the quarter. SG&A to gross profit deleveraged 350 basis points to 84% as lower volume more than offset lower costs. The continued deployment of AI technology remains a key driver of efficiency gains and experience enhancements across our operations. For example, this quarter, Sky, our AI-powered virtual assistant, continued to deliver year-over-year double-digit percent improvements in containment rate, customer experience consultants productivity, and web and phone response rate SLAs. We recently fully rolled out Sky 2.0 which leverages AgenTeq AI and expect this release will drive even more efficiency and experience improvements. As Bill noted, we are committed to further reducing our SG&A by continuing to deliver efficiency gains across the business. The investments in technology, systems, and processes that we have made as part of our omni transformation will allow us to substantially reduce spend through several key initiatives. Modernizing and consolidating our technology infrastructure, automating manual processes, renegotiating and reducing third-party contracts, and eliminating redundancies across the organization. The goal of at least $150 million in SG&A reductions over the next eighteen months represents a material improvement in our cost profile, and reflects the execution on a plan that we have been developing with outside support. While we expect to realize some of these savings this fiscal year, we expect the vast majority will materialize in our exit rate by the end of fiscal 2027. In addition to offsetting inflationary pressures, these ongoing savings will provide additional flexibility to reinvest in areas that directly drive sales. While also serving as a tailwind to our already robust earnings model of a high teens EPS growth CAGR when retail unit growth is in the mid-single digits. We will continue to provide updates on this initiative during future earnings calls. Looking forward, I'll cover a few items. Regarding marketing, we expect an increase in per total unit spend in the back half of the year, particularly in the third quarter as we appropriately support our new brand positioning launch. We expect service margin to face pressure in the back half of the year due to seasonal sales volumes. For the full year, we still expect to deliver positive margin, which is a direct result of our efficiency improvements and cost coverage measures. Turning to capital allocation. During the second quarter, we continued our share repurchases at an accelerated pace, buying back approximately 2.9 million shares for a total expenditure of $180 million. As of the end of the quarter, we had approximately $1.56 billion of our repurchase authorization remaining. Now I'll turn the call back over to Bill. Bill Nash: Thank you, Enrique and John. Our customer-centric car buying and selling experience is a key differentiator in a very large and fragmented market and positions us well for the future. We are intently focused on driving this differentiated and best-in-class experience doing so with greater efficiency. As you heard from us today, we're actively executing on our key priorities which include driving sales, advancing innovations to improve customer and associate experiences, bolstering our marketing efforts, increasing company-wide efficiencies, and expanding CAF participation across the credit spectrum. All of these priorities will give us added flexibility and strengthen us for the future. With that, we will be happy to take your questions. Operator? Operator: Thank you. And at this time, if you would like to ask a question, please press the star and one on your telephone keypad. Your first question comes from the line of Brian Nagel with Oppenheimer. Please go ahead. Your line is open. Brian Nagel: Hey, guys. Good morning. Bill Nash: Morning, Brian. Brian Nagel: So the question first question I want to ask, just with regard to used unit sales. So, Bill, if I if I heard you correctly, you know, it seemed like the most disruptive factor here in fiscal Q2 was you know, now it's was was a clearer or pull forward in demand. You know, into the fiscal first quarter. So the the question I have is, you know, it could could you are there numbers you can give us to to size that better, you know, that that disruption? And then you know, as we look as you look through the quarter, I know you typically don't discuss, you know, sales trends in the quarter, but you know, following that pull forward impact, I mean, has the has the business or have sales got back to a more normal run rate, and what is that? Bill Nash: Yeah. So, Brian, first of all, you know, like I said, it's actually, we think, two factors. And I would put the I put the other factor probably first because it is hard to quantify exactly how much each one is. But know, my commentary around buying inventory up and then seeing that depreciation happen, I would say that is probably the the most impactful and then the pull forward. But, again, it's hard to it's hard to quantify exactly how much each of those each of those are. Know, for the quarter, each month, was was down year over year, and each month got a little weaker throughout the quarter. Now what I'll tell you for September and month to date is that it is stronger than the quarter and any of the months in the second quarter But when I look at it from a year over year, it's still a little soft on a from a year over year standpoint. But certainly, we put ourselves in a better position the start of this quarter, both on an inventory position as well as from a a pricing standpoint. Brian Nagel: That's helpful. If I could I ask a follow-up? Bill Nash: Sure. Brian Nagel: Just just with with regard to pricing. So, you know, the know, CarMax has, for a long time, talked about, you know, you know, know, having attractive pricing within the market. It seems me just listening to your comments say that you're you're focusing on this more now, So I guess that's is that the case? And then know, the the question I have is, are you seeing something in the marketplace or other competitors are getting more price aggressive that CarMax may have to change some of its stance there? Bill Nash: I think the the pricing commentary, first of all, is is you're right. We're always focused on pricing. We want to be competitive. I think in the quarter, we we fell into a spot where we weren't as competitive. Again, I feel better about where we are now. Then the only other thing I would add to that is I think we just need to continue to be as nimble as possible. When it when it comes to pricing. Mean, you saw in the quarter, we saw that South dollar depreciation over a month period and and, you know, we started acting on it very quickly. And there's a lot that goes into that decision. You know, as far as what do you do with your prices when you see depreciation, that kind of thing. But I think the takeaway for for that I want you to hear is that always focused on on competitive pricing. And, certainly, the focus as we go forward is to continue to be as nimble as possible because it is a it's a it's an aggressive environment out there. Brian Nagel: Right. Appreciate all the color. Thanks. Bill Nash: Sure, Brian. Operator: Thank you. Our next question comes from Rajat Gupta with JPMorgan. Please go ahead. Your line is open. Rajat Gupta: Great. Thanks for taking the question. Just got a couple. First one on CAF. Last quarter, had mentioned that you expect CAF income to be up year over year for the full year. Can you give us an update on that? And if it has changed, I'm just surprised by just the magnitude of, you know, the provision pickup know, because we had your last earnings call just two months ago. So curious, like, how could it how could it have changed so dramatically in shift for the short period of time? And any color there would be helpful. And I have a quick follow-up on SG&A. Enrique Mayor-Mora: Sure, Rajat. Appreciate your question. First, let's touch on the cap income. Obviously, as mentioned, there's a larger provision impact this quarter. Also, we mentioned we're excited about the the twenty five b transaction, which will yield gain in, you know, in during Q3. You put all that together, Yeah. We did highlight that we thought there would be, you know, increase year over year in CAF income. I think we're gonna be, you know, flat to down. Obviously, two more quarters to go, but flat to slightly down. But I think there's some nice trade offs that are occurring there. Obviously, all disclaimers with, you know, how does the consumer perform, how does sales come in, because that would yield a provision origination for us. But, hopefully, that gives you a little flavor on the income cadence. Regarding provision, it's certainly a fair question. I'll give a little color on what we saw for the quarter beyond what I did in my prepared remarks. So let's highlight the 22, and 23 vintages. That customer as I mentioned, high ASP, you know, certainly a higher APR environment, higher overall payment they were seeing, They come into the, yeah, the purchasing cycle with excess cash from COVID. And they hadn't fully experienced inflation yet. So we had a lot to learn about that customer. Initially, we saw some you know, again, we're coming off of incredibly low trough loss rates of 19, 20, 21 vintages. So hard to gauge how those twenty two and twenty three vintages were gonna perform. We saw an increase in losses initially, but that's not surprising because it's coming off of trough lower vintages. So there's previous years. So as we watched that customer perform, we saw it and thought maybe it was a pull forward in losses. Ultimately, as we saw a little increase, so maybe a timing curve adjustment, And then we watched that customer begin to struggle and continue to struggle a little bit. We made some adjustments that we thought were very smart for consumer and smart for us, and that has proven to be the case. And that was we adjusted our extension policy in the fall. We saw more payments come in had we otherwise not done that, so we were pleased to see that. But we had to watch that play through. We saw some of those customers coming back into delinquency and loss during Q1. It's obviously a tax time season as well, so it's a little muddied. So we did make an adjustment in Q1. And we wanted to watch it all play through. We saw some good performance initially with, again, those extensions. We wanted to see how much was gonna come back in delinquency. Unfortunately, during the quarter, we saw more revert back to delinquency and loss. That being said, you know, we've we've made a a significant adjustment this quarter as you see. We made what we would say a sizable adjustment last quarter I think we have a a much better handle on where these guys are are gonna land because we've watched these extensions play through almost completely at this point. Also, if you look at the totality of those vintages, you're about two thirds of the way through those vintages. So there's about a third left. So it's really gonna ultimately, you know, play through. There's more to come. But it really has played through. And then if you look at these twenty four and twenty five vintages, we are extremely pleased with those. So, you know, we're watching those losses early on. We're now twelve, fifteen months through there, and that stuff is right on the mark from what we expected So, yeah, hated to have to make an additional adjustment. I think there are a lot of, you know, confounding factors that had to play out. We feel like we have a mess much better understanding of them. And then I'll end with and, again, just as a reminder, these things are incredibly so profitable. You know, $1,800 versus maybe what we anticipated, $1,500 because of these loss adjustments. Roughly a half a billion dollars we're gonna achieve in lifetime value across the 2223 vintages. So a lot to say there because I wanted to explain what was going on there. But hopefully, that answers your question. Rajat Gupta: That that's that's helpful color. And just just on the SG&A, could you elaborate a little bit more on the areas of cost reduction? I'm curious because it seems to me that, you know, a lot of you might need might be tied to know, the omnichannel support function. Because you've already gained good productivity on your in store salespeople. I'm curious, like, should investors be worried that know, these actions might hurt your ability to recover some of the share loss that you seen. I'm curious, like, how do you balance those two? Enrique Mayor-Mora: Yeah. Absolutely. Thanks. Yeah. And and also, like, what he offers offset from the pickup and advertising. Thanks. Yeah. No. Absolutely, Rajat. I'll I'll jump into it. We do not think it's gonna impact our growth strategy. As I noted in my prepared remarks, our investments in technology, systems, and and processes are really going to allow us to rationalize our costs. So very specifically, I'll give you some examples. So we have a a stronger ability to retire legacy systems. Have an ability to lower licensing usage as we either need less of them or we can eliminate certain functionality as well given our investments in technology such as chat. Due to invest investments in Sky. Become even more efficient in our call centers, and I've been talking about that for quite a few quarters at this point in time. Able to automate manual processes, and leverage AI to even more frequently review third party contracts. So those are just some of the examples. That will help us take out that 150,000,000 and if you'll note, those examples don't really impact our growth strategy. And part of our thinking as well is that there is a portion of these savings again, it's $150,000,000 at least 150,000,000 that we do expect to direct back to investments that have a direct tie with sales, you know, such as an example this quarter would be marketing. You know, we are going heavier up in marketing, appropriately so, or our new brand positioning, and that'd be an example of something that we're gonna go invest in. I do think it's important to remember, right, that we had been in investment mode as we transformed our company into an omni retailer. But once you're done with that, the next step really is to optimize and then rationalize that spend. And that's where we are. Rajat Gupta: It's not a it's not a net $150,000,000 reduction. Is there a net number? That you can give us? Enrique Mayor-Mora: Yeah. So it's gonna be net of any ongoing SG&A expenses to accomplish. That number, but it's not net of any kind of onetime charges that we may end up having to to incur. But it is net of ongoing expenses to to realize the savings. Rajat Gupta: No. No. I meant, like, net of, like, investment in other areas like advertising and other sales initiatives. Is there any Like I said, there there will be part of those dollars that will be a reinvestment back into the business to drive top line sales. However, that being said, know, we do expect just the SG&A savings to be, you know, a material tailwind to our already robust earnings model. Rajat Gupta: Understood. Great. Thanks for the color, good luck. Operator: Thank you. Our next question comes from Sharon Zackfia with William Blair. Please go ahead. Your line is open. Sharon Zackfia: Hi. Good morning. I wanted to go back to morning. I wanted to go back to Brian's question on price. And as you think about it, and I know you're talking about reinvesting some of the SG&A savings. And back in 2019, which seems like forever ago, you had talked about kind of maybe targeting some lower GPU to drive incremental sales. So kind of putting that all together, is there a a thought process or a strategy about taking of the bulk of the 150,000,000 and really reinvesting it to the consumer and price your selection to drive the top line? Because it does feel like the consistent market share story that we had had in the past has kind of become much more volatile, you know, post pandemic. Bill Nash: Yeah. Sure. I I think you're thinking about it the right way, but I would expand on it a little bit. I mean, the $150,000,000 in SG&A reductions, as Enrique pointed some of that we will reinvest directly back into things to of driving sales. The other piece I would tell you, which is another reason why we're focused on it, the key priority, is just being able to generate additional profit from other parts of the business. Because that also gives you flexibility and allows you to reinvest some of that in price. So, again, I think it goes back to Brian's initial questions that we wanna be as nimble as possible make sure that we're as competitive as possible, and we feel like we're gonna have several levers to be able to do that. Sharon Zackfia: Bill, can I just follow-up? And do you think there's price in less elasticity of demand that if you were more aggressive on price, you could stimulate sales in a profit accretive way? Bill Nash: Yeah. There's look. There's always elasticity when it comes in. You know, we've talked about this before. You know, we know pretty much because we're constantly testing. You take prices down a certain dollar amount, we know what you get for that. The what you have to think way we think about it is is that that when you look at the price elasticity, there's a lot of things that go into that equation. So for example, your variable expenses. So the better that you're doing in your variable expenses, it makes that equation easier. The capacity of your of your operational workforce. Are they at capacity? Are they not? Capacity? Are you having to pay people for unproductive time? Your ancillary profit attachment, how well we're doing on things like ESP or or finance, there's a lot of things that we look at to decide, okay. Does this make sense? And that equation changes depending on the market factors. I mean, even without taking some of those things in, the elasticity will change just given what competitors are doing. So we will con continue to be nimble. We will continue to make improvements in some of these other factors because, again, that makes the elasticity pay off. Sharon Zackfia: K. Thank you. Bill Nash: Sure. Thank you. Operator: Thank you. Our next question comes from Chris Bottiglieri with BNP Paribas. Please go ahead. Your line is open. Chris Bottiglieri: Hey, guys. Two questions on credit for me. So the first one is, can you elaborate on the servicing fee of $4,045,000,000? I would think there's probably some servicing cost to achieve that servicing revenue. Just was wondering if you'd help us think through the cost since the receivables won't be in on the balance sheet, but the expenses will be. And then bigger picture question on credit. Like, you guys are normally really conservative, you know, really prudent guys historically. Kinda pushing into deep subprime now. The market's you know, I think beyond your control is getting a little bit weaker. Wanna kinda, like, test to resolve. Like, how committed are you to pushing into subprime right now? Just given the macro backdrop? Is it something you're gonna pull, you know, forward into regardless, or if macro keeps worse or you'd have maybe hit the brakes a little bit. Bit? Bill Nash: Yeah. I'll start off and then I'll I'll pass it over to John. Just wanna to clarify something on deep subprime. Know, John and his comments talked about going into really the top half of what we call the tier two. So you know, we're not talking about deep subcoms. I just wanna have some clarification there. And then, John, I'll let you add just to that end. The first part of the question. Jon Daniels: Yeah. Kicked me under the table because he wanted that one. Yeah. I mean, that we wanna make that very clear. I mean, it is not It it is not deep subprime at all. Again, we have been in tier three space. And we we have experience there and all that. But, again, we're trying to be very prudent to your point, Chris. Of how we go down when we go down. Now make no mistake. There is there is money to be made there. We have partners that make tremendous profit there. You need to price it right, provision correctly, service it correct. We believe, you know, we're learning how to do that. So but, yeah, I wouldn't characterize it as deep subprime. There's a lot of penetration to be gained as we inch our way down there. No doubt about it. To your first question on the expenses, I just just to step back because I like to take that after I speak to the overall program. Again, we are super excited because it ties to the first question. The the full spectrum nature. We have laid out a plan, and I think we have gone after that plan. First, it was, hey. We're gonna bifurcate our securitization program. We've done that. We've executed multiple deals now there. We said we're gonna recapture volume in tier one and expand into tier two. Again, we're being very prudent about that. Then announced that we that plan to do a deal where we're actually gonna sell the the future's residual interest in that deal, and we've done that very, very successfully. So we are super pleased. This was supposed to give us flexibility. Obviously, you know, give us insight into to what a deal like this looks like, and we've I think, hit on all of those. That being said, we've enjoyed the game. We'll enjoy the game that we're gonna see 25 to $30,000,000 in new highlights also referenced the additional value to be gained on the servicing side. Again, future interest there. On the expense on the expense there, yes, there is a little additional volume to be gained from the servicing side. There is a cost to us, but, yes, we will make additional additional value there. Enrique, anything you wanna add? Enrique Mayor-Mora: Yeah. And, Chris, you don't see the servicing income. It'll be broken out the cap contribution line, so you'll get a good view of that kinda on go forward reporting. And while the servicing costs will be embedded in kind of your your your cost of your business. Right? And so that's how it'll be reported. And you'll see that moving forward. Jon Daniels: Yeah. And and and the 40 to 45 also includes retain Yeah. Some retainers. Also, income from the five percent retention as well, the five and five. So we expect that'll continue as well. So, you know, all in all, like John mentioned, we're really pleased with the deal and the execution of the deal out there and and and really proud of the teams in getting that done. And as John mentioned, this just fits our overall strategy, and we are executing on that strategy. Chris Bottiglieri: Gotcha. Okay. Is the is most of the income coming from the beneficial interest or from the service fees? Or would I like to mention that a at all? Jon Daniels: Yeah. It's coming from kind of a mix. Yeah. It is. Chris Bottiglieri: Okay. Okay. And thanks thanks for clarifying this stuff, Rami. You did say that prepared remarks. So spoke there, so thanks for clarifying Yep. Operator: Thank you. Our next question comes from David Bellinger with Mizuho. Please go ahead. Your line is open. David Bellinger: Hey, good morning. Thanks for the question. Can you help us walk down the path back to positive unit comps and what the the timeline could be there? Bill, you mentioned the aggressive environment. So maybe if we take this up to the industry level, is the used car market just getting materially worse in your view? Or are there some macro cracks forming with these CAF adjustments? Or any other signals of a more strained consumer? Or do you think this is more of a competitive element here in Q2 versus other players in the sector and something that you guys have to invest against going forward? Just help us piece all that together. Bill Nash: Yeah. So, you know, when I say aggressive environment, I wouldn't say it's necessarily more aggressive than last quarter. It's been aggressive aggressive for a while. I think, you know, on the the strained consumer, I think we are seeing where consumers, especially your your mid to high FICO customers, they be sitting on the sidelines a little bit, and we just measure that by just pure app volume. Think we're seeing that with you know, it's a it's a little bit of a headwind in September, but that's not you unique to us. We we've talked with our finance partners, and they're seeing something similar. So you know, again, think and and even that, you know, consumer's been distressed for a little while. I think there's some angst. You could the consumer sentiment isn't isn't great. But again, I think we've put ourselves in in good shape, and I think the priorities that we we're focused on will will continue to pay dividends. You know, as I think about the full year, we we set out this year to to gain market share. And, you know, look, through the first half of the year, we feel good about it. Through the calendar June, which is where we have data through. Would just caution people when you're looking at June, July, and August, it's tough on a year over year comparison just because of the CDK outage last year. But you know, we're not backing off of our stance. It's like we started this year going after market share. And at this point, I don't see a reason why we would back off that. We expect to gain market share for the full year. So hopefully that that adds a little color. Jon Daniels: Yeah. David, I'd to just jump in on the consumer just to highlight a few things again, the cracks issue set. I think there's something incredibly unique about the twenty twenty two to twenty three consumer, and it is an industry issue. You look at other issue lenders out there, they would tell you, those are some tough vintages. It's kind of the perfect storm of IAS and probably an overconfident consumer coming in with they think they have plenty of cash. Get hit with inflation. If you look at the 2425 consumer, they're just more eyes wide open walking in the door. Prices have come down a little bit. They're you know, interest rates have come down a little bit. Typically, people that buy in a a in a more stressed environment perform usually better. Now, again, we think we have reserved. We watch very carefully, how those guys performing, and and we know they might perform worse than maybe pre COVID. Yeah, I think that 24, 25 consumer is gonna just be a a better one. Bill Nash: Yeah. So I think to your point, David, you know, the second quarter second quarter kind of event that would be a second quarter event. You know, truing that up, but we feel good about where we stand on that know that that's getting to be less and less of a population. As John said, the extensions are kinda back in, and that's really what this was to to to clean up on. So we we feel good about where we are there. David Bellinger: Great. Very helpful. Thank you. Bill Nash: Thank you, guys. Operator: Thank you. Our next question comes from Scott Ciccarelli with Charisse. Please go ahead. Your line is open. Josh Shang: Hey. Good morning, guys. This is Josh Young on for Scott. So as we think about the slowdown in sales here, is it a function of you just aren't getting people into the top of the funnel, or is it more you get them in there, but then they're kind of falling out of the bottom? Just any color on how you guys are thinking about that would be helpful. Bill Nash: Yeah. No. Look. Our our web traffic is up year over year. Our conversion as you go down the funnel is actually improving. I would say the biggest opportunity and some of it I think we can control and some of it we we can't control and that's that's really kind of web traffic to what we call a selling opportunity. Do does the customer do something that we can then you know, kind of start the process versus just folks that come to the website that are just, you know, viewing cars. Some of it is gonna be that we can't control because there's gonna be some folks who are they're they're window shopping. Others, I think we we can control and just how we how well we do in the presentation on that first initial glance how we make this the website stickier at that that topper part of top of the of the funnel. So I think it's a little bit kind of macro, but I think there's absolutely some improvements we can make. Josh Shang: Got it. That's helpful. Thanks. Bill Nash: Sure. Operator: Thank you. We will move next with David Winston with Morningstar. Please go ahead. Your line is open. David Whiston: Thanks. Good morning. I was kind of staying on that question. I mean, maybe help me fill in some blanks here because, I mean, it sounds like at the beginning of the quarter, you wanted to the the tariff the juicing of demand didn't really happen on the quarter, so you're you were trying to clear inventory to get rid of that depreciation. But you're saying web traffic was up year over year conversions improving. Yeah. Your unit volumes were slowed down over 5%. Used prices have been elevated for a long time now. Is the consumer just staying away, or is it that they're still having sticker shock despite this many quarters of elevated pricing? Bill Nash: Yeah. David, just so just for clarification, the web traffic is up. What's down for us would be what I would call selling opportunities. Once we have a selling opportunity, the conversion, we're actually seeing some good improvement in conversion just down through the rest of the funnel. So the opportunity really is, a customer hits our website, actually getting them to do something on the website. And, some of that I think is in our control. Of it is not in our control. You're just gonna have folks that are coming in there and realize, well, you know, either they're just looking or they just they're not ready to to to buy. So that's that's of the clarification of you know, your question between, well, your traffic's up, your conversion up, why aren't you seeing more sales? That's why. Jon Daniels: And, again, I would say not all traffic is considered the same. A seven eighty comes through the door versus a five eighty comes through the door. They convert it tremendously different rates. David Whiston: Yeah. In high quality, is that down even at the very high end of prime. Right? Bill Nash: Well, yeah. What we're seeing is that the the higher FICO customers, the app volume is down. So and that, you know, that's a that's a core customer of of ours. And really, you're seeing that kind of and John, keep me honest on that. You're probably seeing it probably 600 and above is probably down, certainly at the high end. I think the one area that's maybe not down is probably low FICO five fifty and and and below. Right. And and and I think, again, I don't think we're alone there. We can talk to other, you know, other lenders other dealers. You can see it in the credit bureaus. It's it's apparent. David Whiston: Okay. Thanks, guys. Operator: Thank you. Our next question comes from Jeff Lick with Stephens Inc. Please go ahead. Your line is open. Jeff Lick: Good morning. Thanks for taking my question. Bill, I was wondering if we could talk about the concept of the reserve inventory that you guys do, my understanding is it's any it's at the most, seven days, it's usually around seven, but not not always seven. But you know, our records or just our analysis shows that you know, roughly about 40% of your inventory at any given time online is reserved. And it know, it appears that you know, let's just take, you know, a unit that is probably attractive because someone's reserving it, so someone else who wants it doesn't see it. Or it's, you know, at the back of the queue. I'm I'm wondering your thoughts there you know, in terms of how that's affecting sales and if that's a policy you're looking at changing. Bill Nash: Yeah. No. I look. I think there's both reserve inventory and there's that that can't be transferred. I think the the reserve inventory generally is is inventory that has a customer that's basically interested in that that inventory. And, you know, that's obviously when you've got a customer in Richmond that's interested in a car and Pennsylvania, we think that's a a huge benefit that that customer can actually get that car. So that plays into our transfer. You know, I think the only thing that we'd be looking at there from a reserved inventory standpoint is just making sure that we're being active on how long a consumer can actually hold the car or reserve the car, and that's the the the transaction is progressing. On the the vehicles that are labeled not transferred, only reason they're not transferred at that time is because that's generally related to title issues. In some states, you can sell them, you'll see it on our website, hey. This can't be transferred because you can sell that car without a title in that state. There's other states you cannot sell a car without the without the title, so we're not gonna transfer that car in that case. And then once the title becomes available, it certainly can be open for transfer it's still around. So it's those are the two buckets we think about that would bring just kind of your overall available inventory down. Jeff Lick: And do you you know, I'm assuming you won't disclose this, but in terms of the amount of sales you know, of the percentage of people that are reserving I'm wondering what percent actually buy versus it goes back in. So how much of the inventory actually kinda sits out of out of view of the next potential buyer for seven days. Bill Nash: Yeah. I mean, we haven't gone into the specifics, but, obviously, there's you know, we look at the economic of that. The other thing I'd let you know is even on the reserved inventory, consumers can still express interest for it and say, hey. Please let me know if this doesn't does not actually pan out with that that customer. Keep in mind, you think about the reserved inventory, you know, a third of our sales are through transfers, and they go through the reserved inventory process. So you're absolutely right. We go through an economic decision, and where we are with that is we feel really good about it. You know, can we add a little extra friction just to make sure that cars aren't held for reserve over, you know, three days? Sure. But that's a that's a a small enhancement. Jeff Lick: Okay. Great. Thanks for taking my question. Best of luck. Bill Nash: Thank you. Operator: Thank you. Our next question comes from Michael Montani with Evercore ISI. Please go ahead. Michael Montani: Yes. Hi. I just had two questions. The first question was really around the credit trends. Can you just give us some more color in terms of the progression that you saw playing out throughout the quarter? When you think about kind of delinquency rates, and then how we should be thinking, you know, for provisions into the third quarter. And then the other question, let's do that and hopefully get to the other one. Jon Daniels: Sure. Yeah. Appreciate the question. Yeah. If you look at delinquency rates for the quarter, there's definitely a seasonality trend that you're always gonna have to observe there. So you're coming out off of tax time into Q2. It ramps up delinquency ramp will ramp up through through the rest of the calendar year and then back down through delinquency time typically. So but all in all, you look at overall delete delinquency rates, we're really looking at it by vintage We're looking at it, are they as expected often not the best indicator of ultimate loss, timing of loss, what have you. But if I think broadly, you know, through the quarter, aside from, again, those vintages that we've adjust that we adjusted on, as you can imagine, the delinquency trends on the newer stuff, and and even the older stuff that's more seasoned continued to be in line. So again, we feel very positive as we're gonna continue as we continue to put on that again, lower risk, tightened stuff. That'll perform well. So, hopefully, that addresses your addresses your question. Enrique Mayor-Mora: And, Mike, I think part of your question too was just on the the kind of provision as we as we go forward. And I I think the way I think the way to to think about that I mean, you saw what our provision was for our origination this quarter. You saw what the what we're calling the true up is. The way you should think about it is the provision this quarter for the new originations, I think, you know, that's pretty representative. You know, we'll we'll just with the stuff that we're going into, it it might be a little bit higher. But you know, we feel good about the true up. So the provisions, John, and, you know, you certainly speak up, but we would expect it to to be more You saw the $71,000,000 this quarter. Again, you you can go back and look at where we didn't have outsized strips where it was probably lean a little higher considering that we are, again, going after, yeah, a little bit lower in the credit spectrum. So that's gonna require a higher upfront provision. But, yeah, a hopefully, the the true ups are going to be minimal. That is our goal through this. We feel like that older stuff is rolling off. So, yeah, I would think you'd you'd see more in that $70.80 certainly south of a 100 thou a $100,000,000 range from a provision standpoint. Jon Daniels: And like John said, right, what we're seeing in the '24 and twenty five vintages is they are consistently meeting our expectations in terms of what the loss trends are. So what we're really talking about here, and we've taken a a material hit to our provision this quarter, what you're really talking about is the provision for new originations that John and and Bill just spoke to. Michael Montani: Okay. And then the the follow-up question that's helpful was just around some of the cost savings. So you had called out 150,000,000 you know, which could work out to somewhere around $200 a a car here potentially as reinvestment fuel if you decided to do it. And then on the COGS front, I believe you've said in the past that could be another 100 or $200 there as well. I just wanted to understand, you know, you know, is that separate and distinct? Am I kind of in the ballpark there in terms of some of COGS opportunity? And then kinda bottom line, if if it does require several $100 of reinvestment in into sharper pricing, you know, is that something that you all are committed to doing in order to kind of reinvigorate the top line? Bill Nash: Yeah. So okay. A lot of neck questions. Let me tackle the the the COGS and the SG&A. You're thinking about that the right way. They're they're separate. Separate initiatives. So on the COGS side, if you recall last year, we were going after over a couple years, we were going after $200 in cog savings. Last year, we actually got a 125 at the beginning of this year. We actually talked about going after another 125 for this year. So we're ahead of where we thought we'd be from a $200 goal. Will tell you we're still on track for that 125 for this year partway through the year, and that is a separate and distinct initiative versus the SG&A savings. So we we don't wanna get those two muddied up. To your question about, hey. If if you know, would you be willing to reinvest all that back in to be you know, to make sure that you're competitive? What I would tell you is yes. But would also tell you I don't think that's necessary. I think that we'll be able to take some to to the bottom line. Absolutely, but we'll invest some of them back in appropriate amount. And as I said here right now, I don't I can't see a scenario where you'd have to take all that savings and put it back into and and to price. But, again, I also want you to know that we're gonna we're gonna continue to be price competitive. Michael Montani: Thank you. Thanks, Mike. Operator: Thank you. Our next question comes from Chris Pearce with Needham. Please go ahead. Your line is open. Chris Pierce: Hey. Good morning. Just kind of following up on that question, I guess, you were a lot about pricing in the quarter, pricing going forward. Is this something that you know, should we reset our because you guys had sort of reset GPU expectations kind of higher with your performance. Does this conversation around pricing mean that investors maybe reset GPU expectations modestly lower? Or is it too soon to tell? Or how kind of intertwined would those be? Bill Nash: Yeah. No. Chris, that's a that's a that's a great question. And, you know, what I had had said at the beginning of the year is, from a modeling standpoint, you can kinda think about year over year on a retail GPU will will be similar. I also said, hey. You know, in any given quarter, there's gonna be some some some puts and and takes, and I think that's what you're seeing here. Think we still feel comfortable for the year as a as a whole to use that kind of retail GPU target. But what I will tell you is, you know, if you think about the third quarter, if you look at year's third quarter, it was a record high. So I would expect this to certainly come off of that. From from from last year and be more kind of in in the historical historical range. And I think didn't ask it, but I think you can think about wholesale being the same way on a on a year over year. I think you can know, keep that target that we talked about being very, very similar. But similar to retail, you know, last year's third quarter wholesale, one of the strongest, probably the top two or three GPUs that we had in in wholesale for the third quarter. So I would expect to to down and be more in line with kind of historical averages on that one. For the quarter. Chris Pierce: Okay. Thank you for that. And then just I might get my years wrong here, but at the '22, I believe, was calendar 2022 when you guys had too much inventory at that period in time and dealers were being more aggressive on price, and it kinda took you longer to work through because you wanted to hold margin versus pricing. And it there was sort of a longer reset to your inventory level. I I just wanna confirm that's sorta not what we're talking about here because of kinda your commentary around September and this being more onetime, or I guess I'd just love to hear you kinda talk through that, and apologies if I got the dates wrong given your system for line up the quarters. Bill Nash: You actually did get the date wrong. It's it was it's really which I think what you're referring to is the the the big depreciation event. Which we saw in calendar '23 and twenty four. I believe there was one in '23, and there were two in '24. That that we worked through. And and just to to remind everyone, on those events, it was about for each of them, it was about $3,000 in each of the event over a few months. So the degree of it was was different back then. Than it is here. And this this event, a couple different things. One, it was a thousand dollars over about a month period, and then you saw some stabilization. And then we're also going into a period where you know, you're gonna see generally seasonal depreciation. So we wanted to make sure we get we got through that. But yeah, those events that you're talking about, basically, at those times, you know, you look at that elasticity with all the things that we talked about earlier that go into that equation. And, you know, we held our margins a little bit more because at the time that that made sense. This one actually, it made sense. Let's get this stuff through. And so, again, we'll we'll tackle these things as as they come up. Chris Pierce: Okay. Thank you, good luck. Operator: We have a follow-up from Rajat Gupta with JPMorgan. Please go ahead. Rajat Gupta: Oh, hi. Thanks. Just wanted to follow-up on CAF. Just going back to the commentary, I'm still expecting flat to slightly down Could you help us a little bit more around the third quarter? You're going to get the gain on sale the 900,000,000 but you're also gonna lose, a quarter of net interest income. On that 900,000,000. So it almost feels like a wash. Is that is that the right way to think about it? If if you could give us a little more color on how you'd get to you know, still flat income even if you have, like, 80,000,000 provisions in the April and maybe the fourth quarter. I just want to bridge that. Thanks. Jon Daniels: Sure. Yeah. I I think you've got a a couple things going on there. First, yes, you've got the income, but you're gonna realize that you know, all upfront. Whereas, again, the receivables, you're gonna no longer have there. You were gonna gain that income over time. So that's a bit of a a pull forward. Your overall NIM will will be impacted. There's no doubt about that, Rajat. You're you're correct. But, yeah. Obviously, when we look at the provision going out, that's a key piece of it. But, again, you're bringing on higher NIM receivables as well. So I think that's that's that's helping benefit you to bring that NIM back up in the probably by the fourth quarter off of where you are in the third quarter. So I think all that's playing together Yeah. I think you got servicing income. You have the 5% retention. Right. So there there are things that, you know, should provide a tailwind. Rajat Gupta: Yeah. Jon Daniels: And, again, I'd probably say it's more slightly down a lot a lot plays into what's the origination provision, where's the NIM, where the losses go. Ultimately. But, yeah, I'd say probably slightly down more than flat. For the full year? For the full year. For the for the third quarter. No. No. For the full year. So take last fiscal year, this fiscal year. That's what I'd refer to. Rajat Gupta: Understood. Okay. Thanks for the color. Operator: Thank you. We do have another follow-up from Brian Nagel with Oppenheimer. Please go ahead. Your line is open. Brian Nagel: Hey, thanks for slipping me back in here. So my follow-up question and I think we've discussed this in the past, but did you notice anything with regard to I'm I'm I'm looking at used car unit demand. Anything notable with regard to kinda, you know, the the different type vehicles? I mean was there a stronger trend, high end, low end, that type? And did anything shift as we push here through the fiscal year? Bill Nash: Yeah. I think a couple observations. I mean, I still just the industry is a is a as a total, you're seeing older vehicles Like, if you look at older vehicle registration, older vehicles being, you know, older than ten year old, ten years old, that market segment is doing better than the the the zero to 10. You know, from the in the first quarter, we kinda had a barbell effect where you're under $25,000 cars were up year over year, so were, like, your 40,000 plus. This quarter, pretty much everything was down. The the under 25,000 was was you know, as a percent of sales, was up a little bit over over last year. But, you know, as far as the other ones, they were either down or or a little bit flat. So you still picked up some more as a percent of sale and the the under $25,000 card. Brian Nagel: And then built to that end, I I know you're you know, you've been, you know, merchandising different. To say, to to reflect the consumer preferences. But, you know, so as you look forward, is is is there are you are you pushing further into that that older inventory within the system? Bill Nash: Yeah. Look, we've obviously, Brian, been focused on this. I think if we look at the what we call that value max sale, let's call it six years and older or more than 60,000 miles. We had you know, a bump up in sales in that. We're up if you look year over year, we had a nice little tick up, which means you know, we had more of that that available. I think our goal will be continue to have more of that available, but I also think that we have to make sure that there's also a good selection of later model used cars as well because that appeals to a lot of CarMax customers also. So know, you can't go to at some point, you have, you know, the the benefit that you get of having older, higher higher mileage, will be offset because you don't have some of the vehicles that, you know, the core car customer is looking for. So we'll we'll walk that we'll walk that line. Brian Nagel: I appreciate it. Thanks. Bill Nash: Sure. Thank you. Operator: And we don't have any further questions at this time. I will hand the call back to Bill for any closing remarks. Bill Nash: Great. Thank you, Nikki. Well, listen. Thank you for joining the call today and and for your questions and your support. As always, I just want to thank our associates for everything they do to take care of each other and the customers in our communities and and we will talk again next quarter. Operator: Thank you, ladies and gentlemen. That concludes the second quarter fiscal year 2026 CarMax Earnings Release Conference Call. You may now disconnect.

Operator: Thank you for standing by, and welcome to the Stitch Fix Fourth Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Cherryl Valenzuela, Head of Investor Relations. Please go ahead. Cherryl Valenzuela: Good afternoon, and thank you for joining us today for the Stitch Fix Fourth Quarter and Full Fiscal Year 2025 Earnings Call. With me on the call are Matt Baer, Chief Executive Officer; and David Aufderhaar, Chief Financial Officer. We have posted complete fourth quarter and full fiscal year 2025 financial results in a press release on the quarterly results section of our website, investors.stitchfix.com. A link to the webcast of today's conference call can also be found on our site. We would like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ. In particular, our press release issued and filed today as well as our annual report on Form 10-K for fiscal 2025, which we expect to file later this week. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements, except as required by law. Please note that fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, the adjusted revenue growth rates we referenced on this call remove the impact of that extra week to provide a comparison that we believe more accurately reflect our performance. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website, and a replay of this call will be available on the website shortly. And now let me turn the call over to Matt. Matt Baer: Thank you, Cherryl, and good afternoon, everyone. Over the last 2 years, we've been relentlessly executing our transformation strategy to deliver the most client-centric and personalized shopping experience. I'm incredibly proud of the significant progress we've made. We've fundamentally reshaped how we operate by strengthening the foundation of our business and embedding retail best practices. We've also made significant strides in reimagining our client experience. Our transformation is driving tangible results. We closed out fiscal '25 with a strong Q4, delivering 4.4% adjusted revenue growth. Revenue of $311.2 million exceeded our guidance and marked our second consecutive quarter of revenue growth. We once again gained market share in the U.S. apparel market this quarter according to Circana data. Adjusted EBITDA was $8.7 million or 2.8% of revenue. which also came in ahead of guidance. Our strong top line performance was the direct result of the improvements we've made to our client experience and assortment. Fix average order value grew 12% year-over-year, our eighth consecutive quarter of AOV growth. AOV growth was driven by higher items per Fix due to greater penetration of our larger fixed offering. AOV growth was also driven by fixed AUR that was up 7.6% year-over-year, as we continue to benefit from the newness and trend-right styles we brought to our merchandise assortment. Both our women's and men's lines of business accelerated revenue growth in Q4. Expansion into non-apparel categories and a greater infusion of established brands were the primary drivers. I'm especially proud of the continued strength of our men's business that delivered double-digit revenue growth in Q4 and a positive full year performance. Our core Fix channel continues to perform with Q4 revenue growth that outpaced our total growth. This is due in part to the encouraging initial results we're seeing from our new feature that allows clients to build a Fix around a freestyle item. This is a strategic move that blends the best of both channels to create a more seamless experience for our clients. As a result of the changes to our client experience and our thoughtful client acquisition strategy, we are encouraged by the trends we're seeing with new client acquisition, engagement of former clients and retention of our current clients. These shifts have led to improvements in year-over-year active client growth rates for 5 consecutive quarters. Bringing in the right clients to our service remains a key priority, and this is an area where we continue to see strength with 90-day new client LTVs at 3-year highs. Our recurring Fix shipments enrollment also remains up year-over-year, reflecting the resonance of our client experience improvements. FY '25 was a milestone year for Stitch Fix, where our consistent execution set us on a path to sustainable, profitable growth. In the last fiscal year, we achieved our highest contribution margin in the last decade. We expanded our adjusted EBITDA margin by 170 basis points and we completed another year with positive free cash flow and no debt. Now firmly in the growth phase of our transformation will continue in fiscal year '26 and to enhance our client experience, including through investments in generative AI and remain focused on 4 areas: creating more dynamic ways for our clients to engage with us, deepening our client stylist relationships, introducing increased Fix flexibility and strengthening our assortment. In line with these priorities, we recently began to roll out a new suite of innovations. These enhancements will further our efforts to deliver industry-leading personalization and convenience. First, we are leveraging generative AI to offer even greater personalization as well as new engagement opportunities. As a result of our services continuous feedback loop, we have billions of insights on our clients fit and style preferences. And we are using these insights coupled with the latest in GenAI technology to serve them in ways only we can. Our clients have shared with us that one of their biggest challenges is expressing what they want to their stylists. To address this, we recently began to roll out an AI style assistant which chats with clients while they develop their Fix request note. Using GenAI imagery as well as leading questions to help them articulate what they are looking for. Through the feedback we secure from the AI style assistant as well as our sophisticated algorithms and the expertise of our human stylists, we are now able to be much more precise with meeting each client's individual needs. In addition to launching our AI style assistant, we are also beginning to roll out a style visualization feature called [ Vision ] that provides clients with personalized GenAI imagery of their likeness in a variety of shoppable outfit recommendations incorporating the latest styles and trends. Second, we're further deepening client stylist relationships. I often think back to the golden age of retail when sales associates knew their customers by name, remember their preferences and could anticipate their needs. Those personal relationships have all but disappeared from shopping today. However, at Stitch Fix, they are alive and well. Our stylists serve as trusted partners to our clients. And now we're creating opportunities for clients and stylists to collaborate like never before through a new platform called Stylist Connect. Through the beta rollout of Stylist Connect to let clients can communicate with their stylists whenever they need assistance, whether to ask a question about Fix, get tips on the latest trends or work together on their next Fix. Client feedback on this feature has been incredibly positive, and we are also seeing higher order values from clients who have been part of the early rollout. Third, we're giving clients even more flexibility. One of the main reasons clients come to us is for the convenience and time savings we offer. We recently launched Family Accounts, which enable clients to shop for their partner or anyone else in their household all from 1 account. This helps families save hundreds of hours a year. Family Accounts join other ways we've embedded flexibility into the experience, including larger Fixes, themed Fixes and the ability for clients to build a Fix around a freestyle item. Lastly, we're further strengthening our assortment by leveraging GenAI in our private brand design process and adding new styles and brands. By integrating GenAI and private brand development, we are responding to trend signals more quickly and accelerating how we bring relevant styles to the market. We are uniquely positioned to do this because of the depth and quality of our data from the continuous direct and indirect feedback our clients provide. While we are enhancing our private brand development process, we're also expanding our portfolio of emerging and established brands. Since the start of FY '25, we've added more than 50 new brands, including Varley, Favorite Daughter, Alex Mill, [ Grown Women ], Pendleton, Madewell Men, Birkenstock, Gola, Abercrombie Kids and my kid's favorite, GOAT USA, with additional brands launching in the coming months. Building off the momentum of FY '25, we are operating from a position of strength, and our FY '26 guidance anticipates a return to full year revenue growth. We also expect active client year-over-year growth rates to continue to improve through the year, including a quarter-over-quarter increase in net adds. We will accomplish this while staying disciplined with our growth investments as we navigate an increasingly dynamic and complex environment. 2 years ago, when I stepped into the CEO role, I recognize that Stitch Fix offered a powerful and differentiated alternative to traditional retail whose potential had yet to be fully realized. I'm incredibly proud of the work the Stitch Fix team has done since then to further unlock that potential. At Stitch Fix, we know that the best retail experience is one that serves clients at a truly individual level, one where you know your clients so well that you don't just meet, but anticipate and ultimately exceed their needs and expectations. That's the level of service we aspire to provide every day harnessing the power of AI, almost 15 years of proprietary data are algorithms that get smarter with every interaction our assortment of leading brands and the human connection of our stylists who know each of their clients personally. With this competitive edge, we're well positioned to be the retailer of choice for apparel and accessories and to continue to grow faster than the overall U.S. apparel market. In closing, I want to thank our team for their incredible work and our clients, partners and long-term shareholders for their support. And with that, I'll turn it over to David for our financial results and outlook. David Aufderhaar: Thanks, Matt, and good afternoon, everyone. Our financial results in the fourth quarter and for the full year are a direct reflection of the strategic plan Matt outlined. We made disciplined choices to operate more efficiently, and that rigor enabled us to return to revenue growth earlier than expected, while driving significant leverage in our business. AOV growth was a highlight in FY '25. This was a main factor in our return to growth, but was only one of many clear signals of a healthier business overall. We're seeing encouraging trends in many areas, including more consistently bringing in highly engaged clients, retaining those clients for longer and selling them more items. This progress confirms that our strategic focus on the fundamentals from improving our inventory to enhancing the client experience, is the right path to drive sustainable, profitable growth. At the same time, we continue to deliver strong improvements to our cost structure. Over the last 3 years, we have removed a total of almost $500 million in SG&A spend, going from 53.1% of sales to 47.5%. Rationalizing our cost structure has become ingrained in our company culture. We achieved these operational efficiencies through a combination of large strategic initiatives and everyday expense management. We optimized our warehouse network and stylist workforce. We restructured our corporate head count to eliminate redundancies and flatten our organizational hierarchies. We focused our marketing spend on the most effective channels for growth and we reduced the remainder of our Fix cost structure. In FY '26, we will continue to identify additional savings opportunities that will allow us to reinvest in growth. Now let's turn to the numbers. FY '25 net revenue was $1.27 billion. On an adjusted basis, this was down 3.7% year-over-year, with revenue for the second half of the year, growing 2.5%. We drove further leverage in our business in FY '25. Gross margin was 44.4%, up 10 basis points year-over-year and our highest annual gross margin since FY '21. The increase was primarily driven by transportation leverage due to improvements in carrier mix and rate negotiations with key carriers. We also captured additional efficiencies across our operations and styling teams. This resulted in our highest full year contribution margin in the last decade. We reduced our overall SG&A spend by $124 million in FY '25. The decrease was primarily driven by lower compensation and benefits expense, including lower stock-based compensation expense and lower facilities costs. These actions allowed us to deliver adjusted EBITDA for the year of $49.1 million or 3.9% margin, up 170 basis points compared to FY '24. We generated $9.3 million of free cash flow in FY '25 and ended the year with $242.7 million in cash, cash equivalents and investments and no debt. Turning to our Q4 results. Q4 net revenue was $311.2 million. Revenue was up 4.4% year-over-year on an adjusted basis and down 4.2% quarter-over-quarter. As Matt mentioned, growth was largely driven by strength in AOV due to the increased penetration of our larger Fix offerings and our focus on trend and style right assortment. We ended Q4 with active clients of $2.3 million, down 7.9% year-over-year and down 1.9% quarter-over-quarter. As expected, sequential active client net losses increased this quarter due to seasonality, though the year-over-year comp improved for the fifth consecutive quarter. Revenue per active client was up 3% year-over-year to $549. This was the sixth quarter in a row, we have seen a year-over-year increase in RPAC, demonstrating that the clients we are acquiring and retaining are highly engaged. Gross margin for the quarter came in at 43.6%, down 100 basis points year-over-year and down 60 basis points quarter-over-quarter. The year-over-year change was driven primarily by higher transportation costs due to general rate increases from carriers such as USPS. Gross margin was also impacted by a mix shift towards non-apparel categories. Advertising came in at 9.5% of revenue in Q4, up 50 basis points year-over-year but down 70 basis points quarter-over-quarter as part of our broader reinvestment in revenue and active client growth. We'll remain thoughtful and disciplined in how we invest in this area. We ended Q4 with net inventory of $118.4 million, up 20.9% year-over-year and up 3.5% quarter-over-quarter as we expanded merchandise to support larger Fixes. Q4 adjusted EBITDA was $8.7 million or 2.8% margin, down 20 basis points year-over-year and down 60 basis points quarter-over-quarter. It exceeded our guidance largely due to flow-through from our stronger-than-expected top line performance. Turning to our outlook for Q1 and FY '26. For full year FY '26, we expect total revenue to be between $1.28 billion and $1.33 billion. We expect total adjusted EBITDA for the year to be between $30 million and $45 million, and we expect to be free cash flow positive for the full year. And for Q1, we expect total revenue to be between $333 million and $338 million. We expect Q1 adjusted EBITDA to be between $8 million and $11 million. I'd like to offer a few additional thoughts on our guidance. First, with respect to revenue, we are projecting full year revenue growth for the first time since FY '21 and in a macro environment that is pointing to a more challenging environment as we enter the holiday season. For active clients, we believe our methodical approach to rebuilding our client base is working. We expect to deliver a quarter-over-quarter increase in net adds in Q3 FY '26. We are projecting FY '26 gross margin to be between 43% and 44%. This reflects higher transportation costs and ongoing strategic investments in our client experience and assortment. Our teams have done an excellent job managing the impacts of tariffs by negotiating with suppliers and diversifying our sourcing, resulting in only a small impact to gross margins attributable directly to tariffs. We expect full year advertising cost to be between 9% and 10% of revenue as we continue to be opportunistic in this area, given the success we've had in acquiring healthier clients with higher LTVs. And finally, we plan to further shift more of our compensation mix from equity to cash. This will have an impact on adjusted EBITDA with a positive trade-off on net income. In closing, we are encouraged by the momentum in our business. While cognizant of the difficulties in the current macro environment, how we plan and execute is in our hands, and that is where our focus continues to be. We're operating at scale with a strong financial foundation and a uniquely agile business model anchored by a debt-free balance sheet, proprietary data science and AI and the ability to quickly adapt our marketing, merchandising and pricing levers. These give us the confidence to not only navigate the current environment but to see strategic opportunities and accelerate our path to long-term profitable and sustainable growth. With that, operator, we can open the line for Q&A. Operator: Certainly. And our first question for today comes from the line of Dana Telsey from Telsey Advisory Group. Dana Telsey: And nice to see the progress, Matt. As you think about the changes in the business, particularly on the top line and the additional brands that you've added lately, where are you seeing the most growth from? And how are tariffs impacting the AOV? And then I have another question after that for a follow-up. Matt Baer: Dana, I appreciate the question and the recognition for the continued growth. And I think to answer your question in 2 parts, the first in terms of what we're seeing from our assortment and then the second, the impact that we're seeing from tariffs, particularly any impact for AOV. As we noted in the prepared remarks, both our women's and our men's business accelerated their year-over-year revenue growth on an adjusted basis in the fourth quarter. And that was driven by expansion into non-apparel categories as well as the greater infusion of established brands we've added to our assortment. If you drill down into our women's business, we saw increased demand for footwear and that grew over 35%. We also saw significantly improved demand for denim especially wide leg denim. We also saw improved demand for skirts that would include miniskirts, maxi skirts and fleeted skirt styles. And we also continue to see strength in our athleisure business. If you drill down into our men's business, first, just to point out again that we had double-digit growth in Q4 within our men's business and a full year of positive revenue comp in fiscal '25 for our men's business. In the quarter, and similar to our women's business, we saw a very high demand for footwear and athleisure. And we also saw a strong performance from national brands like Travis Matthew, Adidas, Marine Layer and Tommy Bahama, just to name a few. I'll speak to the tariff piece a little bit and let David add any additional context. In the fourth quarter, none of the improvement in AUR, the 7.6% year-over-year growth or the growth in AOV of 12%, which was our eighth consecutive quarter of growth is attributable to tariffs. That's in large part due to the great work that our tariff task force did in order to mitigate any potential impacts in the fourth quarter of fiscal '25. Dana Telsey: Got it. And then the -- go on. David Aufderhaar: No, go ahead. Dana Telsey: And then on the uptick in the sales, where do you see you're taking the share from? And given the volatile outlook for holiday, how do you think about planning for holiday or its timing, whether it is what you're seeing from your customers? How do you see that? Matt Baer: Yes. I appreciate the question again. We're very proud of the fact that we continue to gain market share. and that coincides with our growth in the fourth quarter, growing 4.4% on an adjusted basis, considerably outperformed the overall market, something that we are very proud of. And to me, that indicates the fact just that our superior service is very clearly resonating with our clients. I'm very proud of the trends we're seeing in our active client growth rates the fact that those have improved for 5 consecutive quarters. I'm also really proud of the fact that for the new clients that we brought in, we see 90-day LTVs continue to be at 3-year highs. With regards to who we are taking market share from, at Stitch Fix, we're very much focused on delivering the most client-centric and personalized shopping experience. And in doing so, we're picking up share from all of the retailers that are letting consumers down. It's our superior service that is enabling us to take share from a wide variety of retailers who don't and actually cannot deliver on the personalization consumers want and expect and that is core to our business. In terms of what we're doing for holiday, we talked about this last year, we really leaned into holiday more meaningfully than we ever had before, and we plan to build on that success in our holiday this year. I believe we're better positioned this year compared to last, given the changes we've made to our experience. A few of those of note is the continued flexibility we brought into our experience. That's what themed fixes, larger fixes, the ability to build a Fix around the freestyle item, and one that I'm particularly excited about is the introduction of family accounts. One of the critical components of family accounts is that really unlocks gifting opportunities for us. We've also, as I noted before, continue to improve our assortment across private brands, emerging brands and well-known brands. so that we can ensure that we have the right assortment to drive promotions at healthy margins as well as ensure that we have the right assortment to serve our clients for all of the occasions that they might attend over the holiday time period. And also the new features like Vision and Stylist Connect that I mentioned, those will continue to provide clients with new ways to engage with us throughout the holiday season. We've also talked at times about the investments we've made into our promotional and CRM capabilities. Those will also help us remain competitive during this time. And ultimately, it comes down to the differentiation of our business model that just continues to give us a competitive edge and we're confident that we will continue to gain market share throughout the holiday time period. David Aufderhaar: And then, Dana, just to add one additional point to Matt's point, especially around active clients and how that might be part of the underlying growth from a revenue perspective. to his point, we're really encouraged by the continued improvement that we're seeing from a year-over-year comp standpoint. And when you play that trajectory forward for the client cohorts that we talked about, the new client adds, reengaging clients that have gone dormant and retaining our existing clients, there is that natural inflection point in clients. And that's one of the reasons why I called out earlier in our remarks that we see a quarter-over-quarter inflection in active clients in Q3. One of the other things we're seeing, I tend to give color on the most recent quarter. For Q1, we expect quarter-over-quarter active clients to be roughly sort of flat quarter-over-quarter to down approximately 0.5%. And so definitely just really encouraged with those trends. And again, this is part of that methodical approach that has worked really well for us of just focusing on deepening relationships with our clients and bringing in clients where this service really resonates with. And that's -- you also see that in some of the metrics where it's the eighth quarter in a row that we saw year-over-year growth in new client LTVs. And so just really encouraged with what we're seeing there as well, and that's one of the things we'll continue to focus on. Operator: [Operator Instructions] Our next question comes from the line of Sole Jay from UBS. Sole, you might have your phone on mute. We're still not hearing you. [Operator Instructions] And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Matt Baer, CEO, for any further remarks. Matt Baer: Appreciate that. To close, I'll just reiterate how proud I am of the results the team delivered this year and how confident I am in the future of Stitch Fix. The momentum that we have, it proves that we have the right strategy, it proves that we have the right team and it proves our ability to execute at the highest level. It's my fundamental belief that you gained market share by playing offense. At Stitch Fix, we continue to innovate. We continue to strive to exceed our clients' expectations, and we continue to face external headwinds head on. We know our clients intimately, and we serve them individually. We build enduring relationships, which give us a competitive advantage relative to the transactional relationship consumers have with other retailers. Our differentiated business model of expert stylist paired with our proprietary data and algorithms as well as our leading assortment and generative AI innovations position Stitch Fix to uniquely serve clients. In doing so, I believe that we'll continue to take share from those that struggle to deliver the level of personalization and convenience consumers desperately want and deserve. Everything we do at Stitch Fix is in service of the client and to deliver sustainable, profitable growth. We are judicious, methodical and unrelenting in that pursuit. We remain focused and committed to accelerating growth and becoming the retailer of choice for apparel and accessories. I believe this is an exciting time to be in retail. I also believe it's an even more exciting time to be at Stitch Fix, where we are writing the future of what retail will look like. We are operating from a position of strength and a solid financial foundation. I'm more confident than ever in our future. Appreciate your interest in our business, and I look forward to sharing our continued progress. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

35天前Insight Analytics约5分钟阅读

SGPLF 2026 Q2 财报电话会议

Michael Hazell: Good morning, everybody, and welcome to Saga's results for the 6 months ended 31st of July 2025. My name is Mike Hazell, and I'm the group CEO, and I'm joined today by our Group CFO, Mark Watkins. I'll kick off with an overview of our first half performance. And then Mark will take you through the financials in detail. Finally, I'll provide a brief update on our strategy before we open for questions at the end. I'm pleased to report we've had a strong first half with a performance ahead of our expectations. We've seen first half revenues increase, profits perform ahead of our expectations and a significant reduction in net debt. Underpinning this performance was the continued momentum we are seeing in travel. Alongside a strong trading performance, we've also continued to deliver the strategic actions that we previously laid out. We completed our refinancing in February, putting in place a new 2031 corporate debt facility and repaying our 2026 bond maturity and the Roger De Haan loan facility. To support the delivery of our next phase of our strategy, we have reorganized our management team. The new leadership team in place across insurance and travel now in place. In July, we successfully completed the sale of our underwriting business with cash proceeds GBP 17 million ahead of our forecast, and we're making good progress on the preparations for the launches of both our Ageas and NatWest Boxed partnerships later this year. In doing so, we're making rapid progress towards a less complex, lower-risk business model with more predictable earnings that will allow us to focus on our core strengths of customer insight, marketing and data in support of our medium-term growth plans, particularly in travel. To that end, we were delighted to launch the latest addition to our river fleet earlier this year, responding to the demand we are seeing for our boutique cruising offer. I was on board the Spirit of the Moselle last month, and she's an amazing ship. Taken together, as we go through this morning, you will see clear progress being made on both underlying trading performance and our strategic execution plans. This gives me even greater confidence with regard to the GBP 100 million profit target we laid out in April. On this slide, I've highlighted some of our key trading metrics. I'm not going to speak to every line, but you can see even at a glance, the strength of our trading performance across travel and insurance and the foundations we have put in place for money, all of which set us up well for future growth. I'll now hand to Mark to go through our financial results in more detail. Mark Watkins: Thanks, Mike. Good morning, everyone. It's a pleasure to be here today. I'll spend the next few minutes covering the detail of the financial results before covering the outlook for the remainder of the year. Saga had a really good start to the year, delivering a strong financial performance in the first half, largely driven by our travel businesses and insurance broking. Underlying revenue, which excludes some accounting adjustments and one-off items, increased by 7% from the prior period. Underlying PBT from continuing operations of GBP 23.5 million is marginally behind the prior period, but importantly, is ahead of our expectations. This was largely driven by the continued growth in our travel businesses and an improved performance in insurance broking, offset by higher finance costs. This was expected due to the successful refinancing at the beginning of the year. The group continued to be highly cash generative in the first half with available operating cash flow of GBP 89.4 million in the period, a 64% increase. This does reflect some seasonal strength, which I'll touch on again in a moment. Net debt reduction continued, and the position at the 31st of July was GBP 515.1 million, GBP 102.1 million lower than 31st of July '24 and GBP 77.7 million lower than at the year-end. Alongside strong trading EBITDA growth, which grew 8%, this supported further deleveraging with a total leverage ratio now at 4.3x compared with 4.8x at the same point in the prior year. I'll now focus on the headline underlying profit contribution from each of our business units. Our Travel businesses continued to generate strong customer demand, delivering GBP 41.6 million of underlying PBT in the first half, a 33% increase on the year before. Our Insurance Broking business performed well in the first half. Despite the anticipated decline in earnings, performance was ahead of our expectations. The standout performance of this business is that after a number of years of decline, policy volumes for motor, travel and our private medical insurance have returned to growth. Other businesses and central costs marginally increased due to lower investment income as the group now holds a lower level of cash than it previously did. The result of this is that underlying profit before tax increased from GBP 27.2 million in the prior year to GBP 38.7 million. Insurance underwriting is now classified as discontinued, but the strong performance in the first half supported our ability to capture an additional GBP 17 million of cash from the sale, which completed on the 1st of July. I'll now spend some time covering each of our core businesses in a bit more detail, and I'll start with ocean cruise. Our Ocean Cruise business had an exceptional start to the year, growing underlying PBT by 23% and continuing to show extremely strong forward bookings. Revenue grew 8%, supported by an increased load factor and per diems. The load factor in the first 6 months of the year was 94%, which compares with 90% last year, and the per diems worth GBP 391, 8% higher than the year before. Underlying PBT of GBP 34.5 million was 23% higher than the prior period supported by cost discipline and lower finance costs. The lower finance costs reflect the continued repayment of the cruise facilities. This has now reduced to GBP 55.6 million per year due to the repayment of the first COVID deferral loan. Looking ahead to the full year, the booked load factor and per diems are very strong, currently 2 percentage points and 10% ahead of the same time in the prior year, respectively. For the '26-'27 season, the booked load factor is 3 percentage points ahead with the same time last year with the per diems continuing to increase at 13% ahead. Now turning to our River Cruise. In the first half, we successfully launched the Spirit of the Moselle, our third Spirit Class rivership. The timing of this launch meant we operated with marginally lower capacity in the period, driving revenue to be flat against the prior period. The 93% load factor in the first half was 7 percentage points higher than the last year and the per diem of GBP 364 was 7% higher, reflecting the strong demand for our river cruises. This supported growth in underlying PBT of 34% from GBP 2.9 million in the prior year to GBP 3.9 million. Bookings for the full year are strong and currently reflect a load factor of 87%. The per diems of GBP 351 is ahead of the same time last year, albeit lower than H1, reflecting expected seasonality. Bookings for next year are also in a good position with strong load factors maintained alongside growing per diems. Turning now to our holidays business. Revenue grew 14% against the prior year, supported by a 13% increase in the number of passengers traveling with us. Underlying profitability was also strongly ahead at GBP 3.2 million against only GBP 0.3 million in the prior period. This serves to validate our step-up in the level of marketing to support bookings. As you'll see from this slide, revenue growth is set to continue into the second half of the year, with current full year booked revenue 14% ahead of the prior year, with passengers 12% ahead. The team are now focusing their attention on driving demand for next year's bookings. Insurance Broking also showed an improved performance in the first half, generating underlying PBT of GBP 8.9 million. This performance supported an increased investment in policy growth ahead of the Ageas partnership with 3 of our 4 main products, after many years of decline, returning to growth. Motor grew by 26,000 policies and the combination of PMI and travel grew by 5,000. This investment is expected to continue into the second half, further driving policy volumes ahead of the go-live date with Ageas. The graph on the left-hand side shows the material drivers of the movements in underlying PBT. The motor contribution before overheads decreased by GBP 0.6 million, driven by higher renewal margins, particularly for 3-year fixed-price policies as market-wide net rates reduced, offset by higher investment into volumes. Home is the most significant driver of the overall decline with a GBP 6.2 million lower contribution as net rate inflation, which was more pronounced within our panel, led to a reduced competitiveness and 19% fewer policy sales. Private Medical Insurance benefited from lower net rate inflation together with the GBP 2.6 million profit share from the Bupa partnership. Travel insurance remained broadly flat with policy volumes growing in the period. Our insurance underwriting business, AICL, was sold to Ageas on the 1st of July and therefore is treated as discontinued throughout these results. As you can see, AICL performed strongly prior to disposal generating an underlying PBT of GBP 15.6 million. This supported our ability to generate an additional GBP 17 million of net cash from the disposal with AICL paying a GBP 10 million pre-completion dividend and there being a GBP 7 million positive adjustment through the completion mechanism. We received GBP 57.9 million on the completion date, representing 90% of the proceeds, with the remaining 10% due in October. There remains a further GBP 2.5 million payable on the go-live of the partnership. Debt reduction is a clear strategic priority for Saga, and I'm pleased with the progress made in the period. During the first half of the year, net debt reduced by GBP 77.7 million to GBP 515.1 million, with a leverage ratio of 4.3x also below the year-end level of 4.4x. Available operating cash flow for the first 6 months was GBP 89.4 million, 64.3% higher than the last year. This was driven by a step forward in cash generation from all of our businesses together with the GBP 10 million dividend paid by underwriting. Debt service costs have increased due to the HBS refinancing, which was drawn in February this year and restructuring costs have increased due to the AICL disposal and the Ageas partnership. While the cash generation is strong in the first half, it does include some positive seasonality from both the Ocean Cruise and Insurance Broking business. These are benefiting from positive working capital positions with Ocean holding a high level of customer advance receipts and policy growth in Insurance Broking also benefiting cash. So let's now turn our attention to the full year. Bookings for the full year in cruise are strong. We do, however, expect profitability in the second half to be marginally lower than the first, purely due to the normal seasonality within that business. The peak trading months for our Holidays business are typically August to October. And as a result, we expect the underlying profitability will be materially higher in H2 as we benefit from economies of scale and operational leverage. In Insurance Broking, we expect the trends that we saw towards the end of the first half of the year to continue for the second half, but a step-up in investment in the second half means that profitability will be lower than the first. What this all means for the group is that the momentum we have seen in the first half gives us confidence to move our guidance for the full year. We now expect the full year underlying PBT to be in line with the prior year and importantly, our net debt leverage ratio to be below that of the prior year. And with that, I'll hand back to Mike for an update on strategic progress. Michael Hazell: Thanks, Mark. Now I'm going to take you through more detail on the delivery of our strategic priorities and our growing confidence that we are paving the way for long-term sustainable growth. Underpinning everything we do is our brand and customer insight, so it's worth a moment to remind you how that makes us different. Saga is one of the best-known and most trusted brands in the U.K. This is built on our deep understanding of our target customer and our extensive customer database, which together provide us with a competitive advantage that sets us apart from our competitors. Nobody understands older people better than us. And we have more than 70 years of experience designing products and services exclusively for them. We know who they are, we know what they like and we know how best to communicate directly with them. This means that in the growing attractive and affluent market for people aged over 50, we are ideally placed to succeed. Our businesses leverage these advantages through a series of consistent principles that I have shown on the screen. With the customer at the heart of our strategy, we will deliver quality and value through a suite of differentiated unique products uniquely tailored for our customer group using the insight we have developed over decades of experience, all supported by our powerful marketing and publishing channels that drive deep customer engagement. Since joining Saga, I've redoubled our focus on these principles, all of which are now central to our growth. In April, we laid out our medium-term profit target of GBP 100 million and a leverage ratio of less than 2x by January 2030. A strong first half performance gives us even greater confidence in these targets and our time line to achieve them. Our four strategic priorities laid out the routes by which we would deliver these targets, and we continue to make good progress on each of them, progress that will be obvious as I now touch on each business. Travel is now the largest contributor to Saga's profits. In March, we announced that we had combined the leadership and operations of our previously separate Cruise and Holidays businesses under the leadership of Nigel Blanks, previously CEO of our Cruise division. No longer operating in silos, a single management team ensures consistent, excellent customer experience and a coherent marketing strategy across both Cruise and all of our Holidays. Best practice is shared across the different product lines and customers are more easily introduced to a wider range of holiday options for their next experience. Saga has been taking older people on holiday since 1951, and we are the experts in catering for their needs. Our customers are time rich and have money to spend. They like to travel outside of peak season, enjoying quieter destinations, sometimes though quite adventurous ones. What unites them all is that they know Saga can offer, when needed, a little more support than our peers to ensure they can really make the most of their holiday. We take our customers to places they might not otherwise go, tailoring the experience to meet their needs. We open the world to them and allow them to enjoy traveling for longer. By understanding these needs, we create holidays exclusively designed for this age group catering for them in a way that the mass market can't. By playing to our strengths, we separate ourselves from our competitors and all of our travel businesses are now growing as a result. Ocean Cruise remains at the heart of Saga's travel offer with its enduring popularity only getting stronger. Forward bookings remain strong and repeat bookings are consistently high. This performance is down to the quality of our product and our relentless focus on our guests. Tailor-made for our customers, built on decades of cruising experience, our customer satisfaction and TMPS scores are market-leading. Our 2 ships provide a tailored luxury experience within a boutique cruise environment, setting us apart from the mainstream providers or the mega ships, which constitute the wider market. Smaller and easier to navigate, our specialty designed ships provide a tailored experience for our customers' holiday from our nationwide chauffeur car pickup service at the start of their holiday to the number of single cabins we have catering for solo travelers, to the quality of service and hospitality onboard. We continually look to improve and refresh our proposition across dining, trips and entertainment. You can see on the screen a picture of our newly launched French restaurant, aboard the Spirit of Discovery. Refined but contemporary, it offers a fantastic dining experience and is proving extremely popular with our guests. We aim to do things differently catering for our distinct customer base. And in doing so, we generate strong demand for our product and loyalty to our brand. That demand is driving high load factors, more early bookings and increased per diems, the amount of customers pay per day, as our need to discount reduces. But importantly, our customers still recognize the great value for money they are getting. This is a trend we are confident will continue as we carry on giving customers what only Saga knows how to do. River cruise holidays are perfect for our customers, sitting between our active land-based touring options and our no-fly hassle-free ocean cruise experiences, River cruising offers a gentle river-based touring option without the need for lengthy coach journeys and multiple changes in hotel. Customers wake up each day at an exciting new destination. We moved our River Cruise business under the leadership of the Ocean Cruise team earlier this year -- sorry, several years ago and have been aligning the service experience across the 2 propositions. As you can see from the page, the results have been very successful, with load factors, per diems and customer satisfaction all performing very well. Building on this success, we're adding more ships. And this summer, launched our newest vessel, the Spirit of the Moselle. This is an outstanding contemporary ship, especially designed by us for our customers. Its sleek exteriors and modern interior design is already proving incredibly popular with our customers, demonstrating the opportunity we have to scale up our river cruise business. Our next river ship is already in development and due to launch in summer 2027 as part of our ongoing growth ambition for this part of our business. Our cruise performance has somewhat out-shown our holidays business in recent years, but we've been making great progress there, too. And there are clear opportunities to build on this under our new leadership structure. At Saga, we offer holiday options that meet customers' needs whatever their age. We tend to find a younger, more active customer attracted to our land-based touring holidays, often as a gateway to a more relaxed river cruise in the future. Other customers look to enjoy a hotel stay at an interesting destination through one of our specially selected hotel stays, complete with Saga host on site to make sure they get the most out of their holiday. Whatever their choice, we understand that older customers are drawn to different aspects of travel to those generally catered for by the mass market. With more time available to them, older customers will typically choose to stay a little longer to more deeply experience the destination they are visiting. They're interested in understanding the language, enjoying local cuisine and visiting culturally significant sites. Beaches and swimming pools are nice, but our customers would typically prefer a nice meal overlooking amazing scenery without the sound of children splashing around behind them. Our holidays offer had over time become a little too generic, missing this opportunity to fully play to the differing demands of our customers, something that our cruise businesses have been doing brilliantly. Now under the leadership of Nigel Blanks, previously CEO of our Cruise division, we are bringing the focus more squarely back on our customers and differentiated experiences tailored for them. Recognizing the type of holidays our customers want, we are expanding our range of special interest holidays, think bird watching, food and wine, history, archeology and so on. It's early days. But as you can see, this refocus, which will take a while to fully flow through to our program, has already started to work. Revenues and profits are continuing to grow from an already strong performance last year and satisfaction levels have materially improved. Customers tell us they love our nationwide chauffeur car service and so from April, our chauffeur service will be included in all Saga Holidays as standard, meaning that whatever their holiday choice, the Saga experience starts from the moment they leave their house. Our insurance business is in a transitional year, as we prepare for our Ageas partnership. Nonetheless, we've made significant steps forward towards our new simplified lower-risk operating model and traded well in the meantime. Under the new leadership team we put in place earlier this year, led by Lloyd East. We've been investing in price and marketing to support long-term growth and prepare us for the Ageas partnership. And the results have been strong. Three out of our 4 policy lines are now growing after several years of decline and our customer satisfaction scores reflect the refocus on customer that Lloyd and his team are bringing. Much credit goes to our insurance colleagues for Saga's Insurance business being ranked in the top 50 organizations for customer satisfaction by the Institute of Customer Service, only 1 of 2 insurers to be named in that group. Preparations for our Ageas partnership have continued at pace, as we work towards a significantly simplified lower risk insurance business model. We completed the sale of our underwriting business in July, meaning that Saga is no longer exposed to underwriting risk, and we will transition a large part of our broking operations to Ageas later this year as we go live with that home and motor partnership. I'm particularly excited about how new products and services can drive future growth. In particular, we are focused on creating more ways to engage on a deeper level with our customers more frequently. Take our money business, for example, the partnership we signed with NatWest earlier this year is exciting in its own right, given that we are expanding our suite of differentiated products. But more than this, it's symbolic of how we could pursue additional innovative partnerships across different business lines in the future. Elsewhere, we've already been deepening our customer relationships with lesser-known products within the Saga portfolio. For example, our Saga wine club, Vintage by Saga, with more than 10,000 customers regularly buying wine from us. Similarly, our Saga Connections introductions service for older people engages with 13,000 subscribers checking their connections on the website multiple times a week, significantly increasing their exposure to Saga and our wider product set. These are great ways for us to remain front of mind with customers beyond their annual holiday or insurance renewal. While our primary focus remains on our core travel and insurance propositions, you can see the obvious crossover from those businesses to these types of additional service. So there are undoubtedly opportunities to cross-pollinate and build on areas like this that amplify our customers' engagement with Saga. Our publishing business lies at the heart of our customer engagement strategy. Celebrating the lifestyles of older people, it provides deep and regular engagement with our target customer group and in a digital world is increasingly a powerful source of insight into what is on their minds and what attracts their interest. As you can see from this page, comprising our award-winning magazine, newsletters, website and online articles, it's a fantastic aspirational communication channel, positively portraying the lifestyles and interests of older people. This month's magazine encapsulates that perfectly. You will have seen coverage of our interview with Pierce Brosnan and Helen Mirren right across the mainstream press. And in every instance, crediting Saga Magazine in the reporting. And we have a real opportunity to build on this amazing content, given the early success we are seeing across our digital channels and platforms. Our print magazine is already the largest paid subscription magazine in the U.K. By servicing this content on our website and refreshing it regularly, we're now driving highly engaged customers into the heart of our business, where they spend more time and come back again to see what else we've got to say. They sign up for more content, allowing us to then communicate with them more broadly. We're now seeing 1.3 million monthly visits to our magazine website, 37% of which are new to Saga and these numbers are growing every month. Building on this brilliant content, we're sending around 10 million newsletters each month, covering anything from lifestyle tips to personal finance matters and seeing opening rates of up to 49%, a clear indication of the quality and relevance of that content. By refreshing our website, both our Saga homepage and the magazine side, we are driving traffic into the Saga environment, exposing customers to individual businesses and the messaging while they browse. You should recognize this slide from April where Mark and I laid out our medium-term targets. So I wanted to update you on our progress. We previously guided that UPBT for '25-'26 would be lower than that of '24-'25, largely due to the increase in finance costs. You will have seen from Mark's slide that as a result of our strong first half performance, we now expect UPBT to be in line with '24-'25. Trading EBITDA is now expected to be ahead of '24-'25 demonstrating the strong trading momentum that we've seen. And with leverage falling, we now expect year-end to be below that of '24-'25. So while it's too early to update any medium-term projections, we have clearly made a strong start and are ahead of where we expected to be this year giving us even greater confidence as to the level and timing of those medium-term targets. Finally to wrap up before we move to questions: We've made significant progress in the first 6 months of this year. We've delivered a strong financial performance, particularly in travel, and we have significantly reduced our debt. Alongside this, we've achieved some significant strategic milestones toward our more customer-focused, simplified business model going forward. That puts us in a great position as we head towards the full year. Looking ahead, we expect to go-live with our Ageas partnership in Q4 2025, beckoning the start of a significantly less complex and lower-risk insurance model for us next year. We will continue to build on the momentum we are seeing across our travel businesses, leveraging the benefits we are now seeing from the combined operations that we've put in place. And we'll go-live with our NatWest Box partnership at the end of this year, which will start us down the path of engaging customers in more differentiated products and services beyond our travel and insurance offerings. In short, we'll keep delivering on what we said we would do. We'll now go to Q&A, taking questions in the room before moving online. Timothy Barrett: Tim Barrett from Deutsche Numis. I had a couple of things, please. A question on Ocean Cruise. Could you give us an idea on how we should benchmark your performance there? And specifically, GBP 437 on the forward book looks really impressive, just wondering how you would encourage us to think about next year as a whole? And then interested in what you said about the database. Could you talk about scaling that and what size it is? I guess, how the database is growing? That would be great. Michael Hazell: Sure. So taking the ocean point first. So what we're seeing on ocean is really strong load factor growth and performance. Clearly, that's been growing year after year. We're getting to the point now where we're well into the 90%. What that translates into is a very powerful performance in per diems. The per diem growth is coming from a combination of the demand and people competing to get on to their favorite ship and their favorite cabin and their favorite holiday. But we're also seeing that translating into earlier bookings which means we then didn't need to discount less to drive that demand. So that, together with improving the itineraries, improving the onboard experience, improving the onshore excursions, all of those things add greater value, which drives that per diem growth. So as we now get to the point where it's pretty clear that there's only so far you can take a load factor growth, it will continue to grow a bit. But actually, the growth opportunity from here is continuing to add more value, discount less and drive that per diem growth. So very confident that now we've got the load factors in that sweet spot that per diem growth will now continue through a combination of demand management, less discounting and adding more value as the proposition improves year after year after year. So that's the way to think about per diems. In terms of our database, we've got the largest database for older people in the country, we've got 9.7 million people on that database. It's a really powerful insight tool. We've got contact details and can communicate to 7.7 million of those customers. So you can think of it, first and foremost, in 2 aspects. The power of that database to enable us to understand older people and curate our product proposition for those customers, whether it be on holidays, insurance or anything else, that is a really powerful tool for us, made even more powerful by our publishing business, whereby we can talk to them post articles, if you want to know who might be interested in pet products, send out a newsletter with a pet article and see who opens it. You'll then very quickly understand what resonates with those customer groups. You'll then understand who's got a dog. But we're actually getting even cleverer. With the benefit of AI now what we've been able to do is back, what's the word I'm looking for, tag all of our historic articles to get a better understanding of what type of article works for what type of customers. So it's not just about was it an article about dogs or was it an article about cats and so on. But actually, some customers respond better to a top 10 list of X, other like an interview style article. So what we can do is both, understand more about the customers and what they're engaging with in that publishing business and then curate and tailor our articles going forward to make sense of that. All with a view of a virtuous circle us communicating with our customers and then learning more about those customers in the process. Obviously, the other side of that is, it's a very powerful marketing tool off the back of that. So we've got the insight on the one hand, but we've got 7.7 million customers that we can communicate with about the products that we offer. So it is something that we're driving hard. What we have done more recently, and I touched in my presentation is, we're starting to make our Saga homepage a destination for customers online, putting brilliant publishing content on there, so that customers are seeing the content somewhere in the web, in the newsletter or simply because they've come to Saga. They see the brilliant content and then they come back the next day or even later in the day to see what else we might be saying because it talks to older people in a way that other people don't. Clearly, in surfacing, both on the homepage and then those articles, what we're able to do is flash up relevant product content alongside it to then drive those customers into our business units. So when I say we're bringing publishing to the heart of the business, it's not in an off-line way, it really is as an introduction into our business with that insight powering the products that we offer and the services we deliver alongside them. Sahill Shan: Sahill here from Singer Capital Markets. Three questions from me, if that's okay. On the money side of the business, I appreciate it's relatively small at the moment. But you made progress in terms of partnerships. How should we be thinking about how that's likely to play out or you're planning to play out over the next few years or so? Just help me understand, I think there was a waterfall chart. And within them, was quite a decent chunk in terms of contribution going forward, the building blocks to actually get that kind of profitability going forward. So that's on the money side of things. Secondly, just more generically, clearly, you're doing fantastically well on the cruise business at the moment. Can you just help us understand and just give us an overview of the state of play of the cruise market at this moment in time, particularly the area that you're focusing on? And are there any competitive threats that we need to be thinking about? And finally, just ahead of the launch of the relationship with Ageas in Q4, how is that going in terms of the lead up to that particular launch? That would be really helpful. Michael Hazell: Sure. So if I take the money business, and thanks for raising that because I think that's a really exciting opportunity for us. But you're right to call out the bar in that building block. It's there quite deliberately because we can see the opportunity that is a medium-term opportunity. The NatWest partnership goes live later this year. We've got around 180,000 customers engaging with our money products even today. But in the short term, it's not about driving profitability. It's about scaling up, driving engagement, talking to customers regularly for that wider Saga environment. But clearly, as we build that proposition over time, then the focus shifts from the early scaling up to then converting that into more profits and returns on that investment. So I'd encourage you to think about that as a long-term opportunity with a short-term scale up. In terms of the cruise market, look, I think it's dangerous right the way across our holidays proposition to think about the market rather than understanding that we do something different to the market, and that's what I'd encourage you to think about. Nobody is doing what we do. We've got 2 ships, and I said it in my presentation, that are tailored uniquely for older people, and we tailor our entire proposition for that market. When you look at the wider market, they are either in a mass market, larger scale cruising environment or they're operating outside of the ex U.K., i.e., you've got to fly cruise. Nobody is offering that, no fly boutique cruise experience to U.K. customers exclusive for people over 50 in the way that we do. So when we talk about what's the wider market? Actually, the wider market will have its own sort of ebbs and flows. What we are seeing for our customers is consistent and growing demand year after year for what we do brilliantly. In terms of competitive threats, I think that therein lies the answer. We do something different right the way across our holidays proposition, whether it be cruise, ocean crews, river or holidays. We win by being Saga, understanding older people better than anybody else and then curating products and services in a way that nobody else actually wants to because they're catering for a mass market, and you'll see that as we move into this new phase for Saga, where we've moved away from fixing the business, which we've been focused on for the last couple of years. This point around we do what Saga does, we understand older people better than anybody else and right the way through all of our product propositions and indeed anything new that we offer, you're going to see us, first and foremost, thinking about the customer how their needs are different and then playing that out. And therefore, when you think about that competitive advantage that brings, it's not so much about what the wider market is doing about what we can bring that is different to that wider market. And Ageas. So just to remind you on the Ageas for those that won't be close to it, really exciting opportunity, will transform our insurance business model. So it's a home and motor partnership where Ageas will bring the operations and the insurance infrastructure scale and investment as a first-class insurer in the U.K. After their acquisition of they will be in the top 3 U.K. insurers. They do that brilliantly. What we do brilliantly is understand older people market in a way that other people can't using our database and our experience of marketing to older people and help Ageas design products and services for those older customers. Put that together, you've got the perfect combination of Saga doing what it does brilliantly and Ageas is doing what it does brilliantly as a first-class insurer. So really exciting opportunity, but not just because of the overall opportunity to grow but also because it frees us up to focus on what we do best and allows Ageas to focus on what they do best. So in striking this partnership, we will and are rapidly implementing a much more simple and lower risk business model, whereby we no longer take underwriting risk. We completed the sale of our underwriter in July. And by the end of the year, we'll be live with the Ageas partnership, whereby they run the policy administrations, they run the back end, they run the infrastructure and so on and they have all the regulatory complexities that come with that, we will become a customer-focused marketing driver of that business and, therefore, be able to focus on what we do well. So as well as the growth opportunities, that simplification objective that frees us up to focus on what we do best is a really powerful aspect of that. So underwriting completed end of July, the wider partnership due to go live at the end of the year, and everything is on track. Any other questions in the room before we move to online? Any questions online, Chantel? Unknown Attendee: Yes, a couple. Under holidays, how are the Saga and Titan brands being developed differently? And also, how is the destination mix changing under holidays? Michael Hazell: Okay. Thank you for that question, whoever that came from. So yes, really, really important point. So we have the opportunity to win twice in holidays because we've got a brilliant Titan brand, which is an open-age holiday business, touring business, that's got great heritage in touring and then we have the wider Saga proposition that both does touring, holidays and obviously, our cruising business. But it's really important that we recognize those are two different businesses. And therefore, what we have been developing over the last couple of years and will continue to develop is differentiation across those two propositions because actually, in the past, we've been dangerously close to offering the same or similar experiences on Titan tour as you would a Saga tour. And going forward, we definitely want to separate the two out so that you get something different as a different type of customer for Saga as you would from Titan. So where you see Saga on the badge, you'll see all of the things that we curate for that older customer base that comes through in with the Saga customer. And then likewise, those customers that are looking for a complementary proposition that may be slightly younger and more active will engage with the Titan brand potentially as a feeder to engaging with Saga at a later stage when they see what the wider service and product proposition we can offer under the Saga banner looks like. So great opportunity. It's a complementary product set between the two. And in terms of destinations, look, we'll talk more about product development and proposition in the future as Nigel and the team get their feet under the desk. Our immediate focus on proposition has been to really double down on what our customers look for from a business that offers something different for older people. And that starts with special interest holidays. So as I said in my speech, older customers go on holiday for something different. They're not typically looking to go and lie on a beach or lie by a swimming pool. They're looking for something that engages their brain, maybe participate in their hobbies and just have a great experience beyond simply the pool side. So special interest is always something that we've offered, but we are increasing the range of special interest holidays and seeing increased demand for our special interest holidays. So we're seeing more people engaging with our special interest holidays quite a mouthful, but I'll keep saying it. And as we add in more special interest opportunities going forward or experiences going forward, then we're seeing increased demand as a result of that. So we're seeing more demand for what we've got, and we're driving more growth in that demand by adding in more. Unknown Attendee: Okay. I've got a couple more. That's from Peel Hunt, from Ivon Jones. Say ocean cruise, how are the dry dock timings managed? And were the cruises impacted by the Middle East over the summer and what was the financial impact? Michael Hazell: Okay. Taking the latter easily. We're not impacted by the Middle East disruption. The way to think about our ocean cruise is, it's a floating hotel, and therefore, we float wherever that we want to in any given year. So Middle East is not a big part of our itinerary. And therefore, we flex that itinerary every year to make sense of what we're seeing in the demand, but also the geopolitical environment. So actually a really flexible market for us. And despite all of the disruption in recent years, you've seen that we've gone from strength to shrink without any disruption there. In terms of dry dock timing. We had a dry dock in the first half of this year and we had the other ship, and I forget which way around it is, but the other ship had a dry dock in the second half of last year. And you'll see that just having a slight impact on the load factors in any given year. So that therefore, effectively, the dry docks are now out of the way, and I'm going to look at Nigel, this is why I bring the team here. The cycle for dry docks are every... Nigel Blanks: It's effectively every -- we do 2 docking every 5 years, a wet dock and a dry dock. Wet dock clearly ships those in water, dry dock comes fully out, so that's what we do, our statutory and compliance work. Michael Hazell: So it's a 5-year cycle. Was that the 2 questions? Great. Any other questions online? Unknown Attendee: One more from Ivor. Travel marketing, how are they being deployed and how is that changing? Michael Hazell: So there's a few things on travel marketing. Firstly, by combining the two travel businesses, cruise and holidays, we get much bigger bang for our buck because we're able to optimize our marketing right the way across our travel proposition rather than focusing on cruise marketing overhead or holidays marketing over here. So that is increasing the penetration of our marketing spend right the way across the business. The profile of marketing is slightly different this year to previous years. We focused our marketing in the current year on driving our current year bookings, and you'll see that passenger numbers in here are 13% ahead of the strong year that we had last year. What that means is as we go into the second half of this year, we'll shift our focus into marketing next year, but it does mean that the year-on-year booking profile is slightly different, which is why you're seeing that next year bookings are slightly behind where we were this time last year for the year ahead, not concerned about that. That's simply because we've rightly focused on driving this year, driving the growth into this year, which will then mean that translates into repeat business for next year and then we drive the next year's bookings in the second half of the year. So very confident in the outlook, and that's a business that's growing very well. Outside of the sort of coherent marketing approach right the way across travel, what we are also now doing is really driving up our holiday marketing, more tailored for our customers, again, by looking at all of what works and what doesn't work right the way across our holiday propositions, we can take learnings from one part of the business into the others. So I would say that in our holidays business, we've probably been a little overexposed to digital marketing and a little underexposed to analog marketing. That means that if you recognize our customer base, they tend to respond more to the white male catalog marketing than they will do to digital marketing. There's room for both, but our cruise business has got brilliant experience in doing that. The Marketing Director that was sitting across cruise is now sitting across the whole of our Travel business, bringing those learnings into the Holidays business. So we're rebalancing the spend between digital and analog, importantly. But we're also out on radio. You'll notice that insurance is now actively marketing on TV as well, that brings us a halo effect. So right the way across the board, you'll see Saga present not just in travel, but more generally, putting your head above the parapet, which I think is a real sign of where the business now is. We're coming out, we've got a strong footing, we've got our funding in place, we've got our growth trajectory ahead of us, and we're now trading the business hard and investing in that growth, and clearly, it's working. Any other questions online or should I say from Ivor? Good. All right. Any other questions in the room? Doesn't sound like there's any more online. Okay. Just to wrap up then, thank you for joining today. Look, I think we've made really good progress. You can see that we're trading well, which sets us up really well for the trajectory we're on. But really importantly, that's going to be underpinned by the delivery of our strategic actions, and we're getting on with that stuff as well, which means when we talk about those medium-term targets that we set out in April, we're even more confident here today that we'll deliver on those targets, GBP 100 million profit and less than 2x leverage by January 2030. So great fun, and we're getting it done. Thank you, everybody.

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