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Operator: Good afternoon, everyone. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to the Salesforce Fourth Quarter and Full Year Fiscal 2026 Conference Call. This conference is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Mike Spencer, Executive Vice President of Finance and Investor Relations. Sir, you may begin. Michael Spencer: Good afternoon, and thanks for joining us today on our fiscal 2026 fourth quarter results conference call. We are trying out a new format today and as such, have shortened our prepared remarks to ensure we have time for your questions. Our press release, SEC filings and a replay of today's call can be found on our website. Joining me on the call today are Marc Benioff, Chair and CEO; and Rob Washington, Chief Operating and Finance Officer. We also have Miguel Milano, President and Chief Revenue Officer; and Patrick Stokes, President and Chief Marketing Officer, joining us for the Q&A portion of the call. Some of our comments today may contain forward-looking statements that are subject to risks, uncertainties and assumptions, which could change. Should any of these risks materialize or should our assumptions prove to be incorrect, actual company results or outcomes could differ materially from these forward-looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results or outcomes is included in our SEC filings, including our most recent report on Forms 10-K, 10-Q and other SEC filings. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. As a reminder, our commentary today will include non-GAAP measures. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings materials and our press release. And with that, let me hand the call to Marc. Marc Benioff: All right. Thanks so much, Mike. We're so thrilled to be here with everybody. And I'll tell you what, we're here in this beautiful San Francisco on the 60th floor of Salesforce Tower, and it is a gorgeous day, 70 degrees, the AI capital of the world, and we're coming here to you live, really excited about everything that's going on. So let's start with the highlights from one of the absolute best years in our history and one of the best performances in software ever and guiding one of the best performances in software ever, we have delivered phenomenal performance across revenue, across margin expansion, across cash flow and cRPO and RPO. I mean the numbers are really incredible. For the full year, we delivered $41.5 billion in revenue, up 10% year-over-year, 9% constant currency. We had $11.2 billion in revenue for the fourth quarter, up 12% year-over-year, 10% constant currency. CRPO rose to $35.1 billion, up 16% year-over-year and 13% in constant currency. And we passed an incredible milestone with $72 billion in total RPO, which is up 14% year-over-year. Now that is $72 billion in total RPO, up 14% year-over-year in case you missed that point. I did read a tweet that RPO does not matter, but evidently, we have it if it does matter. So total RPO, $72 billion. Last year, we laid out a path towards double-digit revenue growth by the second half of fiscal year '27, and we're hitting our marks. And based on our strong Q4 performance and the fast start with Informatica, we're updating our fiscal year '30 revenue target to $63 billion. Now that means we've only spent 2 years of the 40s, kind of hard to believe. I have never seen performance like this. But this obviously is not a rational market. We all know this. So we're using our remarkable cash flows to take advantage. This is not our first SaaS Pocalypse. We have been through many SaaS Pocalypses. I remember the horrible SaaS Pocalypse of 2020 when not only the software industry was dying, but we were all dying, but we made it through that. And now everyone is back, doing great. So we're so grateful to make it through that, and we're going to make it through this one as well. And it's just a great marketing opportunity and a great buying opportunity, and that's why we are doing this incredible repurchase authorization of $50 billion. In fiscal year '26, we returned more than $14 billion or 99% of our free cash flow to shareholders. Thank you, Robin, for that. And today, we're increasing our share repurchase authorization to $50 billion because these are some low prices. So Robin will share more about that in a moment. The biggest brands in the world are choosing Salesforce to lead their Agentic transformation, companies like Amazon, Ford, AT&T, Moderna, GM, Pfizer, so many, and these are big deals in Q4, wins over $1 million were up 26% year-over-year. That's just so we know in Q4, wins over $1 million were up 26% year-over-year. Congratulations, Miguel. Wins over $10 million were up 33% year-over-year. For example, the U.S. Army run by Army Secretary, Dan Driscoll, do an amazing job, has awarded us a 10-year indefinite delivery, indefinite quantity contract with a ceiling of $5.6 billion. Thank you, Dan. This level of financial performance is a clear signal, a clear signal that companies across every industry and region are investing in Salesforce to become Agentic enterprises, just like we've been talking about now for 2 years at Dreamforce that the Agentic Enterprise is our real idea, and we're going to talk about Agentforce, and I think it just became an $800 million business. We're going to talk about that. You've heard me talk about it at Dreamforce and on these calls, our vision of humans and agents working together for years, companies bought apps. We all use apps. I've got apps right here on my phone. I've got apps on my computer. But now I'm using apps and agents. I use them at home. I use them in my company. We talking about that. That is a reality. We have 83,000 employees here at Salesforce Humans. And we have lots of agents running around as well. Miguel qualified 50,000 leads this week with agents. So we have apps and agents. We have humans and agents working together. We've been talking about that at Dreamforce as well. And this is just an incredible opportunity for Salesforce. Our market is bigger than ever because not only selling apps, we're selling apps and agents. So bringing humans, agents, apps and data together, not just to make people better at their jobs, but to redefine how work gets done. This is just an incredible exciting moment in software. So we're seeing incredible demand for Agentforce. In its first 15 months, we closed 29,000 deals, up 50% quarter-over-quarter. Customers in production have increased as well, nearly 50% in Q4. It can do more, have more power, more capability than ever. If you haven't seen the new Agentforce, you haven't seen Agentforce, the level of determinism, the voice capabilities, Agentforce Studio, Agentforce Builder. We are spending a huge amount of time on Agentforce. I just saw the new Agentforce demos from our team. It was incredible. We even have Agentforce running in Slack. We have Agentforce Builder running in Slack. We have amazing things happening. And our Agentforce and Data 360 ARR, including Informatica, now exceeds $2.9 billion. I heard ARR, doesn't matter anymore. But in case it does, we have $2.9 billion, up 200% year-over-year. More than 75% of our top 100 wins in Q4 included both Agentforce and Data 360. In a bit, we're going to hear from 3 amazing customers. Wyndham, one of my very favorite customers in the world, the world's largest hotel chain. Shark and Ninja. I just got one of their great new products. I'm sure you know about. They've got the best SLUSHi machine, but one of the most innovative consumer product companies in the world and SaaStr, an incredible community of B2B software founders, executives, investors and I think you all know that I love [indiscernible]. But I've never been more excited about our business here at Salesforce. No one else is delivering this level of capability at this scale to this many customers. And we are taking the power of the Agentic enterprise of these apps and Salesforce, and we're giving them the security, reliability, availability, scalability that you need to make them successful in business like ours, but in all businesses, in small and medium businesses and general-sized businesses and very large enterprises in the government and in ISVs as well. So this is a category that just did not really exist a year ago. I will just say that look at IT service management. We just launched Salesforce IT service in October, Salesforce ITSM. And in just a few months, Miguel has won over 180 customers, amazing Miguel. But I especially love 5 customers who got to leave the purgatory of ServiceNow, like Sunrun, Cornerstone, CoolSystems, and there's others, too, that we're not allowed to mention, but I might mention them anyway. Who are leaving in ServiceNow, now for the new Salesforce IT service product, which is about apps and agents, helping you manage all your ITSM. But don't just think it's just that. We built an amazing new life sciences product this year. Agentforce for life sciences. And since we launched so many of the global pharma companies, and I've met with so many of the CEOs myself, they're leaving Veeva, purgatory Veeva, including AstraZeneca, Novartis, Takeda and of course, Albert at Pfizer. They're all saying that they are going to Salesforce Life Sciences, which is a product that has apps and agents. And this is amazing. They are the most regulated businesses in the world, and they are choosing Salesforce. And over the years, I've met with untold numbers of customers, call it thousands, call it more than that. They used to tell me maybe, okay, I want to roll my own AI. I'm going to build my own model. I'm going to build my own agent. I said, tell me about that. Let me know how that goes. Show me exactly what you're doing. Or you can just turn it on in the Salesforce product you already have. You have Sales Cloud, turn on the agents. You have Service Cloud, turn on the agents. You have Marketing Cloud, turn on the agents. You have Slack, turn on SlackBot. And that idea that every app now has the capability to have agents. So customers tell me that they want to basically kind of get to that next level. And the way to do that is by including this context, the ability for the AI, the data to know you. No better example of that than SlackBot, immediately as you turn it on, you're a Slack customer, it looks at all your Slack. It looks at your DMs. It looks through Salesforce. It looks through Google. It looks even that Microsoft Teams as hard as that is for some agents to go and do, but we've told them how to do it. And then it says, I understand your business, and I can give you help, advice, support. And in fact, a recent survey of 100 CIOs found that the number of companies planning to use a platform like this, this idea of apps and agents has now doubled just in the last 18 months because of this, they realize this is more than just turning on Moltbot on your Mac mini, okay, which, by the way, I have a Mac and a setup is great. OpenClaw, I love it. But for companies who want to have the reliability, availability, security, okay, the sharing models, the key parts of that to really make sure that the business is safe and secure while you're running all these skilled agents. Well, let's just know that, that is what Salesforce is doing. And that's why Salesforce has become one of these incredible companies because our platform provides these amazing 4 layers that you see right here that everyone needs to convert raw intelligence into real work. Everything they need to become an Agentic enterprise. Just look at this, look at what we've built. Look at what we have built. And thank you to our team. They have done a phenomenal job. Srini can't be here because he's in India. He was at the India AI Summit this week. He could not make it back here in time. Look at what our engineering team has built, and thank you to them. Look at where it starts. First of all, yes, we can use all those large language models. We love them all. We love all of our children equally. And down below here, whether it's Anthropic or OpenAI or Mistral or Llama, all of them. And there's more coming. They're amazing. World models are coming. They're amazing. They're all down below here, and we're using them. And then, of course, we bring them into Data 360, and that lets you harmonize your data, integrate your data and federate. That means connecting the other data sources throughout your company and grab it. Other data repositories, you might be using Snowflake or Databricks, you might be using BigQuery or anything, even IBM mainframes and you can bring it into Data 360, activate your data and then it comes up into your apps. So if you're using the service app, and you want to have an experience like help.salesforce.com for your company. Now the service app has that Agentic capability, the data is coming up. And it comes up to the next level to Agentforce and you can build your agents, train your agents, put the guardrails in your agents, give them voice, they can talk now, they're talking. And then all of a sudden, you can even manage and orchestrate and collaborate from Slack. So this is our architecture. And all of this is unified, integrated. And that idea that we can deliver this unified platform to our customers to help them deliver humans and agents working together. So you can see right here, Agentforce has the tooling to build, to manage, to orchestrate the agents to make them talk, to give them determinism, to give them the capabilities that they want. And then we have the engagement layer to deliver Agentic enterprises where work happens in Slack across our apps. So if you haven't seen SlackBot. I talked to a lot of customers like, I don't see SlackBot. Why we used it? I have the free edition. I'm like, well, maybe you should pay and get the enterprise edition because boom. That's when all the SlackBot turns on and you can go through your whole company, run your company. I had one of our customers over last night, Aneel Bhusri Workday. I'm like, have you seen SlackBot? Aneel is like, no, I haven't seen it yet. I'm like, you're the biggest Slack customer we have. I'm like I just sit there and say, look at this. And I'm like, said a SlackBot. I'm having drinks with Aneel. And I just am trying to like give him a demo of SlackBot, what should I say to him? What is the strategy between Salesforce and Workday and then boom, boom, boom. It just went through the whole thing, showed them every deal. He couldn't believe everything that was happening between these -- our two companies. He had to get updated because he's the new CEO of Workday. And it was amazing. That was my real experience. Together, all of this is the complete operating system for the Agentic enterprise. Yes, I'm using it myself, and we're using it. We're customer 0. And that's crucial because, look, we already know now. Our customers aren't going to deploy just one agent. There's going to be many agents, many capabilities, the ability to automate many different types of work, and they're going to deploy hundreds or thousands. Many are going to be from us. Others are going to be from other amazing companies, like the one that I just mentioned, Workday, I love them. But these agents can't work in isolation. Like ET, each one of them needs to go home. Okay? So that home is Salesforce, and they are calling us through the MCP server or maybe even just through one of our core platforms. And the more agents that our company deploys, us or anyone else, the more essential our platform becomes. This is my personal testimonial. I'm giving you my personal testimonial of how I run Salesforce. You can come here. I will show you how I run a business with apps and agents together. And it's why nearly 90% of Forbes top 50 AI companies, Forbes top 50 AI companies use Salesforce and Slack. And if there is a SaaS pocalypse, I think it might be being eaten by the SaaS and SaaSquatch because there are a lot of companies using a lot of SaaS because SaaS just got a lot better with agents as a Service. Now I won't tell you exactly tell you what that says. But let's just say they're SaaS and there's also Agents as a Service. Now I want to tell you how we're measuring the value our platform delivers to customers. Today, we are one of the largest consumers of tokens in the world to date, now over 19 trillion tokens. So we continue to show you that because we want you to see that we're actually doing what we say. I know that there's been some enterprise software companies who say they're doing agents or they're doing AI, but then they're not showing up in the token rankings from the language model companies. So we're here's 19 trillion, okay. But we really want to take this to another level. And another level is a token on its own doesn't know your customers, your pipeline, your org chart, but Salesforce does. And the value isn't in the token. The value is in what our platform does with it, the work. That's why today, we're introducing an additional metric, the Agentic Work unit created by our very own Patrick Stokes sitting here at the table, the AWU not to be confused with our customer, AWS. And AWU represents one unit of AI work, Agentic work unit. We're rolling this out to see how you like it actually here in earnings. It's a record updated workflow triggered, decision made, MCP called. And to date, AI agents on the Salesforce platform delivered 2.4 billion Agentic work units. That is where AI isn't just thinking or calling things, it's getting work done, work done, transactions. And in Q4 alone, we delivered about 771 million of them. We're still trying to exactly figure out exactly what these numbers mean for us. But what it means for me is that we are doing what we say. That is we are explaining that humans and agents are working together. We are showing you a business at scale, running them. We are showing them how we are making our business better. Our service is so much better this year because we're using our new Service Cloud with our omnichannel supervisor deployed with Agentforce. Our sales, Miguel just hit record sales numbers. You can see them. We've never sold or had so much ACV in our history in the fourth quarter because not only does he has 15,000 account executives, but he has all these agents who are out there doing this amazing work. So that is so exciting. This is raw intelligence converted into real work. It's driving efficiency and growth. Okay. Now let me tell you about one of the biggest drivers of these work units, SlackBot. A lot of you use Slack. I use Slack every day. It's the employee -- ultimate employee agent. And many of you know that X, the social media platform hosts about 500 million messages a day, right? Elon Musk do an amazing job on X, incredible what he has done. But did you know that Slack hosts about 1 billion messages a day? So while X, amazing X, I use it myself. I just tweeted something, 500 million messages a day. Well, Slack is hosting 1 billion messages a day. And remember, every one of them is about getting work done. That's why we bought it. Remember, Slack's ticker symbol was work. SlackBot can access all of those messages as well as your files, your calendar, your Salesforce, your Google, your Microsoft Teams here this, here that. SlackBot goes around, pulls it all together. And then it knows your business. So then it's able to orchestrate with other agents and has an incredible partner marketplace, really the #1 AI ecosystem in the world and has more than 350 AI apps and agents already. There is no other AI ecosystem like it. One of those partners is in Great Anthropic, we love Anthropic, we love Dario, Daniela, I tweeted about what they did yesterday, incredible demo. Just yesterday, Dario demonstrated how he is doing something amazing with Salesforce in the enterprise. Every single one of their demos, whether it was for HR, engineering, investment banking, started and ending in Slack, pretty awesome. And so it's about agents and apps, humans and agents, it's all working together. You can see it in his demos. You can see it in our demos. By the way, Anthropic runs its whole global operation on Salesforce and Slack, I think actually every AI company does. Yes, I think they do. So maybe you saw they're hiring a Salesforce admin, Dario. Let us know if you need new names. But I think it's just a point we're making that Salesforce is doing great with these AI companies. We're so thrilled of our relationship with Dario. And I think we just put another $100 million into the new round. We're up about $330 million in Anthropic invested. It's almost about 1% of Anthropic. And believe me, I wish we had invested a lot more, John. I don't know why we didn't do more. Okay. With that, it's time we're going to hear from some of our most inspiring customers becoming Agentic Enterprises. We have the great Mark. Mark, I see you. Mark is there from SharkNinja. Mark Adam Barrocas: Marc, congratulations to you and your team. What a quarter? Marc Benioff: Mark, I'm so thrilled to talk to you, and I love all your products, and thank you for the Christmas presence. I have them, and I'm using them. Mark Adam Barrocas: Appreciate it. I'm really happy that so much of our holiday selling season was really driven by the launch of Salesforce that, as you know, happened at the end of September and would love to talk to you about it. Marc Benioff: Well, Mark, you know that we've been working together now, just me and you as well as with our whole sales team to make we can automate all of SharkNinja. We want to automate your sales, service, marketing, your commerce, everything you're doing. I'm so excited about your future. We have our best team working with you. Give us your view of what's happened and the value we've been able to deliver. What's your biggest surprise? What in the Slushi machine, what came out? Mark Adam Barrocas: Look, Marc, I mean, we launched 25 products a year, and we're really innovating at speed. And we need customer service solutions that move just as fast I mean most companies treat service as a cost center. For us, Marc, it's really about lifetime value of the consumer. I mean we view service as a growth engine for the business. And it's not just about servicing problems, it's about building lifetime value. We set up with you and your team, a guided shopping agent in 8 weeks right before the holiday season. I was nervous about it as I went to my team and I said, we're putting this in place in October. There's generally kind of a cutoff in our business where after October 1, you don't really do anything. And we launched this in 8 weeks, and it brought tremendous value to the consumer. I mean, it helped them with researching and buying and troubleshooting really all in one seamless conversation. So it was a great success for us this holiday season. Marc Benioff: Well, Mark, I think that working with you has been extremely interesting because you're very much a B2C company. And there's so many exciting things that you're doing. When you look at what Salesforce has done and deployed, especially in regards to AI agents and apps, where has it really impacted you the most? Mark Adam Barrocas: Well, look, let me start with this stat for you. I mean, just since we launched Salesforce in Q4, I mean, agents have participated in 0.25 million consumer engagements during that period of time. So just in a really, really short period of time, 0.25 million engagements. We put so many products out into the market and sometimes that many products creates complexity for the consumer. And so whether they're calling about a service issue or a troubleshooting issue or where is my order issue, it's allowed our customer service agents to focus on really the really challenging issues, and it's freed up an enormous amount of time for them. It's a win for the consumer because the consumer is getting their questions answered quickly, they're not waiting. And it's a win for us because it's driving down cost. And it's, in the end, just having a better service experience. Marc Benioff: Well, Mark, I just want to thank you so much. We're so grateful to you as a customer of Salesforce. It has been an absolute pleasure getting to know you, working with you. And I think that we have such a great future together, and thank you for the Christmas presence. I'm using them. I have made some amazing Mango sorbet actually this week, and it was awesome. Mark Adam Barrocas: Sounds great. Thanks, Marc. Marc Benioff: Bye, Mark. Great to see you. Well, I've been so thrilled to work with Mark, but I have to also introduce you to another really good friend of mine, Geoff at Wyndham, and you probably heard from Geoff this week. He had a phenomenal quarter, doing great, the #1 hotel in the world. Geoff, we are so thrilled. Geoff, congratulations on everything that's going on with Wyndham. We're thrilled. Give us your vision of what's going on in the world and with Wyndham. And we'd love to hear how you're using Salesforce as well. Geoffrey Ballotti: We have, Marc, I mean, when you think about just how far we've come in the last year, today, we have over 5,000 deployments of Agentforce across our over 8,300 hotels. It is a huge, huge part of our Agentic platform, and we are really just getting started. We're starting to roll out to Canada and Internationally. But with Salesforce tools like MuleSoft and Data 360, we have built a single source of truth, unifying all of our guests' reservation information and data, all of their loyalty information and all of their CRM data so that all of our agents now are operating with the same trusted and real-time guest and hotel information, which they weren't before. We're calling it Wyndham Guest 360. It is a key enabler for our Agent Foundry. And it is delighting in better guest experiences, improving those experiences and building on increased loyalty engagement. But most importantly, Marc, you've talked a lot about labor, which is agentic. It is taking millions of dollars of labor costs from our small business owners in the front office out of their operation, and it is driving millions of dollars of increased revenue for these franchisees. Marc Benioff: Well, I just have to say this one thing, which is I have been hugely surprised at how fast you have gone, Geoff. We work with all the major hotel companies, and I love them all. And I stay in them all. They're fantastic. I'm actually going to stay at a Wyndham Hotel tonight. I'm flying East. But I have to ask you this question, Geoff, because I don't understand how are you going so fast? What are you doing? Is this because you're leading from the top? I mean you seem to like -- I just talked from Mark at SharkNinja. He really is owning this. Why are you guys going so fast? Why are you doing so well? I mean it's just incredible. You're loading out these apps and agents, your team is crushing it. What is going on? Geoffrey Ballotti: We're in the hospitality business, and we always say it's all about humans, yes. But it is humans, as you've always said, with agents who are driving that customer success together. Think about our customers. Before our integration with you all, our agents had to spend time gathering basic guest information on who Marc Benioff was before he checked in tonight. And that was not easily at their fingertips or even worse asking Marc for his information that we should have had. And our agents now have encyclopedic knowledge, think about it of all of your guest history, all of your booking behavior, all of your loyalty status because we tied it all together, giving us an ability to answer any question imaginable that any guest like you might have before you check in tonight, before your stay in moments, not minutes, and we're booking you into your preferred room based on our knowledge, our guest sales force knowledge of your past day history. We are successfully working now. I hope to upsell you a suite upgrade if we haven't already an early check-in. It sounds like you're getting in late, a late checkout tomorrow if you'd like one. I don't know if you're bringing -- if you have pets, but if you were -- those agents would be selling you a pet fee or [indiscernible]. Marc Benioff: Don't tell dogs about that. They're going to jump in. Geoffrey Ballotti: But look, this is all being done autonomously, which small business owners and operators would not have had time to do before. We have been working so hard. It is generating so much money. We're seeing faster average speeds of answer, 0 hold times. I've heard you talk a lot about why no customer should wait. And that's why we're doing it. We're receiving and we're removing more importantly, millions and millions of dollars, as I said, in the front office, but we're generating millions of dollars of increased ancillary revenues to these small business owners. It's not costing anything. And we're also seeing, which is really, really important, a 200 basis point increase in direct bookings from AI voice agents -- and AI voice agent conversion versus having to get those bookings through expensive third-party online travel agencies. That is increasing guest satisfaction. Our guest satisfaction scores are up 400 basis points. They've never been higher. And this customer experience that we've created is more efficient. Again, humans with agents, driving customer success. We're agent first, and we're very proud of it. Marc Benioff: Well, I just want to thank you so much, Geoff, thank you, and thanks to your team because I'll tell you, it takes a great leader like you, but it also takes a great team, and you've got both. And you've made something really incredible happen. Great job and congratulations. Geoffrey Ballotti: We're proud to be with you, our Chief Commercial Officer, was on stage with you at Dreamforce. Marc Benioff: You did a great job. Did a great job. Geoffrey Ballotti: We'll be back this year. Marc Benioff: See you. I hope you come to Dreamforce this year. Bye, Geoff. All right. Well, you -- I want to now introduce you to an incredible person who I've known for 20 years, and it's very inspiring entrepreneurs, really become a huge influencer in the world, who's getting his hands dirty to a great company called SaaStr, building agents, learning how they work, deploying them, really being on the bleeding edge, the cutting edge of this technology. And thanks for being here, Jason. I'm so thrilled to have you. Jason Lemkin: Super exciting. Yes, congrats on the quarter, by the way. Marc Benioff: Jason, I just want to ask you one question. What is it that's making this happen? What is inspiring you to kind of transform yourself and transform SaaStr to this incredible opportunity? Jason Lemkin: Well, look, maybe two things. If you're -- we're builders. We've been -- I mean, you were -- I think you were like on RadioShack computers or something back in the day, right? We've been building since are there? Marc Benioff: Right down the street here, Rolodex game. Jason Lemkin: So we've been building at heart, right? And this is the most exciting time to build ever, ever for us as executives, entrepreneurs. Honestly, if you're not excited to be building an Agentic, you should quit. You should go off and go to pasture, do your next thing. So we backed into agents because I got tired after our own big event of rebuilding the team. And we went all in and we said, I want to try to rebuild the whole team with agents about almost 10 months ago. Agentforce was a key part of that. And we wanted to push it early. Can you really do all of this, all these go-to-market motions with agents, and the numbers are pretty good. Marc Benioff: Well, you've been a pioneer. You it's a funny thing because in our own independent world, here we are, we're out here building Agentforce, SlackBot, you know that. We also acquired Momentum and we acquired Qualified and so forth. We're so excited about these companies. And then all of a sudden, well, you kind of were building our vision of the future totally independently. Jason Lemkin: Yes. Marc Benioff: And so we felt very validated in a way. It was kind of crazy. But then we looked at you and said, "Wow, this is a true visionary." And you really have always had a lot of clarity, not just in SaaS before that, you know that. Jason Lemkin: Yes. Marc Benioff: And now here you are, you know as Agent as a Service as well. You have your vision there now as well. So I guess, once a visionary, always a visionary. But give us your vision then. Where are we going? Because you've heard about the SaaS pocalypse, and you know that this isn't our first SaaS pocalypse. We've had a few of them. But now where are we going over the next couple of years? Jason Lemkin: Well, I think -- and I think this is good for Salesforce, but I think we're underestimating how powerful these agents are. I think -- look, for most people, AI is confusing, the media is confusing, what the hell is going on. Let me simplify this. I was just looking at our numbers on Agentforce this morning. So far -- and again, we're a small organization. We went from 15 humans to 2.5 and 20 agents, okay? That's a lot of change. But on Agentforce alone, as a tiny organization, we closed $2.7 million. That's not the Army contract you got, but that's a lot for us, $2.7 million with an agent, and we have $3.5 million more in the pipeline. Those are agents, and it works. And so that is exciting. That is exciting that these agents can go out and sell for you. And the first thing I did. Marc Benioff: It is kind of crazy and amazing, isn't it? Jason Lemkin: It's crazy. It just wasn't -- not only was this not really possible a year ago, and this is -- a year -- the problem with all of us, we were using ChatGPT in the early days, it was all hallucinations. It was hard to believe this stuff would work even 18 months ago, wasn't it? It was hard to believe. But everything got okay last summer. And then at the end of the year, it got great. And there's reasons that Salesforce had got great. But to be nerdy, even at Anthropic, your customer, when they rolled out these 4. models up to 4, 5, for B2B stuff like we do, it wasn't a little bit better. It was like jaw-droppingly better. The hallucinations will be worse than a human makes and the productivity is high. So it's just we've never seen these gains. And the idea that now our Salesforce instance can run autonomously versus doing manual data entry, I mean this was always a dream. Marc Benioff: I want to tell everyone exactly why I wanted to do here because number one is, yes, we love, by the way, Mark at SharkNinja was awesome, right? And then we had Geoff at Wyndham. And these are very big companies, like good-sized companies. And not the biggest companies in the world, but incredible companies. But you're a small company. You're in some ways, a solopreneur, right? You're an entrepreneur, you're -- and I think that it is going to go across the whole market that is small businesses are benefiting, medium. We call small businesses 0 to 200 employees, maybe that's where you are. Then we have 200 to 2,000 medium, then we have the 2,000 to 5,000 in general business, then we have the 5,000, the Monsters, then we have the government. We have software companies. Every segment is impacted by this. Don't you think every company is impacted? Jason Lemkin: I think everyone is going to look at their business and say, -- what can I fully automate with an agent? Everyone's -- you're going to unleash a torrent of creativity, right? The key thing that I've learned for folks is just start with one use case. For us, it was what you -- the idea you came up with like last summer, reactivate the leads the sales team never talked to. That was our first use case. Find something or with Window. Marc Benioff: That is a huge thing, right? Because like there's 20 million, 30 million. We don't even know, maybe 100 million people we didn't call back in the last 26 years. But Miguel called back 50,000 people with agents last week that we would not have gotten to. Even though he's got all these reps, he still doesn't have the ability to call everybody back. It's amazing. Jason Lemkin: We did 3,000 with Agentforce. And for one -- I was just looking at a couple of examples. We closed a $250,000 customer this week, but the first one with Agentforce was Freshworks. You know Freshworks. They do support and a bunch of other stuff. But they've changed. Girish isn't the CEO anymore. The marketing teams turned over, we don't know anybody. The agent found the right person and closed the deal. That's sort of magical. That wouldn't have really been possible without agents' AI. Marc Benioff: Is that exciting. Jason Lemkin: Yes, it's just like... Marc Benioff: That's exciting, right. Jason Lemkin: It is exciting. And the fact that every company can start with something here. They can reactivate something or even with Wyndham responding after hours. And actually, my old Head of Customer Success is now Head of SMB at PayPal. They use Agentforce. And he just told me -- text to me this morning or DM this morning, they have a broken merchant flow where folks would sign up to use PayPal and then they would abandon it like an abandoned cart. They put Agentforce on it and the conversion rates are much higher, but they couldn't get any people to do this, right? So all of us have some process where there's no one to do it. Marc Benioff: That is why I think it's so exciting because you have humans and agents working together. You're working with your agents. It's the apps and the agents working together. But it's kind of fun because I think that for the last 26 years, you and I, we've been in this kind of SaaS industry, and it's all been all about apps. And that's now -- and the apps aren't gone away. But as PayPal is still using those apps, they have -- by the way, PayPal is a huge customer in sales, B2B and also service, call center, contact center. But now just as you articulated so beautifully, more productivity, more capability, the ability -- the lost card idea, that's what we're finding this ability. So now we're selling not just in the SaaS apps world, we're also selling agents. And yes, these 2 are going to be 2 markets. And who knows, maybe one will be bigger than the other. Maybe they'll both be the same size. We don't exactly know. I mean we just gave guidance that we're going to do $46.2 billion this year on revenue. So I can't tell you when the -- and Agentforce is like about an $800 million business now. So I can't tell you exactly when Agentforce will be a $46 billion or $30 billion. But it has the potential to go just like -- but I'm still planning. Jason Lemkin: What's 46 x 3 help me you guys. That's something I think Agentforce... Marc Benioff: [ 46 x 3 is 120 plus 18 is 138 ]. Jason Lemkin: I think Agentforce and I'm not being [indiscernible]. I think it will be $120 billion. want to the table because I think the value is about 3x the software. This is why I think the SaaS apocalypse or SaaSquatch pocalypse or whatever, I think there's some truth to this because agents are changing the world. And if you're not -- if you don't have Agentforce, if you're one of the leaders and you don't -- you're not there, I think it's fair to be concerned, right? But the value -- I wrote this post about how much more valuable Salesforce is up with our agents. It's not a little more value. It's like 10x more valuable. Marc Benioff: I don't think you are using Salesforce really 6 months ago. Jason Lemkin: Not really. Our team had shrunk and the value was we were using it as a data store... Marc Benioff: Fired with some reps... Jason Lemkin: Never fired, they left. Yes. Yes. Marc Benioff: They left. Jason Lemkin: They left. Yes. Yes. Marc Benioff: But now you have like a team of agents and humans and your company is bigger and more successful than ever. Jason Lemkin: We're using Salesforce all... Marc Benioff: Amazing this year, right? Jason Lemkin: Yes. Yes. Marc Benioff: Okay. Jason Lemkin: Or even -- and actually, what's interesting is not only are these agents using more Salesforce, I just figured this out today. The most dated part of our software stack is a company called Marketo. You'll remember from the old days for marketing automation. Marc Benioff: Absolutely. Jason Lemkin: Back in the day, very innovative, right? Jaw dropped in the day. We're sort of a prisoner. We're stuck on it. These agents. Marc Benioff: I got some things to show you there. Jason Lemkin: Yes. But the agents, our Salesforce agents have taken all of that data and put it into Salesforce. So now Salesforce is accumulating all the value from all these other stores and becoming the hub. So that's why whatever the math is -- I'm going to bet on the 150. I'm not going to -- it might take 8 years, but I think it's -- I think the Agentic side is worth 3x to 4x the software side. Marc Benioff: A plus. Great job. Thank you being here. Really appreciate you joining the earnings call. Jason Lemkin: It's great. Thanks, everybody. Marc Benioff: All right. There we go. We just had 3 great customers. We gave some numbers. And now I'm turning it over to you, Rob, and take it over. Robin Washington: Thanks, Marc. What an amazing trilogy of 3 great questions. Marc Benioff: Congratulations for such a great quarter. Robin Washington: Absolutely. On a great year. We're going to turn to the numbers and tell everybody about it. So good afternoon. We closed an exceptionally strong fiscal year. We have rebuilt our platform to convert the raw intelligence of LLMs into real work that drives revenue, as we just heard about, reduces costs and scales reliably without limits. This is powering the transition to the agentic enterprise for our customers and ourselves. So to share a few data points, as expected, as Marc said, we had a great quarter or a great year. We finished the fiscal year '26 with second half net new AOV growth ahead of second half AOV growth. Agentforce and Data 360 ARR, inclusive of Informatica Cloud ARR reached $2.9 billion. That's up over 200% year-over-year. This includes Informatica Cloud ARR of $1.1 billion and Agentforce ARR of approximately $800 million, which is up 169% year-over-year. New bookings for Agentforce One Edition and Agentforce for Apps or as we call it A4 X, our most premium SKUs, nearly tripled quarter-over-quarter. Our consumption flywheel is spinning faster than ever. In the quarter, more than 60% of Agentforce and Data 360 bookings came from existing customers expanding their commitments. Looking at our largest deals, every single one of our top 10 wins included Agentforce, data, sales, service, platform and analytics. Our newest addition to our portfolio, Informatica, landed in 6 of those top 10 wins, proving it is a critical component of us building the data foundation for the Agentic enterprise. So let's dive a bit further into these incredible results. Subscription and support revenue grew slightly above 10% year-over-year in nominal and constant currency. Total revenue was $41.5 billion, up 10% year-over-year in nominal and 9% in constant currency, driven by Agentforce, Data 360, Slack, Agentforce sales and service performance. Informatica's Q4 results also outperformed our expectations. This strong performance was partially offset by continued weakness in marketing and commerce, weaker-than-expected Tableau performance and the on-prem revenue timing in Tableau and MuleSoft we shared last quarter. Q4 revenue attrition ended the year at approximately 8%, in line with recent trends. Our current remaining performance obligation, or CRPO, ended Q4 at $35.1 billion, which was up approximately 16% year-over-year in nominal and 13% in constant currency, driven by strong net new AOV, especially in Agentforce, Data 360, Slack and Sales. This does include a 4-point contribution from Informatica. Our top priority remains accelerating growth. Based on our FY '26 net new AOV performance, we are more confident in our path to reaccelerate organic revenue in second half FY '27 as outlined at Investor Day. Given our strong net new AOV performance and the incorporation of Informatica, we are updating our FY '30 framework as follows. We are now targeting FY '30 revenue of $63 billion, which represents an 11% CAGR from FY '26 to FY '30. We remain on track to Rule of 50 by FY '30, and we are pleased that with our continued focus on operational excellence, we delivered 60 basis points of expansion in FY '26. As we think about FY '27 and fueling our framework, we are making targeted investments, including advancing our Hyperforce third-party infrastructure for trust and security, ramping our AE capacity and scaling FTEs to drive adoption. These investments are partially funded by efficiency we've unlocked becoming the lean Agentic enterprise as our own customer zero. Before we turn to guidance, a quick update on capital allocation. I'm proud to say that we have achieved all elements of our Investor Day commitments, including capital allocation. Also, our Board has approved a 5.8% increase in our quarterly dividend to $0.44 per share. Additionally, and as you've heard, given the current stock price dislocation, the most prudent investment we can make is in Salesforce. We are updating our share repurchase authorization to $50 billion. So let's talk about FY '27. We are initiating fiscal year '27 revenue guidance of $45.8 billion to $46.2 billion, growth of approximately 10% to 11% in nominal and constant currency. We expect subscription and support growth guidance of slightly under 12% year-over-year or approximately 11% year-over-year in constant currency. This is fueled by continued momentum in Agentforce and Data 360, partially offset by weakness in Marketing, Commerce and Tableau. Our non-GAAP operating margin guidance is 34.3%, an expansion of 20 basis points. As I mentioned, this is the year where we are making further investments to fuel long-term growth and ensure customer success with Agentforce. We expect GAAP operating margin of 20.9%, an expansion of 80 basis points. Turning to Q1 guidance. We expect revenue of $11.03 billion to $11.08 billion, growth of approximately 12% to 13% in nominal and 10% to 11% in constant currency. CRPO growth for Q1 is expected to be approximately 14% year-over-year in nominal and approximately 13% year-over-year in constant currency. Clearly, we are executing against our FY '30 framework, accelerating growth and investing with discipline, including investing in Salesforce via share repurchases. Before we wrap up, to better reflect our Agentic Enterprise strategy, we are reevaluating our revenue by cloud disclosures in FY '27. So stay tuned for an update on this disclosure prior to our Q1 earnings release. Finally, a big thank you to all of our employees for their dedication and hard work delivering a very successful FY '26 and onward to an incredible FY '27. Mike, I'll turn it over to you. Michael Spencer: Thanks, Robin. And with that, Leila, we're going to go to the first question, please. Operator: [Operator Instructions] And your first question will come from Keith Weiss with Morgan Stanley. Keith Weiss: Excellent. Congratulations on a really nice end to FY '26, particularly when it comes to the Agentforce numbers. The Agentforce numbers are definitely eye-popping getting to a big scale and still growing at really, really high rates. But on the other side of that, CRPO perhaps was a little bit disappointing. On an organic basis, you grew that at 9%, just in line with your guidance. And typically, we expect a little bit of a beat, 100, 150 basis points of a beat. And I think that's stoking some concerns with investors, can Salesforce do both? Can we grow a big Agentforce business and sustain the growth and momentum in the broader Salesforce portfolio? Can we bring it along the entirety of the business? So can you talk to that aspect? Can Agentforce catalyze the broader Salesforce product portfolio? Can it bring along everything? And what gives you confidence in that acceleration in the back half of the year? Marc Benioff: All right. Well, I think that, that is absolutely a great question. And I think the reason why it's such a great question is because Salesforce is, just as you said, it's a comprehensive business. We're closing new business, new ideas. We have been building new technology, and we also carry with us that we are a subscription business. So we're carrying with us our legacy as well, and we're renewing and moving that legacy business forward. That's also one of the exciting parts of Salesforce because that also gives us the predictability to understand what's going to happen in the future fiscal years. So yes, we are innovating, we're creating the future, we're adding to the future, we're also renewing our customers and I have to tell you, we're just very proud actually of the numbers. I mean this fiscal year is far better than I expected it at the beginning of the year in the fourth quarter, actually, even the third and fourth quarter, Miguel's numbers were far exceeded my expectations and to your point, Agentforce also and also Data 360 are exceeding our expectations. And yes, could we sell more? Could we renew more? Can we do more? Can we do this? Can we do all these various things? We absolutely can, but we are very grateful for what we've been able to achieve so far. Robin, do you want to add to that? Robin Washington: Yes, I agree with that. I think we're monetizing AI, Keith, through many different fashions. We've got multiple ways to monetize. We're seeing great growth, as I mentioned, in our premium SKUs. We're seeing acceleration. I think just listening to the 3 customer interviews, it talks about the great value that they're getting from core. It's also important to point out, we didn't talk about it a lot, but our seats, we're still seeing them grow year-on-year and quarter-on-quarter. So what we see is now with Agentforce with the system that you laid out, the system of agency, et cetera, we're just seeing incremental value to our software. And some of it's going to be consumption-based, but we're going to have a hybrid model. Seats will continue to be a key component of our growth going forward. And what we hope to see is just what you heard from the 3 customers today, incremental value coming as a result of our agentic technology and capabilities. Operator: Your next question will come from Brent Thill with Jefferies. Brent Thill: Marc, the $50 billion buyback, I guess many are asking given the falloff in big multiples, why not lean a little harder in acquiring technology in M&A versus buying the stock back? Marc Benioff: Well, I really appreciate that. I think, Brent, the way to look at this is -- I'll just tell you how I look at it, which is that there's many uses of cash. Number one is dividend. We just increased the dividend by 5%. That's one use of cash, very important. And then we also look at buyback, traditional buybacks, okay? And so we're doing that. We've done that very aggressively over the last few years, as you know. And acquisitions, we will continue to do acquisitions, but using our new formula that we put into place, and we've done now quite a few acquisitions using that new formula, and it's been great. I wish I had used it actually through the entire history of Salesforce. I think we have a much better understanding of how to do acquisitions that are accretive to the business, but not dilutive to investors. And then debt. So I think there is a role here that we're just very underleveraged on our balance sheet. And I think, look, you're a great banker. You've been a great banker for decades now. I think if you look at our balance sheet, now we're going to do more than $16 billion in cash flow this year. We're not using debt effectively. And I think at these prices in the market, the ability actually to kind of come to terms that we had some acquisitions in the past like Slack and Tableau that diluted our investors, I think now is the opportunity to take some of that stock back out of the market. And these are great prices, I'm sure you would agree with that, and we want to use our capital correctly, and I think debt is a great way to do that. And I think our stock is at a great price, and I want Robin to buy as much of it as you possibly can. Robin Washington: Yes. And I'd maybe add to that, Brent. It doesn't preclude us from doing all the things you mentioned to grow, as Marc just said, with our free cash flow, with our cash balance, with our access to market. We're going to do -- we bought 10 companies, and we also returned over 99% of our free cash flow to our shareholders via buybacks and dividends. So as we think about optimizing our balance sheet, to Marc's point, we're positioning ourselves to grow organically, inorganically and also return value to our shareholders. Marc Benioff: I think that when you look at such a huge cash flow number, although we just finished a $15 billion year coming into what will be probably at least a $16.5 billion cash flow year, then we should be really just thinking about how do we use cash correctly? What is the right way to use cash? And yes, I think that there are many ways to use cash, but focusing on those 4 things, the dividend, the buyback, the acquisition and debt, all 4 are critical. And if you have other ideas or you have other thoughts, we're very open. We -- I'd love to have the conversation, of course. Operator: Our next question will come from Kirk Materne with Evercore. S. Kirk Materne: Marc, you alluded to it in your comments. The presentation yesterday by Anthropic, I thought was an interesting example of sort of a better together strategy with you and one of the model partners. But there is continued concern that those providers might become more competitive with you over time. I was wondering if you could just give us an idea of how you see the lines of demarcation in terms of partnering as well as potentially competing down the line? Where you think you guys have a right to win, where they might have a right to win? I think just a little bit more color on that would be helpful in terms of people's view of where we might be going in terms of the partnerships with those companies. Marc Benioff: Well, no, I'd be delighted to do that. And maybe we can even put up our slide again of our kind of stack diagram because it makes it really clear what our vision of the world is, which is at one very critical part of this, these new models, whether it's OpenAI, whether it's Anthropic, whether it's Gemini, whether it's Llama, whether it's, you pick, DeepSeek, Mistral, there are so many. You can go off as well to look at that there's thousands of them. We make some of them ourselves. These models are new parts of our infrastructure that we really did not have in place a few years ago. We had some of our own models. You remember when we did Einstein, and I would talk about on the earnings call that I was using Einstein to understand what was happening in my business, that was all based on Salesforce models that we had. So we've always had models at the bottom of our infrastructure. But now we really are able to say, look at this, we've done 19 trillion tokens with these models. So these models here, that's who we have today. They will change over time. They're a critical part of our infrastructure. I think the strategic question that you're asking is this: Not only does it look like that in this slide that we just saw, but could those models themselves become platforms? So could OpenAI then also be a platform, could Anthropic be a platform, can Gemini be a platform, can DeepSeek be a platform, can Mistral be a platform, can Llama be its own platform, so that in the way that we have Windows and Mac or HTML or different things as platforms where applications all of a sudden appear, well, all of a sudden, an application come in within one of those platforms and then use some of those services? Absolutely. Those could be new platforms. There will also be other new platforms. I have a platform right here as well, iOS. There are many platforms. And our job, as a software company, is to help our customers to create success and to take that and help them connect with their customers in a whole new way. So we'll deliver our products, our capabilities, our value proposition with our customer relationships, of course, we have over 150,000, I think, customers on our core, 1 million on Slack. We have 15,000 sales reps who are out there. Their job is to work with customers to help architect their future success with these ideas. And our primary vision though today, because this -- in the current reality, this is about humans and agents working together. And these customers, like you saw today with Wyndham, with SharkNinja, even SaaStr, even Salesforce. Our job is to take what's available today and make it successful. And that isn't where those platforms are today, as you know. And in your business, you work for an amazing company, Keith works for an amazing company. And these large banks, where we are providing a lot of automation for the sales professionals, the service professionals, there is a lot to do to not only automate those call centers, those contact centers, the sales forces, the employees with Slack, but then to also then unleash the agents in a way that is compliant, that is secure, that is available, that is scalable, that is reliable, that is able to operate hand-in-hand. So if you go to help.salesforce.com today and you want to get help from Salesforce, you know that you're going to be able to automatically connect to our contact center as well. That's incredible. We couldn't do that just a couple of years ago, as you know. So that's the current way we're deploying. Well, there could there be other ways that we deploy? It's definitely possible. The future could have many different forms, but we can see right now what we're going to sell this year to our customers. We have a lot to sell and a lot to do. Operator: Your next question will come from Gabriela Borges with Goldman Sachs. Gabriela Borges: I wanted to ask the team about the $2.4 billion disclosure on AWUs. Tell us a little bit about how you translate the tokens and the agentic work units to monetization? I know you've been working on AELAs. How do you think about the evolution over time in the pricing model? Jason from SaaStr was talking about the agentic value of the stack being 3x to 4x more than software value of the stack. So tell us a little bit more about how the ELAs are going? And Robin, for you specifically, how does it impact gross margin? Marc Benioff: I think Patrick should really lead this AWU discussion because it's kind of his brainchild, and he was very unhappy that I keep bringing out this token number because I'm very impressed that we have 19 trillion tokens, but because I think that really shows that we're really using these products to deploy these agents. I mean everybody now knows Agentforce is hugely successful and all the new capabilities of Agentforce, the determinism, the voice, the programmability, Agentforce Studio, Agentforce Builder and now Slackbot as well. But I think that then there's another level, this idea of agentic work units. So why don't you tell us your vision? Patrick Stokes: Yes, sure. So as we started looking at how our customers were using Agentforce and we started looking at how we're consuming tokens from the model providers, right, all those models that sit at the bottom of our layer from OpenAI and from Anthropic, what they're doing is they're providing intelligence into our system, and we're able to measure that intelligence through the lens of a token, and that's how most of these model companies are charging. It's the amount of tokens that your platform, in our case, is consuming. But when we started looking at that across our customers, we can start to see, okay, our top 10 customers are consuming this many tokens. We know how many tokens Salesforce is consuming internally. But it begs the question, well, is it -- are they doing anything? Are they working? Are they providing any value? Or is it just input and output of intelligence, right? So you can ask it a question, it can write you a poem, but that's not really all that valuable in the enterprise world. What's valuable is creating a document for you or updating a record or helping us; right here at this table, we all used Slackbot to prepare our notes here, our customer stories, we're all preparing that with Slackbot. And so what we did is we said, what if we could count those individual work units? And then what if we could look at those work units relative to the tokens? And we said, "Oh, there's a relationship between the 2." We can start to see a ratio of tokens being consumed and work coming out. And that ratio starts to become really interesting because now we can look at our customers and say, "Hey, Customer A, you have a really nice ratio. You're getting a lot of work done on the platform for the amount of tokens that you're consuming. And hey, Mr. Customer B, your relationship is actually not so good. You're consuming a ton of tokens and not getting a lot of work done, what can we do to help you?" So it becomes a really kind of interesting way. The tokens are kind of a leading indicator, but the work unit, we think is a much more valuable indicator in terms of where the value is actually coming from for our customers and for our own transformation into an agentic enterprise. But maybe on the monetization, I can toss to you. Robin Washington: Yes. I mean this is something that we continue to look. I think you were asking specifically, Gabriela, about what does it do to gross margins? And as we think about margins in the short run, we think we're pretty neutral. Patrick talked about this differentiation between tokens and AWUs. Well, tokens, those prices, we're working with our various partners. Those are going to start to go down over time and commoditize. But also importantly, when you think about our products, engineering and product is working on ways to continue to fine-tune our products with things like Agentforce Scripts, which is going to make it easier for us to produce the work, but reduce the overall cost. So those are things. And then again, we're optimizing. We're using Customer Zero. Marc talks about the fact that we're reallocating resources. We're also looking at other things to overall continue to drive our efficiency down. So short term, we don't see gross margins getting worse, fairly neutral. Long time, we're doing everything in conjunction with our FY '27 framework and our overall operating margin improvement to continue to get efficiencies in gross margin and operating margin. Marc Benioff: Miguel, do you want to take on the question about AELAs and kind of what we're seeing in the market and how customers are consuming this technology? Miguel Milano: Yes. I've been working very hard for the last quarter to have this minute because I really want to tell you the story. Q3 was stellar. You heard the numbers at the time. We made a very clear commitment, Robin and I in partnership at the Investor Day. We shared 3 key messages to you all. Number one is we were seeing the very likely possibility of revenue reacceleration in 12 to 18 months. That was 4 months ago. Today, we are saying that the revenue reacceleration, organic revenue acceleration of subscription and support is going to happen in H2. And we are very -- we have committed to that, and we are certain now because we've seen the net new AOV growth outpacing the AOV growth in H2 last year. We're sitting now in Q1. We're looking at Q1 and Q2. And I can tell you with absolute confidence that the net new AOV growth is going to significantly outpace the AOV growth. So now 4 quarters of net new AOV pulling up the AOV growth is going to finally translate in H2 into a revenue reacceleration. That was number one. Number two was the fiscal year '30 a long-term durable growth plan. We are recommitted to that to the point that we've increased the target from 60 to 63, if you do the math, it's not all because of Informatica, it's because we are more and more certain that we are going to hit the numbers. And then the third thing, which is substantially important, and it goes to the monetization and to the AELA question is, we have found the formula to monetize AI. There are 3 ways, distinct ways and the main ones that we are using to monetize AI. Number one is our large installed base of 100 millions of seats, we are upgrading to our premium SKUs that contain already embedded AI and unlimited access to agentic for employee use cases, number one. We've seen, as Robin referred to earlier, that, that SKU business has triple Agentforce First Edition and Agentforce for Sales and Service has tripled quarter-on-quarter. Last quarter, it doubled. So it's pretty monster. The second way to monetize is this is very peculiar because now our apps are Agentforce Sales, Agentforce Service, all of them are agentic. So now the ROI that companies generate by implementing our apps has increased. So now we have access to new seats that before companies couldn't afford to roll out Salesforce or any of our apps. And the third way is for customer-facing agentic use cases, agents, which sell fuel, the credits, Flex Credits. And companies, if you look at the bookings of Agentforce in Q4, 50% were credits, Flex Credits, fuel; and 50% were higher SKUs. If you look at the top 12 deals, which, by the way, record, Robin and Marc, we've never done more than 10 deals above $10 million in any given quarter. This was our best Q4 ever, our best quarter ever. We did 12 deals above $10 million, one of them above $50 million, 3 of them above $20 million. When we look at those and if you look at the 3 ways to monetize, 6 out of the top 10 deals basically were upgrades of the existing SKUs. Seven out of the top 10 deals, we added seats. And 5 out of the top 10 deals included credits for agentic use cases, customer-facing use cases. Three of them included everything. But the beautiful thing is in every story that we heard today -- that was very incredible, these 3 customer stories, I have a bunch of stories that I wanted to tell you, but we're running out of time here. In every one of these stories, we are monetizing AI through these 3 different angles. And we are seeing it in the bookings, we are seeing it in the pipeline. I'm very confident about Q1. I mean something happened in Q4 that was monster. I mean, Marc said a target to me and to my team. I need to see bookings starting with a number, and we delivered above the number. That was incredible. I'm looking at the pipeline, double-digit growth in pipeline. I'm looking at my capacity. We've hired over time. We started last year, 12 months ago, with 0% growth in ramped AEs. This is -- these are AEs that are ready to sell. It takes our AEs a year-or-so to sell, to be prepared. We are starting this fiscal year with 15% to 17% more growth in ramped AEs. That's dynamite. We have double-digit growth in pipeline. I'm very confident about the net new AOV growth significantly outpacing AOV growth. And AELAs have been a big part of this. This is the #1 product that we sell now. We sold 120-plus AELAs in Q4. I thought we were going to do between 50 and 100. We did 120. In the top 10 deals, we sold 8 AELAs in the top 10 deals. These are customers that go all-in and commit and commit long term to our -- to the future, and they are outsized deals. Marc Benioff: Very good. Thank you so much, Miguel. Robin Washington: Thank you. Operator: Your last question will come from Raimo Lenschow with Barclays. Raimo Lenschow: I'll make it a quick one. If your cross-sell or the token upsell is working so well, you said 60% of the booking came from that one, it's kind of almost getting the message out to more customers quicker. You now have 29,000 customers. How do you think about that evolution from kind of getting new customers and getting those guys up and productive this year? How do you think about the role there and what are the roadblocks? Miguel Milano: Yes, Raimo, good to see you again. Listen, we did 29,000 Agentforce transactions. We have approximately 22,000, 23,000 customers. But you said it very well: Our role, the role of my team, the role of my executive, the role of all the AEs is to be in front of customers to explain these stories and the value that we can drive. I mean today -- yesterday or today, I don't know when, there was a world tour in Australia, we had 12,000 customers... Marc Benioff: It's actually tomorrow, but it's today. Robin Washington: Australia time. Miguel Milano: I don't know, whatever. 12,000 customers showed up. It's happened. It's already happened, by the way. And I think we just need to -- the key message that we are conveying to our customers is we are -- SaaS is more important than ever. In the world of LLMs, this is -- I mean, we are so happy that this raw intelligence exists. But to convert raw intelligence into reliable, accurate, scalable enterprise work, you need a software infrastructure like the one that Marc described with our 4 layers, the system of context, the system of work. This is our big differentiator. Nobody has 40% market share in sales and service. I'm sorry, in the customer domain, we are the systems of work. We have the system of agency, very sophisticated. Some companies are building it, whatever, but we have the best because we are proven in 4,000 production customers, 23,000 total customers. Nobody has that at the scale and the complexity because our agents are connected to the data, connected, able to trigger actions. And then we have the system of engagement, which is Slack. I mean the demo of Anthropic was incredible. It started in Slack. Then what did they do? They took it out to another UI, which is awful, by the way. But it's -- I mean it wasn't really as nice as Slack, but they did all the work, incredible work. Again, we are so lucky that these companies exist. And then they copy-pasted. They did that, right? They copy-pasted it and they put it back in Slack. Okay, today, you can do that with Slackbot. You don't have to get out and in. We have a great partnership with Anthropic. But anyway, Raimo, we are very excited. Marc Benioff: Patrick, I think you should come in here and talk about this. Patrick Stokes: Yes. I mean everybody right now, everybody through the past few years has been so enamored with the model, of course, it's this brand-new thing, this intelligence layer that we never had, but also the data. But what's really happening around us is the apps are changing. The UI is changing, as Miguel is alluding to. And that's really what we're seeing because these old apps of these point-and-click buttons, those were designed for human beings to interact with. But what happens when you have human beings and agents in the same place, right? Suddenly, a lot of those interactions, those UI paradigms kind of get thrown away. You don't need all of this complex UI anymore. And that's what makes Slack so powerful. And I think that's what Anthropic knows. I think that's what we saw in their demos yesterday, right? You kind of like process the work. But ultimately, it's coming -- that work is getting done because some person or some agent is asking for it and then you need to give it back to that person or that agent. And where do you do that? You do that in Slack. And that's what makes Slackbot so unbelievably powerful is you never have to leave. And of course, it's powered by Claude. We love our partners of Anthropic, but it knows all of the context of your business, not just the context of your systems of records, as we think about it, but all of the conversations happening inside of Slack and has access to all of that and the knowledge that it gains from that is truly unmatched. It might be our most important piece of data that we have. And so when you put all that together into this brand-new user interface, that's really where we see this big transformation in SaaS happening. It's that the apps are going to -- they're going to change and they're going to just turn into this environment where humans and agents are really working together. Robin Washington: And I think to add to that, if you think about customer success, right, we're really doubling down, as we said, on FTEs. And I think they're the folks that are on the ground with our selling teams, our solution selling teams to ultimately make this vision a reality. And I think that's the key component to converting it from AELAs to ultimately consuming. That's what we want to continue to see happening is that consumption wheel continuing to fly. Marc Benioff: Well said. Michael Spencer: Well, great. Thank you, Raimo. And we want to thank everyone for joining us today and look forward to seeing you soon. Marc Benioff: Bye, everybody. Thanks so much.
Operator: Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACADIA Pharmaceuticals Inc. Fourth Quarter Earnings Call. [Operator Instructions] I would now like to turn the conference over to Al Kildani, Senior Vice President of Investor Relations and Corporate Communications. You may begin. Albert Kildani: Good afternoon, and thank you for joining us on today's call to discuss ACADIA's fourth quarter and full year 2025 financial results. Joining me on the call today from ACADIA are Catherine Owen Adams, our Chief Executive Officer, who will provide some opening remarks; followed by Tom Garner, our Chief Commercial Officer, who will discuss our commercial brands, DAYBUE and NUPLAZID. Also joining us today is Elizabeth Thompson, Ph.D, Executive Vice President, Head of Research and Development, who will provide an update on our pipeline programs; and Mark Schneyer, our Chief Financial Officer, who will review the financial highlights. Catherine will then provide some closing thoughts before we open up the call to your questions. We are using supplemental slides, which are available on our website under the Events and Presentations section. On today's call, both GAAP and non-GAAP financial measures will be discussed, including non-GAAP NUPLAZID net sales and non-GAAP total revenues. The non-GAAP financial measures that are also referred to as adjusted financial measures are reconciled with the most directly comparable GAAP financial measures in our earnings press release and slide presentation, which has been posted on the Investors page of the company website. Before proceeding, I would like to remind you that during our call today, we will be making several forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events, future results and financial guidance are based on current information, assumptions and expectations that are inherently subject to change and involve several risks and uncertainties that may cause results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date, and we assume no obligation to update or revise these forward-looking statements as circumstances change, except as required by law. I'll now turn the call over to Catherine for opening remarks. Catherine Owen Adams: Thanks, Al, and good afternoon, everyone. I'm pleased to report that ACADIA delivered another strong quarter, capping off a milestone year for our company. We achieved adjusted total revenues of $298 million in the fourth quarter, up 16% from the prior year. And for the first time in our company's history, annual revenues exceeded $1 billion, reaching $1.08 billion in adjusted 2025 revenue, which represented 14% growth from the prior year. This achievement underscores the strength of our commercial execution and positions us for sustained growth in the coming years. We are presenting adjusted revenues because during the fourth quarter, we received our Inflation Reduction Act invoices from CMS for NUPLAZID, which were higher than anticipated and required a nonrecurring accounting change in estimate that you see reflected in our financials. Mark will walk you through the details later in the call. As a result, we delivered adjusted NUPLAZID net sales of $189 million in the fourth quarter and $692 million for the full year. These results were up 17% and 15%, respectively, and in terms of volume represented 13% in the fourth quarter and 9% for the full year. together demonstrating the continued strength of NUPLAZID and further reinforcing our confidence in its long-term growth trajectory. So now looking forward to 2026, we expect NUPLAZID net sales of $760 million to $790 million, which would represent between 10% and 14% growth over 2025 adjusted net sales, placing the brand on a strong trajectory towards our expectation of achieving blockbuster status with $1 billion of net sales in 2028. Turning to DAYBUE. We delivered net product sales of $110 million in the fourth quarter and $391 million for 2025, representing 13% and 12%, respectively, year-over-year sales growth. This growth was driven primarily by our expanded reach into the community physician setting in the U.S. and our ex-U.S. named patient supply programs, including countries outside the European Union, where we're seeing strong interest to access DAYBUE. We're excited about the launch of DAYBUE STIX, our new powder formulation, which is still in the very early stages, but already generating significant interest from both health care providers and caregivers. Tom will share more details on how this new formulation is being received and the opportunities we see ahead. I do want to briefly address the regulatory developments in the EU. As we shared, following our oral explanation to the Committee for Medicinal Products for Human Use, or CHMP, which we gave to support our trofinetide marketing application, we were informed that the outcome was a negative trend vote. Liz will provide details on our plan to request a reexamination subject to the formal opinion. Our commitment to advancing access to trofinetide in the EU remains unchanged. Importantly, our named patient supply programs remain active, ensuring patients maintain access to treatment as we move through the regulatory process. For our 2026 DAYBUE guidance, we expect global net sales between $460 million and $490 million, which would represent between 18% and 25% growth over 2025, driven by contributions from the STIX launch in the U.S. and continued growth of our named patient supply outside the U.S. Due to the current status of our application within the EMA, this 2026 guidance does not include potential commercial sales that would result from this regulatory approval. However, it does include contributions from our global named patient supply programs, including countries within the EU where we continue to see strong interest. Longer term, we continue to project 2028 global net sales for DAYBUE of $700 million, inclusive of the EU, and we'll update our expectations after clarity on the final EMA opinion. Just for perspective, of our projected $700 million in 2028 sales, the EU sales represent less than 15% of the total, meaning we have ample opportunity for growth ahead under any scenario. Turning to our robust R&D pipeline. We are excited for the Phase II readout of remlifanserin in the August through October 2026 time frame as this presents a key event for our company this year. Beyond that, we see several important catalysts, which Liz will detail. Importantly, we have 4 unique molecules targeting large addressable markets with a combined full peak sales potential of $11 billion. Approximately $4 billion of that potential is specifically attributable to remlifanserin across both the Alzheimer's disease psychosis and Lewy body dementia psychosis indications, highlighting the transformative potential this asset represents for ACADIA's future growth trajectory. I'll now turn the call over to Tom for an update on our commercial brands. Thomas Garner: Thank you, Catherine. I'm pleased to share the strong fourth quarter performance delivered by our commercial portfolio, beginning with NUPLAZID. NUPLAZID delivered another outstanding quarter with adjusted net sales of approximately $189 million in the fourth quarter. Importantly, as Catherine mentioned, underlying quarterly volume growth remained exceptionally strong at 13%, accelerating the momentum we've built throughout the year. This growth was broad-based with strength across all channels. For the full year, volume increased 9%, reflecting sustained and durable demand for NUPLAZID. Several key metrics underscore this commercial momentum. New prescriptions led the way, growing 18% year-over-year in the fourth quarter. This performance reflects continued traction in the marketplace and validates the effectiveness of our commercial strategy to improve awareness and diagnosis of Parkinson's disease psychosis while positioning NUPLAZID as the preferred treatment option earlier in the course of the disease. This has been supported by a refined approach to targeting and segmentation. While on the direct-to-consumer front, our new branded campaign launched in the fourth quarter, and we expect pull-through benefits to build throughout 2026. From an execution standpoint, we have now completed a 30% expansion of our customer-facing teams to better support our evolving prescriber base with representatives now fully deployed in the field. Based on our experience with DAYBUE, we expect a 6- to 9-month ramp before the full impact of this investment is reflected in results. Our expanded team is now equipped with enhanced tools and resources to engage a broader and evolving prescriber base. Notably, 40% of NUPLAZID's prescribers in fiscal year 2025 were new to brand, and we are now even better positioned to meet the needs of this growing group of HCP writers. Overall, 2025 was a very strong year for NUPLAZID, and we are well positioned to build on this momentum in 2026 and beyond. As reflected in our guidance, we expect another year of solid growth. And as Catherine noted, we remain confident in NUPLAZID's path to approximately $1 billion in annual sales by 2028. Now turning to DAYBUE. We delivered another quarter of meaningful progress across multiple growth drivers. Fourth quarter sales were approximately $110 million, driven primarily by strong U.S. performance with growing contributions from our rest of world programs. This represents 13% year-over-year sales growth, supported by 12% volume growth. In the fourth quarter, 1,070 patients received DAYBUE shipments globally, which represents record highs in both the U.S. and outside the U.S. This milestone highlights our continued success in reaching more patients who can benefit from therapy. As the business matures, we expect to increasingly emphasize sales-based metrics over patient counts as our primary performance indicator. Core business fundamentals remain consistent with what we reported last quarter, including strong persistency, low discontinuation rates and continued penetration within the approximately 6,000 diagnosed Rett syndrome patients in the United States, reinforcing the significant opportunity that remains. We continue to see growing momentum from our community expansion strategy. In the fourth quarter, 76% of new prescriptions originated from community-based physicians, validating our strategy on expanding access beyond specialty care centers and bringing DAYBUE closer to where patients receive their ongoing care. Now turning to DAYBUE STIX, one of our most exciting recent developments. In December, the FDA approved this new formulation of DAYBUE, a powder for oral solution. We believe this represents a meaningful advancement in how we can serve patients and families. DAYBUE STIX has been developed based on the feedback we've heard directly from caregivers and HCPs. The powder formulation allows flexibility in mixing with different liquids and adjusting volume based upon patient preference. It requires no refrigeration, offers enhanced portability through compact packaging and contains low sugar and carbohydrate content with no red dye or preservatives. Based on our analysis, we believe there's an incremental opportunity of over 400 patients, including treatment-naive and those who have previously discontinued DAYBUE due to formulation concerns. We've been very encouraged by the early response to the approval of DAYBUE STIX across the Rett community. Initial product is already in channel, and the first patients have already begun receiving shipments. Early patient mix is tracking in line with our expectations, and we remain on track for a broader commercial launch in early Q2 as we ensure appropriate inventory levels and a smooth transition for patients. Outside the United States, we continue to make progress expanding global access to trofinetide. DAYBUE liquid is now approved in 3 markets, including Israel, following recent approval by the Ministry of Health, further expanding our international footprint. Looking ahead, we see a strong growth outlook for DAYBUE reflected in our 2026 guidance. Key drivers include the U.S. launch of STIX, continued benefits from the expansion of our customer-facing teams and ongoing contributions from the named patient supply programs internationally. Overall, the fundamentals of the DAYBUE business remains strong with multiple demand drivers in the U.S., coupled with a runway for continued growth as we expand access globally. I'd like to thank the ACADIA commercial organization for their outstanding commitment to both NUPLAZID and DAYBUE in 2025. I look forward to further building on the strong momentum we've established as we head into 2026. And with that, I'll turn the call over to Liz. Elizabeth Thompson: Thank you, Tom. I'm pleased to have the opportunity to discuss progress on our robust R&D pipeline, where we continue to see real momentum building across multiple programs and to provide some regulatory updates. As we updated last month, across our 8 disclosed programs, we anticipate initiating 5 additional Phase II or Phase III studies by the end of 2027, demonstrating the breadth and depth of our development portfolio. Over recent quarters, we've achieved several important milestones with new study initiations. Among these, we initiated a Phase II study of remlifanserin in Lewy body dementia psychosis, initiated a Phase III study of trofinetide in Japan and launched our Phase II study of ACP-211 in major depressive disorder. Soon, we expect to initiate our first-in-human study of ACP-271 in healthy volunteers, marking an important advancement for this novel asset into clinical development. As a reminder, our current target indications are tardive dyskinesia and Huntington's disease. We continue to expect to deliver 4 Phase II or Phase III study readouts by the end of 2027. The next milestone will be top line results from our Phase II study of remlifanserin in Alzheimer's disease psychosis. Based on the pace of enrollment, we remain confident in the updated August to October 2026 time line we shared last month. Recruitment in our remlifanserin study for Lewy body dementia psychosis is getting off to a solid start and is tracking in line with our expectations. Turning to our trofinetide regulatory and international development updates. As we announced earlier this month, we were informed of a negative trend vote from the CHMP. We expect to receive the final opinion this week, which we expect will be adopted following the CHMP meeting currently taking place. Based on the trend vote, we do anticipate that final opinion to be negative. We are currently intending to follow the normal regulatory process for reexamination. In total, this process would be expected to take approximately 120 days from the adoption of the negative opinion. Assuming that time line holds, we would expect the reexamination process to lead to a new final CHMP opinion around the end of Q2. Again, our intention to request reexamination is based on our current understanding of the trend vote, but we will need to review the final opinion to determine our optimal path forward. While we look to bring trofinetide to patients in the EU, we continue to make progress on other fronts. In Japan, as I mentioned, we recently initiated our Phase III study, which represents an exciting opportunity to bring trofinetide to Japanese patients with Rett syndrome. We anticipate results from this pivotal study between Q4 2026 and Q1 2027, which would position us for a potential regulatory submission in 2027 in this important market. The strength and diversity of our pipeline continues to position ACADIA for sustained growth with multiple potential opportunities to bring truly meaningful innovation to underserved patients living with rare and neurological diseases. 2025 was a milestone year for ACADIA in many ways, and I am particularly proud of what the R&D team has done to continue to move our science and our pipeline forward. And with that, I hand the call over to Mark. Mark Schneyer: Thank you, Liz. I'm pleased to walk you through our strong financial performance for the fourth quarter and full year 2025. Fourth quarter total revenues were $284 million and for the full year were $1.07 billion on a GAAP basis. Turning to NUPLAZID. Fourth quarter GAAP net product sales were $174 million and for the full year 2025 were $680 million. We are also reporting results on a non-GAAP basis to adjust for the accounting impact on NUPLAZID from receiving our first invoices for inflation cap rebates under the Inflation Reduction Act, or IRA. While we've been accruing for inflation cap rebates since Q4 2022 based upon historical data that we received from the federal government and our customers, the invoices we received from CMS indicated that our Medicare volume for NUPLAZID was higher than we had been accruing for. This volume difference required us to make a change in estimate for our IRA rebate accruals in fiscal year 2025, which is accounted for as an increase in gross to net and resulted in a nonrecurring $20 million reduction in net sales. A reconciliation from our GAAP results to non-GAAP adjusted NUPLAZID net sales and total company revenues is presented on Slide 15. The adjusted net sales methodology apportions the previously described $20 million change in estimate to the years in which the applicable NUPLAZID net sales volumes occurred. As you can see on this slide, the change in estimate is only a modest change in net sales when looking over the entire 4 fiscal year period. For the fourth quarter, adjusted NUPLAZID net sales were $189 million, up 17% year-over-year. For fiscal year 2025, our adjusted NUPLAZID net sales were $692 million, up 15% year-over-year. For the quarter, gross to net for NUPLAZID was 29.4% on a reported basis and 23.6% on an adjusted basis. Our gross to net for NUPLAZID for the full year was 25.9% on a reported basis and 24.6% on an adjusted basis. For DAYBUE, we achieved $110 million in net sales in Q4, up 13% year-over-year, demonstrating continued strong momentum in this brand. The gross to net adjustment for DAYBUE in the quarter was 19.5%. Full year DAYBUE net sales were $391 million, up 12% year-over-year. DAYBUE gross to net was 22.3% for the year. Turning to our operating expenses. R&D expenses for the fourth quarter were $85 million, down from $101 million in the fourth quarter of 2024. The decrease was primarily attributable to the $28 million upfront payment for ACP-711 in the fourth quarter of 2024. SG&A expenses for the fourth quarter were $156 million, up from $130 million in the fourth quarter of 2024, primarily driven by increased marketing investments to support NUPLAZID and from our DAYBUE field expansion and marketing investments. With regard to taxes, we released the valuation allowance on the company's deferred tax assets, resulting in a onetime noncash income tax benefit of approximately $250 million in the fourth quarter. Our cash balance at the end of 2025 was $820 million. Looking ahead to fiscal year 2026, I'm pleased to provide our financial guidance, which reflects our confidence in the continued growth trajectory of both NUPLAZID and DAYBUE. While we will be making some foundational SG&A investments this year, we expect them to deliver meaningful top line and operating income growth as we move forward into 2027 and 2028. For total revenues, we expect to achieve between $1.22 billion and $1.28 billion, representing meaningful year-over-year growth that builds upon our strong 2025 performance. For NUPLAZID, we're guiding to net sales between $760 million and $790 million Sales growth is primarily expected to be driven by expanding volume. Gross to net is expected to be in the range of 22% to 24%, and this aligns with the Medicare volume mix implied by our IRA inflation cap invoices received from CMS. For DAYBUE, we're guiding to net sales in the range of $460 million to $490 million, driven by DAYBUE STIX and continued growth in our named patient supply programs. Given the delay to any potential EMA approval, this guidance range does not assume EU commercial sales. Gross to net is expected to be in the range of 22% to 24%. We expect R&D expense to be between $385 million and $410 million. The increase in R&D spend expected in 2026 compared to 2025 is primarily attributable to an increase in clinical and personnel costs as we advance and have broadened our R&D portfolio. Our R&D expense guidance assumes our remlifanserin program continues into the Phase III portion of the program. We expect SG&A expense to be between $660 million and $700 million for the full year. The growth in SG&A year-over-year is primarily due to our expansion of customer-facing personnel and marketing investments for NUPLAZID and increased spend to support the launch of DAYBUE STIX as well as the annualization of our DAYBUE field force expansion that took place in Q2 2025. This guidance reflects our confidence in the underlying strength of our business and positions us well for continued growth as we advance towards our 2028 objectives. And with that, I'll turn the call back to Catherine. Catherine Owen Adams: Thank you, Mark. Looking ahead, in addition to the strong revenue growth we've highlighted on this call, we have a series of exciting milestones to support our growth in 2026 and beyond. Our most significant catalysts arrived later this year with top line results from the Phase II study of remlifanserin in Alzheimer's disease psychosis expected between August and October, an opportunity with the potential to meaningfully shift our long-term growth profile. We also plan to initiate our first-in-human study of ACP-271 before the end of the first quarter. With a strong balance sheet, we also have the flexibility to pursue business development opportunities that complement and support our future growth. Taken together, our commercial execution, advancing pipeline and financial strength, ACADIA is well positioned for sustained growth and value creation. And with that, I'll turn the call back to the operator to begin our Q&A session. Operator: [Operator Instructions] Your first question comes from the line of Tess Romero of JPMorgan. Tessa Romero: So how should we be thinking about ramp to your 2028 global net sales targets that you outlined at our conference last month? Any additional color you can give us now that your 2026 guidance has been outlined for both DAYBUE and NUPLAZID? Catherine Owen Adams: Thanks, Tess. I'll give you a top line view and then maybe ask Tom to add some specifics. So if we take NUPLAZID and we look at our midpoint guidance for '26 at $775 million, that's about 12% above this year's growth on the adjusted basis. And so would indicate we're expecting low to mid-teens growth out to the $1 billion. So we feel very confident in that incremental growth that we see, and Tom will explain maybe a bit more about how that tracks through to the marketing execution. And then with DAYBUE at the midpoint of our guidance, 21% over last year, again, expecting for next year and out to '28 sort of low 20% growth to continue. So those -- that's how we bridge between today and our guidance for 2028. Overall, the company's CAGR during that time will be about 16%. But Tom, in terms of the confidence to ramp, perhaps you'd add some stuff for Tess. Thomas Garner: Sure, absolutely. So as you can see by our results through 2025, both brands are coming off a very strong year. And just looking at NUPLAZID and in particular, our Q4 performance, you can see the acceleration that we actually saw in some of our metrics through Q4. This gives us real confidence going into 2026 but now with our 30% expansion of the field force in place, we can really begin to further capitalize upon the underlying demand that we are seeing in the market for NUPLAZID. Obviously, we mentioned on the call that we are really kind of positioning NUPLAZID earlier in the treatment paradigm for these patients with PDP. We are continuing to focus on our unbranded efforts. We think awareness for this patient population is incredibly important. And as we begin to tap into just some of the underlying dynamics that we see on a weekly and a monthly basis, especially as it relates to kind of our expanding a new writer base, that gives us real confidence that our strategy moving forward is going to continue to pay dividends for us. Turning to DAYBUE. We obviously got the approval for DAYBUE STIX back in December. We've been really encouraged by the early signals that we're seeing through January. And just recall, we're not anticipating a full launch for that formulation until Q2. But what we're seeing already, I think, really underpins the excitement that we had leading up and then through that approval just given the encouraging stories we're hearing both from caregivers, but also HCPs and their interest in continuing to use DAYBUE and try the new formulation, either for those patients who are naive to therapy or potentially may have discontinued due to formulation concerns. So there's 2 big opportunities that we see for DAYBUE in the U.S. Outside of the U.S., obviously, it's going to be a continuation as we further bolster our named patient supply programs. So we continue to see plenty of inbound interest from across the various countries where those programs are available, and we'll support those patients where we can. Operator: Your next question comes from the line of Ritu Baral of TD Cowen. Ritu Baral: I wanted to ask the team what good remlifanserin ADP data will look like later this year. What are you hoping to show on the primary endpoint that SAPS-HD at week 6? And if you could go through some of the powering. And in the January presentation, you noted a key exploratory endpoint of the NPIC. Is there anything in particular that you're looking for in that exploratory endpoint of note that sort of fills out the clinical story of what remlifanserin benefit in this population could be? And then I have a quick follow-up. Catherine Owen Adams: I'll get Liz to give you her response. Elizabeth Thompson: Sure. Thanks for the question, Ritu. So broadly speaking, what we're looking for in our Phase II study with remlifanserin is continued evidence that we are developing a molecule that's in line with our target product profile, what we think a drug really needs to be meaningful in this patient population. And that has a number of different components to it. And then I promise I will come to your questions about powering. But some of the components are, we know that we think it's important here to have a drug that's going to be easy for people to take and easy for them to be compliant with, particularly in this patient population. You can imagine the challenges in having people take their medicine appropriately and the potential big impact if they don't. And so something that is once a day, something that can be taken with or without food, something that doesn't have significant DDIs with other medicines or beyond. Those are all things we think are important that we feel pretty good about with remlifanserin to date. We think it's going to be important, obviously, to show efficacy and a good safety profile. And frankly, if we see something that's in line with the established NUPLAZID safety profile, I think we'll be very pleased with that. And finally, certainly, we're not going to answer this just with this Phase II trial, but we think it's going to be important to see data that's directionally supportive of other things that we think matter that we're not going to have a negative impact on motor, for example, that we're not going to have a negative impact on cognition. So those are all the kinds of things that we're going to be looking for in this study. In particular, around powering and the SAPS-HD, from a primary endpoint perspective, what we have powered for here is a moderate effect size, so 0.4 in particular. We'll be pleased, of course, if we see statistical significance on that at week 6. Around NPIC, I'm not really ready at this point to comment on specifics of what we're looking for there. That is a more recently added endpoint, and so we certainly did not power the study around that. So it's more exploratory in nature, and that's reflected in where it is in our hierarchy at this point. Operator: Your next question comes from the line of Marc Goodman of Leerink. Marc Goodman: Yes. Can you just give us a sense of what's going on behind the scenes with DAYBUE and just the persistency and how patients are being compliant with the drug, just how that's changed? We haven't heard you talk about that at all today. Catherine Owen Adams: Yes. I think Tom talked to it at a high level in his comments. So Tom, do you want to add any more color for Marc? Thomas Garner: Yes. I mean, essentially, Marc, everything is kind of in line with what we shared in previous quarters. Our discontinuations remain in the pretty low single-digit range. They've really stabilized. Consumption kind of remains as we've shared before, which I think for the full year was kind of the high 60% range. Yes, I mean, our story really now is -- now we've stabilized the business. I think now we're kind of back on a growth trajectory. Now we're kind of really seeing the benefits from the expansion that we made back in Q2. And our strategy as we expand into the community is working for us. It's really now a case of utilizing STIX to really unlock that next wave of growth, and that's what we anticipate doing as we head into 2026. Marc Goodman: It's been single digits all year. Is that what you're saying, all 4 quarters? Catherine Owen Adams: Yes. Thomas Garner: Yes. Operator: Your next question comes from the line of Rudy Li of Wolfe Research. Guofang Li: I have a follow-up question for the upcoming Phase III trial in ADP. Can you maybe just talk about the time line, how long it would start -- it would take you to start and finish the trial? And a second question regarding the EU opinion for DAYBUE. What specific concerns regarding the pathway? And how do you plan to fix that with the upcoming request for reexamination? Catherine Owen Adams: So Liz, I think that's clarity on the ADP II/III enrollment time line and then you can fill them in on EU. Elizabeth Thompson: Sure. Rudy, welcome and thanks. So first, on the remlifanserin Phase II to Phase III. So when we originally designed this program, we were building it on a wealth of information from pimavanserin. And so we took an assertive approach to clinical development, where we've got a combined program, a master protocol that includes the Phase II and 2 Phase IIIs. And the advantage of this is that they're statistically separate. So I've been talking about how we're going to provide detail or we're going to provide top line results on the Phase II in the August to October time frame, but they are operationally seamless. And so what that means is that as soon as we stop enrolling in the Phase II portion of the ADP program, sites can start enrolling in the Phase III portion of the ADP program. So we look to move from Phase II to Phase III enrollment later in the course of this year. Switching over to the reexamination. So we don't have the final opinion in hand. We expect that to show up over the course of the coming days. So I can't tell you exactly what is going to be in it. What I can say is that we do anticipate, throughout the process, we have gotten questions on things like the relevance of the endpoints to the patient population, the clinical meaningfulness of the results that we saw on our endpoints, the duration of therapy and the mechanism of action of DAYBUE and how that could be extrapolated to the kind of impact you might expect to have on the disease. So those are the types of things that we anticipate we're going to see in the final opinion. But again, that's going to come in the following days, and we'll put out a press release that provides more information on it when we have more information on it to share. In terms of -- I think there was also embedded in there a question about what we might do differently this time around. Some of that is going to depend on the nature of the questions that we actually wind up seeing. But I will say in terms of reason to believe, there is precedent for reexaminations taking a negative opinion and turning it into a positive opinion. If you look over the last 5 years, depending on how you cut it, you get something like 20% to 30% of reexaminations result in a positive opinion. There are a number of factors that can go into this. Certainly, part of the process is that you do have a new rapporteur and co-rapporteur. You have an opportunity to come in specifically addressing only those grounds that are the grounds for refusal of the application, and we have an opportunity to potentially bring some new voices into it. We're really committed to the EU patient population and are looking for ways to get our way through this regulatory process. Operator: Your next question comes from the line of Yigal Nochomovitz of Citi. Unknown Analyst: This is Caroline on for Yigal. Could you tell us how remlifanserin is differentiated from Cobenfy, which has upcoming Phase III readouts in ADP this year? Elizabeth Thompson: Sure. So mechanistically, these are different approaches to coming at psychosis. Overall, psychosis is really understood to result from an excessive ratio of your serotonergic -- sorry, I'm having a hard time talking today, serotonergic versus your cholinergic signaling, neurotransmission pathways. And we come at that from sort of different angles of the seesaw, if you want to think of it that way. One is taking down one side versus increasing the other side. So there's reason to think that either could be impactful in psychosis. Certainly, there are going to be a number of differentiators in terms of how the drugs are taken. We have a good understanding, I think, of what the dosing paradigm looks like for remlifanserin as well as what it's likely to look like for Cobenfy. And you need to think about the profile of each of these in the context of an elderly frail patient population. So we think that remlifanserin could be a good treatment option for patients if we see a safety profile that continues to be consistent with what we've seen for NUPLAZID. Operator: Your next question comes from the line of Sean Laaman of Morgan Stanley. Sean Laaman: As DAYBUE STIX rolls out more broadly in early -- I think it's early Q2 '26, you said, how should we think about net new patient capture versus switching? And do you think STIX meaningfully expands the addressable Rett population over time? Thomas Garner: Yes. Sean, it's Tom here. Thanks for the question. Yes, I mean, first off, just to reiterate, we've been really, really encouraged by the early excitement that we're seeing from the Rett community regarding STIX. As we mentioned on the call, by our own internal estimates, we think there's around 400-plus patients that we could unlock in addition to just having the liquid on the market with the STIX formulation. And that's made up of both patients who are naive, but also those that may have discontinued or maybe never started due to formulation concerns. So you take that in totality, and we believe that there is clearly additional upside that we can capture over the next few years. Worth noting that, that 400 patients that we're talking about, we don't think we're going to see all of them in 2026. We anticipate unlocking those over the next 2 to 3 years. But taken together, coupled with all of the efforts that we've already employed in 2025, obviously, we have the expanded field team. We now are doing more in terms of direct-to-consumer, we've been doing a significant amount of education, especially as we move into the community setting, we believe that there is an opportunity to further penetrate the Rett marketplace with DAYBUE, and potentially continue to expand it further. We now estimate that there's around 6,000 Rett patients diagnosed in the U.S., which is a modest increase in what we've shared previously. So I think taken together, absolutely, we believe in the long-term growth outlook for DAYBUE. Catherine Owen Adams: Thanks, Sean. We are excited about STIX and getting patient stories in already with a few -- the patients now in the channel and look forward to really giving you a full insight into DAYBUE STIX at our next call. Operator: Your next question comes from the line of Brian Abrahams of RBC Capital Markets. Nevin Varghese: This is Nevin on for Brian. Just a couple of questions on 204 remlifanserin. So I think at the R&D Day last year, you had shown that there was a dose dependence in the exposure response signal with pimavanserin in the ADP and Lewy body patients where some of that higher exposure have correlated to greater symptom reduction. So I guess what drives your confidence that the 30 mg and 60 mg doses of remlifanserin would reproduce that exposure response relationship in the same way in the RADIANT trial. And is there any way to maybe quantify that target gap or target efficacy gap versus pimavanserin's marketed dose based on some of the preclinical and Phase I PK data that you have? Elizabeth Thompson: So all right. Let me think how to come at this one. So yes, first off, we do -- part of our reason to believe with remlifanserin is based on the fact that with PIM, we did see what appears to be an exposure response from an efficacy perspective. And in neither ADP nor Lewy body, do we appear to be at the maximum or near maximum plateau level of that efficacy. I will say that, frankly, even if we were able to just reproduce similar levels of efficacy with remlifanserin that was seen with 34 milligrams of pimavanserin and do it in a more robust study that is focused specifically on the Alzheimer's population, we think that, that would be meaningful in and of itself. And so additional efficacy, I would say, is sort of the cherry on top. We do think that there are good reasons to believe that, that exposure response relationship is true and will play out when we're able to really actually test it with 2 different doses, but we do have to do that test. So I would say that even if we don't see as much of a differentiation between the 30 and the 60 as you might expect based on that exposure response, we still could have a meaningful therapy here just in the context of a more robust, more specifically designed therapy or designed trial. Operator: Your next question comes from the line of Ash Verma of UBS. Ashwani Verma: So as we think about the increase in the OpEx this year, does that mostly now enable you to get to your 2028 goals? Or is there more incremental investments coming in the subsequent years that would be key to delivering that? And then just secondly, I know like on Cobenfy ADEPT-2 trial, there's been just a lot of focus on the irregularities that they saw in terms of clinical trial execution. Just can you give us some confidence that when you look at your study execution, you don't necessarily see any type of an issue like that? Catherine Owen Adams: Thanks, Ash. I'm going to get Mark to talk about the OpEx strategy and then Liz can further discuss Cobenfy. So Mark? Mark Schneyer: Yes. Thanks, Ash, for the question. So I would say that from an SG&A standpoint, kind of you'll see incremental increases from here. this is kind of the foundational investments that we're making to achieve our goals in 2027, 2028 and beyond. From an R&D standpoint, it certainly is how the portfolio advances as it continues to be successful with the broader and bigger portfolio, it can increase. And if we see normal rates of attrition, it will increase less. We do think our margin achievement will significantly expand from here. And our expectation is really depending upon how the R&D portfolio evolves that we could see kind of mid-teens operating margins with no attrition. But if you think about normal rates of attrition in the R&D portfolio, you'd be in the low 20% operating margin in 2028. Elizabeth Thompson: As far as the question about the BMS situation and the irregularities, I mean, I'll note, like everyone else, we don't know the specifics of the irregularities that we're seeing in the BMS situation. That said, on an ongoing basis, we do look at blinded data in a number of ways. And what I can say is, at this point, we're not aware of any substantial irregularities that suggest that we have a problem. Obviously, this is an ongoing thing. We're very committed to good clinical practice. And so we do continue to look on an ongoing basis, but so far, so good. Operator: Your next question comes from the line of Evan Seigerman of BMO Capital Markets. Malcolm Hoffman: Hi, I'm Malcolm Hoffman on for Evan. I know this study is early, but can you take a second to talk about what you are looking to see from the Phase I ACP-271 healthy volunteer study that you expect to initiate this quarter? Given the mechanism and preclinical work, it seems obvious that you want to see improved levels of sedation relative to the VMAT2 inhibitors. But I just want to get a sense of whether there's other key measures you're looking to assess here. Elizabeth Thompson: Very exciting. This may be the first 271 question I've gotten, well, maybe ever. No, thank you for the question. So it is early here. But what I will say is we're -- this is some of the most novel biology we've got in the pipeline. And so part of it is we're just -- it's -- this is the first step of a GPR88 agonist into humans in clinical trials. So we are interested in understanding overall how that behaves in humans. We're interested in understanding PK and to whatever extent we can, the PK/PD disconnect that we did seem to see in some of our animal models, suggesting the potential for a long PD effect that outlasts the PK. So some initial exploration there. And yes, obviously, understanding what this looks like from an adverse event potential profile is going to be important in terms of the degree to which it bears up our hypothesis of how this could work in people. So thank you for your interest. Looking forward to talking more about this as we go through the upcoming months and years. Operator: Your next question comes from the line of Sumant Kulkarni of Canaccord Genuity. Sumant Kulkarni: I know you mentioned a couple of times today that you're running 2 Phase III trials for ACP-204 in Alzheimer's disease psychosis. But what does the FDA's recent publication of its official position on needing one robust pivotal trial plus confirmatory evidence mean for ACP-204 in ADP and Lewy body dementia psychosis, especially if your Phase II data turn out to be "very good." Elizabeth Thompson: That is -- sorry, shall I just go -- that is a great question. We are obviously really excited to see any regulatory innovation that could mean that safe and effective products could get to patients faster. That is great. There's a lot that at this point, this has been discussed in a journal article and certainly in some presentations, there are a lot of questions that I think we don't know the answer to yet that makes it hard to know exactly what this could mean for ACADIA's future development program. So obviously, we're watching this very closely. Things like what the impact is on the required safety database as an example. And of course, we always do have to think of this in terms of globally acceptable development program. So there is a fair bit to work through there. That said, I do think this, I would always want in a situation where one had amazing data to think about whether there were ways to bring something to patients further, faster. I think this gives us a little bit of additional reason to think we should try having those conversations, if nothing else. Catherine Owen Adams: That's great. And just to reiterate, as we come through our top line results in between August and October and Liz and team develop the Phase III protocol from those results, we will continue to inform you how those Phase III trials will be redesigned or designed according to what's happening in the policy environment as well as also what's driven by the data. Operator: Your next question comes from the line of David Hoang of Deutsche Bank. David Hoang: So maybe first, just one on remlifanserin commercial opportunity. I think you've mentioned a potential $4 billion peak sales number for ADP and LBDP combined previously. Could you just help put some arms around that number in terms of anything like what would be the split between ADP and Lewy body? Is that just the U.S. market? Does that contemplate competition from Cobenfy? What would ramp to peak sales potentially look like? And then just to come back on the IRA rebate accrual for NUPLAZID. Could you just help reconcile what is actually cash versus noncash for the quarter and full year? And is this a situation that may repeat in the future and would require another reconciliation? Catherine Owen Adams: So let me just talk to ADP and LBDP in terms of the $4 billion, and then we'll move to the next part of the question. So we haven't disclosed the split that we see exactly between the 2 indications, but we have said that they're roughly equally weighted. Obviously, the populations are slightly different in the U.S. and the unmet need is different as well as the population fragility. So there are some differences between the 2 indications that we will work through both commercially and financially as we come through our clinical trials. But overall, we feel this is a very strong opportunity for us in much larger markets than we are in now. And with the confidence that we have behind the design of remlifanserin for these specific populations, we feel like if the data bears out, they're going to make a huge difference to this patient population and provide us a robust value story for both our health care environment, but also patients more broadly, both in the U.S. and hopefully beyond the U.S. In terms of NUPLAZID and the IRA, do you want to talk a little bit more about it, Mark? Mark Schneyer: Sure. Thanks for the question. As far as kind of cash versus noncash, we did pay our invoice in the quarter. And for the first 2 years of the program, that was $108 million payment that went out. Over the course of the year, if we factor in the payment plus additional accruals that we made, it was kind of a net cash flow over the year of about $30 million. The adjustments that we made to net sales, those are all kind of noncash adjustments, but they're meant to be reflective of our operational performance so you can compare periods when we shared the data going back to 2022 that if we had full information, these were the accruals that we would have made rather than needing to make the change in estimate that we made now that we got the information from CMS for the first time this year. Catherine Owen Adams: Hopefully that answers the questions, David. Operator: Your next question comes from the line of Jason Butler of Citizens. Jason Butler: Just understanding it's still early. Any initial comments you can speak to out of the increased NUPLAZID field force? And how are you on an ongoing basis, assessing ROI on the full commercial investment for NUPLAZID, specifically the non-field force components? Catherine Owen Adams: I'm going to get Tom to talk to you about the field force. But just to reiterate that we assess ROI on our marketing and commercial mix on a very regular basis. That's the basis of how we manage the business and the decisions that we make in order to ensure that our investments are really driving both efficiency and effectiveness. But in terms of the team, Tom, why don't you share a little bit more about how it's going? Thomas Garner: Sure. So as we mentioned, Jason, we fully executed the expansion of the field team in January of this year, and I'm very pleased to announce, obviously, that the team are now out in the field. We've actually been really encouraged that they've hit the ground running, probably in a manner that was maybe kind of earlier than we thought, quite honestly. I mean, we are already seeing a very nice uptick in terms of their activity. Just as a reminder, with this expansion, we're able now to kind of capitalize on or meet the needs of around 60% of the overall PDP market in terms of prescribers. So we've kind of increased our target universe from about 7,000 writers to about 11,000 writers. And we believe that, that additional 4,000, 5,000 that we're now going to be targeting is really going to help us unlock this incremental growth that we anticipate seeing through 2026, '27 and '28. So I think very pleased with the early activity, early metrics that we're seeing. And we're following our top of the funnel metrics very tightly, as you would imagine, and we're actually beginning to see already a noticeable increase just in terms of referral volumes. So excited to see that, that will carry on through the year and looking forward to seeing the continued impact of that expansion and that investment over the next 2 to 3 years. Catherine Owen Adams: Yes. And just to reiterate, you can see the step-up in SG&A for 2026 versus '25, and that is being contributed by both the annualization of the DAYBUE expansion as well as the NUPLAZID expansion. And as Mark said on a previous question, we don't expect that to continue to ramp at the same rate. We expect this to be the step-up this year and then a more sort of incremental increase as we head into '28. We sort of feel like we've got a good base right now. And this will be our base with minor adjustment moving forward. So again, just to reiterate that point in terms of the OpEx to support this incremental growth. Operator: Your next question comes from the line of Jack Allen of Baird. Jack Allen: Congrats on the progress made over the course of the quarter. I wanted to ask on DAYBUE and the $700 million in sales expectations by 2028. Can you just help us understand a little bit more about the assumptions that are going in behind that number that you're throwing out there, $700 million? Does that include ex U.S. sales? And what are your thoughts around potential competition for gene therapies within that period? Catherine Owen Adams: Yes. So I'll answer it at a high level and then maybe either Tom or Liz can have a response on gene therapy. So the $700 million consists mainly of the U.S. business, which is driven through growth of STIX and liquid and expanding the patient population from where we are now into the community. It does include global sales from the named patient programs. And so that is within there where we have the ability legally and through the regulatory framework to supply the named patient programs. And it does include EU commercial sales for now. Our current assumption is that we will have an EU approval before 2028. However, obviously, once we get the decision from the final decision, we will reguide for that 2028 number. But to reiterate, now the EU commercial sales within that $700 million number is less than 15%. I hope that's a good explanation. And then... Elizabeth Thompson: I can make a couple of comments and then if there's anything you want to add, Tom. So generally, I guess there's a couple of components to your gene therapy question. One is it's probably better for you to ask the gene therapy companies when they're speculating that they're coming to market. I'll just note that the developmental milestones do take some time to mature. So whether that's going to feature into 2028 or not, we probably should leave for them to comment. In terms of the, I guess, the implied idea of whether there is room for more than one type of agent out there. I mean, I think what I'd say is that the data that we've seen so far suggests that there is -- while we all wish that these would be cures, I don't think that the data so far suggests that they are. And so I think that the predominant likelihood is that patients are going to require more than one aspect to their care. Operator: Your next question comes from the line of Paul Matteis of Stifel. Julian Hung: This is Julian on for Paul. Just wondering what you guys think is the biggest risk to the ACP-204 readout? And are there different sort of indication-specific considerations for ADP versus LBDP that you've thought of? Any chance that you plan on sharing baseline information ahead of the Phase II or anything else that you could share would be helpful. Elizabeth Thompson: Okay. So a few things here. So we're not currently anticipating that we would be sharing baseline information prior to the readout. So just to get that out there. In terms of any specifics of ADP versus Lewy body, I think there are a few things that we think about, one, of course, is psychosis is obviously impactful in both patient populations, but it is very frequent in Lewy body. So I think we do see that being a much more substantial proportion of that patient population. That's something that's important to keep in mind. And I think that while in both cases, you're generally dealing with obviously a more elderly population, I think it is also considered that the Lewy body population may be a bit more frail. And so we are especially mindful of appropriate safety profiles in that patient population. In terms of biggest risks, I mean, I think that we have done a great deal to build upon pimavanserin in terms of how we put the molecule together, how we put the program together. In these kinds of spaces, of course, you always have to be concerned about placebo effect. We are doing what we can to manage it in terms of good training of investigators, looking for outliers, all that good stuff. But that is something that you always have to be mindful in these kinds of trials. Operator: We've run out of time for any further questions. I will now turn the conference back over to Al Kildani for closing remarks. Albert Kildani: Thank you, everyone, for joining us today. We look forward to speaking to you on our next conference call. Operator: This concludes today's conference call. You may now disconnect.
Matthew Beesley: Okay. Good morning, everyone. Welcome to Jupiter's full year results for 2025. I'm Matt Beesley, Chief Executive at Jupiter, and I'm joined, as always, by Wayne Mepham, our Chief Financial and Operating Officer. You will have already seen results in our morning's release, and Wayne will talk you through the details shortly. But from a financial perspective, last year was a challenging one for Jupiter. We started the year with materially lower AUM. We see multiple years of outflows. Client sentiment for risk assets was limited and short-term performance was not where we wanted it to be. But we remain focused on what we could control. Careful planning and deliberate management actions many taken in years before this one allowed us to navigate these challenges and make meaningful progress against our strategic objectives. Across cost savings, capital allocation and revenue generation, we have done what we said we were going to do, and in many cases, quicker than we had initially expected. Moving into 2026, we are demonstrably in a stronger position than we were 12 months ago. Many leading indicators are now firmly pointing in the right direction, giving us increased confidence on being able to deliver on our targeted 70% cost/income ratio. Investment performance has improved across all time periods. Client demand, particularly for risk assets, has grown, and we generated positive net flows for the first time since 2017. We've also completed 2 acquisitions, the larger of which not only avoided any client overlap, but positioned us to move into a new part of the U.K. market. Importantly, we also end the year with a highly engaged and client-centric workforce. One particularly pleasing aspect of today's results is that investment performance, crucial for any active manager and often a lead indicator, has markedly improved over all time periods. Our key performance indicator is measured across 3 years, over which 68% of mutual fund assets outperformed their peer group median compared to 61% last year. Nearly half of our total AUM was in the top quartile on the same basis. On a 5-year view, 75% of our AUM outperformed with more than 60% in the top quartile. But the biggest move we saw was over 1 year, where the figure increased by 42 percentage points to 84% of AUM outperforming with nearly 70% of our AUM in the top quartile of its peer group. A number of funds have had really strong performance over this albeit shorter time period, including both dynamic bond and strategic bond, which moved from fourth quartile to first quartile. A number of funds with our Merlin multi-manager capability also moved into the first quartile and the whole range is now above median over all of 1, 3 and 5 years. Looking at this from another angle, our larger funds are also continuing to perform well. At end December, we had 15 funds with over GBP 1 billion of client assets under management. Of these, 11 outperformed across each time period, with 6 funds top quartile over all of 1, 3 and 5 years. We know clients are rightly more focused on longer-term performance, but it is nonetheless encouraging to see such a turnaround and across all time periods. Strong investment performance is not necessarily a precursor to inflows, but it is nearly always a prerequisite. Let's move on to look at flows that we have seen through 2025. It's been great to see that flows have been broad-based across regions, client channels and capabilities. And that so far, this has continued into the first quarter of 2026. From a growth perspective, it was a really strong year with meaningful upticks across both retail and institutional client channels. We generated GBP 16.9 billion of gross flows were the highest that we have ever recorded. Across all regions, gross flows increased compared to the prior year and our AUM from European clients grew by just under 40%. This is a significant achievement given our ambitions to grow internationally. From a net flow perspective, we generated GBP 1.3 billion of net inflows in 2025. This is our first calendar year of net inflows since 2017. The institutional channel was the largest contributor here with GBP 1 billion of net inflows. The real turnaround, though was from retail clients, where we generated GBP 0.3 billion of net inflows with over GBP 2 billion coming in the second half of the year. In terms of investment capabilities, clearly, systematic was a material driver of flows. And within that, Global Equity Absolute Return or GEAR, continued to demonstrate excellent performance. And as such, client demand remained high. But this was not simply a GEAR story. Rather, the majority of the systematic range saw net inflows, including the long-only world equity fund, which tripled its AUM to over GBP 1 billion. Global equities was also a positive contributor, including demand for global leaders and gold and silver. And finally, something we've not been able to report for some time, our U.K. equity capability had positive flows across both retail and institutional clients, most notably into dynamic and growth strategies. It is indeed possible that we could now be seeing a more constructive outlook for U.K. equities going forward. So a welcome return to positive flows, encouragingly diversified across capabilities, channels and regions. And this momentum has continued so far this year. As of a few days ago, we generated positive flows year-to-date across both channels to the tune of over GBP 1 billion, and we now manage over GBP 70 billion of client assets. This time last year, when I discussed growth opportunities, I said we might expect most of these 7 investment capabilities to be larger within 12 months. Well, today, 5 of the 7 have greater AUM, most notably our systematic and global equity capabilities, which are more than 60% larger than they were a year ago. Of these, 3 have seen positive inflows, too. Where there has been a decline in AUM, some of this was cyclical, such as within Asian and emerging market equities after strong flows in the prior periods and some was more performance driven as with our unconstrained fixed income strategies. However, all of these are now performing well, particularly over shorter time periods, and we've already seen outflows abate from levels at the start of 2025. We have strong performance, and we are now positioned to be both more resilient and to better embrace the growth opportunities in front of us. And there are an increasing number of opportunities out there. For a long time, arguably, the smart trade for investors has been to be long U.S. large cap and to do so in a cheaper way possible, which largely meant owning S&P tracker indices. But we could now be entering into a new environment where clients' assets shift away from the U.S. and where markets become less correlated. Against this backdrop, active stock picking becomes ever more important. And if these conditions persist, this should be positive for active managers and even more so for Jupiter, given our areas of investment expertise. Before I hand over to Wayne, I want to give a quick update on the CCLA acquisition, which completed early this month. As you will be aware, CCLA are one of the U.K.'s largest asset managers focused on serving the nonprofit sector. And they bought GBP 15 billion of client AUM with them across charities, religious organizations and local authorities. This is a new client channel for Jupiter, and there's absolutely no client overlap between the 2 firms. It is a stable business with a long-term sticky client base. They bring complementary investment expertise too, across equities, real estate and multi-asset. And as you can see, the deal results in a much more diversified product range. Much like Jupiter, CCLA have a culture of open, transparent communication with their clients. So it's no secret that their recent performance has not been where they would like it to be. Using their charities fund as a proxy here and on a longer-term view, their flagship fund outperformed for 7 straight years, but has lagged comparative benchmarks more recently. Given their style, which is more focused on quality and growth and given what has happened within markets, this is understandable and indeed, to some extent, even expected. There are not long-term concerns here. But between a period of softer performance and the corporate event of the acquisition, it's conceivable that clients could use this as a catalyst event to consider allocations. For our own budgeting purposes, we are conservatively expecting a minor level of outflows from the CISA strategies through 2026. Overall, however, the deal remains highly compelling from strategic, cultural and financial perspectives, and the market seems to recognize this, too. And the opportunities for us to leverage the strengths of both businesses as a more scaled player in this large and growing client segment are meaningful, whether that is broader investment expertise, a global footprint or a more technology-driven operating model. Wayne? Wayne Mepham: Good morning, everyone. So 2025 has been an eventful year for Jupiter with some key drivers of future financial growth. We announced the acquisition of CCLA, declared an additional distribution and identified further cost savings, all of which are important management actions that will drive value today and into the future on top of the organic growth in our underlying business. I'm going to put these into context both for our financial results in 2025, but more importantly, the expected benefits still to come. Of course, the CCLA acquisition completed only early this month. So the guidance I will give includes some estimates, and you should expect more on this in July. So let's kick off with the normal financial summary. Reductions in AUM have been one of our biggest challenges for a number of years. but the combination of those positive net flows Matt took you through and strong market performance since May has seen our AUM reach GBP 54 billion at the year-end. That's up over 19% with continued momentum into the new year. But of course, it's the average that matters for 2025 revenues, and that was down 5% to GBP 48 billion. Combined with lower fee margins, that results in around GBP 311 million of net revenues, excluding performance fees for the year. As revenues were down, our cost-income ratio is higher than I would like in the longer term at 82%. But our cost management initiatives brought benefits this year and the steps we have taken to grow revenue and manage costs will move us close to that 70% target. Performance fee revenues were strong at GBP 120 million. We committed to an additional distribution of 50% of 2025 performance fee revenues. So that leads to a distribution of GBP 60 million, which I will cover later. Overall, it means we delivered over GBP 138 million of underlying profits or GBP 62 million, excluding performance fees. That's a total underlying EPS of 19.4p. And without performance fees, that's an EPS of 8.7p, taking us to full year ordinary dividends of 4.4p per share. Let's look at this in a bit more detail, starting with AUM. Since the beginning of 2024, AUM has fallen each quarter and into April 2025. We all know about the outflows in 2024, nearly half of which came through in the final quarter. And early 2025 was also challenging with real market disruption in the lead up to tariff announcements. We reached a low of GBP 43 billion of AUM in April. But since then, we have seen steady progress each month from markets and importantly, for momentum, positive flows almost every month and over GBP 1 billion of flows in the last quarter alone. That's a strong sign for 2026. It means our AUM was up nearly 20% from the start of the year and it's up over 12% on the average for 2025. And that momentum has continued into 2026, so positive signs already for this year. As I've already touched on, net management fee revenues were down compared to 2024 at GBP 311 million. Fee margins were down on 2024 at 65 basis points, which was driven by ongoing changes to our business mix. That's both from net flows and market dynamics, pushing up AUM in relatively lower margin areas. It's a progression we saw through 2025, so we enter 2026 with a run rate margin of 64 basis points. It's also a trend that I expect to continue in the short term. So I'm budgeting for average margins to be around a further 1 basis point lower this year at around 63 basis points, but off a much higher starting AUM. Of course, that excludes the impact of CCLA, which I will guide to separately for this year. Along with performance fees, that's combined net revenue of GBP 431 million for this year. Those performance fees are a lot higher than I guided and is a clear demonstration of simply how difficult it is to predict, both in terms of AUM levels and alpha generated. But accepting years like this can happen from time to time, if I look back at the average income we've generated, that tells me that performance fees could be around GBP 20 million for 2026. I'd emphasize all the usual caveats and disclaimers and note as 2025 demonstrates, there is the potential for that to be much more. So let's move on to costs. Before I run through the details, I wanted to remind you of our approach here. We've always been very thoughtful on costs. We recognize there is both the opportunity and the necessity to focus on good cost management. Cost management to us means controlling necessary expenditure, but also allowing investment and controlling that expenditure whilst maintaining good investment with a high ROI requires careful planning, a good cost management culture and a willingness to explore new ways of working. And we've been doing just that for some time with our most recent work leading to that announcement in May of a GBP 15 million minimum targeted savings. And our approach translates well to the integration of CCLA with a further minimum savings of GBP 16 million through that same careful and considered approach. Matt and I have always delivered on our cost commitments. And as before, we see a path to get to that next milestone of a 70% cost/income ratio. So overall operating costs for this year, excluding those relating to performance fees, are down by GBP 5 million compared with 2024. But the split of comp to non-comp is a little different to what I expected even in July, and so I'll walk you through this. Firstly, our range of outcomes for total compensation costs is normally 45% to 49%. But for 2025, we have reported a 50% ratio, so just outside that range. That's a very short-term impact, and we don't expect that to repeat. In fact, our projections see that coming down by 2 percentage points in 2026. So the main reason we are above the target is the share price. It's nearly doubled over the course of the year, and that has an impact on the accounting for employee taxes on existing share awards. Of course, we seek to hedge the impact by buying shares, but that's an economic hedge and does not have -- does not remove the accounting cost. But these short term and largely accounting impacts have been more than offset by savings we have achieved in noncompensation costs. They are over GBP 11 million down on expectations at the start of the year and GBP 6 million down on our most recent guidance. That's the full year saving we targeted from noncompensation costs over a year ahead of schedule and absorbing higher variable costs linked to that rapid growth in AUM in the second half. And looking ahead to 2026 and still excluding CCLA, I expect our non-compensation costs to be around GBP 106 million. With the GBP 11 million saving already achieved, the increase reflects variable cost growth where they are linked to AUM. For my compensation guidance, where it's the same as I've said before, that's the 48% guidance from earlier this year and lower still in the future with combined -- and combined with non-comp costs gets us to the targeted savings of GBP 15 million. The investment we have made since 2024 in automation and through outsourcing has enabled us to achieve our lowest headcount since 2014 without adding to our ongoing noncomp costs. In fact, we have delivered savings there, too. So a lower compensation ratio through building scale and lower overall headcount despite having more people today in our investment management teams than we had some 10 years ago. And lower overall noncomp costs through systematic review of the smaller systems, the smaller supplier relationships that I said we would do and where we will continue to focus. With the results that we have a business that delivers greater operational efficiency today despite the well-documented cost headwinds. Turning to exceptional items. They were in line with guidance at GBP 6 million. I had said they might be higher this year, but it was dependent on the completion of the CCLA acquisition, and that did not happen until this year. So 2025 included some charge for the acquisition, but these will mainly come through in 2026 and beyond. Matt has already touched on this, but I wanted to provide an update on the CCLA financials, such as we can, having only owned the business for a matter of weeks. It's important that your model should only include 11 months of contribution. And of course, the half year is just 5 months. AUM was little changed from the announcement date at GBP 15 billion of AUM. The mix of business has changed a little and the run rate fee margin is now 43 basis points. The underlying fee rates have been stable for many years, but the mix of long-term assets to money market AUM driven by clients' needs could have an impact on the average in the future. From a cost perspective and before any synergies, my expectation is that compensation costs will be GBP 32 million and noncompensation costs will be GBP 20 million. That's 11 months' worth, so not quite half of that for this first half year. To remind you, we have a minimum targeted synergy saving of GBP 16 million to be achieved on a run rate basis by end 2027 and GBP 17 million of net cash costs to achieve the acquisition and integration. We continue to focus on the effective delivery of those financial measures, and I'll continue to update you as we progress. For your models, on synergies, I expect to deliver a good proportion of our target on a run rate basis by the end of 2026. But for the 2026 numbers, I've included GBP 4 million of reduction as savings from those headline costs I just gave you. On the acquisition and integration costs as well as the normal acquisition-related intangible asset, where we are reporting those as exceptional items. For that noncash intangible asset for now, I'll include an annual charge of GBP 5 million, and I'll confirm the number once finalized. For cash costs in exceptional items, I have GBP 14 million for 2026, and that leaves about GBP 5 million of integration costs still to come mainly in 2027. That is in line with my previous guidance of GBP 17 million net cash cost relating to the acquisition, which is, of course, after tax deductions. Later in the year, I will also set out how we intend to report on the group as a whole, so you can adjust your models. But for 2026, you should expect to get separate information on this business as we demonstrate delivery of the financial returns we announced. So finally, let's look at capital. So some capital movements after the balance sheet date this year. That's mainly the impact of the acquisition. And you can see the current expectation of our capital, but these are very draft numbers as at the completion date. Importantly, our capital position is broadly in line with where we have said, well above 2.5x cover of the higher capital requirement. That remains very strong, but also some of the acquisition integration costs have not come through yet. So I think about it net of those and still feel very comfortable we are well positioned for the future. Of course, this is after the ordinary dividend we proposed at 2.3p on top of the interim dividend of 2.1p, distributing half our underlying EPS for the year in line with our policy. And also that commitment to distribute half the performance fee revenues for just for this year. That's GBP 60 million of additional distributions, which the Board has elected to make through a combination of a special dividend and a new buyback program. So that's equally weighted between the 2, a GBP 30 million buyback or around 3% of issued shares and a 5.7p special dividend to be paid in May. As you know, we already have over 16 million shares in treasury. That's a share purchase we completed in 2025. The shares we're about to acquire and those treasury shares will be canceled. And when we are done, we will have bought back and canceled over 7% of our issued share capital since 2022. And that remaining capital continues to be put to work in liquidity positions for ongoing business needs and in seed capital, where we are supporting organic growth in our business. At the year-end, we held seed investments with a market value of GBP 73 million, all of which has been held for less than 3 years. And in 2025, we recycled funds from areas where we achieved our objective into our first active ETF and a Cayman Island domiciled version of our highly successful GEAR fund. It's early days for both of those. That Cayman fund has already attracted client funding. So we'll monitor the capital needs there very closely and put it to work elsewhere when I can. So to wrap up on the financials. Well, financial results are often a lagging indicator of performance, and that's really clear in the measures we have reported today. But there are also signs that give us indicators of future performance, too. Profits are up on 2024, driven by performance fees. But importantly, strong underlying revenue growth might be expected in the future, driven by rapid growth in the AUM at the year-end. We've delivered on our cost actions, implemented ahead of schedule and in considered way that doesn't compromise our growth potential. We have taken clear actions to deliver growth in the business, bringing in teams that are performing well as well as through the acquisition of CCLA. And finally, we have fulfilled our commitments to reward shareholders through strong distributions equivalent to 15.8p per share or well over 18% return on the share price just a year ago. Back to Matt. Matthew Beesley: This is my fourth full year results as CEO here at Jupiter. So 3 years since we first presented this strategy for the future growth of the business. I wanted to briefly look back across the real progress we have made, but also to look forward to what is coming next. We've consistently stated that increasing scale is and remains the most important of our objectives. While we continue to deliver on our cost commitments, focus must shift on to driving top line revenues and to building scale. Importantly, scale for us is not simply a question of increasing the absolute pounds of clients' assets we manage. But by better leveraging our operating model, we know that new assets for us to manage will lead to higher incremental profit margins. We are making material and visible progress here. AUM has increased by 19% over the last 12 months, supported by positive client flows, strong investment performance and good market returns. And clearly, that number increased by a further GBP 15 billion in early February with the completion of CCLA. We continue to add depth to our expertise, investment expertise this year with the acquisition of the team and assets of Origin Asset Management as well as bringing in the new investment team to manage European equities. We are not yet where we want to be in terms of scale, but there's both momentum and growth optionality, both organic and inorganic right across the group. To deliver our target cost ratio, this growth in scale must be paired with an unrelenting focus on efficiency and cost discipline. Wayne and I have continued to deliver on our commitments here. But reducing complexity is not simply about taking costs out of the business. It is evolving our structure to ensure we have an efficient operating model. The most material change in that through 2025 was unquestionably the consolidation and outsourcing of much of our middle and back-office operation functions to BNY, which will help us work more efficiently and ultimately deliver a better service to our clients. As we look forward, we remain resolutely focused on cost discipline as we find efficiencies in our core business and deliver on synergies through the CCLA deal. In prior years, we've talked much here around the rationalization of our product range. That product range now being largely complete, the focus in 2025 was on sharpening the attractiveness of our active offering. Within the underlying business, we've always looked for ways to broaden our range of expertise that we offer to our clients. And we launched 2 active ETFs last year listed in the U.K. and across Europe and also our first fund on our offshore Cayman platform. The joining of CCLA brings a whole new client channel to Jupiter, broadening our appeal now across into the nonprofit channel where we hadn't previously had any presence. Clients' needs continue to evolve, and we must evolve with them. But through the additions of new capabilities and new methods of delivery, I'd argue that Jupiter has never before appealed to as broad a range of clients. Our fourth and final objective is to deepen relationships across all of our stakeholder groups. For our clients, we continue to produce high-quality and improving investment outcomes. For our shareholders, who we appreciate who have not had the easiest of journeys in recent years, we have now delivered a meaningfully positive shareholder return and have announced total dividends of 10.1p per share and another share buyback program of up to GBP 30 million. Everything we have discussed this morning, though, has only been made possible by the hard work of our people who work tirelessly to serve our clients. We regularly conduct star surveys, and I was delighted to see that in our most recent survey, our engagement score was 88%. This is a truly great result. It is up 9 points from where we were 12 months ago and also 9 points ahead of the financial services benchmark. So it is fitting that in 2025, we were selected as one of the Sunday Times Best Places to Work. So we go into 2026, having made significant strategic progress. Many of our leading indicators are pointing in the right direction. Client sentiment has improved, and we are generating net positive flows. We built scale, both organically and inorganically, bringing new assets onto our operationally efficient platform. Investment performance is strong, and we have a broader platform of diversified and differentiated investment expertise than we've ever had before. However, we are not yet where we want to be. We know there is still a tremendous amount of work yet to be done, but we are unquestionably better placed today than we were 12 months ago to capitalize on the opportunities ahead of us. And if market trends persist, those opportunities for Jupiter could be plentiful. So with that, I will hand over to Alex to lead us to questions. I think first in the room, Alex, and then online. David McCann: Dave McCann from Deutsche Bank. Three questions from me. Matt, you mentioned in the remarks that you're expecting or possibly could see some outflows in the CCLA business this year because of the performance of the funds. I think that's a reasonable assumption given what we can see there. A question really is, was that expected, as you say, when you did the deal and therefore, was it priced in? Or is this sort of an unwelcome development that's, I guess, cropped up since? And then probably one for Wayne. You accepting the significant caveat you made around performance fee guidance, you have increased effectively the guidance from 10 to 20, all else equal. So I just wanted some color what is the sort of waterfall to get from 10 to 20? Is this just extrapolating from last year, noting that obviously, GEAR hasn't started this year as well, but we're obviously very short as a short-term period. But we'll start with those, and I'll come on to the other one in a moment. Matthew Beesley: Yes. Thanks, David. So the first question, the outflows from CCLA, was this expected. Yes, it was. Let's remember that CCLA as investment proposition has had many years of very strong investment performance, indeed, 7 successive years of outperformance prior to the 2 soft years of performance that they've currently delivered for their clients. So within context, as an active manager, this is not unexpected. They have a particular quality growth style of investing, and that style has been under significant pressure in the last 2 years, say, after a period of very strong performance. So while, of course, we want to see all our businesses grow, ideally, we recognize as active managers, there will be periods of time where some of our investment capability lags benchmarks. As a result of that, the outflows that we are suggesting might come to pass today are completely consistent with our prior expectations. Wayne Mepham: In terms of performance fees, what I've done here is look back over time and taking into account the AUM we now have in those areas that can generate performance fees, obviously, taking into account watermark as well with some of those being below. So it's an extrapolation as you put it, in terms of the outlook. I mean you quite rightly referenced here short-term performance. I mean it's difficult in January. I think if you'd ask me that question just a month ago, you'd be putting the question in quite a different way. Clearly, that strong return in January hasn't continued into February. So it's very difficult to predict this far in advance. But yes, GBP 20 million based on history, extrapolated, I think, is the right number for now. David McCann: Okay. And then the third and final question for me. Obviously, CCLA completed now, obviously, there's still some integration to do. But -- you touched on the remarks there, Matt, about the scalable platform and so forth. So would you be looking to do more of those kind of deals if you could find them? . Matthew Beesley: Yes. So look, you're absolutely right, David. In the short term, the focus is very much on the successful execution of the integration with CCLA and we obviously outlined both our targets and our time line in that regard. As of today, Wayne pointed out the very robust nature of our balance sheet. We know this is a very capital-generative business. We have a focus on improving the profitability of this business. We are very much focused on that 70% cost-income ratio. And with that improved level of profitability would naturally come likely an improved level of capital generation as well. What I hope that shareholders see is that we're going to be thoughtful and judicious about how we deploy that capital. When opportunities arise for us to deploy it inorganically as with CCLA, as with the Origin Asset Management deal, we believe we should be looking into -- looking at those opportunities given how attractive they can be both strategically and financially. But absent those opportunities, as we've shown today, we will return that capital to shareholders. So the outlook from here is to remain judicious focused and balanced in terms of how we generate -- sorry, how we allocate that capital that we expect to generate. Alex James: If no more in the room, we've got a couple online. One on flows for Matt and one on fee margins for Wayne. Matt, you referenced positive year-to-date net inflows across both channels. I wonder if we can give any more details around capabilities or regions or anything else. And Wayne, on fee margins, if you -- a question for a bit more detail around what's happened in the second half of this year and then the drivers of that guidance into 2026. Matthew Beesley: So year-to-date, the trends we are seeing so far are very much consistent with the trends we saw at the end of 2025. So still a very diversified range of investment capabilities that are attracting new client money and also a diversified range of geographies. And indeed, the comment I made in my prepared remarks is that, that positive flow that we've seen year-to-date is effect of positive growth in both our institutional as well as our retail wholesale investment trust channel as well. So very much so far a continuation of the trends we saw at the end of 2025. Wayne Mepham: Yes. So on fee margins, I mean, we always guide to in recent years a decline in the fee margin somewhere between 1 and 2 basis points on an annual basis. I mean, obviously, very difficult to predict because often and nearly always actually, it's due to business mix rather than any necessary fee pressure. Now I think what's slightly unique about last year is just the rapid change. I mean, I spoke about it in my prepared remarks, the AUM was down at GBP 43 billion in April, and we ended the year at GBP 54 billion. So that rapid increase in AUM and actually the weighting of the growth that came through, through that period was obviously beneficial to our business overall, it was tending towards lower fee margin areas of our business. So hence, why that increase. Now clearly, the impact so far is in this year has continued to follow really that trend that we saw towards the back end of last year. So hence, the 65 basis points for the year as a whole last year on average, end the year at 64 basis points. Clearly, I'm trying to look to the future and where it might go. At this stage, I'm seeing a 63 basis point average for 2026, of course, excluding CCLA. Alex James: Thank you. No more questions online. No more in the room? Matthew Beesley: Well, that leads me just to thank you all for being here today, and we look forward to updating you on our progress in the summer. Many thanks.
Operator: Ladies and gentlemen, welcome to the Erste Group Full Year 2025 Results Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Sommerauer, Head of Group Investor Relations. Please go ahead, sir. Thomas Sommerauer: Thank you, Sergen, and also a very warm welcome to everybody who is listening in to our full year conference call 2025. We follow our usual procedure. That means that Peter Bosek, our Chief Executive Officer; Stefan Dorfler, our Chief Financial Officer; and Alexandra Habeler-Drabek, Chief Risk Officer of Erste Group, will lead you through a brief presentation, highlighting the main achievements, especially the financial achievements of 2025 and in particular, also of the fourth quarter of 2025. And before handing over to Peter, my usual reminder on the disclaimer of forward-looking statements, of which there will be quite a few as usual. And with this, I hand over to Peter for the presentation. Thank you. Peter Bosek: Good morning, ladies and gentlemen. Welcome again to our full year 2025 results and at the same time, fourth quarter 2025 conference call. I'm on Page 4 now. 2025 was an exceptionally successful year for Erste Group. A lot of good things happen to the bank and a lot of good things happen to shareholders of Erste Group. But allow me to briefly dive back to a year ago, the discussion back then and to a certain extent still today were all about share buybacks and dividends and somewhat subdued business outlook for 2025 on the back of rate cuts in the Euro zone and a mixed macro-outlook for Europe. What a difference the year makes. We at Erste found a better way to solve the excess capital challenge. We invested in growth, in Polish growth. And with this, we have substantially expanded our growth footprint in the fastest-growing region of Europe. In the meantime, the acquisition of a 49% controlling stake in what soon will become Erste Bank Polska has closed on time and from the first quarter of 2026 will be fully consolidated in our accounts. But this is just half of the story. The other half is about our strong performance in 2025. Quarter-by-quarter, growth momentum improved. This enabled us to repeatedly upgrade our financial outlook and, in the end, even outperformed our upgraded guidance. We are particularly pleased with revenue momentum, not only in terms of quantity, but more importantly, in terms of quality because quality brings it with sustainability. Translated into numbers, this means we posted record revenues in 2025, driven by our core income lines, net interest income and net fee income, and we closed the year in style with another set of quarterly records for these items. We are also on track in terms of costs. We were running somewhat above our 5% target in the first 3 quarters, but thanks to the cooling of cost inflation and adjusted for the booking of some integration costs for our Polish acquisition in the final quarter of the year, we managed to deliver on our guidance. Risk costs were only marginally higher in 2025 than in the previous year, but fully in line with our upgraded guidance with CEE shining again in terms of asset quality. Clearly, other result was special in 2025 as well as in the fourth quarter, flattering our reported net profit despite hefty banking taxes included in this line item. To be concrete, other result in 2025 benefited from net positive one-offs in the amount of about EUR 270 million pretax and some EUR 250 million post-tax. Stefan will give you the details later. Accordingly, underlying net profit would have been more in the order of EUR 3.3 billion rather than reported EUR 3.5 billion. Other way, no bad figures and comfortably historical records. And clearly very helpful in delivering capital gen beyond anybody's expectation, including our own. With a CET1 of 19.3% at year-end 2025, we are well positioned for first-time consolidation of Erste Bank Polska and arguably beyond. I therefore think it's not over to say that we got most of the decisions right last year and at the same time, set a clear ambition for 2026. It's our firm intention to stay focused and do the same in 2026. Ladies and gentlemen, throughout this presentation, we will make reference to our expectations for the business of Erste Group, including Erste Bank Polska in order to give you the best possible idea of our new Erste will look like. We will also detail already on the extraordinary items that come with first-time consolidation to almost all of which tax and minority fits fully. And in order to allow for a better like-for-like comparison, we will provide an outlook for Erste excluding Erste Bank Polska profit guidance for 2026 that we already repeatedly communicated, we hereby confirm that's a return on tangible equity of about 19% and a year-on-year increase in earnings per share more than 20%, taking our adjusted 2025 net profit of EUR 3.3 billion as a starting base and adjusting expected 2026 net profit for extraordinary items. This should translate into a net profit of somewhat above EUR 4 billion on a clean basis in 2026 as opposed to somewhat below EUR 4 billion on a reported basis. With this, let's now move to Page 5 of our key P&L performance benchmarks. Obviously, this very much reflects what I just talked about with a stable margin backdrop contributed quarterly NII record would have been difficult to achieve. And without improving cost dynamics, it would not have been possible to report a cost-income ratio of below 48%. We delivered on both fronts. Strong margins were not only supported by good balance in loan growth and healthy competitive environment, but importantly, by strong deposit pricing power, particularly in Austria and improving deposit mix overall. Risk costs at 21 basis points were in line with our improved full year guidance, as already mentioned. Trends very pretty much unchanged in this respect with continued low risk cost in the CEE region, while Austria saw most of the allocations in the final quarter of the year at a slightly lower level than a year ago. If one adds banking level reported under other operating result as shown in the lower left-hand chart with those reported under taxes, then the banking reached a new all-time high of almost EUR 440 million in 2025. Irrespective of this earnings per share adjusted for the AT1 dividend climbed to a record level of EUR 8.24 per share. And finally, return on tangible equity increased to 16.6% from 16.3% a year ago, quite a good achievement, bearing in mind the strong capital build through the year. When we look at the development of balance sheet on Page 6, we see a picture that is evidence of the strength of the business model. The business model is geared to our superior organic growth in customer business, a perfect case in point is the performance in 2025. Both on the asset and liability side, balance sheet growth can be explained by the expansion in customer business. Customer loans grew by almost EUR 14 billion or 6.4% in 2025, while customer deposits were up by more than EUR 11 billion or 4.7%. And in context of both, we can without exaggeration talk about high-quality growth. Loan growth was driven by the retail business in CEE on the back of a solid demand for housing finance, while deposit growth was also better than average in the retail and SME business. Austria, and in particular, the savings banks made a solid contribution to loan growth, while deposit growth was solid in both Austrian retail and SME segments. With volume momentum being good across the franchise in 2025, we see no reason why 2026 should turn out any worse in 2025. Consequently, we target organic loan growth of higher than 5% in 2026. That is for the business of Erste excluding Erste Bank Polska. Including Erste Bank Polska, we also expect an underlying growth rate in a similar ballpark. So, by the end of 2026, loan stock for the combined entity should be higher than EUR 285 billion. The key highlight when looking at our balance sheet metrics on Slide 7 are our regulatory capital ratios. Having said this, the other parameters are also excellent. We can again report an ideal loan-to-deposit ratio of 91.7. The growth of customer loans and customer deposits show good momentum. And finally, asset quality also reported an improvement with the NPL ratio improving both quarter-on-quarter as well as year-on-year. Generally, the asset quality situation remained very good across the CEE region and importantly stable in our Austrian. As usual, Alexandra will provide further detail on credit risk later. Liquidity and leverage ratios were as usual. But now to our capital ratios. Year-on-year, we recorded a massive rise in CET1 ratio of more than 400 basis points to 19.3%. Stefan will lead us later. But what is important to me as a CEO is that this puts us in a perfect position for first-time consolidation of Erste Bank Polska. A year ago, when we promised to the regulator that despite the 460 basis point CET1 ratio drawdown resulting from the Polish acquisition, we will always maintain a CET1 ratio of higher than 13.5%, and we aim to reach our new target CET1 ratio of 14.25% during the course of 2026, well above 13.5% and 14.5% Tier 1 ratio will certainly be the first consolidated Erste Bank Polska in the first quarter of 2026. Let's now briefly take the macroeconomic environment and particularly the outlook for 2026 on Slide 9. Our economies predict better economic growth for 6 out of our 8 core markets than we saw in 2025. And in the 2 markets for which they project consolidation, this is expected to happen at very healthy levels of between 2.5% to 3%. I'm specifically talking about the Czech Republic and Croatia. The new country in our portfolio, Poland will provide further growth in with real GDP growth estimated at 4% for 2026. Good news are also coming out of Austria, where the past 3 years, economic growth was almost nonexistent. For 2026, a modest recovery is predicted. In this forecast, we have not modeled any material tailwind from Germany fiscal expansion as this seems to take longer than initially hoped for. All in all, this is a very good starting point for the banking business and with further ground for profitable loan growth. The other macro forecasts are equally encouraging. Inflation is forecasted to retreat in most of our markets, while labor markets are expected to stay strong. When it comes to external fiscal balance, the picture is mixed as in many other places around the world. I'm tempted to say Austria, Czech Republic, Poland and Hungary usually enjoy neutral or positive current account balances while the Czech Republic is preventing a poster child of fiscal prudence. As far as the interest rate outlook is concerned, we assume only minor cuts in countries like Poland, Hungary, Romania and Serbia, while rates in the Eurozone are expected to stay flat. This as well will support profitable banking business in 2026. Talking about profitable banking business, let me share with you a couple of performance highlights of the business in 2025. To cut the long story short, retail business was a clear growth driver in the past year. I'm on Page 10 now. Retail loans were up by 8.1% to EUR 115.4 billion. Growth was reasonably balanced between housing and consumer loans and the quality of the retail book remained very good. Retail deposits also showed good growth dynamics with retail deposits climbing by almost EUR 5 billion to EUR 173 billion in the final quarter of 2025. Retail current account deposits grew the fastest quarter-on-quarter. Year-on-year, current account and saving deposits were up by 7% to 8% each, while term deposits declined by almost 6%. We also saw continued growth in off-balance sheet customer funds, security savings plans that enable customers to build long-term rates in an easy to manage digital format approached the EUR 2 million mark at the end of the year and generated gross sales in excess of EUR 1.5 billion in 2025. George, our digital platform for retail clients continued on its growth path. The number of onboarded users reached 11.4 million by the end of the year and the digital sales ratio in the retail business inched up 67%. Going forward, our ambition is unchanged to develop George into a fully-fledged financial adviser in order to give even larger parts of our client operation access to high-quality financial advice. In the corporate segment, I'm on Page 11 already loans were up 5% year-on-year and 0.8% quarter-on-quarter. The slight growth slowdown in the final quarter of the year was to weaker demand in large corporate business after a strong performance earlier in the year, while the SME and commercial real estate business lines continue to exhibit solid growth. In terms of products, demand for investment loans continued to be more pronounced in the fourth quarter, while year-on-year, there was a good balance between investment and working capital. On the liability side, corporate deposits enjoyed good growth. And here as well, current account deposits grew faster than term deposits year-on-year. The market business also delivered strong performance in 2025 with our ECM and DCM teams successfully executing 360 transactions with an issuance volume of EUR 211 billion. In Asset Management business, after passing the historic EUR 100 billion milestone in the third quarter, dynamic growth continued. Assets under management reached EUR 104 billion at the end of 2025. This bodes well for the future fee growth. On the digital front, the corporate business also progressed well. Client migration to George business has been completed in Austria, Romania and is progressing well in the Czech Republic. With this, by the end of 2025, some 76,000 corporate clients across our region are using George business. And with this, I hand over to Stefan for the presentation of the quarterly operating trends in the reporting segments. Stefan Dörfler: Thanks very much, Peter, and good morning also from my side. Please follow me to Page 13, and let me start by saying that for 2025, I'm particularly pleased with our loan growth performance. We achieved an acceleration in loan growth to 6.4%, up from 4.9% a year ago at the same time when we needed to speed up our capital build. To accomplish these 2 competing goals concurrently is testament to the strength of this organization. As far as loan volumes by country are concerned, the Czech Republic was the standout performer, producing consistent double-digit growth throughout the year. As highlighted already in previous quarters, Czech growth was well balanced between retail and corporate business, but within retail, mortgages led the way. Of the more than EUR 5 billion worth of net loans we added there, mortgages contributed roughly 50%. Growth in Hungary was equally driven by a massive increase in housing loans, admittedly from low levels, but still due to the introduction of a government-subsidized mortgage scheme as of September 2025. Having said this, demand for consumer loans was also quite robust, while corporate lending momentum trailed. Growth in Slovakia and Romania was more or less in line with the group average and in the former driven almost exclusively by strong momentum in the mortgage business, while in the latter, growth was mostly registered in consumer loans. In Austria, as Peter already mentioned, we saw mixed trends. At the savings banks, growth momentum improved noticeably towards end of the year. Interestingly, growth was better in the corporate than the retail business and within retail, clearly attributable to housing loans. In Erste Bank Austria, however, growth was generally subdued. On an aggregated level, in the corporate business, we saw a good growth balance between investment loans and working capital facilities, while in the retail business, housing loans in absolute terms made a better growth contributions -- better growth contributions, especially in the final quarter of the year. Thanks to this growth momentum in 2025 and the constructive macro-outlook, we target organic growth in 2026 of more than 5%, both for Erste with and without Erste Bank Polska, resulting in a net loan stock of higher than EUR 285 billion for the enlarged group by year-end 2026. On the liability side, the favorable mix towards cheaper deposits continued in the fourth quarter of 2025, as you can see on Page 14. This we observed in our core retail SME and savings bank's deposit base, which rose 5.5% over the past 12 months to EUR 209 billion, but also in our corporate business line. In both, overnight deposits increased, while term deposits declined year-on-year. Consequently, the cost of deposits fell again in the fourth quarter of 2025 with corresponding positive read across to net interest income. In terms of total deposit volumes, we are up 4.7% and 2.1% year-on-year and quarter-on-quarter, respectively. As far as geographic segment highlights are concerned, we saw strong retail inflows in both Austria retail and SME segments in the final quarter of 2025, while the quarter-on-quarter decline in the Czech segment was attributable to volatility in noncore deposits. In conclusion, we benefited from strong volume momentum, and that's true for both assets and liabilities, not just in the fourth quarter, but throughout the year 2025. Let me now move to net interest income on Page 15. As those of you who follow us for some time will remember well, ever since the end of the rate hike cycle in September 2023, we talked about NII plateauing even when rates were cut in half between mid-2024 and mid-2025. Now is the time to officially start talking about the next leg up because we are right in the middle of it. Most of the moving parts that are relevant for NII performance point in the right direction. Macro is somewhat supportive. Volume momentum is strong. Deposit mix is improving. Pricing power of Erste Group is intact. And last but certainly not least, we have an interest rate environment that bar any dramatic changes is at least not unsupportive of bank profitability. Consequently, we produced the second consecutive record quarterly NII print with NII first time topping EUR 2 billion. That's a year-on-year increase of 4.6% or a plus of 2.7% quarter-on-quarter. If we look at the annual performance, we started this year, let's say, the year 2025, of course, with a flat outlook and closed it with an increase of 3.5%, resulting in NII of almost EUR 7.8 billion. A key development in this context was the stabilization of NII in Austria as the year went on, followed by a trend reversal towards the positive in the final quarter of the year, essentially driven by a better deposit mix and continued deposit repricing. One could say that we have turned the NII tide in Austria. This is not insignificant as the Austrian retail and SME segment will still contribute more than 1/4 to NII even going forward. And it bodes well for the outlook for 2026 to which I will come in a minute. We also saw continued good performance in the Czech Republic and Slovakia, where a combination of deposit repricing, upwards fixations of mortgage loans and, of course, good volume dynamics all helped. The other segment principally benefited from higher allocations of income earned on local access capital, mainly from money market and government bond investments. And a final comment on NII 2025 and also at this point in time, our sensitivity to rate cuts has declined further to about EUR 170 million for a 100-basis point instant downward rate shock with the full impact expected at the minority-owned savings bank. So actually, no big deal for you as our shareholders. Now for the outlook for 2026. We target net interest income north of EUR 11 billion for this year. This incorporates an organic growth assumption of about 5% for the -- excluding Erste Bank Polska, strong contribution from Erste Bank Polska. The nonrecurrence of interest earned on the purchase price of Erste Bank Polska, around about EUR 7 billion, as you know, and the amortization of about EUR 170 million gross, that's about only EUR 60 million net of positive fair value adjustments recognized on debt securities and derivatives on first-time consolidation. Let's now turn to another success story of 2025 and frankly speaking, the past couple of years, and that's fee income on Page 16. At EUR 850 million, we posted another record in the final quarter of the year, up 9.1% year-on-year and 6.5% quarter-on-quarter. The drivers are in the meantime well known. Securities business, which includes asset management, continued to perform exceptionally well amid a helpful market environment and customers' increased propensity to invest in capital markets. Payment fees also made a good contribution when adjusting for the shift of loan account fees from payments to lending fees as of the first quarter of 2025. And insurance brokerage fees benefited from the usual end of year performance bonus payments. If we look at fees from the annual perspective, the story is very similar to what I've just said about the quarter. Net fee income reached nearly EUR 3.2 billion, again, a new record. This means that fees grew by 8.6% in 2025, comfortably above the target we set for the year. As for the growth drivers, we again talk about securities business, payment services and insurance brokerage. Honestly, it's hard to highlight individual country segments in the context of fee performance because as you see from the chart of the slide, Page 16, all of them made great contributions in 2025. Therefore, the main task for us is now to maintain the momentum going into 2026 as the bar is clearly moving even higher. But with an organic growth target of higher than 5%, you see that this is also clearly our goal. The inclusion of Erste Bank Polska should result in a combined fee income of about EUR 4 billion in 2026, whereas where we have to look at the final print that will also depend on the allocation of local FX income from Poland, either to the fee or the trading line. Over to operating expenses now. I'm on Page 17 already. Let me start with a quick summary on 2025. We were clearly running above our 2025 cost inflation guidance of about 25%. You all remember our discussions in the quarterly calls until the third quarter as we invested in efficiency projects, but in the end, still managed to come in right on target when adjusting for booking Polish integration costs in the amount of EUR 38 million to be fully transparent. This was only possible because of a significant year-on-year slowdown in cost growth in the fourth quarter, mainly driven by a stabilization in personnel costs and a moderation in depreciation and amortization charges as well as office expenses. Quarter-on-quarter, we saw the usual seasonality, so no surprises there. For 2026, it is our target to build on the solid performance of the fourth quarter and limit organic growth inflation to 3% as we should now benefit from efficiency gains and the downward inflationary trend in our countries, even Austrian inflation numbers came down recently. But 2026 is not only about better efficiency in Erste's pre-Poland business, but all about consolidating Erste Bank Polska. And in this respect, there will be 2 absolutely very relevant topics. First, and we have been talking about this in the past already, we can be more specific today, integration costs. Secondly, is intangibles amortization. While the former will mainly impact 2026, the latter will stay with us for the next decade. Our refined estimate of remaining integration costs now stands at EUR 180 million. The net impact will be dependent on the final split between Genna and Warsaw, but a good portion can be assumed to be booked locally based on the recent announcements of our colleagues from Erste Bank Polska in relation of rebranding costs. The amortization of intangibles, essentially, it's about customer relationships, will be based on the value of customer stock for 100% of Erste Bank Polska of EUR 2.1 billion and consequently have an outsized impact on the cost line of EUR 210 million annually. As opposed to this gross amount, the bottom-line impact at about EUR 70 million will be significantly lower as tax and minority shields fully apply. This is a noncash charge and irrelevant to regulatory capital as already fully deducted. Taking all of these items into account, we target operating expenses of about EUR 7 billion in 2026 for the enlarged Erste Group. Next up is operating results, and I'm already on Page 18. At almost EUR 11.7 billion, we posted record operating income in 2025 and at almost EUR 3.1 billion, we also posted record operating income for the quarter. The reasons we have discussed already in detail. We saw high-quality revenue growth driven by our core income lines, net interest income and net fee income. Or put differently, we enjoyed strong core business momentum. And with cost performance being in line with expectations, we saw records for both annual and quarterly operating results. As cost growth was a touch higher than revenue growth in 2025, the cost/income ratio was slightly weaker in 2025. However, much better than anticipated at the beginning of the year. When it comes to the outlook for 2026, and we just look at the Erste business, excluding Erste Bank Polska, then based on what we already said about macro, interest rates and business momentum, there's only one conclusion, and that's positive operating jaws or translating this into concrete numbers, a further improvement of the cost/income ratio towards 47%. Well, obviously, this is a somewhat theoretical statement as our 2026 financials will fully include the financials of Erste Bank Polska as well as the special effects in NII and operating expenses. But given the industry-leading efficiency level that Erste Bank Polska is operating at, that will only lead to a further improvement of these efficiency metrics. Our best guesstimate and guidance at this point in time is around 45%. And with this, over to Alexandra for more details on credit risk. Alexandra Habeler-Drabek: Thanks, Stefan, and also good morning, and welcome to this call. I'm now on Page 19. In the final quarter of 2025, we booked risk costs of EUR 159 million or 27 basis points. This is better than a year ago, even though FLI and overlay releases in both quarters were more or less comparable. As shown on the left-hand chart, we continue to book risk costs in our Austrian retail and SME operations, so Erste Bank Austria and Savings Banks, but the asset quality situation in Austria has definitely stabilized, thanks to somewhat lower NPL inflows in 2025 versus 2024. Fourth quarter risk cost bookings in Central and Eastern Europe continued to be very low. Looking at 2025 overall at 21 basis points, we came in right in line with our improved full year guidance. As in the previous year, again, EB Group and Sparkassen savings banks accounted for the largest part of net allocations in the context of an exceptionally strong performance in the CEE region. However, again, both at Erste Bank Uusterich and at the savings banks, risk costs improved compared to 2024, in line with trends seen in the broader Austrian banking industry. As far as FLI industry overlay provisions are concerned, we now hold a stock of about EUR 350 million, down by EUR 109 million compared to the third quarter on the back of FLI and overlay releases. For 2026, we currently project further releases of roughly EUR 60 million. When it comes to the risk cost outlook, including Erste Bank Polska for 2026, we forecast 25 to 30 basis points as risk costs tend to be somewhat higher in the Polish market. This is adjusted for the already previously communicated one-off ECL provisions of EUR 300 million gross with a net impact of EUR 120 million that is required by IFRS 9 on first-time consolidation. For Erste excluding Poland, we would see risk costs similar to 2025 levels, somewhere between 20 to 25 basis points given the generally robust macro backdrop. Let's now turn to asset quality on Page 20. The group NPL ratio improved both quarter-on-quarter as well as year-on-year to 2.4%, thanks to a stable NPL stock and a dynamically growing loan book. The stable NPL stock resulted from lower NPL inflows as well as higher recoveries. Let me again comment on Austria in this context as it has been and still is in the spotlight. For Erste Bank Austria and the Sparkassen asset quality metrics are perfectly acceptable and have improved in 2025. We saw lower NPL inflows, higher NPL recoveries. And importantly, we saw hardly any new entrants into our early warning list. And we expect more of the same in 2026 as the Austrian economy is recovering slowly. In Central and Eastern Europe, the asset quality performance remained excellent. It is hard to single out a country for doing better than the other, whether we talk about the Czech Republic or Hungary or Serbia because all of them did really well. In Romania, you might recall, where we saw some NPL inflows early in the year, the situation stabilized. We sold some NPLs. And with this, our NPL ratio in Romania is once again below 3%. In terms of projections for year-end 2026, we expect that the group NPL ratio will stay more or less at current levels, and that applies to both Erste with and without Erste Bank Polska. NPL coverage is projected to slip slightly, but only slightly and should stay close enough to 70%. And with this, I hand back to Stefan. Stefan Dörfler: Thanks, Alexandra. Let's turn to Page 21. To top off an exceptional year, other result also turned in a tremendous performance in the fourth quarter, again, benefiting from positive one-offs in the form of real estate selling gains and releases of legal provisions, particularly in the Czech Republic and Romania. When looking at other results from an annual perspective, we saw the best print since 2007. Thomas had to go back that far in analyzing the data to find a better print. And to put this into context, back then, banking levies or resolution fund contributions, which today run into the hundreds of millions of euros and annually were unheard of. As a result of this extraordinary performance throughout 2025, one thing must be clear. This is a onetime event that is very unlikely to be repeated in 2026. We estimate that the net positive onetime items amounted to approximately EUR 270 million, as Peter already mentioned, pretax and that in 2026, other result will more closely mirror regulatory charges, which based on higher banking levies in Hungary and Romania should be in the order of approximately EUR 450 million. Typically, we already expect one or the other positive or also negative print there for the first quarter, we are anticipating a better print due to the closing of the Erste transaction in Croatia. Based on what you heard about record annual and quarterly operating performance as well as quarterly and annual other results, and I'm on Page 22. In the meantime, it follows that quarterly and annual net profits were comfortably record prints as well. And one could argue somewhat inflated, obviously, to the benefit of capital and capital ratios, so no complaints here. But still, therefore, it is only fair to adjust net profit for onetime items. And if we do this, clean net profit prior to AT1 dividend deduction, as Peter already mentioned, would be closer to EUR 3.3 billion rather than the reported figure of EUR 3.5 billion. By extension, the same comments apply to reported earnings per share and return on tangible equity, both benefited from one-off supported net profits. If one adjusts reported 2025 EPS of EUR 8.24 for this, then underlying EPS would amount to EUR 7.72 and ROTE would be closer to EUR 515.5 as opposed to the reported figure of 16.6%. When it comes to the outlook for 2026, we confirm everything we have said since the announcement of the Polish acquisition on 5th of May 2025. We expect a significant improvement on return on tangible equity to around 19% and an earnings per share uplift north of 20%. These targets are based on reported net figures adjusted for extraordinary items with EUR 3.3 billion serving as a basis for 2025 and a figure of greater than EUR 4 billion being the target for 2026 adjusted. And with this, let's move on to wholesale funding and capital, starting on Page 24. Stability and competitive advantage are the name of the game when it comes to funding. High granular and well-diversified retail and SME deposit base remains a key source of long-term funding. Wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits. The stock of debt securities was pushed up primarily by issuance of covered bonds and senior preferred bonds. On to Page 25, in order to look in more detail at our long-term wholesale funding. My short summary would be that we successfully completed our 2025 funding plan and that we had a busy and successful start to the 2026 funding year. Next to several transactions of our subsidiaries, we have issued a Tier 2 and a senior preferred note, EUR 750 million each on group level in January. Overall, we expect similar funding volumes this year as in 2025 and we'll have more focus on MREL instruments compared to covered bonds. Let's now move to regulatory capital and risk-weighted assets on Page 26. In the context of other results, I talked already about a onetime event, and I think this is also a fair statement for the development of regulatory capital and risk-weighted assets. We saw a massive buildup in capital and at the same time, a massive reduction in risk-weighted assets in 2025. Of course, most of this did not happen by chance, but was the result of a well-executed strategy that was instrumental in funding the acquisition of Erste Bank Polska exclusively from internal resources. To give you an idea about the scale of the achievements, we grew loans by about EUR 14 billion in 2025, as already discussed, while risk-weighted assets were down by almost EUR 10 billion. The main drivers for this were the increased use of securitizations, positive portfolio effects and last, but not at all least, Basel IV implementation also came in handy. These factors more than offset the volume growth related up drift. The strong growth in CET1 capital by EUR 4.5 billion during 2025 is rooted in strong profitability and temporarily increased profit retention. The former also benefited from positive one-offs as detailed earlier in the presentation, but was mainly driven by strong business momentum, while the latter was supported by suspension of the share buyback we already announced early in the year and a lower dividend payout from 2025 profits. The result of these massive moves, you can see on Page 27, our CET1 waterfall, a 408-basis point increase in our CET1 ratio in 2025. Viewed differently, one could say that we absorbed almost the entire expected CET1 drawdown expected from the Erste Bank Polska acquisition within 1 calendar year. And I can only repeat what Peter said. We have far outperformed all capital commitments that we gave to the regulator in the run-up to the transaction. That's the CET1 ratio floor of 13.5% and the new increased target ratio of 14.25% to be achieved during the course of 2026. When it comes to capital distribution, we will stick to our communicated dividend policy for 2025, resulting in a payout of EUR 0.75 per share. I think it is also evident that we have the full capacity to return to our pre-transaction dividend policy of 40% to 50% and possibly even put share buybacks back on the menu if this is in the best interest of shareholders. When it comes to the CET1 ratio outlook for 2026, the triangle of profitability, loan growth and shareholder distribution will determine the extent and speed of any further buildup. In any case, we have created a space for many options for future growth. And with this, over to you, Peter, for concluding remarks. Peter Bosek: Thank you, Alexandra. Thank you, Stefan. Let's take a step back again and look at the bigger picture. What emerges in front of us, you can see summarized on Page 29. It's about strong organic growth momentum in the Erste's business without Erste Bank Polska. On a like-for-like basis, we expect loan growth of higher than 5%. We project mid-single-digit net interest income growth. We once again target fee growth of north of 5%, and we aim to push cost inflation down to 3%. With this positive operating jaws and improved cost-income ratio are firmly on the agenda for 2026. Risk costs are expected to stay at a very level. And even if other will be more in line with the reported net profit should at least be on par with what we achieved in 2025. Erste Bank Polska to the mix that the future will be brighter still. Growth opportunities will multiply by having access to the largest market in the CEE region. On the back of a better macro backdrop, we therefore project loans to surpass EUR 285 billion for the combined entity of new Erste, if you prefer. We see net interest income north of EUR 11 billion, fees at about EUR 4 billion and costs in the order of about EUR 7 billion. Risk costs will inch up to 25 to 30 basis points, leaving aside the one-off related to first-time consolidation. All of this is set to result in a significant increased return on tangible equity of 19% and an increase in earnings per share of more than 20%. Despite this very robust financial outlook, we are not getting carried away. Our full focus and attention is on integration of Erste Bank Polska and rebranding. At the same time, you can rest assured that we will not lose sight of strategic opportunities, which we expect to open up in front of us as the year progresses. Superior profitability and consequently, fast capital build will enable us to choose from a number of options ranging from increased capital return before further M&A, all of which have the potential to create significant shareholder value. And this, ladies and gentlemen, concludes our presentation remarks. Thanks for your attention, and we are now ready to take your questions. Operator: [Operator Instructions] And the first question comes from Jeremy Sigee from BNP Paribas. Jeremy Sigee: Could you just give us a quick update on the integration time line for Poland? What are the big steps in terms of systems migration or other big things? And when do they happen? And then second question, you've talked about the various options that you've got for growth. Could you talk a bit about both organic and M&A opportunities, what your priorities are, where you see opportunities presenting themselves? Peter Bosek: If I may start with the integration in Poland, we plan to be done with the integration when it comes to IT and technology within 24 months. We have already started to work with our colleagues in Poland. So, this is a lot of work in front of us, but we have both sides very experienced IT people. So, we know what we have in front of us to be able to manage. The second also very important part is the rebranding, which will take place in the second quarter. So, we have more than 400 branches, we have to rebrand. We have a lot of ATMs, we have cards, we have papers. So, a lot of things in front of us, but very much looking forward to use the opportunity to build up a very strong brand in the Polish banking market. When it comes to growth opportunities and potential M&A, it is very much depending on the market situation. I think it's much too early. I would like to -- just to remind you, although we have a very strong capital position now, we just had closing on of January. And again, now we are very much focused on integrating Poland. But if something pops up where we think it's a business opportunity and is creating value to our shareholders, we will definitely look at it. Operator: The next question comes from Gabor Kemeny from Autonomous Research. Gabor Kemeny: Thanks for walking us through the intricacies of the Polish consolidation. But my first question is actually on the business ex-Poland and the NII guidance there, I mean, 5% growth you guide for, which is decent, but it's actually similar to the Q4 run rate. It implies similar NII to the Q4 run rate, I believe. So, what makes you assume that NII will not grow sequentially from here together with loans? And the second question would be on cost. I mean you expect cost growth to half practically on an organic basis. Can you walk us -- which is a significant improvement. Can you walk us through what you actually expect to drive this slowdown and perhaps give us some quantification of those drivers? And then finally, on the capital deployment options, how do you think about your options for this year, including if you could comment on the possibility of raising your stake further in the Polish bank. Stefan Dörfler: Let me start with the remark on the interest rates for 2026. I understood you right. You wanted a reply to, say, on our growth expectations on the former Erste Group, I would call it. Look, let's not forget there are a couple of points that we need to observe when it comes to the translation of loan growth into NII. First of all, we all know that this is a buildup throughout the year. So, if we expect better growth on the loan side than 4%, 5%, then this will only get into NII numbers over the year, not only for the first quarter. The second element is, and I mentioned it on a side comment when running the presentation, we have paid EUR 7 billion for the acquisition of Erste Bank Polska. So that's in a simple calculation around EUR 130 million that we simply have less of interest on excess liquidity. It's not a huge amount given the overall dimension of NII nowadays, but it's not to be completely ignored and it is a certain churn on our growth year-on-year. And last but not least, the interest rate environment should be still okay-ish and kind of supportive, but definitely, we will not have tailwinds or tail storms from the interest rate environment. We've put ourselves in a position that is quite neutral to interest rate developments. So, from that end, we shouldn't expect too much of an uplift. And if you look at the 2025 developments, we've had a good momentum still from our investment book. This is still there, but significantly slowing down. So, I would say, at the end of the day, we are back into a game which is mainly depending on growth. You're perfectly right, but it's not a one-on-one translation of loan growth into NII. So, I think if we can deliver 5% on existing group, I would be very satisfied. The other point was on cost growth, look, it's very simple. Inflation is now really sharply coming down even in the countries like Austria, where we saw after really super elevated prints, we saw in January now a 2% number. That will help the negotiations for collective bargaining are ongoing. We hope that there will be a reasonable behavior on all sides like it was in other industries in this country. In the other countries, we see wage inflation still around, but significantly lower than in the past. So that's the external element. And the internal element, we have always communicated that the impact of the efficiency investments that we started already in the end of 2024 should have a first-time impact in 2026, and that is also something we are committed to deliver. And this in combination would land around this 3% level. Of course, a lot of integration efforts will be there, but you were asking about the core group. And then I think capital deployment. Look, Peter already made it clear in his answer just before. We are evaluating all options, but we are also not deviating from our super focus. We got everything very well done. We were achieving not only the signing, but also the closing in a very smooth manner. And I really want to praise the teams here on all sides who guaranteed very smooth operations day 1 already across the group, and we will build on that. But let's not forget that the integration will still occupy a lot of resources. And therefore, we will elevate very, very precisely how much we have still in our pockets to invest into, let me say, new adventures. I think you know the markets that we look at. There are some of the markets which are able to do transactions, for example, on themselves. If there are options opening, we will analyze them, but I think it's much too early to say. Last comment, since this is obviously also part of your question, we will not comment at this point in time about any kind of precise dividend indication for 2026, but it's natural that we have full capacity to at least -- let me stress this, at least get back to the capital distribution that you were used to up until the year 2024. Operator: The next question comes from Ben Maher from KBW. Benjamin Maher: I actually have one. It's just on the growth in the Corporate Center NII was very strong last year, effectively doubling. I think you mentioned the securities portfolio, that tailwind perhaps tailing off a bit this year. But any guidance around NII in the Corporate Center for 2026 to 2027 would be helpful. Stefan Dörfler: In short, it's going to be slightly up, not as strong growth momentum as you rightly observed for '25, but certainly also not falling from the slightly up is an indication that I can give you. Operator: The next question comes from Amit Ranjan from JPM. Amit Ranjan: The first one is on capital. What's the current outlook on balance sheet measures going forward, SRTs, et cetera? How much did you achieve in 2025? Because if I look at the credit RWAs, they declined by almost EUR 4 billion quarter-on-quarter. So, if you could highlight that and also the costs associated with that SRT in 2025? And how should we think about that in 2026? And then the second one is on -- you have provided very clear 2026 targets. How should we think about medium- to long-term targets for the group? Is that something we can expect to be provided during 2026? Are you planning a Capital Markets Day at some point for the combined entity? And last one, if I may, on loan growth. Are you seeing any pickup in corporate loan demand in the various geographies? And is there any assumption you're making around benefit from the fiscal stimulus in Germany and the infrastructure spending for countries like Austria, Czech Republic, please? Stefan Dörfler: I'll take the first question and then hand it over to Peter. So, first thing, the costs, not to forget around securitization, around about EUR 60 million, and that's in the fees. Maybe let me use this opportunity to say 2 sentences about fee development, which I'm very impressed from colleagues do a great job there. We have had already cost for securitization during the year 2025 in fees. It's even more remarkable to see the results. And that will be around about EUR 60 million in the year 2026, first point. Second point, I want to be precise on what I said on the fee trading stuff when it comes to our EUR 4 billion target. We have observed a little bit of a different treatment in the Polish market around FX fees or let's say, fixed trading revenues rather. And we will analyze in the next weeks whether we can also show this on the group level in fees or whether we have to put it in trading. So just that you can put my remark here in perspective because it fits to this point. And last but not least, in terms of planning for 2026, so nothing tremendous being planned at this point in time for securitizations in 2026. We will do 2, 3 further transactions for sure as we use this toolbox ongoingly, but significantly less than in 2025 since the effort here was directed to the capital -- I wouldn't call it rebuild, but the capital optimization effort in 2025. Peter, please? Peter Bosek: Yes. When it comes to midterm outlook, I think as we mentioned already before, I think this year, on the one hand, we are heavily focused on integrating Erste Bank Polska. It's very clear. we will see the full positive impact in terms of P&L, of course, in 2027. On the other hand, it's also fair to say that we are very -- again, very strong being up capital, which gives us a lot of opportunities. And this is exactly the other part for this year to make up our mind and see how markets are developing and what kind of opportunities are poping up in terms of M&A or further increase in our stake in Erste Bank Polska, also depending on the Polish scheme, how we are able to increase. So, there are still a lot of things we have to think through. But you can be assured that we are very well aware. And I think we are in a luxury situation in terms of our strengths being able to build up capital. When it comes to your question about the Capital Market Day, this is something we are making up our mind. Stefan, Alexandra and myself, we are, of course, discussing it. But it's also very obvious that we would go for a Capital Markets Day if we have something detailed to you, which is worth the effort of you and your colleagues to join. When it comes to potential impact of Germany, I mean, this is something we are waiting for already 1.5 years. Of course, we expect a positive impact in countries like Czech Republic, Slovakia, Poland, Romania, but the political procedure in Germany just takes longer as we expected. And therefore, we didn't take it into consideration, as mentioned during our presentation in our P&L for this year because we are sounding a little bit like broken record every time telling that there will be an impact, there will be an impact, there will be an impact and so far we cannot. Operator: The next question now from Mate Nemes from UBS. Mate Nemes: I have 3 questions, please. The first one would be a follow-up on your -- Stefan, on fee growth. I understand the uncertainty around the treatment of some of the FX commissions or FX fees in Poland. For the rest of the portfolio, putting that uncertainty aside, is there any reason why fee growth shouldn't be in the high-single digits given your track record, given strong volume growth, given good traction with the securities business and so on? That's the first one. The second question would be just a clarification, please. Could you clarify what exactly will be added back to get to the adjusted net profit in 2026, i.e., the amount slightly above EUR 4 billion. Is that the EUR 240 million intangibles amortization and the EUR 180 million integration costs or it's only the integration costs? So that's the second question. And the third question is just a, I guess, conceptual one perhaps for Peter. The outlook on retail lending, very, very strong performance in 2025, retail growth and within that housing loan growth in the CEE region is very strong. Could you talk about expectations whether that momentum can be maintained in one or the other country, be it Croatia, be it Czech, be it Hungary? Or we could see some moderation here and there? And also in that context, perhaps, what is your expectation in retail growth in Austria? Stefan Dörfler: All right. So let me take the number question first. So, we talk about roughly EUR 350 million that you should consider in this, so to say, adjustment logic, and this is the sum of ECL impact the integration costs, as you rightly assume, and the intangibles. Honestly speaking, we really try to manage, and I think we have kind of got 80%, 90% there to absorb everything as much as possible in 2026. So, you heard the question before, the earlier question to Peter regarding integration costs. That's also what we have been discussing internally. While we will be busy with a couple of the things on 28 when it comes to really absorbing most of the matters in P&L representation and so on, I would say, given the dimension of the numbers, everything that comes there after 2026 with the sole exception of the depreciation of the customer list I would personally from a CFO perspective, say you can pretty much forget, right? So, it's EUR 50 million here, EUR 30 million there, for sure, not numbers to be ignored in a bigger sense. But the way we look at, for example, NII of a base EUR 11 billion plus, yes, have an item here in 2027 impact of EUR 80 million, EUR 90 million. But frankly speaking, a small change in interest rate environment also does a much, much bigger impact, as you very well know. Fee growth. To specify the dimension that we are discussing here with the Polish colleagues and also with the audience is EUR 200 million, just to be precise. So, it's about EUR 200 million to be allocated rather to fees or FX. So that is around the -- if you map it to the EUR 4 billion total, it's around 5% difference, not to be ignored. Of course, it doesn't do anything to the total operating income. It's pretty clear. And that was the reason why Thomas and the Board discussed which guidance should we give. Otherwise, we would have been coming up with greater than 4. Now we are around 4%. We will clarify that. And by Q1, we will be very clear about where to book this. When it comes to growth, thanks for your confidence in our growth potential. I do not disagree. However, if we look around at what happened in the last 2, 3 years, let's also be fair. We had quite strong supportive factors, not the least, a positive inflationary environment, which, of course, by indexation of payment fees and so on, not only for us, but for the whole industry was supportive. And if we now go significantly down with our growth expectations on costs, it's also consequently clear that some of the tailwinds are slowing down on the fee side. That's point number one. And point number 2, as you know better than anyone else, if we have such a supportive capital market every year as we had in the last 2, 3 years, is also not a given -- and some not all, but some components of the income here on asset management fees and securities business depending on it. So do I rule out that we come up with higher than 5%. So, I think you said upper mid-single digit again in 2026? No. Do I want to guide for it at this point in time? Also no. Peter? Peter Bosek: Yes. Thank you, Stefan. When it comes to mortgage business, when we talk about volume, it's very much about Czech Republic, Austria. So, we don't see any -- or we don't expect any change in the demand in Czech Republic. So, the market is still strong I would expect even a little bit more positive momentum in Austria because demand has come back already over the last 12, 18 months, and we saw a clear correlation that demand was picking up and interest rates are coming slightly down. And Croatia, I think we are doing very well in terms of balancing between mortgage lending and consumer lending. So, which was true also for the whole year in 2025 that we have between these 2 product lines. Good that you asked for Croatia because we took a special effort in Croatia and set up an initiative to improve our mortgage lending there because there, I think it's fair to say that from our perspective, we are a little bit underpenetrated when it comes to mortgage lending is an area we would like to take more efforts to improve the situation. Operator: The next question comes from Riccardo Rovere from Mediobanca. Riccardo Rovere: Two or 3, if I may. The first one is on the NII guidance. I mean in Erste stand-alone a couple of billion per quarter in Q4. So, say before any growth land, you could land in the EUR 8 billion region without being too sophisticated. And Erste Bank Polska reported kind of anywhere between EUR 750 million and EUR 800 million in Q4. So that could be another, say, EUR 3 billion or so more or less. So, before growth will be in the EUR 1 billion ballpark and this before, again, loan growth. So, I was kind of -- I just want to understand what -- and you also say, Stefan, if I'm not mistaken, that you expect kind of supportive policy rate environment, if I got it right during the call. So, I was wondering if there is no margin pressure and if the growth stays as you land, what could to go above or well above EUR 11 billion and more than EUR 11 billion could be EUR 11.5 billion in your mind. Then again, on growth, I mean you're growing at 6.4% before Poland. Macro is expected to be to improve. Maybe you're going to have an impact from fiscal in Germany are at 7% and pretty good when they make their projections. So why 5% when the macro is improving and you're exiting '25 at 6.4%. The other question I have is on common equity. I mean, you end at 19.3%, take out EUR 460, you end at EUR 14.7 billion divided by 2, it's another EUR 2 billion, risk assets, say, EUR 180 million, EUR 150 million from you, 30, 30-something from Erste Bank Polska is another more than 100 basis point. So, as it is today, we will land anywhere between 15.5% and 16%. So, the question here, I just want to connect to what Jeremy asked right at the beginning of this call. What's the priority here? Is because the share price suffered quite a lot on in early 2025 when there was uncertainty about capital use. So just to be clear, what's the priority here? Is the priority more M&A? Or is the priority returning capital to shareholders as you have to integrate Poland, which is a transaction? Because the numbers do not adopt just don't adapt with the numbers what you said. Just to say so, but I think the market needs a little bit of clarity on that. Stefan Dörfler: So first, unfortunately, the sound was very bad. So, let's make sure that we got everything right because you started by saying 3 questions, I only identified kind of 2.5. But anyway, the first one is very clear. And I completely -- I completely can follow your thinking EUR 8 billion here because you guys are already at EUR 2 billion in Q4, then simply extrapolate that and then add the EUR 3 billion from Poland and they go EUR 11 billion plus the growth, why don't you talk about EUR 11.5 billion. That's in a nutshell what you said. Look, it's not exactly that easy this time for sure, at least from today's perspective. Number one, again, we have a clear subtraction. This is a super simple calculation of EUR 130 million from the nonrecurrence of the interest on our paid here. It's not a huge element, but not to be completely. Secondly, and I give you the precise description, we have EUR 170 million, and we always talk about the gross figures here, right? I said it -- talk about the gross figures because 11, 11.5 is also, of course, the gross NII for 2026 in the whole group. EUR 170 million impact from hedge accounting adjustments and the debt securities, both around about close to EUR 100 million adding up there, and there's a little bit of a counter effect on other positions. So, it's a total of EUR 300 million, please, Riccardo, that you have to take. This is not something which is kind of a question of optimism or pessimism. It's just the fact that this is 100% clear that this will be booked this way. So, I have to take this into consideration because then with your expectation somewhere between EUR 11.2 billion to EUR 11.5 billion, we are already talking a little bit of a different story. And the rest -- yes, the rest is a question of interpretation if everything goes fully our way, if interest rate environment is as supportive as we expected. And therefore, we decided to go for a greater than EUR 11 billion guidance, which I think is leaving also upside. And you know us then when we have more evidence for better development, we will adjust the guidance. At this point in time, I think it's a task to get there with all the moving parts around the first-time consolidation. And on capital, look, I think referring back to the first part of 2025, I don't believe it's really helpful because you know that we were negotiating the deal at that point in time. And you guys know much better than anyone else how strict capital market communication is on indicating anything that is not really watertight in terms of insider what the hell. So therefore, yes, it was also not my most pleasant quarterly call on the 30th of April 2025. I very, very much remember, and we were dancing around how we deploy capital. I agree. This was not a pleasure, but in the same moment, it was a pleasure then making very clear what we do with the capital 1 week later. It's not the case this time. This I can assure you. We are not in any whatsoever kind of negotiations or so. But what we are in is in analyzing our opportunities, both legally, Peter already mentioned it, but also in terms of how we can manage also a step-up in Poland in an efficient manner for our shareholders and in a way that we are not endangering, so to say, our economics. Other countries, I think, have been commented on by Peter and me already. I think it's fair to say, looking at my colleagues that after the first quarter, we will have a little bit more clarity. However, to satisfy everything of your expectations, what we will do with the excess capital, it might still not be enough. And it's going to be a question of the next couple of months to evaluate the deployment. We try to do the best with the excess capital, but there are many moving parts. I think there was a third kind of question, but I didn't get it from the sound. Operator: Mr. Rovere, you're still on the line. Riccardo Rovere: Let's move to the next question please. Operator: The next question comes from Jovan Sikimic from ODDO BHF. Jovan Sikimic: I would have also a question related to Poland. I mean, your colleagues from the new subsidiary, right, they indicated a kind of new strategy in coming months. But maybe at this stage, can you tell us just the key parameters, right, in terms of loan growth, in terms of NII year-over-year? And what is actually the interest rate which you incorporate because currently, it's like 25 to 50 basis points. Let's say, difference within consensus where the rates will end up in Poland, how the sensitivity is? And also from this perspective, if you can share what would be kind of cost/income ratio in the longer-term horizon because Polish subs or Polish bank kind of has significantly lower cost-to-income ratio compared to your current subsidiaries? And if you could also remind us what's the agreement on Swiss franc provisioning. I mean Q4, in my view, in Poland was a bit below expectations in terms of kind of adding to the current outstanding volumes. But what's the position at this stage in your case? Peter Bosek: If I may start in terms of strategy, please don't expect too many changes in terms of strategy in our Polish subsidiary because from our perspective, strategy is already very much aligned. So, we have a very similar approach in retail banking. We have a very similar approach in corporate banking. I think there's a lot of added value, of course, in the corporate area because the pure size of the economy in Poland is fantastic in the way how this economy in terms of economic infrastructure was built up over the last decades. I think this is a huge opportunity also for the rest of our group. And we see also kind of network value related to it because there's a lot of money flow between companies within our region now and a lot of Polish companies operating in other parts of our group and vice versa. So there, we have very, very positive client feedback. When you refer to cost-to-income ratio, of course, it's great how our colleagues are managing efficiency. Of course, it's all kind of very supportive where we have relatively high NII margins when it comes to cost/income ratio. And please, we ask for your understanding that we don't want to comment too much on local entities, especially when they are stock listed in terms of NII sensitivity. Stefan Dörfler: And that also, if I may add, Peter, that also holds true for the strategy of the local bank when it comes to Swiss franc. I think the colleagues are commenting on that. The read-through to the group is well known. So, there's nothing to add to that. Nothing has changed on that side. And all the rest is decided by our local colleagues and will be also communicated by them in their capital market communication. Jovan Sikimic: Great. And if I may add one maybe on -- it's maybe of a minor importance, but still your positioning in Hungary on rate cuts or further rate cuts and also in Romania. How would it affect the group NII? Stefan Dörfler: No, happy to take this in a very short manner. We saw the rate cut yesterday or the day before yesterday, I guess, in Hungary. We expect overall a relatively stable development of key interest rates for this year, at least for the next 2, 3 quarters. You know the policy of the Romanian National Bank. Further later in the year, there might be some changes depending on inflationary environment and so on. But at the moment, we do not see an aggressive rate cut cycle of either of the 2 national banks. Operator: We have a follow-up from Riccardo Rovere from Mediobanca. Riccardo Rovere: And just a quick follow-up on the previous one on loan growth. Why 5% when you're exiting the year at 6.4% and the macro is supposed to get better and maybe you're going to have some boost from Germany fiscal support. And then on bank taxes, if I may, can you shed some light what should be the situation in 2026 and if possible, onward, where do we stand there? Peter Bosek: If I may start with loan growth. From our perspective, we were even a little bit more aggressive than last year in terms of giving the guidance because we see loan growth above 5%, right? And as Stefan mentioned already during his presentation or answers, loan growth is accelerating over the year. So, you don't have the full impact immediately in the P&L in the first 2 months of the year. But be assured that we believe -- strongly believe in loan growth above 5%. Stefan Dörfler: What was the other question, Riccardo? Riccardo Rovere: Just on bank taxes, what should you expect? What should we expect for 2026 on bank taxes in general? Stefan Dörfler: The existing ones, I think you know precisely. It will go up in numbers a little bit. And then you know the situation in Poland, which again is to be commented mainly by our local colleagues, but we, of course, consider in our assumptions the elevated corporate income tax in Poland of 30% for the year 2026, which is expected to go down, not expected, it's in the law, to go down to 26% in 2027 and then to 23% in 2028. Those are elements that we have to consider, which all are in our guidance that we mentioned today. Other than that, forecasting or so to say, making any kind of assumptions around political decisions, I guess, is definitely not my task. And I think, Peter, you also don't want to probably say that. Peter Bosek: I would not expect any kind of material impact during 2026, but long-term trends are very, very much depending on how budget deficits in other countries will develop over the upcoming years from that perspective. We don't see any kind of that there will be additional taxes for this year. Operator: The next question comes from Robert Brzoza from PKO BP Securities. Robert Brzoza: Congratulations on the results. Sorry if I make a repeated question because I joined later during this call. I have 3 questions, actually. One on the adjusted net target. What are the adjustments actually? Is this only the integration cost or also the fair value adjustment? So that's question number one. Question number two, the 3% OpEx growth target for '26, does it include the indexation to wages? How do you manage this? And question number three, I've spotted that the NII in Hungary and Romania were relatively flattish despite great quarter-to-quarter loan book growth. What is it related to? Does it mean that you had to compromise a bit on the pricing of loans? Stefan Dörfler: Thank you very much. You were touching upon of the stuff we discussed already, but no problem. So, first answer, I specified already before, it's around EUR 350 million of adjustment. It includes the integration cost, but not only. It's also the onetime booking of the IFRS 3 related ECLs CLSA and the intangibles, as you rightly assume. So that's a correct assumption. Those 3 components play into there. When it comes to wage inflation, I mentioned in an earlier answer, it's supposed to come down. We see inflation coming down now even in Austria and other places, and that's what will certainly drive the levels of, let me say, wage and personnel cost increases down. But I also mentioned that another element of our guidance there is that we will benefit from efficiency gains that we invested in '24 and '25. And last but not least, you're right. We had a slower development in Hungary and Romania, and it is partially due to quite some pricing competition in these markets, which we usually do not take a part in as aggressively as competitors, but we cannot exclude ourselves completely. So that's certainly a driver of the NIMs in those 2 specific markets. Just adding that in Hungary, we always say, please don't analyze this market line by line. You will not get anywhere. Look at what our fantastic colleagues there have achieved in bottom line delivery, and that's really the measure that we look at. Operator: [Operator Instructions] There are no more questions at this time. I would now like to turn the conference over to Peter Bosek for any closing remarks. Peter Bosek: Yes. Thank you very much, ladies and gentlemen, for taking your time. Thank you very much for your questions. What I would like to mention is that our Annual General Meeting will take place on the 17th of April and the results for the first quarter of 2026 are on 30th of April. Thank you very much. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Ryan Chellingworth: Thank you, everyone, for standing by. Welcome to the Retail Food Group First Half 2026 Results Presentation. [Operator Instructions] I will now hand over the conference to Peter George, Executive Chairman of Retail Food Group. Peter George: Good morning and thank you for joining the Retail Food Group first half presentation. My name is Peter George, and I'm the Executive Chairman of RFG. I'm joined today by Ryan Chellingworth, who is the Group's Chief Financial Officer. Ryan was appointed CFO on the 1st of January this year, having previously served as Deputy CFO. He is a chartered accountant with over 25 years experience domestically and in the U.K., including as Group Treasurer at EML Payments. Ryan brings a strong blend of financial fundamentals and commercial acumen, and I'm confident he'll make a significant contribution to RFG's next phase. Today, we'll be providing an update on the first half business performance, financial results for the period, the outlook for the balance of the financial year and recent trading, and then we will open up to questions. RFG remains Australia's largest multi-brand retail food franchise manager. We own and manage 10 brands with a global footprint of over 1,200 trading outlets across 29 countries, including over 690 outlets in Australia. We also manufacture and distribute high-quality pies from our Sunshine Coast bakery and roast and distribute coffee from our Sydney Roastery, and we hold the exclusive license to establish Firehouse Subs in Australia. As we move forward, our focus is on building our core brands by concentrating our resources and investment under the strategic framework that will be detailed today. Turning to Slide 5 and the key messages from today's presentation. First half was a period of mixed conditions. Consumer sentiment remains subdued, particularly across shopping center exposed categories and our earnings declined as previously guided. However, the results also provided insight into the opportunities moving forward as we focus on transformation and enhancing the network. Across our core brands network sales rose 0.8%. Same-store sales were up 0.2% and average weekly sales grew by 0.9%. These metrics demonstrate improving network quality and underlying brand resilience even as the total number of stores declined through the exit of low-performing and noncore outlets. Further progress has been made on the company store strategy reset with 70% of the 50 targeted transitions or exits now either agreed or complete. The refinancing announced on the 3rd of February provides balance sheet certainty and scope to further execute our strategic priorities. Today, we are also outlining a transformation program built around 3 pillars: cost rationalization, operational enhancement and structural alignment. This program is designed to right size the organization, consolidate our Southeast Queensland offices to our Robina headquarters, remove process inefficiencies, improve supply chain and field team effectiveness and ensure brand-aligned leadership. These actions will deliver material cost savings, will improve franchise partner support and position the business for sustainable earnings growth. Our growth opportunities remain central to the longer-term earnings story and will continue to be pursued with disciplined investment. First Firehouse Subs restaurant is planned for launch in the fourth quarter of this financial year. Our Turkiye international hub is now operational, and we continue to focus on sustainable network expansion for Beefy's Pies. Turning to Slide 6. At the headline level, domestic network sales were $254.6 million, down 1% on the prior corresponding period with domestic same-store sales growth of 0.2%. Growth in Crust and Beefy's offset softer conditions across the shopping center exposed categories. Domestic outlets ended the period at 693, which was down 29 from the number at June 2025 as we exited low-performing sites and progressed the company store strategy reset. These actions have resulted in improved network quality, and we are seeing the benefits through improved average weekly sales across the remaining stores. Underlying revenue declined 1% as higher Beefy's revenue was more than offset by cycling the $2.7 million in nonrecurring insurance proceeds and $0.6 million in deferred franchise-related income recognized in the prior corresponding period. Underlying EBITDA declined 43% to $9.2 million within the $9 million to $10 million guidance range provided to the market a couple of weeks ago. The decline reflected several factors, lower gross margin on slower-than-expected ramp-up of the newer Beefy's stores, compressed coffee margins where the group chose to maintain wholesale pricing to support franchise partners through the difficult trading conditions, absorbing higher green coffee bean costs and finally, delays in the commissioning of the new international supply hub in Turkiye. Looking at the network results in more detail. Core Brands, as we said, delivered network sales growth of 0.8% and same-store sales growth of 0.2%, driven by continued strength in Beefy's and Crust as customer count improved and competitor discounting in the pizza category eased. Improving network quality was evidenced by core brand average weekly sales rising 0.9%. During the period, we opened 22 new outlets across our core brands, offset by the closure of low-performing stores and the exit of sites as part of the company's store strategy reset. Within the coffee, cake, bakery segment, Gloria Jean's and Donut King traded in line with the challenging conditions flagged at the AGM in November. The Glorange refresh and premium product innovation continue to provide positive support, which I will cover shortly. In QSR, Crust delivered same-store sales growth of 2.2%, building on the momentum that we saw in the fourth quarter of last financial year when network sales returned to growth. Beefy's continued to perform well with same-store sales growth of 4.6%. RFG's immediate priority is improving core brand network sales and operational efficiency, which will maximize value for both our franchise partners and our shareholders. This involves 3 areas of focus: first, operational improvements to enhance our service delivery to franchise partners; second, procurement and supply chain initiatives to improve buying and reduce input costs; and third, a back-to-basics marketing strategy, targeting core customers and driving foot traffic. The goals of these focus areas is to increase network sales across core brands and improve store level profitability for franchise partners. As we've previously highlighted, RFG does well when its franchise partners do well. Early proof points of this strategy are encouraging with core brand same-store sales growth of 0.2%, average weekly sales up 0.9% and the current year cost reduction run rate of $1.2 million to $1.8 million already achieved. We will also have seen further Glorange store refresh success, which I'll discuss on the next slide. As previously disclosed, following the conclusion of the potential divestment review process, the Board has decided to retain Brumby's Bakery as a core CCB brand. While the process attracted considerable interest from multiple parties, we were not convinced that the options available would be in the best interest of shareholders, franchisees or team members at this time. Brumby's remains profitable and is an important contributor to the group's performance. We are currently developing strategies to support and grow the Brumby's network, and we will share these in due course. Our key medium-term growth opportunities, Firehouse Subs, international and Beefy's will continue to be supported by disciplined investment, and I will address each of these later in this presentation. The transformation program sets out the practical actions that will allow us to execute against our strategic priorities structured under 3 pillars. The first is cost rationalization. We are rightsizing the business to align with expected revenue growth. This includes consolidation of our Southeast Queensland offices to our single headquarters in Robina and reducing management layers to improve speed of decision-making. The second is operational enhancement. We are identifying and addressing process inefficiencies, improving supply chain and field team effectiveness and simplifying internal processes. The end goal is faster, better support for our franchise partners. The third pillar is structural alignment. We are improving our core business units with brand-aligned leadership, better operational alignment across brands and more effective use of centralized support functions. These pillars have clear measurable outcomes that will deliver $1.2 million to $1.8 million in cost savings during FY '26 that we have previously disclosed, targeting to increase to $5.7 million to $7 million of annualized cost savings during FY '27. They will support our focus on increasing core brands store numbers over time, and they underpin our goal to improve RFG profitability. Crucially, these initiatives are designed to be mutually beneficial for RFG and our franchise partners. The Gloria Jean's refresh. The Gloria Jean's Glorange format continues to demonstrate encouraging performance. Sales of the refurbished Glorange outlets in Goulburn and Robina are up 31% and 25% on the prior corresponding period. Our new store at GJ Shepparton is trading at 24% above the Gloria Jean's network average, excluding the drive-thru sites. Five further Glorange refreshes are planned for the second half, which will provide additional data points to validate the format at scale. Beyond the physical store format, we're also refreshing the broader Gloria Jean's market approach and improving the in-store customer experience. The combination of a modernized store environment, improved product offering and targeted marketing is designed to reenergize this brand for its next chapter. Brand innovation continues to drive customer engagement and network sales growth across our portfolio. Donut King's premium Christmas program lifted campaign performance 15% versus the prior corresponding period with the premium donut category advancing 14% following the Pistachio and Biscoff campaigns. This continues the strong Donut King premium range trend we highlighted at the AGM. Crust rolled out 5 new summer flavors generating over $1 million in additional product sales. This follows the success of the meat deluxe collection, which delivered $1.3 million in incremental sales in FY '25. Crust continues to benefit from its position as a QSR sector leader, topping the Fonto December quarter customer satisfaction scores across pizza brands. Gloria Jean's launched a collaboration with Pistachio Papi in September 2025, building on earlier global brand collaborations and extending the brand's relevance into new beverage occasions. Beefy's Pies. Since our acquisition of 9 Beefy's Pies stores in December 2023, we've delivered 7 new outlets and consistent network sales growth. In the first half of this year, the brand delivered 19% network sales growth and 4.6% same-store sales growth. Average weekly sales across the network were $28,000, while the 7 newer stores averaged $15,000, which is 70% of the non-highway network average and was below our expectations. The newer store performance is, therefore, what we are focusing on near-term for this brand, operational and marketing improvements to lift new store ramp-up and ensure sustainable growth as we expand beyond the Sunshine Coast. Recent innovation includes the Aussie Roast Lamb Pie with over 15,000 units sold since November. This type of product-led innovation is important in driving trial and repeat purchases in new markets. International represents another important medium-term growth opportunity. Our Turkiye hub is now operational, improving service levels and purchasing compliance by positioning supply closer to our master franchise partners and unlocking road freight options across the region. This is a meaningful structural improvement that will support margin and growth for our international franchise network. We appointed a Head of International in September last year, and we are reviewing incentive structures for international franchise partners to encourage store growth in key regions. International trading outlets stood at 528 at the end of the period, effectively flat on the prior 6 months. Firehouse Subs. Further progress has been made towards RFG's Australian launch of Firehouse Subs. During the half, we advanced the selection of key suppliers, progressed stores design finalization and develop marketing launch plans with agency support. Under the terms of our 20-year development agreement with Restaurant Brands International, we have a target to open 15 company-operated restaurants in the first 3 years and have a right to commence sub-franchising from year 4 with a target of 165 stores over 10 years. We continue to target the first Firehouse Subs restaurant opening in the fourth quarter of this financial year in Southeast Queensland. Turning to the company store reset. As announced in August, alongside our FY '25 results, 50 of our 65 company-operated stores were identified for sale or exit with the remaining 15 to be retained. The retained portfolio is concentrated in Beefy's Pies, which we will continue to operate as company stores to drive brand expansion, along with Gloria Jean's and one Donut King outlet. At the end of February 2026, 70% of the 50 targeted outlets have now been transitioned, agreed for sale, exited or closed. In the first half, the stores identified for sale or exit recorded a post-AASB 16 loss of $1.2 million and a cash outflow of $2.1 million, inclusive of lease costs. This strategic reset remains central to improving RFG's cash flow profile and network quality. As transitions take effect in the second half, we expect the associated cash outflows to reduce, contributing to an improvement in group cash flow. I'll now hand over to Ryan to walk through the financial results in more detail. Ryan Chellingworth: Thank you, Peter, and good morning, everyone. Turning to Slide 17, which outlines the P&L for first half 2026. Underlying revenue declined 1% on the prior corresponding period. Higher company store revenue from Beefy's and the full period contribution from CIBO Espresso helped offset the cycling of 2 one-off items in the prior period, $2.7 million in insurance recovery proceeds and $0.6 million in deferred franchise income. Gross margins were pressured by higher coffee bean costs, which the group chose to absorb rather than pass on to franchise partners given the challenging trading conditions. A wholesale coffee price increase will take effect from March 2026, which combined with better buying of green coffee beans is expected to support gross margin improvements in the second half. Underlying EBITDA and NPAT declined as a result of the above, together with a reduction in lease impairment benefits relative to the prior period, which we have previously flagged. Whilst company store costs increased from the new Beefy's stores and the CIBO full period impact, we did see a reduction in corporate overhead costs due to a reduction in bad debt expense, insurance costs, recruitment fees and occupancy costs. On Slide 18, we reconcile underlying to statutory EBITDA with detailed reconciliations including in the appendix on Slides 27 and 28. Key reconciliation items include company store lease provisions, company store trading results for outlets identified for sale or exit, marketing fund timing differences and growth horizon investment costs relating to Firehouse Subs and international hub establishment. Statutory NPAT for the period was $2 million, a reduction from $7.3 million in the PCP for the reasons outlined on Slide 17. Moving to Slide 19. The CCB division accounts for 72% of RFG's domestic network sales, contributing a greater share of EBITDA due to the vertical integration of coffee and pies. CCB same-store sales were resilient, down 0.4% though declining customer count and noncore outlet closures drove network sales 2.4% lower in difficult trading conditions, particularly in shopping centers. Positively, average weekly sales rose 1.7% and average transaction value increased 4%, indicating improved network health among continuing stores. Underlying segment EBITDA declined 47% to $7.5 million, reflecting compressed coffee margins, the cycling of one-off revenue adjustments across insurance proceeds and deferred franchise income and a lower contribution from lease impairment releases relative to the prior corresponding period. Turning to QSR on Slide 20, which accounts for 28% of domestic network sales. Key trading metrics across QSR improved over the period. Network sales were up 2.8% and same-store sales grew 1.6% with customer count, average weekly sales and average transaction value all rising. We opened 4 new Crust outlets during the half and the easing of aggressive competitor discounting that had previously impacted the pizza category supported growth for the brand. Crust had deliberately chosen not to participate in a price war to protect franchise partner profitability and was able to capitalize through a continued focus on value for the customer. Underlying segment EBITDA declined due to the cycling of lease and bad debt provision releases in the prior corresponding period. Moving to Slide 21 and our operating cash flow. Our operating cash flow declined by $9.9 million versus the prior corresponding period. This reflects several factors. First, the cycling of the one-off benefits in the PCP, including insurance proceeds and debt recoveries. Second, lower gross profit from the decision to maintain wholesale coffee pricing to support franchise partners and a lower contribution from Beefy's. Third, noncore cash outflows, including those relating to the setup of the international hub and Firehouse Subs preparatory costs. And fourth, company store cash outflows, which are expected to reduce in second half 2026 as transitions and exits take effect. We expect a meaningful improvement in operating cash flow in second half 2026, driven by the wholesale coffee price increase from March, cost-out benefits and the progressive reduction in company store outflows following the store exit and transitions in the first half 2026. On Slide 22, we include the balance sheet. We ended first half 2026 with $16.7 million of cash, which includes $11.3 million of restricted cash relating to marketing funds, bank guarantees and Firehouse Subs commitments. Working capital increased modestly due to seasonal timing and inventory positioning through the holiday period. Lease-related assets and liabilities reduced as company store exits progressed. At first half 2026, we had drawn borrowings of $32.5 million under our previous debt facility. Post period end, we completed the refinancing of a new $41.2 million facility with WH Soul Pattinson maturing 31st of August 2027. This facility provides for an additional $7.5 million drawdown to support our strategic priorities. Moving to Slide 23. The debt refinancing delivers balance sheet certainty and supports the company's strategic priorities. Our capital allocation framework is now focused on 5 areas: first, core brand operational efficiency and targeted marketing to drive network sales; second, the cost-out program across the 3 pillars Peter outlined, which directly supports cash flow improvement; third, maintaining appropriate liquidity to execute our strategic priorities; fourth, the initial Firehouse subs rollout funded within the new facility; and fifth, leveraging the Turkiye hub to support growth in our international franchise network. With that, I will hand back to Peter to discuss our FY '26 outlook. Peter George: Thank you, Ryan. For FY '26, we continue to guide underlying EBITDA of $20 million to $24 million. This guidance implies a meaningful improvement in the second half relative to the first half, which is underpinned by several drivers that we have discussed today. Macro conditions remain challenging, and our market will stay tightly -- marketing will stay tightly focused on core customers and value-driven propositions. In the first 8 weeks of calendar 2026, core brand network sales were down 5.5% versus the prior corresponding period, primarily reflecting customer count impacts within the CCB division from outlet closures. Over the same period, core brand same-store sales declined 0.2%, demonstrating continued brand resilience in a challenging environment. Looking at the key drivers for the second half. Gross margin is expected to improve as the wholesale coffee price increase takes effect from March, combined with better green bean purchasing and improved international coffee trading. Cost-out initiatives are underway and expected to deliver $1.2 million to $1.8 million of savings in the second half with the full year FY '27 benefit expected to reach $5 million to $7 million. International growth will be supported by the go-live of the Turkiye hub and incentive programs for master franchise partners. Company store cash outflows are expected to reduce as transition benefits take effect. Beefy's will focus on brand expansion outside the Sunshine Coast and on lifting the performance of the 7 newer stores for operational and marketing improvements. And Firehouse Subs remains on track for a fourth quarter '26 opening with the refinancing providing the funding runway for the initial rollout. Before opening to questions, I'd like to take this opportunity to thank our franchise partners and team members for their commitment through what has been a challenging period. Our franchise network is the heart of this business and the actions we are taking are designed first and foremost to improve their outcomes. I'd also like to thank our shareholders for their continued support as we execute the transformation and growth agenda. While near-term earnings have been impacted by a number of factors, the strategic foundations we are building, notably a leaner cost base, stronger core brands and a compelling growth horizon in Firehouse Subs and international position RFG well for sustainable value creation. We'll now move to questions. As a reminder, if you wish to ask a question please enter it into the webinar chat. Ryan Chellingworth: Moving to the questions. So we've had some come through prior to the webinar, and there's some that have come through since the webinar started. First question: What is being done to modernize and bring back the Bakery division? Why has it not competed with other bakeries taking market share? Peter George: Well, I think it's -- since COVID, it's been fairly stable. It hasn't competed with some of the other bakery chains for reasons probably related to the allocation of capital to other areas of priority. But it is -- as we said earlier, we've decided to retain the asset, and we will come to the market with details of its strategic future in the near-term. Ryan Chellingworth: The second question that's come through from the chat, it's come through from Ling Zhang. Could you please let us know the result of the revised corporate store strategy, especially the results for cash flow in the first half 2026? I'm happy to take that one. So as we noted in the presentation, we have 70% of the 50 company stores, we have either transitioned to franchise partners. We have agreed sales in place or we've exited or closed. From a cash flow perspective, we saw cash outflows of $2.1 million in the first half 2026, which we expect to improve through the second half as those store transitions take effect. The next questions come from Ken Wagner. How many Firehouse stores do you expect to have at the end of FY '27? Peter George: We have a contractual commitment for 15 stores in 3 years. The 3 years is probably running about 6 months behind schedule for a number of reasons, access to appropriate sites. We took a while to get the supply chain for the ingredients put in place. So by the end of 2027, I would expect we'd have somewhere around half of the 15 stores in place. Ryan Chellingworth: Second question from Ken. Assuming Glorange works, how quickly can you roll it out to the rest of the Gloria Jean's stores? Peter George: Well, we're confident that it will work. We need to give it a fairly rigorous trial period, though, because we do in this industry, often see a honeymoon effect of a refurb of the store, then it comes back to its original sales performance. In order to encourage franchisees to invest the money in refurbishing, we have to have fairly compelling proof. So once that compelling proof is available, which I think it will be in the near future, the rest of the network will be refurbished in accordance with the requirements of the franchisee and the landlord, but it will take probably 2 to 3 years for the whole network to be transformed. Ryan Chellingworth: Next question from Ken. How material is the international business in terms of EBITDA? Peter George: Yes. Right now, it's not immaterial. It contributes $2.5 million of the total, so it's about 10%. There is significant upside potential though out of the new supply chain initiatives that were put in place recently, we were missing a lot of revenue because they weren't buying coffee office because of the inefficiency of providing that out of Australia and Dubai. So we think its potential in the long-term is to be much more significant, probably somewhere around the 20% of earnings level. Ryan Chellingworth: Okay. Next question comes from Larry Gandler. With regards to the debt facility, does RFG expect the facility to be fully drawn by the end of financial year 2026? Peter George: Yes. Ryan Chellingworth: Second question from Larry. What have early demand indications or what early demand indications can you discuss about Firehouse Subs? Has the company -- is the company building consumer anticipation? Peter George: The answer to that is, yes. We've done extensive taste testing and that's universally come back very positive. The proposition is that these are much higher quality products than the main competitor offers. The price differential is not great. There are a few added extras such as availability of fries, which our main competitor doesn't offer. And further down the track, the angle of the Firehouse foundation will come into play. Ryan Chellingworth: Okay. We'll just pause there for one moment while we wait for any more questions to come through. On the basis that we don't have any further questions coming through, that concludes today's presentation. Thank you, everyone, for joining in, and have a good day.
Sverre Flatby: Good morning, everyone. I am here with my colleague and CFO, Einar Bonnevie, and we thank you all for joining today. Let me start clearly. The fourth quarter 2025 was a record quarter, and 2025 was a record year. So, we have interesting topics for you to go through today, and these are the main highlights. We're going through the fourth quarter highlights, the full year '25 and of course, AI, which is important. We'll go through that deeply. [Audio Gap] Status when it comes to M&A. And as you see, we will have a presentation for about 25, 30 minutes, and we will have a Q&A session at the end of the session. So please, if you have any questions, type them in as we go, and then we will attend to them at the end of the presentation. So, let's start and talk about the fourth quarter 2025. Reported revenue, NOK 135 million. That is 17% growth compared to the fourth quarter 2024. We are quite happy with that and also happy with the fact that the reported EBITDA in that quarter is NOK 31 million and the reported EBITDA margin is 23%. And even there are some one-offs as usual, this is the reported margin without any adjustments. And then the full year, it didn't just end on the high note with the fourth quarter. The full year 2025 is also a structural step-up for Omda. NOK 496 million in sales and revenue for 2025, which exceed our guiding for '25. That is 16% growth compared to 2024. And that also means that the operational baseline, the operating baseline into 2026 is very, very strong based on what has happened in 2025. So, the profitability and performance in '25, NOK 117 million, which is good, and that also implies 24% reported EBITDA margin for 2025. So next topic will be AI. And of course, when you look at AI in the market today, there's a lot of discussions, a lot of noise and predictions, and we have to respect AI as an important topic for all businesses, including our own. What we have to do is to explain properly what we are doing and how it is affecting us. The good thing for Omda is that we operate, as you see here in the picture, in a regulated, certified specialized health care and emergency environment. And what is going on in there? It is mission-critical. It has to do with life-critical treatments and reliability and compliance is, of course, much more important for customers than speed to change things in these environments. And also, if you think about the switching cost of a situation like this, it's not only about software and code. So the stability and the mechanisms in this specialized market will stay the same, although AI will have an impact, which I will get back to in a few minutes. So, if you look at this, a user using a software in the process working in these environments, the value is not necessarily only in the code. The value is, of course, in regulatory trust in specialized workflows and expertise that we deliver and, of course, in cooperation with the customers and their demands and needs. So, if you look at it that way, AI for Omda gives us a stable situation from the customer side, but it is rather an acceleration tool for us when it comes to be more efficient, a productivity accelerator really. So that is what I'm going to explain to you. It's more like what are we actually using AI for in Omda. And these 2 pictures will give you an idea. I think many analysts have already seen what's going on. And I think it's clear that a company like Omda can use development tools with AI agents to completely change the development processes and make them much, much more efficient. So, we are using, like in this picture, a senior developer, the new era gives the possibility to get added code, testing, documentation and much more efficient workflow processes using the agents rather than a lot of other colleagues helping out creating code, for instance. And this was in '24, it was experimental. In '25, we already started projects to make sure that we could do something both in our business units, but also centrally for Omda to create toolboxes for our business units to accelerate this in 2026. So, it's no longer experimental. It's our operating model going forward. So, this is going to accelerate in 2026. And then you will ask yourself, what is the impact on our business? And if you look at this graph, and let me explain it simply to the left, the percentage is self-explanatory. But then again, you see the topping here, the 3 dimensions. One thing is what we have delivered, our guidance for this year, which my colleague will go through in a minute, and then the ambitions and the long-term targets. So, what does this mean really? If you look at the gray curve here, CapEx, which is the same as investments in our own software. We think that investments in our own software will continue with the absolute value level that we have today. But that also means that the CapEx and investment in software compared to our revenue will decline over time as we show you in this curve. And if you look at the green curve, obviously, when you reduce CapEx like that, it will give more cash from operations. So that means the cash EBITDA margin or so-called EBITDAC will, of course, then increase. And this is really the important thing for Omda. So, AI in our company is not a hype. It's actually a tool set that helps us create a much more profitable business. So that means we have delivered a very strong fourth quarter '25 and also a strong year '25. So now it's time to dive deeper into that. And Einar, if you're still awake, the floor is yours. Einar Bonnevie: Thank you, Sverre. Thank you. Good morning, everyone. Let's have a deep dive into the financials. And let's start with the quarterly comparison, the fourth quarter '25 versus the fourth quarter '24. And we see it's -- yes, it is a record quarter. And there's one -- you can say, one-off or anomaly here. It's the sales of hardware and usually large hardware order in the fourth quarter made us beat the expectations. But if you adjust for that, I think we are very much within the guidance of -- in the upper range of what we guided more than a year ago for the year. And when we look at earnings, a very marked improvement in earnings. When you look at the EBITDA or cash EBITDA, you see a very strong margin improvement in the fourth quarter. And also, if you look at the whole year, the same thing here, we see a very strong year, ending -- very much ending on a high note. And the earnings was not only a quarter or 2, we actually met or beat the expectations each quarter in 2025. And ending, as Sverre said, on a record high EBITDA and cash EBITDA. I think it's also worth noting that even though we had a very large hardware order in the fourth quarter and that for the year, actually, hardware sales doubled compared to 2024. Our gross margin was still improving. COGS is coming down and the gross margin is still improving. So, taking note of that. And that also points to where we will be in 2026 and going forward. The margin improvement should continue. In a nutshell, NOK 117 million in EBITDA. We had a CapEx of NOK 47 million, so slightly less than 10%. That was our guidance and cash EBITDA, EBITDAC. We have received some questions from various investors, why do you focus on EBITDA? Why don't you only focus on cash EBITDA? And some say EBITDA is better is more general. The thing is we need both for, say, bond purposes and current tests, et cetera, measured on EBITDA, and it's more common, so you can compare it to other companies. Cash EBITDA, on the other hand, that is what we use internally. So, let me be very, very clear. Business unit leaders, they relate to cash EBITDA and not EBITDA, all right? And that is mainly because CapEx, that is a capital allocation decision. And that is one of the few decisions that are still centrally managed. So, capital allocation is centrally managed. You can get the approvement for a capital allocation for a CapEx project or not don't go to the highest bidder, so to speak. So that is why we have them, and we need them both, and I hope this explains it. As you know, we focused a lot on recurring revenue. And in the past, we have discussed recurring software revenue, but it's not only the software that is recurring. And a few analysts also have taken notice of this that they've said your professional services, they seem to be very, very stable. And yes, indeed, they are. So, in the past, we referred to professional services as semi-recurring, but we split those and started -- as from the third quarter 2025, we started splitting the professional services in the recurring part and nonrecurring part. And what we define is that customers of ours that were also customers 1 year ago, they are defined as recurring professional services or recurring professional services customers. So, we view those as recurring, and applying that logic, you get a very different perspective on what is recurring and the stability of our business. So, we see that the recurring software business takes us up to approximately 80%. And then we can add another 15% or so on recurring professional services. That brings the real recurring or the true recurring income or recurring revenue in number up to almost 95%. So, it's an extremely predictable business and an extreme stability there to the benefit of shareholders, but also, of course, to bondholders. This really gives you a stability that you don't see very many other places. And combine this with very limited churn on the software. We have guided in the past less than 2% per annum. We can restate that guidance. Churn is limited. And speaking of churn and speaking of predictability, with the earnings in 2025, and you see the cash earnings, the EBITDA and the EBITDAC, cash earnings are coming up. Revenue is growing. Cash is stabilizing. We are moving into what we call a very low leverage territory. Here, okay, let me explain the bars, 3 bars, the blue on the left, that is the last 4 quarters EBITDA. That's how they are measured. EBITDA is measured in the bondholder agreement for incurrence test purposes. Then we have the orange bar, that is the run rate. So, if the current quarter is a template for the other quarters as a run rate, and then we have on the green bars, that is the forward-looking the next 4 quarters because what is ahead of us, it is not the past. It's the future, and we have a 2026 guidance. So, the green bars, they are based on the guidance for 2026, okay? Then the blue line, the upper blue line is the incurrence test. So, we have to be below that in order to do a tap issue on the current bond. And then we have the purple line that is at 2.5, and that is what typically is referred to as low leverage, low gearing. And you see that if you look at the first quarter -- fourth quarter '25, first quarter '26, where we currently are, you see and especially if you look at the leverage compared that to, and relate that to the next 4 quarters earnings, you see that we are indeed moving into a very low leverage territory. So, low leverage, combined with high predictability on income and earnings, that is where we currently are. And this also makes -- if you, again, taking a capital allocation perspective, what shall we -- how to spend our money most wisely. Debt repayment is probably not one of them, but maybe we can improve the debt terms. And that is exactly what we are now considering. Very strong performance on the top line, on the bottom line and low leverage that points to possibilities for refinancing of the current debt. I think, as most of you have observed, and some of them are also comment to us, saying that of the approximately NOK 70 million in cash EBITDA, a large chunk of that -- of those cash earnings from operations, they go to payout interest. And paying interest, that's the largest cash items in our P&L. And of course, that costs as all other costs, we like to reduce the cost and increase the earnings. Looking at the current bond that was issued in December '23. It's callable in December '26 and at NOK 104.3. And until then, it's a so-called make-whole clause. But the bond has been trading well, and we see that the spread has been narrowing. And the last I saw was actually a spread starting with the #3. So, we are around 400 basis points -- so 400 basis points, 4 percentage points, 4%. And the current bond is dominated in NOK. So, it's 3-month NIBOR plus 4%, translates into approximately 8%. That is where the bond is currently trading. And we have higher ambitions. And currently, the bond is trading in NOK. We will have to evaluate other jurisdictions also. So, when the bond was issued, and Omda went public, we were a very Norwegian company. As you have seen on the distribution of earnings, you can see that in the report, where are our customers, where are our employees. You see from an operational perspective we are more Swedish than Norwegian. That was on finance, and what we think there's room for improvement there. Let's move on to the guidance. We know where we are, where are we heading. Okay. We will repeat our guidance for 2026. So, we will end with revenues of NOK 500 million to NOK 525 million, ending at NOK 494 million. And even if you knock off the hardware for 2025, it shouldn't be Mission Impossible. And this is just the organic part. So, this is without any new acquisitions. This is just the organic part. We forecast a margin between 28% and 32% on the EBITDA. And as Sverre just pointed out, we will compress the CapEx. So, the cash EBITDA, the EBITDAC margin should be somewhat higher than the EBITDA. So, CapEx should be less than 10%. We forecast -- we guide on 9% for 2026, and that should absolutely be possible. Not guidance, but targets. What we just saw, they were guidance. This is where we think we're going to end up. These are what we see now are our targets. They haven't changed much since what we presented in the third quarter presentation but let me be even more specific and even more clear. We restate organic growth, 5% to 10%. That includes CPI adjustments and the like. We restate that we aim for target inorganic growth or growth through acquisitions, 10% to 20% on top of that. And EBITDA in excess of 30% CapEx going forward over the next 5-year period, we see it shrinking from where we have been in the past around 10% of sales or revenue to 5% of revenue. We see COGS. As I said, in spite of the unusual large hardware order in the fourth quarter, gross margin was still improving. COGS are still coming down from around 7%, 7.5% in '24 to 6.5% in 2025. And it should be -- there's more to come. It's not an overnight sensation, but we have gradually -- if you look 5 years back, 10 years back, you see we have constantly been improving. That improvement will continue. And we see that we can bring it down to at least 2% to 5%. Salary and personnel, we have constantly bringing it down. We have been trimming the number of FTEs compared to total revenue, to 55% at the end of the fourth quarter. In percent of total revenue, down from 70 to 65 to 60% to 55%, 54%, 55% ending -- exiting 2025, and we see we should bring it down to below 50%. Other costs currently at around 13% of sales. The original target was to bring it down to 15%. We are already there and actually beyond. We see now that the next target is to bring it down to 10%. Partly still trimming your nails and also as part of that, they will remain constant, and the top line will grow. And then last but not least, on the bond loan, it's currently NOK 500 million. If we just maintain that level, I'm not saying that we will, but just take that as a starting point, we should be able, with the improvement that we have displayed already and what is to come, to bring an end to an interest rate closer to 5% than 10%. Now I'm not saying 5%, I'm saying closer to 5% than 10%. Some analysts, have said maybe you should reach 7%, well, 7% is closer to 5% than 10%. But we are ambitious, and we are ambitious based on the strong underlying performance. Okay. And with those assumptions and targets, we will end up with revenues something like this. And you can do your own calculation, do your own math. Here, I have used those expectations to see where we end up on revenues on the organic side and on the acquired side. And you can use it in your own spreadsheets, for calculations. You can apply the speed and how fast you think we'll reach the margin improvement, and you will end up with robust margins, and you can do your own math on what you think the valuation of a company like Omda should be. Okay. Let me round off by addressing the M&A. We have a huge pipeline. We do most of the sourcing ourselves. We have a lot of targets on the radar screen. We have an active dialogue with someone between 5 and 10 companies. So, we are absolutely active in the space. In short, and some may say, well, you haven't announced anything. That is true. But as the old statistics professor once told me, absence of evidence is not evidence of absence. So don't think for a single minute that the fact that we haven't announced anything is not because we haven't been active. And sometimes, the only thing you end up with is a successful DD. But we maintain the goal of 10% to 20% inorganic growth. We will consider. Should we do bolt-ons or should we do large, more transformative deals? Sometimes the bolt-on may be less money for more value. So that is always a consideration. In the current market, we've seen there has been turbulence in the market on valuation, everything from us stocks or compounders or software companies and the AI turmoil, but that also gives opportunities for us as an acquirer. And then speaking of acquisitions, this, again, is a matter of capital allocation, and we need to spend money wisely. And we also need to reconsider this, I mean, how is it undervalued compared to other things we can buy in the market? So, share buyback is also something we need to keep considering. And last but not least, since we are moving into positive cash flow, good cash territory, smaller deals may be financed with cash from operations without having to issue any new capital in any form. That was a snapshot, and let's move into the Q&A. Einar Bonnevie: And there are a few questions here, and most of them seem to be to myself. And there's one question from John here, and it's related to the last topic, M&A. And the question is, with the incurrence test being met, and you have been expecting that for a while, given your goals, what's the next outlook on getting the M&A engine humming in the next quarters? Okay. As I just said, and you can add some comments to this, Sverre. But as I just said, it has been humming. So, it hasn't been turned off. And again, we haven't announced anything, but that doesn't mean that we haven't done anything on the subject. So, it is indeed humming. Would you like to add anything, Sverre? Sverre Flatby: Yes. I think what is important is actually that the value creation behind M&A has to do with the sequence of things. So, when we have dialogues going on for many years with many targets, we're also very good at looking at when to put things together. So, there is a very, very high activity, much more than you think, when we look at this. And I think what's going on now is that we will stick to the guidance of 10% to 20%, and they will come out, as Einar mentioned, probably of a handful of smaller acquisitions rather than a big one. So, all in all, we are very happy to tell you about the M&A processes going on because these are what will make us reach our goals in the next 5 years as well. Einar Bonnevie: Okay. Thank you. Another question here from John, and that's about the bond agreement. And the question is, remind us of your buyback opening in the bond agreement. Yes. The current bond agreement gives us the opportunity to buy back shares. And we haven't done anything for the last year or so. But the bond agreement gives us an opportunity to continue to buy back bonds. What it doesn't allow currently is to delete the buyback shares. We can buy back and continue to buy back. We still have room to buy back more shares, but we cannot delete them under the current bond agreement. But that was a trade-off we made when we borrowed money the last time, but that is something we will look into because that is one way of making the implicit dividend more effective. So, we can continue to buy back shares, but we can't delete them. Okay. There's one question pending. [Operator Instructions] And this is from Balas, and it's related to net working capital. And the question is, can you please elaborate on net working capital dynamics? It looks like this year; net working capital was a drag on cash generation. And I can understand the question and the reason behind it. Okay. We have a very active net working capital view. And as you saw in the 2024 fourth quarter, we had a minus 31%. Our official target is that we should be below minus 10%. We ended 2 years ago in '24 at minus 31%. That was a record. In 2025, we end at minus 26%, which is still very good, but not as good as last year. There are always some dynamics there. As you know, we like to invoice annually upfront as much as we possibly can and then pay our bills as late as we can to use the capital effectively. But in 2025, we issued invoices and sometimes the invoices, are paid just before New Year's Eve and other times, they are paid just after. And in '25, some of them were delayed to be paid in early January. So that is what you see. There are a few bumps there, but nothing to lose sleep about. There are now 6 new questions. So let me continue. And this is one for you, Sverre. It relates to artificial intelligence. And it goes like this. Can you explain in more detail, Omda's product moat against AI in the long run? So, contract, security relationships. So, I mean, how does AI protect us? Sverre Flatby: Yes. I think, first of all, what protects us is really what I was into when it comes to what is the priority on the customer side here, which is the regulated business they have and the reliability and compliance is critical and the life-saving activity is critical, and these are run through extremely complex workflows. So, the ability to change things is, of course, there, but the business case to change things is one thing. It's really not that relevant. It's not only the code. It's a very, very complex completeness there. And then secondly, of course, the ability to replace things is one thing. But the timeline, it takes years in these areas, not because you change the code, but because you have to refactor a lot of other things and you have to handle procurements, rollout projects, et cetera, that takes years in the complex environments. So, it's really not the AI itself that protects that part of us, but we are protected in that sense that the collaboration long-term, as you ask for here as well, the contracts, what we do now with our customers is to actually have the dialogue, how are we going to deliver add-on components that includes AI functionality. But that is not easy because you also have to certify components like that. So maybe we would use 1 or 2 years to certify, but still the customer will use maybe some years even to implement because of the criticality. So, this is why it takes time. But on the good side, although it takes time to implement on the customer side, the speed of the value creation on the inside of Omda is really what is the good thing at the moment because that is no longer, as I mentioned, experimenting with tools. These are agents that actually already now are actually giving us the ability to increase the cash from operations. Einar Bonnevie: Okay. Thank you, Sverre. There's another question about AI. So, I suggest we continue that. That's also from Matt. Thank you, Matt, for submitting your questions. Which division or business area, business unit is most at risk from AI competition? And you mentioned specifically emergency or ProSang or blood management. What will you say? Sverre Flatby: Yes, that's a good question. But it's none of those 2, that's for sure. I would say it's quite the opposite. Those are quite protected given how these systems are handled. So, it's difficult to change the engine when you have a flight over the Atlantic. So that is not the places to see. However, the specific questions, my theory would be that the analytics part of our business would probably be more competitive from outside because the usage of large data and the functionality around this is probably the area that will have more competition because they are not so tied into actual clinical and emergency critical processes. So that would be my take. However, I see already that we are using AI and working with AI components inside our analytics software and the customers would like to acquire more from us -- so it's -- please remember, we have contracts there as well and customers that want to add on. So, it's not only a competition in the market with tenders. We have existing customers that want more. Einar Bonnevie: Thanks, Sverre. There's 6 more questions pending. Thank you for submitting them. And there's another one that relates to AI also from Matt. Let's take that one before we move on to other topics. What is your average contract length? And do you have enough time to integrate AI innovations before the next round of tenders. How does this work Sverre? Sverre Flatby: Yes, that's a good question. It's important to understand that when you choose a strategy like we have done and when you focus only on these very sticky software types that could be there since you mentioned in your questions, ProSang, which has more than a 50-year history with the same customers being the same -- being customers, of course. When it stays that long, that is really what's the fact here that it won't be -- it won't change because of the fact that it's tied to the workflow processes in these areas. Einar Bonnevie: Okay. There are some more questions on the financial side and also from Matt. And the question is, do you see already an impact on private valuations and M&A targets following the current software sell-off? That is a very good and relevant question. I think I tried to sum it up on the very last slide, the M&A short slide and say bolt-ons versus larger transformative deals, we see that bolt-ons are typically -- what you are referring to, the smaller private valuations. Yes, I think it's probably now an opportunity to pay less money for more value. And also, as I said, the current market provides more opportunities than challenges from an M&A perspective if you are the buyer. Because after the -- what I say, the hype in maybe 2020, 2021, '22 and expectations were going sky high. I think a lot of the private owners, they have summed up and much more realistic expectations now than maybe at least 2 or 3 years ago. And another one on acquisitions and capital allocation also from Matt. And at current share price of NOK 38, so that's approximately 2x sales or 7x, 8x EBITDA, isn't share buyback the best capital allocation? Yes. And that is also something on the very last slide that we try to sum up. Yes, share buybacks, et cetera, is to be evaluated. It's all about capital allocation. Should we increase working capital? No. Should we invest more in R&D? No. We will use AI to be more efficient. Shall we buy companies? Yes. But again, maybe the bolt-ons rather than the larger deals, again, the best return on your investment. And as you point out, yes, if you compare Omda, I mean, from an outside in view, not speaking as a CFO, but maybe more like a financial analyst from outside in view, Omda is very attractive compared to a lot of companies that we can buy. So that has to be a part of the equation. But I think it's probably not an either/or, maybe it's -- you can have that calculated too. There are still 4 questions. And this is from Mark, and I think it goes to you Sverre, it's about M&A and start-ups with AI. And he says, in terms of M&A, do you see interesting start-ups with AI agent tech that you could add to the portfolio? Please expand on venture capital funding dynamics in the Nordics in the space. Sverre Flatby: Yes, I think the most important answer to that is that our strategy when it comes to M&A is related to customer code competence. That means we acquire companies that has a proven track record within the customer space. Of course, we look at additional AI companies that has interesting technology, but this is not our strategy. And also, because, as I mentioned, it takes many years to implement on the customer side, the type of customers we have. So, what we have -- one example of how we approach this would be the last acquisition of one of the last 3 that was Dermicus, which is an AI-based app that handles wounds or cancer -- skin cancer, for instance. And these type of components that are in production that we can integrate and add and have synergies for our own business, that will be the preferred acquisition of AI companies from our side. So, I don't think the speed of -- even if the new technology comes out, the speed on the customer side will still be the same. So, for us, we will still continue to buy customer code competence in that order. Einar Bonnevie: Okay. Let's continue on the M&A topic, and this is one from John. And he writes, with your aim for small bolt-ons for M&A, do you foresee any material impact to your expected 2026 margin guidance in that year or future years? And how far can bolt-on take you versus your targets over the years? I think I can address those. Those are 2 questions combined in one. And first, on the margin side, I guess the background for the question may be that in the past, we've done some larger deals. When we IPO-ed, we were at NOK 200 million in sales. And a couple of years later, we reached NOK 400 million. So, we doubled in size. And a lot of those we acquired were turned around or turn better candidates, they diluted our margin. Now if you look at the current guidance and we say on the current business, we grow 5% to 10% organically, and we will improve the margins. We will take down the COGS. We will take down salary and personnel. We will take down CapEx. We will take down other costs. That's on the current business. Now if you add to that bolt-ons or small acquisitions, and we said our guidance and target is 10% to 20%, that would mean that we would add NOK 50 million to NOK 100 million in sales roughly for million and you have 0 margin on that in the year it turn around -- turn better candidate and you have 0 in EBITDA. Still the dilution wouldn't be very noticeable. And it would dilute maybe the margin in percentage points with a couple of percentage points, but it wouldn't dilute the absolute number, all right? So, we expect that there may be some margin dilution on the total, but not if you look at the underlying business and that on top. And it shouldn't be dramatic. So, we're not speaking of from 30% down to 10% or something like that, but knock off a few percentage points. That should be your expectation. And how far can bolt-on takes us? Okay. Again, it comes down to what is the definition of a bolt-on. But say it's -- say we're acquiring a business, there are a lot of businesses between NOK 10 million and NOK 20 million in sales. So, 3 of those would amount to approximately NOK 50 million, 10%. So that would -- 3 bolt-ons would take us into the lower part of our guided range. So absolutely doable. There are still 3 questions. We still have 15 minutes. So, if there are any more questions, keep typing in. One question here from Draven, and that goes to you Sverre. And it goes like this. Are there any success stories from this year that you are particularly proud of that demonstrate to you the strength of the business? Sverre Flatby: Yes. I think the results speak for itself. And I think actually, the most important thing is the combination of the decentralization that we have and the ability that each business unit leader have had to work much closer to the customers. So the result of that has been a much more predictable business, and there are many smaller and bigger success stories inside those business units. But I think seen from my side, the successful transition to a decentralized organization is definitely what has changed everything and has created a new operating baseline for Omda, which is going to be very strong from '26 and onwards. Einar Bonnevie: So what are you saying Sverre is 3 things. Capital allocation is important, decentralization is important. And then in a decentralized organization, have the right people on board of the bus. So, if you control those 3, things are going pretty well. Sverre Flatby: Yes. Einar Bonnevie: Okay. Let's continue to do that. There's another question from John here, and that is directly relates to a potential bond refinancing. And the question is, have you had talk with investors in the Swedish market or banks to take advantage of the difference in STIBOR versus NIBOR. And the general answer is, yes, we have Norwegian investors, we have Swedish investors. We have American, Anglo American, French. So, we have investors, and we absolutely -- and we love to have a dialogue with our investors. And yes, we, of course, also have dialogue with our Swedish investors. And again, yes, and we have dialogue with several investment banks, and we bounce ideas. And the effect then on STIBOR versus NIBOR, the STIBOR is around 2% and the NIBOR is around 4%. So of course, if we were refinancing just as an example, I'm not saying -- this is not a guidance. This is not a target, just as an example, if we were to refinance in Swedish krona on STIBOR 2% plus where the bond is currently trading 4%, that would yield 6%. So just as an example, for those of you who are watching this call and are not that into NIBOR, STIBOR and the whole interest rate universe. There's one more question, and this one goes to you, Sverre. So, you have the -- and that is also from David. Across Europe, many health care organizations are cutting staff and budgets. How does Omda work with customers to support them to maintain standards with less staff? Has this been an opportunity for cross-selling or -- how is that? How can we support our customers? Sverre Flatby: Yes, that is a very good question. And it's a quite interesting thing, combined with the previous question about the average length of a contract because it's really not a contract we're talking about. Contracts are tools that we have to have, the way the stickiness is coming from the fact that customers are using our software. And since the situation is like that, of course, we have the dialogue with the customer on how we could help and combine offerings from our own business. So, we are doing that inside our business areas with different business units working together and come up with the broader offerings to our customers. So that will help to be much more efficient. So that is one way. But also, between different business areas, since we have a strategic dialogue with large customers and key customers, we have the ability to look at a strategic approach years ahead as well and talk about what's going on. And explicitly, you're quite right in defining the fact that the economy is very, very complex and it's hard times for health care. That is a good thing for Omda because we can help them. The cost of our recurring software is quite small compared to everything else in these businesses. So yes, we are working with the customers to make sure that they can also get much more benefit of our current software and new software. Einar Bonnevie: Okay. There we are. There is actually one more question that came in while you were addressing this one, Sverre, and this is -- also goes to you. And the question is about the pricing models. And the question is, please comment on your pricing model on seat versus usage based. This is typically from -- I take it from a SaaS perspective of thinking like how does the pricing model actually work in Omda? Sverre Flatby: Yes. First of all, there are differences between different business units. However, in general, if you look at the complex widely used national, regional, highly specialized solutions, which is the backbone of our business. This is coming from contracts many years ago and where the idea is that we pay for the usage of the software normally as a site license or a predefined pricing model might add extra for an extra department or things like that, but it's much more a conservative model from the beginning here. So, it's not like a SaaS thing as such where you can -- as you do with your Netflix account that you add it or you cancel it. So, this is much more from the beginning, a more stable income that is not related to users directly. However, we have some areas where we have volume-based, but I would say more than 80% of our recurring revenue is based on these stable long-term and many times over decades contracts. Einar Bonnevie: Okay. Thank you, Sverre. There seems to be no more questions. Happy we have addressed them all. Thank you all for watching. Thank you all for submitting questions. We very much treasure the opportunity to have a dialogue with all our investors. We hope you have enjoyed this presentation and the numbers. Tune in again on the 21st of May, that is when we are going to present the numbers for the first quarter of 2026. And before that, we will also release the annual report that will be released in April. But until we speak again, our minds and souls meets, do you some napkin calculations using the numbers we have guided on. Enjoy your day. Take care and stay safe.
Gemma Garkut: Okay. Welcome, everyone, and thank you for joining IR's Half Year FY '26 Results Webinar. My name is Gemma Garkut, Head of Communications here at IR, and I'll be hosting today's session. This morning, IR released its half year results and associated presentation for FY '26, which have been lodged with the ASX. These are available on the ASX platform and our Investor Center on our website and should be read in conjunction with this webinar. Joining me on the call today are Ian Lowe, CEO and Managing Director; and Christian Shaw, CFO, who will present today on IR's business performance for the half. We will then open the session for a short Q&A. A few housekeeping items before we begin. Today's session is being recorded and will be made available on our Investor center following the call. [Operator Instructions] If we do not get to your question during the live session, you are welcome to contact our Investor Relations team via the details provided on our website and in today's ASX announcement. A reminder that today's discussion may include forward-looking statements. Please refer to disclosures by the ASX, including the materials lodged earlier today. With that, I'll now hand over to Ian to take you through the highlights for the half. Ian Lowe: Thank you, Gemma. Welcome to the webinar, everybody. We're really going to cover 3 core themes in the course of today's presentation. I'll just quickly run through these to begin with at a headline level. So, first of all, our half 1 financial performance. So, the headlines here being revenue was slightly down due to a softer renewals book. Our earnings performance impacted by expected credit losses. This is consistent with disclosures made in November of last calendar year, and we've also seen cash improvement. The second theme around continued product-led growth execution. We've launched a number of new products in the first half. We've seen some early-stage sales and adoption progress. And I'm going to expand a little today on some new product releases that we've confirmed for 2026. And the third theme is around new business growth. And so, this is where I'm going to give some color on some modest improvement we've seen in new client revenues and also improvement in revenues derived from existing clients, which we refer to as expansion revenues. Just quickly on product-led growth highlights before we get into the financials. So as many of you will be aware, product-led growth is the central growth strategy for the business. And so, we wanted to give a high-level view of our progress against this important, this important part of the overarching strategy. So, in the first half, we launched our first AI-powered product called Iris. This is a natural language interface that allows our clients to undertake deep discovery in the very granular data that we harvest for them. And Iris will evolve over time and become a foundational component in the product-led growth strategy. So, the launch of this first iteration of Iris was really important for us. In the first half, we also launched Elevate. So, this is the same Prognosis technology that we've offered as an on-prem solution for a long period of time but provided as a service. And so, this is particularly attractive to new clients that haven't invested in the Infrastructure to maintain and run Prognosis where they can essentially outsource that process to us and consume Prognosis-as-a-service, and that is the Elevate product. We also launched this in the first half. Some time ago, we launched High Value Payments. Now we've fully implemented this product for a top 10 U.S. bank, which is a really significant milestone for us. And we're engaging with other major global banks on the sale of that same product. I'll give some more detail on that through the presentation. Our innovation initiative called IR Labs. We're looking forward to launching a new AI-powered stand-alone product in calendar year '26. I'll give some more detail on that in this presentation. And indeed, as we approach that launch, we would expect to share more information in relation to it. As mentioned earlier, we've also seen some modest early-stage improvement in the growth metrics that we've laid out to monitor our progress against product-led growth. This was underwritten by a cohort of new clients that we secured in the half, in particular, across verticals, including Government, Health and Defence. So, I'll expand on this as we go, but I'll just hand over to Christian in relation to the financial update. Christian Shaw: Thanks, Ian. My name is Christian Shaw. I've been the CFO with IR for 2 years now. It's my pleasure to provide a financial update on first half FY '26. Firstly, by way of introduction, I'd like to confirm that thanks to a strong sales close in December 2025, the company's results were at the upper end of the guidance range that was provided to the market via the ASX on the 14th of November 2025. And there's a slide included in the appendix of today's presentation to this effect. The focus of my presentation today relates to first half FY '26 results versus the Prior Comparable Period or PCP. I'll now take you through the key financial metrics for the first half of FY '26. However, shareholders are encouraged to read the Appendix 4D and the interim financial report lodged this morning on the ASX in conjunction with this results presentation. In summary, core operating performance for the period was broadly consistent with PCP. However, the incurrence of material expected credit losses ultimately resulted in an operating loss and a net loss after tax. A relative earnings shortfall is more obvious given the existence of large nonoperating gains in the PCP. Statutory revenue for the first half of FY '26 was $28.3 million, which was slightly down 2% to PCP. Renewals performance and contribution to total revenue was slightly down versus PCP, reflecting a softer book of business in the period. Expansion or cross-sell and upsell revenue outperformed, albeit against a low base. Encouragingly, new client revenue grew with multiple strong wins achieved late in the reporting period and despite shorter-than-usual contract lengths. Operating expenses, inclusive of expected credit losses exceeded PCP and without which were slightly lower. Product and technology expenses increased in line with strategy, while Sales & Marketing expenses reduced, and G&A held steady. The earnings before interest, tax, depreciation and amortization or EBITDA loss was a loss of $3.1 million and a net after-tax loss of $1.5 million, both of which were down against PCP, which reported profit results of $4.6 million for both measures. First half FY '26 cash increased to $43.6 million and net assets remained strong at $95.7 million. The company has no debt. I'll commence a deeper dive now for the period with Pro forma revenue, which is an underlying measure that alters statutory revenue by apportioning the License Fee revenue from term-based contracts as the largest component evenly over time based on contract life. This alternate view of revenue provides the ability to look through cyclical swings in the renewals book and to more readily observe underlying performance across reporting periods. It's particularly relevant to the company because as you can see from the slide, the very strong majority of our business is represented by term-based contracted revenues. For first half FY '26, Pro forma revenue was down 6% to $34.4 million versus PCP, with term-based contracts revenue down 4% and services revenue down 2% to PCP. The company's product-led growth strategy is targeting a sustainable growth in Pro forma revenue, and this will happen when increased new client and expansion of existing clients' business exceeds client churn. This next slide shows Pro forma revenue by territory and product. The Americas being our largest market at 70% of Pro forma revenue was down 6% to PCP. Pro forma revenue in the Americas was negatively impacted relative to PCP by the prior sale of the testing business, although much more importantly, by the closing of new client sales late in the period and by the broader business theme where new business sales, whilst growing, are not yet a complete mitigant to churn. APAC was down 7% in a quieter period and Europe, our smallest market, was down 6%. Turning to a product view. Our largest product, Collaborate's Pro forma revenue was down 9% to PCP, with 5% of that impact coming from less services revenue, including less testing revenue after the testing business sale. Collaborate's churn, although relatively stable, continues to impede growth acceleration in Pro forma revenue despite the recent strength seen in sales to new clients and expansion in existing clients. Infrastructure, representing 28% of Pro forma revenue, similarly to Collaborate, decreased by 9% to PCP, driven by churn, whereas Transact, our third product and 22% of Pro forma revenue was up 6% and driven by expansion business. And further information is available in the appendix to this presentation on Pro forma revenue. Turning now to Statutory revenue. First half Statutory revenue was $28.3 million and slightly down by 2% to PCP. The highlight for the half was an increase in License Fee revenue of 4% that was underpinned by a combination of new client contracts and expansion uplift business to existing clients across all territories and products despite a softer renewals book that was less than that of the prior half year period. Another minor point to note is the anomalous nature of the services revenue, which contained less testing revenue in the reporting half than the PCP due to the sale of the testing business. As a reminder, because of the accounting standards on revenue recognition, the company's Statutory revenue trends with our primary sales measure, Total Contract Value, or TCV, and in turn, the renewal book of business due to the current dependency in our business composition. One of the ambitions of our product-led growth strategy is to build and sell value in IR software over time through consumption, which will drive variable SaaS style revenues that demonstrate reduced fluctuation over the lifetime of client contracts. The next slide highlights first half FY '26 EBITDA, a common non-IFRS profit measure. For the first half of FY '26, the company's EBITDA was a loss of $3.1 million, which contrasts to the prior comparable period profit of $4.6 million and a brief analysis will follow. Statutory revenue, which has been discussed, was slightly down, driven by modestly reduced renewals and increased new client and expansion sales. Expected credit losses for the half year was $4.8 million, being an increase of $4.8 million. And for clarity, this is recorded in the consolidated statement of comprehensive income in the line item, General & Administrative expenses. The charge was principally associated with a single client and reflected an increase in credit risk, which was signaled by the client, a product reseller and was not related to software performance. Operating expenses. Excluding expected credit losses for the first half, operating expenses were down 4% versus PCP to $26.5 million, reflecting an ongoing disciplined approach to cost management despite the company pursuing a growth agenda. During the half, product and technology expenses increased 14%. Sales & Marketing expenses decreased 9% and General & Administrative expenses, excluding expected credit losses, were flat. No R&D was capitalized during the reporting period. Shareholders are advised that the company is expecting expenses to increase in the second half of FY '26 as a result of accelerated investment in the company's product-led growth strategy. And further information is available on operating expenses in the appendix to this results presentation. Other gains and losses for the first half were a modest $100,000 loss comprising a grant from the U.S. government of $1 million relating to Employee Retention Tax Credit program and currency exchange losses of $1.1 million. This contrasts sharply to the PCP gain of $3.3 million relating to the sale of a testing business and currency exchange gains. Moving now to IR's cash, which for the half year increased by $3 million or 8% to 30 June 2025, leading to a closing balance of $43.6 million at the end of the half. Our operating cash flow increased strongly for the reporting period to $5.5 million against a PCP of $0.5 million. Client receipts were $3 million higher to PCP due to timing. And in combination, payments to suppliers and employees and payments for income taxes were down $2 million due to timing and some nonrecurring payments in the prior comparable period. And further information is available in the appendix on the company's operating cash flow and its link to EBITDA. Investing activities contributed a net $1.8 million cash inflow, which was moderately increased to PCP, where increased interest receipts largely offset the prior comparable period proceeds from a sale of the testing business. Net financing outflows of $4 million was a reduction of $600,000 against PCP and included a $3.5 million payment for the FY '25 final dividend and $400,000 in reduced lease payments. Exchange rates had a minor negative impact on closing cash. Lastly, IR's balance sheet, which remains strong. At 31st of December 2025, net assets were $95.7 million, down 5% to PCP and comprised total assets of $115.3 million, which includes the combination of cash and Trade & other receivables totaling $107.2 million and total liabilities of $19.7 million. There is no debt. Net tangible assets per share closed first half at $0.53, down 7% to PCP. And I'll now hand back to Ian for product-led growth update. Ian Lowe: Thanks, Christian. I'm just going to take a few minutes here to share with everybody some of the progress that we're making on our product-led growth strategy and in particular, the new products that we have earmarked for build and release over the coming months. So I think most people are probably aware that product-led growth is really a central focus of execution. And really, this slide lays out the context around that. So our historical revenue performance has really been reflective of an overreliance on contract renewals and the value of those renewals fluctuates each year. Our underinvestment in building new products has compounded our reliance on the renewals book. And ultimately, it's limited our new business growth. And so a substantial and ongoing investment to build new products is essential for the company to return to sustainable growth, and this is product-led growth. So, with this strategy, our focus is to increase our innovation investment to build the new products that align to our clients' current and future needs and then commercialize those new products. In particular, we're focused on securing new clients and the revenue that they bring and also cross-sell and upsell to our existing clients, which we call expansion revenue. And realizing these benefits over time as we build momentum is really what should lead to the secure product-led, or securing the product-led growth that we're targeting, which in turn establishes sustainable growth over the medium term. So, with this in mind, we've previously shared three growth metrics which are really a way for us to start to share with you our progress against our product-led growth strategy. And so let me go through each of these very quickly. The first is new client revenue or, if you like, client that is derived from new clients that we've signed. So pleasingly, we've seen modest progress against this metric in the first half versus PCP. The second flavor is expansion revenue. And so as previously described, this is about cross-sell and upsell driven principally by these same new products, to the client base that we already have today. In percentage terms, we saw a strong uplift in real dollar terms, it was a modest uplift because it's off a low base. But nonetheless, we saw some progress in the second metric expansion revenue. And obviously, as we continue to release new products, and I'll expand on that momentarily, we anticipate that this should strengthen our sales pipeline over time. And then the third growth metric, Subscription fees. This is flat or down 3% against the prior corresponding period. And again, this is a growth metric that really will be largely reflective of our ability to secure clients with products that are linked to a variable pricing model. So Prognosis Elevate, for example, where clients will pay a portion of their License Fee based on consumption and new products that we plan to release in calendar year '26, and I'll cover this in more detail shortly, which should strengthen both our proposition with Elevate, but also we anticipate or we're targeting an improvement in the Subscription fee revenue. So these three metrics really will continue to give us a very good sense of our progress as we execute against our product-led growth agenda. In terms of new products, in the first half, there are a couple of particularly noteworthy product launches, which I've mentioned previously. Elevate, this is Prognosis-as-a-service. This simply allows clients to consume the existing Prognosis product in a cloud-based context as opposed to on-prem. It doesn't replace on-prem. It's really just an option that clients can take if they choose to consume Prognosis-as-a-service. This is particularly relevant for new clients. And the reason for that is where clients have already invested in the infrastructure to run Prognosis on-prem, they may want to continue to commit to that infrastructure, in which case, we're seeing that Prognosis-as-a-service, Elevate is particularly relevant for new client discussions. And we will release new products under the subscription model that I've mentioned previously. And in turn, we believe that will strengthen the Elevate proposition. In the first half, we also launched Iris, and this is in its first iteration, a natural language AI capability specifically built to the needs of observability. We've started to roll this out across the client base with our collaborate product. The feedback has been overwhelmingly positive. And we're now in the process of completing the development that would allow us to roll this out to clients on both Transact and Infrastructure. And we believe the development for that will be complete towards the end of the FY '26 period. Iris really is a key pillar in our medium-term product-led growth strategy. Iris will become increasingly central to the way that we look to monetize value moving forward, and it will become increasingly focused on consumption-based revenues. High Value Payments is a product that we launched back in FY '25, and we sold that to a foundation client in the form of a top 10 U.S. bank. I'm pleased to say that, that complicated but very important deployment for that first foundational client is complete. And in parallel with that deployment, we've been talking to a number of other global banks and Tier 1 banks in different domestic markets, and we have progress against a number of those. Moving forward, there's a number of new products that we plan for release in calendar year '26. So firstly, we've talked previously about our innovation division, IR Labs. And we're on track to deliver a new stand-alone AI-powered product in calendar year '26. This will be a minimum viable product release. And we're going to share a lot more detail about what this technology does, the value it creates and our plans for commercialization. We'll share a lot more about that as we get closer to the release date. I've also previously mentioned Iris to be launched for both Transact and Infrastructure clients, and that will happen in calendar year '26. We believe we're on track for a first release towards the end of the financial year '26, the current financial year. And we have plans to extend the Iris capability in a couple of important ways. The first is to transition from a Natural Language Query Interface to also being Agentic. And really, what this means for clients is that Iris will start to communicate with them proactively, not just reactively with important insights and discovery, and it will always be on. So this gets our clients to the point where they're essentially able to subscribe to an Agentic AI capability that is purpose-built for observability data that will feed them all of the insights they need to know to stay on the front foot and maintain the performance of their critical systems. And then secondly, later in calendar year '26, we have a data layering capability that we're planning to release. And this will allow our clients to bring data other than the data that is harvested through Prognosis to correlate to the Prognosis data to deliver richer insights again. And so that contextual correlation will allow clients again to reach new insights that previously aren't possible without this data layering. So we're enormously excited about that road map. Just very quickly, and again, we touched on this at the AGM. There are three core themes in our innovation agenda. So when we think about building new products, we really benchmark those ideas against these three core themes. The first is that we are transitioning to being an AI-first platform. That is absolutely essential, but it's also going to create enormous incremental value that shifts our value proposition in a meaningful way for all of our current and future clients. The second theme is interoperability. Historically, Prognosis has been an isolated part of the technology ecosystem for our clients, and we're setting about changing that. Prognosis will become integrated into client workflows and processes. Clients will be able to leverage the data within Prognosis in new ways. Prognosis will also start to ingest data from other sources, and we talked about how we want to layer data to the benefit of the Iris value proposition. And we also want to start to expose data from within Prognosis to new users, so extending outside of the IT organization within the client into other external and internal stakeholders. The third theme is remediation. And this is really what happens after an issue, a performance issue has been identified, which is what Prognosis does so well today. We want to go on the journey with the client to accelerate their remediation process. And that will extend into predictive capabilities that look to avoid the need for remediation in the first place as well as starting to automate elements of the remediation process by interacting with the underlying technology that is actually creating the performance degradation. So, these three themes are really central to the way we think about new products and on that basis, important that we share that. So, in summary, some observations. The first half of FY '26, our performance really does reflect this historical underinvestment in new products and a softer renewals book. So, in response to that, our product-led growth strategy will see us invest substantial amounts on an ongoing basis to build and commercialize new products, and that process is well underway, as you've seen from today's update. We are starting to see new product momentum emerge. So, this is the production line that we've built and refined to deliver these new products. And we're also seeing some very modest early improvement in the growth metrics that will gauge our progress towards sustainable growth. I think it's important to understand that this transition to a product-led sustainable growth future will take a little bit of time. Our softer FY '26 renewals book on the impacting the top line, our investment in product-led growth, building new products in terms of our expenses, those 2 things come together to impact our profit performance over the short to medium term. Importantly, the business has a strong cash position to fund our product-led growth strategy. And so we continue to focus on the execution of that strategy. Thanks very much. That concludes the presentation, and I'll hand it back over to Gemma. Gemma Garkut: Thank you, Ian. Thank you, Christian. We'll now open it up to Q&A, and we have a couple of questions. The first question is directed to Christian. The credit loss is large relative to revenue, which is very disappointing. What processes have you put in place to ensure this can't happen again? Christian Shaw: Thanks, Gemma. Look, this particular client that led to this outcome was an anomalous or an unusual client contract for us. And unsurprisingly, the management and Board of this company have been all over the nature of that. And we've put in place incremental guardrails to ensure that the structure of the nature of the contract and that counterparty won't be repeated in the company's near future or hopefully at all in the future. And that risk is contained and is contained to that particular client. And there is no such risk in quantum or in nature on our books. Gemma Garkut: Okay. Thank you. Moving on to the next question. Ian, this one will be for you. There is a lot of talk about Generative AI replacing SaaS software businesses. What are your barriers to stop this happening? And what do you have that Gen AI can't replicate? Ian Lowe: It's a good question. And with the benefit of more time, I'd very happily pull all of this apart. Look, I think the first thing is that AI will present some disruption over time in a couple of areas. At the moment, the value proposition of observability is really threefold. The ability to collect all of the telemetry that speaks to the performance of the technology that we monitor. Our ability to normalize that, centralize that, tidy that data up and present it in a way that drives reporting, analytics, notifications, alerts, things of this nature. And then the third is the ability to operationalize that data. So this is about workflow automation. It's about remediation. It's about decision-making on business performance, not just the technology in isolation. And so our opportunity is, first of all, to leverage AI, so to participate in the AI dynamic by leveraging AI and in particular, increasingly Agentic capabilities to take our clients on that journey where we are operationalizing the data in new and meaningful ways. And we think about that beyond just the client organization. We also think about that in terms of the clients' stakeholders, internal and external. So, this is a very conspicuous part of our product strategy and something we think and talk about and are building towards with new products as we speak. I think that AI will be increasingly disruptive in its ability to capture telemetry, although in an on-prem environment, that presents challenges that AI today can't really address elegantly. I think AI's ability to assemble and analyze the data is probably where it will make inroads fastest. But the operationalization of that data and using AI to do that in new and meaningful ways for our clients is really a big opportunity. And it's not a space where we see a lot of capabilities in the market today. And so we're determined to get into that space quickly. Gemma Garkut: Next question. Are you looking at M&A opportunities? And if you are, what would these look like for you? Ian Lowe: Well, look, I'm happy to take that question. So, we're not determined to undertake a transaction. We absolutely would look at a rightsized opportunity that accelerates the strategy, the product-led growth strategy. Anything that is tangential to that strategy is probably going to be less interesting. So, we remain interested in opportunities that are rightsized and can accelerate the existing product-led growth strategy. Gemma Garkut: Two more questions. Can you give a little bit more color to IR Labs and what will be launched at the end of the financial year? Ian Lowe: Probably not. And the reason for that is that, look, we're operating somewhat in stealth mode here for very good reasons. What we have said, just to reiterate, is that in calendar year '26, we will launch a minimum viable product that will be available in the market, and we'll have supporting Sales & Marketing activity around that. In the lead up to that launch, that first release, we will share a lot more in terms of what that product is, the value it creates and our plans to commercialize that product, both at that point in time and ongoing, we'll share a lot more of that as we get closer to that launch date. Gemma Garkut: And final question. You've mentioned there is a lot to do next half and into FY '27. What gives you the confidence, Ian, that IR will be able to execute on these goals? Ian Lowe: Look, that's a good question. There's a couple of things that combine to respond to that question. This business has an extraordinary base of clients to which we have direct access to inform decisions around new products and understand the journey that they are on and make sure that we're aligning our future product sets and new products with those journeys. So, with that, there is a level of trust around the IR brand and the market generally that I think is quite extraordinary and a great credit to what the company has achieved historically. And that's a big part of how we succeed moving forward. We have extraordinary talent in the business. I'm reminded of this every day. And I think critically, we've got a balance sheet that funds our product-led growth strategy. So these things all combine, I think, to put us in a position where there's a lot of work to do. It's not going to happen quickly, but we do believe that over that medium term, we're in a good position to execute our strategy. Gemma Garkut: Final question. IR is still generating cash and has a very strong balance sheet with $43.6 million in cash. Notwithstanding the increased expenses for product-led growth, there would still seem to be headroom to investigate a share buyback to improve EPS, especially knowing that profit will be subdued in the short to medium term. Wouldn't this be a good use of capital while the share price is so low? Ian Lowe: I'm happy to take this one. So, look, it will come as no surprise that we've looked at this, and we've looked at it both closely and repeatedly. I think on balance, certainly, my view is that we don't know exactly what's going to lie ahead as we pursue our product-led growth. And on that basis, we think that at this point in time, at least, preserving our capital to execute a strategy that will deliver the sustainable growth we're all seeking. We think that's the priority. We, of course, reserve the opportunity or the right to continue to review this, and we may make or take a different position if circumstances warrant taking a different position. But right now, we think that, that's in the best interest of shareholders. Gemma Garkut: Thanks, Ian. That is the final question that has been sent through. So, we will conclude the webinar there. Please do reach out to our Investor Relations team directly if you have any further questions following this webinar. But Ian, before we conclude, I'll just hand over to you for any closing comments. Ian Lowe: Thanks, Gemma. Look, I really just want to thank everybody for their interest and support. Hopefully, we've explained or laid out for you the journey that the business is on, and we're looking forward to sharing our full-year results in a few months' time. Gemma Garkut: Okay. Thank you very much. Thanks, everybody.
Sverre Flatby: Good morning, everyone. I am here with my colleague and CFO, Einar Bonnevie, and we thank you all for joining today. Let me start clearly. The fourth quarter 2025 was a record quarter, and 2025 was a record year. So, we have interesting topics for you to go through today, and these are the main highlights. We're going through the fourth quarter highlights, the full year '25 and of course, AI, which is important. We'll go through that deeply. [Audio Gap] Status when it comes to M&A. And as you see, we will have a presentation for about 25, 30 minutes, and we will have a Q&A session at the end of the session. So please, if you have any questions, type them in as we go, and then we will attend to them at the end of the presentation. So, let's start and talk about the fourth quarter 2025. Reported revenue, NOK 135 million. That is 17% growth compared to the fourth quarter 2024. We are quite happy with that and also happy with the fact that the reported EBITDA in that quarter is NOK 31 million and the reported EBITDA margin is 23%. And even there are some one-offs as usual, this is the reported margin without any adjustments. And then the full year, it didn't just end on the high note with the fourth quarter. The full year 2025 is also a structural step-up for Omda. NOK 496 million in sales and revenue for 2025, which exceed our guiding for '25. That is 16% growth compared to 2024. And that also means that the operational baseline, the operating baseline into 2026 is very, very strong based on what has happened in 2025. So, the profitability and performance in '25, NOK 117 million, which is good, and that also implies 24% reported EBITDA margin for 2025. So next topic will be AI. And of course, when you look at AI in the market today, there's a lot of discussions, a lot of noise and predictions, and we have to respect AI as an important topic for all businesses, including our own. What we have to do is to explain properly what we are doing and how it is affecting us. The good thing for Omda is that we operate, as you see here in the picture, in a regulated, certified specialized health care and emergency environment. And what is going on in there? It is mission-critical. It has to do with life-critical treatments and reliability and compliance is, of course, much more important for customers than speed to change things in these environments. And also, if you think about the switching cost of a situation like this, it's not only about software and code. So the stability and the mechanisms in this specialized market will stay the same, although AI will have an impact, which I will get back to in a few minutes. So, if you look at this, a user using a software in the process working in these environments, the value is not necessarily only in the code. The value is, of course, in regulatory trust in specialized workflows and expertise that we deliver and, of course, in cooperation with the customers and their demands and needs. So, if you look at it that way, AI for Omda gives us a stable situation from the customer side, but it is rather an acceleration tool for us when it comes to be more efficient, a productivity accelerator really. So that is what I'm going to explain to you. It's more like what are we actually using AI for in Omda. And these 2 pictures will give you an idea. I think many analysts have already seen what's going on. And I think it's clear that a company like Omda can use development tools with AI agents to completely change the development processes and make them much, much more efficient. So, we are using, like in this picture, a senior developer, the new era gives the possibility to get added code, testing, documentation and much more efficient workflow processes using the agents rather than a lot of other colleagues helping out creating code, for instance. And this was in '24, it was experimental. In '25, we already started projects to make sure that we could do something both in our business units, but also centrally for Omda to create toolboxes for our business units to accelerate this in 2026. So, it's no longer experimental. It's our operating model going forward. So, this is going to accelerate in 2026. And then you will ask yourself, what is the impact on our business? And if you look at this graph, and let me explain it simply to the left, the percentage is self-explanatory. But then again, you see the topping here, the 3 dimensions. One thing is what we have delivered, our guidance for this year, which my colleague will go through in a minute, and then the ambitions and the long-term targets. So, what does this mean really? If you look at the gray curve here, CapEx, which is the same as investments in our own software. We think that investments in our own software will continue with the absolute value level that we have today. But that also means that the CapEx and investment in software compared to our revenue will decline over time as we show you in this curve. And if you look at the green curve, obviously, when you reduce CapEx like that, it will give more cash from operations. So that means the cash EBITDA margin or so-called EBITDAC will, of course, then increase. And this is really the important thing for Omda. So, AI in our company is not a hype. It's actually a tool set that helps us create a much more profitable business. So that means we have delivered a very strong fourth quarter '25 and also a strong year '25. So now it's time to dive deeper into that. And Einar, if you're still awake, the floor is yours. Einar Bonnevie: Thank you, Sverre. Thank you. Good morning, everyone. Let's have a deep dive into the financials. And let's start with the quarterly comparison, the fourth quarter '25 versus the fourth quarter '24. And we see it's -- yes, it is a record quarter. And there's one -- you can say, one-off or anomaly here. It's the sales of hardware and usually large hardware order in the fourth quarter made us beat the expectations. But if you adjust for that, I think we are very much within the guidance of -- in the upper range of what we guided more than a year ago for the year. And when we look at earnings, a very marked improvement in earnings. When you look at the EBITDA or cash EBITDA, you see a very strong margin improvement in the fourth quarter. And also, if you look at the whole year, the same thing here, we see a very strong year, ending -- very much ending on a high note. And the earnings was not only a quarter or 2, we actually met or beat the expectations each quarter in 2025. And ending, as Sverre said, on a record high EBITDA and cash EBITDA. I think it's also worth noting that even though we had a very large hardware order in the fourth quarter and that for the year, actually, hardware sales doubled compared to 2024. Our gross margin was still improving. COGS is coming down and the gross margin is still improving. So, taking note of that. And that also points to where we will be in 2026 and going forward. The margin improvement should continue. In a nutshell, NOK 117 million in EBITDA. We had a CapEx of NOK 47 million, so slightly less than 10%. That was our guidance and cash EBITDA, EBITDAC. We have received some questions from various investors, why do you focus on EBITDA? Why don't you only focus on cash EBITDA? And some say EBITDA is better is more general. The thing is we need both for, say, bond purposes and current tests, et cetera, measured on EBITDA, and it's more common, so you can compare it to other companies. Cash EBITDA, on the other hand, that is what we use internally. So, let me be very, very clear. Business unit leaders, they relate to cash EBITDA and not EBITDA, all right? And that is mainly because CapEx, that is a capital allocation decision. And that is one of the few decisions that are still centrally managed. So, capital allocation is centrally managed. You can get the approvement for a capital allocation for a CapEx project or not don't go to the highest bidder, so to speak. So that is why we have them, and we need them both, and I hope this explains it. As you know, we focused a lot on recurring revenue. And in the past, we have discussed recurring software revenue, but it's not only the software that is recurring. And a few analysts also have taken notice of this that they've said your professional services, they seem to be very, very stable. And yes, indeed, they are. So, in the past, we referred to professional services as semi-recurring, but we split those and started -- as from the third quarter 2025, we started splitting the professional services in the recurring part and nonrecurring part. And what we define is that customers of ours that were also customers 1 year ago, they are defined as recurring professional services or recurring professional services customers. So, we view those as recurring, and applying that logic, you get a very different perspective on what is recurring and the stability of our business. So, we see that the recurring software business takes us up to approximately 80%. And then we can add another 15% or so on recurring professional services. That brings the real recurring or the true recurring income or recurring revenue in number up to almost 95%. So, it's an extremely predictable business and an extreme stability there to the benefit of shareholders, but also, of course, to bondholders. This really gives you a stability that you don't see very many other places. And combine this with very limited churn on the software. We have guided in the past less than 2% per annum. We can restate that guidance. Churn is limited. And speaking of churn and speaking of predictability, with the earnings in 2025, and you see the cash earnings, the EBITDA and the EBITDAC, cash earnings are coming up. Revenue is growing. Cash is stabilizing. We are moving into what we call a very low leverage territory. Here, okay, let me explain the bars, 3 bars, the blue on the left, that is the last 4 quarters EBITDA. That's how they are measured. EBITDA is measured in the bondholder agreement for incurrence test purposes. Then we have the orange bar, that is the run rate. So, if the current quarter is a template for the other quarters as a run rate, and then we have on the green bars, that is the forward-looking the next 4 quarters because what is ahead of us, it is not the past. It's the future, and we have a 2026 guidance. So, the green bars, they are based on the guidance for 2026, okay? Then the blue line, the upper blue line is the incurrence test. So, we have to be below that in order to do a tap issue on the current bond. And then we have the purple line that is at 2.5, and that is what typically is referred to as low leverage, low gearing. And you see that if you look at the first quarter -- fourth quarter '25, first quarter '26, where we currently are, you see and especially if you look at the leverage compared that to, and relate that to the next 4 quarters earnings, you see that we are indeed moving into a very low leverage territory. So, low leverage, combined with high predictability on income and earnings, that is where we currently are. And this also makes -- if you, again, taking a capital allocation perspective, what shall we -- how to spend our money most wisely. Debt repayment is probably not one of them, but maybe we can improve the debt terms. And that is exactly what we are now considering. Very strong performance on the top line, on the bottom line and low leverage that points to possibilities for refinancing of the current debt. I think, as most of you have observed, and some of them are also comment to us, saying that of the approximately NOK 70 million in cash EBITDA, a large chunk of that -- of those cash earnings from operations, they go to payout interest. And paying interest, that's the largest cash items in our P&L. And of course, that costs as all other costs, we like to reduce the cost and increase the earnings. Looking at the current bond that was issued in December '23. It's callable in December '26 and at NOK 104.3. And until then, it's a so-called make-whole clause. But the bond has been trading well, and we see that the spread has been narrowing. And the last I saw was actually a spread starting with the #3. So, we are around 400 basis points -- so 400 basis points, 4 percentage points, 4%. And the current bond is dominated in NOK. So, it's 3-month NIBOR plus 4%, translates into approximately 8%. That is where the bond is currently trading. And we have higher ambitions. And currently, the bond is trading in NOK. We will have to evaluate other jurisdictions also. So, when the bond was issued, and Omda went public, we were a very Norwegian company. As you have seen on the distribution of earnings, you can see that in the report, where are our customers, where are our employees. You see from an operational perspective we are more Swedish than Norwegian. That was on finance, and what we think there's room for improvement there. Let's move on to the guidance. We know where we are, where are we heading. Okay. We will repeat our guidance for 2026. So, we will end with revenues of NOK 500 million to NOK 525 million, ending at NOK 494 million. And even if you knock off the hardware for 2025, it shouldn't be Mission Impossible. And this is just the organic part. So, this is without any new acquisitions. This is just the organic part. We forecast a margin between 28% and 32% on the EBITDA. And as Sverre just pointed out, we will compress the CapEx. So, the cash EBITDA, the EBITDAC margin should be somewhat higher than the EBITDA. So, CapEx should be less than 10%. We forecast -- we guide on 9% for 2026, and that should absolutely be possible. Not guidance, but targets. What we just saw, they were guidance. This is where we think we're going to end up. These are what we see now are our targets. They haven't changed much since what we presented in the third quarter presentation but let me be even more specific and even more clear. We restate organic growth, 5% to 10%. That includes CPI adjustments and the like. We restate that we aim for target inorganic growth or growth through acquisitions, 10% to 20% on top of that. And EBITDA in excess of 30% CapEx going forward over the next 5-year period, we see it shrinking from where we have been in the past around 10% of sales or revenue to 5% of revenue. We see COGS. As I said, in spite of the unusual large hardware order in the fourth quarter, gross margin was still improving. COGS are still coming down from around 7%, 7.5% in '24 to 6.5% in 2025. And it should be -- there's more to come. It's not an overnight sensation, but we have gradually -- if you look 5 years back, 10 years back, you see we have constantly been improving. That improvement will continue. And we see that we can bring it down to at least 2% to 5%. Salary and personnel, we have constantly bringing it down. We have been trimming the number of FTEs compared to total revenue, to 55% at the end of the fourth quarter. In percent of total revenue, down from 70 to 65 to 60% to 55%, 54%, 55% ending -- exiting 2025, and we see we should bring it down to below 50%. Other costs currently at around 13% of sales. The original target was to bring it down to 15%. We are already there and actually beyond. We see now that the next target is to bring it down to 10%. Partly still trimming your nails and also as part of that, they will remain constant, and the top line will grow. And then last but not least, on the bond loan, it's currently NOK 500 million. If we just maintain that level, I'm not saying that we will, but just take that as a starting point, we should be able, with the improvement that we have displayed already and what is to come, to bring an end to an interest rate closer to 5% than 10%. Now I'm not saying 5%, I'm saying closer to 5% than 10%. Some analysts, have said maybe you should reach 7%, well, 7% is closer to 5% than 10%. But we are ambitious, and we are ambitious based on the strong underlying performance. Okay. And with those assumptions and targets, we will end up with revenues something like this. And you can do your own calculation, do your own math. Here, I have used those expectations to see where we end up on revenues on the organic side and on the acquired side. And you can use it in your own spreadsheets, for calculations. You can apply the speed and how fast you think we'll reach the margin improvement, and you will end up with robust margins, and you can do your own math on what you think the valuation of a company like Omda should be. Okay. Let me round off by addressing the M&A. We have a huge pipeline. We do most of the sourcing ourselves. We have a lot of targets on the radar screen. We have an active dialogue with someone between 5 and 10 companies. So, we are absolutely active in the space. In short, and some may say, well, you haven't announced anything. That is true. But as the old statistics professor once told me, absence of evidence is not evidence of absence. So don't think for a single minute that the fact that we haven't announced anything is not because we haven't been active. And sometimes, the only thing you end up with is a successful DD. But we maintain the goal of 10% to 20% inorganic growth. We will consider. Should we do bolt-ons or should we do large, more transformative deals? Sometimes the bolt-on may be less money for more value. So that is always a consideration. In the current market, we've seen there has been turbulence in the market on valuation, everything from us stocks or compounders or software companies and the AI turmoil, but that also gives opportunities for us as an acquirer. And then speaking of acquisitions, this, again, is a matter of capital allocation, and we need to spend money wisely. And we also need to reconsider this, I mean, how is it undervalued compared to other things we can buy in the market? So, share buyback is also something we need to keep considering. And last but not least, since we are moving into positive cash flow, good cash territory, smaller deals may be financed with cash from operations without having to issue any new capital in any form. That was a snapshot, and let's move into the Q&A. Einar Bonnevie: And there are a few questions here, and most of them seem to be to myself. And there's one question from John here, and it's related to the last topic, M&A. And the question is, with the incurrence test being met, and you have been expecting that for a while, given your goals, what's the next outlook on getting the M&A engine humming in the next quarters? Okay. As I just said, and you can add some comments to this, Sverre. But as I just said, it has been humming. So, it hasn't been turned off. And again, we haven't announced anything, but that doesn't mean that we haven't done anything on the subject. So, it is indeed humming. Would you like to add anything, Sverre? Sverre Flatby: Yes. I think what is important is actually that the value creation behind M&A has to do with the sequence of things. So, when we have dialogues going on for many years with many targets, we're also very good at looking at when to put things together. So, there is a very, very high activity, much more than you think, when we look at this. And I think what's going on now is that we will stick to the guidance of 10% to 20%, and they will come out, as Einar mentioned, probably of a handful of smaller acquisitions rather than a big one. So, all in all, we are very happy to tell you about the M&A processes going on because these are what will make us reach our goals in the next 5 years as well. Einar Bonnevie: Okay. Thank you. Another question here from John, and that's about the bond agreement. And the question is, remind us of your buyback opening in the bond agreement. Yes. The current bond agreement gives us the opportunity to buy back shares. And we haven't done anything for the last year or so. But the bond agreement gives us an opportunity to continue to buy back bonds. What it doesn't allow currently is to delete the buyback shares. We can buy back and continue to buy back. We still have room to buy back more shares, but we cannot delete them under the current bond agreement. But that was a trade-off we made when we borrowed money the last time, but that is something we will look into because that is one way of making the implicit dividend more effective. So, we can continue to buy back shares, but we can't delete them. Okay. There's one question pending. [Operator Instructions] And this is from Balas, and it's related to net working capital. And the question is, can you please elaborate on net working capital dynamics? It looks like this year; net working capital was a drag on cash generation. And I can understand the question and the reason behind it. Okay. We have a very active net working capital view. And as you saw in the 2024 fourth quarter, we had a minus 31%. Our official target is that we should be below minus 10%. We ended 2 years ago in '24 at minus 31%. That was a record. In 2025, we end at minus 26%, which is still very good, but not as good as last year. There are always some dynamics there. As you know, we like to invoice annually upfront as much as we possibly can and then pay our bills as late as we can to use the capital effectively. But in 2025, we issued invoices and sometimes the invoices, are paid just before New Year's Eve and other times, they are paid just after. And in '25, some of them were delayed to be paid in early January. So that is what you see. There are a few bumps there, but nothing to lose sleep about. There are now 6 new questions. So let me continue. And this is one for you, Sverre. It relates to artificial intelligence. And it goes like this. Can you explain in more detail, Omda's product moat against AI in the long run? So, contract, security relationships. So, I mean, how does AI protect us? Sverre Flatby: Yes. I think, first of all, what protects us is really what I was into when it comes to what is the priority on the customer side here, which is the regulated business they have and the reliability and compliance is critical and the life-saving activity is critical, and these are run through extremely complex workflows. So, the ability to change things is, of course, there, but the business case to change things is one thing. It's really not that relevant. It's not only the code. It's a very, very complex completeness there. And then secondly, of course, the ability to replace things is one thing. But the timeline, it takes years in these areas, not because you change the code, but because you have to refactor a lot of other things and you have to handle procurements, rollout projects, et cetera, that takes years in the complex environments. So, it's really not the AI itself that protects that part of us, but we are protected in that sense that the collaboration long-term, as you ask for here as well, the contracts, what we do now with our customers is to actually have the dialogue, how are we going to deliver add-on components that includes AI functionality. But that is not easy because you also have to certify components like that. So maybe we would use 1 or 2 years to certify, but still the customer will use maybe some years even to implement because of the criticality. So, this is why it takes time. But on the good side, although it takes time to implement on the customer side, the speed of the value creation on the inside of Omda is really what is the good thing at the moment because that is no longer, as I mentioned, experimenting with tools. These are agents that actually already now are actually giving us the ability to increase the cash from operations. Einar Bonnevie: Okay. Thank you, Sverre. There's another question about AI. So, I suggest we continue that. That's also from Matt. Thank you, Matt, for submitting your questions. Which division or business area, business unit is most at risk from AI competition? And you mentioned specifically emergency or ProSang or blood management. What will you say? Sverre Flatby: Yes, that's a good question. But it's none of those 2, that's for sure. I would say it's quite the opposite. Those are quite protected given how these systems are handled. So, it's difficult to change the engine when you have a flight over the Atlantic. So that is not the places to see. However, the specific questions, my theory would be that the analytics part of our business would probably be more competitive from outside because the usage of large data and the functionality around this is probably the area that will have more competition because they are not so tied into actual clinical and emergency critical processes. So that would be my take. However, I see already that we are using AI and working with AI components inside our analytics software and the customers would like to acquire more from us -- so it's -- please remember, we have contracts there as well and customers that want to add on. So, it's not only a competition in the market with tenders. We have existing customers that want more. Einar Bonnevie: Thanks, Sverre. There's 6 more questions pending. Thank you for submitting them. And there's another one that relates to AI also from Matt. Let's take that one before we move on to other topics. What is your average contract length? And do you have enough time to integrate AI innovations before the next round of tenders. How does this work Sverre? Sverre Flatby: Yes, that's a good question. It's important to understand that when you choose a strategy like we have done and when you focus only on these very sticky software types that could be there since you mentioned in your questions, ProSang, which has more than a 50-year history with the same customers being the same -- being customers, of course. When it stays that long, that is really what's the fact here that it won't be -- it won't change because of the fact that it's tied to the workflow processes in these areas. Einar Bonnevie: Okay. There are some more questions on the financial side and also from Matt. And the question is, do you see already an impact on private valuations and M&A targets following the current software sell-off? That is a very good and relevant question. I think I tried to sum it up on the very last slide, the M&A short slide and say bolt-ons versus larger transformative deals, we see that bolt-ons are typically -- what you are referring to, the smaller private valuations. Yes, I think it's probably now an opportunity to pay less money for more value. And also, as I said, the current market provides more opportunities than challenges from an M&A perspective if you are the buyer. Because after the -- what I say, the hype in maybe 2020, 2021, '22 and expectations were going sky high. I think a lot of the private owners, they have summed up and much more realistic expectations now than maybe at least 2 or 3 years ago. And another one on acquisitions and capital allocation also from Matt. And at current share price of NOK 38, so that's approximately 2x sales or 7x, 8x EBITDA, isn't share buyback the best capital allocation? Yes. And that is also something on the very last slide that we try to sum up. Yes, share buybacks, et cetera, is to be evaluated. It's all about capital allocation. Should we increase working capital? No. Should we invest more in R&D? No. We will use AI to be more efficient. Shall we buy companies? Yes. But again, maybe the bolt-ons rather than the larger deals, again, the best return on your investment. And as you point out, yes, if you compare Omda, I mean, from an outside in view, not speaking as a CFO, but maybe more like a financial analyst from outside in view, Omda is very attractive compared to a lot of companies that we can buy. So that has to be a part of the equation. But I think it's probably not an either/or, maybe it's -- you can have that calculated too. There are still 4 questions. And this is from Mark, and I think it goes to you Sverre, it's about M&A and start-ups with AI. And he says, in terms of M&A, do you see interesting start-ups with AI agent tech that you could add to the portfolio? Please expand on venture capital funding dynamics in the Nordics in the space. Sverre Flatby: Yes, I think the most important answer to that is that our strategy when it comes to M&A is related to customer code competence. That means we acquire companies that has a proven track record within the customer space. Of course, we look at additional AI companies that has interesting technology, but this is not our strategy. And also, because, as I mentioned, it takes many years to implement on the customer side, the type of customers we have. So, what we have -- one example of how we approach this would be the last acquisition of one of the last 3 that was Dermicus, which is an AI-based app that handles wounds or cancer -- skin cancer, for instance. And these type of components that are in production that we can integrate and add and have synergies for our own business, that will be the preferred acquisition of AI companies from our side. So, I don't think the speed of -- even if the new technology comes out, the speed on the customer side will still be the same. So, for us, we will still continue to buy customer code competence in that order. Einar Bonnevie: Okay. Let's continue on the M&A topic, and this is one from John. And he writes, with your aim for small bolt-ons for M&A, do you foresee any material impact to your expected 2026 margin guidance in that year or future years? And how far can bolt-on take you versus your targets over the years? I think I can address those. Those are 2 questions combined in one. And first, on the margin side, I guess the background for the question may be that in the past, we've done some larger deals. When we IPO-ed, we were at NOK 200 million in sales. And a couple of years later, we reached NOK 400 million. So, we doubled in size. And a lot of those we acquired were turned around or turn better candidates, they diluted our margin. Now if you look at the current guidance and we say on the current business, we grow 5% to 10% organically, and we will improve the margins. We will take down the COGS. We will take down salary and personnel. We will take down CapEx. We will take down other costs. That's on the current business. Now if you add to that bolt-ons or small acquisitions, and we said our guidance and target is 10% to 20%, that would mean that we would add NOK 50 million to NOK 100 million in sales roughly for million and you have 0 margin on that in the year it turn around -- turn better candidate and you have 0 in EBITDA. Still the dilution wouldn't be very noticeable. And it would dilute maybe the margin in percentage points with a couple of percentage points, but it wouldn't dilute the absolute number, all right? So, we expect that there may be some margin dilution on the total, but not if you look at the underlying business and that on top. And it shouldn't be dramatic. So, we're not speaking of from 30% down to 10% or something like that, but knock off a few percentage points. That should be your expectation. And how far can bolt-on takes us? Okay. Again, it comes down to what is the definition of a bolt-on. But say it's -- say we're acquiring a business, there are a lot of businesses between NOK 10 million and NOK 20 million in sales. So, 3 of those would amount to approximately NOK 50 million, 10%. So that would -- 3 bolt-ons would take us into the lower part of our guided range. So absolutely doable. There are still 3 questions. We still have 15 minutes. So, if there are any more questions, keep typing in. One question here from Draven, and that goes to you Sverre. And it goes like this. Are there any success stories from this year that you are particularly proud of that demonstrate to you the strength of the business? Sverre Flatby: Yes. I think the results speak for itself. And I think actually, the most important thing is the combination of the decentralization that we have and the ability that each business unit leader have had to work much closer to the customers. So the result of that has been a much more predictable business, and there are many smaller and bigger success stories inside those business units. But I think seen from my side, the successful transition to a decentralized organization is definitely what has changed everything and has created a new operating baseline for Omda, which is going to be very strong from '26 and onwards. Einar Bonnevie: So what are you saying Sverre is 3 things. Capital allocation is important, decentralization is important. And then in a decentralized organization, have the right people on board of the bus. So, if you control those 3, things are going pretty well. Sverre Flatby: Yes. Einar Bonnevie: Okay. Let's continue to do that. There's another question from John here, and that is directly relates to a potential bond refinancing. And the question is, have you had talk with investors in the Swedish market or banks to take advantage of the difference in STIBOR versus NIBOR. And the general answer is, yes, we have Norwegian investors, we have Swedish investors. We have American, Anglo American, French. So, we have investors, and we absolutely -- and we love to have a dialogue with our investors. And yes, we, of course, also have dialogue with our Swedish investors. And again, yes, and we have dialogue with several investment banks, and we bounce ideas. And the effect then on STIBOR versus NIBOR, the STIBOR is around 2% and the NIBOR is around 4%. So of course, if we were refinancing just as an example, I'm not saying -- this is not a guidance. This is not a target, just as an example, if we were to refinance in Swedish krona on STIBOR 2% plus where the bond is currently trading 4%, that would yield 6%. So just as an example, for those of you who are watching this call and are not that into NIBOR, STIBOR and the whole interest rate universe. There's one more question, and this one goes to you, Sverre. So, you have the -- and that is also from David. Across Europe, many health care organizations are cutting staff and budgets. How does Omda work with customers to support them to maintain standards with less staff? Has this been an opportunity for cross-selling or -- how is that? How can we support our customers? Sverre Flatby: Yes, that is a very good question. And it's a quite interesting thing, combined with the previous question about the average length of a contract because it's really not a contract we're talking about. Contracts are tools that we have to have, the way the stickiness is coming from the fact that customers are using our software. And since the situation is like that, of course, we have the dialogue with the customer on how we could help and combine offerings from our own business. So, we are doing that inside our business areas with different business units working together and come up with the broader offerings to our customers. So that will help to be much more efficient. So that is one way. But also, between different business areas, since we have a strategic dialogue with large customers and key customers, we have the ability to look at a strategic approach years ahead as well and talk about what's going on. And explicitly, you're quite right in defining the fact that the economy is very, very complex and it's hard times for health care. That is a good thing for Omda because we can help them. The cost of our recurring software is quite small compared to everything else in these businesses. So yes, we are working with the customers to make sure that they can also get much more benefit of our current software and new software. Einar Bonnevie: Okay. There we are. There is actually one more question that came in while you were addressing this one, Sverre, and this is -- also goes to you. And the question is about the pricing models. And the question is, please comment on your pricing model on seat versus usage based. This is typically from -- I take it from a SaaS perspective of thinking like how does the pricing model actually work in Omda? Sverre Flatby: Yes. First of all, there are differences between different business units. However, in general, if you look at the complex widely used national, regional, highly specialized solutions, which is the backbone of our business. This is coming from contracts many years ago and where the idea is that we pay for the usage of the software normally as a site license or a predefined pricing model might add extra for an extra department or things like that, but it's much more a conservative model from the beginning here. So, it's not like a SaaS thing as such where you can -- as you do with your Netflix account that you add it or you cancel it. So, this is much more from the beginning, a more stable income that is not related to users directly. However, we have some areas where we have volume-based, but I would say more than 80% of our recurring revenue is based on these stable long-term and many times over decades contracts. Einar Bonnevie: Okay. Thank you, Sverre. There seems to be no more questions. Happy we have addressed them all. Thank you all for watching. Thank you all for submitting questions. We very much treasure the opportunity to have a dialogue with all our investors. We hope you have enjoyed this presentation and the numbers. Tune in again on the 21st of May, that is when we are going to present the numbers for the first quarter of 2026. And before that, we will also release the annual report that will be released in April. But until we speak again, our minds and souls meets, do you some napkin calculations using the numbers we have guided on. Enjoy your day. Take care and stay safe.
Stella Mariss: Hello, everyone. Thank you for joining CLINUVEL's Investor Webinar. I'm Stella of Monsoon Communications. In today's webinar, CLINUVEL will share their half year results and operational highlights for the 6 months ended on 31st December, 2025. I will now hand over to Malcolm Bull, Head of Australian Operations and Investor Relations, to conduct the proceedings. Malcolm Bull: Thank you, Stella, for the introduction. I'd first like to welcome members of CLINUVEL's management team to the webinar. Not surprisingly, reflecting the focus of the webinar on the financial results for the half year to December '25, we have Chief Financial Officer, Peter Vaughan. We are joined by 2 executives who are leading the business in key operational areas: Director of Clinical Affairs, Dr. Emilie Rodenburger; and Director of North American Operations, Dr. Linda Teng. We're also joined by our Managing Director, Philippe Wolgen. I'd like to acknowledge there are several analysts on the line who cover CLINUVEL and we'll ask some questions in the webinar. It would be remiss of me if I didn't say on behalf of management and the Board that we appreciate your work on CLINUVEL, your role in telling our story to a wider audience than we could reach ourselves and your involvement in this webinar. It's pleasing also that there are over 175 participants to the webinar, reflecting increasing interest in CLINUVEL. So welcome, one and all. Before going further, I think it's appropriate to highlight why we have 5 executives in today's webinar. So you frequently see Philippe; our Chief Operations Officer, Lachlan Hay; Peter Vaughan; and Investor Relations presenting the company to a range of stakeholders. We have received feedback that it would be good to have greater access and the opportunity to hear from other executives. So for today's webinar, noting this is not the forum for a strategic review, but as a courtesy to you all, we include Dr. Rodenburger and Dr. Teng to answer questions and provide their insights direct to you. Today's webinar will be in 2 parts. First, a discussion of the half year results; and second, the analysts online will be called upon to ask questions of the CFO and management. We will be talking today about plans and intended outcomes. So I'll draw your attention to the forward-looking statement or safe harbor statement on screen that identifies a range of risks that can materialize and impact their achievement. So I think 10 seconds to review that is enough, and that is on our website and on all of our announcements. I now kindly invite the CFO to summarize the results. Peter? Peter Vaughan: Thanks, Malcolm. Good evening, and good morning, everyone, from wherever you're calling in from. It's another set of very consistent results at CLINUVEL, I'm pleased to announce, with our revenues up 4% on the prior year, maintaining a steady growth pattern. Our expenses were up 22% for the period, and this really was part of the supporting the expansion initiatives that we'd foreshadowed previously that we were going to be undertaking during this period. We continued our strong positive net operating cash flows, and this saw our cash reserves over the 6 months increase by $9 million to $233 million. We're closely monitoring all of our expenditures and any discretionary spending is being scrutinized really closely. And the good news is that our profitability for this period, whilst lower, continues to be maintained despite the increasing level of expenditure during this expansionary phase. Malcolm Bull: Thanks, Peter. I'll now ask Philippe to comment on the results. Philippe Wolgen: Thanks, Malcolm. Welcome to all the analysts and shareholders. Well, in a nutshell, we follow a plan, a strategy, which is gradual and with purpose. And for this strategy to play out, we need to manage our finances tightly in a very controlled manner. In the past 12 months, we intentionally increased our expenses. And therefore, naturally, one expects to see the net profit decrease. These expenses towards R&D, the clinical trial in vitiligo and regulatory filings. We are very much in line with our own forecast, so we're content with the results, and we will proceed on this basis. And with positive cash flows, we can expand the activities of the company, the group. We gave expense guidance from 2021 to 2025. And for the financial year, we expect to spend about $55 million to $58 million, excluding the capital expenditures. So in summary, the business model we chose is playing out really well. Malcolm Bull: I agree. So let's delve into the results and call on Peter to look at in turn revenues, expenses, profit and indeed the balance sheet. Peter Vaughan: Thanks, Malcolm. So our revenues for the period continue to grow year-on-year. And this period, I'm pleased to say we saw our highest ever sales revenue result. This period marks the 20th consecutive profit for CLINUVEL since the commencement of our commercial operations. And our expenditure, as I touched on before, whilst increasing, is very focused, controlled and targeted around the specific areas of the business that we're focusing on. Our expansion saw key developments in our R&D activities across our ACTH-NEURACTHEL program; our vitiligo study, CUV105; and of course, our peptide drug platform that we developed at our Singapore Research Development and Innovation Center that we recently announced we'll be undertaking a large expansion of. Now all of this expenditure and all of this growth has been achieved without sacrificing our overall profitability, which is really a fantastic result for the organization. Only 4% of biotechs deliver a profit and even fewer are able to sustain a profit for an extended period of time. So where CLINUVEL has done this for over a decade, it's truly a remarkable outcome. In turning forward to our revenues, specifically, we saw our revenues from sales increased by 4% from the prior period to just under $37 million. As I mentioned before, this is our highest first half year sales results we've ever seen. This reflects the increasing and continued demand for SCENESSE right across our sales regions. In particular, we saw strong growth in volume of sales across Europe. And as we announced in September 2025, the approval by the EMA, lifting the number of maximum implants per year from 4 to 6, has already seen some of the patients take up that extra initiative, and we expect other patients to follow suit as well. In the U.S., our team and -- led by Linda has able to increase the number of sites to meet the target that we had for December, which was 120 sites across North America. The patient demand has been consistent throughout the period, and our U.S. team operates extremely well given the evolving U.S. medical reimbursement landscape that is constantly changing at the moment. Perhaps at this point, Linda, as our Head of -- Director of North American Operations, I might ask you, could you provide some insight to the people listening in around the U.S. reimbursement process and in particular, the prior authorization scheme that enables us to have such a high success rate of reimbursement? Linda Teng: Sure, Peter. So first off, please excuse me for my raspy voice, as I'm still recovering from the flu. But thankfully, the technology allows me to share the insight without spreading the flu. Philippe Wolgen: Linda, we can't hear you well. Linda, we can't hear you. Linda Teng: Can you hear me now? Philippe Wolgen: No. It's very muffled. Malcolm Bull: Go off the headphones if you can. Linda Teng: Is that better? Philippe Wolgen: No. Malcolm Bull: Not really. Linda Teng: Is that better? Can you hear me now? Philippe Wolgen: Yes. Much better. Okay, let's move on. Malcolm Bull: Yes. Linda Teng: Can you now hear me? Philippe Wolgen: Yes. Okay. Linda Teng: Can you hear me now? Philippe Wolgen: Yes. Please proceed, Linda. Linda Teng: Yes? Philippe Wolgen: Yes. Linda Teng: Okay. So all right. So we're going to continue with what Peter said about prior authorization. So in short, basically prior authorization is a way for health insurance companies to control their cost, by making sure that they are only paying for treatments that are medically necessary for their patients. And so because SCENESSE is the only FDA-approved treatment for EPP, and it has a strong and also a long-standing safety records. We haven't seen any prior authorization denials for the EPP patient. And we also have a dedicated in-house team that works very closely with the physicians to really streamline the submissions and also speed up the approvals. And for SCENESSE, most of our PAs that are already approved, they are only renewed annually. There really is minimal paperwork for the physician, and so they don't have to get approval for every single treatment visit. And for those who are familiar with the U.S. healthcare system, you might notice that our approach is very unique. Most high-cost drugs, they go through the middleman or the pharmacy benefit managers or we call them the PBM. And they usually drive up prices up even more. So we made that deliberate decision to avoid the PBMs. And I think that is moving like a smart moves, especially now because the government is increasingly the scrutiny of them. And we said the 2026 Consolidated Appropriations Act, which has really signed into law a few weeks ago, including the provisions aimed at the PBM industry. And as for the patients, the feedback has been consistently positive. And I think the reason for the continued treatment year-after-year is because they are seeing real clinical benefit. And we even saw some patients are increasing their treatment dose within the year because of the clinical benefit. And I do want to be clear that we don't pay physicians or patients for any testimonials. Everything is completely organic. The feedback from the patients are voluntary and genuine. And usually, they can share more within -- happily within their patient communities or directly with my team. So I hope this gives you some insight into our prior auth process. Peter, handing back to you. Malcolm Bull: You're on silent, Peter. Peter Vaughan: Thank you, Linda. As we look forward to the other areas of revenue for the period, our interest income was up to $5.3 million this period, which was a 14% increase on the prior year. And this was really the result of a larger cash reserves balance that we continue to maintain. We generally take our surplus funds that we have at the time and invest them into term deposits to help to build and grow on that balance. And at the moment, we're extending the length of our term deposits to be able to take longer-term maturities at higher yields. So we're seeing our average term deposit for about 300 days at the moment, and we're receiving an average yield of about 4.5% across the portfolio. Our other income, now this number has swung the other way from the prior period, and it's a difference of about $4.6 million. Now just to explain, this is an unrealized foreign currency translation that occurs each balance date, so each reporting date. It's really a non-cash transaction that's effective at balance date for accounting purposes. And it takes the process of taking all of our foreign currency balances and bringing them back to account at balance date into Australian dollars. So it's not a real loss. It's an unrealized loss just purely to be able to balance the books at balance date. So if we look at our revenues overall, I would mark them as being stable, growing and also consistent. Historically, our second half of our financial period generally tends to be proportionately higher from a revenue perspective, with the EU and U.S. summers coming into effect through that second half of the year. So we're really excited to see how the second half of the year plays out given we've still got that maintaining growth. Perhaps moving to expenses, Mel, now more specifically. Malcolm Bull: Yes. Peter Vaughan: So we saw a 16% increase in our personnel expenditure. And I'd probably -- I'd just like to provide some context around that for everyone to understand. This is a strategic part of our expansionary team and increasing the in-house capability of CLINUVEL. It provides greater control and oversight of our activities. But at the same time, we're upgrading the skill and expertise within our organization. Now as everyone will know, skill and expertise within the life sciences sector is really important. And recently, we've seen regulatory challenges and hurdles that some other life sciences and biotech companies have faced in just recent times. So this highlights the need to really develop and create the skill and expertise within that team and make sure we've got the right people around the decision-making process. And when we look at CLINUVEL, CLINUVEL's never had a market authorization knock back in over 20 years of being active in the pharmaceutical sector. Now if that was to occur in some shape or form, a regulatory rejection of some sort can really have a significant effect on an organization. It erodes shareholder and market confidence in the company. It raises doubts around management's decision-making and assessment of processes and events. It can push commercialization time frames back up to 3 years as seen in some of our peers where another study or more data may need to be gathered before a resubmission can take place. And clinical trial designs and endpoints around the quality of data may suit one region, which brings in revenue, but not always both revenues -- both regions to bring in revenue across the globe. And this can really affect the total revenue pie that's available from the advancement and the approval. Our people are really critical to the process. And in plotting the path forward, we're really confident that they'll be able to obtain the right outcome around our clinical programs. In turning specifically to our clinical and non-clinical expenditure, the expansion of our CUV105 expenditures was somewhat offset by the orderly wind down of some of our earlier phase programs. We've reallocated and focused our resources towards our later stage and strategically significant programs aimed at achieving the nearest-term commercial results and prospects we can. Preparation for CUV107 has already commenced and is well underway, and we'll start to see those expenditures flow through in the second half of the year also. Commercial distribution, if we look at that area, that was up 42%, but this is predominantly off the back of increased volumes of shipments, particularly in Europe, as I touched on before. So it's all increased proportionately. There has been some temporary one-off costs that have been associated with some transitions that we've made in our supply chain to some of our warehouse providers to ensure the long-term stability of that supply chain as well as being able to scale with us for the future. The other area that is somewhat affecting the commercial distribution area is also some of our regulatory fees. Previously we used to sit under an SME discounted scheme in some of those regions for the FDA and EMA annual fees. And now that our revenues have increased to the point that they are, we're no longer eligible for some of those discounts, so we're having to pay full annual service fees now to those organizations, which is also increasing the expenditure in that area. The next area to touch on is really finance, corporate, and legal. Now this did increase proportionately from the prior year to up 47%. And really, this is the direct cost of a lot of it is being our ADR program uplift from Level 1 to Level 2 that I'm sure you're all aware of as we uplift that program for the U.S. to list on NASDAQ. There's been a substantial amount of work undertaken across that area by the finance team, but also in conjunction with our accountants, auditors and legal firms, both here in Australia and in the U.S. And this process we had to go through undertook a 3-year reaudit of all of our financials into U.S. GAAP -- converted into U.S. GAAP financial presentation, and then that was submitted to the SEC for review. Our other expenses, that's up 191%, and it's predominantly driven by the increase in our R&D programs and all the consumable materials that we use within those programs, whether it be ACTH, PRENUMBRA or NEURACTHEL, any of those developments. Our non-cash expenditure was down for the period. This is usually a change in our inventories in our balance sheet differences from period to period, that's really what reflects quite a bit of that expenditure. This period, that's a lower number than it was previously because we've actually increased our manufacturing during the period, so therefore, there hasn't been as low a drop in our inventories. It stayed more on par. Our share-based payments have also been much lower this period than in previous years, and we recently changed our share plan at the start of 2025, which meant the expenditures will now appear differently, but also it's now a 1-year plan instead of a 3-year plan. Now I've spoken fairly at length around all of the expansionary activities that we're undertaking and some of the critical advancements to our program. But this expanding expenditure should really be seen as an investment in the organization rather than just being pure expenditure. So from a financial perspective, it does take time to build up these resources internally, but it is cheaper than outsourcing to a CRO. CROs can add 25% or more costs to the bottom lines of a clinical trial program. But by having that skill and expertise in-house, it's critically important for us to maintain that control and oversight of the program. We've got Emilie Rodenburger on the call, who's our Director of Global Clinical Affairs. Emilie, in speaking around our expansionary activities and what's been undertaken, I guess, would you be able to provide some insight into why that was necessary? And what are the specific advantages of doing them in-house? Emilie Rodenburger: Yes, absolutely, Peter. I can give some additional context to the numbers. So first of all, good morning, good afternoon, good evening, everyone. It's good to be here. In my capacity as Director of Clinical Affairs, I really think more on the deliverable and how to achieve them, but it certainly ultimately impacts the numbers we report. So clinical expansionary activities are twofold. It's talent growth and building the infrastructure into which the talents operate. As Peter mentioned, the company has taken a conscious decision to build our capabilities in-house, which is not the norm in our industry. Where most are relying on outsourcing their studies, we have chosen not to rely on these models and not to work with CROs. It increases cost and can result in loss of control and oversight over studies and data. In order to deliver the CUV105 study, we had to invest in new talent and these professionals will be retained through the CUV107 and beyond. Currently, the clinical affair department that I lead is the largest department in the company spread across U.K. and U.S. with a great range of expertise, operations, data science with data management and statistics, and medical affairs and clinical quality. In addition to bringing new talents in, we have also trained and upskilled existing talent. So building and retaining the expertise in-house. And again, I repeat what Peter said, it's really critical for the health of our business. In terms of infrastructure, it's really the processes and the systems, and we've also been investing in this. This investment will continue further for us to be able to manage a significant data set that are coming from the vitiligo studies and deliver efficiently on the studies. So when we build in-house, we both supporting the present and investing for the future. I mentioned the talents, the expertise, the ownership, processes and systems. They can be seen as a platform assets that is transferable to any studies and programs that we will be conducting in the future. So in a way, we're building a CRO in-house. Peter Vaughan: Excellent. Thank you, Emilie. In turning to our balance sheet, Malcolm. If we look at our balance sheet, it keeps going year-by-year from strength to strength. As I touched on, our cash reserves increased by $9 million to just under $233 million, and it's the highest cash balance we've had in the company's history. Our net assets have also increased by $8.2 million to just under $250 million, which again is the strongest point in the company's history. And we remain debt-free for the 21st consecutive year with no equity dilution since my March of 2016. A strong balance sheet with positive net cash flows is really a strategic priority for CLINUVEL as it enables us to see clinical programs through to commercialization without any additional funding required. It also provides resilience for any unforeseen events or economic uncertainty, particularly in the current geopolitical times. It provides flexibility to ensure expansionary opportunities, acquisitions or investments that align with our objectives, can be taken advantage of, which many peers in the industry aren't able to consider without having to raise additional capital. It also enables strategic objectives to be delivered such as the expansion of our Singapore research and development facility, which we've slated for over the next 5 years to provide vertical integration of ongoing peptide and formula development and innovation. A number of our peers have recently announced capital raisings, some as much as at a 45% discount to market to fund these sorts of activities that we can take on and that we can develop without having to raise any further capital. Some of these peers are raising for clinical program developments, for raw material supplier scale-up or for product rollout into a new jurisdiction. As already touched on, CUV is funded for our full clinical trial program for vitiligo. Malcolm Bull: Thanks, Peter. I mean that was a comprehensive overview, I must say, but I'd like now to move to strategy. I mention and shared with you that a number of institutions, particularly in the U.S. have asked us why CLINUVEL stands out in its strategy. They even ask, are we a bit dogmatic and a bit rigid in our strategic focus and execution. Philippe, can you comment on this? Philippe Wolgen: Well, I'll pick up the 2 words: dogmatic and rigid. The contrary, we've built in the flexibility and optionality in this business model, and that allows us to navigate markets and cycles in pharma. But the objectives are really clear, they're fivefold. We need to expand the EPP commercial market, advance the vitiligo programs as a focal point of the company, advance the NEURACTHEL dossier, which is a large opportunity in the use of ACTH in a number of indications, advanced PhotoCosmetics, and bring in-house the manufacturing of the new and next formulation. So in any given business model, there are a number of options. We can serially raise funds like most of our peers. We can change the business strategy altogether, step away from melanocortin and do something totally different. We can self-fund the program starting gradually as we've done. And the fourth option is, we can cease operations and say, ladies and gentlemen, it's too difficult, it's too hard, and let's give the cash back to the shareholders. And we haven't chosen that because we believe that there are a number of opportunities that we worked on for decades that are worthwhile pursuing. And there are a number of underlying assumptions that the Board and management take into account that we are privy to and no one else is. And first of all is, are we conducting an honest genuine business, no one indicated in further activities. Do we keep the teams in check? Do we have technologies that are safe and work? And third of all, do the patients -- do the investors have the patience to see out the strategies? But the most important underlying assumption is whether there is perpetual funds available for this company. And we've come to the conclusion that this model is very appropriate for the way we need to reach the vitiligo and the ACTH markets. So in summary, Malcolm, we needed to accumulate these funds to execute a program, which we all believe will lead to a sustainable multi-dollar a billion-dollar enterprise. But we also need to be conscious of the realistic risks that evolve around clinical, regulatory and execution. And for that, you need to have optionality and optionality is cash. And that will eventually lead to a diversified company. So that's how the company stands out. Malcolm Bull: Thanks, Philippe. So moving to another area where we've had numerous questions, and this is on the readout of vitiligo. And Emilie, it's good to have you here, and this is where you come in. What can you tell us about the regulatory process and path to market on vitiligo? Emilie Rodenburger: Thank you, Malcolm. I will address your question by providing a number of specific observations that support the regulatory process and path to market for SCENESSE in vitiligo. Some of these observations are unique to SCENESSE and some you might also be familiar with, but allow me to go through them. The first one is SCENESSE is already on the market for another indication, EPP. It's a product for which we have accumulated 2.5 decades of safety data and a safety profile that has been maintained over time. The regulatory agencies know the product well from the Annual Report or regulatory and pharmacovigilance teams are and have submitted for 1 decade now. In regards to vitiligo, vitiligo is a condition with visible symptomatology and the treatment effect -- skip that one. And the treatment effect that we desire, repigmentation, is visible. So from the cases we received and cases published by physician, one can gain much confidence that the effect of the treatment are visible. From an operational point of view, the trials can't be blinded. The work -- the drug either works or not and physician and patient can see the effect very quickly, the visible efficacy. So what I'm trying to say here is that in vitiligo, the photographs do not lie. And part of the analysis is to have centrally assessed photographs up to 32 per patient, which is up to 6,000 assessments. Very importantly as well is the patient experience and how they appreciate the return of their pigments. JAK inhibitors, some currently in Phase III, one recently submitted to the EMA and FDA for marketing approval, they take a long time to work, thereby suppressing the immune system. And last but not least, we are living in a very dynamic regulatory landscape where the concept of generating clinical evidence is evolving. EMA speaks about totality of evidence for drug approval, while as I'm sure you've seen the FDA recently announced that single trial will now be the default for drug approval. So what I really wanted to convey by all of this is that, these are positive considerations for SCENESSE to come to market for vitiligo, as we are continuing on the same trajectory. I can't tell you exactly when. But for sure, vitiligo is the natural home for afamelanotide, a pigment activating peptide, which is an analog of hormone that's naturally produced by our own body. Thanks, Malcolm. Malcolm Bull: Thanks, Emilie. So before we go to analyst questions, all stakeholders want to know what's next. Philippe, can you summarize that for us, please? Philippe Wolgen: Sure. So there are a number of catalysts that we're approaching over the next 2 years. The most immediate ones are the top line results from vitiligo CUV105 in the second half of 2026, the start of the vitiligo CUV107 study, and the preclinical results on the peptide formulation in the latter half of this year and the listing of the ADRs on NASDAQ that we await the SEC answers for. So the catalyst will naturally change the complexion of the company, and this is exciting, and we've navigated the waters over time to arrive at this point. And so we all need to get patients and see what the impacts are from these results. So there's much to look forward to, yes. Malcolm Bull: Indeed. Thank you, Philippe. So let's go to analyst questions. But thank you, Peter, Emilie, Linda, Philippe for the discussion. Some good insightful comments there, and I hope those on the line also have got some insights and appreciate that. The first analyst to ask a question is Dr. David Stanton of Jefferies. Hello, David, are you there? David Stanton: I am. Can you hear me? Malcolm Bull: Yes, David. Please go ahead. David Stanton: So my question is, do you have to wait until you have the results of CUV105 -- sorry, CUV105 and CUV107 before you file for approval in vitiligo? And in which geography would you file in first and why, please? Emilie Rodenburger: I'm going to take this question, Malcolm. Malcolm Bull: Okay. Emilie Rodenburger: It's a -- yes, it's a good follow-up and from what I was mentioning a couple of minutes ago. So thank you, Dr. Stanton for this question, question that's relevant and often asked. Our intention is to complete CUV105 and CUV107 before going to the EMA and FDA. And the recent announcement on single trial for drug approval from the FDA doesn't change this strategy. So based on the ongoing interactions we have with both agencies, EMA and FDA on the specificity of our work that we are conducting, we will need the CUV107 study to complete our program. For the second part of the question, we opt to file with the EMA first and then FDA second. And this really -- this strategy really much follows the approach we had with EPP back in 2012. I want to say more. I think it's important for me when we speak about regulatory agencies, I want to give a bit more color. An agency, as you know, it's a conglomerate of thousands of people, so at the EMA in Amsterdam, there are more than 1,000 permanent staff and more than 4,000 part-timers and experts. We are dealing with 2 European reporters that are representing the National Competent Authorities, which are Lithuania and Poland, with a scientific adviser representing the Scientific Advice Working Party, a very knowledgeable German physician. At the FDA in Silver Spring, there are more than 8,000 permanent staff and another 6,000 elsewhere consultant part-timers. We interact with the Division of Dermatology and Dentistry now led by Dr. Jill Lindstrom in the Center of Drug Evaluation and Research. And we have a new Commissioner, as you know, Dr. Martin Makary, who has reshuffled the agency, bringing new procedures and new approach. In our EMA reporters, we find willing listeners and may I say more supportive of our regulatory and market strategy. We are the only company focusing on patients of darker skin color and this point resonated very well in our recent discussions with the EMA. The approach we have on vitiligo is so novel that we deem the European regulators to be the first protocol, and then it will make it easier for the FDA to assess similar data. Malcolm Bull: Okay. Thanks, Emilie. The next question is for -- from Dr. Melissa Benson of Barrenjoey. Hi, Melissa. Melissa Benson: So I had a question in regards to the ACTH program, so NEURACTHEL. Just to help us understand, you've mentioned there later this year, you expect to file with EMA. A similar question to the lining of vitiligo, but understand like how does filing with Europe first and then the FDA, how does that kind of expedite the U.S. opportunity? And then secondly, any color you can kind of provide on the differences, I guess, between the commercial landscape for a product like this in Europe versus the U.S.? Because I understand one market is quite a synthetic peptide-based and the other is a natural hormone based. So that would be great. Malcolm Bull: Philippe, for you. Philippe Wolgen: Thanks, Melissa. Yes, we've talked about this in the past. NEURACTHEL will first be filed in Europe through the route of mutual recognition. And as you know, the analogues of ACTH, in our case, NEURACTHEL are used by many institutions, both as a therapeutic and as a diagnostic. And so we opted to go to Europe first and U.S. second. Once you've filed through the mutual recognition procedure, you can file shortly in the U.S. after. ACTH products are mostly distributed to specialty centers in Europe. They prescribed by internal specialists, endocrinologists. And we believe that it's possible to make the first inroads directly to these centers in Europe. Reimbursement in Europe is albeit lower than in the U.S. So both markets are sizable and are attractive, but we have experience in leveraging the European regulators and the resonance there is high. So it's a slightly different strategy than most of our competitors, but so far it worked. Malcolm Bull: Okay. Thanks, Philippe. We've just lost you on camera. So if you can try and get back to us, we'd like to continue to see you. Let's move to Dr. Thomas Schiessle of Parmantier in Germany. Thomas, you're a long way away, but let's hope you're connected. Thomas Schiessle: I would like to ask a question, what does the recent FDA decision on Disc Medicine's Bitopertin mean for your business and growth outlook, please? Malcolm Bull: Okay. Peter? Peter Vaughan: Sure. Yes. No problem. I can answer that one. So I guess thank you doctor for your question. From a finance perspective, I'm happy to answer that. So I see it from a way of increasing our monopoly in the market with the other player, obviously, not being able to enter that market yet as we're really the only approved drug treatment for EPP with a proven safety and efficacy record in the U.S. So it could take them, I would estimate about 1 to 2 years to come back or even longer to enter the European market. So it could be quite an extended period of time that we still maintain a monopoly within that market. So I guess that's how I see it, doctor. Malcolm Bull: I'll come back to you, Thomas, to ask another question because we've covered that fairly succinctly. But I'd like Linda to make some comment because some shareholders have asked what's our reaction to the FDA's decision on this. So can you make some comment on that, please, Linda? Linda Teng: Sure. First, can you hear me okay? Malcolm Bull: Yes. Linda Teng: Okay. Right. So first, I definitely can comment. However, I do prefer not to comment on the setbacks of other companies or their management. And I will just leave that to the external observers. And while competitors may have made critical remarks about our work, I don't consider it to be elegant to respond in kind. However, what I will say is that it is not easy to get a regulatory approval in one go. Our team have done this by working thoroughly and diligently. And at the end of the day, it is really all about the patients, making sure that the drug is safe and that it shows significant clinical improvement in their quality of life. And the FDA really raised questions regarding the bioavailability and efficacy of Bitopertin, which, by the way, I'm sure most of you already know. This was actually originally developed for an antipsychotic drug for schizophrenia before it was abandoned by Roche. And so for EPP, the company had then had to increase the dose from 20 milligrams to 60 milligrams to achieve a statistically significant reduction on the biomarker of the protoporphyrin level. But higher doses also mean that there's going to be extra stress on the patient's liver or kidneys. And this is very concerning, especially for EPP patients because they are already at a higher risk of liver disease. And on top of that, oral pill higher dose also increased side effects, complications and drug-drug interactions with other medications. So as the pharmacist, I really cannot see how this is a benefit for the EPP patients. And the other point that the FDA also raised, a very valid concern, was its primary endpoint. And this was based on the change in the biomarker protoporphyrin IX. So in case -- I don't know how much you guys know about biomarkers. Well, biomarkers are a very helpful tool for scientists, for physicians to really understand what's happening in our body, but it does not always reflect real-world meaningful clinical benefit. And an example that comes to mind is there was a drug that was received an accelerated FDA approval back in 2016 for an advanced soft tissue sarcoma, and this was approved based on a biomarker endpoint. But once they came to real life, the real-world clinical outcomes did not show any survival benefit. And so at the end of the day, the FDA had to pull the approval soon after. And from a bigger picture pharmacological perspective, it also seems very unusual to me to prescribe a lifelong oral pill that affects the central nervous system to lower the protoporphyrin IX marker -- biomarker levels. So I guess, I suppose, we'll really have to wait to see the results of their future trials to see whether this drug can really show both the efficacy and the meaningful clinical benefits for the patients. Malcolm Bull: Right. Very insightful. Coming back to you, Thomas, do you have a follow-up -- a quick follow-up question? Thomas Schiessle: Yes, indeed. Thank you, Malcolm. Absolutely another issue. The FDA -- no, no, no, no. That's a second one. What impact does NASDAQ listing have on CLINUVEL's future regular reporting concerning frequency and content, please? Malcolm Bull: Okay. Peter, for you. Peter Vaughan: Sure. I can answer that one, Malcolm. So we'll be listing on the NASDAQ or uplisting our ADR program and listing over there as a foreign private issuer. So what that basically means is that we'll continue to lodge half year and full year financials. In the U.S., we'll be reporting in U.S. dollars and also in U.S. GAAP accounting. But I guess, in short, Thomas, it's -- it will be exactly the same as what we currently do every 6 months and then every 12 months for the half year in the annual reporting. So no real change to the frequency. Malcolm Bull: Thanks for dialing in Thomas. I just mentioned that several shareholders have asked for an update on our listing application. So Peter, give us an update, please. Peter Vaughan: Sure. No problem. So we lodged our initial filing, which was a 20-F document to the SEC in mid-December or 18th of December to be specific. And we did foreshadow that there may be some delay in the turnaround time because it was also -- it was Christmas period, but also the government was -- had come out of shutdown mode and the SEC that obviously affected them. So they needed to catch up and clear the backload of filings and other documentation they had. But we have had some further correspondence back and forward with the SEC, and we're refiling our response to them. So we're hoping to be able to receive clearance from them in the very near future and then move quickly to implement the ADR program uplift. So watch this space. Malcolm Bull: Okay. We sure will. Let's now call on Sarah Mann from Moelis. Sarah, please. Sarah Mann: My first question is just on the EPP market. Could you provide us any details around what percent of your patients are covered under Medicaid? And just curious how you anticipate some of the cuts to Medicaid potentially impacting your ability to reach those patients? Malcolm Bull: Linda, for you. Linda Teng: Sure. I'll take this one. Sarah, thank you for your question. So we're actually seeing less than 5% of our U.S. EPP patients on Medicaid benefits. So in short, we don't really have a noticeable impact. And in fact, like you mentioned the One Big Beautiful Bill, it actually broadens the orphan drug exclusion. It now allows orphan drugs to -- with more than one rare diseases to remain exempt from Medicare price negotiations and potentially so far looking like it's indefinite unless the drug is later approved for a non-orphan indication. So one can theoretically say that the TAM would increase through curing the federal programs. But given that most of our patients are commercial insurance patients, we don't really see a worthwhile impact in the U.S. market at this time. Malcolm Bull: Okay. Sarah, a follow-up question. Sarah Mann: Just on a separate topic. Just curious if you could provide more color around the cosmeceutical strategy. Obviously, it's been in market for a couple of years in, I suppose, prototyping or early stage testing. Yes, just curious how you expect it to ramp up this year and any learnings that you've had over the past couple of years as well, please? Malcolm Bull: Philippe, can I call on you? Philippe Wolgen: Sure. First of all, good to see you back, Sarah. It's been a long time. On numerous occasions, we mentioned that the PhotoCosmetics are in development, and they accompany a complement our pharmaceutical program. That's quite an unusual strategy to have both pharmaceuticals and the PhotoCosmetic franchise, not many pharmaceutical companies do that. And so the first was the P line, the photoprotection lines, providing polychromatic photoprotection in population of the highest risk and extreme conditions. And then that will be followed by the M line, the melanocortin containing peptides. And they intend to provide assisted DNA repair and self-bronzing or the so-called sunless tanning. And in all these properties, the endeavors goes really to launch products with a substantial marketing effort. And that needs to provide visibility to our products. And we started to gradually increase our marketing spending online to focus groups, advocates, target populations and channels. And so we are in the prelaunch phase where we get feedback on these products. But ideally -- and nothing is ideal, but that was the anticipation and the model, when the vitiligo trials start to yield results, we then see a parallel large-scale effort to promote the M lines, because the concept was that the medical tanning that you see in vitiligo follows a parallel path to the PhotoCosmetic self-bronzing properties. So in short, we advance, but we're not really ready to launch these products, not from a scientific point of view and not from a marketing. But what we aim to see is lotions and serums applied a number of times a day that assist the self-bronzing in the epidermis. And we're not quite there yet, but we're advancing. The other part is in order to make this a commercial success, the company needs to differentiate itself in all aspects. The retail experience needs to be changed or disrupted, if you wish. The primary packaging, the secondary packaging, the way we distribute it, the retail store concept and all that at a reasonable large scale. But thereby we are conscious of the spending and the budgets we put aside for this exercise while keeping the company profitable. So it's a balancing act that we do need to navigate all the obstacles, but to decrease the risk of failure and that we do that in a very gradual and deliberate manner. Malcolm Bull: Okay. So let's move to Madeleine Williams of Canaccord. Please, Madeleine. Madeleine Williams: So I think, firstly, I was just wanting to know, you've got a few things happening at the moment. Obviously, last year, Europe allowed the increased number of doses and then also in the U.S. as the Disc Medicine trial completes this year, I assume there's sort of going to be more patients available. Just thinking about how you're thinking about the growth in those jurisdictions and sort of the splits going forward. Malcolm Bull: Well, Peter, do you want to comment initially on... Peter Vaughan: For me? Yes, sure. No problem, I can comment on that. So I would say that there's a segment revenue note that we've included within the half year report that does show the breakdown. But I guess a quick summary would be the U.S. revenues have increased year-on-year. And this period, we saw a rise more predominantly in the European volumes, partly spurred on by some patients taking up that increase from 4 implants being a maximum during the year up to 6 that was announced in September 2025. I guess at the moment, the current revenue split is about 53% U.S., 47% for the rest of the world. So that kind of -- that's the insight that I can provide there. I guess on the peptides side, that's probably more Philippe perhaps might be able to answer that one. Malcolm Bull: No, we'll park that. I think we'll move on to Mark Pachacz, because I think he's got to leave pretty soon. So Mark, if you're still there, can you ask your question? Stella Mariss: Malcolm, looks like Mark is no longer here. Malcolm Bull: Okay. That's all right. Well, fortunately, we have another analyst, Thomas -- Thomas Wakim of Bell Potter. Do you want to ask a question please, Thomas? Thomas Wakim: Yes. It's a bit of a follow-on from the previous one actually. So in that revenue segment, the split between U.S. and non-U.S. sales for the period just gone, where we saw a decline in the U.S. and a significant increase outside the U.S. So can you just kind of explain in a bit more detail what those factors were that were at play there leading to that? And how does that look moving forward? Peter Vaughan: Sure. So there was some effect on the U.S. side from the government shutdown. So the government shutdown met delays in Medicare processing as well as also the processing of reimbursements. So in some instances, some of the smaller centers didn't want that longer-term delay on their payment cycles and things like that. So that did cause some headwind there for them. And then we also passed on a CPI increase in 2025 and some of those have caused some negative reimbursement pressure on some of the centers. But overall, we anticipate that the U.S. is still stable and still growing across that, and that's where we've continued increasing the number of centers across North America. So we're seeing new centers come online and start to bring patients to the floor as well. So there is that difference between prior year and this year, but I think it's really explained by the U.S. government shutdown predominantly. Malcolm Bull: Okay, Peter, thanks. And as I was talking with Madeleine before and also with Mark Pachacz, there was a fair bit of interest in peptides. So let's come back to peptides and ask Philippe to comment on the potential of that new area of development. Philippe Wolgen: Well, we spoke for a long time in public about the skill set of the company and how it was expanding concentrically. So we started off as a company focused on clinical affairs. We understood the melanocortin peptides really well. Then we focused on the delivery methods, the best way to deliver and administer a drug into a human body. And from that, we built our Singapore labs and progressed fundamental research into new formulations. We call it formulations of the next generation using liquid injectable peptide platforms. And so naturally, once we mastered these technologies, it opened up the realm of fantasies of what other peptides could you use to deliver a product in a sustained or controlled manner. And that's where we are. So you're going to expect much more from that team and our activities in Singapore. Malcolm Bull: Thanks, Philippe. Very exciting. It's about time that we wrap up, but I didn't want to conclude without addressing a couple of shareholders who asked me about the company's dividend policy and whether we have one, and I can say we certainly do. It's available on the CUV website, but I can tell you that it is the Board's intention to pay a dividend subject to the sufficiency of our funds and the operating and investment needs of the business and indeed future growth and needs to fund that growth. So the Board will determine that, and you can investigate, as I say, the dividend policy online. So I want to say thank you to all the analysts online for asking their questions. Peter, Emilie, Linda, Philippe for their contributions, good insights and all attendees, thank you very much. A link to the webinar will be posted to the CLINUVEL News website as soon as possible for other stakeholders to review. So I'll now close the webinar, wishing you all good health and fortune. Thank you.
Operator: Thank you for standing by, and welcome to the Ridley Corporation Limited, RIC 1H FY '26 Presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Quinton Hildebrand, Managing Director and CEO. Please go ahead. Quinton Hildebrand: Thank you, and good morning to everyone. Thanks for your attendance on our conference call today. I have with me Richard Betts, who will present his final set of financial results before retiring from Ridley after 5 successful years. We also have Chris Opperman, incoming CFO, who started at Ridley on the 5th of January. Chris joins us from Energy Australia, where he was CFO. And prior to that, he was with Dyno Nobel, where he held a number of executive leadership roles, including CFO and later President of Incitec Pivot Fertilisers. For this morning's address, I'll be talking about the slides that are uploaded on the ASX website. So starting on Page 2, the financial summary. The business delivered a first-half underlying EBITDA of $55.4 million, a 9% increase on PCP. This result included 3 months' contribution from the new Fertilisers segment and a strong performance in Bulk Stockfeeds, which carried the softer outcome in the Packaged and Ingredients segment. I'll speak to the performance of each of these segments in the next few slides. As you will see, we had a very positive operating cash flow, and this has reduced our net debt, with the leverage ratio post-acquisition now at 0.8x. On the back of this performance, the Board determined a progressive dividend of $0.051 per share, fully franked. Moving to Slide 3. The Bulk Stockfeeds segment delivered an EBITDA of $27.1 million, up 25% on PCP, a very pleasing result, especially when you consider that there were $1.7 million in lost earnings in FY'25 from the Wadley feed mill, which was sold on the 30th of June 2025. This result was achieved by 13% volume growth in ruminant sales and 7% volume growth in monogastric sales, together with higher-margin supplementary feeding of beef and sheep at the start of the period. Once again, Ridley Direct, now in its fourth year, was able to generate profit by leveraging our grain and co-products procurement flows and accessing a broader customer network. Moving to Slide 4. As we foreshadowed at the AGM in November, the Packaged and Ingredients segment had to contend with a number of short-term challenges, which decreased the EBITDA by 28% to $25.6 million. Short-term ovine supply constraints at OMP due to lower lamb slaughter rates across Australia impacted sales through this period. We endured lower prices for protein meals when compared to the prior year. And lastly, we experienced some temporary processing challenges. The first was due to a slip in the main cooling dam wall during a rain event at the Maroota rendering facility. This made this dam inoperable and imposed processing constraints, requiring us to incur costs diverting material to Laverton and other processes. The second temporary processing challenge has been with the commissioning delays at the new OMP Timaru greenfield facility, which has impacted our daily throughput and yields. On the positive front, the raw supply volumes to the rendering plants grew 7%, and the packaged dog sales also grew 7%, taking up the extrusion capacity vacated from the aquafeed transition. So a challenging period for the Packaged and Ingredients segment, which should correct itself through the second half as we've added additional supply of land bones to OMP and are addressing the processing constraints with capital projects, and I'll address these in greater detail later in the presentation. Moving to Slide 5. The Fertilizer segment delivered an EBITDA of $10.3 million, above the top end of our expectations and above the PCP under the previous owner. This was achieved through good cost control and margin management in a period that is known to be the lowest seasonal demand quarter. To provide some context, on the right-hand side of the slide, we've provided the average monthly volumes dispatched by Incitec Pivot Fertilisers over the past 7 years. This clearly illustrates that our Q2 is the lowest seasonal demand period and also shows how our dispatches build in Q3 and Q4. The table below the graph offers some more detail on the timing of the various crops and the volume intensity in each month. I'll now hand over to Richard, who will take you through the financial results in more detail. Richard Betts: Good morning, everyone, and thank you, Quinton. I will now present the financial results for the first half of FY'26, beginning with the profit and loss summary on Slide 7. Quinton has already talked you through the operating segments, which delivered a combined EBITDA for the half of $63 million. The corporate costs increased by $0.8 million to $7.6 million, with the increase primarily associated with the employee incentive schemes, which now incorporate all the employees of the IPF business. The reported underlying EBITDA of $55.4 million represents a 9% increase on the PCP. During the period, the business reported net individually significant gains after tax of $31.4 million, which related to the acquisition of the IPF fertilizer business. I will cover this in greater detail in a later slide. Depreciation and amortization for the period was $18.6 million, a $3.5 million increase on the PCP. This relates to the depreciation and amortization of the newly acquired IPF business, which totaled $3.6 million. The underlying depreciation included several significant capital projects that were depreciated for all or part of the period, including the recently completed debottlenecking projects. As anticipated, finance costs increased from $4.9 million to $8.7 million on the back of debt funding relating to the acquisition of the fertilizer business, which was partially offset by the interest received from the half 2 FY '25 capital raise. The income tax expense for the underlying operations decreased by $1.6 million as a result of the lower profit before tax. The underlying effective tax rate was 29.9%, an increase from prior periods, but in line with the lower available research and development deductions. Turning now to Slide 8 and the balance sheet. The balance sheet looks significantly different from 30 June 2025 following the acquisition and related debt financing. The pro forma balance sheet highlights the impact of the acquisition on the movement since 30 June in order to better understand the movements that relate to operations. Excluding the acquisition, working capital has reduced by $72.5 million during the period. This gain will be covered in further detail on a later slide. Property, plant, and equipment has increased by $15.3 million, with the increase relating primarily to the Ridley growth projects, including OMP's new facility at Timaru and the debottlenecking projects within both bulk stock feeds and rendering. Net debt reduced by $22.4 million, driven by improved EBITDA and the reduction in working capital, partially offset by the increase in CapEx, dividends, tax, and interest payments, all associated with the higher earnings. Now turning to Slide 9. As outlined on the previous slide, the group working capital increased significantly following the acquisition of IPF, where the business acquired $387 million of working capital. In line with what the business would traditionally hold at a September balance date, together with the additional inventory held to support the transition of the Single Super Phosphate business, or SSP, from being a manufacturing business based out of Geelong to an import-only model and the associated longer supply chain. Subsequently, the fertilizer working capital has reduced by $98 million. This was due primarily to the timing of receipts and payments associated with the export products sold by fertilizers from the Phosphate Hill facility, and management's focus on ensuring working capital reduced to align with the seasonal sales cycles. The working capital for the Ridley business units increased by $26 million, with $14 million related to receivables associated with the increased volumes. Debtor days remained at a very healthy 33 days, in line with the prior period. Payables reduced despite the higher volumes due to the shorter payment terms associated with the strategic decision to purchase increased volumes of raw materials directly from Farmgate. Moving to Slide 10, capital management net debt. During the period, net debt increased by $321 million, with $358 million used to fund the acquisition of the fertilizer business, with the difference relating primarily to the cash from operations that was used in part to fund the CapEx and the increased dividend. The business has increased its available funding lines by $500 million to $690 million through a combination of a $200 million revolver facility and a new $300 million working capital facility. Our existing and new revolver facilities have been split between 3- and 5-year tenors to provide greater certainty regarding the long-term financial capacity of the company. The working capital facility is uncommitted and provides the flexibility to manage the annual seasonal highs in the working capital cycle of the new fertilizer business. Bank leverage for covenant purposes was 0.8x, comfortably within covenant levels despite the recent acquisition of the fertilizer business. Turning now to Slide 11 and the capital allocation framework. First implemented in FY '21, this remains pivotal in prioritizing the capital within our business and ensuring we are aligned to making the best investment decisions to maximize shareholder returns. This will become an even greater priority now that have acquired the fertilizer business. During the period, the business delivered strongly against the model, including ensuring the improvement in underlying business translated to a very healthy operating cash flow of $128 million. We continue to prioritize reinvestment in our underlying asset base through the focus on maintenance capital, with spend of 60% of depreciation aligned to our committed range. We continue to deliver on the targeted leverage range, supporting the decision to increase the interim dividend to $0.0510 per share, up from $0.0475 in half 1 FY '25 and in the middle of our targeted range at 59% of underlying NPAT. Pulling all this together, the business has been able to deliver the acquisition of IPF for $357 million and still report a covenant bank leverage that is below the 1.2x targeted range. On Page 12, we have set out the individually significant items that were reported during the period as a result of the IPF acquisition that occurred on 30 September 2025. The total consideration for the fertilizer business was $433 million, which included a cash outlay of $357 million. This is $57 million higher than originally reported as we acquired higher working capital, mostly associated with the take-on balances associated with the Geelong SSP business, the higher inventory associated with the Geelong SSP business, which totaled roughly $30 million. The fair value of the assets acquired has been assessed at $489 million, which is primarily made up of $386 million of acquired working capital. Following the acquisition for less than net assets, the business has booked a provisional gain on bargain purchase of $56 million. The gain is provisional as further work will be required in half 2 to finalize the carrying values of land and buildings, long-term leases, and any future additional site rehabilitation costs. Partially offsetting the provisional gain was acquisition costs of $17.8 million, which related to stamp duty, legal, and advisory fees for the acquisition. And separately, the business has incurred $1.7 million of project office and IT integration costs. The business also incurred a cost of $5 million relating to the unwinding of the inventory step-up created as part of the provisional gain on bargain purchase. The unwind was required as the inventory has now been sold. The net effect on profit of this item during the period was nil. All of these items resulted in a net gain of $31.4 million. Before I hand back to Quinton, as he said, this will be my last official duty as CFO. And as such, I want to thank all of you that I have worked with over the journey. The 5 years have been a great ride. And as I look at these results for the half, they align with what we reported for the full year just over 5 years ago. The acquisition of IPF was a career highlight, and I genuinely believe represents a golden opportunity to transfer this company again. I wish Quinton and the team all the luck in this journey. And as a significant shareholder, I will be watching with interest from the golf course or racetrack. I will now hand back to Quinton, who will take you through the remaining slides. Quinton Hildebrand: Thanks, Richard. I'll just take you through the strategic progress on the year-to-date and starting Slide 14. I'm very pleased with the progress we're making with the transition and integration of Incitec Pivot Fertilisers. Having owned the business for 4 months, and being confident that our pre-acquisition thesis of a regional distribution model is correct. In the last few weeks, we flattened the structure and reduced the matrix model with the appointment of regional general managers in 5 regions. They'll each have responsibility for both the sales and the execution of those sales through the primary distribution centers, making us more responsive to the customer and driving accountability for cost control. This is the model that we applied in the Bulk Stockfeeds business back in 2019, and has seen us grow to the business that we are today. The outcome of this initial restructure is the removal of 45 roles, reducing costs by $8 million per annum from FY '27 with a one-off cost of around $3 million in FY '26. The migration from Dyno Nobel's SAP platform to Ridley's Microsoft Dynamics platform is expected to take place in calendar year '26 at an estimated cost of $30 million. And once complete, should release corporate synergies of $7 million per annum from calendar year '27. And lastly, just to keep you informed, the urea offtake agreement with Macquarie Commodities is on track to commence in FY '28 upon the commissioning of the Perdaman facility. And the decision on the future supply contract with Phosphate Hill is expected in this financial year as Dyno Nobel run a process to find a buyer for that business. Moving to Slide 14, the Bulk Stockfeeds strategic progress to date. Ridley's flywheel strategy continues to drive momentum in this period, and we've secured significant new layer and dairy business. On the back of additional demand and as we are already operating 7 days a week at the Lara feed mill, we have committed to a $5.7 million debottlenecking project to complete in calendar year '26. And in November, we completed a 1.6 million concentrates production line at the Gunbower feed mill, adding a new product to our offering. On Page 16, we outlined the investments we are making in the underlying assets within Packaged and Ingredients to improve our processing performance. The first 2, the commissioning at Timaru and the replacement of the billing dam at Maroota are to address the short-term impacts we have endured in recent months. And the third additional small pack line at the Narangba extrusion plant is to replace labor and meet new customer expectations. All these investments provide the runway to significantly improve the operating cost base and deliver incremental volumes. Turning to the outlook statement. Ridley's diversified businesses and market exposures provide the group opportunities and resilience in commodity and weather cycles. In FY '26, Ridley expects group earnings growth to be driven by 9 months contribution from the Fertilizer segment, including the second half seasonal peak demand, increased market share and volume-related operational efficiency in the Bulk Stockfeeds segment, processing improvements from capital investments in the Packaged Feeds and Ingredients segment and modest commodity price recovery in the second half. For the longer-term outlook, this will be presented in the form of the FY '26 to '28 growth plan at the Investor Strategy Day on the 10th and 11th of March 2026. On the next page, we've included the program for the Strategy Day and site visits, and we're excited to take you through the expanding opportunity in Australian agriculture and how we can position ourselves as #1 in each business sector to give ourselves a competitive advantage. We'll outline what we are doing to support our customers to become a critical player in their supply chains and how we look to unlock value from the fertilizers acquisition. Ultimately, we want to demonstrate to you the resilience and opportunity of our diversified portfolio and to give you some appreciation for the platform that we are establishing for future growth. That concludes the formal part of our presentation, and I'll now hand back to the moderator and ask to facilitate the questions. Operator: [Operator Instructions] Thank you. The first question is from the line of Apoorv Sehgal from Jarden. Apoorv Sehgal: First question, just on the core business EBITDA, excluding the fertilizer contribution. I think going back to the AGM, you were indicating modest growth for the core business for FY '26. I can't see your line in the presence for that today. But are you still expecting the core business EBITDA to grow modestly in FY '26? Or has the weakness in that Ingredients segment potentially changed that? Quinton Hildebrand: We are AP for the full year expecting modest growth. We expect there to be ongoing momentum in the Bulk Stockfeeds segment, and we expect a modest recovery in the Packaged and Ingredients segment in the second half. So the combination of those playing through to the statement. Apoorv Sehgal: Let's unpack the Ingredients segment a bit more then. So the Ingredients segment EBITDA was down $10 million year-on-year. Could you maybe allocate that across the different dot points you got there on Slide 4, I'm just sort of calling out 3 things. You've got the OMP issues with the slaughter rates and the Timaru delays. You've got the lower protein meal prices and then the capacity constraints at Maroota. Could you like just allocate that the $10 million headwind across those different buckets? Quinton Hildebrand: Well, I'll give you a high-level split on that. And as you can appreciate, there are some positives as well that are partly offset. So on Slide 4, we've got the volume increases in rendering and the packaged performance there. So I think the first impact, which is the reduction in land bones in Australia for supply to OMP would account for roughly half of what we're considering here. And then lower protein and meal prices would be about half of the balance quarter and the capacity constraints at both Maroota and Timaru accounting for the final quarter. Apoorv Sehgal: Then if we're then looking into the second half, how much of those headwinds do you think you can recover? So I guess looking at the commentary here, okay, you're expecting higher commodity prices in the second half. So there's a little tick up there. That's good. I would presume the Maroota and Timaru commissioning issues get fixed. But the slaughter rate issue, which is obviously the bulk of the earnings fall, I think slaughter rates are still pretty weak, aren't they looking at the MLA data over the last sort of 1 or 2 months. So just keen to explore into the second half, to what extent do those headwinds kind of recover? Quinton Hildebrand: So just starting with your last point first, which is the slaughter rates. Our supply of bones into OMP in Australia is back on track. And as I indicated just in the address, we have brought on some additional supply. So whilst slaughter rates across the sector are not back up substantially, we've sourced additional raw material. So in the second half, we are processing back at the level that we would expect. I just flagged that our main market is North America, and there's a lag in the supply chain. But for the majority of the second half, we will see that recovered position. Then in terms of the Maroota dam wall, subject to weather, that should be complete within a month, and that would return us to that position. As we progress the commissioning of the Timaru facility, we would expect incremental improvements during the second half. Apoorv Sehgal: And actually, the one headwind I missed, I'm not sure if it was discussed on the pro. remember the $3.5 million or $3 million to $4 million hit you had from the avian AI export restrictions back in the second half of '25. Did that impact from those restrictions remain all the way through the first half of '26 as you're working through the excess inventory? And if that's the case, are we now back to normal in the second half of '26? Like is that a headwind that now gets recovered? Quinton Hildebrand: So AP, the AI that led to the excess poultry meal in the marketplace, yes, that's there are still higher volumes in the market. And this is a combination of both that we started with high levels from avian influenza. But if you look at alternative protein sources, canola meal, soybean imports, those the protein complex was lower priced in this first half. And there is some improvement now, and that should also facilitate the movement of stocks. Apoorv Sehgal: Yes. Sorry, last final follow-up before I jump back. Overall then, just to round out the Ingredients business, should the Ingredients segment EBITDA grow for the full year of '26 versus full year '25? Or is that too optimistic? Quinton Hildebrand: That's too optimistic. I think where we see it, AP, is that we will see improvement in the second half over the first half. But as we reported at the AGM, that won't be caught up in terms of delivering a stronger result in terms of the PCP. Operator: We have the next question from the line of James Ferrier from Canaccord Genuity. James Ferrier: Richard, thanks very much for all of your efforts and support over the last few years and good luck with the next stage of your career. Can I ask, first of all, on the fertilizer business. So that from an EBITDA perspective, you talked about the growth on PCP being driven by cost control and margin management. Firstly, how did volumes compare to PCP just thinking about the sort of the tail end of winter cropping and whether or not you're seeing any early season pull forward sales volumes for the upcoming season into the quarter. So firstly, just how volumes were in that 3-month period? Quinton Hildebrand: So it is traditionally the lowest demand quarter. Volumes were slightly lower than the prior than PCP. But as we indicated, more than offset by margin and cost control. James Ferrier: So on that basis then, Quinton, if you think about that early run rate of cost control and margin management, which that's the sort of hitting zone for what Ridley is trying to achieve and focus area for improvement. When you look at that run rate and appreciate it's only 3 months and it's the smallest seasonal period, but how do you think that compares if you extrapolate it to the full business case earnings for the business and assuming all else equal, how do you think you're tracking relative to that business case earnings on an annualized basis? Quinton Hildebrand: I think Ridley's philosophy is starting to get early traction. within the business. And our recent restructure and focus will support that together with the savings in the underlying cost base. So yes, early signs, but we think there's more to come through engaging the teams, particularly in the regions to be able to embrace the new approach. And obviously, some of this will be shared with customers as we grow, but that will support our volume position, which is what we see as a critical advantage relative to competitors. James Ferrier: On the margin management side of things, a lot of what you've referenced today with organizational structures and the like is probably more OpEx centric. But within margin management, can you talk a bit about where gross margins are for the business at the moment and whether or not it's sort of BAU there or perhaps there's some management-led improvement coming through there as well? Quinton Hildebrand: Yes. We're being very cautious in that area. We need to make sure that as we take on the business, we manage those risks effectively. And so we're engaging directly with the expertise and the team that we've inherited, where we have some significant strengths. Then Chris Opperman joining and bringing his previous experience to this part of the business is also all part of the key process for us transitioning the business into Ridley. So we're taking a conservative approach in how we manage the supply chain in that regard, although we do think as a business, we should be able to bring our general commodity risk management philosophy over time and make sure that we act decisively in the process. James Ferrier: The second topic is on the Bulk Stockfeeds segment. AP covered a lot of the content in the packaging ingredients. But on bulk, I mean, that was a super impressive result. And we could see the volume growth accelerated from what was achieved in FY '25 across both Ruminant and monogastric. And you've referenced there some of the mix of the volumes with supplier margin subs volumes coming through. So I get that. But I'm just interested in your views on where the bulk business sits today from an operating leverage perspective and asset utilization perspective. On the assumption that volumes keep growing in this business, are you still in a sweet spot in terms of incremental volumes and the operating leverage you get from that? Or are you starting to bump up against capacity limits. And so maybe in the period ahead, you don't quite get as much operating leverage before your debottlenecking efforts kick on again? Quinton Hildebrand: Yes. So in the South, so Victoria, Tasmania, we have got high utilization rates. And it's for that reason, expanding Lara gives us further runway. And as you can appreciate, we do operate as a network. So you do a relatively significant expansion at Lara, and it gives you all your monogastric feed mills some capacity. So in the South, where we are highly utilized and we're continuing our debottlenecking journey. In the North, so the 2 mills in New South Wales and the 2 mills in Queensland, at those facilities, we're underutilized still as in we were using only 1 or 2 shifts a day over a 5-day operation. So we have got growth capacity. They have been running at high utilization within those shifts, which is very positive. But we've got further capacity should dry conditions support increased demand. James Ferrier: And last one for me, and maybe you could try this one to your colleagues, given you've been carrying all the load there, Quinton. Working capital expectations going into the second half, noting where you were at the December balance date for the existing business and for fertilizer? Richard Betts: Yes. I mean, look, James, as we've always said, this business tracks against the seasonal sales cycles. So we will head into a period of significantly higher working capital within the fertilizer business. And in fact, we'll probably peak somewhere in the area of around $200 million higher than where we are at December. That is fully funded within the facilities and was always assumed in our thesis. So June will obviously be a little bit dependent upon which side of -- because obviously, June is right smack in the middle of the peak season. So there will be a little bit of where are we against that. But certainly, by the time we get to June, we will see a significantly higher utilization of the new working capital facility to allow us to adequately fund all the working capital requirements to take full advantage of that peak season. James Ferrier: Yes. And any callouts on the business expert? Richard Betts: Business expert? James Ferrier: From a working capital perspective. Chris Opperman: You're spot on. You are going into the highest point of the season, especially in February, you get the ultimate high February and March and your stock holding and you start to sell that down. And your June, July is really your 2 months that could swing around your working capital. But your general swing is about that 200 up, could be less depending on how good we go with sales in June, and that's all pharma demand. Operator: [Operator Instructions] We have the next question from the line of Richard Barwick from CLSA. Richard Barwick: I just wanted to do a more general discussion given the rainfall outlook looks pretty ordinary, at least on a 3-month view. So for starters, just from a Bulk perspective, I'd imagine that presents quite an attractive backdrop. And so just interested to hear your comments just then about the Queensland facilities being underutilized. How quickly can they be ramped up? And then if you got capacity in the North, but you're constrained in the South, you did mention that you operate as a network, but that network effect, does that work across the full geography? I'm just wondering if we do have a dry period, how can the Bulks actually respond? Quinton Hildebrand: Yes. So in Bulk, the network is more regional, so state-based. So transporting finished feed from Victoria to New South Wales happens only at the margin. And what we have done in the past is set up temporary depots in the dry areas in New South Wales, and we've shipped full loads of feed direct into those regions. So we can at the margin. How quickly can we ramp up? In Queensland and New South Wales, it requires additional shifts. So it just takes training. You're looking at a 3-month period to get to full capacity as we stretch. And in the past, we have said that in an extended period of dryness, so with buildup, there's a circa $5 million EBITDA potential upside per annum in the Bulk Stockfeeds from supplementary feeding in a drought. Richard Barwick: And that comment would relate to a widespread drought as opposed to something that we've seen more recently is very centered in the South. Quinton Hildebrand: Yes. Yes. For the full benefit, so to speak, for the Bulk Stockfeeds business, that would have to be across the network. Richard Barwick: And then from a ferts perspective, you talked about the other situation. So if we are running into a dry period, I know obviously, you haven't owned the business very long, but I don't know to the extent that you can see the historical data, how much of a swing factor which might we expect in the ferts business from the same conditions. So extended dry across the eastern growing regions and how negative might that be for the fertilizer business? Quinton Hildebrand: If we look back over the history, the range in volumes is about 1.8 million tonnes a year up to 2.2 million tonnes a year. So that would demonstrate the extremities of the fertilizer volume exposure. As you can appreciate, we're geographically well spread from the North Cairns all the way through to Tasmania, South Australia Port area. So if you look at across that, you normally have a fair bit of diversification. But nevertheless, your point is absolutely right. And I think I would expect the diversified portfolio of Ridley, the fertilizer impact in a drought circumstance would be greater than the benefit to the Bulk Stockfeeds. And hard to know and all depends on what region, what timing. But if Bulk Stockfeeds is $5 million EBITDA you might find that fertilizer could be double that to the negative. So that's sort of how we're interpreting it at this point. Chris, anything to add to that? Chris Opperman: Yes, Quinton, I think you're right, especially the width of the swing isn't that much because the 1.8 billion you were talking about, that's really extreme dry weather conditions. We're not seeing that at the moment. And then just for in year, more specifically, the business do write contracts throughout the season going into the high season. So as we stand today, we've already got a fairly large position written, which you can basically lock in. Quinton Hildebrand: So I hope that answers your questions, Richard? Richard Barwick: Yes, it does. And just the last one on the first. Just looking at the map in a very simplistic view. I look at some of the placement of the blue dots and the red or pink dots, some of them sit pretty close together. So in the fullness of time, do you see opportunities here for potentially some consolidation in the number of sites? Quinton Hildebrand: So yes is the answer. We bought the distribution-only part of the business and Incitec Pivot used to be a manufacturing and distribution business. So the footprint can be enhanced as we go forward over time, and that is part of our planning. So if you're able to attend the Strategy Day on the 10th and 11th of March, we'll give a bit more color to that. Operator: There are no further phone questions at this time. I'll now hand the conference back to Mr. Hildebrand for closing remarks. Quinton Hildebrand: Great. Thank you, Myron. And thank you, everyone, for your attendance today and appreciate the questions. I just want to take the opportunity to publicly thank Richard for his contribution to Ridley over the last 5 years. And during that time, we have substantially driven the earnings of the business, and he has played a significant role in that. Then culminating in the acquisition of IPF last year and the mountain of work that he did in concluding that transaction. So I'd just like to thank Richard and appreciate the conscientious handover that he's done with Chris. We look forward to working for him as a critical shareholder on the other side. So thank you, everybody, for your attendance today, and thank you to Richard. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
David de la Roz: Good afternoon, everyone, and thank you all for joining us today for the Q3 fiscal year 2026 results presentation for the 9 months ending 31st of December 2025. I'm David de Roz, the Director of Investor Relations at eDreams ODIGEO. As always, you can find the results materials, including the presentation and our results report in the Investor Relations section of our website. I will now pass you over to Dana Dunne, our CEO, who will take you through the first part of the presentation. Dana Dunne: Thank you, David, and good afternoon, everyone. Thank you for joining us today. We're going to discuss 3 things. The first is I'll do a brief update of our first 9 months' results of FY '26 and the outlook, which we are on track. Second, David Elizaga, our CFO, will take you through the Prime model and how it continues to drive very strong growth. Third, I will then share some closing remarks on why we think we are significantly undervalued. Please turn to Slide 4, which is a summary of our performance for the first 9 months of fiscal year 2026. We're firmly on track to deliver on our new guidance. In the first 9 months, adjusted EBITDA increased 74% year-on-year to EUR 138.4 million. Adjusted EBITDA isolates operational performance from cash timing effects of the move from annual subscription to annual subscription with monthly installments. So this 74% increase of adjusted EBITDA shows the strength of the underlying business absent the cash timing effects. Prime membership. We reached 7.7 million members, up 13% year-on-year. As of January, we hit 7.8 million subscribers and reaffirm our FY '26 target of 7.9 million. Cash EBITDA improved by 2% to EUR 126.7 million compared to the 9 months of FY '25, which was partially impacted by the investments we are making in the new businesses, the temporary instability in our Ryanair content, and the timing impact of the move from annual subscription to annual subscription with monthly installments. Despite this, growth resulted in a substantial expansion of our profit margins and is also on track to meet our FY '26 target of EUR 155 million cash EBITDA. In terms of revenue mix, Prime-related revenue now accounts for 75% of cash revenue margin and grew 7% year-on-year. I will cover this in my closing remarks, but it's important to briefly highlight that our strategy review update back in November 2026 was done from a position of strength and is a high conviction move based on solid data from extensive live operations. All in all, we will deliver a much better business, faster growing, more profitable, and more diversified, and we are significantly undervalued. Moreover, we are committed to shareholders' returns, and a proof of this is that we've repurchased 23 million in shares this quarter, with EUR 100 million committed through September 2027. We have already amortized 12 million shares, which is 9.4% of the share capital. And at today's prices, 24% share of eDO's market capitalization is pending to be repurchased between January 2026 and September 2027. And this represents a yield to our shareholders of around 33%, and very few companies out there are doing the same. Now I'll pass this over to David, who will take you through our Prime model strong growth. David Corrales: Thank you, Dana. If you could all please turn to Slide 6 of the presentation, I will take you through the Prime model. In the last 12 months, Prime cash revenue margin grew 7%, with Prime now representing 75% of the total. Even more impressive is the Prime cash marginal profit, which grew 18%, with Prime contributing a dominant 89% of our total cash marginal profit. This reiterates the fact that IDO is a subscription business focused on travel and that the strong growth of Prime more than offsets the anticipated decline in the non-Prime side of the business. If you could all please turn to Slide 7 of the presentation, I will take you through the key highlights of our Prime P&L. Looking at the 9-month P&L, our cash EBITDA reached EUR 126.7 million, that's a 2% increase. This was achieved despite headwinds, including investments in new products, temporary instability in Ryanair content, and the timing impact of moving to annual subscription with monthly installs. Notably, our cash marginal profit margin expanded by 5 percentage points to 42%. Looking at Prime's impact on profitability and the drivers behind that growth. Our cash marginal profit, a key measure of profitability, grew by 3%, reaching EUR 207.8 million. This shows that our business is not just growing, but each transaction is becoming more profitable. This improvement is due to the maturity of our Prime member base. As members stay with us longer, their profitability grows, which is evident in the 7% increase in cash marginal profit for Prime and its margin increasing by 4 percentage points over the past year. This is having a positive ripple effect on our entire business as our overall cash EBITDA margin improved by 3 percentage points from 23% in the 9 months of fiscal '25 to 26% in the 9 months of fiscal '26. Cash EBITDA for the 9 months reached EUR 126.7 million, marking a 2% year-on-year increase. Adjusted EBITDA, which isolates operational performance from cash timing effects of the move from annual subscription to annual with monthly installments, increased 74% to EUR 138.4 million. Looking at revenue performance. In the 9 months of fiscal '26, we have observed a few key changes in our revenue margin. Cash revenue margin for Prime decreased by 1% versus the 9 months of fiscal '25. While member growth was a positive factor, it was offset by an enlarged test in the first quarter of fiscal '26 and the move from the second quarter of fiscal '26 to the annual with monthly installment subscription fees and the progressive implementation of this option in the current quarter. Please turn to Slide 8 of the presentation. Revenue margin, excluding the adjusted revenue items, increased by 3% versus the 9 months of fiscal '25 to EUR 502.8 million. This improvement was driven by a substantial 16% increase in revenue margin for Prime, resulting from expansion of our Prime member base. The growth in revenue margin for Prime, as anticipated, was partly offset by the revenue margin for non-Prime, which decreased 24% versus the 9 months of fiscal '25, due to the switch of our customers from non-prime to prime and more generally to the focus on the prime side of the business. Variable costs decreased by 15% despite revenue margin is 3% above the 9 months of fiscal '25, as the increase in maturity of the Prime members reduces acquisition costs. Fixed costs increased by EUR 3.3 million, driven primarily by an increase in provisions and higher external fees costs. As a result, adjusted EBITDA, which isolates the operational performance from the cash timing effects of the move from annual subscription to annual with monthly installments, increased 74% to EUR 138.4 million from EUR 79.7 million in the 9 months of fiscal '25. Adjusted net income stood at EUR 63.8 million in the 9 months of fiscal '26. Turning now to Slide 9. I will take you through the cash flow statement. Our cash generation remains robust despite the transition to the annual with monthly installment subscription program. In terms of the operations, the cash flow from operating activities rose by EUR 31.1 million to EUR 79.1 million. In the working capital, we saw an outflow of EUR 42.9 million compared to an outflow of EUR 27.3 million in the 9 months of fiscal '25, primarily driven by a decrease of EUR 55 million in the variations of the prime deferred revenue. This variance is largely attributable to the timing impact of transitioning the subscription model from upfront annual payments to an annual subscription with monthly installments. This impact was partially offset by an improved working capital performance, notably driven by the hotel segment. In financing, we used EUR 96.3 million in financing activities, which includes significant acquisition of treasury shares as part of our buyback of EUR 55.9 million for the 9-month period. I will now turn the presentation back to Dana to do some closing remarks. Dana Dunne: Thank you, David. Please turn to Slide 11 of the presentation. I'll take you through some of our closing remarks. Let me start by reiterating that our strategic review update back in November 2025 was done from a position of strength, and it is a high conviction move based upon solid data from having done this for over 1 to 2 years, and in fact, having run Prime now for well over 8 years. First, we are accelerating the growth and the profile of the business. We expect record net adds of 1.5 million to 2 million per year between FY '28 and FY '30. These are growth rates of 15% to 20% per annum, which is much higher growth profile than the trajectory that we were on. Second, we have derisked the business model. The new guidance is built on conservative high certainty foundations. We have built our new guidance on conservative foundations by lowering expectations for Ryanair content and pivoting to annual commitment with monthly installment subscription fees. And third, this is a team that delivers. It is not just the first time we have announced a long-term plan. And in fact, each time we have announced one, we have met our 3-year guidance. We did this in 2017 to 2019. We did this in 2021 to 2025. All in all, while we face a temporary timing impact on cash metrics as we move to an annual subscription with monthly installments, this shift allows us to capture a much larger market share and higher-quality and more diversified revenue streams. And we are still guaranteed to get this money from customers. It is merely a timing difference in recognition of the money. If you could please move to Slide 12. We are positioning for accelerated growth with a team that delivers. We are setting targets that are very clear, 13 million Prime members and EUR 270 million in cash EBITDA by FY '30. Our growth trajectory will deliver record net adds of 1.5 million to 2 million per year between FY '28 and FY '30. Cash EBITDA margins will dip to roughly 15% in FY '27 during the peak investment phase and will return to 23% by FY '30 as these new members mature. And to be very clear, the anticipated decline in EBITDA margin over the next few years is solely due to expansion into new products and geographies as a result of the initial investment to support the company's future growth. You saw exactly this in FY '22 to FY '25, and you'll see this again in the coming years. Please turn now to Slide 13. We've done this before. eDO is a team that delivers. It's not the first time we've announced a long-term plan, and each time we have met our 3-year guidance. We have clearly demonstrated our ability to deliver on our long-term plan, such as the very aggressive targets we put in November 2021 or March 2025. That strategic shift involves significantly more risk than this latest one, and yet we still delivered on the previous one despite headwinds like Omicron, Ukraine, Middle East wars, double-digit inflation, and consumer confidence below pre-pandemic levels. So the market should have no doubt that we will again meet or exceed all of our long-term plan targets. Furthermore, the current strategy is more conservative and designed to ensure future growth, building upon the existing solid foundation. If you could please move to Slide 14. We believe there is a significant disconnect between our performance and our valuation. In terms of the implied multiples at current prices, we are trading at 4.4 and 4 FY '26 cash EBITDA and adjusted EBITDA. The opportunity, if we apply the average multiples of other OTAs or B2C subscription companies, they trade at roughly 8.3 and 11, respectively. So there's a massive upside potential as we hit the lowest point of our investment plan in FY '27 and accelerate thereafter. Please turn to Slide 15. We think it's important to highlight that we are not alone. Other successful subscription companies like Netflix broadened their business, but yet it caused a share price decline, and then the share price rerated as the company executed on their plan. Again, we have a track record in 8 years' history of doing this. If you could please turn to Slide 16. In sum, we are delivering a much better business, and we believe we are significantly undervalued. We are achieving higher growth with a 15% to 20% Prime member CAGR between FY '27 and FY '30. We are seeing higher customer lifetime value and stronger loyalty with a 10%-plus increase in NPS. By FY '30, 66% of our volume will be diversified away from the core European flight market. So we're inviting you to join us as we believe the current share price is significantly undervalued as we execute this final stage of becoming the world's preeminent travel subscription platform. The market is currently using conservative assumptions and high discount rates, valuing us at an implied 6.4x EV to cash EBITDA for FY '26, well below the 8.3 and 11x average for global OTAs and B2C subscription businesses. The onetime cash unwind is planned, but we are still guaranteed to get the cash. Growth will accelerate, and the valuation gap represents a massive upside for investors who recognize the strength of the world's leading travel subscription platform. I will reiterate once again, this is a high conviction move based upon solid data from extensive time of running this business and not a defensive move. It was a change to a higher growth strategy done from a position of strength and confidence. And I will conclude by saying that we will continue the share buyback as we are committed to shareholders' returns. If you could please turn to Slide 17. A proof of it is that we repurchased $23 million in shares this quarter, with $100 million committed from October 2025 through September 2027. We have already amortized 12 million shares. That's 9.4% of the share capital. And at today's share price, 24% share of eDO's market capitalization is pending to be repurchased between January 2026 and September 2027. This represents a yield to our shareholders of around 33%. There are very few companies out there doing the same. This concludes my closing remarks, and I will now pass it back to David. David Corrales: Thank you, Dana. With that, we will now take your questions. David Corrales: [Operator Instructions] Should we not have time to respond to questions from the webcast, the Investor Relations team will make sure those are answered afterwards. Now I'm going to start reading the questions. The first set of questions comes from Carlos Crevigno of Banco Santander. The first one says, how has your access to Ryanair's content evolved over the last 3 months? I'll take it. Dana Dunne: [indiscernible] Ryanair, this situation is similar to the one that we announced back in November 2025, the last time we spoke. We still do have access to Ryanair, albeit at significantly lower levels than what we've had historically. I want to really point out this does not affect our new strategy plan, as we have derisked this plan as we explained in November '25 and use much lower assumptions. We are absolutely 100% focusing on our growth plan and really making this fundamental transformation switch from annual to annual commitment with monthly, quarterly, and growing in all of the new markets and the new product categories, which in turn has real upside for shareholders. David Corrales: The second question from Carlos today is, could you comment on initial progress of Prime introduction in your new markets? I think this one is as well for you, Dana. Dana Dunne: Sure. Let's see. Let me take us back to what we said in November 2025, is that we've been in these markets now for 12 to 18 months. And we know absolutely what the results are. And this is no different than having run Prime for actually over 80 in so many other markets. Now in these specific markets, the test -- sorry, the results are positive. We've concentrated on 5 key countries. And all of them today continue to perform extremely well as planned and as announced back in November as well, but even what we've seen over the past kind of 1 to almost 2 years now. We see very significant growth. We see very good attachment. We see very good NPS. We see very good LTV to CAC. All of our key metrics are absolutely on track. David Corrales: The next question comes from Luis Padrón de la Cruz of GVC Gaesco, and it says, when you use OTAs ratios to your own valuation, you assume that OTAs are well valued, undervalued, or overvalued at current market prices. I'll take that one. We actually made no judgment in that assessment as to if either the OTAs or the B2C subscription companies are undervalued or overvalued. We're just taking a view of what we think should be at the very least a floor valuation to ourselves, to eDreams. And if you notice, we take the lowest point in our projections to act as the driver of the valuation. We're taking the fiscal year '27. So the worst possible year that we could choose, and we're taking the 2 sets of comparables that we have. Even if you take the lowest point, the current valuation of the share doesn't make any sense. If I had done that same graph, I don't know, 1 month ago, the multiples would have been higher. That's to say independent from this. And maybe those multiples increase in the future. That's also independent of this. Even with our lowest point of financial projections, and you apply a multiple to it, the current share price doesn't make any sense. That's the point that we're making in that slide. We now have a set of questions from Nizla Naizer from Deutsche Bank. The first one says, can you share some thoughts on how you view the threat from agentic AI agents that search, book, and pay for travel on behalf of individuals. Would you consider also launching an app within ChatGPT? Dana Dunne: Absolutely. So let me take it. Overall, we believe that we're well-positioned for this, and I'll explain why. But I can understand that from a broader context, even though Nisla didn't actually use this, there's other questions as well from investors that say, are you concerned about LLMs, disintermediating, et cetera. And so let me kind of cover Nizla's and the broader question here. And in fact, I'm also going to weave into my answer how we even see opportunities within this for us. So let me cover 3 things or 3 parts to this. The first part would be around complexity. It's really critical to understand how complex the business actually is. There are huge amount of technicalities like different IATA licensing, financial agreements -- sorry, financial guarantees, complexities and servicing, including delays, cancellation, amendments, refunds, different payments, et cetera. Remember also, there's post bookings, prebooking, people can be in airports, et cetera. There's huge amounts of complexities within there. And it's really important to focus on the key buying criteria of a customer so that they feel delighted on that. And there's a lot of price and non-price things within that in there. Now that complexity is extremely difficult to get right even from a price point of view, for an LLM. And that is where it really plays to, in essence, our advantage, but on all the non-price, all the technicalities, complexities, it really does play to us. Let me just give you some simple examples on this. So you see lots of airlines are not even set up to offer advanced booking and post-booking capabilities. And even the large, let's say, call them legacy carriers also struggle to offer a seamless online booking flow. And we have built a business by offering a better user experience. When you look at the NPS of us versus anybody else, we have the best in the industry, and there's a big delta between us and everybody else. And we're years ahead. And we do that already, already today by using AI and agentic AI. Many of you that have known us for a while know that we were one of the first companies over 10 years ago investing in AI, and we leverage it. Let me just also make the statement that, look, we've heard this hype about blockchains are really going to disintermediate us. Voice assistants are going to disintermediate us. Google, in general, is going to disintermediate us and not only travel, but in all other industries. And it's simply not true because people don't appreciate the amount of complexity and making certain that you meet the consumers' key buying criteria for it and do it in a better way than anybody else. The second part to this equation is around distribution and how an LLM and the business is monetized, which again relates to the concept of lifetime value of a customer. Now the LLMs need to make money. Many of them actually don't today. And the proven monetization model is one that Google has used for search. And most of them have said that they will pursue a similar type of model as well. And so that means that they'll pass on the transaction to a merchant like an OTA, for example. And so in this, let's say, emerging environment where the LLM passes on the transaction, a new option will be set up. Now we have subscription, and we have a better consumer proposition and higher monetization per customer. And so that means that we're able to outcompete most players in this distribution race. We see this, in fact, as playing more to our strengths for it. Lastly, consumer. We have a cutting-edge platform, and we have the high levels of customer NPS, I mentioned. So what that has also translated into when we focus on the key buying criteria of customers, we have created new and unique products and offerings that either very few or in many cases, no one else in the industry does and create. And so that takes it one step further to even delight and provide even more value to customers. I would say just lastly is that our platform, because it is one of the leading-edge AI platforms, we are well prepared. We already get traffic from some of the LLMs, and we're absolutely set up to distribute our content through emerging agentic channels, regardless of what those would absolutely be, be it on an app, et cetera. Let me stop there. David Corrales: The next question from Nizla Naizer is, can you give us an update on the rail product offered within Prime? Has this helped drive engagement and customer acquisitions already? Dana Dunne: So let me take that, David. I think rail is absolutely performing very well for us. It's fully rolled out in Spain. There's also on our plan to do even more feature functionality changes because we think that we can actually create even more competitive advantage, even more barriers to entry, so to speak, even more stickiness and unique differentiation with our rail product in Spain and other countries. But already today it is highly competitive. I shared with you in November about how we're doing from a distribution and capturing customers. We're doing very well. I shared with you, I believe, on the NPS, and the NPS is extremely good for it. So overall, it is absolutely doing well. David Corrales: And the last question from Nizla says, the Prime net adds in January of about 70,000 appear to be quite strong. Was there anything incremental driving this performance? Are you expecting this momentum to continue for the rest of the quarter? So yes, yes, the performance has been good on the first month of, say, the quarter from January to March, but that was as expected. The seasonality of our business is one in which the quarter from October to December is overall a low seasonality quarter, whereas the quarter from January to March is a high seasonality quarter. So yes, the performance has been very good, but we continue to stick by our numbers of reaching 7.9 million card members by the end of March, which is 600,000 net adds. The next set of questions come from [indiscernible] of Al Maria Funds. The first question says, looking at your strategic growth plans through fiscal '30, the cash EBITDA margins imply that you're still investing for Apple growth in fiscal '30 without providing official fiscal '31 numbers, and you talk at a high level for post fiscal '30 growth. How does a new plan with expanded markets and services compare to the previous post-fiscal '30 plan? So let me remind first that what we have said. And what we have said is that from fiscal '28 to fiscal '30, we will grow the Prime member base by between 15% and 20% per annum. That is between 1.5 million and 2 million net adds per annum. and that we will grow the cash EBITDA by 33% per annum over that period. So as you can see, the cash EBITDA is going to grow more than the Prime member base. The reason for that is that as we incorporate a lot of new year 1 members in all of the areas of expansion that we're going into the new geographies, the new products like train, those in the first year have relatively low margins. And then when they go into the second and the third year, they come to much higher margins. So the same way that it happened in the cycle from 2021 to 2025, in which you saw top-line volume growth and you saw a much higher increase in the margins that compounded and get you much higher absolute EBITDA growth, you're going to see that as well in the cycle from fiscal '27 to fiscal '30. Now you're asking about fiscal '31, now I get into the heart of your question. You're going to have in fiscal '31, still high top-line growth. I'm not going to venture a number, but you will still be in the double digits for sure. And you will have, at the same time, a continued expansion in the margins. We have said that the margins will go from a 15% cash EBITDA margin in fiscal '27 to about 23% cash EBITDA margin in fiscal '30. For fiscal '31, you should continue to expect an expansion of the margins. So you're going to have, again, a growth in EBITDA in '31, which will be higher than the top line growth with an expansion of the margin. The second question has already been answered. It was about AI. The third question says, eDreams headcount is up 5% year-over-year. This is obviously to support future growth. There is a narrative that people in technology positions can be replaced. Can you talk about your experiences with this and thoughts on continued headcount growth to support the growth of eDreams? I'll take that. I think if you look again, there's a very useful parallel in the cycle from '21 to '25 and how we executed that and the way we're going about the execution of this upcoming cycle. In the process going from '21 to '25, we went from 2 million members to 7.25 million members. And in order to achieve that growth and go to all of the markets in which we expanded Prime, we increased the headcount from roughly 1,000 employees to about 1,800 employees. So that's an 80% increase in the headcount. We're now going into a cycle in which we're going to go from 7.5 million, 7.6 million, like we were a quarter ago to more than 13 million members. That's actually in absolute and in percentage higher than the growth from 2 to 7. And we're going to do it by increasing the headcount, like you're saying, only by single digits. That tells you that the leverage that we're getting from the new AI technologies that facilitate the coding make our software development workforce much more productive than what it was before. So absent that improvements in productivity, we would have had all other things being equal, to increase the headcount a lot more. So you already probably saw a press release that we did, I think, a few weeks ago, in which we let the market know that already, as of today, 30% of the software code that we put into production has been written by AI, supervised by a human, but it has been written by AI. The fourth question says, in December, the Italian Competition Authority fined Ryanair EUR 0.25 billion for withholding content from OTAs and degrading the OTAs, including eDreams. Where are you at with Ryanair content? Does this ruling help speed up getting full access to the content? And lastly, the Italian authority unearthed evidence that the Ryanair CEO, in communications to the Board and shareholders, blamed their sales declines associated with blocking OTAs on a boycott from the OTAs and not an action taken by management. Do you think there will be any ramifications for Ryanair given this evidence unearthed by the Italian Competition Authority? Dana Dunne: So let me take that. So I think I mentioned in terms of the access for Ryanair continues to be volatile. But I also want to just highlight to everybody, again, our results no longer depend upon Ryanair's meaning hitting our guidance, as we've derisked that in our projections. Now in terms of the question, the AGM ruling, yes, does confirm that Ryanair used massive disparaging campaigns to coerce OTAs into restrictive agreements. It's important to note that eDreams maintains its legal right to distribute flights without such agreements, and this has been confirmed by European high courts. In terms of the denigration, as you may know, we have secured a significant legal win with an unfair competition condemnation against Ryanair in Spain, and we will continue to defend our business and seek enforcement of the ruling. At the heart of our business, though, is we have access to Ryanair on a volatile basis. We are absolutely on plan and derisk our plan. And we have a consumer-led business, which we've demonstrated again and again that consumers hold us in really high NPS and our existing base of customers, we have demonstrated and shared data repeatedly with investors and analysts that Ryanair-like customers stay with us irregardless of whether we have full access or not of Ryanair and that they have extremely strong retention rates, renewal rates and satisfaction Prime. Now obviously, in terms of the ramifications of the evidence that you talked about, we've commented on those when the ruling came out, and we'll continue to monitor closely the situation to see if other authorities or anybody else takes actions on them. David Corrales: The next set of questions come from Guilherme Sampaio of CaixaBank. The first one says, do you still see no changes in churn or bad debt in the movement to a more phased payment scheme? I'd say that what we have seen in the 3 months since November is perfectly in line with the results of the test that we conducted for a period of 2 years. So no news. The second question from the same analyst is there are EUR 4 million nonrecurring items booked in the Q3 on those attached to LTIP. Could you provide more detail of the nature of this? And what is the level of nonrecurring costs that we should expect for fiscal '26? This EUR 4 million are tied to legal proceedings in Germany. There's a note that describes them. It's note 22.14 in the financial statements. So for full details, you can go in there. These are nonrecurring in nature, and you should expect that the level of nonrecurring items in the Q4 would be in line with other quarters, Q1, Q2, et cetera. Let me go now to the next investor. The next investor is [indiscernible] from Barclays. Could you touch on average order basket trends in the quarter? And any color on current Prime booking volumes, it would be helpful. Look, I would separate the 2 things. On the one hand is the booking volumes of the Prime members, and those continue to evolve according to the historical track record and in line with the increases in the Prime members. A different aspect is what we call the average basket size. And what we see in the comparison versus the past for this quarter is that we see a continued decrease in the average basket size. There are a couple of elements in the in which we are noticing changes in behavior from the customer. There is less percentage of the bookings on intercontinental routes, which are migrating to continental routes. So those are, if you want to simplify, Europeans preferring to go to European destinations as opposed to cross the ocean or going to Asia, let's say. And then on the other hand, what we see as well is more occasions in which people break down the return flight from the original flights, and they book, let's say, 2 one ways instead of aggregate, and they disperse those in time, and that also affects the average basket value of each one of the individual bookings. The next set of questions, although one is already answered. So the next 2 questions come from [indiscernible]. The first one says, can you provide more color on churn for Prime members and give us an idea on the split of monthly versus annual members, new versus existing Prime members, and number of products used by members? Well, that's a rather long question. Let me try to take it in a fashion. The churn we don't disclose, but there's nothing new about the churn of the Prime members. In terms of new versus existing Prime members, of course, in a period in which we show less increase in the net adds, like this year, which we're going to have 600,000 net adds versus the previous year at 1 million net adds, you have more existing. And you can see that in the progression of the margins, right? The progression of the margins is because you have more members in the year 2, 3, 4, 5, which would have higher margins than the members in the first year. In terms of the products used by members, let's say, there's no change there in terms of the frequency of the bookings that we see. T he second question says what metric or trigger would result in the business stopping share buybacks during the expansion phase. I'd say that as long as we continue to see performance in line with our expectations of the plan, so if we deliver the cash EBITDA that we have forecasted, and therefore, the cash flows that follow, there is going to be no change in the share buyback. So share buybacks are financed by the cash flows produced by the business. So as long as the business produces the same level of cash flows, we are going to have the same plan of repurchases. What we are not going to do, I mean, just be triple clear, is to incur additional debt in order to fund purchases of shares. The purchase of shares are funded with the cash flows produced by the business. Next question from Lazar is actually repeated from the previous one. The next question from Martinez [indiscernible] Capital is what is driving the ARPU decline? Okay. Let's remember what the ARPU -- how the ARPU is calculated. The ARPU is the cash revenue margin over the last 12 months divided by the average number of Prime members over that same period of time. So therefore, it is a cash metric. So one of the consequences of starting to incorporate into our member base, those that get into an annual subscription, but with monthly payments is that for people that joined, let's say, 6 months ago, we have received 6 monthly payments but not 12 monthly payments, whereas when you had the whole member base being on annual upfront payment, even if they join on day 365 of the period, they still pay you the full subscription fee. So you're going to see a natural softness in the ARPU going until the end of fiscal '27 derived precisely for this. And this is already a guidance that we gave to the market, and we said that the ARPU was going to go to a range between 60 and 65, and then after that would start to increase in fiscal '28 and beyond. There's another question that says from Cos of Swiss Life. Don't you think that it makes more sense from a stakeholder perspective to buy back your bonds roughly 50 points below par at 8% plus yield level versus continuing share buybacks? Well, I disagree, and the math is not very complicated to do. You point to an 8% plus yield level. I'd say the free cash flow yield from our projections is well in excess of that 8% plus. And therefore, it is a better financial investment to repurchase shares than to repurchase bonds. The next question comes from Linda from [ Arc ]. It says in terms of maintaining and defending your credit rating, which actions are currently on the table? Among others, would you consider the suspension of share buybacks? I'd say that the rating agencies have just refreshed their assessment on us based on the strategy that we communicated in November. And that strategy included inside the plan to repurchase 100 million of shares over a period of 24 months. So that's already factored in. It doesn't -- therefore, to defend the current rating, we don't need to change the action plan for that. The next question comes from [ Alice Stack ] of DB. You report 11,000 net adds in the Q3 compared to around 70,000 net adds in January alone from the fourth quarter so far. What reason would you attribute to this inflection in membership growth? Sorry, this is a repeated question. We already responded this question in the set of question from [indiscernible]. The next question from BNP Paribas is also answered. The next question has also been answered. It's a question from Giacomo Fumagamani of Arm. And it says, when you say that hotel performance was weak, what specifically do you mean? Less hotel supply, users changing habits, et cetera? I'm very confused about the question because we have never said that the hotel performance is weak. Actually, we're very satisfied with the performance of our hotel segment. And it continues to make very good progress. The penetration of how many hotels do we sell for every flight that we sell continues to increase. The amount of customer satisfaction of the members that use the hotel product is superior to the customer satisfaction of those that only use the flight product. So I actually don't know what this investor is referring to. The next question says, what has been the trend -- is from the same investor, what has been the trend in user base for Prime users in terms of age and user type? Dana Dunne: I'll do that. Yes. So first of all, overall Prime pretty much represents the market. So when you try to segment the market and look at, let's say, age distribution or socioeconomics, or you can think about even long-haul, short-haul, et cetera, many different types of things. We pretty much represent the online market with the following exception, we skew positively in a couple of segments and quite strongly in 1 of the 2 in particular. And that's obviously Gen Z. We over skew versus the market and also in millennials as well. David Corrales: Yes. I'm going to jump over several questions, which are repeated with the ones that have already come up. I'm going over to -- this one is new to Bharath Nagaraj from Cantor Fitzgerald. It says, how is the health of the consumer currently and travel still high on priorities for consumers despite worries about job losses, fears from AI generating job losses, et cetera. I'd say it's very consistent with the trends that we have seen in the previous quarters. If you look at public data out there that anyone can look at, you see, for instance, the data that IATA publishes on a monthly basis about the number of flights which are booked by people, or you look at another source is Eurocontrol that reports about the number of planes that actually fly in discount. It's another angle of the same thing. You can see that there are increases in volumes of about mid-single digit year-on-year, and that has been consistent over the last 2, 3 quarters. So in terms of leisure travel, I'd say that nothing has really changed upwards or downwards. It is a very resilient category in which people prefer to give up other discretionary expenses before they give up travel, and we continue to see that with the behavior of the consumers. And the next question is from Serena Mont of Santander. It says the recent legal requirement in Spain for subscription services to inform a customer whether he or she wants to renew or not. Could this have an impact in churn rate in your opinion? Have you noticed some early signals on that? Dana Dunne: Absolutely. So first of all, obviously, we're fully compliant with local regulations in each markets where we operate. We're fully transparent. We're transparent with our customers. We have not seen a structural churn deterioration from increased transparency. And I think we've even made comments about how, actually, in the sense our retention of customers is increasing. If you look at our NPS scores also, they continue to increase in these markets, including in Spain. And that all supports the fact that we have a strong offering is valued by customers, and we have as good, if not even better retention of customers than what we had, let's say, a year ago. David Corrales: The next question comes from -- it's a new question from an investor that already asked before [indiscernible] and it says, can you comment why other OTAs are not following a similar subscription business model? Dana Dunne: Yes, absolutely. So let me take that. So there's a couple of things. The first one is that we've been at this for over 8 years. Now in that period of time, there have been other companies that have come into the market and then have exited from a subscription-based business. And I think there's a lot of things that one really needs to do in order to get it right. And you've seen the NPS is very high for us. And you've also seen that our margins are good in the first year when you acquire a customer initially, and you have the CAC, obviously, the margins are very low. But assuming you have a really strong, good proposition, then you get into the year 2 plus, where you have very good margins. And that's what you've seen. And you've seen that like, for example, in '21 and 2025, as we grew the base of year 2-plus customers as a proportion to year 1, our margins continue to grow, and you even see that in our most recent results. And that also links with obviously the investment phase, as we acquire more year 1 customers proportion than what we had in the past, it does put some pressure in our margins, and then it comes back as we move the proportion of the year 2 plus customers, and we get to higher basis of those customers. That whole dip or that funding, a lot of companies don't want to go through. They also need to transform their business because subscription is fundamentally different offering, and you have to do things from the different types of, let's say, pricing, marketing, customer servicing, even cash management, every aspect of the company has to be transformed. Now we've done that, but it's a massive company transformation. So these are probably some of the reasons why some companies either have decided not to do it and/or some of the companies that did decide to try to do it have pulled back. David, back to you. David Corrales: Yes. There is a second question. Can you comment on the mix of products customers use? I understand holiday packages to be more profitable compared to just flights. Where do you see the mix shifting over your expansion phase? Will there still be a high focus on flights? Or is there an expectation that this will evolve over time? Dana Dunne: Yes. Why don't I take it? A couple of things. One is that we're really a consumer-led subscription-led consumer business. So we focus on that individual consumer. And so the most important driver for us is obviously the number of members, and then obviously moving those into year 2+, which we do very well. In terms of the individual product categories, we don't make, let's say, more money or less money on a certain product category. What we did when we set up our model a long time ago is we said that we're going to set up a model that's very similar to Costco in the sense that you don't try to price really a profit margin into your daily transactions of it. And instead, if I call it the profit pool is your subscription. Now because you don't price in a profit margin there, obviously that gives -- it meets a key buying criteria of the customer, and it delights them and they'll be coming back and coming back at the end of, let's say, the year period, they'll be more likely to renew because they've been relying on one of their key criteria for it. So that's where we've set up our model. So it's important to focus much more on the NPS that we have on the satisfaction of the customers and on the number of customers we actually have. David Corrales: The next question comes from [indiscernible]. Says you're currently executing a share buyback, of which EUR 77 million remain until September of 2027. Why don't you consider a tender offer at, say, EUR 5? This company should be trading between EUR 10 and EUR 15. This is a very low, low price. Of course, I agree with you, we've said repeatedly that the share price is severely undervalued. But then let me bring back together a couple of things that I said to separate questions today that I think are going to help you to understand the path that we're taking. The commitment to invest EUR 100 million over a period of 24 months is one in which we, let's say, face the repurchases with the production of the cash flows. So we first generate the cash flows, and then we invest the cash flows. And another thing that I've said today is that we do not intend to increase debt to fund repurchases of shares. So if we wanted to invest tomorrow, EUR 77 million, we would have to incur that to then do the tender offer and then repay the debt over the next 20 months or so as we generate the cash flows. That's the path that we said that we are not comfortable taking. So we will continue to buy progressively according to the generation of the cash flows. I think we're out of time. Thank you very much for a lot of interest in the business and joining our webcast today. Before we conclude the call, I would like to inform you that on Thursday, the 28th of May, we will be hosting our conference call for the full year 2026 results presentation. In the meantime, we will be very happy to receive your questions via our Investor Relations team or in the investor e-mail address, which is investors@edriimsolidia.com. Have an excellent rest of Thursday and rest of the week, and looking forward to speak soon. Thank you.
Operator: Welcome to Arkema's Full Year 2025 results and outlook conference call. For your information, this call is being recorded. [Operator Instructions] I will now hand you over to Thierry Le Henaff, Chairman and Chief Executive Officer. Sir, please go ahead. Thierry Le Hénaff: Thank you very much. Good morning, everybody. Welcome to Arkema's Full Year 2025 Results Conference Call. With me today are Marie-Jose, our CFO; and the Investor Relations team. As always, the slides used during this webcast are available on our website. And together with Marie-Jose, we will be available to answer your questions at the end of the presentation. In 2025, the macroeconomic environment was, as you know, particularly challenging, probably one of the most difficult our industry has faced in the last 20 years. The second part of the year, in particular, was marked by subdued demand across many end markets. The slowdown in the U.S., while Europe remained at low levels. This reflected ongoing cautiousness of economic factors as well as tight year-end inventory management at many of our customers. On the other hand, Asia continued to be the most dynamic region for the group, in particular, China, where we could see an acceleration in certain sectors like electric mobility, advanced electronics and sustainable consumer goods as well. As you could expect in this context, the group focused on its fundamentals of customer proximity and innovation while strengthening its cost and cash initiatives. The teams have been fully mobilized on a daily basis to best address the environment and strictly control the operations. As a result, we generated a high level of cash at EUR 464 million, well above our revised guidance of EUR 300 million. This performance was also better than last year's level despite the significant EBITDA decrease. EBITDA stood indeed at EUR 1.25 billion with a margin of 13.8%, so close to 14%, not living up to our expectation at the beginning of our year, but not different from what most of our peers have experienced. We were able to offset fixed cost inflation and delivered around EUR 90 million of fixed and variable cost savings in 2025, nearly doubling our initial annual target set at CMD. This work will be pursued in 2026 as we strive to offset against the inflation, and we should, therefore, be able to deliver the 2028 cumulative cost savings target of EUR 250 million, 2 years in advance. As you can see in Slide 7, the group has launched a number of new initiatives to make the organization even more efficient, leading to more than 2% headcount reduction in 2025, and we anticipate a further reduction of around 3% per year over the next 3 years. Our performance continued to be supported by several of our key attractive markets, namely batteries, sports, 3D printing, healthcare and new generation fluorospecialties with low global warming potential, which benefited from strong dynamics with sales up 16% year-on-year. This market will continue to grow in the future and contribute to the ramp-up of our major projects listed on Slide 5. These projects delivered around EUR 60 million additional EBITDA in 2025, and we expect this trend to continue in 2026. The group will benefit from the ramp-up of the recent investment in the U.S. and Asia, successfully started in 2025 and early 2026, namely our new 1233zd and the DMDS unit in the U.S. as well as the Rilsan Clear transparent polymer capacity downstream of the polyamide 11 plant in Singapore. In addition, our investment in PVDF in the U.S. is planned to start up in the first half of 2026, increasing our capacity by 15% in the region. PIAM should continue to benefit from the launch of new smartphones, notably foldable and ultra slim models in which polyamide is becoming essential to answer their higher requirements in terms of reliability and thermal management. PIAM should also start benefiting from successful diversification into new high-end application in industry markets. After this important wave of organic projects, offering significant room for growth midterm, Arkema will further reduce its CapEx envelope to EUR 600 million in 2026. This level will enable the group to continue investing in targeted projects with high returns and fast payback. We did not only focus on the very short term but continue to build Arkema for the future by developing strategic partnership with leaders in their domain in order to strengthen our positioning in key markets such as batteries or sports. Maintaining our efforts in R&D is key in order to stay differentiated and accelerate our growth in high-end applications. We stay focused on sustainable innovation. We leverage our competencies by collaborating with doctors, OOYOO in carbon capture is a good example. Coming back to our 2025 EBITDA performance, outside of the negative currency impact, the low cycle in upstream acrylics and the decline of old generation refrigerant explained most of the decrease. The rest of Arkema's business was far more resilient, but this performance to a certain extent, was overshadowed by these other activities. That's why in order to improve the reading of the group's results, we have decided to implement a new segmentation starting in 2026 to better highlight the distinct dynamics and business models of the resilient and fast-growing platforms within Specialty Materials compared to the most cyclical and last industrial activities, which will be rebooked in a new segment called Primary Materials. The global Arkema polyamide business will be included in this new segment. This business has been much more volatile in recent years than it used to be, as you can see Slide 21. However, looking back since the acquisition of our American assets in 2010, this activity has been tremendously cash generative, largely contributing to further growth portfolio transformation over the past year. So we continue to leverage our strong industrial and commercial position in acrylics to generate solid cash generation and capital returns over the cycle. The new segmentation will also bring more visibility to our next-generation low GWP solution for air conditioning, which were actively managed to enhance our prospects. They will now be integrated into the fluorospecialties portfolio and will benefit from accelerated growth in applications like heat pumps and data centers. On the other hand, old generation refrigerants that have been a highly profitable and cash-generative business since 2020, probably exceeding potential proceeds from a disposal will join the Primary Material segment. While this business will quickly fade over the coming years, Arkema will benefit on the other end and within the Specialty Materials from the ongoing growth of the low GWP solution, generating substantial value. I believe this new segmentation will provide the financial community with greater transparency on Arkema's portfolio business drivers and Specialty Materials performance. Finally, I think it's important, I also want to quickly highlight some of our CSR results where we made again strong progress and achieved quite good performance in 2025. This is the case for our climate plan, where the group's numerous initiatives to reduce its carbon footprint are paying off. We reduced our Scope 1 and 2 emissions by 48.7% at the end of 2025 compared to 2029, fully in line with our target. And we have also decided to strengthen our ambition in water withdrawals and introduced a new target on waste treatment, another key priority for Arkema. Lastly, given the strength of the group's balance sheet, the Board has decided to propose a stable dividend of EUR 3.60 per share to the Annual General Meeting despite the challenging macro, which is a sign of confidence, both in the quality of the portfolio and in the relevance of the strategy. Thank you for your attention. I will now hand over to Marie-Jose, who will review in more detail the financial results before I come back to discuss the outlook with you. Marie-José Donsion: Thank you, Thierry, and good morning, everyone. So as commented by Thierry, 2025 was a challenging year. Starting with revenues of EUR 9.1 billion. Sales were down 5% year-on-year that were impacted by a negative 2.9% currency effect reflecting mainly the weakening of the U.S. dollar against the euro, but also from other currencies, including the Chinese Yuan and Korean Won. The scope effect at plus 1.6% reflecting the integration of Dow's laminating adhesives. Volumes were down 1.6%, reflecting the overall weak demand environment in Europe and North America as well as a tight inventory management by customers in the fourth quarter. On the other hand, we continue to benefit from a positive dynamic in Asia and more particularly in China, mainly driven by high-performance polymers. The price effect was a negative 2.1% impacted essentially by the acrylics cycle and by the refrigerant gases that are transitioning from old to new generation. Our other activities showed a more limited price decrease of 0.9% in the context of declining cost of raw materials. The group EBITDA came in at EUR 1.25 billion, including EUR 40 million negative currency effect. Let's mention first, Q4, which is a seasonally low quarter. The decline in EBITDA in the fourth quarter reflected the overall weak demand environment in Europe and in the U.S. as well as the strong destocking due to tight year-end inventory management at our customers and ourselves, actually, which impacted particularly our Adhesives and Advanced Materials segment. Looking now at the full year performance by segment. Adhesives margin came in at around 14% if we exclude the dilutive effect of Dow's laminating adhesives business still in its integration phase. Full year EBITDA reflected the weak demand in industrial additives and the slowdown in the U.S. in the second half, notably in flexible packaging, transportation and construction. Positive performance continues to be supported by our ongoing work on efficiency and our price discipline. Advanced Materials resisted well with a broadly stable volumes and prices, delivering an EBITDA margin of 17.9%. High Performance Polymers in particular, showed a 2% organic growth on the year, supported by new business developments in batteries, sports and 3D printing and the ongoing positive dynamic in Asia. The segment's EBITDA was nonetheless impacted by the negative currency effect by an unfavorable mix in performance additives as well as by lower volumes in Europe and in U.S. In Coatings, EBITDA was impacted by the low cycle conditions in the upstream acrylics as well as by the weak demand environment in coating market. Construction and decorative paints market in Europe and U.S. were subdued. The performance of the segment was therefore significantly lower than last year despite the resilience of downstream activities. Lastly, Intermediates EBITDA was mostly impacted by the decline in refrigerants in the first half of the year, while acrylics in Asia improved slightly. The group's recurring EBIT amounted to EUR 564 million, which corresponds to a recurring EBIT margin of 6.2%. It takes into account EUR 687 million of recurring fixed asset depreciation, higher than last year due to the integration of Dow's laminating adhesives and to the starting amortization of new production units, which came online during 2025. Nonrecurring items amounted to EUR 276 million. They include EUR 144 million of PPA depreciation and EUR 132 million of one-off charges, notably the restructuring costs linked to the hydrogen peroxide site in France. Financial expenses stood at minus EUR 125 million. The increase versus last year reflects the increased interest costs of our bonds on one hand and the lower interest on invested cash on the other hand. All in all, adjusted net income amounted to EUR 328 million, which corresponds to EUR 4.34 per share. Moving on to cash and debt. Arkema delivered a strong cash flow generation with recurring cash flow standing at EUR 464 million. This reflects our continuous initiatives to tightly manage our working capital. Working capital ratio on annualized sales reached 12.5% from EBITDA. And the EBITDA to operating cash conversion rate stood at 88%. Our spend in capital expenditure amounted to EUR 636 million, below the level of our recurring depreciation in . Free cash flow amounted to EUR 390 million, including a nonrecurring outflow of EUR 74 million, linked essentially to restructuring costs. Taking into account these elements, Arkema's net debt and hybrid bonds were slightly down at EUR 3.2 billion, which includes a EUR 1.1 billion hybrid bonds. The group continues to enjoy a strong balance sheet with a net debt to last 12-month EBITDA ratio of 2.5x. Note that our 2026 maturities were all prefinanced till 2025. The EUR 300 million outstanding hybrid bond issued in January 2020 was redeemed in January 2026. So our portfolio of hybrid bonds at the end of this month -- end of Jan is back at EUR 800 million. I hand it over back to Thierry now. Thierry Le Hénaff: Thank you, Marie-Jose, for this explanation. So if we exchange all the outlook for this year. So at the beginning of the year, the environment remains and there is no surprise to find the continuity of the second half of last year, with limited visibility and weak demand. The currency effect, you saw it continues to be a headwind following the further weakening of the USD and Asian currencies against the euro. In this context, as we said already, our first priority will continue to focus. And I think we did a good job last year, and we'll continue to do a good job this year on the elements under our control. This means, in particular, optimization of fixed costs, optimization of variable costs, CapEx and working capital. Besides, we continue to rely on the progressive ramp-up of our major project and it's slower than expected because of the macro, but is still material for the company, and it will support the Arkema growth in the long run. So for '26 versus '25, we expect this project to contribute around EUR 50 million of additional EBITDA. It will continue to help us this year and in the following year to reinforce our geographical footprint, since we anticipate more long-term development potential in Asia and in the U.S. In light of these elements for 2026, the group aims for its EBITDA to grow slightly at constant FX, and we prefer, obviously, to reason at constant FX, given the unusual volatility of exchange rates against the euro, not only the USD, as I mentioned, but also most of the Asian currencies. The year-on-year comparison will be more challenging in H1, and more particularly in Q1 since last year profile was more weighted on the first semester with significant destocking in the second half. Besides the currency effect on Q1 should be negative estimated at EUR 25 million. If we put the currency effect aside, we expect in 2026, the macro more or less similar to '25. The comparison with last year should ease progressively until the end of the year, including specifically to Arkema, the ramp-up of our major project. As a result, we anticipate the performance of the 2 halves more balanced in '26 than in '25. So thank you very much for your attention. And together with Marie-Jose, we are ready to answer the questions you may have. Operator: [Operator Instructions] The first question comes from Tom Wrigglesworth with Morgan Stanley. Thomas Wrigglesworth: Two, if I may. First, could you talk a little bit about the construction end markets by region? And how -- and kind of help us understand how much step down you saw in the U.S. in the second half and how much weight that weighs on 2026? And conversely, there are expectations that construction refurbishment improves in Europe in '26. Do you see anything in your order books or in your discussions with customers that kind of talk to that? And then secondly, if I may, just around obviously very strong free cash flow in the fourth quarter. How much of that was your decision to really cut the working capital versus the pricing element rolling through working capital, i.e., as we look at working capital for '26, if we do start to see some volume improvement at some point, do you need to see a rapid increase in working capital to meet that demand? Thierry Le Hénaff: Okay. I will let Marie-Jose answer on the working capital. On the construction market, it's an interesting question because, as you know, we have -- compared to other peers, we have more -- we are more weighted in construction, especially Europe and U.S. and in Asia is less than that. I would say, and it joins your question, in fact, to a certain extent, the answer is in your question. Europe, we have reached certainly a bottom. I'm quite cautious on the signals because we have been caught several times by surprise. My feeling is that let's say, there is a little bit of incremental improvement, but to be confirmed, okay? So Europe is like the bottom, it does not decrease anymore. And if there was a trend, it would be incrementally slightly better. In the U.S., clearly in second semester, it was one of the bad surprise. We are down in terms of business development. I would be -- I know the elasticity and the agility of the U.S. economy. So I would not extrapolate necessarily what we saw in the second semester in the U.S. with what it could be this year. What is clear is that -- and this is a difference with Europe, U.S. decreased second semester of last year in construction, while Europe gave the impression, it was more at the bottom and with a little bit more positive. So U.S. we will see. I know that the administration -- Trump administration is trying to put in place some measures in order to support construction-related activities. We'll see if it brings -- it brings some support, but there are so many variables that are difficult to know today. So I would be cautious as I am on the macro -- overall macro economy, let's take month by month and see how things are developing. Marie-José Donsion: On the cash? Thierry Le Hénaff: Yes, the cash. Marie-José Donsion: A few comments. So basically, you saw the working capital landed at 12.5% of our annual sales, frankly, reflecting the similar work that our customers have been doing on their end. For 2026 at constant macro, I would expect, frankly, a flat working cap. In case of a rebound, then for sure, working cap should increase in a commensurate way versus those 12.5% or 13% of our sales. Thomas Wrigglesworth: Okay. Just as a quick follow-up. I mean, do you think that the industry or the supply chain has overcut inventories and working capital? It just feels like everybody has cut aggressively at the end of last year and then aggressively cut again in the end of 2025 -- sorry, '24 and '25. I guess investors are surprised as to how much destocking has taken place. So any commentary or color there as to the level of inventories in the system would be very helpful. Thierry Le Hénaff: Certainly, this question is worth a lot of money. The difficulty, as you know, and you know as much as I know, Tom, is in the supply chain in chemicals, they are complex and they are longer. So it's -- and fragmented, so it's very difficult to have a clear view what is sure is that. And it has been, to a certain extent, a little bit of a mystery for all of us because normally, when you have a cycle in chemicals doesn't last so long. It's clear that we see destock. Now we are already talking about end of destocking, 18 months ago, we thought it was already long. So -- but it's clear that the stock for most of the chain seems to be rather low, but they are low if there is a rebound, if there is no rebound, certainly, the chain can live with that. So my theory is still the same. It does not change. And is that at a certain point, you will get a rebound. We don't know when it will happen. We don't know when and when the rebound will come, the chain will be under big pressure. This is obvious, but we don't know when. And there will be nuances depending on which region, which end market, which product line, et cetera. But basically, this is a typical cycle of chemicals, where you have volume and pricing on the both directions depending on the -- if it goes down or it goes up, always amplifying the industry. Then we have to be a bit patient, but it will come at a certain time. We don't know we'll see. So your question is valid. Certainly stock are less at the end of this year than they were at the end of '24, '24 was less than end of '23. But now this is a demand which will be the main driver of the stock. Operator: The next question comes from Matthew Yates of Bank of America. Matthew Yates: I'd like to ask about the new structure, the divisional restatement. Not the first time the company has done that since its creation. And I heard your introductory remarks about the benefits of transparency. But I would put it to you that there is an argument that it highlights a lack of industrial logic to the portfolio that you can move things around so frequently. It hurts investors' ability to track performance over time because we lose that transparency. So can you just elaborate a little bit more as to why you think this is a good decision. And by association, have you changed reporting lines or management structure? I had a quick glance at your exec committee on the website, which hasn't changed. But is there going to be a change in roles and responsibilities that may help us bring some better operational performance and some genuine benefit of this move? Thierry Le Hénaff: First of all, Matthew, we don't change so often. And here, we are talking about an incremental change. I think the difficulty we had and hopefully, it was well explained in our -- and we are completely open to discuss more with you and who wants. The difficulty we had were 2 things. The first one, we got the impression that on the Specialty Material business, which is whatever definition, by far, the large majority of Arkema portfolio. We are really doing a great job and this year, we were frustrated by the fact that we could not read it and you could not read it simply. And the reason was that we have -- things have changed over the past 3 years, the world has changed. I think maybe we change, but I think it's good to be agile and to try to be as transparent and as clear as possible in a world which is changing a lot, where yourself, ourselves, all our stakeholders are trying to understand what is happening and on what you can really rely and build for the future. And what we saw is that in fact on the refrigerant gas, while we saw that we were mostly old generation gases and little development in new generation, and this is why we wanted to sell it because we saw that there was no future and it was far from our sustainable strategy. What we saw is 2 things: that the old generation that we know already, were going to -- were phasing out or fading out and with an acceleration in the past 2 years. But on the other side, we're far stronger, far better, far quicker in the development of new generation, not for the traditional application in refrigerant, but for new application, heat pump, data center, energy efficiency in the buildings, which were really completely core in terms of the strategy of Arkema with some of niches, same end market, same kind of growth pattern, et cetera. So we wanted absolutely to recognize that. And this is why a part of this we split between old and new generation, and it makes completely sense from a portfolio standpoint that this new generation joins them. We have already started to do it, join the HPP. The second thing with regard to acrylics, for a long time, and we had -- I know discussion together on that. We are absolutely convinced that we would be able, for Europe and U.S., to stabilize their volatility by developing the downstream. It was true for Asia, but Asia, we knew that it would be quite limited. But Europe and U.S., we thought we could go at further on this path to balance the upstream and the downstream. But in fact, we have seen that the targets were not so many. In fact, we bought already most of this target with Sartomer and Coatex. And the second thing was that not only we were -- we decided when we bought Bostik to put most of our allocation of cash for acquisition for adhesives. And the second trend that we see, which is linked to the fact that the world is becoming far more volatile than it was in the old time. You can see on every parameter, the FX, the -- also the macro figures in this or that market, et cetera, or the brand evolution. In fact, it reinforces the volatility of the acrylic acids, the acrylics monomers. And we wanted to also to -- so we decided to put back China, Europe and U.S. together, and to recognize that in the portfolio, we have a minority, a small minority, which around 15% of the portfolio which is really in nature, more volatile. Even if on the -- over the cycle, we still generate a lot of a lot of cash. And for acrylics, it's normal because the upstream goes with this downstream. The upstream is a basic material. We know that basic material. So we think that with this evolution of the world that we want to recognize, the more volatility of what is now in primary materials, we are able really to be -- to show you that all the jobs that we have been doing on the Specialty Materials is really bearing its fruit with quite a resilience and the growth over time. And it was in this context of '25, which was completely atypical and unexpected. They were able to deliver minus 5% EBITDA evolution, which, frankly speaking, given the level of the context or the challenges of the context was quite a good performance. So for us, it was far easier to explain it like this. So you have to take it as a better reading now. This is why we did it. So hopefully, it will -- and we are ready to discuss with any of you. For us, it reinforced the quality of the reading on the performance and also of the benefit of the strategy we have been leading over the past 10 years. Matthew Yates: Okay. Can I ask a follow-up? Because from your answer, it sounds like the concept of integration across the value chain hasn't worked and is no longer valid. So this goes above and beyond simply the way you're reporting it. It questions the actual strategy of the company. Are you open to the idea of exiting the 3 upstream acrylics plants if there were to be a possible buyer out there? Or are they still core to the broader group? Thierry Le Hénaff: No. I would say that we have to take it for what it is, which is a better reading and reporting of where we are. Acrylics remains a backbone, which is important of the downstream. So, so far, I would say, is really part of the portfolio. And anyway, the results are quite low. So it's not at all even beyond what you say, the topic of disposal. Now as you say and you have seen the history of Arkema, there is never any taboo. So I think that for the time being, it's quite a reporting topic, and we have to take it as such. Operator: The next question comes from Laurent Favre of BNP. Laurent Favre: My first question, I guess, is on HPP where we had a stable Q2, stable each Q3 and Q4, I think a bit of a collapse down -- sales down 15%. We saw something similar with your peer this morning. And I was wondering if you could talk about what you're seeing on beyond, I guess, destocking, what you're seeing on competitive pressures and in particular, maybe some kind of commoditization risk? That's question number one. And the second one just to echo the comments from Matthew. I think best practice for us, especially if you're talking about adding transparency would be to have sort of restatements for the divisions going back to at least 2023. That would be really, I think, helpful for investors and for us. But a question related to the restatement is around acrylics. EU, U.S. I think it looks like you had EUR 13 million of EBITDA in 2025. And I was wondering how you're thinking about this going forward? It seems that we still have capacity additions in the industry in 2026 and maybe 2027. So are you expecting acrylics EU, U.S. to still be around that sort of breakeven EBITDA for '26 before we eventually see a recovery? What did you bake in the guidance? Thierry Le Hénaff: Okay. So with regard to the first question, I really think that the end of the year and you mentioned also our peers on the -- on the HPP is really driven by the destock of customer. When I saw -- we saw in detail, you can imagine the dynamics to really understand the results beyond the fact that the impact of the FX was more important in Q4. Don't forget that. What we saw is that the impact of destock was quite high. And destock, it happened less in Asia, where by culture, they don't stock a lot, but in Europe and U.S. So in fact, not only we have destock globally, but the fact that the destock was more pronounced in Europe and U.S., where culturally, our customers have more stock changed the geographical mix, okay? And it weighs on the profitability evolution. So the geographical mix was especially this low sales in the U.S. was a little bit of a surprise and that was linked to the destocking. We have spent a lot of time, as you can imagine, in this kind of contact with our customers. We knew, we understood that they would be very cautious in terms of stock at the end of the year. So this destocking topic is not just a matter of the chemical industry. Our customers, they destock, our suppliers, they destock, everybody try to finish the year with stock, which was, I would not say minimal, but more reasonable than they were given the level of the demand. So for me, it's not a matter of more competition or anything special sort of change in evolution, we would have seen in Q4. It's really a matter of customer by customer destock, as you can imagine, we check our market shares very precisely also, no. So -- and you know Q4 is the last quarter of the year. So sometimes you can have certain years, you can have a little bit of amplification of the low demand. But I would not consider this sort of new trend at all. It's not my feeling. And as you know, in HPP, we put a lot of efforts on the new business development, innovation and I think this is a paradox. I think we have been good on that. And so the growth is there. We are able to differentiate versus competition. And the market is not easy, but we are not particularly concerned for the next few years. On restatement, so I pass the message to the Investor Relations team will do what we can, but the idea is certainly not to lose you on the contrary, is to help you. So don't worry on that. We'll do our best. Yes. And with acrylics, yes, EBITDA, you could make the math, at least maybe we're not -- it's complicated for you. But as you could see, you could try to find some new information that you had not before. So it helps you also. I can see you started to work on the acrylics. Clearly, we are surprised by the, let's say, the depth of the cycle of acrylics is something. In fact, we have to go back to 2010 and the acquisition of the acrylics from Dow where the cycle were more or less that one. And I don't know if it makes you more comfortable. A year after, it was our one of best product line. So I think everybody has to be modest on anticipating. So I think that acrylics was under -- in Europe and U.S., was more under pressure than expected clearly in '25. We expect for the time being, something in, hopefully, a little bit of improvement, but something not far from what we saw in '25. Operator: The next question comes from Emmanuel Matot of ODDO BHF. Emmanuel Matot: Three questions for me. First, does that make sense to believe that H2 could be in line with H1 in terms of EBITDA? Is that the seasonality you are factoring into your guidance for 2026 because it's quite unusual historically? Second, given the ramp-up of your major projects , why do you expect those projects to have a lower additional contribution to the group's EBITDA in 2026? Because you are mentioning only EUR 50 million contribution compared to EUR 60 million last year. It seems to be cautious. And last question. Do you feel that the authorities in Europe are more willing than in the past to help you and the sector regain competitiveness significantly and protect you more from unfair competition, in particular, from China? Thierry Le Hénaff: Thank you, Emmanuel, for the question. On the first one, we didn't say it would be equal, we say it will be more balanced. So because on the contrary, in '25 was atypical, in terms of seasonality, but I'd say it would be at par H1 and H2. It's just the imbalance we had in '25 would be more back to normal, I would say. On the project, it's just -- in fact, there is no -- maybe it's counterintuitive, but it's not because you do a EUR 60 million in one year and EUR 50 million the following year. We are talking about incremental, as you know, additional EBITDA, okay? It depends on the momentum of the project. If in '24, you had a project which was started with the first step in '25, with the first step, which was very high in terms of contribution, the year after the same project can deliver far less on top of it. So you can deliver on a project. I don't know I will give you an example. You deliver on 5 years EUR 100 million. You can have the first year of EUR 40 million, the second year EUR 20 million and then EUR 10 million, et cetera. So it's not linked. So what is important is cumulative, and it depends on the phasing of the projects. Some have started 3 years ago. Some will after -- have just started at the end of last year. So don't -- there is no relation, I would say. What is important is accumulation. If we are cautious so much the better, it will depend on the macro. But I think that we should count on the EUR 50 million, I think it's reasonable. But the projects are -- what is more important beyond the figures is that we confirm that the positioning of the project is still completely valid from a strategic standpoint, from a geographical standpoint. And I think this is good news. This means that since the world is changing, your question could have been also, do you think that some of the projects are not relevant anymore because there were a change. It's not the case. We really confirm the quality of the projects. They are all meaningful even if it takes more time to develop than we would have thought at the beginning. On the last question, yes, we think that -- so first of all, we are a global company. So this is not Arkema protected. This is the assets of Arkema in Europe, but we have assets everywhere. And we will be pragmatic at the end, even if we like our region our country, we put our money where we believe we can be competitive and we can develop. And now with regard to Europe, yes, authorities have understood the danger for the industrial assets of chemical company, but also beyond chemicals in Europe. This seems to be more aware of the danger, more protective, think more about competitiveness. So in terms of let's say, awareness and intent, I would say, is positive in terms of act for the time being, we see nothing. Operator: The next question comes from Chetan Udeshi of JPMorgan. Chetan Udeshi: I had maybe 2, maybe 3, I don't know, but I'll try. The first one was just I'm looking at your Advanced Materials Q4 numbers. And I mean you're saying you had destocking, but then your revenue in Q4 is actually above Q3 and your EBITDA has been -- I mean it seems revenue is up EUR 10 million versus Q3. EBITDA is down EUR 40 million versus Q3. So I'm just curious what happened there? And maybe just to challenge your comment that Arkema is doing very well in Specialties. It doesn't seem like when I look at your numbers in Adhesives or Advanced Materials that's really coming through in terms of numbers. The EBITDA in both these divisions are down quite dramatically year-on-year. So just curious why you think we should think Arkema is doing well, and this is not a competitive pressure that is coming through in the business? And the last question I had was just in Q1 -- sorry, Q1 guidance. Historically, if I go like many years back, your typically, Q1 will be up 20% to 30% versus Q4. But in the last 2 years, we've had a more modest improvement of 1% to 5%. What should we think in terms of the magnitude of that seasonal rebound that we should have in mind for Q1? Thierry Le Hénaff: Okay, Chetan. I try to understand your -- the rationale of your questions. When you compare Q4 with Q2 with -- on Advanced Materials or no, I think on Advanced Materials, this is the answer to Laurent. This is a destock. So the destock -- as I said, which was not the case in Q3 happened mostly in Europe and the U.S. We have strong destocking in the U.S., and this is where in terms of added value, we are higher than in Asia. So the geographical mix is working against us. That's all. You have all the figures. So at the end, but it's more -- it's really the destock and the geographical mix. We have some high-value applications in Europe and U.S., which really completely destock. And sometimes just in December, you have no order because your customers are just optimizing their stock. So this is what happened. But from what I see with other peers that I know that you have some peers you especially follow. You can see that we -- destock was all across the board by many peers. So I would say no, no, I confirm what we say. Then your second question that is... Marie-José Donsion: It's the seasonality between Q1. Thierry Le Hénaff: No, there was another one. Marie-José Donsion: We said we are doing well in Specialty, but Chetan seems to flag that Adhesives and Materials were not so great. Thierry Le Hénaff: No, I think what we -- I don't really understand what your question. But what we say is that I'm sure you are referring to my point to Matthew on the transparency, why we changed segmentation. I think what we see very clearly is that the EBITDA of the Specialty Material over the year has declined by 5%, which we consider in macroeconomic, which is one of the worst we have seen in 30 years is performance, which show the quality of this portfolio. That's all. For the rest, you have your own opinion as the rest. But we consider that we have minus 5% EBITDA in really more than trough conditions. On 85% of the portfolio is a performance which need to be appreciated and to be highlighted. This is what we do. This is -- we think it was worth doing it. With regard to the Q1 guidance, we will not enter into precise figures. The only thing that we can say is that Q1 will be above Q4. There is a seasonality. The macro is comparable, certainly destocking should be less and the seasonality, typical, is better in Q1. We agree that in the recent years, it has been a bit less higher compared to Q4 than it was before. So you have some reference points that you can take. But I think this is a qualitative element that it will certainly not be the kind of seasonality you could find a few years ago. It's more typical of the more recent years, but Q1 will be above Q4, no surprises there. The macro should be quite comparable, but the destocking will be less also. Okay. And don't forget the FX impact of EUR 25 million that we have mentioned. Operator: The next question comes from James Hooper of Bernstein. James Hooper: Can we go into a little bit more detail around the outlook, please? Specifically, kind of division through division, if that's possible? And another thing I'd like to try and understand is, obviously, you're guiding for the EUR 50 million cumulative effect from the projects. But is there a cannibalization impact on some of the existing revenues? Because I'm just trying to bridge to the kind of the -- how this -- and also the kind of impact of the specialty groups versus refrigerants? Thierry Le Hénaff: With the outlook, I think we -- you got our press release and -- and what we can say at this stage on the outlook. So we are not given -- I think we have never given any guidance by division. We give a guidance for the whole company. Now I would say the macro and this is -- this was our feeling in '25, especially if you look at the new segmentation, I would say the macro is similar for each of the business, and there is there geographical footprint is quite comparable. The end markets are a little bit different, but they are all diversified in terms of end market. So I would not make a big difference by division. And there was a question of Laurent on the primary products materials with the weight of acrylics, et cetera, where we think it will stay at least for the first part of the year at a low level. But for the rest, I think the macro should be similar. Now on HPP, you will benefit more of Advanced Materials. You will benefit more from the projects than the rest -- than the other division. You could see that in -- if you take the list of the project is more in Advanced Materials and in Adhesives, but certainly Advanced Materials than the other division. Construction in Europe, we mentioned that I think, should more help the Adhesives and the Coating. So I'm sure you factored also old generation refrigerant and the primary material. So you have some nuances depending on which division you are talking about. So overall, a similar picture, but with some nuances that you know pretty well if you take our slide because you have where the projects are located. You have this discussion on construction, the discussion on old generation refrigerant and the acrylics. On the project, the EUR 50 million, I don't know what you mean by cannibalization, but there is no cannibalization. So this means this is a really -- at least it does not cannibalize other product line, if it is your question, a new product line would replace another one. No, it's not the case, except with refrigerant, where refrigerant is -- that is one project. And in fact, it's not for us in the case of the new refrigerant business, the end market is not the same. So it's not a cannibalization, but we know that old generation disappear, new generation are coming. But for the rest, no, I didn't see any cannibalization coming from the projects. James Hooper: And can I just ask a quick follow-up as well in terms of the cash outlook as well? Because I don't think you've given formal guidance for cash. Marie-José Donsion: So on the cash outlook, as we said at, let's say, comparable macro, cash performance should be quite comparable, let's say, provided that you take into account that the working capital would remain flat. So you see, in fact, for 2025, the contribution of the working capital variance. If we assume macro remains comparable, then there is no change in working capital expected in '26. Operator: Mr. Le Henaff, there are no more questions registered right now, so back to you for any closing remarks you may have. Thierry Le Hénaff: Yes. So first of all, thank you very much for your attention. I think this new year will be quite interesting as was the previous one. I think the team is really focused on the 2 time horizon, as you know, and as you could appreciate the efforts, cash, fixed costs, which are very important, so we'll continue then with a lot of engagement, and we still are confident on our major projects. It's a very important part. It takes more time than expected to develop them in the current macro, but it will really be a very material contributor in the coming years. And for the rest, we confirm that we have really strong positioning on most of our business lines. And even if the macro for the time being, remain rather weak, we think that our leadership position is really a support in this kind of environment. So looking forward to meeting you at different occasions. And have a good day. Thank you. Operator: Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation. You may now disconnect.
Reese McNeel: Hello, everyone, and welcome to this Q4 2025 results presentation for Prosafe. My name is Reese McNeel, and I am the CEO. I'd like to just highlight here to start off where we are. Prosafe, we are the largest operator in the accommodation market. I think we have a very strong high-end fleet of 5 units, a leading position in Brazil. I think there's very strong market fundamentals. And today, I want to spend a little bit more time on talking about the market that we're in. And we have a really strong focus, particularly the last quarters, on cost and improving our strategic position. Coming back a little bit to Q4. I was very happy with the Q4 results. I think Q4, if I look back to get to the EBITDA that we had in Q4, we have to go back to 2022. So I think it was one of the strongest quarters we've had in many years. It's also a quarter where we had all 5 of our rigs operating and all 5 of our rigs earning. I think again, we got to go back quite a while since we've seen that. And I think that's a reflection of how strong the market is. Also had a very strong operating performance with 100% fleet utilization. So basically, essentially no downtime. So really strong operations and also good safety performance. A little bit on the marketing side, very important, of course, as well. We did sign an LOI for the Caledonia for 2027, very happy about that. I think as part and parcel of that LOI, also, we will -- we have agreed to sort of an upfront payment structure. So I think that's also going to be beneficial for us. And of course, we're looking for additional work for the Caledonia to fill the gap, but very happy that we were able to secure something for the Caledonia. When we come to sort of CapEx and looking at CapEx going forward, we did move the SPSs, which we had originally planned in 2025. They have now been moved into 2026. And actually, we'll be starting those SPSs here very shortly in the coming weeks, and that is both for the Safe Zephyrus and the Safe Notos. I'll let Halvdan talk a little bit more about the financials when we come to that, and I will go through on the next few slides a little bit more in depth on how I see the market and maybe what our strategic focus is. Again, largest operator of the offshore accommodation, where are our units today, 3 in Brazil, 1 in Australia. And the Caledonia, which we just demobilized, she was off contract on the 22nd. We're very happy with that. We actually got all the options exercised, which we had on that contract. It was originally a 6-month contract with 3 months options. We got all the options exercised. We're very happy about that and really safe and well, she performed extremely well on this contract, but she has now been demobilized and will -- is laid up in Scapa Flow. Looking a little bit at the backlog picture. You'll see this last year, we did successfully extend the Safe Notos. She will go on to her new contract from the 1st of September. One thing that we're actually very happy about there is that we have been able to organize it such that during this SPS period, we will also do any contract modifications that need to be done. So we do not need to bring the rig in between the 2 contracts. That is something that we often see in Brazil is that you need to go in between contracts, but we will avoid that. We will do all this work now in this SPS period, and she will be on the newer day rate of close to $140,000 a day from 1st of September. Safe Boreas, also very pleased. We got to Australia, we got there on time. Client was not quite ready for us so we have actually agreed with the client that the fixed -- the 15-month firm period for Boreas will only start when she has the gangway down, and the gangway is not down yet although we're expecting that quite soon now. So in essence, we have gained a little bit more fixed term on that Boreas contract. Caledonia, as I mentioned, the LOI, let's see if we can fill the space. There are some opportunities out there, but I would categorize this as cautiously optimistic, just given kind of the time where we are already for 2026, a lot of clients have already locked in their work programs for summer of '26. A very key strategic focus for us in the coming months. And I think if -- those who are following us, you will know that I have said many times that I think H1 is going to be the time frame when I think we will know more about the Safe Zephyrus and the Safe Eurus. I'm still very much there. They're running off contract in April, May '27, and then in the fall of '27, Petrobras has been very clear that they wish to extend the units that are rolling off, not only ours but others, extend or recontract. So we are expecting to see some tender activity, but I'll come on to that. There's also opportunities with other providers in Brazil. And I think one of our key competitors also has demonstrated that by putting together a good work from other players in Brazil. A little bit more on the market. Again, I very much like where we are. We are not -- so we are very much a late cycle provider. We're very much focused on the brownfield and very much focused on maintenance to FPSOs. We do, do some hookup work. That's why it's here, 20%. A good example of that is Boreas. She's doing actually a hookup job. She's not doing a maintenance job. But the 3 in Brazil and Caledonia, they were all in this category, I would say, of operations, maintenance, tie-back, doing this type of life extension type work. And I think I'll touch a little bit on that, but I think with the increasing number of FPSOs and increasing number of on water assets, I think there's strong demand in that area. Some may be familiar with this slide. This is a bit how we look at the market and where rigs are positioned. The market hasn't grown in the last quarter from our perspective, it's still sitting at 31. There are a couple of these heavy lift units, which are on their way. They won work in Brazil so they're on their way so there might be some shift in where the assets are located. But generally, the market has been flat. And again, you see that South America, and that's largely Brazil is the main market for these assets. We continue to have a leading position with the largest player, one of the largest players in this market. And I continue to believe, a firm believer that this is a market which needs to -- which would significantly -- would need to and would significantly benefit from consolidation. All the players here, we're all sitting on $15 million, $20 million of SG&A alone. So I think there would be a strong benefit. So I think as the market improves, that's something that we've been quite vocal about that we continue to focus and see what kind of opportunities may be out there to play a role in that consolidation. Demand and supply, I think demand is actually at a 10-year high in this market. We got to go back to the last peak before we can see where the demand is. You see that on the graph here on the side there. When we look at the higher-end units, we're close to 90% utilization. So there's very little supply available. When I'm talking about high-end units, I'm talking about DP3 semi-submersible vessels. I think maybe some here in Norway will -- have heard the news that there's a proposal to walk to work on FPSO in Norway. That was rejected by the unions, but there is actually no available DP3 Norwegian compliant rig to actually do that work in '26. So the market is very tight. Also recent tender out in Brazil for this summer. And also if they want a high-end unit, there's actually no supply readily available. So I'm very positive about the market, and that is actually flowing through into higher and higher day rates. So our Safe Notos is on $75,000 a day. That was a contract obviously entered into 4 years ago. New contracts, $140,000. Latest done is actually $150,000, and we actually see in the North Sea, of course, for a shorter -- not a 4-year contract, a shorter contract, we see rates going above now the $200,000 level. So again, we got to go back quite a bit of time before we have seen those rate levels. And I listed out here also on the side of the slide a little bit because a lot of people ask me, they say, Reese, you're solely dependent on Petrobras in Brazil. I said, well, we are working a lot for Petrobras, but actually, there is quite a lot of other work now in Brazil as well. So I listed out some of the names, but I think PRIO has been using, Brava, I think you see some of these announcements from our competitors. SBM, MODEC, I think there's many of the players in Brazil, large FPSO operators who are now also using accommodation. And I think this trend is definitely going to continue. It's a trend which we have seen and actually recently even is picking up. West Africa, we also see quite a few opportunities, rigs going to Nigeria. We even see some opportunities in the Mediterranean. There's a working rig, working in Libya, there's one working in Israel. So I think the market has more depth than just Brazil. And I think there is also more demand out there than simply Petrobras. So I'm very optimistic on the market. I think we will continue to see day rates, solid day rates here going forward into the next couple of years. And just again to reiterate, that's a similar rate trend. It's not only Brazil where we see rates going up, but we see the same in the rest of the world. And if I look at even the latest done in the last quarter, we haven't seen any sign of this trend sort of lagging. In fact, it continues to be very strong. I'd like to talk a little bit about kind of the operations. I mentioned some of that already before, 100% utilization in Q4. I think that was great, great achievement to get all the rigs working again. If I roll back to when I joined, we had a couple of rigs still sitting idle. I think we've cleaned up the fleet. We've sold some of the assets. We've got all the rigs back working. So I think really good achievement from everybody. And if I look into Q1, I think the biggest impact that you see there on the bar chart -- on the line chart here, the biggest impact here is, obviously, we are taking rigs to SPS. We got 2 rigs that have a bit of time out, and the Caledonia is obviously rolling off. So we will see a little bit lower utilization with the Caledonia coming off and also with the rigs working -- with the rigs out on SPS. Yes, on the SPS, yes, 40 days for Zephyrus, 50 days for Notos, doing a little bit more work than simply an SPS. Some people ask me, "Do you need that much time to do only the special survey?" Well, actually, we are using this opportunity as well to do modifications that are required for the new contract, but also to do some exchange and overhaul some thrusters. The rigs are approaching the 10-year mark. So there is a need actually to do a little bit more maintenance, and this is the ideal opportunity. Backlog, probably no surprise when you see the high utilization backlog also at close to a 10-year high. And I think, again, the Caledonia LOI, very happy with that. And I think our focus really in the coming quarter, as I mentioned, is very much on Eurus and Zephyrus extensions. That's really the key going forward here and to successfully execute, of course, these SPSs. So with that, I'll hand over to Halvdan, who will talk you through a few of the financials. Halvdan Kielland: Okay. Thank you. Great to be here. As Reese mentioned, EBITDA in the quarter has been fantastic, one of the best we've had in a while, almost tripled year-over-year. You'll see a significant increase in charter income. This is mostly due to the fantastic utilization we've had and the Boreas on full rate from 15th of December. Other income of $20 million, this is largely cost reimbursements that's coming from -- out of the Boreas contract in Australia, and we expect kind of a limited EBITDA margin contribution from that going forward. No real surprises on the income statement, significant step-up in net profit in the quarter, $5.3 million, kind of the important part here, interest expense, this reflects the full interest expense, including the PIK interest. So you'll see that on the next slide, the actual cash interest is slightly lower. The full year 2025 includes a significant portion of the recapitalization gain. Other than that, again, just a fantastic quarter on the income side. Now moving on to the most important part, the cash flow. CapEx of $9 million. This is mostly related to the tail end of the Boreas contract and the start-up of the Safe Zephyrus SPS. The large shift in working capital here is very natural with the beginning of the Safe Boreas contract, and we do expect kind of looking forward into 2026. Of course, we see that there's a large negative shift here, but we expect a lot of this to be recouped during 2026, and will have a significantly positive impact for the year. Cash position of $65.3 million. I think the important thing is here that we feel very comfortable that we are well covered on our liquidity to go into these 2 SPSs and for all our projects going forward. Strengthened balance sheet. Of course, we do see that we are in the best position that we have been for a while. As I said, liquidity that we feel very comfortable with going forward. Significant reduction even just quarter-over-quarter in net debt to EBITDA. Of course, this is largely due to the step-up in EBITDA. We would also like to see both sides of the fraction decrease on this. And yes, much better equity ratio. In terms of capital structure, no real changes. The only thing is we've repaid a small portion of the Eurus seller's credit, and we've added on the PIK interest for the senior secured facility. And we currently are paying that as PIK interest and we'll continue to do so as long as we feel the need to. Worth mentioning here, currently, the way this is structured, the whole debt stack is due in August 2028 at the same time as the Eurus facility. There is an option to push this out if the Eurus facility can get extended. The main tranche of $233 million can be pushed out until latest 31st of December 2029. Now we talked a little bit about where we are and where we've come from, going into where we'd like to go, $40 million of EBITDA in the year. Of course, as those of you who follow the company will know, we are still working on some legacy rates, specifically for the Eurus and the Notos. We see that the step-up on these, the Notos will go -- have that step-up expected around September onwards. But of course, for the Eurus and even the Zephyrus, this will be a massive increase. So we see that the potential on these new contracts should be able to bring us to around $90 million to $100 million of EBITDA, which on our current debt stack would bring us from around 6 to closer to 2. And of course, this is just on the increase in EBITDA. Of course, as a company, we'd like to get to the point where we can start to deleverage our balance sheet as well and bring both sides down. Talking a little bit about asset values. I think you can pretty comfortably say that if we start a replacement cost, there's not going to be any -- I mean I can't say for certainty, but looking at the value and looking at the cost, there's not going to be any new builds of these kind of vessels anytime soon. The market, we're very comfortable in saying that the market would have to have a substantial rate increase for people to even start considering it. In terms of broker valuations, we feel that is significantly above where the market is today. So we do feel that in terms of asset valuation, we do have some room to grow. Now to give you a little bit about our thoughts for the future, here is Reese. Reese McNeel: Thank you, Halvdan. I'll wrap it up here a little bit, and then I think there's also some questions that I have received. So I think a little bit on the outlook and the guidance. We gave guidance last year, $35 million to $40 million of EBITDA. We ended up in the higher range of that guidance, again, driven largely by the fact that we had all the units working and working well. Looking into 2026, we've given quite a large guidance range, $45 million to $55 million on the EBITDA. We do expect obviously an improvement of earnings. We'll have Boreas on contract throughout the full year, and we will also have the Notos rolling on to a new contract. So we do expect a little bit of an uptick in that. And as Halvdan said, we expect a pretty strong improvement in working capital. We had, obviously, the ramp-up of Boreas in the fall, and we had some of the SPS costs, which we took also in the fall, which had a negative working capital impact, but we're going to see a positive working capital impact throughout 2026. So all in all, I think we'll see an improvement in 2026. And the real key focus for me looking ahead is very much on to the new contracts and what we can secure with Eurus and Zephyrus. So with that, I'll end the formal part of the presentation. Reese McNeel: I do have a few questions, which I have received. So I will read them out here to the audience and then answer some of them to the best that I can. One of the questions was a question regarding Nova and Vega. I think we've talked about Nova and Vega several times. These are 2 rigs, which were actually built in 2015, 2016 by Axis Offshore and acquired by Prosafe. They're actually the last 2 remaining semi-submersible accommodation -- accommodation rigs, if you will, or specifically built for accommodation. I had the luxury of actually going on board a few weeks ago. They do actually look very nice. The takeout delivery price plus the cost to -- obviously, they've been sitting there for 10 years, so you need to spend some money to take care of obsolescence. And then you would also need to mobilize them to a location, most likely would be Brazil or West Africa. So our sort of take is if you added up that delivery price plus all that, you're probably in the range of $230 million to $250 million for each rig. It's probably not a lot of science behind if you look at sort of our EV per rig, we're probably more like 80-ish to 90-ish, depending a bit on which rig you're talking about. Broker values is around $100 million, $130 million, $150 million. So clearly, the sort of takeout delivery price or the all-in price for these rigs is quite high relative to where things are trading. We have had a consistent dialogue with the yard, and we continue to have that to see if we can find an amicable solution to get us into a position to take delivery of these rigs. We've continued to market them. So we have bid them in all the last tenders. But I think the key to sort of unlocking this is, of course, to see a continued improvement in the market, but we probably also need to -- we need to come to some kind of a structure with the yard, which we haven't to date. So hopefully, that gives a little bit of color on Nova and Vega. Back to a couple of other questions here. Yes. Another question was, give a little bit more color on Safe Caledonia and our plans. The way that I see Safe Caledonia is very much sort of, if we have worked for her, that's great. We keep her in the fleet. She's actually a pretty old vessel. She's 40 years old. So she's -- I like to make a joke that she's older than probably many of the guys in our office. But she was -- she had a significant renewal program in 2012, well over $100 million was put into her then. So she's actually a very nice rig. I've had the fortune to be on board a few times. And I think what we saw now with her performance for Ithaca was really strong. She had really good connectivity even through a large part of the winter. And I think the client was extremely happy with the unit and her performance. So on the back of that, we won a new contract in '27. And as I mentioned, Ithaca is actually funding or prefunding, subject to us signing the final contract, which we expect now in Q1. They will actually be funding a lot of that upfront. So in essence, we are not putting in a lot of our capital to keep her there and to keep her well ready for 2027. So for me, that's a perfect situation. We're not having to necessarily put out money. We've got a good contract for her, and we actually see now in '26 that she was one of our better earners. So I'm actually a bit more optimistic on Caledonia than I was if I roll myself back a couple of years. And I also see that in the U.K. market, there is work actually coming up. So I'm relatively optimistic, but we are very much taking this year by year. We got a job for '27. We basically got it funded through to '26, and we'll take a view. We'll try to find her some work in '28 or '29, but she's obviously not an asset that we are going to take a ton of risk on, if you want to put it like that. But I think there's a good market at the moment. I think we can actually keep her quite busy. The final question I saw popping in was with regards to my belief in FPSOs and the need for these units to supply FPSOs, the continuing need and how -- and a bit more color on that. And I guess, again, I've had the luxury and the opportunity to actually be offshore in Brazil on several of our units and the opportunity to actually see some of the FPSOs we're working against. And I think the corrosion level in Brazil, if you talk to some of our clients, they talk about 4 to 5x the corrosion level that you would see in the North Sea. These units need a lot of maintenance, whether it's Petrobras units or MODEC units or SBM units or any of them. There's a big maintenance need. And I think we have also seen actually ANP, the regulator in Brazil also shutting down some units. If we look at Peregrino, it was actually shut in by the regulator with a need for maintenance. So what we're hearing from our clients is they need the maintenance. And also what we are seeing is, again, as I mentioned, with Brava using PRIO using Petro Rio, I think there's a number of MODEC, there's a number of clients in Brazil. So I think there's clearly not only sort of the sort of theoretical that they need -- they're getting older, they're high corrosion, but actually, we actually see clients using. And I think interestingly enough, we see a bit the same in Norway. If you look where the accommodation units are working, they're largely working now this against FPSOs rather than, again, new installations. And I don't see this FPSO trend declining. There's many FPSOs on order into Brazil, but also Guyana. And I guess if we're looking even further down the line, then we're talking Namibia. But I'm very optimistic about sort of the underlying demand driver for our units. I'll just take one last check. I think that was it from questions, unless there's any questions from the audience here. Go ahead, Lucas. Unknown Analyst: So what kind of OpEx number for Caledonia did you bake in, in your guidance number? Reese McNeel: Yes. So Caledonia has about $35,000 OpEx when she's working and she has about $20,000 when she's going to be laid up. And of course, we also have some costs associated with laying her up. So we will have a few million dollars of cost just to get her, of course, get her property laid up. Unknown Analyst: And your CapEx expectations beyond '26. I mean you are doing 2 major SPSs in '26. So '27, '28, what's kind of the run rate that you are looking at? Reese McNeel: Yes. No, that's a very good question. I think what we're seeing is SPS costs tend to be in the sort of $20 million to $30 million range. So we're doing this. We've done quite a few of the SPSs. So if we can -- we're going to have another 5 years on Notos, another 5 years on Zephyrus. Eurus is coming up, I think, end of '28, '29. So I think -- but those are kind of $20 million to $30 million chunks per rig, but they are all kind of now in the 2031, 2029 time frame. And I think one of the key questions here, of course, is always when you're getting on to new contracts, is there going to be a requirement for contract-specific modifications or CapEx. So a good example is now, when we transition Notos onto her new contract with Petrobras, there is some CapEx, which is required according to the contract. In exchange, we did get a mob fee from Petrobras. So you match them off. But I think what exactly the CapEx will be in the coming '27, '28, leaving aside SPS, I think that's a little bit dependent on which contracts and the contract structure that we enter into. But generally, we're looking at $2 million to $4 million a rig outside of SPSs. Unknown Analyst: Okay. And the kind of reimbursables that you incurred in the Q4, is it going to continue in '26, given the structure of the contract? Reese McNeel: Yes. I think the reimbursables will continue to be quite high, but Q4 was particularly high because the heavy lift vessel itself, the entire chartering of the heavy lift vessel from Norway to Brazil was a reimbursable. And that was a double-digit million figure. So we won't see the same level of reimbursables. But we'll continue to see some reimbursables. But the market is -- the markup is sub-5%. Okay, with that, thank you very much, everyone, for coming and for listening in. Thank you.
David de la Roz: Good afternoon, everyone, and thank you all for joining us today for the Q3 fiscal year 2026 results presentation for the 9 months ending 31st of December 2025. I'm David de Roz, the Director of Investor Relations at eDreams ODIGEO. As always, you can find the results materials, including the presentation and our results report in the Investor Relations section of our website. I will now pass you over to Dana Dunne, our CEO, who will take you through the first part of the presentation. Dana Dunne: Thank you, David, and good afternoon, everyone. Thank you for joining us today. We're going to discuss 3 things. The first is I'll do a brief update of our first 9 months' results of FY '26 and the outlook, which we are on track. Second, David Elizaga, our CFO, will take you through the Prime model and how it continues to drive very strong growth. Third, I will then share some closing remarks on why we think we are significantly undervalued. Please turn to Slide 4, which is a summary of our performance for the first 9 months of fiscal year 2026. We're firmly on track to deliver on our new guidance. In the first 9 months, adjusted EBITDA increased 74% year-on-year to EUR 138.4 million. Adjusted EBITDA isolates operational performance from cash timing effects of the move from annual subscription to annual subscription with monthly installments. So this 74% increase of adjusted EBITDA shows the strength of the underlying business absent the cash timing effects. Prime membership. We reached 7.7 million members, up 13% year-on-year. As of January, we hit 7.8 million subscribers and reaffirm our FY '26 target of 7.9 million. Cash EBITDA improved by 2% to EUR 126.7 million compared to the 9 months of FY '25, which was partially impacted by the investments we are making in the new businesses, the temporary instability in our Ryanair content, and the timing impact of the move from annual subscription to annual subscription with monthly installments. Despite this, growth resulted in a substantial expansion of our profit margins and is also on track to meet our FY '26 target of EUR 155 million cash EBITDA. In terms of revenue mix, Prime-related revenue now accounts for 75% of cash revenue margin and grew 7% year-on-year. I will cover this in my closing remarks, but it's important to briefly highlight that our strategy review update back in November 2026 was done from a position of strength and is a high conviction move based on solid data from extensive live operations. All in all, we will deliver a much better business, faster growing, more profitable, and more diversified, and we are significantly undervalued. Moreover, we are committed to shareholders' returns, and a proof of this is that we've repurchased 23 million in shares this quarter, with EUR 100 million committed through September 2027. We have already amortized 12 million shares, which is 9.4% of the share capital. And at today's prices, 24% share of eDO's market capitalization is pending to be repurchased between January 2026 and September 2027. And this represents a yield to our shareholders of around 33%, and very few companies out there are doing the same. Now I'll pass this over to David, who will take you through our Prime model strong growth. David Corrales: Thank you, Dana. If you could all please turn to Slide 6 of the presentation, I will take you through the Prime model. In the last 12 months, Prime cash revenue margin grew 7%, with Prime now representing 75% of the total. Even more impressive is the Prime cash marginal profit, which grew 18%, with Prime contributing a dominant 89% of our total cash marginal profit. This reiterates the fact that IDO is a subscription business focused on travel and that the strong growth of Prime more than offsets the anticipated decline in the non-Prime side of the business. If you could all please turn to Slide 7 of the presentation, I will take you through the key highlights of our Prime P&L. Looking at the 9-month P&L, our cash EBITDA reached EUR 126.7 million, that's a 2% increase. This was achieved despite headwinds, including investments in new products, temporary instability in Ryanair content, and the timing impact of moving to annual subscription with monthly installs. Notably, our cash marginal profit margin expanded by 5 percentage points to 42%. Looking at Prime's impact on profitability and the drivers behind that growth. Our cash marginal profit, a key measure of profitability, grew by 3%, reaching EUR 207.8 million. This shows that our business is not just growing, but each transaction is becoming more profitable. This improvement is due to the maturity of our Prime member base. As members stay with us longer, their profitability grows, which is evident in the 7% increase in cash marginal profit for Prime and its margin increasing by 4 percentage points over the past year. This is having a positive ripple effect on our entire business as our overall cash EBITDA margin improved by 3 percentage points from 23% in the 9 months of fiscal '25 to 26% in the 9 months of fiscal '26. Cash EBITDA for the 9 months reached EUR 126.7 million, marking a 2% year-on-year increase. Adjusted EBITDA, which isolates operational performance from cash timing effects of the move from annual subscription to annual with monthly installments, increased 74% to EUR 138.4 million. Looking at revenue performance. In the 9 months of fiscal '26, we have observed a few key changes in our revenue margin. Cash revenue margin for Prime decreased by 1% versus the 9 months of fiscal '25. While member growth was a positive factor, it was offset by an enlarged test in the first quarter of fiscal '26 and the move from the second quarter of fiscal '26 to the annual with monthly installment subscription fees and the progressive implementation of this option in the current quarter. Please turn to Slide 8 of the presentation. Revenue margin, excluding the adjusted revenue items, increased by 3% versus the 9 months of fiscal '25 to EUR 502.8 million. This improvement was driven by a substantial 16% increase in revenue margin for Prime, resulting from expansion of our Prime member base. The growth in revenue margin for Prime, as anticipated, was partly offset by the revenue margin for non-Prime, which decreased 24% versus the 9 months of fiscal '25, due to the switch of our customers from non-prime to prime and more generally to the focus on the prime side of the business. Variable costs decreased by 15% despite revenue margin is 3% above the 9 months of fiscal '25, as the increase in maturity of the Prime members reduces acquisition costs. Fixed costs increased by EUR 3.3 million, driven primarily by an increase in provisions and higher external fees costs. As a result, adjusted EBITDA, which isolates the operational performance from the cash timing effects of the move from annual subscription to annual with monthly installments, increased 74% to EUR 138.4 million from EUR 79.7 million in the 9 months of fiscal '25. Adjusted net income stood at EUR 63.8 million in the 9 months of fiscal '26. Turning now to Slide 9. I will take you through the cash flow statement. Our cash generation remains robust despite the transition to the annual with monthly installment subscription program. In terms of the operations, the cash flow from operating activities rose by EUR 31.1 million to EUR 79.1 million. In the working capital, we saw an outflow of EUR 42.9 million compared to an outflow of EUR 27.3 million in the 9 months of fiscal '25, primarily driven by a decrease of EUR 55 million in the variations of the prime deferred revenue. This variance is largely attributable to the timing impact of transitioning the subscription model from upfront annual payments to an annual subscription with monthly installments. This impact was partially offset by an improved working capital performance, notably driven by the hotel segment. In financing, we used EUR 96.3 million in financing activities, which includes significant acquisition of treasury shares as part of our buyback of EUR 55.9 million for the 9-month period. I will now turn the presentation back to Dana to do some closing remarks. Dana Dunne: Thank you, David. Please turn to Slide 11 of the presentation. I'll take you through some of our closing remarks. Let me start by reiterating that our strategic review update back in November 2025 was done from a position of strength, and it is a high conviction move based upon solid data from having done this for over 1 to 2 years, and in fact, having run Prime now for well over 8 years. First, we are accelerating the growth and the profile of the business. We expect record net adds of 1.5 million to 2 million per year between FY '28 and FY '30. These are growth rates of 15% to 20% per annum, which is much higher growth profile than the trajectory that we were on. Second, we have derisked the business model. The new guidance is built on conservative high certainty foundations. We have built our new guidance on conservative foundations by lowering expectations for Ryanair content and pivoting to annual commitment with monthly installment subscription fees. And third, this is a team that delivers. It is not just the first time we have announced a long-term plan. And in fact, each time we have announced one, we have met our 3-year guidance. We did this in 2017 to 2019. We did this in 2021 to 2025. All in all, while we face a temporary timing impact on cash metrics as we move to an annual subscription with monthly installments, this shift allows us to capture a much larger market share and higher-quality and more diversified revenue streams. And we are still guaranteed to get this money from customers. It is merely a timing difference in recognition of the money. If you could please move to Slide 12. We are positioning for accelerated growth with a team that delivers. We are setting targets that are very clear, 13 million Prime members and EUR 270 million in cash EBITDA by FY '30. Our growth trajectory will deliver record net adds of 1.5 million to 2 million per year between FY '28 and FY '30. Cash EBITDA margins will dip to roughly 15% in FY '27 during the peak investment phase and will return to 23% by FY '30 as these new members mature. And to be very clear, the anticipated decline in EBITDA margin over the next few years is solely due to expansion into new products and geographies as a result of the initial investment to support the company's future growth. You saw exactly this in FY '22 to FY '25, and you'll see this again in the coming years. Please turn now to Slide 13. We've done this before. eDO is a team that delivers. It's not the first time we've announced a long-term plan, and each time we have met our 3-year guidance. We have clearly demonstrated our ability to deliver on our long-term plan, such as the very aggressive targets we put in November 2021 or March 2025. That strategic shift involves significantly more risk than this latest one, and yet we still delivered on the previous one despite headwinds like Omicron, Ukraine, Middle East wars, double-digit inflation, and consumer confidence below pre-pandemic levels. So the market should have no doubt that we will again meet or exceed all of our long-term plan targets. Furthermore, the current strategy is more conservative and designed to ensure future growth, building upon the existing solid foundation. If you could please move to Slide 14. We believe there is a significant disconnect between our performance and our valuation. In terms of the implied multiples at current prices, we are trading at 4.4 and 4 FY '26 cash EBITDA and adjusted EBITDA. The opportunity, if we apply the average multiples of other OTAs or B2C subscription companies, they trade at roughly 8.3 and 11, respectively. So there's a massive upside potential as we hit the lowest point of our investment plan in FY '27 and accelerate thereafter. Please turn to Slide 15. We think it's important to highlight that we are not alone. Other successful subscription companies like Netflix broadened their business, but yet it caused a share price decline, and then the share price rerated as the company executed on their plan. Again, we have a track record in 8 years' history of doing this. If you could please turn to Slide 16. In sum, we are delivering a much better business, and we believe we are significantly undervalued. We are achieving higher growth with a 15% to 20% Prime member CAGR between FY '27 and FY '30. We are seeing higher customer lifetime value and stronger loyalty with a 10%-plus increase in NPS. By FY '30, 66% of our volume will be diversified away from the core European flight market. So we're inviting you to join us as we believe the current share price is significantly undervalued as we execute this final stage of becoming the world's preeminent travel subscription platform. The market is currently using conservative assumptions and high discount rates, valuing us at an implied 6.4x EV to cash EBITDA for FY '26, well below the 8.3 and 11x average for global OTAs and B2C subscription businesses. The onetime cash unwind is planned, but we are still guaranteed to get the cash. Growth will accelerate, and the valuation gap represents a massive upside for investors who recognize the strength of the world's leading travel subscription platform. I will reiterate once again, this is a high conviction move based upon solid data from extensive time of running this business and not a defensive move. It was a change to a higher growth strategy done from a position of strength and confidence. And I will conclude by saying that we will continue the share buyback as we are committed to shareholders' returns. If you could please turn to Slide 17. A proof of it is that we repurchased $23 million in shares this quarter, with $100 million committed from October 2025 through September 2027. We have already amortized 12 million shares. That's 9.4% of the share capital. And at today's share price, 24% share of eDO's market capitalization is pending to be repurchased between January 2026 and September 2027. This represents a yield to our shareholders of around 33%. There are very few companies out there doing the same. This concludes my closing remarks, and I will now pass it back to David. David Corrales: Thank you, Dana. With that, we will now take your questions. David Corrales: [Operator Instructions] Should we not have time to respond to questions from the webcast, the Investor Relations team will make sure those are answered afterwards. Now I'm going to start reading the questions. The first set of questions comes from Carlos Crevigno of Banco Santander. The first one says, how has your access to Ryanair's content evolved over the last 3 months? I'll take it. Dana Dunne: [indiscernible] Ryanair, this situation is similar to the one that we announced back in November 2025, the last time we spoke. We still do have access to Ryanair, albeit at significantly lower levels than what we've had historically. I want to really point out this does not affect our new strategy plan, as we have derisked this plan as we explained in November '25 and use much lower assumptions. We are absolutely 100% focusing on our growth plan and really making this fundamental transformation switch from annual to annual commitment with monthly, quarterly, and growing in all of the new markets and the new product categories, which in turn has real upside for shareholders. David Corrales: The second question from Carlos today is, could you comment on initial progress of Prime introduction in your new markets? I think this one is as well for you, Dana. Dana Dunne: Sure. Let's see. Let me take us back to what we said in November 2025, is that we've been in these markets now for 12 to 18 months. And we know absolutely what the results are. And this is no different than having run Prime for actually over 80 in so many other markets. Now in these specific markets, the test -- sorry, the results are positive. We've concentrated on 5 key countries. And all of them today continue to perform extremely well as planned and as announced back in November as well, but even what we've seen over the past kind of 1 to almost 2 years now. We see very significant growth. We see very good attachment. We see very good NPS. We see very good LTV to CAC. All of our key metrics are absolutely on track. David Corrales: The next question comes from Luis Padrón de la Cruz of GVC Gaesco, and it says, when you use OTAs ratios to your own valuation, you assume that OTAs are well valued, undervalued, or overvalued at current market prices. I'll take that one. We actually made no judgment in that assessment as to if either the OTAs or the B2C subscription companies are undervalued or overvalued. We're just taking a view of what we think should be at the very least a floor valuation to ourselves, to eDreams. And if you notice, we take the lowest point in our projections to act as the driver of the valuation. We're taking the fiscal year '27. So the worst possible year that we could choose, and we're taking the 2 sets of comparables that we have. Even if you take the lowest point, the current valuation of the share doesn't make any sense. If I had done that same graph, I don't know, 1 month ago, the multiples would have been higher. That's to say independent from this. And maybe those multiples increase in the future. That's also independent of this. Even with our lowest point of financial projections, and you apply a multiple to it, the current share price doesn't make any sense. That's the point that we're making in that slide. We now have a set of questions from Nizla Naizer from Deutsche Bank. The first one says, can you share some thoughts on how you view the threat from agentic AI agents that search, book, and pay for travel on behalf of individuals. Would you consider also launching an app within ChatGPT? Dana Dunne: Absolutely. So let me take it. Overall, we believe that we're well-positioned for this, and I'll explain why. But I can understand that from a broader context, even though Nisla didn't actually use this, there's other questions as well from investors that say, are you concerned about LLMs, disintermediating, et cetera. And so let me kind of cover Nizla's and the broader question here. And in fact, I'm also going to weave into my answer how we even see opportunities within this for us. So let me cover 3 things or 3 parts to this. The first part would be around complexity. It's really critical to understand how complex the business actually is. There are huge amount of technicalities like different IATA licensing, financial agreements -- sorry, financial guarantees, complexities and servicing, including delays, cancellation, amendments, refunds, different payments, et cetera. Remember also, there's post bookings, prebooking, people can be in airports, et cetera. There's huge amounts of complexities within there. And it's really important to focus on the key buying criteria of a customer so that they feel delighted on that. And there's a lot of price and non-price things within that in there. Now that complexity is extremely difficult to get right even from a price point of view, for an LLM. And that is where it really plays to, in essence, our advantage, but on all the non-price, all the technicalities, complexities, it really does play to us. Let me just give you some simple examples on this. So you see lots of airlines are not even set up to offer advanced booking and post-booking capabilities. And even the large, let's say, call them legacy carriers also struggle to offer a seamless online booking flow. And we have built a business by offering a better user experience. When you look at the NPS of us versus anybody else, we have the best in the industry, and there's a big delta between us and everybody else. And we're years ahead. And we do that already, already today by using AI and agentic AI. Many of you that have known us for a while know that we were one of the first companies over 10 years ago investing in AI, and we leverage it. Let me just also make the statement that, look, we've heard this hype about blockchains are really going to disintermediate us. Voice assistants are going to disintermediate us. Google, in general, is going to disintermediate us and not only travel, but in all other industries. And it's simply not true because people don't appreciate the amount of complexity and making certain that you meet the consumers' key buying criteria for it and do it in a better way than anybody else. The second part to this equation is around distribution and how an LLM and the business is monetized, which again relates to the concept of lifetime value of a customer. Now the LLMs need to make money. Many of them actually don't today. And the proven monetization model is one that Google has used for search. And most of them have said that they will pursue a similar type of model as well. And so that means that they'll pass on the transaction to a merchant like an OTA, for example. And so in this, let's say, emerging environment where the LLM passes on the transaction, a new option will be set up. Now we have subscription, and we have a better consumer proposition and higher monetization per customer. And so that means that we're able to outcompete most players in this distribution race. We see this, in fact, as playing more to our strengths for it. Lastly, consumer. We have a cutting-edge platform, and we have the high levels of customer NPS, I mentioned. So what that has also translated into when we focus on the key buying criteria of customers, we have created new and unique products and offerings that either very few or in many cases, no one else in the industry does and create. And so that takes it one step further to even delight and provide even more value to customers. I would say just lastly is that our platform, because it is one of the leading-edge AI platforms, we are well prepared. We already get traffic from some of the LLMs, and we're absolutely set up to distribute our content through emerging agentic channels, regardless of what those would absolutely be, be it on an app, et cetera. Let me stop there. David Corrales: The next question from Nizla Naizer is, can you give us an update on the rail product offered within Prime? Has this helped drive engagement and customer acquisitions already? Dana Dunne: So let me take that, David. I think rail is absolutely performing very well for us. It's fully rolled out in Spain. There's also on our plan to do even more feature functionality changes because we think that we can actually create even more competitive advantage, even more barriers to entry, so to speak, even more stickiness and unique differentiation with our rail product in Spain and other countries. But already today it is highly competitive. I shared with you in November about how we're doing from a distribution and capturing customers. We're doing very well. I shared with you, I believe, on the NPS, and the NPS is extremely good for it. So overall, it is absolutely doing well. David Corrales: And the last question from Nizla says, the Prime net adds in January of about 70,000 appear to be quite strong. Was there anything incremental driving this performance? Are you expecting this momentum to continue for the rest of the quarter? So yes, yes, the performance has been good on the first month of, say, the quarter from January to March, but that was as expected. The seasonality of our business is one in which the quarter from October to December is overall a low seasonality quarter, whereas the quarter from January to March is a high seasonality quarter. So yes, the performance has been very good, but we continue to stick by our numbers of reaching 7.9 million card members by the end of March, which is 600,000 net adds. The next set of questions come from [indiscernible] of Al Maria Funds. The first question says, looking at your strategic growth plans through fiscal '30, the cash EBITDA margins imply that you're still investing for Apple growth in fiscal '30 without providing official fiscal '31 numbers, and you talk at a high level for post fiscal '30 growth. How does a new plan with expanded markets and services compare to the previous post-fiscal '30 plan? So let me remind first that what we have said. And what we have said is that from fiscal '28 to fiscal '30, we will grow the Prime member base by between 15% and 20% per annum. That is between 1.5 million and 2 million net adds per annum. and that we will grow the cash EBITDA by 33% per annum over that period. So as you can see, the cash EBITDA is going to grow more than the Prime member base. The reason for that is that as we incorporate a lot of new year 1 members in all of the areas of expansion that we're going into the new geographies, the new products like train, those in the first year have relatively low margins. And then when they go into the second and the third year, they come to much higher margins. So the same way that it happened in the cycle from 2021 to 2025, in which you saw top-line volume growth and you saw a much higher increase in the margins that compounded and get you much higher absolute EBITDA growth, you're going to see that as well in the cycle from fiscal '27 to fiscal '30. Now you're asking about fiscal '31, now I get into the heart of your question. You're going to have in fiscal '31, still high top-line growth. I'm not going to venture a number, but you will still be in the double digits for sure. And you will have, at the same time, a continued expansion in the margins. We have said that the margins will go from a 15% cash EBITDA margin in fiscal '27 to about 23% cash EBITDA margin in fiscal '30. For fiscal '31, you should continue to expect an expansion of the margins. So you're going to have, again, a growth in EBITDA in '31, which will be higher than the top line growth with an expansion of the margin. The second question has already been answered. It was about AI. The third question says, eDreams headcount is up 5% year-over-year. This is obviously to support future growth. There is a narrative that people in technology positions can be replaced. Can you talk about your experiences with this and thoughts on continued headcount growth to support the growth of eDreams? I'll take that. I think if you look again, there's a very useful parallel in the cycle from '21 to '25 and how we executed that and the way we're going about the execution of this upcoming cycle. In the process going from '21 to '25, we went from 2 million members to 7.25 million members. And in order to achieve that growth and go to all of the markets in which we expanded Prime, we increased the headcount from roughly 1,000 employees to about 1,800 employees. So that's an 80% increase in the headcount. We're now going into a cycle in which we're going to go from 7.5 million, 7.6 million, like we were a quarter ago to more than 13 million members. That's actually in absolute and in percentage higher than the growth from 2 to 7. And we're going to do it by increasing the headcount, like you're saying, only by single digits. That tells you that the leverage that we're getting from the new AI technologies that facilitate the coding make our software development workforce much more productive than what it was before. So absent that improvements in productivity, we would have had all other things being equal, to increase the headcount a lot more. So you already probably saw a press release that we did, I think, a few weeks ago, in which we let the market know that already, as of today, 30% of the software code that we put into production has been written by AI, supervised by a human, but it has been written by AI. The fourth question says, in December, the Italian Competition Authority fined Ryanair EUR 0.25 billion for withholding content from OTAs and degrading the OTAs, including eDreams. Where are you at with Ryanair content? Does this ruling help speed up getting full access to the content? And lastly, the Italian authority unearthed evidence that the Ryanair CEO, in communications to the Board and shareholders, blamed their sales declines associated with blocking OTAs on a boycott from the OTAs and not an action taken by management. Do you think there will be any ramifications for Ryanair given this evidence unearthed by the Italian Competition Authority? Dana Dunne: So let me take that. So I think I mentioned in terms of the access for Ryanair continues to be volatile. But I also want to just highlight to everybody, again, our results no longer depend upon Ryanair's meaning hitting our guidance, as we've derisked that in our projections. Now in terms of the question, the AGM ruling, yes, does confirm that Ryanair used massive disparaging campaigns to coerce OTAs into restrictive agreements. It's important to note that eDreams maintains its legal right to distribute flights without such agreements, and this has been confirmed by European high courts. In terms of the denigration, as you may know, we have secured a significant legal win with an unfair competition condemnation against Ryanair in Spain, and we will continue to defend our business and seek enforcement of the ruling. At the heart of our business, though, is we have access to Ryanair on a volatile basis. We are absolutely on plan and derisk our plan. And we have a consumer-led business, which we've demonstrated again and again that consumers hold us in really high NPS and our existing base of customers, we have demonstrated and shared data repeatedly with investors and analysts that Ryanair-like customers stay with us irregardless of whether we have full access or not of Ryanair and that they have extremely strong retention rates, renewal rates and satisfaction Prime. Now obviously, in terms of the ramifications of the evidence that you talked about, we've commented on those when the ruling came out, and we'll continue to monitor closely the situation to see if other authorities or anybody else takes actions on them. David Corrales: The next set of questions come from Guilherme Sampaio of CaixaBank. The first one says, do you still see no changes in churn or bad debt in the movement to a more phased payment scheme? I'd say that what we have seen in the 3 months since November is perfectly in line with the results of the test that we conducted for a period of 2 years. So no news. The second question from the same analyst is there are EUR 4 million nonrecurring items booked in the Q3 on those attached to LTIP. Could you provide more detail of the nature of this? And what is the level of nonrecurring costs that we should expect for fiscal '26? This EUR 4 million are tied to legal proceedings in Germany. There's a note that describes them. It's note 22.14 in the financial statements. So for full details, you can go in there. These are nonrecurring in nature, and you should expect that the level of nonrecurring items in the Q4 would be in line with other quarters, Q1, Q2, et cetera. Let me go now to the next investor. The next investor is [indiscernible] from Barclays. Could you touch on average order basket trends in the quarter? And any color on current Prime booking volumes, it would be helpful. Look, I would separate the 2 things. On the one hand is the booking volumes of the Prime members, and those continue to evolve according to the historical track record and in line with the increases in the Prime members. A different aspect is what we call the average basket size. And what we see in the comparison versus the past for this quarter is that we see a continued decrease in the average basket size. There are a couple of elements in the in which we are noticing changes in behavior from the customer. There is less percentage of the bookings on intercontinental routes, which are migrating to continental routes. So those are, if you want to simplify, Europeans preferring to go to European destinations as opposed to cross the ocean or going to Asia, let's say. And then on the other hand, what we see as well is more occasions in which people break down the return flight from the original flights, and they book, let's say, 2 one ways instead of aggregate, and they disperse those in time, and that also affects the average basket value of each one of the individual bookings. The next set of questions, although one is already answered. So the next 2 questions come from [indiscernible]. The first one says, can you provide more color on churn for Prime members and give us an idea on the split of monthly versus annual members, new versus existing Prime members, and number of products used by members? Well, that's a rather long question. Let me try to take it in a fashion. The churn we don't disclose, but there's nothing new about the churn of the Prime members. In terms of new versus existing Prime members, of course, in a period in which we show less increase in the net adds, like this year, which we're going to have 600,000 net adds versus the previous year at 1 million net adds, you have more existing. And you can see that in the progression of the margins, right? The progression of the margins is because you have more members in the year 2, 3, 4, 5, which would have higher margins than the members in the first year. In terms of the products used by members, let's say, there's no change there in terms of the frequency of the bookings that we see. T he second question says what metric or trigger would result in the business stopping share buybacks during the expansion phase. I'd say that as long as we continue to see performance in line with our expectations of the plan, so if we deliver the cash EBITDA that we have forecasted, and therefore, the cash flows that follow, there is going to be no change in the share buyback. So share buybacks are financed by the cash flows produced by the business. So as long as the business produces the same level of cash flows, we are going to have the same plan of repurchases. What we are not going to do, I mean, just be triple clear, is to incur additional debt in order to fund purchases of shares. The purchase of shares are funded with the cash flows produced by the business. Next question from Lazar is actually repeated from the previous one. The next question from Martinez [indiscernible] Capital is what is driving the ARPU decline? Okay. Let's remember what the ARPU -- how the ARPU is calculated. The ARPU is the cash revenue margin over the last 12 months divided by the average number of Prime members over that same period of time. So therefore, it is a cash metric. So one of the consequences of starting to incorporate into our member base, those that get into an annual subscription, but with monthly payments is that for people that joined, let's say, 6 months ago, we have received 6 monthly payments but not 12 monthly payments, whereas when you had the whole member base being on annual upfront payment, even if they join on day 365 of the period, they still pay you the full subscription fee. So you're going to see a natural softness in the ARPU going until the end of fiscal '27 derived precisely for this. And this is already a guidance that we gave to the market, and we said that the ARPU was going to go to a range between 60 and 65, and then after that would start to increase in fiscal '28 and beyond. There's another question that says from Cos of Swiss Life. Don't you think that it makes more sense from a stakeholder perspective to buy back your bonds roughly 50 points below par at 8% plus yield level versus continuing share buybacks? Well, I disagree, and the math is not very complicated to do. You point to an 8% plus yield level. I'd say the free cash flow yield from our projections is well in excess of that 8% plus. And therefore, it is a better financial investment to repurchase shares than to repurchase bonds. The next question comes from Linda from [ Arc ]. It says in terms of maintaining and defending your credit rating, which actions are currently on the table? Among others, would you consider the suspension of share buybacks? I'd say that the rating agencies have just refreshed their assessment on us based on the strategy that we communicated in November. And that strategy included inside the plan to repurchase 100 million of shares over a period of 24 months. So that's already factored in. It doesn't -- therefore, to defend the current rating, we don't need to change the action plan for that. The next question comes from [ Alice Stack ] of DB. You report 11,000 net adds in the Q3 compared to around 70,000 net adds in January alone from the fourth quarter so far. What reason would you attribute to this inflection in membership growth? Sorry, this is a repeated question. We already responded this question in the set of question from [indiscernible]. The next question from BNP Paribas is also answered. The next question has also been answered. It's a question from Giacomo Fumagamani of Arm. And it says, when you say that hotel performance was weak, what specifically do you mean? Less hotel supply, users changing habits, et cetera? I'm very confused about the question because we have never said that the hotel performance is weak. Actually, we're very satisfied with the performance of our hotel segment. And it continues to make very good progress. The penetration of how many hotels do we sell for every flight that we sell continues to increase. The amount of customer satisfaction of the members that use the hotel product is superior to the customer satisfaction of those that only use the flight product. So I actually don't know what this investor is referring to. The next question says, what has been the trend -- is from the same investor, what has been the trend in user base for Prime users in terms of age and user type? Dana Dunne: I'll do that. Yes. So first of all, overall Prime pretty much represents the market. So when you try to segment the market and look at, let's say, age distribution or socioeconomics, or you can think about even long-haul, short-haul, et cetera, many different types of things. We pretty much represent the online market with the following exception, we skew positively in a couple of segments and quite strongly in 1 of the 2 in particular. And that's obviously Gen Z. We over skew versus the market and also in millennials as well. David Corrales: Yes. I'm going to jump over several questions, which are repeated with the ones that have already come up. I'm going over to -- this one is new to Bharath Nagaraj from Cantor Fitzgerald. It says, how is the health of the consumer currently and travel still high on priorities for consumers despite worries about job losses, fears from AI generating job losses, et cetera. I'd say it's very consistent with the trends that we have seen in the previous quarters. If you look at public data out there that anyone can look at, you see, for instance, the data that IATA publishes on a monthly basis about the number of flights which are booked by people, or you look at another source is Eurocontrol that reports about the number of planes that actually fly in discount. It's another angle of the same thing. You can see that there are increases in volumes of about mid-single digit year-on-year, and that has been consistent over the last 2, 3 quarters. So in terms of leisure travel, I'd say that nothing has really changed upwards or downwards. It is a very resilient category in which people prefer to give up other discretionary expenses before they give up travel, and we continue to see that with the behavior of the consumers. And the next question is from Serena Mont of Santander. It says the recent legal requirement in Spain for subscription services to inform a customer whether he or she wants to renew or not. Could this have an impact in churn rate in your opinion? Have you noticed some early signals on that? Dana Dunne: Absolutely. So first of all, obviously, we're fully compliant with local regulations in each markets where we operate. We're fully transparent. We're transparent with our customers. We have not seen a structural churn deterioration from increased transparency. And I think we've even made comments about how, actually, in the sense our retention of customers is increasing. If you look at our NPS scores also, they continue to increase in these markets, including in Spain. And that all supports the fact that we have a strong offering is valued by customers, and we have as good, if not even better retention of customers than what we had, let's say, a year ago. David Corrales: The next question comes from -- it's a new question from an investor that already asked before [indiscernible] and it says, can you comment why other OTAs are not following a similar subscription business model? Dana Dunne: Yes, absolutely. So let me take that. So there's a couple of things. The first one is that we've been at this for over 8 years. Now in that period of time, there have been other companies that have come into the market and then have exited from a subscription-based business. And I think there's a lot of things that one really needs to do in order to get it right. And you've seen the NPS is very high for us. And you've also seen that our margins are good in the first year when you acquire a customer initially, and you have the CAC, obviously, the margins are very low. But assuming you have a really strong, good proposition, then you get into the year 2 plus, where you have very good margins. And that's what you've seen. And you've seen that like, for example, in '21 and 2025, as we grew the base of year 2-plus customers as a proportion to year 1, our margins continue to grow, and you even see that in our most recent results. And that also links with obviously the investment phase, as we acquire more year 1 customers proportion than what we had in the past, it does put some pressure in our margins, and then it comes back as we move the proportion of the year 2 plus customers, and we get to higher basis of those customers. That whole dip or that funding, a lot of companies don't want to go through. They also need to transform their business because subscription is fundamentally different offering, and you have to do things from the different types of, let's say, pricing, marketing, customer servicing, even cash management, every aspect of the company has to be transformed. Now we've done that, but it's a massive company transformation. So these are probably some of the reasons why some companies either have decided not to do it and/or some of the companies that did decide to try to do it have pulled back. David, back to you. David Corrales: Yes. There is a second question. Can you comment on the mix of products customers use? I understand holiday packages to be more profitable compared to just flights. Where do you see the mix shifting over your expansion phase? Will there still be a high focus on flights? Or is there an expectation that this will evolve over time? Dana Dunne: Yes. Why don't I take it? A couple of things. One is that we're really a consumer-led subscription-led consumer business. So we focus on that individual consumer. And so the most important driver for us is obviously the number of members, and then obviously moving those into year 2+, which we do very well. In terms of the individual product categories, we don't make, let's say, more money or less money on a certain product category. What we did when we set up our model a long time ago is we said that we're going to set up a model that's very similar to Costco in the sense that you don't try to price really a profit margin into your daily transactions of it. And instead, if I call it the profit pool is your subscription. Now because you don't price in a profit margin there, obviously that gives -- it meets a key buying criteria of the customer, and it delights them and they'll be coming back and coming back at the end of, let's say, the year period, they'll be more likely to renew because they've been relying on one of their key criteria for it. So that's where we've set up our model. So it's important to focus much more on the NPS that we have on the satisfaction of the customers and on the number of customers we actually have. David Corrales: The next question comes from [indiscernible]. Says you're currently executing a share buyback, of which EUR 77 million remain until September of 2027. Why don't you consider a tender offer at, say, EUR 5? This company should be trading between EUR 10 and EUR 15. This is a very low, low price. Of course, I agree with you, we've said repeatedly that the share price is severely undervalued. But then let me bring back together a couple of things that I said to separate questions today that I think are going to help you to understand the path that we're taking. The commitment to invest EUR 100 million over a period of 24 months is one in which we, let's say, face the repurchases with the production of the cash flows. So we first generate the cash flows, and then we invest the cash flows. And another thing that I've said today is that we do not intend to increase debt to fund repurchases of shares. So if we wanted to invest tomorrow, EUR 77 million, we would have to incur that to then do the tender offer and then repay the debt over the next 20 months or so as we generate the cash flows. That's the path that we said that we are not comfortable taking. So we will continue to buy progressively according to the generation of the cash flows. I think we're out of time. Thank you very much for a lot of interest in the business and joining our webcast today. Before we conclude the call, I would like to inform you that on Thursday, the 28th of May, we will be hosting our conference call for the full year 2026 results presentation. In the meantime, we will be very happy to receive your questions via our Investor Relations team or in the investor e-mail address, which is investors@edriimsolidia.com. Have an excellent rest of Thursday and rest of the week, and looking forward to speak soon. Thank you.
Remon Vos: Good morning, everyone, from CTP here in Prague, Czech Republic. Excited. And thanks for dialing in. It's good to have you on the call. We are going to talk about the 2025 results, which are good. But before we start, I'd also like to look back. 2025, you could say, has been 25 years of growth. We have completed our first building in 2000 here in the Czech Republic in Humpolec, where we did our first CTPark model. The CTPark Humpolec was the first site we acquired, initially 10 hectares, and later on we had the opportunity to grow that park. So that's where we first started with a club house where we looked for people and did establish a small team and did then develop a number of properties, and those buildings are still fully leased and many of the tenants which we initially had actually, they're still there, and they have been able to grow their business. So 25 years of continuous growth, which started with nothing, with a piece of land, and then building and second, et cetera, et cetera. So thank you very much to all the very loyal clients, all those companies who we have been working with, the companies who gave us the opportunity to work for them outside of the Czech Republic later on. And of course, thank you very much to all people we've been working with a lot over the past 25 years. And thank you to all other partners and of course, the fantastic team here at CTP, which in the meantime is 1,000 people, more than 1,000 actually nowadays. So that has been 25 years of continuous growth, good times, bad times with all kind of different opportunities along the way. So '25 has been a strong year, has been a good year with good results, which illustrates also the growth engine, the thing we like to do, we like to grow and the largest growth engine in the business here in Europe. So last year has been also an important year for us, because we added another country. We opened up business in Italy. In the meantime, we have more than 200,000 square meters of projects under construction in Italy, mostly pre-leased, 70%. We do that in south of Milan, close to Piacenza, Castel San Giovanni, but also in Padua, and we have other projects underway. At the same time, we set up a team of people in Italy, and we have a land bank to build an average of, we thing, 200,000 square meters of properties over the next years, and we hope within 5 years to hit the 1 million square meter lettable area target in Italy as well. We see good opportunities in Italy. Overall, we see opportunity in Europe over the next years. So we're quite happy with the entry so far, and we're making good progress. The land bank, mostly North Italy, but also strategic sites in the region of Rome. So there's also other places where we believe we will be successful in the development of our industrial properties, again, mostly for existing clients, so the companies who are already renting from us in other markets. For those clients, we plan to develop properties in Italy. And the amount of business we do for existing clients is approximately 70%, 7-0 percent of the total amount of business we do. When we look at drivers for Europe, it's definitely near-shoring Asian companies coming a setup shop in Europe for Europe. I mentioned defense, but also technology, semiconductor industry, consumer goods. People have more free time, so they go out biking, running. Pets, massive industry. We do multiple facilities for pet food producers, pharmaceuticals. So there's a whole of consumer spending, means people have more money to spend than they had 25 years ago when we started here, and we see that in other markets in Serbia, in Slovakia, in Romania, where we came initially maybe for low-cost manufacturing and later turned into manufacturing for domestic market. And nowadays, Central Europe is the engine of Europe. Here is where you go for manufacturing. And yes, it's all positive. So relatively good outlook, and we have a number of growth drivers. We are not in it for the short, we're in it for long. So we have plans for the next 25 years. And those plans are definitely to make CTP a global player and to grow with our clients and to use all the experience we have building business parks. Last year, we signed 2.3 million square meters of new leases, 2.3 million, which is a bit more than we did the year before. In '24, we did some 10% less. Rental rates were a bit higher last year in '25 compared to '24, approximately almost 5% higher rents than same building in a year earlier, in 2024. So a bit rental growth, 10% more deals, and still around 10% yield on cost. Target, midterm ambition, continue to grow with existing clients, which we have a lot of them. Good companies. They pay on time. 99.7% is rent collections of money which we charge to tenants, which is paid. And as I said, most of them on time, good companies. 70% of all new business we do with existing clients have 80% retention rate. And this is also important to mention, 75% of all the projects we do are being built within existing business parks. So we don't do stand-alone boxes. We really create an address, a park, an environment, an ecosystem with sufficient infrastructure and manage these facilities for people to work, develop themselves, to create business together, to work together, to grow stronger, and to have a stable business park. Also not overexpose to one specific industry, you want to mix it up with different industries. It's also good for labor market. We see a lot of automatization among our tenants. So they continue to invest in their facilities, in their production lines, in their technologies, which is good as well. We break it down at CTP, as you know. We talk about 3 things. We have the operator, which is the income-producing part. So the part of the company will look after the buildings which we have built over the past 25 years, with EUR 840 million of rental income, on the way to hit EUR 1 billion rental income next year. So it's the operator with good occupancy level, always above 90%, between 93%, 95%, depends a little bit on the market and the location where you are. It depends also on how much property we actually build to enter a market and you need time for the market to absorb all those buildings, but remain at the target around 93%, 95%. That's the operator. Then we have the developer. Those are the people at CTP who develop properties or who build business parks and properties. Quite active now also with inventing new type of properties, adjustments, constantly working on making these buildings better, both the existing refurbishment upgrades, but also new properties. And better means flexibility. So we have generic designed buildings for multiple generations, energy consumption, maintenance, those things are important when you design a property. That's what these guys are busy with. Some highlights as well what we've done in terms of completions last year, 1.3 million square meter, 180,000 square meter in Bucharest; 65,000 square meter in the CTPark Budapest in Hungary, but also, of course, in Brno, Czech Republic, yes, the home of CTP, where we have built millions of square meters. Last year, we did a deal with FedEx, for example, just to mention one. Part of our 30-30 plan, right, to grow to 30 million square meters. 2 million square meters under construction this year, which is good for EUR 150 million of rental income. Another highlight, maybe if you talk about those 2 million, we do a lot in Poland, the largest economy, largest country in Central Europe, very dynamic. Can do, a lot of support from the government, very good locations, I think we have secured a good team on the ground. So there we invest a significant amount of money now building properties, mostly leased, in and around Warsaw, but also Upper Silesia, Katowice, Zabrze, as well as along the German border on the west side of Poland. So we see there good opportunity, as well as in Gdansk, by the way. Another highlight, I would -- yes, Bucharest, Romania has been good, is still strong. Serbia is strong. Germany this year is important to get things going in Mülheim. Some of you have been on the Capital Markets Day event last year, we looked at Mülheim Energy Park with E.ON, Siemens and more to come. So that's happening, making good progress in Düsseldorf as well as in Wuppertal. So overall, quite positive about Germany as well. I think, yes, well established and good position. Last but not least, the growth engine, the third activity, we look globally at opportunities in different countries. And how does this work? Well, it comes from clients. Clients tell us, okay, we are going to that market, because we see growth. We need properties. Are you there? Sometimes we are, sometimes we are not. If we are not, then we have a closer look at such a market. We think shall we go there? Does it make sense now? And we constantly do that. Sometimes we do not enter. Sometimes we have a closer look. Now we always have the desire, as you know, to also become active outside of Europe, because we see other opportunities in other markets. And we found good opportunities in Vietnam and strong demand from existing clients. So we continue to have a closer look. We announced it last September. And so far, we've been making some good progress, having a closer look at the market and the opportunity. We have a few people in the meantime on board. So we have a CTP Vietnam, and we have there a small team of experienced industrial property people. Vietnam, obviously strategically located, 100 million people, very productive workforce, but also quite young people, around 30 years of age. So in the future also, you will see consumer spending. Well connected to the rest of the world. And that will also give an opportunity to get us feet on the ground in Asia and also closer to other Asian companies who look at coming to Europe. And then we'll keep you up to date on developments we are making. Yes, it's not only about getting bigger, we need to also get a better company. So we are obviously constantly working on getting a better company with maybe doing more buildings with less people, more efficient, more effective, different processes and procedures. We automatize. For example, when it comes to property management, when it comes to energy consumption, we know exactly how much energy tenants consume in their buildings. We can help them again with energy management with clear understanding of the condition of the building, and when there are issues, property management related, then we can fix that. We have a clear system for that in place in the meantime to monitor all the maintenance and repairs, which potentially are needed. So both energy consumption as well as maintenance and repairs to make sure buildings are in good condition and remain in a good condition. That's one example. And there's many other things we've done, whereby we've introduced new processes, better, and software and automatize, standardize, digitalize the company, and that makes us think better and quicker and more efficient to continue to grow our business. Yes. So we're looking forward very much to the next 25 years. Thank you for your attention. I will hand over to Rob. Some of you know Rob. He's not really new to CTP, but as IR, we are happy to have him on board and look forward to answering your questions. Robert Jones: Turning to the financial highlights. Net rental income increased by an impressive 14.1% to EUR 738 million, driven by record leasing of 2.1 million square meters, excluding Italy. Like-for-like rental growth came in at 4.5% in FY '25, accelerating from the 4% we delivered in FY '24, and this was driven by indexation and positive rent reversion capture. We also delivered record development completions of over 1.3 million square meters with occupancy at the year-end still remaining stable at 93%. Annualized rental income increased by 13% to EUR 840 million, illustrating the strong cash flow generation of our portfolio and locked-in growth profile of our business for 2026. Company-specific adjusted EPRA earnings increased double digit by 11.3% year-on-year to EUR 405 million. CTP's company-specific adjusted earnings per share amounted to EUR 0.85, an increase of 6.3% year-on-year, as we also made positive progress on our debt refinancing during the period. This EPS figure was just EUR 0.01 variance to guidance, driven by the timing of development completions in Q4 '25 with some moving to Q1 '26. As we look forward, the important message here is that our medium-term double-digit annualized growth trajectory is unchanged, as Richard will highlight shortly. Now looking at the valuation results. The revaluation of the portfolio for 2025 came to over EUR 1.1 billion, a key contributor to our leading total accounting return for the period. Of this positive portfolio performance, EUR 422 million was driven by the construction and leasing progress on our developments, while EUR 649 million came from the revaluation of our standing portfolio with the balance from our land bank. As at the year-end, the total portfolio gross asset value now stands at EUR 18.5 billion, up 15.6% from FY '24. CTP's reversionary yield stood at a conservative 6.9% at full year '25. For '26, we expect further selective yield compression and positive ERV growth in line with inflation. This is also illustrated by the new leases that we signed in '25, where rents were a solid 4% higher than 2024, adjusting for country mix. The supportive demand drivers of our business remain present, whether that be near-shoring, manufacturing in Europe for Europe, businesses upgrading their supply chains or reacting to the changing global landscape alongside increasing deglobalization of political agendas. Our core CEE markets, where industrial and logistics space per capita is half of that of many of other Western European markets, continues to benefit from these supportive trends alongside our own Western European markets and our opportunities being assessed outside of Europe. We are not short of opportunity, nor are we short of capital, with that opportunity driven primarily by the embedded value to be unlocked from CTP's existing land bank of more than 33 million square meters with the majority next to our existing CTParks. This land bank that we have on our balance sheet allows us to facilitate our tenants growth as a solution provider for their real estate needs. We remain active in the market for the acquisition of land, especially in Poland and Germany, and we replenish and, in a number of cases, grow the land bank in existing markets where returns are the most attractive. Now as Remon mentioned, we also continue to look to enter markets such as Vietnam, following on from our successful CTP Italy market entry at the back end of last year. Our EPRA NTA per share increased from EUR 18.08 at year-end '24, up to EUR 20.39 FY '25, and this represents a strong increase of 12.8% during the period. With this NTA growth, in conjunction with our dividend distributions, we delivered a total accounting return to our shareholders of 16.1% over the past 12 months, highlighting our superior total return profile, which is underappreciated by the equity market within the real estate sector. I now hand over to Richard. Richard Wilkinson: 2025 was another year of solid growth for CTP as we continue on our journey to 30 million square meters of GLA, a doubling of the current portfolio. The company's interconnected business units, the operator, the developer and the growth engine are all supported by our strong access to debt capital markets, diversified funding structure and multiple sources of liquidity provided from across the globe. 2025 saw us receive an investment-grade credit rating upgrade to BBB flat from Standard & Poor's. Moody's also have a positive outlook on our credit rating, confirming the growth trajectory of our business. This January, we again evidenced the high institutional demand for our debt, issuing a 4.5-year bond at a spread of only 92 basis points with a peak order book of over EUR 4 billion. Looking forward, we will continue to diversify our sources of debt funding as well as managing our liquidity to ensure we do not hold material excess cash. We also target growing our share of unsecured debt towards 80% of total outstanding debt. Turning to the key credit metrics. Our interest coverage ratio was unchanged quarter-on-quarter at 2.5x, and we expect this level to be the bottom. Our normalized net debt-to-EBITDA remained broadly stable at 9.3x and our loan-to-value stood at 46.1%. This LTV is marginally higher than our 40% to 45% target due to us seizing the acquisition opportunity in Italy at the end of 2025. In Italy, we will deliver 200,000 square meters of GLA in 2026, more than 10% of our annual target. And with a land bank of over 8 million square meters, we have a long runway for growth in Italy, a country with a significant undersupply of modern A-class industrial and logistics space. As our development pipeline is completed and over 10% yield on cost and revaluation gains are fully booked, we expect loan-to-value to move back towards our target range. To complete our development pipeline of 1.4 million to 1.7 million square meters in 2026, we do not need additional equity capital due to our sector-leading yield on cost around 10% from projects to be delivered in 2026. Every euro we invest in our pipeline increases our ICR and decreases our net debt-to-EBITDA as our leasing income comes on stream. This allows us to grow group rental income at double-digit rates while simultaneously improving the most important credit metrics. In 2025, we signed EUR 1.7 billion of unsecured debt to fund our development business, debt refinancing and our growth engine. We continue to demonstrate our ongoing strong market access whilst actively managing our funding costs. During the year, we renegotiated or repaid EUR 1.6 billion of our most expensive bank loans. Looking through 2026 and beyond, CTP maintains a conservative debt maturity profile. We repaid EUR 350 million of bonds maturing in January, and our only remaining bond maturity in 2026 is EUR 275 million maturing at the end of September. Looking further ahead, maturities remain limited over 2027 and 2028 with less than EUR 1 billion in total outstanding. Our liquidity at the end of 2025 stood at EUR 2 billion, comprised of EUR 700 million of cash and our EUR 1.3 billion RCF, more than sufficient to meet our cash needs for the next 12 months. The average debt maturity stands at 4.8 years, and the weighted average cost of debt was 3.3%, which represents only a marginal increase compared to year-end 2024. We do not expect a material increase in our average cost of debt as our marginal cost of funding is currently below 3.5% for the 5-year midterm period. Regarding the midterm outlook, a key message here is that the medium-term growth outlook for CTP remains unaltered. At our 2025 Capital Markets Day, we introduced our ambition to double the size of our portfolio to 30 million square meters. We expect to grow top line income around 15% per annum, driven by rental growth in our operator business alongside double-digit organic GLA growth from our developer business as we build on our unrivaled land bank at 10% yield on cost, supported by our growth engine as it seeks attractive global investment and growth opportunities. Digging deeper into those attractive return drivers. Firstly, we have the operator, over 1,500 supportive tenants who pay on time, stay with us and grow with us. Secondly, we have our development business, led by the strategic land bank of more than 33 million square meters, either on balance sheet or under option, located mainly around our existing parks. This is the key component of our portfolio growth ambition. And thirdly, we have the growth engine, the global identifier of shareholder value-accretive land-led acquisition opportunities to continue to deliver high returns well above our cost of capital. We also continue to see above inflationary rental growth across our markets, supported by income reversion capture, positive near-shoring trend, production in Europe for Europe, and ongoing e-commerce growth driven by rising disposable incomes across our strong Central Eastern European region and our Western European markets. Previously, unlike the rest of the sector, we did not capitalize interest on development activities, which made comparability between companies for investors more difficult and made CTP appear more expensive on a simple earnings multiple basis. Going forward, we now capitalize interest to provide reporting harmonization with all other European real estate companies. Following this change, we now set our company-specific adjusted EPRA earnings per share guidance for 2026 at EUR 1.01 to EUR 1.03. This implies year-on-year growth of 9% at the lower end of the range, rising to 11% at the top end of the range when compared to the 2025 result. In summary, CTP delivers leading shareholder returns as a growth business with income and cash flow growth, development profit growth and the growth engine lever through expanding our global exposure. Thank you for your attention. We now welcome your questions. Operator: [Operator Instructions] With that, we'll take our first question from Marios Pastou from Bernstein. Marios Pastou: I've got 2 questions from my side, one on the development pace and then one on capitalized interest. Just firstly, on development. So you had some delays in 2025. You also then added Italy. I'm just questioning why there isn't any upgrade really to the guidance range for the development targets for 2026, and whether there's any kind of room to beat on this going forward? And then secondly, on capitalizing interest, I suppose another question really on why you've decided to implement this change now. Not all companies do this, and whether you'll continue to headline both numbers going forward? Richard Wilkinson: Yes. Thanks, Marios. I'll take the interest capitalization question first. look, as we've been on the market now for 5 years, if someone wants to look at the real estate sector, they fire up their Bloomberg and they sought companies by earnings multiples, if everyone else is capitalizing interest and we are not, we screen expensive compared to the market. So basically, what we're doing is we're just aligning ourselves with the standard market practice of all the logistics players. And the timing, we think that -- we've increasingly heard from investors that when they look at us first, they think you screen expensive. And then when we dig in, we understand better why that first look isn't always helpful. We understand investors are time poor. So we want to try and make it easy for them to have a simpler comparison going forward. And on that basis, we will publish the EPS targets and results, including the capitalization, not excluding it. Regarding the development pace, maybe I start and then Remon maybe comes in. Regarding the guidance for 2026, we're coming out with something that we are very confident that we can deliver. We think the 1.4 million to 1.7 million is something that is very achievable with us. The lower end of that range would be a new record for deliveries for us, but we're confident that we can reach that. We know we missed on the EPS guidance for last year, and we don't want to disappoint the market in any way going forward. Operator: Our next question comes from John Vuong from Kempen. John Vuong: Just on the pre-let for 2026, could you elaborate a bit more on the mix of developments in existing and new locations and how that compares to last year? And have you started relatively more developments in existing locations essentially? Or did leasing start a bit slower than last year's pipeline given the 30% pre-let rate? Richard Wilkinson: Yes. Thanks for the question, John. Yes, regarding the overall pre-let, we stand at 30% at the start of the year, which is in line with our 30% to 35% range that we've been doing over the last years. In terms of the existing parks, the pre-let is 23%; in new parks, the pre-let is 62%. So consistent with what we've been doing over the last years and what we've been reporting in parks, where we know the demand, where we understand the tenant requirements coming up, we are willing to start with a lower pre-let ratio. And finally, I would also highlight that we have another 175,000 square meters of pre-let projects that we have not started yet. So you don't see those in the pre-let ratio. Robert Jones: John, this is Rob Jones. The other thing to add is, we're still very comfortable on our 80% to 90% target for pre-letting at delivery for '26. We obviously delivered 88% in 2025, so very much towards the top end of that range, and are happy to guide for that 80% to 90% again for 2026. So yes, we're pretty comfortable there. Operator: Our next question comes from Jonathan Kownator from Goldman Sachs. Jonathan Kownator: Just coming back to the guidance, please. So 2 questions really. The first one, I think your guidance previously excluded Italy. Now it does include Italy for EUR 200,000. So overall, the entire amount has not changed, meaning that it's probably a bit lower for the rest of the business. Is it just risk management; ultimately, that's the amount of space you're comfortable having to let or deliver as a package? Or are there differences that you've noticed in terms of appetite for different countries? That's the first question. The second question, please. The growth implied by your guidance from the top line seems to be a bit stronger than the growth at the bottom line, and yet you highlighted that your marginal cost of debt is pretty close to the in-place. So is there something that we're missing here? Or are you expecting some additional costs that we need to be aware of? Robert Jones: Jonathan, I can touch on both of those, and I'll pass over to Richard for part of the second half, the second question. So on the guidance for deliveries for '26, you're absolutely right, 1.4 million to 1.7 million square meters. We initially announced that '26 guidance, obviously, towards the second half of last year prior to the Italy transaction. But it's important to understand that we obviously had a high degree of probability internally that we were going to complete on that Italy transaction. So when we gave that raised guidance, and as Richard touched on earlier, even at the bottom end of the range, it's still a record in terms of what we've delivered in previous years. That included our expectations for the Italy deliveries of 200,000 square meters, which, of course, is already substantially pre-let for '26. And when you think about Italy going forward in your model, we are guiding to 250,000 to 300,000 square meters of deliveries from 2027 looking forward, so an increase thereafter. So I guess the takeaway from that is, do we think that there's further upside in the 1.4 million to 1.7 million? No, very comfortable with the range and it includes Italy. Just on the top line growth versus bottom line, so you're right in your assessment. But I think one important point to make is, yes, our weighted average cost of debt today, which is about 3.3%, is very similar to our marginal. We did debt issuance at the start of the year where we issued 4.5-year money at 3.375%. So very, very close to our weighted average cost of debt. But don't forget, we do have a debt instrument bond that matures in September this year. I think, remember, the coupon on that is 0.625%. If we refinance that with, say, 5-year money today, that would probably cost 3.4%, 3.5% all in. So it's important to be aware of that. But obviously, then looking thereafter, from '27 onwards, we're then in a position where we've got no refinancing upcoming that has a notably different coupon to our marginal cost of debt. Richard, I don't know if you want to add anything to that? Richard Wilkinson: No. I mean, unfortunately, we never see the top line flowing one-to-one through to the bottom line. Of course, we would love to see that. I think one of the things to please bear in mind in this year is, also we'll be building up a team in Italy and there's some costs associated with that. And although we have the pre-let deliveries to come, they're coming in Q4. So there's not going to be a lot of income to offset the ramp-up in the costs. Secondly, we've continued to investigate the opportunities in the Vietnamese market and are looking to build up a team there over time as well. Robert Jones: And of course, as you -- sorry, go ahead. I was going to say, as you say, despite those points that Richard makes, we're still in a position where at the midpoint of our earnings guidance for '26, it still represents double-digit EPRA EPS growth year-on-year despite that investment we're making in the business. Remon Vos: And maybe to add also for you, Jonathan, it's also -- for the cost of debt is also the annualized impact from '25. So you cannot only look at '26, because, yes, as Rob explained, we had, of course, the bonds in January and then in September, but it's also the annualized impact of '25, which is, of course, reflected already in the average cost of debt, but still has an impact on our '26 EPS. So if you do the math, and you can do it relatively easily, also if you look to the refinancings we have done in '25, you see that the impact is still a few cents on the overall EPS. Jonathan Kownator: Okay. So if I understand correctly, cost of debt and admin cost you're building as opposed to being a bit less confident on the top line, right? Remon Vos: Correct. Richard Wilkinson: Yes, absolutely correct. Remon Vos: If you want, I can add something on the supply, because it keeps coming back, this question. So first of all, we look after the income-producing part of the portfolio. We make sure that we are happy with the occupancy rate. And then we will continue to build if we can lease. So we are going to not build buildings if we are not confident we can lease those buildings. So we balance between supply and demand. And while doing that, we do gain market share. So if there's an opportunity to develop and to lease properties, we do. And that's what Rob explained in his presentation, as we've been doing over the past years, we do gain market share. So we build as soon as we believe we can lease. Operator: Our next question comes from Frederic Renard from Kepler Cheuvreux. Frederic Renard: First of all, let me flag that your line is not really great. So I'm not so sure it's just me. So just flagging. Then I would like to comment on 2 elements. First, on the long-term guidance of 30 million square meters. Even with Italy today, the pace of growth is important, but far from the level which would bring you to a portfolio of 30 million square meters by 2030. So it seems basically that your existing market is not absorbing what you are delivering at the moment from an external point of view. Can you comment on that first? And then maybe on the second question, if I compute your vacancy in terms of square meters, it looks like your portfolio is at 1 million square meters of vacancy, which is quite sizable. What is structural here in the mix? And finally, on the pre-letting, you mentioned 88%. But actually, if you compute the pre-letting in Q4, it came close or slightly below 80%. So can we conclude that there is some kind of a softer demand in the market at the moment versus what you had in mind 1 year ago? Richard Wilkinson: Yes. So in terms of our midterm ambition, I mean, we said 30 million we would like to achieve target. It's an ambition, we want to get to 30 million square meters by 2030. If you compound our portfolio by 12.5% per year for the next 5 years, you're going to get to somewhere around 26 million, 26.5 million square meters. And there's a small gap there, but we think that there may be opportunities or there will be opportunities to find one or the other attractive acquisition over the next 5 years. We talk about a relatively midterm perspective there, Fred. So I think we're comfortable with that level of ambition and our ability to realize that. If we can do 15% a year, which would be the top of our organic growth rate, then we get almost to the 30 million square meters. But it's our ambition and we're comfortable with that at the moment. In terms of the vacancy, as Remon just said, we're always balancing supply and demand in our parks and in and around our parks. Our business model is to run a vacancy of -- we target around 95% occupancy going forward. And as the portfolio grows, that means the absolute square meters of vacancy increases. So yes, at some stage, that gets to 1 million square meters, that's simple math. That's part of our business model that we live with, we accept that vacancy rate, because we feel that gives us a competitive advantage when tenants are looking for space in the short term, because not everyone is planning years in advance. Sometimes people need space quickly, and then the ability to act quickly and grab a tenant and meet their demand puts you in a better position to retain and grow with them then also going forward. And regarding the pre-let for Q4, look, across the year, we delivered 88% towards the top end of our 80% to 90% guidance. We try not to get too hung up on the volatility of any one quarter. Short-term trend is not our target. As Remon said in his presentation, we're in it for the long term. That's why we have the land bank that we have mostly in existing parks or with the potential to build a new park of more than 100,000 square meters for each park. That's the real value driver for us and... [Technical Difficulty] Operator: It seems we have lost audio with our speakers. Please stand by whilst we're getting them reconnected. Robert Jones: Yes. Let me continue. I think Richard dropped out. Operator: Okay. Hold on. I'll just transfer you back over, because I've moved you out of the main room. I'll transfer you back over now. Remon Vos: Okay. I'm still here as well. Operator: We'll now continue. Robert Jones: Sorry for the connection drop. I think Richard dropped out, but let me continue on where he stopped. So if you look to the pre-letting as always, so I think last year, when you look to the Q3 of '24, we were at 95%. At the end of the year, we came also within the range. So there is always a bit quarter-by-quarter movements and that comes indeed back to our business where we are mostly developing in our existing business parks. If you also look to the quantum of leasing that we are doing, yes, 1 million of vacancy might seem a lot, but we sign 2.3 million square meters of leases each year. So if you look to the overall amount of leasing that we are doing, 1 million square meters is less than half a year for us. So yes, of course, with the scale of the portfolio, that becomes a larger number. But in our overall leasing capacity, that's ultimately important for us, because it all comes back to tenant demand. That is ultimately the key thing when we are looking for, are we starting the next development, where are we starting the next development, and where do we see growth. Operator: We'll now take our next question from Vivien Maquet from Degroof Petercam. Vivien Maquet: I think your line dropped again, but I hope you will hear me. A couple of follow-up questions from me. Maybe when it comes to the deliveries, can you quantify the volume of deliveries that was moved to Q1 2026? And if possible, what kind of level of pre-let do you have on this project? And maybe I ask my other question afterwards, if you can hear me? Robert Jones: Yes, sure. So if you look to the deliveries, we came out on the lower end, of course, of the 1.3 million to 1.6 million that we guided for. We were planning to be more in the middle or the higher end of the range, but that's business. So if you look to what has shifted, that's basically, say, 150,000 square meter or so to the next year. So that's also -- it's reflected in the overall pre-letting, of course, for this year, the 30%. But like Richard mentioned, actually, the 30% might look a bit low compared to previous years. But on top, we have the 175,000 square meter of projects leased that haven't started yet. Some of that also will be delivered in '26. So it's always a mix of those elements. So that is basically the impact on the shift of deliveries, and that will help a bit in '26, and that's why we are so comfortable with the 1.4 million to 1.7 million for this year. Remon Vos: And let me add to that, maybe an important one, is structural vacancy. There is nothing like that. There is not buildings which are empty for years and years and years, okay? So it's just adding supply to the market and then you need the market, you need some time for the market to absorb all that space, and that's what we are doing. So when it comes to buildings which have been vacant for a longer term, then I can think of properties in Germany. As you remember, we entered the German market through an acquisition of buying Deutsche Industrie, which is a mix of some fantastic locations, redevelopment opportunity, but all the buildings, so there is some vacancies, and we need time to refurbish those buildings, which have started, but that takes a bit of time. It's all part of the budget and it makes a lot of commercial sense. But then you have buildings which will not produce income for a while because you're doing some refurbishments now. And there's some vacancy in the German portfolio, you can see, but our core portfolio, all of the stuff we built, there's no structural vacancies. There are some vacancies here and there because of the supply. But again, this goes down to CTP's business model. So I suggest you have a good look and listen to all the nice videos we have done to understand the way we run it. It took us more time to get to 15 million square meters. It took us 25 years to get to 15 million square meters. It's going to not take us 25 years to add another 15 million square meters, to grow to 30 million, because we know the game of how to develop and with whom, and with all of the clients we have, that gives us great opportunities to continue to do what we do. But yes, 5% from 30 million is 1.5 million square meters. Operator: Our next question comes from Eleanor Frew from Barclays. Eleanor Frew: One question, please, on the reconciliation between your company-specific EPRA EPS and EPRA EPS. The adjustment this year was a lot larger than last year. Can you talk us through the reasons for that? And also, what should we expect on that adjustment moving forward? Is this the new run rate? Robert Jones: There were some one-offs in that adjustment. And I think we already discussed that in the H1 and Q3. I think on the tax side, you saw a positive, especially in the first half of the year. So the tax adjustment for '26 will be lower. That's one. There are also some in the other expenses where there were some one-off adjustments, for example, related to some transaction that in the end did not take place, which is booked in the other expenses and therefore, adjusted, of course, in the recurring elements. So there are some of the one-offs in '25, which are slightly higher than I would expect on a run rate basis. So that should be less in '26. Operator: Our next question comes from Steven Boumans from ABN AMRO - ODDO BHF. Steven Boumans: Some technical questions for me. What's the assumptions on the capitalized interest? So what's the interest rate that you use and what loan on cost do you assume? Second, what's the impact on the average yield on cost for the change there due to the capitalized interest? Can I assume that will increase the cost of development? And last one, do you assume a similar number of shares year-end '26 as in '25? Robert Jones: Yes, Steven. So in terms of -- go on. Marios, do you want to go -- we had a problem with our line. Yes. So apologies for that. And I hope that you can hear us properly, because Fred was saying that he couldn't hear us and then we dropped. So apologies for that technical lapse. In terms of the capitalized interest, what level do we use? We use the actual cost in the balance sheet, so the average cost of debt. So for this year, it's 3.3%. In terms of the yield on cost impact, that would be somewhere around 30 basis points. And there was a third question as well, but I lost the connection on that one. I'm sorry, Steven. Steven Boumans: So the last one, the number of shares you assume in your full year '26 outlook, is that the same as in '25? Robert Jones: Yes, we're not -- yes, it's slightly higher because it incorporates the dividends that we're paying. As you know, we proposed a final dividend of EUR 0.32 for the full year. We'll also have an interim dividend later in the year. Based on past behavior of the shareholders and expected behavior, we would expect the majority of that to be taken up in scrip. So there will be an increase in the number of shares as a consequence of the scrip dividend. But otherwise, we're not planning on an increase in the share capital. As I said in the presentation, we don't need to raise equity to fund the development pipeline, the 1.4 million to 1.7 million that we're very confident to deliver. Operator: Our next question comes from Suraj Goyal from Green Street. Suraj Goyal: Hope you can hear me. The rent levels for new leases in '25 were around 4% higher compared to 2024, but I noticed it was lower in Bulgaria, Serbia, Hungary and also flat in Romania. I wanted to find out what the reason for this is, and if this is reflective of some of the softness or normalization in operating fundamentals across Eastern Europe. And then are you able to give any color on the market split of the 3.8% ERV growth that you quote? Robert Jones: Yes. So maybe I'll deal with the technical part, maybe Remon will pick up on the overall tenant demand and how we see rents going overall. Yes, I mean, it depends a little bit country by country as to where we're leasing within that country. So certain parks have higher rent levels than others. So if you're very close in town -- in the capital, you're going to get a higher rent than if you're leasing in one of the regional cities. So the mix there across the countries is generally to do with where we're doing the leasing in that specific quarter or in that year. So generally speaking, if we look at our ERVs, the ERVs across the portfolio are increasing. So location for location, like-for-like, we're seeing across the portfolio, a general increase in the rent levels. But we don't expect that to -- that's different location for location, depends on the supply, on the demand in the individual location at the time. Overall, you will see rents continuing, we think, to grow inflation plus over time. There will be markets where it's going quicker, at a point in time markets where it's going slower. But overall, we're very happy with the rent level development that we're seeing across the whole region. Operator: Our next question comes from Vivien Maquet from Degroof Petercam. Vivien Maquet: Sorry, I had 2 other questions that was skipped. First is on the retention rate. Just trying to understand the decline to roughly 81%, if I recall. And how do you see a normalized retention rate going forward? Robert Jones: Yes. Look, I think our retention rate historically has been 80% to 85%. There have been times where it's been a bit higher. There have been times where it's been a bit lower. We would think that generally, if we look, 70% to 75% of our new leasing, last year was 71%, is done with existing tenants. So we would think that 80% to 85% is a reasonable rate to expect in terms of tenant retention. So you're retaining the vast majority of your tenants, but you won't never keep everyone. Vivien Maquet: All right. And then one last question on the goodwill impairment. Can you comment on that one? Robert Jones: Yes, sure. That goes to our German acquisition back in 2022. And what we see -- last year we saw a nice uptick in the valuations of our portfolio in Germany. And as the valuations increase, then the goodwill that we recognized at the time of the acquisition decreases. Operator: Our next question comes from Bart Gysens from Morgan Stanley. Bart Gysens: Quick question on the dividend payout ratio. So you're saying that for '26, the dividend payout ratio remains unchanged. But of course, the accounting policy of starting to capitalize interest increases your reported EPS by 10%. So will you now start paying a higher percentage of this previously more cash EPS? Or will you gravitate towards the lower end of that range to reflect this accounting policy change? Robert Jones: Yes. Bart, good question. Yes, I think that we'll end up gravitating towards more 70%, 72%, 73% rather than historically, we've been 75%, 76%, 77%, something like that. Bart Gysens: But that would still mean a higher percentage payout, right, on the previous... Robert Jones: No, you end up -- if you're 70%, you're almost the same. There shouldn't be a material increase in cash out as a consequence of the capitalization of the interest. Operator: We'll now take some questions from the webcast. Our next question comes from Laurent Saint Aubin from Sofidy. Can you please comment on the decline in your client retention rate to 81%? Robert Jones: So we already answered that question. So yes, look, like I said, we're targeting generally expecting to be between 80% and 85% in our tenant retention. In '24, we were 84%; in '25, we're 81%. So very comfortable with that. Operator: And then our next question is from Wim Lewi from KBC Securities. What is expected impact of the capitalization of interest costs on your yield on cost expectation? Robert Jones: Yes. Again, that's another question I answered earlier. It's around 30 basis points. Operator: And then our next question from Crispin Royle-Davies from Nuveen. Are you going to keep the same payout ratio against the new definition of earnings, or adjust this downwards to keep cash payout ratio the same? Robert Jones: Yes. So payout ratio will stay within -- or move towards the bottom end of the 70% to 80% payout range. Cash outflow for the business remaining relatively unchanged given the majority of our divi is taking scrip. Operator: With that, we have no further questions in the queue at this time. So I'll hand back over to the management team for some closing comments. Remon Vos: Yes. So thank you very much, everyone, for your questions and your interest. I'd just like to underline that we continue to see really attractive midterm growth potential, primarily in and around our existing CTParks, but also with the addition of Italy and hopefully an addition in Vietnam, we think that we have everything in place for the next leg of growth. And we wish you all a good day. Thank you very much for your attention. Robert Jones: And you're invited for the Capital Markets Day in September, right, in Warsaw. Remon Vos: Yes, of course. Sorry. Thanks very much. Richard Wilkinson: Thank you very much, everybody. Operator: Thank you all for joining. That concludes today's call. You may now disconnect your lines.
Operator: Welcome to Arkema's Full Year 2025 results and outlook conference call. For your information, this call is being recorded. [Operator Instructions] I will now hand you over to Thierry Le Henaff, Chairman and Chief Executive Officer. Sir, please go ahead. Thierry Le Hénaff: Thank you very much. Good morning, everybody. Welcome to Arkema's Full Year 2025 Results Conference Call. With me today are Marie-Jose, our CFO; and the Investor Relations team. As always, the slides used during this webcast are available on our website. And together with Marie-Jose, we will be available to answer your questions at the end of the presentation. In 2025, the macroeconomic environment was, as you know, particularly challenging, probably one of the most difficult our industry has faced in the last 20 years. The second part of the year, in particular, was marked by subdued demand across many end markets. The slowdown in the U.S., while Europe remained at low levels. This reflected ongoing cautiousness of economic factors as well as tight year-end inventory management at many of our customers. On the other hand, Asia continued to be the most dynamic region for the group, in particular, China, where we could see an acceleration in certain sectors like electric mobility, advanced electronics and sustainable consumer goods as well. As you could expect in this context, the group focused on its fundamentals of customer proximity and innovation while strengthening its cost and cash initiatives. The teams have been fully mobilized on a daily basis to best address the environment and strictly control the operations. As a result, we generated a high level of cash at EUR 464 million, well above our revised guidance of EUR 300 million. This performance was also better than last year's level despite the significant EBITDA decrease. EBITDA stood indeed at EUR 1.25 billion with a margin of 13.8%, so close to 14%, not living up to our expectation at the beginning of our year, but not different from what most of our peers have experienced. We were able to offset fixed cost inflation and delivered around EUR 90 million of fixed and variable cost savings in 2025, nearly doubling our initial annual target set at CMD. This work will be pursued in 2026 as we strive to offset against the inflation, and we should, therefore, be able to deliver the 2028 cumulative cost savings target of EUR 250 million, 2 years in advance. As you can see in Slide 7, the group has launched a number of new initiatives to make the organization even more efficient, leading to more than 2% headcount reduction in 2025, and we anticipate a further reduction of around 3% per year over the next 3 years. Our performance continued to be supported by several of our key attractive markets, namely batteries, sports, 3D printing, healthcare and new generation fluorospecialties with low global warming potential, which benefited from strong dynamics with sales up 16% year-on-year. This market will continue to grow in the future and contribute to the ramp-up of our major projects listed on Slide 5. These projects delivered around EUR 60 million additional EBITDA in 2025, and we expect this trend to continue in 2026. The group will benefit from the ramp-up of the recent investment in the U.S. and Asia, successfully started in 2025 and early 2026, namely our new 1233zd and the DMDS unit in the U.S. as well as the Rilsan Clear transparent polymer capacity downstream of the polyamide 11 plant in Singapore. In addition, our investment in PVDF in the U.S. is planned to start up in the first half of 2026, increasing our capacity by 15% in the region. PIAM should continue to benefit from the launch of new smartphones, notably foldable and ultra slim models in which polyamide is becoming essential to answer their higher requirements in terms of reliability and thermal management. PIAM should also start benefiting from successful diversification into new high-end application in industry markets. After this important wave of organic projects, offering significant room for growth midterm, Arkema will further reduce its CapEx envelope to EUR 600 million in 2026. This level will enable the group to continue investing in targeted projects with high returns and fast payback. We did not only focus on the very short term but continue to build Arkema for the future by developing strategic partnership with leaders in their domain in order to strengthen our positioning in key markets such as batteries or sports. Maintaining our efforts in R&D is key in order to stay differentiated and accelerate our growth in high-end applications. We stay focused on sustainable innovation. We leverage our competencies by collaborating with doctors, OOYOO in carbon capture is a good example. Coming back to our 2025 EBITDA performance, outside of the negative currency impact, the low cycle in upstream acrylics and the decline of old generation refrigerant explained most of the decrease. The rest of Arkema's business was far more resilient, but this performance to a certain extent, was overshadowed by these other activities. That's why in order to improve the reading of the group's results, we have decided to implement a new segmentation starting in 2026 to better highlight the distinct dynamics and business models of the resilient and fast-growing platforms within Specialty Materials compared to the most cyclical and last industrial activities, which will be rebooked in a new segment called Primary Materials. The global Arkema polyamide business will be included in this new segment. This business has been much more volatile in recent years than it used to be, as you can see Slide 21. However, looking back since the acquisition of our American assets in 2010, this activity has been tremendously cash generative, largely contributing to further growth portfolio transformation over the past year. So we continue to leverage our strong industrial and commercial position in acrylics to generate solid cash generation and capital returns over the cycle. The new segmentation will also bring more visibility to our next-generation low GWP solution for air conditioning, which were actively managed to enhance our prospects. They will now be integrated into the fluorospecialties portfolio and will benefit from accelerated growth in applications like heat pumps and data centers. On the other hand, old generation refrigerants that have been a highly profitable and cash-generative business since 2020, probably exceeding potential proceeds from a disposal will join the Primary Material segment. While this business will quickly fade over the coming years, Arkema will benefit on the other end and within the Specialty Materials from the ongoing growth of the low GWP solution, generating substantial value. I believe this new segmentation will provide the financial community with greater transparency on Arkema's portfolio business drivers and Specialty Materials performance. Finally, I think it's important, I also want to quickly highlight some of our CSR results where we made again strong progress and achieved quite good performance in 2025. This is the case for our climate plan, where the group's numerous initiatives to reduce its carbon footprint are paying off. We reduced our Scope 1 and 2 emissions by 48.7% at the end of 2025 compared to 2029, fully in line with our target. And we have also decided to strengthen our ambition in water withdrawals and introduced a new target on waste treatment, another key priority for Arkema. Lastly, given the strength of the group's balance sheet, the Board has decided to propose a stable dividend of EUR 3.60 per share to the Annual General Meeting despite the challenging macro, which is a sign of confidence, both in the quality of the portfolio and in the relevance of the strategy. Thank you for your attention. I will now hand over to Marie-Jose, who will review in more detail the financial results before I come back to discuss the outlook with you. Marie-José Donsion: Thank you, Thierry, and good morning, everyone. So as commented by Thierry, 2025 was a challenging year. Starting with revenues of EUR 9.1 billion. Sales were down 5% year-on-year that were impacted by a negative 2.9% currency effect reflecting mainly the weakening of the U.S. dollar against the euro, but also from other currencies, including the Chinese Yuan and Korean Won. The scope effect at plus 1.6% reflecting the integration of Dow's laminating adhesives. Volumes were down 1.6%, reflecting the overall weak demand environment in Europe and North America as well as a tight inventory management by customers in the fourth quarter. On the other hand, we continue to benefit from a positive dynamic in Asia and more particularly in China, mainly driven by high-performance polymers. The price effect was a negative 2.1% impacted essentially by the acrylics cycle and by the refrigerant gases that are transitioning from old to new generation. Our other activities showed a more limited price decrease of 0.9% in the context of declining cost of raw materials. The group EBITDA came in at EUR 1.25 billion, including EUR 40 million negative currency effect. Let's mention first, Q4, which is a seasonally low quarter. The decline in EBITDA in the fourth quarter reflected the overall weak demand environment in Europe and in the U.S. as well as the strong destocking due to tight year-end inventory management at our customers and ourselves, actually, which impacted particularly our Adhesives and Advanced Materials segment. Looking now at the full year performance by segment. Adhesives margin came in at around 14% if we exclude the dilutive effect of Dow's laminating adhesives business still in its integration phase. Full year EBITDA reflected the weak demand in industrial additives and the slowdown in the U.S. in the second half, notably in flexible packaging, transportation and construction. Positive performance continues to be supported by our ongoing work on efficiency and our price discipline. Advanced Materials resisted well with a broadly stable volumes and prices, delivering an EBITDA margin of 17.9%. High Performance Polymers in particular, showed a 2% organic growth on the year, supported by new business developments in batteries, sports and 3D printing and the ongoing positive dynamic in Asia. The segment's EBITDA was nonetheless impacted by the negative currency effect by an unfavorable mix in performance additives as well as by lower volumes in Europe and in U.S. In Coatings, EBITDA was impacted by the low cycle conditions in the upstream acrylics as well as by the weak demand environment in coating market. Construction and decorative paints market in Europe and U.S. were subdued. The performance of the segment was therefore significantly lower than last year despite the resilience of downstream activities. Lastly, Intermediates EBITDA was mostly impacted by the decline in refrigerants in the first half of the year, while acrylics in Asia improved slightly. The group's recurring EBIT amounted to EUR 564 million, which corresponds to a recurring EBIT margin of 6.2%. It takes into account EUR 687 million of recurring fixed asset depreciation, higher than last year due to the integration of Dow's laminating adhesives and to the starting amortization of new production units, which came online during 2025. Nonrecurring items amounted to EUR 276 million. They include EUR 144 million of PPA depreciation and EUR 132 million of one-off charges, notably the restructuring costs linked to the hydrogen peroxide site in France. Financial expenses stood at minus EUR 125 million. The increase versus last year reflects the increased interest costs of our bonds on one hand and the lower interest on invested cash on the other hand. All in all, adjusted net income amounted to EUR 328 million, which corresponds to EUR 4.34 per share. Moving on to cash and debt. Arkema delivered a strong cash flow generation with recurring cash flow standing at EUR 464 million. This reflects our continuous initiatives to tightly manage our working capital. Working capital ratio on annualized sales reached 12.5% from EBITDA. And the EBITDA to operating cash conversion rate stood at 88%. Our spend in capital expenditure amounted to EUR 636 million, below the level of our recurring depreciation in . Free cash flow amounted to EUR 390 million, including a nonrecurring outflow of EUR 74 million, linked essentially to restructuring costs. Taking into account these elements, Arkema's net debt and hybrid bonds were slightly down at EUR 3.2 billion, which includes a EUR 1.1 billion hybrid bonds. The group continues to enjoy a strong balance sheet with a net debt to last 12-month EBITDA ratio of 2.5x. Note that our 2026 maturities were all prefinanced till 2025. The EUR 300 million outstanding hybrid bond issued in January 2020 was redeemed in January 2026. So our portfolio of hybrid bonds at the end of this month -- end of Jan is back at EUR 800 million. I hand it over back to Thierry now. Thierry Le Hénaff: Thank you, Marie-Jose, for this explanation. So if we exchange all the outlook for this year. So at the beginning of the year, the environment remains and there is no surprise to find the continuity of the second half of last year, with limited visibility and weak demand. The currency effect, you saw it continues to be a headwind following the further weakening of the USD and Asian currencies against the euro. In this context, as we said already, our first priority will continue to focus. And I think we did a good job last year, and we'll continue to do a good job this year on the elements under our control. This means, in particular, optimization of fixed costs, optimization of variable costs, CapEx and working capital. Besides, we continue to rely on the progressive ramp-up of our major project and it's slower than expected because of the macro, but is still material for the company, and it will support the Arkema growth in the long run. So for '26 versus '25, we expect this project to contribute around EUR 50 million of additional EBITDA. It will continue to help us this year and in the following year to reinforce our geographical footprint, since we anticipate more long-term development potential in Asia and in the U.S. In light of these elements for 2026, the group aims for its EBITDA to grow slightly at constant FX, and we prefer, obviously, to reason at constant FX, given the unusual volatility of exchange rates against the euro, not only the USD, as I mentioned, but also most of the Asian currencies. The year-on-year comparison will be more challenging in H1, and more particularly in Q1 since last year profile was more weighted on the first semester with significant destocking in the second half. Besides the currency effect on Q1 should be negative estimated at EUR 25 million. If we put the currency effect aside, we expect in 2026, the macro more or less similar to '25. The comparison with last year should ease progressively until the end of the year, including specifically to Arkema, the ramp-up of our major project. As a result, we anticipate the performance of the 2 halves more balanced in '26 than in '25. So thank you very much for your attention. And together with Marie-Jose, we are ready to answer the questions you may have. Operator: [Operator Instructions] The first question comes from Tom Wrigglesworth with Morgan Stanley. Thomas Wrigglesworth: Two, if I may. First, could you talk a little bit about the construction end markets by region? And how -- and kind of help us understand how much step down you saw in the U.S. in the second half and how much weight that weighs on 2026? And conversely, there are expectations that construction refurbishment improves in Europe in '26. Do you see anything in your order books or in your discussions with customers that kind of talk to that? And then secondly, if I may, just around obviously very strong free cash flow in the fourth quarter. How much of that was your decision to really cut the working capital versus the pricing element rolling through working capital, i.e., as we look at working capital for '26, if we do start to see some volume improvement at some point, do you need to see a rapid increase in working capital to meet that demand? Thierry Le Hénaff: Okay. I will let Marie-Jose answer on the working capital. On the construction market, it's an interesting question because, as you know, we have -- compared to other peers, we have more -- we are more weighted in construction, especially Europe and U.S. and in Asia is less than that. I would say, and it joins your question, in fact, to a certain extent, the answer is in your question. Europe, we have reached certainly a bottom. I'm quite cautious on the signals because we have been caught several times by surprise. My feeling is that let's say, there is a little bit of incremental improvement, but to be confirmed, okay? So Europe is like the bottom, it does not decrease anymore. And if there was a trend, it would be incrementally slightly better. In the U.S., clearly in second semester, it was one of the bad surprise. We are down in terms of business development. I would be -- I know the elasticity and the agility of the U.S. economy. So I would not extrapolate necessarily what we saw in the second semester in the U.S. with what it could be this year. What is clear is that -- and this is a difference with Europe, U.S. decreased second semester of last year in construction, while Europe gave the impression, it was more at the bottom and with a little bit more positive. So U.S. we will see. I know that the administration -- Trump administration is trying to put in place some measures in order to support construction-related activities. We'll see if it brings -- it brings some support, but there are so many variables that are difficult to know today. So I would be cautious as I am on the macro -- overall macro economy, let's take month by month and see how things are developing. Marie-José Donsion: On the cash? Thierry Le Hénaff: Yes, the cash. Marie-José Donsion: A few comments. So basically, you saw the working capital landed at 12.5% of our annual sales, frankly, reflecting the similar work that our customers have been doing on their end. For 2026 at constant macro, I would expect, frankly, a flat working cap. In case of a rebound, then for sure, working cap should increase in a commensurate way versus those 12.5% or 13% of our sales. Thomas Wrigglesworth: Okay. Just as a quick follow-up. I mean, do you think that the industry or the supply chain has overcut inventories and working capital? It just feels like everybody has cut aggressively at the end of last year and then aggressively cut again in the end of 2025 -- sorry, '24 and '25. I guess investors are surprised as to how much destocking has taken place. So any commentary or color there as to the level of inventories in the system would be very helpful. Thierry Le Hénaff: Certainly, this question is worth a lot of money. The difficulty, as you know, and you know as much as I know, Tom, is in the supply chain in chemicals, they are complex and they are longer. So it's -- and fragmented, so it's very difficult to have a clear view what is sure is that. And it has been, to a certain extent, a little bit of a mystery for all of us because normally, when you have a cycle in chemicals doesn't last so long. It's clear that we see destock. Now we are already talking about end of destocking, 18 months ago, we thought it was already long. So -- but it's clear that the stock for most of the chain seems to be rather low, but they are low if there is a rebound, if there is no rebound, certainly, the chain can live with that. So my theory is still the same. It does not change. And is that at a certain point, you will get a rebound. We don't know when it will happen. We don't know when and when the rebound will come, the chain will be under big pressure. This is obvious, but we don't know when. And there will be nuances depending on which region, which end market, which product line, et cetera. But basically, this is a typical cycle of chemicals, where you have volume and pricing on the both directions depending on the -- if it goes down or it goes up, always amplifying the industry. Then we have to be a bit patient, but it will come at a certain time. We don't know we'll see. So your question is valid. Certainly stock are less at the end of this year than they were at the end of '24, '24 was less than end of '23. But now this is a demand which will be the main driver of the stock. Operator: The next question comes from Matthew Yates of Bank of America. Matthew Yates: I'd like to ask about the new structure, the divisional restatement. Not the first time the company has done that since its creation. And I heard your introductory remarks about the benefits of transparency. But I would put it to you that there is an argument that it highlights a lack of industrial logic to the portfolio that you can move things around so frequently. It hurts investors' ability to track performance over time because we lose that transparency. So can you just elaborate a little bit more as to why you think this is a good decision. And by association, have you changed reporting lines or management structure? I had a quick glance at your exec committee on the website, which hasn't changed. But is there going to be a change in roles and responsibilities that may help us bring some better operational performance and some genuine benefit of this move? Thierry Le Hénaff: First of all, Matthew, we don't change so often. And here, we are talking about an incremental change. I think the difficulty we had and hopefully, it was well explained in our -- and we are completely open to discuss more with you and who wants. The difficulty we had were 2 things. The first one, we got the impression that on the Specialty Material business, which is whatever definition, by far, the large majority of Arkema portfolio. We are really doing a great job and this year, we were frustrated by the fact that we could not read it and you could not read it simply. And the reason was that we have -- things have changed over the past 3 years, the world has changed. I think maybe we change, but I think it's good to be agile and to try to be as transparent and as clear as possible in a world which is changing a lot, where yourself, ourselves, all our stakeholders are trying to understand what is happening and on what you can really rely and build for the future. And what we saw is that in fact on the refrigerant gas, while we saw that we were mostly old generation gases and little development in new generation, and this is why we wanted to sell it because we saw that there was no future and it was far from our sustainable strategy. What we saw is 2 things: that the old generation that we know already, were going to -- were phasing out or fading out and with an acceleration in the past 2 years. But on the other side, we're far stronger, far better, far quicker in the development of new generation, not for the traditional application in refrigerant, but for new application, heat pump, data center, energy efficiency in the buildings, which were really completely core in terms of the strategy of Arkema with some of niches, same end market, same kind of growth pattern, et cetera. So we wanted absolutely to recognize that. And this is why a part of this we split between old and new generation, and it makes completely sense from a portfolio standpoint that this new generation joins them. We have already started to do it, join the HPP. The second thing with regard to acrylics, for a long time, and we had -- I know discussion together on that. We are absolutely convinced that we would be able, for Europe and U.S., to stabilize their volatility by developing the downstream. It was true for Asia, but Asia, we knew that it would be quite limited. But Europe and U.S., we thought we could go at further on this path to balance the upstream and the downstream. But in fact, we have seen that the targets were not so many. In fact, we bought already most of this target with Sartomer and Coatex. And the second thing was that not only we were -- we decided when we bought Bostik to put most of our allocation of cash for acquisition for adhesives. And the second trend that we see, which is linked to the fact that the world is becoming far more volatile than it was in the old time. You can see on every parameter, the FX, the -- also the macro figures in this or that market, et cetera, or the brand evolution. In fact, it reinforces the volatility of the acrylic acids, the acrylics monomers. And we wanted to also to -- so we decided to put back China, Europe and U.S. together, and to recognize that in the portfolio, we have a minority, a small minority, which around 15% of the portfolio which is really in nature, more volatile. Even if on the -- over the cycle, we still generate a lot of a lot of cash. And for acrylics, it's normal because the upstream goes with this downstream. The upstream is a basic material. We know that basic material. So we think that with this evolution of the world that we want to recognize, the more volatility of what is now in primary materials, we are able really to be -- to show you that all the jobs that we have been doing on the Specialty Materials is really bearing its fruit with quite a resilience and the growth over time. And it was in this context of '25, which was completely atypical and unexpected. They were able to deliver minus 5% EBITDA evolution, which, frankly speaking, given the level of the context or the challenges of the context was quite a good performance. So for us, it was far easier to explain it like this. So you have to take it as a better reading now. This is why we did it. So hopefully, it will -- and we are ready to discuss with any of you. For us, it reinforced the quality of the reading on the performance and also of the benefit of the strategy we have been leading over the past 10 years. Matthew Yates: Okay. Can I ask a follow-up? Because from your answer, it sounds like the concept of integration across the value chain hasn't worked and is no longer valid. So this goes above and beyond simply the way you're reporting it. It questions the actual strategy of the company. Are you open to the idea of exiting the 3 upstream acrylics plants if there were to be a possible buyer out there? Or are they still core to the broader group? Thierry Le Hénaff: No. I would say that we have to take it for what it is, which is a better reading and reporting of where we are. Acrylics remains a backbone, which is important of the downstream. So, so far, I would say, is really part of the portfolio. And anyway, the results are quite low. So it's not at all even beyond what you say, the topic of disposal. Now as you say and you have seen the history of Arkema, there is never any taboo. So I think that for the time being, it's quite a reporting topic, and we have to take it as such. Operator: The next question comes from Laurent Favre of BNP. Laurent Favre: My first question, I guess, is on HPP where we had a stable Q2, stable each Q3 and Q4, I think a bit of a collapse down -- sales down 15%. We saw something similar with your peer this morning. And I was wondering if you could talk about what you're seeing on beyond, I guess, destocking, what you're seeing on competitive pressures and in particular, maybe some kind of commoditization risk? That's question number one. And the second one just to echo the comments from Matthew. I think best practice for us, especially if you're talking about adding transparency would be to have sort of restatements for the divisions going back to at least 2023. That would be really, I think, helpful for investors and for us. But a question related to the restatement is around acrylics. EU, U.S. I think it looks like you had EUR 13 million of EBITDA in 2025. And I was wondering how you're thinking about this going forward? It seems that we still have capacity additions in the industry in 2026 and maybe 2027. So are you expecting acrylics EU, U.S. to still be around that sort of breakeven EBITDA for '26 before we eventually see a recovery? What did you bake in the guidance? Thierry Le Hénaff: Okay. So with regard to the first question, I really think that the end of the year and you mentioned also our peers on the -- on the HPP is really driven by the destock of customer. When I saw -- we saw in detail, you can imagine the dynamics to really understand the results beyond the fact that the impact of the FX was more important in Q4. Don't forget that. What we saw is that the impact of destock was quite high. And destock, it happened less in Asia, where by culture, they don't stock a lot, but in Europe and U.S. So in fact, not only we have destock globally, but the fact that the destock was more pronounced in Europe and U.S., where culturally, our customers have more stock changed the geographical mix, okay? And it weighs on the profitability evolution. So the geographical mix was especially this low sales in the U.S. was a little bit of a surprise and that was linked to the destocking. We have spent a lot of time, as you can imagine, in this kind of contact with our customers. We knew, we understood that they would be very cautious in terms of stock at the end of the year. So this destocking topic is not just a matter of the chemical industry. Our customers, they destock, our suppliers, they destock, everybody try to finish the year with stock, which was, I would not say minimal, but more reasonable than they were given the level of the demand. So for me, it's not a matter of more competition or anything special sort of change in evolution, we would have seen in Q4. It's really a matter of customer by customer destock, as you can imagine, we check our market shares very precisely also, no. So -- and you know Q4 is the last quarter of the year. So sometimes you can have certain years, you can have a little bit of amplification of the low demand. But I would not consider this sort of new trend at all. It's not my feeling. And as you know, in HPP, we put a lot of efforts on the new business development, innovation and I think this is a paradox. I think we have been good on that. And so the growth is there. We are able to differentiate versus competition. And the market is not easy, but we are not particularly concerned for the next few years. On restatement, so I pass the message to the Investor Relations team will do what we can, but the idea is certainly not to lose you on the contrary, is to help you. So don't worry on that. We'll do our best. Yes. And with acrylics, yes, EBITDA, you could make the math, at least maybe we're not -- it's complicated for you. But as you could see, you could try to find some new information that you had not before. So it helps you also. I can see you started to work on the acrylics. Clearly, we are surprised by the, let's say, the depth of the cycle of acrylics is something. In fact, we have to go back to 2010 and the acquisition of the acrylics from Dow where the cycle were more or less that one. And I don't know if it makes you more comfortable. A year after, it was our one of best product line. So I think everybody has to be modest on anticipating. So I think that acrylics was under -- in Europe and U.S., was more under pressure than expected clearly in '25. We expect for the time being, something in, hopefully, a little bit of improvement, but something not far from what we saw in '25. Operator: The next question comes from Emmanuel Matot of ODDO BHF. Emmanuel Matot: Three questions for me. First, does that make sense to believe that H2 could be in line with H1 in terms of EBITDA? Is that the seasonality you are factoring into your guidance for 2026 because it's quite unusual historically? Second, given the ramp-up of your major projects , why do you expect those projects to have a lower additional contribution to the group's EBITDA in 2026? Because you are mentioning only EUR 50 million contribution compared to EUR 60 million last year. It seems to be cautious. And last question. Do you feel that the authorities in Europe are more willing than in the past to help you and the sector regain competitiveness significantly and protect you more from unfair competition, in particular, from China? Thierry Le Hénaff: Thank you, Emmanuel, for the question. On the first one, we didn't say it would be equal, we say it will be more balanced. So because on the contrary, in '25 was atypical, in terms of seasonality, but I'd say it would be at par H1 and H2. It's just the imbalance we had in '25 would be more back to normal, I would say. On the project, it's just -- in fact, there is no -- maybe it's counterintuitive, but it's not because you do a EUR 60 million in one year and EUR 50 million the following year. We are talking about incremental, as you know, additional EBITDA, okay? It depends on the momentum of the project. If in '24, you had a project which was started with the first step in '25, with the first step, which was very high in terms of contribution, the year after the same project can deliver far less on top of it. So you can deliver on a project. I don't know I will give you an example. You deliver on 5 years EUR 100 million. You can have the first year of EUR 40 million, the second year EUR 20 million and then EUR 10 million, et cetera. So it's not linked. So what is important is cumulative, and it depends on the phasing of the projects. Some have started 3 years ago. Some will after -- have just started at the end of last year. So don't -- there is no relation, I would say. What is important is accumulation. If we are cautious so much the better, it will depend on the macro. But I think that we should count on the EUR 50 million, I think it's reasonable. But the projects are -- what is more important beyond the figures is that we confirm that the positioning of the project is still completely valid from a strategic standpoint, from a geographical standpoint. And I think this is good news. This means that since the world is changing, your question could have been also, do you think that some of the projects are not relevant anymore because there were a change. It's not the case. We really confirm the quality of the projects. They are all meaningful even if it takes more time to develop than we would have thought at the beginning. On the last question, yes, we think that -- so first of all, we are a global company. So this is not Arkema protected. This is the assets of Arkema in Europe, but we have assets everywhere. And we will be pragmatic at the end, even if we like our region our country, we put our money where we believe we can be competitive and we can develop. And now with regard to Europe, yes, authorities have understood the danger for the industrial assets of chemical company, but also beyond chemicals in Europe. This seems to be more aware of the danger, more protective, think more about competitiveness. So in terms of let's say, awareness and intent, I would say, is positive in terms of act for the time being, we see nothing. Operator: The next question comes from Chetan Udeshi of JPMorgan. Chetan Udeshi: I had maybe 2, maybe 3, I don't know, but I'll try. The first one was just I'm looking at your Advanced Materials Q4 numbers. And I mean you're saying you had destocking, but then your revenue in Q4 is actually above Q3 and your EBITDA has been -- I mean it seems revenue is up EUR 10 million versus Q3. EBITDA is down EUR 40 million versus Q3. So I'm just curious what happened there? And maybe just to challenge your comment that Arkema is doing very well in Specialties. It doesn't seem like when I look at your numbers in Adhesives or Advanced Materials that's really coming through in terms of numbers. The EBITDA in both these divisions are down quite dramatically year-on-year. So just curious why you think we should think Arkema is doing well, and this is not a competitive pressure that is coming through in the business? And the last question I had was just in Q1 -- sorry, Q1 guidance. Historically, if I go like many years back, your typically, Q1 will be up 20% to 30% versus Q4. But in the last 2 years, we've had a more modest improvement of 1% to 5%. What should we think in terms of the magnitude of that seasonal rebound that we should have in mind for Q1? Thierry Le Hénaff: Okay, Chetan. I try to understand your -- the rationale of your questions. When you compare Q4 with Q2 with -- on Advanced Materials or no, I think on Advanced Materials, this is the answer to Laurent. This is a destock. So the destock -- as I said, which was not the case in Q3 happened mostly in Europe and the U.S. We have strong destocking in the U.S., and this is where in terms of added value, we are higher than in Asia. So the geographical mix is working against us. That's all. You have all the figures. So at the end, but it's more -- it's really the destock and the geographical mix. We have some high-value applications in Europe and U.S., which really completely destock. And sometimes just in December, you have no order because your customers are just optimizing their stock. So this is what happened. But from what I see with other peers that I know that you have some peers you especially follow. You can see that we -- destock was all across the board by many peers. So I would say no, no, I confirm what we say. Then your second question that is... Marie-José Donsion: It's the seasonality between Q1. Thierry Le Hénaff: No, there was another one. Marie-José Donsion: We said we are doing well in Specialty, but Chetan seems to flag that Adhesives and Materials were not so great. Thierry Le Hénaff: No, I think what we -- I don't really understand what your question. But what we say is that I'm sure you are referring to my point to Matthew on the transparency, why we changed segmentation. I think what we see very clearly is that the EBITDA of the Specialty Material over the year has declined by 5%, which we consider in macroeconomic, which is one of the worst we have seen in 30 years is performance, which show the quality of this portfolio. That's all. For the rest, you have your own opinion as the rest. But we consider that we have minus 5% EBITDA in really more than trough conditions. On 85% of the portfolio is a performance which need to be appreciated and to be highlighted. This is what we do. This is -- we think it was worth doing it. With regard to the Q1 guidance, we will not enter into precise figures. The only thing that we can say is that Q1 will be above Q4. There is a seasonality. The macro is comparable, certainly destocking should be less and the seasonality, typical, is better in Q1. We agree that in the recent years, it has been a bit less higher compared to Q4 than it was before. So you have some reference points that you can take. But I think this is a qualitative element that it will certainly not be the kind of seasonality you could find a few years ago. It's more typical of the more recent years, but Q1 will be above Q4, no surprises there. The macro should be quite comparable, but the destocking will be less also. Okay. And don't forget the FX impact of EUR 25 million that we have mentioned. Operator: The next question comes from James Hooper of Bernstein. James Hooper: Can we go into a little bit more detail around the outlook, please? Specifically, kind of division through division, if that's possible? And another thing I'd like to try and understand is, obviously, you're guiding for the EUR 50 million cumulative effect from the projects. But is there a cannibalization impact on some of the existing revenues? Because I'm just trying to bridge to the kind of the -- how this -- and also the kind of impact of the specialty groups versus refrigerants? Thierry Le Hénaff: With the outlook, I think we -- you got our press release and -- and what we can say at this stage on the outlook. So we are not given -- I think we have never given any guidance by division. We give a guidance for the whole company. Now I would say the macro and this is -- this was our feeling in '25, especially if you look at the new segmentation, I would say the macro is similar for each of the business, and there is there geographical footprint is quite comparable. The end markets are a little bit different, but they are all diversified in terms of end market. So I would not make a big difference by division. And there was a question of Laurent on the primary products materials with the weight of acrylics, et cetera, where we think it will stay at least for the first part of the year at a low level. But for the rest, I think the macro should be similar. Now on HPP, you will benefit more of Advanced Materials. You will benefit more from the projects than the rest -- than the other division. You could see that in -- if you take the list of the project is more in Advanced Materials and in Adhesives, but certainly Advanced Materials than the other division. Construction in Europe, we mentioned that I think, should more help the Adhesives and the Coating. So I'm sure you factored also old generation refrigerant and the primary material. So you have some nuances depending on which division you are talking about. So overall, a similar picture, but with some nuances that you know pretty well if you take our slide because you have where the projects are located. You have this discussion on construction, the discussion on old generation refrigerant and the acrylics. On the project, the EUR 50 million, I don't know what you mean by cannibalization, but there is no cannibalization. So this means this is a really -- at least it does not cannibalize other product line, if it is your question, a new product line would replace another one. No, it's not the case, except with refrigerant, where refrigerant is -- that is one project. And in fact, it's not for us in the case of the new refrigerant business, the end market is not the same. So it's not a cannibalization, but we know that old generation disappear, new generation are coming. But for the rest, no, I didn't see any cannibalization coming from the projects. James Hooper: And can I just ask a quick follow-up as well in terms of the cash outlook as well? Because I don't think you've given formal guidance for cash. Marie-José Donsion: So on the cash outlook, as we said at, let's say, comparable macro, cash performance should be quite comparable, let's say, provided that you take into account that the working capital would remain flat. So you see, in fact, for 2025, the contribution of the working capital variance. If we assume macro remains comparable, then there is no change in working capital expected in '26. Operator: Mr. Le Henaff, there are no more questions registered right now, so back to you for any closing remarks you may have. Thierry Le Hénaff: Yes. So first of all, thank you very much for your attention. I think this new year will be quite interesting as was the previous one. I think the team is really focused on the 2 time horizon, as you know, and as you could appreciate the efforts, cash, fixed costs, which are very important, so we'll continue then with a lot of engagement, and we still are confident on our major projects. It's a very important part. It takes more time than expected to develop them in the current macro, but it will really be a very material contributor in the coming years. And for the rest, we confirm that we have really strong positioning on most of our business lines. And even if the macro for the time being, remain rather weak, we think that our leadership position is really a support in this kind of environment. So looking forward to meeting you at different occasions. And have a good day. Thank you. Operator: Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation. You may now disconnect.
Reese McNeel: Hello, everyone, and welcome to this Q4 2025 results presentation for Prosafe. My name is Reese McNeel, and I am the CEO. I'd like to just highlight here to start off where we are. Prosafe, we are the largest operator in the accommodation market. I think we have a very strong high-end fleet of 5 units, a leading position in Brazil. I think there's very strong market fundamentals. And today, I want to spend a little bit more time on talking about the market that we're in. And we have a really strong focus, particularly the last quarters, on cost and improving our strategic position. Coming back a little bit to Q4. I was very happy with the Q4 results. I think Q4, if I look back to get to the EBITDA that we had in Q4, we have to go back to 2022. So I think it was one of the strongest quarters we've had in many years. It's also a quarter where we had all 5 of our rigs operating and all 5 of our rigs earning. I think again, we got to go back quite a while since we've seen that. And I think that's a reflection of how strong the market is. Also had a very strong operating performance with 100% fleet utilization. So basically, essentially no downtime. So really strong operations and also good safety performance. A little bit on the marketing side, very important, of course, as well. We did sign an LOI for the Caledonia for 2027, very happy about that. I think as part and parcel of that LOI, also, we will -- we have agreed to sort of an upfront payment structure. So I think that's also going to be beneficial for us. And of course, we're looking for additional work for the Caledonia to fill the gap, but very happy that we were able to secure something for the Caledonia. When we come to sort of CapEx and looking at CapEx going forward, we did move the SPSs, which we had originally planned in 2025. They have now been moved into 2026. And actually, we'll be starting those SPSs here very shortly in the coming weeks, and that is both for the Safe Zephyrus and the Safe Notos. I'll let Halvdan talk a little bit more about the financials when we come to that, and I will go through on the next few slides a little bit more in depth on how I see the market and maybe what our strategic focus is. Again, largest operator of the offshore accommodation, where are our units today, 3 in Brazil, 1 in Australia. And the Caledonia, which we just demobilized, she was off contract on the 22nd. We're very happy with that. We actually got all the options exercised, which we had on that contract. It was originally a 6-month contract with 3 months options. We got all the options exercised. We're very happy about that and really safe and well, she performed extremely well on this contract, but she has now been demobilized and will -- is laid up in Scapa Flow. Looking a little bit at the backlog picture. You'll see this last year, we did successfully extend the Safe Notos. She will go on to her new contract from the 1st of September. One thing that we're actually very happy about there is that we have been able to organize it such that during this SPS period, we will also do any contract modifications that need to be done. So we do not need to bring the rig in between the 2 contracts. That is something that we often see in Brazil is that you need to go in between contracts, but we will avoid that. We will do all this work now in this SPS period, and she will be on the newer day rate of close to $140,000 a day from 1st of September. Safe Boreas, also very pleased. We got to Australia, we got there on time. Client was not quite ready for us so we have actually agreed with the client that the fixed -- the 15-month firm period for Boreas will only start when she has the gangway down, and the gangway is not down yet although we're expecting that quite soon now. So in essence, we have gained a little bit more fixed term on that Boreas contract. Caledonia, as I mentioned, the LOI, let's see if we can fill the space. There are some opportunities out there, but I would categorize this as cautiously optimistic, just given kind of the time where we are already for 2026, a lot of clients have already locked in their work programs for summer of '26. A very key strategic focus for us in the coming months. And I think if -- those who are following us, you will know that I have said many times that I think H1 is going to be the time frame when I think we will know more about the Safe Zephyrus and the Safe Eurus. I'm still very much there. They're running off contract in April, May '27, and then in the fall of '27, Petrobras has been very clear that they wish to extend the units that are rolling off, not only ours but others, extend or recontract. So we are expecting to see some tender activity, but I'll come on to that. There's also opportunities with other providers in Brazil. And I think one of our key competitors also has demonstrated that by putting together a good work from other players in Brazil. A little bit more on the market. Again, I very much like where we are. We are not -- so we are very much a late cycle provider. We're very much focused on the brownfield and very much focused on maintenance to FPSOs. We do, do some hookup work. That's why it's here, 20%. A good example of that is Boreas. She's doing actually a hookup job. She's not doing a maintenance job. But the 3 in Brazil and Caledonia, they were all in this category, I would say, of operations, maintenance, tie-back, doing this type of life extension type work. And I think I'll touch a little bit on that, but I think with the increasing number of FPSOs and increasing number of on water assets, I think there's strong demand in that area. Some may be familiar with this slide. This is a bit how we look at the market and where rigs are positioned. The market hasn't grown in the last quarter from our perspective, it's still sitting at 31. There are a couple of these heavy lift units, which are on their way. They won work in Brazil so they're on their way so there might be some shift in where the assets are located. But generally, the market has been flat. And again, you see that South America, and that's largely Brazil is the main market for these assets. We continue to have a leading position with the largest player, one of the largest players in this market. And I continue to believe, a firm believer that this is a market which needs to -- which would significantly -- would need to and would significantly benefit from consolidation. All the players here, we're all sitting on $15 million, $20 million of SG&A alone. So I think there would be a strong benefit. So I think as the market improves, that's something that we've been quite vocal about that we continue to focus and see what kind of opportunities may be out there to play a role in that consolidation. Demand and supply, I think demand is actually at a 10-year high in this market. We got to go back to the last peak before we can see where the demand is. You see that on the graph here on the side there. When we look at the higher-end units, we're close to 90% utilization. So there's very little supply available. When I'm talking about high-end units, I'm talking about DP3 semi-submersible vessels. I think maybe some here in Norway will -- have heard the news that there's a proposal to walk to work on FPSO in Norway. That was rejected by the unions, but there is actually no available DP3 Norwegian compliant rig to actually do that work in '26. So the market is very tight. Also recent tender out in Brazil for this summer. And also if they want a high-end unit, there's actually no supply readily available. So I'm very positive about the market, and that is actually flowing through into higher and higher day rates. So our Safe Notos is on $75,000 a day. That was a contract obviously entered into 4 years ago. New contracts, $140,000. Latest done is actually $150,000, and we actually see in the North Sea, of course, for a shorter -- not a 4-year contract, a shorter contract, we see rates going above now the $200,000 level. So again, we got to go back quite a bit of time before we have seen those rate levels. And I listed out here also on the side of the slide a little bit because a lot of people ask me, they say, Reese, you're solely dependent on Petrobras in Brazil. I said, well, we are working a lot for Petrobras, but actually, there is quite a lot of other work now in Brazil as well. So I listed out some of the names, but I think PRIO has been using, Brava, I think you see some of these announcements from our competitors. SBM, MODEC, I think there's many of the players in Brazil, large FPSO operators who are now also using accommodation. And I think this trend is definitely going to continue. It's a trend which we have seen and actually recently even is picking up. West Africa, we also see quite a few opportunities, rigs going to Nigeria. We even see some opportunities in the Mediterranean. There's a working rig, working in Libya, there's one working in Israel. So I think the market has more depth than just Brazil. And I think there is also more demand out there than simply Petrobras. So I'm very optimistic on the market. I think we will continue to see day rates, solid day rates here going forward into the next couple of years. And just again to reiterate, that's a similar rate trend. It's not only Brazil where we see rates going up, but we see the same in the rest of the world. And if I look at even the latest done in the last quarter, we haven't seen any sign of this trend sort of lagging. In fact, it continues to be very strong. I'd like to talk a little bit about kind of the operations. I mentioned some of that already before, 100% utilization in Q4. I think that was great, great achievement to get all the rigs working again. If I roll back to when I joined, we had a couple of rigs still sitting idle. I think we've cleaned up the fleet. We've sold some of the assets. We've got all the rigs back working. So I think really good achievement from everybody. And if I look into Q1, I think the biggest impact that you see there on the bar chart -- on the line chart here, the biggest impact here is, obviously, we are taking rigs to SPS. We got 2 rigs that have a bit of time out, and the Caledonia is obviously rolling off. So we will see a little bit lower utilization with the Caledonia coming off and also with the rigs working -- with the rigs out on SPS. Yes, on the SPS, yes, 40 days for Zephyrus, 50 days for Notos, doing a little bit more work than simply an SPS. Some people ask me, "Do you need that much time to do only the special survey?" Well, actually, we are using this opportunity as well to do modifications that are required for the new contract, but also to do some exchange and overhaul some thrusters. The rigs are approaching the 10-year mark. So there is a need actually to do a little bit more maintenance, and this is the ideal opportunity. Backlog, probably no surprise when you see the high utilization backlog also at close to a 10-year high. And I think, again, the Caledonia LOI, very happy with that. And I think our focus really in the coming quarter, as I mentioned, is very much on Eurus and Zephyrus extensions. That's really the key going forward here and to successfully execute, of course, these SPSs. So with that, I'll hand over to Halvdan, who will talk you through a few of the financials. Halvdan Kielland: Okay. Thank you. Great to be here. As Reese mentioned, EBITDA in the quarter has been fantastic, one of the best we've had in a while, almost tripled year-over-year. You'll see a significant increase in charter income. This is mostly due to the fantastic utilization we've had and the Boreas on full rate from 15th of December. Other income of $20 million, this is largely cost reimbursements that's coming from -- out of the Boreas contract in Australia, and we expect kind of a limited EBITDA margin contribution from that going forward. No real surprises on the income statement, significant step-up in net profit in the quarter, $5.3 million, kind of the important part here, interest expense, this reflects the full interest expense, including the PIK interest. So you'll see that on the next slide, the actual cash interest is slightly lower. The full year 2025 includes a significant portion of the recapitalization gain. Other than that, again, just a fantastic quarter on the income side. Now moving on to the most important part, the cash flow. CapEx of $9 million. This is mostly related to the tail end of the Boreas contract and the start-up of the Safe Zephyrus SPS. The large shift in working capital here is very natural with the beginning of the Safe Boreas contract, and we do expect kind of looking forward into 2026. Of course, we see that there's a large negative shift here, but we expect a lot of this to be recouped during 2026, and will have a significantly positive impact for the year. Cash position of $65.3 million. I think the important thing is here that we feel very comfortable that we are well covered on our liquidity to go into these 2 SPSs and for all our projects going forward. Strengthened balance sheet. Of course, we do see that we are in the best position that we have been for a while. As I said, liquidity that we feel very comfortable with going forward. Significant reduction even just quarter-over-quarter in net debt to EBITDA. Of course, this is largely due to the step-up in EBITDA. We would also like to see both sides of the fraction decrease on this. And yes, much better equity ratio. In terms of capital structure, no real changes. The only thing is we've repaid a small portion of the Eurus seller's credit, and we've added on the PIK interest for the senior secured facility. And we currently are paying that as PIK interest and we'll continue to do so as long as we feel the need to. Worth mentioning here, currently, the way this is structured, the whole debt stack is due in August 2028 at the same time as the Eurus facility. There is an option to push this out if the Eurus facility can get extended. The main tranche of $233 million can be pushed out until latest 31st of December 2029. Now we talked a little bit about where we are and where we've come from, going into where we'd like to go, $40 million of EBITDA in the year. Of course, as those of you who follow the company will know, we are still working on some legacy rates, specifically for the Eurus and the Notos. We see that the step-up on these, the Notos will go -- have that step-up expected around September onwards. But of course, for the Eurus and even the Zephyrus, this will be a massive increase. So we see that the potential on these new contracts should be able to bring us to around $90 million to $100 million of EBITDA, which on our current debt stack would bring us from around 6 to closer to 2. And of course, this is just on the increase in EBITDA. Of course, as a company, we'd like to get to the point where we can start to deleverage our balance sheet as well and bring both sides down. Talking a little bit about asset values. I think you can pretty comfortably say that if we start a replacement cost, there's not going to be any -- I mean I can't say for certainty, but looking at the value and looking at the cost, there's not going to be any new builds of these kind of vessels anytime soon. The market, we're very comfortable in saying that the market would have to have a substantial rate increase for people to even start considering it. In terms of broker valuations, we feel that is significantly above where the market is today. So we do feel that in terms of asset valuation, we do have some room to grow. Now to give you a little bit about our thoughts for the future, here is Reese. Reese McNeel: Thank you, Halvdan. I'll wrap it up here a little bit, and then I think there's also some questions that I have received. So I think a little bit on the outlook and the guidance. We gave guidance last year, $35 million to $40 million of EBITDA. We ended up in the higher range of that guidance, again, driven largely by the fact that we had all the units working and working well. Looking into 2026, we've given quite a large guidance range, $45 million to $55 million on the EBITDA. We do expect obviously an improvement of earnings. We'll have Boreas on contract throughout the full year, and we will also have the Notos rolling on to a new contract. So we do expect a little bit of an uptick in that. And as Halvdan said, we expect a pretty strong improvement in working capital. We had, obviously, the ramp-up of Boreas in the fall, and we had some of the SPS costs, which we took also in the fall, which had a negative working capital impact, but we're going to see a positive working capital impact throughout 2026. So all in all, I think we'll see an improvement in 2026. And the real key focus for me looking ahead is very much on to the new contracts and what we can secure with Eurus and Zephyrus. So with that, I'll end the formal part of the presentation. Reese McNeel: I do have a few questions, which I have received. So I will read them out here to the audience and then answer some of them to the best that I can. One of the questions was a question regarding Nova and Vega. I think we've talked about Nova and Vega several times. These are 2 rigs, which were actually built in 2015, 2016 by Axis Offshore and acquired by Prosafe. They're actually the last 2 remaining semi-submersible accommodation -- accommodation rigs, if you will, or specifically built for accommodation. I had the luxury of actually going on board a few weeks ago. They do actually look very nice. The takeout delivery price plus the cost to -- obviously, they've been sitting there for 10 years, so you need to spend some money to take care of obsolescence. And then you would also need to mobilize them to a location, most likely would be Brazil or West Africa. So our sort of take is if you added up that delivery price plus all that, you're probably in the range of $230 million to $250 million for each rig. It's probably not a lot of science behind if you look at sort of our EV per rig, we're probably more like 80-ish to 90-ish, depending a bit on which rig you're talking about. Broker values is around $100 million, $130 million, $150 million. So clearly, the sort of takeout delivery price or the all-in price for these rigs is quite high relative to where things are trading. We have had a consistent dialogue with the yard, and we continue to have that to see if we can find an amicable solution to get us into a position to take delivery of these rigs. We've continued to market them. So we have bid them in all the last tenders. But I think the key to sort of unlocking this is, of course, to see a continued improvement in the market, but we probably also need to -- we need to come to some kind of a structure with the yard, which we haven't to date. So hopefully, that gives a little bit of color on Nova and Vega. Back to a couple of other questions here. Yes. Another question was, give a little bit more color on Safe Caledonia and our plans. The way that I see Safe Caledonia is very much sort of, if we have worked for her, that's great. We keep her in the fleet. She's actually a pretty old vessel. She's 40 years old. So she's -- I like to make a joke that she's older than probably many of the guys in our office. But she was -- she had a significant renewal program in 2012, well over $100 million was put into her then. So she's actually a very nice rig. I've had the fortune to be on board a few times. And I think what we saw now with her performance for Ithaca was really strong. She had really good connectivity even through a large part of the winter. And I think the client was extremely happy with the unit and her performance. So on the back of that, we won a new contract in '27. And as I mentioned, Ithaca is actually funding or prefunding, subject to us signing the final contract, which we expect now in Q1. They will actually be funding a lot of that upfront. So in essence, we are not putting in a lot of our capital to keep her there and to keep her well ready for 2027. So for me, that's a perfect situation. We're not having to necessarily put out money. We've got a good contract for her, and we actually see now in '26 that she was one of our better earners. So I'm actually a bit more optimistic on Caledonia than I was if I roll myself back a couple of years. And I also see that in the U.K. market, there is work actually coming up. So I'm relatively optimistic, but we are very much taking this year by year. We got a job for '27. We basically got it funded through to '26, and we'll take a view. We'll try to find her some work in '28 or '29, but she's obviously not an asset that we are going to take a ton of risk on, if you want to put it like that. But I think there's a good market at the moment. I think we can actually keep her quite busy. The final question I saw popping in was with regards to my belief in FPSOs and the need for these units to supply FPSOs, the continuing need and how -- and a bit more color on that. And I guess, again, I've had the luxury and the opportunity to actually be offshore in Brazil on several of our units and the opportunity to actually see some of the FPSOs we're working against. And I think the corrosion level in Brazil, if you talk to some of our clients, they talk about 4 to 5x the corrosion level that you would see in the North Sea. These units need a lot of maintenance, whether it's Petrobras units or MODEC units or SBM units or any of them. There's a big maintenance need. And I think we have also seen actually ANP, the regulator in Brazil also shutting down some units. If we look at Peregrino, it was actually shut in by the regulator with a need for maintenance. So what we're hearing from our clients is they need the maintenance. And also what we are seeing is, again, as I mentioned, with Brava using PRIO using Petro Rio, I think there's a number of MODEC, there's a number of clients in Brazil. So I think there's clearly not only sort of the sort of theoretical that they need -- they're getting older, they're high corrosion, but actually, we actually see clients using. And I think interestingly enough, we see a bit the same in Norway. If you look where the accommodation units are working, they're largely working now this against FPSOs rather than, again, new installations. And I don't see this FPSO trend declining. There's many FPSOs on order into Brazil, but also Guyana. And I guess if we're looking even further down the line, then we're talking Namibia. But I'm very optimistic about sort of the underlying demand driver for our units. I'll just take one last check. I think that was it from questions, unless there's any questions from the audience here. Go ahead, Lucas. Unknown Analyst: So what kind of OpEx number for Caledonia did you bake in, in your guidance number? Reese McNeel: Yes. So Caledonia has about $35,000 OpEx when she's working and she has about $20,000 when she's going to be laid up. And of course, we also have some costs associated with laying her up. So we will have a few million dollars of cost just to get her, of course, get her property laid up. Unknown Analyst: And your CapEx expectations beyond '26. I mean you are doing 2 major SPSs in '26. So '27, '28, what's kind of the run rate that you are looking at? Reese McNeel: Yes. No, that's a very good question. I think what we're seeing is SPS costs tend to be in the sort of $20 million to $30 million range. So we're doing this. We've done quite a few of the SPSs. So if we can -- we're going to have another 5 years on Notos, another 5 years on Zephyrus. Eurus is coming up, I think, end of '28, '29. So I think -- but those are kind of $20 million to $30 million chunks per rig, but they are all kind of now in the 2031, 2029 time frame. And I think one of the key questions here, of course, is always when you're getting on to new contracts, is there going to be a requirement for contract-specific modifications or CapEx. So a good example is now, when we transition Notos onto her new contract with Petrobras, there is some CapEx, which is required according to the contract. In exchange, we did get a mob fee from Petrobras. So you match them off. But I think what exactly the CapEx will be in the coming '27, '28, leaving aside SPS, I think that's a little bit dependent on which contracts and the contract structure that we enter into. But generally, we're looking at $2 million to $4 million a rig outside of SPSs. Unknown Analyst: Okay. And the kind of reimbursables that you incurred in the Q4, is it going to continue in '26, given the structure of the contract? Reese McNeel: Yes. I think the reimbursables will continue to be quite high, but Q4 was particularly high because the heavy lift vessel itself, the entire chartering of the heavy lift vessel from Norway to Brazil was a reimbursable. And that was a double-digit million figure. So we won't see the same level of reimbursables. But we'll continue to see some reimbursables. But the market is -- the markup is sub-5%. Okay, with that, thank you very much, everyone, for coming and for listening in. Thank you.
Remon Vos: Good morning, everyone, from CTP here in Prague, Czech Republic. Excited. And thanks for dialing in. It's good to have you on the call. We are going to talk about the 2025 results, which are good. But before we start, I'd also like to look back. 2025, you could say, has been 25 years of growth. We have completed our first building in 2000 here in the Czech Republic in Humpolec, where we did our first CTPark model. The CTPark Humpolec was the first site we acquired, initially 10 hectares, and later on we had the opportunity to grow that park. So that's where we first started with a club house where we looked for people and did establish a small team and did then develop a number of properties, and those buildings are still fully leased and many of the tenants which we initially had actually, they're still there, and they have been able to grow their business. So 25 years of continuous growth, which started with nothing, with a piece of land, and then building and second, et cetera, et cetera. So thank you very much to all the very loyal clients, all those companies who we have been working with, the companies who gave us the opportunity to work for them outside of the Czech Republic later on. And of course, thank you very much to all people we've been working with a lot over the past 25 years. And thank you to all other partners and of course, the fantastic team here at CTP, which in the meantime is 1,000 people, more than 1,000 actually nowadays. So that has been 25 years of continuous growth, good times, bad times with all kind of different opportunities along the way. So '25 has been a strong year, has been a good year with good results, which illustrates also the growth engine, the thing we like to do, we like to grow and the largest growth engine in the business here in Europe. So last year has been also an important year for us, because we added another country. We opened up business in Italy. In the meantime, we have more than 200,000 square meters of projects under construction in Italy, mostly pre-leased, 70%. We do that in south of Milan, close to Piacenza, Castel San Giovanni, but also in Padua, and we have other projects underway. At the same time, we set up a team of people in Italy, and we have a land bank to build an average of, we thing, 200,000 square meters of properties over the next years, and we hope within 5 years to hit the 1 million square meter lettable area target in Italy as well. We see good opportunities in Italy. Overall, we see opportunity in Europe over the next years. So we're quite happy with the entry so far, and we're making good progress. The land bank, mostly North Italy, but also strategic sites in the region of Rome. So there's also other places where we believe we will be successful in the development of our industrial properties, again, mostly for existing clients, so the companies who are already renting from us in other markets. For those clients, we plan to develop properties in Italy. And the amount of business we do for existing clients is approximately 70%, 7-0 percent of the total amount of business we do. When we look at drivers for Europe, it's definitely near-shoring Asian companies coming a setup shop in Europe for Europe. I mentioned defense, but also technology, semiconductor industry, consumer goods. People have more free time, so they go out biking, running. Pets, massive industry. We do multiple facilities for pet food producers, pharmaceuticals. So there's a whole of consumer spending, means people have more money to spend than they had 25 years ago when we started here, and we see that in other markets in Serbia, in Slovakia, in Romania, where we came initially maybe for low-cost manufacturing and later turned into manufacturing for domestic market. And nowadays, Central Europe is the engine of Europe. Here is where you go for manufacturing. And yes, it's all positive. So relatively good outlook, and we have a number of growth drivers. We are not in it for the short, we're in it for long. So we have plans for the next 25 years. And those plans are definitely to make CTP a global player and to grow with our clients and to use all the experience we have building business parks. Last year, we signed 2.3 million square meters of new leases, 2.3 million, which is a bit more than we did the year before. In '24, we did some 10% less. Rental rates were a bit higher last year in '25 compared to '24, approximately almost 5% higher rents than same building in a year earlier, in 2024. So a bit rental growth, 10% more deals, and still around 10% yield on cost. Target, midterm ambition, continue to grow with existing clients, which we have a lot of them. Good companies. They pay on time. 99.7% is rent collections of money which we charge to tenants, which is paid. And as I said, most of them on time, good companies. 70% of all new business we do with existing clients have 80% retention rate. And this is also important to mention, 75% of all the projects we do are being built within existing business parks. So we don't do stand-alone boxes. We really create an address, a park, an environment, an ecosystem with sufficient infrastructure and manage these facilities for people to work, develop themselves, to create business together, to work together, to grow stronger, and to have a stable business park. Also not overexpose to one specific industry, you want to mix it up with different industries. It's also good for labor market. We see a lot of automatization among our tenants. So they continue to invest in their facilities, in their production lines, in their technologies, which is good as well. We break it down at CTP, as you know. We talk about 3 things. We have the operator, which is the income-producing part. So the part of the company will look after the buildings which we have built over the past 25 years, with EUR 840 million of rental income, on the way to hit EUR 1 billion rental income next year. So it's the operator with good occupancy level, always above 90%, between 93%, 95%, depends a little bit on the market and the location where you are. It depends also on how much property we actually build to enter a market and you need time for the market to absorb all those buildings, but remain at the target around 93%, 95%. That's the operator. Then we have the developer. Those are the people at CTP who develop properties or who build business parks and properties. Quite active now also with inventing new type of properties, adjustments, constantly working on making these buildings better, both the existing refurbishment upgrades, but also new properties. And better means flexibility. So we have generic designed buildings for multiple generations, energy consumption, maintenance, those things are important when you design a property. That's what these guys are busy with. Some highlights as well what we've done in terms of completions last year, 1.3 million square meter, 180,000 square meter in Bucharest; 65,000 square meter in the CTPark Budapest in Hungary, but also, of course, in Brno, Czech Republic, yes, the home of CTP, where we have built millions of square meters. Last year, we did a deal with FedEx, for example, just to mention one. Part of our 30-30 plan, right, to grow to 30 million square meters. 2 million square meters under construction this year, which is good for EUR 150 million of rental income. Another highlight, maybe if you talk about those 2 million, we do a lot in Poland, the largest economy, largest country in Central Europe, very dynamic. Can do, a lot of support from the government, very good locations, I think we have secured a good team on the ground. So there we invest a significant amount of money now building properties, mostly leased, in and around Warsaw, but also Upper Silesia, Katowice, Zabrze, as well as along the German border on the west side of Poland. So we see there good opportunity, as well as in Gdansk, by the way. Another highlight, I would -- yes, Bucharest, Romania has been good, is still strong. Serbia is strong. Germany this year is important to get things going in Mülheim. Some of you have been on the Capital Markets Day event last year, we looked at Mülheim Energy Park with E.ON, Siemens and more to come. So that's happening, making good progress in Düsseldorf as well as in Wuppertal. So overall, quite positive about Germany as well. I think, yes, well established and good position. Last but not least, the growth engine, the third activity, we look globally at opportunities in different countries. And how does this work? Well, it comes from clients. Clients tell us, okay, we are going to that market, because we see growth. We need properties. Are you there? Sometimes we are, sometimes we are not. If we are not, then we have a closer look at such a market. We think shall we go there? Does it make sense now? And we constantly do that. Sometimes we do not enter. Sometimes we have a closer look. Now we always have the desire, as you know, to also become active outside of Europe, because we see other opportunities in other markets. And we found good opportunities in Vietnam and strong demand from existing clients. So we continue to have a closer look. We announced it last September. And so far, we've been making some good progress, having a closer look at the market and the opportunity. We have a few people in the meantime on board. So we have a CTP Vietnam, and we have there a small team of experienced industrial property people. Vietnam, obviously strategically located, 100 million people, very productive workforce, but also quite young people, around 30 years of age. So in the future also, you will see consumer spending. Well connected to the rest of the world. And that will also give an opportunity to get us feet on the ground in Asia and also closer to other Asian companies who look at coming to Europe. And then we'll keep you up to date on developments we are making. Yes, it's not only about getting bigger, we need to also get a better company. So we are obviously constantly working on getting a better company with maybe doing more buildings with less people, more efficient, more effective, different processes and procedures. We automatize. For example, when it comes to property management, when it comes to energy consumption, we know exactly how much energy tenants consume in their buildings. We can help them again with energy management with clear understanding of the condition of the building, and when there are issues, property management related, then we can fix that. We have a clear system for that in place in the meantime to monitor all the maintenance and repairs, which potentially are needed. So both energy consumption as well as maintenance and repairs to make sure buildings are in good condition and remain in a good condition. That's one example. And there's many other things we've done, whereby we've introduced new processes, better, and software and automatize, standardize, digitalize the company, and that makes us think better and quicker and more efficient to continue to grow our business. Yes. So we're looking forward very much to the next 25 years. Thank you for your attention. I will hand over to Rob. Some of you know Rob. He's not really new to CTP, but as IR, we are happy to have him on board and look forward to answering your questions. Robert Jones: Turning to the financial highlights. Net rental income increased by an impressive 14.1% to EUR 738 million, driven by record leasing of 2.1 million square meters, excluding Italy. Like-for-like rental growth came in at 4.5% in FY '25, accelerating from the 4% we delivered in FY '24, and this was driven by indexation and positive rent reversion capture. We also delivered record development completions of over 1.3 million square meters with occupancy at the year-end still remaining stable at 93%. Annualized rental income increased by 13% to EUR 840 million, illustrating the strong cash flow generation of our portfolio and locked-in growth profile of our business for 2026. Company-specific adjusted EPRA earnings increased double digit by 11.3% year-on-year to EUR 405 million. CTP's company-specific adjusted earnings per share amounted to EUR 0.85, an increase of 6.3% year-on-year, as we also made positive progress on our debt refinancing during the period. This EPS figure was just EUR 0.01 variance to guidance, driven by the timing of development completions in Q4 '25 with some moving to Q1 '26. As we look forward, the important message here is that our medium-term double-digit annualized growth trajectory is unchanged, as Richard will highlight shortly. Now looking at the valuation results. The revaluation of the portfolio for 2025 came to over EUR 1.1 billion, a key contributor to our leading total accounting return for the period. Of this positive portfolio performance, EUR 422 million was driven by the construction and leasing progress on our developments, while EUR 649 million came from the revaluation of our standing portfolio with the balance from our land bank. As at the year-end, the total portfolio gross asset value now stands at EUR 18.5 billion, up 15.6% from FY '24. CTP's reversionary yield stood at a conservative 6.9% at full year '25. For '26, we expect further selective yield compression and positive ERV growth in line with inflation. This is also illustrated by the new leases that we signed in '25, where rents were a solid 4% higher than 2024, adjusting for country mix. The supportive demand drivers of our business remain present, whether that be near-shoring, manufacturing in Europe for Europe, businesses upgrading their supply chains or reacting to the changing global landscape alongside increasing deglobalization of political agendas. Our core CEE markets, where industrial and logistics space per capita is half of that of many of other Western European markets, continues to benefit from these supportive trends alongside our own Western European markets and our opportunities being assessed outside of Europe. We are not short of opportunity, nor are we short of capital, with that opportunity driven primarily by the embedded value to be unlocked from CTP's existing land bank of more than 33 million square meters with the majority next to our existing CTParks. This land bank that we have on our balance sheet allows us to facilitate our tenants growth as a solution provider for their real estate needs. We remain active in the market for the acquisition of land, especially in Poland and Germany, and we replenish and, in a number of cases, grow the land bank in existing markets where returns are the most attractive. Now as Remon mentioned, we also continue to look to enter markets such as Vietnam, following on from our successful CTP Italy market entry at the back end of last year. Our EPRA NTA per share increased from EUR 18.08 at year-end '24, up to EUR 20.39 FY '25, and this represents a strong increase of 12.8% during the period. With this NTA growth, in conjunction with our dividend distributions, we delivered a total accounting return to our shareholders of 16.1% over the past 12 months, highlighting our superior total return profile, which is underappreciated by the equity market within the real estate sector. I now hand over to Richard. Richard Wilkinson: 2025 was another year of solid growth for CTP as we continue on our journey to 30 million square meters of GLA, a doubling of the current portfolio. The company's interconnected business units, the operator, the developer and the growth engine are all supported by our strong access to debt capital markets, diversified funding structure and multiple sources of liquidity provided from across the globe. 2025 saw us receive an investment-grade credit rating upgrade to BBB flat from Standard & Poor's. Moody's also have a positive outlook on our credit rating, confirming the growth trajectory of our business. This January, we again evidenced the high institutional demand for our debt, issuing a 4.5-year bond at a spread of only 92 basis points with a peak order book of over EUR 4 billion. Looking forward, we will continue to diversify our sources of debt funding as well as managing our liquidity to ensure we do not hold material excess cash. We also target growing our share of unsecured debt towards 80% of total outstanding debt. Turning to the key credit metrics. Our interest coverage ratio was unchanged quarter-on-quarter at 2.5x, and we expect this level to be the bottom. Our normalized net debt-to-EBITDA remained broadly stable at 9.3x and our loan-to-value stood at 46.1%. This LTV is marginally higher than our 40% to 45% target due to us seizing the acquisition opportunity in Italy at the end of 2025. In Italy, we will deliver 200,000 square meters of GLA in 2026, more than 10% of our annual target. And with a land bank of over 8 million square meters, we have a long runway for growth in Italy, a country with a significant undersupply of modern A-class industrial and logistics space. As our development pipeline is completed and over 10% yield on cost and revaluation gains are fully booked, we expect loan-to-value to move back towards our target range. To complete our development pipeline of 1.4 million to 1.7 million square meters in 2026, we do not need additional equity capital due to our sector-leading yield on cost around 10% from projects to be delivered in 2026. Every euro we invest in our pipeline increases our ICR and decreases our net debt-to-EBITDA as our leasing income comes on stream. This allows us to grow group rental income at double-digit rates while simultaneously improving the most important credit metrics. In 2025, we signed EUR 1.7 billion of unsecured debt to fund our development business, debt refinancing and our growth engine. We continue to demonstrate our ongoing strong market access whilst actively managing our funding costs. During the year, we renegotiated or repaid EUR 1.6 billion of our most expensive bank loans. Looking through 2026 and beyond, CTP maintains a conservative debt maturity profile. We repaid EUR 350 million of bonds maturing in January, and our only remaining bond maturity in 2026 is EUR 275 million maturing at the end of September. Looking further ahead, maturities remain limited over 2027 and 2028 with less than EUR 1 billion in total outstanding. Our liquidity at the end of 2025 stood at EUR 2 billion, comprised of EUR 700 million of cash and our EUR 1.3 billion RCF, more than sufficient to meet our cash needs for the next 12 months. The average debt maturity stands at 4.8 years, and the weighted average cost of debt was 3.3%, which represents only a marginal increase compared to year-end 2024. We do not expect a material increase in our average cost of debt as our marginal cost of funding is currently below 3.5% for the 5-year midterm period. Regarding the midterm outlook, a key message here is that the medium-term growth outlook for CTP remains unaltered. At our 2025 Capital Markets Day, we introduced our ambition to double the size of our portfolio to 30 million square meters. We expect to grow top line income around 15% per annum, driven by rental growth in our operator business alongside double-digit organic GLA growth from our developer business as we build on our unrivaled land bank at 10% yield on cost, supported by our growth engine as it seeks attractive global investment and growth opportunities. Digging deeper into those attractive return drivers. Firstly, we have the operator, over 1,500 supportive tenants who pay on time, stay with us and grow with us. Secondly, we have our development business, led by the strategic land bank of more than 33 million square meters, either on balance sheet or under option, located mainly around our existing parks. This is the key component of our portfolio growth ambition. And thirdly, we have the growth engine, the global identifier of shareholder value-accretive land-led acquisition opportunities to continue to deliver high returns well above our cost of capital. We also continue to see above inflationary rental growth across our markets, supported by income reversion capture, positive near-shoring trend, production in Europe for Europe, and ongoing e-commerce growth driven by rising disposable incomes across our strong Central Eastern European region and our Western European markets. Previously, unlike the rest of the sector, we did not capitalize interest on development activities, which made comparability between companies for investors more difficult and made CTP appear more expensive on a simple earnings multiple basis. Going forward, we now capitalize interest to provide reporting harmonization with all other European real estate companies. Following this change, we now set our company-specific adjusted EPRA earnings per share guidance for 2026 at EUR 1.01 to EUR 1.03. This implies year-on-year growth of 9% at the lower end of the range, rising to 11% at the top end of the range when compared to the 2025 result. In summary, CTP delivers leading shareholder returns as a growth business with income and cash flow growth, development profit growth and the growth engine lever through expanding our global exposure. Thank you for your attention. We now welcome your questions. Operator: [Operator Instructions] With that, we'll take our first question from Marios Pastou from Bernstein. Marios Pastou: I've got 2 questions from my side, one on the development pace and then one on capitalized interest. Just firstly, on development. So you had some delays in 2025. You also then added Italy. I'm just questioning why there isn't any upgrade really to the guidance range for the development targets for 2026, and whether there's any kind of room to beat on this going forward? And then secondly, on capitalizing interest, I suppose another question really on why you've decided to implement this change now. Not all companies do this, and whether you'll continue to headline both numbers going forward? Richard Wilkinson: Yes. Thanks, Marios. I'll take the interest capitalization question first. look, as we've been on the market now for 5 years, if someone wants to look at the real estate sector, they fire up their Bloomberg and they sought companies by earnings multiples, if everyone else is capitalizing interest and we are not, we screen expensive compared to the market. So basically, what we're doing is we're just aligning ourselves with the standard market practice of all the logistics players. And the timing, we think that -- we've increasingly heard from investors that when they look at us first, they think you screen expensive. And then when we dig in, we understand better why that first look isn't always helpful. We understand investors are time poor. So we want to try and make it easy for them to have a simpler comparison going forward. And on that basis, we will publish the EPS targets and results, including the capitalization, not excluding it. Regarding the development pace, maybe I start and then Remon maybe comes in. Regarding the guidance for 2026, we're coming out with something that we are very confident that we can deliver. We think the 1.4 million to 1.7 million is something that is very achievable with us. The lower end of that range would be a new record for deliveries for us, but we're confident that we can reach that. We know we missed on the EPS guidance for last year, and we don't want to disappoint the market in any way going forward. Operator: Our next question comes from John Vuong from Kempen. John Vuong: Just on the pre-let for 2026, could you elaborate a bit more on the mix of developments in existing and new locations and how that compares to last year? And have you started relatively more developments in existing locations essentially? Or did leasing start a bit slower than last year's pipeline given the 30% pre-let rate? Richard Wilkinson: Yes. Thanks for the question, John. Yes, regarding the overall pre-let, we stand at 30% at the start of the year, which is in line with our 30% to 35% range that we've been doing over the last years. In terms of the existing parks, the pre-let is 23%; in new parks, the pre-let is 62%. So consistent with what we've been doing over the last years and what we've been reporting in parks, where we know the demand, where we understand the tenant requirements coming up, we are willing to start with a lower pre-let ratio. And finally, I would also highlight that we have another 175,000 square meters of pre-let projects that we have not started yet. So you don't see those in the pre-let ratio. Robert Jones: John, this is Rob Jones. The other thing to add is, we're still very comfortable on our 80% to 90% target for pre-letting at delivery for '26. We obviously delivered 88% in 2025, so very much towards the top end of that range, and are happy to guide for that 80% to 90% again for 2026. So yes, we're pretty comfortable there. Operator: Our next question comes from Jonathan Kownator from Goldman Sachs. Jonathan Kownator: Just coming back to the guidance, please. So 2 questions really. The first one, I think your guidance previously excluded Italy. Now it does include Italy for EUR 200,000. So overall, the entire amount has not changed, meaning that it's probably a bit lower for the rest of the business. Is it just risk management; ultimately, that's the amount of space you're comfortable having to let or deliver as a package? Or are there differences that you've noticed in terms of appetite for different countries? That's the first question. The second question, please. The growth implied by your guidance from the top line seems to be a bit stronger than the growth at the bottom line, and yet you highlighted that your marginal cost of debt is pretty close to the in-place. So is there something that we're missing here? Or are you expecting some additional costs that we need to be aware of? Robert Jones: Jonathan, I can touch on both of those, and I'll pass over to Richard for part of the second half, the second question. So on the guidance for deliveries for '26, you're absolutely right, 1.4 million to 1.7 million square meters. We initially announced that '26 guidance, obviously, towards the second half of last year prior to the Italy transaction. But it's important to understand that we obviously had a high degree of probability internally that we were going to complete on that Italy transaction. So when we gave that raised guidance, and as Richard touched on earlier, even at the bottom end of the range, it's still a record in terms of what we've delivered in previous years. That included our expectations for the Italy deliveries of 200,000 square meters, which, of course, is already substantially pre-let for '26. And when you think about Italy going forward in your model, we are guiding to 250,000 to 300,000 square meters of deliveries from 2027 looking forward, so an increase thereafter. So I guess the takeaway from that is, do we think that there's further upside in the 1.4 million to 1.7 million? No, very comfortable with the range and it includes Italy. Just on the top line growth versus bottom line, so you're right in your assessment. But I think one important point to make is, yes, our weighted average cost of debt today, which is about 3.3%, is very similar to our marginal. We did debt issuance at the start of the year where we issued 4.5-year money at 3.375%. So very, very close to our weighted average cost of debt. But don't forget, we do have a debt instrument bond that matures in September this year. I think, remember, the coupon on that is 0.625%. If we refinance that with, say, 5-year money today, that would probably cost 3.4%, 3.5% all in. So it's important to be aware of that. But obviously, then looking thereafter, from '27 onwards, we're then in a position where we've got no refinancing upcoming that has a notably different coupon to our marginal cost of debt. Richard, I don't know if you want to add anything to that? Richard Wilkinson: No. I mean, unfortunately, we never see the top line flowing one-to-one through to the bottom line. Of course, we would love to see that. I think one of the things to please bear in mind in this year is, also we'll be building up a team in Italy and there's some costs associated with that. And although we have the pre-let deliveries to come, they're coming in Q4. So there's not going to be a lot of income to offset the ramp-up in the costs. Secondly, we've continued to investigate the opportunities in the Vietnamese market and are looking to build up a team there over time as well. Robert Jones: And of course, as you -- sorry, go ahead. I was going to say, as you say, despite those points that Richard makes, we're still in a position where at the midpoint of our earnings guidance for '26, it still represents double-digit EPRA EPS growth year-on-year despite that investment we're making in the business. Remon Vos: And maybe to add also for you, Jonathan, it's also -- for the cost of debt is also the annualized impact from '25. So you cannot only look at '26, because, yes, as Rob explained, we had, of course, the bonds in January and then in September, but it's also the annualized impact of '25, which is, of course, reflected already in the average cost of debt, but still has an impact on our '26 EPS. So if you do the math, and you can do it relatively easily, also if you look to the refinancings we have done in '25, you see that the impact is still a few cents on the overall EPS. Jonathan Kownator: Okay. So if I understand correctly, cost of debt and admin cost you're building as opposed to being a bit less confident on the top line, right? Remon Vos: Correct. Richard Wilkinson: Yes, absolutely correct. Remon Vos: If you want, I can add something on the supply, because it keeps coming back, this question. So first of all, we look after the income-producing part of the portfolio. We make sure that we are happy with the occupancy rate. And then we will continue to build if we can lease. So we are going to not build buildings if we are not confident we can lease those buildings. So we balance between supply and demand. And while doing that, we do gain market share. So if there's an opportunity to develop and to lease properties, we do. And that's what Rob explained in his presentation, as we've been doing over the past years, we do gain market share. So we build as soon as we believe we can lease. Operator: Our next question comes from Frederic Renard from Kepler Cheuvreux. Frederic Renard: First of all, let me flag that your line is not really great. So I'm not so sure it's just me. So just flagging. Then I would like to comment on 2 elements. First, on the long-term guidance of 30 million square meters. Even with Italy today, the pace of growth is important, but far from the level which would bring you to a portfolio of 30 million square meters by 2030. So it seems basically that your existing market is not absorbing what you are delivering at the moment from an external point of view. Can you comment on that first? And then maybe on the second question, if I compute your vacancy in terms of square meters, it looks like your portfolio is at 1 million square meters of vacancy, which is quite sizable. What is structural here in the mix? And finally, on the pre-letting, you mentioned 88%. But actually, if you compute the pre-letting in Q4, it came close or slightly below 80%. So can we conclude that there is some kind of a softer demand in the market at the moment versus what you had in mind 1 year ago? Richard Wilkinson: Yes. So in terms of our midterm ambition, I mean, we said 30 million we would like to achieve target. It's an ambition, we want to get to 30 million square meters by 2030. If you compound our portfolio by 12.5% per year for the next 5 years, you're going to get to somewhere around 26 million, 26.5 million square meters. And there's a small gap there, but we think that there may be opportunities or there will be opportunities to find one or the other attractive acquisition over the next 5 years. We talk about a relatively midterm perspective there, Fred. So I think we're comfortable with that level of ambition and our ability to realize that. If we can do 15% a year, which would be the top of our organic growth rate, then we get almost to the 30 million square meters. But it's our ambition and we're comfortable with that at the moment. In terms of the vacancy, as Remon just said, we're always balancing supply and demand in our parks and in and around our parks. Our business model is to run a vacancy of -- we target around 95% occupancy going forward. And as the portfolio grows, that means the absolute square meters of vacancy increases. So yes, at some stage, that gets to 1 million square meters, that's simple math. That's part of our business model that we live with, we accept that vacancy rate, because we feel that gives us a competitive advantage when tenants are looking for space in the short term, because not everyone is planning years in advance. Sometimes people need space quickly, and then the ability to act quickly and grab a tenant and meet their demand puts you in a better position to retain and grow with them then also going forward. And regarding the pre-let for Q4, look, across the year, we delivered 88% towards the top end of our 80% to 90% guidance. We try not to get too hung up on the volatility of any one quarter. Short-term trend is not our target. As Remon said in his presentation, we're in it for the long term. That's why we have the land bank that we have mostly in existing parks or with the potential to build a new park of more than 100,000 square meters for each park. That's the real value driver for us and... [Technical Difficulty] Operator: It seems we have lost audio with our speakers. Please stand by whilst we're getting them reconnected. Robert Jones: Yes. Let me continue. I think Richard dropped out. Operator: Okay. Hold on. I'll just transfer you back over, because I've moved you out of the main room. I'll transfer you back over now. Remon Vos: Okay. I'm still here as well. Operator: We'll now continue. Robert Jones: Sorry for the connection drop. I think Richard dropped out, but let me continue on where he stopped. So if you look to the pre-letting as always, so I think last year, when you look to the Q3 of '24, we were at 95%. At the end of the year, we came also within the range. So there is always a bit quarter-by-quarter movements and that comes indeed back to our business where we are mostly developing in our existing business parks. If you also look to the quantum of leasing that we are doing, yes, 1 million of vacancy might seem a lot, but we sign 2.3 million square meters of leases each year. So if you look to the overall amount of leasing that we are doing, 1 million square meters is less than half a year for us. So yes, of course, with the scale of the portfolio, that becomes a larger number. But in our overall leasing capacity, that's ultimately important for us, because it all comes back to tenant demand. That is ultimately the key thing when we are looking for, are we starting the next development, where are we starting the next development, and where do we see growth. Operator: We'll now take our next question from Vivien Maquet from Degroof Petercam. Vivien Maquet: I think your line dropped again, but I hope you will hear me. A couple of follow-up questions from me. Maybe when it comes to the deliveries, can you quantify the volume of deliveries that was moved to Q1 2026? And if possible, what kind of level of pre-let do you have on this project? And maybe I ask my other question afterwards, if you can hear me? Robert Jones: Yes, sure. So if you look to the deliveries, we came out on the lower end, of course, of the 1.3 million to 1.6 million that we guided for. We were planning to be more in the middle or the higher end of the range, but that's business. So if you look to what has shifted, that's basically, say, 150,000 square meter or so to the next year. So that's also -- it's reflected in the overall pre-letting, of course, for this year, the 30%. But like Richard mentioned, actually, the 30% might look a bit low compared to previous years. But on top, we have the 175,000 square meter of projects leased that haven't started yet. Some of that also will be delivered in '26. So it's always a mix of those elements. So that is basically the impact on the shift of deliveries, and that will help a bit in '26, and that's why we are so comfortable with the 1.4 million to 1.7 million for this year. Remon Vos: And let me add to that, maybe an important one, is structural vacancy. There is nothing like that. There is not buildings which are empty for years and years and years, okay? So it's just adding supply to the market and then you need the market, you need some time for the market to absorb all that space, and that's what we are doing. So when it comes to buildings which have been vacant for a longer term, then I can think of properties in Germany. As you remember, we entered the German market through an acquisition of buying Deutsche Industrie, which is a mix of some fantastic locations, redevelopment opportunity, but all the buildings, so there is some vacancies, and we need time to refurbish those buildings, which have started, but that takes a bit of time. It's all part of the budget and it makes a lot of commercial sense. But then you have buildings which will not produce income for a while because you're doing some refurbishments now. And there's some vacancy in the German portfolio, you can see, but our core portfolio, all of the stuff we built, there's no structural vacancies. There are some vacancies here and there because of the supply. But again, this goes down to CTP's business model. So I suggest you have a good look and listen to all the nice videos we have done to understand the way we run it. It took us more time to get to 15 million square meters. It took us 25 years to get to 15 million square meters. It's going to not take us 25 years to add another 15 million square meters, to grow to 30 million, because we know the game of how to develop and with whom, and with all of the clients we have, that gives us great opportunities to continue to do what we do. But yes, 5% from 30 million is 1.5 million square meters. Operator: Our next question comes from Eleanor Frew from Barclays. Eleanor Frew: One question, please, on the reconciliation between your company-specific EPRA EPS and EPRA EPS. The adjustment this year was a lot larger than last year. Can you talk us through the reasons for that? And also, what should we expect on that adjustment moving forward? Is this the new run rate? Robert Jones: There were some one-offs in that adjustment. And I think we already discussed that in the H1 and Q3. I think on the tax side, you saw a positive, especially in the first half of the year. So the tax adjustment for '26 will be lower. That's one. There are also some in the other expenses where there were some one-off adjustments, for example, related to some transaction that in the end did not take place, which is booked in the other expenses and therefore, adjusted, of course, in the recurring elements. So there are some of the one-offs in '25, which are slightly higher than I would expect on a run rate basis. So that should be less in '26. Operator: Our next question comes from Steven Boumans from ABN AMRO - ODDO BHF. Steven Boumans: Some technical questions for me. What's the assumptions on the capitalized interest? So what's the interest rate that you use and what loan on cost do you assume? Second, what's the impact on the average yield on cost for the change there due to the capitalized interest? Can I assume that will increase the cost of development? And last one, do you assume a similar number of shares year-end '26 as in '25? Robert Jones: Yes, Steven. So in terms of -- go on. Marios, do you want to go -- we had a problem with our line. Yes. So apologies for that. And I hope that you can hear us properly, because Fred was saying that he couldn't hear us and then we dropped. So apologies for that technical lapse. In terms of the capitalized interest, what level do we use? We use the actual cost in the balance sheet, so the average cost of debt. So for this year, it's 3.3%. In terms of the yield on cost impact, that would be somewhere around 30 basis points. And there was a third question as well, but I lost the connection on that one. I'm sorry, Steven. Steven Boumans: So the last one, the number of shares you assume in your full year '26 outlook, is that the same as in '25? Robert Jones: Yes, we're not -- yes, it's slightly higher because it incorporates the dividends that we're paying. As you know, we proposed a final dividend of EUR 0.32 for the full year. We'll also have an interim dividend later in the year. Based on past behavior of the shareholders and expected behavior, we would expect the majority of that to be taken up in scrip. So there will be an increase in the number of shares as a consequence of the scrip dividend. But otherwise, we're not planning on an increase in the share capital. As I said in the presentation, we don't need to raise equity to fund the development pipeline, the 1.4 million to 1.7 million that we're very confident to deliver. Operator: Our next question comes from Suraj Goyal from Green Street. Suraj Goyal: Hope you can hear me. The rent levels for new leases in '25 were around 4% higher compared to 2024, but I noticed it was lower in Bulgaria, Serbia, Hungary and also flat in Romania. I wanted to find out what the reason for this is, and if this is reflective of some of the softness or normalization in operating fundamentals across Eastern Europe. And then are you able to give any color on the market split of the 3.8% ERV growth that you quote? Robert Jones: Yes. So maybe I'll deal with the technical part, maybe Remon will pick up on the overall tenant demand and how we see rents going overall. Yes, I mean, it depends a little bit country by country as to where we're leasing within that country. So certain parks have higher rent levels than others. So if you're very close in town -- in the capital, you're going to get a higher rent than if you're leasing in one of the regional cities. So the mix there across the countries is generally to do with where we're doing the leasing in that specific quarter or in that year. So generally speaking, if we look at our ERVs, the ERVs across the portfolio are increasing. So location for location, like-for-like, we're seeing across the portfolio, a general increase in the rent levels. But we don't expect that to -- that's different location for location, depends on the supply, on the demand in the individual location at the time. Overall, you will see rents continuing, we think, to grow inflation plus over time. There will be markets where it's going quicker, at a point in time markets where it's going slower. But overall, we're very happy with the rent level development that we're seeing across the whole region. Operator: Our next question comes from Vivien Maquet from Degroof Petercam. Vivien Maquet: Sorry, I had 2 other questions that was skipped. First is on the retention rate. Just trying to understand the decline to roughly 81%, if I recall. And how do you see a normalized retention rate going forward? Robert Jones: Yes. Look, I think our retention rate historically has been 80% to 85%. There have been times where it's been a bit higher. There have been times where it's been a bit lower. We would think that generally, if we look, 70% to 75% of our new leasing, last year was 71%, is done with existing tenants. So we would think that 80% to 85% is a reasonable rate to expect in terms of tenant retention. So you're retaining the vast majority of your tenants, but you won't never keep everyone. Vivien Maquet: All right. And then one last question on the goodwill impairment. Can you comment on that one? Robert Jones: Yes, sure. That goes to our German acquisition back in 2022. And what we see -- last year we saw a nice uptick in the valuations of our portfolio in Germany. And as the valuations increase, then the goodwill that we recognized at the time of the acquisition decreases. Operator: Our next question comes from Bart Gysens from Morgan Stanley. Bart Gysens: Quick question on the dividend payout ratio. So you're saying that for '26, the dividend payout ratio remains unchanged. But of course, the accounting policy of starting to capitalize interest increases your reported EPS by 10%. So will you now start paying a higher percentage of this previously more cash EPS? Or will you gravitate towards the lower end of that range to reflect this accounting policy change? Robert Jones: Yes. Bart, good question. Yes, I think that we'll end up gravitating towards more 70%, 72%, 73% rather than historically, we've been 75%, 76%, 77%, something like that. Bart Gysens: But that would still mean a higher percentage payout, right, on the previous... Robert Jones: No, you end up -- if you're 70%, you're almost the same. There shouldn't be a material increase in cash out as a consequence of the capitalization of the interest. Operator: We'll now take some questions from the webcast. Our next question comes from Laurent Saint Aubin from Sofidy. Can you please comment on the decline in your client retention rate to 81%? Robert Jones: So we already answered that question. So yes, look, like I said, we're targeting generally expecting to be between 80% and 85% in our tenant retention. In '24, we were 84%; in '25, we're 81%. So very comfortable with that. Operator: And then our next question is from Wim Lewi from KBC Securities. What is expected impact of the capitalization of interest costs on your yield on cost expectation? Robert Jones: Yes. Again, that's another question I answered earlier. It's around 30 basis points. Operator: And then our next question from Crispin Royle-Davies from Nuveen. Are you going to keep the same payout ratio against the new definition of earnings, or adjust this downwards to keep cash payout ratio the same? Robert Jones: Yes. So payout ratio will stay within -- or move towards the bottom end of the 70% to 80% payout range. Cash outflow for the business remaining relatively unchanged given the majority of our divi is taking scrip. Operator: With that, we have no further questions in the queue at this time. So I'll hand back over to the management team for some closing comments. Remon Vos: Yes. So thank you very much, everyone, for your questions and your interest. I'd just like to underline that we continue to see really attractive midterm growth potential, primarily in and around our existing CTParks, but also with the addition of Italy and hopefully an addition in Vietnam, we think that we have everything in place for the next leg of growth. And we wish you all a good day. Thank you very much for your attention. Robert Jones: And you're invited for the Capital Markets Day in September, right, in Warsaw. Remon Vos: Yes, of course. Sorry. Thanks very much. Richard Wilkinson: Thank you very much, everybody. Operator: Thank you all for joining. That concludes today's call. You may now disconnect your lines.
Operator: Good morning, ladies and gentlemen. Welcome to the RBC's 2026 First Quarter Results Conference Call. Please be advised that this call is being recorded [Operator Instructions] I would now like to turn the meeting over to Asim Imran. Please go ahead. Asim Imran: Thank you, and good morning, everyone. Speaking today will be Dave McKay, President and Chief Executive Officer; Katherine Gibson, Chief Financial Officer; and Graeme Hepworth, Chief Risk Officer. Also joining us today for your questions, Erica Nielsen, Group Head, Personal Banking; Sean Amato-Gauci, Group Head, Commercial Banking; Neil McLaughlin, Group Head, Wealth Management; Derek Neldner, Group Head, Capital Markets; and Jennifer Publicover, Group Head, Insurance. As noted on Slide 2, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. [Operator Instructions] With that, I'll turn it over to Dave. David McKay: Thank you, Asim. Good morning, everyone, and thank you for joining us. Today, we reported record earnings of $5.8 billion and adjusted earnings of $5.9 billion. Pre-provision pretax earnings were nearly $8.5 billion and were up 14% from last year. These strong results were underpinned by record revenue of nearly $18 billion and a 5% operating leverage. Both Wealth Management and Capital Markets reported record revenue and pre-provision pretax earnings benefiting from a constructive environment for our market-related businesses. Personal Banking and Commercial Banking reported record results underpinned by growth in [ money and balances ], higher margins and strong operating leverage as well. This was achieved even as housing conditions and uncertainty around trade policies continue to temper loan growth in Canada. Our return on assets increased to nearly 90 basis points and we bought back over 4 million shares this quarter for approximately $1 billion. Our performance delivered a return on equity of 17.6% on the foundation of a robust 13.7% common equity Tier 1 ratio. This powerful combination drove 9% growth in retained earnings. Before covering client activity and business results, I'll briefly discuss the macro environment shaping our revenue drivers. The Canadian economy remained resilient through the elevated uncertainty from persistent and evolving geopolitical and trade tensions. GDP and job growth continued despite lower immigration levels and household balance sheets are improving. That said, the impact from tariffs on the economy varies depending on the clients or sectors. We are seeing strong profitability and improving productivity for many of our corporate clients, while commercial clients and tariff-impacted sectors and geographies are facing headwinds. And the impact of the K-shaped economy continues to bifurcate Canadian. Going forward, we expect increased fiscal [ stemness ] and the diversification of new trading relationships to create a multiplier effect of supporting economic growth and client activity over the near to medium term. With this context, I will now speak briefly to key trends we are seeing across our businesses as seen on Slide 5. In Personal Banking, mortgage growth remained modest as housing demand remained soft in key regions. This was due to the affordability challenges, economic uncertainty and a pullback in immigration levels. Looking forward, given weaker demand, we reiterate our low to mid-single-digit mortgage growth guidance for the year. This growth will be supported by proprietary mortgage specialist sales force, capturing switch opportunities and driving strong retention through increased investments in channel capacity. Further, our recently announced strategic partnership with realtor.ca, will create new top-of-funnel opportunities. The strength of our money in franchise was on display again this quarter. We saw growth across demand deposits and mutual funds as many of our clients sought higher returns amidst term deposit renewals. The aggregate flows to personal savings accounts, GICs and mutual funds increased almost 50% from last quarter, driving strong revenue growth. Commercial Banking loans were up 4% with strength in health care and agriculture. Growth was moderated by a tariff-related slowdown in supply chain sectors and demand-driven headwinds in commercial real estate, which represents approximately 40% of the portfolio. On a provincial level, Ontario continues to experience tariff-related headwinds, while we are seeing resilience in the Prairies. Even though larger clients are cautiously returning to growth mode, we expect commercial loan growth to stay closer to the lower end of our mid- to high single-digit range for the year, the longer we go without clarity on the CUSMA trade negotiations. Deposit growth was stronger, up 5% year-over-year, reflecting broad-based expansion across nearly all sectors amidst the competitive landscape. To build on this momentum, we continue to invest across our sales force capacity and enhanced digital and AI-driven underwriting capabilities while elevating our transaction banking offerings. Our Wealth Management segment had a very strong quarter, generating over $6 billion in revenue, $1.7 billion in pre-provision pretax earnings and $1.3 billion in net income. Growth in fee-based assets benefited from market appreciation as North American equity markets rose double digits year-over-year and bond indices also moved higher. In addition, we recorded strong net new assets over the last 12 months, benefiting from clients moving back into the markets as well as continued adviser recruitment. Assets under administration were up 13% year-over-year in Canadian Wealth Management, surpassing $1 trillion for the first time. U.S. Wealth Management AUA was up 12% to USD 777 billion and RBC GAM assets under management were up 11% to $796 billion. Furthermore, City National's earnings continued to grow with both pre-provision pretax earnings and net income more than doubling year-over-year. This quarter, wealth management announced the expansion of RBC Echelon, our premier platform for a growing base of ultra-high net worth U.S. clients. We're also addressing the needs of new and aspiring self-directed investors by launching GoSmart, an intuitive mobile-first platform integrated within the RBC mobile app. Capital Markets also had a record quarter with revenue of $4 billion, pre-provision pretax earnings of $1.9 billion and net income of $1.5 billion. Global Markets generated record revenue of $2.2 billion with robust client activity amidst a constructive environment. We benefited from notable performance in equities, where we've made strategic investments to bolster our equity derivatives and financing capabilities. Corporate & Investment Banking benefited from higher debt and equity origination activity, higher M&A activity and higher North American lending revenue with average loans up 8% from last year. We continue to have a healthy M&A and origination pipeline as the macro and regulatory environment is expected to support growing fee pools. I now want to talk about our focus on compounding long-term shareholder value. Our philosophy has remained consistent. As noted last quarter, we constantly evaluate opportunities to optimize shareholder value, not to just maximize ROE. We concurrently want to enhance client-driven profitable growth while upholding our disciplined risk appetite and we have done both. This requires both the deployment of capital as well as leveraging our structural advantages in funding and noninterest expenses, along with our leading franchises, distribution and technology. On dividends, we look to progressive increases underpinned by sustainable earnings growth as we strive towards the midpoint of our 40% to 50% medium-term objective. When it comes to the level of share buybacks during times of uncertainty and volatility, we are aware of our book value multiples and intend to maintain capital levels near the higher end of our targeted range. Similarly, we have a high bar when it comes to acquisitions and we'll continue to be patient for the right opportunities to accelerate growth instead of solving capability gaps. Our priority continues to be investing to organically grow our businesses. The on [ top left ] side of Slide 6 highlights the organic RWA deployed to support our clients' financing needs and growth aspirations discussed earlier. We have increased the level of client-driven growth given an expanding suite of opportunities. Organic RWA growth this quarter was greater than the quarterly average of each of the last 3 years. Our diversified business model allows us to strategically grow RWA through a changing macro environment. We took advantage of constructive opportunities to utilize our resources to grow access across our capital markets businesses over the past year and reduced client demand and lower growth in commercial banking. The bottom left charts on Page 6 illustrates growth by ROE bands across our segments and sub lines of business. When it comes to allocating capital to drive client growth, we don't just allocate capital to grow the highest ROE businesses, we also look to strengthen market share and invest in new technologies and lay the foundation for new growth verticals to enhance future value and diversification across One RBC. These create a flywheel multiplier effect for driving durable ancillary revenue streams. Important point to make is that some of our largest businesses are inherently capital-light and do not need a lot of capital to grow. These are mostly funded by noninterest expenses, growth in less capital-intensive higher ROE businesses is a key driver of our revenue mix and growth. A relatively equal weighting between capital-light fee-based revenue and more capital-intensive net interest income provides us an attractive business mix as well as a lower credit risk profile. While some of our capital-intensive businesses generated returns below our expectations in fiscal 2025, this was partly due to several headwinds, which we expect to reverse over time. These include elevated PCL on performing loans, higher wholesale PCL, elevated spend in the U.S. and lower mortgage spreads due to increased competition. Furthermore, we look to offset any dilution from growing businesses with a lower stand-alone ROE by deepening client relationships to drive improved revenue productivity while also becoming more efficient. We also won't grow for the sake of growth, as evidenced by our discipline on mortgage growth and pricing amidst intense competition. We target profitable revenue growth that drives future value. Looking forward, we see momentum and significant opportunities to organically deploy capital across our diversified business model to accelerate profitable revenue growth. We are growing capital markets, corporate loans, which would initially generate a lower stand-alone ROE. However, this growth creates opportunities to add on higher ROE revenue such as transaction banking and investment banking fees. Additionally, we will continue to support client activities by deploying RWA into our financing businesses, which can further monetize sales and trading intermediation activities. A combination of growth and deepening relationships drives a higher segment and client relationship ROE. Another strategic initiative is to align transaction banking with our growing City National Bank commercial loan book as we build out teams while launching U.S. mortgage and credit card products to increase penetration within a high net worth client segment in U.S. Wealth Management. We also expect meaningful opportunities in commercial banking when we have certainty around CUSMA and when we start seeing the execution of large-scale infrastructure projects highlighted in the Canadian federal budget. The segment's ROE of over 16% this quarter highlights the power of the franchise when PCLs normalize. We are applying similar approaches across our strategic initiatives, some of which are listed on the right-hand side of Slide 6. We're not trying to just acquire loans, we are building relationships, and there are a lot of opportunities to grow without diluting our ROE. To close, we are focused on creating sustainable shareholder value by accelerating our ambitions to drive both profitable growth and a premium ROE underpinned by our Investor Day targets, including improving revenue productivity and cost efficiencies. We also remain committed to using our strong internal capital generation to return capital to shareholders through both dividends and buybacks. Our future success will include opportunities to turn our highest potential AI use cases into solutions that bring value to clients. To do that, we recently announced that our group head, technology and operations, Bruce Ross, will lead our newly created AI group to accelerate our AI ambitions. Moving into the group head technology and operations role is Naim Kazmi, a transformational leader who has held multiple leadership roles as most recently, the technology lead for the successful close and convert integration of HSBC Canada. We look forward to their continued success. And with that, Katherine, over to you. Katherine Gibson: Thanks, Dave, and good morning, everyone. Starting with Slide 8. This quarter, we reported strong results with diluted earnings per share of $4.03, adjusted diluted earnings per share of $4.08 was up 13% from last year, reflecting solid revenue growth and adjusted all bank operating leverage of 4.3%. Turning to capital on Slide 9. The CET1 ratio of 13.7% was up 20 basis points from last quarter, reflecting strong internal capital generation of 79 basis points underpinned by our 17.6% ROE. A modest benefit from changes in regulatory updates and market-driven OCI gains also contributed to the increase. This was partly offset by higher dividends as announced last quarter and higher RWA from the strong client-driven business growth that Dave just spoke to. Share buybacks of 4.2 million shares for approximately $1 billion, largely in line with last quarter's pace also had an impact. Moving to Slide 10. All bank net interest income was up 8% from last year or up 7%, excluding trading revenue, reflecting strong growth in Personal Banking and solid results in Commercial Banking and Capital Markets. All banks net interest margin was down 7 basis points from last quarter, largely due to seasonally higher financing activities in capital markets. All bank NIM, excluding trading revenue, was up 1 basis point from last quarter largely due to higher net interest income on certain transactions in capital markets, which were offset in noninterest income. Canadian Banking NIM was flat relative to last quarter largely reflecting favorable product mix, driven by growth in non-maturity deposits. Continued benefits from our structural tractor hedging strategy also contributed due to a combination of beneficial 5-year swap [ spread rule on ] trends and continued growth in notional balances. This was offset by pricing competition and lower purchase price accounting accretion benefits related to the acquisition of HSBC Bank Canada, which we guided to last quarter. Excluding the PPA accretion roll-off impact, Canadian Banking NIM would have been up [ 2 ] basis points. Moving to Slide 11. Reported noninterest expense was up 2% and adjusted noninterest expense was up 3% from last year. Adjusted expense growth was largely driven by higher variable compensation consistent with higher revenues in Wealth Management and Capital Markets. Higher salaries and pension and benefits-related costs also contributed to the increase, largely driven by a net increase in headcount. This was offset by the impact of FX translation and lower share-based compensation, which was driven by changes in equity markets and our own share price. Our expense growth also reflected the realization of cost synergies from the acquisition of HSBC Bank Canada and higher severance last year. Excluding these impacts, our expense growth would have been in the mid-single-digit range. On taxes, the adjusted non-TEB effective tax rate of 21.9% was up approximately 1.5 percentage points from last quarter, reflecting changes in earnings mix. I'll now turn to our Q1 segment results beginning on Slide 12. Personal Banking reported record results of approximately $2 billion this quarter. Focusing on Personal Banking in Canada, net income was up 18% from last year, and the segment generated operating leverage of 9%. Revenue growth was 9% with net interest income up 10% reflecting higher margins and volume growth. Noninterest income was up 8% from last year, largely reflecting higher mutual fund revenue. Loan growth of 4% was driven by growth across all portfolios. Deposit growth was flat as growth in lower cost demand deposits was offset by a decline in term deposits, concurrent with lower interest rates. However, this quarter, we generated over $2 billion in retail mutual fund net sales compared to the $5 billion we generated in all of fiscal 2025, reflecting the strength of our money in franchise. We expect this momentum to continue next quarter, including benefits from the seasonally active retirement contribution period. Turning to Slide 13. Commercial Banking reported record net income of $863 million, up 11% from last year. Pre-provision pretax earnings was up 5% from last year, driven by revenue growth from higher volumes and well-managed expenses. Deposits increased 5% from last year or 2% sequentially, driven by growth in non-maturity deposits, partly offset by a decline in term deposits. Loan growth continued to moderate to 4% year-over-year or 1% sequentially with tariff-related uncertainties impacting demand in key sectors and geographies. Turning to Wealth Management on Slide 14. Net income of $1.3 billion was up 32% from last year, reflecting record revenue. Noninterest income was up 11% reflecting higher fee-based client assets driven by market appreciation as well as net new assets. Strong retail mutual fund net sales over the last 12 months, including this quarter, were partly offset by outflows in short-term institutional mandates, which can be lumpy in nature. Transactional revenue, driven by client activity in U.S. Wealth Management also contributed. Net interest income was up 4% from last year, driven by higher deposit growth in Canadian Wealth Management as well as higher spreads and loan growth in U.S. Wealth Management, including City National Bank. City National's net income increased to USD 143 million. Record revenue this quarter was partly offset by higher expenses, including higher variable compensation and staff costs, including adviser recruitment. Turning to our Capital Markets results on Slide 15. Net income of $1.5 billion increased 3% from last year. Record pre-provision pretax earnings of $1.9 billion were up 11% from last year, partly offset by higher variable compensation. Global Markets revenue was up 7% from last year, reflecting record equity trading as well as strength in repo products, partly offset by softer credit trading results. Corporate and Investment Banking revenue was flat year-over-year. Investment banking revenue was down 6% from last year, offsetting lending and transaction banking revenue that was up 6%. Turning to Slide 16. Insurance net income of $213 million was down 22% from last year, reflecting a $65 million reinsurance recapture gain in the prior year. Return on equity for the business was 24.9%, reflecting the increase in attributed capital for insurance as guided to in our fourth quarter call. We continue to target a mid- to high 20% medium-term ROE. The U.S. region net income of USD 716 million was up 2% from last year, driven by a pickup in client activity in both capital markets and wealth management, including City National as well as some benefits of strong markets and improved operational efficiency. This was partly offset by higher PCL. I'll now spend a few minutes updating our outlook for 2026. Consistent with last quarter, we expect annual all bank net interest income growth, excluding trading, to be in the mid-single-digit range. This includes the majority of the remaining $80 million PPA accretion roll-off next quarter, which translates to approximately a 4 basis point impact to Canadian banking NIM. Noninterest income is expected to benefit from robust client activity in market-related businesses. That said, capital markets is seasonally stronger in the first quarter, particularly in certain trading businesses, consistent with increased client activity. As a reminder, starting next quarter, we'll also begin to see the modest impact of reduced fees in personal banking in line with regulations set out in last year's federal budget. Also recall the second quarter has fewer days than the other quarters. We continue to expect all bank expense growth to be in the mid-single-digit range for the year due to the realization of previously committed costs and ongoing investments. This includes the growth initiatives that Dave spoke to earlier. Investments in technology and safety and soundness framework of the bank continue to be a priority, given emerging opportunities and risks where we spend approximately $1 billion annually. Nonetheless, we continue to expect positive all-bank operating leverage for the year, including 1% to 2% for Canadian Banking as we continue to focus on efficiencies across the bank, including AI-related benefits. We expect the adjusted non-test effective tax rate to move towards the higher end of our 21% to 23% previously guided range over the next 12 months. In contrast, we expect corporate support segment losses to now trend closer to the lower end of the $100 million to $150 million range per quarter. On capital, we expect a modest 10 basis point negative impact to our CET1 ratio next quarter, reflecting changes to retail capital parameters. To conclude, we remain focused on continuing to drive sustainable shareholder value through capital allocation, centered on client-driven organic growth within our risk appetite, along with returning capital to shareholders. With that, I'll now turn it over to Graeme. Graeme Hepworth: Thank you, Katherine, and good morning, everyone. Starting on Slide 17, I'll discuss our allowances in the context of the macroeconomic environment and ongoing trade uncertainty. We remain cautiously optimistic on the outlook for the Canadian economy. We expect to see mild growth and continued stabilization in the economy, supported by prior rate cuts, ongoing trade diversification initiatives and targeted fiscal measures. Looking ahead, while we believe the Canadian economy has demonstrated resilience, factors such as U.S. trade policy, the upcoming CUSMA joint review and geopolitical tensions add ongoing uncertainty to our outlook. Against this backdrop, we have maintained a prudent approach with our allowances. While our base outlook assumes that current CUSMA exemptions and tariffs are maintained going forward, to reflect the uncertainty of outcomes, we have retained elevated [ weightings ] to our downside scenarios consistent with the last three quarters. As a reminder, in the second quarter of 2025, we introduced a trade disruption scenario into our IFRS 9 framework. This scenario captures the risk of Canada facing significantly higher tariffs across all exports but also reflects the potential for a severe North American recession driven by escalating global trade wars. When certain trade conditions have widened the range of possible outcomes, we feel the potential downside risk of a CUSMA [ trial ] been appropriately captured in our allowances supporting our financial resilience through the cycle. Turning to Slide 18. We took a total of $28 million or 1 basis point of provisions on performing loans this quarter, reflecting unfavorable changes in credit quality and portfolio growth partially offset by a favorable impact from our macroeconomic forecast. Moving to Slide 19. PCL on impaired loans of 40 basis points was up 2 basis points or $84 million relative to last quarter with higher provisions in Capital Markets and Personal Banking, partially offset by lower provisions in Commercial Banking. In Capital Markets, provisions on impaired loans were up $130 million from the prior quarter. Most notably, we incurred a large provision related to a borrower in the consumer discretionary sector as well as to a previously impaired borrower in the financial services sector. We also continue to see provisions in the commercial real estate sector consistent with ongoing headwinds in that space. In our commercial banking portfolio, PCL on impaired loans was down $73 million compared to last quarter, reflecting lower provisions on larger borrowers. While we saw a better performance in Q1, we expect losses to remain elevated in the coming quarters given the ongoing soft economic conditions, particularly in cyclical industries. As a reminder, impairments and recognized losses in our wholesale portfolios are inherently more difficult to predict and can be more episodic quarter-to-quarter. In Personal Banking, PCL on impaired loans increased by $27 million, driven by higher provisions in residential mortgages and credit cards partially offset by lower provisions in personal lending. We continue to see a more localized impact in our retail portfolios with higher provisions driven by softness in Ontario and the Greater Toronto region. Residential mortgage provisions are increasing as expected due to these regional factors and pressures from higher payments at mortgage renewal. We expect these pressures to abate as they exit 2026 with average payment increases at renewal decreasing substantially in 2027. We remain confident in the quality of our mortgage portfolio, underwriting and collateral. Moving to Slide 20. Gross impaired loans of $9.2 billion were up by $485 million or 3 basis points from last quarter, largely driven by 3 segments. In Personal Banking, gross impaired loans increased by $294 million quarter-over-quarter, largely driven by new formations in the Canadian residential mortgage portfolio. In Wealth Management, gross impaired loans increased by $90 million, driven by CNB with newly impaired loans in the commercial real estate and consumer staple sectors. In Commercial Banking, gross impaired loans increased by $88 million quarter-over-quarter, [ largely formations ] in the quarter related to borrowers in the transportation and industrial product sectors. To conclude, despite higher episodic losses in capital markets this quarter, we remain confident in the overall quality, diversification and resilience of our portfolios. We still expect full year 2026 provisions on impaired loans to remain within the guidance previously provided. Credit outcomes will continue to depend on the extent and duration of tariffs, the performance of labor markets, interest rates and real estate prices, factors we are actively monitoring as the trade and geopolitical landscape evolves. As always, we continue to proactively manage risk through the cycle and evaluate multiple scenarios across our credit and stress testing frameworks. We remain well provisioned and capitalized to withstand a wide range of macroeconomic and geopolitical outcomes. With that, operator, let's open the lines for Q&A. Operator: [Operator Instructions] Your first question comes from the line of Ebrahim Poonawala with Bank of America. Ebrahim Poonawala: Yes. So I wanted to go back, the Slide 6 is extremely helpful. So thanks for laying it out that way. But there's something you said like around that slide around profitable growth at a premium ROE. From an investment standpoint, it comes down to a relative game. So when we look at that Slide 6, maybe just talk to us about -- there are lots of tailwinds in capital markets today that the industry is benefiting from. As we think about the advantage that Royal has because of scale, because of market leadership position in many businesses, what are things that Royal can do that some of your peers may not be able to do as [ profitably ] that we, as investors, should think about? David McKay: That's fair. Maybe I'll ask Derek to start because you referred specifically to capital markets. And then myself, Sean or Erica will maybe answer that question in the context of Canadian Banking. So Derek, maybe the scale advantage that you have in capital markets. Derek Neldner: Sure. Thanks for the question, Ebrahim. So as you know, we've obviously been investing in the capital markets business now for many decades and have established very much a global footprint with today, about 70% of our revenue coming from outside of Canada. I think those investments over multiple decades have really put us in a position where we do bring advantages in terms of our global footprint, the diversification of our business, both across client segments sectors and products. And then obviously, the scale that, that brings, not just the scale within capital markets, but the scale of RBC that we can more broadly leverage. So what does that allow us to do from a competitive advantage perspective? I think, first, you've really seen that come through in the sustainability of our results. That breadth across geographies and products and client segments has allowed us to deliver. We believe, very sustainable results at lower volatility than some of our industry peers. Importantly, from a client perspective, the cross-border platform we have allows us to serve our clients across multiple markets, whether that be in financing or advisory or sales and trading intermediation which is very important as our clients get bigger and scale themselves and are looking for partners that can serve them across all their needs and allows us to pursue and support them in larger transactions, which again, scale is a theme we're seeing across industries, and our clients are looking for partners that can support them. And then finally, I would just say, very importantly, the scale advantages that we have and the sustainability and diversification of our business allows us to continue to invest very consistently over the cycle. And we're not going to chase certain themes at a certain point in the market cycle but allows us to pursue a very consistent strategy, make the investments in talent, technology with our balance sheet resources to really build long-term durable client franchises. And then finally, it allows us to do that without stretching on risk. So we've got lots of different avenues where we can invest organically, continue to build the business. We want to be thoughtful, particularly at this point in the cycle. And so we feel we can do that without compromising our risk appetite in any way. David McKay: Thanks, Derek. Ebrahim, when we think about scale, we think about in the context of operating scale, brand scale, data scale among a number of dimensions. And when you think about the operating scale of the Canadian Bank, Consumer and Commercial Banking operating at a combined productivity ratio, I think, 35%, 36%, it allows us to compete for business and drive a high ROE at the same price, same risk level allows us to price more flexibility. When you have a 30% advantage over your competitors are [ when they're in the ] mid-40s, it allows us enormous flexibility within our risk appetite to earn a higher ROE on the same piece of business or price more aggressively if we want to serve that client. So on the operating scale side, it's clear the advantages that gives us and it drives that consistent premium ROE -- operating ROE that we've driven. And maybe I'll turn it to Erica because it's such an important question, right, go on and spend a little more time on it. It's a great question, maybe about data scale and brand scale, Erica, [ in your business ]? Erica Nielsen: Thanks, Dave. So maybe just a comment on the data scale. One of the most important things that we see going forward as we serve more Canadians in the Canadian marketplace is our ability to understand and understand what those consumer needs are, understand the everyday financial of those consumer needs and then use that information to build models that allow us to further grow our business, further penetrate that business. When we look at the ability of our models, particularly those AI-based models that we're looking at. Now we can see very different outcomes based on the scale of consumers that we see in the Canadian marketplace. And so we look at that as a significant opportunity for us to grow our businesses differentially based on the data scale and the activity scale that we see in our client franchise. David McKay: Thanks. So that's a big part of our Investor Day thesis. I think -- we probably have a long queue, we should move on, but I appreciate that question. Operating data, balance sheet, brand scale are a big part of how we drive consistent premium growth in ROE. Operator: Your next question comes from the line of John Aiken with Jefferies. John Aiken: I was hoping to drill down a little bit on City National. I think Katherine mentioned in her commentary that there were a bit of headwinds in terms of provisions. I wanted to discuss the outlook for '26, '27 and how much work is left to be [indiscernible]? Or have we finished with most of the heavy lifting? David McKay: I think you heard incorrectly, there's a tailwind from [indiscernible], not a headwind. We're having great credit experience in City National. We serve a premium, affluent and entrepreneurial commercial customer. Any other clarity on that, Katherine? Katherine Gibson: No. I would just say in my comments, I was just calling out the strength of their earnings this quarter and In addition to the clean credit book growth, the really strong loan growth, deposit growth, profitable growth, and we're really pleased with the results that we see now on a continued basis over a few quarters. So as we go forward, really seeing them deliver against the targets that they have set out almost a year ago with that profitable top line growth, driving the efficiencies and it's really materializing with more to come. David McKay: Yes. And we are well on our way to meeting and exceeding our Investor Day targets in City National. We are very excited about being on a growth front footing right now with that business, profitability-wise and customer growth-wise. So I don't foresee the credit headwinds that you mentioned. Operator: Your next question comes from the line of Gabriel Dechaine with National Bank Financial. Gabriel Dechaine: Katherine, can you repeat what you said about the Canadian banking NIM and the impact of HSBC? That accretion runoff and stuff in Q2? Katherine Gibson: Yes, happy to. So what we saw as an impact this quarter was the PPA rolling off related to HSBC and so it's starting to roll off this quarter, which was the 2 basis points impact, and we're going to see it largely kind of fully roll off. There's a little bit that will last throughout the rest of the year, but it will be a 4 basis point impact. Having said all that, we're still seeing like a positive momentum from our tractor strategy we're seeing positive impact from the deposit mix shift as we're seeing those flows move into non term. We're also, as I said in my comments, seen really positive flows into mutual funds. So I know that doesn't necessarily show up in NIM, but it's showing up in overall revenue growth. And then you would have seen in the charts that we've included, there is still competitive pressure that is a bit of an unknown going forward. But we're seeing that on GICs and we're also seeing in the commercial book and a little bit still on the mortgages as well. Gabriel Dechaine: So margin down for the next quarter? Katherine Gibson: Yes, not -- the impact will be 4 basis points, and we don't give specific guidance out on NIM. We kind of pushed towards the guidance on the NII, excluding trading. But I would say you could look to kind of track to a stable expectation on NIM as we go forward. Gabriel Dechaine: Got it. And for Dave, just -- we hear this comment every now and then like pressure to deploy capital, which -- I don't think that applies to Royal. You got a lot of capital but you're going to nearly an 18% ROE. I didn't see a huge boost from capital markets that helped, but it wasn't like outsized this quarter. So are you just willing to sit on excess capital and wait for the organic growth to come, and then we'll see like a leg up then that type of thing? David McKay: That's a great question as we are put our third quarter consecutively of 17-plus percent ROE. It's driven from the strength of the business, not largely from buybacks. We haven't seen the benefit of our AI benefits that we discussed the $700 million to $1 billion benefits as we've invested that money and are still on track to deliver that for investors. So we're excited about that. We do, to your point, have significant capital to buy back shares. And we're certainly looking to continue to do that and grow into that. So we will be able to improve that ROE through some share buybacks. And then from an organic perspective, we want to spend more time talking about it. We do see more growth coming from a significant number of projects that are going to get built in this country, whether it's deployment of our defense industry spend, it's the energy infrastructure we need to be, the Arctic infrastructure, the minerals infrastructure, all these multiple use capabilities that the Prime Minister and the government has talked about is going to require a significant amount of domestic and foreign capital. One of the reasons we're looking to intermediate that capital from places like the Middle East as well into the country. So I think from that perspective, we see an acceleration of growth opportunities coming at us on the organic side that we're trying to anticipate the timing on that. It's hard to predict some of these larger projects. But again, we anticipate good growth coming. And the third thing I'd say we continue to be on the lookout for the right acquisition. It's not that we're avoiding them. Just none have met our hurdles at the end of the day and the hurdles that we promised you to drive accretion. At the end of the day, they are all significantly dilutive, and that's not acceptable to us. We don't grow for the sake of growth. We're here to create shareholder value. So it's not that we're not looking, that we understand the business we want to grow. They're all in the businesses that we talked about. What's global wealth, U.S. wealth, commercial banking, those are the types of acquisitions we would look at and nothing's met our hurdle rate. So we continue to be active in all fronts in creating shareholder value. And I think that you should get comforted by the number of levers we have to pull to enhance ROEs and create growth at the same time. Operator: Your next question comes from the line of Paul Holden with CIBC. Paul Holden: A question for Graeme. So Dave talked about loan growth being near the bottom end of the guidance range for the year due to sort of softer economic conditions in Canada persisting. What does that imply for the PCL guidance? I know you've restated the PCL guidance. Does that mean, should be assuming something at the upper end of the range, would you assume? And then sort of tied to that, I'm really curious by [ the good ] slide on -- I think it's Slide 34 where you show the mortgage portfolio, sort of the component of the higher risk where LTVs over [ 80 ] and credit bureau score below [ 6.85 ], and we saw some change in that number quarter-over-quarter. So maybe just on the question is talk to us about Canadian consumer risk and what that might mean for PCLs. Graeme Hepworth: Thanks, Paul. I think the comments they made around kind of softness on the growth side is quite consistent with the guidance we've given in Q4, and we're persisting into Q1. We continue to see the Canadian economy in particular not certainly weakening into a recessionary [ state of point ], but struggling with kind of pretty modest growth. And there's certainly regional effects, particularly when we talk about the consumer side of our portfolio, we particularly see weakness in Ontario consistent with kind of the elevated levels of employment we see in the region. And I think when we talked about in our guidance previously and that persists into Q1 is that we really kind of saw 2026 being a year where we were going to kind of be in this plateau of relatively elevated credit losses. And as things are really kind of trending sideways, there's some near-term headwinds that haven't changed that are still playing out. Those are headwinds like the increasing payments that many of our mortgage clients are going through. We've got the kind of ongoing kind of trade and tariff uncertainty. And again, that's impacting many sectors that we've talked about in the commercial side, but that does play through into the consumer side as well. And again, a lot of that is centered in the GTA in Ontario as well. So overall, I wouldn't say -- I think our view on the consumer has changed a lot in Q1 versus Q4. We're seeing a lot of the things we talked about then persist into Q1. When we look at the different products, I would say we see some indicators of stability and kind of early delinquencies in products like our mortgage product, [indiscernible] our unsecured lending products. Areas like indirect auto where we've seen maybe some recent trends in impairments that were improving, but the earlier delinquencies there are showing a bit of a [ softening ]. And so there's some pluses and minuses there, and we pull that together. That's what's kind of leading to us persisting kind of our view that the forecast and guidance we provided in Q4 still holds now. That's kind of the rough view of the consumer side. I'd say. The wholesale side is where we see more volatility, right? And I think we kind of called that out in Q4, and we're seeing that play out pretty much in Q1. Wholesale is by nature are just going to -- is going to be more volatile quarter-to-quarter. Interesting in our portfolio, you've seen kind of that play out in both directions. I think in capital markets, we obviously saw elevated levels of impairments and risk playing through in the quarter. Let me kind of compare that against a lot of the forward-looking metrics we look at in the wholesale book, things like our watch list and we've been into our special [ home group ] ratings migration. Those are all stable, if not improving. And so we don't see this as a new indicator that capital markets is resetting at a higher level. Likewise, Commercial Banking had a much improved quarter this quarter. But that's a business where, likewise, the indicators are still high and risk is still elevated. And so when you put wholesale together, we still think we're going to be in an elevated environment for the year, but it's going to be pluses and minuses as we work our way through each quarter. So -- and overall, very consistent, I would say, with Q4, but a few pluses and minuses as we look throughout the portfolio. Operator: Your next question comes from the line of Sohrab Movahedi with BMO Capital Markets. Sohrab Movahedi: Okay I just wanted to go back to Slide 6 and ask a question of there, in particular, [ maybe Graeme ]. You're kind of listed a couple of times as both capital-intensive and moderate capital intensive use of, I guess, resources here. So when you go to grow your corporate lending, for example, before some of the benefits come through, should we be expecting a bit of a, I don't know, moderation or mellowing in your segment ROE before it picks up. And as you do more corporate banking, Graeme, do we need to think about Royal's through the cycle average PCL with a greater volatility around it, even if it comes in around the same. So if you could just provide some color as to what the outlook may look like, not necessarily over the next 12 months, but over the next 24, 36 and beyond. Derek Neldner: Sure. Thanks, Sohrab. It's Derek. I'll start and then Graeme can obviously chime in on the second part of your question. Just a few things I would highlight. So on that Slide 6, as you know, Capital Markets has a broad portfolio of businesses. Some are more capital intensive, such as the corporate banking loan book. Some are moderate being parts of our Global Markets business. But I would also highlight, we have some very low capital intensity businesses, such as investment banking and transaction banking that are key growth areas for us as well. And so when we look at how we might deploy organic capital, it's really across all of these areas. For the more capital or moderate capital intensity through direct capital employment through financing and lending. And then through the less capital-intensive areas, it's really through NIE as we invest in talent and technology. To your specific question on what should you expect from the ROE, we would not expect a deterioration in our ROE. We think we can deploy capital, while at the same time, do that across the portfolio to continue on the trajectory of moving our ROE target higher consistent with what we articulated at Investor Day, and you've obviously seen that in the last two quarters as our ROE has continued to trend upwards. So it's a balance between ROE and growth we think we can invest across the portfolio, drive accelerated growth while continuing to migrate our ROE higher. Graeme Hepworth: Maybe just sort of add on the kind of risk element to that question, just kind of say a few things on that. I think while capital markets has been growing and there are plans to grow, if you kind of pull up and look at what [ tapped ] over the last 3 to 5 years, and you use kind of a metric like RWA as an indicator. We've actually seen the RWA footprint of capital markets kind of abate or kind of remain a stable proportion of RBC's overall risk profile. And so no, I don't expect it will kind of dramatically change kind of the volatility of our credit book per se. [ Look ], where the growth is happening, say, on the loan book or off the markets business on the financing side, it tends to be kind of higher grade corporate relationships that we're driving more of. And so I wouldn't expect it to be kind of driving volatility in a really distinct or unique way there. So as it stands, again, in the plan, we have a kind of a very well-articulated risk appetite. I don't think anything that we're laying out here has us changing our risk appetite. That's consistent with what we messaged at Investor Day. So no change in approach on that at this point. Operator: Your next question comes from the line of Mario Mendonca with TD Securities. Mario Mendonca: Dave, perhaps just a quick question. I was intrigued by a comment you made in your prepared remarks. You said -- and it was in the context of returning capital in the form of buybacks. You said something to be effect of, "And we acknowledge where the price of the book is." And I may have misheard you, but what message were you trying to convey if I did, in fact, head you correctly? David McKay: Just as we came out of Q4 into Q1 and saw the significant run-up in the share price, we looked at the volatility in the marketplace. And I think we tempered some of our buyback activity through Q1. As you saw, we maintained a kind of consistent level as we had in previous quarters between [ $800 billion ]. It was probably more most attributable to the uncertainty in the marketplace. And we exited the quarter thinking we'd be buying back shares at a certain level and ended up having a target much higher. So it's just a combination of events. I wouldn't attribute anything specific to the share price because we continue to buy back at $225, $230, $235 a share throughout the quarter. So we maintained an even cadence to the quarter versus an acceleration through the quarter. So I wouldn't attribute anything. It's more the uncertainty of the geopolitical situation that caused us to hedge a little bit through the quarter. Mario Mendonca: And then when you made reference to wanting to be at the high end of your target capital range, just remind me is [indiscernible] the high end? Or would you take -- that's the high end? David McKay: [ You ] let it run up a little bit. We had a significant quarter where we earned a great return, and we're very capital efficient and it moved up to [ 13.7 ]. It just gives us more flexibility to deploy that into buybacks and growth in the coming quarter. Mario Mendonca: And then just maybe I think one other thing. When you think about your U.S. franchise, I think CNB went through a rough patch. It's clearly out the other end, things are looking much better than they were a couple of years ago. Does that give you the confidence? And maybe this is the right way to ask it, is does the institution have the stomach for another meaningful U.S. banking transaction? David McKay: Does it have the stomach? Absolutely. Accretive shareholder value and the synergies lead to that shareholder value. It's all about your business case. And can you extract synergies versus the price and the competition. I mean we expect to have significant competition for any commercial property that we'd be looking at or wealth management property. And therefore, does your synergy start compete and can you earn a return on it. So we spent all our time building hypothetical synergy cases for each of these opportunities, and we talk about them, what would we do with this franchise differently than the current management team does. How do you put a valuation on that, and that leads us to be disciplined in any approach. So we know we have capital strength. We know our currency is strong, and therefore, we want to grow, but we're going to grow and create shareholder value at the same time. Operator: Your next question comes from the line of Ebrahim Poonawala with Bank of America. Ebrahim Poonawala: Just a quick follow-up maybe for Erica and Sean, as we think about the margin outlook for the Canadian banking business, maybe just talk to what you're seeing on deposit pricing on term deposits versus acquiring new households I'm just trying to get a sense of what the competitive dynamics look on both fronts and the implications that may have as we think about just margins over the next year or two? Erica Nielsen: Yes. Thanks, Ebrahim, for the question. It's Erica. Maybe just a couple of reflections. As it relates to the pricing and the competition that we're seeing on our deposit franchise, particularly with GIC, I would say that it still continues to be a competitive market. And that is coming from a group of clients who are largely in 1-year term deposits, and they're looking now to make the determination of is it time for equities or is it time to remain in the GIC portfolio. And so we are watching that portfolio and trying to guide clients appropriately. So we want to make sure that, a, first and foremost, as we retain the dollars at RBC to grow our money in franchise. And then we follow what the client need is based on, should they remain in the GIC portfolio or should they largely move into the mutual fund portfolio. We see increasing, as Katherine talked about in her remarks, increasing rotation into mutual funds. But at the end of the day, our core metric is that we keep the dollars in the RBC franchise. And then as it relates to client acquisition, as you can imagine, there is -- client acquisition is challenged for all of us in this market at this point given the rollback in immigration in Canada. And so we are competing aggressively in that marketplace to switch Canadians across the different institutions and win, and we have had good success in our business at attracting with our value propositions, RBC Vantage, the Avion portfolio, acquiring clients into our core checking and savings businesses so that we can continue to grow that franchise. But that is -- remains competitive across all of our peer set. Sean Amato-Gauci: It's Sean. So on the commercial side, we are seeing continued mix -- product mix shift from term into demand as kind of the clients perceive the opportunity cost of holding excess liquidity to be low and are giving up some yield to maintain flexibility in this current environment. Just to give you some context there, we saw term obviously peak in 2023 or so at peak levels of rate increases at approximately 20% of the portfolio. The trough was about 8% to 9% in the early stages of COVID. We're in the close to the 14% range now. So while there's potential tailwind opportunity, we think that will continue to abate over the coming quarters. But we do see customers being more liquid and especially at the upper end of the portfolio, keeping sort of powder dry as we see investment activity starting to pick up on the lending side by the same clients who are being much more active than sort of the core commercial and smaller base. David McKay: Thanks, Sean. I think that's our last question. And I know you need to jump to another call, so maybe I'll wrap up here. So a strong quarter for RBC across all our businesses client-driven growth. As you heard Katherine say, we earned through some margin headwinds from the PPA. We earned through some tax increases. We earned through some PCL increases. So it just talks to the earnings power of the organization and what -- where headwinds will become tailwinds. You saw the very strong capital efficiency well into -- well on our way to, as one of you referred to at 18% with tailwinds as well, as I highlighted around, we haven't seen the AI benefits yet, which are coming and are on track, or we're confident of. We haven't really bought back shares that are utilizing the capital surplus capital that we have that creates opportunities there and the growth that's coming to deploy that organically as well. And I'm going to finish where we started with Ebrahim's question on scale. I mean when you're looking at these lower capital-intensive businesses that are so important in driving our business, whether it's wealth, or the transaction banking opportunity. The operating scale we have allows us to invest in this type of growth and get ahead of the curve. When you deploy $0.5 billion into your transaction banking platform because it's essential to your [ competitors ] in the future, but also the profitability that's going to come from that platform in the future. I think it's very significant. We've absorbed all that into our current run rate. So as you think about the ability to invest our NIE organically into growth. Neil's GoSmart initiative, which you didn't have a chance to talk about today, creating higher ROE, lower capital growth largely comes from your NIE efficiency and your NIE scale. And I think we -- that is the characteristics of our platform, and that's the benefits you see in getting ahead of these and creating revenue growth and [ profit and growth ] from that. So thank you for your questions. I know you have another call. Appreciate your interest and questions, and we'll see you next quarter. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Celsius Holdings Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Paul Wiseman, Investor Relations. Please go ahead. Paul Wiseman: Good morning, and thank you for joining Celsius Holdings 2025 earnings webcast. With me today are John Fieldly, Chairman and CEO; Jarrod Langhans, Chief Financial Officer; and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our fourth quarter and full year 2025 earnings press release was issued this morning, with all materials available on our website, ir.celsiusholdingsinc.com, and on the SEC's website, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on our current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward-looking statements except as required by law. Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We will present results on both a GAAP and non-GAAP basis. Non-GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted SG&A and adjusted SG&A as a percentage of revenue, and their GAAP reconciliations, are detailed in our Q4 and full year earnings release. And non-GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John. John Fieldly: Thank you, Paul. Good morning, everyone, and thank you for joining us today to discuss our fourth quarter and full year results for fiscal year 2025. As I look back in 2025, the message is clear: We continue to execute with momentum and operating discipline, and we are reinforcing the scale of our platform as we build a modern energy portfolio. One of the reasons we feel good about the progress is that we delivered full year record revenue of $2.5 billion, reflecting our disciplined approach to growth and the material scale we've accomplished. At the core, our focus is straightforward. We stay close to the consumer and we execute with consistency alongside Pepsi and our retail partners, which creates the opportunity to grow in a sustainable and profitable way over time. With that as context, let me start with the portfolio: what we see across CELSIUS, Alani Nu and Rockstar Energy. Across the portfolio, we continue to manage and invest in CELSIUS, Alani Nu and Rockstar Energy with the intent to broaden our reach. Our combined portfolio represents approximately 1/5 of the U.S. energy market in tracked channels for the full year, which we believe to be very impressive both on an absolute basis and relatively. In addition, our portfolio includes 2 billion-dollar brands, validating that sustainability and scale of our portfolio. Each brand can win in its own way, and our focus is to enable that to happen more and more. We operate with precision, making sure that we are present where it counts, bringing the right innovation and activating demand in a way that strengthens our core, not just the moment. When you look at the CELSIUS brand, the opportunity is about strengthening momentum and executing in a way that positions us to outgrow the category over time. We are focused on the fundamentals that drive that outcome: staying disciplined with SKU productivity, sharpening revenue growth management and promotional efficiency, maintaining a consistent innovation cadence, and elevating market execution with Pepsi and our retail partners, particularly during key priority periods. LIVE. FIT. GO. continues to be the core part of how we connect with consumers, and we remain focused on the long-term runway and household penetration, expanding reach while also driving frequency and loyalty as modern energy becomes more embedded in daily routines. For Alani, we continue to see momentum supported by the strength of our core brand and the opportunity to expand distribution. As the brand transitions into the PepsiCo system, we are focused on what is complete, what remains in motion and what improves as the transition finishes. We saw the momentum with Cherry Bomb as the first limited time offer in the PepsiCo system, and we are taking those key learnings forward. And with Rockstar, our integration remains on track, and we expect to complete the remaining integration in the first half of 2026. Importantly, this is not just about completing 1 integration. It's about strengthening our growing operations. We are building repeatable processes, executing transitions with discipline and refining a playbook that improves how we manage complexity across our growing portfolio. On that note, let me give you a quick update on the integration and transition progress across the portfolio. Starting with Alani Nu, we are making strong progress moving the business into the PepsiCo system. As of year-end, we are substantially complete on the U.S. DSD transition. The way we're approaching the remaining work is intentional and methodical and is designed to make sure we set up the portfolio the right way with Pepsi and our retail partners. And they are brought in on this too. We believe we are set up for success and we continue to expect the Alani implementation and integration to be completed by the end of the first quarter of 2026. With Rockstar, we are progressing through the remaining integration steps and staying focused on the work required to fully bring the brand into our operating model. We are executing against a clear plan and remain on track to complete the integration in the first half of 2026. And when you talk about success, it is very clear. It is consistent execution, a more focused SKU set and improving the margin structure over time as we bring the brand further into our platform. As we think about brand health and durability, our view is rooted in what drives loyalty and relevance. Across the portfolio, we continue to differentiate through sugar-free and flavor innovation, and really believe the category continues to support brands that stay closely aligned with evolving consumer preferences. Looking at 2026, our focus is on making sure that loyalty and brand relevance remains durable. That means staying consistent on what each brand stands for, continuing to bring innovation that creates trial and drives frequency, and executing with that kind of operational discipline that protects the long-term value of our business. We kicked off 2026 by making our Fizz-Free line available nationally. And we see a meaningful opportunity as there's many consumers that prefer beverages without carbonation or like the optionality of fizz or fizz-free. Across 2026, you will see a more intentional innovation and a limited time offer cadence, supported by broader distribution and strong end market execution. For Alani, that also includes expanding distribution of the core SKUs as we complete the transition into the PepsiCo system. International represents a meaningful long-term growth opportunity for us. Today we are present in approximately 10 markets. While international remains a smaller portion of the total business, we see a significant runway as global consumer trends increasingly mirror what we're seeing in the U.S., particularly around fitness, wellness and better-for-you energy. Our approach to expansion is intentional. We are prioritizing focused market selection, clear entry plans and ensure the right execution model is in place before we scale. This is not about entering as many markets as possible. It's about building our brands the right way, with strong local partnerships, disciplined launch plans and sustained marketing and distribution support. To support this next phase, we've brought on Garrett Quigley as President of International. Garrett brings deep experience scaling beverage brands globally and is building a dedicated international sales and marketing organization to expand our footprint in a thoughtful and profitable manner. As global consumer behaviors continue to shift towards zero sugar, functional energy that fits into daily routines, we believe our portfolio is well positioned to participate in that structural growth. We will continue to prioritize strong execution and long-term value creation as we build our international presence. That same focus on execution and scale also shapes how we're evolving our marketing capabilities. On marketing, we're continuing to sharpen how we tell our story and activate demand across the portfolio. Historically, our brands use separate creative teams across different companies. A key step forward, the creation of our new brand studio, a full-service in-house agency built to drive brand growth with speed, consistency and sophistication. More than a creative team, the brand studio is a strategic engine that will shape, produce and scale how our brands show up across every consumer touch point, from packaging and campaigns, to digital-first content and 3D motion graphics. And importantly, this strengthens our ability to run the portfolio in a more intentional way, helping us reach more consumers and connect awareness to trial, and ultimately, to retail activation. The scale of our portfolio allows us to leverage the team, maintain clear control of each brand's voice. Innovation remains central to how we grow the portfolio. That includes leaning into consumer preferences, like fizz-free, while also deploying limited time offers in a disciplined way. For us, LTOs are not about chasing short-term spikes. They are about expanding the funnel, driving incremental trial, reinforcing the strength of the core portfolio. When executed with the right distribution and retail alignment, they can become a repeatable lever within our broader growth framework. Energy remains one of the most attractive growth areas in beverage, with zero sugar offerings leading expansion. We believe our positioning allows us to help grow the category, not just participate in it, by staying relevant to consumers and executing with discipline across both mature and white space markets. And that matters because it speaks to the runway. In more mature markets, the work is about consistency, innovation and driving frequency. In white space markets, the focus is on building awareness, expanding distribution and scaling trial, all while staying disciplined to how we execute. Our partnerships and activations are part of how we do that. We continue to leverage partnerships and others to connect awareness to trial and then the retail activation. These programs are designed to put the brands in motion, in real consumer moments and to convert that energy into demand where consumers shop. Through our social media community building as well as our macro and micro influencer bases, we are building excitement, brand awareness and loyalty to further grow the brands. And we're also proud to see Alani Nu recognized by BevNET's 2025 Brand of the Year. Congratulations to all of our team members. That recognition reflects the strength of our brand and the momentum we're building as we expand reach and execution. Finally, as we look ahead, we have a clear strategy and priorities for 2026 and believe they will support sustainable, profitable growth. Our focus on continuing to strengthen the platform we have built, executing with discipline across the portfolio and staying closely aligned with consumers as the category continues to evolve. Across each of these priorities, our intent is the same: execute consistently, strengthen our operating system and create long-term value. With that, I'll turn it over to Jarrod to walk through our financials. He'll begin with some context around the Rockstar accounting treatment, then cover full year and quarterly results. Jarrod? Jarrod Langhans: Thanks, John, and good morning, everyone. From a financial perspective, we have a lot to cover. As John noted, I'll begin with Rockstar given the accounting treatment during the integration, then move to Alani and brand CELSIUS to walk through the components of our consolidated results. Beginning with Rockstar, during the quarter, we were actively integrating the brand into our supply chain, back office and commercial organization, which impacted how certain sales activities reflected under generally accepted accounting principles. As a result, some components were required to be recorded in other income rather than net sales. For the quarter, $45 million was recorded within net sales and an additional $6 million was recorded in other income. As we move into the first quarter, we expect to fully transition the U.S. portion of the business to the finished goods model and we expect that only the Canadian portion will remain in the other income. We expect the Canadian portion of transition to the finished goods model in the first half of 2026. On a full year basis, we recorded $56 million in net sales for Rockstar and an additional $13 million in other income. And as we sit here 6 to 8 weeks into 2026, we remain confident the brand continues to resonate with many consumers, and we have a plan to stabilize the business and move it back into growth over the next handful of years as previously discussed. Turning to Alani Nu, during the fourth quarter, Alani achieved record net sales of $370 million, benefiting from significant ongoing customer demand, increased distribution points and increased orders as we move the business out of its prior distribution system and into the PepsiCo distribution system. On a pro forma basis, that would equate to growth of 136% for the quarter compared to the prior year. In the 9 months since we purchased the brand, Alani has contributed $1 billion to our net sales. During the quarter, we continued to execute against the integration plan we presented in May, and we are pleased to note we remain on track, including moving the business into our supply chain, back office and commercial operations. We have also moved a substantial portion of the distribution network into the Pepsi system, with only a few pieces of the DSD network remaining outside of Pepsi today. Moving a substantial portion of the business into Pepsi was a significant operational milestone, and I want to recognize the teams across our organization, our former distribution partners and Pepsi for making that happen as seamlessly as it did. We also saw the execution show up in innovation. Cherry Bomb, our first Alani LTO launched in the Pepsi system, and was very successful running out in record time. With strong pull-through, we saw increased orders in the last few weeks of the year above and beyond our initial projections, supporting triple-digit growth in the first 6 to 8 weeks of the year. As we look across 2026, we expect continued expansion into more locations with more SKUs and overall triple-digit space gains. As expected, the transition of Alani into Pepsi drove increased orders and strong execution, which in turn impacted reported results for brand CELSIUS as we manage the timing and sequencing of inventory movements within the Pepsi system as we balance the Alani load-in with total inventory across the network. As a result, scanner data is a healthy 12.8% for the quarter, while underlying GAAP sales for CELSIUS showed a 7.7% decline due to the timing activities noted. When combining brand CELSIUS inventory movements with the Alani load-in, the company had a net benefit of approximately $25 million. Just a year ago, we were coming off a period in which both the category and brand CELSIUS experienced pressure in the back half of 2024, with some continued softness in the first quarter of 2025. As a result, we put a plan in place across our commercial organization, and we are pleased by the improvements seen since then where tracked sales are more aligned with the upper range of the energy category growth. As a result, for the full year, brand CELSIUS delivered $1.46 billion of net sales, growing 7.5% year-over-year. So combining everything for the fourth quarter, consolidated revenue was approximately $722 million and full year consolidated revenue was $2.5 billion, including having 2 billion-dollar brands. Taking a step down the P&L, for the 3 months ended December 31, 2025, gross profit increased by $175.1 million to $341.8 million from $166.7 million for the prior year period. Gross profit margin was 47.4%, compared to 50.2% in the prior year period, reflecting dilution from Rockstar Energy, higher cost of product related to integration costs and tariffs, partially offset by improved outbound freight, lower consolidation billbacks as a percentage of revenue and favorable product impact mix. As previously discussed, gross margin was impacted by onetime integration and distribution transition costs associated with the timing and sequencing of integrating Alani Nu and Rockstar and transitioning Alani into the Pepsi DSD system. While operational efficiencies and revenue growth management will be ongoing initiatives, we continue to expect the Alani integration to be completed by the end of the first quarter of 2026, and we expect the Rockstar integration to be completed in the first half of 2026. As integrations progress and ongoing initiatives take hold, we expect margins to expand across 2026 and return to a more normalized profile, with gross margins in the low 50s driven by savings across raw materials, scrap, manufacturing tolling fees, freight and package and brand mix, offset in part by tariffs and aluminum costs. For the full year, gross profit increased by (sic) [ at ] approximately $1.27 billion, from $680 million in 2024. Gross profit margin increased by 20 basis points from the prior year to 50.4% in 2025. Sales and marketing expense in the fourth quarter was $249.2 million or 34.5% of sales, and administrative expense was $66.6 million or 9.2% of sales. Adjusted for distributor termination and integration costs of $81 million, sales and marketing expense in the fourth quarter was 23.3% of sales, and administrative expense was 8.5% of sales when adjusting for $5 million in acquisition and integration costs. On a GAAP basis, we reported a net income of $24.7 million for the quarter. On a non-GAAP basis, adjusted EBITDA was $134.1 million, up from $62.9 million in the prior year period. Adjusted SG&A for the quarter was 31.8% of sales. For the full year, sales and marketing expense was $876.3 million or 34.8% of sales, and administrative expense was $250 million or 9.9% of sales. Adjusted for distributor termination and integration costs of $327.5 million, the full year sales and marketing expense was 21.8% of sales, and administrative expense was 7.5% of sales when adjusting for $60.2 million of acquisition and integration and other costs. Adjusted SG&A for the year was 29.4% of sales. We had an adjusted EBITDA margin of approximately 18.6% for the quarter. For the full year, on a GAAP basis, we reported net income of $108 million, and adjusted EBITDA was $619.6 million, representing an adjusted EBITDA margin of approximately 24.6%. On cash flow and the balance sheet, we remain focused on free cash flow generation and working capital discipline. We ended the year with $399 million in cash and approximately $670 million in total debt. Operating cash flow was $359 million. Working capital reflects the timing dynamics we discussed earlier, including inventory positioning and customer order cadence during the transition period. As cadence normalizes, we expect working capital volatility to moderate. On capital deployment, we remain focused on 3 priorities. One, investing to support brand growth and integration execution. Two, strengthening the balance sheet. And three, returning capital to shareholders. During the quarter, we reduced debt by approximately $200 million and repurchased $40 million of shares. We ended the period with $260 million remaining under our share repurchase program. We will continue to evaluate repurchase activity based on cash generation, market conditions and capital priorities while preserving flexibility for strategic M&A opportunities. As we look at 2026, I want to briefly frame how we are thinking about cadence and variability following an active fourth quarter. As I mentioned, the fourth quarter included integration and distribution transition activity that we expected, and those actions created timing effects within the Pepsi network. At times, reported results can vary when shipments, inventory positioning and promotions are not perfectly aligned with consumer takeaway. When that occurs, it is typically a function of timing and sequencing, and we will continue to be clear about what we believe is transitory versus what we believe reflects underlying trends. As we progress through the first half of 2026, we expect those impacts to moderate as integration milestones are completed. We remain focused on tightening alignment between shipments and underlying takeaway where possible, while recognizing that periods of integration and large customer ordering cycles can still create some quarter-to-quarter variability. On pricing and revenue growth management, we are taking a portfolio approach with greater precision and ROI discipline. Revenue growth management for us is not about broad-based price increases. It's about shaping the business through mix, price pack architecture by channel, pack strategy, and disciplined promotion to improve both growth and quality of earnings. As we scale, we are tailoring price pack architecture by channel, sharpening priority periods and using data to allocate investment where it drives the highest return. Over time, this should lead to promotional activity that is tighter, more intentional and more measurable. In addition, aligned planning and the captaincy with Pepsi support more consistent end market execution and a more repeatable commercial playbook across retailers. With that, I'll turn the call back to the operator to open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Filippo Falorni with Citi. Filippo Falorni: The shelf space gains that you discussed last week at the CAGNY conference for both CELSIUS and Alani, can you give us a bit of an update on the spring shelf space resets and when we should start to see some of the benefits from the shelf space gains? And then in particular for the brand CELSIUS, you explained the gap versus consumption in Q4. That was very helpful to add it to the release, so thank you for that. So could we see an improvement in Q1 as we think about it on a reported sales basis given the shelf space for brand CELSIUS? John Fieldly: I appreciate the questions. In regards to the shelf gains, historically, we've seen them really materialize through and kind of finalize right around the end of spring, has historically been when the final resets take place as everyone is gearing up, as we call, the beverage summer selling season. So we do expect those to continue to materialize through the end of spring, really with the biggest gains, especially for Alani, would be in convenience. So that's been a big white space opportunity for the portfolio as well as with the CELSIUS portfolio. And really excited about, as we're heading into summer, especially leading off with a lot of our innovation that's coming. In regards to some of the timing and some of the differences as we look through consumption data versus the revenue that's recognized as we sell through to our distributor, there is timing and sequencing. Jarrod made some comments on that in our prepared remarks. Jarrod, do you want to provide any color? Historically, we don't provide any forward-looking information. But we do anticipate there could be gaps going forward within consumption on a weekly or within a moment of time. But over the long term, we'll start to see some more consistency there. But Jarrod? Jarrod Langhans: Yes. I mean if you look at it from a portfolio perspective, I think you'll see it tighten up quicker than if you're going specifically brand by brand, because we are looking at different things across the calendar. So for instance, we just launched an LTO, the Lime Slush, it's delicious, with Alani, so you'll see some spikes in some of the data. We also have LTOs coming out with CELSIUS this year. So depending upon the timing of those activities, you might see some differences within the scanner data versus load-ins in those kind of things. And then as we continue to expand distribution, with Alani in particular, as we continue to move across the Pepsi system and gain shelf space, you'll see some expansion there. And then you'll also see expansion within CELSIUS with the 17% space gains that we had as well. Operator: Your next question comes from the line of Peter Grom with UBS. Peter Grom: Great. I wanted to follow up on that. Obviously, a lot of moving pieces as it relates to the top line growth. But when we think about the $25 million net benefit from CELSIUS versus Alani, can you help us unpack what that looks like from a brand perspective? And then I guess, Jarrod, maybe more specifically as you think about Alani, would you expect inventory levels to remain elevated as we move through this transition? And similar to kind of what we saw when CELSIUS moved into the Pepsi system a couple of years ago, implying that maybe more of the unwind would be a 4Q, into '27 dynamic? Or would you anticipate maybe kind of some under-shipment to occur faster? Jarrod Langhans: Peter, so as we're looking at Q4 and into the future, I'd say John and I are committed to tightening up the peaks and the valleys of the data. With the captaincy and the more aligned partnership we have with our largest distributor, we're definitely much tighter and working very closely. We actually had the supply chain from their team in -- back in January. So we're committed to really tightening up those peaks and valleys. From an operational perspective, we'll continue to have our supply chain and commercial teams focused on what ultimately is going to drive the success of our modern energy portfolio, which is winning at the register as that is where we're going to win or lose. So if we have the opportunity to load an additional volume of 1 brand kind of at or near the end of the quarter while adjusting another brand, while maintaining our service levels and the growth of those brands, that's something that we're committed to doing so that we win. So as we look at kind of the results that you saw in the quarter, we benefited to the tune of roughly $25 million in our reported results. We were excited to see brand CELSIUS come out of gate with low double-digit growth and great service levels while seeing Alani kind of rocket out of the gate with triple-digit growth. And we have seen brand CELSIUS orders align more closely to the tracked data as we look at kind of the initial deliveries and orders in 2026. I will caveat that by saying there are 4 to 5 more weeks in the quarter, so we'll continue to manage the business holistically and make adjustments along the way as we do manage the portfolio. So I think there -- again, we'll manage the peaks and the valleys. I think, as a portfolio, playing a much more scaled business, we'll be able to get those a bit tighter and manage that. So we don't have as many kind of as much volatility as we've seen historically when we just had a 1 brand and when we were really learning each other within that supply chain. If I go back to kind of Q4 and I boil it down, if I'm looking at our supply chain around DSD in particular, as we approached the end of Q4, we did adjust an additional week for brand CELSIUS and loaded in additional Alani. That benefited Alani. And it benefited the portfolio from a net basis, as I said. So this didn't have an impact on service levels, and we continue to win at the register with both brands. And as John mentioned, as a proof point, we're picking up roughly 17% additional space with brand CELSIUS in '26, really as a result of that scanner growth and, obviously, even more with Alani, triple-digit space gains with Alani. Operator: Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Bonnie Herzog: I guess I had a question on gross margins. You mentioned you expect your gross margins to return to a more normalized profile, in the mid-50% range, across this year. So maybe first, could you touch on the potential impact that the Midwest premium is having on your business near term? And then second, can you give us a sense of phasing gross margins this year? And then I guess beyond this year, how should we think about the evolution of your margins over the next few years? Can you highlight maybe some of the key puts and takes that we should think about? John Fieldly: No, excellent question. I would say in regards to the margin profile, and a lot of the infrastructure and strategies we've built about building on our orbit model with the CELSIUS portfolio, further looking at opportunities with supply chain, purchasing strategies, as well as vertical integration with the acquisition of our co-packer over a year ago, really driving further leverage and scale and efficiencies through that location. We also, as we're further integrating Alani and Rockstar, as it's moving through orbit over the next several quarters, we'll be able to gain additional leverage as well. Jarrod, do you want to provide additional color in regards to some of the timing around that and also some of the opportunities we see as we're progressing to this low to mid-50% margin profile by the end of the year? Jarrod Langhans: Yes. So I think our target for this year is to get back to a more normalized low 50s. In terms of the opportunity, we do see ability to move up into the mid-50s like you noted. I wouldn't necessarily call that a '26 target, but definitely a near-term target, into the next handful of years. Some of the things that are going to drive our benefit in order to get back, call it, from the 47.4% that we sat in Q4, and work our way to the low 50s, are really getting the cost of sales, the COGS, the raw material prices in line with what you see with brand CELSIUS. So we are working through that with Alani and with Rockstar. We're a bit ahead on Alani, so we should have that cost structure in place by the end of Q1. For Rockstar, we should have that in place by the end of Q2. Some of that has to do with integration, some of that has to do with just moving through the inventory balances and moving through some of the higher raw material costs as we have them fully integrated. So Alani will be fully integrated by end of Q1 and Rockstar by the end of Q2. So we've got those costs. Some other things that are going to benefit us is our orbit model and our freight structure. Getting them fully baked into that structure will provide us with benefit. Our mix, when you kind of look at a blended mix of our price pack and promotion strategy, will also be beneficial. So you kind of put those together. If you look at Q4, some of the kind of onetime things we had, we did have some transition costs where we had some COGS write-offs and we had some scrap and things like that, that were more onetime, so those will be gone after Q4. And so we'll have that benefit directly into Q1. But really, the goal is, once we get through that first half of the year, to be in good shape to get into that low 50s as you look at the back half of the year. Those do also factor in the Midwest premium that has picked up as well as tariffs. So depending upon where the Midwest premium goes, there could be some impact in terms of timing. And as well as tariffs, if the tariffs kind of subside quicker, then there's an opportunity to get to some of those numbers quicker. Operator: Your next question comes from the line of Andrea Teixeira with JPMorgan. Andrea Teixeira: So I was hoping to see, John, if we step back and think about the 3-brand portfolio and the opportunities of trimming at some point the SKUs and -- or you think that this cadence of LTOs now with Celsius, like how is the experience that you've had? And how do you think velocity, obviously, with the increase in shelf space, you obviously will have a reduction in velocity at some point, but just thinking of how to position the SKUs, how to position the category? And we all know this is a record year of innovation for everyone in the space. So hoping to see how you're seeing that set. And what are you hearing from the retailers as far as the competitor set and the -- what we think going forward? And just also on the -- just a clarification on the margin. It's very encouraging to see that you see the opportunity for synergies and improvements in the execution. I also was encouraged to hear from you guys at CAGNY in terms of the systems and visibility. So I was hoping to see if you can kind of wrap it up on how predictable your sales have been with the view from Pepsi and how you can see margins evolving as we go from a promo perspective. John Fieldly: Excellent, Andrea. In your question, you're absolutely right in regards to the overall category and what we're seeing as driving growth. Innovation has been a key factor of that. And also, innovation has been a great, not only for our portfolio, but the total category -- it's bringing new consumers in. And we're starting to see, as in CAGNY, we were talking about the evolution of a category, expanding day parts, expanding usage occasions. Big opportunity is social occasions with energy drinks. As we're seeing alcohol and liquor come into some challenges and headwinds, and what we're seeing is consumers are switching to energy drinks to -- as a replacement. And that's a huge opportunity with our CELSIUS mocktails and dirty Alanis that we have out there. So that's a big push for us as well. They continue to bring excitement and new consumers, new occasions in. When you look at the SKU prioritization, that's the beauty of a portfolio. We're able to really maximize the value of the portfolio now with CELSIUS, Alani and Rockstar, making sure we're maximizing the SKUs really for the channel and also for a regional basis. So that's going to allow us to put the fastest-turning SKUs on -- in the coolers, in the planograms. The space allocations are also, that we're seeing with resets, 17% with CELSIUS and over 100% with Alani, is allowing us not only getting additional slots and distribution and more flavors and availability in retail, but also additional points of disruption. And having that path to purchase is so important, those cold checkouts, the impulse purchases, the expanded shelf space in the dry sets. So that's all going to come into landing on exactly what you're talking about, velocity. Velocity is very important in the category. That's what is going to continue to drive it. We feel confident with the innovation. We're going to see the space gains. We're focused on velocity with some of our marketing strategies. Jarrod mentioned Lime Slush just hitting within our LTO strategy. And the LTOs are designed to lift up the core, to bring new consumers into the portfolio, into the franchise, and then build that daily consumption, daily routine. The other big area we see a huge opportunity is with the female consumer. That's a big opportunity. We're seeing them expand purchase occasions. There's a higher adoption rate that's taking place as well. And our portfolio is really positioned to leverage that tailwind with Alani and with CELSIUS. So we think we're really well positioned there, especially as coming through the finalization of the resets at the end of spring. Really excited about great innovation from an LTO standpoint, not only for Alani, but also for CELSIUS. We got some great innovation coming out, and it's going to be an exciting summer for us. Talk about the synergies and some of the costs within our system, Jarrod touched on that in our prepared remarks, and I also covered it, in regards to some of the investments we've made, the vertical integration, the optimization of our purchasing strategies, the further investment we've made in revenue management. Revenue management, RGM, is a really big component as we maximize the value. We're not just a singular brand anymore going on promotion against many other brands. We're really to maximize that value within the portfolio, gain that trial, gain that scale and compete at the highest level within the energy category. So I think when you look at all those components there, where consumers are, where our portfolio is connecting with consumers and then also the infrastructure we built here with the organization, really sets us up to continue to optimize and improve and continue to grow this category. Operator: Your next question comes from the line of Kevin Grundy with BNP Paribas. Kevin Grundy: Great to see you at CAGNY last week. John, just a follow-up, and Jarrod, for you as well, the distribution gains again. Not to beat the dead horse. But obviously, super strong with Alani up triple digits, CELSIUS up 17%. Three questions here, if I may. Number one, what -- can you quantify what you sort of estimate the distribution gains to be for the category given the strength? That would be question number one. Number two, where are the shelf space gains coming from for Alani and CELSIUS? To the extent it's sort of above and beyond what you'd expect with the category, which certainly would seem to be the case, where are the shelf space gains being sourced from within the category? And then just lastly, I think Andrea was sort of touching on this, with respect to velocity. When we think about holistically the innovation that's coming on and which seems like a really strong pipeline, but you're moving in to new areas, new geographies, particularly in convenience, how should we think holistically about velocity growth for CELSIUS and Alani this year sort of vis-a-vis the TDP gains that you're going to benefit from? John Fieldly: Kevin, great questions. We spent some time on the category on the space gains we anticipate for CELSIUS. But I think to your point in regards to the category, like where is that coming from? And when you look at the energy category, and it continues to grow as a larger percentage of LRB, retailers are expanding more space. They're expanding half-coolers and doors and more dry shelves. Like in the convenience channel, we're hearing from a lot of retailers, they're optimizing some of the beer coolers just to -- they're trying to get as much productivity out of these coolers as possible. So you've heard that. Juice category as well, and high premium waters as well has been under pressure. So those are areas that retailers are making those decisions. I think each retailer is a little bit different on how they're being able to carve out more space. But there is a lot more space coming in the energy category as it's becoming part of a daily lifestyle, daily routine, daily -- and expanded usage occasions. Historically, it's been an impulse purchase, and convenience has been a main driver of that, over 60% of sales. But if you look at large format and you look at the space gains we saw over the last 2 years, we expect anticipated space gains in large format as they can capture a larger share of that -- of those energy drink sales that will continue to grow. So seeing a variety of different retailers react differently, but many in convenience are, we're hearing, cooler doors within the beer category getting a little optimized there. And then you look at where we are within velocity, we're here to grow velocity. That's really important. That's a major KPI within our organization, within our teams. I think with the space gains, when you look at Alani particularly, we're expanding that distribution, right? So it's going into a lot of locations that are new. Many retailers, many regions, Alani is going to be new. So we will likely see a lower velocity entering new segments of the regions, within also channels and retailers, that we're going to have to build up those velocities. So each channel is going to be different. Each market is going to be different. But any time, just like when we saw CELSIUS, as you expand out broader, we did see reduced velocities as that expansion takes place. And then you build upon that. Remember, consumers are -- it's a daily routine, it's a daily lifestyle. We've got to get these brands into a cadence where consumers are purchasing on a frequency. And gaining distribution just doesn't mean the product starts flying right away. There is great momentum behind these brands. We're really excited about it. It's part of the LTO strategy, the innovation strategy to get trial and awareness. But that is something we're very keen on, is continuing to build velocity over time. Operator: Your next question comes from the line of Gerald Pascarelli with Needham & Company LLC. Gerald Pascarelli: A couple of things. Just a housekeeping question going back to the cadence, Jarrod. I just want to make sure I'm understanding this correctly. But are there any parts of the inventory benefit that Alani got this quarter that should in any way be considered a pull forward in revenue? It doesn't sound like it just based on the distribution opportunities ahead, but just wanted to confirm that. And then John, just going back to the shelf space growth that you're expecting for Alani this year, is there a way for you to broadly contextualize that in terms of what we saw for core CELSIUS back in 2022 when that brand transitioned? I understand that back then, CELSIUS has been benefiting in part from lost shelf space from Bang. But yes, just curious if you could provide your thoughts on how we should view that 102% in the context of the prior transition. Any similarities and differences? And then I guess, how that compares in this environment with a more competitive landscape. Jarrod Langhans: Yes, I'll jump in first, Gerald. In terms of pull-through, I do think we saw opportunity to load in even more of Alani with the ability of the Pepsi distribution system and really how quickly they were able to get Alani out from an ACV perspective across the shelf. So I think there was, I would call that more of an opportunity than a load-in, that we took advantage of. And you saw coming out of the gate with the triple-digit growth that Alani has hit pretty quickly, and we continue to see that expand. And then with our Cherry Bomb, we did -- that was kind of one of the pieces that was loaded in at the end of the year, and that really got depleted pretty quickly, record time. So we got the Lime Slush going out. We're looking for, hopefully, another record from an LTO perspective. But I would definitely see that as more of an opportunistic move as opposed to a pull back or pull forward. John Fieldly: In regards to some of the expansion when we look back on the CELSIUS integration, expansion to the PepsiCo network, and then timing of resets upon that, CELSIUS went in, in September, Alani's going in, obviously, in December. There are some similarities, but there's many differences as well. I think when you look at CELSIUS and Alani, when they were starting off, CELSIUS was at a lower ACV versus where Alani is. I think when you look at Alani, similar opportunities in convenience on distribution gains there. And yes, you are right, when we went into -- through that process, CELSIUS did take a lot of space from Bang at that point in time. But I will say when you look at Alani and the opportunity and you look at the category, this category has extremely strong growth. And although Alani will not likely be replacing brands, the category is expanding. We're hearing retailers expand their shelf presence for energy. So that's what really allowed Alani to gain some of that -- the large distribution gains as well. Also, the consumer dynamics have changed as the -- as I mentioned, usage occasions have expanded. More females are coming into the category and increasing consumption. So there's a lot of different dynamics at play. Although there are some similarities, there's a variety of differences just due to the evolution of the category and the growth we've seen in energy overall, as well as the innovation that's come in. And it's an exciting time for the portfolio. Coming out of NACS, where we presented in October, we felt the energy from a lot of retailers and the excitement about CELSIUS. And now with the partnership with Pepsi, being the energy captain with the Celsius Holdings portfolio, and having that distribution confidence and breadth. A lot of retailers really want to make sure you can keep those shelves full, especially with the velocity and how quickly these products turn. So that is really a show of confidence and really allowed our key accounts team to take advantage of those opportunities and gain that additional distribution for the total portfolio. Operator: There are no further questions at this time. I will now turn the call over to John Fieldly, Chairman and Chief Executive Officer, for closing remarks. John Fieldly: Thank you again for joining us today. 2025 was truly a defining year for Celsius Holdings. We recorded a record $2.5 billion and continue to scale a true modern energy portfolio with CELSIUS, Alani Nu and Rockstar Energy. As we move through 2026, our priorities are clear: execute with discipline, strengthen our operating system and stay closely aligned with consumers as the category continues to evolve. I want to take this opportunity to thank our employees, our partners and all of our customers out there for their focus, their teamwork that makes this all possible. We appreciate your support, and we look forward to updating you next quarter. Until then, grab a CELSIUS and live fit. Operator: This concludes today's call. Thank you for attending. You may now disconnect.