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Operator: Ladies and gentlemen, thank you for standing by. I am [ Gaily ], your Chorus Call operator. Welcome, and thank you for joining the Bally's Intralot conference call and live webcast to present and discuss the Bally's Intralot trading update. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Robeson Reeves, CEO of Bally's Intralot. Mr. Reeves, you may now proceed. Robeson Reeves: Good morning, everyone, and thank you for joining. As a standard reminder, this call may contain forward-looking statements. Please refer to our 17th March full year results announcement for the full disclaimer detailing FY 2025 [Technical Difficulty]. Operator: Mr. Reeves, if I apologize, this is the operator. Can you hear me. Mr. Reeves, I apologize. This is the operator. Can you hear me? Robeson Reeves: Yes. Operator: I'm sorry. Your line is very bad. I cannot hear -- we cannot you very well. Robeson Reeves: Okay. I'll try again. Apologies. Operator: No problem. Robeson Reeves: Good morning, everyone, and thank you for joining. As a standard reminder, this call may contain forward-looking statements. Please refer to our 17th March full year results announcement for the full disclaimer and detailed FY 2025 financials. Today, I want to do 3 things. First, briefly recap the key numbers we published on the 17th of March '26, so we're all working from the same base. Second, reaffirm our 2026 adjusted EBITDA guidance, and I want to be clear that reaffirmation is exactly what it is. And third, give you the Q1 2026 trading data, which I'm providing because it directly supports the confidence behind that reaffirmation. Let me get straight into it. On the 17th of March, we published our full year 2025 results. I'm treating that filing as read and want to reconfirm the headline numbers disclosed previously remain unchanged. A few points worth reiterating. The 39.7% adjusted EBITDA margin reflects the structural quality of this business. A U.K. operator running at that margin has a different risk profile to any operator running at 20% to 25%. That matters particularly now as we enter the period of U.K. gaming duty change. EUR 172.7 million of levered free cash flow gives us clear capacity to service debt, return capital and pursue M&A simultaneously if the right opportunity arises. The EUR 50 million of capital returns represents less than 30% of annual free cash flow. And we continue with our plan on deleveraging the balance sheet towards our 2.5x target. That is the base. Now let me tell you where we stand on '26. Our 2026 adjusted EBITDA guidance of approximately EUR 422 million is reaffirmed. From today, the 1st of April, U.K. remote gaming duty moves from 21% to 40% of gross gaming revenue. We have been preparing for this since Q4 last year. So we have a mitigation bridge. If I go to the start point, that's approximately EUR 431 million. That's our 2025 pro forma adjusted EBITDA. So we get this gross tax impact of EUR 95 million, the direct cost of the duty increase on our U.K. gross gaming revenue. With our first mitigation, that's our generosity reductions and marketing optimization, we add EUR 25 million. That's already in motion, phased in Q1 and in the run rate now. Our second mitigation are the cost savings, headcount and operating expenditure adding EUR 10 million. That's been actioned in Q1. Mitigation 3, that's the transaction synergies, adding EUR 15 million, which tracks to be in line with the commitment we made at the time of acquisition. The final mitigation is just our organic growth across all markets, including our Lottery division with 0 U.K. gaming duty exposure, adding EUR 34 million. The net result of that is approximately EUR 422 million. That's a 2% impact on the 2025 pro forma. That is what I told you this cost would be, and that's where we remain. On leverage, we're at 3.46x. We are entering this tax change with approximately EUR 173 million of levered free cash flow. The mitigations are operational levers within our control. And as the Q1 data I'm about to give you will confirm, we are entering this change with stronger underlying trading momentum than at any recent point in our history. On margin, our B2C adjusted EBITDA margin was approximately 40% in Q4 2025. Most comparable operators are running below 25%. When Gaming Duty nearly doubles on gross gaming revenue, not profit, a 20% to 25% margin compresses to near 0. A 40% margin does not. That asymmetry is why our guidance is reaffirmed with confidence. Now on to trading. The reason I'm giving you Q1 data today is straightforward. Q1 trading is strong, and I want you to have that as context when evaluating our guidance reaffirmation. This is not a separate story. It is the evidence base. Please note that these numbers are unaudited and could change slightly as we close our Q1 accounts. So now I want to touch on sequential quarter-to-quarter performance. So Q4 to Q1. Q4 is always the biggest quarter, our biggest quarter. It's always that every time. October, November, December has the autumn sporting calendar, the Christmas build, peak promotional intensity across the entire market. So in Q4 '25, U.K. net gaming revenue was GBP 148.8 million. Q1 '26 was approximately GBP 147.9 million. That's essentially flat quarter-on-quarter against Q4, right? Q4 is always the biggest. So flat is exceptional performance. So that is the first thing to hold. Q1 2026, when we look at that for the quarter in full, U.K. B2C NGR for the quarter, as I said, GBP 147.9 million, up approximately 10.5% year-on-year. Every single month of Q1 delivered year-on-year growth. B2B performed in line with our expectations across the quarter. The B2B division is a core part of the business, and it's stable with a strong contracted revenue base, which provides additional resilience to the group during this tax transition period. Touching on some other customer metrics in Q1. Active players were flat quarter-on-quarter, so against a really strong Q4 base. This reflects sustained momentum in both acquisition and retention as well as efficient welcome offers. First-time depositors were up 10.8% quarter-on-quarter and 59.4% year-over-year. The customer pipeline is expanding into the tax change, not contracting. B2B is stable. It's operating within our expected parameters, and there's no material surprises. Noncore international markets are also stable. There are modest FX translation headwinds in certain markets and some market-specific dynamics we flagged at the FY '25 results. That picture has not materially changed. The group margin is carried by UK iGaming and our Lottery division. Both of those are performing. Noncore stability means they are not a drag. That's the message. This is the trading base on which we reaffirm our EUR 422 million of adjusted EBITDA guidance for 2026. Now on to capital allocation. So I'll start with buybacks. Approximately EUR 20 million has been executed since the EGM authorization. I believe our shares represent outstanding value. I intend to continue utilizing related TRS products of international banks that do not immediately impact our cash on balance sheet and give flexibility to execute buybacks when we determine that timing is right. On to dividends. The Board is recommending approximately EUR 30 million to the Annual General Meeting, leaving EUR 173 million of levered free cash flow, EUR 50 million returned, well within our capacity while deleveraging. On leverage, net leverage at year-end was 3.46x pro forma. The medium target remains at 2.5x, and we have a clear line of sight. On M&A, the tax environment is creating very motivated sellers, and we have the platform, the margin headroom and the management team to act on the right opportunities. So we are active. My closing remarks, I'll just give you a nice summary. FY 2025 published on the 17th of March, pro forma revenue of EUR 1.0858 billion, adjusted EBITDA EUR 430.8 million, margin of 39.7%, leverage 3.46x and free cash flow, EUR 172.7 million. 2026 adjusted EBITDA guidance of approximately EUR 422 million is reaffirmed and our mitigation program is in execution with all 4 levers active. Q1 U.K. B2C NGR of approximately GBP 147.9 million, flat on the seasonal peak of Q4, up approximately 10.5% year-on-year. Active players flat Q-on-Q, but up 8.7% year-on-year. First-time depositors up 10.8% quarter-on-quarter and 59.4% up year-on-year. The customer pipeline is expanding into the tax change. B2B is performing in line with expectations and noncore international markets are stable. EUR 20 million of buybacks have been executed and a EUR 30 million dividend recommended. Deleveraging is on track to 2.5x. I said this before that the strong don't only survive, but they do get stronger, and I believe that we are getting stronger. We'll now take your questions. Operator: [Operator Instructions] The first question is from the line of Chinchilla Ricardo with Deutsche Bank. Luis Chinchilla: I wanted to start on the M&A front. As you mentioned that there is opportunities and that the press has recently mentioned that you are active. While respecting the company's confidentiality regarding specific targets, I would appreciate an assessment of the company's M&A appetite. This assessment could encompass suitable target profiles. Are you looking at B2C operators, technology stacks and a specific company within a market? And also, can you please also provide us with an evaluation of the maximum leverage that the company can sustain or that you will be willing to elevate just to move fast in an environment and consume something strategic for the business? Chrysostomos Sfatos: Robeson, shall I take this one? Robeson Reeves: Go for it, Chrys. Go for it. Chrysostomos Sfatos: Yes. Thank you for your question. We have said many times that we are on the lookout for any opportunity that will contribute towards either organic or inorganic growth. We're clearly on a growth path from this point on. So inorganic growth would cover -- our appetite for M&A is there. But on condition that we will be able to fulfill our financial policy goals as stated, which includes, first and foremost, our path to delever and the distribution to shareholders. So both goals, I think, on distributions, we've already covered enough on this call and through our announcement. On the path to delever, it remains our goal. We have disclosed what is the pro forma free cash flow generation. And with that, as you probably know, we have an amortization schedule with regard to our bank loans in our capital structure. And so we intend to make significant repayments and reduce the gross debt in the next 2, 3 years. So we are committed to deleverage. We will do whatever M&A is necessary by adding EBITDA by considering anything that's meaningful in terms of very, very substantial synergies that we feel comfortable we can deliver or cost reductions on the target. And at the moment, this is our message to the market. Luis Chinchilla: Got it. If I may do a follow-up. The company recently opened that casino in Newcastle and you had mentioned in the past that they wanted to expand into sports betting. Can you provide your thoughts on additional casino footprint in the U.K. And if you rather acquire a sports business or build it yourself from the ground up? Robeson Reeves: I'll take this one. For us, the retail casino in Newcastle is much more of an R&D piece. It's very, very small part of the actual footprint. There's no intention to expand into retail within Bally's Intralot. The retail presence we'll have will remain in the lotteries. With respect to Sports Betting product, we currently have an agreement with Kambi, who provides really a back-end sports betting solution. We're very happy with them. If we were to look at any opportunities out there, as we said, the U.K. market has become more attractive more because of the trauma, which has been created by this tax change. We would only consider things if we could see substantial cost-cutting opportunities as well as synergies. I would not underestimate how strong our margin profile is versus peers in this space. As long as we can bring things into our platform, and I mean our platform, how we manage things, how we operate things that gives us this margin improvement over others, then it can become very attractive. But we'll be very diligent and ensure that we protect our capital structure in whatever we do. Luis Chinchilla: If I could squeeze one last one. In the past, the company mentioned articulated growth opportunities contingent upon the integration of the [ Merck ] technology stacks. I was hoping if you could give us an update on these potential opportunities that at the time you mentioned that you would disclose once the merger was completed and you get permission. So any update would be very helpful? Robeson Reeves: So as we discussed previously, Ricardo, our intention is to launch into 2 B2C markets per year, utilizing the Intralot footprint and their relationships. These things are progressing. We will disclose those closer to the time. If we end up looking at other opportunities inorganically, that may change that plan if it accelerates expansion, but we're still on track for 2 new B2C markets being launched this year. Operator: The next question is from the line of Narula Raman with Principal Asset Management. Raman Narula: Just a couple from me, please. The first, just curious if you can disclose what percentage of your full year '25 U.K. revenue was Sports Betting and maybe the same for Q1 as well? And just if you could give a sense of how that's been growing, that would be appreciated. Robeson Reeves: Cool. Katherine, do you want to take this? Katherine Gomaniouk: Sure, Robeson. Thank you. Sports Betting still constitutes a fairly small percentage of our revenue, but we have seen healthy growth in that space as is demonstrated by the growth in our FTD numbers, which were in part driven by some sports events that happened in Q1. So we continue using sports as a funnel to acquire gaming customers, and that strategy seems to have been working as would have been demonstrated in our Q1 numbers. Chrysostomos Sfatos: And just to layer on top of that -- so thank you, Katherine. Just to layer on top of that, when we look at Sports Betting and iGaming, what you would have seen from many of our peers' recent releases around Q1 performance that there was a decline in Sports Betting and there was an increase in iGaming. Now if you've got the balance right between your product sets, so people might win on sports and they reinvest into iGaming and so on, then you would -- the net position would always be better, whereas actually, a lot of the peers are showing down by 5% or so in Sports Betting and up in iGaming by 5%. So they're not even really seeing any growth. What we've been very careful to do with our Sports Betting offering is ensure that it fits with all of the regulations which sit in the U.K. market, such as stake limits on slot machines. So you need to balance exactly the scale of bets that you would take alongside people's ability to reinvest. Sports betting just, call it, [ GBP 1 million ] or so per month is what we're seeing in the U.K. So small, but that's where a huge opportunity lies. Raman Narula: Understood. That's very helpful. And I guess as a segue into the next question, obviously, this year, huge sports calendar along with the World Cup. Just curious, maybe in a similarly stacked sports year like '24 with the Euros, I mean, what kind of effect did you see on your sort of core iGaming business during those months, those summer months when you had those big football tournaments ongoing? Robeson Reeves: We didn't see any -- if you're asking, is there any negative impact by having -- you have to understand, you've got the euros, you got the World Cup. How many of those matches are competitive and how many fixtures do they have in terms of volume. They are good acquisition drivers, but they're not necessarily big revenue drivers, right? You're going to have fixtures between Curacao and other matches, which are heavily one-sided. When it comes to soccer, you prefer fixtures, which are a bit more balanced or you have sufficient volume. The World Cup actually is, call it, a low period or the Euros is a low period in fixture volumes for actual revenues, but it does bring new customers to the market. So for us, this would aid the funnel for acquisition, and it's almost like a perfect storm in lots of ways because there's not enough matches for people to be betting on to constantly be active. If you think about normal Saturday, there's lots of fixtures for revenue to flow there. But actually, this will get the right prestige and coverage to acquire and then there's no matches, then people can play iGaming products and so on. Raman Narula: Makes sense. And then lastly, I just wanted to touch on dividend policy. Obviously, in the preliminary results, you stated that it's the intention to recommend a pre-dividend sort of along with the publication of H1 results. If you could just give us a sense of like the potential quantum? Is that going to be a percentage of the pro forma adjusted EBITDA? Or is that still a percentage of adjusted net income? Just if you could give -- remind us of your dividend policy, that would be really helpful. Robeson Reeves: Chrys, do you want to take it? Chrysostomos Sfatos: Sure. At this point, we cannot give you an estimate about the pre-dividend. I think the combination of buybacks and the dividend that we will distribute the EUR 30 million, which is what we already have available for previously undistributed profits in the past, which we could not distribute at the time due to losses that we're now covering. That's the only specific thing that we would like to share at the moment. We don't want to preempt what the results are going to be. We will evaluate the entire situation, our cash flows at the time, and we will make the decision once the results are available. Raman Narula: Understood. And could you just clarify the medium-term target of 2.5x. Do you expect to sort of be there around mid of '27? Or what are you targeting? Chrysostomos Sfatos: That will be in line with our amortization schedules. Yes. By the time we get basically to 2029 when we have the retail bond maturing, the EUR 130 million retail bond, the unsecured portion of our debt maturing in February 2029, we intend to repay that. And we intend to repay through amortizations, as I said, and eventually on maturity at the end of 2029, the Greek bank loan. Well, these 2 tranches together is EUR 330 million of gross debt, which we intend to reduce in the coming period. Of course, it will all depend on the cash generation, on our CapEx requirements and all of this. So in this period, we think that it's achievable if we manage to deliver our growth targets. What we said is that basically the imposition of a new tax regime in the U.K. will have, as a result, the delay of our plan by 1 year because we will be able to capture market share from a market which we believe is going to change fundamentally in the next year. Operator: The next question is from the line of [indiscernible] with Credit Suisse. Unknown Analyst: As part of the bond offering last year, the company included the helpful KPIs. You mentioned the impressive growth, 8.7% increase year-over-year in the first quarter. Is that going to be included in the annual report that -- in upcoming presentations? Chrysostomos Sfatos: I think you're referring to the U.K. market or to the combined growth. Unknown Analyst: Yes. Maybe the active online players, revenue per active players, that type of disclosure was helpful and it was including the bond offering, and you mentioned it again today. I guess it was more of a request to include it as part of your presentations. Robeson Reeves: Yes. I think going forward, we'll share the most relevant KPIs, which can indicate the future pathway as best as we can guide. But that's why we showed new player volumes. New player volumes will build on your base and actually drive future revenues. So we're trying to be as -- we believe that transparency is always a good thing. So we'll be as transparent as is sensible without giving away too much competitor information, let's say. So we -- yes, we'll try and be as transparent as possible in every quarter going forward. Unknown Analyst: And what is driving the impressive growth in the first quarter? Robeson Reeves: Well, with respect to the revenues, as we said, we've made some slight adjustments to our products, so some of the configurations with regards to ensuring that players basically lose at a very sustainable rate. So our objective has actually been to manage player spend almost down slightly on a visit frequency, which means that people retain better longer term. But we've seen really good numbers coming from, call it, marketing performance from acquisition spend. As I've said to all of you, the day following the tax announcement in the U.K., we saw improved performance from the same marketing spend amounts because there was reduced competition. For me, that's a pretty amazing sign that the statement of tax coming caused a reaction. So from this day, we'll see what performance looks like given now this is the first time that people with suppressed margins will have to start footing a bill with the increased gaming taxes. I'm very hopeful that if I think about my history in this sector, when I started working here, there was no tax on revenues, no gaming duty on revenues. Then it went to 15% tax of net gaming revenue, then flipped across on to gross gaming revenue, then became 21% and this is the next tax change. In every single period of this, it's led to consolidation. And actually, through this cycle, our EBITDA margin has grown because we're very, very good at, call it, flying through a storm and operators who don't see there's a storm there, even if it might be a clear blue sky, they just don't see opportunities because you can continuously improve and continuously improve your margins and improve your growth. So I'm quite excited about this next period. This is opportunity. Operator: The next question is from the line of Gondhale Pravin with Barclays. Pravin Gondhale: Firstly, on U.K. sort of growth outlook for 2025 and 2026, what's your assessment on that given the tax changes? And then within that, are you seeing any changes in channelization of online gaming? I realize it's just day 1 of the new taxes, but what's your outlook for that as well? Robeson Reeves: Yes. Okay. So you're talking about the overall U.K. market, right? Just for clarity. Pravin Gondhale: Yes, please. Yes, yes. Robeson Reeves: Yes. So the U.K. market, as I was indicating when I spoke about some of the peers who haven't been able to see reinvestment of winnings from sports betting go back into casino, there will be a degree of channelization coming from that. So people -- because the reason why people can't reinvest is due to limits on what they're able to spend. This can do multiple things. People could move to the black market slightly. But bear in mind, the U.K. Gambling Commission are investing substantially in trying to police this. I don't see the market growing by that much, if growing at all this year because of these changes to stake limits. Having said that, I believe it's a significant period of consolidation. So I'd expect all the big operators to gain share in this. There are many operators out there who are willing to hand over databases for royalty fees and so on. They're willing to exit. And that will just mean that we can soak up that revenue. So I don't see the market really growing. It will be minimal, a couple of, like, call it, low single digit if growth, right? But there will be consolidation into the big guys. Operator: [Operator Instructions] The next question is from the line of Katsios Nestoras with Optima Bank. Nestor Katsios: Just a question from my side. Can you please repeat your free cash flow guidance because I missed that part. Chrysostomos Sfatos: We have not given the guidance for 2026. We have published the pro forma free cash flow for the combined entity at EUR 171 million -- EUR 172.7 million for last year. So that was on the background of an EBITDA of EUR 230.8 million -- EUR 430.8 million, sorry. So based on the guidance on EBITDA -- and it will depend a little bit on our CapEx requirements this year. Last year, the CapEx we published was around EUR 60 million. This year, it will be a bit higher because of certain renewals in the United States. And we are still waiting to hear from our bid for the Victoria Monitoring License in Australia. So we can't reveal the sensitivities on our CapEx. So it will depend on that alone. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Robeson Reeves: Thank you. Thanks, everyone, for joining us today. I'm sorry that we're interrupting your Easter break. I hope you all get a bit of time off. But we wanted to give you the most up-to-date summary of Q1, and I look forward to speaking to you again soon. Feel free to reach out to the company if you've got any further questions. So thank you for joining us. Goodbye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Synergy CHC Corporation's financial results for the fourth quarter and full year ended December 31, 2025. Joining us today are Synergy's CEO, Jack Ross; CFO, Jamie Fickett; and Greg Robles with Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I'd like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg Robles: Thanks, Liz. Good morning, and thanks for joining our conference call to discuss our fourth quarter and full year 2025 financial results. I'd like to remind everyone that this call is available for replay and via a live webcast that will be posted on our Investor Relations website at investors.synergychc.com. The information on this call contains forward-looking statements. These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will and other similar expressions. Forward-looking statements are not guarantees of future performance and the actual results may be materially different from the results implied by forward-looking statements. Factors that could cause results to differ materially from those implied herein include, but are not limited to, those factors disclosed in the company's SEC filings under the caption Risk Factors. The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now I would like to turn the call over to the CEO of Synergy, Jack Ross. Jack? Jack Ross: Thank you, Greg. Good morning, everyone. Thank you for joining us today to discuss Synergy's performance for the fourth quarter and full year 2025. While 2025 was a year of transition in many areas of our business, it was also a year of meaningful strategic progress that sets an important foundation for sustainable long-term growth. Before discussing our performance, I want to briefly address the 8-K we filed regarding our international license agreement covering the UAE and Turkey. As many of you recall, in mid-'25, we expanded our international license partnership to include UAE and Turkey for a baseline licensing fee with additional royalties tied to product performance. However, the licensee has elected to terminate the agreement, given the increasing instability and uncertainty across the region. As a result, the $2.5 million licensing revenue associated with the agreement had to be reversed in the fourth -- sorry guys. I have technical difficulties here. Just one second. Okay. While unfortunate, this outcome reflects the macro volatility outside of our control rather than any change in our conviction around the potential of FOCUSfactor internationally. We continue to view the UAE and Turkey as an attractive multiyear growth market for both our supplements and functional beverages. The groundwork we laid in 2025 hasn't been lost, the demand remains intact. The brand is strong and our international strategy continues to be focused on scalable, capital-efficient expansion. Before I turn the call over to Jamie, I want to touch on another development that further supports our international growth strategy. During 2025, we established our wholly owned subsidiary in Mexico. And in December, we initiated our first product shipments to Costco, Mexico. On the beverage side of our business, during the first quarter of 2026, we have generated over $600,000 in gross revenue surpassing the entire 2025 revenue, which now equates to $2.5 million run rate for 2026. We have shipped our focus in energy RTDs in shots to new key distribution locations, including EG of America, the parent company of Cumberland Farms convenience stores, Wakefern Foods, Indian Nation wholesale, Mackoul Distributors, Mancini beverages, [indiscernible] and Pine State Beverages to name a few. We have millions of cans of RTDs and shots in stock and ready to ship, and we expect 2026 to be a foundational growth year for our Beverage division. We continue to execute on our supplement side as well, having just shipped 3 new SKUs to all 1,600 Kroger locations. One initiative that we did not achieve in 2025 was turning back on the TV advertising, which is hugely important for our existing store growth. We will be diligently working towards executing this in 2026 to drive same-store growth within our key retailers. If the results that we achieved in the past hold true, we expect to see at least a 15% lift in same-store sales once the TV advertising is up and running. With those updates, I'd like to turn the call over to our Chief Financial Officer, Jamie Fickett. Jamie? Jaime Fickett: Thank you, Jack. I'll now review our financial results. Beginning with the fourth quarter, net revenue was $6.07 million compared to $10.27 million in the year ago quarter, a 41% decrease versus the prior year. The decrease was due to the termination of the license agreement of $2.9 million. Without that reversal, net revenue was $8.97 million, a 12.7% decrease. Gross margin for the fourth quarter was 36.6% compared to 63.3% in the same quarter last year. The decrease in gross margin was primarily driven by the termination of the license agreement of $2.9 million and the write-off of obsolete inventory of $1.04 million. Without those 2 items, gross margin would have been 68.8%, an increase from prior year. Operating expenses for the fourth quarter were $15.53 million compared to $5.14 million in the year ago quarter. The increase in operating expenses was largely due to one-time items of an allowance for bad debt of $6.6 million and the write-off of prepaid media credit of $0.9 million. Without those 2 items, operating expenses would have been $8 million. The majority of the increase was due to professional fees for our corporate development. Loss from operations for the fourth quarter of 2025 was $13.31 million compared to income from operations of $1.35 million in the fourth quarter of 2024. As discussed, this is largely due to onetime items of allowance of bad debt of $6.66 million, termination of the license agreement of $2.9 million, write-off of the obsolete inventory of $1.04 million and the write-off of a prepaid media credit of $0.9 million. Without those one-time items, loss from operations would have been $1.85 million, which is impacted by the increased professional fees for our corporate development. Net loss on the fourth quarter -- net loss for the fourth quarter was $14.82 million or $1.35 per diluted share compared to net income of $105,700 or $0.01 per diluted share income in the fourth quarter of 2024. This is largely due to one-time items of allowance of bad debt of $6.66 million, termination of the license agreement of $2.9 million, write-off of obsolete inventory of $1.04 million and the write-off of prepaid media credits of $0.9 million. Without those one-time items, net loss would have been $3.35 million, which is impacted by the increased professional fees for corporate development. EBITDA loss for the fourth quarter was $13.28 million compared to EBITDA income of $1.68 million in the fourth quarter of 2024. Adjusted EBITDA loss for the fourth quarter was $4.48 million compared to adjusted EBITDA income of $2.79 million in the fourth quarter of 2024. Now turning to our full year results. For the full year of 2025, revenue was $30.38 million compared to $34.83 million in the year ago period. Without reversing the $2.9 million in license revenue, our net revenue would have been $33.28 million in 2025. Gross margin for the full year of 2025 was 66.8% compared to 67.9% in the year ago period. Without the previously discussed inventory write-off, gross margin would have been 70.3%, an increase over prior year. Operating expenses for the year were $28.76 million compared to $17.84 million a year ago. Without the one-time items previously mentioned, operating expenses would have been $21.24 million, which is impacted by the increased professional fees for corporate development. Loss from operations for the year was $8.46 million compared to income from operations of $5.8 million a year ago. The decrease is also due to the one-time items as discussed. Without them, the full year income from operations would have been $3 million, impacted by increased professional fees for corporate development. Net loss for the year was $12.3 million or $1.27 per diluted share compared to net income of $2.1 million or $0.28 per diluted share a year ago. This is also due to the one-time items as discussed, offset by a gain on the settlement of our notes payable of $2.15 million. Without those items, the full year net loss would have been $3.03 million, which again is impacted by the increased professional fees for our corporate development. EBITDA loss was $6.19 million in 2025 compared to EBITDA of $6.46 million a year ago. Adjusted EBITDA and income was $800,000 compared to adjusted EBITDA income of $7.35 million a year ago. Moving to our balance sheet and cash flow. As of December 31, 2025, we had cash and cash equivalents of $2.6 million compared to $687,900 as of December 31, 2024. Inventory was at $3.7 million at the end of the fourth quarter compared to $1.7 million at the end of 2024. At the end of December 31, 2025, we had $33.3 million in total liabilities compared to $33 million in total liabilities December 31, 2024. At December 31, 2025, we had a working capital surplus of $1.78 million as compared to a working capital deficit of $1.12 million as of December 31, 2024. For the 12 months ended December 31, 2025, our cash used in operating activities was $2.6 million compared to cash used in operating activities of $4.8 million at December 31, 2024. The decrease primarily reflects higher noncash charges, including bad debt write-offs and stock-based compensation as well as improved cash collections and accounts receivable, partially offset by the increased inventory investment and the gain on the settlement of debt. Now I will turn the call back to the operator. Operator: [Operator Instructions] And our first question will come from Sean McGowan with ROTH Capital Partners. Sean McGowan: Can you hear me okay? Jack Ross: We can. Sean McGowan: On your comments on the RTD year-to-date being better than all of last year, it kind of implies that the fourth quarter was, I don't know, maybe $200,000 or something and -- so what is still going on there that kept out from being a lot higher in the fourth quarter? Jack Ross: We -- as you know, we just raised the money to actually build the inventory in August and to actually get the inventory built takes time, meaning 8 to 12 weeks to build the inventory. So we just really received the majority of the RTD inventory in-house in December. So that's what affected that. Sean McGowan: Okay. And looking at some of the other lines, was, let's say, compared to the third quarter, was Flat Tummy up? Jack Ross: No. Flat Tummy continues to decline. The weight loss business is being heavily impacted by the GLP1s. It seems that the whole industry has moved to those. So we'll be making a strategic decision on Flat Tummy in the near future. Sean McGowan: Okay. And then on the core supplement group, what's going on there? Jack Ross: The core supplement group, I think, is relatively strong. We continue to add key retailers like Kroger, we mentioned, although the TV advertising is very key to that same-store growth. We have our competitors. We all know who the competitors are pounding the TV airways every single day and night and we need to get that TV turned back on. Sean McGowan: Okay. And what do you think the outlook is going to be with a lot of these one-time things behind you regarding gross margin? Jack Ross: Jamie, you want to talk to that? Jaime Fickett: Sure. We anticipate gross margin to maintain its current level or increase. Again, it was impacted largely by those one-time items. But other than that, our gross margin remains stable. Sean McGowan: Do you mean -- when you say at the current level, you mean excluding those one-time items? Jaime Fickett: Yes. Sorry, like as I read in the script. We look at it normalized. Sean McGowan: Okay. And has there been any other changes to your approach to kind of go-to-market strategy on the RTD as you look to roll that out? Jack Ross: No. I think again, it's a sales cycle, Sean, right? So these things are all driven by planograms. So you really get twice a year where you can really call gain meaningful distribution and we'll call it the major chains. Certainly, you can add smaller chains in the meantime. But we continue with the sales cycle. We do expect -- this is big news. We do expect to have some Costco roadshows coming up in different regions, and we expect to have a BJ's road show coming up. So it should be some meaningful growth there on the beverage side. Operator: [Operator Instructions] And our next question will come from Edward Woo with Ascendiant Capital. Edward Woo: Congratulations on the growth in Mexico. You guys recently formed a subsidiary in Mexico. Are there other international markets that you plan on creating a subsidiary to ship directly in those markets? Jack Ross: Edward, good speaking with you today. No, we don't have any other any other plans on open and international markets directly at this time, although Mexico is a massive opportunity for us to build out the retail network there. So having that subsidiary there allows us to do that. But as you can see, we've started a lot of initiatives last year and for Synergy 2026 is about executing against those initiatives. If those TVs turn back on, get the same-store sales growing, get the opportunities in Mexico that we've already identified up and running and continue to grow our beverage business, that's the focus for 2026. Operator: At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Ross for closing remarks. Jack Ross: Thank you, everyone, after joining the earnings call today. We look forward to speaking to you shortly as we report our first quarter 2026 results. Thank you. Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Artur Wiza: Good afternoon, ladies and gentlemen. I'd like to welcome you very cordially to the conference dedicated to the results of the Asseco Group for 2025 today. At today's conference, we will summarize our operations for the previous year, for last year, and we'll also convey information pertaining to the backlog for the upcoming year, for the current year. During the first portion of the conference, we will have the presentation. The latter portion we will invite you for a Q&A session. We have the CEO, Mr. Adam Goral, and we also have Rzonca-Bajorek, who is the CFO of the group; as well as Marek Panek, who is the Vice President of the group. I'll go ahead and give the floor right now to Adam Goral. Adam Góral: [Interpreted] I would like to welcome you very cordially. I'm pleased that we're all here together. And above all, I see in the first row, we see people who decided to be here physically in attendance. And of course, with full respect for all those persons who are participating remotely. So I'd like to welcome everybody very cordially. So Artur didn't emphasize that this is a special meeting because in a year, we Rafal Kozlowski will have to be here. And for me, this is going to be a totally new situation, of course, with the hope and looking to the future because I'm going to move into the Supervisory Board where I should be the Chairman of the Supervisory Board. And so Asseco will always be with me, and this is my entire life, of course, outside of my family, but I treat this company as a member of my family. I'm going to have to be vigilant because I want Rafal to be a leader with his attributes. He's a little bit different. We're different from another. Of course, I have a guarantee of one thing that he represents espouses the same values and that he's perfectly well prepared to run this company -- and I'm sorry for saying that saying that I believe that it was well run. But I think the company was in good hands and was well run. And having in mind that I have a good hand towards other people and is managed by really great people. And so we come here in great sentiments. And these sentiments, of course, are somewhat toned down because I would like for the world to look a little bit differently. And there's a lot of bad people heading up some company -- countries. And even though you have wonderful results, people are aware of their responsibilities, their liabilities, and it's a shame that the world is -- has much turmoil, but we don't have any impact over that. Today, up until now, the various wars have not obstructed us. I don't really want to talk about it. So we have our leader on Friday, I was talking quite a bit with [ son ]. And when we hear that 12 times during the day that you had to go into like the bomb shelter, then you become aware of what it means to think about a war. It doesn't matter who started the war. It doesn't matter who's at fault, who's the guilty party. We have to think about these people who are suffering in Ukraine and those people who are suffering war at the hands of war. And so these wars, I'm not going to say they are helping us or acting as a boost, I'm sorry, during the pandemic period, I had hoped that these times would teach us something that the leaders of -- the global leaders would understand, would grasp the concept that there's not that much that needs to be done in order for us to be totally disappear. They have to understand that human life is of importance. And so that's all the more reason to be disenchanted. But thanks to the wonderful work of tens of thousands of people in the Asseco Group. I'm able to come here today in convey wonderful information. And the previous year was a great year. It was a record-breaking year. And the net profit of PLN 1.139 billion. We have the successful sales. We were able to sell at a good price. And so we had basically 119% growth. And so we made these decisions because we thought that Sapiens should have a new impulse. And today, jointly with Advent, we want to make sure that this impulse will continue to drive us forward. And we hope that, that 18% will have a huge loss of roughly PLN 500 million of that EUR 1.139 billion is due to Sapiens. The rest, which is also record-breaking is linked to the organic growth that we have achieved. And so I'm pleased that we are well positioned in Poland and Central Europe, and you've been able to look at that, and we had a more difficult period. And I'm, of course, under a great impression that as we've been having seen the organization being run by Jozef Klein, our leader. And so for me, the test of his person as a manager is an exceptional year. This was the difficult time when those countries and we are dependent on government projects. It didn't seem that it wasn't spending money on IT and it seemed that some of the substantial EU funds that were being allocated to the energy sector and then Jozef's ambitions led to a situation. Well, it was a very difficult point in time for him. So I'm pleased that they were able to survive and this very difficult period, they were able to draw conclusions, and they were able to perceive the weaknesses of the organization, and they utilize that time in order to eliminate those weaknesses. And today, they have a wonderful 2025. And today, we believe very strongly that they will continue to prosper in 2026. So that group in terms of what's linked to Asseco International, we have reasons to be proud. And in these difficult and challenging times, our teams in Israel. This is a global company, of course, has done very well has coped very well. And so we've known for years that we have exceptional wonderful people there. I remember because I'm going to have a request when we talk about our stock exchange. I don't entirely understand this that we're not able to vote on that 1.5% for my team. So take a look at this. I was a person who was looking at the interest of the investors, the management and the people working for this company. And if I'm going to be in the [indiscernible] I'm going to be in the Supervisory Board, I'm not going to be able to -- operationally, I'm not going to be able to scrutinize these things. Ralph is going to do it, but these 95 people, for us, for the investors, this is the safety in terms of people fighting for the value of this company. And this is the time to encourage you to look at this vote. Once again, it's really worth looking at closely. Do you know why we've been able to achieve such a great success in Israel, the first thing that I did was I met with guy and I gave him a certain number of shares. Of course, in the voting, I wasn't afraid that he's going to be -- he's going to be the richest person in the world. Of course, I wish that to him. Look at the business we've been able to do there. Of course, those equities might not have been the deciding factor, but he had an incredible amount of motivation to run the company in such a way because we say that we're controlling some company. But in our area, there's no bonafide control as a leader, I'm dependent on thousands of people. In terms of how they're operating. And if that later would want to do something, it would be possible to do that legally. And doing this simple maneuver, we were able to achieve a very simple and straightforward objective. And so the $143 million has paid back quickly. And I'm pleased that our investment in Israel is the largest Polish investment. And so we've only got good experience under our belt here. And some of you had given us heatings, warnings, but they're going to try to, let's say, maneuver you and somehow do something. We have a wonderful success there. Take a look at this case and think about my people, please. Think about them who are totally deserving. Of course, they've created this beautiful history of Asseco. And this is not a salary for the history. There is a portion of that is remuneration for -- but this is also remuneration for what they're going to do in the future. So I'd be grateful if you were to follow and embrace my thinking, I'll give the floor to Marek, and we'll drill down into some of the details, and we'll talk about the individual results. And then at the end, I'll take the floor -- I go ahead and bore you a little bit more because I continue to think about the future of this company, and I'm going to tell you a little bit about how I see the future. So I'll give the floor to Marek. Marek Panek: [Interpreted] Thank you very much. So having in mind what Adam said that we still have the final section of the meeting during which Adam is going to want to speak to the future. I today will try to speak more succinctly and I'll take less time than usual, especially since the trends we've observed over the last 3 quarters were sustained and nothing happened, nothing extraordinary happened in Q4. And I think this -- so it wouldn't be necessary to talk about. Let's talk about the profits. So Adam mentioned the net profit, which is PLN 1 billion nearly PLN 140 million. But look at some of the other 2 numbers. So we have revenue at nearly 16.7 -- so it's PLN 16.780 billion, and this is a 12% increase year-on-year. And then we have operating profit, which is in excess of PLN 1.6 billion, and the increase here was 11%. As a matter of tradition, I will show you the split of our revenue by operating segments in terms of geographies. And you can see this is not a mistake. That all 3 of our segments were growing at exactly the same pace of 12% year-on-year. And if you start on the right side, Formula Group, which is the largest, and this is some 60% of our revenue, we've been able to achieve nearly the PLN 10 billion watermark. And then we have international, which is some 27% of total revenue in the group. So we have PLN 4.6 billion. And then we have the Polish segment, which is the Asseco Poland segment, and we have nearly PLN 2.3 billion in revenue. As I mentioned everywhere, we have across the board a 12% pace of growth year-on-year. We'll also show you the revenue by product groups. Here, I will not discuss this in great detail. You can see that all of our segments across the board are basically growing. In some cases, we're growing more quickly. In some cases, we're growing less quickly. All of the solutions that we have for public institutions, which represent 25%, so 1/4 of the total revenue of the group, we have very dynamic growth of some 15%. We're pleased with what's happening in banking sector from the very outset of our operations as Asseco. This is a very important and significant bulk of products or segment of products that we've been offering. So we have nearly PLN 4.7 billion. So it's more than 8% increase. And so all these things are pleasing to us. We're pleased with the diversification of our business. So the top 10 customers in the revenue of the overall group is a mere 12% of the total revenue of the group. And so -- so the largest customer represents 2% of total group revenues. So we're not dependent on any single customers or clients. And let me say a few words about our solutions for finance. We'll talk about the other segments as well. So we have across the group, some PLN 3.7 billion. We have in revenue, an increase of nearly 5% year-on-year. And so you can see in the Formula Group up until now, it was always the leader and was the major contributor of revenue in the financial segment. Now it's #2. And that is a result of the fact that Sapiens has been extracted because it was sold as was stated previously. And of course, this formula system segment is still doing very well. So it's nearly PLN 1.5 billion at 11% growth. Then we have Asseco International, which came in at PLN 1.6 billion, which is 4% growth. And we have Southeastern Europe and PST, which is our company in Portugal, which is operating in the Portuguese market. And then we have Asseco Central Europe. So all of these businesses are growing well. Then we have on top of that, Asseco Poland. So this segment, Asseco Poland segment has a 10% uptick in growth. And here, we're the market leader in terms of banking and lease companies as well as brokerage houses. And so we're very pleased because this business for many, many years has developed nicely. If we think about our public institutions, the growth is much more dynamic than in the financial sector. So we have a 15% increase year-on-year. So it's more than PLN 4.15 billion. And so we have the International segment. Well, for a couple of reasons, that's grown so fast because it's the Czech and the Slovakian markets. And as you recall, we had a stagnation there in previous years. We've been able to rebuild our position. And so the revenue is substantially higher. And the same is true in Southeastern Europe. In the Balkan Group, and so 2024 was clearly a softer year. And so we have experienced dynamic growth on this revenue. In Poland, our growth is nearly 20%. So we came in at PLN 1.2 billion in revenue. So in Poland, we are the leader in terms of our solutions for public institutions. We're a major player in terms of public administration for the health service as well as for the power sector, where our position is a leadership position. And so we're very pleased that the business has grown at such a fast clip. And then we have Formula Systems, which you can see is the major contributor to the revenue. In public institutions, it's seen 11% growth with revenue coming in at PLN 2. billion -- nearly PLN 4 billion. And the final segment that I would like to cover today is ERP solutions. So these are our businesses within Asseco International. So as a matter of fact, it's Asseco Enterprise Solution, ERP solution in Poland, Germany, Slovakia, Czech Republic, we see 8% growth and revenue over PLN 1 billion. You might have noticed that another line disappeared Asseco Poland segment. But this is the reason -- the reason is that DahliaMatic that used to be reporting to Asseco Poland was transferred to Asseco Business Solutions and now is part of the Asseco International segment. Therefore, it made no further sense to show Asseco Poland segment. In Formula Systems, we also have our ERP solutions at a lower scale, but we are very happy to see a 14% increase and revenue over PLN 6 million. We continue our acquisitions 2 slides to cover this story. We are showing all the acquisitions completed last year, Asseco Poland segment and Asseco International segment and Formula Systems segment likewise. That was the greatest bunch. Altogether, we had 13 new entries joining the group last year. So we were keeping the pace from the previous years. Every year, we have a dozen or so new companies joining the group. And we continue our efforts as we speak. We are scanning the market. We are speaking to [ content ] companies, and we are looking for the best match. We have definitely more selective approach. We don't want to just build our mass, but we want to have entities that have specific features in terms of products and competence that they bring to the table. And obviously, we have to look at the price that we need to pay and the return that we can get on each deal. Now when we look at the formula, I have to emphasize that it was a special year for formula systems acquisitions and corporate governance involvement. In addition to the acquisitions that they made, you may recall because we've mentioned that already in Q1, this year, we reached the sort of final line. However, we've been working on it since 2024, namely the combination and Matrix and Magic were joined as one company. So today, they are the largest company in Israel and one of the top 10 IT service providers globally. That was a major project, and it turned out to be very successful. We've already heard that Sapiens sale was a long project, a difficult project, but at the end of the year, very successful. And another sort of tier that we are building here, Michpal, that's the new company that was listed on the Israeli Stock Exchange last year. This is mostly HR and payroll solutions, software companies and service providers. So we are happy to embrace that because we see a lot of growth potential here. So we see a lot of good prospects for the future. Guy has a lot of ideas. He has a healthy and sound pipeline of M&A projects, and I believe that he will be delivering that step-by- step. Thank you for your attention. Over to Karolina. Karolina Rzonca-Bajorek: [Interpreted] I will briefly cover the financials. On the first slide, you see the key numbers. Marek mentioned revenue. We are almost at PLN 17 billion. And we remember that Sapiens was sold in December last year. So it was already excluded from the individual items of our P&L. So it was shown in one line as a discontinued business. Therefore, this is all comparable when you look at these numbers. It's comparable to the prior periods. So over PLN 16 billion of sales. Our own proprietary services PLN 12.6 billion and a nice growth of 7% in both items. And Non-IFRS EBITDA and Non-IFRS EBIT, 8% and 9% up, respectively, and it's PLN 2.5 billion for EBITDA and over PLN 2 billion for Non-IFRS EBIT. And Non-IFRS net profit is PLN 742 million and CAGR, the best of the past 5 years, 9% up. And for some time, we've been showing P&L items between the years. And here, we are sharing this information again. You may see that there is less negative impact of the currency exchange compared to the prior years. It is still a negative impact, but not major, PLN 48 million in terms of revenue and PLN 4 million in terms of operating business and Non-IFRS. We are truly happy about our organic results, PLN 1.3 billion it's ours organic sales. Across the group. And that was translated into PLN 300 additional million operating profit, non-IFRS. And acquisitions is PLN 452 million at the revenue line and PLN 46 million at the operating income, Non-IFRS. Net profit, Non-IFRS, we show which segments were the greatest delta contributors on an annual basis. And we can tell that Asseco Poland is doing very well. The Marek company is showing exquisite performance, but you may scrutinize in the stand-alone financial statement, minus [ PLN 11 million]. So it's a [ interior ] contribution from Formula Systems segment. The main reason is that Sapiens was consolidated over the course of 12 months. But in Q4, we had a first restructuring processes and the cost of that charged the result for the Q4. And Asseco International contribution was PLN 49 million more compared to the prior year. When you look at the entire P&L statement, and we are happy about the dynamics, 11% growth year-to-year revenue and proprietary software and services, over 15% Non-IFRS EBITDA goes up and 20% nonoperating profit, Non-IFRS and 11% the standard operating profit. And here, there is a slight decline when it comes to profitability year-to-year. But please note that it was just Q4. And the reason is in the line that you will find below and namely M&A. This is all one-off events. PLN 67 million is the write-off at Formula Systems for ZAP company. Well, they were not doing as well as we were projecting at the moment of the acquisition. So we decided to actually write off that asset. Some costs were generated by the transaction that Marek referred to. So the merger of Magic and Matrix is PLN 67 million. And then we also have some write-offs from other companies and PLN 15 million was our own project, our own investment, goodwill and assets in Nextbank company. Now what is happening below the operating profit line? Well, you can tell that we are efficiently managing our debt. We were decreasing debt year-to-year. Interest income, the cost of interest is less year-to-year. And the currency line, it's mostly the formula. Formula is reporting in [indiscernible], but they were paid for the Sapiens deal in US dollars. And the translation of the currency balance, even with a small exchange rate decrease generated major foreign exchange impact. Well, we may say that this is just an accounting impact. M&A, I've already covered. And for some time, we've been affected by hyperinflation, and that is Turkish business. And the share in profit of associates looks very nice, but this is formula who is the main contributor. We had the indexation of the revaluation of the -- our investment in the company that was doing SPO, but this year. And therefore, we have the step-up and therefore, we are showing better numbers. In addition to that, we have profit on the discontinued business or discontinued operations. So this is the accounting result that we show on sale of Sapiens, PLN 500 million. This is what we show in the current report, and this is distributed to the shareholder of the dominating company. Now the Sapiens Group. I think that we need to align our projections when we look at the operating revenue and operating profit, well, the Sapiens was a major contributor to these lines. Therefore, for 2026, because of the sale of Sapiens Group, we will be probably PLN 2 billion short in terms of revenue on our operating business and probably around PLN 350 million profit on our operating activities. So Q4 was really charged with the cost of the sale transactions at the cost of restructuring. Therefore, I would rather look at prior year instead of Q4 2025. So that was the explanatory note to Sapiens. Now what is happening across different companies. As I said, we are truly happy to see the performance of the Marek company. In terms of the dynamics and profitability, both were very, very decent. Your notes, analytical notes, expressed some surprise about the net profit contribution. Let me just explain. But when we speak about deals like the sale of Sapiens, the taxes such as CFC are actually booked to Asseco Poland line. And therefore, it is really a charge to our net result. And this is a one-off effect. In case of the Sapiens sale, the Marek company had to pay -- or had to show almost PLN 24 million of additional tax, namely CFC. So the effective tax rate for the Marek company seems to be surprisingly high, but this is the one-off effect of that transaction. In terms of other operations in Poland, Asseco Data Systems is improving their performance, and I think that they are doing quite well and other major companies seem to be in good shape likewise. Now Formula. Here, we decided to show Matrix and Magic together in one line. And as Marek explained, in February, the merger was completed. Right now, they are going to operate as one company. Magic was taken off the stock exchange. It is actually the subsidiary of Matrix. Therefore, you need to look at them as one group. And in terms of other companies, we have consolidated Michpal that was listed on the Israeli Stock Exchange this year. And we have a new subgroup under Formula. The working name or actually the formal name is Formula Infrastructure. Now Asseco International segment, we are truly thrilled with the improvement that Slovakia demonstrated. Adam highlighted that. This is both true for the core business, the public sector business, our health segment in Slovakia. It seems that they really rebounded and they improved substantially. But it needs to be highlighted that in this line, we have our ERPs. So excellent performance of Asseco Business Solutions. We also have major improvement in profitability in Germany. So that's another reason to be happy. And now the Southeastern Europe -- so great performance in dedicated solutions, major improvement year-to-year, very good result in the banking sector. And the payment segment, very decent, too. We need to remember that they are actually charged with the write-offs in India. I believe that [ Piotr ] mentioned that during the conference earlier. And there are some risks that emerged in that segment because of the loss of one of the Turkish customer and the potential loss of another customer in Turkey. Both of them are actually switching to in-sourcing. Therefore, they will drop from our customer portfolio. If we look at cash, I think this is something that has been observed. We have very robust cash flow across the year in Q4 as well. And this is true across the board, across the group. So it's 122%. And if we look at EBITDA, this is something that we've been displaying for years. And Asseco Poland this is 124% it's 109% in international and Formula Systems, 128%. So we had specially good cash flow in the Matrix ID company. And let's take a look at the balance sheet. And you can see that the header is more up to date than previously. And you can see the amount of cash. So it's more than PLN 7 billion on the bank accounts of the companies in the group. and Asseco Poland, which is the mother company and from the sale of treasury shares, it's more than $1.5 billion. Then you have Formula Systems. Here, we need to remember that more than $750 million was obtained from the sale of Sapiens. And this is also on the accounts of the company or in the segment at the end of last year. If we look at the proportional recognition, as is the case in the full recognition, we have certain reconciliations year-on-year. And so we can look at the contribution of the organic businesses and so PLN 734 million and then EUR 110 million from acquisitions. And then if we look at the operating profit Non-IFRS and so we have 3 from acquisitions, PLN 216 million from organic results. We have to remember about some of those impairments. I talked about them previously, the M&A adjustments. And so they're in this proportional recognition. What's also important here, as I've mentioned, that some of these impairments are through Formula, but we also have the Asseco Poland as well. And if we look at the proportional results, we can see that the growth rate is better and the profitability and the improvement in profitability is better. And this is a result of the fact that the Polish segment and Asseco International saw market improvement. And we also show the main companies. I don't think I will discuss that because we've already discussed that. And if we think about the proportional recognition of cash flow generated, it seems that it's very decent, 27%. And so we have 124% in Asseco Poland and 114% in International and 127% in Formula Systems. And so then we have the balance sheet set up on proportional recognition. So the cash available to the shareholders or the holders of the parent company. And so it's PLN 3.3 billion, then EUR 1.5 billion in Asseco Poland and then Formula and Asseco International. So this information has been indicated that a portion of this will be paid out in the form of dividends of some $200 million has been communicated and that this will be paid out in the formal resolution of the shareholder meeting. Well, of the Board of Directors will be made after the -- this will probably be in May once the financial statements of Formula Systems are approved. Then if we look at the backlog, I think we've got a satisfactory growth rate. This information coming from your releases. And so -- if we look at own proprietary services and software and 19% in Asseco Poland is like 17%. And so it's more or less equally divided on public systems and financial sector. So hence, we've got 9% for Asseco International and 14% in Formula Systems. And if we look at this on a proportional basis, we have 16% in Asseco Poland and 10% in Asseco International and 14% in Formula Systems. And then I mentioned the dividend. I said that we have very decent cash flow, and we have a very stable position -- cash position if we look at our balance sheet. And these robust results give us the ability and the wherewithal to pay out a dividend of PLN 1.051 billion, which translates into PLN 13.05 as a dividend per share. Of course, treasury stock doesn't participate in that and 3% of our shares are in the form of treasury stock. And so the PLN 13 per share as dividend per share. And if we look at the consensus opinion here, it's probably around PLN 11 was, I think, the figure that was stated in the consensus. Why did we make the decision to pay out PLN 1.51 billion. The first tranche would be paid out in terms of the cash proceeds from the sale of treasury stock. So we had received more than PLN 1 billion. And so PLN 500 million with plus would be a little bit -- that would be half of that would be from the sale of treasury stock and the rest. And so we took a look at the free cash flow. We factored in on our balance sheet. We looked at the results, and we came to the conclusion that all of this taken together would give us the ability to pay a higher dividend from our current results and cash flow, and that's what fed into this defining the specific figure or calculating the specific figures. Adam Góral: [Interpreted] So thank you very much, Karolina and Marek and my friend who's been listening to us that these are wonderful results, and you guys are even smiling, so I'd like to apologize. It's because of my gravity because I was talking about the world itself. And let's forget about the world for a little bit. Because we have enormous reasons to be joyful and satisfied because these results are wonderful, and they're linked to our efficacy, to our wisdom and to the cogent execution of our strategy. These are things that have happened. I've never lived in the past. So only future is of interest to me. And so of course, we're living in interesting times. So there's the AI battle, which is not easy to monetize in terms of what -- it's not having an easy go at monetizing what is achieved up until now. So this world is giving us wonderful opportunities, and new hopes. We have this battle for the world in terms of AI with us. Of course, this world isn't monetizing things because they're thinking that we're operating too slowly and informing the world, quite the contrary, that we do appreciate what AI is doing because we've reconciled ourselves that this is happening with the tools, but there's a large number of our people who are following this world or tracking that world that we're going to utilize that in a wise fashion. And Asseco's strategy is unchanging. [ Rafal ] is something that will continue along with my new wonderful partners, and we agreed that at the outset, we will continue to make sure that we're going to specialize in the producing software and services related to the software we're going to write. And this is going to be the predominant or prevalent portion of our revenue. And where it's sensible, we won't, of course, resign from integration. We want to make sure there are several regions where we are very strong. We don't want to lose those footholds. We will continue to build and make sure that we're building our sector position, sectoral position. This is something that I'm very proud of. In the near future, I'll have a meeting with my teams responsible for the various sectors and each sector is coming in with its vision for the upcoming 3 years. Of course, our strength is [ individually ] our knowledge of our customers, our customer knowledge and our customer knowledge is something that's been proving its position, its importance in Asseco for some 35 years. So I've been the leader for some 35 years. So this year, we're celebrating the 35th anniversary. We're not going to make a major celebration as a result, isn't that true? But it's a wonderful Jubilee celebration. And the fidelity in terms of our education, the awareness processes that customers utilize. This is our greatest value in the marketplace. And having in mind these new times, well, our fortune is predicated upon the following that we are present in many institutions. Well, these are nonstandard solutions. So AI trying to learn those types of solutions is something that will take a lot more time for that to be replaced or for that to be done. And so this knowledge that we mentioned on the first slide in terms of the teams of people, we talk about our human intelligence. This is going to drive the future of the company. And here, we have an advantage. And I'll show you another slide in a moment. We talk about our experience in a given area is also a great source of value. On top of that, we are utilizing and we are utilizing AI. I will show you where we are because we've made enormous inroads for many years, we've allowed ourselves to be dispersed. We've been a little bit chaotic. So 1.5 years with [ Garrick Brown ] who was -- has been running business intelligence for many years in a wonderful way and in our business division. And so we've appointed him to be a leader in terms of AI. And then I'll show you what we've achieved thus far. Our goal, we want to utilize these tools to enhance the quality of our operations, our activities. We want to be more efficient. We won't use them to restructure. We want to do more with the exact same team. That's our concept. And I'll give you some evidence that we are far along the path in terms of implementing this concept. So in some cases, we have a little bit more time as opposed to those areas where the standard plain vanilla solution is the name of the game. So when we talk about the learning process, that standard, that plain vanilla approach for those companies that are selling the plain vanilla approach, this is going to be something that's going to be precarious for them because those companies will have greater problems. We -- by utilizing our tools wisely, we're going to speed up the pace at which we're utilizing those tools. So our sectoral knowledge, which is a type of capital, this is an edge that we hold. So we have more than 30,000 employees I don't like the word employees, but that's what we wrote on the slide because these are my business partners in some more than 50 countries, the knowledge about the banking sector, about the health care sector, about the government sector. And we have people from various countries. No country has been capable of creating a solution for the government that would be a plain vanilla solution that one size fits all. This gives us some time to learn these AI tools and utilize them at the right point in time. So 12 years is the average seniority in Asseco Poland, somebody could say, well, you guys are old. Well, take a look at the last item, more than 8,000 people applying to participate in our internship programs in 2025. So in the on-boardings, we need these young people, and I convey that to them. I impart that knowledge to them. We can be -- I've never lived by success. I only see problems, and I'm interested in solving problems because I know that we're going to be better as a result. But if people are, let's say, somehow have -- they're just quite. So we're bringing on board these young people. So 12, 15 years ago, I delivered a lecture at the Warsaw University where we're being promoted and touted and Artur hadn't yet joined us. And I was showing thousands of articles, lots of publications about us that everybody knows everything about us. And I was asking the most outstanding IT experts at the University of Warsaw Do you know something about Asseco? And they didn't know anything about Asseco. So I'd like to thank Artur here. From that point in time, we've made huge inroads because our brand recognition that the young people want to join us. And we have young people. Sometimes I'm surprised they want to learn COBOL because we have solutions at PKO BP, which is a COBOL solution. And so I'm pleased to see that young people want to learn COBOL. So you should learn it, but you should make sure that you're diversified in terms of your knowledge business. You can't lose from sight those tools that are timely today. And you have to have that knowledge about other types of tools. And so you should take pains to ensure that you have those things mastered. So that's why I'm calm at ease that this company is going to be healthy, but somehow not entirely quite, not calm. We're #1 in Poland and Europe, many countries. We always talk -- say one thing about that, but the other talk -- the other things we talked about in 10 years, we want to continue being a wonderful company. We want to be a competitive company. Of course, I fully believe that we will be such a company, and that's clearly the case. Why am I trying to be reasonable about AI? As a businessman and entrepreneur, I've been through a time when IT was about distributed architecture. We were one of the very first Polish companies that were centralizing IT systems. And some people were saying, "Oh, you will get lost, the Polish system will never survive." but we made it. We were able to centralize whatever had to be centralized. And then there was a moment of the Internet frenzy. Unfortunately, we were not the main players in that field because we didn't offer the tools. But please note that we were able to grab quite a place for ourselves and build it up. And then the cloud came up. And from the very beginning, I was cautious about it because cloud mean when you have a public cloud, it means that you give single individuals huge power over everyone else. And today, I'm really happy to see the Polish government taking measures and looking at the local content. This is what we are really trying to do. Other countries have done it earlier. I've been fighting for it over 30 years because I've always been of the opinion that Polish people should depend on themselves or [indiscernible]. Let's do it the same way other nations do it. Today when we look at our Diplomatic Corp and our economic diplomacy in different countries. I also noted a major progress. You can actually rely on the Polish ambassadors. They really want to help you. And it started back when we had the first government of Civic Platform and land justice was keeping it up. And now the coalition is doing it again. We have great ambassadors for our beautiful growth and development. I'm really proud that Artur is actually setting up the meetings and people show up. People want to help us sell because they show that we were able to grow. And I know for a fact, but if we take good care of all these things that I mentioned, we will not get lost in the new world where the AI becomes a major player. Now look at [ Adam Goral ] and his team. In June last year, they made a promise, Adam, in December, we will cover your entire internal production process with AI solution. It's been covered. We have been implementing it internally. No not much is going to change with our customers because when we approach our customers, we want to solve their core problems. We don't talk about the products. We say, okay, we help you increase your sales with IT solutions. A we enhance your security or we help you control and curb your costs. So we sell that. The tools are secondary. Why am I saying that we are cautious and we try to be wise about it. The only value that we truly have is our customers and the value that we are able to bring to them. If the customers are disappointed with the solutions that will be driven by AI, we will be doomed. And some AI-based solutions are not stable, are not mature. So this cautious approach, but I'm advocating here. Is something that is not appreciated by the evangelist of the new tools. They think that we should take a different approach. You may have noticed, but there are other peer companies that are similar to us, and they've been dropping in value 20%. This is like pressure on us to get our act together and act faster here. But I have a message to everyone who wants to make money on AI. No worries here. We are going to do it in a smart way. We are going to take advantage of everything that you have developed there, but we will do it in a way that brings the real and true value to our customers, and we are not going to experiment on our customers. So the entire AI process is somewhat atypical for our organization. That's the way we do it. We opted for the federated model, and this is how we do our business. We really wanted to enhance enterprise in all our locations. We didn't want to kill the local spirit. So 3, 4 years ago, we worked everywhere on these themes. Today, we are trying to integrate that and centralize that, not to overlap and double the costs. We are trying to develop the model where Slovaks do not feel fully dependent on Poles. We want to make sure that Balkans curb some room for themselves. And I believe in that model. So the advantage over the companies that have holdings is such that they have to actually scrutinize each of their group companies. They didn't integrate it. But we are pretty well integrated across different sectors. And therefore, once we have AI solutions, it will be much easier for us to implement that than for those who have completely distributed and dispersed business. Therefore, I do have faith. I think that this is my new passion, and that's something that we are going to deliver. I don't want to bore you with the stories of all the sectors that we support and cover. I'm proud of the leaders we are disruptive, but in a healthy way and our ambitions run high. But there are 2 things where my ambitions have not been met. One is cybersecurity. We have a small company concept, and we are not yet happy with them. They are not efficient. Despite the fact that they have smart people on board, they can do a lot, but we are honest about it. We haven't been able to develop the business model that would be fully aligned with Asseco philosophy. And another area is solutions for defense and armed forces. And we have very strong references because we are supporting Frontex. But nevertheless, something is missing here. I believe in my leaders, and I believe that we will see some progress in these areas. Right now, we have a great project in Togo on the radar. You may remember the project that we successfully completed during the pandemic in Togo. We have a Togo company shared with the government. Togo is a very pro-European country, and the leaders are very well educated. And I'm really thrilled because we signed a contract for the development of the system for the Togo Armed Forces for their army. So that also has to do with the cybersecurity and solutions that address the needs of the armed forces. But now we are also trying to find a good partner for cybersecurity business. We are looking for a company that would be better than our current capabilities. Today, we are talking to a company that is of great interest to us. But at the end of the day, there is a price. You pay for the history, but you are buying the future. So we have to be reasonable about it. So this is something that I'm going to really look at and take good care. I think that in our countries in Eastern Europe, these areas have not been truly developed yet in terms of business. I believe that if we find the right leader, we would be able to build a very strong regional position. So that's what I have in my screen. Okay. So once when I am going to be on the Supervisory Board, I'm really going to harass -- sorry for my word, but everyone who will be responsible for these areas that I have just mentioned. But they know how I handle that. I have a lot of patience and -- but I believe that we will be able to build a new position for our business. And the time comes when we have to assess our partnership with our friends from the Netherlands. I'm saying that they are our friends. It hasn't been a long time, but I have to say that we are really pleased I am grateful. Probably the transaction would have never occurred if we were not able to keep the Polish control, so to speak, in terms of the power and being able to decide about the strategy. They come from the background that has a different strategy. When we were buying companies, we were integrating and building our integrated position. Their philosophy is that each company that they acquire, they have as a separate company within the group, and they actually have a separate settlement for each investment. This is a different approach. But now they are looking at the way we are doing it because they truly appreciate the fact that we are in a very special point in time. AI is definitely affecting or impacting our world and our companies have to respond adequately. And I would like to really acknowledge our gratitude to them. I would like to thank them for their openness, for being so generous with their knowledge, the expertise that they have with acquisitions and with handling of the companies once they are acquired. They also have a lot of expertise in finance management. So I have to say that they were really open about it. We were actually borrowing some of their solutions and methods. Some KPIs that they have been using. This is not very surprising to us because they were looking at cash flow, and we were also very mindful of our cash flow. For them, cash was #1 and so has been for us. But they also have other KPIs that really help, but they keep people motivated. They also have KPIs for software companies that are able to identify certain weaknesses. We've been also looking at that, but I'm really happy that we were able to tap into the expertise of these KPIs because to be honest, we were relying more on our intuition here. And based on that knowledge, I think that Rafal can claim the greatest contribution here. Asseco growth. And this is the project that started a lot of commotion within the group because everyone thinks, okay, we've been doing it for years. We know everything about software. But suddenly, it turned out that others approach the same thing from a completely different perspective. So I have to say that it was a very informative and educational experience. And I really wish that we would have this 1.5% approved. I don't feel sorry about the 3% that I didn't get, although they told me openly that Adam, you have to get the 3%. But I say, okay, I can go about it because otherwise, it's like not appreciating the succession that you need. There is a change in generations, right? If you've been doing business with someone and they always deliver and never failed you, you really want to continue doing business with them. So in my generation is still there and is still quite efficient. Rafal has his own peers of his own generation, and he's navigating that very well. But my role is to make sure that we have proper continuity with this succession. So they came to us and they said, well, 3% is the right way to go. I told them, look, our market is not really ready for that. So they were disappointed that we were not able to take a good vote on that. So they don't understand our mindset and our investors. But they continue to respect our country and our market and our capital market. And we believe that together, we were able to vote in the favor of this 1.5%. Once we finally close 2025. Now 2026 makes us optimistic. I always say that it's great. I always say that we are good. And Artur was saying that we are phenomenal. We were great. We were phenomenal. I've already said that on several occasions when I was speaking about our company and our business. So I've been learning too. So very optimistic. Today, journalists were asking questions. They were saying, Adam, we would like to meet you again. I said, look, now Rafal is the key man. I am a very open person. I think that Rafal is more restrained. But if he's more restrained make sure that he's more down to earth, because media has never failed us. And even if I was saying way too much, they didn't publish everything when I said afterwards that, well, perhaps that shouldn't be published. It's not very much shame of that, but we are just humans. And to rank people who are onboarded in the company, I always tell them, look, we don't have a single individual in this company who has never made any mistake. The shame is to repeat the same mistakes again and then to lie about it. If you made a mistake and if you lie about it, then as a result, 100% can get sacked because of it. If you don't lie, if you're open about it, everyone will help you repair and remedy your mistake. That's the way we need to keep it at a [ side]. We have to be positive. You may say, okay, it's hard, but you have to multiply it by 10, saying what you can do to make it better. We are critical, but not in terms of complaining, but we are critical in terms of, okay, that needs to be improved. This is what has to be done about it. It's not about just complaining and saying, I don't know what to do about it. And we are not afraid to make mistakes. And we believe that customers are definitely sacred. They pay our bills. So if something prevents us from providing good service to the customers, we have to fight with that. You have to show it to us, but this is wrong and young people are coming full of power and energy. I love the onboarding experience. I always tell them that they have to address me as Adam. I have a great assistant and she's 24 years, and she's addressing me Mr. President. And I say, look, one order that I always give, I'm Adam. Look, I'm not saying farewell. I'm not really leaving for good, but I'm -- it will be tough because I've always loved meeting you. So I don't know. I will have to learn what to do not to get into Rafal's way. Rafal is definitely sharing and representing the same values. I know that he's prepared. He knows everything how to do the job, but he's a different person. I want him to be himself. I just cannot get in his way. And I know that things will be fine. And I would like to thank all of you for still coming to our meetings because we've been together on so many occasions, but probably you don't find me surprising. I said at the beginning that there are wars out there, and this is not a reason to be happy. But then there is another aspect. It's important to actually speak to people face-to-face. The more the people we have in the room, the merrier it is. It's easier to smile when you have real people sitting in front of you. I know that we have 100 people who are watching us online, but those who came here and are with us in person, it's really nice. Well, perhaps for those 100 that are just watching us online, we were not top performers. If there is anything we need to improve, please let us know. Operator: [Interpreted] So after this wonderful presentation and summary, we have the opportunity to move on to the Q&A session because there are questions coming to the forefront from some of our participants, our online participants. And so the idea is we'd like to move on now to the Q&A session. And at the end, we'll wrap up by bidding ado. So let's begin with the first question in terms of this year's recommendation for the dividend. Should we treat that as an extraordinary dividend? What is the dividend policy for the upcoming years? And in subsequent years, should we anticipate that there would be a higher amount or quantum of transfers to the shareholders? Unknown Executive: [Interpreted] If we will not acquisitions are still our passion. It's more difficult to buy things. There's an enormous amount of competition. We have certain boundaries. The only limit, I think I mentioned that in terms of relations with our new partners that the decisions, acquisition decisions, we make those decisions together. This is a limitation for Marek. This is something we wanted. We wanted to buy things at the optimum price. So we've had major success even if we were a little more intuitive than our new business partners. We've been very effective. I would like for Marek's team to have access to knowledge about how others do that. And I'm pleased that we have that access. So Marek has several potential acquisition targets. We're working on that now. But in Asseco, we always want to buy for organic growth. That's our obsession. One of the very kind journalists, Adam, you know you had Balkans, other areas, but those were different times. At that point in time, we were buying companies at normal prices. So today, if somebody is coming forward to us and we have tens of people, business owners talking with me per annum. And so Marek, of course, is talking with them because Marek, of course, introduces me as well. And so somebody is coming forward and what they've created, which is far away from our standard is pricing that at a multiple of tens over the profit, but they don't want to buy the brand. And I'm not interested in that because we have -- we can pay a lot for the past, for the history. But the fact that we're going to build the future together, well, because if you're using a very high multiple, let's say, 30 or 20 or 40, whatever, then we all understand what that means. And since there's a lot of competition, there are funds out there that have a pressure to spend money and Asseco is not going to participate in that type of battle. We want to attract business owners who understand that based on what you've created in Poland, you can create a wonderful European position because we've proven that we're capable. Our model has proven itself. We know how to attract business owners from other countries. And so if we can find partners like -- and we're looking for those types of partners and hypothetically, we have them, -- but of course, we can always haggle a little bit about price multiples. We are buying -- not to buy. We want it to be effective to generate a return. And jointly with our leaders, we want -- we're going to give them a lot of authority to build things. So if we don't have those type of projects, you can always count on a hefty dividend. And of course, if we have those type of M&A projects, then we won't have that cash. And so the dividend will be a little lower. And so this is a question to our colleagues from Business Solutions. In Asseco Business Solutions is the biggest impact of the national inventory system KSeF was it exerted in Q4 2025? Or will we see it in subsequent quarters? So perhaps I'll field that question because I'm in the Supervisory Board. And I think I might not be entirely precise. I think we can count on KSeF, this national invoicing system. I don't think I'm apologize for saying perhaps I don't know the figures. I don't think it was the biggest quarter for us, Q4 2025. So at the beginning of 2025, we were counting on the national invoicing system. The results were phenomenal because all of you in ABS are proud of what we have done. What Rafal did on an international basis, that integration of our teams with Germany, and Germany is doing very well and competing with Poland, trying to catch up. And of course, this will take a little bit of time. And so we're working strongly on Slovakia and Czech Republic because we want to have integration, I believe in that strongly. So I think in ABS, we will continue to deliver results through the national invoicing system,. And if we talk about recurring revenue, and this is something that's been prepared that we're going to have increase in recurring revenue. For people who might not know the Polish market, today, we have the opening the next wave of companies that will utilize the national invoicing system called KSeF. And so those companies, there's going to be many more companies starting to use that. And so this is coming down. It's going to be applicable to medium-sized companies and smaller companies. What are the problems with implementing or adopting the share system? And what are the obstacles to implementing this program? So based -- this is a little bit of gossip. Basically, what I'm hearing is as follows: the open-end pension funds, we can't give anything away free of charge because we're paying for the past, so we can't vote in favor. So I can embrace that -- I can accept that opinion. But I'm asking these OFEs for them to think about this because even if something is so highly regulated, that's against the development of the Polish capital market, and I'm always going to be an advocate because had it not been for the Polish Stock Exchange, we would not have moved for it because in 2024, nobody would have lended money to Adam Goral for his -- to build his fantasies because I wouldn't be able to prove to any bank in 2004 that I was going to be capable of doing something had it not been for the Polish Stock Exchange. There would be no Asseco. I'm sorry to say, I regret that we don't have a sufficiently large number of IPOs and business owners have started to stop seeing that there's opportunities linked to being on the exchange. So like PKO BP, baby was waiting for us with a credit to when we wanted to buy back shares. Well, the times are different nowadays. And we have to remember that times do change. So of course, I understand the regulations. Well, let's change things that are illogical. My friends from the Netherlands and Canada linked to Constellation, they don't really understand what's behind this because for them, the fact that we will vote this through, well, it's not a guarantee because we're making decisions together in fact. The fact that we voted through gives greater certainty to all of us as investors. So I would precede those. We understand those who can't do it because of the laws, but I hope that we'll have people, if we looked at the results of voting, I was nearly satisfied. We were only missing some 700,000 shares. So that's not very many. So maybe somebody want to come to the shareholder meeting, we're going to vote on that. And then we could vote it through. Let me tell you, honestly, I don't understand why they're behaving this way. We, as investors, why don't we want for one group of Poles that have worked hard and toiled hard for them 95 people for them to receive a total of 1.5% of the company. Of course, 1.5% PLN 200 million. Of course, it's PLN 200 million. That's 95 people that will be the recipients. We haven't -- we're not creating [ oligarchs ]. We want people to have interests aligned and be participating in the risk we have. And if we want to be active on the Polish Stock Exchange, if you want to have more IPOs, we have to have and utilize mechanisms that are utilized on mature stock exchange. I'm not sure if this is of importance, if it will have import. We've been -- we've received rewards or awards by like, for example, the Parkiet newspaper that gave us an award for the growth we've been able to achieve in terms of our market cap and so on and so forth. But I also asked and perhaps these words will exert an impression on somebody and they will vote through proposal through. Well, people are for those person, we want to take care of the stock exchange. The people who are taking care of our business interest, we want more and more of these people to think about the interest of the investors for them to buy for the value of the company and the shareholder value. Operator: [Interpreted] The next question, is it possible to think about the sales of the -- remaining 18% shareholder -- share stake in Sapiens? Well, you remember that after the sale of Sapiens, this is a strange case. We lost control because we sold almost all of the shares. We hope that we have an 18% minority stake, which we hold indirectly in Sapiens. Unknown Executive: [Interpreted] And so this is a good position to think about how to earn thinking about the new shareholder, what the new shareholder is doing in Sapiens, what the restructuring processes are in telling, and we surmise that advent because that's a new investor, if it makes the decision in a couple of years to sell Sapiens, then of course, we will, of course, join forces with them in that sale. Operator: [Interpreted] The next question, what will you earmark the money -- the proceeds from the sale of Sapiens in terms of -- because only a portion is going to the dividends. Unknown Executive: [Interpreted] But well, we don't have the right. You know Guy, even though he was started as a manager, we gave him shares. He's an investor. He's a business owner. He's an entrepreneur. And please note that everything that he did was with our consent and he's nearly made no mistakes over the last 16 years. He was buying at the right prices. We've all forgotten because you were -- perhaps you were right. We were buying shares in the holding, which was running a company that was slightly lost. This is not the Sapiens that was sold just recently. This was not the Magic. This was not the Matrix company. All of that was growing and expanding, not talking even forgetting about the new purchases. So in terms of investing in running these type of companies, he knows and he's very cognizant of. He knows it very well, and he talked -- he didn't give me much time sometimes for some decisions. That's true. But I always had that time to make a decision. I received the materials that were needed and so on and so forth. I continue to believe in him, and we're going to pay out a very hefty dividend. I think we can officially say -- so it was already announced at $200 million. And so we're also counting on a dividend. Well, Guy is working how to neutralize this fact, the sale of the majority stake. He has ideas. We won't talk about those ideas because I analyze this is a new topic in terms of building a position in a given area is still within the framework of IT. He's not running into other areas. And initially, this is something that really appeals to me in Israel. So we wish peace to that corner of the world. We hope that peace will be achieved. And major investments are in the works, infrastructural investments. And we would like to have a company, a group of companies prepared to participate in these projects because we have a very strong position there. We haven't agreed on this, but if there were no interesting targets on the marketplace to purchase, well, then we can always buy back some shares in formulas, we can increase our shareholding. We have some opportunities. I'm not saying that we as Asseco, but utilizing that money that's there. So we can have different types of ideas. Today, we're not being precise on that subject. But I wanted for this decision to be a joint decision about Sapiens because we were of the opinion that we were coming close to a wall that we might not have better ideas. And looking at Advent we're learning a new approach to these type of situations. We believe strongly that Advent is going to be effective and that our 18% stake will have the same value of what we sold. And -- this is something that we wish to those people who are now managing. We wish that from the bottom of our hearts. Operator: [Interpreted] The next question is about TSS and Constellation as your potential competitor in M&A in terms of consulting on M&A. Is that something that's beneficial to Asseco? Unknown Executive: [Interpreted] So Marek, he likes to argue. So this is my area. And of course, we're competing with TSA in Constellation and M&A. And that's not changing after the transaction, but we have written down what we're going to do together and how we're going to behave if we identify a conflict of interest. And so betraying what it looks like from the kitchen. So if we identify that there is a conflict of interest that we're competing on a given project, then we won't engage in these type of consultations in that case. So even members of the investment committee from the TSS that would not participate in these meetings. They would not have any role to consult on those projects. And so we can do that according to our own recognition, according to our best knowledge and our experience. But this is an area where there is competition. Well, this is high business culture. somebody might think about it whether or not you needed that. But take a look, had we not been together. We wouldn't know anything about it. We would compete with one another anyway. Today, I wouldn't preclude a situation, in fact, that we will not want to buy something and we'll inform them of that fact. And we'll give them that target for them to think because it's perhaps the case they might want to buy it because this could be aligned to a concept they harbor. This is something we're going to be able to master. Marek, there are some individual examples and we've developed -- we've cultivated them. There are some cases. It's hard to be surprised because TSS and Constellation are highly active players and the market of potential targets is finite in size, that universe is finite in size. So in many cases, in 5 cases, we had conflicts of interest. And if this is something that we can live with out of a number under 20. Operator: [Interpreted] The next question is to Marek. In terms of potential targets in cybersecurity, are there any Polish companies in that universe? Marek Panek: And the answer is brief, yes. And this is where I would stop. Operator: [Interpreted] And the final question that we have from remote participants, are you thinking about developing a motivation program where the strike price would be closer to the market price as opposed to, let's say, PLN 1. Unknown Executive: [Interpreted] Well, yes, in our concept, I don't know if somebody has noticed, we have 1.5% stake. Those are shares linked to my -- to me. I've selected some 95 persons who, in my opinion, will clearly drive the future. I would like to give shares to 33,000 people. There is no person in our company, in our group who will not drive the future. But just as such, that we had to make some choices. And so for group consists of 95 people. And I believe that these people have earned and deserve to take a role in the future. This is one program. And in that program, these objectives, we can discuss what those objectives should be. But this is going to be PLN 1 because we need these people as investors, but there is a program PLN 0.25. That is a program to change or slightly new bonus program and the bonus program this is experience that I've known from Constellation for years, and this is from [ Topicos]. And so Rafal Kozlowski is today coming forward to each one of our leaders in people who are heading up businesses. And the proposal is that a portion of their bonus would be paid out in shares, in equities, and they will be purchased at the market price. And so these shares would be purchased at market price. And so we'll have a program of that sort as well. I don't know the details, but [indiscernible] who set up Constellation in that overall concept. This is a person from the financial market. He himself with his family. I don't want to -- it was a 7% or 9% over 30 years. These were shares. These were these bonuses. That's how he was able to compile that position that were purchased at various points in time. We want -- our team doesn't have an obligation to follow that program, but we would also like to implement that program. And this will be an additional portion because the 95 people, this will give us a guarantee if you assist me in making sure that we can vote this through at the shareholder meeting, and then we'll make sure that, that other program is going to be available and that we want to remunerate people in the form of shares, of course, at the market price. So we'd like to thank you. Are there any other questions here in the room? Would anybody else like to we don't have a question from the room. So we'll wrap up the Q&A session. And we'd like to thank you very much. And so we've started this year very well. So it portends well. In the near future, we'll come back, but they won't take me to participate in the quarterly conferences. So I think Rafal will be Okay. You can -- so you can take him. I'd like to thank all of you, all those people who are participating remotely, the people here physically in attendance. And so I would like to thank you enormously because we are a very close-nit group, and we've lived many years together in a beautiful way, and you've all had a very positive contribution to the development of our capital market. You've never disappointed me. So I didn't have the 95% share. You've never disappointed me and the votes were always consistent with what I was thinking or what I came forward to propose. And so I'm very grateful because you have a real participation in what we as Asseco have achieved this great achievement. Let me tell you, this is a commercially viable approach. It's worthwhile to turn over that 1.5% equity stake to 95% [indiscernible]. So let's continue vying for our position for there to be peace across the world because then it will be very easier -- much easier for us than to smile then. So thank you once again, then Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good afternoon, and welcome to the Xaar plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to John Mills, CEO. Good afternoon, sir. John Mills: Thank you very much. And first of all, thank you, everybody, for taking the time to come on and listen to the story of Xaar. For some people who will have known Xaar from old, I just wanted to kind of quickly run through some of the history and some of the things that would have characterized Xaar historically and hopefully how Xaar today contrasts with that. So if you go back to 2013, Xaar was a FTSE 250 company, had GBP 140 million of revenue, made GBP 42 million profit, market cap of around about $1 billion, but it was effectively a single product into a single market, and that was ceramics. And that market, Xaar lost that market for various reasons and left the company really with no other revenue streams. And over the last decade, it's really been recovering from that situation. In contrast today, I've been with the company now for 6 years, and we've really focused on making sure that we have a broad portfolio of applications based around a value proposition, which is unique to Xaar. And really, what I would like you to take away with today is really two things. Firstly, that we have a unique capability to print fluids that no one else can and that we deploy that capability across a broad range of applications, which potentially give us significant revenue opportunity and indeed quite significant resilience against any individual market problems. So in order to first of all, explain to you what the value proposition of the business is that we make industrial inkjet printers and printheads. And we compete with companies like Epson and Fuji, Kyocera, Ricoh, Konica and also Seiko. These are huge Japanese corporations with global reach and substantially lower manufacturing costs than we have. And I think that the challenge or the problem for Xaar over the previous 15, maybe 20 years is trying to compete with these companies on their home territory is incredibly difficult and ultimately, Xaar has lost. And having joined the company in -- back in 2019, I, having known the company for many years, really focused on the attribute that Xaar had, which was unique, which is that we can print fluids that no one else can. And that parameter that's really important is viscosity. And viscosity is a measure of how thick the fluid is. So water has a viscosity of 1. Cream is 22. olive oil is 65 and yogurt all the way up at 1,000. So if you take the global #1 Epson, they can go up to around about 8 center points. So -- and some of the other competitors may be able to get over 20 and approaching 30, but really, that will probably be a generous assessment. We've got applications well over 100. And therefore, we have this capability of printing fluids that no one else can print. And the way to think about that is that if you have a fluid, if you want to add things into the fluid to add functionality to the fluid, the more you add in to the fluid, the more functionality you will have. But the more you add in, the more viscous or the thicker the material, the fluid is likely to become. So there is a correlation between functionality and viscosity. So the more functional the fluid, typically the thicker, more higher the viscosity is. And therefore, what we are seeing at Xaar is we can print fluids that are far more functional than other printhead manufacturers. And so the question then remains is, well, what do you do with that? And what I'd like to do today is just share with you some of the applications that utilize this unique capability, so you can see the sort of the breadth of applications that we are currently operating in. So the first one is decorating of cars. So today, if you want to put a graphic on a car, you need to use a sticker. If anybody has a mini or know somebody with a new mini, typically, they have some form of graphic on there that's a sticker. And those are not really well liked in the industry. So if you want to put graphics on there, that's pretty much the only way you can do that. We started working with Axalta, who are one of the major global suppliers of car paint to the industry and also Durr who make robots and 50% of the world's paint shops have their robots in them. And collectively, we have created a technology called NextJet, and this allowed you to digitally print graphics onto cars. So if you see the bottom right-hand corner, we're printing on the side of a door. And you could imagine that if we had a low viscosity watery fluid, then that would actually just drip and run down the side of the car, you would not be able to print graphics on a vertical surface. And so what I hope is clear from this that you actually need to have high viscosity capability to be able to print graphics onto vertical surfaces in this application. And so there's no other printhead that can do this, and we've enabled an industry to adopt digital technology through our ability to print high viscosity fluids. Just to go through another application. So this is car batteries. So this is another application where we started working with the battery industry about 5 years ago. There are issues around battery safety. And one of the contributory factors to this is that the insulation layer, the blue plastic film that goes around the battery to provide electrical insulation can be damaged through mechanical rubbing or through heat cycling of the battery as it's charged and then utilized. Having developed a fluid which is UV curable, you print on the battery, you shine UV light on it and it turns into plastic. This coating is nonflammable. It's much stronger. It doesn't crack and it has better peel strength away from the battery. So this is a better solution than the wrapping of the battery. As of today, we have 3 OEMs who we sell printheads to. They've built machines that print the battery. You see one of those operated on the bottom left-hand side of the video. And there are now 10 production lines in China that are making batteries on a daily basis for cars. And to give you some sense of scale, we have about GBP 150,000 worth of revenue for each production line. There's 10 in there at the moment, and we expect another 10 to 15 going in this year. And overall, there are 1,300 production lines in China. And so if the industry adopts this fully and changes all of the production lines to this digital coating, that would represent around about GBP 200 million of revenue for us. And if they did that over a 5-year period, that would be a good volume of revenue per year. For each of the applications that we have, there's a secondary revenue stream, which is from the replacement printhead cycle. So once you have an installed base, depending on the life of the printhead in that application, and that's a function of the type of fluid and the environment it works in. And in this application, the life of the battery may be -- may be, say, 4 years, then every year, you would expect to replace 25% of your printheads. What that means is if you have an installed base of GBP 200 million worth of printheads, then 25% would get replaced on an annual basis. So -- and that's the same across all industries. So you have revenue of printheads going in for new machines. And then depending on the replacement cycle, you have an annuity revenue from the replacement and printheads. So that's the battery coating. Change in tacks. If anybody has a desktop 3D printer, it's probably for those who recognize the term, an FDM printer, which is like a roll of fishing line that essentially goes through a nozzle and heats up and basically an arm scribes a path around and the fiber sticks to the fiber that was previously laid down and that way you build up a 3D model. And it typically is one color or a couple of colors and it's not very high resolution. And that's the typical 3D printer that's bought today, but there are 5 million of those printers bought every year. If you want to print something high resolution in full color, so things like you see on the bottom of the screen, all the things on the table next to the machine and the little farm on the left-hand side, if you want to print high-resolution things of that nature, you probably have to pay somewhere between GBP 40,000 and GBP 150,000 for an industrial machine. We've been working with Flashforge. They're one of the major suppliers of the desktop 3D printers. They sold 700 units last year. We have been working with them to develop the world's first desktop 3D printer. We estimate that, that printer will be on sale for around about GBP 2,500 to GBP 3,000. And with the occurrence now of AI, you can take a photograph of somebody or any object, AI will render that into a 3D model, and you can print it out on the printer. Equally, you can describe something into AI, and it will create the figure for you. So hobbyists around the world will be able to print whatever they would like to fulfill their needs in their hobby. So just if you have opportunity if you were to Google Flashforge CJ270, you'll be able to see the pre-marketing -- prelaunch, which we expect to be in the next few months. It's actually been shown at multiple trade shows to date ahead of the launch later this year. So I'll just play you the promotional video for the product. [Presentation] John Mills: Just to give you some sense of scale, the 500,000 desktop printers are sold each year, 1% of the market were to buy this machine that would represent GBP 25 million of revenue for Xaar. What we don't know because it's a brand-new product into the market is exactly how many units will be sold. So we're quite excited about this, so -- but the exact number is very difficult to predict, and so we will look forward to launch and see how many did sell. One of the things that's really impacted the numbers this year, we started working with the wax industry about 3 years ago, 4 years ago. This is an industry which uses wax to create bespoke high-quality jewelry in gold and platinum. What happens here is that the wax is actually heated up with melts and then you inkjet print the wax onto a substrate and you build up the facsimile of whatever you want in the gold or platinum in the wax. You then take that wax model and in case in effect like a plaster of Paris and it dries. And then once it's dried, you then heat up, the wax melts and then runs out and then you've left with the mold and then you can pour your gold and platinum into the mold. And then once it cools down, you break the mold and you've got your piece of jewelry. The -- we've taken that market very quickly because the -- again, the ability to print a wax that's much better, much stronger than the previous wax means that you can produce higher quality and more intricate jewelry. So when this was actually launched by the first company, the quality of the jewelry that was produced was so differentiated that every single other OEM looked at that and said, "We need to use our printheads because we won't be able to compete". So we went from 0 revenue in '23, we had around about GBP 1 million revenue in '24 and then GBP 8 million of revenue in '25. So we think we've got a sizable share of that market now. So we expect some growth in '26, but that's an example of a market where, again, we've taken market share purely down to the fact that we can print a better fluid than what was previously printed. The final application I'll show you today is on printing of cardboard. Probably all of you will receive Amazon packages. These are sort of cardboard boxes or sort of envelopes that you -- and they will all have a plastic -- a white plastic label with the address and the barcodes and other things on it. That's -- the plastic label that's on it is expensive, and it also makes it more challenging to recycle. And the reason for that is you can't print white ink onto -- digitally on to cardboard because what happens is that it's low viscosity and it just soaks into the cardboard, which is what you see in the image at the top here. As it sinks in, it takes the pigment with it into the cardboard and you can't see any of the white pigment left. Closer to a slowdown, you see that by contrast, a high viscosity fluid and a high viscosity fluid has less water. It's thicker. It doesn't soak into the cardboard and therefore, the pigment stays on the surface. So this gives us the opportunity to actually print digitally onto cardboard, which would be a significantly cheaper process, but also help with recycling. So again, this is just about the benefit of using a high viscosity fluid. So hopefully, that's been helpful. What I'll do now is hand over to Paul, who can take you through some of the financials. Paul James: Thank you, John. Yes. Okay. I'm not going to plow through the slides, slide by slide. If you want to see that, it's available on our website, but what I would like to do is just highlight some key financial numbers that we've delivered and talk about the shape of the numbers going forward over the medium term. So first of all, the group is organized into three divisions. The largest one, one of the greatest scale is Printhead, and then we have Megnajet, which is predominantly dealing in producing ink systems, and then we have EPS in the United States, which builds machines for high-speed single pass printing direct-to-shape purposes. And then you look at how they performed in 2025 versus 2024. Overall, the group is up 12% year-on-year, but Printhead revenue standout performance of 22% up versus the prior year. And that performance is driven, as John has alluded to, primarily from the Wax segment, the growth there. And actually, that 22% revenue growth, over half of it was a volume increase. And so more about that and its effects on our numbers in a moment. Megnajet broadly flat 2% and EPS down 10%. And the reason for that was they had a large multiyear contract to basically print on golf balls, and that came to a sudden unexpected end at the beginning of last year. And the then management team hadn't yet built a sufficient pipeline to backfill that loss of contract. So we have had a dip in performance there, but we brought in new management. And interestingly, despite that 10% reduction in revenue, the gross margin at EPS grew by 300 basis points, and that is as a result of restructuring, cost-out initiatives and so on and so forth. So the new manager has dealt with that. He's dealt with a number of intractable issues, and he's also rebuilt that pipeline. And one of the attributes of EPS is the way revenue is recognized. You kind of know 6 months ahead of time how much revenue you're going to have. So EPS is very much back into growth mode and we will, I'm sure, continue growing, continue performing financially very well. And then back to Printhead, as we said, 22% up, and that also came with 300 basis points increase in gross margin. And that is a key attribute of this business, which is that we have a very effective operational gearing effect. If volume does increase, then margin will increase too. So let's talk about first number, how that's -- we see that, how it's going to develop over the medium term. 40% gross margin overall. I had a look back -- by the way, I've been in Xaar just over a year. I had to look back over its history and the high watermark in terms of gross margin performance was probably about a decade ago where it was nudging 50%, high 40s certainly. Now you've got to be a bit careful making that comparison with then because, of course, it's apples and pears and revenue was made up of different constituent parts. But nevertheless, 50% does seem to be a laudable target to get back to. And so the current management team, we're now all working towards that over the medium term increasing that gross margin. And yes, operational gearing will help. If the business grows, the volume increases. But also, we are looking at cost-out initiatives. We're looking at -- we'll be looking at procurement, better procurement initiatives. And we've also shifted part of our supply chain to China to be closer to our customers. I describe as sort of ancillary activities. It's not the core IP activities that go into China and the inkjet systems construction also in China. So two benefits of that. We'll be close to the customer base, the Chinese customer base, but also it will take a lot of cost out of our base. So yes, 50% is we've set ourselves that medium-term goal to get as close to that as possible. I think another thing I'd like to talk about is the balance sheet and how that's shaping up. So it's true to say that in recent years, Xaar has held elevated levels of inventory. I'm not interested in why that was, but it's a fact, and it does need addressing. So we are setting ourselves the goal of -- and I've done this in other companies I worked in, of, if you like, a continuous improvement goal of increasing stock turn year in, year out, a minimum of half turn increase, preferably a 1 turn increase every year. And rather than just obsessing about a particular absolute number, stock turn has the benefit of being linked to how the business is performing, how the business is growing. And I see that as a way to free up more cash and get into that sort of virtuous circle of investing more, growing more, et cetera, et cetera. So that's something else perhaps you should look out for going forward with Xaar. In terms of investing in growth, a couple of things there. We spend about 8% to 10% of our revenue on R&D, and that feels about the right number at the right level. And in terms of capital expenditure, we have had last year elevated levels of CapEx, but that was investing in capability to basically speed up sales and to deal with some bottlenecks. And I think going forward, you can expect slightly higher elevated levels of CapEx, too, just to invest in growth, but also -- perhaps also to deal with some legacy issues in terms of replenishment of the asset base in the factory that we do need to address. So I hope that gave a bit of a flavor for the business. And yes, I'll hand back to John. John Mills: Good. I mean it's quite difficult to judge these things when the -- you can't see the audience. So hopefully, that's given you a sense of the company. I think the summary for me about the business is that when I go around and talk to particularly institutional investors, many of them have -- know Xaar. And one of their concerns is that Xaar has historically been boom and bust, and very difficult to predict the future revenues. I think what we'd say today is that we've worked hard on making sure that we have a very clear value proposition, and we only enter into markets where we have a unique and clear value proposition against the competition and that we now have 21 separate markets where we derive revenue. And we have in most of those many customers and a strong pipeline of applications that are coming through. So we feel confident about the business model, and we feel confident about the revenue growth over the coming years. What's very difficult to predict is the detail of when any individual application tool will land. And therefore, we tried to avoid talking about specifics of timing. But I think the key thing is that over time, the ones that are in the pipeline will come through. So for those who've got a slightly longer time horizon in the sort of 3 to 5 years, I think where we are today, it's difficult to see how we're not going to grow revenue substantially over that time. And with the operational gearing, we should see some of that falling through to the bottom line. John Mills: So with that, I think we'll look at any questions that we have. So I can currently see four questions that have come through. So please write any questions in the thing, and we'll do our best to answer them. We have a bit of time left over, so we can hopefully answer those questions as we go through. So I'll take them. First question, do we have any collaboration with [TeraView]? No, we don't at the moment. It's interesting that we're now starting to see companies coming to us once they understand our capabilities. So maybe that's something we should pursue. The second question is that with the 22% increasing in Printhead revenues, how much is initial system adoption versus recurring? That's from Matt. Matt, I think the revenues that we see coming in, we would describe as all recurring revenues. What we would normally see is that you have several years where you sell printheads into an OEM as they start developing machines and selling machines, then eventually, you get to a level of saturation where everybody who needs a machine has got one. And then you left to replacement recycle of the machine and you are left to growth within that market. And then the replacement heads for your installed base. So the revenue would peak after a number of years and then would move into a steady state where there will be slower growth, it might fall back by 20%, 30%. So that's how we tend to think about it. And therefore, what we -- when we model revenues, we look at layering on different applications. And so we take sort of fairly modest views of growth after the initial market size and try and layer that on. So hopefully, that answers the question. The second question is how visible are revenue levels over coming years from the new application areas? And again, this is a really good question and one of the fundamental ones for understanding the business. We sell printheads to OEMs. And if you take the battery situation, we sell printheads to OEMs who make the digital printers. They sell the digital printers to companies that develop production lines for the battery manufacturers and the battery manufacturers buy the production line. So we're three companies removed from the decision-makers in relation to the batteries. And therefore, we're not having direct conversations with the battery companies. We take our information from a number of sources and try and integrate that together to create a picture of what we think is going to happen. So it's incomplete. We are not selling machines directly to an end user. So in many cases, our information is not perfect in that. We do our best to try and understand forecasting and we ask our OEMs' forecast and what they believe are going to happen, and we have to interpret that in the best way that we can for planning. Typically, things usually take longer. The numbers that get delivered are usually smaller. And we try to take that into account when we look at any forecast that we publish. Next question I have is that the revenue opportunities for battery coating and 3D printing, are those annual revenue? How does the drop-through margins in each section differ? Yes, very good question. I think on the 3D -- on all of the -- as I said earlier, on all of the applications, we really are looking at recurring revenue. We don't see any revenue that comes in for a single year and then stops. So the revenues we talk about should be recurring revenues. The margins are quite different across different market sectors. The wax and the battery coating, the margins are quite strong. If you look at the consumer market, the desktop 3D, the margins are much lower in those areas. So we tend to try and price to value rather than looking at competitive pricing. And we try to maintain margins on the basis that we are enabling industries to do things they previously couldn't do. We're not competing on price in many of these markets. So -- and in terms of drop-through, this year, we did GBP 0.8 million profit on the revenues. As the top line grows, we should have -- we're now at that kind of breakeven point with the factory. So as we go forward, we should see more of that revenue dropping through. Okay. Next question is around IP from Paul. The IP protection, particularly as we are exposing the technology in China. Yes, really good question. We have very strong IP, but our strategy is to patent in -- according to GBP. So we take the top 6, 7 countries, excluding China, and we patent in those countries. And the reason we do that is that I think if we have a Chinese company, for instance, that did infringe our IP, we may find it difficult to enforce our IP in China. However, if those companies then build a printhead and sell that printhead outside of China into a territory where we have IP, then whoever uses that printhead is infringing our IP, and therefore, we can send the cease and desist. So our strategy is to enforce it in territories where we are able to kind of follow up and prosecute our IP effectively. So that's really what we would do. Somehow all the questions have disappeared. Paul James: You've answered them, I think. John Mills: Hopefully, that -- is there any more questions that we could -- I'm going to let you take that one, Paul. Paul James: Yes. Okay. So we obviously have a medium-term strategic plan, which we've not yet... John Mills: Please go and state the questions, Paul, you probably have to read the question. Paul James: Sorry. Thanks for reminding. So the first question, what level of turnover and profitability would you target in 3 to 5 years? So we obviously do have a medium-term strategic plan. It's been discussed at Board level and all signed up to. You would expect to see the growth levels we've achieved last year of 12% for the group, according to our plans, that's not inconsistent with the sort of annual growth levels you could expect to see going forward. And in fact, if you look at the consensus numbers that are out there, the revenue growth is broadly consistent with that. So a sort of 10 and a bit percent growth in revenue going forward. And then as we've mentioned a couple of times, the operating leverage benefits will start to kick in as well with that volume growth. By the way, I expect at least half of that revenue growth will be volume at least. And so as I said earlier, I am pushing for gross margins to be heading towards as close to possible 50% and with an operating margin in the high teens. That would be the sort of place I'd like to be in terms of profit and revenue. I think the next question is a congratulatory note, I think. Operator: That's great. Thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, John, could I please just ask you for a few closing comments? John Mills: Yes. Well, thank you very much for taking the time to come and listen to the story. We're quite excited about the business. It's been a bit of a grind for 5 years to build the pipeline and to do that. We do feel we're in a position now where we're at a kind of inflection point. And we can see growth coming over the coming years. It's important to say with any of these applications, it's very, very difficult for us to predict the exact timing or volume of any individual applications. So I wouldn't buy our shares on the basis of one particular application, but I think I'd encourage everybody to look at the broader value proposition of the unique capability of high viscosity fluids and the impact that has on industry and the breadth of the opportunity that we have because I think ultimately, that will be the thing that drives consistent revenue growth over the coming years. So again, thank you very much for your attendance. And hopefully, we can see some of you joining the share register in the near future. Thank you very much. Paul James: Thank you. Operator: That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good day, everyone. Welcome to the Milestone Scientific Inc. Fourth Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to turn the floor over to your host, James Carbonara with Hayden IR. The floor is yours. James Carbonara: Thank you, operator. Good day, everyone. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results differ materially from those projected. Please refer to our earnings press release as well as our filings with the SEC, including our 2025 Form 10-K for a discussion of these risks. A replay of this call will be available shortly after its conclusion. With that, I'll turn the call over to our CEO, Eric Hines. Eric Hines: Thank you, James, and good morning to everybody, and thank you for joining our call today. When I stepped in as a CEO in August of 2025, the company was in the middle of the quarter and had been operating without a consistent executive leadership team. I found an organization where spending wasn't always tied to revenue generation or clear ROI. And from day 1, we went line by line through every expense,, cut what wasn't moving the needle and made sure every dollar had a purpose. We also chose not to raise capital just to fund that kind of spending. Our shareholders deserve better. Our focus has been on responsible stewardship while building a stronger operating model. Our early priority was understanding the business, restructuring and building the right team. We also invested in organizational structure, building a capable commercial team and strengthening leadership to ensure we have the talent, processes and tools to execute. The restructuring completed in 2025 allows us to move past stabilization and begin to play offense smartly, investing where we see clear returns and staying disciplined and everything else. By Q4, we began that shift to increasing targeted digital marketing and launching initiatives across both business segments that drove early traction. Our dental business remains the company's backbone. Internationally, adoption of the STA, Single Tooth Anesthesia system continues to grow, reflecting the strength of our technology and distribution relationships. We are also pursuing registrations in many other countries, including Japan, India and Mexico, which could open meaningful new markets. Domestically, we see significant room for expansion with still less than 2% of the overall market. The pilot launch of our dental Ambassador program in December sparked renewed engagement. And in January '26, we took it national. We continue executing that program and pursuing international registrations, and we expect to see results from these efforts beginning in the second and third quarters. Turning to the medical side. CompuFlo is increasingly important to our story. This patented system provides real-time pressure feedback to guide precise epidural injections and clinician interest continues to build. We believe CompuFlo represents a transformative growth driver as reimbursement and clinical adoption expand. In 2025, we relaunched commercialization efforts for CompuFlo and advance the foundation for broader adoption, expanding clinician awareness, progressing regulatory and reimbursement efforts and strengthening key account engagement. In February 2026, we introduced our CompuFlo Advisor program, bringing together more than 10 physician partners and a dedicated reimbursement support infrastructure to drive utilization and accelerate adoption. Looking ahead, we are advancing broader Medicare reimbursement, onboarding new distribution partners and pursuing national and local VA channels. These programs position us to translate early traction into meaningful growth over the coming quarters. Turning to the guidance for 2026. We expect total revenue of $9.8 million to $10.2 million, reflecting double-digit year-over-year growth, driven by expanding adoption across both markets. We expect CompuFlo to contribute $500,000 to $600,000 and approximately 400% increase over 2025. Combined with 2025 cost actions, this 2026 top line growth should meaningfully improve operating leverage and significantly reduced cash burn relative to prior year levels. I want to be direct. Our goal is to reach cash flow breakeven in early 2027 and build real lasting value for shareholders. With a stronger organization, clear commercial focus and innovative products at the heart of our business, Milestone Scientific is entering 2026, ready to deliver. I'll now turn the call over to Keisha now for a few reviews of the financials. Keisha? Keisha Harcum: Thank you, Eric, and good morning, everyone. Let's take a look at our financial performance for the fourth quarter and full year of 2025. For the 3 months ended December 31, 2025 and 2024, total revenue was $2.1 million and $2 million, respectively, an increase of 2.2% or $45,000. Gross profit was $1.5 million, unchanged compared to $1.5 million for the prior year period. Operating loss was $1.1 million, an 89% improvement of $953,000 compared to the operating losses of $2 million in the prior period. Net loss was $1.1 million compared to the net loss of $2 million for the prior period. Turning to the full year. Net sales totaled $9 million, up 4% from $8.6 million in 2024, driven primarily by the growth in international and dental sales. Gross profit remained flat at $6.4 million, reflecting changes in product mix and cost structure. Operating losses for 2025 improved by $1.1 million to $5.7 million, down from $6.8 million in 2024, primarily due to lower SG&A, reduced of dental-related and R&D expense. Net loss was $5.7 million or $0.07 per share, an improvement of $1 million on a dollar base compared to $4.7 million $0.06 per share in 2024. As of December 31, 2025, the company had $1.1 million in cash and debt of $800,000 and a strong working capital position to support continued growth initiatives. With that, I'll -- With that, operator, we can open the floor for questions. Operator: [Operator Instructions] Your first question is coming from Bruce Jackson with Benchmark Co. Bruce Jackson: You mentioned that with -- I think it was CompuFlo, you've put in place some reimbursement support with the doctors. Maybe you could elaborate on that a little bit more. Eric Hines: Thanks, Bruce, and good to hear from you. So yes, so one of the things that I observed even in the past as a shareholder is that we really didn't have the infrastructure in place to sort of shotgun the CompuFlo out globally. And so what we've done as part of the Advisor program is we have put a very robust group of individuals, in fact, 2 consultants Evelyn Gittinger and [ Rhonda Turner ], both 20-plus year Medicare veterans, who will be supporting our doctors that are part of the Advisor program with reimbursement claims and so forth as they start to initiate that process. So not only that, we've also got a call center, dedicated call center with 3 to 4 people that will be also helping the offices deal with rebuttals and so forth from a claims perspective. So we've got a good team with a lot of experience who will be helping the doctors through that process. Bruce Jackson: Okay. Great. And then 1 more reimbursement question. Are you still currently in 3 of the MACs? Eric Hines: We are. Bruce Jackson: And then the idea is to go more deeply into those 3 regions and then consider expanding from there? Eric Hines: Yes. So the focus will be on Novitas and First Coast in those 3 respective regions. However, we are already into, I believe, 2 additional MACs that we are -- that are part of Advisor program. So we are going to be pushing down and pressing down hard on the First Coast of Novitas MACs, but also expanding into others. Bruce Jackson: Okay. And then last question for me. The gross margins had a nice little tick up this quarter. Is that something that's going to be sustainable going forward? Eric Hines: I'm going to turn that over to Keisha. I think we're more or less going to be consistent with the gross margins. I think we'll stay in the 70% range is kind of the plan. Keisha Harcum: Yes, that is our plan. However, with issues of tariffs and anything like that might arise, we still have to look at all of those options to make sure that we are putting in accruals and different things like that, but we have not been affected totally with tariffs or anything like that at this time. Operator: Your next question is coming from Anthony Vendetti with the Maxim Group. Anthony Vendetti: Yes, Eric, I was just wondering the guidance for the CompuFlo, for the Epidural System for pain management. Is -- are there specific milestones you need to reach or specific number of pain clinics or physicians using it to get to that? How much of that is -- how that guidance is from current signed up clinics or physicians? And then how much of that do you need to actually go out and procure? Eric Hines: That's a great question. So it will be a combination of a handful of things, right? So it will be -- I'm going to say 3 different things, right? First and foremost, it will be the existing customers, right? We've got 1 of our Board members Dr. Demesmin, whose clinic and others within that group use the solution. And we've got several that were generated under the prior administration. We also have added quite a number of new physicians, and we're finding that the adoption rate is maybe a little bit higher than even we expected because people that get it, get it and see the value even in spite of some of the Medicare challenges right at this moment. And then the third is international, right? So we've got sort of 3 components to that. But right now, we are seeing quite an appetite for people and for new customers, embracing the units. And I think you'll see that reflected in our Q1 highlights at some point. Anthony Vendetti: Okay. And then switching gears to the dental program. you launched a new program, the Wand Ambassador program. How does that differ from any other marketing strategy the company has had in the past? And what specific KPIs do you need to hit? Or do needs to occur for that to be deemed successful for '26? Eric Hines: Yes. No, another good question. So how it differs is historically, we've got a relatively small inside sales team who chases the dental business. So we've got 1 person who focuses on the installed base and another person that's focused on new business. And we've really fortified sort of our digital marketing tremendously to the point that we're seeing so many leads come in that it's a tough time for us to sort of keep up with the staff we have to do the demos. So the Ambassador program is a little bit more of a local push. So I believe that as of now, we've signed up nearly 200, I think, about 175 ambassadors nationally, which include, I don't know, maybe 20 or 30 states, and so the point there is that we get people out physically in the marketplace talking with expertise because these are registered for the most part, dental hygienists, until we get people out in the community who know the doctors in their respective communities out visiting offices, in some cases, in a physical way. And in other cases, them using some of our own content to broadcast the great things about the Wand STA on their own social media channels. So it's really an effort to get out into the physical market, more so than relying on inside sales and relying on digital marketing. We've generated, I think, close to 30 demos as a result of it so far. And again, there's a certain percentage of those that translates into new sales. So as far as what we expected to contribute in 2026, the goal is somewhere in the neighborhood of a few hundred thousand dollars of new sales as a result of the Ambassador program. And more recently, I think in the next -- in the coming days, we have -- I don't know if it's like a refresher, but we have monthly meetings with our entire ambassador staff, they're sort of giving them FAQs, what's working, what's not working, who's having success, what content seems to be working. So it's still a little bit new, but at the same time, we're pretty happy with the results of thus far. Anthony Vendetti: Okay. And then on the guidance, I think the total guidance is $9.8 million to $10.2 million. Obviously, most of that is the dental program, the STA. You mentioned you're looking at other international opportunities in Japan, Mexico, India. Is -- does the guidance include any revenue from those new countries? Or is the guidance -- or if you start generating revenues in 1 of those other countries in '26, that would be upset. Eric Hines: Yes, the numbers don't contemplate any business from Mexico, India or Japan at this moment that -- we're still waiting for the final registrations to be approved. We're 85%, 90% of the way through those, but it's up to each individual country to work through their respective systems to get us the official registration. But we're pretty far along in each of them. We had expectations that we might 1 or 2 in the first quarter, but we're probably a couple of months. So we'll see. We hope that will be accretive to the guidance. Anthony Vendetti: Okay. Great. And then last question, just switch back to the CompuFlo. So I know one of the reasons that the focus has moved to the pain clinics versus the hospitals for OB/GYN. For CompuFlo, the hospitals are a much longer sales cycle, tougher to penetrate and get traction as a small company and the pain clinics are a little bit faster conversion cycle in terms of marketing to them and seeing the benefits and hopefully, getting a sale. Is -- do you have a -- at this point, a good grasp on how long that takes? How long is the sales cycle for the pain clinics. And is there any way to shorten that at this point? Eric Hines: Yes. No, we've seen sales cycles as short as a day, right? I mean, so -- and I don't think that we're just missing OB/GYN, neurosurgery, what we're finding is we're still kind of a little bit in the discovery phase where we pivoted from labor and delivery over to pain. We're not convinced or at least I'm not convinced that this -- the CompuFlo doesn't have an opportunity to penetrate all respective markets. Again, we want to do our best to be focused. On the other hand, we're -- we don't want to completely walk away from things where we think there's huge potential. I mean, labor and delivery being one of those, right? Because there, the doctors going blind with no fluoroscopy. And when you get into more complex cases and neurosurgery up in the cervical spine and even the thoracic, you've got ribs in the way that compromise the x-ray. So it makes it more difficult for them in more difficult cases. We're seeing spinal stimulation opportunities. So we haven't completely dismissed any of the markets. We want to remain focused on pain, and we're seeing sales cycles like I said, that can -- anywhere from a few days, right? I'll just give a shout out to 1 of our great Board members, Dr. Sayed, who's been tremendously helpful in introducing us to lots of people within that community. Operator: [Operator Instructions] your next question is coming from John [ Corb ], a private investor. Unknown Attendee: Eric. I have a very short comment. As you may know or remember from our last quarterly call, I'm a long-term shareholder, been a shareholder for many years with Milestone. First of all, I really like the way you are handling this company since you came on Board. And there's -- the last line in your comment or your written comment yesterday, I don't think I've ever read anything like this from Milestone. Our objective is clear: position the company to achieve cash flow breakeven by early '27. That's extremely focused. I've asked in the past, when will you be cash flow neutral positive and the answers were always nebulous. You're extraordinarily focused, and I'm greatly encouraged by your stewardship at Milestone. So I just want to thank you for your efforts. Eric Hines: John, I appreciate that, and I couldn't do any of this without Keisha. She's sitting here with me, and she's tough, right? And we, together as a team are going to ensure that we -- every money -- every cent that comes into this company is going to be used in the right way. And as a former shareholder and current shareholder like yourself, a lot of us were discouraged by the way the company was handling some of that. And I can promise you, we're going to do everything we possibly can to get to cash flow breakeven. And as I pointed out in the conversation we had moments ago, we are not going to take money and send it toward bad situations. And the money that we receive or that comes into the company will be used in a very judicious way. And if we can't get to breakeven next year, I'll be disappointed. Operator: [Operator Instructions] There are no questions in queue at this time. I would now like to turn the floor back over to Eric Hines for any closing remarks. Eric Hines: I just want to thank everybody for joining, and we greatly appreciate all of our shareholders. This is going to be a shareholder-driven company here until I'm gone. Hopefully, that's not for a long time. And I'm looking forward to a great 2026. And I hope everyone has a happy and healthy week ahead of them, and good luck to all of us and thank you Kelly and thank you, James, for managing the call, and good luck. Thank you. Operator: Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to the Nanobiotix Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joanne Choi, Head of Investor Relations, U.S. Please go ahead. Joanne Choi: Thank you, Heidi. Good afternoon, and good morning, and welcome to the Nanobiotix conference call to discuss our full year 2025 financial and operational results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial and Business Officer. Today's call is being webcast and will be available on our website for replay. Before we begin, I would like to remind you that today's discussion will include forward-looking statements within the meaning of applicable securities laws. These statements are based on our current expectations, assumptions and available information and are subject to significant risks and uncertainties that could cause actual results to differ materially. Such risks include, among others, those related to the timing, progress and outcomes of our research and clinical development programs, regulatory developments and our financial and operational performance. We encourage you to review the full description of risk factors that can be found in the documents we filed with the AMF in France and the SEC in the U.S., which are available on the Investor Relations section of our website. Any forward-looking statements made during this call reflect our views as of today and should not be relied upon as representing our views as of any subsequent date. Thank you. I will now turn the call over to Laurent. Please go ahead. Laurent Levy: Thank you, Joanne, and thank you, everyone. Good morning, good afternoon. Really happy to be here with you today to share our 2025 year and to give you a bit of perspective of what's going to happen in the next 12 to 18 months. So today, we're going to go over different aspects of things, how we've been moving the company for the past year and also give some financial highlights and then open for Q&A session. I think we've had a very rich 2025. We've been able to do many things during this year. First of all, start moving forward in a good way in the collaboration we have with Johnson & Johnson and start showing the potential of this first product, along with the potential of this deal in terms of future revenue for Nanobiotix. While doing so, we've been also pivoting the company towards the new platform, which has been a big effort from the team, and I would like to thank them all for that. While doing those operational things in parallel, we've been able to really improve our cash visibility into 2028. And this is beyond the timing of some of the expected milestones that should come from the collaboration with J&J. So altogether, we've had a rich year, and we are pleased to share that with you. And now we're going to go in some more details to give you a bit of insight. Before getting there, we would just like to remind a few things about the philosophy with which we are developing things at Nanobiotix. So as you can see here, we mentioned delivering first-in-class directly. But I think definitely, we are doing more than this. We are creating new class of drugs. That's what we have done for the radioenhancer, for the Nanoprimer and also for the last platform OOcuity. And that's really our philosophy. We don't want to do what other biotech are doing, not because it's bad because we think there are enough people working on the same target with the same technology. So we really want to bring something deep and different to help millions of patients. And that's what we're trying to do, and we continue to do. Our strategy is simple and stay in line with what we told you last year. First of all, is to continue to push and help J&J to address one of the potentially largest untapped market in oncology. And that's through our first product, radioenhancer that has been licensed to Johnson & Johnson. And beyond this product, we're really pushing hard on new platforms, starting with the Curadigm platform, which we think is going to disrupt part of how we think about drug development. And we have been starting making good progress in that regard this year. Obviously, we will come back to that in more detail. But let's focus first on NBTXR3 or JNJ-1900. What do we mean by addressing one of the largest untapped market in oncology? Well, I think for that, we still need to look at patients. And when patients are diagnosed with cancer, the vast majority of them have a local disease. It's more than 70% of patients having local disease at diagnosis. And our industry, in general, is more focused on late-stage treatment of patients when they get metastatic or have received several lines of treatment. If you think about it, if you want to have a big impact for those patients, it will be much better, if possible, to treat them at the beginning of their disease and try to eradicate the tumor when it's still at the local stage. And that's exactly what we are trying to achieve with NBTXR3. And for that, we're working with radiation therapy, which is one of the largest treatments used in oncology as more than 60% of all cancer patients are getting radiation. And we have a product that we licensed to J&J that fits this existing market with almost no competition. And as you can see on this slide, we have a very large pipeline linked to this product that have been developing across many tumors. And technically, that's just a few examples of what could be done with this product because there are many, many other patients getting radiation in different oncology indications. But let's try to look at where is the value here, what are the next key point of inflection and how are we going to bring that to next steps. This year, last year, sorry, 2025, we've been publishing additional data in different cancer types. On the top of the already established proof of concept in soft tissue sarcoma, the first data in head and neck cancer, we've been able to continue to show that this product could be widely applicable in oncology. Through 2025, we've been publishing data on head and neck cancer by talking here about recurrent metastatic patients, also pancreatic cancer, esophageal cancer, melanoma cancer and lung cancer. All those data have been showing not only that you could use safely NBTXR3 in different indications, but also start to show some potential good of efficacy for those different indications. And altogether, some consistency. In the way you administer the product, but more importantly, in the way this product could amplify the radiation therapy and potentially bring new benefits and additional benefit to patients. Let's focus on the 2 key developments. As you know, we've been transferring to Johnson & Johnson last year, the ongoing Phase III in head and neck cancer. That's a very important trial as a Phase III and could lead, if positive, to first approval and first market activity around NBTXR3. This trial is progressing well. J&J now has the full operation on this and also the financial aspects of this trial are taken care by J&J, and we still expect to get the first readout of this trial the first half of next year. You may have noticed that on the top of this Phase III, J&J has also started a Phase Ib in another population of head and neck, meaning patients getting radiation plus cisplatin. If you think about head and neck cancer, with those 2 trials, you're technically capturing all the patients frontline that have a locally advanced tumor and that received radiation and that cannot go to surgery. So technically, if you -- if you exclude, sorry, the few patients that have metastasis at diagnosis, with those 2 trials, you could capture the vast majority of head and neck cancer patients, first-line treatment with the highest unmet medical need. So that's a very important pathway and could, if positive, establish NBTXR3 as a key player in whole head and neck cancer treatment. Now there is another trial, which is equally important and potentially even more important. We're talking about here the first lung cancer trial that J&J is running. The name of this trial is CONVERGE. It's a randomized Phase II trial in unresectable Stage III non-small cell lung cancer. This trial is important for many reasons. First of all, as you may have seen, lung cancer is a very important aspect of the strategy of J&J in oncology. And it's also, as you know, a gigantic market, if not the biggest market with breast cancer. So here, starting with this trial, assuming that the data are positive, what we feel at Nanobiotix is that could be a trigger for Johnson & Johnson to start expanding the development. But if we just stick to lung cancer, that's already a gigantic market per se. Here, we're talking about Stage III, but could expand into some other indication in lung cancer. And maybe as we did not have the occasion to talk about the data that has been generated, the first part of this data, let's have a small focus on that. As I mentioned, we are talking here about patients that have a locally advanced unresectable Stage III lung cancer and the treatment of reference is radiation to chemo followed by consolidation with durvalumab. And as you can see, if you look left and right of this box, many other patients in lung cancer would receive radiation therapy frontline treatment, which could be at some point an expansion of the use of this product, assuming that this trial read positive. So what's the design of the trial? There's 2 parts in it. First, a safety leading with very few patients and then what we call a proof of concept with the randomized part of the trial where we compare the standard of care chemo radiation with durvalumab versus the same plus the product with 2 different dose. And this is randomized 1:1:1. Total should have 120 patients. And Johnson & Johnson published that they should expect the readout of the randomized part beginning of 2027. The data that have been presented this week are about the safety leading. So there's a lot of caveat around that. It's a small number of patients, but nevertheless, we can start looking at what we observe here. So we've been first showing a good safety profile with no serious adverse events linked to the treatment of the procedure and the feasibility of injection in every patient. Then what has been observed is a good first rate of response that we could see as we've seen 5 out of 7 patients responding. And equally importantly, we get 100% disease control, meaning that all those patients will go or went to durvalumab, which is not the case if you look at the details of PACIFIC trial. Many patients have been excluded post radiation and chemo for different reasons, including progression post radiation and chemo, which we did not observe so far in this clinical trial. But altogether, what we can say it's a first readout encouraging. And we can wait to see the next steps of this safety lead-in or the final data that should come as we mentioned beginning of 2027. So we can say we've been progressing a lot with this collaboration. Also now that we have transferred the Phase III to J&J, they are running most of the operation. We're still running and finishing the 1,100 trial that has completed in terms of recruitment. Now there is some follow-up of patients, and we will continue to deliver some data in that regard. And the collaboration with MD Anderson Cancer Center is still ongoing with many trials that have been completed in terms of recruitment last year, we're going to see data this year, and we may open to new trials with MD Anderson Cancer Center. But maybe let's take time to talk a little about our new platform, Curadigm. Here, we're still talking about nanophysics. We're still talking about nanoparticle, but with a different perspective with different particle with different potential benefit to the patient. Just as a reminder, for those that are new on the call, as I see many, Curadigm is about trying to help many of the innovations we see in the biotech and the pharma arena. You do notice that most of the new innovation coming out, people are building more and more complex objects. We can talk about oncolytic virus, RNA-based therapy, in vivo CAR-T, cell therapy and all the subjects because being complex, at some point, when you try to inject them IV, the liver will play a role of filter and will capture a big part of them, if not all, in certain cases. So for many of those innovations, it's very hard to have access to the entire body with a normal IV route. So rather than doing what our industry is usually doing, which is let's try to tweak this subject to make it more efficient and try to escape the liver while delivering at the right place while delivering the payload and get the good transection, for example, so you're building a lot of compromise in one object. With the Curadigm technology, we decided to build what we call a nanoprimer, a second object. This nanoprimer is injected prior to the second product, and this nanoprimer has been specifically designed to transiently getting into the liver and get it occupied for a certain amount of time. So why the liver is busy? When you inject the second product, then it is much less captured by the liver and can have access to many other organ from the body. So what you could do with this approach is improving pharmacokinetic of a product, allowing when it's not possible to escape the liver, reducing liver toxicity or combination of all this. So there are many, many opportunities and many, many applications we could do with this technology. And now a big part of the team is focused on the development of it. What we've been doing lately is really continuing pushing, meaning filing for 4 new patents applications to continue to build our supremacy with this technology. We also have presented positive new in vivo preclinical combination with different type of combination. And more importantly, we are moving forward towards the IND, and we started the CMC activity with the start of the GMP manufacturing and also preclinical studies allowing to file for an IND. And while doing that, that the internal program at Nano, we've been expanding a lot our external reach out. We have now more than 20 MTAs that we've been signing with pharma or biotech, where they have taken our product and they are testing it with one of their products to either improving the pharmacokinetic of this product or reducing liver toxicity, and we've done that with many different technologies for different therapeutic areas like oncology, rare disease, CNS disorder. So it's moving quite well. And then we expect in a not-too-distant future to start transforming some of those MTAs into deals. But globally, the way we see the value of this platform and the 3 pillars that we are using to push it is first, continue to build and protect the technology while building an internal pipeline. We want to have our fully owned product to be developed up to a certain stage. While we are building or piling up deals with different partners, pharma and biotech. And of course, because of all this, we need to prioritize and build the right infrastructure to be able to build to manufacture and to provide this product to many partners and to our internal pipeline. So things are moving well, and we expect to get a bit more update and new data on this platform coming before the end of the summer. Just of note, last year, we've been entering a new index on the Euronext market, which is the SBF 120, and that's an index that covers 120 largest French listed company by market and cap liquidity. So it does give us a bit more institutional visibility, and we've seen through that some of the new investors coming on the top of specialized biotech investors that have entered our stock last year. And I'm going to take this to give the mic to Bart to talk about the financial part of this presentation. Bart Van Rhijn: Thank you, Laurent. Good morning and good afternoon, everyone, and thank you for joining us today. Over the past year, we've materially strengthened the company's financial foundation, positioning us to advance to upcoming value inflection points with greater resilience and strategic flexibility. This progress was supported by 2 strategic initiatives that meaningfully reshaped our capital requirements and hence our long-term operating flexibility. First, we amended our global licensing agreement with Janssen in a way that materially improves our financial profile. Under the revised terms, we have removed the vast majority of our funding obligations for the Phase III NANORAY-312 study while retaining significant upside through milestone payments that could total hundreds of millions of euros over the next 24 to 36 months. This amendment materially enhances capital efficiency, improves cash flow visibility and better aligns the partnership structure with our long-term strategic priorities. Second, we strengthened our balance sheet to the securing of a nondilutive royalty financing with Healthcare Royalty Partners for up to $71 million. This transaction provides incremental capital while avoiding shareholder dilution extends our projected cash runway into early 2028, excluding potential milestone inflows. Taken together, the strategic initiatives that I just outlined enhance our financial flexibility, reduce near-term funding requirements and position the company to sustainably advance its pipeline while maintaining a disciplined approach to capital allocation and long-term value creation. Turning to the next slide. Just a brief overview of the deal we announced back in October. We're extremely pleased to have partnered with Healthcare Royalty Partners on this transaction, bringing up to $71 million of nondilutive capital into the company. We selected Healthcare Royalty Partners following a comprehensive evaluation of financing alternatives. And given their deep sector experience and expertise, long-term investment outlook and strong record of supporting innovative biotech companies, we selected to partner with them. We believe that this partnership reflects a high degree of alignment around the long-term potential of JNJ-1900 and our broader strategic objectives. Critically, this royalty structure ensures that our partners' return is directly linked to the success of our lead program, which aligns incentives while avoiding repayment obligations beyond the nominal value of the bonds. Moreover, this is a construct that is kept from a time and amount perspective and therefore, a capital-efficient way to finance the company beyond anticipated value inflection points to ensure we maximize the value for our shareholders. This financing not only ensures we are funded through those critical inflection points, but validates the commercial potential of JNJ-1900 and supports our continued progress towards long-term sustainability and profitability. Moving over to our full year financial highlights. For the full year 2025, we recognized positive revenue of EUR 32.6 million compared to negative EUR 7.2 million for the year ended 2024. As a reminder, the negative revenue recorded in 2024 was primarily driven by a onetime recognition of the net liability to Janssen following the transfer of the sponsorship of the NANORAY-312 study. The positive revenue recognized in 2025 reflects a onetime accounting impact of EUR 21.8 million associated with the amendment to a licensing agreement that we executed in March 2025. This amendment, as Laurent alluded to earlier, eliminated the vast majority of the company's development cost obligations related to the NANORAY-312 study. This technical accounting effect related to the transfer of sponsorship and the cancellation of current and future study-related costs resulted in a corresponding impact on our reported top line, which is nonrecurring. Said differently, as these changes in 2024 and 2025 are considered purchase price adjustments from an accounting point of view, these results flow through the revenue line in our profit and loss account. Let us turn to R&D expenses. These include clinical and manufacturing expenses related to the development of JNJ-1900 and preclinical pipeline activities and totaled EUR 23.1 million for the 12-month period ended December 31, 2025, which compares to EUR 40.5 million for the 12 months ended December 31, 2024. As previously discussed, the significant year-over-year decrease of approximately 43% was primarily driven by the removal of development costs associated with the NANORAY-312 study following the transfer of sponsorship to Janssen. This transition resulted in the elimination of related clinical and operational expenditures previously borne by the company. More broadly, R&D spending during the period reflects continued prioritization of capital-efficient development across our clinical and preclinical programs, while maintaining investment in key manufacturing and pipeline activities, supporting the long-term advancement of our all platforms that Laurent just spoke to. Selling, general and administrative expense for the 12-month period ended December 31, 2025, were flat to significantly -- sorry, to slightly down year-over-year at EUR 20.4 million compared to EUR 20.5 million, reflecting continued expense control. Net loss attributable to shareholders was EUR 24 million or EUR 0.50 per share for the 12-month period ended December 31, 2025, reflecting a year-over-year decrease of 65%. The decrease was primarily attributable to the one-off noncash positive revenue recognition accounting impact together with a meaningful decrease in R&D expense resulting from the removal of the funding obligation for the 312 study. This compares to a net loss of EUR 68.1 million or EUR 1.44 per share reported for the same period last year. As we turn to cash and cash equivalents, as of December 31, 2025, that amounted to EUR 52.8 million compared to EUR 49.7 million as of December 31, 2024. Based on the current operating plan and financial projections, Nanobiotix anticipates that the cash and cash equivalents of EUR 52.8 million as of December 31, 2025, will fund its operations into early 2028, assuming the receipt of the remaining $21 million from Healthcare Royalty Partners expected in Q4 of 2026. To conclude, we remain focused on disciplined execution as we advance through key clinical and strategic milestones. We will continue to prioritize prudent capital allocation, operational efficiency and balance sheet resiliency and believe the foundation we have built positions us well for the periods ahead as we work to deliver long-term value for our stakeholders. Thank you. And now I would like to turn the call back to Laurent. Laurent Levy: Thank you, Bart. Just in a nutshell, what's coming for the 12, 18 months in front of us, we will continue to push with our new platform Curadigm and we'll continue to deliver new data and also visibility on how we're going to transform that into business. On the top of that, the NBTXR3 or JNJ-1900 development is still key in our development, as should be the critical next step for value creation as we expect to get the results of the Phase III in first half of '27 and the results of the Phase II in lung cancer in early 2027. Besides this, this year, we're going to deliver 4 different results of clinical trials, which 3 of them have been completed, so you will be able to see the final data for this. The key takeaway for today, if we think about 2025 and what's coming is the J&J partnership and the development of NBTXR3 is moving in the right direction with amplification of the development through multiple trials. We've continued to show that potential use of NBTXR3 across different indications, which reinforces the potential value of this product. And as mentioned, we've continued the Curadigm development, a new class of drug that we intend to bring to life. As Bart just mentioned, we're getting in a good financial position as our cash visibility is going into 2028 beyond key milestones in head and neck and lung and potentially other milestones. And as you have just seen, we have multiple near-term data readouts that could continue to show, assuming it's positive, that NBTXR3 could really improve life of millions of patients. Thank you very much for your attention, and now we're going to open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Tara Bancroft from TD Cowen. Tara Bancroft: So my question is about the lung data that you guys showed from CONVERGE yesterday that were really interesting even it's only in the first 7 patients. So we were hoping you could give us some context for how you benchmarked that to the 45% to 50% ORR. We ask because PACIFIC seems to be the best comp here where ORR was actually around 30%. So just curious to hear your thoughts on that. And then on follow-up, when were these assessments taken that were in the poster? And how does that length of follow-up so far play into your level of confidence in the data that potentially improving even further in Part 2? Laurent Levy: Thank you, Tara. Well, I think there are a few paper or historical control we could look at comparator for that. As a context, we are using the PACIFIC regimen in this trial and patients getting radiation plus chemo and if they do not progress, then they go to durvalumab. If you look at the PACIFIC paper, they start with 983 patients that received radiation plus chemo. And out of that, only 70% will be randomized, 2 patients in the direction of durvalumab, one with placebo. So there is in the evaluation of the response rate in the PACIFIC paper, something telling 40% -- 48% of response, but that excludes the 30% patients that have been not treated after that with durvalumab. So that's the response rate therefore after radio chemo. And if you look at the response rate post durvalumab, then it's going down, but it's going down slower than the placebo arm. And here, you find the 27% response that you probably mentioned. But again, this 27% response is excluding the patients that have been frontline excluded from the trial before randomization. So altogether, if we take 40%, 50%, that's what we can find in some other paper as what radiation plus chemo is doing for those patients and close to what they find as an optimization in the PACIFIC regimen. But I think that's just the first part. The most important part is how this evolves over time. Because what we see in PACIFIC, some patients did not get durva, 30%, and then the rate is going down over time. So I think if [R3] can provide a real local control, then we should see something different happening versus what you can observe with durvalumab. But this will be answered a bit later and potentially definitely answered when we will see the results of the Phase II beginning of next year. Operator: Your next question comes from the line of Clemence Thiers from Stifel. Clemence Thiers: Just to come back to the CONVERGE study. Full data will be in early 2027. Is there any chance you or J&J could file based on that study? Or do you have to run a Phase III afterwards? That's the first question. Laurent Levy: Thank you for the question. Well, first of all, we can talk for our partner. J&J now is running the CONVERGE trial and has the license on the product. So that will be their decision. And I think it's a bit early to talk about that. That may be a question we could ask when we see the data coming from the Phase II. But if the data are excellent, everything is open. But again, that will be a J&J's decision to move that direction or to do a proper Phase III after that. But we will hope for the best. Clemence Thiers: Yes. That was worth the shot. And the second question, in 2026, we'll have all those additional data sets from your IO study and MD Anderson studies. Are those the last ones in the sense that will you be after that at the stage where you again J&J decide whether you move forward with it or not? Laurent Levy: Yes. I think some of those trials have been completed like the melanoma cancer trial, the lung re-radiation and the last one, esophageal cancer. Just to know that we are now looking with MD Anderson as opening some potential new trial to explore new avenues, but that's something that will come a bit later. Obviously, out of all those trials, we got a lot of signs of safety, feasibility, potential good efficacy for the product. And now it's within the hands of the J&J, but also discussing with us about potential next step, but nothing that we can say at this stage. I have one mention to do, is to maybe take a particular look at the MD Anderson cancer trial about lung reraadiation. This trial, the recruitment has been completed last year, and we'll see the final data this year on more patients with more follow-up. I think this trial is very important because it's not like the same population that is treated in CONVERGE, but to a certain extent, could be seen as a surrogate of what we could observe in CONVERGE. So we will pay particular attention to this trial, but also we'll bring that to your attention. Operator: Your next question comes from the line of Jonathan Chang from Leerink Partners. Albert Agustinus: This is Albert Agustinus, on for Jonathan Chang. Congrats on all the progress. So my question also reflects on the CONVERGE data, is how do we extrapolate these results to your other ongoing trials and potential indications? And secondly, if I may, how do you foresee JNJ-1900 will be positioned within the landscape of non-small cell lung cancer treatment paradigm? Laurent Levy: Well, I think lung stage III cancer, like locally advanced head and neck cancer and other tumor are different because they are coming and they are in different organ, but they all share something is that if you can improve the local control and have a strong rate of response and CR, then you can deeply change the PFS and overall survival. And what our product does is improving the absorption of energy, killing more cells. And we know when you have a local disease, killing more cells may lead to more control. So that's the basic thesis that led us to start developing NBTXR3 and going into frontline treatment when patients have a local disease. And that's also what J&J is going after if we think about the 2 trials in head and neck and this trial in lung cancer. For us, it does establish the strong power of having local control transforming into benefit for patients. And starting from this point, then we could anticipate or imagine the diffusion of this product across different populations that are also getting radiation. But it's always pure to demonstrate that this work when local control plays the key role in the survival and quality of life of patients. So that's how we will extrapolate the results of CONVERGE, but also that's what we started to do with the randomized data coming from soft tissue sarcoma, which was a similar situation, even though this is really different. And that's a good start to any tumor type. And if we think about how to extrapolate to other indications, that could be a path. Now for lung cancer, there are many patients receiving radiation beyond lung Stage III. It is around 77% of lung cancer patients getting radiation. And not to mention that small cell lung cancer is also another indication where radiation is key. So we could imagine, but again, that will be J&J's decision to spread this product across different lung subpopulation. Operator: We will take our next question. And the question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Swayampakula Ramakanth: This is RK from H.C. Wainwright. I also have a couple of quick questions on CONVERGE. So in your mind, do you see J&J when they're spending time on both NANORAY-312 and CONVERGE, do you see them sourcing equal time for both of these projects? And additionally, does -- do you have any data from your partner regarding abscopal effect in the lung? Because injecting into lung lesions are potentially technically challenging. So how do we -- how do you and your partners see this being a successful therapeutic modality in the lung? Laurent Levy: Well, first of all, about the bandwidth or the investment in lung versus head and neck. I think a Phase III is always bigger than the Phase II. And in that case, that's a very big Phase III versus the CONVERGE trial. So there's much more people working on one than the other, which is normal given the size of things. But the attention is equally important from our perspective and what we can observe. And obviously, as I mentioned previously, the lung is a very important trial for J&J and also for us because if it does work, that's really opening a big market for JNJ-1900 or NBTXR3. But let's say that what we observe is they're pushing all front to make sure that all this could happen. Now on the abscopal effect, I think that's a big question. That's an effect we already observed that in melanoma patients, head and neck patients, some of the lung patients, when they have met with or without primary tumor, when we do inject one lesion and irradiate that lesion, we see a distant effect in the non-irradiated non-injected lesion. So that's something we start observing in many different clinical situations. That will be very useful to understand and to investigate when we think about metastatic patients. But for the vast majority of patients getting radiation, they have no met. They have a local or local regional disease. And here, local control is much more important than any potential immune response. And if we can provide it through local injection of the particle plus the radiation, that could be a win. And in the case of local regional when some of the lymph node could be involved, then we've seen in different trials now that we are able to inject lymph node on the top of the primary tumor, which could add also an additional immune response. But RK, if we just step back a minute, I think this abscopal effect or the possibility to trigger an immune response is really critical for met, as I mentioned. But also if you think about local regional disease where radiation plays a role, usually the local regional area is irradiated, which is not in favor of having an immune response because the X-ray, as we know and have seen, could kill some of the activity of the immune system. So here, the local control brought by physical treatment like radiation with the addition of JNJ-1900 is where we should play and where we should try to win. Swayampakula Ramakanth: One quick question on Curadigm. You did present some preclinical data previously. Now thinking -- going forward, since you also have collab MTAs with multiple parties. Are you planning to initiate an IND from the internal pipeline? Or do you expect some of these external collaboration partners to file first? How should we think about that program going forward? Laurent Levy: We are pushing both because we think building our internal pipeline will go through have a first proof of concept of this product into human, and that's what the team is working on, not only by manufacturing the product and starting pre-IND studies, but also designing the first proof of concept we want to bring to life. And if we think about it, as soon as we have established the safety and feasibility of this product into human, that's also opening many more combination possibilities with other products that are already into clinical development. So that will not only push forward our pipeline, but also will open many other opportunities for collaboration and licensing out. Operator: We will take our next question. Your question comes from the line of Kiara Montoni from Van Lanschot Kempen. Unknown Analyst: This is [indiscernible] on for Kiara. So for the J&J driven Phase II trial in lung, do you expect that J&J will report an interim before the readout in early 2027? And if they do, what do you think they will most likely disclose the ORR or the post durvalumab from Part 1? Laurent Levy: Thank you for the question. So yes, that's true. There are multiple readouts in this trial, different rate of response depending on timing, PD-L1 and also potential measurement as exploratory for other more systemic endpoints like PFS and OS. Now we can't talk for J&J. What we can say is what has been said publicly, which is the readout of the Phase II beginning of '27. But in between, who knows. Unknown Analyst: Okay. And on the MD Anderson lung reirradiation trial, you said you expected to read out in 2027. Is there any possibility you can narrow down on the timing? Laurent Levy: We filed for different abstracts. If first one accepted, that should be around the summer. Operator: We will take our next question, and the question comes from the line of David Dai from UBS. Xiaochuan Dai: Congrats on the progress. So a couple of questions from me as well. So just on the CONVERGE trial, so just thinking about the JNJ-1900, how do you think this early post-CCRT response we saw from the Part 1 could translate into durable load control and PFS benefit in Part 2? And I have a follow-up after that. Laurent Levy: Well, I mean, that's depending on how durable will be the response. But generally what we have observed in other clinical trials with different disease, when you start getting radiation, you usually get the optimal efficacy of radiation a few months after the end of the last session. Here, patients are going directly, I mean, rapidly into durvalumab. The good point is that, first of all, all of them went to durvalumab, which is not the case when you look at the overall population. And now we need to wait the next set of data to conclude on that. But if we believe of what we have seen previously in other trials, we should expect a much greater local control. And now we'll see how this potentially impacts a more systemic aspect of things for the patient. Xiaochuan Dai: Got it. Okay. And then just on -- for next follow up, just on the Part 1 study here, will we expect another follow-up of this data from the Part 1? And also for the Part 2, which we're expecting to have some data in early 2027. Could you just help us understand a little bit more around what's the sort of expected data readout? Would it be OR? Or should we look at PFS as well? Laurent Levy: I don't know. What we know is that all this that you mentioned are endpoint of the trials, but we don't know what J&J is going to communicate yet. Operator: Your next question comes from the line of Michael Schmidt from Guggenheim. Michael Schmidt: I had a couple more on the CONVERGE data from yesterday. Obviously, very interesting. Could you confirm whether Part 2 of that study is enrolling? Or are still patients being added to Part 1, sort of the safety lead-in component of the trial? Laurent Levy: Yes. Part 1 has been completed and the Phase II part, randomized part is enrolling since last year. Michael Schmidt: Okay. That makes sense. And then, yes, so just -- so you did note the sort of next update in early 2027. Is your impression that this is sufficient for your partner to potentially make a Phase III go decision? Or do you think more follow-up may be needed to look at things like DFS or maybe even OS to make that move into a large Phase III trial? Laurent Levy: That's a very good question, Michael. I think overall, first of all, a response in those patient population, if you find a high rate of response, then you should get an impact and a correlation with PFS and OS. I think the number of CR globally also could be a surrogate of that as PACIFIC did show very little rate of CR, less than 1.7% in the post [indiscernible] treatment. But globally, patients, if you look at the dynamic of the curve, they're relapsing quite fast in [indiscernible] arm and versus radio plus chemo. So I think comparing all those data, we can say if you beat that bar, then you move to Phase III directly, you don't need PFS, you don't need OS. I think that should be a mix of results linked to number of patients getting to [indiscernible] because usually 30% are not, number of patients getting response, number of patients getting complete response and then you can start following PFS and OS to see. But a combination of all these or just a few of them, depending on the magnitude could be enough. But at the end, that's J&J's decision to look at this and to take the path moving forward. Michael Schmidt: Okay. Makes sense. And then another one, I know this may be, again, difficult to answer, but what is your sense how J&J may prioritize other indications beyond head and neck and lung. For example, breast cancer is obviously a very big opportunity in prostate as well. And to what degree do you think they're incorporating data that's sort of coming out of the ISTs that have been ongoing? Laurent Levy: Well, that's a tricky question. We can't answer. What we can say is you can see the priorities of J&J in terms of indications like lung, bladder, head and neck and so on. So as you mentioned, breast cancer is not part of those priorities. Also, we have all the trials we've been running or are still running with MD Anderson that could serve as a base for expansion. But even though we have a lot of discussion with J&J's team about optionality, there's nothing we can say at this moment. Michael Schmidt: So we'll keep our eyes out for any other updates. Operator: [Operator Instructions] We will take our next question, and the question comes from the line of Shan Hama from Jefferies. Shan Hama: Just 2 from me, please. Actually, just on potential indication expansion on J&J's part. I know there's obviously not much you can comment on their behalf. But the indications that NDA is working on, is there scope for J&J to actually expand the [R3] program into those indications, so pancreatic, esophageal, et cetera? That's my first question. And then I can ask a follow-up after. Laurent Levy: I'm sorry, I'm not sure I got. The question was can they or will they? Shan Hama: As in, can they?, are they able to? Laurent Levy: Yes, of course, they are able to. And obviously, all the clinical trial we've been running serve really as a base for discussion with them, and they can. Shan Hama: Okay. That's clear. And then just actually on cash burn. So obviously, R&D has come down pretty sharply post the transfer to J&J. So what's the sort of steady-state annual cash burn we should assume through to 2027? Bart Van Rhijn: Thank you for the question. We don't provide specific forward-looking guidance to the individual years, and we refer to the cash runway that is in early 2028. But we have a very disciplined approach to how we allocate capital. So what you've been used to in the past few years, you should expect to continue to see from us. Maybe one high-level comment is that as the 312 costs have been transferred to our partner, Janssen, we should expect to see development cost on the new platforms that Laurent talked to. Operator: Your next question comes from the line of Clement Bassat from Portzamparc BNP Paribas. Clément Bassat: I have 2. First, I was wondering how much R&D you spent in oncology in H2? And how much was allocated to Curadigm just in order to assess the shift? And secondly, regarding the mechanism of Curadigm, my understanding is that with the Nanoprimer, we will reduce the effective dose level, but at the same time, we may also reduce the dose. So could you please provide some insight into the relationship between these 2 dose, if the relationship is linear or not? And if this could lead to narrowing the trend between these 2 dose due to the suspension of the liver clearance? Bart Van Rhijn: Let me try to address the question on the R&D spend and how that is proportion between our 3 new platforms. What I can share is that at this time, and this is relating to full year 2025, the spend on Curadigm has been ramping and should be in the low single-digit millions. Again, as we start to pivot and have pivoted meanwhile to these new platforms, that spend will obviously increase. But for the past year, it was a smaller amount compared to the total R&D spend. Laurent Levy: So to your second question about Curadigm, I think the answer is yes, there is a correlation, but will depend also on the need of the product. Let me try to get to that. So what the Nanoprimer does is by occupying transiently the liver, it will allow a second product to circulate more freely. So if this product had a strong accumulation in liver, but not much toxicity, what you're going to play on is the ability for the second product to circulate more freely and to reach other targets that will not be able to reach normally. But if this product has a high liver toxicity, would prevent him to be used at the right dose, then you will play more on the liver toxicity by preventing the accumulation while allowing some circulation of a therapeutic dose. But there's always a correlation between the dose of the Nanoprimer and the quantity that you will avoid to be captured in the liver and the quantity that will be allowed to circulate. And there is a link to that but different products will request different outcome, and that's where we're going to play A or B, meaning more efficacy or less safety issue. In some cases, we can play on both. Operator: This concludes today's question-and-answer session. I'll now hand back for closing remarks. Laurent Levy: Everyone, thank you very much. It was a pleasure, as usual, to talk to all of you. And I think that you are numerous today assisting to the call. It's a very good thing and hope to see you all in a short for more news about Nanobiotix. Thank you very much. I wish you a great day. Thank you. Bart Van Rhijn: Thank you all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Nanobiotix Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joanne Choi, Head of Investor Relations, U.S. Please go ahead. Joanne Choi: Thank you, Heidi. Good afternoon, and good morning, and welcome to the Nanobiotix conference call to discuss our full year 2025 financial and operational results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial and Business Officer. Today's call is being webcast and will be available on our website for replay. Before we begin, I would like to remind you that today's discussion will include forward-looking statements within the meaning of applicable securities laws. These statements are based on our current expectations, assumptions and available information and are subject to significant risks and uncertainties that could cause actual results to differ materially. Such risks include, among others, those related to the timing, progress and outcomes of our research and clinical development programs, regulatory developments and our financial and operational performance. We encourage you to review the full description of risk factors that can be found in the documents we filed with the AMF in France and the SEC in the U.S., which are available on the Investor Relations section of our website. Any forward-looking statements made during this call reflect our views as of today and should not be relied upon as representing our views as of any subsequent date. Thank you. I will now turn the call over to Laurent. Please go ahead. Laurent Levy: Thank you, Joanne, and thank you, everyone. Good morning, good afternoon. Really happy to be here with you today to share our 2025 year and to give you a bit of perspective of what's going to happen in the next 12 to 18 months. So today, we're going to go over different aspects of things, how we've been moving the company for the past year and also give some financial highlights and then open for Q&A session. I think we've had a very rich 2025. We've been able to do many things during this year. First of all, start moving forward in a good way in the collaboration we have with Johnson & Johnson and start showing the potential of this first product, along with the potential of this deal in terms of future revenue for Nanobiotix. While doing so, we've been also pivoting the company towards the new platform, which has been a big effort from the team, and I would like to thank them all for that. While doing those operational things in parallel, we've been able to really improve our cash visibility into 2028. And this is beyond the timing of some of the expected milestones that should come from the collaboration with J&J. So altogether, we've had a rich year, and we are pleased to share that with you. And now we're going to go in some more details to give you a bit of insight. Before getting there, we would just like to remind a few things about the philosophy with which we are developing things at Nanobiotix. So as you can see here, we mentioned delivering first-in-class directly. But I think definitely, we are doing more than this. We are creating new class of drugs. That's what we have done for the radioenhancer, for the Nanoprimer and also for the last platform OOcuity. And that's really our philosophy. We don't want to do what other biotech are doing, not because it's bad because we think there are enough people working on the same target with the same technology. So we really want to bring something deep and different to help millions of patients. And that's what we're trying to do, and we continue to do. Our strategy is simple and stay in line with what we told you last year. First of all, is to continue to push and help J&J to address one of the potentially largest untapped market in oncology. And that's through our first product, radioenhancer that has been licensed to Johnson & Johnson. And beyond this product, we're really pushing hard on new platforms, starting with the Curadigm platform, which we think is going to disrupt part of how we think about drug development. And we have been starting making good progress in that regard this year. Obviously, we will come back to that in more detail. But let's focus first on NBTXR3 or JNJ-1900. What do we mean by addressing one of the largest untapped market in oncology? Well, I think for that, we still need to look at patients. And when patients are diagnosed with cancer, the vast majority of them have a local disease. It's more than 70% of patients having local disease at diagnosis. And our industry, in general, is more focused on late-stage treatment of patients when they get metastatic or have received several lines of treatment. If you think about it, if you want to have a big impact for those patients, it will be much better, if possible, to treat them at the beginning of their disease and try to eradicate the tumor when it's still at the local stage. And that's exactly what we are trying to achieve with NBTXR3. And for that, we're working with radiation therapy, which is one of the largest treatments used in oncology as more than 60% of all cancer patients are getting radiation. And we have a product that we licensed to J&J that fits this existing market with almost no competition. And as you can see on this slide, we have a very large pipeline linked to this product that have been developing across many tumors. And technically, that's just a few examples of what could be done with this product because there are many, many other patients getting radiation in different oncology indications. But let's try to look at where is the value here, what are the next key point of inflection and how are we going to bring that to next steps. This year, last year, sorry, 2025, we've been publishing additional data in different cancer types. On the top of the already established proof of concept in soft tissue sarcoma, the first data in head and neck cancer, we've been able to continue to show that this product could be widely applicable in oncology. Through 2025, we've been publishing data on head and neck cancer by talking here about recurrent metastatic patients, also pancreatic cancer, esophageal cancer, melanoma cancer and lung cancer. All those data have been showing not only that you could use safely NBTXR3 in different indications, but also start to show some potential good of efficacy for those different indications. And altogether, some consistency. In the way you administer the product, but more importantly, in the way this product could amplify the radiation therapy and potentially bring new benefits and additional benefit to patients. Let's focus on the 2 key developments. As you know, we've been transferring to Johnson & Johnson last year, the ongoing Phase III in head and neck cancer. That's a very important trial as a Phase III and could lead, if positive, to first approval and first market activity around NBTXR3. This trial is progressing well. J&J now has the full operation on this and also the financial aspects of this trial are taken care by J&J, and we still expect to get the first readout of this trial the first half of next year. You may have noticed that on the top of this Phase III, J&J has also started a Phase Ib in another population of head and neck, meaning patients getting radiation plus cisplatin. If you think about head and neck cancer, with those 2 trials, you're technically capturing all the patients frontline that have a locally advanced tumor and that received radiation and that cannot go to surgery. So technically, if you -- if you exclude, sorry, the few patients that have metastasis at diagnosis, with those 2 trials, you could capture the vast majority of head and neck cancer patients, first-line treatment with the highest unmet medical need. So that's a very important pathway and could, if positive, establish NBTXR3 as a key player in whole head and neck cancer treatment. Now there is another trial, which is equally important and potentially even more important. We're talking about here the first lung cancer trial that J&J is running. The name of this trial is CONVERGE. It's a randomized Phase II trial in unresectable Stage III non-small cell lung cancer. This trial is important for many reasons. First of all, as you may have seen, lung cancer is a very important aspect of the strategy of J&J in oncology. And it's also, as you know, a gigantic market, if not the biggest market with breast cancer. So here, starting with this trial, assuming that the data are positive, what we feel at Nanobiotix is that could be a trigger for Johnson & Johnson to start expanding the development. But if we just stick to lung cancer, that's already a gigantic market per se. Here, we're talking about Stage III, but could expand into some other indication in lung cancer. And maybe as we did not have the occasion to talk about the data that has been generated, the first part of this data, let's have a small focus on that. As I mentioned, we are talking here about patients that have a locally advanced unresectable Stage III lung cancer and the treatment of reference is radiation to chemo followed by consolidation with durvalumab. And as you can see, if you look left and right of this box, many other patients in lung cancer would receive radiation therapy frontline treatment, which could be at some point an expansion of the use of this product, assuming that this trial read positive. So what's the design of the trial? There's 2 parts in it. First, a safety leading with very few patients and then what we call a proof of concept with the randomized part of the trial where we compare the standard of care chemo radiation with durvalumab versus the same plus the product with 2 different dose. And this is randomized 1:1:1. Total should have 120 patients. And Johnson & Johnson published that they should expect the readout of the randomized part beginning of 2027. The data that have been presented this week are about the safety leading. So there's a lot of caveat around that. It's a small number of patients, but nevertheless, we can start looking at what we observe here. So we've been first showing a good safety profile with no serious adverse events linked to the treatment of the procedure and the feasibility of injection in every patient. Then what has been observed is a good first rate of response that we could see as we've seen 5 out of 7 patients responding. And equally importantly, we get 100% disease control, meaning that all those patients will go or went to durvalumab, which is not the case if you look at the details of PACIFIC trial. Many patients have been excluded post radiation and chemo for different reasons, including progression post radiation and chemo, which we did not observe so far in this clinical trial. But altogether, what we can say it's a first readout encouraging. And we can wait to see the next steps of this safety lead-in or the final data that should come as we mentioned beginning of 2027. So we can say we've been progressing a lot with this collaboration. Also now that we have transferred the Phase III to J&J, they are running most of the operation. We're still running and finishing the 1,100 trial that has completed in terms of recruitment. Now there is some follow-up of patients, and we will continue to deliver some data in that regard. And the collaboration with MD Anderson Cancer Center is still ongoing with many trials that have been completed in terms of recruitment last year, we're going to see data this year, and we may open to new trials with MD Anderson Cancer Center. But maybe let's take time to talk a little about our new platform, Curadigm. Here, we're still talking about nanophysics. We're still talking about nanoparticle, but with a different perspective with different particle with different potential benefit to the patient. Just as a reminder, for those that are new on the call, as I see many, Curadigm is about trying to help many of the innovations we see in the biotech and the pharma arena. You do notice that most of the new innovation coming out, people are building more and more complex objects. We can talk about oncolytic virus, RNA-based therapy, in vivo CAR-T, cell therapy and all the subjects because being complex, at some point, when you try to inject them IV, the liver will play a role of filter and will capture a big part of them, if not all, in certain cases. So for many of those innovations, it's very hard to have access to the entire body with a normal IV route. So rather than doing what our industry is usually doing, which is let's try to tweak this subject to make it more efficient and try to escape the liver while delivering at the right place while delivering the payload and get the good transection, for example, so you're building a lot of compromise in one object. With the Curadigm technology, we decided to build what we call a nanoprimer, a second object. This nanoprimer is injected prior to the second product, and this nanoprimer has been specifically designed to transiently getting into the liver and get it occupied for a certain amount of time. So why the liver is busy? When you inject the second product, then it is much less captured by the liver and can have access to many other organ from the body. So what you could do with this approach is improving pharmacokinetic of a product, allowing when it's not possible to escape the liver, reducing liver toxicity or combination of all this. So there are many, many opportunities and many, many applications we could do with this technology. And now a big part of the team is focused on the development of it. What we've been doing lately is really continuing pushing, meaning filing for 4 new patents applications to continue to build our supremacy with this technology. We also have presented positive new in vivo preclinical combination with different type of combination. And more importantly, we are moving forward towards the IND, and we started the CMC activity with the start of the GMP manufacturing and also preclinical studies allowing to file for an IND. And while doing that, that the internal program at Nano, we've been expanding a lot our external reach out. We have now more than 20 MTAs that we've been signing with pharma or biotech, where they have taken our product and they are testing it with one of their products to either improving the pharmacokinetic of this product or reducing liver toxicity, and we've done that with many different technologies for different therapeutic areas like oncology, rare disease, CNS disorder. So it's moving quite well. And then we expect in a not-too-distant future to start transforming some of those MTAs into deals. But globally, the way we see the value of this platform and the 3 pillars that we are using to push it is first, continue to build and protect the technology while building an internal pipeline. We want to have our fully owned product to be developed up to a certain stage. While we are building or piling up deals with different partners, pharma and biotech. And of course, because of all this, we need to prioritize and build the right infrastructure to be able to build to manufacture and to provide this product to many partners and to our internal pipeline. So things are moving well, and we expect to get a bit more update and new data on this platform coming before the end of the summer. Just of note, last year, we've been entering a new index on the Euronext market, which is the SBF 120, and that's an index that covers 120 largest French listed company by market and cap liquidity. So it does give us a bit more institutional visibility, and we've seen through that some of the new investors coming on the top of specialized biotech investors that have entered our stock last year. And I'm going to take this to give the mic to Bart to talk about the financial part of this presentation. Bart Van Rhijn: Thank you, Laurent. Good morning and good afternoon, everyone, and thank you for joining us today. Over the past year, we've materially strengthened the company's financial foundation, positioning us to advance to upcoming value inflection points with greater resilience and strategic flexibility. This progress was supported by 2 strategic initiatives that meaningfully reshaped our capital requirements and hence our long-term operating flexibility. First, we amended our global licensing agreement with Janssen in a way that materially improves our financial profile. Under the revised terms, we have removed the vast majority of our funding obligations for the Phase III NANORAY-312 study while retaining significant upside through milestone payments that could total hundreds of millions of euros over the next 24 to 36 months. This amendment materially enhances capital efficiency, improves cash flow visibility and better aligns the partnership structure with our long-term strategic priorities. Second, we strengthened our balance sheet to the securing of a nondilutive royalty financing with Healthcare Royalty Partners for up to $71 million. This transaction provides incremental capital while avoiding shareholder dilution extends our projected cash runway into early 2028, excluding potential milestone inflows. Taken together, the strategic initiatives that I just outlined enhance our financial flexibility, reduce near-term funding requirements and position the company to sustainably advance its pipeline while maintaining a disciplined approach to capital allocation and long-term value creation. Turning to the next slide. Just a brief overview of the deal we announced back in October. We're extremely pleased to have partnered with Healthcare Royalty Partners on this transaction, bringing up to $71 million of nondilutive capital into the company. We selected Healthcare Royalty Partners following a comprehensive evaluation of financing alternatives. And given their deep sector experience and expertise, long-term investment outlook and strong record of supporting innovative biotech companies, we selected to partner with them. We believe that this partnership reflects a high degree of alignment around the long-term potential of JNJ-1900 and our broader strategic objectives. Critically, this royalty structure ensures that our partners' return is directly linked to the success of our lead program, which aligns incentives while avoiding repayment obligations beyond the nominal value of the bonds. Moreover, this is a construct that is kept from a time and amount perspective and therefore, a capital-efficient way to finance the company beyond anticipated value inflection points to ensure we maximize the value for our shareholders. This financing not only ensures we are funded through those critical inflection points, but validates the commercial potential of JNJ-1900 and supports our continued progress towards long-term sustainability and profitability. Moving over to our full year financial highlights. For the full year 2025, we recognized positive revenue of EUR 32.6 million compared to negative EUR 7.2 million for the year ended 2024. As a reminder, the negative revenue recorded in 2024 was primarily driven by a onetime recognition of the net liability to Janssen following the transfer of the sponsorship of the NANORAY-312 study. The positive revenue recognized in 2025 reflects a onetime accounting impact of EUR 21.8 million associated with the amendment to a licensing agreement that we executed in March 2025. This amendment, as Laurent alluded to earlier, eliminated the vast majority of the company's development cost obligations related to the NANORAY-312 study. This technical accounting effect related to the transfer of sponsorship and the cancellation of current and future study-related costs resulted in a corresponding impact on our reported top line, which is nonrecurring. Said differently, as these changes in 2024 and 2025 are considered purchase price adjustments from an accounting point of view, these results flow through the revenue line in our profit and loss account. Let us turn to R&D expenses. These include clinical and manufacturing expenses related to the development of JNJ-1900 and preclinical pipeline activities and totaled EUR 23.1 million for the 12-month period ended December 31, 2025, which compares to EUR 40.5 million for the 12 months ended December 31, 2024. As previously discussed, the significant year-over-year decrease of approximately 43% was primarily driven by the removal of development costs associated with the NANORAY-312 study following the transfer of sponsorship to Janssen. This transition resulted in the elimination of related clinical and operational expenditures previously borne by the company. More broadly, R&D spending during the period reflects continued prioritization of capital-efficient development across our clinical and preclinical programs, while maintaining investment in key manufacturing and pipeline activities, supporting the long-term advancement of our all platforms that Laurent just spoke to. Selling, general and administrative expense for the 12-month period ended December 31, 2025, were flat to significantly -- sorry, to slightly down year-over-year at EUR 20.4 million compared to EUR 20.5 million, reflecting continued expense control. Net loss attributable to shareholders was EUR 24 million or EUR 0.50 per share for the 12-month period ended December 31, 2025, reflecting a year-over-year decrease of 65%. The decrease was primarily attributable to the one-off noncash positive revenue recognition accounting impact together with a meaningful decrease in R&D expense resulting from the removal of the funding obligation for the 312 study. This compares to a net loss of EUR 68.1 million or EUR 1.44 per share reported for the same period last year. As we turn to cash and cash equivalents, as of December 31, 2025, that amounted to EUR 52.8 million compared to EUR 49.7 million as of December 31, 2024. Based on the current operating plan and financial projections, Nanobiotix anticipates that the cash and cash equivalents of EUR 52.8 million as of December 31, 2025, will fund its operations into early 2028, assuming the receipt of the remaining $21 million from Healthcare Royalty Partners expected in Q4 of 2026. To conclude, we remain focused on disciplined execution as we advance through key clinical and strategic milestones. We will continue to prioritize prudent capital allocation, operational efficiency and balance sheet resiliency and believe the foundation we have built positions us well for the periods ahead as we work to deliver long-term value for our stakeholders. Thank you. And now I would like to turn the call back to Laurent. Laurent Levy: Thank you, Bart. Just in a nutshell, what's coming for the 12, 18 months in front of us, we will continue to push with our new platform Curadigm and we'll continue to deliver new data and also visibility on how we're going to transform that into business. On the top of that, the NBTXR3 or JNJ-1900 development is still key in our development, as should be the critical next step for value creation as we expect to get the results of the Phase III in first half of '27 and the results of the Phase II in lung cancer in early 2027. Besides this, this year, we're going to deliver 4 different results of clinical trials, which 3 of them have been completed, so you will be able to see the final data for this. The key takeaway for today, if we think about 2025 and what's coming is the J&J partnership and the development of NBTXR3 is moving in the right direction with amplification of the development through multiple trials. We've continued to show that potential use of NBTXR3 across different indications, which reinforces the potential value of this product. And as mentioned, we've continued the Curadigm development, a new class of drug that we intend to bring to life. As Bart just mentioned, we're getting in a good financial position as our cash visibility is going into 2028 beyond key milestones in head and neck and lung and potentially other milestones. And as you have just seen, we have multiple near-term data readouts that could continue to show, assuming it's positive, that NBTXR3 could really improve life of millions of patients. Thank you very much for your attention, and now we're going to open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Tara Bancroft from TD Cowen. Tara Bancroft: So my question is about the lung data that you guys showed from CONVERGE yesterday that were really interesting even it's only in the first 7 patients. So we were hoping you could give us some context for how you benchmarked that to the 45% to 50% ORR. We ask because PACIFIC seems to be the best comp here where ORR was actually around 30%. So just curious to hear your thoughts on that. And then on follow-up, when were these assessments taken that were in the poster? And how does that length of follow-up so far play into your level of confidence in the data that potentially improving even further in Part 2? Laurent Levy: Thank you, Tara. Well, I think there are a few paper or historical control we could look at comparator for that. As a context, we are using the PACIFIC regimen in this trial and patients getting radiation plus chemo and if they do not progress, then they go to durvalumab. If you look at the PACIFIC paper, they start with 983 patients that received radiation plus chemo. And out of that, only 70% will be randomized, 2 patients in the direction of durvalumab, one with placebo. So there is in the evaluation of the response rate in the PACIFIC paper, something telling 40% -- 48% of response, but that excludes the 30% patients that have been not treated after that with durvalumab. So that's the response rate therefore after radio chemo. And if you look at the response rate post durvalumab, then it's going down, but it's going down slower than the placebo arm. And here, you find the 27% response that you probably mentioned. But again, this 27% response is excluding the patients that have been frontline excluded from the trial before randomization. So altogether, if we take 40%, 50%, that's what we can find in some other paper as what radiation plus chemo is doing for those patients and close to what they find as an optimization in the PACIFIC regimen. But I think that's just the first part. The most important part is how this evolves over time. Because what we see in PACIFIC, some patients did not get durva, 30%, and then the rate is going down over time. So I think if [R3] can provide a real local control, then we should see something different happening versus what you can observe with durvalumab. But this will be answered a bit later and potentially definitely answered when we will see the results of the Phase II beginning of next year. Operator: Your next question comes from the line of Clemence Thiers from Stifel. Clemence Thiers: Just to come back to the CONVERGE study. Full data will be in early 2027. Is there any chance you or J&J could file based on that study? Or do you have to run a Phase III afterwards? That's the first question. Laurent Levy: Thank you for the question. Well, first of all, we can talk for our partner. J&J now is running the CONVERGE trial and has the license on the product. So that will be their decision. And I think it's a bit early to talk about that. That may be a question we could ask when we see the data coming from the Phase II. But if the data are excellent, everything is open. But again, that will be a J&J's decision to move that direction or to do a proper Phase III after that. But we will hope for the best. Clemence Thiers: Yes. That was worth the shot. And the second question, in 2026, we'll have all those additional data sets from your IO study and MD Anderson studies. Are those the last ones in the sense that will you be after that at the stage where you again J&J decide whether you move forward with it or not? Laurent Levy: Yes. I think some of those trials have been completed like the melanoma cancer trial, the lung re-radiation and the last one, esophageal cancer. Just to know that we are now looking with MD Anderson as opening some potential new trial to explore new avenues, but that's something that will come a bit later. Obviously, out of all those trials, we got a lot of signs of safety, feasibility, potential good efficacy for the product. And now it's within the hands of the J&J, but also discussing with us about potential next step, but nothing that we can say at this stage. I have one mention to do, is to maybe take a particular look at the MD Anderson cancer trial about lung reraadiation. This trial, the recruitment has been completed last year, and we'll see the final data this year on more patients with more follow-up. I think this trial is very important because it's not like the same population that is treated in CONVERGE, but to a certain extent, could be seen as a surrogate of what we could observe in CONVERGE. So we will pay particular attention to this trial, but also we'll bring that to your attention. Operator: Your next question comes from the line of Jonathan Chang from Leerink Partners. Albert Agustinus: This is Albert Agustinus, on for Jonathan Chang. Congrats on all the progress. So my question also reflects on the CONVERGE data, is how do we extrapolate these results to your other ongoing trials and potential indications? And secondly, if I may, how do you foresee JNJ-1900 will be positioned within the landscape of non-small cell lung cancer treatment paradigm? Laurent Levy: Well, I think lung stage III cancer, like locally advanced head and neck cancer and other tumor are different because they are coming and they are in different organ, but they all share something is that if you can improve the local control and have a strong rate of response and CR, then you can deeply change the PFS and overall survival. And what our product does is improving the absorption of energy, killing more cells. And we know when you have a local disease, killing more cells may lead to more control. So that's the basic thesis that led us to start developing NBTXR3 and going into frontline treatment when patients have a local disease. And that's also what J&J is going after if we think about the 2 trials in head and neck and this trial in lung cancer. For us, it does establish the strong power of having local control transforming into benefit for patients. And starting from this point, then we could anticipate or imagine the diffusion of this product across different populations that are also getting radiation. But it's always pure to demonstrate that this work when local control plays the key role in the survival and quality of life of patients. So that's how we will extrapolate the results of CONVERGE, but also that's what we started to do with the randomized data coming from soft tissue sarcoma, which was a similar situation, even though this is really different. And that's a good start to any tumor type. And if we think about how to extrapolate to other indications, that could be a path. Now for lung cancer, there are many patients receiving radiation beyond lung Stage III. It is around 77% of lung cancer patients getting radiation. And not to mention that small cell lung cancer is also another indication where radiation is key. So we could imagine, but again, that will be J&J's decision to spread this product across different lung subpopulation. Operator: We will take our next question. And the question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Swayampakula Ramakanth: This is RK from H.C. Wainwright. I also have a couple of quick questions on CONVERGE. So in your mind, do you see J&J when they're spending time on both NANORAY-312 and CONVERGE, do you see them sourcing equal time for both of these projects? And additionally, does -- do you have any data from your partner regarding abscopal effect in the lung? Because injecting into lung lesions are potentially technically challenging. So how do we -- how do you and your partners see this being a successful therapeutic modality in the lung? Laurent Levy: Well, first of all, about the bandwidth or the investment in lung versus head and neck. I think a Phase III is always bigger than the Phase II. And in that case, that's a very big Phase III versus the CONVERGE trial. So there's much more people working on one than the other, which is normal given the size of things. But the attention is equally important from our perspective and what we can observe. And obviously, as I mentioned previously, the lung is a very important trial for J&J and also for us because if it does work, that's really opening a big market for JNJ-1900 or NBTXR3. But let's say that what we observe is they're pushing all front to make sure that all this could happen. Now on the abscopal effect, I think that's a big question. That's an effect we already observed that in melanoma patients, head and neck patients, some of the lung patients, when they have met with or without primary tumor, when we do inject one lesion and irradiate that lesion, we see a distant effect in the non-irradiated non-injected lesion. So that's something we start observing in many different clinical situations. That will be very useful to understand and to investigate when we think about metastatic patients. But for the vast majority of patients getting radiation, they have no met. They have a local or local regional disease. And here, local control is much more important than any potential immune response. And if we can provide it through local injection of the particle plus the radiation, that could be a win. And in the case of local regional when some of the lymph node could be involved, then we've seen in different trials now that we are able to inject lymph node on the top of the primary tumor, which could add also an additional immune response. But RK, if we just step back a minute, I think this abscopal effect or the possibility to trigger an immune response is really critical for met, as I mentioned. But also if you think about local regional disease where radiation plays a role, usually the local regional area is irradiated, which is not in favor of having an immune response because the X-ray, as we know and have seen, could kill some of the activity of the immune system. So here, the local control brought by physical treatment like radiation with the addition of JNJ-1900 is where we should play and where we should try to win. Swayampakula Ramakanth: One quick question on Curadigm. You did present some preclinical data previously. Now thinking -- going forward, since you also have collab MTAs with multiple parties. Are you planning to initiate an IND from the internal pipeline? Or do you expect some of these external collaboration partners to file first? How should we think about that program going forward? Laurent Levy: We are pushing both because we think building our internal pipeline will go through have a first proof of concept of this product into human, and that's what the team is working on, not only by manufacturing the product and starting pre-IND studies, but also designing the first proof of concept we want to bring to life. And if we think about it, as soon as we have established the safety and feasibility of this product into human, that's also opening many more combination possibilities with other products that are already into clinical development. So that will not only push forward our pipeline, but also will open many other opportunities for collaboration and licensing out. Operator: We will take our next question. Your question comes from the line of Kiara Montoni from Van Lanschot Kempen. Unknown Analyst: This is [indiscernible] on for Kiara. So for the J&J driven Phase II trial in lung, do you expect that J&J will report an interim before the readout in early 2027? And if they do, what do you think they will most likely disclose the ORR or the post durvalumab from Part 1? Laurent Levy: Thank you for the question. So yes, that's true. There are multiple readouts in this trial, different rate of response depending on timing, PD-L1 and also potential measurement as exploratory for other more systemic endpoints like PFS and OS. Now we can't talk for J&J. What we can say is what has been said publicly, which is the readout of the Phase II beginning of '27. But in between, who knows. Unknown Analyst: Okay. And on the MD Anderson lung reirradiation trial, you said you expected to read out in 2027. Is there any possibility you can narrow down on the timing? Laurent Levy: We filed for different abstracts. If first one accepted, that should be around the summer. Operator: We will take our next question, and the question comes from the line of David Dai from UBS. Xiaochuan Dai: Congrats on the progress. So a couple of questions from me as well. So just on the CONVERGE trial, so just thinking about the JNJ-1900, how do you think this early post-CCRT response we saw from the Part 1 could translate into durable load control and PFS benefit in Part 2? And I have a follow-up after that. Laurent Levy: Well, I mean, that's depending on how durable will be the response. But generally what we have observed in other clinical trials with different disease, when you start getting radiation, you usually get the optimal efficacy of radiation a few months after the end of the last session. Here, patients are going directly, I mean, rapidly into durvalumab. The good point is that, first of all, all of them went to durvalumab, which is not the case when you look at the overall population. And now we need to wait the next set of data to conclude on that. But if we believe of what we have seen previously in other trials, we should expect a much greater local control. And now we'll see how this potentially impacts a more systemic aspect of things for the patient. Xiaochuan Dai: Got it. Okay. And then just on -- for next follow up, just on the Part 1 study here, will we expect another follow-up of this data from the Part 1? And also for the Part 2, which we're expecting to have some data in early 2027. Could you just help us understand a little bit more around what's the sort of expected data readout? Would it be OR? Or should we look at PFS as well? Laurent Levy: I don't know. What we know is that all this that you mentioned are endpoint of the trials, but we don't know what J&J is going to communicate yet. Operator: Your next question comes from the line of Michael Schmidt from Guggenheim. Michael Schmidt: I had a couple more on the CONVERGE data from yesterday. Obviously, very interesting. Could you confirm whether Part 2 of that study is enrolling? Or are still patients being added to Part 1, sort of the safety lead-in component of the trial? Laurent Levy: Yes. Part 1 has been completed and the Phase II part, randomized part is enrolling since last year. Michael Schmidt: Okay. That makes sense. And then, yes, so just -- so you did note the sort of next update in early 2027. Is your impression that this is sufficient for your partner to potentially make a Phase III go decision? Or do you think more follow-up may be needed to look at things like DFS or maybe even OS to make that move into a large Phase III trial? Laurent Levy: That's a very good question, Michael. I think overall, first of all, a response in those patient population, if you find a high rate of response, then you should get an impact and a correlation with PFS and OS. I think the number of CR globally also could be a surrogate of that as PACIFIC did show very little rate of CR, less than 1.7% in the post [indiscernible] treatment. But globally, patients, if you look at the dynamic of the curve, they're relapsing quite fast in [indiscernible] arm and versus radio plus chemo. So I think comparing all those data, we can say if you beat that bar, then you move to Phase III directly, you don't need PFS, you don't need OS. I think that should be a mix of results linked to number of patients getting to [indiscernible] because usually 30% are not, number of patients getting response, number of patients getting complete response and then you can start following PFS and OS to see. But a combination of all these or just a few of them, depending on the magnitude could be enough. But at the end, that's J&J's decision to look at this and to take the path moving forward. Michael Schmidt: Okay. Makes sense. And then another one, I know this may be, again, difficult to answer, but what is your sense how J&J may prioritize other indications beyond head and neck and lung. For example, breast cancer is obviously a very big opportunity in prostate as well. And to what degree do you think they're incorporating data that's sort of coming out of the ISTs that have been ongoing? Laurent Levy: Well, that's a tricky question. We can't answer. What we can say is you can see the priorities of J&J in terms of indications like lung, bladder, head and neck and so on. So as you mentioned, breast cancer is not part of those priorities. Also, we have all the trials we've been running or are still running with MD Anderson that could serve as a base for expansion. But even though we have a lot of discussion with J&J's team about optionality, there's nothing we can say at this moment. Michael Schmidt: So we'll keep our eyes out for any other updates. Operator: [Operator Instructions] We will take our next question, and the question comes from the line of Shan Hama from Jefferies. Shan Hama: Just 2 from me, please. Actually, just on potential indication expansion on J&J's part. I know there's obviously not much you can comment on their behalf. But the indications that NDA is working on, is there scope for J&J to actually expand the [R3] program into those indications, so pancreatic, esophageal, et cetera? That's my first question. And then I can ask a follow-up after. Laurent Levy: I'm sorry, I'm not sure I got. The question was can they or will they? Shan Hama: As in, can they?, are they able to? Laurent Levy: Yes, of course, they are able to. And obviously, all the clinical trial we've been running serve really as a base for discussion with them, and they can. Shan Hama: Okay. That's clear. And then just actually on cash burn. So obviously, R&D has come down pretty sharply post the transfer to J&J. So what's the sort of steady-state annual cash burn we should assume through to 2027? Bart Van Rhijn: Thank you for the question. We don't provide specific forward-looking guidance to the individual years, and we refer to the cash runway that is in early 2028. But we have a very disciplined approach to how we allocate capital. So what you've been used to in the past few years, you should expect to continue to see from us. Maybe one high-level comment is that as the 312 costs have been transferred to our partner, Janssen, we should expect to see development cost on the new platforms that Laurent talked to. Operator: Your next question comes from the line of Clement Bassat from Portzamparc BNP Paribas. Clément Bassat: I have 2. First, I was wondering how much R&D you spent in oncology in H2? And how much was allocated to Curadigm just in order to assess the shift? And secondly, regarding the mechanism of Curadigm, my understanding is that with the Nanoprimer, we will reduce the effective dose level, but at the same time, we may also reduce the dose. So could you please provide some insight into the relationship between these 2 dose, if the relationship is linear or not? And if this could lead to narrowing the trend between these 2 dose due to the suspension of the liver clearance? Bart Van Rhijn: Let me try to address the question on the R&D spend and how that is proportion between our 3 new platforms. What I can share is that at this time, and this is relating to full year 2025, the spend on Curadigm has been ramping and should be in the low single-digit millions. Again, as we start to pivot and have pivoted meanwhile to these new platforms, that spend will obviously increase. But for the past year, it was a smaller amount compared to the total R&D spend. Laurent Levy: So to your second question about Curadigm, I think the answer is yes, there is a correlation, but will depend also on the need of the product. Let me try to get to that. So what the Nanoprimer does is by occupying transiently the liver, it will allow a second product to circulate more freely. So if this product had a strong accumulation in liver, but not much toxicity, what you're going to play on is the ability for the second product to circulate more freely and to reach other targets that will not be able to reach normally. But if this product has a high liver toxicity, would prevent him to be used at the right dose, then you will play more on the liver toxicity by preventing the accumulation while allowing some circulation of a therapeutic dose. But there's always a correlation between the dose of the Nanoprimer and the quantity that you will avoid to be captured in the liver and the quantity that will be allowed to circulate. And there is a link to that but different products will request different outcome, and that's where we're going to play A or B, meaning more efficacy or less safety issue. In some cases, we can play on both. Operator: This concludes today's question-and-answer session. I'll now hand back for closing remarks. Laurent Levy: Everyone, thank you very much. It was a pleasure, as usual, to talk to all of you. And I think that you are numerous today assisting to the call. It's a very good thing and hope to see you all in a short for more news about Nanobiotix. Thank you very much. I wish you a great day. Thank you. Bart Van Rhijn: Thank you all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good afternoon, and welcome to the Xaar plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to John Mills, CEO. Good afternoon, sir. John Mills: Thank you very much. And first of all, thank you, everybody, for taking the time to come on and listen to the story of Xaar. For some people who will have known Xaar from old, I just wanted to kind of quickly run through some of the history and some of the things that would have characterized Xaar historically and hopefully how Xaar today contrasts with that. So if you go back to 2013, Xaar was a FTSE 250 company, had GBP 140 million of revenue, made GBP 42 million profit, market cap of around about $1 billion, but it was effectively a single product into a single market, and that was ceramics. And that market, Xaar lost that market for various reasons and left the company really with no other revenue streams. And over the last decade, it's really been recovering from that situation. In contrast today, I've been with the company now for 6 years, and we've really focused on making sure that we have a broad portfolio of applications based around a value proposition, which is unique to Xaar. And really, what I would like you to take away with today is really two things. Firstly, that we have a unique capability to print fluids that no one else can and that we deploy that capability across a broad range of applications, which potentially give us significant revenue opportunity and indeed quite significant resilience against any individual market problems. So in order to first of all, explain to you what the value proposition of the business is that we make industrial inkjet printers and printheads. And we compete with companies like Epson and Fuji, Kyocera, Ricoh, Konica and also Seiko. These are huge Japanese corporations with global reach and substantially lower manufacturing costs than we have. And I think that the challenge or the problem for Xaar over the previous 15, maybe 20 years is trying to compete with these companies on their home territory is incredibly difficult and ultimately, Xaar has lost. And having joined the company in -- back in 2019, I, having known the company for many years, really focused on the attribute that Xaar had, which was unique, which is that we can print fluids that no one else can. And that parameter that's really important is viscosity. And viscosity is a measure of how thick the fluid is. So water has a viscosity of 1. Cream is 22. olive oil is 65 and yogurt all the way up at 1,000. So if you take the global #1 Epson, they can go up to around about 8 center points. So -- and some of the other competitors may be able to get over 20 and approaching 30, but really, that will probably be a generous assessment. We've got applications well over 100. And therefore, we have this capability of printing fluids that no one else can print. And the way to think about that is that if you have a fluid, if you want to add things into the fluid to add functionality to the fluid, the more you add in to the fluid, the more functionality you will have. But the more you add in, the more viscous or the thicker the material, the fluid is likely to become. So there is a correlation between functionality and viscosity. So the more functional the fluid, typically the thicker, more higher the viscosity is. And therefore, what we are seeing at Xaar is we can print fluids that are far more functional than other printhead manufacturers. And so the question then remains is, well, what do you do with that? And what I'd like to do today is just share with you some of the applications that utilize this unique capability, so you can see the sort of the breadth of applications that we are currently operating in. So the first one is decorating of cars. So today, if you want to put a graphic on a car, you need to use a sticker. If anybody has a mini or know somebody with a new mini, typically, they have some form of graphic on there that's a sticker. And those are not really well liked in the industry. So if you want to put graphics on there, that's pretty much the only way you can do that. We started working with Axalta, who are one of the major global suppliers of car paint to the industry and also Durr who make robots and 50% of the world's paint shops have their robots in them. And collectively, we have created a technology called NextJet, and this allowed you to digitally print graphics onto cars. So if you see the bottom right-hand corner, we're printing on the side of a door. And you could imagine that if we had a low viscosity watery fluid, then that would actually just drip and run down the side of the car, you would not be able to print graphics on a vertical surface. And so what I hope is clear from this that you actually need to have high viscosity capability to be able to print graphics onto vertical surfaces in this application. And so there's no other printhead that can do this, and we've enabled an industry to adopt digital technology through our ability to print high viscosity fluids. Just to go through another application. So this is car batteries. So this is another application where we started working with the battery industry about 5 years ago. There are issues around battery safety. And one of the contributory factors to this is that the insulation layer, the blue plastic film that goes around the battery to provide electrical insulation can be damaged through mechanical rubbing or through heat cycling of the battery as it's charged and then utilized. Having developed a fluid which is UV curable, you print on the battery, you shine UV light on it and it turns into plastic. This coating is nonflammable. It's much stronger. It doesn't crack and it has better peel strength away from the battery. So this is a better solution than the wrapping of the battery. As of today, we have 3 OEMs who we sell printheads to. They've built machines that print the battery. You see one of those operated on the bottom left-hand side of the video. And there are now 10 production lines in China that are making batteries on a daily basis for cars. And to give you some sense of scale, we have about GBP 150,000 worth of revenue for each production line. There's 10 in there at the moment, and we expect another 10 to 15 going in this year. And overall, there are 1,300 production lines in China. And so if the industry adopts this fully and changes all of the production lines to this digital coating, that would represent around about GBP 200 million of revenue for us. And if they did that over a 5-year period, that would be a good volume of revenue per year. For each of the applications that we have, there's a secondary revenue stream, which is from the replacement printhead cycle. So once you have an installed base, depending on the life of the printhead in that application, and that's a function of the type of fluid and the environment it works in. And in this application, the life of the battery may be -- may be, say, 4 years, then every year, you would expect to replace 25% of your printheads. What that means is if you have an installed base of GBP 200 million worth of printheads, then 25% would get replaced on an annual basis. So -- and that's the same across all industries. So you have revenue of printheads going in for new machines. And then depending on the replacement cycle, you have an annuity revenue from the replacement and printheads. So that's the battery coating. Change in tacks. If anybody has a desktop 3D printer, it's probably for those who recognize the term, an FDM printer, which is like a roll of fishing line that essentially goes through a nozzle and heats up and basically an arm scribes a path around and the fiber sticks to the fiber that was previously laid down and that way you build up a 3D model. And it typically is one color or a couple of colors and it's not very high resolution. And that's the typical 3D printer that's bought today, but there are 5 million of those printers bought every year. If you want to print something high resolution in full color, so things like you see on the bottom of the screen, all the things on the table next to the machine and the little farm on the left-hand side, if you want to print high-resolution things of that nature, you probably have to pay somewhere between GBP 40,000 and GBP 150,000 for an industrial machine. We've been working with Flashforge. They're one of the major suppliers of the desktop 3D printers. They sold 700 units last year. We have been working with them to develop the world's first desktop 3D printer. We estimate that, that printer will be on sale for around about GBP 2,500 to GBP 3,000. And with the occurrence now of AI, you can take a photograph of somebody or any object, AI will render that into a 3D model, and you can print it out on the printer. Equally, you can describe something into AI, and it will create the figure for you. So hobbyists around the world will be able to print whatever they would like to fulfill their needs in their hobby. So just if you have opportunity if you were to Google Flashforge CJ270, you'll be able to see the pre-marketing -- prelaunch, which we expect to be in the next few months. It's actually been shown at multiple trade shows to date ahead of the launch later this year. So I'll just play you the promotional video for the product. [Presentation] John Mills: Just to give you some sense of scale, the 500,000 desktop printers are sold each year, 1% of the market were to buy this machine that would represent GBP 25 million of revenue for Xaar. What we don't know because it's a brand-new product into the market is exactly how many units will be sold. So we're quite excited about this, so -- but the exact number is very difficult to predict, and so we will look forward to launch and see how many did sell. One of the things that's really impacted the numbers this year, we started working with the wax industry about 3 years ago, 4 years ago. This is an industry which uses wax to create bespoke high-quality jewelry in gold and platinum. What happens here is that the wax is actually heated up with melts and then you inkjet print the wax onto a substrate and you build up the facsimile of whatever you want in the gold or platinum in the wax. You then take that wax model and in case in effect like a plaster of Paris and it dries. And then once it's dried, you then heat up, the wax melts and then runs out and then you've left with the mold and then you can pour your gold and platinum into the mold. And then once it cools down, you break the mold and you've got your piece of jewelry. The -- we've taken that market very quickly because the -- again, the ability to print a wax that's much better, much stronger than the previous wax means that you can produce higher quality and more intricate jewelry. So when this was actually launched by the first company, the quality of the jewelry that was produced was so differentiated that every single other OEM looked at that and said, "We need to use our printheads because we won't be able to compete". So we went from 0 revenue in '23, we had around about GBP 1 million revenue in '24 and then GBP 8 million of revenue in '25. So we think we've got a sizable share of that market now. So we expect some growth in '26, but that's an example of a market where, again, we've taken market share purely down to the fact that we can print a better fluid than what was previously printed. The final application I'll show you today is on printing of cardboard. Probably all of you will receive Amazon packages. These are sort of cardboard boxes or sort of envelopes that you -- and they will all have a plastic -- a white plastic label with the address and the barcodes and other things on it. That's -- the plastic label that's on it is expensive, and it also makes it more challenging to recycle. And the reason for that is you can't print white ink onto -- digitally on to cardboard because what happens is that it's low viscosity and it just soaks into the cardboard, which is what you see in the image at the top here. As it sinks in, it takes the pigment with it into the cardboard and you can't see any of the white pigment left. Closer to a slowdown, you see that by contrast, a high viscosity fluid and a high viscosity fluid has less water. It's thicker. It doesn't soak into the cardboard and therefore, the pigment stays on the surface. So this gives us the opportunity to actually print digitally onto cardboard, which would be a significantly cheaper process, but also help with recycling. So again, this is just about the benefit of using a high viscosity fluid. So hopefully, that's been helpful. What I'll do now is hand over to Paul, who can take you through some of the financials. Paul James: Thank you, John. Yes. Okay. I'm not going to plow through the slides, slide by slide. If you want to see that, it's available on our website, but what I would like to do is just highlight some key financial numbers that we've delivered and talk about the shape of the numbers going forward over the medium term. So first of all, the group is organized into three divisions. The largest one, one of the greatest scale is Printhead, and then we have Megnajet, which is predominantly dealing in producing ink systems, and then we have EPS in the United States, which builds machines for high-speed single pass printing direct-to-shape purposes. And then you look at how they performed in 2025 versus 2024. Overall, the group is up 12% year-on-year, but Printhead revenue standout performance of 22% up versus the prior year. And that performance is driven, as John has alluded to, primarily from the Wax segment, the growth there. And actually, that 22% revenue growth, over half of it was a volume increase. And so more about that and its effects on our numbers in a moment. Megnajet broadly flat 2% and EPS down 10%. And the reason for that was they had a large multiyear contract to basically print on golf balls, and that came to a sudden unexpected end at the beginning of last year. And the then management team hadn't yet built a sufficient pipeline to backfill that loss of contract. So we have had a dip in performance there, but we brought in new management. And interestingly, despite that 10% reduction in revenue, the gross margin at EPS grew by 300 basis points, and that is as a result of restructuring, cost-out initiatives and so on and so forth. So the new manager has dealt with that. He's dealt with a number of intractable issues, and he's also rebuilt that pipeline. And one of the attributes of EPS is the way revenue is recognized. You kind of know 6 months ahead of time how much revenue you're going to have. So EPS is very much back into growth mode and we will, I'm sure, continue growing, continue performing financially very well. And then back to Printhead, as we said, 22% up, and that also came with 300 basis points increase in gross margin. And that is a key attribute of this business, which is that we have a very effective operational gearing effect. If volume does increase, then margin will increase too. So let's talk about first number, how that's -- we see that, how it's going to develop over the medium term. 40% gross margin overall. I had a look back -- by the way, I've been in Xaar just over a year. I had to look back over its history and the high watermark in terms of gross margin performance was probably about a decade ago where it was nudging 50%, high 40s certainly. Now you've got to be a bit careful making that comparison with then because, of course, it's apples and pears and revenue was made up of different constituent parts. But nevertheless, 50% does seem to be a laudable target to get back to. And so the current management team, we're now all working towards that over the medium term increasing that gross margin. And yes, operational gearing will help. If the business grows, the volume increases. But also, we are looking at cost-out initiatives. We're looking at -- we'll be looking at procurement, better procurement initiatives. And we've also shifted part of our supply chain to China to be closer to our customers. I describe as sort of ancillary activities. It's not the core IP activities that go into China and the inkjet systems construction also in China. So two benefits of that. We'll be close to the customer base, the Chinese customer base, but also it will take a lot of cost out of our base. So yes, 50% is we've set ourselves that medium-term goal to get as close to that as possible. I think another thing I'd like to talk about is the balance sheet and how that's shaping up. So it's true to say that in recent years, Xaar has held elevated levels of inventory. I'm not interested in why that was, but it's a fact, and it does need addressing. So we are setting ourselves the goal of -- and I've done this in other companies I worked in, of, if you like, a continuous improvement goal of increasing stock turn year in, year out, a minimum of half turn increase, preferably a 1 turn increase every year. And rather than just obsessing about a particular absolute number, stock turn has the benefit of being linked to how the business is performing, how the business is growing. And I see that as a way to free up more cash and get into that sort of virtuous circle of investing more, growing more, et cetera, et cetera. So that's something else perhaps you should look out for going forward with Xaar. In terms of investing in growth, a couple of things there. We spend about 8% to 10% of our revenue on R&D, and that feels about the right number at the right level. And in terms of capital expenditure, we have had last year elevated levels of CapEx, but that was investing in capability to basically speed up sales and to deal with some bottlenecks. And I think going forward, you can expect slightly higher elevated levels of CapEx, too, just to invest in growth, but also -- perhaps also to deal with some legacy issues in terms of replenishment of the asset base in the factory that we do need to address. So I hope that gave a bit of a flavor for the business. And yes, I'll hand back to John. John Mills: Good. I mean it's quite difficult to judge these things when the -- you can't see the audience. So hopefully, that's given you a sense of the company. I think the summary for me about the business is that when I go around and talk to particularly institutional investors, many of them have -- know Xaar. And one of their concerns is that Xaar has historically been boom and bust, and very difficult to predict the future revenues. I think what we'd say today is that we've worked hard on making sure that we have a very clear value proposition, and we only enter into markets where we have a unique and clear value proposition against the competition and that we now have 21 separate markets where we derive revenue. And we have in most of those many customers and a strong pipeline of applications that are coming through. So we feel confident about the business model, and we feel confident about the revenue growth over the coming years. What's very difficult to predict is the detail of when any individual application tool will land. And therefore, we tried to avoid talking about specifics of timing. But I think the key thing is that over time, the ones that are in the pipeline will come through. So for those who've got a slightly longer time horizon in the sort of 3 to 5 years, I think where we are today, it's difficult to see how we're not going to grow revenue substantially over that time. And with the operational gearing, we should see some of that falling through to the bottom line. John Mills: So with that, I think we'll look at any questions that we have. So I can currently see four questions that have come through. So please write any questions in the thing, and we'll do our best to answer them. We have a bit of time left over, so we can hopefully answer those questions as we go through. So I'll take them. First question, do we have any collaboration with [TeraView]? No, we don't at the moment. It's interesting that we're now starting to see companies coming to us once they understand our capabilities. So maybe that's something we should pursue. The second question is that with the 22% increasing in Printhead revenues, how much is initial system adoption versus recurring? That's from Matt. Matt, I think the revenues that we see coming in, we would describe as all recurring revenues. What we would normally see is that you have several years where you sell printheads into an OEM as they start developing machines and selling machines, then eventually, you get to a level of saturation where everybody who needs a machine has got one. And then you left to replacement recycle of the machine and you are left to growth within that market. And then the replacement heads for your installed base. So the revenue would peak after a number of years and then would move into a steady state where there will be slower growth, it might fall back by 20%, 30%. So that's how we tend to think about it. And therefore, what we -- when we model revenues, we look at layering on different applications. And so we take sort of fairly modest views of growth after the initial market size and try and layer that on. So hopefully, that answers the question. The second question is how visible are revenue levels over coming years from the new application areas? And again, this is a really good question and one of the fundamental ones for understanding the business. We sell printheads to OEMs. And if you take the battery situation, we sell printheads to OEMs who make the digital printers. They sell the digital printers to companies that develop production lines for the battery manufacturers and the battery manufacturers buy the production line. So we're three companies removed from the decision-makers in relation to the batteries. And therefore, we're not having direct conversations with the battery companies. We take our information from a number of sources and try and integrate that together to create a picture of what we think is going to happen. So it's incomplete. We are not selling machines directly to an end user. So in many cases, our information is not perfect in that. We do our best to try and understand forecasting and we ask our OEMs' forecast and what they believe are going to happen, and we have to interpret that in the best way that we can for planning. Typically, things usually take longer. The numbers that get delivered are usually smaller. And we try to take that into account when we look at any forecast that we publish. Next question I have is that the revenue opportunities for battery coating and 3D printing, are those annual revenue? How does the drop-through margins in each section differ? Yes, very good question. I think on the 3D -- on all of the -- as I said earlier, on all of the applications, we really are looking at recurring revenue. We don't see any revenue that comes in for a single year and then stops. So the revenues we talk about should be recurring revenues. The margins are quite different across different market sectors. The wax and the battery coating, the margins are quite strong. If you look at the consumer market, the desktop 3D, the margins are much lower in those areas. So we tend to try and price to value rather than looking at competitive pricing. And we try to maintain margins on the basis that we are enabling industries to do things they previously couldn't do. We're not competing on price in many of these markets. So -- and in terms of drop-through, this year, we did GBP 0.8 million profit on the revenues. As the top line grows, we should have -- we're now at that kind of breakeven point with the factory. So as we go forward, we should see more of that revenue dropping through. Okay. Next question is around IP from Paul. The IP protection, particularly as we are exposing the technology in China. Yes, really good question. We have very strong IP, but our strategy is to patent in -- according to GBP. So we take the top 6, 7 countries, excluding China, and we patent in those countries. And the reason we do that is that I think if we have a Chinese company, for instance, that did infringe our IP, we may find it difficult to enforce our IP in China. However, if those companies then build a printhead and sell that printhead outside of China into a territory where we have IP, then whoever uses that printhead is infringing our IP, and therefore, we can send the cease and desist. So our strategy is to enforce it in territories where we are able to kind of follow up and prosecute our IP effectively. So that's really what we would do. Somehow all the questions have disappeared. Paul James: You've answered them, I think. John Mills: Hopefully, that -- is there any more questions that we could -- I'm going to let you take that one, Paul. Paul James: Yes. Okay. So we obviously have a medium-term strategic plan, which we've not yet... John Mills: Please go and state the questions, Paul, you probably have to read the question. Paul James: Sorry. Thanks for reminding. So the first question, what level of turnover and profitability would you target in 3 to 5 years? So we obviously do have a medium-term strategic plan. It's been discussed at Board level and all signed up to. You would expect to see the growth levels we've achieved last year of 12% for the group, according to our plans, that's not inconsistent with the sort of annual growth levels you could expect to see going forward. And in fact, if you look at the consensus numbers that are out there, the revenue growth is broadly consistent with that. So a sort of 10 and a bit percent growth in revenue going forward. And then as we've mentioned a couple of times, the operating leverage benefits will start to kick in as well with that volume growth. By the way, I expect at least half of that revenue growth will be volume at least. And so as I said earlier, I am pushing for gross margins to be heading towards as close to possible 50% and with an operating margin in the high teens. That would be the sort of place I'd like to be in terms of profit and revenue. I think the next question is a congratulatory note, I think. Operator: That's great. Thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, John, could I please just ask you for a few closing comments? John Mills: Yes. Well, thank you very much for taking the time to come and listen to the story. We're quite excited about the business. It's been a bit of a grind for 5 years to build the pipeline and to do that. We do feel we're in a position now where we're at a kind of inflection point. And we can see growth coming over the coming years. It's important to say with any of these applications, it's very, very difficult for us to predict the exact timing or volume of any individual applications. So I wouldn't buy our shares on the basis of one particular application, but I think I'd encourage everybody to look at the broader value proposition of the unique capability of high viscosity fluids and the impact that has on industry and the breadth of the opportunity that we have because I think ultimately, that will be the thing that drives consistent revenue growth over the coming years. So again, thank you very much for your attendance. And hopefully, we can see some of you joining the share register in the near future. Thank you very much. Paul James: Thank you. Operator: That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's Quarter ended December 31, 2025 Earnings Call. It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer. Andrew Muns: Thank you, operator. Welcome, everyone, to Investcorp Credit Management BDC's earnings call for the quarter ended December 31, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I will provide an overview of our results, summarizing the financials. This will be followed by Q&A. Please note that today's discussion will focus on our financial results. As stated in our press release, we do not intend to comment further regarding the review unless or until it determines that further disclosure is appropriate or necessary. As such, we will not be taking questions on the strategic review process during today's call. Management will be pleased to address questions related to our quarterly financial statements and business operations. At this time, I would like to turn the call over to Suhail. Suhail Shaikh: Good morning, everyone, and thank you, Andrew, and thank you, everyone, for joining our December 31, 2025 quarter-ended earnings call. As a reminder, ICMB provides flexible capital solutions to middle-market companies, primarily through first lien senior secured debt. Our disciplined underwriting approach focuses on downside protection while generating income for shareholders. We will begin with an update on the business, a review of our fourth quarter results and portfolio activity, and then Andrew will walk you through our financials in greater detail. Before we dive into the details, here are the key takeaways from the quarter. We formed a special committee of independent directors to review strategic alternatives and maximize value for shareholders. We successfully refinanced the $65 million notes due April 1 with new unsecured notes maturing in 2029. NAV per share declined to $4.25, primarily driven by fair value adjustments and dividend payout in excess of net investment income. Nonaccruals increased to 6.9% of the portfolio at fair value with Easy Way added to nonaccrual. We remain focused on liquidity, capital preservation and disciplined underwriting in a still uncertain market environment. As announced in our earnings press release, the Board of the company has formed a special committee of independent directors to review strategic alternatives to maximize value for shareholders and in parallel has decided to not declare a quarterly dividend for the current quarter. In addition, on March 30, we successfully refinanced the $65 million 4.875% notes due April 1 with new $65 million unsecured notes provided by our advisers affiliate. The unsecured notes bear a floating rate coupon of SOFR plus 550 basis points and are due on July 1, 2029. The market environment, macroeconomic and geopolitical uncertainty continues to shape the operating backdrop. Credit markets have remained open, but deal activity in our segment of the market has stayed below historical norms as sponsor-driven transaction volumes have yet to recover in a meaningful way. Our focus on disciplined underwriting and active portfolio management has not changed, and we remain in active dialogue with management teams and sponsors of our portfolio companies. Turning to our fourth quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share before taxes, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a reduction in income-producing assets, including the placement of Easy Way term loan on nonaccrual and an increase in professional fees and other expenses that is typically experienced in the December quarter. Nonaccruals increased to 6.9% of the portfolio at fair value compared to 4.4% last quarter, driven by the addition of Easy Way, as mentioned above. Easy Way is a manufacturer of customizable outdoor furniture products sold through retail channels. Net assets declined approximately 16% sequentially from the prior quarter, with net asset value per share decreasing to $4.25 from $5.04 in the previous quarter. This was largely the result of fair value adjustments and the payment of a dividend in excess of NII. These fair value adjustments primarily reflect changes in market valuation levels and updated exit timing assumptions in the current environment rather than broad-based deterioration across the rest of the portfolio. The portfolio remains diversified across 18 industries with no single investment representing more than approximately 3% of fair value. I would also like to note that our software exposure represented less than 3% of fair value at quarter end. Our focus during the quarter was on liquidity management. Hence, our new investment activity remained muted. During the quarter, ending December, we invested $1.5 million in the first lien term loan of Axiom Global, an existing portfolio company to fund the dividend to existing shareholders. Axiom is a leading provider of flexible expert legal talent for enterprise customers. We have been investing in Axiom across our platform since February 2021. Our yield at cost is approximately 8.8%. In the same period, we fully realized 3 portfolio company investments totaling $8.2 million in proceeds with an IRR of approximately 10.6%. This included the full realization of 2 term loan investments in existing portfolio companies, CareerBuilder and LABL, L-A-B-L as well as our preferred equity investment in Advanced Solutions International, which was recapitalized during the quarter. I'll now turn the call over to Andrew to review our financial results in more detail. Andrew Muns: Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended December 31, 2025, the fair value of our portfolio was $172.7 million compared to $196.1 million on September 30. Our net assets were $61.3 million, a decrease of $11.4 million from the prior quarter. This quarterly change in net assets consisted of a $9.4 million decrease from operations and a $2 million decrease related to our dividend, which was paid in excess of NII for the quarter. The weighted average yield of our debt portfolio was 10.6%, a small decrease of 31 basis points from the September quarter. As of December 31, our portfolio consisted of 37 borrowers, approximately 81% of these investments were in first lien debt and the remaining 19% was invested in equity, warrants and other positions. 98% of our debt portfolio was invested in floating rate instruments and 2% in fixed rate instruments. The weighted average spread on our floating rate debt investments was 4.5%, which is relatively unchanged from the prior quarter. The average investment size per portfolio company on a market value basis was approximately $4.7 million or 2.7% and our largest portfolio company investment on a fair market value basis, Bioplan at $11.4 million. Our largest industry concentrations by fair market value were professional services at 14.5%, IT services at 9.2%, insurance at 8.9%, diversified consumer services at 8.6% and commercial services and supplies at 7.9%. Overall, our portfolio companies are spread among 18 GICS industries as of quarter end, including our equity and warrant positions. Gross leverage at the end of the quarter was 2.02x and net leverage was 1.78x compared to 1.75x gross and 1.59x net, respectively, for the previous quarter. We paid down approximately $14 million of debt in February. On a simple pro forma basis, had this pay down occurred on December 31, our net leverage would have been closer to 1.8x, while our reported year-end net leverage remains 1.78x. This pay down improved our asset coverage ratio from 150% to 155%. With respect to liquidity, as of December 31, we had approximately $15 million in cash, of which approximately $10.4 million was restricted cash. In addition, we had $41.1 million of unused commitment under our revolving credit facility with Capital One, of which approximately $8.7 million was available under our borrowing base. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-K. And with that, I would like to turn the call back over to Suhail. Suhail Shaikh: Thank you, Andrew. As we reflect on the quarter, we are operating in an environment with elevated uncertainty both across both the macro backdrop and broader market sentiment. Our priorities are clear. preserving capital, maintaining disciplined underwriting and actively managing our nonaccrual positions. To summarize, we have formed a special committee to pursue strategic alternatives focused on maximizing shareholder value. We refinanced our April notes and extended our maturity profile, and our portfolio remains predominantly first seen with broad industry diversification. While we expect market conditions to remain challenging in the near term, we believe our focus on liquidity and risk management positions ICMB to navigate this period and pursue opportunities as they arise. We appreciate your continued support and look forward to updating you on our progress next quarter. That concludes our prepared remarks. We will now open it up for questions regarding our quarterly financial performance and business operations. As noted earlier, we will not be commenting further on the strategic review. Operator, please open the line up for Q&A. Operator: [Operator Instructions] Our first question comes from Justin Scott, [indiscernible] Research. Unknown Analyst: First of all, I'd like to applaud the forming of the special committee. I know you can't take any questions on it, but I think we can all see that, unfortunately, it's an economic necessity for the fund. Just back of the envelope, fees and expenses of running this fund have now $0.48 a share. The additional interest on the shift from the previous loan notes costing the fund 4.9% to the current ones, 9.1%, add another $0.19 per share. So $0.67 per share of fees and expenses and additional interest, which is 15.8% of the net assets or 42% of the share price. Obviously, no matter how hard your team tries, those are unattainable investment skills to generate a return for the fund. So I fully understand why you had to do it. Obviously, most of the investors are in here for income, but applaud the decision. And I know you can't comment about the options you're looking into. One thing I'd like to ask is whether anything is being done to trying to put this tactically, closer align the interest of the manager with the shareholders, given that the fees that the manager takes and now with the new loan, the interest that the affiliate of the manager is earning is a very substantial part of the assets of the fund and whether during the interim period as you're doing the review, whether the manager will consider reducing their fees somewhat. Suhail Shaikh: Justin, thank you for your question, and thank you for your opening remarks as well. Look, I think, as you can see from our financials, we have been [ waiting ] fees on an ongoing basis, even when the fund is performing slightly better in a slightly better environment. So that tool always exists for us and if we have to. But I think what I more importantly note is, you should think about the managers sort of alignment with the shareholders. If an affiliate of the manager just provided $65 million of capital to refinance the notes. Affiliate of the manager also owns about 25% of the shares. So I think we are -- we consider ourselves fully aligned with shareholders, and we'll use whatever means necessary to keep that alignment going. Hopefully, that answers your question. Unknown Analyst: It's just that you are earning a substantial amount of money during the period when the fund is open, and I just concerned about that affecting the motivation. Basically, the adviser is going to be earning about $10 million in interest and fees during this period. And I think time is not on your side, and I guess I'm saying don't dilly-dally, so to speak. Suhail Shaikh: Understood. Operator: [Operator Instructions] I currently don't see anyone with questions. [Operator Instructions]. Suhail Shaikh: If no more questions, Luke, I think we can conclude the call, and thank you again for everyone joining in. And we look forward to talking to you again next quarter, and we'll see you then. Thank you, Luke. Operator: Thank you, everyone. And this concludes today's conference call. Thank you for attending.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to VolitionRx Limited Full Fiscal Year 2025 Earnings Call. [Operator Instructions] This conference call is being recorded today, April 1, 2026. I would now like to turn the call over to Louise Batchelor, Group Chief Marketing and Communications Officer. Please go ahead. Louise Batchelor Day: Thank you, and welcome, everyone, to today's earnings conference call for VolitionRx Limited. Before we begin, I'd like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. We do not undertake an obligation to update any forward-looking statements made during the course of this call. Cameron Reynolds, Group Chief Executive Officer, will open the call, providing a summary of key achievements in 2025. Terig Hughes, Chief Financial Officer, will then provide a financial report, before handing over to doctors Retter and Micallef, who will present research highlights from across our product pillars. Cameron will close with a discussion of upcoming milestones. We will then open the conference call to a question-and-answer session. And with that, I'll turn the call over to Cameron. Cameron Reynolds: Thanks, Lou, and thank you, everyone, for joining Volition's full fiscal 2025 earnings call today. As always, we very much appreciate your time given the busy earnings call season. Before diving into detail, I would like to take a moment to reflect on our founding mission. We set off over 15 years ago to help save lives and improve outcomes for millions of patients worldwide. And I could not be prouder of the progress we have been making towards that goal. In the fourth quarter of 2025, we not only received our first order for the new Nu.Q Cancer assays for clinical certification ahead of routine clinical use in lung cancer, but we also announced the inclusion of our Nu.Q NETs assay in real-world interventional evaluation of early detection of sepsis in a government-backed, approximately $7.3 million, program in France. Our tests are about to be used in both these devastating diseases to help save lives in the real-world hospital settings, an extremely proud moment for our entire team. Cancer and sepsis are leading causes of death, accounting for approximately 1/3 of deaths worldwide. With the first clinical use now imminent, we're about to be part of the solution, through simple, easy-to-use, low-cost tests. I believe we will look back on 2025, this first quarter of '26 and even in time, the next few quarters, as transformational for the company. In 2025, efforts for Volition focused on commercializing our groundbreaking Nu.Q platform in the human diagnostic market. We're excited to start the implementation of our human licensing strategy with the signing of not 1, but 2 agreements. The first, with antiphospholipid syndrome, APS, with Werfen; and a co-marketing service agreement with Hologic. Both are multibillion dollar companies and worldwide leaders in their specialized fields, and we are delighted to be working with them. We have further strengthened our intellectual property portfolio and are continuing our licensing discussions with around 10 of the world's leading diagnostic and liquid biopsy companies. These discussions are at various stages of negotiation process across all our different pillars, and we anticipate announcing additional agreements throughout 2026. Our goal is to secure a wide range of licensing agreements in the human diagnostic space, mirroring our successful strategy in the vet market. And we anticipate diverse deal structures with potential for upfront and milestone payments and future recurring revenue. We have developed a truly remarkable, versatile platform and are working with governments and some of the biggest diagnostic and liquid biopsy companies to make our technology available worldwide as quickly as possible. Beyond licensing, we also achieved several significant commercial milestones in 2025. In the first quarter, we recorded our first revenue from sales of our CE-marked Nu.Q NETs automated assay, a regulated, clinically approved product. NETs, or more specifically NETosis, goes far beyond just sepsis and is implicated in a very wide range of diseases. Currently, 12 hospital networks across a number of countries are evaluating our Nu.Q NETs assay across 15 different clinical use cases and indications. We believe NETs testing will become a key part of routine blood testing. In February of 2025, we announced our first commercial sale of Volition's proprietary high-throughput NETs method that measures neutrophil extracellular traps, NETs, activation and inhibition in whole blood in real time, helping companies develop new therapeutics to combat sepsis and other NETs related disease. In March, we signed an agreement with a leading pharmaceutical company to utilize Volition's Nu.Q Discover biomarkers in a longitudinal Phase I/IIb study, the first human clinical study with a pharmaceutical company sponsor that our test supports. Through our Nu.Q Discover pillar, we are now serving close to 100 clients worldwide, including many top pharma and diagnostic companies, accelerating disease research and drug development across multiple therapeutic areas. Some of these pharmaceutical companies are progressing to late-stage clinical trials using our assays as pharmacodynamic biomarkers. We estimate the total addressable market for relevant companion diagnostics to be a little under $1 billion. In 2025, we delivered substantial revenue growth for Nu.Q Discover, which Terig will detail. And we anticipate a similar trajectory in 2026. The Nu.Q Vet Cancer Test is the #1 canine cancer screening blood test in the world, now available in over 20 countries. To further accelerate revenue growth and ensure consistent delivery, we focused on central lab automation. In March of 2025, Fujifilm Vet Systems extended their contract to implement a centralized automated platform for the Nu.Q Vet Cancer Test using IDS i10 made by Revvity. Subsequent to year-end, in March of this year, we announced the completion of all validation and verification of the chemiluminescent immunoassay, ChLIA, version of the Nu.Q Vet Cancer Test with Fuji Vet Systems in Japan, allowing use of full automation rather than menu plates in central labs. This is a world-first and will significantly enhance turnaround times and throughput to meet increasing demand. We believe that central lab automation is crucial for scaling of our vet business and integrating our tests into routine pet wellness panels. Importantly, this automation platform is the same technology utilized for our human diagnostic products Nu.Q Cancer, Nu.Q NETs and Nu.Q Discover, highlighting the inherent synergy and efficiency of our core Nu.Q platform. From a product expansion perspective, we made great progress with our research in the use of Nu.Q NETs in cats. In May of 2025, we announced the publication of our first clinical paper reporting the detection of nucleosomes in cats. And subsequent to year-end, in early January of this year, we reported results from a clinical study demonstrating the high accuracy of its Nu.Q Vet feline assay in detection of lymphoma in cats, the most common cancer in the species. At 100% specificity, meaning no false positives, the assay detected over 80% of feline lymphomas. This breakthrough marks the development of what we expect to be the world's first simple, affordable blood-based liquid biopsy test for feline cancer, a significant unmet need in veterinary medicine. This opens up the potential for cancer screening and monitoring in cats. There are more than 60 million cats in the U.S. alone, 25% of which are senior cats, and therefore, suitable for an annual check. This represents a tremendous commercial opportunity for Volition. The publication of this study in a peer-reviewed journal is expected subsequently to unlock a $5 million milestone contract payment. And we will also generate ongoing revenue in this large and growing market where our technology meets an unmet need, incredibly quick progress from a product development perspective and great to add a third species for Nu.Q. I will return at the end of this call to discuss some additional recent achievements and upcoming milestones, but now will pass over to Terig for a finance report. Terig Hughes: Thanks very much, Cameron, and hello, everyone. I'm now delighted to provide a full fiscal year financial report for the year to December 31, 2025. From a revenue perspective, we finished the year strongly with year-on-year growth for Q4 of 133%. For the full year 2025, we recorded $1.7 million in revenue, a growth of 40% over the full year 2024. And I'm delighted to report we received our first revenue from the CE-marked Nu.Q NETs product in Europe during 2025. We also received our first order for Nu.Q Cancer from Lyon for the certification of our cancer test in their hospital network, more of which from Andy later in the call. As we have stated previously, at this early stage of commercialization, revenues remain fairly lumpy and difficult to predict from 1 quarter to the next. So while I remain confident of continuing to see solid growth year-over-year, we will not be providing revenue guidance for 2026 at this point in time. From an expenditure perspective, we significantly reduced operating expenses, which were $4.8 million lower, a reduction of 17% compared to the full year 2024. And indeed, looking at the trend over the last 2 years, we are now operating at significantly lower levels of expenditure. Furthermore, we will continue to take measures to reduce costs further over the coming year. Net cash used in operating activities was $19.7 million in 2025. This compared with $25.9 million in 2024. Cash and cash equivalents at the end of the year totaled approximately $1.1 million. However, subsequent to year-end and through March 25, we received approximately $5.4 million in net proceeds from our at-the-market or ATM facility and $1.9 million in net proceeds from issuance of a convertible note to Lind Global Asset Management LLC. We continue to receive significant support from agencies of the Walloon Region in Belgium. And subsequent to year-end, we announced nondilutive funding of approximately $2.3 million. This takes the nondilutive funding support from all sources from inception to date to over $25 million. So to summarize the finance report, key indicators are trending positively. Revenue was up 40% year-on-year; operating expenses were down 17% on a full year 2025 basis; net cash used in operating activities was down 24% year-on-year. We continue to work on reducing our underlying operating expenses. We expect to secure a $5 million milestone payment from our existing agreement in the vet space. And last but not least, licensing discussions are progressing well, and I look forward to providing updates as they progress. Throughout 2025, and indeed subsequent to year-end, we have made significant scientific and clinical progress. And so with that, I will hand over to Andy and Jake. Andrew Retter: Thank you, Terig, and hello, everyone. I appreciate there is an incredible volume of information shared on these calls, so I will try and limit my comments to what I believe our recent important clinical achievements. I'll start with Nu.Q NETs. NETosis is an area of increasing scientific interest with a significant number of research articles published in recent years. In February, a review article entitled "The NET effect: Neutrophil extracellular traps, a potential key component of the dysregulated host immune response" was written by myself alongside 2 key opinion leaders in the sepsis arena, Professor Djillali Annane and Professor Mervyn Singer. This paper has already been accessed more than 11,000 times and cited in almost 60 peer-reviewed publications. From a clinical utility perspective, we have published 2 key papers. The first was with the team from UMC Amsterdam, looking at more than 1,700 critically-ill patients. Our paper is available free to download from Critical Care. The second paper, available on medRxiv, written with our colleagues in Jena, is another independent study looking at 971 patients with sepsis. Together, the data from these studies show that Nu.Q H3.1 accurately distinguishes sepsis from noninfectious systemic inflammation. It is strongly correlated with disease severity and provides excellent prognostic information for outcomes such as organ failure, specifically renal failure, and mortality. The prognostic power of H3.1 measured at ICU admission significantly exceeded existing severity scores, such as APACHE II and the SOFA Score. As a result of this convincing evidence, in December, we were delighted to announce the inclusion of our Nu.Q NETs test as the sole biomarker in the DETECSEPS study, a real-world evaluation using H3.1 in combination with the National Early Warning Score to promote the early detection of sepsis and try and promote the flow of patients for emergency rooms. This is a problem every health care system in the world faces. Not only is DETECSEPS led by prominent clinicians, it's also backed through financing from the French government. DETECSEPS aligns with Volition core purpose of operationalizing our understanding of epigenetics and, in particular, of H3.1 in clinical practice, to help identify and monitor the severity of disease. The DETECSEPS program provides an opportunity to receive individualized care adjusted to the risk of deterioration or risk of progression to multiple organ failure. It is a great privilege to be involved in such a program. And we hope that through earlier identification and risk-stratification of patients, many lives can be saved. We also hope that by improving the flow of patients out of the emergency rooms, that we can help hospitals run more efficiently, sending people home safely, escalating and expediting care to those patients who need it most. These efficiency gains could be huge and have a real impact on the entire running of hospitals and improve the delivery of health care. I think you can understand why we say it has an impact in all health care settings. Our final exciting development in 2025 has the potential to be a game-changing technology, not only in disease where time is critical, such as sepsis, but also in providing our tests to lower-income countries where laboratory infrastructure may be weak or nonexistent. Specifically, this is the development of a lateral flow test for point-of-care quantification of nucleosomes. In July 2025, we reported the quantification of nucleosomes in whole blood in minutes utilizing a simple lateral flow device. I'm delighted to say the second phase of research is now well underway, with the first patient recruited for comparison between whole blood and capillary blood in critically-ill patients. This really is a technology to look out for in the coming months. And hot off the press, we are delighted to announce this week the publication of a study with our colleagues at the Mayo Clinic in the journal, Shock. The Mayo Clinic study of 674 trauma patients demonstrated that nucleosome levels, as measured by Volition's Nu.Q H3.1 and Nu.Q H3R8 Citrulline tests, are elevated in people that go on to have complications from trauma. The identification of reliable biomarkers in trauma is a clinical challenge and remains a significant unmet need in the emergency and surgical settings. Professor Park, the principal investigator and senior author of the paper said, "These biomarkers could aid in early risk identification and may inform targeted preventive strategies in trauma care." For my part, I believe this is a significant study not only for clinicians, patients and their families, but also for Volition. A peer-reviewed publication with the Mayo Clinic Research team strongly supports our efforts to commercialize our Nu.Q NETs products. Indeed, my overall sentiment is that this study, together with our previously published evidence, demonstrates that Nu.Q NETs may enable clinicians and researchers to anticipate disease, guide treatment decisions, understand disease trajectory and monitor patients over time across acute and chronic conditions. Turning to Nu.Q Cancer and, in particular, lung cancer, where the first clinical use of Nu.Q is now imminent. Nu.Q Cancer represents a significant advancement in lung cancer patient management, offering clinicians an additional tool to enhance precision in treatment selection and monitoring. Research conducted by our long-term collaborators in Taiwan and Lyon consistently demonstrates that our Nu.Q Cancer technology empowers clinicians to make informed treatment decisions that provide valuable new monitoring capabilities through the patient journey. From a publications perspective, the first NTU manuscript was published in March 2025, coincidentally, almost the same day as the first patient was enrolled in the validation study. The NTU team also presented data at the North American Lung Cancer Conference in Chicago in December, and then as recently as last week's ESMO's European Lung Cancer Congress. Both posters support the use of Nu.Q Cancer preoperatively to help identify patients at high risk. High H3K27 trimethyl nucleosome levels predicted poorer recurrence-free and overall survival outcome. Whereas a lower H3K27 trimethyl level indicated a significantly better outcome. Joint Lead Author, Dr. Chen, commented that "The Nu.Q Cancer technology supports a practical approach to empower clinicians to make a more informed treatment decision and provide valuable new monitoring capabilities throughout the patient journey." This is excellent endorsement indeed. And I know from the commercial team, that they are now looking forward to how we can provide the test in routine clinical practice. Together with our colleagues in Lyon, we've also presented at a number of conferences and prepared a further 2 manuscripts for a submission to peer review publication, the first of which has just been submitted and the second is due to be submitted in the coming weeks. These results demonstrate that measured methylated nucleosome biomarkers at non-small cell lung cancer diagnosis can provide valuable information about survival -- progression-free survival and crucially help enhance the identification of patients who may benefit from more intensive therapy and potentially offer them curative care. As Cameron said at the top of the call, we made our first sale of our Nu.Q Cancer assays to the Hospices Civils de Lyon, one of Europe's leading cancer centers. And subsequent to year-end, we have announced, with the support of our Lyon team, the preparation of our reimbursement submission to the French government. Reimbursement is the next step on the path to the first use of Nu.Q in clinical practice, an exciting prospect which is core to Volition's mission of using our tests to help save lives. Reimbursement will be a major milestone for Volition in the commercialization and licensing of Nu.Q Cancer. Once achieved, we anticipate the introduction into routine clinical use in France by the fourth quarter of 2026. This is a truly exciting and rewarding prospect. And with that, I will pass you over to Jake, who will give you an update on another significant project. Thank you, everyone. Over to you, Jake. Jacob Micallef: Thanks very much, Andy, and hello, everyone. I'm just going to be talking about one project today, Capture-Seq, which we've had several announcements about, the first in December and others in more recent weeks. Volition is, I believe, the first company to demonstrate the isolation and analysis of greater-than-99% pure circulating tumor-derived DNA. To set the scene, the biggest problem facing liquid biopsy worldwide is that the vast majority of circulating DNA in blood plasma samples comes from healthy cells, not from cancer cells. In a world-first new technology, Volition has overcome this hurdle and produced greater-than-99% pure cancer-derived plasma DNA sequence sets for liquid biopsy. Our manuscript, submitted in November and previously announced in December 2025, described a new liquid biopsy chemistry for isolating CTCF DNA from plasma. Subsequently, our continuing work on CTCF-bound DNA has revealed what we believe to be an unprecedented new discovery: that there is almost no CTCF-bound DNA in healthy plasma, and almost all CTCF-bound DNA in the blood of a cancer patient is derived from cancer cells, i.e., it is virtually pure circulating tumor-derived DNA. Removal of background normal cell free DNA from the blood to reveal this level of tumor-derived DNA has been a long-term goal of liquid biopsy. In this updated manuscript, we report a new 2-step method for preparing virtually pure circulating tumor DNA sets for cancer patients. The first step is the physical enrichment of the sample, and the second step is the bioinformatic removal of virtually all remaining nontumor cfDNA sequences from the DNA sequence data set. This new method produced more than 99% pure ctDNA sequencing data sets for blood samples from cancer patients. And whilst we capture a subset of the circulating tumor DNA, not all of the circulating tumor DNA in a sample, it is virtually pure cancer DNA. These methodological and technological breakthroughs represent a novel liquid biopsy method for a novel class of potentially thousands of liquid biopsy sequence biomarkers, representing, in my opinion, the biggest scientific breakthrough in cancer testing and monitoring in recent years. Last week, we released data from a blinded validation cohort of 81 subjects, including 59 colorectal and lung cancer patients and 22 healthy controls. And we were extremely encouraged by the results, particularly in early-stage cancer where we detected more than 95% of Stage 1 and Stage 2 cancers. For patients, the potential significance is huge. If validated in larger cohorts, CTCF Capture-Seq could contribute to multi-cancer early detection, fulfilling a significant unmet clinical need. We also believe Capture-Seq has the potential to play a role in cancer management, including but not limited to, minimal residual disease detection, including tumor-naive minimal residual disease detection and treatment monitoring, either alone or potentially in combination with other technologies. Volition is, I believe, the first liquid biopsy company to focus on circulating cell free nuclear proteins, and we have filed a number of new patents to protect this technology. As you can imagine, this has generated a lot of interest, and we're in active discussions with several large liquid biopsy and diagnostic companies to accelerate the development and launch of this technology as soon as possible. And with that, I'll pass over to Cameron for his commercial perspective and wrap-up. Cameron? Cameron Reynolds: Thanks, Jake. Let me start by congratulating you, Andy and the whole innovation, research and development and the clinical teams on the truly amazing progress you have made, not only this year but over the last 15 years. We set out to help save lives and improve outcomes for millions of patients worldwide, and we're making huge progress towards that goal. With the first clinical use now imminent in both early sepsis detection and lung cancer management, we are about to be part of the solution, through simple, easy-to-use, low-cost tests. Our vision is for our technologies to be incorporated into tests that will be used first by millions, and ultimately, hundreds of millions of people and animals a year, with our platform licensed to a range of large diagnostic and liquid biopsy companies and governments worldwide. Combining our groundbreaking technology with their installed base of labs, analyzer machines and sales forces around the world, we will achieve the optimal outcome for us. Large companies have the resources to realize the opportunities better than Volition. The total addressable markets, TAMs, for our technologies on an annualized basis are multibillion-dollar opportunities, not only for Volition, but for our licensing partners too. Volition has made strong progress both clinically and commercially. Our goal is to secure a wide range of licensing agreements in the human diagnostic space, mirroring our successful strategy in the vet market, and anticipate, similar to vet market, diverse deal structures with potential for upfront and milestone payments and recurring revenue. As mentioned earlier, we are continuing our discussions with around 10 of the world's leading diagnostic and liquid biopsy companies. These discussions are at various stages of the negotiation process across all our pillars. Our laser focus is on executing licensing agreements, and we will update you as they complete. Thank you for joining our call today. We very much appreciate it. We will now take your questions. Operator? Operator: [Operator Instructions] Our first question is from Justin Walsh with JonesTrading. Justin Walsh: As we see more from Capture-Seq, it would be great if you could provide some additional color on the current state of the liquid biopsy field, where maybe the field has seen some success and where alternative approaches have fallen short. And then maybe related to this, some takeaways on the failure of the large NHS-Galleri trial to achieve its primary endpoint. Cameron Reynolds: Yes. So we tend not to criticize the other companies. I mean they're often well-run companies with good people trying to do good things. But I think it's very fair to say our discussions with everyone, no one out there is very -- since their current testing modality is where they really needed to be in early-stage detection for multi-cancer detection, or an MRD for treatment-naive, that's obviously not something either, so there is 100% an opportunity for anyone who can develop something which is truly routine, which ours is, low cost and easy to use, which ours is. And it certainly appears to be very accurate, we're doing more and more study, but the early work is incredibly encouraging. So I think in any space like cancer detection, there's going to be a number of parties. No company, no matter how good the technology, will be everything. But I think there's a very strong case to be made we will be a big part of cancer detection in the human space, like we are in the vet space, starting with the fantastic lung work, which is in the process of being reimbursed, which is incredibly encouraging, and of course, the strong promise we have from Nu.Q Capture, which could either be used in conjunction with what's currently used or potentially a test in itself. And given the early-stage detection that we have shown, that's certainly a possibility. So overall, I think we've got something which is very special in what we do. And we're working with a number of groups now. Obviously, we can't say who they are; it's confidential. But we have a lot of active discussions going. These are things which are far bigger than we can commercialize ourselves. And the bigger companies certainly have the installed capacity or the knowledge in particular areas, like screening and MRD. So we'll be updating as those hopefully come to fruition, hopefully, in the near term. And we're expecting a lot of news on that through the year. But as far as individual ones go, I guess, I read the news, there's been a lot of things which have not turned out exactly how they wanted. But we always say, we will succeed if we deliver a good platform. So we haven't spent a lot of time concerned about everybody else. There's always going to be a place for a routine, accurate, low-cost test, and that's exactly what we think we've developed. So we're working hard on commercializing. Operator: Our next question is from Yi Chen with H.C. Wainwright. Yi Chen: My first question is, could you comment on how do you expect the Nu.Q Cancer assays to ramp up in terms of volume throughout 2026? And my second question is, can you just provide some general comments on how many new licensing deals you expect to close this year? Cameron Reynolds: I'll start with the deals. And the first question, I didn't quite understand, what -- can you repeat the first question, please, Yi? Yi Chen: How do you expect the volume of the Nu.Q Cancer assays to ramp up through 2026? Cameron Reynolds: Okay. I'll have the CFO to answer that. I'll deal the deals. Look, it's very hard to know. We've signed several in the human space already with fantastic companies. We're working with 3 multibillion-dollar companies in the human space now. Revvity has launched a CE-marked kit in Europe on its platform. Revvity via PerkinElmer, obviously, a very large company. They very much like what we do. We're working with Hologic on the Discover side, on the marketing, which is very exciting. And we're working with Werfen now on the NETs kit and the process. So if you look at each individual area, I think, ultimately, the NETs test will be something that's extremely widely used. And the uses, as we've said, go way beyond the massive market of sepsis. Just yesterday, I believe it was yesterday -- anyway, these last few days, we announced the Mayo Clinic results which show, if you had trauma, a very elevated level -- I mean I've looked at the numbers, it's quite spectacular. Very elevated level if you've had trauma. And even higher, and I mean, very, very high, you can go through the numbers again in the paper, if you've had VET (sic) [ VTE ]. And trauma is one of the biggest -- well, highest cause of death of people below 50 in the world and one of the major causes of admission to emergencies. So another massive use for our NETs test. So deal-wise, there's all the NETs tests. We're talking with more companies now on the capture side, which is obviously very exciting. The governments are working on the lung cancer monitoring side, as you know. So it's hard to say which of the 10 or so companies will be first and what the order will and how many there will be. But I think I'd strongly suggest we will have multiple deals with different companies, different governments this year. And I think it will be across cancer and probably NETs as well. And then we're also working with groups on our recombinant nucleosomes and on Discover. And don't forget, we do have 100 clients in Nu.Q Discover now, and some of those are coming to the stage where they're going to become quite large in process where they come into clinical studies where they become very serious amounts of revenue. So overall, I can't give you an exact number, but I'm sure, I'm quite certain we'll have deals. And we're trying to get them out as quickly as possible because we basically stopped the R&D side and we're now on just commercialization because we have an absolute mountain of opportunities in all of the pillars. And we're very happy with how those deals are progressing. And the volume, Terig? Terig Hughes: Yes. So I think as Cameron mentioned earlier, we're in the process of submission preparation for the reimbursement. Yes, that's, obviously, that's an H2 event in terms of approval of that. And so we'd expect it to be about Q4 by the time we get that reimbursed product into routine clinical use. So we haven't built a huge amount in this year given the timing, but we would expect it to ramp fairly quickly once it's in routine clinical use. Cameron Reynolds: And the Nu.Q NETs now is in IVDD, in the process of being IVDR, so we're recording some revenue for that. But at the moment, we're not providing guidance, to be conservative. Obviously, there's a lot of things happening and they're all moving forward. But exactly when in the year it happens, obviously, will greatly affect when we can start recurring revenues. But they're all making progress, and they'll all be coming on stream, we think, in the next few quarters. Operator: Our next question is from Steven Ralston with Zacks. Steven Ralston: I looked into the revenue streams that you expect from the different pillars going forward and it seems to be quite complex because there are different avenues in each area. The one in Nu.Q Vet is developed and it's basically dependent on the partners and how successful they are in their different geographic regions. Can you make a comment on the rate of acceptance of the vet test for canines among the different partners you have? And are there any commonalities of the more successful ones of how they've ramped up usage? Cameron Reynolds: Yes. So I think there's several different partners there. So between all of them, the one strong message we got -- so obviously, our revenue is growing, but -- which, in a normal company, 40% will be very good, but obviously, we're looking for a lot more than that to really ramp. The key message from all of them, the key to that is to have it in a centralized lab. Currently, the vast majority of market, like over 80% of testing in dogs is done through a centralized lab. The only option currently we have available in centralized lab up until few weeks ago was microtiter plates, the plastic plates. So obviously, that's not great if you're trying to do millions of tests. A centralized hospital network, and there are several in the U.S. and France, you could get hundreds of thousands or millions of tests per network if it's part of a wellness panel or what they call the index of individuality. We obviously have not cracked them yet. And a key part of that is the acceptance, but also being able to run maybe potentially hundreds of thousands of tests per month. So you've probably noticed Fuji, who have been fantastic partners and very proactive, have shown it now works on the centralized lab. The fantastic Revvity machine, which we're now using also for NETosis in Europe, the CE-marked machine, the same one. So that will start flowing through. So it comes down to -- it's lumpy between quarter-on-quarter and when they order a batch and when they don't, because the plates can last up to a year. Obviously, Antech has also launched the small machine, but that's also subject to them selling and getting those machines in lots of different places. So that's not going to be an exponential growth by any means. So it has come down to that. But don't forget also, we are now working on felines, which potentially, I don't think will actually double the market, but theoretically, it doubles the market because there's more cats than dogs in the world, and that's making good progress. And obviously, we've got Nu.Q Capture, which potentially has uses in all this as well. So there's a lot of things going on in vet, and it's very hard to predict once -- if and when a centralized lab system in the U.S. goes for the centralized machine, I think that's something that could then accelerate very quickly. But in the meantime, it's kind of lumpy and bumping along with the rates of growth you can see. So it's hard to tell. But our commercialization efforts in the last 6 months are very much focused on the human space. We're extremely keen, lung reimbursement in Europe, that's EUR 50 per test, so that's a lot more per test as well. And if it's -- once it's approved, we expect it to be by the end of this year, then obviously, that's a very good revenue source. And the CE-marked kits are out there, so we spent a lot of effort changing from IVDD to IVDR, so it extends indefinitely from the time limits we currently have. And of course, we've put a lot of effort into licensing Nu.Q Capture. So the vet has not been the focus of the company, but it's obviously important to keep it ticking over. But we have made progress in the cats and the centralized labs, and we're looking perhaps even for transcription factors in dogs and cats. Steven Ralston: Now you even went into an area that I wanted to ask you about next, is that, in Europe, you seem to have a very strong foothold with these hospital networks in the areas of sepsis and lung cancer. Cameron Reynolds: Yes. Steven Ralston: Is that a model for the -- for your global emphasis? Or it just happens to be that this is the first foray? Cameron Reynolds: A bit of everything. So ultimately, what we have in Europe is a fantastic, large, multinational company in Revvity, so PerkinElmer, who have the machine which our test works on very well. They've undertaken to put it in lots of different locations. There's over a dozen large hospital networks which are testing. So our CE-marked is any NETs related inflammation. So that's obviously a lot of different things. You've seen the Mayo Clinic, that also involves trauma, and trauma is potentially as big as everything else. It's quite remarkable how versatile it is. But as Volition, we don't want to be doing 10 studies in trauma, in sepsis, in COVID, in APS, in HS, all those things. So we've shifted a lot to our partners doing the work, like Werfen, for example, in inflammatory diseases, like all the companies doing it in the process. So we are also looking for a large or several large diagnostic companies to -- you know who the large diagnostic companies are, to take it on. And I think as Andy said, the evidence is getting more and more overwhelming that NETs is going to be a very, very, very large product. So if you take all the issues in sepsis, all the issues in all the autoimmune diseases, add in trauma and COVID, it's just obviously huge. So it's been part of our strategy to get other people to buy our kits and do these studies. Again, the issue, just take their own time, but we're not spending. But I think that the big daddy of all those is the French government, which has spent, $7 million, $8 million, whatever it is, on an interventional study to test and hopefully launch our product as the screening test in France, in conjunction with NEWS, which are the physical symptoms, the non-biomarkers. Now if that does go well, and I think there's a very good chance it will, we won't know till the end, but we've seen it work very well in sepsis, we will become the test in France, which I think then we'll become the test in Europe. And then it becomes extremely easy to license to a large international diagnostics to do a 510(k) in the U.S. to also launch there. So our strategy has been: develop the platform, make sure it's incredibly robust, reproducible, reliable, make sure it's certified, which it is now in the first platform, get other people to do the work. And I think that's been a tremendous success. And to get them to do the leg work to show what the cutoff should be. So it fits in with our global strategy, and now we're working with the big diagnostic companies to get the first one of them to license on large auto-analyzer machines beyond the Revvity machine that we have now. Does that answer your question, Steven? Steven Ralston: Oh, yes. Very much so. Cameron Reynolds: Yes. And just on a personal note, just to finish, I think it's incredibly gratifying. I don't know if everyone understands necessarily, an interventional study means it's used on real people in real life, and those decisions are taken based on our test. That's going to be this year when the study starts. So that's -- the confidence they have in the test, this is not a university exercise or someone doing some samples from the freezer. It's an interventional study. And I don't quite know how much that would cost in the U.S., we didn't get it costed, but it's an awful lot more than the $8 million I think the French government is spending on it, to do it, say, in the U.S. So a huge amount of very valuable work being done for us, and it shows the level of confidence in what we do. And it's very heartening for us as a team to have them being used on actual saving people's lives this year. Operator: Our next question is from Bruce Jackson with the Benchmark Company. Bruce Jackson: I wanted to follow up on the Capture-Seq paper, the -- it's a fabulous study. I'm curious to know how amenable is this process to front-end automation in the lab and how easily could it be integrated into like an MRD test or a liquid biopsy test in the lab? Cameron Reynolds: Jake is here, our Chief Scientist. So that's probably a Jake question. Jake? Jacob Micallef: Bruce, thanks for the question. Yes, very good question. Essentially -- well, first of all, the updated, revised version of the manuscript is live on Research Square now. So that's public. And exactly how it works and how we've proved that we really have produced pure tumor DNA, all of that's in the paper and publicly accessible to everybody. In terms of the question, the basic process involves 2 parts. So the first part is a magnetic antibody. So it's the same as an immunoassay, it's the same as a Nu.Q immunoassay, it's the same as a PSA assay or a CTA assay. And the second part is sequencing. So immunoassay is easy to automate and the sequencing is actually much less involved than the sequencing that is involved in other tests, because we've removed all the background so there's actually less DNA to sequence. And of course, there's, in the end, there's less analysis because most of the analysis is involved in trying to work out whether any of the DNA came from a cancer or not. But if you've removed everything that didn't come from the DNA, that analysis also becomes like a PSA test, it shouldn't be there. If it is there, it came from the cancer. So I think it's -- at the moment, what we do is manual, but it is extremely suitable to be automated. Cameron Reynolds: And just some indications of costs, Bruce, people ask us this. It's -- we can answer that in a couple of ways. So the capture side, which as Jake said, the magnetic bead, the antibody, the immunoassay, at the moment, may cost us $100, but that's going to come down, but not to $10 or $20, but somewhere more like $60, $70, $80, something like that, to do the capture side. Then as Jake said, it depends on the sequencing. Those sequencing really depends on what the panel looks like, how many markets you have. But that could be a few hundred dollars or $500, depending on where we end up and how the panel looks. But that's sort of the cost you're looking at for the tests, that sort of $80 if -- for the capture and then the sequencing. If it's shallow sequencing or oxidizable sequencing, shallow sequencing, it won't be a lot. But that's really to be determined. And that's actually something our partners are looking at when we're looking at licensing. Obviously, they're the sequencing experts. So it's not a low-cost test in the sense of ELISA that costs us just $1 or $2 to make, but it has a strong potential to be tissue-specific and very accurate. So I think the market certainly would bear a few hundred dollars for that test, as we talked about. But that's all in process. But no, it's incredibly encouraging and an amazing breakthrough for a small company to have managed to concentrate. And people say, how did we do it? What made us able to do it? We're the experts at chromatin fragments, CTCF fragments. Everyone has ignored the ultrashort DNA for a whole lot of reasons. The sequencing machines don't tend to do much below 100. And we're experts at nucleosomes and now are experts at transcription back bound DNA. So we've really done something -- 15 years of heartache and pain getting where we are has made us very good at chromatin fragments. And this is just another chromatin fragment. So it is actually a quite easy process. It's a magnetic bead with an antibody and sequencing. Obviously, there's a lot of sequencing there and a lot of work to get to where we are. But at its heart, it's a very simple process, which I think can be optimized a lot from where we are. Bruce Jackson: Okay. Great. Then just a couple of quick finance questions. What's the anticipated timing of the feline cancer milestone? I know the paper has to be published before you get the milestone, but would that be like a second quarter event potentially, a third quarter? Terig Hughes: So it's difficult to predict, but we do expect to collect that money this year. We are in the process of submitting that paper, which is the final step in completing the requirements for the milestones. So we do expect to have that completed shortly. And then it's, like I said, it's difficult to know exactly which quarter it's going to fall into in terms of collecting that money. But we certainly expect to collect it this year. Bruce Jackson: Okay. And then last question for me, on the operating expense profile for 2026. Would you expect that to be up, down or about the same as 2025? Terig Hughes: So I think, yes, we've made a lot of progress over the last 18 months in terms of bringing the costs down. We're now operating at a significantly lower burn rate than we were 18 months ago, for example. Nevertheless, we're continuing with cost-saving actions, and we're targeting take out another 25% to 30% from the cash OpEx this year. That's not all going to happen in one fell swoop. That's going to take us through the end of the year to achieve that so that the exit run rate is that much lower. I think in terms of quarters, it's a bit lumpy and difficult to predict. But I wouldn't expect a sequential reduction in the first quarter. First quarter is always a little bit heavier and there are obviously some severance costs to take into account. So I think I would expect going through the rest of the year to see the cash OpEx burn rate coming down. Again, yes, it's not a one -- you won't see a one big drop. It's going to continue to come down over the quarters over the rest of the year. Cameron Reynolds: And I think, Bruce, something just to say from more of a take a step back, we are obviously cutting because we understand the climate and we understand Volition and we need to cut. But also it's a fundamental shift in the company. We spent a lot of our time and effort on studies, on research, on papers and processes, which we're just not doing anymore to anywhere near the extent that we were. Because, as you said, the French government is funding the interventional study in sepsis. Mayo Clinic did a lot of that work, obviously, in the trauma and is publishing itself. All those groups, Revvity selling kits to -- in Europe, are on the whole paying for the kits, and so we're not funding those studies. So overall, it's coming down a lot because we are no longer spending on our days doing R&D. We're commercializing. And I think we have an absolute pile of products, which I think are world-leading, to commercialize now. So we're shifting the cost base down quite a few notches so that we can, A, extend the runway; but B, it's just a fundamental change in our business. We are not intending to do a lot of research studies anymore. We're firmly in the commercialization path. Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Cameron for closing remarks. Cameron Reynolds: Thank you, everyone, for listening. I know it's been a very interesting year for Volition. And obviously, we've made a tremendous amount of progress. It's been a tough year in a lot of ways, as you can probably tell, but something where we, I think, we've made very strong progress in a lot of areas. And I can assure you, we're absolutely focused on getting products commercialized now. So hopefully, we'll have a lot of news on that through the rest of this year and we can really turn the corner on the commercial side to be a strong commercial company where we've been a very strong R&D and IP company. So keep a close eye out, we should have a lot of news throughout the year. Thanks again for calling in. Bye. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Thank you for standing by. This is the conference operator. Welcome to the NOVAGOLD's First Quarter 2026 Financial Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Melanie Hennessey, Vice President, Corporate Communications. Please go ahead. Melanie Hennessey: Thank you, Galen. Good morning, everyone. We are pleased that you have joined us for NOVAGOLD's 2026 First Quarter Webcast and Conference Call and for an update on the Donlin Gold project. On today's call, we have NOVAGOLD's Chairman, Dr. Thomas Kaplan; President and CEO, Greg Lang; and NOVAGOLD's Vice President and CFO, Peter Adamek. At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received via e-mail and the webcast. I would like to remind you, as stated on Slide 3, any statements made today may contain forward-looking information such as projections and goals, which are likely to involve risks detailed in our various EDGAR and SEDAR filings and forward-looking disclaimers included in this presentation. With that, I will now turn the presentation over to NOVAGOLD's President and CEO, Greg Lang. Greg? Greg Lang: Thank you, Melanie. On Slide 5, we highlight the key attributes that make the Donlin project unique in the gold industry. Donlin has a combination of scale, grade, long life, low operating costs and significant upside potential in the exploration areas, and we're in a safe jurisdiction. With about 40 million ounces of reserves and resources at 2.25 grams, Donlin has got grade better than twice the industry average. Our known resource occupies only 5% of our total land holdings and there is considerable potential to increase the strong reserve base. We're also fortunate to have long-term committed shareholders who understand the value in an asset like Donlin. Moving on to Slide 6. This chart illustrates the value of Donlin and a variety of gold prices. With today's gold price approaching the upper end of this chart, the project has a net present value of almost $24 billion at a 5% discount rate. This underscores the leverage and significant economic potential of Donlin in the current gold price environment. As highlighted on Slide 7, Donlin will be a big mine. It will average over 1 million ounces a year during its 30-year mine life and about 1.3 million ounces the first 10 years. This asset production makes it really unique and stands out in the gold space. Grade is one of the most important attributes of a mining project. At 2.25 grams, Donlin is twice the industry average. It's this high grade that contributes to Donlin's very low operating costs at less than $1,000 an ounce. This slide really highlights the significant exploration potential at Donlin. Our known resources reside in the ACMA and Lewis areas, as shown on Slide #9. These areas represent only 3 kilometers of an 8-kilometer gold bearing system. When the time is right, we will continue to explore both along strike and at depth, and there's tremendous potential right in our own backyard. Turning to Slide 10. This slide is a summary of the status of our permitting. We've completed the federal permitting process and we're wrapping up the state permitting. We've worked well with the federal and state agencies over the years, and our permits are in good standing. The only remaining permit in Alaska is for the dam safety certificates and the design packages have been submitted to the state, and we anticipate approval well in advance of needing this permit. Slide 11 highlights a recent statement from Governor Mike Dunleavy up in Alaska. Governor Dunleavy as well as the other elected officials in Alaska have long been staunch advocates for the Donlin project and the importance of what it can mean to the state of Alaska in the Y-K region. On Slide 12, we highlight our long-standing engagement with our Native Alaskan partners, Calista owns the mineral rights and TKC owns the surface rights. We've got a life of mine agreements in place with both of these entities. And it's really important to remember that this is private land that was designated for mining activities. Both Calista and TKC have an owner's interest in seeing this project go forward. Moving on to Slide 13. We are starting to fill out the Donlin Gold feasibility team. Frank Arcese is our project manager. He's been around the industry for almost 40 years and is very well seasoned with big projects in remote locations. We've hired Fluor, one of the industry's leading engineering firms to lead the bankable feasibility study. Under Fluor, we have 3 specialty firms, Worley, who was responsible for the pipeline; Hatch, who is a leader in pressure oxidation and oxygen plants; and WSP, a firm specializes in, among other things, power plants. These are all industry-leading firms that will help us with the bankable feasibility study and taking the project forward into construction and, ultimately, operation. I will now turn the call over to NOVAGOLD's Vice President and Chief Financial Officer, Peter Adamek. Peter? Peter Adamek: Thank you, Greg. Turning to our operating performance on Slide 15. NOVAGOLD reported a fiscal 2026 first quarter net loss of $15.4 million. This represents an increase of $6.3 million from the comparable prior year period primarily due to higher expenditures at Donlin Gold following the commencement of the bankable feasibility study related activities including hiring for key roles on the Donlin Gold project team and higher G&A expenses at NOVAGOLD. The company's share of Donlin Gold expenses in the first quarter of 2026 was $3.9 million higher than the comparative prior year period due to camp remaining open this winter and increased project activities following Fluor being awarded the lead engineering role for the Donlin Gold bankable feasibility study in early February 2026. Unlike the comparative prior year period, the company's first quarter results also reflect NOVAGOLD's 60% interest in Donlin Gold. NOVAGOLD's G&A expenses increased in the first quarter of 2026 by $3.9 million from the comparable prior year period, primarily due to higher professional fees and share-based compensation. Professional fees were elevated during the first quarter but remained in line with quarterly cadence expectations and are expected to decline from first quarter levels during the remainder of the year and remain within previously issued 2026 guidance. On Slide 16, our treasury increased by $277.4 million to $392.5 million at the end of the first quarter, primarily due to closing of a private placement of approximately [Technical Difficulty]. NOVAGOLD intends to use the net proceeds from the private placement for expenditures associated with Donlin Gold activities, exercise of the company's prepayment option on the Barrick promissory note and general corporate purposes. Excluding the financing, corporate G&A costs during the first quarter increased by $3 million, and our share of Donlin Gold funding increased by $11.9 million compared to the prior year. Moving to Slide 17. Our treasury at the end of the first quarter sits at a robust $392.5 million. NOVAGOLD is well funded, enabling it to complete the Donlin Gold bankable feasibility study in 2027 and exercised its option to prepay the Barrick promissory note later this year. Our operating cash expenditures in the first quarter of fiscal 2026 remained in line with our 2026 budget and guidance. And with that, I will now turn the presentation back over to Greg to discuss first quarter highlights. Greg Lang: Thank you, Peter. Slide 18 highlights our continuing engagement with the communities in and around Alaska. We work closely with Calista and TKC on all of these programs as well as preparing them and the local people for ultimate employment at the mine. All of these programs are a testament to our commitment to total engagement with the local communities and ultimately preparing a workforce for the Donlin project. Turning to Slide 19. During the first quarter, we announced the advancement of the Donlin Gold bankable feasibility study as well as additional engineering firms have been engaged for very specialized components of this study. This integrated approach leverages the deep technical expertise that all of these firms bring to the bankable feasibility study. On Slide 20, another development we follow with a lot of interest is the proposal to bring gas down from the North Slope into the Cook Inlet, ultimately tying into the header that will feed the Donlin project. We've got a nonbinding letter of intent with Glenfarne to evaluate natural gas supply from this proposed pipeline. This pipeline has the potential to be a real game changer for Donlin, giving us access to cheap, reliable and long-term natural gas. We will continue to advance discussions with Glenfarne as the project moves forward and where they might potentially fit in supporting the infrastructure for the Donlin project. Last year was really a transformational year for the company. Post the Barrick transaction, we've steadily made meaningful progress to advance the Donlin Gold project through a bankable feasibility study. We're building up the team with expertise to do this. In a while, we will continue to engage with our local communities. Turning to Slide 22. This highlights our top shareholders, we have always valued their long-term commitment to the project into the company. I think it's important to note that Paulson, who is now our 40% partner with Donlin has been a major shareholder in NOVAGOLD for over 15 years. This slide also highlights the coverage that NOVAGOLD has from various banks. NOVAGOLD is focused on delivering on every single commitment we've made, advancing the Donlin Gold project through a bankable feasibility study and achieving all of these milestones. Operator, we are now prepared to open the line for questions. Operator: [Operator Instructions] Our first question is from Francesco Costanzo with Scotiabank. Francesco Costanzo: I'll just start with the BFS. I appreciate that you'll be giving a more fulsome update on the BFS time line around midyear. But given that you've now awarded the engineering contracts for the project, can we consider that the clock on the 12- to 18-month time line to complete the BFS has now started? Greg Lang: I would say, yes, certainly, we have got all of the firms in place to do the bankable feasibility study. Fluor hit the ground running. They're obviously the key driver in this. And from where we're sitting today, I'd say, give or take a year, we will have it wrapped up. Francesco Costanzo: That's great. And my second question is just going to move to project financing. Just this week, we saw Perpetua Resources announced the approval of a $2.7 billion loan from EXIM. Now though the projects are obviously different, I'm wondering if you see any read-throughs on the potential debt financing availability for a project that offers significant domestic investment in the U.S., such as Donlin? Thomas Kaplan: Shall I take that one, Greg? Do you want to begin? Greg Lang: Sure. Go ahead, Tom. Thomas Kaplan: I think that it's very fair to say that when you're building the biggest gold mine in the United States, you're going to have multiple sources of financing that come to the floor. And if I had to hazard a guess, I would say that governments will be a very large component in that. There is, of course EXIM. I believe that EXIM is very well aware of our project. And for many reasons that you've cited, the domestic component of this story, not only being the largest gold mine in the United States, but being located in a place where it becomes a nexus for the energy story in Alaska, which is of extraordinary importance to this administration. Yes, I think it is fair to say that we should expect that the U.S. government has a serious interest in this story. But equally, I would point out that at least 2 Asia Pacific countries, Japan and South Korea have made very substantial commitments to investment in the United States. $550 billion in the case of Japan, $350 billion in the case of Korea. And both of those have advanced in terms of execution over the last several months. I think that it is fair to say that one of the things that we do expect them to be interested in is being able to make quite a statement with Donlin as the biggest, but also as enjoying the fruits of location, location, location. If you're on the Pacific Coast of Alaska, you have an opportunity to really develop relationships that are natural in terms of meshing together. The Japanese are very large buyers of gold and the South Korean Central Bank. Several months ago, announced that it was going to go back into the market to add to its reserves. Their timing was actually quite good. The prospect for us to be able to utilize the benefits, for example, of offtake agreements of 1.3 million, 1.4 million ounces a year, clearly make us a bit of a unicorn in terms of the ability to attract financing. And I'm not even talking about the other traditional sources. I hope that helps. Operator: The next question is from Soundarya Iyer with B. Riley Securities. Soundarya Iyer: Congratulations on this, the quarterly update. My question is on the exploration work. So as you mentioned in your opening remarks, the current resource is just 5% of the land package. So have you planned any 2026 exploration drill program or budget to test further targets? Or is that a priority after the bankable feasibility study? Greg Lang: I'll start with that one. We have putting together an exploration plan, more I would describe it as general reconnaissance work throughout our land holdings and the area in and around Donlin. So I think that's getting started. But you have to remember, I think there's a lot of snow left on the ground in Alaska. So it will be another month or 2 before we really can get on the ground. But it's more general recon. We've been studying Donlin. We believe the next Donlin is at Donlin, and we're in a modest program starting to evaluate that. Thomas Kaplan: If I may add just a few words on that because the drill bit has been my best friend over the last 3 decades. If I may echo Greg's comment, and this is obviously a very forward-looking statement. But being that for reasons belonging to Barrick's ultimate belief that this would fall into their lap one day or the other. The 95% of the property that's been unexplored is all prime real estate. And we believe that in addition to what we see as low-hanging fruit to add tens of millions of ounces within the 8-kilometer belt, 5 kilometers of which just simply have been drilled, shown mineralization, but there was never any follow-up because the deposit was already so big that it was thought you leave that for later. But in addition to the 45 million ounces of resources that we already see, it's low-hanging fruit to add, in our view, tens of millions of more ounces. But we are looking for that at Donlin. In a bear market, people really don't care about exploration results. And so I'm very glad that you asked that question because in a bull market, great drill results can cause the stock price to double or more. And we do expect to be adding a lot more ounces in the immediate vicinity of the property as we go from the 3 kilometers to the 8-kilometer mineralization. But at the same time, what Greg is referencing is that we are undertaking a project or property-wide analysis in order to identify the best drill targets that are extrinsic of the 8 kilometers. Because in our view, the odds that this occurrence is alone. Well, mother nature is very fickle. We know that the odds are very long in exploration. But I've been in this movie before. And I found that in the case of precious metals, and in the case of hydrocarbons, where we made our biggest killing at Electrum, Wildcatting is something that can take a 10x opportunity to 100x. And fortunately, we have a partner who doesn't see exploration success as being a challenge. But John Paulson and his team completely have aligned with us on understanding that good news through the drill bit is a multiple expander. And if this turns out to be what we hope it is and it's a hope, this is really the next Carlin. And the partners are aligned in being able to identify that. So when you think of the relatively low cost of exploration versus the high reward, I think you can understand that the partners in Donlin are very keenly aware that we may just be scratching the surface in this story. It remains one of the greatest exploration stories in the world, and that will unfold for the market. Soundarya Iyer: Yes. I mean I totally agree with that. My question was on that front that exploration work could gain more value in a bull market. And just one more. On the state permitting, can you walk us through what's left there on the -- as a full state permitting checklist? What is in hand? What remains outstanding? And how do we expect the receipt of those permits going forward? Greg Lang: Sure. I'll take that one. The only outstanding state permit is for the tailings dam and other water retention structures. Our federal permits which are all in hand, authorized us to do this work. However, in Alaska, these structures are administered by the state, and they require final engineering drawings before they grant approval. We've submitted the design packages to the state. We had already completed the geotechnical work, and we expect approval of these permits about the time we're wrapping up the bankable feasibility study. So they're not on the critical path, but the work to get these permits is well in hand. All of our other remaining state permits are in good standing as is our federal permits. Melanie Hennessey: Thank you. I do have a few questions from the webcast that I wanted to read out. The first is from Eric. Will the BFS include a closure and recognition estimate, including long-term water treatment and post-closure monitoring assumptions? Greg Lang: I'll start with that one. Yes, it does. Part of the feasibility study and actually the permitting requires you to have approved closure plans that have to be invested by the state and our native partners. The lease plans, reclamation and closure and water treatment, they are all part of the commitments in our existing permits. Once the mine is in operation, it will cash fund these permits through a trust. So it's -- the procedure is well defined and the approvals are all in place for the subsequent reclamation and restoration of the Donlin site post mining. Melanie Hennessey: Great. Thank you, Greg. The next question comes from Jean. Given the recent share price volatility and now with the feasibility team in place, which upcoming milestone in this study do you believe will be most important in helping the market recognize the project's underlying progress and value? Greg Lang: Well, there's -- I mean, the important piece of this, obviously, is to finish the feasibility study. But along the way, we're advancing many different avenues. I think particular interest is we will be evaluating third-party participation in our gas pipeline and other components in the infrastructure that we could logically bring in a third party to handle. So that will be one of the catalysts coming up as we advance the feasibility study. Then the other milestones along the way as different components of the study are completed, and we will update the marketplace as this work unfolds. But the real key item is finishing the study, and we anticipate it will certainly demonstrate robust economics in this price environment. Melanie Hennessey: Great. Thank you. I have a further question that come through the line from Matt. Dr. Kaplan, at the last quarter's update, you mentioned that your decisions toward NOVAGOLD and Donlin were family influence. I have been following NOVAGOLD for over 15 years and now have many family members investing in the story. I just wanted to say that I appreciate your's and NOVAGOLD's integrity over the years. A big thank you. Could you comment on the recent movement in gold and how that relates to NOVAGOLD? Thomas Kaplan: Well, that's very kind. While I'm going to ask our team, could you please call up the chart that references the long-term bull market in the Dow, and just let me know when it's up there. Melanie Hennessey: Yes, the slide is up. Thomas Kaplan: But before that, let me get to the best part of the questioner's remarks. First of all, I find it very gratifying, we all do that you're able to make this comment about our integrity and your family's investment in NOVAGOLD. Needless to say, as Electrum is the largest shareholder of the company. And as the largest shareholder of Electrum is my family. I take it very much to heart that I have a responsibility to my family, but all the other shareholders and in your case, your own family, to do the best possible thing that we can. And I would say that the thing that Greg and I are most proud of since having come into the story together in 2011, we are celebrating 15 years of joyful monogamy. And one of the things that we are most proud of is that any promises that we made, we kept. To the extent that we disappointed, I think 100% of our shareholders understood it was for reasons beyond our control. And we had all the tailwinds that I think and John Paulson thinks will take us to $100 per share. But we had one headwind. And when you think that a year ago, our stock was at $2 and change, and reached 14, and I have no doubt that we will vastly surpass that and multiply past $14. You understand that we took it to heart as much as any shareholder that we were being held back. And once that was relieved approximately a year ago, we knew that we would be on our way to $10 to $15 to $30, and we think well beyond that for all of the reasons that have become so clear to everyone that whether people realize it or not, and I'm not saying we're going back to a gold standard, because we'll never see that kind of discipline ever again in human economics. But we are seeing the remonetization of gold. We are seeing that central banks have shown through their purchases that gold is the asset that they hold because it doesn't represent someone else's liability. When central banks hold gold, when central banks buy gold, they're making a statement. To the extent that some central banks need to lay off some gold as Turkey is said to have, that proves, proves to all of the rest of them that gold is the asset that you want to own because gold traditionally in a crisis gets hit because if it's in a bull market, it may be one of the only things in which people have a profit. So the ability to not just buy but the ability to sell something, if you need to take some chips off the table because I don't know, you have missiles that are flying into your territory and need to be taken out with Patriots. That's a good thing, not to be concerned about. And this is one of the things that I enjoy most in the time that I've been bullish on gold and publicly so since gold was at $500 in 2007. And when I said my first equilibrium for gold would be between $3,000 and $5,000, people thought I was nuts. Similarly, when I said that silver will go to triple digits, people thought I was nuts, but that's my stock in trade. I don't know how to build a mine. Greg Lang knows how to build the mine. Richard Williams knows how to build the mine. They know how to do it on budget and on schedule. I can't figure out how to make chrome work over Safari. But I don't need to. You surround yourself with the very best people. My job is to protect my family's wealth. And by extension, all of the families that depend on me, including our management team and including our shareholders. So with that, let me go back to a chart that I spoke to on our last conference call because I wanted to give people a heads up as to what might happen. It wasn't required, but it might happen. In fact, what I would call the 1987 correction started 3 days later. Now I'm not going to say that I was predicting it. I was going to say that it should be expected. And for that reason, whereas people who predict a downdraft are seen as Cassandra's, I wasn't actually being a Cassandra in this case. And I have been a Cassandra in different cases, like on the Middle East. But in this instance, I was presenting people with my belief that we could have in 1987. 1987 is not so much remembered for how you felt when you thought the world was caving in, in October of '87. It was -- it is and should be remembered as the blip that created the best buying opportunity of the bull market in stocks. The best because we've already seen the stock market go to 2,750. And when it pulled back to 1,650, you have to fade these numbers a bit, I'm sorry. That was actually the cream of the opportunity to be able to build the position if you didn't have one or to add on weakness in a bull market that has all the structural factors going forward. And if anything, we can see that the world is a very different place. I hope that it's going to turn out to be a much safer place. But without getting into politics, the reality is that we're in unchartered waters economically and the debt burden will never be repaid. So just for all these reasons, if you didn't own gold on the way up, taking advantage of a pullback was what I was trying to express, while some people were a little bit upset that I said that there could be such a pullback, the reality is we're looking at it. So look at this chart again because this is the exact same chart as I issued. And I'll just repeat the sentence that I repeated 3 months ago. As a curiosity, I want you to go back and look back at the mid-1980s. The blip, which barely is noticeable is the crash of '87 that a lot of us thought was going to be the harbinger of The Four Horsemen of the Apocalypse. You can't even see it as the Dow march from 1,000 to 45,000 and up to 50-some-odd thousand plus leap in value over the decades. A few days later, '87 began. And then it was compounded by the need for people to be able to have some liquidity due to the war with Iran. So once again then let me reiterate, in the words of Ray Dalio, one of our greatest contemporary applied historians, Gold is now the second largest reserve currency behind the U.S. dollar. To understand why you need to look at the history of fiat currencies like the dollar and hard currencies like gold. The way I see it, we're currently facing a classic currency devaluation similar to what we saw in the 70s or 80s. In both of those cases, fiat currencies around the world all went down together and all went down in relationship to hard currencies like gold. If events today follow a similar pattern that makes hard currencies an attractive asset to hold. For all of you who've known me or listened to me over the years when I was asked which currencies to own, I said, if you have to own a paper currency on the dollar. But the real currency is gold. And now I don't really know what paper currencies are going to thrive the most. But I will repeat something which I've said now over the last couple of years, regardless of your view on currencies against gold, the dollar is actually collapsing. So every once in a while, you'll have a pullback, but the long-term trend on gold, to my mind, is going to be very similar and indeed price-wise, it actually looks at, but that's coincidence. Very similar to what we saw in the Dow Jones. And so for those, if you haven't taken advantage of the pullback, my strong recommendation is that you do. And I can only say that what my family does, we are long-term holders in our flagship gold asset Donlin and will absolutely remain so because to our mind, if we sell it, we can't go into something at least as good, and we really think impossible to go into anything better. So thank you for being a long-term shareholder. Thank you for your support. I can tell you it means a lot to us. And the last conference call for those who managed to stay through it. One of the callers actually said that he and his wife had an argument over NOVAGOLD during the tough times, but that the revival of NOVAGOLD actually saved his marriage. And we regarded that as probably not only the funniest, but the most heartwarming piece of news we've had all year. So with that, I thank you and all of the shareholders who have kept the faith. All I can do is promise you that I, the entire management team is devoted to being able to unlock the fullest value of what we consider to be the greatest gold development story in the world and what will be the largest single gold mine in the best jurisdiction on the planet. Thank you. Operator: I'd now like to hand the call back over to Greg Lang for concluding remarks. Greg Lang: Well, I just want to thank everybody for taking the time to get an update on NOVAGOLD, and our Chairman's thoughts on gold prices and markets. So everybody thank you. We'll be in touch. Operator: This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Thank you for standing by. This is the conference operator. Welcome to the NOVAGOLD's First Quarter 2026 Financial Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Melanie Hennessey, Vice President, Corporate Communications. Please go ahead. Melanie Hennessey: Thank you, Galen. Good morning, everyone. We are pleased that you have joined us for NOVAGOLD's 2026 First Quarter Webcast and Conference Call and for an update on the Donlin Gold project. On today's call, we have NOVAGOLD's Chairman, Dr. Thomas Kaplan; President and CEO, Greg Lang; and NOVAGOLD's Vice President and CFO, Peter Adamek. At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received via e-mail and the webcast. I would like to remind you, as stated on Slide 3, any statements made today may contain forward-looking information such as projections and goals, which are likely to involve risks detailed in our various EDGAR and SEDAR filings and forward-looking disclaimers included in this presentation. With that, I will now turn the presentation over to NOVAGOLD's President and CEO, Greg Lang. Greg? Greg Lang: Thank you, Melanie. On Slide 5, we highlight the key attributes that make the Donlin project unique in the gold industry. Donlin has a combination of scale, grade, long life, low operating costs and significant upside potential in the exploration areas, and we're in a safe jurisdiction. With about 40 million ounces of reserves and resources at 2.25 grams, Donlin has got grade better than twice the industry average. Our known resource occupies only 5% of our total land holdings and there is considerable potential to increase the strong reserve base. We're also fortunate to have long-term committed shareholders who understand the value in an asset like Donlin. Moving on to Slide 6. This chart illustrates the value of Donlin and a variety of gold prices. With today's gold price approaching the upper end of this chart, the project has a net present value of almost $24 billion at a 5% discount rate. This underscores the leverage and significant economic potential of Donlin in the current gold price environment. As highlighted on Slide 7, Donlin will be a big mine. It will average over 1 million ounces a year during its 30-year mine life and about 1.3 million ounces the first 10 years. This asset production makes it really unique and stands out in the gold space. Grade is one of the most important attributes of a mining project. At 2.25 grams, Donlin is twice the industry average. It's this high grade that contributes to Donlin's very low operating costs at less than $1,000 an ounce. This slide really highlights the significant exploration potential at Donlin. Our known resources reside in the ACMA and Lewis areas, as shown on Slide #9. These areas represent only 3 kilometers of an 8-kilometer gold bearing system. When the time is right, we will continue to explore both along strike and at depth, and there's tremendous potential right in our own backyard. Turning to Slide 10. This slide is a summary of the status of our permitting. We've completed the federal permitting process and we're wrapping up the state permitting. We've worked well with the federal and state agencies over the years, and our permits are in good standing. The only remaining permit in Alaska is for the dam safety certificates and the design packages have been submitted to the state, and we anticipate approval well in advance of needing this permit. Slide 11 highlights a recent statement from Governor Mike Dunleavy up in Alaska. Governor Dunleavy as well as the other elected officials in Alaska have long been staunch advocates for the Donlin project and the importance of what it can mean to the state of Alaska in the Y-K region. On Slide 12, we highlight our long-standing engagement with our Native Alaskan partners, Calista owns the mineral rights and TKC owns the surface rights. We've got a life of mine agreements in place with both of these entities. And it's really important to remember that this is private land that was designated for mining activities. Both Calista and TKC have an owner's interest in seeing this project go forward. Moving on to Slide 13. We are starting to fill out the Donlin Gold feasibility team. Frank Arcese is our project manager. He's been around the industry for almost 40 years and is very well seasoned with big projects in remote locations. We've hired Fluor, one of the industry's leading engineering firms to lead the bankable feasibility study. Under Fluor, we have 3 specialty firms, Worley, who was responsible for the pipeline; Hatch, who is a leader in pressure oxidation and oxygen plants; and WSP, a firm specializes in, among other things, power plants. These are all industry-leading firms that will help us with the bankable feasibility study and taking the project forward into construction and, ultimately, operation. I will now turn the call over to NOVAGOLD's Vice President and Chief Financial Officer, Peter Adamek. Peter? Peter Adamek: Thank you, Greg. Turning to our operating performance on Slide 15. NOVAGOLD reported a fiscal 2026 first quarter net loss of $15.4 million. This represents an increase of $6.3 million from the comparable prior year period primarily due to higher expenditures at Donlin Gold following the commencement of the bankable feasibility study related activities including hiring for key roles on the Donlin Gold project team and higher G&A expenses at NOVAGOLD. The company's share of Donlin Gold expenses in the first quarter of 2026 was $3.9 million higher than the comparative prior year period due to camp remaining open this winter and increased project activities following Fluor being awarded the lead engineering role for the Donlin Gold bankable feasibility study in early February 2026. Unlike the comparative prior year period, the company's first quarter results also reflect NOVAGOLD's 60% interest in Donlin Gold. NOVAGOLD's G&A expenses increased in the first quarter of 2026 by $3.9 million from the comparable prior year period, primarily due to higher professional fees and share-based compensation. Professional fees were elevated during the first quarter but remained in line with quarterly cadence expectations and are expected to decline from first quarter levels during the remainder of the year and remain within previously issued 2026 guidance. On Slide 16, our treasury increased by $277.4 million to $392.5 million at the end of the first quarter, primarily due to closing of a private placement of approximately [Technical Difficulty]. NOVAGOLD intends to use the net proceeds from the private placement for expenditures associated with Donlin Gold activities, exercise of the company's prepayment option on the Barrick promissory note and general corporate purposes. Excluding the financing, corporate G&A costs during the first quarter increased by $3 million, and our share of Donlin Gold funding increased by $11.9 million compared to the prior year. Moving to Slide 17. Our treasury at the end of the first quarter sits at a robust $392.5 million. NOVAGOLD is well funded, enabling it to complete the Donlin Gold bankable feasibility study in 2027 and exercised its option to prepay the Barrick promissory note later this year. Our operating cash expenditures in the first quarter of fiscal 2026 remained in line with our 2026 budget and guidance. And with that, I will now turn the presentation back over to Greg to discuss first quarter highlights. Greg Lang: Thank you, Peter. Slide 18 highlights our continuing engagement with the communities in and around Alaska. We work closely with Calista and TKC on all of these programs as well as preparing them and the local people for ultimate employment at the mine. All of these programs are a testament to our commitment to total engagement with the local communities and ultimately preparing a workforce for the Donlin project. Turning to Slide 19. During the first quarter, we announced the advancement of the Donlin Gold bankable feasibility study as well as additional engineering firms have been engaged for very specialized components of this study. This integrated approach leverages the deep technical expertise that all of these firms bring to the bankable feasibility study. On Slide 20, another development we follow with a lot of interest is the proposal to bring gas down from the North Slope into the Cook Inlet, ultimately tying into the header that will feed the Donlin project. We've got a nonbinding letter of intent with Glenfarne to evaluate natural gas supply from this proposed pipeline. This pipeline has the potential to be a real game changer for Donlin, giving us access to cheap, reliable and long-term natural gas. We will continue to advance discussions with Glenfarne as the project moves forward and where they might potentially fit in supporting the infrastructure for the Donlin project. Last year was really a transformational year for the company. Post the Barrick transaction, we've steadily made meaningful progress to advance the Donlin Gold project through a bankable feasibility study. We're building up the team with expertise to do this. In a while, we will continue to engage with our local communities. Turning to Slide 22. This highlights our top shareholders, we have always valued their long-term commitment to the project into the company. I think it's important to note that Paulson, who is now our 40% partner with Donlin has been a major shareholder in NOVAGOLD for over 15 years. This slide also highlights the coverage that NOVAGOLD has from various banks. NOVAGOLD is focused on delivering on every single commitment we've made, advancing the Donlin Gold project through a bankable feasibility study and achieving all of these milestones. Operator, we are now prepared to open the line for questions. Operator: [Operator Instructions] Our first question is from Francesco Costanzo with Scotiabank. Francesco Costanzo: I'll just start with the BFS. I appreciate that you'll be giving a more fulsome update on the BFS time line around midyear. But given that you've now awarded the engineering contracts for the project, can we consider that the clock on the 12- to 18-month time line to complete the BFS has now started? Greg Lang: I would say, yes, certainly, we have got all of the firms in place to do the bankable feasibility study. Fluor hit the ground running. They're obviously the key driver in this. And from where we're sitting today, I'd say, give or take a year, we will have it wrapped up. Francesco Costanzo: That's great. And my second question is just going to move to project financing. Just this week, we saw Perpetua Resources announced the approval of a $2.7 billion loan from EXIM. Now though the projects are obviously different, I'm wondering if you see any read-throughs on the potential debt financing availability for a project that offers significant domestic investment in the U.S., such as Donlin? Thomas Kaplan: Shall I take that one, Greg? Do you want to begin? Greg Lang: Sure. Go ahead, Tom. Thomas Kaplan: I think that it's very fair to say that when you're building the biggest gold mine in the United States, you're going to have multiple sources of financing that come to the floor. And if I had to hazard a guess, I would say that governments will be a very large component in that. There is, of course EXIM. I believe that EXIM is very well aware of our project. And for many reasons that you've cited, the domestic component of this story, not only being the largest gold mine in the United States, but being located in a place where it becomes a nexus for the energy story in Alaska, which is of extraordinary importance to this administration. Yes, I think it is fair to say that we should expect that the U.S. government has a serious interest in this story. But equally, I would point out that at least 2 Asia Pacific countries, Japan and South Korea have made very substantial commitments to investment in the United States. $550 billion in the case of Japan, $350 billion in the case of Korea. And both of those have advanced in terms of execution over the last several months. I think that it is fair to say that one of the things that we do expect them to be interested in is being able to make quite a statement with Donlin as the biggest, but also as enjoying the fruits of location, location, location. If you're on the Pacific Coast of Alaska, you have an opportunity to really develop relationships that are natural in terms of meshing together. The Japanese are very large buyers of gold and the South Korean Central Bank. Several months ago, announced that it was going to go back into the market to add to its reserves. Their timing was actually quite good. The prospect for us to be able to utilize the benefits, for example, of offtake agreements of 1.3 million, 1.4 million ounces a year, clearly make us a bit of a unicorn in terms of the ability to attract financing. And I'm not even talking about the other traditional sources. I hope that helps. Operator: The next question is from Soundarya Iyer with B. Riley Securities. Soundarya Iyer: Congratulations on this, the quarterly update. My question is on the exploration work. So as you mentioned in your opening remarks, the current resource is just 5% of the land package. So have you planned any 2026 exploration drill program or budget to test further targets? Or is that a priority after the bankable feasibility study? Greg Lang: I'll start with that one. We have putting together an exploration plan, more I would describe it as general reconnaissance work throughout our land holdings and the area in and around Donlin. So I think that's getting started. But you have to remember, I think there's a lot of snow left on the ground in Alaska. So it will be another month or 2 before we really can get on the ground. But it's more general recon. We've been studying Donlin. We believe the next Donlin is at Donlin, and we're in a modest program starting to evaluate that. Thomas Kaplan: If I may add just a few words on that because the drill bit has been my best friend over the last 3 decades. If I may echo Greg's comment, and this is obviously a very forward-looking statement. But being that for reasons belonging to Barrick's ultimate belief that this would fall into their lap one day or the other. The 95% of the property that's been unexplored is all prime real estate. And we believe that in addition to what we see as low-hanging fruit to add tens of millions of ounces within the 8-kilometer belt, 5 kilometers of which just simply have been drilled, shown mineralization, but there was never any follow-up because the deposit was already so big that it was thought you leave that for later. But in addition to the 45 million ounces of resources that we already see, it's low-hanging fruit to add, in our view, tens of millions of more ounces. But we are looking for that at Donlin. In a bear market, people really don't care about exploration results. And so I'm very glad that you asked that question because in a bull market, great drill results can cause the stock price to double or more. And we do expect to be adding a lot more ounces in the immediate vicinity of the property as we go from the 3 kilometers to the 8-kilometer mineralization. But at the same time, what Greg is referencing is that we are undertaking a project or property-wide analysis in order to identify the best drill targets that are extrinsic of the 8 kilometers. Because in our view, the odds that this occurrence is alone. Well, mother nature is very fickle. We know that the odds are very long in exploration. But I've been in this movie before. And I found that in the case of precious metals, and in the case of hydrocarbons, where we made our biggest killing at Electrum, Wildcatting is something that can take a 10x opportunity to 100x. And fortunately, we have a partner who doesn't see exploration success as being a challenge. But John Paulson and his team completely have aligned with us on understanding that good news through the drill bit is a multiple expander. And if this turns out to be what we hope it is and it's a hope, this is really the next Carlin. And the partners are aligned in being able to identify that. So when you think of the relatively low cost of exploration versus the high reward, I think you can understand that the partners in Donlin are very keenly aware that we may just be scratching the surface in this story. It remains one of the greatest exploration stories in the world, and that will unfold for the market. Soundarya Iyer: Yes. I mean I totally agree with that. My question was on that front that exploration work could gain more value in a bull market. And just one more. On the state permitting, can you walk us through what's left there on the -- as a full state permitting checklist? What is in hand? What remains outstanding? And how do we expect the receipt of those permits going forward? Greg Lang: Sure. I'll take that one. The only outstanding state permit is for the tailings dam and other water retention structures. Our federal permits which are all in hand, authorized us to do this work. However, in Alaska, these structures are administered by the state, and they require final engineering drawings before they grant approval. We've submitted the design packages to the state. We had already completed the geotechnical work, and we expect approval of these permits about the time we're wrapping up the bankable feasibility study. So they're not on the critical path, but the work to get these permits is well in hand. All of our other remaining state permits are in good standing as is our federal permits. Melanie Hennessey: Thank you. I do have a few questions from the webcast that I wanted to read out. The first is from Eric. Will the BFS include a closure and recognition estimate, including long-term water treatment and post-closure monitoring assumptions? Greg Lang: I'll start with that one. Yes, it does. Part of the feasibility study and actually the permitting requires you to have approved closure plans that have to be invested by the state and our native partners. The lease plans, reclamation and closure and water treatment, they are all part of the commitments in our existing permits. Once the mine is in operation, it will cash fund these permits through a trust. So it's -- the procedure is well defined and the approvals are all in place for the subsequent reclamation and restoration of the Donlin site post mining. Melanie Hennessey: Great. Thank you, Greg. The next question comes from Jean. Given the recent share price volatility and now with the feasibility team in place, which upcoming milestone in this study do you believe will be most important in helping the market recognize the project's underlying progress and value? Greg Lang: Well, there's -- I mean, the important piece of this, obviously, is to finish the feasibility study. But along the way, we're advancing many different avenues. I think particular interest is we will be evaluating third-party participation in our gas pipeline and other components in the infrastructure that we could logically bring in a third party to handle. So that will be one of the catalysts coming up as we advance the feasibility study. Then the other milestones along the way as different components of the study are completed, and we will update the marketplace as this work unfolds. But the real key item is finishing the study, and we anticipate it will certainly demonstrate robust economics in this price environment. Melanie Hennessey: Great. Thank you. I have a further question that come through the line from Matt. Dr. Kaplan, at the last quarter's update, you mentioned that your decisions toward NOVAGOLD and Donlin were family influence. I have been following NOVAGOLD for over 15 years and now have many family members investing in the story. I just wanted to say that I appreciate your's and NOVAGOLD's integrity over the years. A big thank you. Could you comment on the recent movement in gold and how that relates to NOVAGOLD? Thomas Kaplan: Well, that's very kind. While I'm going to ask our team, could you please call up the chart that references the long-term bull market in the Dow, and just let me know when it's up there. Melanie Hennessey: Yes, the slide is up. Thomas Kaplan: But before that, let me get to the best part of the questioner's remarks. First of all, I find it very gratifying, we all do that you're able to make this comment about our integrity and your family's investment in NOVAGOLD. Needless to say, as Electrum is the largest shareholder of the company. And as the largest shareholder of Electrum is my family. I take it very much to heart that I have a responsibility to my family, but all the other shareholders and in your case, your own family, to do the best possible thing that we can. And I would say that the thing that Greg and I are most proud of since having come into the story together in 2011, we are celebrating 15 years of joyful monogamy. And one of the things that we are most proud of is that any promises that we made, we kept. To the extent that we disappointed, I think 100% of our shareholders understood it was for reasons beyond our control. And we had all the tailwinds that I think and John Paulson thinks will take us to $100 per share. But we had one headwind. And when you think that a year ago, our stock was at $2 and change, and reached 14, and I have no doubt that we will vastly surpass that and multiply past $14. You understand that we took it to heart as much as any shareholder that we were being held back. And once that was relieved approximately a year ago, we knew that we would be on our way to $10 to $15 to $30, and we think well beyond that for all of the reasons that have become so clear to everyone that whether people realize it or not, and I'm not saying we're going back to a gold standard, because we'll never see that kind of discipline ever again in human economics. But we are seeing the remonetization of gold. We are seeing that central banks have shown through their purchases that gold is the asset that they hold because it doesn't represent someone else's liability. When central banks hold gold, when central banks buy gold, they're making a statement. To the extent that some central banks need to lay off some gold as Turkey is said to have, that proves, proves to all of the rest of them that gold is the asset that you want to own because gold traditionally in a crisis gets hit because if it's in a bull market, it may be one of the only things in which people have a profit. So the ability to not just buy but the ability to sell something, if you need to take some chips off the table because I don't know, you have missiles that are flying into your territory and need to be taken out with Patriots. That's a good thing, not to be concerned about. And this is one of the things that I enjoy most in the time that I've been bullish on gold and publicly so since gold was at $500 in 2007. And when I said my first equilibrium for gold would be between $3,000 and $5,000, people thought I was nuts. Similarly, when I said that silver will go to triple digits, people thought I was nuts, but that's my stock in trade. I don't know how to build a mine. Greg Lang knows how to build the mine. Richard Williams knows how to build the mine. They know how to do it on budget and on schedule. I can't figure out how to make chrome work over Safari. But I don't need to. You surround yourself with the very best people. My job is to protect my family's wealth. And by extension, all of the families that depend on me, including our management team and including our shareholders. So with that, let me go back to a chart that I spoke to on our last conference call because I wanted to give people a heads up as to what might happen. It wasn't required, but it might happen. In fact, what I would call the 1987 correction started 3 days later. Now I'm not going to say that I was predicting it. I was going to say that it should be expected. And for that reason, whereas people who predict a downdraft are seen as Cassandra's, I wasn't actually being a Cassandra in this case. And I have been a Cassandra in different cases, like on the Middle East. But in this instance, I was presenting people with my belief that we could have in 1987. 1987 is not so much remembered for how you felt when you thought the world was caving in, in October of '87. It was -- it is and should be remembered as the blip that created the best buying opportunity of the bull market in stocks. The best because we've already seen the stock market go to 2,750. And when it pulled back to 1,650, you have to fade these numbers a bit, I'm sorry. That was actually the cream of the opportunity to be able to build the position if you didn't have one or to add on weakness in a bull market that has all the structural factors going forward. And if anything, we can see that the world is a very different place. I hope that it's going to turn out to be a much safer place. But without getting into politics, the reality is that we're in unchartered waters economically and the debt burden will never be repaid. So just for all these reasons, if you didn't own gold on the way up, taking advantage of a pullback was what I was trying to express, while some people were a little bit upset that I said that there could be such a pullback, the reality is we're looking at it. So look at this chart again because this is the exact same chart as I issued. And I'll just repeat the sentence that I repeated 3 months ago. As a curiosity, I want you to go back and look back at the mid-1980s. The blip, which barely is noticeable is the crash of '87 that a lot of us thought was going to be the harbinger of The Four Horsemen of the Apocalypse. You can't even see it as the Dow march from 1,000 to 45,000 and up to 50-some-odd thousand plus leap in value over the decades. A few days later, '87 began. And then it was compounded by the need for people to be able to have some liquidity due to the war with Iran. So once again then let me reiterate, in the words of Ray Dalio, one of our greatest contemporary applied historians, Gold is now the second largest reserve currency behind the U.S. dollar. To understand why you need to look at the history of fiat currencies like the dollar and hard currencies like gold. The way I see it, we're currently facing a classic currency devaluation similar to what we saw in the 70s or 80s. In both of those cases, fiat currencies around the world all went down together and all went down in relationship to hard currencies like gold. If events today follow a similar pattern that makes hard currencies an attractive asset to hold. For all of you who've known me or listened to me over the years when I was asked which currencies to own, I said, if you have to own a paper currency on the dollar. But the real currency is gold. And now I don't really know what paper currencies are going to thrive the most. But I will repeat something which I've said now over the last couple of years, regardless of your view on currencies against gold, the dollar is actually collapsing. So every once in a while, you'll have a pullback, but the long-term trend on gold, to my mind, is going to be very similar and indeed price-wise, it actually looks at, but that's coincidence. Very similar to what we saw in the Dow Jones. And so for those, if you haven't taken advantage of the pullback, my strong recommendation is that you do. And I can only say that what my family does, we are long-term holders in our flagship gold asset Donlin and will absolutely remain so because to our mind, if we sell it, we can't go into something at least as good, and we really think impossible to go into anything better. So thank you for being a long-term shareholder. Thank you for your support. I can tell you it means a lot to us. And the last conference call for those who managed to stay through it. One of the callers actually said that he and his wife had an argument over NOVAGOLD during the tough times, but that the revival of NOVAGOLD actually saved his marriage. And we regarded that as probably not only the funniest, but the most heartwarming piece of news we've had all year. So with that, I thank you and all of the shareholders who have kept the faith. All I can do is promise you that I, the entire management team is devoted to being able to unlock the fullest value of what we consider to be the greatest gold development story in the world and what will be the largest single gold mine in the best jurisdiction on the planet. Thank you. Operator: I'd now like to hand the call back over to Greg Lang for concluding remarks. Greg Lang: Well, I just want to thank everybody for taking the time to get an update on NOVAGOLD, and our Chairman's thoughts on gold prices and markets. So everybody thank you. We'll be in touch. Operator: This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Mark Allen: Good morning, everyone, and thank you for joining us. We're pleased to present our 2025 full year results today. Joining me this morning are Matt Osborne; Mel Chambers, COO for the East region; Samy Zekhout, COO for the West region; and Martyn Espley, Investor Relations Director. You all know Martyn and are getting to know Martyn, but I also think it's important that you get to meet more of the wider leadership team, and I'll ask Mel and Samy to say a few words about themselves when they present later. I should mention Hannah Surtees is also with us today. Hannah has handed over the Investor Relations button to Martyn. Going forward, she's going to head up our communications team and work closely with me on our strategy. I'd like to thank Hannah for the sterling job she's done in recent years and say how much I enjoy -- I'm enjoying working with her. Over the next 35 minutes, we'll take you through the key highlights of the year, including our financial performance and our refresh strategy. Then there'll be time for questions. Let's start with our 2025 full year. Overall, we delivered solid financial performance in what has been a challenging operating environment. Adjusted profit before tax was GBP 73.2 million, which is down around 3% year-on-year. This reduction reflects the impact of the disposal of Fairfax Meadow together with the challenges in our seafood businesses and Dalco. Importantly, performance in our core meat operations in this challenging environment was stable. This demonstrates the resilience of our core business. We made good commercial progress during the year. We secured contract extensions in both the Netherlands and Denmark. This reinforces the strength of our long-standing customer relationships and the value we continue to deliver to our retail partners. In terms of our growth investments, our projects in Canada and Saudi Arabia remain on track. These are important platforms for future expansion, and we continue to expect them to contribute from 2027 onwards. Alongside this, we are planning to invest up to GBP 30 million to expand capacity in Poland. This will enable us to benefit from attractive growth opportunities in fresh prepared foods. It will also strengthen our position in Central Europe. Looking ahead, our 2026 outlook remains unchanged since the January trading update. We expect adjusted profit before tax to be in the range of GBP 60 million to GBP 65 million. This year-on-year reduction largely reflects continued challenges in our seafood, vegetarian and vegan businesses. We remain cautious on the impact of red meat inflation. Finally, we've refreshed our strategy. Going forward, we will focus on growth plans and investment in our core meat and fresh prepared food activities. We will also implement plans in Seachill, Foppen and Dalco to improve performance and increase strategic optionality. As part of our strategic refresh, we've also updated our financial framework. We have a clear focus on delivering sustainable profit growth, disciplined investment and compelling returns for shareholders. So while 2025 has had its challenges, we have made important changes in several areas and continue to position the business for long-term growth and value creation. I'll now hand you over to Matt to take you through our full year 2025 performance. Matthew Osborne: Thanks, Mark, and good morning to those of you in the room and those of you listening in. I'll now walk you through our 2025 financial results, highlighting the main drivers of volume, revenue, profit, net debt and cash flow. I'll also touch upon the outlook for 2026 before handing back to Mark. As we saw in the first half of the year, our full year performance was underpinned by continued resilience within our core meat and fresh prepared food businesses, which now account for around 90% of our revenue. This is a testament to the strength of our core business model and the expertise and commitment of our teams. As we've previously highlighted, our seafood vegetarian and vegan businesses are facing challenges and our strategic review, which Mark will introduce shortly, seeks to address them. Before then, though, let's take a closer look at the numbers. First, the headlines. Volumes from our continuing operations, so excluding Fairfax Meadow, which we sold in September last year, were up 0.2% against a highly inflationary environment, which drove revenue up 11.9% on a constant currency basis. Constant currency operating profit fell by 4.4%, reflecting in particular the challenges in the U.K. seafood business, and I'll cover profit in a little more detail shortly. The resulting operating profit margin was 2.3%, down from 2.6% last year. In line with the guidance we provided last November, profit before tax was GBP 73.2 million, down 2.8% and from continuing operations, so again, excluding Fairfax Meadow, profit before tax was GBP 69 million, down 1%. Adjusted earnings per share of 56p was 7.4% lower, reflecting a slightly higher tax rate of 30% due to the impact of truing up some historic tax allowances. Our strong financial position and confidence in the medium-term outlook means we are maintaining our commitment to a progressive dividend policy with the final dividend flat, the full year dividend per share is up 1.4% to 35p. Net debt improved slightly year-on-year with significant cash inflows in the second half from divestment proceeds and a partial unwind of working capital. This was despite the planned increase in growth capital with 2025 being the main year of spend on our Canada project. Moving to revenue. With volumes and mix broadly stable, an 11.9% increase in constant currency revenue was almost entirely down to increases in raw material input costs. On mix, we continue to see a shift in the U.K., in particular, with lower-cost products forming a higher proportion of our overall volume. However, multi-buy and promotional activity were a positive for us in Australia. The relative strength of sterling versus the Australian dollar remained a headwind, albeit partially mitigated by a strengthening of the euro in the year. Now moving to show volume and revenue by region. I've shown a version of this chart before, but I've split out our seafood, vegetarian and vegan businesses to demonstrate the performance of our core meat businesses. These numbers also exclude Fairfax Meadow. In the U.K. and Ireland, core meat volumes remained resilient and were only down slightly despite significant inflation in beef of more than 30%. The impact of this inflation can be seen in revenue increases of 23.5%. European volumes were stable overall, including double-digit growth in fresh prepared foods in Central Europe and the benefit of new customer volumes in Denmark. Revenue growth was less material than in the U.K., reflecting a more diversified mix of meat products. And APAC again delivered volume growth despite the reemergence of raw material inflation. Seafood, vegetarian and vegan volumes were down 2.6% with price inflation weighing heavily on whitefish volumes in the U.K. Foppen volumes were relatively stable as we continue to meet customer demand despite the regulatory restrictions on our facility in Greece. And Dalco volumes were up, albeit from a low base. Revenue was down by more than volume despite the whitefish inflation with market salmon prices 17% lower in 2025 than in 2024, reducing Foppen revenues. Moving now to profit. Operating profit from our core meat and fresh prepared food businesses were slightly up year-on-year with the volume growth in APAC being the main driver, given the cents per kilo fee structure there. Seafood, vegetarian and vegan operating profit was materially down, however, with Seachill moving into a loss-making position, reflecting the pressure that lower volumes puts on gross profit. Foppen's underlying profit was stable, albeit there were material non-underlying costs that I'll cover shortly. We delivered an improved result of Dalco, although the business remains loss-making. Central costs were lower as were interest costs, reflecting lower market rates. Before the negative impact of FX due to the weaker Australian dollar, in particular, group PBT on a constant currency basis was down 2.8%. After excluding the contribution from Fairfax Meadow, which we sold in September, it was down 1%. Nonunderlying and exceptional items excluded from the underlying results represent a net profit of GBP 29.3 million in the period, albeit there were a number of moving parts. The biggest cost related to Foppen. We incurred cash costs totaling GBP 9.2 million relating to the relocation of production from Greece to the Netherlands to ensure continuity of supply to our customers in the U.S. while also using air rather than sea freight to ensure an appropriate level of inventory. We expect regulatory restrictions to be in place for at least the first half of 2026 and expect some further Foppen-related exceptional costs this year. In addition, we wrote off inventory that could not be delivered to the U.S. or resold elsewhere, resulting in an GBP 18.4 million charge. We incurred reorganization and restructuring costs of GBP 9.6 million compared to GBP 4.2 million in 2024, and this reflects the ramp-up of our transformation activity and group reorganization in order to support long-term efficiency and growth. We expect these costs to continue in the range GBP 5 million to GBP 10 million a year over the next few years, and this spend will help underpin our medium-term growth objective,s, and we'll provide some more detail on our transformation program in the strategic update section shortly. Last, but certainly not least, we recognized profits on disposal of GBP 66.5 million relating to the sales of Fairfax Meadow and Foods Connected. Both of these transactions are steps towards simplifying our portfolio whilst also realizing significant value for the group. Now moving to net debt and cash flow. Net bank debt improved slightly in the year despite a free cash outflow. This includes the impact of material cash inflows from the disposal of Fairfax Meadow and Foods Connected as we realize value through portfolio simplification. Exceptional cash flows relating to Foppen and wider group transformation and restructuring totaled GBP 18.9 million, and we returned GBP 31.5 million to shareholders in 2025, consistent with our progressive dividend policy. Net bank debt of GBP 126.7 million results in net debt-to-EBITDA of 0.9x, remaining at very comfortable levels. And in February of this year, we successfully refinanced our bank facility, which now provides an increased GBP 450 million of revolving credit facilities for at least the next 5 years, providing flexibility to deliver future growth opportunities. In addition, these bank facilities are enhanced by the ongoing benefits of our lease and customer supply chain financing with margins typically 0.5 to 1.5 percentage points lower than our bank facility. Let me touch on our free cash outflow. The group remains intrinsically cash generative and retains a strong balance sheet. This strength provides flexibility to allocate capital to benefit the group over the longer term. In 2025, this included the investment in inventory to ensure we'd be able to deliver excellent service levels to our customers during peak trading periods in the second half of 2025 and into 2026. It is important we continue with disciplined investment in our existing facilities, ensuring they run efficiently and continue to support growth. Core net capital expenditure of GBP 46.5 million was lower than last year and included spend on capacity increases at Hilton Food Ireland. It also included further investment in Sweden, where we've installed frozen burger production lines, a new category in our partnership with ECA. 2025 was also the main year of investment in our expansion into Canada. We've now spent GBP 55 million in total on the project, with the remaining project costs being incurred in 2026. The project remains on track for full launch in 2027. Before I hand back to Mark, let me cover the outlook. We've traded in line with our expectations in the year-to-date and continue to expect 2026 adjusted PBT in the range of GBP 60 million to GBP 65 million, unchanged from the time of our trading update in January. As we said at the time, the expected reduction in profit is predominantly due to continuing challenges in Seachill, Foppen and Dalco. Our core meat business continues to prove resilient and volumes over the first part of this year were solid. However, given the economic backdrop, it is right we remain cautious on the impacts there may be on meat demand due to inflation. We are also mindful of any potential direct or indirect impacts of the current situation in the Middle East. We would expect net debt to increase in 2026. Core CapEx will be GBP 50 million to GBP 55 million within our expected range. However, total CapEx will remain elevated as we complete our project in Canada and expect to commence spend on our planned capacity expansion in Poland. Both of these projects will create value for shareholders and are expected to contribute to earnings in 2027. One of the reasons we remain positive about the medium-term and long-term outlook for the group. I'll be back later to summarize our refreshed capital allocation framework and medium-term financial targets. But for now, let me hand back to Mark. Mark Allen: Thanks, Matt. Mel, Samy, Matt and I will now take you through a summary of our strategy. This is based on the review we've recently completed. We aim to be the international red meat partner of choice. Aligned with that, in certain appropriate geographies, we have a developing fresh prepared food business that we'll invest in where the returns are attractive. What gives us confidence in this ambition is the structural strength of our core meat businesses. We operate long-standing partnerships with leading retailers. We benefit from high barriers to entry in our markets. We have a proven operating model that is delivered consistently over time. However, this strategy is not only about defending what we already have. We also see significant further growth potential, which we will unlock through a combination of portfolio optimization, targeted investment and the evolution of our operating model. Simply put, this is a strategy that builds from a position of strength and our core capabilities. Importantly, we will be very deliberate about where we invest to drive future growth and attractive returns. Before we provide a bit more detail on our growth potential, let me put it in context against our recent track record. As you can see from the chart on the left, operating profit from the group's core activities excluding Fairfax Meadow, Seachill, Foppen and Dalco has grown by 4% on average since 2022. This demonstrates the strength and stability of our core meat and fresh prepared food operations. On the right, you'll see the building blocks that underpin future growth. The expected reduction in profit in 2026 compared to 2025 is largely down to the challenges faced by Seachill, Foppen and Dalco. We expect profit from our existing core business to be relatively stable and remain so moving forward. This will be supplemented from 2027 by our projects in Saudi Arabia and Canada. We expect to realize the full benefits from these in 2029. We also expect to deliver growth from our focus on our fresh prepared food product offering and multi-customer models in certain markets. We'll provide some color on this shortly. All this results in mid-single-digit average operating profit growth per year with potential for adding additional growth beyond from value-adding investments. Here are the 3 levers that will drive this growth over the medium term. The first is maximizing the core. Here, our focus is on reinforcing our leadership in retail meat by maintaining the structural advantages we built over many years. At the same time, we're driving continuous efficiency improvements to maintain margin resilience. This ensures that the core business continues to generate stable and predictable cash flows. The second lever is enhancing the mix. We are actively increasing our exposure to higher-margin segments where we have an opportunity to win. This is particularly the case in value-added meat and fresh prepared foods. These categories offer faster growth and attractive returns. They allow us to better serve evolving customer and consumer needs. Mel will talk about expansion plans in our Poland business shortly. The third lever is geographic expansion. We will continue to replicate our partnership model in underpenetrated and high-growth markets. We will work alongside anchor retail partners to leverage our expertise and scale. Taken together, these 3 levers create a balanced growth profile. They support stable cash flows, high margins and faster overall growth while reducing our reliance on volume alone. While the framework itself is simple, the value creation potential from executing it well is significant. A key part of enhancing our mix is optimizing our portfolio, particularly in seafood and meat alternatives, where performance has been volatile and unsatisfactory. These businesses have limited synergy with our core meat capabilities. We are taking a very focused and disciplined approach and will limit future investment across the 3 businesses, Seachill in the U.K., Foppen and Dalco. Across these businesses, the overarching objective for the group is consistent to reduce earnings volatility, improve returns and create greater flexibility and optionality for future value realization. In Seachill, our priorities are operational recovery, cost reduction and product focus. This should allow us to rebuild margins. In Foppen, we are operating in an increasingly consolidating smoke salon market. Our focus here is on driving volume through best-in-class quality, customer service, competitive pricing and continued innovation. We will also address the challenges that are continuing into 2026. We resumed sea freight shipments to the U.S. and are actively rebuilding the stock pipeline. We continue to engage with U.S. regulators to lift the restrictions on our Greek facility. Encouragingly, underlying retailer demand remains strong. In Dalco, the priorities are to improve operational performance and win new business. We're aiming to put the business in a stronger position operationally and financially, giving us greater flexibility in how we create value from it. I will now hand over to Mel, who will then hand over to Samy to help bring our growth strategy to life with specific examples from our East and West regions. Melanie Chambers: Thank you, Mark, and good morning, everyone. Having recently stepped into the role of Chief Operating Officer for the East, I'm extremely excited about the opportunities that lie ahead in my region and the refreshed group strategy. More broadly, I bring with me more than 25 years' experience from across the food industry with a strong focus on operating globally. When I joined Hilton Foods in 2022 as the CEO for the APAC region, I spent considerable time strengthening the customer relationship, building deeper alignment and developing a regional leadership team for future success. As we move on to competitive positioning, there are 3 key areas of focus that will underpin how we maximize our core meat capabilities. First is manufacturing excellence. We are driving continuous efficiency and improvement across all our operations, and this is supported by a clear automation road map. At the same time, we are maintaining a very disciplined approach to cost control, particularly within central functions, and this ensures that we avoid any unnecessary or duplicated overhead. Second, innovation and category leadership. We continue to enhance our capabilities in value-added products, working with our partners to develop new target product ranges that align closely with consumer demand. We are also expanding into adjacent categories such as slow cook products, where we see attractive growth opportunities. And third is our security of supply. We will continue to develop our global red meat sourcing center of excellence, which allows us to leverage our scale more effectively while also using our local sourcing capabilities to ensure resilience and availability in each of our markets. Together, these initiatives will ensure that we improve our competitive advantage, continue to support our retail partners effectively and position the core business for sustained market outperformance. This slide now provides a clear example of our strategy to enhance our mix through our planned investment in Poland. We see a compelling opportunity in fresh prepared foods in Central Europe, driven by strong underlying demand and forecast market growth of around 8% per year. At the same time, our retail partners are increasingly looking for value-added solution, which plays directly to our strengths. Our planned investment of up to GBP 30 million over 2026 and '27 will expand capacity, increase automation and enhance our processing capabilities. Importantly, this will allow us to differentiate our offering through improved shelf life and product innovation. And from a financial perspective, this is a highly attractive investment. It is expected to generate returns well above our cost of capital with return on capital employed above 20% over the life of the project. It will also be accretive to the group's margin mix. And this is a good example of how we can deploy capital in a disciplined way to drive both growth and returns while strengthening our competitive position. I'll now hand over to Samy. Unknown Executive: Thanks, Mel. After 30 years at Procter & Gamble, my most recent role was as CFO and Deputy CEO for 6 years at Nomad Foods. I'm really pleased to have the opportunity to step into this role from my nonexecutive position. After having been exposed to Hilton Food Products, facilities and people over the past several months, as a Board member, I felt that there was a huge opportunity to contribute if we got the strategy right and properly executed to reignite value growth for the years to come. Our investment in Canada comes under my remit and represent a step change growth opportunity for the group. As you probably know, we are developing a new facility to support a long-term 10-year partnership with Walmart with the sites scheduled to launch fully in early 2027. Progress on the project remains on schedule. Product development has been completed and tailored to customer requirements, and we will begin production testing of equipment and systems in the second half of the year. From a financial standpoint, this is an attractive opportunity. We expect return above our cost of capital with return on capital employed over the life of the contract, consistent with our refreshed capital allocation framework. The project will begin contributing to profit from 2027 with a full contribution from 2029 and beyond. Importantly, this is not just about the initial contract. We also see further opportunities in adjacent value-added categories within Canada. More broadly, we see broader potential through all our retail partners' international footprints. So Canada is both a significant stand-alone investment and is a good example of international expansion. To support the delivery of our strategy, the newly appointed executive team is behind our plans to evolve our operating model through what we call One Hilton. This is about embedding a consistent value creation mindset across the organization, ensuring that all parts of the business are aligned around delivering returns. It also involves building a more integrated and scalable global platform allowing us to leverage our international scale more effectively while continuing to execute strongly at the local level. At the same time, we are preserving and strengthening what differentiates us particularly our deep partnership with leading retailer and our unique collaborative business model. Overall, this transformation ensures that we can scale efficiently as we grow without losing the strength that underpin our success. Let me now hand over to Matt. Matthew Osborne: Thanks, Samy. Now let me spend a few minutes taking you through our refreshed capital allocation framework and medium-term targets. Everything is underpinned by our desire to maintain a strong balance sheet, ensuring we have appropriate headroom to withstand any market shocks and provide flexibility for future investment. I'm comfortable with net bank debt, excluding leases, in the range 1 to 2x EBITDA through the cycle. This is significantly below our bank facilities financial covenant of 3x. We will continue to invest in our facilities to maintain and enhance our operations, underpinning core organic growth through improved automation and productivity and the development of new product categories. This investment will be in the region of GBP 45 million to GBP 55 million per annum and will fluctuate depending on when and where investment makes economic sense. Our strong balance sheet and cash-generative model then provides flexibility for further incremental value-adding and strategically aligned investment. This could be in material new capacity expansion, such as the project we're planning in Poland or in geographical expansion, similar to our entry into Canada and Australia and New Zealand before that. Our benchmark for these investments is high. Returns need to be materially ahead of WACC and any investment must support our group ROCE target of greater than 20%. At the same time, we also recognize the importance of cash returns to shareholders. We are maintaining our progressive dividend policy with the intention to move back to around 2x earnings cover over time through adjusted earnings growth that our strategy is expected to deliver. Our dividend policy means we retain flexibility to seek further value-adding investment opportunities in line with our strategy. However, in the future, should no attractive opportunities exist, we would consider returning any surplus cash to our shareholders. In addition, we would continue with our progressive dividend policy. Let me now cover what the strategy means in terms of medium-term targets. First, as Mark has already said, we are targeting mid-single-digit operating profit growth on average each year, recognizing though that the nature of our investment means it won't be a linear progression. This growth will be underpinned by our ongoing investment to improve and automate our facilities and the contribution we expect from the new facilities in Saudi Arabia and Canada from 2027. It excludes any benefit from material incremental investment in new geographies or in large-scale capacity expansion. It also excludes any contribution from the improvement plans we have in place at Seachill, Foppen and Dalco. We expect these businesses, which we anticipate to be marginally loss-making as a whole in 2026, not to become a sustained drag on earnings. Second, through continued good working capital management and a focus on cash flow, we expect cash flow conversion, so free cash flow as a proportion of net income to be around 100% on average over the years. Third, we continue to target a group ROCE of at least 20%. This figure was 20.1% in 2025, and we expect it to drop below 20% in 2026, given the level of preproductive capital related to the Canada project. Any further material incremental projects may also have a shorter-term impact on reported returns. So over the medium term, we believe this is an appropriate target to benchmark the group against. Let me now hand back to Mark. Mark Allen: Thanks, Matt. To summarize, we believe we are well positioned for the future. We have a resilient and cash-generative core business. This is supported by structural advantages and a strong track record of execution. We have a clear strategy to drive growth. This is built around maximizing the core, enhancing the mix and expanding geographically. We will apply a disciplined approach to capital allocation, ensuring that we invest only in opportunities that generate attractive returns. Aligned to this, we have a highly engaged, skilled and talented workforce. Taken together, this positions us to deliver sustainable profit growth, strong cash generation and reduced volatility. We believe this will deliver compelling value for shareholders over the long term as we focus on being the international red meat partner of choice. That concludes the presentation. Thank you all for listening. I'll now chair the Q&A. Can you please ask questions by me and I'll allocate to the appropriate person. Can I also ask that when you ask a question, you introduce yourself and give us the institution that you work for. Thanks very much. Matthew Abraham: Matthew Abraham from Berenberg. First question just in reference to the FY '26 guidance. Just wondering if you can outline what your expectations are for that raw material price inflation that's trapped up in the second half of the year, please? Mark Allen: Mark, do you want to answer that? Matthew Osborne: Yes. Look, I think we recognize that there are inflationary pressures, but the basis for the guidance we issued in January hasn't really changed, and we're confident in that GBP 60 million to GBP 65 million PBT guidance. Matthew Abraham: Okay. So does that then infer that there's the expectation for a deterioration in elasticity as it has been from the first half of the year to the second half of the year because there will be that sustained high price backdrop? Is that the expectation given that this inflation backdrop is likely to persist? Matthew Osborne: So we recognize the resilience of the core product we produce. We recognize that there could well be some inflationary pressures, but I'll come back to the guidance we issued in January, took into account our views on inflation. Mark Allen: If you go back to the presentation, I think in one of my sections I talk about, we are mindful of the ongoing position on red meat is as an example. That mindfulness is built into our numbers and forecasts that we've put into the market for this year. So we feel comfortable where the guidance is, and we feel comfortable that we've taken into account what -- where we think the inflation -- inflationary nature of our products are going to go and the impact on consumers' purchasing habits. Matthew Abraham: Okay. That's helpful. And it was obviously impossible to account for it in January, but one thing that's obviously changed is the freight dynamic. Can you just talk about your exposure there and what you're doing to mitigate those pressures given that, that's a new factor post January? Mark Allen: I think that's a really difficult question to answer. And if I went around the room and asked everybody to answer that question, I think we probably get a lot of different answers. Suffice to say that in our business, we're in the very lucky place that a lot of our contracts are cost plus. So they go automatically to our customers. And where necessary, we're looking at holding the mirror up to ourselves, looking at our internal costs and taking costs out where we can. I don't think anybody can predict what's going to happen as a result of the Middle East. We're very -- as we said in the presentation, we're very mindful of the situation and we will react accordingly. I think the most important thing is outside of that, we are very comfortable with where our numbers are for this year. Charles Hall: Charles Hall from Peel Hunt. A couple of questions, if I may. Firstly, can you just talk a little bit about the red meat market, what your customers are doing to respond to the higher price points and what you're doing in terms of product positioning? Mark Allen: Okay. I think that depends on geography. And maybe in a second, I'll ask Mel to talk a little bit about what's happening in Australasia. I think that's important. In the U.K., which is a fairly substantial part of our business, actually no different than Australia. But what's typically happening is people are trading down and Matt talked about that. I think one of the benefits that we have, we're probably the lowest cost producer of the product in the U.K. that supports our customers' ability to be consumer aware. And if you look at the shelves in Tesco, they're doing a range of things to give real value to consumers. So what we've typically seen is people trading down, moving down the portfolio towards mints, et cetera. But there's still a top-tier purchasing habit that people are buying into premium cuts, maybe eating out less than they were and consuming it at home. We see that trend to -- continuing. We saw evidence of it last year. We expect it to continue for this year. Mel, do you want to quickly talk about Australia? Melanie Chambers: Yes, absolutely. I think you nailed it overall. But I mean, we've seen 3% growth in Australia. We haven't seen it slowing down, but they are definitely changing the mix. So lots of 3 for $25, 3 for $20 offerings, promotions in store, and we're working strongly with the customer on co-creation of that middle tier and how do we build the value in that middle tier. Charles Hall: Great. And Matt, last year, the inventory increased fairly significantly building up ahead of Christmas and Easter, I think. And partly, obviously, that's pricing, but also availability. How do you see that panning out this year? Matthew Osborne: Yes. So as we would have talked about before, we built inventory to ensure we had sufficient available to us to hit both Christmas and now Easter peak. So that's largely unwound. We'll have seen, as you rightly say, an increase in the stock value just because of inflation as well. So comfortable where that sits. And so see that unwind now. Now clearly, we will work with our customers to ensure that we can meet their demand and meet peak trading periods and how that looks really depends on availability of the market and some of the challenges we may face into, but comfortable with where we sit, comfortable with us delivering for our customers and the [indiscernible]. Mark Allen: Let me come in just to add something to that. There was a lot of noise around that -- those purchases last year because there were surprise. And 1 or 2 people since I've been involved has said could that happen again. What is absolutely clear is if -- particularly in the environment that we touched on at the moment where there's lots of uncertainty, if opportunities arise for us to buy meat ahead of any inflationary pressures, that's exactly what we'll do. We'll explain it to you guys. We'll explain it to shareholders. But if it's the right thing for the business, that's exactly what we'll do. Charles Hall: And lastly, Mark, the SPV, I think we'll now call it, is how much do you think you can improve the profits? And how long will it take to get change in those segments? Mark Allen: There's a -- so we didn't really discuss it in the presentation, but I've got a dedicated team working in that area. It's got its own effectively, it's leader. We're already seeing evidence in those -- of improving trends in those businesses. We've won new business in Dalco in recent days as an example. We've got a cost-out program in the Seachill that's starting to pay dividends. Foppen is actually a different set of problems. But as you heard in Matt's presentation, we're already using sea freight as opposed to air freight. That starts to normalize it. We are working very hard with the U.S. FDA to get our protocols reassessed. That's happening. We put it in 2 weeks ago. We're waiting for the results. But we're also challenging some of the -- some of the things that are perfectly acceptable in the U.S. for example, dipping fish in saltwater that on the face of it are not acceptable in Europe and the U.K., but we think we found an opportunity to make them acceptable in the U.K., and we're going to be working on that. So we've got a range of activities in each of the businesses that we're already on with that will start to deliver improvements now. Will they get to the stage where at the end of the year? I think in Matt's presentation, he said that they will be collectively loss-making still by the end of the year. Will we get to the stage where they're profitable by the end of the year, question mark, but we're working very hard to make sure that, that's where we get to. We want to give ourselves choices in these businesses, and that's what the -- all the work we're doing, it's about giving ourselves choices. Darren Shirley: Sorry, Darren Shirley from Shore Capital. Just a question on one of the areas where you talk about enhancing the mix within the business. You talk about scaling value-added meat. Can you just outline exactly what that means? Is that an opportunity you haven't been taken advantage of previously? Or is that a new opportunity... Mark Allen: I guess we -- a bit of both, Darren, to be fair. Just as an example, we use Sid in that area where we've been very successful with it, but there is greater opportunity to do it in more places around the world. some of the work that we're doing in Poland will enhance our capability to deliver against that as a product line. There's opportunities -- further opportunities in the U.K. And the interesting thing is you don't have to manufacture it everywhere. You can manufacture it in one place and export it to the neighboring countries. So as an example, and Mel can probably give you more detail than me on this, we will upgrade our facilities in Poland, but that gives us an opportunity to sell into neighboring countries from the Poland facility, which is a low-cost will be automated solution. Darren Shirley: Okay. And then Poland, GBP 30 million, what exactly are you expanding there? Is it the meat side? Is it just the fresh prepared side? Is it new capabilities. Just a bit of color what you're getting for GBP 30 million. Mark Allen: I feel a bit sorry for Samy because I'm passing all these questions to Mel, but I promise I'll give one to you in a second, Samy. Mel, do you want to just talk about what we're doing in Poland? Melanie Chambers: Absolutely. So it is an expansion of our fresh prepared foods business that we currently have there, which is next to the fresh meat factory. So it's expanding the footprint of that, which allows us to be able to have more capacity so that we can keep up with the customer demand. And as Mark touched on, it can act as a hub that can then serve other markets from there. And so what we're looking at doing is advancing the technology within that facility and also the automation at either end. Mark Allen: In terms of the products, Mel? Melanie Chambers: Yes. So the products, we're looking at sous-vide, we're looking at the ready meals. We do sandwiches, pizzas currently through there. So a lot of the fresh prepared foods. Darren Shirley: And then just one last one, if you don't mind, is, you talked about there being additional exceptional costs associated with Foppen this year. Could you give us sort of a ballpark number in terms of what we're thinking. Matthew Osborne: Yes. So current run rate is around EUR 800,000 to EUR 1 million a period. Now that will have included air freight costs as opposed to sea freight costs. And as Mark touched on, we're moving away from air freight at the moment. So we see that reducing over time. As you know, we are operating out of the facility in the Netherlands, which has increased operating costs as well. So that's where we see it. Clive Black: Clive Black also from Shore Capital. Darren's Younger brother. A few, if I may, Firstly, to follow on from Charles' question about working capital. Are you looking at a similar positive outflow this year? Or is it an improvement year-on-year? Maybe start with that 1. Mark Allen: Do you want to answer that one? Matthew Osborne: Yes. So based on where we sit today, we'd expect there to be a modest improvement over the year. Now as Mark said, though, we will reserve the right to make purchasing decisions if see it's the right thing to do to ensure we're avoiding inflation or ensuring supply for our customers. Clive Black: And then not to keep Samy out of it, I think you talked about long-term opportunities from international retailers. Just flesh that out what that actually means for investors? Mark Allen: John? Unknown Executive: Yes, sure. Absolutely. I think we -- we declared in our third pillar that there was effectively an opportunity to expand geographically. And I think you've seen that in the move that we are making now today in Saudi and Canada. And the idea there is to leverage what we are doing that as a benchmark, if you want for future opportunities either to selling into new geography or expanding effectively into new category within those geographies as well. Clive Black: Okay. So that could mean for the product categories and further plans in those markets? Is that whst you alluding to? Unknown Executive: Yes. I mean all options are being considered and we'll be effectively investigating the opportunity on the basis of, let's say, the best opportunity from a value creation standpoint, absolutely. Mark Allen: Just to be clear, that those opportunities will be in fresh meat, our core capabilities or fresh prepared foods, the list that Mel articulated. We're not going to go into sort of wide categories. We'll focus on the things that we know and understand, and that's where we'll invest. Just to maybe put a bit more flesh on that, 1 or 2 people have asked in recent times, will we spend more in Canada? The answer to that question is we might. And the reason we might is because we might win incremental business there. So that is not a definite, but there is a chance that we win incremental business there. That business, so if the cost -- the capital costs go up, they're going up because they'll deliver improved returns. Clive Black: But the probability will be with existing customers rather than new customers? Mark Allen: I think in the main with existing customers, but I think it's fair to say that we've got a team with suit cases traveling around looking for opportunities in appropriate geographies. These are long pipelines though. You don't have an idea today that gets delivered tomorrow. As you've heard in the case of Canada, that's probably been in the making for 3 years before we actually started the development. So we're working on long-term projects. Clive Black: And again, in your presentation, you talked about a global red meat sourcing capability. What does that actually mean for shareholders? Mark Allen: So the one thing that shareholders should draw from that is we actually have a very well-run, efficient sourcing team based in Huntington that source red meat from South America, from Australasia and around the world. I would say that we are at the top end of capabilities in that area. Look, as the supply of meat declines in the West, in particular, that, I think, will come more and more into ton. and it gives our shareholders and us as a business, a degree of comfort going forward. Clive Black: And does that sourcing capability need to be replicated in fish? Mark Allen: I think, kind of to a degree, it is already there in fish. I think the fish challenges are much more here and now operational, customer product so that we're looking at the business on a relatively short-term basis to solve some of the challenges that we have. Ongoing sourcing capabilities are a thing that we'll look at, but they're not in the immediate to-do list. Clive Black: Okay. And then just the last one. Again, you talk about your production platform around the world. How consistent is that to the extent -- we've been to Huntington and 1 or 2 others have been to other plants around the world. But across the globe, how consistent is your production capability? Mark Allen: I think if you traveled around the factories, you'd see similarities in all the factories. One of the things that I think Sally talked about one Hilton. One of the things that we're addressing full on at the moment is our ability to make sure we're getting synergies from the skills we have in the various locations. You might argue Hilton hasn't historically done that. Each of the businesses has done their own good work, but it hasn't been translated across the group. We're already seeing benefits of getting it group-wide rather than business-wide. And I think we'll continue to do that. I think the fundamental factories, if you walk into our factories, you'll see similarities everywhere, and you'll see the same focus to efficiency, yield, give away, all the things you would expect to see in any factory. And the fact -- the reality of it is if you take Walmart as an example, they didn't just sign a contract and say, we'll go and work with Hilton. They went and visited lots of these facilities, saw it themselves, saw something that is different than what our competitors offer and then sign on the bottom line. So that isn't me saying it. That's a very big highly competent retailer saying we want to put our eggs in the Hilton basket. Matthew Webb: Matthew Webb from Investec. Can I ask about the -- or any operational implications of the strategic review and the very clear distinction you've made between core and noncore. I mean, are these businesses already run very separately? If not, are they going to be separated out more clearly to give you that optionality of selling the noncore when the -- when profitability improves? And then related to that, I think you mentioned that the investment priority would now obviously be on the core side of the business. Clearly, when it comes to expansion, that's what we would expect. But if there was a, say, a big automation project that would improve the profitability of the noncore side, would you go ahead with that? Or would you be wary of doing that if the ultimate plan is to sell? Mark Allen: Well, I think the last -- start with the last point first. We haven't said that the plan is to sell. So let's be clear about that. What we have said is we need to work very hard on these 3 businesses to deliver optionality. They're already now. It was one of the first things I did when I put Mel and Samy into their roles, took out these 3 businesses and manage them separately. They have a management team looking after them that are focused entirely on improving those businesses during this year. So if you wanted a view on the capital question, if the capital pays back in less than a year, then the chances are we'll probably say yes. If it's a long-term capital investment, then the chances are unless we've done the short-term stuff, i.e., got the businesses to a sustainable position, we are not going to be investing long-term capital in these businesses. And that's -- I think the team would probably agree. I've been very clear with the team. We will invest, but sort the businesses out in the first place, and that's where we've got to get to. And I've said a few times, this is all about giving us optionality. Improving the current situation through a range of measures, and then that gives us choices going forward, choices to keep the business, but also to do other things as well. But be clear, there has been no decision to sell any of these businesses. Matthew Abraham: Just a follow-up for me, if I may. So you mentioned the desire to improve the businesses, and there's been improvement initiatives implemented in these businesses over a number of years. What's different in the approach that's being outlined today? But yes, I guess that is the first follow-up, please. Mark Allen: In some respects, I'm probably the wrong person to ask that. They're not here. But if you ask the team, I am sure they would say there's a very different approach in the rigor and challenge that goes on in their businesses to that, that has been historically done. So it's a rigor, it's a focus. It's a accountability, it's an empowerment that maybe didn't exist before as we look to improve them. Now there is -- as I've said already, there's a range of things that we're working on from cost out at one end to volume in at the other, and they're all different depending on the business that we're talking about. Matthew Abraham: Okay. And then maybe just one more follow-up, if I may. So there's a greater concentration of investment going into what appears to be a high-returning business in the core. But the ROCE target is unchanged. Like why would there not be a better ROCE profile if more investments going into a better returning component of the business? Mark Allen: Maybe I should pass that to Matt, but I'm not going to. I'm going to answer it because we believe that, that level is a satisfactory acceptable return for us that work in the business and for shareholders as well. Darren Shirley: It's Darren Shirley again. Two areas of the business, which haven't been mentioned, obviously, you crystallize value with Food Connected early this year. But within that sort of bucket of sort of other investments you've got Agito in there and Cell Ag. I mean, where do they sit in sort of the new Hilton? Mark Allen: Well, I think it's very clear from what we've said that they're not core in terms of investment. They are important, though, because not necessarily as a shareholding point of view, they're important to the running of the business. Agito is intrinsically linked to our developments around the world, and it forms a big part of what we're doing in Australia. Cell Ag is a start-up, and it's a business that's very interesting from a personal point of view, but it's not necessarily that interesting for the view of a public company. And what being absolutely blunt, we would like other partners to join us in the Cell Ag investment. Darren Shirley: And then just a point of clarification because you mentioned cold red meat on a number of occasions. In APAC and in Canada, fish, am I right in thinking seafood will continue to be part of the broader offering you bring it to Woolworths in Canada and Australia? Mark Allen: Seafood is going to be a continuing part of the offering in Australia. May not be in Canada. Darren Shirley: Does that represent sort of a downsizing of the thinking in Canada? Mark Allen: No. 'm not -- at this stage, I'm not going to say any more than that. You shouldn't worry about what I've just said from Canada. It is integral to the offering that we have in Australia. And in Australia, it works really well. I think the difference between Australia, it is a very simple, straightforward cost-plus model. What we operate in the U.K. is different to that. Darren Shirley: Because there were ambitions to expand the seafood after an APAC, would those ambitions still be there? Mark Allen: Do you want to talk about that, Mel? Melanie Chambers: Yes. So the seafood works well in New Zealand as a food park. So we have the red meat, the poultry and the seafood. And due to it being a smaller location, less stores, it serves being able to serve the whole country out of that one facility. In Australia, due to the diversity of travel time and transit time, the seafood model wouldn't work long term because it's fresh, it's not frozen. So when you're looking at trucking for 12 hours from there to there, your shelf life is obviously shrinking. So it works well in New Zealand, but it's not something that we're progressing currently in Australia. Mark Allen: Any more questions? We're going to be around for a little while if there's any individual questions you want to ask. I'm conscious 1 or 2 of you have got to get after another presentation. Good business that is as well, by the way. Thank you for your time. Thank you for your questions, and feel free to come back to us on any points over the next few days. Thank you.
Operator: Good afternoon, and welcome to today's earnings call for Omeros Corporation. [Operator Instructions] Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website. I will now hand the conference over to Jennifer Williams, Investor Relations for Omeros. Please go ahead. Jennifer Williams: Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the Risk Factors sections in our annual report on Form 10-K, which was filed with the SEC today. Today's call will include a discussion of certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the corresponding GAAP measures is included with Omeros' earnings press release issued earlier today, which is available on the Investor Relations page of our website and has been furnished with the Form 8-K we filed with the SEC earlier today. With that, I'll turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros. Gregory Demopulos: Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer. Nadia Dac, Chief Commercial Officer; Dr. Andreas Grauer, Chief Medical Officer; Dr. Cathy Melfi, Chief Regulatory Officer; and Dr. Steve Whitaker, Vice President of Clinical. Two major successes made the fourth quarter of 2025 a turning point for Omeros. On November 25, we closed our previously announced asset purchase and license transaction with Novo Nordisk for our Phase III ready asset, zaltenibart. Then on December 23, we received FDA approval for narsoplimab now commercialized under the brand name YARTEMLEA for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA. Through the zaltenibart deal, Novo Nordisk received exclusive global rights to develop and commercialize zaltenibart, Omeros' proprietary human monoclonal antibody targeting mannan-binding lectin-associated serine protease-3 or MASP-3 and a small number of target-related very early-stage antibodies and antigen binding fragments. MASP-3 is the key activator and is widely considered the premier target of the alternative pathway of complement. Omeros retains rights to its MASP-3 small molecule program, including the ability to develop and commercialize small molecule MASP-3 inhibitors across a range of therapeutic areas, including, but not limited to, ophthalmology, neurology, gastrointestinal disorders, dermatology, musculoskeletal diseases and oncology. Omeros also retains rights to its grandfathered MASP-3 antibodies with temporal and indication restrictions on commercialization and for use in advancing its small molecule therapeutics. The transaction resulted in an upfront cash payment to Omeros of $240 million with an additional $100 million in achievable near-term milestones. We're also eligible for another $410 million in onetime development and approval milestone payments and up to $1.3 billion in onetime sales and commercial milestones. All told, the deal is valued at up to $2.1 billion in upfront and milestone payments. On top of that, Omeros is set to receive tiered royalties up to the high teens on net sales of commercialized products. As part of the transaction, we entered into a transition services agreement, or TSA, with Novo Nordisk. Under this TSA, we are providing and being reimbursed by Novo Nordisk for our employee costs and other expenses associated with services to facilitate the transfer and to maintain the continuous operation of zaltenibart studies and programs. Novo Nordisk will also reimburse Omeros for its inventories of zaltenibart drug substance and drug product. Our partnership with Novo Nordisk is mutually beneficial, underscoring the value of Omeros' science and development expertise while providing us with substantial and ongoing working capital and enabling Novo Nordisk to lever its extensive experience and global reach to unlock the full potential of zaltenibart. Novo plans to advance zaltenibart across PNH and multiple other indications. The ultimate beneficiaries will be patients. Omeros' second landmark achievement in the fourth quarter of '25 was FDA's late December approval of YARTEMLEA, Omeros' lead MASP-2 inhibitor, making YARTEMLEA the first and only approved treatment for TA-TMA. MASP-2 is the effector enzyme of the lectin pathway of complement in TA-TMA and often fatal complication of stem cell transplantation is driven by lectin pathway activation. The FDA-approved indication for YARTEMLEA is broad, covering all TA-TMA in both adults and children at least 2 years of age. Unlike C5 and C3 inhibitors sometimes used off-label, YARTEMLEA by blocking upstream MASP-2 preserves the infection fighting functions of the classical and alternative pathways of complement. This important mechanistic benefit is reflected in YARTEMLEA's approved label, in which there are none of the safety-related obligations usually required for complement inhibitors. Specifically, no box warning, no risk evaluation and mitigation strategy or REMS program and no required vaccinations. As previously disclosed, we began preparations for the U.S. commercial launch of YARTEMLEA well before receiving approval, allowing us to hit the ground running. We've hired and deployed our entire field force of account managers and directors, market development managers, market access leads and medical science liaisons across all territories. Having supplied our distributors within the first 3 weeks of January, first sales occurred shortly thereafter. Within 24 hours of placing an order, both adult and pediatric TA-TMA patients are now receiving YARTEMLEA, including patients who have recently failed prior off-label C5 or C3 inhibitor regimens. Patients are receiving YARTEMLEA in both hospital and outpatient settings and third-party payer reimbursement has been received. The per vial price for YARTEMLEA is approximately $36,000. Each vial represents a single dose. Across the pivotal clinical trial and the expanded access program, median utilization was 8 to 10 vials per treatment course. We expect the majority of the TA-TMA patients course to be administered in hospital outpatient departments where the drug typically is purchased and billed by the hospital. With our field force fully deployed, we remain focused on the 80 highest volume transplant centers across the country. Those 80 centers represent approximately 80% of annual stem cell transplants in the U.S. At this early stage, our primary launch objectives are fourfold: First, to educate the entire transplant care team, including transplant physicians, nurses, pharmacists and reimbursement teams regarding the recently harmonized TA-TMA diagnostic criteria, thereby driving awareness, early diagnosis and treatment of the disorder. On that front, beyond the 80 highest volume transplant centers, our field force has actively met with and detailed centers representing nearly 90% of the allogeneic stem cell transplant procedures performed nationally. Second, to support transplant centers in quickly obtaining their pharmacy and therapeutics or P&T committee approvals, adding YARTEMLEA to their formularies and streamlining their ordering processes to continue ensuring seamless access to YARTEMLEA in both the hospital and outpatient settings. Our progress has exceeded our expectations. YARTEMLEA has obtained P&T committee approval and is now on formulary at 50% of the top 10 U.S. transplant centers, 40% of the top 20 centers, 35% of the top 40 centers and approximately 30% of the top 80 transplant centers across the country. Third, to work with third-party payers to continue ensuring timely reimbursement consistent with the YARTEMLEA label and published diagnostic criteria. To date, third-party payers have approved all pre-authorization requests for YARTEMLEA, meaning that insurers have agreed to prospectively cover those patients. Fourth, to finalize the Health Economics and Outcomes Research or HEOR analysis using the uniformly strong clinical efficacy data and favorable safety profile of YARTEMLEA to demonstrate its compelling cost effectiveness to health care providers and payers. We plan to publish the HEOR analysis for YARTEMLEA soon, and the results strongly support YARTEMLEA's clinical, economic and real-world value. We look forward to providing additional detail regarding the launch of YARTEMLEA during our upcoming earnings call for the first quarter of 2026. Beyond the U.S., our marketing authorization application for YARTEMLEA in TA-TMA is pending with the European Medicines Agency. We continue to expect a decision midyear. For commercialization of YARTEMLEA outside the U.S., we are evaluating potential partnerships, both broad ex-U.S. arrangements and regional collaborations. We believe that these opportunities are substantial. As we have discussed in previous calls, the underlying biology of TA-TMA, endothelial injury and cellular damage spans a broad range of therapeutic areas. For YARTEMLEA, we are evaluating expansion opportunities in additional indications, including acute respiratory distress syndrome or ARDS, solid organ transplant-related TMA and other endothelial injury-related disorders. We also intend to advance our once-quarterly dosed MASP-2 antibody, OMS1029, which is Phase II ready as well as our MASP-2 small molecule program designed for once-daily oral administration. We expect that both our long-acting antibody, OMS1029 and our small molecule inhibitor programs are well suited for chronic indications, including those in nephrology and in neurology. Let's now examine our fourth quarter and full year 2025 financials. For the fourth quarter, Omeros reported net income of $86.5 million or $1.22 per share compared to the third quarter's net loss of $30.9 million or a loss of $0.47 per share. Fourth quarter results include a net gain of $237.6 million resulting from the zaltenibart transaction with Novo Nordisk. In the fourth quarter, Omeros also incurred a $136 million noncash charge associated with the mark-to-market adjustment on the embedded derivatives related to our 2029 convertible notes and term loan. Excluding this charge, our fourth quarter non-GAAP adjusted net income was $222.5 million and our fourth quarter non-GAAP adjusted income per share was $3.14. Further strengthening our balance sheet in the fourth quarter in November, we used a portion of our $240 million upfront payment from Novo Nordisk to repay in full our $67.1 million secured term loan. Last month, we used another portion of the upfront to repay at maturity the remaining $17.1 million principal balance on our 2026 convertible notes. As a result, all indebtedness under our senior secured term loan and 2026 notes has been extinguished, leaving us with only a $70.8 million principal amount outstanding in 2029 convertible notes. As of December 31, 2025, we had $171.8 million in cash and investments, an increase of $135.7 million from the quarter ended September 30, 2025. We anticipate that the YARTEMLEA program will be financially self-sustaining this year, and we expect the company to achieve positive cash flow in 2027. Let's turn now to development programs beyond our complement franchise. Our PDE7 inhibitor program evaluating OMS527 for cocaine use disorder is fully funded by a grant from the National Institute on Drug Abuse or NIDA. Animal cocaine interaction studies designed with NIDA toxicologists were completed and showed no drug interaction or safety issues, supporting the scheduled inpatient human study in cocaine users. FDA subsequently requested additional preclinical information before initiation of the inpatient study. Together with our collaborators at NIDA, we are scheduled to meet with FDA in the coming quarter to discuss that request. Our targeted complement activating therapy or T-CAT platform has also made substantial strides. Our T-CAT platform represents a novel class of pathogen targeting recombinant antibodies designed for broad use against diverse pathogens, including multidrug-resistant organisms or MDROs. MDROs are predominantly bacteria that are resistant to antimicrobial agents and are rapidly becoming a global threat. In 2024, sales of anti-infectives were $46 billion in the U.S. alone and $135 billion globally. Over the next 25 years, more than 39 million people worldwide are estimated to die from MDR bacteria alone. Unlike marketed antimicrobials, T-CAT is designed to kill pathogens regardless of resistance profile without promoting resistance. In well-established in vivo animal models considered predictive of efficacy in humans, T-CAT recombinant antibodies demonstrated effectiveness in treating life-threatening infections caused by both gram-negative and gram-positive bacteria, including those designated by the World Health Organization as priority pathogens. Patents have now been filed and a publication on our T-CAT platform is expected in the coming weeks. Finally, our oncology platform continues to progress rapidly. IND-enabling studies are underway for OncotoX-AML, our biologic agent designed to treat acute myeloid leukemia or AML. AML is an aggressive and often fatal bone marrow and blood cancer. OncotoX-AML has shown broad application across AML genotypes, including historically difficult-to-treat mutations like TP53, NPM1, KMT2A and FLT3. These genetic mutations are collectively found in approximately 90% of AML patients. Across human tumor-bearing animal and in vitro human AML cell line studies, OncotoX-AML has consistently shown superior efficacy to current AML standard of care treatments. In a pilot study assessing the efficacy and safety of OncotoX-AML in nonhuman primates, a single course of OncotoX-AML resulted in selective, reversible and dose-related killing of myeloid progenitor cells, the cells that can mutate and lead to AML by up to 99%. OncotoX-AML was tolerated with no safety signal of concern. Together with our clinical steering committee comprised of AML experts from leading academic cancer centers, we are designing our first-in-human clinical trial targeted for late next year. That concludes our financial corporate and development update. And I'll now turn the call over to David Borges, our Chief Accounting Officer, for a detailed discussion of our financial results. David? David Borges: Thanks, Greg. Net income for the fourth quarter of 2025 was $86.5 million or $1.22 of net income per share compared to a net loss of $30.9 million or $0.47 net loss per share in the third quarter of 2025. Fourth quarter results include a net gain of $237.6 million on the sale of zaltenibart to Novo Nordisk, which I will discuss in more detail in a moment. Results also include a $136 million noncash charge associated with the mark-to-market adjustment on the embedded derivatives related to our 2029 convertible notes and term loan. Excluding this charge, non-GAAP adjusted net income for the quarter was $222.5 million and non-GAAP adjusted net income per share was $3.14. This charge represents a noncash remeasurement adjustment and excluding it, provides a clearer view of the company's operating performance during the quarter. As of December 31, 2025, we had $171.8 million of cash and investments on hand. This balance includes the gross proceeds of the $240 million upfront payment received from Novo Nordisk in connection with the sale of zaltenibart and the full repayment of our $67.1 million term loan in the fourth quarter. In connection with the repayment of the term loan, all liens and covenants associated with the credit agreement, including the $25 million minimum liquidity covenant were eliminated. In February 2026, we repaid at maturity the remaining $17.1 million principal balance on our 2026 notes. Following these repayments, our only remaining debt is a $70.8 million in principal amount of unsecured 2029 convertible notes, which are not due until June 2029. Costs and expenses from continuing operations for the fourth quarter before interest and other income were $29.1 million, an increase of $2.7 million from the third quarter of 2025. Research and development expenses in the fourth quarter were primarily focused on YARTEMLEA and zaltenibart. Interest expense in the fourth quarter was $8.7 million. The primary components of interest expense include the DRI royalty obligation, the 2029 notes, the 2026 notes and the term loan. Excluding the DRI OMIDRIA royalty obligation, which represents pass-through interest from Rayner to DRI and has no economic impact to us, as well as noncash amortization of debt issuance costs, discounts and premiums, contractual cash interest expense was $3.2 million compared to $4.2 million in the prior quarter, a decrease of $1 million. The decrease was primarily due to the repayment of the term loan in November 2025. In connection with the closing of the sale of zaltenibart to Novo, we recognized a net gain of $237.6 million. This reflects the $240 million upfront payment less $2.4 million in transaction costs. Concurrent with the closing of the transaction, we entered into a transition services agreement with Novo Nordisk to facilitate the transfer of acquired assets and liabilities and support the continued operation of relevant studies and program activities. Costs incurred by the company under the transition services agreement, including third-party expenses and internal FTE costs are expected to be reimbursed by Novo. Interest and other income totaled $1.1 million in the fourth quarter compared to $616,000 in the third quarter of '25, primarily reflecting higher average cash balances. In connection with the repayment of the term loan in November '25, we recognized a $17 million noncash gain related to the derecognition of the remaining unamortized premium. This was a onetime accounting adjustment associated with the repayment of the loan. And during the fourth quarter, we reported $135 million noncash loss on the mark-to-market adjustment on the embedded derivative related to our 2029 convertible notes. The change in valuation was primarily driven by the increase in our stock price during the quarter, which rose from $4.10 per share at September 30, '25 to $17.18 per share at December 31, '25. This embedded derivative reflects certain features of the notes, including the conversion option and interest make-whole provisions available to noteholders. Because the valuation of this derivative is influenced by our stock price and other market inputs, it can introduce significant volatility in our reported results from quarter-to-quarter. This adjustment is noncash and does not affect our operating performance or liquidity. As a result, we present non-GAAP adjusted net income and net loss to exclude the noncash nature of these volatile swings. Income from discontinued operations in the fourth quarter was $6.6 million, an increase of $16.2 million from the third quarter. The increase primarily reflects the absence of a large noncash remeasurement expense recorded in the third quarter following a downward revision of the forecast for U.S.-based OMIDRIA royalties. Now let's look at our expected first quarter 2026 results. We anticipate that overall operating expenses from continuing operations in the first quarter of '26 will be comparable to the fourth quarter of '25. Research and development expenses are expected to be lower as zaltenibart-related expenses will be reimbursed under the transition services agreement with Novo. Sales and marketing expenses are expected to increase in the first quarter, reflecting costs associated with building our commercial infrastructure, including the hiring of a field sales force, marketing expenses and other commercial launch activities for YARTEMLEA. As YARTEMLEA is in the early stages of launch, we are not providing revenue guidance at this time. We typically do not provide guidance following a new product launch while the market access and physician adoption are developing until -- and until we're able to estimate revenue with greater accuracy. In the near term, we're focused on building physician awareness, expanding disease education and working with third-party payers to ensure timely reimbursement. Interest and other income are expected to be slightly higher than in the fourth quarter of 2025, primarily reflecting higher average cash balances. Interest expense is expected to be approximately $8.1 million, reflecting the reduction in our outstanding debt and excluding any potential noncash adjustments related to the OMIDRIA royalty obligation. Income from discontinued operations is expected to be in the $5 million to $6 million range, again, excluding any noncash remeasurement adjustments related to the OMIDRIA contract royalty asset. And finally, one thing to keep in mind is that our reported results will continue to reflect mark-to-market adjustments on the embedded derivative tied to our 2029 convertible notes. These adjustments generally move with our stock price and can create significant volatility from quarter-to-quarter. Because these adjustments are noncash and unpredictable, we present non-GAAP adjusted net income and loss measures, and they do not affect our operating guidance. And with that, I'll turn it back over to Greg. Gregory Demopulos: Thanks, David. Operator, please, would you open the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Brandon Folkes with H.C. Wainwright. Brandon Folkes: Congrats on all the progress. Maybe just 2 from me. How should we think about the progress of formulary additions across the top 80% of transplant centers in 2026? Obviously, you got off to a strong start there. So just sort of how should we think about the progress for the rest of the year? And then secondly, I know it's very early on in the YARTEMLEA launch, so kind of asking this with an asterisks. But any color on the real-world vial usage to date? Sort of any early data suggesting a different number of vials in the real world versus what we saw in the clinical data? Gregory Demopulos: Brandon, thanks. With respect to the first question, we're quite pleased with the P&T committee approvals that we've received so far that YARTEMLEA has received. It was really ahead of schedule, which I think indicates the strong interest and frankly, the recognized need for the drug. I expect -- I think we expect that we will continue to see additional P&T approvals over the next several months. And our objective, of course, is to have P&T committee approvals across all of the top 80 and frankly, beyond the top 80 sites. But I'll check with Nadia. Nadia, do you have any additional thoughts on that? Nadia Dac: Yes, I completely agree with everything you said, Greg. And I will underscore how pleased we are with the speed with which these P&T decisions are being taken, which isn't always the case in a launch. Here, they're seeing the value and the urgency to treat patients with YARTEMLEA's value proposition. And I will add that in places where we don't have P&T approval yet, if it's still underway, it's not standing in the way of getting YARTEMLEA to the patients. And so we are seeing the use of YARTEMLEA in the hospitals even without a P&T approval in place. Gregory Demopulos: I would just underscore that latter point from Nadia, which is despite in some of these centers not having P&T approval yet, we continue to see requests and sales of YARTEMLEA, use of YARTEMLEA for the benefit of the patients in those centers. So it's really been very encouraging and frankly, validating on what we believe the importance and the need for YARTEMLEA is in these patients, both adult and pediatric, really both in the hospital setting and in the outpatient setting. Your second question, Brandon, was tied to vial usage. And I assume you're asking whether it's once weekly, twice weekly, but let me just make sure I understand the question. Brandon Folkes: Yes. Ideally. Just anything you're learning early on in the launch, which may be different to what we saw in the clinical data? Gregory Demopulos: Yes, not really different. We are seeing once weekly and twice weekly usage right now, at an estimate, the split is about 70% once weekly, 30% twice weekly, twice weekly being more common in the pediatric patients than in the adult patients. We do expect that shift to move more heavily toward twice weekly dosing. Really what needs to occur and what our field force is doing is educating the transplant teams on their ability to dose twice weekly. It is allowed under our label. And I think that, that information is being really well received by the transplant teams across the centers nationally. And so I would expect that we would see that split to move more heavily toward twice weekly dosing. But again, I'll ask Nadia her thoughts on this. Nadia Dac: Yes, absolutely. And one of the execution tactics and the messaging that the field is focused on is the sense of urgency and not to wait because our label allows twice weekly dosing. And so in several instances, we're seeing that there is an urgency to treat and move a little faster if they need it for the patients. And the other thing that's very encouraging is the published policies that we've seen to date with third-party payers are, they're supporting prior authorization to label. And so it's not restricting the use of twice weekly dosing as needed. Gregory Demopulos: Does that help, Brandon? Brandon Folkes: Very helpful. Congrats on the early launch progress. Gregory Demopulos: Thank you. Operator: Your next question comes from the line of Olivia Brayer with Cantor. Samuel Rodriguez: This is Sam on for Olivia. I have a quick one on -- you mentioned that you plan to be financially sustainable this year and then cash flow positive by 2027. Is that implying that you received the $100 million from Novo and you had to pay the 29 notes? And then under YARTEMLEA launch, what feedback have you gotten from the sales force when educating the teams? And has there been any like pushback or like what kind of roadblocks or things have you seen that you expect to like smooth out by the rest of the year? Gregory Demopulos: Sam, with respect to your first question, the comment about self-sustainability was really directed at the YARTEMLEA business in 2026, meaning the business itself would be self-sustaining in 2026. 2027 is our target for company positive cash flow. So I'm hoping that, that helped and cleared up any misunderstanding. Samuel Rodriguez: Yes. That's awesome. And then on YARTEMLEA, what kind of bumps in the road have you encountered? And what can you do to like smooth those out? Gregory Demopulos: Yes. Again, we'll get into this more in our Q1 call, which will be in about 6 weeks. But I can tell you that our sales team is really very excited, very enthusiastic about the responses that they are receiving from the medical centers that they're detailing. And as I said, we are -- we've been in already sites that represent about 90% of the allogeneic transplants done nationally every year. So the response has been from those centers really uniformly positive. I think that -- there's an education process that's going on. But the eagerness to learn the recognition of the urgency and the need for YARTEMLEA and the benefits with the really quite favorable safety profile, I think, is resonating very strongly with the sites, really all the sites that I am aware of have been very receptive. But again, I'll turn it to Nadia and see if she has more information on that. Nadia Dac: Yes. The receptivity has been extremely positive. Our value proposition is viewed as significant and addressing an unmet need. And I will say that all of the effort we put into the prelaunch period of educating on TA-TMA, the signs of symptoms to identify it and the urgency to treat, we're seeing the payoff of that education. And so now with the first and only approved product for TA-TMA, that sense of urgency is playing out. And if I were to pick on anything that we want to smooth out, what we're working on as a commercial team is to make sure that we have even more education out there that supports our on-the-ground efforts and seeing how we can do more through nonpersonal efforts because as we see, the patient can come from anywhere, 175 centers. So we want to make sure that we're supporting any of the HCPs out there that are looking for treatment and wanting to learn more about YARTEMLEA. Gregory Demopulos: And I would agree with what Nadia said that really we're focused on educating. But I've been personally quite impressed by the steep upswing of that education across all of these sites. They understand it, they get it. And as Nadia said, they're quite receptive to the value proposition here for their patients. I mean this is a drug that works well. And when you look at the safety profile, that's quite a favorable benefit risk profile that I think YARTEMLEA represents. Samuel Rodriguez: And if I can squeeze one last one in. Regarding the EMA decision by midyear and like partnership discussions, do you expect any impact from MFN and like ex U.S. pricing? Gregory Demopulos: Yes. It's too early right now to discuss what we expect with respect to pricing in the EU. We are really sort of laser-focused on achieving that approval. There is, as you know, no approved treatment other than narsoplimab or YARTEMLEA anywhere in the world, and that includes Europe. So I think it is a needed product. We see the interest in it to be high as was clearly evident at the recent EBMT meeting, the European Blood and Marrow Transplantation meeting. The interest in YARTEMLEA there was very high. And our focus is getting it approved, making it available for European patients as we've already made it available through our expanded access program. Operator: Your next question comes from the line of Steve Brozak with WBB. Stephen Brozak: I'd like to go back to something you raised on the last series of questions in terms of the value proposition. I mean, given your compassionate use programs and all the drug that you've given out and all the literature that's been published, I'm certain that the hem-oncs are very, very familiar with YARTEMLEA. But can you go into as much detail as possible as to the value proposition because these are sick patients, of course. But a lot of resources have been expended on them financially and obviously, in the medical care. Can you tell us about that? Because I'd like to put into perspective the criticality of what has just been done and what you're now doing. And I've got a follow-up after that, please. Gregory Demopulos: Steve, yes, with respect to the value proposition, I think I mentioned or I know I mentioned in the prepared remarks, the work we're doing on HEOR, on the Health Economics and Outcomes Research, and we'll be publishing. We plan to publish those analyses soon, but they're compelling. I think they make a very clear case for the economic, clinical and really, as I said, real-world benefits of YARTEMLEA. So we think that there is obviously a strong case to be made, and we are making it, and we'll be publishing that. So did that answer your question? Or was it something additional? Stephen Brozak: No, no. It's answered the question, but frankly, I was looking more for dollars and cents as to the scale order of magnitude when you're seeing these transplant patients, those are not just critical procedures, but they're also very, very expensive. Can you give us an idea of what we're looking at as far as what patients or the insurers, the hospital systems are spending right now? And also, I know this has been the classical unmet need, but what were some of the products that were used before in the order of magnitude and frankly, they were spending and where they really weren't working. If you could give us anything there, and I've got one more again after. Gregory Demopulos: Sure. Well, look, the overall transplant cost and related costs run about $1 million. So you spend a lot of money, you spend a lot of time, energy, there's a lot of patient involvement, patient family involvement. And then TMA hits, right? And it is really unpredictable. You cannot -- there's no test that will tell you this patient versus another patient is going to have a TA-TMA. So I think what I want to be careful about is speaking directly to numbers. With respect to your question about what has been used previously. Well, we know that off-label C-5 and to a much lesser extent, C-3 inhibitors have been used. You know the costs associated with those. Those are quite public. What we do know and what we're seeing in the published literature out of Memorial Sloan Kettering directed to adults, out of Emory directed to children, really now controlled trials with specifically in these cases, C-5 inhibition. But what we have seen and what have been -- what has been published is the markedly increased infection rate associated with C-5 inhibition, I mean up to a sixfold increase in infection-related mortality as reported in this set of publications. So that carries, I think, a significant cost beyond the cost of the agents themselves. So we think that where we are priced, the economic value proposition for narsoplimab or YARTEMLEA is really quite clear. And then when you layer on the clinical benefits of that, it becomes really something that I think is pretty compelling. Is that addressing your question, Steve? Stephen Brozak: Absolutely. Okay. A follow-up. You've been very transparent in saying that the hem-oncs, the hematological oncologists have been accepting YARTEMLEA. Question I've got for you is, since it is obviously a critical mishap, how fast are you in being able to respond? Because part of this is obviously being able to get the drug to the patients, but how quick can you respond to these clinicians who are obviously watching their patients deteriorate, but that those first few days are critical in understanding it. How -- what feedback can you give us there? And I'll hop back in the queue. Gregory Demopulos: Sure. Well, as we have set up our distribution channels, we can deliver drug. We are delivering drug within 24 hours of the request. So we can reach the site very quickly, which, of course, is the objective, right? Our preference would be not to wait until the patient is severely or critically ill, as you just noted, but to move it upstream temporarily, right, to be able to treat patients earlier, jump on it quickly, jump on it hard, meaning appropriately dosing. And in that way, really bring the full effect of narsoplimab or YARTEMLEA to these patients. That's the objective. That's what we've -- that's the purpose behind establishing really 24-hour delivery of the drug. Request comes in, drug goes out. And I think the effects of that we're seeing, and I think we'll continue to see. Nadia, do you have something you'd like to add to that? Nadia Dac: Yes, absolutely. So even before the shipment goes out, if there's any questions or any support that they need with the prior authorization, we have our team on the ground that will either go there in person or jump on a Zoom and address those questions, whether it be our reimbursement manager, our account manager or our MSLs. So we have a model that is designed to act immediately, and we have multiple examples of that. In addition to the 800 number that we have, our in-person phone calls that come in, we jump on that immediately and then drug is delivered within 24 hours. Gregory Demopulos: And with respect to what Nadia just said about pre-authorizations, as I mentioned in the prepared comments, all pre-authorization requests have been approved by the third-party payers. So we're quite pleased with -- we're quite early in this launch. Our launch was really January. And here we are at the end of March, talking pharmacy and therapeutic committee approvals. And to the extent that we have we're very pleased. And we think those are going to continue to move through. Remember, I've given you those that are already approved. I did not mention those that are actively in process for being approved. And those numbers are even substantially higher than what I just gave you. So we're really quite pleased by that and look forward to sharing additional information at our Q1 call. Speaker. Stephen Brozak: Congrats on, obviously, the developments of 2025 and what you've just told us about Q1. Operator: Your next question comes from the line of Serge Belanger with Needham. Serge Belanger: Greg, you mentioned all requests for access to YARTEMLEA have been granted. Just curious if these were via medical exceptions or there's formal formulary coverage for the product at this point? And then since we're at the last day of the quarter, 1Q here, is it too early to talk about how many patient starts we've seen so far that have started treatment on the product? Gregory Demopulos: And the second question I broke up a little bit was how the response has been to the drug? Serge Belanger: No. The second question was since we're on the last day of the first quarter, whether it was too early to start -- to get an idea of how many patient starts you have seen so far on the product. Gregory Demopulos: You're asking about numbers. Right. We aren't going to provide those today, Serge. We'll be talking about those, obviously, in the Q1 call. But I think we've given you color as to how we see the launch going with respect to your first question, let me turn that over to Nadia. Nadia Dac: Yes. So the question is about the PA approval and whether those were handled by medical exception or by policy. The answer is both. And what's really encouraging is, as many of you probably can see, there are published policies already for YARTEMLEA in the public domain and that they are PA to label. And in the places where we don't see a published policy yet, they are being handled by medical exception, also PA to label. Our intent going into the launch, we built a strategy where we would have policies that are PA to label, and that is playing out. And we have a strong national account manager team that is following up with any of the payer requests for in-services, presentations and the value narrative that we spoke about earlier is going to be very critical to those conversations. But we are very encouraged and really strong success to date. Serge Belanger: Great. And Greg, regarding the $100 million milestone that you described as near term from Novo. I guess just how confident are you in this -- in receiving this milestone? And can you give us color on what triggers it? Gregory Demopulos: Yes. We are, by agreement with Novo Nordisk, not able to specify what those -- that collection of milestones ties to. But I will tell you that we're confident around the receipt of those. Again, I can never guarantee these things, but I think our level of confidence is high. Operator: There are no further questions at this time. I will now turn the call back to Dr. Demopulos for closing remarks. Gregory Demopulos: Thank you, operator. Thank you all for joining this afternoon. 2025 ended strong, and 2026 has continued that momentum. The strategy we set for the company is playing out, and we are well positioned now for success. We look forward to speaking with all of you again in about 6 weeks when we'll provide a more detailed update on our YARTEMLEA launch. We appreciate your continued support, and have a good evening. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the BioHarvest Sciences Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] I will now hand the call over to Justin Meiklem, Head of Investor Relations. Please go ahead. Justin Meiklem: Greetings. With us on the call are Dr. Zaki Rakib, Chairman; Ilan Sobel, Chief Executive Officer; and Bar Dichter, Chief Financial Officer. Before we begin, I'd like to remind you that management will be making projections and forward-looking statements on the call today regarding future events. Any statements that are not historical facts are forward-looking statements. These statements are made pursuant to and within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. We encourage you to review BioHarvest Sciences' SEC filings, including the company's most recent Form 40-F, which identify risks and uncertainties that may cause future actual results or events to differ materially. These filings can be found on the company website, as well as the SEC's website at www.sec.gov. Please note that the forward-looking statements made during today's call speak only to the date they are made, and BioHarvest Sciences undertakes no obligation to update them. And with that, I would like to now turn the call over to Ilan Sobel, Chief Executive Officer. Ilan? Ilan Sobel: Thank you. I want to thank you all for joining us on today's call. For those of you who are new to our story, BioHarvest's North Star is to discover, develop, manufacture and democratize life-changing compounds from plants that will positively impact the health and wellness of hundreds of millions of consumers and preserve the planet for generations to come. We are a leader in Botanical Synthesis, a process that utilizes our patented non-GMO platform to produce plant-derived compounds with greater potency than the plant without having to grow the plant itself. Importantly, we required the plant just once to be able to identify the cells in the plants that produce these critical phyto nutrients. Utilizing these cells, we conduct hundreds of experiments with our technology, optimizing the environmental conditions and food that we feed the cells to be able to get the cells to mirror and magnify the levels of the phyto nutrients they produce versus the plant. We then scale the production and elicitation of these cells in industrial scale bioreactors to produce highly soluble, bioavailable and efficacious final material in a short period of time. Our technology allows us to improve nature with the power of our science and create innovative, unique and active molecules and compounds that we can produce with unique consistency, economic viability and commercial protection. We can use these compounds in our own proprietary products or to partner with key customers, which serve high-value markets in the pharmaceutical, nutraceutical, cosmetic and fragrance and nutrition sectors. BioHarvest today operates through 2 distinct but highly complementary business units, our direct-to-consumer products division, led by our flagship VINIA nutraceutical platform, and our CDMO services division, where we partner with third parties to develop novel plant-based compounds using our proprietary Botanical Synthesis technology. These 2 businesses represent the company's dual growth engines and provide BioHarvest with multiple pathways to revenue growth and long-term shareholder value creation. Given their different operating models, capital requirements and stages of financial maturity, we are managing the business through a 2 lens framework designed to optimize performance, capital allocation and strategic execution across both divisions. This structure reflects the way we have operated the company since late fourth quarter 2025. And beginning in 2026, our manufacturing center of excellence will be incorporated into the CDMO organization. This will further align our manufacturing capabilities under a single platform serving both our direct-to-consumer products, business and our external CDMO partners. Importantly, while both divisions are positioned as growth engines, there are at different points in their development. We expect the D2C business to achieve profitability in 2026 while continuing to invest behind growth and customer acquisition. In parallel, we believe the CDMO business has the potential to accelerate meaningfully in 2026 and beyond, supported by continued investment in technology capabilities and commercial infrastructure to unlock its full value potential. Now turning to the fourth quarter. We are pleased to report that our fourth quarter revenues were $9.1 million, falling within our guidance range, up 25% year-over-year. This impressive result was due to a record number of sales orders that came in from our core consumer products business that generated over $3 million in sales just for the month of December 2025, a record month. Revenues were $34.5 million for the year, up 37% from the previous year. Our gross margins were 58% for the fourth quarter, up 100 basis points compared to the same period last year, and 59% for the year, up 400 basis points compared to last year. While the ongoing conflict in the Middle East has understandably raised concern, BioHarvest's research and manufacturing operations are operating continuously without any interruptions. Recent airspace closures have affected commercial traffic, but cargo flights have gradually resumed, and we are meeting supply chain obligations and remain fully committed to meeting our product supply obligations to our partners. However, as the situation is constantly fluctuating, we, of course, continue to monitor developments closely. Before I go deeper into defining our achievements and focus areas for 2026, I'm going to hand over to Bar to share more details on the financial performance. Over to you, Bar. Bar Dichter: Thank you, Ilan. Good afternoon, everyone. I will provide you with a sustained view of our financial results. A full breakdown is available in our SEC filings and in the press release that crossed the wire before market closed today. Please note that all figures are in U.S. dollars unless stated otherwise. Revenues for the fourth quarter of 2025 increased 25% to $9.1 million, within management's guidance. The increase was largely due to the growth in the VINIA franchise, which exceeded 85,000 active users as of March 2026. Gross profit increased 27% to $5.2 million or 58% of total revenues in the fourth quarter of 2025 as compared to $4.1 million or 57% of total revenue in the same year ago quarter. The increase in gross margin was primarily driven by the benefit of revenue mix, in case manufacturing scale and improved manufacturing yields. Total operating expenses for the fourth quarter totaled $6.3 million as compared to $5.8 million in the same year ago quarter. The increase in operating expenses was primarily due to an increased marketing spend and higher expenses from the CDMO service division. Total operating expenses shrunk on a percentage of revenue to 70% as compared to 80% of revenue in the same year ago quarter. Net losses for the fourth quarter of 2025 totaled $2.2 million or $0.10 per basic and diluted share as compared to a net loss of $3 million or $0.17 per basic and diluted share for the same period last year. Adjusted EBITDA and non-IFRS measure totaled $0.5 million as compared to an adjusted EBITDA loss of $1.8 million for the same year ago quarter. Cash and cash equivalents as of December 31, 2025, totaled $23 million as compared to $2.4 million as of December 31, 2024. I would like now to pass the call back to Ilan. Ilan Sobel: Thank you, Bar. Let's now turn to talk about the performance of our VINIA business. We continue to see strong growth in our core business, with our website, vinia.com, continuing to do the heavy lifting and delivering approximately 80% of our revenues, with over 90% of these revenues being highly valuable subscription revenue. Amazon sales, which comprised approximately 20% of our sales revenue, continued to also be a strong contributor for growth in our business. I'm also extremely proud to announce that given the full year revenues of $30.6 million for our D2C business in the U.S.A., we have achieved the total position of being the #1 Resveratrol polyphenol brand in the United States of America based on estimated market sizing utilizing Nielsen IQ 2025 market projections for total U.S.A. for Resveratrol nutritional supplements and beverages and Amazon sales data for Resveratrol nutritional supplements. This is a major achievement for us as a company, given the fact that we have achieved this major achievement in less than 5 years from entering the U.S. market. And today, collectively with Israel, we have more than 85,000 active users of the VINIA brand. VINIA's leadership position is driven by its clinically demonstrated ability to increase arterial dilation, improving blood flow and enabling enhanced delivery of oxygen and nutrients throughout the body. This mechanism of action addresses what many medical experts increasingly recognize as one of the most foundational elements of human health and performance, efficient blood flow and oxygen delivery. Given the recognized importance today by medical experts on arterial health and blood flow and the inimitable characteristics of our VINIA compound, we believe that we have developed a best-in-class blood flow transportation system in the body to make other synergistic nutrients work harder. This, we are seeing as a major asset, which we will utilize in 2026 to accelerate the growth of our direct-to-consumer business. I want to turn our attention now to talk about one of our major focus areas for 2026, our VINIA BloodFlow Hydration launch, which we officially launched on December 3 to the U.S. market with a very differentiated promise of providing American consumers with electrolyte powering cells through better blood flow delivery. Let me explain for a moment how important that is. There are a myriad of electrolyte drinks that currently exist in the market today for hydration. But it's important to understand that water and electrolyte alone are not enough. Without blood flow, the water and electrolytes have nowhere to go. VINIA significantly increases arterial dilation, enhancing blood flow and improving the delivery of fluids, electrolyzed oxygen to our body organs, tissues and trillions of cells. VINIA acts as an amazing blood flow transportation system across our 60,000 miles of arteries, veins and capillaries for any nutritional ingredients, in this case, electrolytes, to better reach the body's trillions of cells due to the ability to increase blood flow and oxygen via increased arterial dilation. We have been very encouraged by the first 16 weeks of our BloodFlow Hydration launch. So now I'd like to share some specific facts that highlight why we believe we have a category disruptor in our hands, given its category differentiation anchored in our core strategy of delivering superior science, superior efficacy and superior taste. Since launch, our VINIA BloodFlow Hydration has achieved the following key results, which give us the confidence that we have a high-performing category disruptor in our hands, which requires further investment to realize its key potential. One, VINIA BloodFlow Hydration is now the #2 contributor to incremental new customer sales with 15% of new customer revenue year-to-date on vinia.com, ahead of all other categories except capsules. Two, VINIA BloodFlow Hydration has achieved a verified rating of 4.8 out of 5 via vinia.com after more than 90 reviews. And three, VINIA BloodFlow Hydration has achieved a rating on Amazon of 4.9 out of 5 after approximately 50 Amazon reviews across all flavors and variety packs. This is currently one of the highest rating of any top 100 electrolyzed products on Amazon. Given these very positive early signals over the past 16 weeks and the approximate 50% premium we have been able to command versus key market leaders, we will accelerate direct marketing dollars behind VINIA BloodFlow Hydration to capture our fair share of this $17 billion category in North America. VINIA BloodFlow Hydration plays an important role for us to be able to broaden the age demographic of our core customer base. Today, our customer base is skewed towards our super senior consumers. These are consumers who are above the age of 65. We have identified that VINIA BloodFlow Hydration is able to appeal to this consumer base, but also, importantly, has significant traction with our [ super seeker ] customer, age 35 to 65, who is looking for better longevity options to support their aging process. And more specifically, our super active consumer, who is aged 20 to 35, who are looking for a hydration solution that is more performance-based. Accordingly, we have spent a large part of Q1 adjusting our marketing mix away from traditional TV aimed at our super senior consumer, which has been the lion's share of our marketing spend dollars in the past, and moved this to digital channels such as Facebook, Instagram, YouTube and now, we have recently opened our TikTok shop so as to more effectively recruit our important younger super seeker and super active consumer segments. This shift to digital media channels also provides us with an opportunity to improve our cost of customer acquisition versus our previous heavy reliance on TV. We are currently utilizing Q1 to best optimize our marketing mix to deliver the step change in growth we expect in Q2, driven by scaling VINIA BloodFlow Hydration and its ability to appeal to a much broader consumer audience with the expectation to drive aggressively, new customer acquisition in Q2 at a lower cost of acquisition. I want to talk now about our second major focus area, which I termed as a big bet during our previous quarterly update in November last year and is also becoming a strategic asset for the company: our health professionals, our Health Pros channel. This initiative, where we are acquiring critical health-driven opinion leaders with large social media followings to advocate and sell VINIA to their social media followers, is really starting to scale. The initiative has gained significant traction over the past 90 days, and we are starting to see the positive effects of scaling these opinion leaders. Right now, we have partnered with 250 Health Pros, and we will be adding approximately 25 to 50 Health Pros per month. This channel, for example, in the month of March, has delivered more than 10% of incremental new customer revenue, and we expect it to be an important contributor to future new customer revenue as this marketing channel continues to scale. Further, this month, we kicked off a consumer challenge for our BloodFlow Hydration product on March 17, together with all our Health Pros. And as of today, more than 1,300 consumers have signed up to our 30-day BloodFlow Hydration challenge, and we are seeing amazing results across social media with consumers posting their results every day, highlighting their increase in physical activity when partnering with VINIA BloodFlow Hydration. In 2026, we will continue to leverage this powerful fact that VINIA is a best-in-class nutrient delivery system for ourselves, given its ability to significantly increase arterial dilation, improving blood flow and the delivery of targeted synergistic active ingredients to our body's organ tissues and cells. Accordingly, our goals for this year are to leverage this insight to drive aggressive premiumization of our business by targeting relevant multibillion-dollar synergistic revenue pools in the nutraceutical industry, where we believe our blood flow delivery advantage, combined with high-performing synergistic active ingredients, will be category disruptors and will enable us to increase key financial metrics such as revenue per month and gross profit margin delivery. These opportunities, we are terming VINIA Plus opportunities, where we are considering entering multibillion-dollar categories combining VINIA with a synergistic nutraceutical ingredient and leveraging our consistent strategy of superior science, superior efficacy and superior taste to bring meaningful differentiated premium products to the market to win consumers' choice in these categories. VINIA Plus our past marketing categories that we are considering entering include the multibillion-dollar greens category focused on gut microbiome health, the cellular health category and the Omega 3 [ CoQ10 ] heart health category, as well as a number of other categories. The company will share more information about its plan to launch VINIA Plus premiumized product over the course of the next few months. Let me now excitingly turn to our CDMO business. As a reminder, our contract development and manufacturing organization, or CDMO business, was formally created in Q2 of 2024. Along with the consumer products side of the business, they form our 2 growth engine strategy that we believe warrants a 2 lens approach. The distinction between our products direct-to-consumer business from our B2B CDMO business reflects the operational reality of how we manage the company today and has already resulted in a meaningful acceleration in the CDMO performance, as will be highlighted to you all shortly. Under this model, the CDMO operates as a fully integrated business unit, including R&D, manufacturing and business development. This organization alignment has significantly improved execution speed, focus and accountability. Investments in this unit can now be tracked more effectively in terms of ROI. Since its creation, CDMO has evolved beyond the traditional model of service to what can be best described as forming strategic partnerships with each of its customers versus just more transactional R&D-based relationships. This shift reflects the collaborative nature of our engagement, where we often participate in long-term value creation, including royalties, and in certain cases, ownership in developed compositions which we may in the future commercialize and bring to market using our direct-to-consumer e-commerce platform. It also reflects the additional set of skills added to the unit capabilities that include AI-driven molecule discovery. From a financial perspective, the CDMO side of the business generated approximately $2 million in third-party revenue in 2025. If we also include internal manufacturing of VINIA powder supply to our products business, total activity would have been approximately $9 million in revenue, demonstrating the scale of manufacturing infrastructure already in place. As a reminder, our development program under the Botanical Synthesis process for new molecules or compounds ranges from $2 million to $3 million and spans 18 to 27 months. It is divided into 3 stages, where the first stage, Stage 1, is the creation of the cell bank that is needed for the subsequent stages, Stage 2 and Stage 3. In Stage 2 and 3, cells are propagated in small- to large-scale liquid medium bioreactors. Stage 3 completion signifies the readiness for the industrial or commercial manufacturing. Right now, we are working on multiple high-value projects on the CDMO side of our business. Specifically, we are advancing quickly all active development programs for third parties, each focused on a unique plant-based composition targeting multibillion-dollar end markets. These are: 1 program in nutraceuticals with *Saffron Tech, a pioneering revolutionizing advanced cultivation methods for *saffron, one of the world's most valuable and health-promoting mechanicals to develop saffron-derived botanical compound; 2 programs in nutrition, including the previously announced collaboration with Tate & Lyle, a leader in natural sweeteners; 1 program in the multibillion-dollar fragrance and scents market with a prominent UAE investment group to develop a plant-based fragrance compound derived from a plant that is under significant threat due to overharvesting and habitat losses. Whilst we have made strong progress across all 4 projects, I want to spend a little time highlighting the biological breakthroughs we have recently achieved in our fragrance program, which was announced earlier today. Our CDMO division has successfully completed Stage 1 of a multistage development program for a rare scent producing plant used in the global fragrance and scents industry. The program is being conducted under contracts signed approximately 1 year ago with a prominent UAE-based investment group and represents what BioHarvest believes to be the first ever successful creation of a stable cell culture for this rare and endangered fragrance-related plants. This milestone positions BioHarvest to enter the growing particular premium scent and fragrance segment, estimated to represent a $12 billion market opportunity, at least. This particular scent is widely regarded as one of the most valuable fragrance raw materials in the world, with premium grades commanding prices exceeding tens of thousands of dollars per kilogram, and demand is growing across the Middle East, Asia and luxury Western perfume market. The development was achieved using BioHarvest's proprietary Botanical Synthesis platform technology, which enables the production of rare plant-derived fragrance compounds without the need to cultivate or harvest the original plant, which, in fact, is classified as an endangered species and typically grows only in highly specific regions of Southeast Asia. The rare molecules responsible for the scent and aroma of this particular plant, including sesquiterpenes and chromones, was successfully identified in the Stage 1 cell culture, with molecular profiles closely matching those found in the original plant. This achievement demonstrates the ability of BioHarvest's platform to replicate highly complex plant-based fragrance compositions that include, but not limited to, the terpenes family of molecules previously considered extremely difficult or impossible to reproduce sustainably. I want to reiterate that under the terms of the agreement, BioHarvest retains 20% ownership of the compositions developed through this multistage program, creating a long-term royalty driven economic model as development advances towards commercialization. This structure aligns with BioHarvest's evolution from a traditional CDMO to a partner development and manufacturing organization, or what we like to call a PDMO, where the company participates directly in downstream value creation. With the successful completion of Stage 1, we are ready to move to Stage 2, where cells stored in a proprietary cell bank will be propagated in liquid medium to generate significant biomass. This biomass is expected to be available for pre-commercial testing within 6 to 9 months, with full development and industrial scale manufacturing anticipated within 12 to 18 months. For the pharmaceutical program, which commenced in 2024 in which the company announced Stage 1 completion in 2025, the company has completed the first step of the 3 steps within Stage 2. Given the long cycles in the development of pharmaceutical programs, further research is being conducted to determine the optimal next steps within Stage 2 in order to best meet the customers' FDA-driven requirements. With our 2 lens focused approach and the success that we are seeing in progressing our projects, we are heavily investing in improvements of further CDMO capabilities, including AI-driven development tools to optimize development time lines, improve success rates and build a library of synthesizable plant-based molecules. To further accelerate pipeline conversion, we added a new Vice President of Business Development in early March, strengthening our commercial capabilities and customer outreach, and we are proactively investing in the development of additional biological assets to expand our portfolio of opportunities for current and future partners. Independent of specific contracts, BioHarvest is advancing a pipeline of highly sought-after plant-based molecules through early and mid-stages of its proprietary Botanical Synthesis process, thereby derisking and accelerating potential customer programs. This growing portfolio already includes assets that have progressed beyond Stage 1 such as basket derived. PGG derived from pomegranate and selected polyphenols from blueberry as well as emerging capabilities in plant-based extracellular vesicles, otherwise called exosomes. By building this library of partially developed biological assets BioHarvest is positioning CDMO to offer faster development times, lower risk profiles and differentiated value propositions to partners across the nutraceutical, pharmaceutical and cosmetic and fragrance markets. Ladies and gentlemen, 2025 was a defining year for BioHarvest. We delivered strong execution across both of our growth engines, scaling our core consumer business, reinforcing VINIA's category leadership and building meaningful momentum in our CDMO platform through strategic partnerships and important development milestones. At the same time, we strengthened our balance sheet, expanded our customer base and entered 2026 with the capital and capabilities and structure to support our next phase of growth. Looking ahead, we believe BioHarvest is exceptionally well positioned. The early performance of VINIA BloodFlow Hydration, our expansion into more efficient and diversified customer acquisition channels and the growing strategic value of our CDMO platform give us increasing confidence in our ability to accelerate growth and create meaningful long-term value when using our 2 lens model to optimize strategic decisions across our direct-to-consumer and CDMO business units. We are entering this next chapter with momentum, with focus and a clear path to building a larger and stronger company. With our platform, our products, our partnerships and capital in place, we believe BioHarvest is entering 2026 in its strongest position yet. Thank you very much for your time. We will now open the call to questions. Operator: [Operator Instructions] Our first question comes from the line of Anthony Vendetti with Maxim Group. Anthony Vendetti: So it seems like the CDMO business is really starting to develop. And with this new contract on the fragrance business, it seems like it's just adding to what you did in '25 on the pharmaceutical side and on the Tate & Lyle side. So maybe, Ilan, if you could just give us a little more detail. You did mention a little bit about the pharma company. Can you give us a little more detail around how the Tate & Lyle contract is going and expectations for that particular contract in '26? Ilan Sobel: Sure, Anthony. I'm going to firstly just kind of take it up a level of abstraction to emphasize how happy Zaki and I are in the significant progress that we've made over the last 4 to 6 months in the CDMO. And a big part of that has been anchored in structuring the organization so that we're allocating resources in a way that those resources are fully dedicated to the respective business units. So now our R&D organization is 100% focused on working on the CDMO. And boy, it's amazing to see what focus can do. And secondly, as we look at the 2 lens model and really start to make conscious decisions by -- given the fact now that we're really running as 2 separate businesses and we're able to really understand the cost structure and the financial performance of these businesses, we're able to, therefore, ensure that we're allocating resources in the right way and making the right investment decisions. And we've started that investment process towards the end of the fourth quarter, continued in the first quarter. And we're seeing major, major dividends with the team really knocking the ball out of the park with some of these milestones, where really, we're breaking biological barriers and unlocking the ability to be able to capture value in multiple billion-dollar categories. I'm going to ask Zaki to go into a little bit more detail across some of the projects so you understand the momentum that we have across this part of the business and why we're so eager to continue to lean in and invest more in this business in building critical capabilities and specifically as well, with the manufacturing organization now coming underneath the CDMO. It makes perfect sense. If you think about it, the manufacturing business should be inextricably linked into the CDMO given that just the name, contract development and manufacturing organization. And as a result of that synergy as well, we are seeing significant progress and are making the required investments in manufacturing, in AI, in ensuring a computer vision, in developing an elicitation center of excellence. And these investments, we're starting to see pay off. And they will continue to pay off in 2026 and be able to drive really nonlinear growth as we move into 2027. Zaki,over to you to give a little bit more texture around the specific projects. Zaki Rakib: Sure. Thanks, Ilan. You've covered a lot of the ground already. So I thank you for that. So just wanted a little bit of background to -- for you to be able to scope, I guess, your question is, how do you analyze the success we've had in the various projects where -- that are undergone within the CDMO organization. So we -- plant molecules can cover multiple industries, the 4 industries we cover, the nutrition industry where we have 2 molecules currently in development. We have the fragrance, which is part of the overall cosmetics and beauty. And then we have the pharma, the projects you mentioned earlier. And we have a nutraceutical project with the saffron. So those are the major projects that are going inside the CDMO organization besides the assets we continue to build. So we advance our own molecules so that when we go talk to a customer, we can offer them a more advanced stages. Ilan mentioned earlier during the call, the 3 stages of development. Each stage within itself is divided into various steps, and each stage carries a certain revenue target. So as you try to model the overall project between 18 and 27 months, $2 million to $3 million is the -- was the NRE, the revenue that we can see. The beauty of the diversification across multiple industries is that some -- is the profile of risk/reward. Some of the projects like in pharma may take more time, but ultimately, because of the high margins that they carry, would provide a lot of reward on the back end of the project, meaning the manufacturing stage where we expect to start even in the latter part of 2027, the second half of 2027, we are expecting to start manufacturing some of the molecules or compounds that we are currently -- that are currently in development. So every time 1 crosses 1 stage and moves to the next one, you need to keep in mind is that it advances us and gets us closer to the commercialization. Or from our end, it would be the manufacturing phase. So if -- I want to give you a quick update on all the various projects. While we have already announced on the pharma side that we've crossed Stage 1 and we have actually recognized revenue associated with some elements of Stage 2, typical to pharma, there's this time where it's more research that is done on both ends, be it the customer as to try to make sure that the adjustments are made to comply with all the FDA regulations and whatnot is required. This is very typical. We're not surprised. We expect to go through that, will take some time. That has been factored in as we look at the revenue projections, both for 2025 and obviously, for 2026 and beyond, as you will be seeing it later. I think it's included in our news release on what we're guiding for 2026. So when we look at the fragrance projects, what's really nice about it is that we completed Phase 1 at a record time from the time we got the source material. Although we signed the agreement earlier, usually, the time starts from when we receive the source material from which we developed the cell culture. We expect it to be running much faster, and we expect it to reach within the next 6 months, so the second stage, which carries a higher revenue than Stage 1, subsequently Stage 2 and then -- 3, sorry, and getting into production. Ilan mentioned the unique breakthrough, first time ever anyone develops a stable culture [ 8 ] molecule like the sesquiterpenes and chromones and whatnot. This is really -- we feel very, very happy about it. On the saffron, we've also made a lot of progress. We're inching closer to the completion of Stage 1. And that also would be something that would move faster, and we expect to see some early production of it in the latter part of 2027. On the nutrition side, we've also made a lot of progress getting really closer to the completion of Stage 1. So we really are -- Stage 1 is also the riskier part because the ability to develop and store a cell bank of stable cell culture is representing the highest risk in the process. Not the shortest time, but the highest risk in the process. And basically, what we're having is a 100% success in any molecules that we have really touched so far. That also brings lot of internal confidence. And also as we display that confidence to our customers, we expect that more of what we look at in the pipeline to converge faster. So I hope that gave you a bit of an overview of where we stand with the various projects and what we expect in the next -- especially 2026, the progress that would be further made. Operator: Your next call comes from Matt Hewitt with Craig-Hallum Capital Group. Matthew Hewitt: Congratulations on the progress last year. Maybe first up, obviously, a lot of updates on the CDMO side with your various partners there. What does the pipeline look like on that side? Is that something that you expect to continue to build? Or do you feel like now is a good time to maybe pause a little bit, focus on kind of helping and shepherd some of those programs to the commercial stage or through the manufacturing stage before you start to build on that more? Ilan Sobel: Zaki, why don't you go ahead, and I'll come in and lean in if I want add anything. Zaki Rakib: Sure. I mean, you get the answer once you analyze the financials and the guidance to understand that we are actually doing both. We continue to invest in the infrastructure. We need an infrastructure to be able to address multiple projects simultaneously. And even with the existing projects, what we found is that by improving the infrastructure we have, we can advance those projects faster which is very important in our business, improving margins, improving the execution time, getting the customer more engaged, more excited. Ultimately, customers want to see new ideas coming to fruition and getting commercialized much faster or faster cycles. And what we -- what will take place in 2026 is infrastructure, continuing to build it. Which, like I said, serves in both ability to absorb more projects, which means part of the work we expect to do in 2026 is work on the pipeline. Part of it is converging some of the projects that we have been in discussion with some of the candidates on the pipeline, and some of which is actually seeking new partners by the end of the year. So between the various activities on the existing pipeline or expanding it, that's why we guided -- in the year 2026, we provided guidance of $4 million to $6 million in revenue coming out from external customers. That would be doubling -- or actually between doubling and tripling the revenue. So that gives you an idea. And when we came up with this number, it's a mix of projects that exist today that advance mostly to Stage 2, and then new projects coming in into Stage 1, all of which are going to be taking advantage of an improved infrastructure that we started focusing on late last year, as the R&D team that was in place was mostly busy completing all tasks relative to the product side and moving, transferring its knowledge to the manufacturing organization so that they have the independence of working on the process for the manufacturing. So that's how -- what's taking place right now. Ilan Sobel: And just to add to that, Matt, that we've made a really conscious decision, a conscious decision in doubling down, leaning in, as I call it, and investing heavily in the CDMO. Because we've seen really strong results in multiple areas which unlock significant opportunities in multi -- multiple billion-dollar categories. And like now is the time to invest. And that investment, we believe that we're going to be making in 2026 and you see it based on the adjusted EBITDA guidance that we've given, is going to pay big time dividends as we move into '27 and '28 because we've got to scale the infrastructure. And there are specific areas of competitive advantage that we believe are inimitable areas of competitive advantage that we layer on to our core Botanical Synthesis technology that we are super enthusiastic and excited about and want to really build these centers of excellence so that we can increase the traffic, increase the success rate and really start to scale the CDMO. If you go back to the North Star of the company, we've always said that the direct-to-consumer business is really the validation of the power of the technology. But as we look to build this business into a multibillion dollar revenue business, it's the CDMO and the manufacturing scaling and the industrialization of plant cell biology which is going to build us to be that global leader in plant cell biology that we want to be, touching the lives of tens of millions or hundreds of millions of people ultimately. And this is the time to be courageous. And this is the time to lean in. And we're doing this, and we have full support of our Board. And Zaki -- and kudos to Zaki and his team and the R&D team that have really given us the confidence to be able to double down and know that we're going to get a really strong ROI on that investment. Matthew Hewitt: Understood. And then maybe shifting gears with my second question. You noted in your prepared remarks that you've made a shift in your marketing for VINIA, specifically looking to expand into some of the younger cohorts. And I'm just curious, that started here this quarter. How long will it take for you to determine if some of those new changes are having the effect or the desired effect that you had hoped for? Ilan Sobel: Thanks. It's a great question. It's actually interesting. When you look at BloodFlow Hydration, this is kind of like the ace in our hand. Because as you saw in the chart that I shared during my prepared remarks, you see the BloodFlow Hydration has an ability to appeal to all 3 of our consumer segments or cohorts. And so we really started to see, when we look at who our consumer is, that younger consumer come in, which is being driven by BloodFlow Hydration. But also, BloodFlow Hydration is very well accepted in that older cohort. So we've got this ace that allows us to kind of bridge and an amazing product that has unique differentiation. And it's very -- well, we're finding as well, it's very simple to understand the power of BloodFlow Hydration. Because when you say to consumers very clearly without BloodFlow Hydration, there's nowhere to go. And ultimately, what we're providing are electrolytes powering cells through better blood flow delivery. And people get it. They go, oh, okay, we realize like, electrolytes is not enough. Fluid is not enough. It's how you transport those fluids and electrolytes to the entire body to be able to really go deep into yourselves. So this has given us the ability now to shift the mix out of TV. And it's not like we're stopping TV. We're just -- we're starting this migration. Hydration is our ace, our catalyst to be able to do this. We'll have more catalysts coming over the course of the next 3 to 6 months as part of our premiumization strategy. But this is a product now that -- Hydration is a product that we started to see great progress on TikTok. We just started TikTok scaling, I would say, in the last couple of weeks, and we're seeing amazing videos being actually produced by TikTok influencers because they get it. People get it. They're understanding the proposition. They understand that it's unique, and they understand it's relevant to a TikTok audience, which is a younger audience. Similarly for Facebook and Instagram, as we go after those super seekers. So my expectation is the migration is going to take us, as we start to sharpen the messaging, optimize. And as my VP of Sales, Jared says, we're tuning. We're tuning YouTube. We're tuning Facebook. We're tuning Instagram and optimizing the mix so that we're getting to the best cost of acquisition. We started to do it very significantly in the month of March. We'll continue in April. And I think by the end of the second quarter, we would have really started to be able to optimize that marketing mix powered by BloodFlow Hydration. And you'll start to see a number of other products that are going to piggyback on top of that. They're going to help us scale their business towards that younger consumer base. And importantly, at a much higher revenue per month per customer, which is what we're going after. Operator: Your next call comes from Sean McGowan with ROTH Capital Partners. Sean McGowan: A couple of questions here. So what can you tell us about your expectations for the phasing of revenue this year, like per quarter, especially now on the last day of the first quarter? What can you tell us how we should expect that to play out? Ilan Sobel: Yes. So I actually -- I knew you were going to ask that question, Sean. I know you pretty well by now. Okay. Look, I mean, basically, we see revenue growth in 2026 being nonlinear to -- in order to achieve the guidance. And for us, Q1 is a critical quarter to make the required changes in the mix in line with our 2 lens model. And therefore, we see Q1 having more moderate growth versus previous year. And then we start to really accelerate the growth as we unlock the benefits of the incremental investments and capabilities that we're building, both on the direct-to-consumer business and on the CDMO business. And so Q2 and beyond, we're really -- you'll start to see a bit of a multiplier effect as a result of the actions that we took in Q1. And so you can kind of start to see how that build goes from Q1 to Q2 to Q3 and Q4. And again, it's not going to be totally linear. You'll start to get a bit of a multiplier effect as you go into the second half of the year. Also, when you layer on the additional activity -- I talked about the premiumization strategy that we're bringing to market, and we're going to start to share more of that over the next, let's call it, 90 days. And once you start to understand the premiumization strategy, you'll start to see how the second half has significant activity in it. And that activity also is going to help to drive that multiplier effect as we move into Q3 and Q4 with a really, really strong end of the year. Sean McGowan: That's very helpful. A couple of other questions on guidance. What can you tell us about your expectations for the gross margins in each of the segments compared to last year? Ilan Sobel: Yes. Look, I think what we're going to see -- I'll talk about the direct-to-consumer side of the business. From the direct-to-consumer side of the business, we're also investing heavily on the manufacturing side. We're investing heavily in manufacturing efficiencies. Always, Q4 and Q1 is a little bit more challenging because you've got seasonality challenges there, higher transportation costs. But my expectation is -- similar to what I shared on revenue, you'll start to see basically, gross profit margins continue to get better through the year with the benefits of scale, with the benefit of process optimization that we're driving. This will be a little bit more linear as opposed to the revenue. But we -- you're anchoring now, 59%, 60%, and we'll start to see that move up let's call it, 0.5 point each -- 0.5 point to 1 point each quarter as we try and move up to the 64%, 65% mark as an aspiration. But obviously, we're modeling and trying to be a little bit more conservative as we look to under promise and overdeliver. And then obviously, on the CDMO, you have a little bit more lumpiness just given the nature of deals and getting deals signed at the end of quarters, beginning of quarters. I think the CDMO is a little bit more challenging to predict. But definitely, as Zaki said, we see a lot of deals moving from Q1 into -- sorry, from Stage 1 into Stage 2. And that's going to be ultimately happening in second quarter and third quarter. So you'll start to see the benefits of that, plus new deals dropping basically in the second and third quarters. And the pipeline is looking really good. And each time we make announcements like we made today on breakthrough capabilities, I mean, I just -- it's very hard for, I guess, the investor community to understand the magnitude of the breakthrough of the R&D team with what they've been able to do with these unique molecules, the sesquiterpenes plus the chromones. It's a major, major breakthrough. And what this does is it starts to now unlock many other opportunities which can really derive significant demand from the marketplace. So bottom line is you'll start to see on the CDMO, those benefits coming through, but it will continue to build in Q2, Q3 and Q4. Sean McGowan: Okay. And then to dovetail on that comment about investments in CDMO, I would assume that you would like us to infer that these investments being made that result in the EBITDA losses are a sign of optimism for the future and not a problem, right? Ilan Sobel: 100%. And as I said before, it's a conscious decision that we're making. And you'll see it just when you look at -- and we'll talk about it more when we do our one-on-ones, and look at the modeling from an R&D expense. I mean, these are expenses that are going in to build capability in critical areas that we have seen already, the ability to win in, and we want to double down, build centers of excellence. And we know that these different centers of excellence, whether it's in AI, whether it's in process engineering on the manufacturing side, whether it's in computer vision that we'll be talking more about, which we think is a real breakthrough for us. Or a center of excellence that we're building in elicitation methods, which is such a critical part of our business. These are anchor, anchor capabilities that really help build a moat, a further moat, I should say, around Botanical Synthesis technology. And ultimately, we feel like now is the time we -- the team has done enough in the last 6 months to show us the potential of what we can do and the optionality that we can build for this business and for our investors. And now is that time to double down and to seize the opportunity. The investor community will see the benefits from this over the next 90 days, 180 days and beyond because there's a lot going on. Operator: Your next question comes from the line of Susan Anderson with Canaccord Genuity. Susan Anderson: I was curious, I guess, as you continue to roll out new products, how should we think about your marketing expenses as a person to sell, particularly as you move on TikTok and other social media platforms. I guess, should we expect it to grow? Or should we expect it to continue to be similar to what we saw this year? Ilan Sobel: So when you look at specifically on the direct-to-consumer business, Susan, we've been looking at like basically total sales and marketing, around about 46%, 47%. We should see similar levels. It should -- there should be some efficiency coming quarter-on-quarter. Importantly, those efficiencies are going to come from basically mix. And for example, the Health Pros that we talked about a little bit earlier on the call really helps drive that mix because it's a very, very efficient way to be able to acquire customers. And we've seen that now. We've spent 12 months building the infrastructure, the capabilities, the end-to-end computerized -- the whole digitized system from onboarding a Health Pro, all the way to paying them their commissions each month, educating them. And we see it in this month of March, literally 10% of our incremental customer base came from Health Pros. And those Health Pros are going to scale as we bring in more and more mega Health Pros in their communities. And so as we navigate and we drive a better mix through the different channels like Health Pros, that starts to drive greater marketing efficiencies and will plow the majority of those efficiencies back into investing in marketing to continue to grow the business. Because that's what our 2 lens model is telling us to do, keep on growing the business, get to scale, increase the adjusted EBITDA. This year is a start, getting into positive adjusted EBITDA territory and then to continue to grow that. But there will be efficiency benefits. It's not going to be drastic, but they will be sharpening of the pencil, efficiency benefits that we can use to drive more leverage to the bottom line. Susan Anderson: Okay. Great. And then I guess on a fragrance front, it sounds like the timing of a potential product is like 12 to 8 months out, per the release, I guess. So should we think about that as like late '27, early '28? And I guess the same thing with Saffron. And then, I guess, in between that, think about continued VINIA rollout, such as the hydration and other products and then also new CDMO products? Ilan Sobel: Correct. So when you think about catalysts, firstly, on the manufacturing perspective, with the specific fragrance that we've talked about, plus Saffron, and just as Zaki articulated, the amount of progress the team have made in a short period of time. Basically, second half of '27 is realistic to actually start manufacturing and starting to move the revenue, getting into really the scaling and the major revenue component. As we start to look at VINIA, the [ premiumization ] strategy, we will start to share more detail. And yes, there are a number of big bets that we're making, going after major multibillion-dollar categories with uniquely differentiated propositions, anchoring in the fact that we have the best nutrient delivery system in the world because of our ability to increase arterial dilation and basically, that being the blood flow carrier of each of those nutrients to be able to actually perform better in the body. And so as we selectively and surgically go after these categories in a way that drives premiumization for our business, you'll start to see a very clear growth strategy that can really take us from a business today that's looking, as we've discussed, 38 -- basically moving from $38 million to $42 million on the D2C business, but really driving exponential growth as we go into 2027 because of the breadth of product line that we bring into the market across multiple categories. Operator: There are no further questions at this time. I will now turn the call back to Ilan Sobel, CEO of BioHarvest Sciences, for closing remarks. Ilan Sobel: Thank you, Kara, and thank you, everybody, for joining us today and for your continued support. I hope you feel after the discussion that we've had and the significant progress that we've demonstrated that we're entering 2026 with great momentum with focus and a very well articulated strategy that we know how to execute and operationalize in order to drive growth across both of our business units. And we look forward to continuing to create value for our shareholders in the quarters ahead. And I'd like to wish everybody a happy Passover and a happy Easter over the next couple of weeks, and safe travels. Operator: That concludes today's call. Thank you for attending, and you may now disconnect.
Operator: Greetings, and welcome to the TruBridge Fourth Quarter Earnings Conference Call. [Operator Instructions] And please note that this conference is being recorded. And it is now my pleasure to introduce to you, Dru Anderson. Thank you. You may begin. Dru Anderson: Thank you. Good afternoon, and welcome to the TruBridge Fourth Quarter and Year-End 2025 Earnings Conference Call. Leading today's call are Chris Fowler, President and Chief Executive Officer; and Vinay Bassi, Chief Financial Officer. This call may include statements regarding future operating plans, expectations and performance that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance. Actual results might differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown risks, uncertainties and other factors, including those described in public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, the most recent annual report on Form 10-K. The company also cautions investors that the forward-looking information provided in this call represents their outlook only as of this date, and they undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. At this time, I will turn the call over to Mr. Chris Fowler, President and Chief Executive Officer. Please go ahead, sir. Christopher Fowler: Thank you, John, and thank you, Dru, and thank you to everyone for joining us today to discuss our Full Year and Fourth Quarter. Before discussing our results, I would like to address 2 topics. First, we filed our 10-K with the SEC in compliance with the extension period. As we disclosed earlier this month, we identified certain out-of-period adjustments during final audit procedures with our new external auditor. As a reminder, this is our first year-end audit together. These adjustments are primarily related to revenue recognition and related costs, capitalized software development costs and nonroutine transactions. I want to emphasize that these adjustments are noncash and not material to our fiscal 2025 financial statements or to our previously issued financials. While the delay was frustrating, this process reflects our commitment to strengthening our financial reporting standards and our internal controls. Secondly, as you may have read in the 10-K, over the past several months, we have been engaged in a strategic review process considering a range of alternatives to maximize shareholder value. We will provide additional information as appropriate. As a result, we are not issuing formal guidance today, but we expect to achieve modest revenue growth in 2026 and anticipate approximately 200 basis points of improvement in adjusted EBITDA margins. Turning now to an overview of the numbers for the fourth quarter and full year 2025. Total revenue for the quarter came in at $87.2 million, in line with the midpoint of the revised guidance we provided last quarter. Adjusted EBITDA of $19.2 million was at the high end of our guidance range and represented a slight expansion in margins compared to the prior year. For the full year, our total revenue was $346.8 million, a 1.4% increase over 2024. Adjusted EBITDA was $68.7 million, up 23% year-over-year. In terms of free cash flow, we generated $20 million for the year, an increase of $5 million over 2024. Bookings of $19.8 million on a total contract value basis compared to $15.5 million sequentially and $14.3 million a year ago. In Q4, our bookings were supported by growing SaaS, strategic partners, including Microsoft and our exclusive Dragon Copilot integration with TruBridge EHR and continued demand for our comprehensive revenue cycle technology and services platform. The pipeline we see today is encouraging and gives us confidence that our market is an environment of healthy demand. As a proof point, the dollar value of our overall sales pipeline is currently the highest it has been in 9 quarters and has increased 53% since the beginning of Q3. And the increase we are seeing is diversified across our business. If I compare the pipeline today to earlier last year, approximately 14% was from opportunities greater than 100-beds, and that segment is 30% of the pipeline today. At the same time, we are improving the quality of the opportunities. The percentage of recurring deals represents greater than 70% of the pipeline compared to onetime projects, a noticeable improvement from approximately 57% last summer. Additionally, our higher-margin encoder solutions continue to gain traction. During this period, encoder pipeline growth increased 74%, driven primarily by strong performance in new business and our channel partner ecosystem. We are confident that between our new leadership team and regionalized coverage model, we expect to see successful conversion of this growing pipeline and healthy demand environment. And while we may be a quarter or 2 away from consistent quarterly performance, our commercial engine is on the right trajectory, and we expect to see continued improvements down the road. I'd like to take a minute to talk about customer retention, specifically financial health and how it has acted as a headwind to us and the actions we've taken to begin to mitigate it. We started our global workforce transition in earnest in 2024. And over the course of the year, we saw a decrease in retention in our CBO customers as the onshore and offshore teams figured out how to work best together. In 2025, we took several decisive actions to strengthen the process and simplify it for the customers. One key action was bringing in the necessary experience in managing global teams and executing successful transitions. Earlier last year, we implemented a more structured transition model with stronger oversight, better visibility into performance across the full transition cycle and deeper collaboration with the customer. It is still early in the process, but we are seeing progress in the results so far and believe that the operation model is repeatable. Additionally, we opened our new Global Capacity Center, or GCC, in Chennai last month, which represents a significant milestone for our cross-shore global delivery model. With all this in mind, we will continue to monitor progress and our transition initiatives will be interlocked to our continued performance improvements. We are also focused on our comprehensive AI strategy. We are currently pursuing 4 pillars that span our entire organization: financial health, patient care, customer service and internal development. On the financial health side, we are working on a solution to predict claims denials earlier and more accurately and taking the corrective action to get the claims approved on the first path. In patient care, we are leveraging Ambient Technology through partnerships with Microsoft. In a pilot that we are running at a regional hospital, we are already seeing results with providers spending more time interacting with patients and meaningfully less time documenting the interactions. We are pleased with the response from HIMS attendees a few weeks ago and are excited to showcase this next week at our National Client Conference. In terms of customer service and satisfaction, on a previous call, I mentioned an internal AI-driven support bot, which has already demonstrated improved support consistency and faster turnaround. We are developing a customer-facing release that will enable clients to directly engage with the chatbot experience through an expanded and improved knowledge base. This enhancement is aimed at significantly increasing self-service efficiency and improving the overall customer experience. We will, however, continue to offer live customer support for those that choose that route for their customer experience. Finally, in terms of our tech stack, we are leveraging AI tools for development to modernize our underlying technology, which should lead to rapid innovations, faster delivery of applications to the customer and simplify new customer implementations and continue to drive margin expansion. In conclusion, as we continue to make the necessary changes in the business we see a positive progress and remain on the right forward trajectory. Given our targeted AI strategy, strong cash position and net leverage ratio of approximately 2x, we are well positioned to compete and we will continue evaluating all available strategies to drive shareholder value. Now I'll turn the call over to Vinay to review our financials. Vinay? Vinay Bassi: Thanks, Chris, and good afternoon, everyone. I will begin by noting that we filed the 10-K today. As Chris mentioned earlier, during the preparation of the financial statements and through our continuous process improvement efforts, we identified some material noncash misstatements primarily related to the timing of revenue for some products and associated contract costs, capitalized software and certain other nonroutine items. We have revised these prior period financials to reflect them in the appropriate period, and these adjustments can be found in the 10-K filed today. While this resulted in a slight delay in our earnings timings, we believe it was the prudent step and reflects our continued focus on strengthening our financial reporting and controls. Today, I will provide update on our 2025 strategic finance priorities, review our fourth quarter and full year financial results, provide additional insight into segment performance and profitability trends, discuss our cash flow generation and balance sheet progress. First, an update on our financial initiatives and overall progress in 2025. This year marked meaningful operational and financial improvement in the health of the business. As Chris mentioned, it was highlighted by the continued margin expansion and strong free cash flow generation in 2025 and over the last 2 years. Firstly, I'd like to highlight the investments we are making in improving our finance function. Over the past 2 years, we have been strengthening the finance team and continuing to improve our processes and controls. Further, mid last year, as part of our ongoing commitments to governance and financial rigor, we appointed our new external auditor. As a result of this partnership, we are accelerating process improvements in many areas, including progress towards remediation of the material weaknesses. As an example, we are already seeing the benefits from the investments we have made in building our in-house quote-to-cash centers of excellence team and continue to further strengthen processes with additional internal and external resources. Next, a core focus throughout the year has been improving cash flow from operations. For the full year 2025, cash flow from operations was $37 million, an increase of 19% year-over-year, driven by stronger profitability, improved working capital management and continued discipline around expenses. Further, we have also maintained a disciplined approach to capital allocation during the year. By prioritizing investments with highest returns and carefully balancing growth opportunities, we were able to reduce gross capital expenditure in 2025 while continuing to support strategic needs of the business. Free cash flow, as defined as cash flows from operations adjusted for capital expenditures was $20 million, an increase of approximately $5 million year-over-year. As a result, we ended the period with a solid liquidity position, providing additional flexibility to continue investing in the business while also supporting balance sheet objectives. Further, we also strengthened our financial position through disciplined debt reduction, lowering net debt by approximately $19.5 million year-to-date and improving our net leverage ratio to 2x. This marks the fourth consecutive quarter with net leverage below 2.5x and a significant improvement from over 2x in Q4 2023, underscoring our consistent improvement in balance sheet improvement and capital efficiency. Further, as cash generation continues to build, our approach to capital allocation remains disciplined. We are constantly evaluating the best uses of capital, including share buybacks and organic investments in order to drive value for all stakeholders. We are also very excited to announce that in November 2025, we entered into an amended and restated credit agreement with our syndicated lending partners. The new agreement includes a 5-year term that expires in 2030 with up to $250 million in credit facilities. This financing extends our maturity profile, provides very attractive overall cost of capital and provide additional liquidity to support both our ongoing operations and strategic priorities. Finally, margin expansions remain central to our long-term strategy, and we continue to see expansion of adjusted EBITDA margins in 2025 by 350 basis points, driven by cost optimization initiatives and disciplined expense management across the organization. The improvements were primarily related -- realized across IT, cloud operation, vendor optimization and patient care support, where we applied a strong return on investment framework and leverage automation to streamline workflows and improve efficiency. Over the last 2 years, the adjusted EBITDA margin has expanded by more than 650 basis points from the combination of global workforce transition, targeted cost optimization actions and efficient revenue growth. Now turning to our fourth quarter results in more detail. Bookings in the fourth quarter were $19.8 million on a TCV basis, up $6 million compared to prior year and up $4 million sequentially, providing continued commercial momentum as we head into 2026. Fourth quarter revenue was $87.2 million, a decrease of approximately 1% compared to a year ago. As a reminder, the year-over-year decline in Q4 '25 included approximately $1 million from the sunset of our Centriq product in the patient care business. Normalizing for this, total revenue growth would have been about 1% point higher with revenue roughly flat to prior year. Financial Health revenue totaled $56.2 million and approximately 65% of the total company revenue represented an increase of 2% year-over-year, primarily due to strong growth in the Encoder business. Patient Care revenue was $31 million, reflecting a 6.6% year-over-year decline, primarily due to the sunset of our Centriq. Total gross margins in the quarter were 53%, flat versus prior year and up 120 basis points sequentially. Financial Health gross margins improved to 50%, an increase of 65 basis points compared to the prior period, driven by the continued impact from our offshore transition as well as other labor efficiencies and ongoing process improvements. Patient Care gross margin was 59%, down 75 basis points compared to last year, primarily due to revenue mix and timing. Adjusted EBITDA for the quarter was $19.2 million with a margin expansion of 160 basis points from 20.4% in the fourth quarter of 2024 to 22% margin this quarter. The consistent quarter-over-quarter improvement reflects both stronger gross profit performance and continued execution against our cost optimization initiatives. As these structural improvements continue to scale, we believe there remains opportunity for additional margin expansion going forward. Now I'd like to provide a few full year highlights. Total bookings for the year was $82.9 million on TCV basis, up 1% compared to the prior year. On ACV basis, total bookings were $70.9 million. Our full year revenue of $346.8 million increased 1.4%. Financial Health revenue was $221.7 million, was up 2% compared to the prior year as growth in CBO and Encoder businesses from revenue generated from bookings was partially offset by client attrition and slower growth in other products. Patient Care revenue was $125.2 million, roughly flat versus prior year. Excluding the impact of Centriq, Patient Care revenue growth would have been about 4%, driven by SaaS booking and new customer implementations. Adjusted -- 2025 adjusted EBITDA of $68.7 million increased 23% year-over-year with margin expansion of 350 basis points, reflecting gross margin improvement through improved productivity and cost actions with disciplined cost management. Moving to the balance sheet. We ended the quarter with $24.9 million in cash, more than double the $12.3 million we exited 2024, driven by improved earnings conversion and disciplined working capital management. Net debt was reduced to approximately $139.8 million, and our net leverage improved to 2x, marking our strongest leverage position in several years. With accelerating free cash flow generation and a strengthened liquidity profile, we are well positioned to continue deleveraging and enhancing financial flexibility into 2026. As Chris mentioned, while we are not providing formal guidance due to our strategic review process, we remain confident that we can achieve modest revenue growth in 2026, along with continued adjusted EBITDA margin expansion of approximately 200 basis points. In conclusion, I'm pleased with the operational and financial progress that we have made across the organization over the past year and look forward to keeping you up to date on our continued progress. Thank you, and I will now turn the call over to John for questions. Operator: [Operator Instructions] And the first question comes from the line of Sean Dodge with BMO Capital. Sean Dodge: Vinay, you mentioned the outlook for the year being modest revenue growth. I guess just in context of the new bookings metric you're providing with the annual contract value, could you give us just a quick tutorial on how to use that to kind of better understand your visibility there? Do we take like recurring revenue from 2025? Is that the baseline and then we assume some type of client churn and then layer in the ACV bookings? Is that the right order? Am I missing a step or an assumption in there? Vinay Bassi: No, I think you're on the right track. Like you said, the recurring revenues and some assumption of bookings conversion because, as you know, bookings have the same -- you can apply some formulaic view of how bookings translate into revenue and attrition. I think that's the right way of doing it. Sean Dodge: Okay. And then the comments on customer retention on the RCM, the CBO side, Chris, you mentioned making some improvements to that process. Did your retention rate in Q4, did that continue to improve? And then if you could just frame the number of renewals that you had in 2025 for the full year, how will 2026 compare? Do you have a similar number of contracts renewing this year as you did last? Or is it more or less? Christopher Fowler: It's not quite as many that we're -- that we have kind of in the target of as it relates to the transition and then where we're paying that close attention to make sure that we're not putting ourselves in a spot of bother. What I would say is that going back to your first question that it's the continuation of some of the attrition from '25 that's playing into '26 and then a modest improvement to flattish improvement over that number. And so that's where we come back to with the bookings performance and with that continued kind of muted success on the retention side, that we see that modest growth year-over-year. Again, we're focused on making sure that we've got the process right and making sure that as we continue to transition customers that we're paying attention to the metrics that matter the most, the cash in the door, the communication with the customers that we have not impaired their operations as well, not just from a cash perspective, but also the day-to-day operations and let that kind of be our guide as the throttle for the transitions going forward. Again, we feel good about the progress we're making, but we want to continue to make sure we're measuring as we go. Sean Dodge: Okay. Great. And then on the strategic review, I know there's a lot you can't talk about with that, and I know there's a wide range of outcomes there. I guess just any indication you can give us on time lines? It sounds like it's been underway for a while. Is there a point in time or date you expect to communicate to us what you decide to do or not to do? Christopher Fowler: I'm going to do my best to not be tongue in cheek here, Sean, but you kind of answered the question at the top, very limited. And what I would say is right now, we do not have a time line on this, to your point. I think the Board is being super thoughtful about this. And again, with the focus of shareholder value as the guiding light to the process and making sure that it's more about getting to the right outcome as it is about hitting a certain deadline. Operator: And the next question comes from the line of George Hill with Deutsche Bank. Maxi Ma: It's Maxi on for George. So we are seeing a lot of volatility in bookings and annual contract value over the past few quarters, and you talked about more larger deals in the pipeline. How should we think about the conversion timing into revenue? And how has implementation duration or client ramp changed? Are there any capacity constraints at this point? Christopher Fowler: Thank you, Maxi. There are no capacity constraints, and we still are in a situation where our bookings were a little bit at the mercy of the customer for the timing. So the capacity is typically not on our side. We're typically looking for ways to accelerate that with the customer and making the entry into the service or the technology more efficient. So as a basis, typically, the technology that we're putting in, if it's a replacement technology, then there is a contract term that the customer is working out of that they're not going to want to double pay for something. And so we are, again, sort of at the mercy of what those contracts are. On the services aspect of things, typically, it gets down to -- sometimes it's politics at the facility of how the onboarding and offboarding of the staff that's doing the current work at the facility plays out. So we continue to be mindful of how we can do a better job of representing the bookings impact into the run rate and how we can be more thoughtful for you guys to understand how that plays out. And I would say, as we continue to work through this year, that's something that we may try to get better at. Maxi Ma: Got it. That's very helpful. I just have a quick follow-up. Given margin expansion is primarily cost driven, how much incremental opportunity remains versus what's already been realized? Are we getting close to peak margin after achieving the 200 basis points improvement target this year? Christopher Fowler: I hate to kind of be a little bit futuristic with this. But I think that we're -- you heard me talk a little bit about AI in the prepared comments. And what I would say is we're continuing to look for opportunities for efficiency and better outcomes based on the availability of AI in the different pillars that we discussed. So from a development standpoint, us being able to accelerate our road map and be able to deliver our products faster to our customers, which drives revenue, which drives margin and also being able to use it on our RCM services side, to be able to return cash faster to our customers. And so I don't think we're at the end when we hit that 200. And I don't know where the ceiling is. We're going to continue to keep pushing and leveraging both the staff that we have and also the technology that's available, and we'll continue to keep you updated on the progress there. Vinay Bassi: And I'll just add one more thing. While cost is obviously the biggest driver, I think revenue mix is also will play as technology solutions like encoder keeps picking up, those are at very higher margins than our services business. So while the big needle mover in the past has been cost, but we keep a close eye on the revenue mix because that could be a big contributor as we keep going. And as Chris said, we still have more room to grow here. Operator: And the next question comes from the line of Jeff Garro with Stephens. Jeffrey Garro: I want to start with a strategic question and ask if you could give some comments on how you currently see the strength of the business from combining Patient Care and Financial Health and opportunities or synergies that you see from that combination beyond just having the overhead scale of having both of them under one roof. Christopher Fowler: I'll take a stab at that, Jeff. First of all, condolences on the heartbreaker with Duke. That was an unbelievable shot. But to get to your question, to me, we've talked about this in the past. I think there is such an interconnectivity between the relationship and the foundation that we have built with the rural community customer base with the EHR and how we're able to use that as really kind of the platform that we can grow from. I think as we continue to advance the technology in the EHR, we are focused on that 100-beds and under space. And I think that there's room for us to expand there. And I think there's natural expansion in that customer base for the RCM services as well. So when we look at this strategically, I think it is about how those 2 pieces together can continue to fuel the growth in the rural and community market going forward. Jeffrey Garro: Excellent. I appreciate that. And I appreciate the condolences, it's going to be a multi-month mourning period here. But I want to go to the forward view and you understand the lack of formal guidance, but I want to see if there's anything that, Vinay, you would want to call out from FY '25 that won't repeat as well as ask about whether there are items from Q4 that you would call out as appropriate to annualize as we look forward into 2026. And then just lastly, to catch all, any general comments on visibility that you see for the business relative to prior years as we look ahead? Vinay Bassi: So that's a great question. I like -- I'm bound a little bit on not giving too much on the guidance and all. But what I would say is you know this business better than I do also, Jeff. We will continue to have some seasonality of some of the revenue streams and the timing of bookings. That -- that part will keep on -- might be more there. But I think as what Sean mentioned, looking at our bookings and attrition, I think modest revenue growth is what we have factored in. But I wouldn't say like there would be significant changes from the past. But yes, some seasonality will play obviously, quarter-to-quarter. Jeffrey Garro: Great. I appreciate that. And one last one, if I could sneak it in. Some really helpful commentary around the pipeline and some of the metrics you gave there. Really great to see that. So I wanted to ask about your plan for pipeline to bookings conversion and specifically around the impact of your new commercial leader, given the growth in the pipeline, some of that pipeline building must predate him, but he has a great set of experience and probably has some good plans on converting that pipeline to bookings. So I wanted to ask you to dive into the weeds a little bit there. Christopher Fowler: Yes. A good question again. What I would say is the pipeline growth that we have seen really is attributable to the new team that we have in place now, right, and their new approach to the process. So the first step is really making sure that we've got that pipeline built so that we have more shots on goal to make sure that we flatten out the consistency of the bookings quarter-over-quarter. So we've done that, that we've seen the pipeline increase. And now I think over the next quarter or 2, we should start to see the size of the pipeline also smooth out through the top to the bottom of the pipeline, really, so the funnel is kind of evenly scattered so that we have the ability to make sure that we're putting up those consistent numbers quarter-over-quarter versus what you've seen over the last several years, where we have good quarters, down quarters and you kind of see that yo-yo. The goal is that we're trending up, but that we're also smoothening it out just a little bit, which allows for us to be a little bit more predictable kind of in all parts of the business. So I think that, that's the second phase from the commercial team transformation, first getting that pipeline built. Now it's about making sure that we're pushing it all the way through. I've been real pleased with how they worked through making sure that the integrity of the opportunities in the pipeline is there. And then also, and I think we called this out on the script that the quality of the pipeline has also improved so that we've got much more recurring revenue and also focused on some of those larger opportunities, we're starting to see those pops. So again, the credibility of the story that we've had from the beginning of we think that there is a tremendous market opportunity in this space for the services that we provide. Now we just need to see the pipeline pay off in the coming quarters. Operator: And the next question comes from the line of Sarah James from Cantor Fitzgerald. Sarah James: I wanted to go back to your earlier comment on the financial health products. You were talking about rolling out solutions that predict claims and claims denials earlier and more accurately than they have in the past. Can you tell us a little bit more about that? Any KPIs you can share time lines of launches of waves of the product? Christopher Fowler: Yes, absolutely. Welcome back, Sarah. Glad to have you on the call. So we are -- we have in a pilot format some of our technology in the field. I think it's important to say this is homegrown. We have built this internally. And we are experimenting, I would say. So if we're looking at it in the baseball parlance, I would say we're in the very early innings on this initiative. But the mindset is that because we have the full RCO technology suite, we have the remit information from 835s. We have the claim status information from the 276 to 277 transactions that go out for us and we have this not just for the customers we do the billing for, but for the customers that we do just the claim submissions for as well. So we have a great database of information to be able to train the models. And right now, we're in that training phase with a handful of code sets on a handful of customers. So right now, we don't have any KPIs because it's still in a learning phase. But the goal is that we continue to take the information that we have from the front-end edits from the back-end remits and continue to winnow that down so that on specific rejection codes that we receive, denial codes that we receive that we're flagging those early with an opportunity to be able to really have an impact on the number of denials that we're having to manage. That's really, I think, the opportunity. I would say, in general, probably 80%, 85% of claims are going through and getting paid once they go through our edits. So now there's an opportunity for 15% of the claims to be improved. I think that's the area that we're looking to really kind of make an impact on. And the real part about it, too, is that the work to get those corrected and then back through the system is an arduous process because it can take hours on the call with the insurance payer and then work back with the customers to get the information and the documentation right, and it just creates this vicious cycle. And we've let the claim go out the door, so it takes 30 to 45 days to find out that it was going to get denied. So it's definitely our priority from the RCM side that this is the -- it might be the most difficult, but I think it has the highest opportunity for return for us from an efficiency and satisfaction for our customers. So more to come there. Sarah James: That's great. And one more. So as hospital systems are trying to manage through EAPTC expiration and what that implies for margins, are you seeing the way they purchase products change or having conversations that over the next year or 2, it might -- whether that's wanting more integrated solutions and less point solutions or if it's focusing on faster ROI versus long-term ROI? Like how are you seeing the demand change given the regulatory environment for providers? Christopher Fowler: It's a good question, Sarah. What I would say people are definitely focused on impact, right, that they definitely want that return. And I think that the world is clamoring for -- because you're now using ChatGPT or Quad personally, I think that people are expecting to see that show up and provide them relief in their work world as well. If you go back to the press release that we issued last week with our customer in New Mexico, Artesia, what you'll see is that it's generating 50% to 75% less time documenting for our providers which is a huge number, right? And it hits in a couple of places from a return standpoint. It provides provider satisfaction. It allows that provider to be more attentive to the patient and provide a better quality of care and hopefully a better outcome for that patient. And it also frees up capacity for that provider to see more patients, which ultimately drives more revenue. So I think those are the kind of -- those are the things that our customers are looking for and customers in general in health care are looking for. And so it's about how do we build and partner with more opportunities to deliver something like that. Operator: And the next question comes from the line of Ryan Halsted with RBC Capital Markets. Ryan Halsted: I guess starting with the hospital end market and some of the regulatory changes that are impacting them. I think one of them is the rural health fund that represents a potential opportunity for you guys. I'm just curious if you've had any better visibility into what that fund could mean for some of your customer bases and if you've had any conversations about maybe even being a part of how that funding could be spent? Christopher Fowler: Absolutely, Ryan. Thank you for the question. So yes, we are 100% locked in on helping our hospitals get into that $50 billion fund and make sure that it's actually providing value for them. The way we've kind of characterized this internally is that it's a meaningful use opportunity again, yet that has a real impact to satisfaction and good outcome for the providers, for the patients and for the vendors as well. We announced -- I think you may have seen this a few weeks ago that we were selected by SAIC to be their preferred partner for the EHR and RCM technology and their alliance around the rural health care, which is really helping hospitals and states tap into those funds. I would still say this is early stages now. We're starting to see RFPs go out, but each state really has their own latitude to kind of help decide, drive what are the initiatives inside of their state that they need to fix, which I think is actually pretty elegant because the needs of Mississippi and the needs of South Dakota aren't necessarily the same. So I think giving that latitude back to the states is great. Now the challenge to some extent is that, that gives us 50 different strategies that we've got to kind of line up with and see where we can play and be helpful. The good news is there are some -- we are going to see some commonalities across that. So we are definitely, as an organization, very much focused on making sure that we are at the table with our customers, at the table with the states to be a part of shaping the use of that $50 billion and making sure that it's providing a positive impact and a good outcome. Ryan Halsted: That's great. That's helpful. And then maybe turning to AI. I think it was helpful to hear how you're deploying it both externally and internally. But I know certainly, a lot of attention is being paid to some of your competition, both across Financial Health and Patient Care. I'm just curious if you're seeing any sort of changes in terms of your competitive landscape from larger incumbents maybe becoming a bit more nimble in terms of making an entry into your markets? Christopher Fowler: We have not seen that yet. I think that companies are all trying to figure out how this plays out for them. And I think it's one of those things where you got to be pretty careful because it's expensive. And I think I said this maybe on the last call. I think sometimes people assume that AI replaces people and then that you get to drop that straight to the bottom line. I think for us, the way that we have kind of modeled out where we think AI can be an improvement is about a 20%, maybe 30% improvement from a bottom line perspective. But if you're not careful, you can really start to layer in some costs pretty quickly. And so we're trying to be mindful of making sure that we pick projects that we think have impact and that we also believe that we can bring quickly and that we're not carrying a bunch of extra cost without being able to rationalize that as we go. And so that's why when you look at the Ambient Technology, and we're seeing the sales that are being generated based on that and the pipeline continue to build based on that, there's a nice return that's associated with that. We look at what we're doing in the support area and how that's improving the experience for our customers, which is improving retention, which improves their desire to want to buy from us going forward. We're making sure that there is ROI attached to the AI projects that we're doing. And I think that, that's really the way that I think that if you're being smart about it, you got to pay attention because otherwise, you can end up with a pretty big bill without a lot to show for it. So we're happy with the progress we've made. And I guess, like others, we hope to see that kind of accelerate. But back to your initial question, we're today not seeing anything dramatically change from the competitive landscape on it other than our customers ask questions a lot more about what's happening, what we're doing with AI. So it's nice that we have a thoughtful response to be able to share back and that we're making meaningful progress on that. Ryan Halsted: Got it. That's great. And then my last question, just a clarification question. In terms of the outlook and the 200 basis points of margin opportunity, so are we to assume that, that is specifically the margin expansion opportunity you've alluded to in the past from offshoring? Or is it from something different or a combination? Vinay Bassi: It's a combination. It's the same one that I gave last time, too. Obviously, you saw the EBITDA is much better than the consensus. So we still feel 200 bps. So it will come from a variety of factors. Obviously, global offshore transition will be a key part of it, plus some other benefits of cost optimization and obviously something with the revenue mix, too. Operator: And the final question comes from the line of Gene Mannheimer with Freedom Capital Markets. Eugene Mannheimer: Congrats on a good finish to the year, gentlemen. So just building off that last comment, Vinay, so the 200 bps of EBITDA margin expansion, so it will be probably most of it from the COGS line, but some SG&A too with -- maybe with some of the AI you're introducing. Is that how to think about it? Vinay Bassi: So you should think about it. It will go through all the major cost or cost of sales, product development and will be the primary contributors of this. And obviously, from sales and G&A, there might be a mix of investments needed as and when. But I think it will not just be in COGS, it will be primarily, but also from product development piece where we constantly keep on looking at ROI driven, like what Chris said, we are working on these 4 initiatives. Some of it goes through product development, some of this goes through cost of sales, but all are positive ROI projects. Eugene Mannheimer: Got it. Got it. Okay. And then second -- my follow-up would be just maybe talk a little bit about that partnership with RevSpring. You signed it about 3 months ago. And I'm just thinking about how you see that bringing value to your customers and if there would be anything incremental this year that could come from that. Christopher Fowler: Thanks, Gene, and thanks for the nice comment at the top as well. I don't think -- and Vinay is pulling up real quickly. I don't think there's a meaningful impact this year. Again, I do think that as the changes on the regulatory wins continue to blow and there may be some challenges with eligibility and continued increase in deductibles and co-pays. I think it's in our best interest to make sure that we have a best-in-class patient collections initiative. So we have the service where we have the call center and we're making the outbound calls, we receive inbound calls and also partnering with RevSpring to deliver the digital experience for how the patients interact with their bill pay. So I do think that it will be a -- I do think that it will have a material impact. I don't expect that to play out in this year. I think we'll start to see some traction there towards the back half of the year and then moving into 2027. Vinay Bassi: Yes. And Gene, I think Chris is right. There will be some savings on the cost part as we go through the digital piece. And obviously, they're becoming a much more strategic partner yields more benefits across the board from next year onwards. Operator: This now concludes our question-and-answer session. And I would like to turn the floor back over to Chris Fowler for any closing comments. Christopher Fowler: Thanks, John, and thank you all for your continued support. As always, thank you to all of our TruBridge team members who wake up every day focused on delivering for our customers. Have a wonderful afternoon. Thanks, everybody. Operator: And ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.
William Li: All right. Let's get going. My name is William Santana Li, Chairman and CEO of Knightscope. I'm here with our Trustee and CFO, Apoorv Dwivedi. We're going to do a little bit of a different format today. First, an announcement regarding this Thursday, then Apoorv will go through the 2025 financial results that we filed on Form 10-K. And then we aggregated a bunch of questions that have come in, including from the 3 equity research analysts, and we'll try to put that in a much more efficient approach to answering questions. So with that, I'll start it off with -- we're going to have our first annual Autonomous Security Force Day and also celebrate our 13th year anniversary in business. I often like to say we're here in Silicon Valley. There are 22,000 start-ups here. 95% of them failed despite having unbelievable ambition, financing and the like. And for us to be able to start the company, get it funded, grow it, take it public, buy 2 companies and still be at it 13 years later is certainly a testament to the relentless nature of the Knightscope team. And I couldn't be more excited about our future as we build out the nation's first autonomous security force. So this Thursday, we're going to have several VIP private sessions for previews as to what we're building during 2026 and intentionally to get some market feedback, and then we're going to have an open house in the evening here in Sunnyvale at our new headquarters. And there's rumors flying around, there's going to be an ice cream truck and a bunch of other stuff. So hopefully, if you have an RSVP, please be sure to check our social media channels or newsletters, and you can grab a spot there. So that will be at 6:00 p.m. this Thursday. All right. With that, I'll turn it over to Apoorv, who will walk you through history, meaning 2025, and kind of what happened then. Then we'll talk a little bit about the acquisition and the questions and why all the excitement for 2026 and beyond. So with that, Apoorv? Apoorv Dwivedi: Thanks, Bill. Good afternoon, everyone, and thank you for joining. I will begin with a review of our financial performance, first for the Q4, and then the full year 2025, followed by commentary on liquidity and capital strategy. With that, let's jump right in. Q1 -- sorry, Q4 revenues declined approximately 9.8% year-over-year [indiscernible] product shipments, primarily driven by supply chain constraints which we've talked about in the past that resulted in delays of ECD product deliveries. The services business remained materially unchanged. Gross loss of $1.6 million reflects ongoing margin pressure driven by elevated material and other input costs for production and by under-absorption of fixed manufacturing overhead. These factors were consistent with full year trends and underscore the need for improved scale and supply chain normalization to drive margin recovery for the company. Our operating expenses of $9.7 million in the quarter increased approximately $3.8 million year-over-year, driven by higher investment in both R&D and SG&A functions. R&D spending reflects the company's deep commitment to continued advancement of our next-generation platforms such as the K7, the K1 Capsule and the Signals software. SG&A increased primarily due to targeted investment in talent and organizational capabilities, which are critical to positioning the company for future scale and growth. Overall, the cost structure reflects a deliberate investment phase to support long-term expansion. Q4 2025 net loss of $11 million widened versus prior year due to a combination of lower revenue, continued gross margin pressure and sustained operating investment. The quarter reflects a near-term financial impact of scaling the platform, while revenue growth remains uneven. With that, moving on to full year. 2025 full year revenue grew approximately 4.9% to $11.3 million, driven primarily by the services revenue expansion in both the Machine-as-a-Service ASR offerings and our full service maintenance plans on the ECD installed base. However, growth in the product revenue was modest due to the already discussed supply chain-related constraints and shipment timing issues discussed earlier. [Audio Gap] increased by approximately $1.1 million versus prior year, reflecting higher bill of material cost [indiscernible] and production variability. The lack of scale continues to pressure unit economics, reinforcing the importance of driving higher volume and utilization as we continue to grow. Full year operating expenses increased approximately 12.1% year-over-year, driven primarily by a $5.4 million increase in R&D investment compared to 2024. This reflects continued focus on platform development and next-generation products to support future scalability. The increase was partially offset by cost savings in SG&A expenses of approximately $1.8 million as well as the absence of $0.5 million in restructuring charges incurred in the prior year. This demonstrates progress in optimizing the company's cost structure while investing in growth. Full year loss increased to approximately $33.8 million. This reflects a combination of modest revenue growth, continued gross margin pressure and elevated investment levels, consistent with the company transitioning to growth. Weighted average loss per share of $4 decreased by approximately 63.5% year-over-year. Finally, from a balance sheet and cash flow perspective, we used approximately $30.3 million in operating activities during 2025, reflecting a continued investment [indiscernible] organizational scale. Importantly, we raised $42.2 million through financing activities, allowing us to strengthen our balance sheet and support ongoing operations. We ended [indiscernible] a significant increase from the $11.1 million [indiscernible] 83% year-over-year improvement in cash position. Looking ahead, our focus remains actively on managing liquidity through a combination of capital markets, access, operational discipline and strategic initiatives designed to improve cash generation over time. In summary, 2025 was a year of foundational investment. We strengthened the liquidity position, continued to grow revenue modestly and made critical progress in evolving our business model towards a more integrated and scalable platform. While near-term financial performance reflects that investment phase, we believe the combination of our technology, software and now human-enabled delivery capabilities position Knightscope to pursue larger opportunities and improve financial performance over time. With that, I'll turn the call over to Bill as we go through the questions provided by our analysts. William Li: Yes. Apoorv, I think there's some connectivity issues. So if you want to kill the PowerPoint and turn your video back on would be great. So while he does that, let me put things in context a little bit. We've been at this problem and tackling this issue of trying to see if we can make the U.S. the safest country in the world, utilizing technology, AI, robotics, electric vehicle technology, telecommunications, the whole gamut. And after working on the problem for over a decade, it's become obvious to me that the nations addicted to CCTV cameras, security guards and video management systems running on Windows and -- are unwilling to change or willing to change at a snail's pace. And so we wanted to try to be helpful to our clients to build a managed service provider that can take a lot of the technological burden, complexity regarding the technology itself, installation, IT, cybersecurity, keeping things up to date, making sure it's all operating off of a Chief Security Officer's hands and come with -- go to market with a complete full solution instead of having this disparate set of widgets all over the place that don't talk to each other and the like. And an accelerant and catalyst to do that was the acquisition of Event Risk that we recently announced. And that's a transformative and strategic acquisition so that we can go to market as a managed service provider to actually fix the client's problems instead of doing the mix and match. And that's one of the reasons we're extremely excited about our future. We've been at this for a very long time. I've never been this excited and kid around with the team here. It's like I couldn't sleep before because all kinds of problems and stuff. Now I can't sleep because I'm too excited. So the future looks genuinely bright. We have a lot of contracts signed, and just focused very much on execution, both operationally and technologically. We've got a lot of new technologies that we're developing, and we're going to showcase some of that this Thursday. And the coming years are going to create literally a new kind of entity that has never existed before, a managed service provider that can be that -- a nation's first autonomous security force. William Li: So with that, we got a bunch of questions in from a variety of folks, including our research analysts. So Apoorv, if you want to read off the first easy question, we can get on it. Apoorv Dwivedi: Absolutely. All these questions are easy. William Li: Excellent. Apoorv Dwivedi: The first one was basically, can you provide visibility on timing of supply chain issues clearing up? And basically, are any supply chain disruptions anticipated due to all the global conflicts happening across the Middle East and Europe? William Li: I think there's volatility prior in the system, still in the system, and I would forecast going forward, we'll continue that volatility. So we need to better manage the volatility. Some of it has to do with tariffs, geopolitical instability, et cetera. Some of it has to do with an end-of-life component. And some of it has nothing to do with, hey, can you get the NVIDIA chip? It's the one specific resistor or button or what have you that ties up the whole thing, and it's not one strategic component. So this continues to be a whack-a-mole kind of problem that we're working through. We now have a supply chain manager and a team that's proactively working the issue. So we're starting to plan better, buy in advance, replace components, outright replace suppliers if needed. But to be on a cautionary note, we've had our struggles. I think we can try to minimize the damage, but a lot of it is not necessarily directly in our control. So we're working through the problem. I don't know if Apoorv, you had a different take on that? Apoorv Dwivedi: No, I agree, Bill. I think the volatility is driven primarily by macro events. And I think we're doing a lot of things internally to mitigate as much as possible, right? The broader electronics market, in particular, continues to be volatile. There's longer lead times, tighter availability in items like compute modules, networking hardware, memory, et cetera. So I think those are some things that are just outside of control, or controlled directly, but we are putting in place mitigation steps. So things like making sure we're not relying on single source, expanding our relationships to multiple vendors, making sure that we identify items that have the highest risk and making sure that we have enough of those in stock, which is an investment in inventory. So there's a lot we're doing, and we've been able to learn over the last few months that we're working through. I would say keeping supply chain and production in sync is important for us, and we'll continue to adjust as things progress. We do expect that versus prior year, this year, we'll have slightly better, if not much better outcomes as we continue to invest in supply chain and our relationships. William Li: All right. Next. Apoorv Dwivedi: Next question was on the move. Is the move to the Sunnyvale facility complete and up to operational efficiency? William Li: Mostly. Mostly done. We have a little bit of a challenging landlord situation with less flexibility than we want, but we're working through it. One of the reasons we're having this Autonomous Security Force Day here is to showcase the progress that we've made since we've moved into the building. Still a lot more that we want to complete, but things are looking pretty good. I will confess that some of us are nervous that we're going to run out of space a lot sooner than we were planning, but that's a good problem to have in the coming quarters. Apoorv Dwivedi: Next one is on the recent acquisition. Following the Event Risk acquisition, can you give us an estimate of how much your potential market has expanded? Do you have an estimate around the new TAM? William Li: I've been wanting to do an acquisition like this for 5 years. So the TAM that we actually put in the investor presentation, if you haven't seen the latest one, it's at knightscope.com/america. That $230 billion there is the TAM that we're going after and remains unchanged because this was kind of the overall plan. I think this is an unlock or a catalyst for us to be able to go to market much more efficiently and much more aggressively. So I think one of the enticing things that's going to happen in the coming quarters is just to see genuine accelerated growth versus the less than optimal growth that we've seen to date. And the idea is to be able to -- maybe 2 different steps here. One, we have existing clients between the acquisition and our legacy clients. And there's a significant amount of opportunity to cross-sell technology or security agents back and forth. So there's that kind of literal synergy. And then there's the -- once that's done, let's go to market together in specific verticals for us to be able to, again, bring a total solution. So the TAM doesn't change the amount that we can go grab after the TAM and do it in an accelerated fashion is, I think, dramatically increased. We're -- if you haven't heard, we're -- the team is well over 400 employees now, and we're in a pretty serious pace of growth. Apoorv Dwivedi: Yes, I agree, Bill. I think the way to think about it is not whether the TAM has increased, but more our ability to penetrate that and grab a larger piece of that market share faster is definitely accelerated. We've talked about this in the past where we've said, generally, when the RFPs and RFQs are out for security guards only, we were, for example, excluded from those because we don't have guarding services. We don't have humans. We're only technology. And then when we would try to go after technology, only RFPs and RFQs, again, we didn't have a full-on solution. So it kind of limited us a little bit. Now with the acquisition and being able to go to market in a way that allows us to provide that fully managed services or fully managed security services, it just allows us to go to market faster. William Li: Yes. And a little bit more context for those newer to that conversation. There are, I think, rough numbers, more than 6,000 guarding companies in the U.S. that maybe have more than 100 employees, plus or minus. Our friends over at Lake Street helped us vet the first 100, and we came across Event Risk and Eric Rose. And a lot of special things about why we got so animated and excited. Having a combination of a serious operator who's been more than around the block, has been able to work in large established guarding companies, help train the Navy SEALS, Marine, law enforcement and been able to grow and bootstrap an entire company unto himself with the team was an accomplishment in and of itself. If you add the growth, the continued double-digit growth that he's been able to enjoy over the past few years is another important bullet point. But another one is very interesting. The industry is 100% to 400% employee turnover rates. The Knightscope Security Force is at 6%, very laser-focused on recruiting, on recruiting the right people, providing them health benefits, providing them the appropriate training. And in our case, we're going to be adding a few more things. We -- the Board of Directors kindly approved stock options for the entire team so we can also attract more people and keep the people employed and engaged and have them be part of the winning solution here. And we're working on some new technologies to add to those security agents. So in the future, you'll be hearing us talk about ASAs or augmented security agents that really don't exist today. And that allows all of that, combined with the stationary technology, the autonomous robotic technology, the augmented security agents, all having that data fed into our upcoming new Signals software platform. And our remote monitoring team is going to give us an unprecedented capability to properly secure a facility. And our security analyst that's remotely operating then now has machines to do things autonomously. They can escalate things to a different risk level to have some humans involved. And then there is a response element, both armed and unarmed. And that's unprecedented in the industry. And one of the reasons why we're in good spirits and more than rather excited about the future. Apoorv Dwivedi: Question on the sales forces and how we mash them together. Two questions, and I'll combine them here. What is the overall sales pipeline expected for the ASR, the ECD and the Event Risk, or now known as the Knightscope Security Force business? And then what is the timing around being able to sell legacy Knightscope with the Knightscope Security Force services together? William Li: I'm going to want Wall Street, media and our own team internally to really stop focusing on selling widgets. How many of these units did you sell? How many of this standard stationary device did you sell? What we really need to focus on is aggregate total revenue growth of providing an actual solution to our clients. And that is the overall strategy for us to deliver a managed service provider and try to focus on fixing the client's problem, improving outcomes, improving quality, improving service levels. And hopefully, there's some cost reductions in there for a client depending on the location. But overall, manage this much, much better that's being done today and not focused on did you sell an agent or 10 agents or 100 or 300 agents with that contract? Or did you sell -- the important part is, are we fixing the client's problems. And that is a bit different and why the change in strategy is to force that change in adoption that's needed across the country. Most humans and most large organizations don't want to change. I told the Pentagon, DHS and Congress the same thing. This whole country does not want to change. Even when I'm sitting here, Silicon Valley is a bunch of engineers. Like you hand them electricity, fire and the Internet. In terms of AI, it's like, no, no, no, I'm good. I know what I'm doing. Like, I don't know. I think we need to find a different path to make those changes and give some relief to the chief security officers. If you really put yourself in their shoes in this day and age, it was different 30 years ago. But when -- if you're ex law enforcement, ex military, you're here to secure a property, that's kind of your go-to skill mix. In this day and age, hey, can you please talk to me about 4G and 5G versus private LTE versus industrial Wi-Fi? And then I don't know about the drone. And then is this cybersecurity compliant, but did the DoD accept the Impact Level 5? Or is it a FedRAMP thing? And you want the robot to work with the guard, and it's just -- it's too much. You're asking a CSO to be the chief technology officer, the chief information officer, the chief information security officer, the head of facilities, purchasing and everything else. And then we're wondering why it's not working and it costs too much money. So I really want the whole team, external and internal, to be focused on top line revenue and bottom line profitability as we get there. Apoorv Dwivedi: From a modeling perspective, will you be breaking Event Risk into its own reporting line item? Or will it be included within the services revenue? I can answer that one, Bill. Really, TBD. We're assessing the right way to reflect the Knightscope Security Force revenues and line items in the business. Most likely, though, we do consider it to be a service, and we would want to include that in the services line. However, there are some GAAP rules that we're evaluating along with our auditors to make sure that we not only provide the right level of disclosures, but the right level of visibility as we go forth and draft up our 10-Qs and 10-Ks. William Li: And I don't -- I think we missed part of the answer to the other question. The pipeline without [indiscernible] is rather healthy, let's put it that way. And we're intentionally focused on execution as primary drivers. So changing the recruiting profile of the team, setting the standards of the team differently, changing processes, figuring out appropriate uses of AI implementation for specific areas, building new technologies, everything is very much focused around execution because the pipeline is rather healthy. Apoorv Dwivedi: Absolutely. Next question is, what -- will you be announcing the contracts of the Knightscope Security Force when they are won? William Li: I think that's also a TBD. As we mentioned during the sit down with Eric, if you haven't seen the interview, go on our YouTube channel. We want to take a thoughtful balance-of-the-year process to think through the branding, through IT, through HR, through finance, accounting, audit, technologies, et cetera, instead of rushing decisions. So that also applies to press releases, public relations, external affairs, government relations and investor relations. So something we'll ponder and think through as the company continues to mature as a premium managed service provider. Apoorv Dwivedi: Next question kind of dovetails right into that, Bill. Can you provide a time line for integration? How is the process so far? And are there any notable items to call out? William Li: So this is probably my -- I've lost track, 24th, 25th or 26th acquisition. And as I often say, doing the deal is the easy part for those that have been around the block. It may not seem that way for people that participate, but it is actually the easy part. The hard part is day 1 after you close the transaction. I will say it has gone a lot more smoothly than all of us expected. We have willing folks who want to work together, who want to make changes, who need additional support and changes. But as I just stated, the integration plan is try to get everything sorted in a reasonable time frame over the balance of the year. In terms of priorities, let's call it, finance, accounting, audit-related stuff first, probably dovetail HR and IT kind of the same time. And then the last is the go-to-market, branding, marketing and that sort of thing. We are planning to be at GSX in Atlanta in September, so that you'll start getting a good -- more than a sneak peek then as to how the integration is going. Apoorv Dwivedi: Yes, Bill, I think being super deliberate in how we merge 2 organizations, primarily around culture, around go-to-market strategy and obviously, the back-end support needed to support the growth of the combined organization are things that we're looking at. From a time line perspective, I think it will take a couple of quarters, if not more, for us to kind of get our hands around how we want to move forward as a combined company. We are looking at internally, some of the things you talked about. For example, finance first, just integrating the finance functions, then looking at HR, IT. And then finally, as we move into the client-focused or public-focused phase of the combined company. Any outlook for any more M&A over the next year? William Li: So we continue to look for accretive opportunities, typically probably around 2 or 3 subjects. One is on the technology side. Again, living here in Silicon Valley, there's always some interesting items that might be easier to buy than to build. So we continue to look on the call -- just call technology front. Those often may not be top line revenue focused. It's more the nugget of talent or technology that we want. Another would be on the remote monitoring side of things. So we want to continue to build up the RTX capabilities as we build out the security force. So we're actively looking there. I think the growth on the security force itself is, as I said, healthy. So I'm not sure we want to do a bolt-on just yet, but we have a lot of activity going on. So M&A, open for business, but I always want to make sure it's going to be helpful for our shareholders and the overall growth of the company and be mindful and careful and make sure we get a good deal. Apoorv Dwivedi: Last question, Bill. What are some key milestones should investors watch out for in 2026? William Li: I can start. Maybe you want to finish, but I think the 10-Q that we filed in the second quarter that will reflect part of the activity from the security force side of things would be, one, the following 10-Q and then the following 10-Q. So I think keeping an eye on the regulatory filings starting mid-May would be important. Maybe there are folks in the audience that don't realize this. But usually, when you make an acquisition, there's like this 71-day rule, I'm sure I'm going to screw this up. But within 71 days, you need to file the kind of overall impact. So we're working on that. And so that will occur in the coming weeks, probably in the May time frame. So that, to us, is going to be really important because that will show is the strategy working or not and is the company growing and heading towards profitability. Second, technology. This all gets very exciting if you can have a pretty serious competitive advantage in a very large marketplace with capabilities that no one else can do. So we probably want to keep an eye on did the beta prototype testing actually occur in the second half of the year for the K7, which we're spending a lot of time on. And -- when the Board is excited, the management team is excited, the team is excited, our suppliers and vendors are excited. And all the recruits that we're hiring -- oh, by the way, go to knightscope.com/careers, we've got a lot of openings -- are all excited and dying to work on the K7. Like, hey, maybe we're on to something. So keeping an eye on the K7 progress, important. On the stationary side, we're unveiling the K1 Capsule and Super Tower here this Thursday. So progress there is important. And then also on the Signals platform. I think those are 3 that we can publicly talk about are things to keep an eye on. So basically, 2 answers to the question, like is Knightscope doing well or not? Is the revenue going up? Yes or no, and not based on press releases or anything else. I want to see the regulatory filing. Are the numbers going up, yes or no? And then are you making serious progress on technology development that will give us a sustainable competitive advantage. I think those probably should be the 2 key items to keep an eye on, unless Apoorv, you've got another one? Apoorv Dwivedi: No, Bill, I think at the end of the day, it comes out to improvements in execution and how does that reflect in the company's financials and the way we are perceived in the market by our investors and customers and clients and vendors. It's really our ability to go out and grow revenue. And with the combined company, we have a theory that this will actually accelerate this. So what -- look out for the second half to see some of that proof. Obviously, product launches and commercialization of our new product development that the team is working really hard on, that's going to be important. And overall, just watching -- hopefully, as we do these things the right way over the next few quarters, especially going into the latter half of 2026 and 2027, we should see improvements across all of our P&L line items, both on the revenue side as well as the cost mitigation side. And that's going to be the sum of all things we do from an execution perspective. If we do that right, it will show up in the financials. William Li: And then I've gotten a lot of questions asynchronously here on, hey, what does Bill and Apoorv and Mercedes know about running a guarding business? Well, keep in mind that the idea and how we approach this is very similar to how a private equity firm would look at it, which is basically, we want to go buy a solid business that's run by stellar management. And then we give them the tools and support and technology for them to grow and give them the autonomy, frankly, to be able to do that. And we found that in Event Risk. The management team is very strong. They've been growing very quickly. The client retention rates are astronomically good. The employee retention rates are astronomically good. And we've got real hitters that we're betting on to continue to grow the business. And then what we're going to come with is technology then that will ensure that it's not a commodity staffing business of headcount the way it's kind of -- the industry has been run today. So we're reimagining and re-architecting how physical security gets delivered to a client. And our initial interactions with folks that are in the know or prospective clients or in the pipeline, we know we're on the right path. Our focus right now is just heads down on execution. So the balance of the year, to kind of wrap this up, is focus on technology development, focus on growth, finish up the integration so that 2027, '28, '29 are hopefully some epic years for us. And again, we're in great spirits. The market, I think, is trying to understand what we just did, both on Wall Street and in the security industry, but the proof is going to be in the pudding. And I'm betting on this team, and we're highly confident that the future is bright. So Apoorv, do you have any last remaining thoughts? Apoorv Dwivedi: No. Same, Bill. I echo both your sentiment and the team's sentiment in that we have a lot to do. We have a lot going on, and we just have to keep our heads down and focus. William Li: Yes. Lastly, I want to publicly thank our Board of Directors and the management team for the support in doing this strategic acquisition. Again, I've been wanting to do this for half a decade and finally got the brave pill to do it. And now I'm just kicking myself that we didn't do it 5 years earlier, but this is going to be a lot of fun. So hopefully, for those of you that can join, we'll see you Thursday night for our first annual Autonomous Security Force Day. Please be safe. Thanks, everybody.
Gary Friedman: There are pieces that furnish the home. And those who define it. There are places you visit. And those you remember. There are spaces you move through. And those have moved you. Welcome to the world of RH. Albert Einstein's Three Rules of Work: Out of clutter, find simplicity; from discord, find harmony; in the middle of difficulty lies opportunity. Seem especially relevant at this moment. We're compounding clutter from tariffs, global discord as a result of war, and the most dire housing market in decades can make it difficult to separate the signal from the noise. It's important to remember necessity is the mother of invention. And our most important innovations were birthed during the most uncertain times. Transforming a nearly bankrupt Restoration Hardware into RH, the leading luxury home brand in North America was not a feat for the faint of heart. While the external challenges are somewhat familiar, our internal opportunities are massively different. We're not closing stores and fighting to survive. We're building a never seen before brand that's positioned to thrive. Before we get into the details of our strategy, let's start with a few facts that should quiet some of the noise. In 2025, RH achieved revenue growth of 8% and 2-year growth of 15%, far outpacing our furniture industry peers by 8 to 30 points. Adjusted EBITDA reached $597 million, or 17.3% of revenues versus $539 million or 16.9% of revenues in 2024. Free cash flow of $252 million versus negative free cash flow of $214 million in 2024, an increase of $466 million year-over-year. Those results were despite 2025 being our peak investment year with $289 million of adjusted CapEx to support our global expansion plus an additional $37 million to purchase the Michael Taylor, Formations and Dennis & Leen brands to support the launch of our new concept, RH Estates, a strong performance considering the unusual circumstances. Let me shift your focus to our strategy and how we expect our growth to accelerate over the next several years. We believe there are those with taste and no scale, and those with scale and no taste. And the idea of scaling taste is large and far-reaching. We believe our goal to position RH as the arbiter of taste for the home will prove to be both disruptive and lucrative as we continue our quest at building one of the most admired brands in the world. We like to use a simple question to frame our significant opportunity. Who is the home brand for the luxury customer? The LVMH, Hermes, Cartier or Cucinelli customer. RH has curated the most compelling collection presented in the most inspiring spaces in the world. Our brand attracts the leading designers, artisans and manufacturers, scaling and rendering their work more valuable across our growing global platform. Our product is both categorically and stylistically dominant, enabling RH to address the largest market of any brand of its kind. We curate across the 7 major product categories: furniture, upholstery, outdoor, lighting, linens, rugs and decor, and we integrate across the 3 dominant product styles, traditional, contemporary and modern, which we refer to as RH Estates, RH Interiors, and RH Modern. RH Estates, our newest brand extension, launching this spring, will address the traditional market where the RH brand is currently underpenetrated. 60% of luxury homes feature classic or traditional architecture, which influences the majority of furniture purchasing behavior. RH Estates will feature the introduction of RH Bespoke Furniture, customizable collections from our recently acquired Michael Taylor, Joseph Jeup, Formations and Dennis & Leen to the trade brands. RH Estates will also include the introduction of RH Couture Upholstery by Dmitriy & Co., tailor-made sofas, sectionals and chairs of arguably the highest quality upholstery available anywhere in the world. Designers will be able to order custom made sizes and finishes plus specified COM fabrics. RH Bespoke Furniture and RH Couture Upholstery will enable interior design firms to now specify RH for their most discerning clients and custom projects. RH Estates will also include collections from many of the most talented designers and artisans in our industry. Let's take a look at some of their work. [Presentation] Gary Friedman: RH Estates will premiere at the opening of RH Milan, the gallery on the Corso Venezia, a 70,000 square foot former palace, during Salone, the largest design show in the world with an estimated 500,000 visitors descending on the city that week. The launch of RH Estates will include a dedicated source book, mainly mid-May, and international advertising campaign and freestanding Estates Galleries in Greenwich, Connecticut and the San Francisco Design District opening early summer. And the West Hollywood Design District opening in 2027. We believe RH Estates will become our largest and highest margin brand extension, driving significant growth over the next several years. Let me shift your attention to our multidimensional physical-first global ecosystem, the world of RH. That goes far beyond a typical multichannel approach, inspiring customers to dream, design, dine, travel, and live in a world thoughtfully curated by RH, creating an emotional connection unlike any other brand in our industry. The question we often are asked is why physical first in a digital world? Let me explain. Furniture remains the least digitized large retail category with an 80-20 store to online split, with luxury furniture estimated to be as high as 95.5%. Why do stores still dominate? Comfort, scale, finish and quality are hard to judge online. Even when customers purchase on a website, most experienced the product in a store, we believe the physical manifestation of a brand will continue to be significantly more valuable than an invisible online way. We also believe most retail stores are archaic windowless boxes that lack any sense of humanity. That's why we don't build retail stores. We create inspiring spaces. Spaces that are a reflection of human design, a study of balanced symmetry that creates harmony. Spaces that blur the lines between residential and retail, indoors and outdoors, home and hospitality, spaces with garden courtyard, rooftop restaurants, wine and barista bars. Spaces that activate all of the senses and spaces that cannot be replicated online. While most have been closing or shrinking the size of their stores, we've been building some of the largest and most immersive spaces in the history of our industry. Let's take a look at our most recent work. [Presentation] Gary Friedman: We believe our investments in building completely unique, immersive experiences in Paris, Milan and London, we'll set the stage for RH to become a truly global luxury brand. It's important to understand that there are several strategically significant businesses embedded in our galleries, including RH Interior Design, where we become the largest residential interior design firm in the world, with projects from San Francisco to Sydney, Los Angeles to London, Miami to Milan, and Dallas to Dubai. We offer design services, including interior architecture, landscape architecture, art and antique curation and turnkey installations. Another important business embedded in our galleries is RH to the trade, a specialized team that calls on services and supports interior design firms assisting in the design, curation, delivery and installation of many of their projects. RH Hospitality operates beautifully integrated restaurants, wine and barista bars in our galleries that generate significant traffic and brand awareness. While our galleries might see several hundred customers per week, our restaurants feed several thousand. With 26 restaurants in operation today and are scheduled to reach 40 by the end of 2027, RH is 1 of only 7 globally owned and operated luxury restaurant brands with 20 or more locations worldwide. We believe our galleries create a unique competitive advantage that will likely never be duplicated in our lifetime as the cost of construction at the luxury level has doubled post-COVID. To address that challenge, we've developed several immersive new gallery concepts that will enable us to scale in a faster and more capital-efficient manner. The first, the most revolutionary is what we call an RH design compound, currently in development in Naples, Miami and Walnut Creek, a compound is 6 to 8 independent buildings connected by beautifully landscaped garden courtyards with a sun-filled atrium restaurant anchoring the project. Due to the absence of multiple stories that require steel structures, grand staircases, elevators, complex mechanical systems and long development time lines, we believe we can build design compounds significantly faster and more capital efficient than our prior design galleries. Another new approach to deploying the RH brand in a faster and more capital-efficient manner is what we call a design ecosystem, currently under construction in Greenwich and Palm Desert and in the development process in West Hollywood Design District. An ecosystem is a multi-building brand presence on a street, in a neighborhood, design district or shopping center. Our first ecosystem will be in Greenwich, Connecticut, and includes our gallery at the Historic Post Office, our new outdoor gallery opened last year, and our new RH Estates Gallery with an integrated restaurant opening in the former Ralph Lauren building this summer. We've also developed a new single-story gallery, ranging from 15,000 to 20,000 square feet with a dramatic courtyard restaurant targeting secondary markets. We're currently under construction in Los Gatos, California and are in design development for galleries in Richmond and Milwaukee. We have been extremely pleased with our performance of our first freestanding RH Interior Design office in Palm Desert, California and have plans to open a second interior design office in Malibu this fall. In total, we have an opportunity to expand our presence in 27 existing markets, and open 1 of our new design concepts in 48 new markets across North America, representing a $2 billion opportunity. Let me shift your attention to our business model and balance sheet. While we believe it's prudent to plan conservatively this year due to uncertainties around interest rates and inflation, and have planned revenue growth in the 4% to 8% range in 2026. We do expect growth to accelerate to 10% to 12% in 2027, and reach $5.4 billion to $5.8 billion by 2030. Adjusted EBITDA in the 14% to 16% range for 2026, reaching 25% to 28% by 2030. We expect cash flow of $300 million to $400 million in 2026, and $500 million to $600 million in 2027, inclusive of $200 million to $250 million of asset sales each year. We expect cumulative cash flow of $3 billion by 2030, inclusive of the asset sales and expect to be debt-free by 2029. While one might look at the current market discord and argue that RH has been in the wrong place at the wrong time. I would argue we've used this period to position our brand to be in the perfect place at the perfect time. Let me explain why. There are two important factors that will meaningfully expand the size of our market over the next 10 years. One is the exponential spending of high and ultra-high net worth consumers on the home. Ultra-high net worth consumers with a net worth above $20 million, own on average 3.7 homes, billionaires own 10. Ultra-high net worth consumers spend 6.4x more on home furnishings than a consumer with a single primary residence. Two, is the estimated $30 trillion to $38 trillion wealth transfer projected to take place over the next 10 years, which is more than double the past 10 years. Not only does the absolute dollar amount more than double, it's estimated that the dollars transfer from one to an average of 7 people. It's possible over the next 10 years our market will be multiple times larger than the past 10 years. When you combine that with our efforts to elevate and expand our product, globally expand our platform, generate significant revenues and brand awareness with our immersive hospitality venues, I would argue that the RH brand is in the perfect place at the perfect time. And we will emerge from this period of clutter, discord and difficulty as one of the highest performing and most admired brands in the world. Allison Malkin: [Operator Instructions] Your first question comes from the line of Simeon Gutman with Morgan Stanley. Simeon Gutman: First question, I want to talk about demand signals from the consumer. This has been a transitional period for the company. I realize the demand is outpacing a lot of other home furnishing companies, but it's come at a pretty big cost to margin. So expectations around demand improving while we see the margin of the business begin to turn. That's my first question. Gary Friedman: Simeon, the margin pressures somewhat disconnected and unrelated from the demand. The margin pressures really from -- kind of the investment cadence we have as far as expanding the business throughout Europe and some of the margin pressure coming from the tariffs, from a transition and timing and resourcing. But you basically have kind of an inflection point of we're in kind of a peak investment period from a capital and an expense and cost perspective based on the investments we're making, both from a global expansion and North American expansion point of view and from a product point of view with the launch of RH Estates. I think you have to think about the launch of RH Estates in Q2, we'll have significant costs with sourcebook and advertising and launching costs, without having much revenue until we get into the third and fourth quarter. And Estates is, remember is basically running late. Our original plan was to have Estates in the third and fourth quarter last year. So we have some timing issues. I think when you think about the significant investments we're making, both from a capital and expense perspective, and we're going through kind of an unpredictable time. So I think that's why it's important as you're looking at the business, you're looking at the model, if you're thinking about being an investor here, you have to have a longer-term view than a shorter-term view in periods like these. And in many ways a lot of people are going less than we're going right as people are pulling back and trying to manage the margin side of their business, we're investing in the most significant way we have in our history, and that's just going to create some timing dislocations from an earnings perspective. Simeon Gutman: And then my follow-up, you made a couple of executive leadership changes, one, a new President and two, a second person. And in the release you talked about potentially helping monetize some of the real estate. So can you talk about both of those hires, what prompted them? And then what does it speak to about the direction of the business you are heading in? Gary Friedman: Well, I think it's explained in the press releases. I don't know if there's anything different than that. We mentioned -- we're extremely happy to have Dave Stanchak rejoined Team RH. He's -- has made a significant impact while he was here, both from a North American transformation point of view and a global transformation point of view and was involved in really setting up the structure of the real estate for European expansion. And so it's good to have Dave back. And I think, Dave, it's probably the most, I think experienced real estate executive on a retail point of view because he's -- both -- not someone who's just been involved with mall leasing and -- which is typical, when you think about most retailers, Dave's been involved in real estate investments. He is an investor. He's had his own shopping centers and controls real estate themselves. So he comes out from an investor perspective, a much bigger perspective and it's a kind of a transformational leader as you think about a unique business like ours and the platform we're building, which is unlike anything anybody else is doing or has done at a level of quality and locations and so on and so forth. So there's not anything that I didn't talk about, I think, in the press release. And then with Veronica's joining RH, we've known Veronica for a long time. We've been able to observe her and her leadership and her ability to build what we think is one of the leading manufacturing businesses in North America for an upholstery point of view. But mostly what we, I think, think about here is not just the upholstery part of our business. But if you think about the best luxury models in the world, whether you're looking at Vuitton or Hermes, or CHANEL or others, one of the things that's very unique with their business models as they have a very concentrated core business, 80% of their business is in the leather goods and accessories part of the business. It's very similar to our business from a penetration point of view, 80% of our business is furniture, that's typical if you look at the home furnishings business. So if you're in all categories, that's going to directionally be the mix depending on how you position those categories. And we think there's an opportunity when you look at our business from a global scale and building a unique platform that's synergistic and appropriate for the unique platform we're building from the selling side. I think we've built -- have built and are building the most unique physical selling platform in the world. And I think it deserves and will be positively impacted by building the most unique manufacturing and sourcing platform in the world. So eliminating, when you think about the inefficiencies of manufacturing, when you don't -- when you don't control your distribution, there's quite a bit. So long term we think we can build a unique manufacturing platform. And as I said in the press release, a combination of owned joint venture and outsourced that can be very unique and significantly accretive from a -- we think both a revenue and a cost perspective and a margin perspective. So yes, so we're excited. We think Veronica is the best person in the industry we've met. I think she's a unique talent leader. She's an engineer by education and experience, and has a big -- and very big and kind of strategic view of manufacturing and sourcing. So it's a new level of talent in the company. We've never had someone this kind of pedigree and experience and talent, and we think she's going to do some incredible things long term. Allison Malkin: Your next question comes from the line of Steven Forbes with Guggenheim Securities. Steven Forbes: Gary, with Milan and London slated to open here in short order, curious if you could give us an update on RH Paris and/or just comment on the anticipated revenue contribution from the broader RH International strategy behind the 2030 reference year you laid out in your prepared remarks. Obviously, just looking today, any color to help support or build conviction around those longer-term outlooks you laid out today? Gary Friedman: Not sure if I get that question correctly. Jack Preston: The impact of international as it relates to the 2030 targets, how we think about that growth of that. Gary Friedman: Yes. Well, I think what we've articulated most recently over the last few quarters and really since, I think, our start, really that the opening of Paris, Milan and London is kind of the brand foundation to build on when you think about European expansion. There are the three most important cities in Europe, we think they're important from a positioning of the brand and a brand awareness point of view. And all three of those are really the besides, again, RH England, which is out in the countryside, which was important from a brand impression and awareness perspective and how to kind of make an entry into the European market. But these really are where we have significant investments in the presentation of the product that hospitality experience, which we think is going to be critical long term to building brand awareness throughout Europe. And then one of the keys here is really not just these key stores because if you -- as we assess the business in Europe, and we have since day 1, I believe that the basic distribution and where the sales will come from will be long term, more important in suburbs and second home markets than cities that the cities are really going to be the key to brand awareness and driving the brand, positioning the brand, and we'll do significantly more revenues, we believe, in Paris and Milan and London than we will in other cities. And if we were ranking them, clearly lending, we believe, going to be the biggest market for us as it should be. But our distribution of business is significantly suburbs and second home markets in North America. 90%, 92% of our business is in suburbs and second home markets. And second home markets are kind of like a suburb, right? And about 8% of our business is in the cities. And we think that distribution is going to be similar throughout Europe. And if you looked at Apple's real estate strategy and you look at their distribution throughout Europe, which we believed was a good kind of model for us to look at as far as a higher-end consumer. And you looked at like Apple's North American kind of distribution versus our North American distribution, their penetration in suburbs, our penetration in suburbs. There are similarities there. We're more highly penetrated into second home markets than they are. Most people have their phone with them. But one of the keys for, I think, Dave is joining the company, too, is just to continue that leadership into Europe and building out into the suburbs and into the second home markets to cover the business. So strategically, we're setting up the business in the kind of key markets that you would from a brand and awareness perspective and not that we don't think that the business is going to have revenues there. We just think the biggest revenues are going to come long term when you think about the longer-term plan as we expand into the suburbs and [ certain end ] markets where people really buy much more furniture, both indoors and outdoors. Steven Forbes: Maybe just a quick follow-up. Obviously, great to hear Dave rejoining the company. You talked about -- you talked about $250 million of asset sales in each of the next 2 years. This is sort of a 2-part question. One, can you speak to sort of the value of the non-core assets or the assets that you don't plan to operate in the future versus the value of the assets RH is still planning to operate in the future. And then maybe any color on sort of timing for 2026 asset sales as we think through the potential interest expense savings. Gary Friedman: As far as that mix, I'd say the majority of the asset sales are assets that we will be operating that are in a sale leaseback kind of properties and then there's some investment properties that we had in Aspen. And a few other things that we've decided not to pursue for whatever reason, we own a building in Milan -- not Milan, excuse me, Madrid, and we're not going to pursue the development of that. We're fine with the location we have today. And so it's just looking at -- taking a look at our balance sheet and just turning the facets into cash, as we said we would be doing. So we've said we have about $0.5 billion of real estate assets that we could monetize. And we're going to begin to monetize those. Dave has got tremendous experience on that end of real estate. So -- and he feels very confident in what we're going to be able to do. And some of these are properties that we had purchased and had developed over the last 2 to 3 years, I guess. You got to think about a lot of our investment horizons are pretty long from a -- when you think about some of the galleries that we've built, you've got significant time to design and develop and get through the approval process and then you've got significant time building them. So you have a relatively long holding time. And I think post-COVID, all of the construction cost have went up, particularly at the luxury level. And those prompted us as we communicated in the video, to develop just other faster, more flexible ways to deploy the brand. And when you think about the design compounds and think about where the first couple are going in Naples, we're taking that what was formerly a Nordstrom's site in Walnut Creek, we're taking what was formerly a Neiman Marcus site. And then in Miami, we're developing kind of a parking lot size kind of a key visible area in Miami, that was kind of Bank of America. But we think about those opportunities to be significantly faster and more capital efficient. We've built most of our big, kind of, I'd say, the higher investment, higher capital side of the business, we've been transforming the real estate here now for 15 years. And so even on a European and global point of view, I would say that we have Sydney coming, but that's a different model that's really being built by the developer. It's not going to take much capital from RH. But yes, we have significant assets. We're going to now monetize, turn into cash, and then we've got some assets in Aspen and other things like that, that will monetize over time. So yes, so a lot of that will come off the balance sheet. I don't know, Jack, do you have anything to add on? Jack Preston: No. I think from a timing perspective, Steve, we'll just keep you posted. We're not ready to commit us to show the cadence to 2026, and we'll just update you as things as appropriate. Allison Malkin: Your next question comes from the line of Max Rakhlenko with TD Cowen. Maksim Rakhlenko: So first on Estates, can you provide color on how you're thinking about scaling the collection? We know when the books will hit, but how are you thinking about the cadence of the product rollout into the galleries? How are you looking by inventory, et cetera? Just if you could compare and contrast this collection versus the Modern and Interiors launches that you had a couple of years back. Gary Friedman: Sure. So the books will hit kind of mid-May, and we will -- we've got a handful of stores that will get the initial product that we'll be able to kind of test and then we and get some reads on, but we feel very confident in this selection. So we went out with a bigger inventory by -- and a lot of it based on just the data. You got 60% of luxury homes in America that have classic and traditional architecture. So -- and it is really the next big trend. As you think about how the trends cycle through, this trend is a lot of the product you're going to see cycle through, it's why we've made some of the acquisitions that we made, whether it's the Michael Taylor brand and the famous diamond table and so on and so forth to really be able to not only have authority, but be able to have intellectual property rights for a lot of the kind of key products that are going to come. And so we just think it's going to be a big building trend. But in the second half will be -- and how many galleries do we think? 30? Unknown Executive: I think -- yes. Gary Friedman: About 30, 40 galleries -- our top 30, 40 galleries in the large design galleries, we'll take over the first floor with RH Estates. So this is a significant launch and a significant bet. Maksim Rakhlenko: Got it. That's helpful. And then just a two-parter on margins. If you could just isolate how you're thinking about the impact of tariffs for 2026, both the cadence and magnitude as I don't think you discussed that in the letter this time around. And then separately, if we exclude tariffs and some of the timing shifts that you discussed earlier on the call, how healthy is sort of your -- or how healthy are your product margins as we think about the long-term targets you laid out? How much higher can the product margins go as you do continue to add these new collections that I think come with much higher margin. So if we just think about the core, where can the business go from a product margin perspective? Gary Friedman: Yes. I think -- I mean, we're not giving detailed margin forecast. But our margin -- our product margins are relatively healthy, except for some bumps we're going through from a tariff point of view. I think we've been able to perform reasonably well. If you exclude kind of the weight that we have from this investment cycle and the drag from Europe and you kind of take a look at the business. And I think one of the things we're doing, as we think about this business, a lot of times with brands as you go through the history of brands, you've got kind of the levels and the transformations you make to kind of get to where you want to go. And this next -- this cycle we're in now, it's a key investment cycle. Clearly, we've spent a lot of capital. We've made big investments to kind of position the brand not only in North America, but positioned in Europe for the long term. And once you get past those cycles, we're going to have great leverage. Opening galleries like we're opening and restaurants like we're opening or significant costs, especially when you're doing them in a different country. There's just more travel, more expense from hiring people and building new organizations and so on and so forth. So from a -- I just think, it's not just the product margins, it's really just the overall margin structure of the business once we go post peak here on this investment cycle, both from a capital and from an expense and cost point of view. I think the model of this business is going to look like one of the best models people have ever seen in our industry. So if not the best model, I think it's going to be the best model anyone seen. So we feel confident in that. I mean, we're also just -- from a global perspective, navigating through very uncertain times. And we do have a product mix that is going to be somewhat more cyclical and have more of a drag. So when you're really focused on the furniture business versus the home furnishing, the broader furnishings business, accessories business, tabletop business, kitchen businesses and so on and so forth. You're going to have more weight during times like these. So that's going to require you to fight for more business. But that's throughout our history. We've always fought through the business in times like these. We've always been more promotional than less promotional in times like these. And we think it's times like these that there's a lot of fallout. And there's going to be a lot of competition that's not going to make it through these times. There's been greater fallout in the furniture business. As most people know, over the last few years than in any time in history. And I think there's going to -- as long as the housing market remains difficult, there's just going to be a lot less competition, and we're going to be better positioned than we've ever been for the other side of the cycle. As we build out the assortment, especially in the Estates over the -- think about the Estates expansion over really a 5-year horizon from a product point of view, I'd say over the next 5 years as Estates assortment is going to grow, it's going to build, it's going to become more dominant. The trend is going to -- that wave is going to keep building over the next 5 to 10 years, right? So I think about the whole model of the business in this way, we're very confident in the long-term model. I think what confuses people is most public companies go public and they kind of manage the business, right? They have a simple rollout and they're going to do so many stores a year and the stores are all the same and everything is really predictable and most of them go through their rollout cycle of 5 to 7 to 10 years, however -- what amount of time they stay relevant for. And then usually, becomes kind of a dated concept over time. And that's why we like to say that most retail malls or graveyard for short-lived ideas. Most retail companies don't even concepts don't live out the first term or second term of their leases. So we're going through one of those investment cycles that will leapfrog this business forward and you're looking at kind of peak investment cycle and kind of trough kind of economic cycle, right? So and even with those two, you still get a business here with a kind of a mid-teens EBITDA margin to high teens EBITDA margin. And once you get past this cycle, there's a lot of leverage in this model. So... Jack Preston: Max, I'll add on tariffs. So in Q4, we talked about last year tariffs having an impact of 90 basis points in terms of a drag. And Q4, we had talked about $170 million. We ended up at $190 million in Q4. And the way we characterized that in the last call is that, that's ultimately by Q4, you're fully baked into the sort of prior tariff regime. Obviously, things have changed now with the Supreme Court decision. But tariffs come out in and out of turn, as you know. And so while in the -- let's say, in the first half, you might have some tailwinds from that relatively lower rate that exists under Section 122 today. Who knows what happens in the second half. There's obviously a sprint to replace all those tariffs and potentially more as Trump first said under Section 301 in the back half. So we're just -- we're playing by year being -- as you know, we're nimble and we're dynamic. But as far as last year's tariff impact was sort of fully baked in at Q4, the bit of an indicator as to how it plays out in the first half, but obviously, the math will tell you that there's going to be some relief there as far as that tariff drag is concerned. So we'll keep you updated if there's -- as things play out. Obviously, we're watching it like you guys are watching. Allison Malkin: Your next question comes from the line of Steven Zaccone with Citi. Steven Zaccone: I wanted to ask about the cadence of the year from a revenue growth perspective because the first quarter, obviously calling for revenue to be down, but in the full year, it looks like an acceleration in the back half. Can you just talk through the points of the acceleration? I assume Estates is a big piece? How much is International? Any details you could share would be helpful. Gary Friedman: Well, yes, clearly, International and Estates, the cycling of -- Estates across the entire platform, International from opening cadence and just what we think the growth in the first couple of years. We really -- RH England is kind of our best point of history and -- we know how that ramps. So we expect the International stores to have a ramp to them over the first several years. But when you think about the back half, sure, you've got openings in North America, you've got openings in Europe. You've got Estates, which will -- in Q3, Q4, you'll start seeing the revenues flow from demand in Q2. And you'll see a ramp in Estate. You'll have a second mailing of the book. You'll have newness in both Interiors and Modern. So all of those things combined, we believe is a big step up in the business in the second half. And we would have expected more in the back half of last year and the first half of this year because Estates would have been part of that cadence. Steven Zaccone: Okay. Understood. And then the second question I have is just on the margin recovery of the business, right, because we've been an investment period for the business for some time, and I think you've used the term leapfrog in terms of margins in the past. For the longer duration investor, when you look at the business, what do you think is the biggest factor holding back margins for improving? Is it just the fact that some of the investments have taken a little bit longer and have been a little bit higher than expected? Has it been the top line, the macro environment? How do we think about some of the unlocks to see that margin improvement on the other side come back stronger? Gary Friedman: I think you've just outlined it. Yes, I mean we've -- we're in peak investment cycle in trough -- economic cycle, especially from a home point of view. So the -- I mean, not just trough investment cycle, you've had the whole kind of chaotic tariff cycle, that has caused kind of significant disruption on the business. I mean we've resourced 40% of our assortment business of our size -- resourcing 40% of your core assortment, which is really -- 40% of the assortment is bigger -- it's a larger part of the business. So, yes, it's all of those things together, Steve. So this is a good time to buy our stock. This is when people create generational wealth, right? This is no different than trough times in a real estate market, trough times in any kind of a transitional time for an industry or business. And all businesses in our industry get hit in these times and all businesses that survive to the other side, get a lift in this time. I think what's different is we've historically been investors during times like this is when we've seen the biggest opportunities. But this time is, I think, different than previous times because we're in a kind of a real peak investment cycle. We're opening Europe, we're launching new businesses. And so the opportunity to have a leapfrog, if we're more right than wrong, and we don't have to be completely right, we just have to be directionally right here. And so we say don't let perfect be the enemy of great. And yes, we've got a lot of experience here in this company. We've been doing this a long time. And I think we've proven that we've been a lot more right than a lot more wrong. I mean if you think about the transformation from what was Restoration Hardware before, to what is RH today, if you think about the transformation of this brand, over a 20-plus year period and try to say, name other brands that have made transformations like that, name other brands that are positioned like we are. These are the times that businesses like ours separate ourselves even further from the pack. But you have to make those investments, you have to take that level of risk to be able to do that. So we are not kind of a management culture or leadership culture. And we're constantly innovating and investing, but this is one of those significant cycles. It just happens to be -- during a significant down cycle, especially focused on our industry. And so -- but we're in a better position than we've ever been from a historical point of view to weather the storm. And I think if you just think about what does the next 5 years look like from an investment point of view. I mean we're going to come off, if you take that -- the $37 million and the $289 million, you've got kind of a peak type of investment year historically. And then we come off that peak. And we come into the $250 million to $260 million, and then that's going to drop to $150 million to $170 million a year. So you think about the company growing, the capital investment period coming down, and it's not just the capital, right -- the investment, but it's also all the expense that's connected to that capital. All the expense that's connected to bringing up those stores, training the people, building the infrastructure, building the distribution capability in the business, all the marketing and advertising that supports a launch, all the time and energy to kind of build out the assortments, develop all the products at scale to create a leapfrog, not to kind of slightly outperform. But it's no different than taking a $300 million business that was losing $40 million a year. That was Restoration Hardware and creating RH, that's a $3.5 billion business. I mean that -- think about what the next cycle looks like. The next cycle is, I think, even more magnified that -- we -- our framework for the model. And the biggest pieces of the model are the pieces we're talking about. If I was on the outside, looking at this, I'd say, hey, what is the outlook for capital investments as they go forward and not just thinking about the capital, but what is the expense, the cost investments that are connected to that capital, how does that change over the next 5 years? And how does it change over the next couple of years, right? Just over the next couple of years, the investment cycle is post peak, and it's going to turn down and accelerate in a downward way just as revenues are going to accelerate in a positive way, right? And when you have those two things going in different directions, that's when you have inflection points in return on invested capital, on margins, earnings, et cetera, et cetera. So the framework for the math is pretty simple. I think the strategy because it's never been seen before is -- can be suspect and could be hard to understand. There can be less believers than more believers at certain times. So look, I don't blame anybody for kind of saying, "Hey, this is -- it looks like an uncertain time to invest," whether it's in our stock or any stock in our category. But especially, you've got to kind of believe in the longer-term debt here. And we think this is going to be the -- one of the best bets that people will make as referenced by my personal investment here. So that's how we think about it. Allison Malkin: Your next question comes from the line of Michael Lasser with UBS. Michael Lasser: Gary, you've laid out this ambitious and aspirational plan to take advantage of what seems like a very large and growing addressable market, and yet the market is not really willing to give you the amendment, sort of a doubt. And part of that is RH has been averse to and does not really look at its business on a same-store basis, which is understandable, and that's long how you've articulated it. But at this point, that has defaulted to the narrative where RH needs to grow concepts and its physical footprint in order to drive growth, and that comes with a significant cost. And as a result you may not be able to realize its aspiration, understanding that it's come a long way from its origin, but it's the market's relying heavily on the recent experience. So why based on the recent experience is the default of the market wrong? Gary Friedman: I think it's what I just said. You have to think about peak investment period and what hopefully is a low point in the trough from a market perspective. It's -- again, I think if you pull out the investments, just pull out the European drag of the investment -- think about -- we're investing in Europe. The European market is worse than the American market right now. It's -- we're investing at a time you likely would like to not invest, but you can't make long-term real estate investments and expect to get them all right, right? So the -- why is the simple model, Michael, of saying I'm cycling peak investments, and I'm cycling hopefully what is trough growth, right? And we've got significant growth opportunities as we've laid out. And the cost, they're going to kind of go away. So a lot of people thought Amazon wasn't going to make a lot of money until he did, right? That's -- I think it's that simple. Think about -- yes, I think the key is don't bake this cost structure into your model right now. You're looking at the -- a peak cost structure, both from capital and an expense perspective. These galleries that we're opening are the most expensive galleries that we've opened, both from a capital and a cost point of view. Michael Lasser: Got you. Very helpful. So put it in parlance that the investment community would think about it is, essentially this is, the peak of the disruption, there will be significant same-brand growth that will lead to sizable margin expansion, especially as the investments moderate. Now the counterpoint would be, hey, we're living in a world of high uncertainty between the geopolitical, technological and other factors. So what would be the sensitivity to your outlook for free cash flow in the event that sales in the back half just don't materialize like you would expect. And without asking you to show your hand, but it is important to the investment case, what options would you pursue in the event you needed more financial flexibility to execute on your strategy? Gary Friedman: Yes. I think it's a great question, Michael. Look, we've got the ability to pull back investments further, right? When I think about the major strategic investments that we had -- we had to decide to go international, invest into Europe, years ago, right? These weren't short-term decisions. These were 5, 6, 7, 8 years ago, right? We're making some of these decisions and investments. And those decisions are easy -- are not easy to pull back on, right? But we're cycling those. We've got a lot of flexibility. When you think about the next wave of investments, whether it's expanding in North America, whether it's expanding in Europe, you're looking at much smaller investments, you're looking at much more flexible real estate, many more choices, et cetera, et cetera. And you're just not going to have the same kind of cost. I mean we're going to -- the cost of building some of the new concepts that we've laid out, just the way we're thinking about deploying capital in North America through compounds and ecosystems and secondary market galleries that are in the 15,000 to 20,000 square foot range. Just the real estate risk, the investment risk of those, the financial participation of developers and landlords is much higher than when you're investing in major cities internationally. It's just a very different investment cadence. And we just have a lot -- and you don't have the same time horizon, right? So there's just a lot more flexibility. And -- so when I look at -- I would say, peak investment, peak risk right now. You're looking at peak investment, peak risk. And who knows from day-to-day or hour-to-hour about the geopolitical and economic environment. Of course, this is -- it's kind of different times. And there's major news headlines are made by tweaks and post today, right, and they happen all day long. So I just think that if you're just trying to say, okay, how do I think about the go forward? There's just a lot less risk. There's a lot more risk, I'd say, over the last couple of years than over the next couple of years. I mean there's -- is there further risk in the housing market? There always could be further risk. There always could be other things. I mean, could the war escalate? Could China try to take Taiwan? Could -- yes, there's a lot of things that can go the wrong way. We can all kind of imagine what those look like. But it's no different in calculating what the federal funds rate is going to be, right? Like everybody has been wrong on that. And unfortunately, that's been bad for our business, right? They're supposed to be 3 cuts to the federal funds rate this year. Now it looks like there's going to be no cuts, then there might be hikes. Does that create some short-term risk? It does. Can we navigate through that? We can. Do we have more upside to downside in the second half from a revenue -- demand and revenue point of view? We do. But I kind of say, look, if I was on the outside of this today and I had the information that the outside world has that we're giving you today. I'd say it's or you could -- I would -- look, I bought the stock at what, $2.16 a share, I bought $10 million of the stock. I was wrong, which is at the low point. But I don't see too much more downside risk in the model. Most of the work is behind us, building the galleries, getting the people trained, bringing up restaurants internationally. We -- the product side, I think, is a lot less risky. We're not going into some unknown aesthetic or trend we're betting on what is kind of the biggest market, the traditional classic market. And it just so happens, if you look at the trend that's going to come through, that is going to be the next trend. So -- but yes, your question is correct. We have toggles we can pull. We have assets that we can monetize. And we're pretty good at navigating 3 times like this. We've got it. Yes, this is my 26th year here. So I've seen cycles and the teams seem cycles, and we've navigated through. I would face somewhat similar times, not completely similar times. Allison Malkin: Your next question comes from the line of Brad Thomas with KeyBanc Capital Markets. Bradley Thomas: Gary, first, I wanted to follow up a bit more about the RH Estates line. And you, I believe, alluded to working more with designers and decorators in this. And so I was hoping you could talk a bit more if the selling process or how you go to market needs to be different on this line that seems to have so much potential for you? Gary Friedman: Well, we do a big business with design -- interior designers today. We have, I think, like I outlined in my comments that we have multiple businesses embedded in our galleries. We have a trade team that services interior designers and decorators, that's a meaningful part of our business. We think it will become a bigger part of our business, especially with the launch of RH Bespoke Furniture and RH Couture Upholstery because that's going to open up the ability to have kind of more customizable product from a size, fabric, finish, so on and so forth. And that will open up -- I think it should open up that market pretty significantly. We have some other strategies to address that market that you'll hear more about, that will kind of support what we're doing from a marketing point of view. So yes, Estates, I think, is when you think -- again, if you think about kind of the high-end part of the business that we're going to address with Estates, and that's just kind of the beginning. We'll also address that throughout the entire brand. But let's say, a stage represents the launch of RH Bespoke Furniture and the launch of RH Couture Upholstery kind of framing those. Think about those across the whole business long term. Bradley Thomas: That's helpful. If I could ask a follow-up on the 2030 margin targets. Just wondering if there's any high-level framework to think about perhaps how International fits into that, and how much mix or leverage of sale -- from sales factors into that? Gary Friedman: Yes, I mean, we have some data now. We kind of know as we've opened some of these, how they're evolving, how to think about, how they might evolve and grow. And so I think we have very reasonable targets internationally, mixed into this. I don't think there's anything that's a stretch perspective. So when you look at -- you just look at the total composition of kind of the top line accelerating in the out years to 12% growth. I think the way I'd think about that is you've got about 4 to 5 points from the platform expansion, you've got 3 to 4 points, maybe 5 points from the product expansion. And you've got -- at some point here, we think, there's a couple of points from the housing market coming back. I mean, I don't think we're going to be in a 9- or 10-year downturn of the housing market. Let's hope not. But if it doesn't come back, it's not like we've got a big number out there for the housing market. We've got kind of a 2- to 3-point hope in the out years of that plan that we'll see some lift in the housing market. If we see a lift in the housing market, you could see -- I mean, based on where it's been, I mean, you could argue there's a 10-point lift from the housing market in the out years. And if that happens, you don't have us growing at 10% to 12%, you have us growing at 18% to 22%. Allison Malkin: Your final question comes from the line of Marius Morar with Zelman. Marius Morar: Just a quick question on the growth outlook for next year. Gary, I think on -- in the video, you mentioned that it's a bit conservative. I was just wondering at the low end, do you sort of embed any sort of deterioration in the housing market or maybe an increase in interest rates? Gary Friedman: Yes. I think we're conservative throughout the second half. I mean, obviously, we have embedded the growth from our platform and the new galleries and the galleries that are cycling, and we've got growth from Estates and some of the newness and expansion of the assortment in Interiors and Modern. But do we have the housing market getting worse? I'd say we have embedded in this -- the current environment right now, which I believe is worse and mostly from a geopolitical point of view and a perception point of view, of more things can go wrong then maybe can go right. And I think that's how the market's generally risk times like these, when you've got uncertainty and you've got global tensions and war and oil issues and the endless amount of things that oil impacts, right? So, yes, I mean -- but did the housing market gets better when interest rates came down somewhat? Not really. Is the housing market going to get worse if they go back? If we get 25, 50, 75 basis points, you get three hikes. I don't think it gets much worse. I think you've got to think back in history and say, in 1978, we sold -- there's 4.06 million homes sold, and that was a low point. And in 2003, '04 and '05, you had 4.06 million homes sold on average, 4 million to 4.06 million of somewhere about 4.03 million. And that's -- and that's with 53 -- I think it's 53% more people, right? So it's hard to believe it gets worse than this to get worse in this for a small period. I mean, none of us have seen a world war in our lifetimes, right? Is there a risk of a world war? I don't think so. I mean I think, cooler heads will prevail. But this is uncertain times. So I think the -- whether the interest rates go up or down 25 to 75 basis points? I don't think it's going to change much in the housing market. If the interest rates go up 300 or 400 basis points, I think that's different. I think they go down 100 basis points with pricing coming down, which is pricing is coming down across the market, I think you're going to see a housing market acceleration. So I'd say short term, handicap it, as even. I think we're seeing pressure right now. Longer term, I think you have to kind of handicap it as a positive because we've never -- we've never seen -- we're now in the fourth year of the worst housing market in 40 to 50 years. That hasn't happened in my lifetime, I've never seen 2 down years -- seen 1.5 down years in my career. I've never seen 3 down years, and I surely never seen a fourth down year. I don't think anybody has. So how long does it stay here? I don't know. It's all today the new normal and build out from here. At some point, I think how the market comes back. And I think it's more likely to come back than go down. But if the interest rates are moving 50 to 75 basis points to 100 basis points, I don't know if that moves the needle plus or minus. On the minus side, you're getting closer to affordability, right? On the upside, you could have some moderate slowing. I think the bigger thing is if we have real inflation and interest rates have to rise 300, 400 basis points, that's a problem. Marius Morar: That's helpful. And maybe a quick follow-up. In the first quarter guidance, do you also embed any drag from the back order and special order similar to the drag you had in the fourth quarter? Gary Friedman: Jack, do you want to take that? Jack Preston: Yes. Yes, that's something that's going to take probably until the second half to fully resolve itself just because of the complexities of resourcing. So that is just -- yes, there's something that... Gary Friedman: We take that drag in, yes. Marius Morar: Is it getting worse in the first quarter? Jack Preston: There's some modest impact that that's over and above what we felt in Q4. And then so then we'll see the resolution of that in the second half. Gary Friedman: It's basically from the amount of resourcing and just the new factories being brought up in different countries, being able to ramp up fast enough. And so that's the biggest hit is coming from tariff-related resourcing of furniture, outdoor furniture, specifically metal outdoor furniture. Lighting is a big one. Rugs is a big one, and furniture is a big one. If you think about our business and you've got -- you take the furniture part of the business includes about 80%. And then you take lighting and rugs, which are the next biggest pieces, those are all being impacted. But you've got to -- by far biggest part of our business has been all impacted in a bigger way. Resourcing things like bedding, pillows, [ throws ], accessories, picture frames, things like that, which are not -- from a percentage point of view, not a very big part of our business, much easier to resource those things, much easier to move picture frames, pillow cases, [ throws ], tabletop, glassware, accessories, things like that much, much more easier. When you talk about ramping furniture factories, lighting factories, rug factories, moving those categories just more complex. And so those have been just slower to scale and transition. And when you think about just the -- being on the manufacturing side or manufacturing partners moving from one country to another, building factories, scaling them. And then all of a sudden, having tariffs change and going, "Oh, God, what do I do now? By doing the right thing, I mean, think about the rug business. And we -- for a while there, I mean, India was a big source of rugs, and you get hit with the 50% tariff and you're sourcing rugs to other countries. There's not that many places that have that kind of capacity to move those businesses. So same thing with lighting. Lighting is very different than any other kind of an item. Again, the more accessories, more seasonal parts of the business, you want to resource Christmas ornaments, things like that, very simple. When you're resourcing the core part of our business, much more complex. Allison Malkin: That concludes our question-and-answer session. I will now turn the call back over to Gary Friedman for closing remarks. Gary Friedman: Thank you. Well, thank you, everyone. We know this is an uncertain time in our business. Hopefully, we've shed some light to give you more certainty and more confidence in our outlook and our strategy. We believe this is the most important period in our history, and we've never been more excited about the outlook and what we believe will be the outcome. So we look forward to talking to you soon. Thank you for all the leadership and partnership from our teams and our partners all around the world. Everybody is working hard to kind of get to the next place. And so thank you. Allison Malkin: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Thank you, everyone, and welcome to the Beyond Meat, Inc. 2025 Fourth Quarter Conference Call. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to turn today's conference over to Raphael Gross, partner of ICR, Inc. Please go ahead. Raphael Gross: Thank you. Hello, everyone, and thank you for participating in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to our fourth quarter and full year 2025 earnings press release filed today after market close. This document is available on the Investor Relations section of Beyond Meat's website at www.beyondmeat.com. Before we begin, please note that during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Forward-looking statements in our earnings release, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, our quarterly report on Form 10-Q for the quarter ended September 27, 2025, and our annual report on Form 10-K for the fiscal year ended December 31, 2025, to be filed with the SEC along with other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements today. Please note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations and adjusted net loss, which are non-GAAP financial measures. While we believe these non-GAAP financial measures provide useful information for investors, any reference to this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures. And with that, I'd now like to turn the call over to Ethan Brown. Ethan Brown: Thank you, Raph, and hello, everyone. We entered a challenging year for our brand with an equally challenging quarter. We used this period, however, to accomplish a series of foundational building blocks for the company. First, we retired the majority of our 2027 convertible debt notes, and second, we raised significant capital, 2 measures that fundamentally changed and strengthened our balance sheet. Third, we invested in an enterprise-wide transformation initiative with a focus on rightsizing our operations and expanding our margins. Fourth, and as you will see reflected in our Q4 2025 numbers, we took another hard look at the assets, products and inventories, we believe, are not needed going forward and took action to disposition them. Fifth, we continue to lead the category in bringing clean plant-based meats to the consumer while hammering away at persistent misinformation promulgated by the incumbent industry. Finally, we laid the groundwork for repositioning Beyond Meat to Beyond the Plant protein company so that we can bring the strength of our brand, technology and expertise to adjacent categories. Having touched on the significant actions we took to strengthen our balance sheet through the elimination of approximately $900 million in debt and the addition of approximately $149 million in cash on our previous earnings call, I will forgo further detail here. Instead, I will focus my comments on a quick financial review of Q4 2025 before turning to our transformation work, product narrative and our brand repositioning and entry into adjacent markets. What I hope will be clear from these comments, especially for the investor who desires to drill down a level deeper than headline numbers, is that we are highly focused on reducing baseline operating expense and cash use, increasing conversion efficiency in our production facilities and addressing category headwinds straight on even as we take significant steps to diversify beyond it. Financial results for the fourth quarter 2025 reflect persistent weak demand in the plant-based meat category, resulting in lower volumes, the impact of which ripple throughout our P&L. This negative pressure was coupled with a number of significant nonroutine charges, many of which, though not all, stem from our transformation activities. Sales were $61.6 million, down 19.7% from the year ago period. Lower sales led to lower overhead absorption, which together with higher trade, negatively impacted gross margin. More significant, however, were large nonroutine or unusual items. These include such items as increased provision for inventory obsolescence, partly reflecting the strategic discontinuation of certain lower-profit products and accelerated depreciation related to the cessation of our operational activities in China, the net result was a reported gross margin of 2.3%. Similarly, despite progress in reducing the baseline cost of operating our business, significant nonroutine items, including large noncash charges, increased our reported operating expenses to $134.2 million versus $47.8 million in the year ago period. These included $48.1 million in noncash charges related to the write-down to fair value of certain of the company's long-lived assets; a $38.9 million litigation-related accrual; and higher noncash stock compensation expense of approximately $13.3 million related to our convertible debt exchange transaction. Stripping out these nonroutine items and the impact of the transaction-related change in noncash stock compensation, one can see that the run rate operating expense of our business is down considerably year-over-year. Finally, also reflecting the aforementioned transaction, net income of $409.9 million in the fourth quarter of 2025 compared to a loss of $44.9 million in the year ago period, reflecting a $548.7 million gain on debt restructuring. To summarize, our fourth quarter 2025 results reflect both continuing challenges in the category as well as substantial noise in our reported numbers due to, among other factors, several of our transformation initiatives. I will now turn to this transformation activity, where we are encouraged by the progress of our transformation office led by our interim Chief Transformation Officer, John Boken. As I noted, we've seen further reduction in underlying operating expenses, excluding the nonroutine items and transaction-related stock compensation increase for both the fourth quarter and full year 2025 on a year-over-year basis, and we are pursuing other cost reduction measures going forward. Also setting aside certain nonroutine charges, we believe we are making progress against our goal to sustainably return to healthy gross margins. As previously shared, we've largely completed the consolidation of our production network and continue to improve asset utilization at our manufacturing facilities. Further, we're now in the process of optimizing our new continuous production line at our facility in Columbia, Missouri and are investing in automation. These and other measures are already showing up in a year-over-year improvement in conversion costs across our network, a key component of our COGS reduction initiatives. Further, through our transformation office, we are seeking to reduce material costs through RFP actions, the cultivation of secondary sources and formulation improvements. We are further consolidating our warehouse network and reducing logistics expenses. We are exiting less profitable product lines, and we are making substantial progress on driving down inventory. Finally, we remain very focused on cash management and significantly reduced our baseline cash use in the fourth quarter compared to prior periods, excluding extraordinary items. I'll now turn briefly to our ongoing efforts to dispel the persistent cloud of misinformation regarding our products. As I have noted countless times in these calls, the incumbent industry did a masterful job of seeding doubt in the mind of the consumer. For the time being, we operate in an upside down world with proteins from peas, lentils, fava beans and brown rice, mixed with avocado oil and a limited number of other clean ingredients, is disingenuously, though broadly cast, as less than healthy. I believe this confusion will ultimately clear. In the interim, we remain focused on innovating around taste and health and helping to communicate the latter via various accreditations and certifications including our now 20-plus certifications from the Clean Label Project. For our latest center to plate innovations, such as Beyond Steak Fillet or Beyond Ground Fava, consumers can now order directly from Beyond Test Kitchen, our direct-to-consumer platform. These products, they're great taste, simple and clean ingredients and the impressive macro nutrient content are winning accolades from consumers even before they reach retail stores. Beyond Steak Fillet boasts 28 grams of protein, fava beans, wheat gluten and mycelia, and only 1 gram of saturated fat from avocado oil, while boosting 0 cholesterol and only 230 calories. Beyond Ground Fava delivers 27 grams of protein from fava beans and potato, 4 grams of fiber from psyllium husk, has no saturated fat or cholesterol and is only 140 calories. Moreover, Beyond Ground Fava is made from only 4 ingredients: water, fava protein, potato protein and psyllium husk and performed extremely well in niches such as tacos, Bolognese and protein bowls. Finally, I'll now turn to a key and central communication. Notwithstanding the many changes occurring through our transformation office that I've discussed above, what I noted late last year that going forward, you should not expect more of the same, I was most of all referring to the broadening of the aperture that you see as we move from Beyond Meat to Beyond The Plant Protein Company. I believe that no company has innovated with plants under more scrutiny than Beyond ever. We're now bringing the results in hard-fought expertise and capabilities, our commitment to health and clean ingredients and our brand to adjacent categories where we believe we can be disruptive and win. Our first foray in this broader delivery of the power of plants to consumers is our exciting new drink platform Beyond Immerse. The Beyond Immerse platform, a clear and slightly carbonated beverage, is designed to provide the consumer with protein, fiber, antioxidants and electrolytes, effectively immersing the body in the nutritional benefits of plants. We launched Beyond Immerse as we now plan to do with all new retail innovation on the Beyond Test Kitchen to early fanfare and excitement, generating over 3 billion media impressions and selling out of our first limited-run inventory quickly. Beyond Immerse is formulated to support muscle health and recovery, gut health, immune function and hydration. Each serving contains 10 or 20 grams of protein, 7 grams of fiber, and only 60 or 100 calories depending on the level of protein. Beyond Immerse is made without added sugar, sugar alcohols, artificial sweeteners or flavors, stabilizers, carrageenan and many other ingredients present in many popular protein drinks. Easier to drink than a thick protein shake and made without whey so it's dairy free, the product is designed for the casual to competitive athlete as well as the busy student or professional who wants protein, fiber, antioxidant and electrolytes at the gym, home, work or on the go. Moreover, we believe it is particularly well suited for GLP-1 users. I personally find it satisfying post workout at breakfast or late afternoon when I'd like a boost between meals. It's been fun to watch consumers enjoy it. And like all things Beyond, we continue to innovate and iterate based on what we believe is a state-of-the-art science and consumer use and suggestions. Far from stepping away from our mission to change the source of protein at the center of the plate from animals to plants, we reaffirm it and take to these promising adjacencies to introduce our brand to a much larger number of consumers and currently participating in a plant-based meat category. We do so not to dabble but with a firm and serious belief that our technology, our brand and our commitment to human health and the power of plants allows us to successfully deliver unique and compelling value within the certain segments we've identified. In the end, it is our aspiration that though indirect, this expansion will lead more consumers back to Beyond at the center of the plate as they enjoy our brand, clean ingredients and commitment to their health in a less controversial, more convenient products like Beyond Immerse. As such, I close today's comments as I have many others that we remain focused on building tomorrow's global protein company of size and significance. With that, I'll now turn the call over to Lubi. Lubi Kutua: Thank you, Ethan, and good afternoon, everyone. I'll begin with a review of our fourth quarter financial results before providing some brief comments on our outlook and additional matters regarding some of our recent disclosures. Total company net revenues decreased 19.7% to $61.6 million in the fourth quarter of 2025 from $76.7 million in the year ago period. The decrease was primarily driven by a 22.4% decrease in volume of products sold, partially offset by a 3.5% increase in net revenue per pound. Ongoing softness in volume of products sold primarily reflects weak category demand in many of our key geographies and channels and lower sales of chicken and burger products to QSR customers, both in the U.S. and abroad. Net revenue per pound increased primarily as a result of changes in product sales mix, favorable changes in foreign exchange rates and price increases of certain of our products, partially offset by higher trade discounts. Breaking this down by channel, U.S. retail channel net revenues decreased 6.5% to $31.7 million in the fourth quarter of 2025 compared to $33.9 million in the year ago period. The decrease was primarily volume driven, which again largely reflects weak category demand, while net revenue per pound was flat. Although volume headwinds persist, we are beginning to see some benefit from recently announced distribution gains in the mass channel, which is helping to mitigate the general softness. In U.S. foodservice, net revenues decreased 23.7% to $8 million in the fourth quarter of 2025 compared to $10.5 million in the year ago period. The decrease was primarily driven by a 25.1% decrease in volumes of products sold, partially offset by a slight year-over-year increase in net revenue per pound. Although category dynamics in the foodservice channel also remain weak, much of the decline in our business was due to the lapping of sales of chicken products to a U.S. QSR customer in the year ago period. Turning to International. International retail channel net revenues decreased 32.5% to $8.8 million in the fourth quarter of 2025 compared to $13.1 million in the year ago period. The decrease in net revenues was primarily driven by a 33.5% decrease in volume of products sold, partially offset by a 1.5% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by reduced burger sales in the EU and certain retail channels in Canada. Although our Canadian business generally remains healthy, year-over-year comparisons were negatively impacted in part by stocking activity in the year ago period in anticipation of potential tariffs. Finally, in International Foodservice, net revenues decreased 31.8% to $13.1 million in the fourth quarter of 2025 from $19.3 million in the year ago period. The decrease in net revenues was driven by a 34.1% decrease in volume of products sold, partially offset by a 3.4% increase in net revenue per pound. The decrease in volume of products sold was primarily attributable to reduced sales of our chicken and burger products to certain QSR customers. The increase in net revenue per pound primarily reflected favorable changes in foreign currency exchange rates and changes in product sales mix, partially offset by higher trade discounts. Moving down the P&L. Gross profit in the fourth quarter of 2025 was $1.4 million or gross margin of 2.3% compared to gross profit of $10 million or gross margin of 13.1% in the year ago period. Gross profit and gross margin in the fourth quarter of 2025 included $2.4 million in noncash charges related to SKU rationalization initiatives and $1.5 million in expenses related to the shutdown of our China business. Additionally, gross profit and gross margin in the fourth quarter of 2025 were negatively impacted by increased cost of goods sold per pound, partially offset by increased net revenue per pound. Reduced production volumes in response to weak demand continue to represent a meaningful headwind in terms of fixed cost absorption even as we have been encouraged by improvements in our variable conversion costs. Overall, by cost bucket, the increase in cost of goods sold per pound primarily reflects higher materials costs and increased inventory provision, partially offset by lower manufacturing expenses, including depreciation and lower logistics costs. Operating expenses were $134.2 million in the fourth quarter of 2025 compared to $47.8 million in the year ago period with a significant year-over-year increase on a reported basis, reflecting the inclusion of certain large noncash charges. Specifically, and of note, operating expenses in the fourth quarter of 2025 included $48.1 million in noncash charges related to the loss from write-down of assets held for sale, reflecting certain PP&E assets which were no longer deemed core to our strategic objectives going forward, a $38.9 million litigation-related accrual and $13.3 million in incremental share-based compensation expenses related to the convertible debt exchange. Excluding these and other lesser items, the decrease in operating expenses compared to the year ago period was primarily driven by decreased marketing expenses. Below the line, total other income net was $542.6 million in the fourth quarter of 2025 compared to total other expense net of $7 million in the year ago period. The increase was primarily due to a gain on debt restructuring, resulting from our debt exchange and to a lesser extent, a gain from remeasurement of warrant liability, partially offset by a loss from remeasurement of derivative liability and an increase in interest expense. Net income was $409.9 million in the fourth quarter of 2025 or $0.84 per common share compared to a net loss of $44.9 million in the year ago period or a loss of $0.65 per common share. Adjusted EBITDA was a loss of $69 million in the fourth quarter of 2025 compared to a loss of $26 million in the year ago period, although I would note that adjusted EBITDA in the fourth quarter of 2025 includes the previously mentioned loss from write-down of assets held for sale. Turning to our balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $217.5 million as of December 31, 2025, and total outstanding carrying value of debt was $415.7 million, which includes the total undiscounted future cash flows of the new 2030 notes in accordance with TDR accounting guidelines. Net cash used in operating activities was $144.9 million in the year ended December 31, 2025, compared to $98.8 million in the year ago period. Capital expenditures totaled $12.3 million in the year ended December 31, 2025, compared to $11 million in the year ago period. Net cash provided by financing activities was $223.4 million in the year ended December 31, 2025, compared to net cash provided by financing activities of $45.8 million in the prior year. In 2025, net cash provided by financing activities included $100 million in draws from our delayed draw term loan facility, partially offset by related debt issuance costs and aggregate net proceeds of approximately $148.7 million from sales of common stock under our ATM program. As a reminder of the key highlights -- as a reminder of the key highlights of our Q4 debt exchange, we exchanged over 97% of the $1.15 billion aggregate principal amount of the 2027 convertible notes for approximately $209.7 million in aggregate principal amount of new second lien 2030 convertible notes and approximately 318 million new shares of common stock. This leaves approximately $29.5 million of the 2027 convertible notes outstanding today. In combination with the nearly $150 million in net proceeds we raised from our ATM program in Q4, we believe these actions have meaningfully strengthened our balance sheet and support our continued efforts to execute our business transformation plan. Let me now touch briefly on our outlook. We continue to experience elevated levels of uncertainty and therefore, low visibility within our core category of plant-based meat. Accordingly, we believe it remains prudent to provide only limited and very near-term guidance until we begin to see more clear signs of stabilization within our operating environment. With that context, we are providing the following revenue guidance for the first quarter of 2026. We expect net revenues to be approximately $57 million to $59 million. Finally, I'll close by making a few remarks on some of our recent disclosures regarding the company's internal controls over financial reporting. As part of our fourth quarter and full year 2025 financial close procedures and in addition to a previously identified material weakness related to the account for nonroutine and complex transactions, we identified an additional material weakness related to controls associated with the accounting for inventory provision, including amounts recorded for the provision of excess and obsolete inventory. We are clearly disappointed with these findings and are actively working on plans to remediate the identified deficiencies. In part, while assessing the impact of these material weaknesses in our financial statements, we identified certain errors related to our previously issued interim condensed consolidated financial statements for 2025, which we determined were immaterial to those interim financial statements. We intend to correct those prospectively when we file our quarterly reports in 2026, and we have also furnished as corrected amounts for certain key affected financial measures in today's press release. We want to assure all our stakeholders that we are fully committed to our efforts for remediating the identified issues and strengthening our controls as applicable, and we have already taken measures to advance these objectives. Lastly, as we noted in our earnings release, we are unable to file our annual report on Form 10-K for the fiscal year ended December 31, 2025, within the prescribed deadline as we require additional time to complete our fourth quarter and year-end financial close procedures. We are working diligently to address these matters. However, at this time, we are unable to estimate when the Form 10-K will be filed. As a result, the company will be considered an untimely filier and will no longer be eligible to use Form S-3 registration statements until it regains timely filer status by filing in a timely manner, all reports required to be filed under the Securities Exchange Act of 1934 as amended for a period of 12 calendar months. And with that, I'll turn the call over to the operator to open it up for your questions. Thank you. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ben Theurer with Barclays. Benjamin Theurer: A few ones -- so maybe to kick it off a little bit on like the outlook for new products and product lines which you've talked a little bit about the beverage opportunities here. And then obviously, you've talked about a pipeline of potential new products under the new branding umbrella. So I really want to understand, Ethan, from you, is that to be seen as like really pivoting away from kind of like the initial mission of Beyond was to really look to diversify the portfolio. And we would like to understand where you are in terms of researching and developing those products to get a better understanding in terms of the time line when we can expect those products to come to market? That would be my first question. Ethan Brown: Thank you, Ben. I appreciate it. So I think, first and foremost, no, it is not in any way abandoning the original mission and focus that we have had. It's simply broadening the aperture of our business and meeting consumer where they are today. And if I could just comment a little bit on why we're making this pivot and then get into kind of the timing and focus of the pivot. If I thought that Beyond, in our original value proposition, were struggling during a period when the role of science and public discourse and social media, media and government was pronounced and effective when our pricing and economic stability and buying power are all favorable and the American political landscape were characterized by a sense of common ground versus the vision, and Beyond were really suffering, I would be very concerned for our long-term prospects and for the plant-based meat category overall. But none of that is true, right? This is a very difficult period for the world, it's a difficult period for our country, and I think one of the things that is most significant for our business in terms of what's impacting it is this kind of surround sound of pseudoscientific jargon and positioning and promotion that really overwhelms what is decades and decades and decades of science. And I think nothing in our lane is more obvious than -- is more obvious representation of this troubling trend and the resurgence of red meat. And I've spent over 17 years now seeking and listening to the council, some of the very best cardiologists in the country at some of our most prestigious institutions, and I can only look at these current trends with a mixture of sadness for the folks that are going to be impacted by it and increased in patients for those that are seeking to profit from it. I was very glad to see the American Heart Association today take a stand, I think a major newspaper, I actually got a clipping of it, summarize it as that new nutrition guidance from the American Heart Association advises getting proteins from plants rather than meat, choosing low fat or fat-free dairy and using olive, soybean and canola oil instead of beef tallow and butter. So you have a kind of an independent institution backed by science that is saying the exact opposite of where our culture is going on diet. But the good news is that this is a pendulum, it's going to swing and it's going to swing back, and I'm very comfortable that Beyond will prosper when it does. But I'm not going to wait around for that. And because of the work we've done, particularly over the last 10 years, to really lead the category and developing extremely clean, healthy products, we're really well positioned to look outside the category and take that technology, take that science, take that brand into segments that are -- and categories that are many, many, many times the size of the plant-based meat category. So you have a great brand. We just for example, again, got the Time Magazine list best brands in the world. You take the science that continues to win awards and accolades for some of the development work we've done around the plant-based protein for the center of the plate and you take a massive trend within the consumer that is around protein and fiber and things like that, you say, okay, where can we apply all this? And the first, we did a lot of work over the last year understanding which adjacent markets we can get into. And the first one that we've identified and been public about and others will follow is the beverage category. And we launched an initial version online earlier and sold out very quickly that initial inventory. And what we're doing is, as we did with Beyond Ground Fava, learning from the consumer what they like and don't like and making adjustments. And that process is going great. And so the product that we're going to be launching soon, I think, is going to be one of the best protein drink markets, protein drinks on the market. It satisfies so many different needs for the consumer, whether it's protein, fiber, antioxidants, electrolytes, does so in a really clean way. And fascinating for me as we get into these other categories and I start looking at some of the key competitors in those categories, the really big ready-to-drink protein companies, they're putting things in their products that we could never put in our products because of the scrutiny we're under, because of our guidelines around clean ingredients. When you're looking at, I think, one of the top ones is sucralose, there's carrageenan, has [ sulfamic ] potassium, another one has artificial flavors and all of the above. Another one has hexametasulfates as well as all of the above, it just goes on and on, things that we put in, they'd be kind of front page news from our friends in the incumbent industry. So we're going to take that relentless innovation. We're going to take that to clean ingredients. We're going into those categories. And so I think the drink category is the one that's most clearly on the horizon for us, the one that I'm willing to most speak most publicly about. And so I think this summer, you'll see us be pretty active there. Benjamin Theurer: Okay. Got it. And then this is maybe more for Lubi. If we kind of like look at the balance sheet and like in connection with the cash flow statement, clearly, throughout the quarter, you got a little bit of a relief on where we are on the cash balance. But if we kind of look at just the underlying trends within cash from operations, it continues to be somewhat in that range, 40 million, 50 million-ish negative on a quarterly basis shaping out at about 140, 150 for the year. So what are the things that you can kind of like work on, just given where the environment is. And I mean, your outlook for 1Q clearly points to not necessarily a top line-driven recovery in 2026. So all that operating leverage continues to be probably a headwind or the lack of operating leverage put it this way. So what are the levers you can pull to kind of like maybe further reduce with any incremental cash burn with durations that you're facing? Ethan Brown: I can just give a quick answer and then turn it to Lubi. One, I think you'll see that we're doing some really interesting things with inventory. So that's going to give us some favorability. And then second, I think you just got to back out some of these onetime charges that have been so difficult for us. And once you do that, you see a dramatically slowing use of cash. So you do it this quarter, for example, you are down significantly from where we were a year ago, if you back out those onetime charges or some of the extraordinary stuff related to convertible debt exchange. And I think you'll only see that as we go forward, it will continue to be favorable for us. Lubi Kutua: Yes, Ben, I appreciate the question. Yes, I would probably echo a lot of what Ethan just mentioned. We have been focused now for a while on our working capital management and in particular ensuring that our stocking levels of inventory are appropriately sized given where the business is. I think the team has done a really good job in managing the inventory down, but I think there's more to come in that regard. The other important thing to -- and again, Ethan mentioned this, is in the last couple of quarters, we have had some fairly large what we would consider sort of nonordinary course business expenses, right, in the fourth quarter? In particular, these were related to the debt exchange. The business -- we continue to execute our transformation plan, all right, for this business. And so from time to time, we will see some of these unusual items, all in sort of service of trying to reposition this business more appropriately towards our goals to profitability. But I would expect that in 2026, some of the larger items, certainly that we saw in recent quarters should not recur. Recall as well that last year in 2025, we unfortunately did have a couple of reductions in force and the associated severance payments that are related with that -- related to that. And then just lastly, I would say that we are focused on trying to expand our gross margin. Ethan, in his prepared remarks, mentioned that we're standing up our sort of first continuous production line or we do end-to-end production, and we're going to be -- that's going to give us an opportunity to internalize additional volume that's previously outsourced and increase our internal asset utilization. So I think all of those measures taken together should help to reduce that rate of cash consumption. Operator: Next question comes from Kaumil Gajrawala with Jefferies. Kaumil Gajrawala: I guess first question -- congratulations on the financing and all of that. Maybe are there things that you can now do that maybe you're prohibited from doing before as you sort of execute the turnaround? And then also, I guess, in the context of the of the refinancing in the -- as it relates to the filing and some of the financial disclosure issues, does that change anything related to the transactions that you've done? Or is there anything that we just need to be aware of if for some reason the 10-K comes out even later than planned, just things that we should know about that could happen. Ethan Brown: Thanks. I'll take the first one and then pass it on to Lubi. I don't think we're going to be making any outsized investments as a result of the cash we brought on. I think we're just continuing to focus on EBITDA positive target and minimize cash use. But there are some things that we now have the ability to do. So if you look at last year, we cut way back, and I think part of the issue with our fourth quarter results on the top line, we didn't market a lot. And we were just in cash conservation mode as we were doing our debt exchange, which was incredibly expensive. And so I pulled back considerably on marketing. So this year, we won't do that, particularly as we as we get into some of these exciting categories where marketing is important. And then just on like the automation and on continuous lines and things like that, you will see us make CapEx investments that will allow us to drop down more cash out of just general sales and operations. But I do think if you take a step back and look at our P&L for the quarter, as we were talking about on operating expense, there's just a lot of noise in these numbers, and I tried to touch upon that. Like I think if you look at gross margin, for example, we did have lower volumes, which led to some of this lower fixed overhead absorption. But we did have these charges, right? We had some of the SKU rationalization charges. We had expenses related to shutting down our China business. Then we had much higher inventory provisions than normal, things like that, so that's masking these kind of lower conversion costs throughout our plants, lower logistics costs and things of that nature. And so if you take a step back to, okay, the company is converting materials at a lower rate than it has before, right, and then you go to OpEx and you say, okay, strip out all those onetime charges, the company is operating this business at a much lower rate than it was before. And so now it's just incumbent and cash is too, same thing. If you take out all of those onetime charges, cash consumption is lower. And so if you start to put that picture together, you say, what this company really needs to do this fix this top line. And I've tried for years to do that through the existing category. And I think the headwinds are going to be here for a little bit longer. And it's something we got to get outside the category to address, and that's why you see us in some of these adjacencies. So it's difficult for people to see if they just look at the top line numbers, but take a step back, what the missing piece really is becoming now is just getting a top line to be where we need to be, and we're very focused on that. Lubi Kutua: Yes. And Kaumil, maybe if I would just add a couple of things to that. So as far as what putting the sort of balance sheet restructuring behind us now enables us to do. I think Ethan sort of covered that well and the raising of the additional proceeds from the ATM allow us to, I think, spend a little bit more on the marketing front, which we do think will be important to stabilize the top line and as we start to expand into some of these adjacent categories. But I think the other thing as well is just the focus, right, that we are able to reallocate to the primary business. As you guys know, I mean, we had been talking about the debt restructuring for quite some time on these earnings calls. And so that did consume quite a bit of the management team's focus. And so it's a relief to put that behind us and really focus now on the very important steps and measures that we need to continue to make to turn the business around. Your question regarding the disclosures around the material weakness and the impacts that's had on our financial statements. I would say it doesn't necessarily change anything immediately. But obviously, we're very focused on ensuring that we can file our 10-K as quickly as possible, notwithstanding the fact that we were not able to do so within the prescribed time line. Kaumil Gajrawala: Got it. And then as it relates to the benefits product, what does the supply chain look like for something like that? Can you leverage your current PP&E assets to produce it? Do you use third-party co-packers? It sounds like it just sounds different from the core of what you're doing that, yes, it's cool, likely to be promising, but how does that impact the actual practicality of production and such? Ethan Brown: Yes. That's a very, very good question. Before I answer, I want to just note one thing on the core business that I moved over to too quickly. If you look at the results on a segment-by-segment basis, in U.S. retail, we were down 6.5%. And to me, that's actually encouraging. Because if you look at the overall numbers, they were down more than that, right? But if you start to see stabilization in the U.S. retail in our core business, which I think we're going to see, though I can't say exactly when, then everything we're doing on these adjacencies is kind of additive, right, if you can turn around that retail position in terms of the retail number. And so I was very encouraged by that, and it has to do with some of the new distribution we've been able to obtain in some of the larger mass stores. So as we layer in things like drinks, I think getting the reconnected to the U.S. retail consumer seems like it's within reach. On the supply chain side, I guess, the first thing I would say is that despite our past, we actually have a lot of beverage expertise. We have some of the -- I think, some of the best minds and beverage on our Board with Seth and Justice and Jim and Boston Beer, Kathy and Coke, so it's not like we're coming into this without a lot of experience. It's just something we haven't done before as the company. And so the supply chain is actually pretty similar from an ingredient perspective. We're dealing with protein. We're dealing with fiber. We're dealing with flavor, things like that. So that is not a stretch for us at all. And the production, if you think about turning plants into needs for the center of the plate and you think about blending together protein and fibers and flavor in a drink, the latter is much easier. And so this is not something that we're worried about from a logistics perspective. Co-packing is readily available throughout the United States. It has much less arduous terms from a scale-up perspective. Often, we have to go teach the co-packer how to make our products. That's obviously not the case here. And I think what you're really going to see is our ability to understand all the characteristics of plant materials, the proteins, the fiber and how to optimize their taste for the consumer is going to shine in these drinks, and that's what I'm excited about. Operator: The next question comes from John Baumgartner with Mizuho. John Baumgartner: Maybe first off, Ethan, just to build on that last line of thinking. Just sticking with the expectations for the beverage expansion and the adjacencies more broadly. Can you walk us through how you plan to scale it, how you'll manage distribution, the specific channels that you'll enter? How you will allocate budget to enter these categories? Just how do think about milestones you ramp up and the impact on cash burn? Ethan Brown: Sure. So we're taking a pretty careful approach. So you'll see the same pattern that we've just done with drinks now initially launching D2C getting feedback from the consumer making adjustments. And then you'll see us go into a particular regional distribution, likely emphasis on natural and then into mass. And so we'll take a step by step. That as we see success or failure, we'll adjust how much we're spending. But so far, and this is very early days, the indications we're getting from the drink are very positive. In terms of distributor interest and things like that, all of it is speculative at the moment. So I don't want to promise anything. But I think what you'll see is a kind of measured approach from us, and we'll spend a certain amount, make sure that we're still on track, then it's an additional amount. But one of the neat things is that we're not necessarily creating entirely new brands, right? Like so the drink is called Beyond Immerse, but we're relying on the fact that Beyond is a very well-known brand. So we don't have to kind of reinvent the wheel. And we have a strong consumer base that's particularly interested in what we're doing. And so that gives us an advantage relative to someone who's just starting out, right? We're able to sell additional product to a consumer that's already buying Beyond. I don't know, Lubi, if you have any comments. Lubi Kutua: No. I think you covered it well, Ethan. What I would say is to your question around potential impact on cash burn, I think one of the things that's attractive about the beverage category -- can be attractive about the beverage category, particularly at scale, is the margin profile, right? So obviously, as we are in relatively limited distribution and producing at much smaller quantities, the economics won't look quite as favorable as if we are successful and begin to scale up. But certainly the margin profile for that category of products would be attractive. And so with the supply chain that we have in place and these co-packer agreements, et cetera, we actually think that the impact on the total cash use will not be overly burdensome. John Baumgartner: Okay. And then I'm curious about your vision for the Beyond Meat portfolio going forward as you work through this SKU rationalization. I guess where have you chosen to retrench in terms of product or new products? And what have you identified as the foundation for the core going forward? Is it steak? Is it burgers? How should we think about that? Ethan Brown: Yes. So as I mentioned in my comments, we have 20-plus products that are clean label project certified. And I really focus on those. And the Beyond portfolio, for example, and because just in my own taste and my own health. And areas where maybe there's less differentiation than I'd like to see. You can make sure what that might be, some of the breaded items, things like that, less interested in that, more interested in where we can deliver really unique value to the consumer. And so Beyond Steak Fillet is a good example. That's 20 grams of protein. It's 1 gram of saturated fat from avocado oil. It's got mycelium, which is a terrific ingredient; it's got fava beans, et cetera. So focusing on things that really help tell the story around Beyond and tell the clean ingredient and healthy narrative are the ones that we're focusing on going forward. Operator: The next question comes from Peter Saleh with BTIG. Peter Saleh: Great. Maybe Ethan, I guess the first question I had was on the beverage lineup. You mentioned initially getting some feedback and then making adjustments. So maybe can you talk a little bit about the initial -- what feedback you may have gotten and any adjustments you've made? And then if you could just help us out here, what is the target customer here for this beverage lineup. And then I have a follow-up as well. Ethan Brown: Sure. So I think one of the things we're learning about beverages is unlike where we have a really clear North Star, what does this taste like a beef burger or not, the reason there are so many definitions in markets that people have different tastes, right? And so what we're trying to do is find that sweet spot where we can appeal to a broad group of consumers, taste profiles. And so I think what we found is the 10-gram we put out kind of home run. The 20-gram, a lot of people are going to love it or didn't like it much. And enough people, thankfully, love it, that we're able to keep going. But that was more polarizing than the 10 gram. And so what we've done is tap back some of the intensity of the flavors in the 20-gram and some of the sweetness in the 20 gram. And the product that they've developed, and we're probably on our sixth or seventh iteration since we launched, is just phenomenal. Again, I put -- I stand behind us. I think it's going to be one of the best protein drinks on the market, to the holistic picture, the protein content, the fiber, antioxidants, the electrolytes, the environmental footprint, the ease of consumption. I'm probably drinking too many a day, and I've watched people in our office, in my home. It is all of a product. And so I'm looking forward to it. But that was the type of feedback we reacted to it. And there's nothing wrong with that, right? Like even with the Beyond Ground Fava, which we just got an award that's under embargo right now for the innovation there, was that 4 ingredient, 27 grams protein product, we just like to iterate with our consumers. Like it's a new model, I think, in food that we're very, very fast in what we do and letting them weigh in and tell us what they like and don't like. Peter Saleh: Great. And then just, Lubi, on the gross margin for 2026, is there anything you can provide or share with us at this point? And should it mirror '25, should be much better, lower? Anything on the cadence, that would be helpful. Lubi Kutua: Yes, Peter, unfortunately, like we're not providing guidance for gross margin for the year. And I think just to provide a little bit of context around that is one of the reasons why we continue to provide only near year-end guidance on revenue is the fact that our category right remains -- our core category, plant-based meat remains sort of very volatile and volumes remain soft. And obviously, with that being, obviously, at this stage, the vast majority of our business, right? The impact that softer volumes has on margins can be pretty significant, right? And so I mentioned in my prepared remarks that we -- that the lower fixed cost absorption continues to be a headwind on margin. And so I think it's just extremely difficult for us to sort of forecast gross margin to any degree of certainty when there's so much variability on the top line. So we -- obviously, we have initiatives in place that are aimed at expanding margins, right, including like the continuous line that I mentioned. But ultimately, we need to see some stabilization on the top line in order for us to have sort of greater confidence in terms of where margins will shake out. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ethan Brown for any closing remarks. Ethan Brown: Thanks, everyone, for the questions. Appreciate all the interest, and got to go look back over the last year, I do want to complement the team this transaction that Lubi and his group executed was just enormous undertaking. And so there's a lot of work that went into that. And I think he's particularly pleased to have that behind him. But as we look forward, we're excited to see what's going to happen as we pivot our brand into some areas that are maybe not as challenged in our core category. We're going to be talking with you guys pretty soon, and I think we'll have more information then as to how things are going. Thanks very much. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon. Welcome to Duos Technologies Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us for today's call are Duos President, Doug Recker; and CFO, Leah Brown. [Operator Instructions] Then before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. Now I'd like to turn the call over to Mr. Doug Recker. Sir, please proceed. Doug Recker: Welcome, everyone, and thank you for joining us. Earlier today, we issued our earnings press release and our 10-K for 2025. Copies are available in the Investor Relations section of our website. I encourage all listeners to review press releases and our 10-K filing to better understand some of the details we'll be discussing during this afternoon's call. Before I begin, I would like to take a minute to personally thank Chuck Ferry for his leadership and guidance. Chuck has served the Duos organization and provided personal mentorship to me. I value Chuck and the opportunity he has provided me at Duos. It is not every day that you get it to be mentored by a war hero and a corporate Champion. And for that, I will be forever grateful I look forward to your continued mentorship and guidance as you continue to serve on our Board of Directors. Thank you, Chuck, for all you have done and continue to do for the Duos organization. As your newly appointed CEO, I am honored and excited to discuss the focus of Duos Technologies Group. We are now fully dedicated to the data center market through our Duos Edge and Tech Solutions division, driven by accelerating customer demand. I will get into more of that in a minute, but I want to give you an update on the Rail technology and Duos Energy subsidiaries. First, let me talk to you about our legacy business, which is the railcar inspection portal. In the previous calls, we have discussed that this line of business has become less important to our future at Duos. We also talked about diversifying our business strategy to edge computing. Thus, we have made the decision to completely divest the Rail division. This divestiture is expected to take place over the next 60 days. This decision did not come lightly, and I know the rail technology has a rich history with Duos shareholders. In fact, my involvement goes back many years before joining Duos and I was intimately involved in the design and building of the Edge Data Centers that the portal uses today. However, the lack of growth and regulatory hurdles for that business has proved to be extremely challenging to manage. The decision to divest to freeze up company resources and cut significant SG&A expenses. For more details will be made available on a few divestitures in the near future. Second, I would like to talk about Duos Energy Corporation. As many of you may remember from last year, Duos entered into an asset management agreement with new APR Energy to help find new contracts to engineer, procure, construct and operate fast power plants. Duos also was giving a 5% equity stake in the parent of APR Energy. The AMA provided the interim financial ability to execute and pivot to our data center strategy. We announced on the Q3 earnings call that the AMA would conclude in 2026, that Duos will remain -- will retain the 5% equity stake. Now I would like to discuss our data center strategy and our new line of businesses at Duos Technology Solutions. Part of our strategy in building and deploying data centers at a rapid pace has always been focused on cost savings, lowering our capital expenditures. Building data center infrastructure is very capital intensive. As Duos is a relatively small buyer compared to the larger hyperscalers and colocation companies, we needed a way to buy products cheaper. So we created Duos Technology Solutions. This brand-new division allows us to do just that as well as provide a new stream of revenue for us. We started by hiring an industry veteran with a proven track record, who understands our business as well as the data center market overall. Kristen Sanderson joined Duos and will serve as a Senior Vice President of Duos Technology Solutions. Kristen has over 18 years of data center product experience, vast market distribution knowledge, relationships with all the key supplier partners that Duos needs to work with and a wealth of relationships in the data center industry. This new division allows Duos to procure materials for its own builds at a much lower rate than the legacy way of purchasing through traditional distribution. Duos Technology Solutions offers the same strategic sourcing and product distribution to new customers, including large-scale enterprise organizations, hyperscalers, large colocation companies, low-voltage contractors and general contractors across the United States. I'm very pleased to report that through the first quarter, Duos Tech Solutions has already sold $10 million in new business, which currently sits as backlog, all of which I expect to be recorded as revenue this year. This new line of business has low overhead and is simple to execute while having strong commitments by the end client. The revenue generator from Tech Solutions is expected not only to replace the revenue from the new APR AMA, but also provide better margins, thus further contributing to the overall future profitability an growth of Duos Technologies Group. Kristen has built a seasoned team with the talent and short 3-month build tremendous sales pipeline, and we expect amazing things from this new venture. Now I want to shift our discussion to the core of our new data center focused organization, Duos Edge AI. The demand for edge computing continues to grow at a rapid pace, and I'm pleased to share that Duos Edge AI is in a great place to meet this demand. The second half of 2025 proved to be extremely busy for Duos Edge. In July 2025, we successfully completed a capital raise of $45 million with Titan Partners to fund the construction and deployment of 15 EDCs to further broaden the connectivity and compute needs of underserved Tier 3 and Tier 4 markets. Duos Edge AI was also awarded a patent for clean room technology for modular data center deployments, which gives us a strategic competitive advantage in the space. Our goal in 2025 was to procure, manufacture, deploy 15 edge data centers. This goal was extremely aggressive and unheard of in our industry. We are proud to report today that we have accomplished that goal. Our focus for the first half of 2026 is to continue executing our sales strategy to acquire new customers in our markets to fully utilize the capacity of each EDC. In March 2026, we completed a $65 million capital raise to deploy approximately 2,300 GPUs-as-a-service, a 4.8-megawatt high-density EDC deployment for a leading hyperscaler and to expand our high-density EDC footprint to support growing demand for power and compute across AI inference, training, enterprise and hyperscale AI workloads. We also have 5 new EDCs in production with plans for an additional 20 megawatts of deployed capacity by year-end. Having inventory for our EDCs to deploy in critical -- is crucial for our continued growth and success in this market. The Duos Edge AI story and its initial success is garnering tremendous excitement in demand. So inventory will allow us to react quickly to new market requests. Part of this new demand, we now see is for higher density power, which serves AI and high-power compute needs. While Duos Edge AI is committed to sticking to our original model of deploying in the Tier 3 and Tier 4 markets, we are seeing unprecedented demand for power in megawatts compared to kilowatts. The data center market is experiencing a boom like we've never seen before and building at scale is costly, and it takes years to complete. During the course of this deployment, our 15 EDCs, we saw an influx of calls requesting more power in the markets where we are formed organizations all across the country. There is such a shortage of data center space and power that companies are turning to Duos Edge AI. So we are going to start to build our new EDCs with greater power capacity to meet this demand. We have shown in the market we can deploy at lower cost with an incredibly faster speed to market. Duos Edge AI will now be able to cater to customers that have the high densities like the neocloud providers and hyperscalers for their remote edge sites. These higher power capacity EDCs should provide much higher monthly recurring revenue for Duos which we will explain in our financial update coming up shortly. Before I transition to the financials, I would like to touch on our start of the year and our first partnership in deploying high-density power EDCs. This month, Duos executed its first contract across two newly launched business lines, GPU as a Service and high-power colocation service for AI infrastructure. Under our GPU-as-a-Service agreement, Duos will deploy 2,304 NVIDIA GPUs across our Edge Data Center platform, generating reoccurring revenue through a GPU rental model, purpose-built for enterprise and AI workloads. This contract is expected to generate approximately $176 million in revenue over a 36-month term, with margins exceeding 80% and expected annual EBITDA of approximately $40 million. Separately, Duos was awarded a high-power colocation contract to deliver 4.8 megawatts of critical compute power to support a leading hyperscalers high-density NVIDIA GPU cluster, housed within Duos edge data centers. This contract represents Duos entry into the market of high-power colocation where demand for AI-grade infrastructure continues significantly outpacing supply. Together, these contracts mark a significant commercial inflection for Duos, establishing two distinct and complementary revenue streams within our data center platform and validating Edge Data Center infrastructure at the highest level of the AI compute market. Since announcing these contracts, we have received strong incremental inbound interest from hyperscalers, neocloud providers and other large-scale compute customers seeking high-density EDC solutions, we see a significant opportunity to scale the high-power EDC model through 2026 and beyond. Now I would like to turn it over to our CFO, Leah Brown, who will go over our financials for 2025. Leah? Leah Brown: Thank you, Doug. This has been an exciting year for Duos. 2025 is a year marked by significant revenue growth, strategic investments and meaningful progress towards building a stronger, more scalable company. I am truly excited to walk through our full year financial performance and highlight key operational drivers that shaped our results. For 2025, total consolidated revenue was approximately $27 million. The company previously projected revenue in 2025 of $28 million. Although that target was not met, we recorded a little over $1 million in deferred revenue for Technology Solutions, which is contracted, cash was received and we will record as revenue in 2025. In 2025, the $27 million in revenue was a significant increase compared to $7.3 million in 2024, which is over a 270% increase year-over-year. This growth was primarily driven by services and consulting revenue from the asset management agreement with new APR Energy, totaling $22.4 million in 2025 versus $900,000 in 2024. The company delivered materially stronger gross margin in 2025 and generating $7.9 million in gross profit, achieving approximately 29%, a significant year-over-year improvement. This was driven by improved cost absorption and continued operating efficiency. The company reported net loss of approximately $9.8 million in 2025. An improvement from the $10.8 million net loss in 2024. The year-over-year improvement was driven primarily by higher revenue and significantly stronger gross margin. As we discussed on our Q3 earnings call, achieving positive adjusted EBITDA was an important milestone for the company, reflecting the early benefits of revenue scale and margin improvement. I'm pleased to report that we've built on that progress in Q4, delivering positive adjusted EBITDA for the second consecutive quarter. This consistency is meaningful and demonstrates that the Q3 results was not a onetime event, but rather the continuation of improving operating performance as the business scales. The consecutive improvement from Q3 to Q4 reinforces our confidence in the direction of the business, driving higher revenue volume, improved gross margin and more fee cost structure. Let's shift to the balance sheet. The company ended 2025 with approximately $63 million in total assets, reflecting meaningful growth year-over-year. Cash increased significantly compared to the prior year driven by capital raise during the year with strengthened liquidity and enhanced our ability to support operations and planned investments. Another strong position on the balance sheet is property and equipment. Each with significantly increased year-over-year, reflecting continued investments in infrastructure and assets required to support the program execution and long-term growth initiatives. The current contract liabilities over $5 million supports the company's future revenue recognition. On the equity side, capital raised during the year strengthened our balance sheet and liquidity, while ongoing investment in the business aligns our strategy to scale operations and drive longer-term value creation. 2025 was a transformative year for Duos Technologies Group. We significantly scaled revenue, strengthened our liquidity position and make strategic investments that position the company for increased operating leverage and margin expansion going forward. As previously reported, the Rail segment remains relatively flat. In response, we are divesting the rail business and reallocating resources to support the continued expansion of our Edge Data Center segment. Turning to our 2026 outlook. The company is providing revenue guidance of $50 million to $55 million in total revenue across all business lines. This forecast reflects growth from both our core operations and newer initiatives, which Doug will cover, and we believe positions us for a strong year. Due to the timing of revenue recognition, a significant portion of revenue is expected to be recognized in the second half of the year, coinciding with the period in which we expect to achieve positive EBITDA. Our investment and expanded revenue opportunities give us confidence in our ability to execute and continue building a stronger, more profitable company. Doug, I'll turn it back to you for additional comments. Doug Recker: Leah, thank you. Before we open this up for questions, I wanted to say again how honored I am to serve as your new CEO. The new data center-focused strategy is the new Duos Group -- Duos Technologies Group, and we are poised for great success. We have been awarded global recognition with the Innovation of the Year award at the largest data center and telecom conference at Pacific Telecom Council, 2026 in January. We have also been nominated for breakout success in North America Digital Infrastructure Leader of the Year from the Tech Capital Global Awards coming up in May. The global recognitions only solidifies, we are on the right path at Duos with a prosperous future ahead. We understand we have a new focus, and this is a departure from our legacy business passed. We are taking steps to ensure the new messaging is related to the market and that we will be given the appropriate market coverage moving forward. We will be retaining an IR firm to assist and expect several analysts to report on our new focus and business activities in the near future. And with that, I will open it up to questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Ed Woo with Ascendiant Capital Markets. Edward Woo: Yes, I'd just like to give my congratulations to you, Doug and to the entire Duos team. The growth that you guys had has just been amazing. My question is, as you mentioned that demand remains very, very strong. Are there any worries of competitors entering this market? And what can Duos do to be able to have the advantages to be able to compete if new entrants come in? Doug Recker: That's a great question, and that's why we're -- we manage the business appropriately. So you're going to see some people come into the market, like you just probably saw the press release from Crusoe. They're entering the market. As far as building 5 to 10 to 20-megawatt modular data centers. They're one of the largest in the business. They build Stargate, they're huge. So that in itself tells us we're in the right market. But what we've done, and this is an incredible piece, I just got back from GTC, and everybody was talking about how they're concerned about deploying with modular because GPUs are extremely sensitive to particles and dust. And ironically, in the best part about our business, we obtained a patent in September called the clean room we actually have a patent that goes on top of our -- it connects to our modular data center that cleans the air before you come in. So all the particles on your body, on your equipment are blown off filtered off, then you walk actually into the data center. That is huge when it comes to deploying because what's going to happen is the GPU providers like NVIDIA and everybody that make chips, everybody makes servers, they won't honor their warranties if the fans get dirty and dust in them. So that is a huge win for us, and it's going to help us differentiate us from the competitors coming in the market. You will see them, but we are the only ones that have deployed, prime example, 15 pods. I challenge everybody that comes into this business that doesn't have a 3D rendering to go look at physically look at their pod. We had a customer fly in from China last week, and they flew into Corpus Christi and toward our pods, just to see our manufacturing capabilities. So it looks like there'll be a new customer of ours on the hyperscale side, possibly. So we have the experience. We've done it. We can actually show people our markets that can physically go there to see our customers see year burning and see how the facility works. So we welcome the competition, but we're strong where we sit. Edward Woo: That sounds good. And my last question is kind of like a longer-term plan. I know you guys kind of been focused on the rural underserved markets. Is there plans to go into the bigger markets? And also, you mentioned China customers or China partners, do you anticipate possibly going international? Doug Recker: Yes. Great question. Right now, our focus is Tier 3, Tier 4 markets, and let me tell you why. The demands to deploy in a Tier 3 market, I can deploy my pods and get access to power in 90 to 120 days. If I go into a Tier 1 market, I'm competing against the larger data centers and the infrastructure that's already in place. We're going to build infrastructure fast. So where do you do that? You go into markets that have accessible power. They've built substations that have 5 to 10 meg available on them and permitting is a lot quicker. So our focus is going to continue to Tier 3 and Tier 4 markets, and that business sector is huge, and it's going to be huge for the next 10 years. And to your international question, once we start deploying at scale here and move on, we'll be open to international. But right now, our #1 focus is in the U.S. into the Tier 3 and Tier 4 markets. Operator: Our next question comes from the line of Dan Weston with WestCap Management. Dan Weston: Congrats on the quarter. Doug, a couple of quick points of clarification. The -- I think you mentioned you were expecting to have -- or you do have 5 new EDCs in production to be deployed by year-end, if I heard that right. Are those 5 EDCs specific to the GPU as a service contract you just signed? Doug Recker: No, those 5 EDCs are committed to markets that have been contracted. So there are markets in Georgia, and we're working with the utility to deploy on their network as well. So those are our normal pods that we deploy in that we've deployed. Like the 15 we've deployed, they're identical. So yes. And let me give some clarification because this might help answer a lot of questions for other folks, too. We're still building our same model. Our core is you go after the education, health care and local government in these markets. But what we're doing at the factory is we're building the pod with more power. So we're deploying these units the same concept, the same places, but we're building more at scale, so we can bring in higher density users. So yes, so that's the model. Dan Weston: Got it. Back to the first GPU-as-a-service customer that you just recently signed. When do you expect to have those larger pods, if you will, in the ground and expect it to generate revenue. Doug Recker: We're on track for July, August. So with permitting and things like that, I want to say August to you, but we're looking good. So more August time frame. Dan Weston: That's amazing. And as it just kind of ties into the guidance that Leah provided, Leah, if you're there, I think I wrote down $50 million to $55 million of revenue expected for this year. Could you give us a sense of how that revenue breaks down, please? Leah Brown: So yes, thank you for that question. So the revenue line that we anticipate for this year, we're expecting definitely on a holistic view to achieve that aggregate. As a company, we don't go into specifics for each business line. But overall, we do anticipate to meet that guidance. Dan Weston: Okay. I understand. And while you're there, you mentioned the PP&E up at $27 million and change. That's obviously a massive increase from last year, but also up $12 million from your Q3. Can you give us a breakdown of what that PP&E is, please? Leah Brown: Absolutely. So the majority of our PPE is our Edge Data Center. So we have 15 data centers, and we've also started prebuying for the next lot that is coming online in 2026. So you -- the majority of that. Yes. Dan Weston: Great stuff. And then last one for me, and I'll jump back in. Doug, I think you mentioned that you had secured the 4.8 megawatts of power for -- I assume you're talking about the GPU as a service contract. The initial LOI, I think you mentioned 10 megawatts dedicated to that project. Could you explain a little bit what the delta is there between the 4.8 and the 10 megawatts? Doug Recker: Sure. So the site is built to 10 megawatts. So there's 10-megawatt available. So they're taking down 4.8 for critical load. So that means I can add to that site quickly up to 10 meg. Now that site can go to 20 meg, but it might take another year to get access to another 10. So that -- so the winner here is that site has a capability that's already been transformed down at 10 meg. So there's 10 meg physically available today if I wanted to sell it. So I would just build the pods, I build another section of pods to get to the 10 meg. So another 5 meg cluster of pods. Dan Weston: And in terms of real estate, if you will, there's plenty of space there to just drop another 2, 3 or 5 pods down if needed. Doug Recker: Yes. So there's 3 acres there. And what we've noticed is 3 acres is plenty. Basically, if you look at our model, we're deploying 5 meg it's really like looking at 5 school buses. Dan Weston: Understood completely. Do you anticipate that your first technology, global technology customer for the GPU as a service will end up taking the whole 10 megs? Doug Recker: Yes. The actual -- there's 2 customers that are -- yes, absolutely. They're looking at 5 more sites at 5 megs with us right now. Obviously, we've researched, we found 5 sites with the power there, but we're going to get this one installed and the one in Iowa installed first, and then we'll report on how quickly we did it and how the revenue looks. But the demand -- I mean, I came back from GTC, and there was 21 -- we had 21 inquiries on 5 to 10 meg sites. The demand in this niche is unbelievable. So like I said, I'm not really worried about other people coming in. Our secret sauce is how we deploy quickly, how we find the power. We have a secret to that. and the other piece is the clean room. I don't see you -- prime example, in one of these pods, you're talking $10 million to $12 million just in GPU in a pod. So a clean room I don't understand why you wouldn't go to it, somebody that has a clean room. It doesn't cost them more. Dan Weston: Understood. By the way, do you anticipate that you'll be able to disclose who that first technology customer is in the near future? Doug Recker: I'm not sure. It's a very, very, very strict NDA right now. So I think maybe if we -- once we prove ourselves to them, it might be an option. But put it this way, they're Tier 1, so we're good. Dan Weston: I appreciate that. Let me squeeze one last one and I'll hop back, you mentioned that there was a $10 million backlog in the Tech Solutions business that you expect to record as revenue for this year. Yes, is that typical for this business where the booking of the contract could take several quarters to actually run through the revenue line? Doug Recker: Yes, exactly. So let me give you an example. So we sell a lot of -- and we have a lot of -- our funnel is huge. So we have a lot of like cabinet, PDUs fiber connectors, those are 60 days, 90 days max, right? Well, we booked that. We ship it out quickly. But UPSs and other switch gears are 6 to 8, some of them are 9 months out. So that's -- we had a big booking towards the end of the year, but it took 3 months for us to bill it, right? So A lot of the bigger products takes longer. But everything that we're booking that's in the funnel and that you see us report in this quarter, next quarter, we'll all build this year because the majority of it is I wouldn't say off the shelf, but it's more UPS, PDUs, cabinets, cold aisle containment, that kind of stuff. And there's a lot of it. Dan Weston: That's incredible. Congrats to everybody. Doug Recker: Thank you. That's why I'm here. I love the question. Thank you, sir. Operator: Our next question comes from the line of Nico Sacchetti with RBC. Nico Sacchetti: Maybe I'll piggyback on Dan's last question here. So not only is that $10 million of the distribution business going actually recognizing revenue. Is $10 million like a quarter a typical run rate for that business? Is that quite huge quarter? Is that low? Obviously, not looking for a definitive guidance, just trying to get an idea of what you're expecting or what that capability [indiscernible] just like a normalized situation. Doug Recker: Yes. And we're new to the business, but what we're seeing is when we can recognize it and how stable it is. So let's say the funnel is over $150 million depending on what the product is. Nico Sacchetti: Sorry, just to clarify, you said the funnel like annual capacity. Is that like your high-end number that you could do in... Doug Recker: The $10 million was over 2 months, and that was when they first started. So obviously, we're looking at a lot greater than that. Nico Sacchetti: yes, going back in and out will hold on a little better. I thought you said the funnel is $150 million. Is that like an annual like TAM or capacity that you could do? Did I hear that number? Doug Recker: Yes, that number is from two sales reps that we hired that's in their funnel for this year -- and that's only for 3 months of doing business. We just started that group. I mean, look, on data center buys $1.6 billion worth of product, right? So that's normal, believe it or not, in this industry. Nico Sacchetti: So it would be fair to say if there was any kind of negative perception around the loss of that $20 million 2-year and the opportunity substantially higher. You mentioned that replacing that revenue, but it sounds like this could be a multiple of that in a normalized situation. Doug Recker: That's exactly right. That's why we brought it on. And Nico, just real quick about that division. Remember, the main reason we brought that division on is in the marketplace right now, everybody knows to build a megawatt, it's anywhere from $10 million to $13 million, right, to build a megawatt. Why they're looking at us is I can build a megawatt for $6.5 million. And how do we do that, it's because an infrastructure group has direct to the manufacturer now. So I'm not buying through a Wesco or a Graybar. So 20% to 30% comes off the line because I buy direct. Nico Sacchetti: So you are offering something that can be set up substantially quicker than like a traditional football field size data center and at a lower cost is what it sounds like. . Doug Recker: That's right. Nico Sacchetti: Any thought of removing the lower cost and just go number a better margin profile. Doug Recker: Right. But we can deploy quicker. Remember that. So in the CapEx isn't as intense. So you're deploying 5 megs at $25 million. It's a big difference. Nico Sacchetti: So a lot of what I have are just clarification questions. Obviously, there's a lot of moving parts. I'm just trying to make sense of what was the company you have the AMA, the equity software and then it's going towards this modular data center, school, hospital, anchor tenant, the metrics around that were very black and white like cost, what the revenue opportunity is. And then it seems like we're kind of pivoting again. And so I just want to make a sense of all of these moving parts. And maybe the -- it would be helpful if could clarify the deck that you have available on your website from February, I think it is. Is this like good information? There's just some difference in metrics from what's on the slide versus like what was reported. And I just have some clarification questions. I'm just curious like how set in stone the numbers were off of that specific presentation. Doug Recker: Yes. So we're actually after -- obviously, after the call, we're going to update because now we've recognized and told some information. We're going to update that. But just remember, there's -- and I don't want to make it confusing. I'm trying to -- that's why I'm trying to change the model here a little bit. There's 2 pieces to our business. One is the Edge Data Center business and the one is the infrastructure. The Edge Data Center business, the GPU business falls under the Edge Data Center business. Remember, it's the same pod. It's the same concept. It's just I'm building them bigger. Just look at the GPU as a different type of customer. So I'm just bringing in different types of customers. So it's the same model, and the revenue is a lot higher, obviously, because they're taking power. We make money off of power space and cross connects, right? So the more power we sell, the more money we make. So -- but obviously, the CapEx goes up in the pod cost. The model -- and I'm pretty sure we shared that the model on the GPU is a big difference. Prime example, remember, our pod model at 15 cabinets is $350,000 to $400,000 a year. That's the goal, right? Out of that if you compare it to the GPU model, 1 meg, you're at $1 million a year. So at 4.8 megawatts, you're now at almost $1 million a month. So why not build the pod bigger and take the customers in that need that power. When all it is for us is at the factory, we just put bigger panels in. Nico Sacchetti: So when you say the same model, you've talked about just the original, the standard version of this going on kind of like Tier 2, Tier 3 markets or rural areas where there is like 500 miles data center, what's the... Doug Recker: Nico, you're cutting out, it's hard to hear you. Nico Sacchetti: I think I'm having some bad service here. I just want to get like do you have -- it sounds like it totally depends on the unit for what the metrics are or it was much more standardized with the other versions or the model and then when you say the same model, are they going in certain locations where instead of being a colocation where you still have the hospital and the school and it's in a rural area and you're just having less of it available to be leased out essentially by maybe other businesses in that town now that... Doug Recker: Yes, that's -- you're exactly right, Nico, that's exactly right. So our core customers are our anchor customers, which are education, health care and then enterprise in that market, right? The carriers coming in to take space so they can peer and cross connect to each other. That's the best -- someone's cross talking, I'm sorry about that. But yes, Nicco, if you can hear me. That's the original model. That's why we're sticking with that model. We're just adding more capacity to bring those customers in that need higher density. So we're always servicing that market. And that's what helps us get into those Tier 3, Tier 4 markets, especially with permitting and everything because we're low on the radar. We're not 10, 20, 30, 40 megawatts that they have to build out that stream in the community. We're going after power that's already there. That's in excess that the utility wants to make money on. So in return, it helps the local community as well. in tax dollars. So they're actually welcoming us. Operator: Our next question comes from the line of Carl Wiese with Grow Funds. Unknown Analyst: Yes. I was wondering if you can kind of talk to at scale as you go into the second half. What does the model look like from a gross margin perspective? And then with all of the selling the Rail business and winding down the management contract. What kind of OpEx should we expect on a go-forward basis? Doug Recker: We'll talk real quick. Let me take over the rail. So the Rail business, we're hoping to offload or decommission that offload it in the next 60 days. That's the goal on that. So there's no burn on that business for us right now. So hopefully, we'll exit that. It frees up a lot of SG&A. So we'll obviously not carry that load of employees and all the other expense. So that's a good thing, and that should happen in the next 60 days. But I'll turn it over to Leah on your numbers there. Leah Brown: Sure. So Carl, good afternoon. Yes, so we should expect to see gross margin improve in the second half of the year. Just a reminder with the revenue recognition for some of our business lines, you are going to see that revenue recognized in the second half of the year. So we're looking at gross margin around 76%. Unknown Analyst: Gross margin shouldn't it -- well, the data centers themselves are what, 70 to 80 type gross margins. Leah Brown: Yes, exactly. So we should see around -- for gross margin, you're about $7 million, $6 million towards the end of the year. Yes, exactly. So just when we report here in May, you'll see our Q1, but you'll be able to see that revenue picking up in Q3 and Q4. Unknown Analyst: And OpEx, should actually be coming down at the same time. Doug Recker: The OpEx, yes. Unknown Analyst: And then just, Doug, as you said here today, how long do you think this demand environment will last? Doug Recker: I think the high demand like what we're seeing now, like when I go to GTC and there's 21 people trying to talk to me to take -- signed contracts. I think that is going to be strong for the next 3 to 4 years. And then what's critical about our business is the main data centers that are out there, and I think we might have talked about this before, the main data centers that are out there are going to look to us as a hub and spoke because they're going to want to capture those markets that we're in like the Dumas, like the Corpus Christi, Lubbock, these Tier 3 markets that we're going in, they need to have compute out there. So does the mobile operators. When we go to 6G, we're at 5G, we're going to 6G now. They need the compute out at what we call the eyeballs. So all that data is going to take a lot of fiber to get back, a lot of network, right? So they want to be able to own that network and they want to own that customer. The best way to do that is obviously buy these many data centers everywhere, bring them back to the core. Because to be honest with you, they're all going back to a core anyway. So it makes complete sense. So I think the growth is going to be very strong and extremely strong in the 3 to 10 meg range because right now, and I just did this exercise for another potential client, he needed 2 meg worth of power, 2 meg, which doesn't sound like a lot nowadays, but it's a lot. I couldn't find it throughout the country in one data center. I'm talking about a legacy data center. So the market is looking past the need of the 10 to 15 meg data centers. And prime example, like Johnson & Johnson, they keep their stuff at a local data center. They go to like a QTS. They go to Flexential. That's where the house. They don't go to a hyperscaler. They don't go to these big ones they're building. We're losing sight that the demand is there and they're still growing. So I think you're going to see the market for the next 5 to 10 years focusing on that 10 to 15-megawatt range. So we have a long haul, but we do have to build quickly. Operator: Our next question comes from the line of Tom Leonard with RiverBay Investments. Unknown Analyst: You provided a lot of color on the GPU-as-a-service, the economics, the revenue of that. I'm trying to think about the revenue exit run rate this year. And so could you put a little more color on the high-density EDC, how many total megawatts and what's the revenue value per megawatt for that high-density colocation customer versus leasing and GPUs that you purchased? Doug Recker: Sure. On the GPU model, let me back up. The goal for this year is to deploy 25-megawatt. Now that can be through 300 kW pod that we deploy. Right now, we have 15 of them on the ground at 300 kW. But the total megawatt because that's what we're being judged by right now, everybody is being judged by megawatts, not by kilowatts or cabinets. So the plan is 25 megawatts. And when we look at the GPU model for every megawatt, we're looking at $2 million a year in revenue. That's right on the head. That's what they're billing, that's what the industry shows, and that's what we're building to. So it obviously is a very strong model to house GPU for customers. Operator: Thank you. And with that, that concludes today's question-and-answer session. I'd like to pass the call back over to Doug for any closing remarks. Doug Recker: Well, I'd like to thank everybody for joining today, and we look forward to speaking with you in Q1 earnings. Thank you so much for your time. Operator: Before we conclude today's call, I would like to provide Duos safe harbor statement that includes important cautions regarding forward-looking statements made during this call. The earnings call contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking terminologies such as believes, expects, may, will, should, anticipates, plans and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties. Risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause Duos Technologies Group's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in the Item 1A and Duos on annual report on Form 10-K which is expressed incorporated herein by reference and other factors as may periodically be described in Duos' filings with the SEC. Thank you for joining us today for Duos Technologies Group Fourth Quarter and Full Year 2025 Earnings Call. You may now disconnect.