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PLLWF 2025 Q2 财报电话会议

Operator: Good afternoon, and welcome to the Polarean Imaging plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Christopher Von Jako, CEO. Good afternoon, sir. Christopher Von Jako: Thank you so much. I appreciate it. So hello. As mentioned, my name is Chris Von Jako. I'm the CEO of Polarean, and I'm joined today by our CFO, Chuck Osborne. So thank you for taking the time to be with us. I'll begin with an overview and some additional context on the RNS we released this morning. And after that, I'll walk through an updated presentation, both as a refresher for those familiar with Polarean and as an introduction for any new to the story. Finally, Chuck and I will take a number of questions at the end of the presentation. So before I begin, just as a reminder, these are the normal disclaimers. We are revolutionizing pulmonary medicine with our FDA-approved Xenon MRI platform. It is the only noninvasive radiation-free technology that shows the full picture of lung function. So usage is growing across our leading academic centers, both in clinical as well as research. And as you may know, our technology is available for use on all 3 major MRI vendors. So that includes Philips, GE and Siemens. Reimbursement is active, which is great for us, and clinical sites are billing and getting paid for Xenon MRI exams. In March, we announced a third revenue vertical in our pharma trial, which is in pharma trials, where we also signed our first multicenter trial, and we continue to build a growing pipeline with our partner, VIDA. And then lastly, on this slide, our platform is really backed by nearly about 1,000 publications and growing in more than about 200 clinical studies, providing strong scientific and clinical validation. So there's no question our first half revenue has been disappointing to both the market and our team. We did not close any new systems in the first half. Obviously, this morning, we announced a new order from the NIH, which was quite significant. But consumable usage continues to grow, which shows strong engagement from our customers already using the platform. At the same time, we faced real market headwinds, right? So the NIH funding cuts have reduced resources available to many of our academic customers, while new Medicaid reductions just put in recently in July are putting an additional pressure on hospital budgets. Together, these policy shifts have slowed capital purchases, particularly for new innovative technology like ours, and it's really lengthened the adoption cycles. We expect this uncertainty to continue into 2026 as academic centers reassess and reset their budgets. That said, we're, I think, doing a great job of managing our cash with discipline and are funded to operate through the second quarter of 2026. And importantly, I would say commercial momentum is building. Physicians see the value today in our technology. Gas exchange approval would be transformative in the future for us. And administrators today value both our existing reimbursement and new revenue opportunities that, that reimbursement brings. So with Alan Huang, who joined us a year ago, actually, leading sales, quotes are sharply up. I think we're over $21 million, which is about a 650% increase from year-over-year. And those quotes get to a point when we release those quotes are -- when we're kind of in that process with these centers. So that's really good to see. Our total addressable market continues to expand across our focus fronts. So in June, we announced our expanded pediatric approval, which basically broadened access to over 1 million more potential patients with our technology with a controlled market release that we have planned actually next month and then hopefully, our first patient in Cincinnati Children's shortly after that. So based on our long ongoing discussions that we've had with the FDA, we redesigned our pivotal Phase III trial for gas exchange, which we announced that cut the cost in half to about $4 million to $4.5 million, and we expect to finalize the gas exchange trial plans before the year-end. Internationally, we continue advancing our potential for our OUS expansion through dealer partnerships. We've had some nice progress with Taiwan and also elsewhere in the Asia Pacific. With Philips, we are advancing approval of our XENOVIEW Chest Coil on their 3T MRI systems. While the coil is already FDA cleared, this additional Philips process ensures seamless integration within their installed base, which is great. And what that really means in practical sense is that the coil is fully compatible for clinical use across their 3 Tesla machines. It's integrated into the software. It'd be recognized automatically and managed safely during the scanning process. In March, as I mentioned, we announced our first pharma collaboration and basically, the Xenon MRI platform is being included in a substudy of a global multicenter trial for investigation of a new lung therapy. That trial is set to begin early next year. And as I mentioned earlier, obviously, our pharma pipeline continues to grow. And that first one that we announced really helps from a foundational standpoint. And finally, scientific momentum remains strong at this past year's American Thoracic Society Annual Meeting, which was held, I believe, in May. That is the leading global conference for pulmonary medicine. There were more than 30 Xenon MRI presentations across a range of indications. What was great is our Founder and Chief Scientific Officer, Professor Bastiaan Driehuys, was honored with a really special award there recognizing his pioneering work of bringing Xenon MRI from the benchtop to the patient. Also the International Society for Magnetic Resonance in Medicine, that's the premier global annual MRI conference that happens, that was in May as well. So Xenon was prominently featured there, including 2 presentations that I personally delivered, which was great. So it really is bringing up the overall presence and knowledge of the technology. And then obviously, we've had a number of really great new publications that validate the platform, including important new studies in lung cancer. I kind of touched on those in my presentation, both from a surgical planning perspective as well as in guiding radiation therapy for lung cancer. And I think that really underscores the growing recognition of Xenon MRI's clinical values, particularly in those areas with cancer. For 2025, given the headwinds that proved greater than we anticipated, we did announce that we're revising our revenue guidance down to $2.5 million to $3.5 million, which is down from our prior $5 million to $6 million. This obviously follows a very strong 2024, where we exceeded our guidance, but we continue to build a really good pipeline. That said, our backlog remains healthy. Prior to our announcement this morning with the NIH, which increased it significantly, it was at $1.2 million that was on orders that we had or stuff that we had delivered since June 30. So looking ahead, we expect to return next year or the following year to the $5 million to $6 million revenue trajectory as we expect market conditions to improve as hospitals continue to adjust with the news that they've had over the last several months, which really I think if I look at it in any way, it was just the uncertainty that has been there. That uncertainty is kind of coming away now, and they can now reassess on that. Importantly, from a profitability standpoint, we continue to see a clear path following the gas exchange approval, and we expect we can achieve that with about $20 million in incremental investment. Throughout, we continue to remain focused on executing our 5-pillar strategy. And as it says here, right, obviously, driving utilization, which we continue to do at both our clinical sites as well as our research sites. We want to grow our customer base. We want to strengthen our reimbursement, expand our total addressable market and continue to advance our partnerships that we have. So turning to the regular presentation. Our mission is to revolutionize pulmonary medicine. We talk about that, obviously, with this vision to optimize lung health and prevent avoidable loss by illuminating hidden disease. Our employees are united by this purpose, and our focus is always on the patients, delivering truly, I would say, breathtaking images that help clinicians detect disease earlier, guide treatment decisions and monitor outcomes over time. So lung cancer is the #1 cancer killer worldwide and over 500 million people suffer from chronic lung disease, yet we still rely on outdated tools. You can see here, if you want to look from an imaging perspective, you have X-ray and CT. They use radiation and only show anatomical structure. And then on the far right there, you can see me doing spirometry. That is obviously the standard for lung function today, but has its major limits. It gives no images and provides a very variable, nonpersonalized and insensitive measure. The lungs have 2 jobs. The first thing that they do is they ventilate. You can see that on the left-hand side, that was move air in and out. The second thing they do is oxygen crosses a thin membrane, a very thin membrane into the blood and the carbon dioxide moves out and is exhaled out of the body. But that deep region that's there is the silent zone. It's hidden from current test, yet it's where many diseases begin. And if you miss the silent zone, you miss that disease until it's too late. I tend to do this with investors just to think about structure and function and what the differences are. If you think about structure, it's like a road map. Here in San Francisco with the roads and the bridges, but there's no traffic. So if you add the traffic in, this is function. It shows what's moving freely and where the traffic jams are. CT works in the very same way. It shows the big structures, the major airways, but it can't see the silent zone where function matters most. And there -- if there's a traffic jam there, oxygen never reaches its destination. So how do we see the silent zone? Well, that's where Xenon MRI comes in. For the first time, we can apply the power and safety of MRI directly to the lungs. What you see is our ventilation scan is FDA approved, it's reimbursed, say, for patients now as young as 6. It occurs in a single 10-second breathhold. This is true 3D view of lung function. The Xenon gas acts as a safe surrogate for oxygen showing exactly where the lungs are working. What you can see here up in that left-hand side is where it's not working. So there's a blockage in the silent zone there, which is visible to other tools. And the gas clears completely from the body in seconds, making Xenon MRI safe, reliable and practical. So here's sort of a standard setup for Xenon MRI. If you look at the far left, the lungs are mostly filled with air. So you only see the outer boundary. So we take that first 10-second image of what we call a proton image or a structural image there. And in that second image, we add Xenon. So now you could see the function or where the ventilation is happening. But then you overlay the 2 together in that third image and you could see where the lungs work and where they're not. And that last image there is our software that really generates the quantitative maps turning the guesswork into clear insight. So this is the silent zone. This is where gas exchange happens. Oxygen, as I mentioned, crosses that thin membrane. It's actually 1 micron, which is invisible to the eye. And when it crosses that membrane, it goes into the red blood cells. But Xenon, as I mentioned, follows the same path. The breakthrough is that it resonates at a different frequency, whether it's in the air space, the membrane or the blood, letting us image all 3 compartments in that 10 seconds. But as we know, the bottom 2 there, I'm showing now a healthy patient, and you're seeing the healthy patient in the airspace, the membrane and the red blood cells. And we have our FDA approval for that top, which is looking at the airspace itself or what we call ventilation. So in a healthy subject, the flow is smooth. Everything is green. In like an airway disease like COPD or asthma, the traffic jam is in the airways. So air flow is blocked, which is shown there in the top image in the red and yellow. In a patient that has tissue disease like pulmonary fibrosis, the jam is in the membranes, that traffic jam. So that's where the oxygen or -- and in this case, also the Xenon is getting trapped. It thickens in that 1 micron membrane that's invisible to everything else. So it's really trapping the xenon and oxygen in there, which is shown in pink on the image. In pulmonary hypertension, which is a vascular disease, the traffic jam is in the vessels. So transfer to the blood is impaired in some way, could be injury. But here, you can see that in the red and yellow. So Xenon MRI uniquely images this gas exchange revealing where the blockage is and why patients can't breathe. Remember, there's some reason where oxygen, when you're inhaling it, and it doesn't get to the blood, that's where patients get breathless. So the unmet need is massive. We know this. We've been talking about this for a while, whether it's across airway disease, tissue disease and vascular disease as well as cancer. And early function loss in the silent zone is that common thread. So with Xenon MRI, as I mentioned before, we can finally see it. We can detect that disease earlier. We can guide therapy and surgery and radiation therapy. We can monitor progression, and we can even predict outcomes. So I'm going to give a couple of examples here. I'm going to start with unexplained breathlessness, then I'll move to cancer, and then I'll also talk about tissue disease, in this case, pulmonary fibrosis. So unexplained breathlessness affects nearly 10 million Americans and the standard tests really fail to explain what the issue is. They don't know whether it is a heart issue, whether it's a lung issue, a combination of those. The patient is just out of shape or maybe they're having some sort of mental health issue. So in this case, at one of our sites, a man presented with difficulty breathing. His chest x-ray, which is the first thing they did look at, is normal. The second thing they have moved to is a CT scan. This also looked normal. Then they would move to doing a functional test, in this case, spirometry, where you can see that 82% is what the patient had, which is on the lower end of normal, but it's still normal. Months later, they ended up sending the patient home, probably giving him an inhaler, but months later, he returned with worsened symptoms. They end up doing another spirometry, which is essentially about the same at 78%. So 2 basically almost normal -- basically normal spirometry settings. But this center actually had our technology and Xenon MRI really revealed large regions with no airflow going to it, which really helped to understand what was going on with this patient. Further, they used those images to help target a biopsy and really give a diagnosis. And I think this is really kind of shows the super power of Xenon MRIs, particularly in ventilation here, revealing what other tests really did not show and what they missed. So looking at the potential in cancer, I think we already addressed earlier that cancer is bad, especially in the lungs. I think worldwide, it's over 1 million patients. But in the United States, and some other countries are doing this as well, they're doing -- they're eligible for lung screening. In the U.S., over 14 million people are eligible for lung screening. But unfortunately, about 10% are screened, but even when CT, you can see a CT here and you can actually see the needle going towards the tumor there. But even when they find this tumor, it doesn't show lung function. So CT can't show and can't tell if this patient is healthy enough for surgery or if the patient should have radiation therapy, for example. And that's really where Xenon MRI comes in for these patients with lung cancer. In surgery, it can guide how much lung can be removed. It can actually also predict postoperative function. There was a really important paper that was recently published that showed this in over 100 patients that were done at one of our sites. And it can actually even anticipate the complications from a postsurgical lung surgery. In radiation therapy, it shows which regions can be spared, really enabling safer and more effective treatments. And Xenon MRI really kind of provides the missing functional insight for lung cancer, making the cancer care even better. So even more exciting is looking at lung tissue diseases. And this is where all the excitement around really getting the gas exchange approval is. About 7% of people actually getting lung screens show early abnormalities. And they really don't know what's happening with these patients. They really kind of don't know which ones will progress to fibrosis and which ones won't. And most of these patients actually fall into the gray zone. So it's a big problem today to know whether they are progressing or whether they're not progressing. Xenon MRI changes that. You can see on the CT, this patient appears normal. There's actually -- it's an older patient, but appears normal in general. But Xenon MRI shows in that pink membrane area, basically shows that thickening, signaling that there's higher risk here for this patient and really heading towards fibrosis. It also allows us to track therapy. Before here, this image is antifibrotics. You can see the widespread pink there. This is a lot of the work that's been done by Duke and really exciting a lot of people from a clinician standpoint as well as a lot of these pharma companies that are focused on bringing up more and more new antifibrotic therapies. But what you see a couple of months later, the green shows the progression has slowed. So CT really is the problem here. I don't actually have the image here, but basically, by the time you see the fibrosis on a CT image is too late. And Xenon MRI really acts earlier, really identifying the risk and guiding that therapy. So this is our drug device platform. It's built on a per patient consumable. It's a real what we call a true razor-razor blade model. It starts with the Xenon cylinder, which you could see on the left there, serving about -- roughly about 100 patients. And then each single-use dose bag is filled with the Xenon gas. But first, it has to go through a hypopolarizer, which makes it visible on MRI. And then it's measured for accuracy. And then, of course, it's delivered into the MRI suite. And then we have our chest coil, which we have actually 4 different versions of our chest coil. They're all FDA cleared, working on both GE -- or not both, but GE, Siemens and Philips. So we capture the detailed images using that chest coil. And then we move those images into our AI software, which integrates the images, providing an automated quantitative analysis. So as mentioned, obviously, many times before, our platform is really protected by over 20 patents, which are great. And each one of those patents actually go out at least another decade plus. And then, of course, while we are MR vendor agnostic, we have a co-marketing relationship partnership with Philips, which has been very, very beneficial to us. So reimbursement is in place and just with 3 scans really covers the system. And I think that's a huge value proposition that we've seen with the potential customers that we've been talking to. And we generate our revenue, whether it's from a system sale, the recurring consumables that we have and service as well as with our third vertical, which is the global pharma partnerships. So I would say that we have really kind of proved out the model. We have a number of systems in place across sites in both the U.S. and Europe. I did not add the NIH yet. So it's not just a vision. This is something that's working today. I did want to just kind of show one example sort of the way the payment schedule does work. So we established this new code, which pays about roughly half of that $2,500 the sites would receive getting for it. So it's a brand-new code. But also as important, we have these other 2 or 3 codes that are already existing procedural codes. And it's great that our centers are receiving reimbursement for all of those codes, in some cases, actually getting higher than the $2,500. We tend to say this quite a bit when we're talking to centers as well. When they're looking for a new revenue, if you're doing just an MRI on a patient's brain, the revenue that they can recognize a hospital from that is about $300. So you can see it's almost 10x more that they can recognize from doing a Polarean image. So as I mentioned a number of times, in March, we did announce that Polarean expanded into our pharma-sponsored trials, really creating this third revenue cycle. Our partnership with VIDA really enables us to scale our imaging service platform and Xenon MRI offers a very sensitive noninvasive biomarker that can really reduce sample sizes and accelerate drug development time lines. And then we saw -- obviously, we also mentioned this that a leading pharmaceutical company did select our service platform for this multicenter trial. And as I also mentioned as well, we're really excited about getting that trial up and running. There's been a lot of work over the last several months between us, VIDA and this really very large pharmaceutical company. So we're obviously also aiming to add additional other pharma companies into the trial. But we really see that this service model really builds a network of Xenon MRI-enabled sites, and it allows us to really accelerate pharma adoption and creates a durable competitive advantage for Polarean. So with that being said, let me just turn it over to Chuck, and I'll have him just go through sort of our first slide around financials. So Chuck? Charles Osborne: Great. Thank you, Chris. Yes. As Chris mentioned, although we faced some U.S. headwinds based on the government funding, we are seeing signs of early traction. Our consumable growth was 36% for the first half of '25 versus '24. As we said with the financing in the previous June, we -- the money is to drive commercialization, and we have been investing in our commercialization and doing it in a very disciplined way, trying to save money in other areas to make sure we can fund a nice aggressive commercialization strategy. We finished June with about $7.3 million in cash, and we continue to have no debt on the balance sheet, and this does fund the company through Q2 of next year. We have our 2 big strategic partners, Bracco and NUKEM, who are very supportive of the company, not just financially, but also commercially and strategically. They've been huge supporters of the company. And then as Chris talked about our updated revenue guidance, we're going to do somewhere between $2.5 million and $3.5 million in 2025. And then we believe we'll be back on the growth trajectory for 2026 and do somewhere between $5 million and $6 million. Christopher Von Jako: Okay. Great. So I always do like to put up the team. We have a proven leadership with this team. They have decades of experience in imaging and commercialization, which is great. And we're really pushing with this team forward on a number of different areas that we've spoken about, really kind of focused on those 5 pillars that we speak about all the time. So I think the story is very much still the same. The unmet need is really immense. And I think that we really do have exclusive intellectual property and the right capabilities to continue to move this technology forward as we continue to work in the research end and continue to move towards the clinical end and adoption of the clinical side. Clinicians, I can't say this so much more, but clinicians really see the clear patient impact. They really do. They understand it. Every person that we present the technology to understands exactly that impact. But unfortunately, the headwinds that we've had, even with a great reimbursement in place, has really put us in a tough position. We had a -- we really anticipated a number of orders by now. Some of these centers that we've been working with, because of these headwinds that they've had, in particular, unfortunately, have had to make lots of changes on their side. In some cases, some of these centers we've been working with, have let hundreds of employees off, which is obviously a really tough shape. So it's really kind of put us on the back burner in some of these centers that we were hoping to progress with. But when they're letting not tens of employees off but hundreds of employees off, in some cases, more than 600 employees at one academic medical center that we were talking about, really makes it hard. But we are very lucky to have a very strong reimbursement in place, and our centers have really enjoyed kind of getting that in place, and we've been working with a number of other centers and making sure that, that reimbursement is going to continue to flourish. Our partnerships with med tech and pharma are expanding as we talk about, the work that we've been doing with Philips, but not only with Philips, also with Siemens and with GE has been really important. And as Chuck mentioned earlier, the work that we've been doing with Bracco and with NUKEM have been really important. And then just very excited about what we're doing from a pharma perspective. The pharma perspective not only does things from a -- brings that third vertical from a revenue standpoint, but really gives us great credibility in looking at what we're doing from a drug development side. It's also good for our story on the commercialization side because from a pharma perspective, when these academic medical centers love to do these trials, and it brings an additional revenue for them to do these trials. And in the end, this is really precision medicine for lung health. And our technology is really showing things that other technologies can't, and that's really the basis behind it. So as I mentioned maybe before, I've had one of the Xenon MRIs myself. I was on the table there for about 3 minutes in and out, got it very healthy. In this case, I'm just showing my ventilation images, but I did do a gas exchange as well, which was good. So I was a healthy test. But I would say we want to right now take the time and conclude the presentation and invite you to ask some questions. So maybe I'll stop there. Lilly? Operator: [Operator Instructions] As you can see, we received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Christopher Von Jako: All right. Thanks, Lilly. I appreciate it. So just looking at the questions here. So Chuck, I'm probably going to ask you to answer some of these too, if they're appropriate. So what factors do you think are driving the 36% increase in consumable sales? And how can you see this growth momentum being sustained or accelerated? Okay. So obviously, the awareness of Xenon scanning is increasing, I think, obviously, in the medical and scientific community. And we are selling consumables, as I probably have mentioned, both to our clinical side as well as our research side. And this is obviously driving an increase in total consumable sales for us, which is great. And we want to continue to do this as we continue to expand the sites and continue to work on that. So I think that's great. We have seen a steady increase in research imaging as well. And also, there have been some notable grants that were just awarded to a number of our sites. So we'll see that continue to steadily increase. And I think I'm hoping some of the work that's been happening at the NIH will kind of smoothen up and some additional grants will be received there. But I think that work is continuing. All right. So let's see the next one. Given the challenges and restrictions in the U.S. capital equipment sales, how do you see the balance between consumables and systems evolving over the next 12 to 18 months? So maybe Chuck, do you want to take that one? Charles Osborne: Yes, I'll take that one. As we've said all along, in the early days, our sales will be largely capital sales. And as for the next 18 months, we see that being a majority of our sales until we increase our polarizer footprint and the number of scans at each site increases. In the later years, when we have this larger footprint and scans are happening more frequently at the sites, our gas sales will be higher than our capital sales. But for the next 18 months or so, we are still predominantly capital sales focused. Christopher Von Jako: Okay. What milestones are you targeting within your existing runway to demonstrate progress and increase further growth? So I think August, I mentioned this a number of time. Our focus really remains on driving utilization. I think we're doing a lot of things on doing that. We have a team that's just dedicated on driving that utilization. We're visiting our centers, both our research centers as well as our clinical centers on really an ongoing basis to do that. The other thing, obviously, is growing the user base. That is going to be really important. I was really excited to announce the NIH order this morning. We had hoped -- it had actually come in before this call. We'd hoped, obviously, a number of orders had come in before this call, but it was really nice to wake up this morning to actually see that e-mail and then put that announcement out as soon as we were able to do that. So pretty excited about that. But we'll look to obviously continue to grow the user base. The third thing is broadening reimbursement. So we're doing a lot of things around broadening reimbursement. And as I've talked about in the past, obviously, Medicare is the governmental insurance for patients that -- sorry, for people that are 65 and older and happen to be patients. So that is basically a guaranteed reimbursement that's there if they want to get an image. And then people that are younger in that age group below 65, it really comes down to private insurance. So we've been working particularly with, say, Cincinnati Children's because their patient population, obviously, is younger than 65. Now some people that are younger than 65 actually qualify for Medicare as well, depending on the type of illness that they have. but they have been getting private insurance reimbursement, which is great. And as we expand and look into looking at gas exchange, we're looking at actually increasing the reimbursement that we have for gas exchange as well because there are some different constraints when they're doing a gas exchange. So we're still trying to broaden that reimbursement. It's a real focus for us. Obviously, the fourth thing is expanding our total addressable market. We talked about pediatric. We talked about international. Maybe just a little bit about international. We're making some great progress with our Taiwanese distributor. We've had a number of calls with other potential distributors as well. In fact, we have one tonight. And I was -- about a month ago, I was in China as well and really looking at that market and opening up that market. It's the largest growing area for MRI sales. So we were there meeting with a number of potential customers. I happened to actually join the annual MRI -- the Chinese annual MRI meeting while I was there. So there is some good work going on there. But obviously, one of the big focuses is gas exchange. And so pretty excited about sort of the work that we've done there with the FDA and hoping to finalize our protocol by the end of the year. And the last thing is really developing those partnerships. And I think I've obviously mentioned that quite a bit. But obviously, we want to make progress in all of these areas. And our current cash flow, obviously, as Chuck mentioned, brings us through Q2 2026. So let's see. How do you see your expanded collaborations with Philips influence adoption and credibility among clinicians and hospitals? So obviously, our relationship with Philips really allows us to expand our reach, which is great because we have other voices out there talking about our technology. We've not only done this with Philips, we've done this with Siemens and with GE as well, getting their salespeople to talk about our technology, not only in the U.S. but outside the U.S. I actually had the opportunity when I was in China also to visit with Philips there and jointly to visit a number of customers while we were there. I actually brought a joint customer of ours from the Cincinnati Children's with me to China to make some specific presentations. Let's see the next one here. Could the Philips and VIDA Diagnostics collaborations open doors to further deals with pharma and device companies? I think, obviously, the answer is yes to that. But both Philips obviously, is broadening our exposure that I just mentioned. And VIDA, in particular, they're working directly with pharma companies. Their focus is mainly they're a CRO for CT. And together, uniting us together with them brings the MRI component into it and really allows us to kind of grow that area from a pharma perspective. So I think the answer is good on that. Well done on securing distribution deal with Sumtage, thank you, in Taiwan. How do you see the balance between the U.S. market and selective international expansion evolving? I think, obviously, I've said it a number of times, we spent quite a bit of money getting our FDA approval and also our reimbursement in the United States. It's really been our primary focus. I got very comfortable last year with our technology as we had it out in the field, which allowed me to kind of think about sort of outside the United States. And I think, as I mentioned, we're looking for like-minded potential partners like distributors like Sumtage, will give us opportunities in select markets. Those select markets, I'd like, in particular, have looked at the Asia Pacific market because there, reimbursement in certain places becomes less of an issue. And so places like Taiwan, like China, like, say, Korea, India, for example, really can open it up. And I think it was probably a good time for us to do that, obviously, with sort of the big headwinds that obviously that we saw in the U.S. marketplace that was happening as well. So how do you expect the expanded pediatric indication to impact adoption and revenue growth in the near term? Obviously, the expansion of the label down to 6 that we announced, I think, in the beginning of June when we announced it, really, as I mentioned even in the presentation, opens up a market by about another 1 million patients. If you think about it, when we -- in the United States, there are dedicated pediatric hospitals, and we've been focusing on about 20 to 30 of these pediatric hospitals here in the U.S. They were only able to image about 1/3 of their population because these pediatric hospitals only treat from infant up to 18 years old. So they were only looking at the 12 to 18. Now we know Cincinnati Children's is also doing adult patients. In fact, they did one yesterday. Across the street, they have the University of Cincinnati, which is an adult hospital, and they've been sending patients over there from the adult hospital. So they've been doing that as well. But they've only been looking at sort of in their core area from the 12 to 6. So opening it up from 6 up to 11 obviously opens up another 2/3. And it becomes really obviously compelling for a number of the other pediatric hospitals that we've been talking to, which I think is -- which is the more important thing. So we're pretty excited about that, not only the work they've been doing at Cincinnati Children's, but also the fact that they've been able to get reimbursement on those pediatric patients, which is really important. The reduced cost for gas exchange indication following your FDA meeting looks very positive. I certainly agree. How does this accelerate your path to broader label expansion? So we are going through this one last step with the FDA. We did -- I think we put an RNS out, I think, in August. And we talked about, in essence, that we put our protocol in. We're waiting to get some feedback around the protocol. And I'm hoping if all goes well, we'll be able to finalize that protocol before the end of the year. I know that when we talk to clinicians, they are most excited, obviously, about gas exchange because it's really showing them the complete picture of lung function, which is really what people want to see. We haven't really even gotten to the depth. It gets a little bit more clinical here, but on some of the things that we can do around the cardiopulmonary side. But some of that work has been advancing really, really nicely at Duke. But I think what we've seen as we've been able to derisk the study and have really nice conversations with the FDA is that we've seen that we've reduced the size of the trial, really the subject size of the trial, which can hopefully help us, obviously, which is reducing the dollar amount, which can also hopefully potentially reducing the time to conduct the trial and then analyze the data. So hopefully, as we get through this last part with the FDA, we can get a little bit more transparent about where we think the trial will be. But we are really excited about where that is going. Are there particular pulmonary diseases or patient populations where, it's perfect segue, I guess, where you expect gas exchange imaging to have the biggest impact? So gas exchange, as I mentioned, obviously, is giving the complete picture. So it actually affects all 5 of those areas that I talked about. Probably the least on is airway disease, but it's also still nice to know in those airway disease patients, whether they're having issues, both in their membrane, that very thin membrane as well as in the capillaries around the lungs and understanding whether the oxygen is transferring over into the blood or maybe there's no blood there. So I think that, that's really important. I think that it's obviously extremely valuable in unexplained breathlessness to really understand so where that oxygen is getting hung up in any of those 3 compartments. Pulmonary fibrosis is something I'm really keyed into. I've mentioned a number of times this coming November, my father passed away about 10 years ago from pulmonary fibrosis. And I think this is so key in understanding this disease early because sometimes they don't understand it. Someone is having unexplained breathlessness as my dad did, and they're not seeing it on CT. So the ability to actually see the membrane, understand what's going on there, getting them on therapy earlier, really preventing what's going on there is really important. And then the ability from a drug development side, really understanding what's happening in that membrane. And then obviously, any of the pulmonary vascular diseases like pulmonary hypertension will be really important as well. And I think that we are just sort of scratching the surface right now there. This is something that currently no other technology can interrogate is that really that capillary structure around the lungs and trying to understand what's happening there, why the oxygen is not getting in or whether it is or isn't getting into that area, but also using this to understand where the pulmonary hypertension is coming from. There are essentially 5 different stages of pulmonary -- or 5 different versions of pulmonary hypertension and some of those involve really invasive steps in order to make a diagnosis. And this is a very noninvasive way of doing this. And some of the work that they've been doing at Duke and other places are going to be really, really important as we continue to progress and move this forward. And I'm hoping actually in the next -- there actually was a nice new publication by Duke a couple of months back, particularly in this area around pulmonary hypertension, but there's a lot of focus there. And this is where the cardiologists are also getting involved, which is nice. And we've had a lot of good, great discussions with the folks at Duke and the cardiology department, which has been great and really see this as a game-changing technology. So how do you plan to address the challenges that were prompted the lower 2025 revenue guidance? Obviously, the headwinds that we saw by the policy changes within the U.S. government have really affected us as well as other companies. I was just in London a few weeks ago at a meeting where I was talking to a number of CEOs from other companies that were also very affected by this. So it's not only a Polarean thing. It's happening to a number of companies. But I would say that it's innovative companies like us that are really probably feeling the headwinds in this market. But we hope, obviously, that hospitals are going to begin to adapt, and we already see this happening and finding creative ways to purchase the equipment. We do offer a number of interesting and creative ways to do this. And we're working with our customers to kind of fit in their new funding constraints. It was really nice to see the NIH spend some money today, obviously, with the order that we had. So hopefully, that's a good sign that the NIH is kind of going to be moving in the right direction from that perspective. How long does your current cash runway last? I think we did explain that before, but -- and do you need to raise capital soon? So Chuck, do you maybe want to just address that again? It's another question that we got in. Charles Osborne: Yes, happy to do so. Yes, as we said, our current June 30 cash of $7.3 million safely funds the company through Q2 of 2026. And so we will have to fund the company at some time in the future. We're trying to time it so that we have some good commercial traction and can finance from a position of strength. We are actively managing our costs and with the reductions of cost of the gas change clinical trial, we believe we can get to profitability post gas change approval with somewhere around or a little bit less than $20 million. Christopher Von Jako: Right. Thanks, Chuck. When do you anticipate starting the gas exchange trial? I think as I mentioned already before, we expect to have that protocol finalized by the end of the year. But more importantly, obviously, is making sure that we have the financing secured before we start that trial. I mean I think that's going to be the end step. I think as I started 2 years ago, we've been working to ensure that everything is in place to start this trial. And that, obviously, the biggest hurdle has been around the FDA, but we had to do things both internally from a product standpoint to make sure that the product is ready to start that trial. I think some of that has been around the software, which, in general, I think, has worked out quite nicely for us because the pharma trial that we're going to be starting has also kind of helped us move in that right direction as that pharma trial will be looking at gas exchange as well. And I think that this is a perfect segue has kind of led us to that place. So again, I think the big thing for us right now is getting the protocol finalized and then obviously securing the financing. How long does your cash runway last? Did we already answer that? That was -- that's another one. How significant is the pharma services model and when could it contribute to revenue? So it is a third revenue source for us, and we are providing a service to these pharma companies. And what it is doing is we are actually analyzing the imaging, right? And we're charging a service to be able to do that. And the other part, obviously, is that our customers will be doing patients as part of this. They'll be buying gas to do the patients. So it's really that kind of twofold from a revenue standpoint. But I think the more important thing is that working with VIDA, I think we've built a scalable imaging service platform to do these multicenter trials. So -- and this partnership basically allows us, as I mentioned before, give us that service component as well as the consumable sales. And I think, obviously, really positions us as a future biomarker in drug development, which I think is a market with really long-term growth potential. So I think that those are really good. Let's see. I think there's a few more here, Chuck. I'll read this one. I'm not sure we can answer this one, Chuck, but I'll give it to you. Have Bracco and NUKEM confirmed they will continue to support the company? Charles Osborne: Obviously, we haven't launched a financing, and so we have not gone out and solicited investment from anybody. But Bracco and NUKEM, as I said during the presentation, have been very supportive in all of our previous financing. They're very supportive in helping us commercialize the product and thinking about our strategy. So they're very supportive partners. Christopher Von Jako: Okay. How long will the gas exchange trials take? What is the expected FDA response time once the trials are submitted? What is the total length of time from start to receipt of the FDA response? So we did send in a formal request on our trial proposal. We do expect sometime this quarter, we'll get a response. Depending on what their response is, we may have to shift our protocol a bit. And hopefully, we'll get that finalized. Once we do that, we'll submit a final protocol to the FDA. We don't actually need to get a response from them. We won't ask for a response next time. We don't need to get a response for them. So we're actually kind of free to start the trial once we submit the final protocol to them. So that's good. So how long does the gas exchange trial take? I think it's too early to say that. But I think in general, what we have talked about, once we formally start the trial, we think it's about a 2-year process, which is enrolling the patients, analyzing the data and then submitting to the FDA and then getting a response from the FDA. So we believe it's about a 2-year process. Knowing their responses to our last submission will kind of give us a real key indication of really how many patients we're going to have to do, and that will kind of be dictated from that. Let's see. When do you think the uncertainty about NIH funding cuts/indirect cost cap will be resolved. Congress has indicated it does not support the proposed cuts. I think the bigger thing, it's really hard to kind of understand that. I think what we did see recently is that the NIH did open up and wanted the funds that they had approved before to be spent before the end of September. Luckily, that happened. That actually opened up the trigger for our NIH order that we got today. So I think that was a good thing. It's really hard to understand because the NIH is one component of it, but really, it's also the Medicare or the Medicaid cuts from the Big Beautiful Bill that was announced in July and just looking at hospital budgets to kind of rethink up and where they're at. So it's really hard to -- and different hospitals are going to deal with it in different ways. As I mentioned, several hospitals that we've been working with, that we were hoping to get closer with, have had huge layoffs. And it's really hard to really be trying to sell a brand-new innovative piece of capital equipment into these centers when they're announcing 500 layoffs plus at these academic medical centers. So I think we do get indications from some sites that it is easing up from some centers, but I think time will tell. I think the bigger thing is the uncertainty is the thing that's really kind of pushing things out. So as things become a little bit more certain, I think we'll be able to tell better from that perspective. With the U.S. market in tough spot, what are the prospects for other markets like the U.K., Europe and Asia? I think I mentioned this before. I think the prospect for us is, that we've been looking at is, really sort of the Asia market and sort of the work that we've been doing around Asia. I think we're just getting started there. But I think there are potentially some good prospects that are there. I think in general, we may have some potential in the U.K., but in Europe becomes very difficult if we're thinking from a reimbursement standpoint. I think in Europe, it really is focused more on the research perspective than it is focused on trying to bring somebody clinical, where in Asia, the reimbursement is less of an issue sort of in that -- in particular regions. So we will continue to kind of explore those areas. Chuck, maybe we could just take a few more. I think we try to answer as many as we can. Charles Osborne: I think this one that says, that you could answer, Chris, do the big MRI manufacturers continue to believe that this technology has an important future? Christopher Von Jako: Yes. What a great question. I think over the last 6 months, I felt that this has increased more and more that the big MRI companies are really focused on it. We know Philips has. I've spent a lot of time with Philips over the last couple of years and even more so in the last couple of months, having been actually over visiting with Philips a few months back, visiting some customers with them actually in the Netherlands as well, some of their big key customers. So I think that the more they hear from it and hearing actually from one of the CEOs of the MRI divisions of one of these companies is they're hearing more and more around Xenon. In fact, even in China, the guidance change for lung imaging in June in China, where they actually added Xenon as a perspective in China using MRI Xenon or Xenon MRI as a potential looking at lung function. So I think that was very big as well. So it says, will the Medicare cuts adversely impact availability of reimbursement. So it's actually Medicaid cuts, not Medicare cuts. No, I don't think that's the case. And I can say no, certainly, it's not going to be the case from a reimbursement perspective. So it was Medicaid cuts that were done. These were basically money that's given to states and then they're dolled out from each one of the states to the hospitals, these large academic medical centers. So that shouldn't -- that won't have any change on what we're doing there. So on average, how many scans per week? How many scans per week, I think it is, are you seeing in your installed base? So I think we had been trying to get to about 3 -- an average about 3. It's really hard for us to actually see that unless we're talking continuous to our sites, which we are. But from a week-to-week basis, we can't see that. We can see sort of the usage when they're ordering images from us. But I know like from a Cincinnati perspective, they're doing somewhere on the order of about 5 patients when they're looking at research. And I know at least this week, I know they're doing 3 patients this week. They're doing 2 today, I believe. And some of our centers are doing a lot when it comes to research. I think Duke is doing anywhere between 5 to 7 patients a week. So I think there's quite a bit happening from that perspective. But the real thing for us is looking at when we get orders to date from our customers. We have no way of really telling today. We are putting some things in place with our technology in the future where we'll be able to actually see what the utilization is on a per week basis, but we don't have that currently in our technology. So Chuck, with that, I think we're about 5 minutes past. Maybe we should thank everybody for joining and really value the questions that we received today and for following our story, and we're continuing to move forward. So thank you very much, everybody. Operator: Christopher, Charles, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Polarean Imaging Group plc, we'd like to thank you for attending today's presentation, and good afternoon.

Operator: Hello, and welcome to Glenveagh Interim Results 2025. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded. [Operator Instructions] I will now hand you over to your host, Stephen Garvey, CEO, to begin today's conference. Thank you. Stephen Garvey: Good morning, and thank you, Laura. I am Stephen Garvey, CEO of Glenveagh. I'm joined today by our CFO, Conor Murtagh. We appreciate you joining our interim results call for the first 6 months ended the 30th of June 2025. This morning, I'll walk you through the key highlights, the market, the policy context and how our strategy is showing up in Homebuilding, Partnerships, land and innovation. Conor will take you through the financials and capital allocation, and I will return to the outlook and closing remarks. As always, we will leave plenty of time for your questions at the end. Let's begin on Slide 4, which sets out our headline numbers for the first half of the year. This period demonstrated the strength of our Building Better strategy, set out scale delivery, deepened our partnerships with the state and drove operational efficiency through innovation, and that's exactly what's reflected in our results. Our focus on standardization and vertical integration is now embedded across the business, making us more resilient and more efficient as we grow. The benefits of our early investment and innovation are visible in our margin profile and our ability to deliver at scale even as the market evolves. This is also the first interim period where our Partnerships segment has made a material contribution to group profit. This is a real milestone for us and reflects the strength of our public-private model. We are now recognized as a partner of choice for the state with a growing pipeline and strong demand for our homes. We continue to manage our capital with discipline, optimizing our landbank and maintaining a strong balance sheet even as we accelerated delivery. Our buyback program continues to create value for shareholders, and we are seeing the benefits of a more efficient, more focused approach to capital deployment. We will discuss these elements in greater detail as we progress this morning. For now, I want to emphasize that the strategy we set out a few years ago is delivering for our customers, our partners and our shareholders. Turning to Slide 5. Let's take a moment here to consider what sets Glenveagh apart in the current environment. The need for new homes in Ireland remains acute, and government policy is more focused than ever on increasing supply. This is happening against the backdrop of continued economic strength and a supportive policy environment, so the market opportunity is clear. What gives us confidence is the way we have positioned the business to capture the opportunity. We've built a sector-leading platform, one that's not just about scale, but about delivering high-quality homes in the right locations, supported by a uniquely integrated operating model. Our early investment in innovation and standardization is now delivering tangible benefits, making our business more resilient and more efficient as we grow. We are seeing the benefits of our deepening partnerships with the state and hard-won reputation as a partner of choice for public housing delivery. This is supported by a disciplined approach to capital allocation and a strong balance sheet. Our focus on profitable growth, active landbank management and ongoing investment in our supply chain is enabling us to create long-term value for the business and drive sustainable returns for our shareholders. Providing further context, Slide 6 shows just the long-term demand outlook for housing in Ireland remains exceptionally strong. We continue to see positive trends in income and employment with both wages and job creation rising steadily across the economy. Alongside this, Ireland's population growth remains robust, driven by sustained net inward migration well above the European average. Mortgage lending activity is also maintaining a healthy pace with first-time buyers accounting for a significant share of drawdowns supported by government schemes. The underlying drivers of demand for new homes are strengthening. Turning to Slide 7. We can see in more detail how government policy and recent market initiatives are creating a genuine supportive environment for housing delivery. The National Development Plan and the Planning and Development Act 2024 are setting ambitious targets and providing significant funding alongside the infrastructure and planning certainty needed to achieve them. On the demand side, supports such as Help to Buy and the First Home Scheme continue to underpin affordability for buyers. They both have been extended, giving buyers and developers greater confidence to plan ahead. There's also a strong policy push for modern methods of construction and using state land at scale through the Land Development Agency and local authorities. But as we've said before, meeting Ireland's housing needs will require more than just policy ambition. It will take sustained private sector capital, adequately zoned land, public sector resources and critical infrastructure. The success of our Partnerships platform shows how public and private resources can be pooled effectively to deliver much needed homes. We've shaped our strategy around this shift, and we are beginning to see material results, which we will talk about shortly. In the short term, the policy environment is evolving for the better, and that gives us real confidence in our ability to continue delivering at scale. Now let's dive deeper into our segments, starting with Homebuilding on Slide 8. Just a quick reminder that at the start of the year, we announced with the 2024 results that we have simplified our reporting on Homebuilding previously Suburban and Partnerships, previously Urban and Partnerships. This was a standout period for homebuilding with delivery nearly doubling year-on-year. The momentum reflects the strong demand and the benefits of our differential model and strategy. Standardization, scalable sites, vertical integration are all coming through in our results. Excellence in our execution saw major completions at Kilmartin Grove and Hereford Park as well as major progress across a number of developments and a number of new sites starting earlier in the year. Our average selling price was elevated in the first half due to mix, but we expect that to normalize as the year progresses. Margin expansion in Homebuilding was driven by the choices we made to invest efficiently and repeatably with the forward order book at around EUR 1.4 billion, we have strong visibility for the rest of the year and well into 2026. Turning to Slide 9. Let's talk about Partnerships. For the first time, this segment made a material profit contribution, reflecting the scale and momentum in this part of the business. We now have 6 active sites underway, including new contributions from Mooretown, New Road, the Cork Docklands, which is a development in collaboration with the Land Development Agency, alongside Ballymastone, Oscar Traynor Road and Foxwood Barns. This growing pipeline underpinned by robust planning momentum and repeated demand from public sector clients gives us strong visibility on future delivery. Moving to Slide 10. We can see how our land portfolio remains a source of strength and flexibility. The portfolio has been carefully assembled to align with our strategy. It is focused on supporting high-quality own-door homes in right locations with 74% of our units in the Greater Dublin area. We continue to maintain a strong cost discipline with the average plot cost at EUR 32,000, and the landbank supports an attractive embedded margins and capital returns. Importantly, this landbank gives us capacity to deliver between 2,600 and 3,600 equivalent units per year through to 2030, underpinning our medium-term delivery objectives. We have also been actively managing the portfolio with over EUR 60 million of land sales either closed or at advanced stages, ensuring we remain flexible and capital efficient as the market evolves. Finally, just to note, the recent publication of the National Planning Framework is expected to materially positively impact our strategic landbank, resulting in a lower capital deployment requirement in future land periods. Turning to Slide 11. Our commitment to innovation remains a core pillar to our strategy. We continue to invest significantly in this area. Phase 2 of our innovation program is now underway via a EUR 25 million commitment to expand our off-site facility -- manufacturing facilities in Carlow, including an additional facade line alongside our timber frame platform. At the heart of this is NUA, our in-house manufacturing and innovation platform. Through NUA, we are moving beyond traditional building methods and embracing innovative lightweight alternatives, such as a new wall system, roof cladding and floor cassettes. Our exclusive perpetual license for integrated external facades is now a key part of this, allowing us to increase premanufactured value and improve further efficiencies. Off-site manufacturing and modern methods of construction are already delivering tangible improvements in cost control, build efficiency and margin performance, all of which makes Glenveagh more resilient, more efficient and better positioned to deliver at scale as the market evolves. With that context, I'll hand you over to Conor to talk you through the financials and the capital allocation. Conor Murtagh: Thanks, Stephen, and good morning, everyone. I'll take you through the financials for the first half of 2025, starting with the income statement, then moving to the balance sheet, land and cash flow and finally, our capital allocation priorities. As always, we'll outline the key drivers behind the numbers and what they mean for the business. If we can turn to Slide 13. As Stephen noted, the first half of 2025 marked a period of strong growth for Glenveagh. Group revenue reached EUR 342 million, up 124% on last year. This uplift reflects the momentum we've built in both Homebuilding and Partnerships with delivery volumes and on-site partnership activity, both moving in our favor. Gross profit increased to approximately EUR 67 million, and our gross margin expanded to 19.5%, up 130 basis points. This margin improvement is as a result of several years of investment in standardization, scale and vertical integration in addition to mix benefits. Work in progress rose to approximately EUR 347 million, which is in line with our plans to ramp up Homebuilding output and deliver under the Croí Cónaithe scheme. Net assets finished the first half at EUR 748 million and reflects approximately EUR 35 million of capital returns in the period. Altogether, it shows we're supporting growth in a disciplined way, optimizing working capital, managing our landbank and maintaining a strong balance sheet. Moving to the landbank slide then. Apologies, continuing on the income statement there, we're seeing the benefits of delivering more homes and large repeatable sites and our off-site manufacturing is now contributing to program certainty, quality and cost control. A feature of both business segments in 2025 is the completion of sites and phases with cost contingencies unutilized supporting margin expansion. Underlying gross margin in the Homebuilding segment, excluding noncore sales at Shrewsbury Road and land sales was 22.8% Nevertheless, spot homebuilding margins in the group's medium-term delivery pipeline are approximately 21%, with site mix continuing to be a principal driver as the business monetizes its vintage landbank and scales to 2,000 units with a focus on return on capital. Gross margin in Partnerships in H1 was 16.2%, ahead of target owing to site mix and unutilized contingency due to strong cost control. Similar to Homebuilding, site mix will play a significant role in future periods as the business scales up and the group completes the transition out of its remaining urban sites. EUR 400 million in revenues remains an achievable current year and medium-term target with visibility on replacing existing partnership sites with new wins increasing over the period. Operating profit for the first half was EUR 42.1 million, Net finance costs were EUR 9.6 million, reflecting a higher opening debt level following last year's land acquisitions. Profit before tax was EUR 32.5 million and earnings per share came in at EUR 0.052. Moving to the balance sheet on Slide 14. Focusing in on the key numbers here. Land balance, excluding development rights, was EUR 536 million, down from year-end as we continue to actively manage the landbank and focus on capital efficiency. I'll come back to land on the next slide. Work in progress rose to EUR 347 million, which is in line with our plans to ramp up homebuilding and deliver under the Croí Cónaithe scheme. Altogether, it shows we're supporting growth in a disciplined way, optimizing working capital, managing our landbank and maintaining a strong balance sheet. Moving to Slide 15. I touched on it briefly, and you can see how our landbank is evolving and supporting our growth agenda. The EUR 536 million land balance at June 2025 represents a peak investment level for us. From here, we're focused on reducing capital intensity, delivering units from our existing landbank and executing targeted disposals. We remain on track to complete land sales of EUR 100 million across 2025 and 2026. More than EUR 60 million of that is already closed or at advanced stages of contract. This strategy is about prioritizing capital employed in land and focusing on sites of scale that can support delivery in both Homebuilding and Partnerships. Given the strength of the landbank, both in terms of scale and product type, i.e., own-door homes, we can both grow the business and reduce capital deployed in land towards EUR 400 million to EUR 450 million over the next number of years. Next, Slide 16 shows our cash flow. Operating cash outflow was EUR 10.8 million, a material improvement from the EUR 194 million outflow in H1 last year. That is driven by higher completions, greater contribution from Partnerships and tighter working capital management. Importantly, net debt was EUR 230 million, a lower figure than this time last year despite a materially higher starting position. Moving forward, we continue to invest selectively where returns are strongest, principally funding construction WIP, investing in innovation and returning surplus capital to shareholders, which brings me to Slide 17, where we have our capital allocation priorities. Our medium-term visibility is as strong as it has been. We have clear line of sight on unit growth combined with landbank reduction on replenishing the Partnership's pipeline on freeing up capital, while capturing manufacturing benefits that will provide a structural medium-term cost advantage. Against that backdrop, we continue to focus on 4 key priorities: firstly, land. We're actively reducing our landbank, as I set out, primarily through unit delivery and targeted unit sales. But importantly, we will sustain, as Stephen mentioned, the capacity to deliver 2,600 to 3,600 units per annum. Secondly, work in progress. Investment here is supporting the planned increase in Homebuilding outputs to 1,900 units in 2027, which remains a core driver of revenue growth. Third, supply chain and innovation. We're investing in off-site manufacturing and next-generation building approaches. That includes a EUR 25 million commitment to deliver a new external facade line and facility upgrade, which will transform how we deliver homes. Approximately EUR 10 million of spend will occur in 2025, EUR 10 million in '26 with the balance in 2027. And finally, returning excess cash. The buyback program announced in May has been expanded from EUR 85 million to EUR 105 million. That's been made possible by strong operational performance, robust cash generation and good visibility on land sales. To date, approximately EUR 84 million has been deployed under the current program. This disciplined balanced approach is supporting growth, innovation and value creation while also maintaining a strong financial position. That's the conclusion of the financial review. Stephen, I'll hand back to you for the outlook and to close out. Stephen Garvey: Thanks, Conor. So to bring it all together on Slide 18, we remain fully on track to deliver full year guidance. We are reiterating our earnings per share target of EUR 0.195 for full year 2025, underpinned by a strong operational momentum and a healthy forward order book. We expect to deliver approximately 1,500 Homebuilding units this year with Partnerships contributing around EUR 400 million in revenue. This reflects the scale and the consistency we are now achieving across both segments. On the capital side, we are making real progress in optimizing our land portfolio with EUR 100 million of land sales targeted across '25 and '26. And our landbank remains a core strength, giving us the capacity to deliver between 2,600 and 3,600 units per year all the way to 2030. Notably, we are achieving this growth while reducing the net debt and returning value to shareholders by expanding our buyback program to EUR 105 million today. To wrap things up on Slide 19 and 20, we have our differential investment case. We will conclude -- I want to conclude by emphasizing 3 things: building better strategy set out the direction, and we are executing on it with consistency. Standardization and manufacturing are improving our cost control and speed with benefits already visible in margin and program predictability. Partnerships are now a material first half contributor and our land strategy balances visibility with capital efficiency. We have strong momentum into the second half and beyond. Glenveagh is uniquely positioned with strong visibility on future delivery for the balance of this year and beyond. All of this gives us real confidence for Glenveagh's ability to deliver sustainable value well into the future. With that, I'll pass you over to Laura for any questions you may have, and thank you. Operator: [Operator Instructions] We will now take our first question from Colin Sheridan of Davy. Colin Sheridan: Just maybe starting on Partnerships. Maybe you could talk a little bit about what the pipeline looks at this point in time. And I guess, with the changes we're likely to see from government with additional funding and a change to housing for all, how you think that could evolve or how you'd like to see it evolve in the next year or so? And maybe just on build cost inflation. I mean, you've referred to the sectoral employment orders in the statement. Just wondering how build cost inflation has been progressing more generally and how the vertical integration in the business has been playing its part and trying to mitigate that on site. Stephen Garvey: Thanks, Colin. Partnerships, yes, obviously made substantial progress. I suppose it's a hard one reputation. We've been at this for a period of time, and we're only really seeing the benefits of that flow through on the income statement now. Positively disposed to what we're seeing coming down the track. We're in negotiations on a number of new partnerships, quite substantial ones, some of them adjacent sites, some future sites that are very close to us. Proactive local authorities out there now looking at opportunities and very much looking at certain local authorities who have probably perfected the model and got it really well coming out there to a certain degree. The Land Development Agency, obviously, very proactive now as well. A lot of their land is starting to come into the system. They're running a number of RFPs. So yes, we've obviously got 6 sites on the go. Some of them will come to completion next year, but we're very positively disposed to being able to replace them on an ongoing basis. And I think we've proven we're the delivery partner of choice out there with all government agencies at this stage. So happy to dispose that. Build cost inflation, yes, you're right. On the sectoral employment agreement was 3%. Labor probably makes up 50%, 55% of the delivery out there. So that will inevitably pass through. On the material side, pretty good, a little volatility in 1 or 2 products, but again, in the either, it's probably not too bad out there. So probably happy where things are at. So somewhere between 2.5% and 3% is probably where we see things plateauing out for the next 12 months. We don't see anything on the horizon that makes us concerned out there. On the manufacturing side, I think what you're really seeing from the manufacturing and innovative side is it's probably really driving that way we can deliver programs, being able to release contingency on sites. They're obviously positive to margins. So it's the capability of predictability, sticking with programs, the quality of the product, all of those things are coming. We're probably now moving to Phase 2 of the innovation side. The benefits of that and the cost that, that will bring to the table and the -- or the cost savings, it's too early to predict yet. But Phase 2, 2027, 2028, we really hope it will feed into the system, and we should see positive turn from that. Conor Murtagh: I think what you see in manufacturing over the next number of years is will be labor and labor increases as we're seeing through sectoral employment orders will be less of a dial mover in that CPI number as we transition more and more to premanufactured value. Operator: And we'll now take our next question from Shane Carberry of Goodbody. Shane Carberry: Just kind of a follow-up on Colin's question, I guess, in terms of that kind of gross margin point. In terms of the standardization piece of the jigsaw, is it fair to think of that as the main contributor to the kind of underlying growth in the gross margin this year? And just, Conor, you mentioned in the presentation about maybe the mix going forward into '26. So if you could expand on that a little bit more, it would be helpful. And then the second question is just around the medium-term targets really, it sounds like even more confident in the medium term kind of maybe beyond all of our forecast horizons as well. So if you could just give me a little bit more color in terms of how that kind of your confidence has evolved? Is it more the policy side improving, underlying demand getting better? Or it is some of the kind of innovation that you're doing or maybe it's a bit of all of the above. Stephen Garvey: Just -- go ahead. Go ahead. Conor Murtagh: On the gross margin side then, yes, you're right. Standardization is a lot of the benefit. It's also sites of scale. It's also strong cost control, getting to the end of sites and having contingency in place. And you're seeing that particularly on the Partnerships side as well. And then mix, there's a good strong mix effect this year, which brings us to your sort of follow-up question around gross margin for next year. We've spoken since the start of this year about intake margins being around approximately 21% in the medium-term landbank. And what you're going to see is that transition happening in 2026. So you'll see margins of approximately 21% in 2026 is the way to think about it. Stephen Garvey: And just on the policy and medium to long term, positive what we said 2027, we feel very comfortable about the 1,900 units in Homebuilding. We're positive towards the National Planning Framework. I suppose for our view, just where the policy is evolving is, you know the government have instructed the National Planning Framework and instructed local authorities to now go out and start varying their development plans. So an element of local authorities will vary their plans, but they'll also start going into their new plan phase. And we see kind of 2027 into 2028 as the period of time that about 750,000 units of zoned land will come into the system. Some of that will be our strategic land as well. So I suppose that's the opportunity we're seeing coming down the track. Obviously, there will be sites of scale. So yes, positive in the sense of, I suppose, you have a government who are really now on the front foot to drive their policy initiatives. They're probably seeing some challenges with the administration side, not moving as fast as they'd like. But I think, yes, they're really trying to make a difference out there. I think we're well set up that our landbank positions ourselves to 2030. We're obviously core product, 80% of our product is that own-door product, so in a nice place there. But obviously, we hope we can enhance that. And the more the vertical integration feeds into the system, the bigger the sites become, the faster, more efficient we can deliver into the future. So yes, we're in a good place. Operator: We will now take our next question from Jonny Coubrough of Deutsche Bank. Jonathan William Coubrough: Can I ask on the landbank? You said in the presentation that the landbank could support up to 3,600 units a year out to 2030. What other investments would you need to make to achieve this level of output across WIP, supply chain overheads? I think you set out some of this on Slide 17, but it would be useful just for a bit of clarification on that one. And then also, you've mentioned EUR 100 million of land site sales over 2 years. So from there, will you be maintaining about a EUR 450 million landbank? And then how would you be looking to replenish that land? Are you looking at land options or other avenues? Stephen Garvey: Jonny, yes. So look, obviously, last year was the big pivotal year. We bought 9,000 plots of land. There was a 3-year supply in 1 hit. Obviously, we got them at attractive 32,000 a plot. So we're very happy with that. We're not actively in the land market. We're always keeping an eye on it, but we're not actively investing. Probably strategic land is where we're looking at an element of because we know what will come down the track. So product that might come into the system in '29, '30, we're looking at those kind of sites. But we're not making a very big investment on that. On the WIP side of it, I'll leave that. Conor, do you want to go on that? Conor Murtagh: Yes. The WIP is actually well invested. So we've obviously grow Homebuilding units from 1,500 to 1,900 over the next couple of years. But at the same time, we have a number of urban schemes where we're well invested on the apartment side, which we'd be seeking to forward fund in the future. So one in North County, Dublin and another one in Cork. So you could see maybe EUR 50 million go into WIP on a net basis there between now and 2027 to support growth into 2028. And we obviously have called out the office as a cash inflow, most likely in or around 2028. So WIP is well invested even to support that growth that's there. And then on the Partnerships side, obviously, there's a prevalence of forward funding in that. So the investment there will be minimum from where we are at the moment. And then manufacturing-wise, it's the EUR 25 million, with EUR 10 million over the balance of this year, EUR 10 million next year and EUR 5 million in '27. Operator: [Operator Instructions] And while we wait, I'm handing it over for the written question. Unknown Executive: So we've had a question in from Glynis Johnson. She has asked regarding the admin costs for H1 '25. What drove step-up? And what is the guidance for FY '25 and medium term? Second, on land market, she's asked, given the competitive land market, but also the positive upside potential to your strategic land, is there scope to increase the land sales targeted? And lastly, can you elaborate on the facade production? Is this the Mauer system? And how many home units would this likely cover by 2027? Conor Murtagh: I'll take 1 and 2 there. On admin costs, H1 reflects the run rate from H2 2024. So consensus is around EUR 51 million of administration costs for 2025. So we're comfortable with where that is. And over the medium term, we've said we want to reduce admin costs to less than 5% of revenue and are on track to do that. The land market and potential for more land sales. And what we'd say on that is we have greater certainty on the EUR 100 million of land sales than we had a number of months ago. However, the likelihood of it being materially in excess of EUR 100 million has reduced. So EUR 100 million is a good number to have across '25 and '26. And Stephen, do you want to take the Mauer system? Stephen Garvey: Yes, you're right on that, Glynis. Obviously, we're the sole holder of that license in Ireland, and we think it's a huge opportunity for us. The potential savings and how this can evolve is it will make huge benefits for our prelims on site. It's a better, more attractive looking product. We've had some of the local authorities out down to look at the finished product. They're really impressed with it. So they're actually -- the quality of it and the aesthetics of it, it's really pleasing. We are putting it into production in '26. First homes are going out in 2027. And we're going to take it on a phased basis. So probably 10% of the portfolio will start with, but the ambition is to get it right across the portfolio by a period of time. Like we've done with all other innovation and manufacturing, we've taken a step basis to us. But I suppose the real benefit is if we see success, we can start factoring that into us as we acquire new lands and right across the portfolio. So hopefully, we'll see the positive turn from that into 2027. Operator: There are no further questions in queue and audio. And I will now hand it back to Stephen for closing remarks. Stephen Garvey: Thank you, Laura, and thank you all for joining today. We really appreciate it. Obviously, we'll be engaged with a number of you over the next number of days and weeks and look forward to seeing you. And thank you very much for joining us today. Operator: Thank you. That concludes today's call. Thank you for your participation. You may now disconnect.

34天前Insight Analytics约5分钟阅读

ACN 2025 Q4 财报电话会议

Operator: Good day, and welcome to Accenture's first quarter of the first fiscal year 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to Alexia Quadrani, Executive Director, Head of Investor Relations. Please go ahead. Alexia Quadrani: Thank you, Operator, and thanks everyone for joining us today on our fourth quarter and full-year fiscal 2025 earnings announcement. As the Operator just mentioned, I'm Alexia Quadrani, Executive Director and Head of Investor Relations. On today's call, you will hear from Julie Sweet, our Chief Executive Officer, and Angie Park, our Chief Financial Officer. We hope you've had an opportunity to review the news release we issued a short time ago, and we also have an earnings presentation, which will be made available on our website after the call. Let me quickly outline the agenda for today's call. Julie will begin with an overview of our results. Angie will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the fourth quarter and fiscal year. Julie will then provide a brief update on the market position before Angie provides our business outlook for the first quarter and full-year fiscal 2026. We will then take your questions before Julie provides a wrap-up at the end of the call. Some of the matters we'll discuss on this call, including our business outlook, are forward-looking and, as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations from non-GAAP financial measures where appropriate to GAAP in our news release or in the Investor Relations section on our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie. Julie Sweet: Thank you, Alexia, and to everyone joining this morning, and thank you to our more than 779,000 reinventors around the world for your extraordinary work and commitment to our clients. In fiscal year 2025, we delivered a strong year financially. We significantly elevated our competitive positioning, and we took our next big steps to position us for growth in the age of AI. We grew 7% last year, which was adding $5 billion in revenue, with over $80 billion in bookings. We did so against a macroeconomic backdrop that did not improve over FY24. Of that 7% growth, the majority was organic, and the growth was broad-based across markets, industries, and types of work. We also delivered strong earnings per share growth and generated strong free cash flow, both above our guidance on an adjusted basis, and we returned a significant amount of cash to shareholders, an increase of 7% over FY24. We took share at more than 5X our investable basket. How did we do it? We built on the rapid shift in our business we made by the end of FY24 to address the challenging market conditions. We then took action to fully capitalize on the competitive advantages we have built over a long period of time to deliver these results. These advantages include our ecosystem partnerships, our breadth of capabilities, our deep and trusted client relationships, our track record of investing in new skills and rotating our business with successive technology revolutions, and of course, our ability to invest. Our strategy for more than a decade has been to be the number one partner for the tech ecosystem, and it's serving us well. Technology is front and center for every client, and in FY25 we continued to be the number one partner for all of our top 10 ecosystem partners by revenue. 60% of our revenue is from work that we do with these partners, which grew 9%, outpacing our overall revenue growth in FY25. These partners are the world's largest technology companies by revenue, and they're seeking deeper and deeper partnerships with us as they look for help to turn their technology into business outcomes and scale the adoption of AI. We continue to be the reinvention partner of choice for our clients. Our deep and longstanding relationships mean we know our clients and their industries inside out. Our global footprint and breadth of capability mean we can serve more of our clients' needs for large-scale transformations than any other player in the industry. We added 37 clients with quarterly bookings greater than $100 million in Q4 alone, bringing us to a record of 129 such bookings for the year, and we finished the year with 305 Diamond clients, our largest relationships. Our early and decisive decision in FY23 to invest significantly to become the leader in Gen AI with a $3 billion multi-year investment is clearly paying off as we capture this new area of spend for our clients. In FY25, we tripled our revenue over FY24 from Gen AI and increasingly Agentic AI to $2.7 billion, and we nearly doubled our Gen AI bookings to $5.9 billion. As a reminder, these numbers only reflect revenue and bookings specifically related to advanced AI, which is Gen AI, Agentic AI, and physical AI, and do not include data, classical AI, or AI used in delivery of our services. We are now going to use the term advanced AI as it encompasses the latest developments that are starting to gain traction. In addition to all we are doing around advanced AI, for over a decade, we have made disciplined inorganic investments to expand our market and fuel organic growth. For example, our capital projects business, which was initially built through several acquisitions around the world, is now a $1.2 billion business for us, and in FY25, it grew 49% year on year, largely organically. While delivering these results, we also took the next big steps in our reinvention for the age of AI. We are reinventing what we sell, how we deliver, how we partner, and how we operate Accenture. In short, on the ground, advanced AI is becoming a part of everything we do. Let's review our reinvention to date. By definition, every new wave of technology has a time where you have to train and retool. Accenture's core competency is to do that at scale. Our clients cannot possibly build all of the expertise they need on their own. They need us to go first and fast. In FY23, we had 40,000 AI and data professionals, with roughly 30 people working on a handful of Gen AI projects with negligible revenue. Today, we have 77,000 AI and data professionals. We have worked on more than 6,000 advanced AI projects just this year, and we delivered meaningful revenue in FY25. We are also in the process of equipping all of our reinventors with the latest AI skills. Over 550,000 of our reinventors are already trained in the fundamentals of Gen AI. We have already significantly embedded advanced AI into key platforms like GenLizard so that we are now delivering differently for our clients. We reinvented our corporate functions to create additional investment capacity, among other benefits, and will now increasingly use advanced AI in the next chapter. In FY25, we focused our new actions on the ecosystem, our talent strategy, and our growth model. We expanded our partnerships beyond the top 10 in AI and data and created new ones with companies that are becoming critical to many of our clients who also want to work with us to help them scale their relationships, and our revenue is growing in double digits with many of these partners. In FY26, we expect to increase our headcount overall across our three markets, including in the U.S. and Europe, reflecting the demand we see in our business. In addition to continuing to hire world-class talent, in FY25, we developed and are implementing a refreshed, robust three-pronged talent strategy to rotate our workforce. We are investing in upskilling our reinventors, which is our primary strategy. We are exiting on a compressed timeline. People work reskilling based on our experience is not a viable path for the skills we need. We are continuously identifying areas of how we operate Accenture to drive more efficiencies, including through AI, in order to create more investment capacity. Finally, our growth model. On September 1, we launched reinvention services, which brings all of Accenture's capabilities into a single unit. Nearly 80% of our large deals are multi-service. The model, as we fully roll it out, will make it faster and simpler to sell and deliver everything Accenture offers and to rotate our offerings to embed more AI and data and equip our people. In summary, I am pleased with our strong results in FY25 and our positioning for FY26 and beyond. Over to you, Angie. Angie Park: Thank you, Julie, and thanks to all of you for joining us on today's call. We were very pleased with our results in the fourth quarter, which were at the top of our guided range and completed another strong year for Accenture. Our results reflect our relentless focus to consistently deliver on our shareholder value proposition while investing for long-term market leadership and reinforce our role as a trusted reinvention partner for our clients and a leader in AI. Now, let me summarize a few highlights for the quarter. Revenues grew 4.5% in local currency. Excluding the 1.5% impact from our federal business, our revenues grew 6% in Q4, and we continue to take significant market share at more than 5X, reflecting the relevance of our services and the strength of our diversified portfolio and execution. As a reminder, we assess market growth against our investable basket, which is roughly two dozen of our closest global public competitors, which represents about a third of our addressable market. We use a consistent methodology to compare our financial results to theirs, adjusted to exclude the impact of significant acquisitions through the date of their last publicly available results on a rolling four-quarter basis. Adjusted operating margin was 15.1%, an increase of 10 basis points compared to adjusted Q4 results last year. We continue to drive margin expansion while making significant investments in our business and our people. We delivered adjusted EPS in the quarter of $3.03, which represents 9% growth compared to adjusted EPS last year. Finally, we delivered free cash flow of $3.8 billion and returned $1.4 billion to shareholders through repurchases and dividends this quarter. Before I move on to the details of the quarter, I want to spend a moment on the six-month business optimization program we initiated in Q4, for which we recorded a charge of $615 million and expect to record an additional approximately $250 million in Q1 for a total of approximately $865 million over the period. The business optimization program has two parts: one related to rapid talent rotation that Julie mentioned, which reflects severance associated with headcount reductions that we are making in a compressed timeline, and second, related to the divestiture of two acquisitions that are no longer aligned with our strategic priorities. These actions will result in cost savings, which will be reinvested in our people and our business. In FY26, we expect to increase our headcount overall across all three markets, including in the U.S. and in Europe, reflecting the demand we see in our business. Now, let me turn to some of the details. New bookings were $21.3 billion for the quarter, representing 6% growth in U.S. dollars and 3% growth in local currency, which is on top of the 24% growth in Q4 of last year. Overall book-to-bill was $1.2. Consulting bookings were $8.9 billion with a book-to-bill of $1.0. Managed services bookings were $12.4 billion with a book-to-bill of $1.4. Turning now to revenues. Revenues for the quarter were $17.6 billion at the top of our guided range, reflecting a 7% increase in U.S. dollars and 4.5% in local currency. Consulting revenues for the quarter were $8.8 billion, up 6% in U.S. dollars and 3% in local currency. Managed services revenues were $8.8 billion, up 8% in U.S. dollars and 6% in local currency, driven by high single-digit growth in technology managed services, which includes application managed services and infrastructure managed services, and mid-single-digit growth in operations. Turning to our geographic markets. In the Americas, revenue grew 5% in local currency, led by growth in banking and capital markets, industrials, and software and platforms, partially offset by a decline in public service. Revenue growth was driven by the United States. Excluding the 3% impact from our federal business, Americas grew 8% in local currency in the quarter. In EMEA, we delivered 3% growth in local currency, led by growth in insurance, life sciences, utilities, and consumer goods, retail, and travel services, partially offset by a decline in public service. Revenue growth was driven by the United Kingdom and Spain, partially offset by a decline in Italy. In Asia Pacific, revenues grew 6% in local currency, driven by growth in banking and capital markets, public service, and utilities, partially offset by a decline in energy. Revenue growth was led by Japan and Australia. Moving down the income statement, gross margin for the quarter was 31.9% compared with 32.5% for the same period last year. Sales and marketing expense for the quarter was 10.2% compared with 10.7% for the fourth quarter last year. General and administrative expense was 6.6% compared to 6.8% for the same quarter last year. Before I continue, I want to note that results in Q4 FY25 and Q4 FY24 include costs associated with business optimization actions, which impacted operating margin, tax rate, and EPS. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating income was $2.7 billion in the fourth quarter, reflecting a 15.1% adjusted operating margin, up 10 basis points compared with adjusted results in Q4 last year. Our adjusted effective tax rate for the quarter was 27.9% compared with an adjusted effective tax rate of 26.2% for the fourth quarter last year. Adjusted diluted earnings per share were $3.03 compared with adjusted EPS of $2.79 in the fourth quarter last year, reflecting 9% growth. Day services outstanding were 47 days compared to 47 days last quarter and 46 days in the fourth quarter of last year. Free cash flow for the quarter was $3.8 billion, resulting from cash generated by operating activities of $3.9 billion, net of property and equipment additions of $108 million. Our cash balance at August 31 was $11.5 billion compared with $5 billion at August 31 last year. With regards to our ongoing objective to return cash to shareholders in the fourth quarter, we repaid our fourth quarterly cash dividend of $1.48 per share for a total of $922 million. Now, I'd like to take a moment to summarize the year as we successfully executed our business to deliver or exceed all aspects of our original guidance that we provided last September on an adjusted basis. We delivered bookings of $80.6 billion, with a record 129 quarterly client bookings over $100 million and a book-to-bill of $1.2. Revenues of $69.7 billion for the year reflect growth of 7% in local currency, with nearly $5 billion in incremental revenue added this year. Our federal business was a 20 basis point headwind to our overall growth for the year. Consulting revenues were $35.1 billion, up 6% in U.S. dollars and 5% in local currency. Managed services revenues were $34.6 billion, up 9% in both U.S. dollars and in local currency, driven by 10% growth in technology managed services and 6% growth in operations. The following comparisons exclude the impacts of business optimization actions I noted earlier and reflect adjusted results. Adjusted operating margin at 15.6% was a 10 basis point expansion over our adjusted FY24 results. Adjusted earnings per share were $12.93, reflecting 8% growth over adjusted FY24 EPS. Free cash flow was $10.9 billion, up 26% year over year, reflecting a very strong free cash flow to net income ratio of 1.4. With regards to our ongoing objective to return cash to shareholders, we returned $8.3 billion of cash to shareholders while investing approximately $1.5 billion across 23 acquisitions. In closing, we feel good about how we managed our business while navigating the macro environment in 2025, and now we are laser-focused on executing and delivering fiscal 2026. Back to you, Julie. Julie Sweet: Thank you, Angie. Today, we've worked across every major market with more than 9,000 clients, including the world's largest companies, three quarters of the Fortune Global 100 and 500. As we look at the markets, we have not seen any meaningful change, positive or negative, in the overall market. We are focused on delivering results regardless of the market conditions by being the most relevant to our clients. Relevance today requires leadership in AI. We're working with companies early in their journey to use AI, which want our help to get them AI ready and to leverage our assets and platforms to accelerate their ability to deploy AI, as well as to help them do what they can now to use AI, even when they're not fully ready across the enterprise. We also are working with companies far along their journey to be AI ready and wanting to be the first to change the game with AI, even as its potential is still emerging. The technology itself is new and rapidly changing, so across companies, they need help in understanding the tech landscape. This is where we are in the age of AI. It is very early innings, however you look at it, which means there is massive opportunity ahead for our clients, our ecosystem partners, and us. It is well recognized that advanced AI has taken the mindshare of CEOs, the C-suite, and boards faster than any technology development we've seen in the past two decades. At the same time, as reported widely, value realization has been underwhelming for many, and enterprise adoption at scale is slow other than with digital natives. This is why our clients are turning to us. We know that the gap between mindshare and faster actual adoption is because the enterprise reinvention required to truly unlock the value of advanced AI is hard and has significant costs. There is a huge difference between how we're all using AI in our individual lives that is incredibly easy and what it takes to use it in an enterprise. The opportunity for AI is at the intersection of business strategy and tech and org readiness. For most companies, the biggest gap between mindshare and adoption is tech and org readiness. We're still in the thick of cloud, ERP, and security modernization. Data preparedness is nascent in many companies, and companies grapple with fragmented processes and siloed organizations. Generations of leaders need new skills to understand how AI should inform their business strategy. The workforce needs new skills to use AI, and new talent strategies and related competencies must be developed. Helping clients with all of this work is what is driving our growth, and our pipeline of large-scale transformations continues to grow. We're also starting to see early signals of an inflection point, with more clients looking for true enterprise-wide plans and activation and seeking out our successful experience with scaling in enterprises and at Accenture. Two years into this AI journey, we also are seeing a pattern in how AI can expand our opportunities with our clients. As some companies are making progress in creating AI readiness, it leads to even more work. Longstanding partnerships are deepening, and the demand for transformation is accelerating. For example, take a major financial services client we've worked with for over a decade. Their reinvention began with digital operations and cloud modernization. Now they've asked us to modernize their data estate, the foundation for scaling AI across the enterprise, from the contact center and marketing to finance and the trading floor. As we begin to implement AI into many facets of their business, our relationship continues to grow as we retire legacy systems, transform core functions like HR and risk, and build AI-centric capabilities to keep them ahead of shifting customer expectations. This has meaningfully expanded the amount of work we do for this client, and in fact, over the past five years, the value of our contract has more than doubled. We're seeing more stories like this across our portfolio, where AI is extending across the enterprise and adjacent work is following. Our contracts are expanding, and our client relationships are compounding, creating a powerful, sustainable growth engine for Accenture. Building the digital core remains our biggest growth driver. Only now, our clients understand that Accenture is bringing even more capabilities because we understand how the digital core will enable them to use advanced AI, and advanced AI is now a new catalyst for doing the large-scale transformations of the digital core in the first place. Taking an industry lens, let's look at banking. In banking, investment in digital core modernization remains strong, with cloud adoption accelerating as AI demand grows. Here's what it looks like in practice, and I'm particularly proud of this work because the scale is frankly breathtaking, and we were trusted by this client with mission-critical work. The Bank of England's real-time gross settlement service, which lies at the heart of most electronic payments in the UK, was rebuilt on a modern digital core using private cloud and end-to-end automation. This upgrade improved security, reliability, speed, and scale. The system now offers faster onboarding and secure APIs, giving more financial institutions safe access. It processes about $1 trillion in transactions every day, and in its first five months up to today, it has handled 22.5 million transactions worth $110 trillion. For people, that means big payments like buying a home go through quickly and safely. This modernization strengthens a national platform, reducing risk and creating a trusted foundation for innovation. Now the system is ready for what's next, even the potential for the market adopting AI-driven payment services. Now let's take a horizontal lens across industries with security. Security is essential to a digital core, which is reflected in our 16% growth for the year. We're seeing increased demand for advanced cyber protection and more integrated intelligent security solutions that can fully harness AI's potential and keep pace with emerging threats. To further strengthen our position, in the past quarter, we agreed to acquire CyberCX, our largest cybersecurity acquisition to date, which helps us in geographic expansion, bringing approximately 1,400 specialists in APAC and also bringing AI-powered security platforms which are applicable globally. We also acquired IAM Concepts, a Canadian identity security specialist serving critical infrastructure, expanding the depth and regional reach of our managed security and identity capabilities that underpin secure AI adoption. Now let's look through the lens of our unique industry, functional process, and talent and org capabilities. These, coupled with our technology expertise, are making a difference to our clients. These next two examples also demonstrate the pattern we're seeing in expanding our relationships due to advanced AI. Ecolab, a global sustainability leader, has been a client for 15 years. Three years ago, we partnered with Ecolab to lay the foundation for their growth transformation. One Ecolab, bringing the company together as one team to better serve customers, drive cross-sell and upsell, and improve operational efficiency. A year into that journey, we started working with Ecolab and its leadership to accelerate value with AI. Instead of executing one-off use cases, we redesigned the entire lead-to-cash process, the steps from generating a lead to collecting payment using nine scaled Agentic AI agents. These agents clean core data, resolve billing errors, and automatically match customer payments to the right billing invoices. In cash application alone, work that used to be 100% manual is now about 60% automated, reducing errors and speeding up processes. By using AI to streamline operations, Ecolab is on a path to deliver an estimated 5% to 7% sales growth and 20% operating income margin without increasing costs at the same pace. Big picture, it supports the company's mission to deliver water, hygiene, and infection prevention solutions to more customers worldwide. We're partnering with a leading energy company, which has been a client for nearly two decades, to reinvent field operations with cloud, data, and Gen AI. The challenge was scale, safety, cost, and sustainability, running thousands of wells with fragmented data and a leaner field workforce. We unified data from more than 25 legacy systems into a single cloud-based digital core. On top of that, we built AI-powered scaled digital twins that monitor, optimize, and control the field in real time using our Accenture Industrial Intelligence Suite solution. That live view speeds decisions and improves safety, often without sending a technician on site, while emissions are continuously monitored for compliance. This solution is expected to reduce lost production by up to 2% to 4%, increase productivity by up to 28%, and decrease costs by up to 22%. Field exposure and unplanned visits are also reduced, and emissions are expected to be lower. People can now focus on higher-value work, and the business can respond faster to a changing energy landscape. Our scaled examples set the North Star. Here's an example of how our clients are starting to work with us for broader AI adoption across multiple areas to enable their business strategy. We've partnered with UOB, a leading bank in ASEAN, for nearly two decades on various initiatives, including multi-country application services rollouts to omnichannel enhancement. Today, we're helping them scale Gen AI and use agentic AI to transform customer experience and core operations. Using our AI refinery platform, we're supporting them in powering high-value use cases in customer engagement, risk management, and workforce enablement. This transformation enables faster, more personalized service, strengthens decision-making with predictive insights, accelerates response times, and enhances operational resilience. Together, we're positioning UOB to lead and create sustainable impact in the financial services industry. Now, an important part of our growth strategy is to be relevant to the core of our clients' industries, such as digital manufacturing, and to be relevant to their growth agenda. Industry X grew 10% and Song grew 8% in FY25. Both follow a similar pattern of needing a strong digital core and reinvention. The digitization of digital manufacturing and engineering and the use of AI and data to reinvent customer experience is still in the early days. We're seeing strong demand across both areas and continue to invest both organically and inorganically. For example, we recently acquired Momentum ABM in the United Kingdom and SuperDigital in the U.S., extending our edge in B2B and social and influencer marketing. Over to you, Angie. Angie Park: Thanks, Julie. Now let me turn to our business outlook. For the first quarter of fiscal 2026, we expect revenues to be in the range of $18.1 billion to $18.75 billion. This assumes the impact of FX will be approximately positive 1% compared to the first quarter of fiscal 2025. Our Q1 guidance reflects an estimated 1% to 5% growth, including about a 1.5% impact from our federal business, with AFS contracting mid-teens. For the full fiscal year 2026, based upon how the rates have been trending over the last few weeks, we currently assume the impact of FX on our results in U.S. dollars will be approximately positive 2% compared to fiscal 2025. For the full fiscal 2026, we expect revenue to be in the range of 2% to 5% growth in local currency over fiscal 2025, including an estimated 1% to 1.5% impact from our federal business. Excluding the impact of federal, our revenue is expected to be an estimated 3% to 6%. This year, we expect an inorganic contribution of about 1.5%, and we expect to invest about $3 billion in acquisitions this fiscal year. For adjusted operating margin, we expect fiscal year 2026 to be 15.7% to 15.9%, a 10 to 30 basis point expansion over adjusted fiscal 2025 results. We expect our annual adjusted tax rate, effective tax rate, to be in the range of 23.5% to 25.5%. This compares to an adjusted effective tax rate of 23.6% in fiscal 2025. We expect our full-year adjusted diluted earnings per share for fiscal 2026 to be in the range of $13.52 to $13.90, or 5% to 8% growth over adjusted fiscal 2025 results. For the full fiscal 2026, we expect operating cash flow to be in the range of $10.8 billion to $11.5 billion, property and equipment additions to be approximately $1 billion, and free cash flow to be in the range of $9.8 billion to $10.5 billion. Our free cash flow guidance reflects a very strong free cash flow to net income ratio of 1.2. We expect to return at least $9.3 billion through dividends and share repurchases, an increase of $1 billion, or 12% from fiscal 2025. Our board of directors declared a quarterly cash dividend of $1.63 per share to be paid on November 14, a 10% increase over last year, and approved $5 billion of additional share repurchase authority. We remain committed to returning a substantial portion of our cash generated to shareholders. With that, let's open it up so we can take your questions. Alexia. Alexia Quadrani: Thanks, Angie. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you please provide instructions for those on the call? Operator: Absolutely. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. Today's first question comes from Tien-Tsin Huang with JPMorgan. Please go ahead. Tien-Tsin Huang: I think it's a good presentation here. My first question I'll ask on visibility on revenue growth, if that's OK. Just love to hear your thoughts on visibility compared to the last couple of years, given the backlog, which is quite big with large deals. You have the pipeline, of course, and then what you're seeing on discretionary spending, given the economic backdrop as you see it. Angie Park: Great. Hi, Tien-Tsin. Good morning. Let me start with that. As we look at FY2026, we feel really good about our positioning. As you said, you saw our strong bookings of $80.6 billion in FY2025. That positions us for FY2026. We can see our backlog from the large deals. If you look at our pipeline, and looking at our pipeline, it's solid overall, and we see strong demand for our large transformation deals. From a discretionary perspective, what we've assumed is at the top end of the range, there's no change in discretionary spend, while at the bottom of the range, it allows for deterioration. By the way, as you think about our guidance of 2% to 5%, excluding AFS, we're at 3% to 6% for the year. Tien-Tsin Huang: OK. Thanks for that, Angie. Julie, I like your AI remarks. Can you dig us? I'd like to want to dig in a little bit more, if you don't mind. Just give us your latest thoughts on AI-driven productivity and those gains and how they might unfold. I get that question quite a bit from investors. Do you see potential deflationary effects? How might that impact Accenture services, both positively and negatively? Thanks. Julie Sweet: Great. Thanks, Tien-Tsin. We do not see AI as deflationary. We do see and are seeing it as expansionary, similar to every tech evolution we've been through. The move from analog to digital, from on-prem to cloud and SaaS, and as many of you who've been with us over the course of the years have known, in every successive tech evolution, we've become stronger. If you look at AI, we see the same thing. Yes, AI absolutely boosts efficiency in areas like coding or operations. Those savings do not disappear. They're being reinvested into new priorities. The list of what our clients want to do with technology is truly virtually unlimited. When we can save them money by delivering our services with advanced AI, that frees up their budget to do the next things on their list. That's what they're doing. They're always going to those next priorities, and we're best positioned then to help them. That is how we delivered our 7% growth last year. Two years in, we're seeing the pattern for how that journey to advanced AI is expanding our business. By the way, I will add that one of the most consistent things that I'm telling CEOs today is that their AI strategy has to focus on both growth and productivity. Almost every CEO that I've talked to says they've pivoted way too far toward productivity and not enough to growth, which, of course, we are helping them with things like Song. We give that advice really from our own experience in how we have successfully grown through every tech evolution, embracing the productivity on one side and then capturing the opportunity it creates on the other side by helping our clients. Operator: Thank you. Our next question today comes from Dave Koning with Baird. Please go ahead. Dave Koning: Yeah. Hey, guys. Great job and great to see Gen AI bookings reaccelerate. A question, I guess, a little like Tien-Tsin's question. Just wanted to ask about the balance between Gen AI and managed services. You do a ton of managed services work. You get to know client operations really well. You can probably go in and recommend Gen AI work and gain a lot of share there, but then maybe displace some managed services. How does that really balance between consulting and managed services over time? Does the net of it all push revenue and margins higher? Angie Park: Sure. First, let me just kind of ground you in how we're thinking about consulting and managed services in FY26, just so we all have the facts of how we're thinking about it in FY26. I'll give you some more color on how we see those things actually work in the market. Angie, you want to just ground them in the FY26 piece? Angie Park: Hi, David. Good morning. For our guidance for FY26, both consulting and managed services are balanced. We see both of them in the low to mid-single-digit range. That's the context. Julie Sweet: Yeah. As you know, how it's actually worked out on the ground is that as you think about enterprise-wide strategies, a lot of times what we're talking to our clients about is where do you invest and build proprietary capabilities, where do you want to buy capabilities, and where are you best situated to go faster because you're partnering and buying them through a managed service like Accenture. What we're seeing a lot of is, for example, companies that are really behind, they're not as far along in their tech journey. They need managed services because they simply can't go fast enough. It's not just a cost play. They want the cost takeout, but they want to use everything we've invested in our platforms to get them to the advanced AI. Similarly, in the core operations, things like digital manufacturing and supply chain, we're developing more and more managed services there in order to allow them to go faster. We see this kind of continuing to develop as we have over the last several years, where managed services have become very strategic. They're not just a cost play. The more we can save them money in the way that we deliver, using advanced AI, that allows them to then reinvest into the business. Very similar patterns, managed services really for the last five or six years have become a very important part to the strategy of companies and how to use advanced technology, now it's advanced AI, faster. Dave Koning: Great. No, that's super helpful. Maybe just quick follow-up. Are you expecting a similar Q4 headwind through the first three quarters of this year and then anniversary it in Q4, and then going forward, maybe not having much impact at all? Is that kind of how you're modeling it? Angie Park: That's exactly right. We expect it to anniversary at the end of Q3. Dave Koning: Awesome. Thanks, guys. Nice job. Angie Park: Thanks. Operator: Thank you. Our next question today comes from James Faucette with Morgan Stanley. Please go ahead. James Faucette: Thank you very much. Appreciate all the incremental color and detail here from everybody. I wanted to ask, we see, at least in the forecast, a little bit of increase in CapEx, et cetera. I'm wondering if you can give us a little bit of detail where that investment is going and how we should expect that to play out further. Angie Park: Sure. On our CapEx, we expect about $1 billion this year, which is about $400 million more than FY2025. This is really about us expanding our real estate and leasehold improvements in certain geographies, certain major markets for us. Julie Sweet: Because we're bringing more people back to the office. James Faucette: Kind of what I suspected. You mentioned, and we saw the reacceleration in Gen AI and bookings, et cetera. How is the pricing of those projects evolving? Has the velocity of projects transitioning from proof of concept to production changed at all? Angie Park: Let me just start on the pricing. For our Gen AI projects and the pure Gen AI that we were, or advanced AI that we've been talking about, we do see pricing that is accretive overall to Accenture's average. Julie Sweet: Yeah. In terms of acceleration, in terms of kind of moving from proof of concept to production, we're seeing more and more now move into production because we're helping them with the proof of concept, and then we're helping them scale. You also are just continuously seeing companies that weren't as fast out of the block now starting proof of concept. It really is a cycle that many companies are going to go through. You have leaders who are way ahead. We have other companies that are just getting started. What I would say is, rather than a reacceleration or deceleration, these things are going to be like everything. They're going to be lumpy, in terms of it. What we really look at is the overall trend of how much growth that we are getting and our share of this new spend. Operator: Thank you. Our next question comes from Jamie Friedman with Susquehanna. Please go ahead. Jamie Friedman: Hi. Good morning. I too appreciate your prepared remarks. Really thought-provoking. I wanted to ask, Julie, about the way you're defining advanced AI. I think if the transcript's right, you say Gen AI, agentic AI, and physical AI. I'm actually asking about why you're saying you're not including data because we've sort of been trained that data is foundational. Why is the data component not in the definition of advanced AI? Julie Sweet: Because what we're trying to share with you is how we're taking spend in a new market. By the way, data is absolutely critical. In fact, one out of every two projects in Gen AI, Agentic AI, physical AI has significant data pull-through. Our data business is on fire, right? This is an absolutely critical area. Companies are just getting started. It's nascent in many places. It's part of the digital core that we're building. It's just that to date, we've wanted to share with all of you transparently the really new area. Data is part of the digital core that's growing. We've shared with you that 60% of our revenue is from the ecosystem partners, including the data. Look, going forward, now that advanced AI is, in fact, in all of the work, because it's either actual work or we're getting ready for the work, we'll think about how to share that. Just to date, since this started for all of us, like really from negligible revenue, we wanted to share how we've been specifically accelerating in the new area of spend. Jamie Friedman: Got it. Thank you. Going further, will you say that every new wave of technology has a time where you have to train and retool, and your core competence is to do that at scale? I'm just wondering, relative to prior technology, and you alluded to some of this in prior architectures, how do you think about that requirement, which you have tremendous mindshare at, which is to do technology at scale? How do you think about this relative to some of the previous technological evolutions? Thank you. Julie Sweet: It's going faster. There is so much demand, and the technology is moving faster. The more advanced skills and the new types of skills are coming faster. That's why we're being very decisive, right? Upfront, we said you've got to start training everyone in the new skills. We're now saying we've got to move faster to that. Also, remember that when we went into this, we'd already trained about 500,000 of our people on classical AI because going back to FY2019, we said the next decade would be about cloud, data, and AI. We start with a very strong base. This is definitely moving faster than prior technology evolutions in terms of how fast the demand is coming and the importance of us really winning the talent rotation. Operator: Thank you. Our next question today comes from Bryan Bergin with TD Cowen. Please go ahead. Bryan Bergin: Hey, good morning. Thanks for the added detail in the slides here. My first question on Gen AI impact. Can you speak about client behavior in seeking to use Gen AI and agentic solutions more themselves? You mentioned the efficiencies from the tech in areas like software development. I'm curious if you're seeing more clients seeking to then benefit to do that more themselves versus with third parties. I'm also curious if you've seen clients that thought they could do it themselves 6 to 12 months ago and then realize they do need help and they return to you. Julie Sweet: Yes. In fact, especially early on, because Gen AI seemed so simple, right? The reality is it's not the technology that is the biggest barrier. It is actually being able to get the mindset reorganized around how best to use it, the ability to do the change management, the process reinvention. If you think about your average company, their core competencies inside are not things like end-to-end process reinvention, right? You're hard-pressed to find a CEO that doesn't say, "I feel like my organization is too siloed. I feel like we don't have the right way of managing our data." We've had lots of clients who have started things on their own and then come to us who've got good proofs of concept that their team was able to do, but then just can't scale it. I'm doing right now, like just in the next few weeks, I'm personally leading a few different workshops with the entire C-suites of companies where the focus is, share with us how do we actually scale it and what can we really do now, right? As we're a couple of years into this, we have a number of solutions which we're now doing repeatedly within industries and across industries. Our clients are looking for us to share that success so that they can start, stop just having their own team saying, "Well, I have this idea, this idea," and saying, "How can we actually get scale now?" Bryan Bergin: OK. Thank you. That's helpful. A follow-up on the business optimization program. Can you talk about the assumed savings you expect to achieve from this optimization program and how it may help you evolve your operations? I'm specifically curious if you see that kind of combined with Gen AI adoption internally allowing you to operate at a sustainably higher utilization as that did take up this quarter. Julie Sweet: Hi, Brian. I think that for overall, we expect savings of over $1 billion from our business optimization program, which we expect that we will reinvest in our business and in our people because it's so important for our future growth. We expect to reinvest that while still delivering modest margin expansion. Julie Sweet: Yeah. In terms of the connection, just making sure this particular, these moves are primarily due to our talent strategy. The other piece was an exit of a couple of non-strategic acquisitions. On the talent strategy, it's more around, our number one strategy is upskilling. Given the skills we need, and we've had a lot of experience in upskilling, we're trying to, in a very compressed talent timeline where we don't have a viable path for skilling, sort of exiting people so we can get more of the skills in we need. That's really not related to the utilization piece in terms of it ticking up to 93%. We think it'll stay in the zone, in the low 90s to that, and it'll fluctuate a little bit. To your point around what can we do long term, we are continuously looking at, as the technology matures, our new structure around reinvention services. We'll look to see, are there ways that we can use the technology to deliver our services and operate Accenture in its core better? That's one of the reasons why we have the new reinvention services to really simplify how we're operating because that makes it much easier to start to use this AI. More to come as we fully roll out that model and identify new opportunities. Operator: Thank you. Our next question comes from Darrin Peller of Wolfe Research. Please go ahead. Darrin Peller: Hey, guys. Thanks. It's good to hear from what it sounds like the pace of procurement change has calmed down a bit from the government side, such that you can forecast those. I guess, number one, just to verify that's right, you feel more confident around forecasting on it. There's a lot of policy changes. Just want to touch on a couple and ask you your thoughts lately. Number one, now that we have a little more clarity on tariffs, do you see more capital investment, especially in areas like products? Number two, maybe you could just comment on H-1B changes or potential changes. What are your thoughts around either wages or the pace of hiring of H-1Bs going forward and how it may or may not impact the business? Just a quick one on health care and the big beautiful bill, if any impact you're seeing there. Thanks, guys. Julie Sweet: Great. Thanks. Just quickly on federal, we do see procurement is now starting to pick up, although it's still slower than it has been in the past. The demand in federal is very much around modernization, consolidation, efficiency. Tech is at the center, so lots of demand around ERP and platforms. Our position with the ecosystem is really key here and our strategy to expand that partnership. Those partnerships are also important. We're really pleased with our new partnership with Palantir, which is really playing a critical role in federal. We feel good about where we are in federal and are relevant to the administration's agenda. That's what we're really focused on, being relevant to our clients. That's federal. On capital investment, I would say it's still a little early, right? Obviously, you've seen the improvement with the cut in interest rates. We're a global company, so there's a lot of stuff going on around the world. I think it's just a little bit too early to call yet how much this is going to open up on the capital investment. Of course, we're growing very significantly and taking advantage of the investments that are already happening, as you saw in our capital projects business. On H-1B visas, for us, this is really a non-issue because we only have about 5% of our people in the U.S. on H-1B visas, and they're for really specialized experience and skills for our clients. Not something that is really a big impact on Accenture. Whether it's health care or a lot of the different policy changes, remember, our business thrives by helping our clients navigate change, right? What we're seeing is that every time there's big policy changes, and this has been true for decades, that's why in our business, we have industry expertise. We have the functional expertise. When you have new compliance rules, et cetera, that usually drives more business for us. At this point, we see an opportunity to really stay close to our clients and help them navigate and take advantage and comply with new policy changes. That's true in health care, and it's really true across the board. Angie Park: Thank you. Operator, we have time for one more question, and then Julie will wrap up the call. Operator: Absolutely. Our final question comes from Jim Schneider at Goldman Sachs. Please go ahead. Jim Schneider: Good morning. Thanks for taking my question. Julie, I just wonder if you could follow on your comment that you expect headcount to grow during the course of the fiscal year across all regions. Can you maybe kind of frame for us the magnitude of that and the timing for it, given the context of some of the other business optimization actions you're seeing? Where would you expect headcount growth to land exiting the year, perhaps? Angie Park: I'll take that. Hey, Jim. Good morning. What I would tell you is, look, we expect it to grow across all markets. We don't have a specific number that we're giving you, but based upon the demand that we see, we expect our headcount to grow. Jim Schneider: Great. As a follow-up on that, if you could maybe talk about the net impact of AI you're using internally to optimize your own work, your own business, utilization. I think you mentioned earlier, 93%. That's basically hitting a new record. When would we expect to see that either reflected in even higher utilization or potentially gross margins, even though we know you don't manage directly to that? Julie Sweet: Yeah. Remember, right now, our utilization is really a reflection of the kind of momentum in demand that we're seeing. You saw the bookings, right? Our utilization, we would expect to continue to move around in the low 90%, so we don't have a structural change in utilization due to AI. We are already embedding AI, particularly in our big platforms like Gen AI, to drive efficiencies, and that's reflected in both our bookings and in our guide for the year. We're going to continue to be the leaders because that is what works, right? As you lead yourself, we're able to take that to our clients. We're able to show them how we're doing it and then help them do it in their business. That's kind of how it's developing. Operator: Thank you. As we close the question and answer session, I'd like to turn the conference back over to Julie Sweet for closing remarks. Julie Sweet: Terrific. Thanks again, everyone, for joining. In closing, I just want to thank all of our shareholders for your continued trust and support. We are working every day to earn your trust. A huge thank you to all of our reinventors because you are why we are able to deliver these results. Thanks again. Operator: Thank you. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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