加载中...
共找到 24,887 条相关资讯
Fed's Stephen Miran resigns from White House post
CNBC's Jim Cramer said the sell-off in software reflects a shift in how investors value future growth rather than a collapse in earnings. The "Mad Money" host said investors are being forced into a far more selective playbook.
Bloomberg Television brings you the latest news and analysis leading up to the final minutes and seconds before and after the closing bell on Wall Street. Today's guests are Bridgewater Associates' Rebecca Patterson, 17Capital's Pierre-Antonie de Selancy, Wedbush Securities' Alicia Reese, Sperling Economic's Gene Sperling, USA Rare Earth's Barbara Humpton, Edward Jones' Mona Mahajan, Allspring Global's Abby Roach, Cleo Capital's Sarah Kunst, Constellation Research's Ray Wang, American Century's Rich Weiss, and TINKR's Tyler Cameron and Tate Madden.
Rapidly expanding artificial-intelligence capabilities helped erase $300 billion in market value on Tuesday.
Mining companies are entering a new phase of the metals cycle marked by expanding margins, stronger balance sheets, and a growing gap between market prices and the assumptions still guiding corporate decisions, according to Nicole Adshead-Bell, director of Cupel Advisory.
Analysts at research firm MoffettNathanson say ‘the capital needs would simply be enormous'
From a new Fed chair nominee to a hard turn to risk-off trading in some parts of the market - the broader landscape is rapidly changing for ETF investors. BondBloxx ETFs co-founder Joanna Gallegos and Strategas Securities technical strategist Todd Sohn sit down with CNBC's Dominic Chu to discuss this and much more on “ETF Edge.
Gartner says customers are “slowing and deferring everything possible” as they make sense of a shifting AI landscape.
Sam Vadas and Alex Coffey talk about ways the markets are pricing in Kevin Warsh as the expected Fed Chair to replace Jerome Powell. They also discuss how geopolitical tensions offered a chance for gold and silver to rally and reclaim some of Friday's losses.
Markets were on edge as this year's software stock slump picked up steam.
Elon Musk has confirmed that his private space company SpaceX (SPAX.PVT) will merge with his private AI developer xAI (XAAI.PVT) ahead of SpaceX's IPO planned later this year. This merger is projected to be worth up to $1.25 trillion as Musk hopes to develop data centers in space.
Kevin Warsh, President Trump's pick as the next chair of the Federal Reserve, has long expressed a desire to shrink what he calls the central bank's “bloated” balance sheet. But doing so is not as easy as it might sound.
Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Katie Greifeld, Carol Massar and Tim Stenovec. -------- More on Bloomberg Television and Markets Like this video?
Worries that Anthropic's Claude is targeting the legal profession led to another software slump and broader market slide.
Materials Select Sector SPDR ETF has outperformed all sectors with a 21% gain in the past quarter, signaling robust market momentum. XLB's strong, positive correlation (+0.71) with SPY, surpassing XLE's, highlights its value as a leading indicator of early-cycle industrial demand.
The Kospi index is up 25.5% year to date, a world-best performance.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the fuboTV Inc. First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Ameet Padte, SVP of Financial Planning, Analysis, Corporate Development, Investor Relations. Ameet, please go ahead. Ameet Padte: Thank you for joining us to discuss fuboTV Inc.'s first quarter fiscal 2026 results. With me today is David Gandler, co-founder and CEO of fuboTV Inc., and John Janedis, CFO of fuboTV Inc. Full details of our results and additional management commentary are available in our earnings release and letter to shareholders, which can be found on the Investor Relations section of our website at ir.fubo.tv. Before we begin, let me quickly review the format of today's call. David will start with some brief remarks on the quarter and our business, and John will cover the financials. Then we will turn the call over to the analysts for Q&A. I would like to remind everyone that the following discussion may contain forward-looking statements within the meaning of the federal securities laws. These include statements regarding our financial condition, anticipated financial performance, expected synergies and benefits from our recent business combination, business strategy and plans, including our product, subscription packages, and commercial agreements, market, industry, and consumer trends, and expectations regarding growth and profitability. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, which could cause actual results to differ materially from our current expectations. For further information, refer to the earnings release we issued today, our letter to shareholders, and our SEC filings, all of which are available on our website at ir.fubo.tv. During the quarter, we closed our business combination with Hulu + Live TV. As a result, our reported results for the current period reflect the results of the Hulu Live business prepared on a carve-out basis for the period from 09/28/2025 through 10/28/2025 and exclude fuboTV Inc.'s results for this period. For the period from 10/29/2025 through 12/31/2025, the results include the combined fuboTV Inc. and Hulu Live businesses. The reported prior year period fiscal Q1 2025 also reflects Hulu Live Financials prepared on a carve-out basis and excludes the results of the historical fuboTV Inc. business. To facilitate comparability between periods, we will discuss certain results on a pro forma basis, giving effect to the transaction as if it had been completed at the beginning of the first period presented. We will also refer to certain non-GAAP measures during the call. Please refer to our Q1 fiscal 2026 letter to shareholders available on our website at ir.fubo.tv for a further description of the pro forma presentation and reconciliations of these non-GAAP measures to the most directly comparable GAAP measure. With that, I will turn the call over to David. David Gandler: Thank you, Ameet, and good morning, everyone. Q1 marked our first as the owner of Hulu Live, and it validated the strategic rationale behind the combination, offering greater scale, broader distribution, and improved economics. On a pro forma basis, over the past twelve months, the fuboTV Inc. and Hulu Live businesses generated $6.2 billion of revenue and ended the period with 6.2 million subscribers in North America. This firmly establishes us as a scaled and relevant player in the pay TV market and one focused on growing. On a trailing twelve-month pro forma basis, adjusted EBITDA was $77.9 million. As a combined company, we believe there are meaningful opportunities ahead to unlock synergies and efficiencies that will support sustained growth and improved profitability. Since closing the Hulu Live combination in late October, our priority has been execution to expand reach, scale, and monetization across all of our services. And just a few months in, we are converting strategy into action. We are nearing completion of stage one of our integration plan, migrating fuboTV Inc.'s ad tech into the Disney ad server. Once live later this month, fuboTV Inc. inventory will be sold alongside Disney Plus, ESPN Plus, and Hulu. We expect this integration to drive a meaningful uplift in both CPM and fill rates. Stage two of our plan is focused on the consumer. We've experienced strong market traction for our well-priced fuboTV Inc. Sports Service. It resonates with value-oriented consumers and complements our broader content offering. fuboTV Inc. Sports includes major networks such as ESPN, ABC, CBS, and Fox, among others. Building on this momentum, we are pleased to announce that we are working with ESPN to include fuboTV Inc. Sports in ESPN's commerce flow. Customers will be able to purchase fuboTV Inc. Sports alongside offerings such as ESPN Unlimited and the ESPN, Disney Plus, Hulu bundle, and then watch directly on the fuboTV Inc. app. This opportunity is particularly exciting given ESPN's scale. Per comScore, ESPN's digital and social properties reached four out of every five US adults in November 2025, representing hundreds of millions of unique fans. It allows us to market fuboTV Inc. Sports directly to a sports-centric audience and drive subscriber growth more efficiently with meaningfully lower customer acquisition costs. We continue to focus on our Spanish-speaking audience, and in fiscal Q1 2026, delivered record-high subscribers on fuboTV Inc.'s Latino product. In January, Hulu Live launched the Spanish language bundle, meaning that Spanish-speaking customers now have two plan options within the fuboTV Inc. and Hulu Live ecosystem. Stage three of our plan focuses on achieving content cost efficiencies commensurate with our increased scale and applying greater portfolio discipline as we evaluate which content best supports flexible pricing and affordability. As major distribution agreements for the fuboTV Inc. services and the Hulu Live service come up for renewal, our objective is to move towards market-based pricing and penetration that reflects our combined increased scale. In the near term, I want to address NBCUniversal as we've received questions from investors and subscribers. Through November, our teams were engaged in renewal discussions with NBC. Following the confirmation of the Versant spin-off, we paused discussions to allow the separation process to proceed. Beginning in early January, Comcast ceased engagement in renewal discussions despite multiple outreach attempts. Comcast indicated that they are satisfied with their existing Hulu Live arrangement and do not intend to engage in renewal discussions on the fuboTV Inc. side at this time, preferring to reengage closer to the Hulu Live expiration. Given that most commercial terms had been largely aligned prior to the spin-off, this position is very difficult to reconcile. Importantly, the subscriber impact to date has been modest since the removal of NBC content and better than our expectations. We believe this reflects the resilience of our sports-focused value proposition, the actions we took to preserve consumer value, including our decision to lower prices, and customers' ability to supplement fuboTV Inc. with Peacock. While we remain open to constructive engagement, we will review the role of the NBCU and Versant portfolios as we continue to evaluate content alignment for our 6 million-plus subscriber base. Looking ahead, our 2026 North Star is simple: growth. We are focused on expanding our subscriber base through differentiated sports offerings, scale distribution partnerships, and improved monetization, driving long-term value for consumers and shareholders. I will now turn the call over to John Janedis, CFO, to discuss our financial results in greater detail. John? John Janedis: Thank you, David. Good morning, everyone. Fiscal Q1 2026 marked our first quarter reporting as a combined company following the completion of our business combination with Hulu Live in late October. As a reminder, because the transaction closed mid-quarter, to aid in analysis of the combined business, we will also discuss our results on a pro forma basis, giving effect to the combination as if it had been completed at the first period presented. Turning to the financial results for the quarter. In North America, reported revenue was $1.54 billion compared to $1.11 billion in the prior year period. On a pro forma basis, North America revenue was $1.68 billion compared to $1.58 billion in the prior year, representing growth of 6%. This reflects the scale of the combined platform and continued demand for live TV streaming across both the fuboTV Inc. and Hulu Live brands. On a combined basis, we ended the quarter with approximately 6.2 million North America subscribers compared to 6.3 million in the prior year. Turning to our profitability metrics. Our reported net loss for the quarter was $19.1 million, a meaningful improvement from a $38.6 million loss in the prior year period. On a pro forma basis, net loss improved to $46.4 million compared to $130.4 million last year. Importantly, we delivered positive pro forma adjusted EBITDA of $41.4 million, nearly doubling from $22 million in the prior year period. From a cash and liquidity perspective, we ended the quarter with $458.6 million in cash, cash equivalents, and restricted cash. Note that operating cash flow in the quarter was impacted by working capital timing, particularly a build on accounts receivable following the close of the transaction we expect to normalize over subsequent quarters. Earnings per share for the quarter reflected a loss of $0.20 based on 351.9 million Class A shares outstanding with an additional 947.9 million Class B shares outstanding on a vote-only basis. We also announced today a planned reverse stock split of our common stock. The reverse split is intended to make the stock more accessible to a broader base of investors and will reduce the number of outstanding shares of common stock to a level better aligned with the company's size and scope. We aim to execute the reverse split by the end of fiscal Q2 2026. In summary, fiscal Q1 represented a strong start to the year and an important first quarter as a combined company. Our results demonstrate healthy top-line growth and significant year-over-year expansion in profitability metrics, including positive pro forma adjusted EBITDA. As we move forward, we remain focused on disciplined execution, driving further efficiencies across the combined business, and continuing to improve our profitability metrics and cash generation over time. With that, I'll turn the call back to the operator for questions. Operator? Operator: At this time, if you would like to ask a question, press star. Then the number one on your telephone keypad. To withdraw your question, simply press 1 again. We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of David Joyce with Seaport Research Partners. Please go ahead. David Joyce: Thank you. Two questions, please. First, to drill down a little further on the issue with NBCUniversal. With more streamers getting more access to sports rights, and industry consolidation out of the way, what's your view on being able to retain or regain sports rights to keep that focus going forward? And do you think that Comcast is not reengaging because they're driving the Peacock service in the near term because of the Olympics? Can you return to the table with Televisa Univision for soccer? When does the Peacock or when does the Comcast and NBC deal with Hulu Live come up for renewal? Any further thoughts on that, please? David Gandler: Yeah. Why I take that, John? So, David, thank you. This is David. I mean, there was a bunch of questions in there. So let me start with the NBC question. First, I want to say that, obviously, going forward, we're not going to separate out the numbers for Hulu Live and fuboTV Inc. But just to be very clear, we were up 3% year over year versus the prior year in subscribers, despite the fact that we were down with NBC for, I believe, over four weeks. So it speaks to the quality of the team, our ability to market on platform, and to really understand the type of consumers we have. We also were able to drive some traffic to Hulu Live TV. As it relates to the programming, look, we have strong relationships with the leagues. We have an excellent relationship with Major League Baseball. We've been working with them closely as teams begin to migrate to the MLB platform. But for the most part, I think the major content deals and partnerships that we have with, obviously, with Disney, Fox, CBS, those are still active. And let's not forget, NBC is still on Hulu Live, and we're working with Disney and the Hulu team to ensure that we can drive traffic to NBC on Hulu Live. John Janedis: As it relates to Univision, again, just want to be very clear here, we've exceeded our own expectations. We've reached an all-time high on our Latino package. And in the same vein, Hulu Live now has its own Skinny package, which does include Univision. And so going forward, we should be thinking about our subbase in totality. So we're north of 6 million subscribers, which is the second largest dMVPD in the United States. And we think that we'll be very focused on continuing to provide flexibility, optionality, and affordable packaging. Operator: Your next question comes from the line of Clark Lampen with BTIG. Please go ahead. Clark Lampen: Thanks very much. John, I know you guys aren't providing guidance for the year, maybe with regard to sort of '26. And if we refer back to the old forecast that you provided as part of the proxy, can you remind us whether those targets included any revenue and expense synergies? You guys have laid out a couple of things that seem potentially interesting with ad server integration and consumer packaging flows that could be accretive. Was that a part of the old guidance? And then maybe second question, for your fiscal Q2, the March, should we expect that assuming nothing changes with NBC, do you anticipate positive year-on-year growth with subscriber resource or any context that you could provide directionally for how we should think about the impact maybe for fiscal Q2 or fiscal Q3? Thanks a lot. John Janedis: Yeah. Sure, Clark. So let me handle the first question, and then I'll go on to the one about the March. So on synergies, when we put the deck out last January, what was in there, what we stated was that we expected and assumed $120 million plus in synergies. In that deck, we also stated that the assumption was those took place on day one in terms of when the deal closed. That was more or less a simplifying assumption. In terms of the timeline around that, maybe just a little bit more color. You know, in the short term, to David's point around the Disney ad server, that will come first in terms of the synergies. That's a combination of film and CPM. Maybe a little more color on that. If you think about our ad numbers at fuboTV Inc. stand-alone historically, call it there around, you know, say, $100 million-ish. And so I would say that the CPM and the fill opportunity is both in the double digits. The second piece was the content and slash programming synergies. Those are, I call, more medium to long term because those take place as contracts renew. There's a third piece that we didn't speak to a year ago, which was, I'd say, call it procurement. We're in the very early stages of that now, and I would say I'm optimistic that that could be a needle mover. And so those are the three. But, again, none of those assumed day one. Sorry. They all assume day one. But they will prove it's low in over time. Yep. Sorry, John. Just one more thing, Clark. This is David. Just around NBC, I understand that it's a concern. But as I mentioned before, we believe that it's very important for us to be able to provide various packaging across a spectrum where we're able to offer consumers enough flexibility. And it's very important to note that the fuboTV Inc. Sports service, which is a skinnier version of our legacy fuboTV Inc. package, includes NBC, is actually performing very well. We haven't been marketing it very hard. It continues to grow. You know, trial conversion rates are very high. And more importantly, when you look at, you know, I think that package is now in its third or fourth month. When you look at it from a retention perspective, retention is actually about 30% above what the legacy plan is. And so when I think about a future in the short term that might or may or may not include NBC, I think this package has a significant opportunity to grow. It fits very nicely into the overall ecosystem. With YouTube TV sitting in that sort of $80 plus dollar range. And then you have the ESPN, you know, Fox One bundle. If I'm not mistaken, is in that sort of, you know, high thirties range. And, you know, with our promotional pricing of $45.99 or $44.99, this is a very attractive entry point to get access to local NFL games, college football, and a very strong, you know, portfolio of programming. So again, you know, basically, what we're seeing now is just strong KPIs across that package. And you know, as I mentioned before, with ESPN, you know, if we can, I mean, if we can figure out very quickly, which as you've heard that we're doing, we should be able to drive a tremendous amount of traffic at some point when we go live with them. There are two different, you know, opportunities that we've been focused on. The first really is around marketing. Think of what YouTube is able to do for YouTube TV from a top of the funnel perspective. You know, ESPN, you know, engages with four out of five adults in the United States. So you know, if we can just leverage that, that should have a significant impact on our blended SAC numbers. David Gandler: And, frankly, could be a lot more measured and disciplined around how we market. So that's just one angle. And the second one in the commerce flow, again, this is another area where not only it would open up the funnel, but at the same time, I think it would have pretty significant, you know, retention metrics around it just given the fact that this would be part of a, you know, an ESPN umbrella or ID. So all of these things, I think, are positive. And I think this gives us a chance to continue to grow. We've demonstrated our ability to grow losing partners in the past, and you know, our goal is to continue to grow this product and reach new highs. John Janedis: And, Clark, maybe one last thing or an exclamation point on David's comment. As it relates to growth going forward, whether it's the March, June, you know, or beyond, let me just add a couple more things. One is, again, we've been pleased to date with the results. But, clearly, we'll know more following the Super Bowl and then the Olympics. And just as a reminder, traditionally, we don't spend much against the Olympics because those subs don't retain well. But our goal is to grow and to grow profitably. Operator: Your next question comes from the line of Brent Pinter with Raymond James. Please go ahead. Brent Pinter: Hey, everyone. Thanks for taking the questions. First one for me, David, you talked about your North Star being growth. And with the merger closed and now you have more scale and a bigger balance sheet, how do you think about your priorities in terms of investing for subscriber growth? Versus, as a stand-alone company? I think you're a little more focused on just generating free cash flow now. How does the merger increase your ability to invest? And then second, just any quantification for the benefits you might have seen from the Disney YouTube TV blackout in the quarter. Thanks. David Gandler: Yeah. Sure. So, first on the profitability front, I think we have now seen three consecutive quarters of profitability. I think this was a major concern dating back three or four years, so I think we've resolved that. The balance sheet, as John likely talked about shortly, is very strong. And we are very well positioned to be able to take advantage of various tailwinds. You did mention the fact that, you know, we're in a much stronger position. I think the beautiful thing about, you know, where we sit right now and the potential of the flywheel within the Disney ecosystem is that they reach hundreds of millions of people every year. And so, you know, if we can figure out, which we're in the process of doing, you know, what are the most efficient and effective marketing channels, it really shouldn't impact, you know, our cost structure very much. And so I think that flexibility does give us the chance to invest more into growth. But I will say, if you look at our, again, on a stand-alone basis, we spend less on marketing in the fourth quarter despite losing NBC and still been able to sort of maintain solid numbers on the fuboTV Inc. side. So from that perspective, we'll be working closely with the various teams within Disney. I want to say that the relationships have been great. Let's not forget this deal closed on October 29 right before the holiday season. And we're just getting to know the various folks who run different teams. And everyone's been very supportive. So we look forward to building those and driving value for the overall subscriber base. And then last question, I think, was around YouTube TV. What was the question? John Janedis: Just yeah. So I'll take that one. I'll just say the impact from YouTube TV going dark with Disney was immaterial to the overall platform. And then Brent, maybe just circling back again, going back to the balance sheet, and priorities. Like, I think it's important again, to look at the balance sheet evolution. And so David spoke to the But just as a reminder, if we look at where we were two years ago, you know, call it the '23, we had about $400 million debt outstanding with a maturity of February 26. Now we have call it, $320 million outstanding with virtually all of them maturing in '29 and '31. And then our adjusted EBITDA for '24 was a loss of $86 million. And now on a pro forma basis, we just reported that $78 million for calendar '25. So pretty major improvements. And so to the investment priorities, I would just say that the free cash flow generation should be an output of those investments. Operator: Your next question comes from the line of Patrick Scholl with Barrington Research. Please go ahead. Patrick Scholl: Hi, good morning. Thanks for taking the question. Just on the advertising front, is there any sort of ramp period after you merge the tech stack with Disney for the ad sales relationship until you get that, I think you said double-digit improvement in fill rates and CPMs? And then just on the variety of service offerings that you guys have in market now, could you maybe talk about the different seasonality trends and how to think about those? As we model out, you know, growth over the course of the year. Thank you. John Janedis: Yeah. Pat, why don't I start on the AdRamp? Look. This is a very straightforward business. The beautiful thing about the advertising integration is that, you know, essentially, Disney is selling ads. They've been selling ads for a very long time. They've been selling against live networks that they own themselves. They've been selling against Hulu Live. This is basically the same service with just more inventory. Our ad inventory will roll right into that ad server and will sit alongside these other, you know, channels and programs. And so, you know, our sense is that, you know, we should see an impact as soon as it's integrated towards the end of the quarter. Or maybe slightly thereafter. Patrick Scholl: And maybe I'll just quickly hit on the seasonality. Just as a reminder to David's earlier report, we're not really gonna break out the various services, but I can give you maybe a couple of high-level comments. One is that I think, you know, the Hulu Live service tends to be and historically been far less seasonal than the fuboTV Inc. service. Within the fuboTV Inc. service, as you know, it's been highly seasonal around fall sporting season. So the one thing we don't know yet is how seasonal the Skinny Sports Service will be. But then again, as it relates to that as a percentage of total subs, I don't think there'll be any visible incremental seasonality as it relates to those smaller services for the foreseeable future. Operator: Your next question comes from the line of Doug Arthur with Huber Research. Please go ahead. Doug Arthur: Yeah. Thanks. Just a couple of geeky, financial questions. John, the difference between sort of reported revenues and pro forma revenues is around $134 million, give or take. Is that the impact of closing Hulu Live late in October? Is that's question one. John Janedis: Yeah. Yeah. Sure, Doug. That's correct. And so it's a little bit quirky there in the sense that because Hulu Live was the accounting acquirer, it actually we're we reported the three months of Hulu Live, and then they called the two months and a couple of days of fuboTV Inc. And so the delta there is just, yeah, that fuboTV Inc. revenue more or less for the twenty-eight days of October. Doug Arthur: Okay. So when I look at the 8-K on page six where you kinda break down not the pro forma, but the actual reported revenue breakdown between related party advertising, etcetera. The fuboTV Inc. live numbers are sort of a stub period there I'm trying to just back out in terms of how fuboTV Inc. did ex fuboTV Inc. Yeah. John Janedis: Let me take up on the one. I don't have the 8-K in front of me, so we can talk about that offline. What I can tell you, though, broadly speaking, is that if we want to isolate the fuboTV Inc. business, what I can tell you to the points we made is, number one, that we had a better subscriber outcome than we expected. And that flowed through the P&L. So I'd say we're pretty pleased with the outcome on the fuboTV Inc. business. Doug Arthur: Okay. We'll disaggregate that later. Thank you. John Janedis: Yeah. Okay. Operator: Your next question comes from the line of Laura Martin with Needham and Company. Please go ahead. Laura Martin: Hey. My first one is breaking news. After the call started, Disney did announce that it is confirming the appointment of Josh D'Amaro as the next CEO to succeed Bob Iger. So this is the second time the board of the Walt Disney Company is telling us that Disney is a park company and not an entertainment company. So my first question to you, David, is how does that affect your world if Disney going forward is gonna be really focused on the real world, which is first assets and not its let's call it, traditional TV and streaming assets. David Gandler: Yeah. Well, first of all, congratulations to Josh. We didn't know about that. So thank you for letting us know. As it relates to, I think, the business, you know, Disney is a very large company. It takes a lot of time for them to decide on what their priorities are going to be. And I think, from what I heard, on the last earnings call, you know, Bob was very focused on highlighting the fact that they are still working on their technology stack, unifying their platform into one app. So I don't know what the impact will really be on us. You know, we're having conversations with the various teams, as I mentioned. Strong conversations with ESPN. You know, we have announced some of the things that we plan to do with ESPN. We've spoken to Dana and others, you know, the Hulu team. And our board has been very focused on trying to make sure that we're talking to the right people to really grow the business. So from my perspective, I don't really see any changes in the short term. But, obviously, that's yet to be determined. Laura Martin: Okay. And then my second one is I was really intrigued in your shareholder letter that you said you were investing in the next generation of consumer-centric innovation. And it sounded like your goal is to close the gap with YouTube Live TV, which has about 10 million subs. As your biggest competitor now that you guys are 6.2 million subs. What kinds of things are on that road map for the next generation consumer-centric innovations that would help you close that subscriber gap? David Gandler: Yeah. So, look, there's lots of things that we're focused on. I think that there's a huge opportunity around mobile. We see a significant number of subscribers, trial users, that enter our ecosystem through the mobile app. And so we'll be relaunching that experience shortly. And, you know, again, we're continuing to review some of the amazing capabilities that Disney and ESPN have. And when you look at, you know, their fantasy business, you know, which has over 10 million users, you think about their betting capabilities, and when you sort of look at all of the ways in which that we can engage, you know, a very large funnel, you know, we start thinking about ways in which we can really sort of develop our technology, our consumer apps and features around that. So, you know, there'll be more to come on that front, but, yes, we're very focused on product. Laura Martin: Okay. And I'm gonna violate the rule, and I'm gonna drill down on the betting. One of the things you did early on, David, is really want you really wanted to go into betting and then we just couldn't afford the cost. Could you get back into the betting business through ESPN? David Gandler: So, again, I don't think anything's off the table. You know, it's still early. Like I said, we've only been talking with Disney and ESPN for a couple of months. So we're trying to navigate the different teams. But I do think that, you know, we have a very strong engineering team. We have a strong product DNA at fuboTV Inc., and, you know, we'll be looking to bring ideas that, you know, we can deliver to Disney across the, you know, fuboTV Inc. platform. But, you know, as I think about Disney, generally speaking, I would say, you know, it's akin to being a kid in a candy store. You know, we're a sports platform. And when you look at, you know, the size, the reach that they have, the different elements, and touchpoints that they use to drive engagement, you know, I think that we can really develop a strong business there. And just some of the things that you and I already talked about, I believe, were highlight generation, which that we've been really focused on as well. I think there's an area to improve as well. And then the DVR experience, related to sports, I think, is another area where we continue to innovate given the number of events that we carry and the level of personalization that we afford consumers. So I'm very excited, generally speaking. It's just a matter of, you know, meeting with the right teams and focusing on delivering value for our consumers. Operator: Your next question comes from the line of David Joyce with Seaport Research Partners. Please go ahead. David Joyce: Thank you. Appreciate the follow-ups. There's a lot to digest here with the new fuboTV Inc. Two things. One, people were concerned when they saw Disney shelf filing for fuboTV Inc. shares, but could you please confirm that that two-year standstill is there and why the filing came out? And then secondly, what's your philosophy on, you know, guidance metrics from here? Normally, that's something you did to both stand-alone, but any sort of projections or guardrails you would put up for us? Thanks. John Janedis: Yep. Sure, David. Hey. Thanks for the question. So on the first one, look. The short answer is that's correct. So the two-year lockup remains in place. Look. The shelf was a routine housekeeping item following the Hulu Live closing that required us to just put up a new shelf including registering Disney shares. But Disney remains subject to the twenty-four-month lockup period and the filing does not change that restriction in any way. On the guidance, I would say no guardrails yet. Like, the comment in the letter around guidance suggests that there are just some factors that we're in the process of refining in terms of timing and sizing and that's gonna impact our subs and, therefore, our subscription and, therefore, the ad revenue. Just as an example, you know, today's agreement with ESPN, you know, the timing on that, for example, or the NBC programming. But, look, we're only ninety-eight days into this combination. So it's just gonna take us a little bit more time. David Gandler: Yeah. And just to add one more point on the reverse split. You know, again, I think we've been very transparent from the onset. People, of course, get nervous around hearing reverse splits. But the reality is, you know, it was important for us to align with our operational scale. We wanted to reduce volatility. And also, you know, attract institutional investment. These are, you know, natural things that have to take place. And it really is part of the corporate hygiene that we're trying to put in place, particularly after we've dealt with the, you know, the convert. So again, all of this is sort of trying to prepare fuboTV Inc. for a very bright future. And this is just one of those steps. Operator: That concludes our question and answer session. Ladies and gentlemen, this concludes the fuboTV Inc. First Quarter 2026 earnings call. Thank you all for joining. You may now disconnect.
Operator: Hello, and welcome everyone to the ATI Fourth Quarter and Full Year 2025 Results Conference Call. My name is Becky, and I will be your operator today. All lines will be muted throughout the presentation portion of the call with a chance for Q&A at the end. I will now hand over to your host, David Weston, to begin. Please go ahead. Good morning. David Weston: And welcome to ATI's Fourth Quarter 2025 Earnings Call. Today's discussion is being webcast at atimaterials.com. Joining me are Kimberly Fields, President and CEO, Rob Foster, Senior Vice President and CFO, and Don Newman, ATI's retiring CFO now Senior Adviser to the CEO. Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results, capabilities, and outlook and can also be found on our at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation. Now turn the call over to Kimberly Fields. Good morning, everyone, and thank you for joining us. Kimberly Fields: Before I begin, I'd like to welcome Rob Foster as ATI's new Chief Financial Officer. Rob brings deep operational experience, strong financial discipline, and proven leadership to this role after more than a decade at ATI. He has been a trusted financial partner of mine since 2019, and I'm confident he will help lead ATI into its next phase of profitable growth. I also want to thank Don Newman for his leadership over the past six years. Under Don's tenure, ATI completed a successful transformation, expanding margins, strengthening cash flow, and sharpening our focus on differentiated aerospace and defense markets. Don will share highlights from our 2025 performance shortly. Turning to our results, the fourth quarter capped a very successful full year. We exceeded profit and free cash flow expectations, expanded margins, improved operational reliability, and deepened our customer relationships. We are entering 2026 with momentum across our core markets in aerospace and defense. Let me start with the key results in the fourth quarter. Q4 revenue was $1.2 billion. Adjusted EBITDA was $232 million, above the high end of our guidance range. Adjusted EBITDA margin was 19.7%, an increase of 180 basis points from Q4 2024, demonstrating continued progress toward our 2027 margin goals. For full year 2025, revenue was $4.6 billion, up 5% year over year, driven by 14% growth in aerospace and defense. Adjusted EBITDA exceeded $859 million, up 18% year over year. Adjusted EPS was $3.24, up 32% from 2024. Adjusted free cash flow totaled $380 million, up 53% from 2024, also exceeding the high end of our guidance. We returned $470 million to shareholders this year, representing 124% of free cash flow. These results reflect disciplined execution, strong pricing, and favorable mix driven by our most differentiated products. Given our confidence in customer demand and our ability to execute the ramp, we are guiding to $1 billion of adjusted EBITDA at the midpoint of our guidance range for 2026, a 16% increase year over year. There are three key reasons we are confident in this outlook. First, aerospace and defense demand continues to be strong entering 2026. Commercial aerospace demand is accelerating across narrow body and wide body platforms. Next-generation engines continue to gain share. Airframes and engines rely on ATI proprietary alloys, forgings, and specialty materials. We're seeing a step change increase in order activity beyond what we would normally see in seasonal first quarter strength across both long-term agreements and transactional demand. Within A&D, full-year jet engine sales grew 21%. As fleets transitioned from legacy to next-gen engines, ATI's content per engine is increasing. With these newer platforms moving into service, we also see aftermarket demand growing. Together, these dynamics create compounding growth that strengthens our position year after year. A clear example of the growth we've seen is isothermal forging deliveries to Pratt and Whitney, where ATI's content has grown six times from 2023 to 2025, with further growth ahead. This is largely in support of Pratt's GTF accelerated shop visit program. As a priority supplier to our key aerospace customers, we continue to gain share and expand content as customers increasingly value on-time delivery, execution, quality, and reliability, particularly in areas where other suppliers have experienced constraints meeting ramp-up requirements. In defense, demand remains strong and diversified, increasing governmental spend across naval, air, missile, and ground systems. ATI's annual defense revenue grew 14% year over year, with missiles up 127%, driven by sustained demand for alloys like C103 and titanium 64 across multiple programs. In 2025, aerospace and defense represented 68% of our full-year revenue, up from 62% in 2024. With forecasted double-digit growth in jet engines alongside continued strength in defense and airframe demand, this mix will continue to increase over time. Beyond aerospace and defense, specialty energy is emerging as a meaningful growth driver for ATI, delivering 9% year-over-year growth in Q4. While it remains a smaller portion of our portfolio today, the growth is supported by multiyear customer commitments. The business is ramping as demand for AI-driven power accelerates across nuclear and land-based gas turbine markets. We recently renewed a long-term specialty energy contract that expanded our share by more than 20%, establishing ATI as their majority supplier and further strengthening our visibility and pricing position as the demand cycle continues to build. ATI's differentiated capabilities in zirconium, hafnium, and other exotic alloys position us as a preferred and increasingly key supplier. The second thing driving our confidence is ATI's growth is anchored in proprietary products and long-term agreements that expand share, improve mix, and secure enhanced pricing. Turning to slide six, I'm pleased to announce that ATI is now producing six of the seven most advanced jet engine nickel alloys, with the remaining alloy produced exclusively by the OEM. We're expanding our proprietary portfolio and reinforcing ATI's competitive moat on the key components of next-generation engines. These products are supported by long-term agreements that secure volume, pricing, and returns and align capital deployment with customer demand. Very few suppliers can match our capabilities at scale. Number three, capital discipline and operational execution remain central to our strategy. As I've shared in the past, our top priority is unlocking capacity through productivity, yield improvements, debottlenecking, and equipment reliability. In 2025, these actions delivered measurable results, including double-digit increases in remelt output, significant cycle time reductions in downstream heat treat, and increased equipment uptime, all without significant incremental capital. When we do invest, projects are secured with long-term customer commitments, often a decade or longer. Many include direct customer funding, enhancing predictability and increasing returns above our 30% return threshold. Each investment is evaluated to ensure durable pricing and protect long-term returns. In 2026, capital investment net of customer funding will be in the range of $220 million to $240 million, with growth CapEx focused on proprietary engine alloys and high-return opportunities. This CapEx guidance includes investment in our nickel melt system, including a new primary melt VIM furnace, along with the previously announced remelt equipment. We are modernizing and upgrading our melting systems, expanding capability, improving quality, and delivering operating efficiencies for our differentiated engine alloys our customers rely on. The new capacity will come online in 2027. Contract-backed, with customer co-funding, these projects target a run rate of about $350 million of incremental nickel revenue by mid-2028. Our targeted phased investment strategy is focused on differentiated nickel capability, not broad capacity expansion. These commitments reflect strong demand for ATI's proprietary hot section alloys and customers' willingness to partner with us to secure essential supply. 2026 is off to a strong start. Incremental operational improvements are already underway, and we see tangible opportunities to streamline processes, reduce costs, and expand margins. As an operations leader at heart, I know the value created by integrating our capabilities and delivering as one ATI. And I'm confident that opportunity remains firmly within our control. I'll now turn the call over to Don. Thanks, Kim. Don Newman: 2025 was a proof point for ATI. Strong aerospace and defense demand translated into a richer mix, sustained margins, robust cash flow, and a stronger balance sheet. In the fourth quarter, we finished the year with solid execution across the business and strong cash generation. This reinforces our confidence in ATI's long-term strategy. Revenue for the full year totaled $4.6 billion, our highest annual revenue since 2012. Sales were up 5% over 2024, powered by 14% growth in aerospace and defense overall. Within A&D, jet engine sales grew 21% year over year, and defense grew 14%. Our transformation continues as we focus our mix on ATI's most valuable products and customers. Full-year adjusted EBITDA exceeded $859 million, up 18% over 2024. Adjusted EBITDA was $232 million in the fourth quarter, $1 million above the high end of our guidance. This is a 3% sequential increase over a strong third quarter and up 11% over last year's fourth quarter. Free cash flow for the full year totaled $380 million, up 53% year over year. Full-year operating cash flow increased more than 50% to $614 million. Managed working capital improved sequentially to 32.5% of sales in the fourth quarter. Capital expenditures for the year totaled $281 million, of which customers funded $25 million, for a net expenditure of $256 million. These investments supported growth, reliability, and improved product flow focused on our highest return differentiated products. Other deployments include repayment of $150 million of debt in Q4 and repurchasing a total of $170 million of our shares during the year. We are pleased with the continued progress in expanding margins. In 2019, our adjusted EBITDA margins were 10.7%. Then we launched our strategic transformation. The strategy to focus on our differentiated products in the A&D markets, along with improving operations, resulted in adjusted EBITDA margins of 19.7% this quarter, a 900 basis point increase in profitability. The momentum is building. Full-year 2025 consolidated adjusted EBITDA margins were 18.7%. That's a full-year increase of 200 basis points, up from 16.7% in 2024. Both segments are contributing. In HPMC, our full-year margin was 23.6%, up 330 basis points over 2024. Q4 margins were 24%, up 400 basis points from the same period last year. The 16.3%, up 90 basis points over 2024 AANS Q4's margin was 18.5%, an increase of 220 basis points from the same period in 2024. Let me say it's been an absolute pleasure and honor to be ATI's CFO these past six years. I am confident the strategy we have put in place will be successful. The transformation we've achieved together in my time here is nothing short of extraordinary. And there is much more to come. This is a business with unique and integral capabilities perfectly positioned in key end markets that will see robust growth for years to come. I have absolute faith in Kim, Rob, and the team to take ATI to its full potential. Thank you to our entire ATI team for their tremendous performance. This is only the start. As Kim and Rob will outline, there's a long runway for growth ahead with a fantastic next chapter beginning in 2026. Now I will turn the call over to Rob. Thank you, Don. I'm honored and privileged to serve as the next Chief Financial Officer for ATI. Building upon the record of success you and Kim have delivered for many years. Let's jump right in with our 2026 guidance. As I look at 2026, I see ATI growing the top and bottom lines, expanding margins every quarter. That growth and margin expansion reflect price capture under LTAs, volume increases, improved mix, as well as operating efficiencies. For 2026, we are positioned for adjusted EBITDA of $216-$226 million, which equates to an EPS range of $0.83 to $0.89. At the midpoint, this represents a 14% increase in adjusted EBITDA over Q1 2025. The guidance for Q1 reflects seasonality, including planned maintenance and HPMC. For the full year, we are setting initial adjusted EBITDA guidance of $975 million to $1.025 billion. The midpoint of $1 billion is a 16% increase over 2025 as we extend the path for profitable growth in our core markets beyond aerospace and defense to include specialty energy. These earnings translate into an initial full-year range of adjusted EPS of $3.99 to $4.27. Turning to adjusted free cash flow, we target a full-year range of $430 million to $490 million. The $460 million midpoint is $80 million higher than 2025, a 21% year-over-year increase. Embedded in this range are gross CapEx investments of $280 to $300 million, which will be partially offset with customer CapEx funding of about $60 million. As we said before, our growth plans include substantial commitments from our customers. Net of customer funding, which is the most meaningful representation of cash invested by ATI, our adjusted 2026 CapEx range is $220 to $240 million. These investments prioritize our differentiated products and are supported by customer product purchase commitments under LTAs with contracted prices. Our adjusted free cash flow range reflects a reduction in managed working capital as a percentage of sales to 31% or lower in 2026. We continue to build upon the efficiencies we are unlocking in inventory and receivables management. The successes we've achieved in 2025 point us towards more consistent cash flow generation by quarter as we work to reduce the seasonality in our cash flows. In terms of capital deployment beyond CapEx, we have no meaningful debt maturities until December 2027, and no significant planned debt repayments in 2026. Returning capital to shareholders has been and will continue to be a priority for ATI. Since 2022, we have repurchased about $1 billion of our shares at an average price of $51 per share. We currently have $120 million remaining under our existing share repurchase authorization, to be completed in 2026. As this program completes, we intend to seek Board approval for additional share repurchase authorization. Let me share some of the key building blocks and financial metrics that support our 2026 outlook. Here's how we see growth for the year, starting with end markets. In jet engines, our largest end market, we see rates in the mid-teens for the full year 2026 as we leverage price and mix to our advantage. In airframe products, we see mid to upper single-digit growth, with most growth occurring in the second half of the year as OEM production rates increase and customer inventory balances normalize. The projected increase in defense spending is well represented in our diversified portfolio of defense products. We are on track for 2026 to mark our fourth consecutive year of double-digit growth in defense, with growth rates in the mid-teens. Our A&D sales mix will continue to increase in 2026, with our A&D portfolio in line to represent more than 70% of our sales for the full year 2026. We're evolving into a model of sustainable and growth in specialty energy, targeting double-digit growth in 2026. This will be underpinned by an expanding portfolio of long-term contracts with accretive margins similar to our A&D LTA portfolio. We are purposely prioritizing A&D and specialty energy using 80/20 and allocating differentiated production capacity to focus on our highest value markets. We're strategically reducing capacity allocations in industrial, medical, and electronics, with our 2026 sales trending down by low to mid-single digits. As a reminder, medical and electronics each represent only 3% to 4% of our total sales. Turning to adjusted EBITDA margins, we see continued margin expansion in 2026, with full-year consolidated margins in the range of 20%. To put a finer point on it, margins are tracking to the upper teens in the first half of the year, then above 20% in the second half. That reflects planned maintenance in the first quarter. In the second half, price increases under LTAs will lift sales, profits, and margins. For modeling purposes, consider that first-quarter consolidated EBITDA margins will be between 18.5% and 19%. At the segment level, full-year margins for HPMC will be in the range of 25%, and A&S in the upper teens, with sequential expansion each quarter. Building out the model a bit further, plan for consolidated incremental margins for the full year to average 40%, with second-half 2026 margins above 40% due to LTA price increases. As noted in the past, HPMC incremental margins are typically higher than AANS, reflecting sales mix and end-market pricing dynamics. Both are general guidelines that can vary by product, end market, and customer, that serve as top-level indicators of ATI's anticipated growth impact this year. These incremental margins are higher than we have signaled in the past. That increase reflects improved mix, price, volumes, and operational performance delivered across our portfolio. There are additional elements to our guidance included in the slide deck shared this morning that will help with modeling 2026. As I begin my tenure as ATI's Chief Financial Officer, I'm confident in our opportunities and energized to extend and build upon the performance of this highly differentiated and capable enterprise. Kim, I will turn the call back over to you. Kimberly Fields: Thanks, Rob. ATI enters 2026 with a strong foundation. Differentiated capabilities, robust contractual partnerships, disciplined capital deployment, and a proven ability to execute. Over the past several years, we've transformed ATI into a business where these strengths reinforce one another. Differentiated materials lead to long-term contracts. Those contracts secure premium pricing, expand share, and generate cash. And that cash is reinvested with discipline, expanding capacity, improving reliability, and deepening our role across the most strategic customer platforms. The world increasingly relies on ATI's differentiated capabilities to support next-generation aircraft, advanced defense systems, and expanding energy generation. And we are delivering to meet that demand. With that, let's open the line for your questions. Operator: Thank you. Please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Seth Seifman from JPMorgan. Your line is now open. Please go ahead. Seth Seifman: Hey, thanks very much, and good morning, everyone. Don, just want to say thanks for all the help over the years. And congratulations, and best of luck. Why don't you start off maybe with a little bit of a big picture question? I know you probably can't talk about a lot of the details, but when we're thinking about expanding capacity with customer support, how do we think about how much of the new capacity is to the customer versus how much you have at your disposal to serve other customers? And then also, you know, the customer support helps to reduce the denominator and the ROI. How do we think about the numerator? Kimberly Fields: Hey, Seth. Yeah. And you're right. We can't share a lot of details around what products or what projects these go to unless we've done a public press release, which we have on some of these in the past. The way to think about that and the way that these are structured, these agreements, is that it's really around security of access to highly constrained differentiated materials. And so, as we are partnering to do these investments, the customers are one looking to ensure that that capacity is available and they have right of first refusal for, you know, whatever that negotiated amount is. But beyond that, as we are managing our mix and managing demand, we're able to flex and move that to support whatever business at the time makes the most sense for us. So, you know, it does give them, like I said, that surety that there's investment and supply coming. Work very closely. I think the other benefit for us, maybe twofold. One, is that alignment around customer demand when they need it. So it's coming on exactly when that demand's coming, but also the becomes much more abbreviated because of the focus around resourcing and the investment and alignment of interest there. On your question around the return, you know, I've shared in the past our threshold for returns on our projects are all 30% plus. And obviously, with this contributed capital from our customers, that helps drive those projects even more robust returns for us over the project timeline. Seth Seifman: Excellent. Excellent. Thanks. And maybe just as a quick follow-up, if you could provide an update on I think you talked about airframe growth being more pronounced in the second half of the year. Just maybe an update on the stocking situation there and what kind of visibility that you have? Kimberly Fields: Yeah. I would say, you know, airframe inventories are getting much closer to being in line. Inventory alignment has progressed meaningfully through 2025. As I shared in the past, they only had pockets where the inventory they were working to normalize that. And so from our perspective, as we see inventories across that supply chain, it's largely will be rightsized by 2026 and that's where we are anticipating that we'll start to see some modest improvement in order rates and demand as we get into the second half. And clearly, Boeing had some great news to share this week. They're on a great path. And as they continue to pull and increase their ramp, build rates, we anticipate that normalization, you know, moving even quicker. Seth Seifman: Great. Thank you very much. Operator: Thank you. Our next question comes from Pete Skibitski from Alembic Global. Your line is now open. Please go ahead. Pete Skibitski: Hey, good morning, guys. Nice quarter. Hey, Kim, you've had some great history here in terms of defense sales and a, you know, nice projection, and we still seems like there's still a lot of runway there with this reconciliation bill spend yet to come. I was wondering if you could parse out some of the pieces of defense revenue. I think naval is about 50% of defense for you, but maybe you could talk about missiles some more in terms of how big that could be because we've seen some historic contracts for PAC-3 and THAAD. You know, items that you guys have content on. So we just wonder if you could parse through some of the growth drivers in defense there. Thank you. Kimberly Fields: Yeah. Sure. And, yeah, I'm very excited about the defense. You know, for the full year '25, it was up 14%. We're expecting that growth to accelerate into the mid-teens in '26. And as you said, the spending that is coming in the programs that we have content and are supported are gonna just continue to accelerate that. So as you said, as we break down and I look at the defense markets, just generally, naval nuclear is probably a little bit less than you said. Closer to 35% to 40% of that overall. And then missile today is around, say, 20% of that total. And as I mentioned, you know, we're continuing to win new content on both current programs as well as development in new programs. And so I mentioned in the prepared remarks specifically around PAC-3 and THAAD, utilizing our very specialized C103 material. We're one of the few US suppliers and producers of that material, and that really goes into that high temperature, high strength applications. And then the titanium six four, which goes to helping support the EV investment we made over the last few years. It's coming online very well. It's right at the right time. And as you said, both of those missile programs, I think they're up three to 4x in spending as we work to replenish our stockpiles. So defense is an area that has continued to grow. It's a very attractive market for us, and it does have a lot of improvement and opportunity as we go into '26 and beyond, frankly. Pete Skibitski: Great. Thanks, guys. Operator: Thank you. Our next question comes from Richard Safran from Seaport Research Partners. Your line is now open. Please go ahead. Richard Safran: Thanks very much. Good morning, everybody. Don, it's been great working with you. Best of luck. First question, I think it's the obvious one. Are you still good with your 2027 guide, you know, that you have out there? I'm curious if you'd like to update it right now. I mean, you're guiding to $1 billion to $1.2 billion in EBITDA in '27. And as Kim, you know, you said you're guiding to $1 billion in '26 at the midpoint. And, you know, if I heard you right, you're expecting 40% incremental margins in '26. So I just what does this all say about your 27% guide? Rob Foster: Yeah. Hi, Rich. This is Rob. I'll jump in here. You know, when I think about the 2027 guidance, you know, I'm really confident in the guidance. You know, it's not, guess everyone doesn't know, but I was a part of the team prior to being the president of our specialty alloys and components business. I was running the operational finance group. So been very closely involved with these numbers. And very confident in our ability to achieve these kind of targets. At this point, I'm going to spend some time in the chair, and we're going to get to reviewing the outlook in longer range and normal course. And I'll be in a position to give you an update whenever we get to that point. I'm not there yet. But I will say that I do have some bias to the top end of the EBITDA margin percent and I do feel really confident with those 2027s, but we're in a position right now to give an update. Richard Safran: Okay. Thanks. Second, Kim, I just was following up on some of your comments about defense, but possibly, but past few years have been, you know, pretty good for share gains. You know, Pratt VSNPO, you know, you picked up. I'm kinda curious. What the opportunity set is for share gains in 2026. And I'm thinking given spending levels, you know, are most of them in defense right now? I mean, you know, that's just my take on things, but I'm very interested in what you're seeing. Thanks. Kimberly Fields: Yeah. Rich, that's an interesting, you know, as I look at 2026, I see opportunities for share gains. And in fact, we've already had a couple here early in the year across three key markets. One is defense. As you mentioned, and I talked about some of those programs. In the missiles, but also in the Jets and Rotor Hub. Areas as well where I know we are winning share, taking share, winning new programs and new parts on those on that equipment. But the other two areas that I think we still have opportunities are one in jet engine. And second in specialty energy. Both of those, I would say, over just the last thirty to sixty days, we won significant new share positions and really those are related to where our peers maybe are challenged to meet the requirements of the ramp. Are challenged to meet the requirements of the OEMs, so the support those rates. And when that, you know? And, again, I mentioned those materials on slide six that we've got the proprietary differentiated materials. Those give us an opportunity then to grow and continue to grow that content on each of those engines. And, you know, I'm very pleased that our customers do feel like they can rely on us to deliver reliability, high product. And I'm seeing share gains account across all three of those. And, again, the tailwinds for the growth of those three markets as well and increasing demand, I think, are going to continue to open up new opportunities for us to go in and win share and win new program positions. Richard Safran: Thank you. Very much. Operator: Thank you. Our next question comes from Scott Deuschle from Deutsche Bank. Your line is now open. Please go ahead. Scott Deuschle: Hey, good morning. Kim, based on the $350 million revenue disclosure you offered, it looks like you'd be adding around 9,000 tons of annual nickel mill capacity, with this new VIM, at least based on my napkin math. Does that sound roughly right in the right ballpark? Kimberly Fields: Hey, Scott. Generally, it's a little bit mix dependent. Right? So the materials that this purpose-built capital is going in for have differences around melt rates, around production time. And so you're in the ball that's part of the reason we shared the revenue targets because some of these are very, very difficult and complicated to make. And so it doesn't equate to what you may see as a general-purpose capacity or run rate. Scott Deuschle: Just as a follow-up, can you share how the melt times typically compare for one of these exotic alloys like RENE 65 versus a more standard alloy like seven eighteen? Kimberly Fields: Yeah. I would say if you take kind of a seven eighteen versus maybe one of those proprietary alloys on that slide six, it could be up to three to four times longer melt times. These are all specified controlled melts to get that quality and grain structure required. Requirements that the OEMs are looking for. Scott Deuschle: That's really helpful. Thank you. And then, Rob, I was just wondering if you could walk us through the 2026 pricing outlook specifically for the exotic alloys that AANS makes. Zirconium, hafnium, niobium, obviously, some big moves on the hafnium market. So curious what that pricing outlook looks like for '26. Rob Foster: Yes. So at a high level, when I think about the walk from the 2025 EBITDA to the 2026 guidance, the way to think about it is roughly 50% pricing, 50% volume. And yeah, there has been some pretty significant movement with some of the alloys within our specialty alloys and components business, as well as some of the other businesses that we have. We don't really disclose that detail. We do talk about zirconium and related products. Thinking about that in the context, just under 10% of our kind of volumes in terms of revenue. But I will say that the pricing assumptions that were used in the 2026 guidance aren't too far from the current information available. So we've considered a lot of that movement into our 2026 guide. Scott Deuschle: Thank you. Operator: Our next question comes from Andre Madrid from BTIG. Your line is now open. Please go ahead. Andre Madrid: Yes. Good morning, everybody. And Don, thank you again for everything, and best of luck in future endeavors. Don Newman: Thank you, Andre. Andre Madrid: You know, not to nitpick, but when looking at airframe, I think you guys are now projecting mid to high single digit. But before, it was just high single digit for '26. I mean, what's giving you any pause there and what would need to happen for you guys to come in the lower side of that range? Kimberly Fields: Yeah. I'd say, you know, our guidance is built on executed customer production schedules and contractual commitments and not necessarily those headline build rate targets. So, you know, as you said, you know, we're coming in at that mid to high single digit growth rates. But specifically, what we base our outlook on is the OEM order rates, the schedules that they've given us for both Airbus and Boeing, you know, contractual minimums. I'll just remind you that our Boeing contract has contractual minimum. There's order frameworks and timing for both of those that tie demand material demand to those actual production plans. And I would say what's really coloring this is maybe a conservative view of the timing for particularly early in the year where we are today, rather than assuming immediate full rate execution. And so we'll continue to update that as we go through the year. But, you know, we're encouraged by that progress Boeing shared on production. But we're not assuming best case rate acceleration as we go through the year. The guidance is really a measured ramp airframe weighted toward that 2026. With production rates that convert to orders and shipments. And as far as up or what would have to be true, these contracts, as I shared with you, expanded both our mix, our participation, our product portfolio. We won price. We won share. And so as they start to accelerate those build rates, we anticipate capturing that share and that volume as we go into the back half of the year. So together, it's taking all this together, supports really a, you know, we're looking at a steady airframe growth throughout the year, modest in the first half, accelerating in the second half, resulting in that mid- to high single digit growth for 2026. Andre Madrid: Got it. That's helpful. Thank you, Kim. And if I could just squeeze one more in. I mean, looking at Jet Engine, it looks like, you know, this was second quarter MRO coming in at about half of Jet Engine. Do you expect similar contribution into '26? Is that what's baked into the guide? Kimberly Fields: Yes, Scott. So I look at the frame, I would say that the jet engine growth in 2026 assumes roughly that continuation of mix being 50% MRO, 50% OEM. Andre Madrid: Got it. Awesome. Appreciate the color, everybody, and have a great day. Operator: Thank you. Our next question comes from Myles Walton from Wolfe Research. Your line is now open. Please go ahead. Myles Walton: Thanks. Good morning. Kim, you commented on the nonseasonal nature of pickup of order activity at the start of the year. Can you maybe expand upon that directionally where that's coming from? How unusual it is in any quantification manner? And then where did the backlog end up at year end? Kimberly Fields: Sure. I could definitely, Myles, talk through that. So we did see an uptick in orders at strength in order inquiries as well as order placements. Just in the first, you know, thirty days here of the year already. And what we're attributing and what it looks like is that it's related supply chain readiness moves as people are moving and are taking, you know, the positive feedback and Boeing's progress to get in position for upcoming rate increases. I will say, you know, from a magnitude standpoint, it's coming in very strong, maybe stronger than we've seen in the last few years for these products and for these airframe applications. But we really don't rely on that short-term transactional buying. Nearly most of our exposure is governed by that airframe and long-term agreement that very closely tie to customer production plans. But, you know, we're going to continue to monitor that. It kind of goes to my earlier comments around the airframe market, and we'll monitor as they continue to make those rate increases, both Boeing and Airbus. And update that as we see opportunities. Myles Walton: And the backlog, the provide that at year end? Oh, sorry. Sequential year on year? Kimberly Fields: Yes. Yes. From a backlog standpoint, you know, our backlog today remains just under one year of revenue, which is about where we'd like to see that backlog at. You know, the one thing that I would anticipate seeing, you know, when I look at lead times for those materials as we just talked about in those proprietary materials around PQ titanium, nickel, alloys, those specialized nickel alloys, and the exotic alloys, like hafnium and zirconium, all of those are extending, some up to two times since a quarter ago. And so, you know, we are looking, and we would expect to see that backlog start to come up a little bit as we continue to implement productivity improvements and efficiency improvements to produce those orders and get those shipped. I'd say in general, those are up it's up about 3%, but as I said, we can we target around one year of backlog generally. I think the other thing I just mentioned is that the backlog is not an indicator. As we've talked about many times before, a lot of our customer demand is contracted. And with those contracts, what that affords our customers is a reserve place in line. And so what I say is it's been the supply chains have stabilized. I've seen some really nice order patterns generally coming in. But what we don't have is you don't have customers coming in and maybe speculative buying or putting in their orders extra early because they know when we get to the lead times in frozen windows that they've got a spot and they can load those against their forecast and what we've reserved for them. So the one pop was that early early in the year, watching the supply chain, ready for the airframe ramp, and that might have some impact. But, generally, we'll stay in about the range that we're at today. Myles Walton: Thank you. Operator: Our next question comes from Gautam Khanna from TD Cowen. Your line is now open. Please go ahead. Gautam Khanna: Hi. Good morning, guys. Kimberly Fields: Morning. Gautam Khanna: And congrats to both Rob and Don. I had two quick ones. First, I was wondering if you could just characterize the VIM capacity add as a percentage of your capacity. So how much does it add to it? And maybe if you could give us some context on how many nickel alloy bins you actually have. As well in the answer. Kimberly Fields: Sure. So we aren't really sharing the total capacity add. As I said, it's to measure given the product portfolio and how that mix can change, you know, depending on which products that we're making. As I said, you know, we're adding this capacity. It's targeted, and it's phased. It's going to focus on supporting those next-gen alloy platforms like LEAP and GTF with that differentiated rotating part alloys that are shown on slide six. So that's the $350 million run rate in '28 is a good way to think about incremental revenue. As you start to model and look forward. From a VIM capacity standpoint or VIM number of VIMs that we have, we have currently four VIMs, but what I might caution is obviously, this investment allows us to up with state-of-the-art equipment and technology helping to drive the highest quality product and cost competitive. And so we anticipate that there will be some improvements in productivity and output from the brand new equipment and new controls and so forth. So today we have four. This would be our fifth. Gautam Khanna: And just to put a finer point on it, I mean, I know it depends on mix and the like, and therefore, you're talking about revenue and not tonnage. But, you know, do you have a ballpark sense of what the capacity increase is? Is it, like, 10, 15%? Is it simple to say if you go to four to five, it's 25%? I'm just ballpark. I'm not asking for specifics. Kimberly Fields: Yeah. Well, I'd say, you know, I shared, previously the remount gives us kind of eight to ten. And I would say this is in that ballpark. Gautam Khanna: Okay. And, you know, again, part of that revenue uptick is really around, you know, the price and mix that we're winning with the LTAs that are supporting this asset. And we're about 80% contracted right now for that capacity. Gautam Khanna: Thanks, Kim. And I was just curious also, as we look to 'twenty seven and beyond, what's your ballpark sense of how much price we as outsiders should anticipate the company will get, you know, company-wide, if you will. Pricing year over year, '26 to '27, '27 and beyond. Kimberly Fields: As I well, as I look at '26, we see substantial price opportunities and mix as we're going forward. These assets and the products that we're making as I shared a couple times, proprietary hot section rotating parts, they go into both MRO and OE. Almost every shop visit's going to be looking at those compressor disks and turbine disks. And so, you know, as we're going forward, we're continuing to maintain that value-based pricing. It's protected under long-term agreements. You know, I would say as you look at our guide for 2026, for example, you can say half of that is related to price and mix, that uptick, and the other half is volume. And I would anticipate that continuing throughout the decade as we bring on these new assets and bring these new materials to our customers. Gautam Khanna: Thank you. Kimberly Fields: Sure. Thank you. Operator: Our next question comes from Phil Gibbs from KeyBanc Capital Markets. Phil Gibbs: Hey, good morning. Kimberly Fields: Morning. Good morning, Phil. Phil Gibbs: This one. Wanted to just ask a general question on headcount and what are your plans on staffing for '26 as you meet some of these growth aspirations? Kimberly Fields: Yeah. Thanks, Phil. I'd say, you know, we're stable on headcount, as I look at and that really stabilized through 2025. And you saw the efficiency and the equipment reliability and that improvement that was then flowing through our financials as our employees moved up the learning curve and became more experienced. So from an overall metric, we're not seeing any spikes in hiring or a lot of new hiring coming in. Now as you mentioned, for this new capacity, we are we've got some open positions to help support that even today. But I will tell you support from our current experienced workforce has been overwhelming. For example, I know they posted six positions here just in the last two weeks, and they had 60 of our current employees that are excited and want to be part of this project. And moving over. And so our goal is to bring in our most experienced operators that know how to make these very, very tough to produce and long qualification times. And that's really where I'm focused as we think about how do we accelerate the qualification of this new equipment that we brought in. I've given you kind of a six to nine-month qualification time with the revenue run rate. But I do anticipate the experienced operators will be moving in, and the installed base and quality systems that already support these products and obviously, the alignment with our customers that we'll be able to accelerate that. So overall, not huge hiring demands. We'll do it in a measured way. But we've got a lot of enthusiasm, I'd say, from our current workforce that want to be part of these investments in this new project. Phil Gibbs: And then this is a follow-up on isothermal forgings, you've got jet engine growth in the mid-teens for 2026. Is the isothermal forging piece likely to grow beyond that as you continue to gain share in content and new expanded wins with folks like Pratt? And I think you also have maybe more engine manufacturers and growing in that portfolio and beyond Pratt with capabilities. To maybe talk to some of that because I know it's an important differentiator for you. Thank you. Kimberly Fields: Yeah. ISO forging is, it's a very important part. It's in high demand. Our lead times are out beyond eighteen months at this point. As you look at the engine OEMs, we support all three. Almost as close to an even mix between the three, especially as you mentioned with the GTF and the growth and the share we've had over the last two years with them. That will continue to grow. I do see continued increased demand from all three where they're looking for things between MRO, upgrade packages, modifications. So those are continuing to come in, and we're really focused on the productivity, the debottlenecking, continuing to expand the new heat treat and ultrasonic test capabilities that we brought online. So we do see growth there. I do think as we work through this year, but as we think about the rest of this decade, that will be an area that, you know, we'll be talking with our customers closely around, making sure that we've got the right capacity in place to continue to support their needs. Phil Gibbs: Thank you. Operator: Thank you. We currently have no further questions. So I'll hand back over to Kim for closing remarks. Kimberly Fields: Thank you. So as ATI enters 2026, we're entering from a position of strength and momentum. I want to thank our customers for their continued trust, our shareholders for their support, and most importantly, our ATI team for another outstanding year of execution. We're confident in the path ahead and look forward to updating you on our progress. Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.
Operator: Good morning, ladies and gentlemen. Please remain on the line. Your conference will begin in just a few moments. Greetings. Welcome to AudioCodes Ltd. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please note this conference is being recorded. I will now turn the conference over to your host Roger Chuchen, Vice President of Investor Relations. You may begin. Roger Chuchen: Thank you, operator. Hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer, and Niran Baruch, Vice President of Finance and Chief Financial Officer. Before we begin, I'd like to remind you that the information provided during this call may contain forward-looking statements relating to AudioCodes Ltd.'s business outlook, future economic performance, product introductions, plans, and objectives. Related thereto, and statements concerning assumptions made or expectations as any future events, conditions, performance, or other factors are forward-looking statements as the term is defined under U.S. Federal securities law. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties, and factors include, but are not limited to, the following: the effect of global economic conditions in general and conditions in AudioCodes Ltd.'s industry and target markets in particular, including governmental undertakings to address such conditions. Shifts in supply and demand, market acceptance of new products, the demand for existing products, the impact of competitive products and pricing on AudioCodes Ltd. and its customers' products and markets, timely product and technology development, upgrades, the advent of artificial intelligence, and the ability to manage changes in market conditions and evolving regulatory regimes as applicable. Possible need for additional financing, ability to satisfy covenants in AudioCodes Ltd.'s financing agreements, possible impacts and disruptions from AudioCodes Ltd.'s acquisitions, including the ability of AudioCodes Ltd. to successfully integrate the products and operations of acquired companies into AudioCodes Ltd.'s business, possible adverse impacts attributable to any pandemic or other public health crisis on our business and results of operations, the effects of the current and any future hostilities involving Israel, including in the regions in which we or our counterparties operate, which may affect our operations and may limit our ability to produce and sell our solutions. Any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel and any other factors described in AudioCodes Ltd.'s filings made with the U.S. Securities and Exchange Commission from time to time. AudioCodes Ltd. assumes no obligation to update the information. In addition, during the call, AudioCodes Ltd. will refer to non-GAAP net income and net income per share. AudioCodes Ltd. has provided a full reconciliation of the non-GAAP net income and net income per share to this net income and net income per share according to GAAP in the press release that is posted on its website. Before I turn the call over to management, I'd like to remind everyone that this call is being recorded. An archived webcast will be made available on the Investor Relations section of the company's website at the conclusion of the call. With all that said, I'd like to turn the call over to Shabtai. Shabtai, please go ahead. Shabtai Adlersberg: Thank you, Roger. Good morning, and good afternoon, everybody. I would like to welcome all to our fourth quarter full year 2025 conference call. With me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of AudioCodes Ltd. Niran will start off by presenting a financial overview of the core. I will then review the business highlights and summary for the core, and discuss trends and developments in our business and industry. We will then turn it into the Q&A session. Niran? Niran Baruch: Revenues for the fourth quarter were $62.6 million, an increase of 1.7% over the $61.6 million reported in the fourth quarter of last year. Full year 2025 revenues were $245.6 million, an increase of 1.4% over the $242.2 million reported in 2024. Services revenues for the fourth quarter were $34.6 million, an increase of 1% over the year-ago period. Services revenues in the fourth quarter accounted for 55.3% of total revenues. On an annual basis, service revenues were $130.7 million, an increase of 0.4% over the $130.2 million reported in 2024. Revenues by geographical region for the quarter were split as follows: North America, 47%; EMEA, 35%; Asia Pacific, 13%; and Central and Latin America, 5%. Our top 15 customers represented an aggregate of 58% of our revenues in the fourth quarter, of which 41% was attributed to our 10 largest distributors. The amount of deferred revenues that sold as of 12/31/2025, was $84.2 million compared to $84.4 million as of 12/31/2024. GAAP results are as follows. Gross margin for the quarter was 65.6% compared to 66.2% in Q4 2024. Operating income for the fourth quarter was $3.7 million or 6% of revenues compared to operating income of $4.1 million or 6.7% of revenues in Q4 2024. Full year 2025 operating income was $14 million compared to operating income of $17.2 million in 2024. Net income for the quarter was $1.9 million or $0.07 per diluted share. Compared to net income of $6.8 million or $0.22 per diluted share for Q4 2024. Full year 2025 net income was $9 million or $0.31 per diluted share compared to $15.3 million or $0.15 per diluted share in 2024. Non-GAAP results are as follows: Non-GAAP gross margin for the quarter was 65.9%, compared to 66.5% in Q4 2024. Non-GAAP operating income for the fourth quarter was $5.4 million or 8.6% of revenues. Compared to $7.5 million or 12.2% of revenues in Q4 2024. Full year 2025 non-GAAP operating income was $21 million compared to non-GAAP operating income of $28 million in Q3 in 2024. Non-GAAP net income for the fourth quarter was $4.5 million or $0.16 per diluted share compared to $11.6 million or $0.37 per diluted share in Q4 2024. Full year 2025 non-GAAP net income was $18.1 million or $0.61 per diluted share, compared to $27.3 million or $0.87 per diluted share in 2024. At the December 2025, cash, cash equivalents, bank deposits, marketable securities, and financial investments totaled $75.7 million. Net cash provided by operating activities was $4.1 million for the 2025, and $29.4 million for the year 2025. Day sales outstanding as of 12/31/2025 were 117 days. In October 2025, we received court approval in Israel to purchase up to an aggregate amount of $25 million of additional ordinary shares. The court approval also permits us to declare a dividend of any part of this amount. The approval is valid through 04/27/2026. During the quarter, we acquired 667,000 of our ordinary shares a total consideration of approximately $6.1 million. Earlier this morning, we also declared a cash dividend of $0.20 per share. The aggregate amount of the dividend is approximately $5.4 million. The dividend will be paid on 03/06/2026, all of our shareholders of record at the close of trading of 02/20/2026. Our guidance for the full year 2026 is as follows: We expect revenues in the range of $247 million to $255 million and non-GAAP earnings per share diluted earnings per share of $0.60 to $0.75. I will now turn the call over to Shabtai. Shabtai Adlersberg: I'm pleased to report another quarter of solid top-line growth in full quarter '25. This performance shows our focus progress towards becoming an AI-driven hybrid cloud software and services company. 2025 marked a period of stabilization and growth for our company. After facing economic challenges in 2023 and 2024 that affected our legacy and hardware business lines, and have led to a decline in revenue in past years. We saw 2025 a recovery of our connectivity business. Over the course of 2025, we saw promising signs of top-line growth inflection. The rate of decline in legacy business has moderated and we saw the newly invested Voice AI strategic areas maintaining their robust upward trajectory. This momentum in our strategic business has been driven by our two primary growth engines, our live managed services and the emerging voice AI business. Combined, these two units contributed to $79 million annual recurring revenue exit 2025. Representing growth of 22% year over year. While holding the line in our connectivity business, we executed well on our Voice AI initiative. Growing revenues by 35% year over year. The transition in overall company business trajectory is a result of deliberate actions. Reallocating our product development investments and efforts to high market potential areas and investing in sales and marketing to build market awareness to these innovative solutions. Looking ahead to 2026, plan to maintain this formula for success. Improving revenue growth, driving steady margin expansion, and strengthening our leadership in voice AI-driven business application for the UCaaS and CX markets. Now to highlight so far our business performance in first quarter twenty five and full year 2025. Fourth quarter total revenue grew as Niran mentioned, 1.7% year over year. As we have continued to build on the strength of our connectivity business and successfully leverage our enterprise customer base, installed base to drive cross-sell of GenAI business voice applications that make up our conversational AI operations. As discussed earlier, our solid fourth quarter results were marked again by strong traction in our dual growth engines. Lab services delivery for UCaaS and CX and Conversational AI. Business lines. Specifically, in all the years of a previous quarter, our conversational AI business increased in over 50% year over year for both the first quarter twenty five and also for the second half two thousand twenty five. Full year 2025 Conversational AI revenues reached nearly $17 million and accounted for 7% of total revenues. As a result, we're growing ever more optimistic about the continued stronger near recurring revenues momentum. For coming years. This conviction is further reinforced by the growing backlog of live and managed services that we convert to revenues in coming quarters. Exit 2025, our backlog for live services reached a level of $75 million compared to $69 million at the end of 2024. Now let me provide more of a visibility into how we operate so that our overall company financial results are better understood. As stated in previous course, we are now in transition in a transition period from our main focus on connectivity solution to expand and build a new AI-first voice AI-led business application operations for enterprises. I believe this will also provide more clarity into our financials too. At this stage, business can be generally broke down into two business units. Long established and running connectivity business provides for about 93 of the company revenue. It is a mature, profitable business, which runs steadily over the past five years, and which has delivered operating margin of above 14% in 2025. On a on a longer term basis, we target these businesses to deliver 16% to 18% operating margin. Relying on our success in these meetings along the past ten years, we are confident in our ability to continue and drive long term stable growth as we are the front runner in this connectivity business for both the UCaaS and the CX markets. The second business, the Voice AI business, focusing on software as a service recurring business model provided at the 2025 about 7% of the company revenue, growing from $12 million plus in 2024 to close to $17 million exit 2025, yielding revenue growth of about 35% year over year. Now that several product lines reached maturity and started to produce growing annual revenue, we are confident in our ability to keep growing this business line at a rate of 40 to 50% annually in coming years. And we plan to reach a revenue level of $50 million in 2028. Need to say, that we rely extensively using the Chennai technology in the solution to provide business voice application. For the UCaaS and CX enterprise market. It is important to note, though, that the Voice AI business is in investment mode currently. And generates an annual budget burn of about $9 to $10 million a year. With the 50% annual revenue growth plan for this business line, we believe we should reach breakeven two years from today. Before turning to detailed business line discussion, let quickly shift into the fourth core profitability metrics. As mentioned before, full score total revenue grew 1.7%, Our non-GAAP gross margin for the quarter of 65.9% is within our long-term target range of 65 to 68%. And a slight improvement sequentially from 65.8% last quarter. Fourth quarter rate related cost headwinds accounted to $600,000 and aggregated to $2.7 million for the full year 2025. We expect tariff-based impact to approximately get to $2.3 million in 2026. Fourth quarter non-GAAP operating expense of $35.8 million compared to $34.7 million in the third quarter and $33.4 million from the year-ago period. On a year-over-year basis, the higher expenses are attributable to targeted investment in marketing and sales tied to the Voice AI business. Allowing it to grow further and impact from the weakening US dollars against the euro in the full score. Full year 2025 non-GAAP operating expense decreased point two versus the year-ago period for the same reasons. In terms of workforce, concluded 2025 with 981 employees, representing an increase from 961, the previous score, and 946 at the end of 2024. Adjusted EBITDA for the fourth quarter was $6.5 million reflecting a 10.4% margin compared to 6.9 or 11.2% in the prior quarter. For the full year, adjusted EBITDA reached $24.8 million or 10.1% margin. Non-GAAP EPS was $0.16 in line with our plans, in the year-ago quarter. Net cash provided by operating activities was $4.1 million for the quarter, and $29.4 million for the full year 2025. On the guidance on the guidance front, we expect 2026 to be a gross year. We expect 02/2026 revenues of 200 I'm sorry, of $247 million to $255 million in the year and non-GAAP EPS of 60 to 75¢. This projection assumes continued strong growth of 40 to 50% in the voice AI business. And a stable connectivity outlook assuming no significant changes in the macroeconomic landscape. Our overall annual recurring revenues, which encompasses our managed services for connectivity plus conversational AI is expected to grow from 79 exit 25 growing 20% in 2026 and reaching a range of $92 to $98 million. In '26. Now let's move to the actual business line. Let let's talk first about Microsoft. During the fourth quarter, Microsoft business saw a sequential increase of 7%. This growth was largely driven by the continued strength of the connectivity franchise and rising attach rate for AI first Evocus EAC, which is our team certified CCaaS solution. The total contract value signed at the full score remained consistent with previous scores. On an annual basis, total contract value grew by 5% year over year reflecting steady progress. The Microsoft Teams Voice ecosystem continues to demonstrate very healthy situation. Recently, it was disclosed that the number of PSTN users reached 26 million, up from 20 million stated in April 2024. Which indicates an annual growth rate of 16 to 17%. Although Teams phone users represent less than 10% over the total team's monthly active worldwide user, which is estimated at 320 million seats, there's potential of total of 80 to 100 million prelicensing five users creating immediate large addressable market. Looking ahead to 2026, we anticipate an additional increase of three to 4 million users supporting the evolution towards an AI-powered workplaces. Stated by Microsoft. One notable win was a 30 win in the quarter was a thirty-six month contract signed with AT and T to support the large public university. Igorand provides for a comprehensive range of services including managed gateway, SBC, and calling plans, as well as IP phones. Facilitating the migration to Teams' words from Cisco. Another key contract was a sixty-month deal with an international equipment manufacturer based in Europe engagement began with the live premium managed service for initial phase of 2,000 users. Marking the start of a full migration to Teams Voice from Cisco. Upon completion of migration, the focus will shift to cross-selling additional business voice applications such as VocaC AC. In the fourth score, we actually we have been engaged in the other front extending and expanding our, efforts in The US market. So all the UCaaS front yesterday, we announced that we now offer an end-to-end push portfolio of certified voice solution for Cisco Webex calling. From CloudConnect PSTN connectivity analog gateways and desk phones. Webex calling is Cisco cloud phone system, a cloud PBX that provides enterprise telephony business calling features and PSTN connectivity, delivered and managed through Webex cloud. For 2025, Cisco publicly stated in November that Webex Calling serves now more than 18 million users worldwide. So for us, this new evolving cooperation with Cisco represents a major new opportunity in expanding our connectivity and devices business for UCaaS in coming years. Now to our conversational AI activity. In the last eighteen months, conversational AI moved from experimentation to expectation. In both UCaaS and customer experience, buyers are no longer asking should we use AI. They are asking, which AI? Where does it run? Who controls the data, and how fast can we scale it? That is exactly why we have been investing in past years in developing a rich portfolio of solutions. Across UCaaS, is about turning conversation into business assets meeting into decision, and voice interactions into actions. Across CX, it is about moving from basic cell service bots to real automation, voice agents that can resolve route, summarize, comply, and improve over time. Pivoting towards a more intelligent enterprise, our conversational AI portfolio is already built for this reality. Our solution namely Voice AI Connect, Live Hub, LocustCIC, Meeting Insights Cloud Edition, Meeting Insights on prem, and more. Are all designed to connect voice and conversation enterprise systems and to support multiple models and deployment options. But let me challenge one assumption. I see here in the market that AI value comes from the model. True. The large language model matters. However, is a durable value that comes from orchestration security, integration, and governance. So combining our vast telephony technology base, with our conversational AI portfolio, towards bring your own AI approach to deploying solution in various UCaaS and CX environments. It's our way to meet customers with the AR, make adoption faster, reduce risk, and expand what partners can deliver. To summarize the quarter, as mentioned earlier, fourth quarter, twenty five, Conversational AI revenue grew over 50% year over year. Now let's start with, the leading line which is the Voice AI Connect Live Hub line. This discussion focuses and revolves around the conversational AI platform market and the emerging voice AI agent sector, which gained significant traction over the past two years. Leading research firms estimate that the market for Voice AI agent will reach between $8 billion to $15 billion by 2028, with expectation that it will double by 2030. Regarding our business activities, both Voltia Connect and the Live Lab business delivered robust results in the 2025. For the full year, this segment achieved growth exceeding 50% compared to 2024, This strong performance was driven by consistent acquisition of new clients across The US Europe, and APAC as well as considerable expansion within our existing customer base. Live Hub service or Voice CPaaS self-service cloud platform empowering voice board developers to build solutions such as conversational IVR, voice agents, agent assist, and real-time translation services. In late third quarter two thousand twenty five, we announced enhancement to the live app voice CPaaS offering notably the integration of newly developed voice AI agents. By year end two thousand twenty five, Live App experienced substantial increase in both number of developers and platform usage in minutes, while monthly recurring revenue approached a 150% increase compared to the fourth quarter in 2024. Notably, many existing VoiceThera Connect Live Hub customers have accelerated their consumption rates beyond the initial projections, reinforcing our belief that the adoption of Gen AI enabled virtual agent virtual an agent assist application is entering a phase of rapid growth. A significant achievement in full score '25 was securing an initial order with a tier one international carrier adopting our voice and eye connect service to support their call summarization solution. The deployment initially targets enterprise fixed line customers, with plans to expand to the entire mobile consumer and enterprise user base in late two thousand twenty six. We view this contract as an important entry point with substantial potential for further expansion as the service is scaled across current clients new use cases are developed. Shabtai Adlersberg: Now to Vocacy, I see. 1,000 agent range, recorded another quarter of strong revenue growth for both fourth quarter and full year. Revenue for the year grew over 55% compared to previous year. Thousand twenty five was very proactive in terms of progress in the VOCA business line. During the year, we have developed cooperation with regional channel channel partners as well as with global system integrators. Activity has been fairly positive. By now, VOCA CIC has more than 200 enterprise customers worldwide We saw extremely success. We are extremely successful in the education space. Especially in North America, UK, and other regions where Microsoft Teams is dominant in the vertical. We have now more than 15 universities accounts acquired in 2025. We have introduced new out of the box practical AI experiences such as agent insights, then AI receptionist, some of which extends beyond the Microsoft Teams installed base. We have productized an on prem survival version of Vocus AIC, to act as a backup in case of cloud outage. Key for quarter highlights include, extending our momentum in higher education market, not only in The US, but also outside The US. We can talk about a large university in South Africa. Selected CIC contact center as part of their overall Microsoft Teams UCCX deployment. Success. Another major win is successful launch scale enterprise deployment with a top five global BPO provider. During the call, we issued a press release highlighting the deployment of Vocus EC with Aptento on a deal one in the Pricor. The new conversational AI voice solution supports more than 500 concurrent AI voice agent for a large healthcare organization. And was delivered in just few weeks compared to typical three to six month deployment timeline for project of this scale. New product was introduced, Agent Insights, as discussed earlier, Ascor, we recently launched Agent Insights, which brings GenAI into the Vocus AIC platform. Agent insight provides contact center with customer customer customizable AI summaries, sentiment analysis, and one click CRM updates. Built natively in agent workflows. Looking ahead, we expect 2026 to be another year of strong revenue growth driven by continued traction in both direct sales and channel partnerships. Moving on to Meeting Insights Cloud Edition. Meeting Insights Cloud Edition maintained impressive momentum throughout this quarter. Seeing consistent increases in new customer acquisitions. Record numbers again achieved in metrics such as total meetings and unique active users, leading to substantial year over year monthly recurring revenue growth as of December 2025. This strong performance was driven by continued product innovation boosting demand both across wider markets and within custom workflow solution designed for specific verticals such as higher education, local governments, HR, finance, and more. Meeting Insights now works independently of any particular UC systems. Expanding its flexibility. In fourth quarter two thousand twenty five, support was added for Google Meet. And we do expect integration with Cisco Webex in the current quarter. That adding to the existing compatibility we have with Microsoft Teams and Zoom. These updates enable GenAI meeting summaries for interactions on a major UC platform so I'll listen in person. Meetings. Beyond allowing customers to customize prompts, for their precise requirements, the platform now offers prebuilt templates created for specific enterprise roles and persona. Including those in legal and HR. This feature is expected to further streamline how efficiently customers can extract useful insights from meetings. Additionally, the platform's mobile app enables on demand recording, action item management, meeting preparations, and chat based search of meeting records. Its features make the meeting user mobile app essential for daily office operations. Now to another derivative of the meeting inside solution, which we call mia OP, mia on prem. Let's talk first about the cloud repatriation trends emerging. The proportion of businesses planning to retain users on premise jumped from 5% to 15% over two years. Driven primarily by data sovereignty concerns in European markets. And regulated sectors such as legal, finance, and defense. Even cloud committed enterprise now scrutinize where data is hosted and processed. This trend validates hybrid deployment capabilities and position data read residency controls as competitive differentiators. Countering pure cloud narrative that dominate previous market cycles. In fourth quarter twenty five, we continue to make good progress with the newly introduced MiaOP solution. With growing number of wins in the government and defense market in Israel. Positioning the business line to account for a growth in our conversational AI segment in 2026. Following last quarter, Israeli Nimbus contract award which streamlines procurement to form meeting intelligence services for all Israeli government ministries and agencies. We have already signed one first deal, and currently, I have several more additional proof of concept engagements across various ministries. We also received Nimbus care five approval, certifying that our solution meets the highest standard of security and compliance standards under the NIMBUS Israel and NIMBUS framework. We expect this designation to expand both the number of agencies we can serve and the range of services we can provide. The MeLP solution supports currently the English and The US English and Hebrew languages. We expect to substantially grow that number of supposed languages to tens basically, already in this first quarter. So we we expect deployment of MeiLP in more countries already in the second quarter and beyond. So to wrap up my presentation, we exit 2025 good operational momentum. The connectivity business has stabilized in second half of the year. Voice AI business grew 35% on a yearly basis. And about 50% in the second half of the year. With the continued pace of investment in our life managed services activity, and in the voice AI area, we expect continued momentum in 2026 and beyond. And I'd like to move over the call to the Q&A session. Operator: Thank you. Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is 1 to ask a question. One moment, please, while we poll for questions. Your first question for today is from Joshua Reilly with Needham and Company. Joshua Reilly: Hey, there. Thanks for taking my questions. Maybe just starting off on the updated financial targets for conversational AI growth through 2028. Is the 40 to 50%, annual growth, is that intended to be a CAGR growth rate? Through 2028. And then along with that, should we think about the primary driver being customer growth or higher spend per customer driving that conversational AI growth. So you expect to get a lot more new customers, or sell more of the new conversational AI products to existing customers? Shabtai Adlersberg: Right. Thank you, Joshua. Yeah. Actually, we're looking for both. You know, as I've mentioned before, several of our conversational AI, you know, this voice application rich mature rich maturity in 2025, which really says that we we just started out with, you know, you know, few hundreds of of customers. We expect that this number will grow substantially as we adding more capabilities and more features. And, also, investing our sales operations. You know, I would say that in 2025, our sales ability was was a bit restrained simply because we didn't want to move too quickly into the cells phase without having a more mature, more complete product. Now we feel fairly confident with you know? And and we get the feedback from customers. So, yes, the number of potential customers should grow I would say I'll use the word using usually. It will grow dramatically, I expect. In certain areas. Also, you know, do you to the addition of new capabilities and new features, we do expect that per customer you know, expand on our solution will grow simply because we intend bring more capability. So, yeah, growth should come from both. And and I'll tell you that I'm talking now about 50% growth, but as as we talk, you know, there are new application popping up you know, on a weekly basis talking to customers. And, again, our ability to combine our vast telephony capabilities with the very large investments we made in, conversational AI. Just to give you a data point, You know, we we are known to be a company that investing, you know, rich in R&D out of about thousand employees. We have 350 employees, doing R&D work. We are moving fastly into moving, you know, big portion of that R&D force into Voice AI. So while we when we started out back in 2010, we had only about 40 to 50 employees on this line. Now we have a 150 out of those 350 employees. So all in all, big investment. We see success. That gives us all the reason to continue to invest and and and believe in growth such as you know, 50%, and it could be more. Joshua Reilly: Gotcha. And then you mentioned there's been a shift in market expectations around AI. Can you just help us understand how is that maybe positively impacted your pipeline visibility and size now that we're moving past the kind of a testing phase for customers with some of these voice AI products and now moving into broader adoption. Do you feel that your pipeline visibility and size, is improving and increasing? Shabtai Adlersberg: Yes. As I've mentioned, you know, we are increasing our sales force. We're spreading our operation into more countries. Some of these application are fairly you know, easy to use, you know, SaaS application that you know, a company can test, do a proof of concept for thirty to sixty days and then moving into production. And with some of the more complaint compelling capabilities we're bringing to the game, we do have better visibility compared to take networking deals or connectivity deals is you you know, being being larger, but still, you know, usually takes essentially more time could turn to be anywhere between three months to nine months. Joshua Reilly: Gotcha. And then last question for me is, how should we think about any impact from tariffs to the 2026 financials and gross margin and any other items to be considering regarding tariffs in 2026? Thank you. Shabtai Adlersberg: Right. Right. So gross margin, we believe, will step up simply because our products you know, mix of products will turn substantially more into software and services. We do expect to keep that range of 65 to 68%, you know, operating margin. I'm sorry, gross margins. And yeah, gross margin. And then I'm sorry. What was the second one? Yeah. The tariff was about $2.7 million in 2025. We currently estimate it to be a bit lower, you know, probably around $2.3 million in '26. Joshua Reilly: Thank you. Shabtai Adlersberg: Sure. Operator: As a reminder, if you would like to ask a question, please press 1 on your telephone keypad. We have reached the end of the question and answer session. And I will now turn it over to Shabtai for closing remarks. Shabtai Adlersberg: Thank you, operator. I'd like to thank everyone who attended our conference call today. With continuing good business momentum in our live managed services operations, continuing growth in our voice AI business. We believe we are on track to grow revenue profitability next coming years. We look forward to your participation in our next quarterly conference call. Thank you all. Have a nice day. Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Ruth: Good morning. My name is Ruth, and I will be your conference facilitator. At this time, I would like to welcome everyone to Two Harbors Investment Corp.'s Fourth Quarter 2025 Financial Results Call. All participants are in a listen-only mode. After the speakers' remarks, there will be a question and answer period. I would now like to turn the call over to Margaret Field Karr. Margaret Field Karr: Good morning, everyone. And welcome to our call to discuss Two Harbors Investment Corp.'s Fourth Quarter 2025 Financial Results. With me on the call this morning are William Ross Greenberg, our President and Chief Executive Officer, Nicholas Letica, our Chief Investment Officer, and William Dellal, our Chief Financial Officer. The earnings press release and presentation associated with today's call have been filed with the SEC and are available on the SEC's website as well as the Investor Relations page of our website at 2inv.com. In our earnings release and presentation, we have provided reconciliations of GAAP to non-GAAP financial measures, and we urge you to review this information in conjunction with today's call. As a reminder, our comments today will include forward-looking statements, which are subject to risks and uncertainties that may cause our results to differ materially from expectations. These are described on page two of the presentation and in our Form 10-Ks and subsequent reports filed with the SEC. Except as may be required by law, Two Harbors Investment Corp. does not update forward-looking statements and disclaims any obligation to do so. I will now turn the call over to William Ross Greenberg. William Ross Greenberg: Thank you, Maggie. Good morning, everyone, and welcome to our fourth quarter earnings call. I'm very excited to be able to speak to you all publicly for the first time about our recently announced merger with United Wholesale Mortgage. The rationale for this transaction should be familiar to most mortgage market participants and observers and was especially fitting given our own history as a company. So let me take a step back and describe why I say that. We are one of the first, if not the first, mortgage REIT to invest in MSR as part of our asset mix. Obtaining our GSE approvals and state licenses to own and manage MSR and then buying our first pool in 2013. We started out using third-party subservicers to service the assets. As our servicing portfolio grew to a certain scale, it became clear to us that we can extract even more value from the asset and increase returns by bringing the servicing in-house. Which we did in 2023 through our acquisition of Roundpoint. The last several years, really post-COVID, have highlighted the need for investors to be able to protect their MSR portfolio by providing recapture capabilities. Hence, we spun up a direct-to-consumer lending platform in 2024. However, in 2025, the mortgage finance landscape shifted again, scale becoming more important than ever. It became clear to us that in order to succeed and compete effectively, our origination effort needed to be much, much bigger. This merger brings us together with the number one mortgage originator in the country in UWM and doubles the size of the MSR portfolio to a pro forma $400 billion. UWM, in turn, also benefits from our expertise in capital markets and asset management, and they can leverage Roundpoint's best-in-class and low-cost servicing capabilities. In many ways, this transaction is the culmination of the business plan that we've been aiming at for some time. And it creates, I believe, a very powerful strategic alignment and positions the combined company for accelerated growth and enhanced outcomes. Which should deliver meaningful upside to shareholders. Now please just turn to slide three. Our investment portfolio performed well as mortgage assets significantly outperformed their hedges, and our low coupon MSR continued to behave as it was designed to do. Earning its carry. For the fourth quarter, we generated total economic return of positive 3.9%. For the full calendar year 2025, we generated a total economic return on book value of negative 12.6%. So if you exclude the previously recorded litigation settlement expense of $3.50 per share, we returned a positive 12.1%. Mortgage assets have thus far continued to outperform into the first quarter. Driven in part by increased GSE buying and announcements from the administration committing to buying significant sizes of MBS. In situations like this, we take the administration's clear desire for lower mortgage rates at face value. And we recognize the possibility that they will ultimately succeed and create increased mortgage and origination activity in 2026. One question that we've heard from investors is around our securities portfolio. And if, following the merger, we intend to liquidate the portfolio. In the short term, the answer is that we intend to manage our business in the ordinary course. Looking further out, I would say that while no decisions have been made yet, we will be thoughtful about how we proceed. There are some paths that lead to selling some or all of these assets over time, and there are other paths where the combined company will need many or even more than our existing TBA and specified pool positions. These are still early days with respect to the merger, so when those details are more clear, we will be sure to update you. Please turn to slide four. Performance across fixed income was positive in the fourth quarter. The release of major conventional economic indicators was severely interrupted by the federal government shutdown. Leaving the Fed and market participants without key data often used to assess the economy. Despite this and in line with market expectations seen in figure one, the Fed still delivered two twenty-five basis point cuts in October and December. As a result, and as you can see in figure two, the yield curve steepened with two-year treasury yields down 14 basis points to 3.47%. While ten-year treasury yields rose by two basis points to 4.17%. Returning the yield curve to its steepest level since January 2022. Equity markets continue to react positively to the Fed cuts, with the S&P 500 up by 2.3% at quarter end. After setting all-time record highs earlier in the quarter. Please turn to slide five. We settled on the sale of an additional $10 billion of MSR out of our portfolio. Increasing our total third-party subservicing to $40 billion at year end, compared to $30 billion at the end of the third quarter. While reducing our total owned servicing to approximately $162 billion from $176 billion in the prior quarter. Despite its small size, our DTC platform is punching above its weight and had a record quarter funding $94 million in first and second liens. A 90% increase from the third quarter. At quarter end, we had an additional $38 million in our pipeline, also brokered $58.5 million in second liens in the quarter which is nearly unchanged quarter over quarter. Looking ahead, we are confident that the partnership with UWM will bring the benefits we have envisioned from increased scale. And we believe this merger is extraordinarily positive for our company and for our shareholders. Now I'd like to hand the call over to William Dellal to discuss our financial results. William Dellal: Thank you, William. Please turn to slide six. Our book value increased to $11.13 per share at December 31, compared to $11.04 per share at September 30. Including the 34¢ common stock dividend, this resulted in a positive 3.9% quarterly economic return. Please turn to slide seven. The company generated comprehensive income of $50.4 million or 48¢ per share. Net interest and servicing income, which is the sum of GAAP net interest expense and net servicing income operating costs, decreased as a result of MSR sales and lower float income. Float income decreased largely as a result of lower interest rates, and end of year seasonals that lowered balances. The net overall decline in portfolio asset yields was offset by lower financing costs. Mark to market gains and losses were lower in the fourth quarter by $15.5 million due to MSR portfolio runoff and the both steepening in rates. You can see the individual components of net interest and servicing income and mark to market gains and losses on appendix slide 20. Please turn to Slide eight. On the left-hand side of this slide, you can see a breakdown of our balance sheet at quarter end. We ended the quarter with over $800 million of cash on the balance sheet. And in accordance with our previously disclosed plans, we repaid our convertible senior notes of $261.9 million in full on their 01/15/2026 maturity date. RMBS funding markets remain stable and available throughout the quarter, with repurchase spreads at around SOFR plus 23 basis points. At quarter end, our weighted average days to maturity for agency RMBS repo was fifty-four days. As a reminder, our days to maturity are typically lower at December 31, as we intentionally roll repos in the third quarter past year end to avoid any disruption in funding that can sometimes occur. We finance our MSR including the MSR assets and related servicing advance obligations, across five lenders. With $1.6 billion of outstanding borrowings under bilateral facilities. We ended the quarter with a total of $1.1 billion in unused MSR asset financing capacity. We have $71.5 million drawn on our servicing advances facility. With an additional $78.5 million of available capacity. I will now turn the call over to Nicholas Letica. Nicholas Letica: Thank you, William. Please turn to Slide nine. Our portfolio performed well in the fourth quarter as both MSR and RMBS returns benefited from the decline of interest rate volatility. Together with strong demand for spread assets. At December 31, the portfolio was $13.2 billion including $9 billion in settled positions and $4.2 billion in TBAs. Our primary risk metrics quarter over quarter were not materially different. Our economic debt to equity was slightly lower at seven times. And our portfolio sensitivity to spread changes marginally increased from 2.3% to 3.7% if spreads were to tighten by 25 basis points. We kept interest rate risks low in aggregate and across the yield curve. You can see more details on our risk exposures on appendix slide 17. Please turn to slide 10, The trend of lower interest rate volatility continued throughout the fourth quarter. Resulting in the one-month realized volatility of ten-year swap rates falling into the bottom fifth percentile over the past decade. Dragging implied volatility down as well. As you can see in figure one, two-year options on ten-year swap rates shown by the green line closed the quarter at 79 basis points. Four basis points below its average level over the past ten years. RMBS spreads responded very positively to decline in volatility, the steepening of the yield curve, and the prospect of strong demand in 2026 primarily from banks, REITs, and the GSEs. The nominal spread for current coupon RMBS tightened by 30 basis points to a 114 basis points of the swap curve. While option adjusted spreads relative to SOFR finished 23 basis points tighter at 45 basis points. As shown by the purple and blue lines respectively. This decline in current coupon nominal spreads brought mortgages to their tightest level since the 2022. Figure one includes data up to January 29, and as you can see, spreads have continued to tighten further into this quarter. It wasn't just current coupon mortgages that outperformed. Spreads across the coupon stack, both on a static and option adjusted basis, shifted lower as you can see in figure two. Please turn to slide 11 to review our Agency RMBS and specified pools we owned throughout this quarter. Figure one shows the performance of TBAs Hedged RMBS performance was positive across the thirty-year coupon stack. With the best performance in 4.55% coupons, where we have our largest pool exposures. Notably, the hedge performance of RMBS was aided by the widening of swap spreads. Which have made up over 75% of our hedges. To give a sense of magnitude, ten-year swap spreads widened by 13 basis points to an eighteen-month high. Our pass-through position was largely stable quarter over quarter. However, although we continue to like the sector and the carefully selected prepayment protected collateral behind our bonds, we reduced our inverse IO position by almost 50% to reduce our exposure to higher coupons. Primary mortgage rates drifted a little lower over the quarter, stabilizing around 6.25%. The share of the universe of thirty-year loans eligible for refinance returned to nearly 20% for the first time in years, And as we had anticipated, speeds for refinanceable coupons continued to increase. The prepayment s-curve steepened back to a more regular shape associated with periods when a larger share of mortgages are refinanceable. Such as in late 2019. Figure two on the bottom right shows our specified pool prepayment speeds by coupon. Which on aggregate increased only very slightly to 8.6% from 8.3% CPR coming from increases in speeds from five and a half coupons and higher. That said, the CPR increases on our pools were small and in line with our expectations, evidencing the value of careful pool selection. Please turn to slide 12. You can see in figure one the volume of MSR available in 2025 declined from prior years. The market continues to be well subscribed with strong demand from originators as well as bank and non-bank portfolios competing for greater scale in MSRs. Indeed, as William said, scale has become increasingly important for mortgage companies to compete in the MSR market. The merger of Two Harbors Investment Corp. and UWM will result in a combined company that is positioned for accelerated growth and has the ability to compete effectively in this market. Figure two shows that with mortgage rates at their current level of around 6.25%, only about 3% of our 5%, the portion of our portfolio in the money would rise to about 9%. Given that the current administration in Washington is focused on policies to stimulate the housing market and increase homeownership, we anticipate that home prices will continue to rise and housing turnover will trend higher from its current historically low levels. Please turn to slide 13. Where we will discuss our MSR portfolio. Figure one is an overview of our portfolio at quarter end. Further details of which can be found in appendix slide 23. In the fourth quarter, we settled about $400 million UPB of MSR from flow acquisitions and recapture. And we sold $9.6 billion UPB on a servicing retained basis. The price multiple of our MSR was consistent quarter over quarter at 5.8 times and sixty-plus day delinquency remained low at under 1%. Figure two compares CPRs across those implied security coupons in our portfolio of MSR versus TBAs. Quarter over quarter, our MSR portfolio experienced a minor 0.4 percentage point pickup in prepayment rates to 6.4%. Importantly, prepays have remained below our projections for the majority of our portfolio, which has been a positive tailwind for returns. Finally, please turn to Slide 14, our return potential and outlook slide. This is a forward-looking projection of our expected portfolio returns, which takes into account the repayment of the $262 million of convertible notes that occurred in January. We estimate that about 65% of our capital allocated to servicing with a static return projection of 10 to 13%. The remaining capital is allocated to securities with a static return estimate of 10 to 14%. With our portfolio allocation shown in the top half of the table and after expenses, the static return estimate for our portfolio would be between 6.9% to 10.2% before applying any capital structural leverage to the portfolio. After giving effect to our unsecured notes and preferred stock, we believe that the potential static return on common equity falls in the range of 5.8% to 11.1%, or a prospective quarterly static return per share of $0.16 to $0.31. The reduction in return potential to quarter over quarter is driven primarily by the large tightening of RMBS spreads and the sales of inverse IOs. Since quarter end, the announcement of explicit support for MBS spreads from the FHFA director has led to more spread tightening. Spreads for agency RMBS have now fully retraced their widening over the past three-plus years leaving spreads historically rich on some measures, like treasury-based OAS, for example. To fair versus swaps in periods when the GSEs have been active. As RMBS spreads have normalized, the potential for more tightening resulting book value benefit of holding RMBS has been significantly reduced. That said, continued GSE buying and or other future policy aimed at supporting mortgage spreads could keep spreads tight and limit their widening and risk-off scenarios. Given all that, we believe that this environment favors our paired portfolio construction of MSR and Agency RMBS, which has less exposure to fluctuations in mortgage spreads. We expect that demand for MSR will remain strong among the origination and communities. Though RMBS spreads have tightened, the paired construction of our low mortgage rate MSR with RMBS generates attractive risk-adjusted returns, with lower expected volatility than a portfolio of RMBS hedged with rates. Thank you very much for joining us today, and now I'll be happy to take any questions you might have. Ruth: Thank you. If you're dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment. We'll go first to Richard Barry Shane with JPMorgan. Richard Barry Shane: Thanks, guys, for taking my questions. And congratulations on the announcement. I am curious as we sort of move through this period tactically how you think about portfolio construction. I realize that you guys continue to and need to, from a governance perspective, operate as an independent company. But obviously, there are strategic reasons for the acquisition. Is that shifting your tactical allocation of capital in any way as you construct the portfolio? Into year-end? Is that one of the other factors that's impacting your static return outlook? William Ross Greenberg: Yeah. Good morning, Rick. Thanks for the question. No. I think you put your finger on it. We're as an independent company. We're managing our portfolio as we normally would in the ordinary course. You know, the changes you've seen in the portfolio have been in response to market assessments of risk and reward. And we're continuing to manage the portfolio as we ordinarily would and do. And the investment decisions that we're making are in line with the way that we have always historically managed the portfolio. Richard Barry Shane: Got it. Okay. Thank you. And then I must have gotten up especially early today because I'm first in queue. I don't think I heard you talk about an update on book value, but I get to ask the question this time if so where is book value most recent mark? Nicholas Letica: Hey, Rick. This is Nick. You know, it's good that you got the opportunity to ask that question this quarter. We are up about 1.5% to 2% as of Friday, January 30. Richard Barry Shane: Terrific. Thank you, guys. William Ross Greenberg: Thanks, Rick. Ruth: We'll go next to Douglas Michael Harter with UBS. Douglas Michael Harter: Thanks, and good morning. Hoping you could just talk about, you know, how you're thinking about leverage, Nick, given your comments around kind of the MBS market, and just how interested you would be in continuing to kind of add at these spreads, given the crosscurrents that you mentioned and just overall, you know, your view on risk-reward? Nicholas Letica: Hey, Doug. Sure. As you alluded to from my comments, the, you know, the administration has made it pretty clear that they want to do what they can to try to tighten spreads in this environment. And potentially as well reduce mortgage rates. So, you know, we have become a little more defensive quarter as a result of that and then just the general movement in spreads. If you look at where spreads are now, historically, I think you can say that they are, you know, at, you know, I think you definitely say there's symmetric, you know, in terms of risks. You might even say they're asymmetric in terms of the amount of, you know, widening versus tightening in here. You know, that being said, there is, you know, there are things that the administration can do that have been, you know, have been widely discussed, for example, raising the caps that the GSEs have on their portfolio, which they can do without, you know, congressional input and other measures to continue to drive the mortgage spread tighter or just limit it from a risk perspective of widening. So it is very much of a dual-edged sword. We have decided, and our portfolio construction being what it is, we do like the paired construction overall, as you know, and it depends less on betting on which way spreads are gonna go and more about just putting together a hedged portfolio that extracts the spread of the combined assets. So that's what we're really focused on. But we have reduced our leverage a little bit this quarter and as well as our mortgage risk. Douglas Michael Harter: Appreciate it. Thank you. Ruth: We'll go next to Bose Thomas George with KBW. Bose Thomas George: Hey, guys. Good morning. Actually, what do you think are the chances of an LLPA, you know, guaranteed fee reduction at the GSEs? And, yeah, how is the agency market kind of viewing that possibility? Nicholas Letica: Hey, Bose. I think there's a reasonable reduction. There'll be some reasonable chance that there will be some changes on the LLPA grid. And I think it's somewhat priced into the market, but not entirely. There are a lot of, there's a lot of optionality, I think, now in terms of the policy actions that could be done. And, you know, it's a lot for the market to digest. So it's hard consequently to fully understand whether just an LLPA change is being baked in or not. But I think there has been some amount of discounting of that. Bose Thomas George: Okay. Great. And then, actually, in terms of the MSR market, have you seen any changes in sort of bank interest or activity just given it looks like the capital rules there, you know, might make it a little more favorable for them to hold on to MSRs? Nicholas Letica: I can't say that we've seen anything notable about that. Overall, all I can say is that the interest in the MSR market continues to be rock solid and strong. So from our perspective, we haven't seen anything particularly new that we have not seen in the past, you know, year or two. Bose Thomas George: Oh, okay. Great. Thanks. Ruth: We'll go next to Trevor John Cranston with Citizens JMP. Trevor John Cranston: Hey. Thanks. A question on the perspective return outlook. Could you maybe give us an update on kind of where you would see those levels today subsequent to the additional spread tightening that we've seen in January? And maybe comment on if there's any kind of near-term read-through from where you're seeing perspective returns to sort of how you're thinking about the appropriate dividend level in the near term? Thanks. Nicholas Letica: I'll talk about the hey, Trevor. Thank you for the question. I will talk about your first part and I'll let William discuss the dividend part of it. Yes, so spreads are tighter since we published this at the December. So it would be reasonable to expect that our dividend levels would be in a little marginally from where they were back then on the December 31. You know, we see spreads overall as being on our whole portfolio of being in maybe about five basis points or so. So that will have an effect of lowering our dividend marginally. William Dellal: Good morning, Trevor. On the dividend, obviously, we'll go through the normal routine of deciding that later in the quarter. Together with the board. I will say still young in the quarter, so it's too early to say what the trend will be on the dividend. Nicholas Letica: And sorry, I realize I just misspoke at the end of my I said lower the dividend. It's not what I meant to say. Lower the return potential marginally. Trevor John Cranston: Yeah. I assume. But thank you for the clarification. And then I guess the second question, you know, since the news came out about the GSE buying, you know, it seems to have had a, you know, kind of a varied impact on the various coupons. Can you say if you guys have had any kind of material changes with your coupon exposures so far in January and sort of how you're thinking about the coupon stack? In light of the initial announcement and the potential for kind of additional announcements aimed at targeting mortgage rates? Thanks. Nicholas Letica: We haven't changed it materially. We have lowered our mortgage exposure overall to some degree. I think there are two effects that are going on. I think the GSEs if, you know, if I were implementing this and you wanna be effective lowering the mortgage rate, lowering current coupon spreads, you would buy current coupons. So I think that there is a natural that's, like, where I would imagine that the GSE buying is focused. You know, commensurate with that, I think we have we've seen a fair amount of down in coupon trades coming out of, you know, various entities, including money managers that haven't, you know, materially lowered their allocation yet to mortgages, but do seem to have gone down in coupons. So thus far on the year, we've seen the biggest positive effect on the lower coupons. Followed by current coupons. And then the higher coupons have actually widened a little. We've seen, you know, quite a bit of expansion of the coupon of the sorry, contraction of the coupon stack. As you go up, you know, some of the higher coupons are actually now wider, you know, on the year. Trevor John Cranston: Appreciate the comments. Thank you. Ruth: Our next question comes from the line of Harsh Hemnani with Green Street. Harsh Hemnani: Thank you. So we've obviously discussed the GSE buying and its impact on spreads, but one of the other things that's justifying spreads today is how low the volatility is. Maybe there's a few events upcoming on the calendar, particularly with, you know, a new federal reserve the middle of this year, you know, how would you expect any, I guess, uncertainty or changes in policy on that front to first off, impact the volatility and then also funding markets for agency MBS. Nicholas Letica: Hey, Harsh. Very good question. I can't say I really have a firm answer. I mean volatility is drifted back to being on the historically low side. We have had periods where been lower than it is right now. As you mentioned, we have, you know, new nominee for the Fed chair. And, you know, it'll take a little bit of time to fully assess what he wants to do at the Fed, and also we'll take him some time likely to develop, you know, the consensus to make that happen. So I mean, I would expect that we might see a mild amount of increase in volatility as a result of that. You know? And, you know, and we're still in an environment where from a, you know, macro perspective, the economy seems to be humming along, but inflation is still running a little hotter than I think the Fed would like. And, you know, it's not clear where those paths are gonna settle out here. So it would make sense that volatility would pick up a little bit, and, you know, that's a little bit of our overall thesis of being a little more defensive here on mortgage spreads. That, you know, vol has kind of drifted historically low in there could be some things that kick it off. It's always hard to say ahead of time what's gonna be the catalyst to make that happen, but it's reasonable to think that we could be in for a little bit of a higher level of volatility. What was the second part of your question? I'm sorry. Harsh Hemnani: Oh, funding markets. Any impacts on agency funding markets? Nicholas Letica: We haven't really seen much of an impact on funding markets. I mean, there's been a few people that postulated that that could be one of the things the administration does or the Fed does to try to lower funding rates for mortgages and other spread assets. To drive that tighter. That's possible. But, you know, at funding markets, it's been stable, we don't really see any disturbance on the horizon on that front. Harsh Hemnani: Got it. And then maybe on the hedge portfolio front, it feels like you moved a little bit heavier into the shorter duration hedges. Any thoughts on what's driving that and how that could evolve going forward? Nicholas Letica: No. I mean, I would say that we, you know, we've continued to have a little bit of a curve steepening bias in the portfolio. It has not been big. I think there's still reasons to believe that curve could steepen further here. So, no, I don't, you know, we can talk about it more specifically. You know, offline. But I don't see us as having shifted our hedges very much in that way. Harsh Hemnani: Thank you. Ruth: Our next question comes from the line of Eric Hagen with BTIG. Eric Hagen: Hey. Thanks. Good morning. Do you guys have a rough breakdown of the channel mix for your current MSR portfolio? Like, what percentage were originated in the broker channel versus the retail channel? And how do you guys feel like the origination channel impacts the prepayment behavior of your portfolio? William Ross Greenberg: Good morning, Eric. Thanks for the question. I don't have those at my fingertips here. You know, we've been, you know, over the years active buyers both across flow and bulk channels. And, you know, they do have different prepayment characteristics, and we attribute different prices to those loans and those characteristics. And so, you know, whatever differences there are in prepayment behaviors are generally reflected in the prices at which we acquire them at. Right? And so all of that is incorporated into the way that we manage the portfolio. They don't have the specific numbers of what's broker versus retail versus a correspondent handy with me right now. Eric Hagen: Got you. Okay. Know, some recent commentary from other originators noticed noted that the GSE cash window has been more active as a delivery execution channel for community banks and small retail originators. Are you guys seeing the same thing? And how do you guys feel like the cash window impacts volatility and MSR valuations in the market? William Ross Greenberg: I think that the MSR market is reasonably diversified in terms of the products that are coming to market and so forth. And those are affected in the price. We continue to see robust MSR demand. Volumes in the MSR market are lower than what they have been in recent years. We have a chart in the deck on that. And so, you know, I think this is just a normal MSR environment. As we're changing regimes to lower supply than what we've seen in the past. Eric Hagen: Got it. But does the GSEs being active with the cash window, is that a reflection of MSR valuations? In any way? William Ross Greenberg: No. I don't think so. Eric Hagen: Okay. Thank you guys for the comments. William Ross Greenberg: Thanks, Eric. Ruth: This concludes today's question and answer session. I would like to turn the call over to William Ross Greenberg for any additional or closing comments. William Ross Greenberg: Just like to thank you all for joining our call today. As we said in the earlier prepared remarks, we view the merger with UWM to be extremely exciting. And we expect that it's going to deliver meaningful upside for our shareholders. Have a great day, and look forward to speaking to you all again soon. Ruth: This concludes today's call. Thank you for your participation. You may now disconnect.