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Operator: Good day, and thank you for standing by. Welcome to Glanbia Third Quarter 2025 Interim Management Statement Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Mr. Liam Hennigan, Group Secretary and Head of Investor Relations. Thank you. Please go ahead, sir. Liam Hennigan: Thank you. Good morning, and welcome to the Glanbia Q3 2025 Interim Management Statement Call. During today's call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of this interim management statement. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these statements. The directors undertake no obligation to update any forward-looking statements made on today's call, whether as a result of new information, future events or otherwise. I'm now going to hand the call over to Hugh McGuire, CEO of Glanbia plc. Hugh McGuire: Thank you, Liam. Good morning, everyone, and welcome to the Glanbia Quarter 3 2025 Interim Management Statement Call and Presentation. On today's call, I will provide an overview of our performance for the first 9 months of the year. And I'm joined by my colleague, Mark Garvey, who will cover the financials and outlook. At the end of the presentation, we will be very happy to take your questions. Overall, quarter 3 year-to-date performance for the group was ahead of our expectations. Group revenue increased by 3.3% with strong performances in our Performance Nutrition and Health & Nutrition segments in the third quarter and continued good growth in our Dairy Nutrition segment. In Performance Nutrition, like-for-like revenue increased by 2.5% year-to-date, excluding the impact of SlimFast and Body & Fit. We continue to see strong consumer demand with double-digit volume growth in the third quarter in our priority growth brands, Optimum Nutrition and Isopure. In Health & Nutrition, we continue to see good momentum with strong demand from end-use markets with like-for-like revenue growth of 6.1% year-to-date. And in Dairy Nutrition, we saw strong volume growth across proteins and cheese and an increase in pricing driven by protein solutions. We continue to make good progress on our group-wide transformation program to simplify our business and drive efficiencies across our new operating model, supporting the next phase of growth. We've completed the sale of non-core brands Body & Fit and SlimFast in our Performance Nutrition division, and we acquired Sweetmix within our Health & Nutrition division. We'll continue to focus on shareholder returns by leveraging our strong cash flow and, in the year-to-date, we repurchased and canceled over 15 million Glanbia shares at a cost of EUR 197 million, which represented an average purchase price of EUR 13.10. I'm pleased to say that based on the continued momentum within our Performance Nutrition segment, we are upgrading our like-for-like revenue guidance for the full year to 3% to 4%, excluding the impact of SlimFast and Body & Fit. And we now expect full year adjusted earnings per share to be at the upper end of our full year guidance range of $1.30 to $1.33. We look forward to meeting investors and analysts at our Capital Markets Day in London on the 19th of November, where we will have an opportunity to delve more into the growth strategy for the group and associated financial targets. Performance Nutrition delivered a better-than-expected performance during the period with like-for-like revenue increasing by 2.5% excluding the impact of SlimFast and Body & Fit, which have now been sold. In the third quarter, we delivered a sequential improvement growing like-for-like revenue by double digits excluding the impact of disposed brands. Year-to-date, the volume performance was driven predominantly by strong category growth with good growth in food, drug, mass and e-commerce channels in both the U.S. and international markets, somewhat offset by lower revenue in the club and specialty channels in the U.S. and a reduction in margin diluted promotions. We continue to scale our international business, which delivered strong like-for-like growth of 8.8% year-to-date excluding SlimFast and Body & Fit, particularly in Asia Pacific. Pricing was broadly in line with expectations with a marginally negative year-over-year impact as a result of tactical price changes, primarily relating to higher-margin products in energy category, which are delivering a strong volume uplift. We continue to navigate ongoing elevated whey prices driven by strong category demand and have responded to this inflation by increasing prices in our international markets in the first quarter of the year. Pricing in the U.S. market comes into effect in the fourth quarter. We continue to expect approximately 15% to 20% of new whey protein isolate supply from the back end of 2025 and through 2026. In terms of brand performance, Optimum Nutrition, our largest brand at 68% of Performance Nutrition revenue, delivered like-for-like revenue growth of 4.6% and U.S. consumption growth of 8.8%. We saw strong double-digit growth in the U.S. food drug mass channel, growing ahead of the category, and continued strong growth in the online channel. We continue to grow our household penetration and expand the brand's distribution. We have a world-leading portfolio of high-quality products within the Optimum Nutrition and Isopure brands, and we continue to focus on innovation and education. We've launched a number of products this year, such as Optimum Nutrition Pro Quench, Clear Whey Collagen, and new products across our creative platform, plus the extension of our Isopure proposition into gut health and immune system support. And we're seeing good growth in our non-whey innovation products for both brands. Our education effort continues to pace, including the Optimum Insiders event we hosted at the McLaren Technology Center, the launch of the Optimum Nutrition Academy program in the U.S. and the continued rollout of Coach Optimum, our AI-powered virtual coach into new markets. Our healthy lifestyle portfolio delivered like-for-like revenue growth of 2.6% and U.S. consumption growth of 6.8%. Our priority growth lifestyle brand, Isopure, continues to enjoy strong growth across all our channels. We introduced a new look and formula for Isopure, improving brand visibility and flavor, and we also launched our new creative campaign, More of What Matters, driving continued growth in household penetration and TDP. We're continuing to roll out and market test of our new ready-to-drink innovation, Isopure Protein Water. As stated already, due to the momentum in the third quarter, which we see continuing in the fourth quarter, we are pleased to upgrade our full year like-for-like revenue guidance to 3% to 4% growth excluding the impact of SlimFast and Body & Fit. Turning to our Health & Nutrition segment, which comprises the premix solutions and flavors platforms and focuses on priority high-growth end-use markets such as vitamin, minerals and supplements, active lifestyle nutrition and functional beverages. This segment delivered a strong performance in the year-to-date, delivering like-for-like revenue growth of 6.1%. This was driven by a 6.9% increase in volume and a 0.8% decrease in price. Total revenue increased by 11.5% as a result of a 7.6% increase from the acquisitions of Flavor Producers and Sweetmix, somewhat offset by a decrease of negative 2.2% as a result of the impact of the 53rd week in the prior year. We are pleased with the strong performance in the quarter, which was driven by good growth across BMS and functional beverage markets, and we continue to see good broad-based demand with strong growth particularly in EMEA and Asia Pacific. Pricing was slightly negative as a result of certain pass-through pricing to customers. During the third quarter, we completed the acquisition of Sweetmix, a high-quality Brazil-based nutritional premix and ingredient solutions business, which will allow continued expansion in the Latin America region. We'll continue to invest in innovation and new capabilities and are building out our new powder flavor capability with planned capital investment in Flavor's spray drying that allow us to capture additional opportunities across our broader B2B customer base. In terms of guidance, we are reiterating our full year guidance of mid-single-digit like-for-like revenue growth in 2025, which will be predominantly volume led and is currently tracking towards the upper end of the range. Dairy Nutrition combines our U.S. cheese and dairy protein portfolios and is largely one integrated manufacturing footprint with a high supply and operational interdependency and is also the route to market for our joint venture supply of whey and cheese ingredients. This business provides a scale leadership position in dairy as a leading producer of whey protein isolate and the #1 producer of American-style cheddar cheese. In the year-to-date, like-for-like revenue increased by 6.1%, driven by a 3.5% increase in volume and a 2.6% increase in price. Total revenue increased by 3.2% as a result of a negative 2.9% decrease from the impact of the 53rd week in the prior year. The volume increase was seen across cheese and protein solutions with strong whey protein demand, particularly targeting the high protein ready-to-eat category. And we continue to see good demand for colostrum targeting gut health and immunity. Pricing increase was largely driven by favorable dairy market pricing in the first half of the year with strong protein markets in particular. Broader dairy market pricing turned negative during the third quarter. For full year '25, we'll continue to expect profit growth across Dairy Nutrition and our joint venture combined. And with that, I will hand over to Mark. Mark Garvey: Thank you, and good morning to everyone on the call. The group has a strong balance sheet and, at the end of the third quarter, net debt was just under $719 million. We have committed facilities of approximately $1.4 billion with an average maturity of 3 years. At year-end, we expect net debt to adjusted EBITDA to be approximately 1.25x. The acquisition of Sweetmix in Brazil closed in August for $41 million. The disposals of SlimFast U.S., SlimFast U.K. and Body & Fit have now been completed as of September 22, October 20 and October 31, respectively. Prior to completion, these businesses have generated approximately $105 million of revenue in 2025. Total consideration for these transactions including working capital transferred was approximately $63 million, of which $14 million has been deferred up to 15 months. Following these transactions, a further charge of approximately $30 million is expected to be taken related to the sale of the SlimFast brand, which will be confirmed with our annual accounts. Capital expenditure, both strategic and business sustaining initiatives for the year, is expected to be between $80 million and $90 million with investments primarily related to ongoing capacity enhancements, business integrations and IT investments to drive further efficiencies in operations. During the first 9 months of the year, the group repurchased approximately EUR 197 million worth of ordinary shares via our share buyback program, which equated to over 15 million Glanbia shares at an average purchase price of EUR 13.10. Shares repurchase represents over 5% of the weighted average number of ordinary shares and issue at the beginning of the year. Approximately EUR 103 million in dividends were also returned to shareholders this year, in line with our dividend payout ratio of 25% to 35% of adjusted earnings per share. We look forward to the opportunity to review our capital allocation framework with you at our upcoming Capital Markets Day on the 19th of November. Now let me turn to outlook and, firstly, revenue growth. We are pleased to upgrade Performance Nutrition revenue growth expectations. We now expect Performance Nutrition like-for-like revenue growth excluding SlimFast and Body & Fit to be 3% to 4%, previously 2% to 3%. We continue to see strong growth in the category, which is supporting growth in the second half alongside distribution gains and planned innovation. Providing further confidence in the third quarter, we saw a strong sequential improvement, particularly in our Optimum Nutrition brand, which increased like-for-like revenue by 14.3% in the quarter. Health & Nutrition delivered a good performance year-to-date across premix solutions and flavors platforms, while we continue to expect like-for-like mid-single-digit revenue growth for the full year, the business is currently tracking towards the upper end of this range. Moving on then to earnings expectations. In Performance Nutrition, we continued to navigate elevated whey costs, and we have now procured our whey needs through the first half of 2026 with whey costs remaining elevated due to strong end market demand. As previously discussed, we have line of sight to approximately 15% to 20% of new whey protein isolate supply coming to market late 2025 through 2026, which has been somewhat delayed from expectations earlier in the year. We have implemented pricing in our international markets in Q2 and in the Americas in Q4, and we anticipate further pricing actions in 2026 as demand for protein is expected to remain strong. Performance Nutrition EBITDA margins are tracking towards the lower end of the 13% to 14% guided range for the full year as we manage some dissynergies for the remainder of the year related to the disposals I've mentioned earlier. Health & Nutrition EBITDA margins are expected to be between 18% and 19% for the year. Dairy Nutrition delivered a strong performance year-to-date on the back of good volume growth in protein solutions and strong dairy market pricing in the first half of the year. We continue to expect profitability growth across Dairy Nutrition and our joint venture operations combined, as previously guided. Operating cash flow conversion is expected to be over 80% for the year. And finally, we are also pleased to update adjusted earnings per share expectations to the upper end of the previously guided range of $1.30 to $1.33. And with that, I will turn it back to Hugh. Hugh McGuire: Thanks, Mark. Just to close, I'd like to reinforce our conviction that Glanbia remains well positioned for growth. In terms of our focus, we're pleased to upgrade our revenue guidance in our Performance Nutrition division today as we're seeing improved trends with strong growth in the category. We also continue to see strong customer demand in our Health & Nutrition and Dairy Nutrition segments. We continue to execute initiatives as part of our group-wide transformation program across our four pillars, simplifying our organization and delivering efficiencies for the next phase of growth. We are navigating high-end whey prices carefully with a number of initiatives ongoing to address this. We continue to invest in key talent and capabilities to drive growth across our great portfolio of Better Nutrition brands and ingredients that operate in exciting categories with market-leading positions in high-growth end-use markets. We are focused on delivering long-term growth and shareholder value. And with that, I would like to hand it over to the operator for questions. Operator: [Operator Instructions] We will now take our first question from the line of Alex Sloane from Barclays. Alexander Sloane: The first one, actually just to dig in a little bit on the impressive acceleration in Optimum Nutrition in quarter 3. You've given some stats that show that obviously some of that has been driven by new distribution, but actually there's been also a strong healthy uptick in consumption growth in the U.S. So just wondering sort of kind of slightly at odds with what we're hearing on the kind of broader U.S. consumer. So what do you think is driving that and how sustainable you see that with kind of potentially more pricing as you alluded to come? And the second one, in terms of the margin outlook, obviously, thanks for the color there in terms of tracking towards the lower end of that 13% to 14%. As we think about 2026 and the moving parts, I mean, it sounds like that whey costs are maybe slightly more elevated. How should we be thinking -- it's early days, but how should we be thinking about '26 margin outlook for PN in this environment? Hugh McGuire: Alex, Hugh here. I'll let Mark take the margin question and maybe I'll address the acceleration in ON. I suppose first thing I'd say, look, very happy with consumption in the quarter and performance across our priority growth brands. A mixture of reasons, I think we're seeing very strong growth across our protein and creatine categories. Certainly, strong category growth in powders and ON, and Isopure continue to take share. We're seeing strong growth in international as well, as you'll see in the numbers, and some new distribution wins in the quarter in the U.S., particularly and no longer lapping the kind of private label impact that we spoke about earlier on in the year and then a little bit of innovation. But I think happy that majority is velocity with a little bit of distribution in there. So overall performance is very strong. I think what I'd say as well is, look, protein is a mega trend. We're seeing good demand for powders. They're the highest quality, the cleanest ingredients, the most versatile and they have a low cost per serve. So we're seeing the powder category growth rates accelerate. So overall very happy with that. In terms of pricing, we've called it out. We priced earlier on in the year in international markets. We saw a little bit of elasticity. But once the market competitors reactive, we're not seeing that elasticity now. We're back into volume growth. I think for North America, given the timing with elasticity, we're not expecting significant elasticity at this point in time. Price increases go live this week. Consumption is strong. Our consumers are highly engaged in the category. It's an affordable product. So would be positive about outlook as we go into quarter 4 and into 2026. Mark Garvey: Alex, just on your margin question, yes, you're right, we did say it's going to be towards the lower end of the range, primarily because of the sales that we just announced. We have some dissynergies we have to manage through, and we'll manage through those into early '26. So I'm not overly concerned about them. We'll sort of manage through that. You're right, it's early days for '26 at this point, and we'll obviously talk a lot more about this when we get to our full year results. But I would say at this point, look, we're very comfortable with the revenue momentum we're seeing, and we probably expect to see that now coming into '26. And overall, I would expect to see EBITDA and margin progression into '26. We have acquired our whey now for the first half. We had said you might recall the last call, we acquired whey for the first quarter. And I said that price is pretty much in line with the second half '25. Now that we acquired the first half, it's marginally higher than the second half of '25. We are putting price increases through in North America. They're done now, and that will be coming through in market. And I expect as we see whey continue to be elevated, we'll probably putting more price increases through next year to be determined in terms of timing. There will also be a margin benefit, obviously, for the Body & Fit and SlimFast sale. That will help us into next year, and some of our transformation work will help as well. And as we sort of look to increase more marketing as well, all in all, I still expect to see margin progression from '25 to '26. Operator: We will now take the next question from the line of Patrick Higgins from Goodbody. Patrick Higgins: Maybe just focusing on Health & Nutrition, obviously, another really strong print in terms of volumes there. Obviously, at the time of the H1, you were expecting maybe a little bit of a slowdown just on possible tariff pull-through in Q2. Was that perhaps a touch conservative on your part? Or did you just see a kind of uplift in terms of the EMEA and Asia Pacific markets that offset that? And clearly really strong given the broader consumer trends we're seeing across the U.S., but globally. So interested to hear your kind of comments on what's underpinning that kind of end market demand. And that's on the volume piece. And then on the pricing side, could you maybe just talk us through some of the pricing dynamics in that division and expectations into Q4? I know there was some tariff kind of costs that you might have to pass through at some point. Should we expect that in Q4? Hugh McGuire: Yes. Patrick, I speak to kind of overall volumes and Mark will speak to price. I think in H1, we probably were being a little bit cautious. We were still coming through a significant tariff turbulence, I suppose, is the best way to put it. So we weren't quite clear on the impact, particularly between China and the U.S. Pleasing to see good growth across all of our end-use markets, but particularly in our international markets, as we've called out. And I think what you're seeing here is this is a smaller part of our overall portfolio, but we're leveraging our broader B2B base and benefiting from the trends that we see in Performance Nutrition overall. So very happy with quarter 3 performance in H&N. Mark Garvey: Yes. On the pricing dynamic, Patrick, there are some tariff impacts, but there's also some commodity pass-through impacts as well. So to the extent that certain prices of materials have come back, we will actually pass those through. So that tends to be how that flows through in the pricing. I think for the fourth quarter, we're expecting the pricing negativity to be a bit better actually than what you saw in the third quarter. So overall, for the year, probably less than 1% negative on price, I would say, for the year, expecting a reasonably good quarter as well on the volume side, and that's why we say we're tracking towards the upper end of our mid-single-digit range now. I'm pleased to see that as we come to the end of the year. Operator: Our next question comes from the line of David Roux from Morgan Stanley. David Roux: Just a couple from my side. Mark, so just to clarify on your comments around whey costs. So as you mentioned, Q1, you had indicated your sort of covered whey costs were sort of flat versus last year. Can you just confirm your comments on how that looks for prices covered to H1? Did you say it was higher versus last year overall? And then -- so then just my second question on Optimum Nutrition. The implied guidance on like-for-like for Performance Nutrition into Q4 implies quite a marked slowdown. Could you maybe just comment on how Optimum Nutrition has performed over basically the first part of Q4? And has it kind of seen a marked slowdown from Q3 as implied by your Performance Nutrition guidance? Mark Garvey: So on the whey cost, David, so as I said at the last call, we have procured through the first quarter, and those costs were in line with the second half '25. As we procured in the second quarter, whey cost went up a little bit. So we're going to look at the first half of '26, they are marginally ahead of the second half of '25. So a little bit higher, and that's why if you look at pricing, that's part of dynamic for us into next year as well. Hugh McGuire: Yes. Maybe just to add as well, David, I think when we spoke to you in August, we would have actually seen whey come off its peak. But what we've seen as we went into September and then specifically at October, we saw prices increase again, all driven by demand. Demand is very strong. You can see that from our own numbers as well. We haven't changed our view on the additional supply coming onstream next year. In fact, we're starting to see that come in now, but demand is very strong. So as Mark said, pricing is done this year. We are now starting to evaluate pricing for kind of late spring, early summer next year as well. But overall, fundamentally, it's all driven by strong demand. In terms of second question on ON, look, probably it's a little bit of conservatism. Consumption remains strong and, answer to your specific question, we're happy with consumption as we go to quarter 4. But you always have -- we ship to a lot of markets all over the world, and we always have a little bit of inventory movement as we go into the back end of the year getting ready for New Year, new you. David Roux: And sorry, just a follow-up on the whey costs. So is the covered position through 1H of next year, would that be inflationary or deflationary versus the prior year? Mark Garvey: It will be inflationary. Operator: Our next question comes from the line of Nicola Tang from BNP Paribas Exane. Ming Tang: First, maybe just to come back on the H&N business again. You talked about this broad-based strength across end markets. Could you give a little bit more color on are you outperforming your end markets? Or are you just exposed to end markets which are growing particularly well? And the second question is -- congrats on all the non-core divestments that you managed to close in Q3. I remember when you announced those non-core divestments, the wording was quite open with respect to continuing broader portfolio assessment and you continue to look at potential further divestments. Do you see scope for further non-core divestments in the near future? Hugh McGuire: Nicola, yes, I think what I'd say, I think you answered it. Look, we're doing well in the end markets that we supply into vitamin and minerals function and beverage and active lifestyle nutrition, so quite similar to our consumer goods business as well. So we're seeing a lot of those similar trends. I think I said it earlier on as well, we're leveraging our broad-based B2B customer base right now particularly with our Flavor acquisition, we have a natural and organic liquid flavor business. We're building our natural and organic powder flavor business as well. That's very much on trend also. And then we're also leveraging our broader protein capability through Dairy Nutrition as well, where we're doing a lot of flavor and fortification work combined with protein. So overall, benefiting from the good trends we see across the broader Glanbia Group. I think, look, what I'd say is the non-core investments, we'll always keep that under review. We're very much focused on driving our priority growth brands within PN. We have a nice portfolio as well, but decisions will all be made in terms of priority investments. And we'll give a little bit more color on our growth drivers at our Capital Markets Day in a couple of weeks' time. Operator: [Operator Instructions] We will now take our next question from the line of Damian McNeela from Deutsche Numis. Damian McNeela: Two questions from me, please. Firstly, can you just provide a little bit more color on the sort of the U.S. category growth? I think you pointed to both protein and creatine has been good components of the growth. But can you sort of talk about whether it's split or weighted to one versus the other there, please. And then just I think at the time of the interims, you talked about longer-term discussions about incremental whey coming to the market beyond '26, '27, '28. Is there any sort of update that you can provide on those conversations, given the sort of continued demand for whey that we see coming through from the U.S., please? Hugh McGuire: Damian, yes, what I'd say is both categories are growing very strongly, both protein and creatine, and not just in the U.S., I think we're seeing that globally as well. So with very strong growth for Optimum Nutrition creatine, and we have a multitude of products across that portfolio now as well with new flavors and new formats being launched. And we're seeing good growth in protein. And what I can say is, look, we've clearly seen the ready-to-mix powder protein category accelerate in the U.S., of course, in 2025. And we're benefiting from that. Our powders -- like we manufacture. We have the largest brand. We manufacture the highest quality. All our manufacturing is in-house with the cleanest ingredients. And powders are versatile. And look, I have no direct data that would say that consumers are switching or moving across formats, let's say. I wouldn't conclude that, but we do have the lowest cost per serve. I think we spoke to you before about making sure that we had the right price pack architecture, the right opening price points. And an example, one of our online customers were seeing very strong demand for the smaller price points. And particularly for our new customers over 80% of customers buying that size of Optimal Nutrition are new to our brand, which is really interesting for us. So overall, I think generally, we're in good demand spaces. In terms of incremental, yes, actually, we have approved capacity for one of our own facilities in the U.S., where we would put it in additional capacity for whey protein isolate for 2027. And one of our local partners here in Europe actually will be announcing additional capacity actually next week as well. So we're working across '26, '27 and into '28 because these investments take time to plan, time to build. But certainly, all of our suppliers are interested in putting in more capacity. Operator: Our next question comes from the line of Karel Zoete from Kepler Cheuvreux. Karel Zoete: I have a question with regards to channel dynamics in the U.S. because it's been, of course, some discussions out about the club channel last year and then the contract loss. What are you seeing across U.S. channels? And then within club, is private label still gaining share? Hugh McGuire: Yes. I think we've called it out specifically. Actually, for our brands, where we're seeing the greatest growth right now is across food, drug, mass and e-commerce channels. Very, very strong double-digit growth across both. Club channel continues to be very important, the broader club channel. We've had some nice wins across -- there's a number of customers who do the club channel. So we've had some nice wins in that broader club channel base. And within private label, the impact on our business from private label that we spoke about earlier on in the year, that has stabilized now and we're happy with ON performance. Operator: [Operator Instructions] Our next question comes from the line of Cathal Kenny from Davy. Cathal Kenny: Firstly, back to the category growth in Q3. What's your best guess for the powders category growth in North America? That's my first question. Second question then is Isopure. Obviously, a very strong Q3, backing up a very good volume growth in Q2. Can you dial in to some of the drivers of that? I know you gave some headline commentary on velocity, distribution, but would be interested lean into the Isopure performance a little bit more. They are my two questions. Hugh McGuire: Yes. It's hard to call -- look we don't get data for some of the channels in the U.S. So it's hard to call overall growth. But what we've certainly seen in food, drug, mass channels where we do get data, that is publicly available, that we have seen growth accelerate from flat to low single digit now into the teens, low teens. So good category growth overall and which ON and Isopure outperforming that category growth. We see good growth within our e-commerce channel as well. So demand generally for powder has certainly accelerated in the U.S. over the course of 2025. Now how long that will continue, that's always hard to call. But certainly, the demand currently is good and we don't see any signs that, that demand will come off as we head into 2026. In terms of Isopure, probably velocity for ON certainly is the key driver, also a little bit of distribution, a little bit of innovation for Isopure. Primarily, it will be significantly more distribution that's coming off a much lower distribution base, much lower household penetration numbers as well. So significant growth in household penetration and point of distribution. But also some nice new innovation as well that we're launching. So for all -- for both our priority growth brands, it's strong velocity, some nice new distribution wins and nice innovation coming into the category. Cathal Kenny: Just a quick follow-up on the pricing point. Are you saying that you expect lower levels of elasticity around this price increase you're now taking in North America? Hugh McGuire: Yes. I think what we've traditionally said, Cathal, is we sometimes talk about elasticity of, one, it tends to come out at around 0.8 from prior experiences. But that doesn't last that long because normally, it's once the entire -- we're the first to move on price, and the category will tend to react. We saw that earlier on in the year in international. The volume growth is back now. I think demand is so strong at the moment that this pricing is well expected. And I think generally, for consumers, it's an inflationary environment in the U.S. But also as we said before, our consumer demand is strong. They're highly engaged in the category. The consumer demand tends to be resilient, and we're in a great format in terms of cost per serve. So it's hard one to call. We're also coming into New Year and new you. So while you won't have much promo effect between now and the end of the year, quarter 1 is obviously a big promotional calendar period for the entire industry. So by the time everything settles, you're kind of coming out into quarter 2 next year. So at this stage, we're not actually expecting significant elasticity. Operator: I'm showing no further questions. Thank you all very much for your questions. I'll now turn the conference back to the CEO, Mr. Hugh McGuire, for his closing comments. Hugh McGuire: Thank you very much. Look, just to close, very pleased with the strong performance in the third quarter. Glanbia remains well positioned for growth. We're moving at pace to deliver on our strategic ambition, and I look forward to speaking more about this at our Capital Markets Day on the 19th of November. Thank you. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Operator: Welcome to the Third Quarter 2025 Arista Networks Financial Results Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section on the Arista website following this call. Mr. Rudolph Araujo, Arista's Head of Investor Advocacy. You may begin. Rudolph Araujo: Thank you, Christa. Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks' Chairperson and Chief Executive Officer; and Chantelle Breithaupt, Arista's Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing the results for the fiscal third quarter ending September 30, 2025. If you want a copy of the release, you can access it online on our website. During the course of this conference call, Arista Networks management will make forward-looking statements, including those relating to our financial outlook for the fourth quarter of the 2025 fiscal year longer-term business model and financial outlook for 2026 and beyond, our total addressable market and strategy for addressing these market opportunities including AI, customer demand trends, tariffs and trade restrictions, supply chain constraints, component costs, manufacturing output, inventory management and inflationary pressures on our business, lead times, product innovation, working capital optimization and the benefits of acquisitions which are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically in our most recent Form 10-Q and Form 10-K and which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. This analysis of our Q3 results and our guidance for Q4 2025 is based on non-GAAP and excludes all noncash stock-based compensation impacts, certain acquisition required charges and other nonrecurring items. A full reconciliation of our selected GAAP to non-GAAP results is provided in our earnings release. With that, I will turn the call over to Jayshree. Jayshree Ullal: Thank you, everyone, for joining us this afternoon on our third quarter 2025 earnings call. Arista continues to drive its 19th consecutive record quarter of growth in this AI era. We achieved almost $2.31 billion this quarter with software and services contributing approximately 18.7% of revenue. Our non-GAAP gross margin of 65.2% was influenced by favorable mix and inventory benefits. Americas was strong at almost 80% and international at approximately 20%. On September 11 at our Analyst Day, we showcased both networking for AI and AI for networking with our continued momentum across our data-driven network platforms. Unlike many others, our Etherlink portfolio highlights our accelerated networking approach, bringing a single point of network control for zero-touch automation, trusted security, traffic engineering and telemetry to dramatically improve compute and GPU utilization. Superior AI networks from Arista improves the performance of AI accelerators. Of course, we interoperate with NVIDIA, the worldwide market leader in GPUs, but we also recognize our responsibility to create a broad and open ecosystem, including AMD, Anthropic, [ Arm ], Broadcom, OpenAI, Pure Storage and [ VAST Data ] to name a few, and build that modern AI stack of the 21st century. This stack includes the trio of compute, memory storage and a solid network foundation to run training and inference models. Our stated goal of $1.5 billion AI aggregate for 2025, comprising of both back end and front end is well underway. We are now committed to $2.75 billion out of our new target of $10.65 billion in revenue, representing 20% revenue growth in 2026. We are experiencing momentum across cloud and AI titans, neo cloud providers and the campus enterprise. The demand and scale of AI build-outs is clearly unprecedented, as we look to move data faster across multiplanar networks. People and leadership are key to our success. And to that end, we announced Todd Nightingale as our President and Chief Operating Officer last quarter. This time, we want to celebrate the promotion of Ken Duda, our President and Chief Technology Officer, not only of engineering, but our top AI and cloud segment of customers as well. Ken, as many of you know, has been a champion of architecture, innovation and culture since founding Arista over 20 years ago. Ken, would you like to say a few words? Kenneth Duda: Thanks, Jayshree. I would like to -- one of the best things about working at Arista is getting to build some of the most ambitious networks ever built, ultra-low latency trading networks, global scale cloud networks and most recently multi-petabit AI networks. Our success in AI has many sources, the sheer power and performance of our hardware platforms, our innovations in fabric architecture, our AI-focused telemetry and provisioning automation, our reputation for the highest quality software and our leadership in the Ultra Ethernet Consortium, the UEC, and our work in Ethernet Scale Up Networking or ESUN. And most importantly, the way we partner with the world's largest AI companies. Partnership has been key to our success over and over at Arista and the AI revolution is no exception. In addition to being a lot of fun, these partnerships benefit our company, both through the sheer revenue opportunity, but also in providing us with the opportunity to learn and innovate at the edge of what's possible. We can then apply what we've learned to bring solutions to the broader networking market, helping a much larger and more diverse customer base, build the most advanced and reliable infrastructure in the industry. For example, our Etherlink distributed switch fabric powers some of the largest AI fabrics in the world. It's also an excellent underlay for data centers of all sorts, providing a full run rate fabric with no hotspots at petabit scale for all workloads, including AI. Etherlink speeds are going from 800 gigabits today to 1.6 terabits in the near future while leveraging our EOS operating system and our NetDI diagnostics infrastructure for top hardware and software reliability. Arista AVA or Autonomous Virtual Assist, uses AI to help our customers design, build and operate their networks. AVA draws on both our internal knowledge base and also on the customers' data stored in NetDL, Arista's network data lake plus AVA has agentic capabilities to help troubleshoot proactively. Our other recent innovations include SWAG, Switch Aggregation Technology, that provides the features of campus stacking along with fault containment and in-service software upgrades for maximum uptime. By running a common EOS and common NetDI platform across so many use cases, we are able to maintain alignment between our different market segments, leveraging central engineering investments efficiently as we pursue cloud, enterprise and AI markets simultaneously. I am so grateful for the opportunity to lead the Arista engineering and cloud teams in an era with so many exciting opportunities. Jayshree Ullal: Thank you, Ken, and congratulations on a fantastic 21-year career, a very well-deserved promotion at Arista. You have always built the always-on resilient leaf-spine architecture, both now for networking for AI workloads, and AVA to bring AI to networking. At Oracle AI World, Ken was invited to formally announce our collaboration with Oracle Acceleron. This builds upon a decade of partnership with Oracle, starting with our Exadata migration from InfiniBand to Ethernet for AI networks to RoCE, RDMA over converged Ethernet, and now multiplanar networking across cloud AI for on-time job completion in gigawatt scale AI data centers. As part of our Leadership 2.0, we have built and focused a cloud and AI mission and organization, now led by industry veteran, Tyson Lamoreaux, reporting to Ken and Hugh. I am so delighted to formally welcome Tyson to Arista. Tyson, if you guys know him well, built the first cloud network for Amazon AWS in the 2000 era and pioneered the first AI network for a stealth sovereign AI company the last couple of years. Tyson, you've had a busy few weeks here. Tell us more. Tyson Lamoreaux: Thank you, Jayshree, and thanks for the question. It's really incredible to have joined the team at a time where Arista is building so much momentum. Spending time with customers has been a top priority for me since coming on board. And I've been so impressed with how strong these partnerships are, both with our long-standing titans and with our emerging customers. We're deeply engaged with them on next-gen architectures for their cloud networks, front end, back end, scale up, scale out and scale across. I mean, really everywhere. It's translating to a ton of wins, and I got to say it's a lot more than I anticipated before I got here. I really love our continuing commitment to open standards and innovation like ESUN and UEC and of course, the practical here, now and always problems that we're addressing by building the hardware systems, software, everything that delivers exceptional power efficiency, reliability, density, visibility and manageability for our customers. I think my background as a builder and operator are really well suited to helping the team anticipate customer needs and delivering the right products for them. I guess the last thing I'd highlight is the culture. I mean it's just tremendous. The customer focus, commitment to quality, innovation and operational excellence are a top notch here and have made me feel right at home. Thanks, Jayshree. Back to you. Jayshree Ullal: Thank you, Tyson, and welcome home. With Tyson's credentials and a track record, Arista is really poised to address multiple facets of the cloud and AI innovation at a system-wide level converging silicon, hardware, software, cables, optics and racks as an overall platform. At the Optical Compute Conference, OCP, Arista unveiled its first Ethernet for Scale-Up Networks or ESUN specification, along with important 12 industry experts. While we began with 4 co-founders, we are now supporting and increasing to more people so that we can build the right interoperable scale-up standard. While there's always white noise, Arista also continues to clarify our role in white box and how we will continue to coexist like we always have the past decade or more. The concept is clear. It's all about good, better and best, where in some simple use cases, a commodity white box is good enough. Yet in other cases, customers seek the value of better Arista blue boxes with state-of-the-art hardware with built-in NetDI for signal integrity, physical, passive, active component and troubleshooting management. The best is, of course, the Arista branded EOS platform for the ultimate superiority. We find ourselves amid an undeniable and explosive AI megatrend. As AI models and tokens grow in size and complexity, Arista is driving network scale of AI XPUs, handling the power and performance Basically, the tokens must translate to terawatts, teraflops and terabits. We are experiencing a golden era networking with an increasing TAM now of over $100 billion in forthcoming years. Our centers of data strategy ranging from client to branch to campus to data and now cloud and AI centers is a very consistent mission for the company. We will continue to invest in our customers, our leaders, our partners and certainly most of all, our innovative technology. And with that, Chantelle, I'd like to hand it to you as our CFO, for financial specifics. Chantelle Breithaupt: Thank you, Jayshree. It is great to see the broadening of the AI ecosystem, and I am excited for Arista to be an innovative [ unit ]. Turning now to Q3 performance. Total revenues were $2.3 billion, up 27.5% year-over-year, above our guidance of $2.5 billion. This was supported by strong growth across all of our product sectors. International revenues for the quarter came in at $468.3 million or 20.2% of total revenue, down from 21.8% in the prior quarter. The overall gross margin in Q3 was 65.2%, above our guidance of 64%, down from 65.6% last quarter and up from 64.6% in the prior year quarter. The year-over-year gross margin improvement was primarily driven by strength in the enterprise segment. Operating expenses for the quarter were $383.3 million or 16.6% of revenue, up from last quarter at $370.6 million. R&D spending came in at $251.4 million or 10.9% of revenue, up from $243.3 million in the last quarter. Sales and marketing expense was $109.5 million or 4.7% of revenue compared to $105.3 million last quarter. Both quarter-over-quarter dollar increases were driven by additional headcount, inclusive of the VeloCloud acquisition. Our G&A costs came in at $22.4 million or 1% of revenue, up from last quarter at $22 million. Our operating income for the quarter was $1.12 billion, landing at 48.6% of revenue. Other income and expense for the quarter was a favorable $98.9 million, and our effective tax rate was 21.2%. This resulted in net income for the quarter of $962.3 million or 41.7% of revenue. Our diluted share number was 1.277 billion shares, resulting in a diluted earnings per share number for the quarter of $0.75, up 25% from the prior year. Now on to the balance sheet. Cash, cash equivalents and investments ended the quarter at $10.1 billion. Of the $1.5 billion repurchase program approved in May 2025, $1.4 billion remains available for repurchase in future quarters. The actual timing and amount of future repurchases will be dependent on market and business conditions, stock price and other factors. Now let's move next to operating cash performance for the third quarter. We generated approximately $1.3 billion of cash from operations in the period, reflecting a strong business model performance. DSOs came in at 59 days, down from 67 days in Q2, driven by billing linearity. Inventory turns were 1.4x, flat to last quarter. Inventory increased to $2.2 billion in the quarter, up from $2.1 billion in the prior period. Most of this increase is due to higher evaluation inventory, indicating uptake of our new products and new use cases. Our purchase commitments and inventory at the end of the quarter totaled $7 billion, up from $5.7 billion at the end of Q2. We will continue to have some variability in future quarters as a reflection of the combination of demand for our new products and the lead times from our key suppliers. Our total deferred revenue balance was $4.7 billion, up from $4.1 billion in Q2. As of Q3, the majority of the deferred revenue balance is product related. Our product deferred revenue increased approximately $625 million versus last quarter. We remain in a period of ramping our new products, winning new customers and expanding new use cases, including AI. These trends have resulted in increased customer-specific acceptance clauses and an increase in the volatility of our product deferred revenue balances. As mentioned in prior quarters, the deferred balance can move significantly on a quarterly basis, independent of underlying business drivers. Accounts payable days was 55 days, down from 65 days in Q2, reflecting the timing of inventory receipts and payments. Capital expenditures for the quarter were $30.1 million. In October 2024, we began our initial construction work to build expanded facilities in Santa Clara, and we expect to incur approximately $100 million in CapEx during fiscal year 2025 for this project. Q3 delivered a strong performance, underscoring our strategic progress. This continues to give us confidence for the remainder of FY '25 and through FY '26. But let's first start with our outlook for Q4. Revenue of $2.3 billion to $2.4 billion with continued growth expected across our cloud, AI, enterprise and providers markets. Gross margin in the range of 62% to 63%, inclusive of possible known tariff scenarios, operating margin of approximately 47% to 48%. Our effective tax rate is expected to be approximately 21.5% with approximately 1.281 billion diluted shares. Incorporating this Q4 outlook, our guidance for FY '25 is as follows: full year revenue growth of approximately 26% to 27% or $8.87 billion at the midpoint. We are on track to deliver between $750 million and $800 million for our campus segment and our AI center target of at least $1.5 billion. For gross margin, the outlook is approximately 64%, inclusive of possible known tariff scenarios. We anticipate operating margin of roughly 48%, demonstrating Arista's strong operational execution and scalable business model. Our outlook for FY '26 presented at our September Analyst Day remains relatively unchanged. Full year revenue growth of approximately 20%, now at a higher dollar amount of $10.65 billion, inclusive of both a campus target of $1.25 billion and an AI center target of $2.75 billion. For gross margin, a range is expected of approximately 62% to 64%, driven by customer mix. And for operating margin, an outlook of approximately 43% to 45%, allowing for investments in relation to achieving the strategic goals of Arista. In closing, the momentum continues. The breadth and depth of our customer interactions have never been stronger nor more exciting. In true Arista style, we remain pragmatic, yet are aware of the potential over the next few years. I wish to extend a warm welcome to Tyson. We are thrilled that you have joined our team, and congratulations to Ken on the well-deserved promotion. I will now turn the call back to Rudy for Q&A. Rudolph Araujo: Thank you, Chantelle. We will now move into the Q&A portion of the Arista earnings call. To allow for greater participation, I'd like to request that everyone please limit themselves to a single question. Thank you for your understanding. Christa, please take it away. . Operator: [Operator Instructions] Your first question comes from the line of Tal Liani with Bank of America. Tal Liani: I want to ask about the sequential or the guidance, and it's more fundamental question, but I'll back it up with numbers. If you look at last year, the growth was very consistent kind of the last 3 quarters of the year, the sequential growth rate is between 6.5%, 7.5%. When you look at this year, you started with 10% growth in 2Q, and it goes to 5% and now only 1.6%. So there is deceleration. And the question is, what is the underlying -- what are the underlying drivers for the deceleration? What do we need to take from it for next year? What does it mean? And should we be concerned about the growth going forward? Jayshree Ullal: Thanks, Tal. First of all, to answer your last line, there is no concern on our demand. I think the shipments and the revenue follows based on our supplies. So if we're able to make the shipments, then the revenue, as you saw in Q2 went right -- blew past any of our guidance, right? However, there are times we can't ship everything despite the demand. And so you're accordingly seeing that. I wouldn't read too much into the quarterly variances. But I would say we feel -- we have never felt more strongly about the demand aspect of this reflected in the continued commitment to 20% growth, even though the number keeps increasing from 8.75% to now 8.87. So no change in demand, some variation in shipments. Operator: Your next question comes from the line of Aaron Rakers with Wells Fargo. Aaron Rakers: I'll stick to kind of the model as well. I'm curious, when I look at the gross margin guidance for this quarter, I think it was 62% to 63%. I guess if we were to assume that your services' gross margin stays consistent at 81%, 82%, it would seem to imply that product gross margin falls below 60%. So I guess the question is, can you unpack the gross margin drivers in this quarter in terms of the guidance? How much is tariff related? Or is there other dynamics to consider? And does that change kind of the expectation as we look forward? Jayshree Ullal: Okay. Sure, Aaron. First of all, I think you're overestimating our services and software margins, but be that as it may. We do have a mix of product margin where it's significantly below 60% with our cloud and AI titans driving the volume and higher obviously, for the enterprise customers. The average of which, together with services is yielding that number. So when the mix tilts heavily towards the cloud and AI, you can expect some pressure on our gross margins. But overall, I think we managed it very well the manufacturing team, now led by Todd does a fantastic job here. So again, the discipline and mix plays well together, but I don't think it's any change from prior years where when we have a heavy mix of AI and cloud, we feel it in our gross margins. Chantelle Breithaupt: Yes. The only thing I would add to that is I wouldn't miss into the last part of your question that it insinuates or offers a new model going into next year. This is a normal part of our mix conversation and well within the guide that you've seen us perform at these levels before. Operator: Your next question comes from the line of Michael Ng with Goldman Sachs. Michael Ng: Thank you for the question. I was wondering if you could just talk about Arista's positioning as we move into more full rack solutions. Is this going to be more of a partnership model? How do you think about addressing this, I say, growing convergence between compute and networking? Jayshree Ullal: Michael, that's a very good question. First of all, as you heard in Analyst Day, Andy Bechtolsheim is personally driving along with the hardware team a significant number of these racks. I think at any given time, we have 5 to 7 projects with different accelerator options Obviously, NVIDIA is the gold standard today, but we can see 4 or 5 accelerators emerging in the next couple of years. Arista is being sought to bring all aspects, the cabling, the co-packaging, the power, the cooling as well as the connection to different XPU cartridges, if you may, as the network platform of choice in many of these cases. So we are involved in a lot of early designs. I think a lot of these designs will materialize as the standards for Ethernet are getting stronger and stronger. We now have a UEC spec. You heard me talk about the Scale-Up Ethernet spec for ESUN where we can bring different work streams onto the same Ethernet headers, transport headers, data link layer, et cetera. So I think a lot of this will be underway in 2026 and really emerge in 2027 as Scale-Up Ethernet becomes a more important part of that. In terms of how we will gain more recognition of revenue, some of this will be not the classic OEM model. There may be more the blue box JDM model where we work with them on IP and have reference designs and offer them capabilities well beyond the network. And -- but many of them will also entail selling the network as is in these racks. Operator: Your next question comes from the line of Atif Malik with Citi. Atif Malik: Jayshree, in your prepared remarks, you mentioned large language model providers like OpenAI, Anthropic, and they have announced partnerships with your cloud titans. Can you share with us who is driving the decision-making on networking hardware on these announcements? And just your commentary on your share being stable within the circle of your cloud titan? Jayshree Ullal: Yes. So to answer your last question, first, I think our share is strong. We always, as you know, coexist with 2 other types of competitors. One is the bundling strategy with NVIDIA and the other is the white box. So we have not seen any significant changes in share up or down at the moment, it's stable. Having said that, it's also a massive market. And we think rising tide rises all boats and this boat is feeling pretty good. Now specific to who makes the decision, it's really a combination. We intimately work with the software and LLM players because they certainly guide the design but we also work with the cloud titans, and it's a shared responsibility between both of them and where the responsibility for procuring the large data centers and the power and the location and the cooling is clearly done by our cloud Titans, but the specifications are exactly what's required on the scale up, scale out network is done by the partners like OpenAI and Anthropic. So it's really a joint decision. Operator: Your next question comes from the line of Samik Chatterjee with JPMorgan. Samik Chatterjee: Jayshree, maybe just going back to your earlier response to another question, you mentioned some variability in shipments at a customer level, maybe driving some of the lumpiness quarter-to-quarter. Just curious, you had talked about previously the Tier 1 customers you're engaged with progressing to their cluster sizes, 100,000 and more. Like how -- has there been any change relative to those plans that are driving the deceleration here in terms of the fourth quarter guide? Or what is sort of behind the variability that you're seeing in terms of shipment? Is it supply driven at all? Any color on that front? Jayshree Ullal: Yes. Yes. Samik, I would say it's largely supply driven. As you know, all 4 are doing well on the 100,000 mark. 3 have already crossed it. The fourth one, I don't know if they'll cross it by end of the year or next year, but they're getting there. So we're feeling pretty good on our large GPU deployments. At the same time, the variability I was stating is demand is greater than our ability to ship. Lead times on many of our components, including standard memory and chips and merchant silicon and everything, it's nothing like 2022, but they have very long lead times ranging from 38 to 52 weeks. So we are coping with that. And you can see Chantelle is leaning in and making greater and greater purchase commitments, we wouldn't do that without demand. Operator: Your next question comes from the line of Amit Daryanani with Evercore ISI. Amit Daryanani: I guess my question, I think folks are kind of trying to ask around this a bit is the growth rate you've had in the last 3, 4 quarters of high 20%, call it, you sort of implying that will decelerate just -- not just in December, but also in '26, I think, at this point, right, high 20% growth goes to low 20%. Maybe just talk about what is driving that kind of deceleration? Because certainly, if you look at things like your purchase commitment, and your deferred product growth, it would almost imply things can accelerate, not decelerate in the out quarters. So just what's driving that deceleration in the out quarters would be helpful to understand. Jayshree Ullal: Okay, Amit, but I don't like the word deceleration. We're talking about big, big numbers here, guys. And I'm committing to double-digit 20% and above percentage, don't call it deceleration, call it, variability across quarters, and demand is great. I just don't know whether it will land in '26 or '27. Chantelle Breithaupt: Yes. The only other thing I'd add to this just generally is a topic is that when you think about that the large AI use cases are acceptance clauses, it really comes down to that coming together and the timing of that. That doesn't follow a seasonality model. That's also for... Jayshree Ullal: Good point. It lands when it lands. That is a very good point that Chantelle is making that in the cloud, we started having predictability of how they landed and how they got constructed. In AI, it's taking longer. Operator: Your next question comes from the line of David Vogt with UBS. David Vogt: So I'm going to ask this question at the risk of Jayshree yelling at me. So -- when we think about your '26 outlook that you just raised, which we didn't expect you to raise this early in the cycle, if I just take what you're doing with regards to the AI-centric opportunity, campus and [ Velo ]. It doesn't leave a lot of room for growth in the core business outside of AI and campus. Maybe can you speak to what you're seeing in that particular market and how we should think about that progressing through 2026? Chantelle Breithaupt: Okay. Well, just -- I'll say something as Jayshree to figure out which tone she wants to answer there. But I think that -- the part that I would take a look at, again, I go back to kind of how we started it early '25, maybe even '24. Part of our style is to not assume 100% of everything hits to get to a number, and we'd like to leave ourselves with some optionality. And so we're putting some goals for ourselves with the AI. We're putting goals for ourselves with campus. It doesn't mean we're not focused on the rest. But I don't think it's the right approach to assume everything is going to be 100% and leave ourselves exposed, and we'll continue to update as we see it right, Jayshree. Jayshree Ullal: Yes, absolutely. And so yelling isn't the tone I'd like to attribute it to, excitement maybe, your enthusiasm is the one I'd like you to think about, which is clearly, AI and campus is going to grow and do great guns for us as it should because they are 2 very large TAMs. Whether it is Ken and Tyson driving the AI and cloud TAM or whether it's Todd Nightingale driving the campus and these 2 are going to grow substantially in double digits, right? So to your point, it doesn't leave the core business with a lot of opportunity. But that's not to say it may be flattish, it may be grow. It's to say that our customers are putting more attention there and that the existing business, which is already on very large numbers, will have lesser growth. We don't yet know if it's flattish or single digit or whether more will go to AI. We frankly can't predict the mix this early in the game on 2026, but we think we're in for a great ride in 2026. Operator: Your next question comes from the line of Ben Reitzes with Melius Research. Benjamin Reitzes: I appreciate you clarifying some of those earlier questions, more on the long-term side, Jayshree. I think there was an earlier question around OpenAI and Anthropic and just some of these larger builds with the private companies that obviously are becoming hyperscalers. Maybe without naming names or whatnot, I just wanted to hear about your confidence on being able to participate in some of these builds that are affiliated with some of your cloud titans. And do you think you'll get a lot of this growth? Is there anything that's changing or evolving that gives you more or less confidence as we end the year here in '25? Jayshree Ullal: Yes, that's a really good question, Ben, and thank you for that thoughtful question. Until now, majority of how we've measured our AI success through our cloud and AI titans has been number of GPUs and how much are they installing and can we verify that the Ethernet network works. The majority of it to date has been scale out. First, I want to reflect that there are 3 big use cases sitting in front of us, scale up, scale out and scale across. Arista's participation to date has largely been in scale-out. So we've got 2 major use cases in addition to augmenting this, and that's what makes the Etherlink portfolio that Ken described so eloquently so beautiful. Now how are these being built? Clearly, they're being driven by large language models, tokens transformers, inference use cases, you name it all. So the influence is clearly coming from these players you named. But the way they are driving the infrastructure, and I can't keep track of the gigawatts myself, it's 10 gigawatts here, 10 there, 30 there. It's adding up to a lot. But I can just tell you, no matter what it is, Arista has been looked at as a very important and relevant participant, especially right now in the scale-out and scale across. We will participate in the scale up. It will take a little longer. Today, it is largely a set of proprietary technologies like NVLink or PCIe, and I think that will happen more in '27. So that to say that as we get now confident about exceeding our $10 billion goal next year, we're looking at our next goal of $15 billion in the next few years. And I think AI will be a very large part of it, and so will be the companies you mentioned. Operator: Your next question comes from the line of Tim Long with Barclays. Timothy Long: Appreciate the question here. Jayshree, maybe if we could just dig a little bit. You mentioned blue box a few times here kind of in that middle portion of the good, better, best. Two-parter. One, could you talk a little bit about kind of the economic model margins or anything like that, that we should expect as blue box maybe becomes a bigger part of the mix over time? And second, can you talk a little bit about where we would expect to see these type of deployments? I'm assuming something like scale up might be, as you described, a little bit more simple and not need the full EOS. But from either a customer or a use case standpoint, where would you expect Arista to be most successful with blue box deployment? Jayshree Ullal: Yes. Thank you, Tim. That's a good -- those are a good set of questions. I think I mentioned at the Analyst Day, we're already quickly seeing success. I'll give you one example, where they were just not getting their white box to work. These are AI mission-critical workloads. And we're seeing a neo-cloud come right in with, in this case, non-NVIDIA GPUs, in fact, where they're looking to deploy Arista with its excellent hardware. And at first, they wanted to do an open NOS, but now they are adopting a hybrid strategy where it's not only an open NOS, but Ken's EOS is coming to shine in its full glory in this use case. So in this case, I think it's a Blue Box to start with, but it's quickly going into a hybrid state of blue and branded EOS box. The economics on that is not too different from our cloud and AI titans, generally speaking, although there will be scenarios, like you rightly mentioned, hasn't yet come to play. But as we go to significant scale-up volume, we expect more margin and economic capability coming together. In other words, the volume of these things will be larger, the pressure on margins will be greater. So -- but we will carefully have a mix of scale up, scale out and scale across to not affect the overall margins, but definitely take our fair share in that. So hopefully, I answered your question on both. Operator: Our next question comes from the line of Meta Marshall with Morgan Stanley. Meta Marshall: Maybe a question for you, Jayshree. Just on -- I know you guys aren't breaking out kind of front end and back end anymore. But just as more inference kind of use cases are getting built out, just what are you seeing in terms of just like how the front-end network upgrades are happening maybe versus where your expectations were a year ago? Jayshree Ullal: Yes. Thank you. I think a year or maybe even 2 years ago, Meta, I may have told you this, we were literally outside looking in at all these back-end networks that were largely being constructed by -- with InfiniBand. We've seen a sea change, particularly this year, where obviously, more and more times, we're being invited to construct their 800-gig, last year was more 400 gig. And I think next year will be a combination of [ 8 and 1.60 ] on the back end. The back end is putting pressure on the front end, which is why it's getting more and more difficult for us to say, okay, what's the back-end number that natively connects to GPUs and what is the front end. But we know of concrete cases in our cloud titans, where not only is it putting pressure on the AI number, but they're having to go and upgrade their cloud infrastructure to deal with it. That part is happening in a small sort of way, but what's happening in a big sort of way is the back and front are coalescing and converging more. And it's really becoming hard to tell, and it's probably [ 6 of 1 and 1/2 dozen ] of the other. Kenneth Duda: I'd just like to point out that we're seeing that Arista, I think, is the only successful vendor outside of China selling both front end and back end. And this is where our engineering alignment is so important because we can offer the customer a consistent solution across their entire infrastructure. I think this is a unique differentiator that will really help us succeed as these networks become more and more mainstream. Operator: Your next question comes from the line of Karl Ackerman with BNP Paribas. Karl Ackerman: How should we think about your market opportunity between disaggregated scheduled fabrics versus nonscheduled fabrics, which appear to be used in the largest AI accelerator clusters at one of your largest customers. I mean you, in fact, happen to be the only networking switch vendor who offers both networking topologies. And I'm curious if other data center operators seek to adopt your DSF architecture given the congestion-free advantages it offers. Jayshree Ullal: Well, I think you hit on it, and Ken hit on it, too, so I'd like him to answer part of the question. But look, we're not religious. We jointly developed the DSF architecture with one of our leading cloud titans, Meta. And we've been selling the nonscheduled fabric for a very long time. So we've never been religious about this. And both are doing very, very well at our cloud titans and specifically the one we co-developed with. Kenneth Duda: That's exactly right. We've had both architectures in massive production scale for, I think, 15 years now. And we'll continue to offer this range of choice to our customers, offering them their choice between the highest value fabric with deep buffers, no hotspots, congestion-free, loss-free or an unscheduled fabric, which is maybe lower cost, but also can be more difficult to operate. And they both run the same software. So it gives the customer a range of options and a consistent operating model. Operator: Your next question comes from the line of Simon Leopold with Raymond James. Simon Leopold: I wanted to come back to the topic around the blue box, which you've talked about quite a bit at the analyst meeting. So I appreciate it's not new. But what I don't quite think I understand is how it may be evolving or changing in that it sounds like there's a broader base of customers that may be employing it and that this is a factor that's in your 2026 margin guidance. Could you elaborate on what you're assuming blue box trends are in 2026? Jayshree Ullal: I think the blue box trends in 2026 will continue to remain with a handful of customers who know how to -- who have the operational skill to deal with it. So think of that as largely our specialty cloud providers or titan. It's not going to be mainstream. So single-digit customers probably, maybe 10, maybe 20, but it's not going to be hundreds, number one, because they really have to have the operational excellence to take our NetDI and our hardware and build upon it and put their open NOS or whatever, right? So -- however, in that scenario, you are right to point out that because we may not have the EOS layer, we will take a lower margin on that. And that's factored into our 2026 guide and mix. And we think the combination of the blue box and the EOS branded box, if I can call it that, will continue to help us thrive with a profitable and high-growing business. Operator: Your next question comes from the line of James Fish with Piper Sandler. James Fish: Just on that topic of blue box shockingly, maybe not just 2026, but what do you see in terms of the mix regarding the adoption curve as to what percentage of the business could actually represent over not just next year, but 3, 5 years from now? And you guys mentioned the convergence of front end and back end. Does that take away from kind of your advantage of where you sit today, though, if that line starts to blur a little bit more and allows competition to enter? Jayshree Ullal: Yes, please go ahead. Kenneth Duda: In terms of the front end and back-end converging, this is purely advantageous to us because the front end requires a massive number of features. It's incredibly mission-critical and supports a whole variety of applications, not just the straightforward if demanding communication patterns of the AI back end. So we see that the -- our ability to tackle both of them effectively is a significant source of strength and a real differentiator and something that's not easy for competitors to replicate. If you look at NVIDIA, for example, the sales volume is small in the front end and Cisco is small in the back end. And so I think we'll see that kind of convergence being beneficial to us. Jayshree Ullal: Yes. Thank you, Ken. And on the blue box, I'm not sure we model 3 to 5 years. But if I had to venture what I think the evolution of the blue box will be, I think it will be more significant in the scale-up use cases where there's a higher dependency on the strength of our hardware and our NetDI capability and a lower requirement for software. So don't know yet what that will be. I think it will be high in units, low in dollars kind of things. So the mix may still be small, but it will actually be incremental since that's not a use case we do today. Operator: Your next question comes from the line of Antoine Chkaiban with New Street Research. Antoine Chkaiban: I'd like to ask about the UEC. So can you maybe tell us about the progress that the consortium is making, whether the different voices are aligned and what milestones investors should be looking out for going forward? Rudolph Araujo: Antoine, can you repeat your question? You weren't coming into clear? Antoine Chkaiban: I'm asking about the Ultra Ethernet consortium. Maybe can you tell us about the program of the consortium. Jayshree Ullal: Yes. Yes. Yes, Antoine, yes. So after 2 years of lots of hard work led by Hugh Holbrook and now Tom Emmons, UEC did publish their first specification, I believe it was 1.0 in June of 2025. Arista's Ethernet portfolio is entirely UEC capable, compatible, and we will continue to add more and more compliance, packet trimming, packet spring, dynamic load balancing. These are all important features that our switches support. And we will augment that with the ESUN specification. As I described, we've been an early pioneer, 4 vendors started this together, including Broadcom, Arista and a couple of our Titan customers. I'm pretty sure it will be 20, 25, 30 over time. And having a standards-based OCP ESUN agreement will allow us to expand UEC into the scale-up configuration as well, leveraging UEC and IEEE specs. So this modular framework for Ethernet for scale-up and scale-out is a thing of beauty, and Arista is in the middle of it. Operator: Your next question comes from the line of George Notter with Wolf Research. George Notter: I think in the monologue, you mentioned neo cloud is an area where you're getting more momentum. I think you guys actually said at the Analyst Day as well. I'm just curious like what are you seeing with that customer set? I guess, from my perspective I've historically kind of thought of that customer as being more focused on the bundle, which isn't necessarily your game, but it sounds like you're maybe talking a bit more positively. I'm just wondering what you're seeing in that space. Jayshree Ullal: Yes. No, George, I think you're right. I think in the beginning, we were looking at them bundling. I can think of 2 examples where we went to and invited to the party because you want my GPU, you've got to get the network from me, so we weren't there. But there are -- leaving the 2 aside, and even I think those 2 might be -- might get open-minded over time, there are many more neo clouds worldwide coming up that are really looking for Arista's help, not only on the product, but on the network design, on the software capability they just don't have the staff and expertise to do everything themselves, and they would rather let us satisfy their network needs. So we are taking down many neo cloud and smaller enterprises, admittedly smaller numbers of GPU clusters as well. But if they start with 1,000 to a few thousand, then we're hopeful they'll grow because the one advantage they seem to all have is colo space and power, which is, as you know, is a very prestigious asset going forward. Operator: Your next question comes from the line of Sebastien Naji with William Blair. Sebastien Cyrus Naji: I'd like to understand a little bit more about the investments you're making in the enterprise go-to-market. It looks like sales and marketing expenses stepped up in the quarter. Where do you think you make the most progress as we go into 2026? Is it geographic expansion? Is it investing more into the channel? Is it just trying to cross-sell more into the existing enterprise customer base? I'd love to get your thoughts there. Jayshree Ullal: Yes. You're hitting on a really important spot because we really have 2 sides to our coin. On one side, the AI and cloud makes us dizzy. But we're just as excited and dizzy about the huge $30 billion TAM, and that's why we're so happy to have Todd here. We were just at an international innovate in London that Ken, Todd and I all got a chance to see. And the excitement and enthusiasm for a relevant high-quality network vendor has never been higher. So indeed, we want to invest there. Todd, do you want to say a few words? Todd Nightingale: Yes. We're excited about the growth here across the board from the enterprise space, but there's 3 real dimensions we're staying really focused on. One is expansion into the campus. The VeloCloud acquisition completes our portfolio there, getting great traction, pushing extremely hard around the world. It's a ton, a ton of white space accounts for us that we haven't gotten. I think you mentioned geographic expansion. That's great. We saw good numbers in Asia this quarter. We've got a lot of opportunity, I think, to accelerate there, and we like the progress. But the last is just reaching new logos, and we're investing in our channel to really deliver that and bring us more opportunities more at bats to find folks and introduce them to Arista for the first time. Jayshree Ullal: That is a cricket analogy. Todd Nightingale: Yes, it was cricket. Jayshree Ullal: Yes, there you go. So Sebastien, we're feeling really good, and it clearly is the other half of our numbers. Operator: Your next question comes from the line of Ryan Koontz with Needham. John Jeffrey Hopson: This is Jeff Hopson on for Ryan Koontz. We've seen a lot of the deals with the hyperscalers or the AI model companies with new data center build-outs, probably not a level since we've seen with the cloud build-out. So I'm just curious, is there a way to think about Arista's opportunity with new network builds versus refreshing or upgrading existing networks? Jayshree Ullal: Yes, that's exactly the way to think about it because in the past, with the cloud, we rarely got to talk about gigawatts and beyond. So much of them were multi-megawatts. So these are newly constructed AI build-outs as opposed to the traditional CPU or storage-driven cloud build-outs. Of course, they will have refresh too. But frankly, they're not getting the attention. All the attention is going to the new build-outs for AI. So that's the right way to look at it. Rudolph Araujo: So we have time for one last question. Operator: That comes from the line of Ben Bollin with Cleveland Research. Benjamin Bollin: Jayshree, you talked a little bit about some of the tightening lead time conditions out there. Curious what you're seeing from these cloud customers around engineering and delivery lead times, how that has evolved? And in particular, just changes you're seeing on your confidence in delivering their needs, whatever, in the next 12, 18 months. That's it. Jayshree Ullal: Ben, as you know, forecast is a very delicate science. I hardly get it right. So I do rely as does Tyson and Ken and the whole team on early preview and early forecast from our large customers without which we couldn't do proper planning. Even before they put in their purchase orders, we've got to have a good idea of what they want. And you're seeing that reflected in Chantelle's purchase commitments. So when it comes to our large and intimate customer engagement, they understand and they've gotten burned by the 2022 supply crisis and are absolutely planning with us. Some of that is true in Todd's areas, too, with the large enterprises because in a large data center, you have to plan ahead. It's not like they miraculously show up. They need power, they need space, and those are 1- or 2-year lead times. Where we have to be more vigilant, and this is something Todd and my campus and the entire manufacturing team is working on, is realize as a campus business, we had one of our best quarters. Congratulations, Todd, Kumar, this quarter on the campus. That planning cycle is a lot shorter. That tends to be days and weeks, not months or half a year or longer, right? So we're working again on this dichotomy in our business and planning as much as we can for the AI, but also planning ahead as much as we can for the enterprise and campus. Would you like to add something, Todd? Todd Nightingale: Yes. I'll just add, we are getting aggressive, as Jayshree said, on to improve our campus lead times and really accelerate that business and help drive that enterprise growth that we feel pretty passionately about. And the only other thing is the investment here and the amount of dollars being put into purchasing, making those purchase commitments is key, and we're looking for improvement in that. Rudolph Araujo: Thanks, Jayshree and Todd. That concludes Arista Networks Third Quarter 2025 Earnings Call. We have posted a presentation that provides additional information on our results, which you can access on the Investors section of our website. Thank you for joining us today and for your interest in Arista. Operator: Thank you for joining. Ladies and gentlemen, this concludes today's call. You may now disconnect.
Sami Taipalus: Good morning, everyone, and welcome to the Sampo Group Third Quarter 2025 Conference Call. My name is Sami Taipalus, and I'm Head of Investor Relations at Sampo. I'm joined on the call by Group CEO, Morten Thorsrud; and Group CFO, Knut-Arne Alsaker. The call will feature a short presentation from Morten followed by Q&A. A recording of the call will later be available on sampo.com. With that, I hand over to Morten. Please go ahead. Morten Thorsrud: Thanks, Sami, and good morning, and warmly welcome to the conference call on Sampo's third quarter results also on my side. As this is my first set of results as CEO, I'm going to spend a little bit of time on our strategy and how it's playing out in our results. But before I go into that, let me first comment briefly on the third quarter as such. Sampo delivered another excellent set of results in the third quarter. By and large, we saw the same positive operating trends as earlier in the year, with strong premium growth, driven by private and SME and solid margins. The claims environment has been favorable with benign weather, large claims below budget and frequency trends in line with expectations. Still, we are continuing to be prudent in setting our loss ratio picks, meaning the benign claims environment has not fully flowed to the bottom line. On our underwriting margin, we saw a roughly 50 basis points of improvement in the underlying Nordic combined ratio, driven by both the cost and risk ratio. U.K. margins, on the other hand, continued to normalize from the elevated levels seen in the prior year, but remained within our target range. All in, year-to-date underwriting profit grew by 17%, driving a 14% increase in operating EPS to EUR 0.38. The result comes on the back of very strong performance through the strategic period so far, leading us to upgrade our operating EPS target from the period 2024 to 2026 to now above 9%. Outside of the operating result, we had a EUR 355 million gain from our stake in NOBA, driven by successful IPO, followed by strong share price performance. We sold only 1/4 of our holdings in the IPO, meaning we retain a 15% stake in NOBA valued at EUR 636 million, at the end of September. The EUR 150 million sales proceeds from the IPO will be returned to shareholders through a share buyback announced today. So that was an overview of the result. Now, let me turn to strategy. I'd like to start with a short comment on where Sampo is as a company today. We are, of course, a pure-play P&C insurer, large and well diversified with EUR 10 billion of premiums, spread across 5 markets of roughly equal portfolio size and then the 3 Baltic countries on top of this. However, what really stands out is that Sampo is at the forefront of the industry in pretty much every area in which it operates. As mainly a direct insurer, without material physical distribution, it has been essential for us to master the art of digital P&C insurance. In the Nordics, we've been at the helm of the industry digitalization, while the acquisition of Hastings in 2020 has catapulted us into a leading position in the U.K. price comparison website market. At the same time, our unparalleled partnership network with the Nordic motor industry, bring wide customer reach and expertise in new car technology. We are a leading -- we are a leader and digital frontrunner also in the Nordic commercial market, and we are the market leader and preferred partner in the Nordic large corporate market. Further, our pan-Nordic PI proposition has recently been strengthened by specialist insurer, Oona. Our Baltic business is a profitable, low-cost direct writer in a market of brokers and agents. Indeed, even Denmark, which used to be our Achilles heel, has been transformed into an attractive opportunity for us now through the acquisition of Topdanmark last year. In conclusion, we are in an enviable position to meet the future of our industry. So where do we go from here? I see the biggest opportunity in leveraging our unique set of operational capabilities to drive organic growth. As shown on this slide, we see structural growth opportunities in areas representing more than half of group's premiums. These should be familiar, is the digital U.K. market, PI in the Nordics, private property, SMEs. Our ambition in these areas are backed by structural trends as well as competitive advantages. For example, in PI, we are seeing increasing demand, combined with our first rate Nordic PI offering, which create opportunities across the customer segments. Similarly, U.K. consumers continue to shop more and more on price comparison websites, for which we have optimized our business. Taking a step back, we see growth opportunities in other parts of our portfolio as well. Right now, I would highlight Nordic motor, where we are in a pole position to benefit from a normalization in new car sales. Now, I talked a lot about growth, so before we go further, let me be completely clear on one thing, we are only interested in growing, of course, at attractive margins. The underwriting discipline that Sampo is known for remains fully intact. Turning to the numbers. Our results show that our strategy has traction. The growth that we've seen in the third quarter is a continuation of several years of strong development, as we can see on the left-hand side on this slide. Partially, this is the result of elevated inflation, particularly in the U.K., but at the same time, our growth is broadly based as we illustrate on the right-hand side. I would even argue that this understates the breadth of our growth momentum. In the third quarter, we achieved growth of 5% or more in all countries in both business area Private and Commercial in the Nordics. Let's take a closer look at operating trends by segment. I'll start with Private Nordic, which delivered a fourth consecutive quarter of record high GDP growth. What's behind this? Well, let's focus at least on 3 things. First, good underwriting through the inflation spike means that we have had -- we have not had to do corrective price actions in the same way as some of our competitors. This supports retention and increasingly allows us to attract new customers. Second, we have strong momentum in our target growth areas. PI, in particular, is strong, which is why we also have raised our guidance and outlook on GDP growth with a now ambition of more than 10% for the strategic period. Third, we are benefiting from higher new car sales with strong motor GDP growth of 13% in the quarter. Put simply, the investments we have made into underwriting, pricing and service are paying off as customer traction. Let me turn to the U.K. The last few quarters have truly illustrated the skills we have in trading on price comparison websites. By actively shifting the mix and leveraging our innovative telematics product, we have sustained attractive policy count growth and solid margins, while market pricing has fallen. This comes on the back of a strong 2024, allowing us to raise our U.K. underwriting profit growth target to now 20% to 25%. Looking ahead, we're always adapting to growth. We are always adapting growth to market conditions. The start of 2025 saw attractive motor market conditions, but as pricing declined, we have responded by slowing our growth rates. At the end of Q3, market pricing has fallen to a level, where we see fewer opportunities for growth, while larger part of the portfolio begins to hit up against target margins. As we are committed to being a disciplined underwriter, this means that we need to see increasing motor market pricing to be able to continue to grow. Like in the Nordics, we have a great track record in delivering solid margins through the cycle, also in the U.K., and we very much intend to keep this. The good news is that due to diversification, we are not too reliant on any one market or strategy for profit growth. Next, I will make a few short comments on Commercial. Our portfolio is dominated by SMEs that tend to act in a similar way to private customers. Here, we can leverage the same skill set that we have in private, particularly as the market is becoming more digital. Outside of SME, a material part of the book is what one could call local specialty business that require specific skills and a strong market presence. This includes our market-leading agriculture business in Denmark and Personal Insurance. Only some 20% of commercial sales are done via brokers, and retention are almost as high as in private. Turning to performance. We continue to deliver solid growth, driven by our target areas, SME, PI and online sales. So we can again see that our strategy has traction. Then, to the Topdanmark integration, Q3 saw a critical step in the Topdanmark integration process in the form of the legal merger of Topdanmark into If. Following this, we have seen a surge in synergies, as we've been able to move to If's Nordic operating model and start also to restructure our reinsurance programs. We have now delivered run rate synergies of EUR 24 million year-to-date, meaning we have reached our target for 2025 one quarter early. You should take this with a pinch of salt, synergy emergence can be a bit lumpy. So we stick to our target of EUR 140 million of ultimate synergies in 2028. Nonetheless, the strong execution to date increases our confidence in being able to achieve this figure. Longer term, the most important thing about the Topdanmark deal is that it transforms our competitive position in Denmark. Since it's still early days, we are not yet fully benefiting from our combined strength in the Danish market, and thus, there is a clear opportunity to improve the performance going forward. Final slide, let me try to tie it all together. We are in a great position as a group. Our results show that we have an organic growth strategy that is working and that we continue to deliver attractive and stable margins. The third quarter performance brings year-to-date underwriting profit growth to 17%, driving a 14% increase in 9-month operating EPS. This follows a 13% operating EPS growth in 2024. On back of these strong results, we have increased our operating EPS target for 2024 to 2026 to above 9%, up from the previous target of about 7%. The increase in the target show that we are going into 2026 with confidence and with ambition. We have great momentum, and we will not let up on pace. That concludes my opening remarks. Back to you, Sami, for Q&A. Sami Taipalus: Thank you, Morten. Operator, we are now ready to begin the question-and-answer session. Operator: [Operator Instructions] The next question comes from David Barma from Bank of America. David Barma: Firstly, on growth in Nordic Private, it was really good again this quarter. Could you give us a bit more color on growth by country? We spent a lot of time on Norway in the last few quarters, but maybe if you could give us some color on the rest of the geographies and the key lines that have been driving the growth in Q3, please? And then secondly, on Storm Amy in October, would you have some early estimates that you can share on the impact for Sampo, please? And then lastly, on the U.K., top line and policy count growth were still pretty strong in the quarter despite average premium being down high single digits. So could you please comment on the profitability of that new business? And how you're seeing market conditions change since the comments you've made on -- regarding Q3, I mean, in the last 6 weeks or so? Morten Thorsrud: Yes. Perfect. I'll try to answer to these 3 questions. First, on growth in Nordic Private, yes, quite a stellar performance, 10% growth overall for Private Nordic, and it's actually quite broad-based. So we have 5% or more in all countries, which actually is the situation, both within Private and Commercial. So both Private and Commercial produced more than 5% growth in all countries. And Norway, of course, still continue to stand out with double-digit growth. But it's good to see that the growth now is broad-based, and also, definitely, the other countries strongly support the growth story. When it comes to Storm Amy, it was a fairly sizable event, mainly impacting Norway in beginning of October. Initial estimate for us is between EUR 30 million and EUR 40 million. So somewhat sizable event, but of course, we're used to seeing these events from time to time, typically in the fall. Top line and policy growth in the U.K., what you will see is that we shifted the growth towards a little bit some other areas. So we had -- continued to have good growth in our telematics offering, also in other areas like bike, van, home. And then we had less growth in, what you could call, the core or classic motor product. So I think we used our excellent capabilities in the U.K. market in driving growth in areas where we believe that we still get attractive margins. And we still then have the same target for our U.K. operation. We talked about 88% to 90% in operating ratio. That is still what we focus on, and that's still what we aim to achieve when we write business, also the new business that we write now. Operator: The next question comes from Ulrik Zürcher of Nordea. Ulrik Zürcher: Yes. I thought the Nordic cost ratio was quite impressive in this quarter. Has anything changed? I think you indicated around 22.5% or something for the full year, which would mean, the cost ratio is a bit back-end loaded into Q4. Has that changed? And also, I'm wondering about given the strong top line momentum and scale economics that you have with -- like what should we look out for, for cost improvement in '26? Morten Thorsrud: Yes. The Nordic cost ratio develops favorably. As you remember, the starting point is 23%, when we include the overhead cost in Topdanmark, that is now included in If's cost base. And the progress is good. So we have a target of 40 basis points reductions for this year, and that's also the target for next year. Of course, growth is supporting this, and also, the synergy realization is supporting this. But again, there is nothing new on the target. We have a 40 basis points target for this year and also next year on cost ratio reduction in the Nordics. Ulrik Zürcher: Okay. Great. And also just a follow-up slightly on Norway. Like, obviously, this sort of exceptional situation can't continue forever. Do you see it continuing into next year? Or are we approaching sort of the peak of the market repricing? Morten Thorsrud: That's hard to comment on really what will happen in the future. Pricing in the Norwegian market has come down a little bit over the last few months. And, of course, it's difficult to expect that repricing will continue on these levels, but I'll revert from speculating when it comes to exactly when. Ulrik Zürcher: And also, a last one, just on the renewal date. I think it was mentioned in your presentation, but -- should we expect like continued strong commercial momentum into the renewal date with both price hikes and new volumes or just more normalized 5%? Morten Thorsrud: I think we continue to expect good development on the commercial book of business, also in the coming quarters. Operator: The next question comes from Vinit Malhotra from Mediobanca. Vinit Malhotra: Hope you can hear me clearly. The 2 questions I would choose today. First is the solvency even when adjusted for a little bit the buyback. I mean, was -- is there anything you would flag in that operating earnings contribution of about 9%, a touch lighter than other quarters. And maybe there's nothing to flag really, but I just thought I'll ask you on the solvency. The other thing I would -- wanted to quickly check is -- when we see your Slide 56, which is very helpful on the new car sales, and I see some big moves, but also Sweden being a little lower than recent, at least last 2 quarters, is there something to flag? Because also Q3 '24 was quite weak on the Swedish number here on the Slide 56. Is there something you would like to flag here? Also because -- are you seeing more competition? We've heard one of your peers talk about opening new contracts with car dealers. There's something you'd like to -- is there something there that is worth noting here for you? Knut Alsaker: Vinit, why don't I start with the solvency, Knut-Arne here, while Morten is trying to find Slide 46 (sic) [ Slide 56 ]. There's really nothing to flag on the solvency in terms of things that worry me. There are some things to be aware of in the 172% that we print. As you referred to, it is including the full buyback, which we announced today, which shaved off 5% on the solvency. Then there are some seasonality in calculating solvency ratios, where that ratio will go up in the beginning of the year because we have a tilt on renewals towards 1/1. So there's a lot of premium reserves, which is beneficial for the solvency calculation, and there's less premium reserves in the third quarter. In the third quarter, that basically shaved off a couple of percentage points of the solvency. But like I said, that will come back. Then, the solvency ratio in the third -- on 30th of September was lower due to higher FX risk related to NOBA. We didn't -- we basically couldn't hedge the Swedish krona exposure before we knew what the share price roughly would land on when it comes to NOBA post-IPO, but that is now being done, and a lot of it has already been done. So that will add back some 3, 4 percentage points on the solvency as well. And then fourthly, I think it is, there is a bit of technicalities related to the legal merger of Topdanmark, it's only 1% or so. That also will come back in the beginning of the year when we have the internal model in place. That is on top of the already announced SCR benefit of EUR 60 million to EUR 90 million, which we talked before. So there are some things that move the solvency ratio a little bit like I now had listed, but nothing that worries me in terms of the stability and solidity of our capital base. Morten Thorsrud: Good. And then to the now famous Slide 56. So that's the overview of new car sales in the Nordics. And as it shows, strong development in the Nordics overall, new car sales increasing with almost 10%, which is, of course, something that supports us, in particular, business area Private, where we see a 13% GDP growth on motor actually in the third quarter. Then the growth is mainly driven by other countries than Sweden. And for us, it's, in particular, important with growth in the Swedish market due to this special car damage warranty construction, where we are clearly the market leader, continue to be the market leader, which means that we have a good upside when the Swedish market continue to bounce back. But it's good to see now at least that the Swedish new car sales is also starting to show positive development. Operator: The next question comes from Nadia Claressa from JPMorgan. Nadia Claressa: Two questions from me, please. The first one is just going back on reserving. I think based on your opening commentary, Morten, it does seem like Q3 was a case of being opportunistically more cautious. So if you could just please confirm that the Q3 PYD is driven purely by this rather than any developments or underlying issues in your book? That would be great. And also, is this something that we should continue to expect going forward if the large loss experience allows for it? Or was this also more extra caution given your first quarter as CEO? So that's the first question. And secondly, on the change in the operating EPS target, just out of curiosity, why are you upgrading this now? I mean, were there any specific drivers that changed your view in the past quarter alone? Or was this more of like a catch-up given the strong year-to-date performance? Morten Thorsrud: Good. I think on the reserving, you're exactly right that this is how we typically operate. We try to be cautious. We would like to have sufficient reserves, and of course, we saw a very benign development in the third quarter with benign development on large claims, benign development in terms of weather claims and also favorable frequency development. So it's part of our DNA to make sure that we have strong reserves, and there is nothing more than that, that explains the reason why we have a little bit less runoff gain in this quarter. Then, to the change in the operating EPS target, while we thought it was natural to do an update in a way almost midterm in the strategy period. Could I have done it after Q2, but then it would have been the previous CEO making predictions for the future. So we thought it was sensible for us to do it now. And it's a good way for me to, of course, also indicate that we have a strong belief in continued strong development, continued strong performance. So that's why we chose to update the operating EPS target at this time. Operator: The next question comes from Vash Gosalia from Goldman Sachs. Vash Gosalia: Just one quick question as most of the other ones have been asked. Just on the new car sales, could you help us understand what are your market shares in each country with new car sales? Why I'm asking this is because your comments sort of makes me believe that you're going to benefit from rising sales in each country. But in the past, you have mentioned that Sweden is an exception where you, I think, have around 40% market share. So just trying to get a sense of where the other countries are, and that will be quite helpful. Morten Thorsrud: Yes, it's correct that we will benefit from increased new car sales in, of course, all markets. We are somewhat stronger on new car transactions than used car transactions. So a growth in this will benefit us in all markets. Don't have sort of exact market shares on the top of my head. But, in Sweden, we have about 70% -- 7-0, 70% market share on the car damage warranty construction. We have partnership with, by far, the most of the large brands in Sweden. And that's why that market is of particular importance. And again, when you buy a car in Sweden, you get a car damage warranty that comes with the car for free, is paid by the importer, and we are the main provider of this type of insurance. Vash Gosalia: So sorry, just to follow up on that. For the other countries, could you at least give us a flavor of how far you are from the 70% mark? I mean, would you say you're roughly close to that? Or materially... Morten Thorsrud: No, no, that's far from. This is quite an exceptional thing. The car damage warranty construction is something that only exists in Sweden. In the other markets, we would be typically having a market share a little bit above our underlying market share in motor in each market. So we will have an overweight towards new cars, but absolutely not in the same magnitude. Operator: The next question comes from Emil Immonen from DNB Carnegie. Emil Immonen: Just a couple more. First, on the operating EPS growth target, the 9%. Could you maybe elaborate on exactly how you think about it? The underlying driving factors as to reach it on average, you don't need that much growth next year, it would seem to me at this point. Morten Thorsrud: Yes. And I think, in many ways, you have to look at the target with the same lens that you typically do when looking at Sampo's targets, it's an above 9% target. It's not 9%, it's above 9%. And I think it's signaling that we expect that we'll continue a strong performance, but it's an above 9% target. Emil Immonen: Okay. And then one more question on NOBA, about how you approach that now as an investment. It was IPO-ed, and it's performing quite well on the stock market, it would seem. Is it still a legacy investment in your view that you want to exit fully? Or what's the thinking on that? Morten Thorsrud: Yes, we've been rather clear on that all the time that our strategy is to exit fully. So we sold down from 20% to 15% in conjunction with the IPO. And we will, of course, in the future, also reduce our holding and eventually exit the NOBA position. Operator: The next question comes from Henry Heathfield from Morningstar. Henry Heathfield: I was just wondering if I could return back to this sort of cost ratio, basically in the Nordics. So if I'm right, you're tracking or you're currently at 22.5%. Based on the 40 bps, you should be at 22.6% if I am right, and you're at EUR 24 million year-to-date, which is the target. So I'm just kind of wondering what's stopping you, either this year or next year, from kind of raising those cost synergy targets? Morten Thorsrud: I think we believe that we have an ambitious target in reducing by 40 basis points for a number of years going forward. That will give us strong support in terms of also underlying profitability. Of course, cost ratio is always jumping a bit up and down quarter-to-quarter. But yes, we are on good track on delivering on the 40 basis points improvement for this year and also have a good outlook then for next year. But I think 40 basis points is substantial and an important contribution, of course, to the Nordic business. So we continue with that as the target. Henry Heathfield: Is there anything I should be thinking about in terms of the fourth quarter in terms of headwinds or you're just being conservative basically and sticking to your targets really? Morten Thorsrud: No. I think, on the fourth quarter, we, of course, have the information about the Storm Amy, which is why we chose not to increase the forecast, but rather stick to the previous announced forecast or outlook. That, of course, is a sizable event, but something that is quite natural for our business, something that we typically see at this time of the year. But that's what's kind of puts a little bit of caution on the fourth quarter. Operator: The next question comes from Youdish Chicooree from Autonomous Research. Youdish Chicooree: This is Youdish from Autonomous Research. So my 2 questions. The first one is on the growth topic in the Nordics. You talked about the solid and broad-based trends in Private and Commercial. But could you also comment on Industrial? And yes, I'm really -- I really want to know whether you think this segment could be a drag on the overall growth next year. That's my first question. And then secondly, on the fixed income running yield, I mean, for the first time, the mark-to-market yield dropped below the running yield. So I was wondering if you could help us understand the implications of this and whether the book yield or the book running yield will drop by roughly 30 basis points in the coming couple of years, basically? Morten Thorsrud: Yes. I'll address the growth in Industrial, and then, Knut-Arne will do the fixed income and running yield. . Industrial is showing a minus 50% growth in gross written premiums in the third quarter. One should bear in mind that it's a small quarter for industrial. There's not that many customers renewing in the third quarter. So in terms of nominal amounts, this is not a huge figure. Year-to-date growth is down by some 4% in industrial. Largely, this is driven by the derisking that we've done in Industrial, where we'd like to see less volatility from our industrial business, and in particular, the property part of it, which should secure our profits going forward. In terms of growth, Industrial is, of course, a little bit different than the other business areas. We will only grow in Industrial when we see that the market opportunity allows for it. And the Industrial, which, of course, is the same also for other business areas, but you have more volatility on the pricing in the Industrial segment. So, therefore, it's natural that the growth in industrial is a little bit more volatile than what you see in Private and Commercial, but it's usually more a stable development. Knut Alsaker: On the fixed income running yield, Youdish, I would say that you're right in your assumption, everything else equal, and then, let's see where rates go in the future. But everything else equal, the running yield would trend downwards to the mark-to-market yield that we indicated end of third quarter. So roughly a 30 basis point drop, but trending downward, not necessarily in 1 quarter, obviously, given the maturity profile that we have. Operator: The next question comes from Vash Gosalia from Goldman Sachs. Vash Gosalia: Just a quick follow-up on your comment on NOBA. So we know you have, I think, 180-day restriction. But just trying to understand, is it fair to assume that you would sell down the entire stake within the current plan, so which is by the end of 2026? Or do you think there's a risk some of it might fall over to 2027 as well? Morten Thorsrud: No, it's correct that we have a 180-day lockup, and we started with ownership of close to 20%. Now, we reduced it down to 15%. It's not likely that we will sell off everything, of course, at once after the lockup period expires. We have to look at the market development, and most likely, this is going to be a more gradual process. But it all depends on market conditions at the time. So it could take some time, but -- and I think that's the natural sort of expectation that we do this gradually in a controlled manner. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Sami Taipalus: All right. Thank you very much. That concludes the call for today. Thank you for listening in.
Operator: Good morning, ladies and gentlemen, and welcome to Siemens Healthineers' Conference Call. As a reminder, this conference is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens Healthineers presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are, therefore, subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Marc Koebernick, Head of Investor Relations. Please go ahead, sir. Marc Koebernick: Thank you, operator. Good morning, and welcome to our fourth quarter 2026 earnings -- '25 earnings call. It's great that you are tuning in again today. At 7:00 a.m., we published our Q4 results, and the materials for today's results are all available on the IR section of the Siemens Healthineers website. It is common practice that our CEO, Bernd Montag; and our CFO, Jochen Schmitz, will be presenting to you what you need to know about our Q4 of fiscal '25 and about the outlook 2026. After their presentation, we will have a Q&A session. [Operator Instructions] Additionally, please note that a full transcript and recording of today's call will be made available on our Investor Relations website. Again, thank you for being here. And now I'll turn it over to our CEO, Bernd Montag. Bernhard Montag: Thank you, Marc. Dear analysts and investors, welcome to our year-end earnings call. Many thanks for joining. We closed fiscal year '25 successfully with a solid quarter and achieved our guidance. Growth came in at the upper end of our outlook range, and we grew in all regions, except China. This broad-based growth was fueled by healthy global demand and our leading position in the market reflected in the book-to-bill of 1.14 for the fiscal year '25. We are very satisfied with the performance in terms of adjusted EPS, which is well within the upper half of the outlook range. Excluding tariffs, adjusted EPS would even be above the upper end of our initial outlook provided back in November '24. I'm also very happy about the development of our free cash flow throughout the year, improving our leverage to 2.8x EBITDA. So we have finished this year strongly, as indicated early on, all resulting in a proposed dividend increase to EUR 1. Let me briefly also run through the highlights of our segments. Imaging, Varian and Advanced Therapies taken altogether increased revenue by almost 8%, driven by excellent performance in Imaging with continued margin expansion from scale, excluding tariffs. I'm very proud to see that Varian since the combination has grown every single year by at least high single-digit percentages, the margin expansion in Varian, excluding tariffs reached the upper end of our initial segment assumption of November 24. And Advanced Therapies contributed solid growth by keeping margins stable after a step-up in margin last year. With a successful and diligent implementation of our transformation program in Diagnostics, we have achieved another step change in profitability despite market challenges in China in fiscal year '25. And most importantly, we have prepared the business for future success. With this, I would like to hand over to Jochen. Jochen Schmitz: Yes. Thank you, Bernd. I will start with some color on the strong equipment book-to-bill of 1.12 in Q4. Book-to-bill was again clearly above 1 in Imaging, in Varian and in Advanced Therapies, which underlines the healthy growth trajectory. The businesses in all segments is well on track. Equipment book-to-bill in China continued to be around 1%. Revenue in China also continued at around the EUR 620 million mark in Q4 as in previous quarters. And there is still no sign in our numbers of a sustained market recovery in China. And this has implications also for our outlook. I will comment on China towards the end of my presentation again. Aside from China, we saw revenue growth across the board with excellent growth in the Americas and EMEA continued to grow on high absolute levels. I'm particularly happy with the solid revenue growth for the group in Q4. At this fiscal year, we successfully rebalanced the load over the quarters, taking some burden of Q4. In the first 9 months of fiscal year 2024, we grew by 4.3% and then had a strong finish with 6.5% ex antigen in Q4. This fiscal year, we grew by 6.8% in the first 9 months and finished the year with a solid 3.7% in Q4. On earnings, the year-over-year margin development was mainly impacted by tariffs. Excluding tariffs, the Q4 margin expanded by more than 100 basis points, driven by the strong operational margin expansion ex tariffs in the segments. Earnings per share, including tariffs, were at the prior quarter level. Excluding tariffs, EPS would be around EUR 0.74, i.e., growing by 10% year-over-year. And now let me run through the segment performances, starting with Imaging. In Imaging, our PETNET business and Photon Counting CT stood out as growth drivers again this quarter. Lifting Imaging revenue by 6.5% versus tough comps of 8% in the prior year quarter. Imaging's adjusted EBIT margin in Q4 phased roughly 350 basis points of headwinds in total from tariffs, unfavorable business mix and negative impact from special items. The special items were headwinds versus the excellent margin in the prior year quarter, for example, in the shift of government grants from Q4 to Q3 or a provision increase necessary for service field inspections. And now to our segments focusing on Therapy, Varian and Advanced Therapies. Since '23, Varian has had a cascade of double-digit Q4 in revenue growth. Based on that, Varian grew 1.4% on very, very tough comps. The lumpiness from prior year quarters is reflected in this year's Q4 growth rate with very consistent revenue delivery in absolute terms over the whole fiscal year and over the quarters for fiscal year 2025. Margin development, though, is very good at Varian. Excluding tariff impacts, Varian achieved a strong 21.5% margin, driven mainly by favorable business mix. Advanced Therapies showed solid revenue growth of 3.8% and generated a solid 19.5% margin, excluding tariffs on the strong level of the prior year quarter. And now let's complete the segment run through with Diagnostics. Diagnostics posted flattish year-over-year revenue due to volume-based procurement in China. We have already pointed to this impacting the second half of this fiscal year and that this will carry over into the next fiscal year until the impact is fully annualized in revenues as a new baseline. This expectation materializes as indicated. Nonetheless, the margin expansion in Diagnostics is still very well on track. The margin expansion benefited from a weaker prior year quarter. We said last year that the Q4 margin in fiscal '24, excluding negative effects related to prior year periods was around 7%. Taking this into consideration, the year-over-year margin expansion in Q4 was driven by operational improvements despite a negative effect of roughly 100 basis points from tariffs. Now let's have a look at the revenue margin performance of the group in Q4. With Q4, we grew year-over-year revenues ex foreign exchange each quarter for the third consecutive year, a strong testament to our revenue growth performance. Excluding tariff, this track record also holds for group margin expansion. Year-over-year and sequential margin expansion for the third consecutive year. A strong proof point that operationally, we consistently turned our strong revenue growth into operational earnings growth. And this brings me to the outlook for fiscal year 2026. We expect our growth trajectory to continue this year. In fiscal year 2026, we expect comparable revenue growth of 5% to 6%. As in the previous year, we have decided to be prudent in terms of assessing growth opportunities in China. We have been saying throughout 2025 that we need to see a sustained recovery to become more optimistic. We have not seen this so far and have hence decided again to assume flattish revenue in China for fiscal year 2026. Beyond this, we expect our good operational earnings performance to continue. However, in fiscal year 2026, we expect earnings growth to be negatively offset by the current macro challenges, particularly a strong euro and the tariffs, including these macro headwinds, we expect adjusted earnings per share to be between EUR 2.20 and EUR 2.40. I will break down the macro headwinds and the operational improvements in more detail later. But first, let's have a look at what the key assumptions for the segments and the other reconciling items are. On the top line, we expect Imaging, Varian and Advanced Therapies to continue on their growth trajectories. We expect Imaging to continue its strong trajectory after 8% growth in 2025 with very decent mid-single-digit growth in 2026. We expect also Varian to continue its growth trajectory in the high single digits as well as Advanced Therapies within mid-single digits. Diagnostics, we expect to be flattish due to the annualizing of volume-based procurement in 2026. On margins, you can obviously see the headwinds from foreign exchange and tariffs in the assumptions for the segments. However, when you exclude the headwinds from foreign exchange and tariffs, we see margin expansion in every segment. For Imaging, we assume that due to FX and tariff headwinds, margins will slightly decline. Those effects are even more pronounced in Advanced Therapies because of its higher exposure to foreign exchange and tariffs. We assume Varian and Diagnostics to face less tariff headwinds and no material headwinds from foreign exchange due to the different value-add structure. For Varian, we assume that the underlying margin expansion compensates for the tariff headwinds, broadly resulting in a year-over-year flat margin development. And for Diagnostics, we assume that the underlying margin expansion overcompensates for tariff headwinds leading to a minor margin expansion. Below the line, taking the guidance midpoint for financial income and tax, we assume year-over-year slight headwind in financial income net. This is mainly due to refinancing at higher rates and the lack of one-off gains from fair value accounting of smaller venture-type investments from a slightly normalized tax rate. It feels like many moving parts. But if we take it to the group level, it is not as complex as it seems. Hence, you find on the next slide, the main moving parts for EPS development from 2025 to 2026. I will talk you through the key effects from left to right. In foreign exchange, we assume a headwind of around EUR 0.15 year-over-year, primarily driven by the U.S. dollar depreciating versus the euro and many other currencies also depreciating against the strong euro, leading to a significant foreign exchange headwind. For example, in Q4, the difference between reported and comparable revenue growth was around 4 percentage points with the euro being around 6% stronger than in the prior year quarter compared to the U.S. dollar. We expect the foreign exchange impact on translation to continue with even more than 4 percentage point headwinds on nominal growth rates in our fiscal Q1 and Q2, where the weaker U.S. dollar of today compares to a period of a stronger U.S. dollar in the prior year period. And we expect a similar pattern in many other currencies compared to the euro. From annualizing tariffs in fiscal year 2026, we expect around another EUR 0.15 of year-over-year headwinds. We saw around EUR 200 million impact in fiscal year 2025 and expect around EUR 400 million in 2026. Fiscal year 2025 includes the first mitigation measures like early shipment and lower tariff rates before the 15% deal with the EU, which have paid off by now. Fiscal year 2026 includes mitigation measures like optimized sourcing, selected pricing measures. However, it does not include further mitigation from better pricing or potential shifting of value add. And as outlined above, there are EUR 0.03 year-over-year headwinds in financial income in 2025 from one-off gains from fair value accounting of smaller venture-type items, which cannot be expected for fiscal year '26. Excluding these 3 headwinds, we expect an underlying EPS growth of around 10% net driven by the operational improvements in the segment. We expect fiscal year 2026 to be the year that will be most affected by tariffs. Assuming a tariff environment like today's persisting, we expect the impacts from tariffs to become less each year based on our mitigation efforts. We expect tariffs to be fully mitigate it over the medium term. The 3 main mitigation levers are: market adaptive pricing, tight cost control and if this is not sufficient, shifting value add with our global manufacturing setup and our strong footprint in the United States and other places in the world, we have all the means to shift value add if necessary. We are evaluating the multiple options we have, and we will pull the trigger when these -- when there is planning certainty and if it makes obviously economic sense. Before I close, let me share our latest view on Q1. We expect revenue growth in Q1 to be below our outlook range of 5% to 6%, we expect Imaging and wearing growth in Q1 to be roughly around the assumptions for fiscal year 2026. That means mid-single digits and high single digit, respectively. However, we expect Diagnostics to be slightly negative due to the volume-based procurement impacts. Also, we expect Advanced Therapies to have a slightly softer start to the next fiscal year due to tariffs and foreign exchange, we expect margins in Q1 to be below the prior year quarter. And with this, back to you, Bernd. Bernhard Montag: Thanks, Jochen. This Q4 not only marked the end of our fiscal year but also concluded the so-called new ambition phase of our strategy. We launched new ambition after the closing of the transformative Varian acquisition at our last Capital Market Day in November 21. After that, the environment became much tougher. There were unexpected macro challenges like the extended duration of the pandemic, the inflation shock, the supply chain crisis, the anticorruption campaign in China and geopolitical tensions. Last but not least, higher tariffs came on top. Nonetheless, we have delivered around 6% revenue growth and double-digit EPS growth per year since '22 and what's maybe even more important than looking to the future. We have widened our innovation lead with breakthrough technologies like Photon Counting CT, our low helium platform in MR and HyperSight, RapidArc and perfect kinetics in Varian. We have grown our clinical relevance in cancer by combining imaging and therapy under one roof and being at the forefront of theranostics. We have increased our relevant in vascular interventions by developing new partnerships with device and robotic companies, and we are becoming more relevant in the nascent field of diagnosing and treating Alzheimer's. We have grown our C-level relevance with more than 200 value partnerships to date, a testament to this unique strength and new way of doing business and creating recurring revenues. We have further strengthened our leadership in AI with over 110 AI-supported products and techniques like Deep Resolve and MRI, which powered more than 30 million scans since its introduction in '22. Lastly, but no less, importantly, let me highlight the great turnaround our Diagnostics team has achieved from negative margins in the year of peak inflation and supply chain disruptions, they have taken Diagnostics to high single-digit margins, and they will not stop there. So what's next for Siemens Healthineers? As you are all aware, we have our Capital Markets Day coming up, and we have received a lot of interest in the event. We will present the next phase of our strategy and update you on our financial framework and the midterm financial outlook. All our business segments will be presenting their growth strategy, innovation road maps and plans on how to further improve profitability. And at a special highlight, we will give you a deeper look into our AI machine room. So coming to London, on the 17th should be worth your while, and I look forward to seeing you there in person. Marc Koebernick: So I think it's me now. Thanks, Bernd. Let's go to the Q&A. [Operator Instructions] And we have the first question or caller on the line, this would be Veronika Dubajova from Citi. Veronika Dubajova: I will keep it to one, maybe with the hope that I can come back again. But just looking at the guidance for fiscal '26. I was hoping you could both talk to sort of what gets you to the top end versus the low end, a slightly wider range than usual. It's obviously contemplating a lot of moving parts. So I kind of love to understand how you're thinking about it. And maybe at this point in time, I know it's very early, but where within the range do you feel most comfortable? That's my question. Jochen Schmitz: Veronika, it's always -- it's a great question. That's when you start off the year and say, okay, what bring you to the upper and the lower end. Obviously, conceptually, it has something to do with top line obviously being more at the upper end of the range in top line helps you to get further up in bottom line. I think that is more than logical. Then you also know that we have a certain spread of profitability levels in the segments, which can also make a difference depending on, I would say, how the growth trajectories will play out precisely amongst the segments. And I think what I'm saying here is not a surprise, yes, if Imaging is stronger relative to what we initially thought. For example, you see that moving this will give, I would say, a positive segment mix into profitability as an example. We have not built in, as I said, we have not built in any aggressive assumptions on China, flat China. If that assumption is -- would be too conservative is a thing -- is a topic. Otherwise, I think these are the, I would say, the main moving parts, I would say. Maybe one last aspect you didn't about it, but I still want to say it. Where we were very, very happy with what we saw on Varian. On the margin side, we are seeing that the 20%, we were always guiding for over the midterm is really inside. And you can see what large revenue quarter despite the fact that the growth rate was not super large can make of a difference. So with this, back to you, Marc. Marc Koebernick: Good. So we move on to Hassan from Barclays. Hassan Al-Wakeel: If you could talk a bit about the contribution of Photon Counting CT to, a, the Imaging revenue growth in the quarter, and b, the CT order book. I appreciate it's relatively early in your lower-priced launches. But any color around existing customers versus competitor replacements on the order front would be very helpful. Jochen Schmitz: Yes. First of all, when we highlight segments or businesses or products in our earnings call for Imaging, then they obviously grow faster than the average. That is the reason how we do this, yes? That means Molecular Imaging and Photon Counting CT were highlighted. And because they grew faster than the average and the average was already strong with 6.5%. On Photon Counting, we see, in general, an ongoing strong interest in the market for everything around this topic. I think when you just hear and maybe that's even more important, if you hear the buzz in the industry about this, every serious competitor is talking about this technology and that they want to have it desperately. But we are leading the camp by far. We have, as you know, the 3 product lines meanwhile out there. We have very, very good price points in place. Meanwhile, for Photon Counting CT, and we are very, very happy with what we see with regard to the demand patterns. And the demand patterns because we talk here revenue, the demand patterns are not only order intake and backlog development, they also transfer well into revenue, and that is a very, very promising and very, very happy about this. Bernhard Montag: For many customers, who so far have not been in our camps, I would say many, there are not too many, but because I think, especially in the high end, we have also a very high market share. I mean in general, it is for many of those who so far have not been in the camp, the reason to switch to our camp. And this can be hospital chains. This can be academic medical centers, not only because they look at it as a CT scanner, but as a means to offer new kinds of care, the preventive applications of early detection of coronary artery disease is something the frontrunners develop at scale. And there simply is only one company, you can do that with here. Marc Koebernick: So maybe also to add to that. We don't want to steal Andre's show totally in 1.5 weeks. When we have the CMD, so should maybe look forward to some more transparency on that topic then. Going on to the next call online, that will be David Adlington. David Adlington: Yes, just a question on China, please. GE's decision to sell their business there feels like a bit of a watershed moment. I just wondered how confident you were on the outlook for China isn't permanently diminished? And if we don't get a recovery there, are you still committed? I suppose following on from that, do you get an opportunity to pick up share following GE's exit? Bernhard Montag: So first of all, David, I mean, I'm not sure whether there is a GE exit. I mean I didn't follow their earnings call, but from my understanding, they were very positive about China. But I'm not invested into them. So you need to ask experts. So I take the question more as how do we look at the Chinese market, yes? So I mean, as Jochen said, there's basically 2 aspects here. On the one hand, we see in the next year, no reason to go into the year with a more bullish assumption of short-term growth in China. While we are confident that the market will return to mid- to high single-digit growth rates, it is an attractive market for us. It is and remains an attractive market for us. It is a market in which we were able to defend our market share. So when I say, defend our market share, while in the rest of the World, we have a very strong track record of market share increases. In China, we are on the same level as a couple of years ago, which is a success since basically, we are the only multinational company, which with the scale, with the local presence we have built with the 8,000 employees we have in the country, which is best positioned to withstand the challenges of a bit of uphill battles now and then from a regulatory and government environment point of view, but also when it comes to the rising strength of local competitors, yes. So that's basically the story. And I believe in when looking at different angle, so you didn't ask this way, but looking at the 6%, close to 6% growth we had in the last fiscal year and a similar guidance for the current year. It is a message here that we can achieve this without China contributing, which also means here that China is important from a mix point of view, but on the other hand, it's also just whatever, "12% to 15%" of revenue. Marc Koebernick: And then we're moving on to Julien Ouaddour from Bank of America. Julien Ouaddour: So my question is about the Imaging guidance. If I remember correctly, I think last year, you guided already for mid-single-digit growth for Imaging, you achieved standing 8%. Would it be fair that mid-single-digit growth this year is also kind of prudence? Can you confirm the drivers such as PETNET Photon Counting will continue to drive some growth. And if we can have any color on the specific growth you expect from CT and Molecular Imaging this year? I mean are we talking high single digit, double digit for these 2 businesses, that would be helpful. Jochen Schmitz: Julien, first of all, we are very happy with what we see in Imaging with 8.5% growth for the full fiscal year. I think that is a stellar number. And therefore you celebrate this, but this forms the basis for next year. That's always, I would say the flip side. On the other hand, when we look at order backlog and everything we achieved from an order intake order, I would say, secular growth drivers we have in this business, and you mentioned most of them, and maybe you did not talk touch about MRI, which is also a very, very strong foothold for us and with dry magnet and everything we will do there. I think we will see also this as a very, very old healthy growth driver in that business. Molecular Imaging with PETNET Photon Counting CT, obviously, will remain growth drivers also for this year. And I'm not sure if you listened -- I mean most of you listened very carefully to what I said, but I even had a word in front of mid-single digits which was decent mid-single digit. And yes, we are very happy what we see and decent mid-single-digit means that we are very, very confident about this. Julien Ouaddour: And so like does it mean that Photon Counting and Molecular Imaging, I mean, are growing double digit, I mean, 2025, and do you expect it to continue into 2026 just for these 2 businesses? Jochen Schmitz: Yes, I would say, Julien as Marc nicely said, we should keep some thunder left for Andre for the week -- in 12 days, but when you grow 8.5% and we highlight Molecular Imaging and Photon Counting, I think the math is relatively easy to be done. Marc Koebernick: So going to the next caller on the line, that would be Oliver Reinberg from Kepler. Oliver Reinberg: It would be on top line, could you just unpack a bit the kind of 5% to 6% assumption for next year? I mean I understand the kind of base effect you just talked about and obviously, the kind of China assumption, but can you just provide some kind of color what do you assume on pricing and in particular also in Americas where we've seen very strong growth if there's a kind of a tough comp for next year? And if I may bid on that, it sounded that on pricing, you're not willing to do more to offset the kind of tariffs. Can you just provide a bit of flavor why that is? And how quickly you expect this kind of headwind to offset? Jochen Schmitz: Maybe I'll start with the latter one. I think we -- I think we are -- since tariffs are a topic relatively clear about the, I would say, the levers how we want to offset tariffs in the midterm. And pricing and smart pricing was always the topic in this regard. But you might recall from the inflation times that there is obviously a time lag to revenue with pricing. And we also have to have this in mind, yes. Therefore, we will look at pricing and pricing -- our pricing excellence, our pricing, sometimes we have maybe a bit more than excellent. We have also certain pricing power will be a driver to compensate the tariff impact over the midterm, yes? Very clear message. But -- and I think that's also an important topic, but we will do this, as I said, in a smart way because we are very, very mindful about our market share gaining strategies, which brought us where we are today in Imaging, where we are today in Varian, where we are today in Advanced Therapies. Therefore, we need to strike that balance. But I think we have a clear plan in and it's also built in to our EUR 400 million mitigation -- net effect from tariffs this year. And with regard to, I would say, to the 5% to 6% growth for Siemens Healthineers, when you look at segments, I think the picture is relatively similar to what we have painted, what we have seen last year. And from a market standpoint, I'm not sure, Bernd, if you want to say something to the market or should I do? Whatever. Okay. I think we expect to see when you look at backlog development, we expect to see, despite having tougher comps in the United States or North American market, we expect to see strong contribution from the North American market, which is very healthy. Europe is growing again, which I think is good. And we also see, I would say, very, very good development in APJ and as we said, China, we have derisked. We have not built in growth tailwind from China into our numbers. Bernhard Montag: Yes. And maybe some more comment on the healthy development of the -- continued healthy development of the U.S. market. I mean we see that the technologies we provide are at the core of dealing with of treating and detecting early many, many, many diseases. So I mean, you can look at it in 2 ways when double clicking on Imaging, on the one hand, you can look at what's the growth of radiology and radiology is a profit center for institutions. When you look at -- from a hospital point of view. But on the other way to look at it is whether it is early detection of Alzheimer's, whether it is early detection of coronary artery disease with Photon Counting CT, whether it is planning minimally invasive surgeries, a lot of new treatment schemes require imaging. So it's a business in itself "for our customers", but it is in addition, center piece for delivering modern and state-of-the-art care. In addition, people continue to build out their ambulatory facilities, which means that there is also the need for additional sites of care, which triggers another growth, especially on the -- in MRI, CT sometimes also Molecular Imaging and also when it comes to the interventional market in AT. Marc Koebernick: Maybe just obviously, also have in mind that the PETNET business is largely still a U.S. business, and that's been growing very, very strongly. So that also contributes to the strong U.S. growth. Maybe going on to Falko from Deutsche Bank now. Falko Friedrichs: My one question is in case the Siemens Group announces an exit from their stake in your company at their event next week, could you remind us of the potential financial implications for your company, if there are any? I'm thinking of the financing rates, for instance. Jochen Schmitz: Falko, I think I said that already several times, when we look at our financing structure, it is at arm's length per se. When I look at if and when we need to refinance ourselves, I would expect us to be in a very, very healthy rating environment. And I don't expect significant impacts on our interest expenses just from the fact that Siemens may decide on their stake or to deconsolidate their stake in Siemens Healthineers. I think what we need to be mindful about is that we financed a lot of the Varian deal at a point in time when interest rates were low -- very low. And as you might know, we have to refinance any way independent of any stake development, a lot of money in the next calendar year, calendar year '26 more than EUR 3 billion, for example. And therefore, I think we will have, to a certain extent, if the interest rate environment stays as it is any way to deal with higher interest expenses, but not due to the fact that Siemens deconsolidates potentially. This is a very, very minor impact. Marc Koebernick: Moving on to Julien Dormois from Jefferies. Julien Dormois: It's actually relates to Varian. So obviously, Q4 was a bit weakish and you explained that because of the comps, and we see that probably the phasing effect considering the strong guidance for '26. But my question relates more to what you have done at Varian over the past couple of years on reducing the lumpiness on the margin side. Do you believe there is room also to flatten a little bit the growth curve at Varian in the future? Or is it just the nature of the business to see that sort of quarterly lumpiness in the numbers of Varian? Bernhard Montag: Jochen gave me a signal that I should answer that is difficult for me. No, no. no. So I mean, one topic is a little bit in the nature of the business. And it's maybe sometimes also fair to compare the, let's say, volatility of the AT business and the volatility of the Varian business. I mean, because what the 2 businesses have in common is that there is a limited number of units contributing to the equipment revenue per quarter. Yes, I mean, to give you a feeling roughly in both businesses. It's about whatever, delivering 200 units, yes, per quarter, yes. I hope it's not too detailed number here, but imagine something like this, yes. I mean AT is the smaller business simply because the average price of our cath lab is maybe just half of the average price of linac. So -- and that simply this lack of the law of big numbers, contributes to -- is one reason for the higher volatility in the Varian and AT growth rates compared to Imaging, where we just have multiple businesses contributing CT, MR, MI, X-ray and so on and so on, where simply these effects smooth out more than in Varian. And I mean -- and what we got wrong also in the more positive outlook which we gave in the Q3 numbers when we were hinting towards, let's say, a bit of a normal or to be expected growth rate in Varian for Q4, was the timing of a large deal, which starts to turn into revenue. Which is now pushed out by a quarter or will happen in the next quarter or will start in the next quarter. So you see these effects much more in Varian. We want to, of course, avoid this. Over time, nobody is happy when there are surprises like this, or volatilities like this. We still have the opportunity to further streamline the production. We are switching step-by-step to a build-to-order philosophy. And I think another aspect which really helps over time is that the recurring revenue on Varian is very high. So that also step-by-step, the importance of 5 linacs more or less, doesn't show so much in the overall growth rate. On the other hand, I really -- I mean talking about Varian, I want to highlight still, I mean, while the top line was a bit below what we kind of guided for in the last quarter. Profitability was really an exclamation mark. I mean, as Jochen said, and I think it's worthwhile to repeat that. Marc Koebernick: So moving on to Hugo from Exane. Hugo Solvet: A quick one on China, please. I understand that the guide is cautious and Bernd, you commented on the fact that for the long term, it will be an important growth driver nonetheless. Curious, what are you seeing exactly on the ground there? Are you seeing some green shoots tenders slowly but surely moving in the right direction? That would be helpful. Bernhard Montag: I mean not -- what we don't see is the very clear green shoot. And as you know, we have clearly said that we don't want to base our assumptions on speculations meaning at some point in time, it has to go back here because I think there was a bit of a learning as you know, and I'm -- this is meant to be expressing our learning curve or you can also call it self critical, 2 years ago when we had to go in -- exactly 2 years ago when we had to give the guidance for the fiscal year '24. When that was a month or so after the anticorruption campaign started. We were -- basically our assumption was based on the -- let's say, our guidance was based on the assumption that something like the effect of the anticorruption campaign should take 6 months, 2 quarters and then things will go back to what we are used to. But that was an unsubstantiated assumption in which we basically were betting on what authorities are doing and how purchasing schemes will be regulated in China. We don't want to do this again, yes, because I mean, in this fiscal -- the year '24 was, on the one hand, a good year for Siemens Healthineers because we could compensate that this assumption wasn't true by stronger business in the rest of the world, but it somehow was a cloud over the share price for quite a while in that year. So from that point of view, we have clearly said we don't -- we only changed the assumption on China when we really, really see signs of a significant new momentum in the market. And this is not what we see. Otherwise, we would have not built that guidance or that assumption into the guidance. Marc Koebernick: Moving on to the next caller online. That will be Oli from ODDO. Oliver Metzger: One question on Diagnostics. So there is the China NVP headwind which should be, let's say, phase out somewhere in -- after Q1, but can you also make a comment about what do you see from an underlying performance for Diagnostic, if you exclude the headwind for Q4, but also what do you expect more from regional perspective for next year? Jochen Schmitz: Oli, I think, unfortunately, I would say your assumption on this is over with Q1 is too optimistic. Why is it -- I think we will see impact from this throughout the year because there is -- this is an ongoing process, and they go into -- they drive this volume-based procurement through the -- all the provinces and all the panels, which could be affected by this. And this is an ongoing process. I think when we started to seeing that this will happen, I think we talked about 1.5 years of impact at least, I think we said we expect to see this in the second half of fiscal year 2025, more pronounced and throughout 2026. And that's what we expect, and that's why we also guided for only flat growth development. And when you look at the industry, I think we are obviously very much in line with what you see from others, even maybe slightly less impacted because our business in China is a bit smaller than some of the other main players in the industry. When we look at underlying other, I would say, drivers of our top line development. I think it's definitely still the transformation, the transformation in, in what we call core lab solutions, which is the biggest portion of the business, where we drive, so to say, the installed base towards Atellica only. I think we are very, very satisfied with what we see on Atellica. The transformation is working well, but also as explained in the past, by switching and/or shifting the installed base towards Atellica and also winning new deals with Atellica. We also look carefully into the existing installed base, and there are accounts, which do not cater I would say, perfectly for what we want to accomplish with Atellica, and therefore, we let them deliberately go. Therefore, there is also, I would say, a structural, I would say, clean up of revenue built into that translation. From a market standpoint, I think we see, I would say, generally speaking, we see healthy markets in Europe, in North America, but also in APJ. I think the only exception is China. Marc Koebernick: So we are slowly but surely coming to the top of the hour. 2 callers on the line left, Sam England from Berenberg. Samuel England: Just around tariff mitigations post 2026. So if you look at the bridge you provided, can you give us a bit of a sense for what proportion of the mitigations on that from pricing cost control, which are presumably things that are easier for you to do versus shifting manufacturing around and around manufacturing. How are you thinking about the decision to move manufacturing now? What would need to happen you to take that step and what sort of time scale could you deliver manufacturing changes? Jochen Schmitz: Let me first say, as always said, we report out a net number. Because from our standpoint, that is the most meaningful way of looking at it. Otherwise, you inflate numbers and then you inflate -- potentially you inflate mitigation measures and then you discuss things and it doesn't help. So what comes from what? I think, when I would say the vast majority for mitigation comes also today from, I would say, smart pricing, but this will increase over time. As I mentioned beforehand, pricing takes a certain time before it finds its way into the P&L. What do I mean with this? You need to negotiate a deal, then you hopefully book a deal, and then you have a time lag between booking and rev rec. And that is, on average, for example, in Imaging, between 6 and 9 months, just the time line between booking and billing just to give you a flavor. So therefore, it takes time. And as I said, we are not following here a brutal pricing way. We follow a smart pricing way. We look where our pockets of strength are, where pricing excellence plays a role, where pricing power plays a role. And we have, so to say, as a boundary condition for how we think about pricing is our market share gaining strategy. I said that several times already. Therefore, we are very, very confident that smart pricing or market adaptive pricing will be one of the main levers to mitigate tariffs, but it will not only -- be the only one. Tight cost control, I think we are currently and we will announce that, and we talk a lot about this about our new strategic phase in 12 days from now. When you start a new phase, you also look into your own house, you look to clean the desk, yes. And we look for a period of -- also higher productivity than normal. You know that our normal productivity is around 5 percentage points of total cost, and we have a clear guidance in the team to go beyond that. Also here for the next 2 to 3 years, yes, and we expect here, I would say, the major things kicking in more in 2027 and 2028 as we have to initiate those measures and then implement. That's why we also guided for a constantly lower impact from tariffs over the years under the current assumptions for tariffs. And that maybe leads perfectly over to your other question, value-add structure shifts. There are -- there is still uncertainty out there on tariffs. We see that on a daily basis, to be honest. And making shifts is something we are happy to do, but we also need to be careful that we don't rush anything in this regard, because these are major decisions. And we also need to be mindful where to shift to. I mean it's because you can also think about United States sounds obvious. It's also a very attractive position to a certain extent. On the other hand, you could also think about different shifts and you think about other low-cost environments, which then maybe have a different driver behind. It's not that it doesn't directly relate or reduce the tariff, but it offers you other advantages, which fall more onto this under the topic of tight cost control and so on. So therefore, we are looking carefully in it, and we try to find a solution which is sustainable, which is long term, because value-add shift is not a short-term measure and has -- should have a long-term impact. Marc Koebernick: Moving on to the last caller for today. Closing off with Richard from Goldman Sachs. Richard Felton: Great. So just coming back to market share trends in China. Bernd, you mentioned that you've been successful at defending your share in recent years. But I'd be interested in your thoughts sort of on the forward, if anything is changing in the competitive dynamics as the market comes back post anticorruption? I suppose sort of the context of my question is the results of some of the local Chinese competitors. It looks like their businesses have recovered ahead of the multinationals, and there's been some interesting product launches. So any comments on how you see those share trends evolving going forward would be very helpful. Bernhard Montag: Yes. Thank you. I mean when it comes to market share development, I mean, just to reiterate what I said, I mean, we said, we were able to keep our market share to defend it on the high level and also to maintain our #1 position in the market. Compared to the rest of the world, yes, the gap to others is not as high and compared to the rest of the world, we have not been gaining market share but defending market share in a market with a different set of competitors. Now what is changing in the Chinese market is, on the one hand, the effects of the anticorruption campaign, but then I mean we talked about that in Diagnostics, which is not your question here, but we also see it in Diagnostics changes to this volume-based procurement. We see more and more experiments and I choose the word consciously to go with provincial central biddings for health care equipment. As an experiment, this is also for the provinces, a learning curve to go through here because there have been provinces in which complete no name companies have won some of the tenders and it was simply based on price. And now the question is, can they deliver at all? What's the service and so on and so on. So there is a learning curve also an adaptation of what this means from a transformation of the business in this part of the market, which so far have been very much governed by using so-called business partners. So -- but overall, from a competitive dynamic, what we see is -- and this is high-level statement. We defend our market share. The smaller multinationals are losing, yes. And with this, I mean, companies like Philips, like Canon, I have the impression that GE is also a bit weakening while local competitors are gaining share from this. And I think that one topic is here that is really, really important, and we benefit from having scale in China, as I said in the question before. We have 8,000 employees in China. We are very locally present. We have 1,000 engineers. We have -- we manufacture the vast majority of our products and for the local demand locally, and that is important to have. And if you are subscale in the market, it's tricky to maintain a position, but I believe we are very well positioned for the future. Marc Koebernick: So that basically brings us to the end of today's call. Thanks for all your questions. Thanks for dialing in. And obviously, looking forward very much to seeing all you in person at our Capital Markets Day on the 17th of November in London. So bye-bye, stay safe until then. Operator: That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the Investor Relations section of the Siemens Healthineers website.
Operator: Ladies and gentlemen, good morning, and welcome to the analyst conference call on the Third Quarter 2025 Results of Ahold Delhaize. Please note this call is being webcast and recorded. [Operator Instructions] During this call, Ahold Delhaize anticipates making projections and forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause our actual results to differ materially from future results expressed or implied by such forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of Ahold Delhaize. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP. John-Paul O'Meara: Thank you very much, Sharon, and I'm delighted to welcome you all today to our Q3 2025 results from sunny Zaandam. On today's call are Frans Muller, our President and CEO; and Jolanda Poots-Bijl, our CFO. After a brief presentation, we will open the call for questions. In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the Investors section of our website at aholddelhaize.com, which also provides extra disclosures and details for your convenience. [Operator Instructions] To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, over to you, Frans. Frans Muller: Thank you, JP, and good morning to all of you indeed from a sunny Zaandam. As you will have seen in our interim release this morning, our 2025 year-to-date performance is a great proof of the potential and value creation we are excited about with our Growing Together strategy. From a macro, social and political perspective, there's a lot going on in the world, the effects of which are felt in our stores every day in real time. With rising inflation, stagnating economic growth and changes in government policy, which, in some cases, are becoming more frequent and more unpredictable, the business and customer climate is for sure, volatile. Whether it is the current delay to the distribution of SNAP benefits and rising health and medical costs in the U.S., timing of the food stamp payments schedule in Romania, the recent limitations on the grocery trade market implemented by the government in Serbia, this creates uncertainty. Tough choices and headwinds for consumers and businesses alike. At the same time, the industry is evolving, be it omnichannel, data, AI and mechanization. Those companies, and I would include Ahold Delhaize in that group, who are at the forefront of these changes, who are well prepared, well invested and can leverage the experience and creativity of their people, those companies will outperform. Therefore, to ensure we continue to sell successfully in this dynamic, I believe 3 things are essential to keep the rather steady: flexibility, resilience and culture. These qualities become truly powerful when they are aligned behind a focused and well-articulated plan, which is exactly what our Growing Together strategy provides. It connects how we serve customers, run our operations, invest in our people and deliver strong financial performance, all while advancing our commitment to health, sustainability and responsible growth. So let me share a few examples how this tangibly shows up across our business in how we innovate for customers, build trust through transparency and act responsibility -- responsibly in our communities. The flexibility comes to life through our work in our own brands, where we adapt quickly to evolving customer needs and local market dynamics. And by harmonizing assortments, accelerating innovation and aligning product development across our regions, our teams can respond faster and with greater position to what customers want compared to competition. This agility helps us deliver differentiated value and quality while simplifying operations and improving profitability. All of our brands have seen year-over-year growth in own brand penetration. And in both regions, we are seeing own brand sales growth outpaced the rest of the store in both dollars or euros or units. But this is not the time to sit back and relax. And therefore, we are stepping up our own brand game and have undertaken a comprehensive cross-functional and cross-regional view to identify further opportunities. We will lean into this more heavily as we move through the next seasons. We have the biggest own brand share of store growth opportunity in the U.S. Some of the foundational work put in place to sustain momentum in 2026 and beyond includes, for example, the review of our 90% of our categories to harmonize assortments, align product specs and reduce supply complexity. The identification of a pipeline for new products in high-growth categories and the activation of commercial plans across the brands to raise own brand awareness and drive higher consistency and efficiency in execution. In Europe, we are building on a very strong position with own brand share already around 50%, 5-0 percent. Therefore, we are concentrating on further strengthening competitiveness through continued assortment harmonization, expansion of our health-oriented brands like Nature's Promise and Terra and the expansion of our everyday low-price products or how we call them Price Favorites. All our European brands now have a minimum of 900 Price Favorite products across their assortments. Through our family of great local brands, we have unparalleled proximity and rich anonymized data to loyalty programs that gives us a real-time understanding of what matters most to our customers. And during challenging times, it's important that our customers do not have to choose between eating an healthy and nutritious meal and paying their rent. This mindset keeps our people motivated and connected to our purpose. Resilience for our customers comes from transparency, being open and consistent about the value, quality and health choices we provide. We strengthen trust by clearly communicating nutritional information, offering price certainty and helping customers to make -- to be informed, affordable and healthy decisions. Here, visibility and education are equally important. Customers increasingly value the healthy options accessible across our brands. They also appreciate the simplicity of easily identifying the health differences between comparable products, such as with the Guiding Stars in the U.S. and NutriScores in Europe, nutritional rating systems used for our own brand products. In the U.S., we are partnering with Circana to expand the accessibility of the system to a broader range of suppliers. Albert Heijn in the Netherlands is revamping its fresh product aisle, expanding its offering with more convenience, new snacks and ready-made meal kits. It's also introducing new fresh food packages to inspire customers to prepare fresh and nutritious meals more quickly and easily. Maxi Serbia held its third Healthy Food Every Day school program to encourage healthy eating amongst children. And in the program, students across Serbia learn about the importance of a balanced diet, eating fruit and vegetables and physical activity. And finally, our culture is reflected in how we show up for our communities. Those partnerships with organizations such as The Global FoodBanking Network and local initiatives like Food Lion Feeds and Hannaford school pantries, we help families access nutritious food and reduce waste across our value chain. It has been just over a year since Ahold Delhaize partnered with The Global FoodBanking Network. And since then, we have provided the equivalent of 2.9 million meals to those in need. Hannaford, its 200th school-based food pantry for students in need, and they launched that recently and through partnership with school districts, food banks and hunger relief organizations, the program has helped expand food access for students from preschool through college. As part of its annual Great Pantry Makeover initiatives, the Food Lion Feeds program restocked 33 food pantries to better serve neighbors experiencing food insecurity. More than 92,000 pounds of food items were donated and associates contribute more than 1,500 volunteer hours. And don't forget, by 2032, Food Lion has committed to donate 3 billion of cumulative meals. Albert Heijn held their annual "you can't learn on empty stomach" campaign, where customers could buy healthy breakfast or dinner products at a discount and donate them to the Dutch food banks. And through the campaign, more than 350,000 products were donated. These efforts are not site projects. They are part of who we are. They demonstrate that our culture of care and connection extends well beyond our stores and that we define success by the positive impact we create. Delivering for our customer communities today sets the standard for how we build the business for tomorrow. We are translating the same flexibility, resilience and culture into our physical network, supply chain infrastructure and technology investments, expanding and densifying its growth markets, modernizing logistics and embedding AI-driven innovation that will enhance both customer experience and productivity. Our U.S. brands are solidifying their real estate pipelines to accelerate new store openings in the coming years. We see the strongest opportunity for growth in the markets served by our Food Lion brand. In some of our markets like Raleigh and Charlotte, we have seen population growth of 7% to 8% in the past 5 years, and that is not slowing. Having achieved its 52nd consecutive quarter of same-store sales growth, Food Lion is well positioned to extend its record performance. Today, Food Lion is launching their omnichannel remodels at 153 stores in the Charlotte market. These remodels enhance the omnichannel shopping experience and include items like updated assortments and easy meal solutions that they're ready to cook or eat and, of course, are priced right. Self-checkouts for an enhanced and efficient shopping experience and e-commerce options for all customers through Food Lion To-Go or a store pickup. This is now the third market to complete the omnichannel remodels, where we have previously launched remodels in Raleigh and Wilmington, we continue to see strong sales performance with average weekly sales outpacing non-remodeled stores. Construction is therefore also underway on 92 store remodels in the Greensboro market, which will be launched in 2026. In Europe, Delhaize Belgium is expanding its footprint with another 8 new supermarkets that will open in '26 under the brand's affiliate model. The new stores complement Delhaize existing network and reinforce our growth ambitions in Belgium. Additionally, we expect the Delfood transaction, which is -- which are the former Louis Delhaize stores to close in the first quarter 2026, allowing Delhaize to further differentiate itself in the convenience store segment. We also continue to make good progress on the integration of Profi, where we see a strong future growth path. Over the past 3 years, the brand has opened over 200 stores and intends to ramp up expansion in the next 3 years. A few of the things we have done this year to set ourselves up for future success include like things like introducing our own brand assortment to Profi customers, enhancing value and differentiation, expanding Profi's strong quick meal service offerings of coffee, fresh pastries and convenient meals and those options also to our Mega Image and our Shop & Go stores and to meet, therefore, evolving customer needs. And we slowed our cadence of store openings to finalize the commitments we made to the competition authority. At the same time, our Romanian teams have used the time to identify optimal locations for each of our local brands to ensure we leverage their unique strength and create a better fit to local market dynamics. And you will see accelerated growth in 2026 on this front. With our customer value proposition advancing and our footprint ambitions taking shape, let me spend a few minutes on where we are on strengthening capabilities that will support the next phase of growth. The same flexibility, resilience and culture that guide our brands also drive how we invest in infrastructure, automation, technology and data. These enablers make us more efficient, deepen our customer relationship and ensure we use our data to create a faster and more connected business. So here are a few examples to illustrate this. To facilitate growing capacity demands, 2 weeks ago, we announced plans for Ahold Delhaize USA to build a new state-of-the-art distribution center in Burlington, North Carolina. The new facility, which will add over 1 million of square feet of distribution center space is expected to begin operations in 2029. To maximize efficiency, the site will leverage proven supply chain mechanization technology. And this investment is within the scope and parameters of the Growing Together financial network. Our culture of innovation is also providing new and powerful ways to interact and serve our customers as we will explore use cases for new technologies and business process improvement. With the rapid developments in AI, we see many opportunities to accelerate across selected domains of our business, focusing on the ones that can have a real impact on our business. And I'm confident that under the leadership of our new CTO, Jan Brecht, we will make fast progress building the right foundational AI platforms that will enable effective future scaling of winning AI solutions. Our teams will scale our proprietary retail media platform, Edge, to our U.S. brands in the coming year. This is an important step as retail media becomes an increasing effective way to create a relevant customer experience and provide additional revenue streams. The platform powers on-site display, sponsored search and in-store digital screens and has already proven successful at several of our European brands. As 2025 draws to a close, I'm proud of our progress and more importantly, that we have sustained and strengthened brand equity and leading market positions across the portfolio. I'm confident we are doing the right things to reinforce our strategic levers to capture growth, volume and market share. And at the same time, we are staying close to our customers and associates working hard to navigate these turbulent times together successfully. As we turn our attention to delivering a strong holiday experience for our customers, prioritizing value, healthy assortments, convenience and everything they need to create their own special and unique holiday moments, I also wish you happy holidays, starting with Thanksgiving in only a couple of weeks. Now over to Jolanda to talk more about the specifics of our third quarter and provide more color on our outlook. Jolanda Poots-Bijl: Thank you, Frans, and indeed, good morning to everyone. We've delivered a strong quarter, steady sales growth, solid execution and continued progress on our Growing Together ambitions. What I'm particularly proud of is our ability to deliver a balanced and consistent performance in a dynamic environment. The backbone is our passionate and dedicated people, supported by a strong portfolio of brands that stay close to their customers and local markets. By combining that deep local insight with the scale and capabilities of our group, we continue to adapt quickly, find efficiencies and create opportunities in real time. This balance of flexibility, resilience and culture is what underpins our financial strength and long-term value creation. Let's have a look at the key underlying results for the quarter, as shown on Slide 17. Net sales grew 6.1% to EUR 22.5 billion. This reflects good momentum across our regions, fueled by our growth model and strategic priorities, which have been a key catalyst contributing to a solid volume performance. The closure of Stop & Shop stores and the cessation of tobacco sales in Belgium negatively impacted net sales growth by 0.7 percentage points. Underlying operating margin was 4.1%. Strong performance in the U.S. more than offset the first-time consolidation of Profi and planned strategic price investments in the U.S. Diluted underlying earnings per share was EUR 0.67, up 8.7% at actual rates. Higher underlying operating profit and the impact from the share buyback program was partially offset by higher taxes and finance expenses. Slide 18 shows our results on an IFRS reported basis for Q3, which were EUR 31 million lower than our underlying results, primarily due to impairment charges on operating stores in the U.S. and an adjustment on the losses related to the affiliation in Belgium. Let's now turn to our regional performance. On Slide 19, you see comparable sales growth by region, including and excluding weather, calendar and other effects, which shows we delivered another solid quarter of steady sales growth. Looking at the regions in more detail. U.S. net sales were EUR 12.9 billion, an increase of 1.9%. Comparable sales, excluding gas, increased 3.1%, excluding a negative impact from weather of 0.2 percentage points. This reflects solid comparable performance and continued customer momentum. In addition to the positive impact from comparable sales, net sales were negatively impacted by the following: around 80 basis points from the impact of Stop & Shop closures and around 20 basis points from a decline in gasoline sales. The underlying operating margin in the U.S. was 4.6%, excuse me. Excluding nonrecurring items, margins were up 20 basis points from the prior year due to higher sales leverage and careful timing of promotions using our learnings heading into the holiday season. This more than offset our price investments and the dilutive impact from a change in sales mix from online and pharmacy sales. The nonrecurring items, including a release of a provision on our self-insurance program. This primarily resulted from continued improvements in workplace safety. Given all the stresses in the health and medical market, creating a healthy, safe workplace is equally a vital part of what we do as a company. The Stop & Shop team has been laser-focused on executing their pricing strategy and have extended key elements and refinements to an additional 88 stores in Massachusetts. At the same time, our associates are improving the quality of service and in-store execution, optimizing promotional effectiveness and tightening day-to-day operations, while there's plenty of work ahead of us, I am encouraged by the positive first response from customers, which we see in our improved Promoter Scores. As we close out the year, I expect our fourth quarter U.S. margin to be roughly in line with the prior year as we continue to invest in value, service and in the customer experience, ensuring sustained momentum into the new year. Turning now to Europe. Sales were EUR 9.6 billion, an increase of 12.4%. The integration of Profi had a positive impact of 9.1%. Adjusted comparable sales growth was 3.4%, excluding the impact of 0.6 percentage points from tobacco. We expect to see a similar impact for the coming 2 quarters when we cycle the tobacco regulation in Belgium coming into effect. As we saw in Q3, comparable sales growth eased, partly due to some of the macro effects Frans mentioned earlier. Also, to a certain extent, as we begin to comp our own successes of the past years in the region. In the CEE region, we expect to see slightly lower growth persist as market growth is pressured due to rising inflation, which, in this case, is more policy-driven, for example, VAT increases in Romania than supply driven. Underlying operating margin in Europe was 3.9%, stable versus last year. Margin improvements in Belgium and better labor productivity in general were offset by the impact of the first-year consolidation of Profi and lower profitability levels in Serbia due to the new governmental degree on grocery industry pricing. The decree started from September 1 and remains in effect until February 2026. Given this new headwind, as we look into the fourth quarter, we expect that the margin profile for Europe will be at a similar level to that of the third quarter. I remain encouraged by how our local brands continue to balance affordability and innovation while protecting profitability, a clear sign of operational resilience. Our relative performance remains strong, and we continue to see the long-term growth and margin opportunities in line with our Growing Together plan, particularly as we drive more alignment of best practices and leverage our scale. Our omnichannel ecosystems continue to drive growth and differentiation and help us build market share. During the quarter, online grocery sales grew 15.4% in the U.S. and 11.9% in Europe, marking a sixth consecutive quarter of double-digit online growth. In the U.S., this reflects our disciplined store-first model, which we pivoted to in 2023. This strategy supports enhanced convenience, delivery immediacy, optionality, order quality and profitability. With over 2,000 stores across our network, our customers can shop nearly the full store assortment and can take advantage of our same-day fulfillment options. Over the past 3 years, we've seen same-day delivery increase from 65% of our orders to nearly 90%. We also completed the rollout of PRISM at Food Lion and Hannaford. And with that, all 5 U.S. brands are now on our proprietary platform, which will amplify speed and impact of innovation in omnichannel convenience for our customers. As online further evolves, so too will our operations and infrastructure with it. We will further evaluate our fulfillment operations to optimize the customer experience and improve online profitability. At Albert Heijn, double-digit growth was supported by a 10% increase in orders. To support its growth, Albert Heijn has announced its real-time delivery slot system to offer personalized delivery windows during checkout based on location and order history. Using AI, this system dynamically recalculates routes and time slots to minimize emissions and maximize efficiency even as orders come in. bol enjoyed another strong quarter, growing 8.4% and is on track to deliver a very good year. As the clear #1 in the market with a reliable assortment, local relevance and growing network of international partners, bol is a well-skilled and innovative e-commerce business with the personality of a great local brand. During the quarter, bol launched branded shelves, a new self-service advertising product, giving sales partners and suppliers their own digital storefront. This marks the next step in bol's development as a full-fledged media mail platform. Moving on to Slide 23. Q3 free cash flow was EUR 389 million lower year-on-year due to phasing and lease repayments. Even with headwinds from foreign currency, we remain on track to deliver on our full year 2025 free cash flow commitments. Our strong balance sheet gives us the flexibility and resilience to keep investing in the business while also returning cash to our shareholders. In that context, we are pleased to reconfirm the continuation of our EUR 1 billion annual share buyback program for 2026, underlining our confidence in future cash generation and earnings growth. Alongside financial results, we continue to advance our healthy community and planet ambitions. Our MSCI AA and Sustainalytics low-risk ratings have been reaffirmed, reflecting consistent ESG performance. Through initiatives such as the Healthy Future Academy, we are equipping associates with knowledge, skills and confidence to further integrate health and sustainability in their daily work. The program takes learners on a journey from farm to plate, covering topics like nature and climate, circularity and health throughout Ahold Delhaize value chain. Across our brands, we're making healthier and sustainable products more affordable and accessible. From Delhaize Belgium reformulated own brand canned vegetables to new hybrid meat and plant-based products. In addition, we continue to foster collaboration with suppliers across our value chain to support regenerative farming and reduce greenhouse gas emissions. Ahold Delhaize USA recently introduced their partnership with Danone North America and The Nature Conservancy aiming to reduce methane from yogurt production over the next 5 years. This follows earlier partnerships with Kellanova, General Mills and Campbell Soup. These examples show how commercial performance across our brands and responsibilities go hand-in-hand. As we move into Q4, our priorities are clear: deliver a strong holiday season, serving our customers with healthy and affordable products. I'm confident that our strong foundations, dedicated associates and customer-first mindset enable us to deliver on our promises for the year, which you can see reiterated on Slide 25. As it is important to track underlying operational performance in both our reporting and our outlook, for 2026, we will align our external guidance to a currency-neutral basis, which is also more attuned to market practice for multicurrency companies. In summary, our strong year-to-date performance reflects a company that is flexible in execution, resilient in performance and guided by a culture of accountability and care. These qualities, together with our clear strategic focus, position us well to continue driving sustainable growth and long-term value creation. And with that, I thank you for tuning in. And Sharon, please open the lines for questions. Operator: [Operator Instructions] And your first question today comes from the line of Robert Jan Vos from ABN AMRO ODDO BHF. Robert Vos: I have 2. Since you mentioned it as one of the reasons for the strong margin expansion in the U.S. in Q4, could you quantify the impact of the timing of the promotional activities in the U.S. in Q3? And my second question is, you talked about the growth in Europe and that it is expected to be a bit more subdued going forward. It was 2.8% in the quarter. However, if we look at food inflation levels in the countries of presence, these are generally a bit higher than that. So that indicates some negative volumes. Can you elaborate on this, please? Those were my 2 questions. Frans Muller: Robert Jan, Jolanda takes the first question, then I take the second one. Jolanda Poots-Bijl: Okay, Robert Jan. Yes, the Q4 question you asked about the promo phasing. As we indicated, our Q3 results were impacted by one-offs of 20 basis points in the U.S., and this 20 basis points is related to the release of the provision that I talked about and the promo phasing, and that's the guidance we can give you on this front. Frans Muller: And on the European margins, they are corrected 3.4% in Europe for the quarter compared to a comparable of 2.8%, which we report. And it has to do with the timing and phasing effects of nonrecurring items from last year. Robert Vos: That's clear. But can you maybe elaborate a little bit on volumes? Were they still positive in most brands? Frans Muller: Yes. Volumes year-to-date, we have positive volumes, and we also expect that will be the same for the fourth quarter. Operator: We will now take the next question, and the question comes from the line of Sreedhar Mahamkali from UBS. Sreedhar Mahamkali: Perhaps if you can talk a little bit about the comments you made, Frans, on the real estate team pulling together pipeline and the warehouse [ Burlington ] you made $860 million. If you can help us understand what we should be thinking about the growth in terms of new footage new stores, maybe next year or the year after, how we should be thinking about what sort of magnitude? That's the first one. Second one is just a bit more of a request to clarify the U.S. margin drivers in the quarter. I know you've talked about 20 basis points. But did you just say, I think the 20 basis points refers both to the provision release and the promo shift? Or was the provision release 20 basis points and then the rest is in the underlying 20 basis points improvement? And the real question there, I guess, for me is, is the provision release a longer-term realizing you provisioned very, very prudently, and this could be there in a year, 2 years', 3 years' time? Frans Muller: Thank you, Sreedhar, for your questions. Jolanda will take up the second one or partially the third one. On the first question on the DC, the DC for Food Lion in the Carolinas is, of course, an evidence of our success, I would almost say. We grow very fast with Food Lion and have also future plans to grow further, both in store remodels like the 153 we just launched in Charlotte, but also with new store openings like we said before. And those new store openings, that is organic growth for Food Lion and the store remodels and the increased success of Food Lion needs more capacity, which is a good thing. The other thing is that we also said in our Grow Together strategy for the 4 years period that we will remodel 1,000 stores in the U.S. So we are on the path of growth. And when we talk about store growth, then we talk about Food Lion, Hannaford and The GIANT Company. And let's not forget that we are in the southern part of the East Coast, where both we see population growth and GDP growth as well. So we're in a very good spot there, and that's why we need more capacity. So it's a logical effect of our success. Jolanda Poots-Bijl: Thank you, Sreedhar, for asking that question on the U.S. margin. The 20 basis points is indeed a combination of the promo phasing that we referred to and the release of the provision. And then your next question on the provision, that's a provision that is reassessed every year, but we do not expect at this point further releases on that provision. So it's a one-off, and that's why we refer to it. Operator: Your next question comes from the line of Rob Joyce from BNP Paribas. Robert Joyce: I'm going to go with 3 as well. So just looking through the kind of SNAP impact from the payment pause, which is probably a [ P ] of one event. Do we now think the U.S. margin has reached a point where it should be kind of broadly flat going forward and looking into 2026? And do you think you are gaining share in the U.S. and can continue to gain share at this kind of margin level? That's still in the U.S. And then in terms of Europe, I mean, it looks like you're suggesting margins should be down, give or take, 50 basis points in the fourth quarter. How do we think about that flowing into next year? Is that a drag on margins we should think about for 2026? Or is 2026 a Europe margin growth on the back of some of those Profi synergies in particular? Jolanda Poots-Bijl: Thank you for the questions asked. First, starting with the U.S. margin profile, which we disclosed will be for Q4 comparable to the prior year, which was 4.2%. We envision to maintain our cadence of price investments, continuation of the sales mix. Bear in mind, [ Rx ] and online are growing double digit. And there's indeed the promo shift from Q3 to Q4 that we see there. If I look at the European Q4 margin, as I disclosed in my statement just now, we expect the Q4 European margin profile to be comparable to Q3 this year, which was around 3.8%. And there you see the impact of the first-year consolidation of Profi. We discussed in previous calls that Profi, the closure of the transaction was somewhat later than we hoped for, and therefore, the synergies also kick in somewhat later. The second impact in the European margin profile is Serbia, the decree that I talked about, which is in there. Overall, as we say, we're steadfast on our commitments to deliver on our Growing Together strategy with an average of 4% margin over the whole period and a 4% growth CAGR, and I don't see any reason to deviate from that. So confident for the next year. And of course, we will provide detailed guidance in February going forward. Robert Joyce: Sorry, just to follow up on that U.S. margin. The question on the market share. Do you think you're taking market share now in the U.S.? And are you kind of at the right level to continue taking share? Frans Muller: We take market share in the U.S. We also see with the latest numbers on grocery development that we trend better than the market. And I think this has to do with the price investments we made, the online performance where we have a very strong penetration. So I think we can confirm that we gain market share in the U.S. geography as a whole. Jolanda Poots-Bijl: We also expect positive volumes in Q3 for the U.S. as well. So yes. Frans Muller: That's what I said before. So the Q4 trend is the year-to-date is positive volume that will prolong for the Q4. And I'm also happy we had yesterday our total Stop & Shop team with us. And also from them, we see now that they trade positive volumes as well. So that's going in the right direction. Operator: Your next question comes from the line of William Woods from Bernstein. William Woods: The first one is on Stop & Shop. I suppose, are you happy that you've done enough at Stop & Shop to date to sustain that turnaround? And I suppose what have you learned and adapted as you've rolled out this strategy? And then the second one is just a shorter-term question on SNAP. How are you thinking about the impact of SNAP at the moment? What are your latest conversations on that? Frans Muller: So Jolanda will say a few things about the nutritional assist programs. I will say a few things more about Stop & Shop. So you were faster on your feet already talking about Stop & Shop than I thought. So I was saying a few things about Stop & Shop because we are excited about the development there. The team was with us, and we had a full report yesterday as we see from them every month with our full management board because this supports an important project. The Stop & Shop team has now invested -- price invested in 70% of their fleet. And like Jolanda mentioned before, 88 new stores to be price-invested in Massachusetts. We have improved execution in our stores, availability, fresh performance and that topic, we work hard on productivity and execution. We closed last year 32 loss-making stores, as we earlier said to you. We have already a very strong online performance with Stop & Shop and a good 10% penetration. And we also see, if you look at the market numbers that we gained volumes that our NPS are trading very nicely up. And also the team with Roger's leadership has also renewed, and we see also there a lot of energy and positivism. Having said all that, that does not mean that we have not still a lot of things to do. And that's what I mentioned before, the type of turnarounds need more time. But good evidence. Team is enthusiastic and energized about the results we see. So I'm optimistic going forward. But again, we come back to you next quarter on this topic, too. Jolanda Poots-Bijl: Yes. Thank you, William, for the question on SNAP. First of all, we think it's quite disappointment, very disappointing for those impacted, those families in need, especially with the winter and holiday season ahead of us. Thus far, for the business, we do not see material impact. We, of course, will closely monitor developments going forward, and we will stay close to our communities. Yesterday, Food Lion released that they've contributed an additional EUR 1 million in support to help the communities they operate in. And also our whole focus on reduction of prices, the price investments of EUR 1 billion in 4 years' time will also support these families. So closely monitoring impact. That's what we're doing. William Woods: But just to clarify on the SNAP impact, if it doesn't get paid or only half of it gets paid, so you're just saying that there's no material impact to Q4. Is that right? Jolanda Poots-Bijl: That's not what I said, William, exactly. I said thus far, we don't see a material impact, and we closely monitor developments going forward. And we remained -- okay. Operator: [Operator Instructions] We will now go to our next question, and our next question today comes from the line of Fernand de Boer from Degroof Petercam. Fernand de Boer: Maybe to come back on the SNAP impact. Could you quantify? Because I think a couple of years ago, you did quantify how much SNAP was of your U.S. sales? And that's the first question. And the second one is on the Netherlands with bol. At this moment is still going very well, I think. But also Amazon recently announced a huge investment program for the Netherlands. Do you see this market changing? And how are you going to prepare for the investment of Amazon? Jolanda Poots-Bijl: Thank you for the question. The SNAP penetration, that's the only quantification that I could provide at this point in time. It's a very -- at a very low level in our company. So it's at one of the lowest levels since a few years pre-COVID. So low penetration, no material impact thus far, and we will monitor just like you what's really happening in the next few months. Frans Muller: And at the same time, Fernand, like Jolanda mentioned before, we did a lot of things on value and price investments. If it's our own brands, if it's investing in our prices. And we're very fortunate that we have a very good relationship with Feeding America and our local food banks to make sure that we can support those families and communities in need. That is now our first priority. And then we monitor the situation how this will evolve, the shutdown and therefore, also the connected SNAP funding. Talking about Amazon and bol, it's a competitive environment. It's -- we see every quarter something new in this beautiful online space in the Netherlands. But I just would like to come back to the facts and how we prepared for that. bol has an 8.4% growth, which is, therefore, growing roughly double how the marketplace is growing for general merchandise. So we're gaining share again. Like Jolanda already mentioned, we're up for a very good year for bol, both top line and bottom line. The company does a great job in adding new categories like refurbished, for example. And the company is also under the leadership of Maite made a very nice transition from Margaret, it was successful, Margaret in her leadership to Maite into the future, and it has gone very smooth. 46,000 partners on the platform, and we increasingly develop the relationship. We talk about logistics viable, advertising viable. So we make bol an even better platform for them to compete with. And we also see that the number of suppliers, the number of partners on the platform is increasing, and we also have a very nice tap into Chinese and Asian suppliers directly on the platform, which gives us a great advantage. You have seen with all the other Chinese players that there is a little bit lower strength because of European regulation on quality and on trading. And that's why also people recognize that bol in its quality assessment, quality and compliance with the European law that they're very much in line and that is for more and more customers and asset. And just look, Fernand, I don't know if it's for your -- for family members or nephews and nieces, just look at the sensational toys catalog over Christmas for Sinterklaas here, 3 million copies out and sensational good toy catalog. So with Black Friday coming up, with Sinterklaas, with Christmas coming up, bol is super prepared for the season, and I'm very confident that we have a very strong run there as well. So yes, we see people investing, making announcements. We look at our own thing and our own strength to see where we can improve both pricing, both value, both logistics and services. And that's why I sound -- and you can hear that. That's why I sound quite enthusiastic, excited about this business. And I'm very proud about the bol team, how they progressed so far. Fernand de Boer: May I do one follow-up on the promotions. Why did you change the strategy there? Why did you do the phasing? Is it simply more to get in Q4 and a little bit less in Q3? Or how does that work? Jolanda Poots-Bijl: Yes, you're referring to the promotions for the U.S., right? Fernand de Boer: Yes, yes. Jolanda Poots-Bijl: Yes, yes, exactly. That promo phasing, as we call it, we're just learning from our promos, optimizing and heading into the holiday season, we shifted a bit of that promo atmosphere into the Q4 quarter based on the learnings we had. But it's also -- don't make too big a thing out of it. It's trending over time. You adjust where you think you can optimize your returns, and that's just what's going on. Frans Muller: And $1 billion price investments, $1 billion price investment for the U.S. in our total Growing Together plan, that is absolutely our commitment, and we are in line with that commitment. Operator: We will now take our final question for today. And the final question comes from the line of Maxime Stranart from ING Bank. Maxime Stranart: I hope you can hear me well. So 2 questions for me as well. Firstly, looking at the U.S., it looks like your comment on Hannaford posting consecutive quarters of growth has disappeared from the release. So I just want to inquire there what has happened with Hannaford precisely. And secondly, looking at Europe, you have decreased your guidance for Profi for full year sales. Anything we should read into it and how it would translate into growth in 2026? That would be all for me. Frans Muller: Yes. So thanks for your engaged question on our beautiful brand, Hannaford in the Northeast. [indiscernible] but also this quarter was another consecutive quarter of same-store sales increase. So strong as they go and going strong. So don't have any second thoughts. A few things on Profi, Jolanda? Jolanda Poots-Bijl: Yes. You asked about the sales profile for this year on Profi. That has been impacted more by macroeconomic factors than anything else. It's the VAT being increased with 2% in Romania, which, of course, impacts sales. And the food vouchers in Romania, the timing of that provision to customers has changed and impacted sales somewhat. There was also a small increase -- a small impact because the 87 stores that we are selling is related to the transaction with Profi happened somewhat earlier than we projected. So it's now in November, and we planned for it in January, which is all good, of course. Is there anything that would impact our structural guidance on the growth for Profi? Not at all. So it's macroeconomic and some of the stores that needed to be sold earlier in timing than we predicted earlier onwards. Frans Muller: Just quickly ChatGPT the data -- data on Hannaford, so super proud. It was the 17th consecutive quarter for growth -- comparable sales growth for Hannaford. So that is then also that data point with you. Operator: We have a follow-up question from Rob Joyce, BNP Paribas. Robert Joyce: Just a couple of quick follow-ups. I think -- sorry if I just missed it in that last Profi answer, but are we still expecting Profi from 2026 to be back in a position of kind of expanding profitability and growing there? And then the second question was, I just had a few questions about the U.S. slowing in the most recent months. Have you seen any sort of change in the trajectory of the U.S. business there? Any underlying weakness in the consumer? Frans Muller: Yes. On the U.S., thanks for that question. I think we gave you already the data that we are -- if you look at Nielsen numbers that although the market is a little bit softer that we did better than the market. So we gained share. And inflation in U.S. at the moment is roughly in 2.5% food at home. So I think we see that we are very well positioned there, but the market was slightly softer. But in that slightly softness, we gained share. Jolanda Poots-Bijl: And the question around Profi, we're very happy to have Profi in our family of great local brands. We will invest in opening up stores going forward intensely because we really see that there is an opportunity for Profi to grow going forward. And as we stated earlier, Profi is expected to come into the average European margin levels in 2 to 3 years going forward with the synergies that we are now realizing and that will impact 2026 positively already. Frans Muller: And synergies come in better than planned, by the way. So also the teams are very successfully working on that. Jolanda Poots-Bijl: On a positive note by our CEO. Frans Muller: No. But I think we have a little bit of experience with integrating businesses, I think. And it's never easy. It's the cultural component, the people component, the network, the synergies. And at the same time, also keep on accelerating your growth because Profi is a growth machine for us and 200 stores in the last years. That means also as from '26, we start growing again fiercely because that market gives quite some opportunities, especially with the business model of Profi and in the rural areas. That's why this is strategically the right move. That's why we're close to EUR 5 billion in Romania in sales #2, and that's the planning we have. Operator: Thank you. I will now hand the call back to JP for closing remarks. John-Paul O'Meara: Thank you very much, Sharon, and thank you all for joining us today. We look forward to catching up with you in the coming weeks. And just to reiterate, a happy holidays to everyone that we don't see between now and the end of the year. Jolanda Poots-Bijl: Thanks for joining us. Frans Muller: Thank you. All the best to you. Have a good week. Bye-bye. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Laura Lindholm: A warm welcome, and thank you for joining Cloetta's Q3 Interim Report Presentation. I'm Laura Lindholm, the Director of Communications and Investor Relations. Our CEO, Katarina; and CFO, Frans will first go through our results, after which we will move to the Q&A [Operator Instructions] Over to you, Katarina. Katarina Tell: Thank you, Laura. I'm very proud to present our third quarter results. We have now successfully established a strong uplift in profitability. We are steadily approaching our midterm target of an EBIT margin of at least 12% by 2027. And this quarter is an important milestone on our continued focus on driving profitable growth. But first, over to the agenda. Today, it looks as following. I will start with Cloetta in a brief. Then I recap on our strategic framework and our updated financial targets that we shared earlier in this year. After that, I move over to our Q3 highlights. Our CFO, Frans, will then walk you through our Q3 financials. And as always, we wrap up with a Q&A. For any new listeners on the call, let me start to tell you a bit about Cloetta. Today, we are the leading confectionery company in Northern Europe. We were founded in 1862 and have for over 160 years, been spreading joy through our iconic brands, and we are planning to stick around for at least another 160 years. We have grown a lot since the early days, and now we have operation in 11 countries. In 2024, we hit SEK 8.6 billion in sales, and our operating margin was 10.6%. As I already mentioned, we have now established a strong uplift from this profitability level, which we will talk more about today. Over half of our sales come from our 10 biggest brands, and we call them our Superbrands. Despite the current geopolitical uncertainty, our company remains largely unaffected. This resilience is due to several key factors. First, we operate in a noncyclical market with stable consumer demand, which provides a solid foundation even in uncertain times. Second, our strong and trusted brands gives us the ability to adjust prices when needed without losing customer loyalty. Third, our broad product portfolio allow us to offer a range of alternatives, helping us adapt quickly shift in consumer behaviors. And finally, our primary focus is on Northern Europe, a region that is generally less impacted by global geopolitical tensions compared to other parts of the world. Together, these strengths position us well to continue to deliver stable performance and long-term value. I will now briefly walk you through how we bring our vision to life through our strategic framework and then in relation to this, also our updated financial targets. For more detailed information, please view the recording of our Investor Day available on our website. So let me start by talking about our vision at Cloetta because it's really capture what we're all about. Our vision is to be the winning confectionery company inspiring a more joyful world. And that is not just a nice phrase on a wall. For us, it's really a commitment to excellence, to innovation and most importantly, to the joy we bring to people every single day. This vision is what guide us, and it is what pushes us to keep improving, to stay curious and to lead the way in our industry. We have created a clear strategic framework to guide us forward. And right at the center is, of course, our vision, to be the winning confectionery company inspiring a more joyful world. But having a vision isn't enough on its own. We can't chase every opportunity or be everywhere at once. So we have made some choices that will help us scale, grow and make the biggest impact where it matters the most. We have 5 core markets, and they are Sweden, Denmark, Norway, Finland and the Netherlands. Around 80% of our total sales today come from our core markets. Our first strategic priority is to focus on our 10 Superbrands in our core markets. These are the brands with the biggest potential and by focusing on expanding strategy, we can unlock new opportunities, grow and drive scale. I will today also give you 2 examples of how we work with them. Next, we are looking beyond our core markets. We have identified 3 high potential markets outside our core markets, and they are the U.K., Germany and North America. By focusing more and making clear choices, we believe we can truly make a difference and achieve strong growth in those markets. Our third priority is to step up marketing and innovation. The market is constantly evolving, and we need to stay ahead, not just reacting to trends, but actually helping them to shape them as well. For the past 7 years, we focused purely on organic growth, but now we are open to exploring M&A as long as it fits our strategy and makes good business sense. That said, any M&A would be an accelerator and is not built in the plan to reach our financial targets. To make all of this happen, we also need the right enablers in place. That means having a simple, efficient operating model and a structure that supports our goals. During Q2, we announced changes to our organizational structure, including some reduction in positions and updates to our group management team. The goal is to better align with our strategy and move faster, but also to support our profitability journey, and we have now finalized all major project milestones. People and our culture are, of course, key to our success. Without that, everything else is just a black box. Our culture is the foundation of everything we do, and we are committed to build a strong, capable and joyful organization. I would like to take the opportunity to thank all my colleagues for keeping their eye on our progress and delivering results, especially during the last 6 months of transformation. Now I'd like to share a few concrete examples of how we are bringing our strategic framework to life. Today, I would especially like to focus on our first pillar, and that is win with Superbrands. One of our key focus areas here is expanding our top 10 brands into new categories, sales channels and core markets. In Q3, we initiated 2 now ongoing launches for Malaco, a super brand within the candy category. The launch of Fruit Drops builds on the trend of consumers increasingly looking for sustainable products and with more natural ingredients. The launch is still ongoing, but both pouches are already available in Sweden. One is available in Norway and both will be launched in Denmark in the first quarter next year. Fruit Drops are vegan and do not include artificial colors or flavors. They contribute to our sustainability agenda and are also aligned with our targets to offer products that match the evolving consumer preferences. The other ongoing launch I would like to highlight is the Chewy Soft Bites. Consumers are seeking for exciting sensory experience and Chewy Soft Bites certainly reflects this trend. This is another multi-market launch, which builds on product that was already proven consumer concept in the U.K. They have been in the Dutch market for a bit more than a year and are now launched in Denmark, Norway and Sweden. And the 3 bags are already now among the top 10 most sold novelties in Denmark in 2025. My other example of our achievement within Superbrand is related to the pastilles category, which is around 10% of our total sales. In the quarter, we were very successfully launched a limited edition of Läkerol hot pepper pastilles in the Nordic. The target of this limited launch was to bring new consumer both to the brand but also to the category. We more than succeeded as more than 40% of the consumer who brought the products were new to the pastilles category. Linked to our strategic priorities and vision, we updated our long-term financial targets in March this year. With a clear plan, we have stepped up our long-term organic target from 1% to 2% to 3% to 4%. Our long-term adjusted EBIT target will remain at 14%, but our plan shows that we should at least reach 12% by 2027. Historically, our net debt target has been around 2.5. Considering our consistent achievement of this target in recent years, we have set a new net debt target below 1.5. However, should a compelling M&A opportunity arise, we might temporarily exceed it. Last but not least, our dividend policy have moved from a payout without a range of 40% to 60% to above 50% of the profit after taxes. And now a short quarterly update. As previously mentioned, our strong uplift in profitability continues, and I'd like to highlight some key takeaways. We are committed to profitable growth, and this is also reflected in this quarter. We reached 11.9% in EBIT margin, which brings our rolling 12 months profitability to 11.4%. We have now a strong uplift in profitability established, and we are steadily approaching our target of at least 12% by 2027. In this quarter, we delivered stable, profitable and organic sales growth with some regional variations. The Nordic region showed strong organic sales growth, while the other European markets faced some short-term challenges due to slowing inflation and related market dynamics. We continue to grow double digit in the U.S. Inflation continued to slow down in all our European markets and retailers and food industry manufacturers experienced some pressure related to food pricing. At the same time, lower inflation creates opportunities. And one example is that more consumer most likely will return to the chocolate category. With our broad portfolio and our new strategic framework, we have a clear path towards our long-term organic growth target of 3% to 4%. As previously mentioned, our new strategic framework is in place and all our major milestones linked to our operating structure are also achieved. With strategy and most of the structure now in place, we expect to see the result of this work during next year. And now it's finally time for the financial, and I hand over to Frans, who is eager to walk you through both our third quarter and first 9 months financials. Frans Rydén: Thank you, Katarina. So yes, let me take you through some more details here. But again, I would also summarize this as stable growth, strong uplift in profitability, strong cash flow resulting in a strong financial position. So starting with the net sales, as I always do. So in the quarter, we delivered stable, profitable organic sales growth of 1.3%, which brings the year-to-date organic growth to 2.2%. And I'm emphasizing profitable here, and that is key and a key aspect to understand the growth in the quarter, and I will come back to that. Now within this growth, as Katarina highlighted, we had strong growth in the Nordic region, a very strong growth, as a matter of fact, as well as in North America, but that growth was partially offset by the rest of Europe as sales were affected by changing retailer dynamics. Now we don't report sales or growth by market. But in the report towards the back, you have a table there where we do report percent share of total sales by market. Now it is a bit of a blunt tool to understand the detailed growth in the quarter. But if you look at the year-to-date, you can get a view of what I just shared. So if you add up the percentages, you can see that the sales outside of the Nordic region have dropped from accounting for 34% of our total net sales last year, year-to-date Q3 last year to only 31% of our total sales Q3 -- Q3 year-to-date this year. So it's a drop of a couple of percent there, and that's sort of an indication of what I just shared. And that is net of the fact that the strong growth we see in North America, of course, counts in the reporting as outside the Nordic region. Now one of the benefits of our portfolio is not only that we play in various confectionery categories, but also that our sales are across a number of markets. And I would argue that a continued stable profitable growth despite the rest of Europe faring a bit worse lately is an effect of that. Now without going into too much details by market here outside of the Nordic region, I'd like to say that it's well known that the general inflation has put a strain on consumers, and that in turn has affected retailers and the trade dynamics have changed, and there are both societal and political pressures relating to food pricing. And those pressures picked up as some of the commodity cost inflation slowed down over the summer, including a very much publicized cost of cocoa coming down from its historically high peak. So not all costs have come down, of course, and there is a delay when changes start to affect manufacturers. But in this environment, our strategy has remained to drive profitable growth also when it has meant giving up some short-term sales. And the context here is very important, and that context includes that we are still rebuilding margins that we used to have but have lost in the Branded Package segment. And we are rebuilding those margins through growth and scale through cost controls and efficiencies and while continuing to invest in marketing and innovation, but also through fair pricing. Now before moving on to the sales by segment and the profitability, let me also state that the reported sales were affected by currency headwinds as the Swedish krona strengthened. Nonetheless, the sales of SEK 2.177 billion that you see in the left graph on the last column of the left graph, that is our ninth consecutive quarter of sales above SEK 2 billion. And it is actually a step-up in sales of almost SEK 100 million versus quarter 2 this year. And as you recall, quarter 2 really benefited heavily from the Easter phasing. So we are pleased with continuing the upward trajectory in our sales. Separately, note that the structural changes in the quarter is zero, and that is as the divestment of the Nutisal brand took place in June last year and therefore, no longer feature in the quarterly comparator, but of course, it's still there in the year-to-date. So moving on to the sales by segment and showing -- actually, starting with the base of the slide today is the Pick & Mix segment, which grew a strong 9.4% in the quarter. And just, I mean, let your eyes feast over those previous quarters here. I mean it is very, very nice. Now that growth was then partially offset by the branded package shown above, where organic sales were down 1.8%, which is actually quite similar to the average development in the first half of this year. But again, as mentioned, related to the development outside the Nordic region. And this is arguably another angle to the strength of our portfolio that we have this portfolio where we can pick up on shifts in consumer behavior, whether that is at the macro level with consumers increasingly loving our Candyking Pick & Mix offering or at the micro level, allowing us to lean on other categories as we did when the price of cocoa spiked. I think it's also a sign of strength that consumers have continued to buy our product as prices in retail have gone up. And also for Q3, our volumes, they're actually down only about 1%. And if I would exclude chocolate in that, then our volumes are actually flat to growing. Then unpacking the branded package sales a little bit, maybe pun intended there, the growth is affected by our continued optimization of the product portfolio to improve profitability. And I'll come back to that as well. But primarily, this is about us staying firm to our strategy of growing profitably rather than to grow at any expense. And the focus on profit is obviously best reflected when we look at the profit. So let's move on to that. So we're very pleased with the result in the quarter to deliver another uplift of operating profit margin adjusted to 11.9%. That's 110 bps better than last year, and it lifts the year-to-date margin to 11.5% and the rolling 12-month margin, as Katarina mentioned, to 11.4%, and that is the strongest since 2019. 11.9% also makes this quarter the fourth consecutive quarter with a margin above 11%. And we can compare that to the prior 3 years where the average margin was, let's say, in the 10%-ish range, but where no individual quarter actually reached 11%. So when we talk about a permanent uplift in operating profit margin, I think that is a fair representation. Obviously, it's also interesting to note that we are consistently getting closer to our midterm target, which is to reach a margin of at least 12% no later than 2027. I want to break this down a little bit further. So if we look at the key drivers for the improved profitability, they are, number one, carryover effect of fair pricing initiatives that we took last year and a little bit at the start of this year, but it's not new pricing in the quarter. Secondly, it's about cost control and efficiencies. And both segments are favorable here. For Pick & Mix, it's on account of efficiencies in merchandising and fixtures. And on the branded package side, again, the portfolio optimization and net revenue management comes back. And as a comment on that, when we optimize the portfolio, it is about replacing slower-moving, lower-margin products with something better, and that helps not only our business, but also our customers by providing a product that the consumer wants even more of. So it's really a win-win-win situation. And then finally, on cost control and efficiencies, both segments benefit from savings from the change to the organizational structure to benefit our new strategy that Katarina mentioned. Then the volume mix, it is unfavorable. And within there, you do have an unfavorable mix as Pick & Mix grows faster than the Branded Package segment but that is partially offset by a favorable mix within the branded package on account of the focus of profitable growth, as mentioned. You also have the effect of the slightly lower volumes, which is sort of the 1% that I mentioned, but also given lower production, it means that there is less volumes to spread the fixed cost over. Finally, and maybe most importantly, for the long-term outlook, the step-up in profitability is not due to any reduction in the investments behind our Superbrands. And I do want to add that at SEK 259 million, as you see in the last column in the left graph, that is actually our highest ever quarterly profit in Swedish krona. In this strong profit, I can also mention that we -- it doesn't include any reimbursement for costs that we incurred in Q1 2024 as a result of the isolated quality incident at that time due to one of our suppliers. But that process is ongoing, and we now estimate to receive such reimbursement in, let's say, in the next 6 months. So with that, let's step up and look at the profitability by segment and see if that actually reflects what I just said. So over and under, you see that both segments margin improved in the quarter, both over last year for the quarter and also year-to-date. The Pick & Mix segment on the lower half, where quarterly margin again is above 9%, also shows why we, during the Investor Day, raised the margin target for Pick & Mix from the prior 5% to 7% to what we now have now is 7% to 9%. And for the Branded Package segment at the top, we improved the adjusted operating profit to 12.9%. And while that is a good thing, we also know that this margin used to be above 14%, and we will continue this work as outlined in the Investor Day through the focus on our Superbrands in our core market through stepping up in the effectiveness of our marketing and innovation and to continue to recover margins there. That said, let's move to the sales, general and admin. Here, you see that costs are down both in absolute and as a percent of sales. But firstly, the strengthening of the Swedish krona in the quarter, which we earlier saw suppressed our reported sales. It does have the opposite effect when we translate our foreign incurred SG&A to Swedish krona. But then you have the net effect of cost controls, offsetting annual salary increases and other inflation, while again not driven by reduced investments in our Superbrands. Now with respect to the cost control, the quarter does benefit from savings from the restructuring program for the new organization. And here, I can reconfirm what we have shared earlier that we expect to achieve up to 20% of the annualized savings of SEK 60 million to SEK 70 million in the second half of the year and the full effect as of the first quarter next year. On the year-to-date, I want to mention the items affecting comparability there of SEK 52 million in lower cost, and that SEK 52 million is the net effect of the onetime impairment of Nutisal that we took last year when we sold it and then the provision related to the organizational changes this year, which is mostly severance cost. So since the provision this year is smaller than the impairment last year, the items affecting comparability comes out as a favorable variance here. Coming then to our cash flow. As mentioned in quarter 2, our normal seasonal pattern is to tie up cash in the first half and generate cash in the second half. And that holds very much true as we look at quarter 3. So in the quarter, we generated a very healthy SEK 339 million in free cash flow. On a profit after tax of SEK 189 million, so almost double the profit. The key driver of the free cash flow is, of course, the stronger operating result, but then a favorable working capital management. But also as the comparator where last year, the steep inflation meant a much less favorable working capital. Last year in Q3, we actually opened with extra payables on account of purchases to replace raw materials with quality defect, which was again the same thing as this isolated quality issue that I mentioned earlier. Now this year, of course, we don't have that problem. Our CapEx in the quarter at SEK 41 million remains on the lower side. And as presented during the Investor Day, is that we expect investments will start to rise in the future to secure growth and profit. Now in this strong free cash flow, -- could it be just phasing from Q2? Well, the answer is no because actually, on a year-to-date basis, this is the first time ever that we've exceeded SEK 0.5 billion in free cash flow. It's actually strong -- so it's the strongest we've had year-to-date. It's more than 50% higher than year-to-date last year. So obviously, it's not a phasing. Finally, with our strong financial position, we have also paid back SEK 800 million of loans to our credit institutions, and you see that in the graph at the top and to the right, which brings me to my last slide on financial position. So we closed the quarter with a net debt to EBITDA of 1.1. So again, better than our new lower target to be below 1.5 and 1.1 is the same we delivered in Q1 this year. And these 2 quarters are tied for the gold, 1.1 is the lowest ever we've had for Cloetta. And the result is a combination of the strong cash flow that we looked at, resulting in lower net debt, bringing it down to SEK 1.4 billion. That's almost down SEK 0.5 billion versus Q3 last year. And then, of course, the improved earnings that we have now spoken quite a bit about. In quarter 2, leverage went up a bit as we paid dividends. So it's great to see that it's back down again to an all-time low. And actually, on the note of dividend, it is really encouraging that our year-to-date profit after tax of SEK 558 million is already SEK 1.96 per share, and that's only after 3 quarters, mind you. So we're pleased to have created good conditions also with respect to our fourth financial target on dividend in addition to top line growth, the stronger EBIT margin and keeping leverage low. Finally, we have plenty of access to additional unused credit facilities and commercial papers based on the new credit facilities entered into during the quarter and as shared earlier in the press release. So access to cash, together with our cash on hand totaled about SEK 2.5 billion as we closed the quarter. So for yet one more quarter, I conclude that our financial position is very strong. And with that, over to you, Laura. Laura Lindholm: Thank you very much, Frans, and thank you very much, Katarina. We already have questions in the chat, but we will start with the telephone lines. [ Valentina ] over to you and for our first caller. Operator: [Operator Instructions] The first question comes from Adrian Elmlund from Nordea. Adrian Elmlund: Adrian here from Nordea. Can you hear me? Katarina Tell: Yes. Frans Rydén: Yes. Adrian Elmlund: Very good. Pleased to see the results. I have a couple of questions, 3 of them, I think. So first off, [ Berry Kelevot ] noted this morning that they expected some mid-single-digit percentage decline of their sales and volumes in cocoa products in the upcoming financial year. So this is, as you know, due to the continued pressure of high cocoa prices. But kind of my question here to you is, do you believe that the market has priced in the inflated cocoa prices, meaning basically what price per tonne do you think is priced in? Looking at the chart now, I think that we're seeing some USD 6,500 per tonne at the moment. Just want to see your reflections on that during the overall market. Frans Rydén: Yes. So I'm just thinking how to reflect this. I think it's -- I think the way that we like to think about this is that, obviously, when costs are coming down, which they have, at least for the cocoa, but not all commodities are down. Sugar, for example, is actually up. And cocoa is not really cheap based on historical levels. But when they're coming down, that's a good thing. It means that over time, the cost for the consumer will be lower, they'll come back into the category. So we think that's a very good thing. Now at the same time, it doesn't happen immediately. It depends on how much inventory you have, what kind of contracts you have in place, how the rest of your business looks. And of course, we look at the competitors and we -- when they publish their results, we can see what is happening in their business. But I don't really want to comment on their businesses instead focus on ours. And ours is simply the following that, that we will continue to execute our fair pricing, which means that when costs go up, we take pricing. And when they come down, we roll back. But of course, it has to be done in a responsible manner as well together with the retailers. And that, I think, over time, will serve everyone really well. And I think what we will see is that consumers that maybe have moved into, let's say, chocolate muffins and similar products when cocoa was very expensive and they've given up on their chocolate tablets, they'll come back into the confectionery category. But exactly how much has been priced in, I think that varies really between the different players in the market. Adrian Elmlund: Okay. A second question here. I want to dig a bit into the margin contribution here between the Nordics and the rest of Europe. Kind of what I'm looking here is trying to understand how much of the margin uplift in the quarter is thanks to a stronger geographical mix, contract your own margin enhancing activities or sort of product mix? Frans Rydén: Okay. Fair enough. So maybe given that we don't actually publish margins by market, but I think what I could help you here is to start with that. So we are Northern Europe's leading confectionery company. It's not just a slogan. We have very strong relationships with our customers that go back decades and decades, maybe hundreds of years in some cases. And our position with the consumers is unparalleled, I would argue, for the products that we play in. So we're very, very strong there. Whereas in the rest of Europe, we're more of a challenger, which is where the opportunity comes from. Here's what we can make something different out of our business. But obviously, we are much stronger in the Nordic regions than before. Now I think if you think about the 2 big markets there like Germany and U.K., I think it's fair to say that Germany is perceived as a market with a lot of strong discount retailers and that you have to work hard for your margins there. But for the U.K. we have in the past actually reported a little bit around the profitability there. I think it was as late as Q2 this year and certainly in last year as well, where we said that we had some negative taxable results in the U.K. And as a result, we had deferred tax provisions that we chose not to recognize. So we basically have said that the U.K. result is not good. So if you think about the U.K. having negative taxable results and the fact that Germany is a tough market, you could see how there is a favorable mix when the Nordic European countries are growing faster. But beyond that, I can't share you a number today. Adrian Elmlund: That really helps. Kind of a follow-up question to that, if I may. like how confident are you that the sales pressure that you're now seeing outside the Nordics, as you stated in the CEO words, are short term? And why are you not seeing similar patterns in the Nordics? Do you think that can happen? Katarina Tell: Yes. I can answer this one. So as mentioned also in the CEO word is, of course, we have -- we launched our new strategy during the spring. We have created a structure, done some reorganization. And now we are -- the strategy are set. The organizational setup or structure are more or less done. So we expect to see the result of this next year. And as you remember, we have to grow with the Superbrands, and then we have to grow beyond core markets. And here, we see still some opportunities where we believe we will have growth in U.K., in Germany, in North America. And then we also have the third strategic pillar, and that is to grow through innovation and excel in marketing. We believe in the strategies, and we believe also we have the structure in place to deliver on the strategies for next year, if that answers your questions. Adrian Elmlund: Okay. I have one final question. Sorry for taking multiple questions here. But the final one. Regarding the pilot stores here in the U.S., you said that you're going to give us some news before the year-end. But could you share anything with regards to how these insights into the consumer preferences, as you stated, have -- like what feedback have you gotten? It basically implies at least that you've gotten some positive feedback. Katarina Tell: So it's very much about learning how is the best mix, how are the consumers' behavior in the store and so on. And this is, of course, important when you roll out a concept to have those learnings going forward. Laura Lindholm: Adrian and Valentina, it seems we have no further questions from the lines. Could you confirm that? Operator: We have no more questions from the phone. Laura Lindholm: Thank you very much. Then we move over to the chat. Speaking of the U.S., we have a question from Danske Bank. The U.S. market size, how large is the U.S. as a percentage of your total sales? Frans Rydén: So we actually shared for North America is what we've shared, and I think we'll stay with that when we have the Investor Day. So in 2024, it was about 3% of our total sales that we had direct sales in there. Of course, products tends also to enter maybe in a more indirect way to the U.S. market, but we have 3% sales. And since then, as you know, we've been growing in double-digit numbers. So simply put, should be north of 3% sales. Laura Lindholm: Thank you, Frans. And then a second question also from Danske Bank about raw material costs and margin outlook. With raw material like sugar and cocoa down year-to-date, how do you see this impacting your cost and sales in 2026 on this, all else equal, do you expect margins to be stronger or weaker going forward? Frans Rydén: Well, so our midterm target is to reach at least 12% by 2027, and we're not there yet, 11.4%. So obviously, we are intent to improve on the margins. And as I mentioned, on the Branded Package segment, we used to be above 14%. So it's -- this is not greed. This is actually recovering the margins that we have lost, and we will do that by continuing to invest behind our brands and in innovation. And it's a critical part of the new strategy is about stepping up our marketing innovation. I think it's going to be a win-win-win again for us, for our customers and for the consumer. So the margins will improve. Then how does the raw material and pricing go into this? So we'll stay with what we said before here, which is that we will price for the cost. And of course, in the past, we've also lowered the prices at times when they have come down, but we have to look at the whole portfolio, and we have to also look at the variance versus when we took pricing the last time in that market because the pricing is not -- let's say, it's not always exactly going at the same time in each market. It depends on the contracts. So we will price for cost. Laura Lindholm: Very good. And then the next question also from Danske Bank is about the IKEA global partnership. How has your global partnership with IKEA developed? Do you think which refers to the quarter? Katarina Tell: Yes. So the cooperation progress according to plan. So the last year, we had an agreement with IKEA in Sweden, but it was only limited to IKEA Sweden. And this year, we signed a global contract with IKEA. I said, it's progressing according to plan. And in the next quarterly release, we will give you a more detailed update about how it's progressing with IKEA. Laura Lindholm: Thank you, Katarina. And then also 2 more from Danske Bank. First one is about the M&A pipeline. How does your acquisition pipeline look like? Are there any companies you are currently in discussion with? Frans Rydén: Number one, [ Emmanuel ] thank you very much for asking a lot of questions. It's a lot more fun. But now unfortunately, obviously, we can't get into any specifics. But I think the most important aspect here, and Katarina emphasized it in the beginning as well, which is that M&A for us is an accelerator. We can deliver these financial targets without an M&A. So we're not going to jump into something unless it really makes business sense, and it helps drive the strategy forward. So -- but of course, we are open to it, and we're being approached and we're looking at things, but we're not going to just jump on to something. Laura Lindholm: Very good. And then the final one from Danske Bank. On Pick & Mix, how much is volume growth versus price? Any particular market you want to highlight during Q3? Frans Rydén: So what we've said in the past is that we don't separate price from other things. And part of the reason for that is -- and Pick & Mix is a great example because the pricing model will look different between customers depending on what type of assortment they have contracted with us to carry. For example, if there's more chocolate or less chocolate, it has to do with how often they want our merchandisers to refill and clean the shelves, if this should happen over weekends to have continued strong sales on Saturdays, not only on Fridays and whatever -- like there's a very complex setup. And if I would give you a price number, then every customer who had seen a lower price increase than that will be happy and they will be silent. But everyone who thought that they got a higher price increase than that, they will be calling us and complaining. So it's not really a fair number to give. I think what I can say, however, is that Pick & Mix, and we said this before, is clearly on consumer trend. It's about individualization. It's about plastic free, it's in-store, arguably entertainment. Consumers spend a lot of time in front of Pick & Mix shelves when they pick their fruit and their meat, where cereals and stuff, you just throw that into the cart when you're shopping. So it is a fantastic segment of confectionery and there is volume growth. There's real volume growth in there. Laura Lindholm: Thank you, Frans, and thank you, Emmanuel, at Danske Bank. We move over to DNB Carnegie. How do you see the impact from the lower cocoa prices in terms of lag or total impact going forward? Frans Rydén: Yes. So again, so obviously, when we are having conversations with our customers, we do that based on the world market prices. But then you have the different thing, which is how long time does it take to get the pricing, how much inventories do you hold, what kind of -- what have you contracted? And I would assume it's the same thing for all our other peer companies out there. And so this will vary. What we will do is we will continue to build our margins, and we will continue to execute fair pricing. Laura Lindholm: Thank you very much. Frans, I think there's another question on Pick & Mix, but we, I think, have answered that already previously through to the Danske Bank question. Good. Operator, any last questions from the telephone lines? Operator: No more questions from the phone. Laura Lindholm: Thank you. That concludes our event. And we take, of course, the opportunity to remind everyone of our upcoming IR events. Our next report, the Q4 report is published on the 4th of February, and that's followed by an investor lunch in Stockholm arranged by Danske Bank on the 5th, the following day. But before that, quite a lot is happening. Next week, we attend the Berenberg Pan-European Discovery Conference, U.S.A. and then also after that, have a planned visit to Ljungsbro in Sweden together with Danske Bank. It's time to conclude. And before we meet again, we, of course, hope that you get the chance to enjoy our wide portfolio of confectionery products during many joyful occasions. Thank you for today. Frans Rydén: Thank you. Bye-bye. Laura Lindholm: Thank you. Bye-bye.
Operator: Welcome to the Medicover Q3 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, John Stubbington; and CFO, Anand Patel. Please go ahead. John Stubbington: Good morning, everybody. John here. Welcome to our Q3 report. And I'd like to start with thanking all of our people for producing a really good result. So thank you for all your hard work. Q1, I described as strong. Q2, I described as stronger. I think Q3, what we're seeing here is a really good, solid, consistent and healthy performance. If you look on the right-hand side, you can see growth is a good performance at 12.1%, especially when you consider that Hungary no longer is in these numbers. So that's quite a pleasing position for us. If you look at EBITDA, it's very respectable increase of 32%, which is really, really positive for us. And you can see that coming through with the adjusted margin of 17.2%. Moving up by 14.6% is really, really solid and quite an impressive performance by the team. We'll talk about that a little bit later on because there's some other sort of factors that are pushing that forward and pushing that back, and we'll try and give you a bit more context on that. Operating cash flows, again, very healthy at EUR 98.8 million, a positive movement of 36.7%, which is, again, really pleasing for us and good to see is what we need. So that's really, really good. And as predicted, we talked about our leverage that as we did the acquisitions that, that would come down. And we see that, that is coming down despite the fact that we did our 2 biggest deals ever in Q2 and which has been very positive for us. So Healthcare Services being driven by high organic growth and the improvements coming through the fact that we've put so much extra capacity on in this area, the utilization of the assets is starting to be seen. When you start, you put all the staff on, you put all the facilities on, you're ready to take customers. But it takes time for customers to come. And more importantly, it takes time for customers to come back, and we did that in many different places across the world. And Diagnostic Services is really, really pleasing to see their performance. They've had quite a lot of headwinds that have affected them and they're navigating them really well, and I'm really pleased with the team to be able to see them do that. And I note to the bottom about our greenhouse gas emissions that we've had those validated, which is a good part of that journey. So if we forward -- and if we move forward and look at our revenue positions, basically, if you look at the bars and look at the percentages, really good solid growth there, 19.5%, 19.8%, 12.1%, which looks a little bit lower. But again, we need to take into consideration Hungary and the fact that we've got a bigger base. So we're really pleased with that progression, and we're really pleased, most importantly, with the consistency of that. If we look at our revenue by country, there's some slight mix change here. Some of this, again, driven by Hungary. I seem to be saying Hungary a lot and a little bit driven by currency from an Indian perspective. And then revenue by payer, relatively consistent, a little bit of a change in terms of the growth rates. The consumer segment, 58% is a really important part of what we do. And of course, at times with consumers, you'll find people being very active, times being a little bit cautious, and we're watching those particular conditions. As we go to Healthcare Services, Healthcare Services revenue growth of 9.6%, feels really strange to be able to talk about Healthcare Services and see single rather than double digit. But of course, if you adjust that for Hungary, we go back up to 12.4%, which I think is good, steady growth. Revenues at EUR 406.5 million, which is very respectable revenue by country. It's pretty pleasing across the board that you see Romania, 16%, Poland at 17% and India, again, affected by currency. So it looks a little bit different. Strong development in terms of sport and wellness and in our ambulatory clinics in Poland, which contributed to the drive of the revenue in fee-for-service. And we've got good progression in terms of the public revenues that we've got in Romania and some of the Polish hospitals. We launched a new hospital in Hyderabad. And of course, as we launch new capacity, that has an impact in terms of the profitability. Again, we're investing in the staff. We're investing in the facility. We're putting out the capacity before the customers come. And whilst the growth in India is a little bit lower than some people may have expected at 8.8% in local currency, some of this is driven by a conscious change in terms of the way that we're steering the business in terms of having less governmental pay, which puts that down. But our underlying trend in India in terms of doctor recruitment is really, really strong. And that's one of the reasons why we've decided to pull forward the planned hospital for next year into this year because we feel that we've got good momentum in terms of the recruitment. We can take advantage of that, and we can get faster growth. So we'll see that come through in Q4. And again, that's 2 new big hospitals that will go on to the -- on to our network and having those through will have an impact in terms of a little bit of drain on our profitability and margins. One word of caution, we talked about the strong margin. Part of that is created by our funded business where there's been a slower phasing of recruitment of doctors. That happens from time to time. There's nothing that is particularly unusual for us, but we will catch up on that. That puts a little bit of extra power into the margin, which will adjust as we go through Q1 -- Q4 and Q1. And that's one of the reasons why we've talked through that, that might happen over the next coming quarters. Membership is okay. Membership is pretty good. If we look at it from a -- without having Hungary involved, we've got growth of 2%. But at the same time, we want to balance this by sharing with you for the first time the number of relationships we have because you can see our fee-for-service line is much higher now in terms of its percentage of our business. And it's really about relationships as well as what being about memberships for us because if we can establish a relationship, we get people that come to us sometimes funded, sometimes through fee-for-service and sometimes through paying out of pocket. And you've got a mix here of different relationships being funded NFZ, some of our benefit customers for loyalty, et cetera. And we'll continue to publish this number so that you can see how that progresses. This doesn't affect this quarter, but you can see that there was a strike in Andhra Pradesh in India in October. That meant that all the hospitals in that location were not taking inpatient stays for governmental pay. Obviously, that will have a slight effect on us in the fourth quarter, but was probably needed to be able to make sure that the government did pay some of their bills, which can take quite a bit of time to settle. All the indicators on the right-hand side from our Healthcare Services are pretty good and a positive progression from the team. So thank you very much. Diagnostic Services, they continued with their strong momentum across the business. And as I say, I'm really, really pleased with the team. Revenue increased by 17.8%, which is pretty impressive. So well done to them. Organic growth at 12.4%, which is still solid and really good for this segment. Strong demand from fee-for-service, which is very positive for us because that's the big part of our revenue stream. Germany, which everybody has been concerned about, worried about and watching with a close eye. We continue to watch it with a close eye, but the team have navigated that really, really well, and we're seeing increasing volumes there, which is helping us adjust as well as our initiatives to be able to drive efficiency. And overall, we've got an increase in tests, which, again, is quite impressive, and that's really positive for us. So revenue, EUR 191.7 million, very pleasing. If you look at the progression by country, there's strong percentage growth there in each of the countries. So congratulations to the team. And I know Germany is 5%. Considering the reform, I think that's pretty good for them. Margin, great to see some improvement here. We've got operational leverage. We'll continue to get that operational leverage if we continue with the lab growth, very solid number of tests. And again, really pleasing strong and good growth in the fee-for-service segment. You can see at 24%. So overall, pretty good. I'll hand over now to Anand, who will talk you through some of the details of the financials. Anand Patel: Thank you, John. Good morning, everyone. So pleased to report on another good quarter for Medicover building on the momentum and themes of prior quarters. So as a reminder of those themes, one, we've got double-digit organic revenue growth again; two, margin expansion across all profit measures; three, strong and consistent performance across both business units. We've mentioned previously from John that we've normalized leverage back down to 3.2, so in line with the guidance we've given in prior quarters. And in the quarter, we've also seen an improvement in our ROIC numbers and in our cash. In terms of overall, so from an organic growth perspective, so I'll talk about organic growth to kind of strip out the Hungary effect, and Hungary will obviously impact our numbers in terms of year-on-year growth overall for the next 3 quarters. So organic revenue growth was 12.4%, which is very pleasing. In terms of EBIT, particularly impressed and pleased with that number internally. So we've got EBIT of EUR 42.8 million with a margin of 7.2%, a lot higher than last year. You'll remember in Q3 last year, we did some impairments. But actually, even if you kind of do a like-for-like comparison, putting back in the impairments for want of a better phrase, we still got healthy margin accretion across the EBIT lines. So very pleased with that, and that actually flows through to our EPS pretty well. From an EBITDA perspective, growing faster than revenues, as you can imagine, due to the margin expansion of 260 basis points. So EBITDA at EUR 98.2 million. And finally, as I mentioned just previously, the earnings per share was very strong in the quarter as well. Again, we've seen consistent growth in earnings per share during the year, and we further did that in Q3 as well. In terms of Healthcare, again, 12.4% organic growth, price driving 7.5%, but still strong volume growth as well as you can see. EBITDAaL growth I'll talk about EUR 50.5 million, which is up and margin rate is up 260 basis points year-on-year. I guess the only other thing I'll talk about on this slide, particularly is the loss from the immature hospitals. So you can see that actually the loss in Q3 is EUR 2.7 million. That is the same charge as we had in Q2. But we've seen really healthy underlying performance in the like-for-like hospitals. What has happened in the quarter is that we've opened a new hospital in India, which is additive in terms of making a loss. But actually, there's been a really strong improvement in the flow and profitability build of the other hospitals. And finally, going back to what John's point was with regards to utilizing our capacity, you can see that flowing through in terms of the medical cost ratios coming down as well. In terms of Diagnostics, I think John touched on it, so really pleasing performance again. So again, organic growth of 12.4%. Here, price accounts for 3%. And as you know, due to the German reform, we've got price reductions in Germany. But actually, overall, even in Germany and across the whole of Diagnostics, we've got strong volume growth is what I'd say. In terms of the other measures, I'd say EBIT growth, again, pretty strong in Germany and in total DS. So we grew to EUR 20.6 million with strong margin rate accretion. And the pleasing thing to note in Germany, because Germany is roughly 50% of DS, that actually, as I said, revenues were up, volumes were up despite the margin contraction -- sorry, the price reduction and overall margins in Germany were up year-on-year as well. So with all the challenges, I think the team are doing a really good job in managing that. In terms of other metrics, I've mentioned leverage. We'll talk about guidance for the full year on the next slide. Tax rate is in line with prior expectations. So previously, we've said our ETR will be between 26% and 30%, and we remain in line with that guidance. Strong net cash flow driven by the improvement in margins flowing through into the cash in our business. So we're pleased about that with a really good performance in free recurring cash flow, which I'll talk about in the next slide. But actually, in the quarter, recurring cash flow was 9.4% of revenue, which is a lot higher than last year. And finally, in terms of ROIC, as you can see, 12.3%. You'll remember at year-end '24, we reported a 6.7% number. So really strong improvement through the year. In terms of CapEx, you can see in the quarter, we had spend of EUR 46.3 million. That is 7.8% of revenues. There's a bit of a catch-up you would have seen in prior quarters, but the numbers were lower. So there's a bit of catch-up in Q3. In terms of full year guidance just to manage now, we kind of say that the number will be between 6.5% to 7%, but broadly in line with what we've said previously. We have mentioned that actually there is kind of clear blue water between our free cash flow as we improve that versus our organic growth investment. So that's pleasing to see and hopefully we'll build on that in the future. In terms of the split of CapEx spend, so you can see in the quarter, the lion's share of the CapEx spend was spent in Healthcare Services. We have in the hospital, there's some land. And overall, the medical space we've got at the end of the quarter is 988,000 square meters. And the final slide from me. So in terms of guidance for the full year and our targets that we mentioned previously, our position is unchanged. So obviously, with the quarter to go, I'd hope it would be. So we've previously said we're going to beat the target, and we continue to say we're going to do so. So as a reminder, we will beat the organic growth revenue numbers of EUR 2.2 billion, the adjusted organic EBITDA of EUR 350 million. We will have leverage below 3.5x and you have seen that we're kind of guiding to, that's what we were 3.2x at the end of Q3, and we'll be below 3.5x at the end of the year. And in the bottom corner, you can see the metrics that we gave in terms of EBIT and adjusted EBITDA, and we'll beat those as well. So in summary for me, a really good quarter, and I'll hand back to John. John Stubbington: Thanks, Anand. So key takeaways. We continue to deliver solid organic growth driven by both divisions, which is really, really good. We've got consistent margin expansion driven by the improved utilization. Customers are coming to users. Customers are coming back. On top of that, we have got a number of efficiency initiatives that are really needed in health care to be able to manage the way that people want to consume more. The maturity in our network can be seen in the hospitals. The fact that we're putting 1 or 2 more on, I think that if you look back at the average losses per hospital, it will probably help you model that as you go forward. Our leverage has normalized, so as promised, as committed to and starting to come back into our guidance. There's some mild headwinds that we're seeing. There's nothing unusual in those. We're commenting on them so that you're aware of them, and we fully expect to be able to navigate through. Thank you very much. Operator: [Operator Instructions] The next question comes from Julia Angeli Strand from Handelsbanken. Julia Strand: Can you hear me? John Stubbington: Yes. Julia Strand: Yes. So my first question relates to India. So what made you change the mix to a more private segment? Is this just to reflect changed consumer behavior? Or is this strike related? John Stubbington: No. I think that over the course of our discussions as we've developed things, we've always said that we wanted to get more cash, more insurance and start to manage some of the ROCE to appropriate kind of levels. Everybody knows if you operate in India, the payment cycle from the governmental pay takes a little bit of time. We will -- it's an important part of Indian society to be able to provide these services. So we will continue to provide these services. It's just that as we grow our network and we grow our doctor capacity, we have the ability to change that mix while still being good providers of that service. And we're just seeing the beginnings of that starting to flow through. And that's just affected the mix and therefore, affected the growth. I mean we could accelerate growth very fast by doing much more ROCE. But again, that would affect our cash flow. So it's a conscious decision as we move forward with our plans to accelerate. Julia Strand: Okay. That's clear. And then on the strike, where do you -- do you think that this strike could come back? Or has this been resolved? John Stubbington: This is not unusual in terms of the health care community taking action because the government payment cycle can be infrequent and can be lengthy. And sometimes it goes too far. When it goes too far, the people take action. I think we've seen this once before in our time there. So it's not something that happens particularly frequently. This was in one state. So we should point out to one state. I can't remember whether I stated it was in one state, but it's only in one state, Andhra and now is resolved in terms of they're no longer on strike, but it was there through October. So we'll see that being a little bit of a setback for us. It shouldn't be massive, massive, massive, but it's there. Julia Strand: Okay. Understood. And then just lastly, before I get back into the queue. The EBITDA loss in Q4, should that stay on the same level as in this quarter? Or should it be higher considering you're doing more openings? John Stubbington: Yes, it's going to be higher. You're talking about -- currently, you see an opening in Q3, but of course, you haven't got a full quarter of that opening in Q3. And then we're going to add on another hospital. And when you put the hospital on, you have a period where you actually recruited the staff before you've even opened the hospital. So you'll see some of those expenses start to come through for the next hospital as well as a full maturity of the new hospital. And whilst the -- we fully expect the other hospitals to do well, I would be surprised if they cover that off. You've now got a good history in terms of this particular line where we shared quite a bit of data. I would imagine that from a modeling perspective, you should be able to put that through your numbers in terms of averages because I think it would be appropriate to use that if you want to guide it. Operator: The next question comes from Mattias Vadsten from SEB. Mattias Vadsten: I have a few. So first one, you talked about early indications of a more cautious sort of consumer behavior. I think this needs to be captured a little bit. If you could provide the details, what you're seeing? And more generally in the business, would you say sort of double-digit organic sales growth is still doable as we move into 2026 and the general trajectory for Medicover? That's the first one. John Stubbington: Yes. I mean we are a little bit more cautious on the consumer line. That's only because we're seeing a bit of consumer behavior in some of our product lines, which is not dramatic, but there's enough there for us to be able to feel that we should share that with you. It's not unusual for us. So we're not sitting here saying we're seeing something that's a massive change that we need to adjust to, but we always have to adapt. So when we see these things, we have to adapt our pricing. We have to adapt our promotions. We have to adapt the way that we push things through. So we'll probably see us dealing with that over the course of Q4, Q1. And as we move longer term, we fully expect that a healthier -- the normal kind of Medicover cycle starts to come through. You asked about double digit. It'd be interesting for us to see, but we'll be around that mark, I would have thought in terms of the performance. We've got the Hungary adjustment, which does affect us whether we like it or not and 1 or 2 other things. So we'll have to wait and see what happens. Mattias Vadsten: And the next one relates to Germany. So long question short, do you see less competition in that country now? Or is this sort of yet to materialize except that there are fewer actors in the market? John Stubbington: I've said all the time about reform that there's good and bad things about reform. Reform kind of like drives you to do more efficiency, and we've done all that kind of thing and reform cuts off the tail. And as it cuts off the tail, bigger providers are there. I still think it's too early in the cycle to be able to see all of that. We're in the third quarter of this reform. But what you are seeing is an increasing volume. If you're seeing those increasing volumes, I think that kind of indicates the shift in the market conditions that we kind of expected to happen related to what you're intimating. But I think in terms of doing an analysis that demonstrates statistically that, that has happened, it's a bit too early. Mattias Vadsten: And jumping on to my next question relating to margins. If we look on the lease adjusted EBITDA, EBITDA margin, it's up by a significant 2.1 percentage point in the first 9 months, 2025. I appreciate this is not the nature of the business to be able to perform each year. So I fully understand it will moderate. I'm just after what you mean by this comment. And then if we look into 2026, just throwing out something like 0.5 percentage point margin expansion. Is this something that is doable? I mean I appreciate that this rate that you've shown this year is not possible to sustain. So what do you mean by those comments? Anand Patel: I'll start and I'll let John finish. So look, I think what we have seen consistently this year is margin expansion, let's say, in excess of 150 basis points per quarter. Yes. So we kind of would assume that's a sensible number to aspire to in Q4 at the very least, I guess, in terms of the short term. So we saw no underlying changes in the momentum of those themes. There's still capacity that we can fill in terms of the space. So John said previously, I've said previously, there's still clear headroom in terms of us upping our utilization levels, and we can still maximize those facilities. I guess in the short term, it depends on your take on the moderation numbers. So John is talking about a strike in India that's kind of happened in Q4. That will moderate revenues naturally, which means the flow-through in Q4 won't be as much as it was before and a slight change potentially in behavior from a consumer perspective. So does that mean that 0.5% margin rate accretion in 2026 is a sensible number? I think it's probably a little bit more, but we're just being cautious in terms of we see kind of a little bit more headwinds, I guess, in the short term rather than in the longer term over 2026. We've still got ample opportunity to grow our margins is what I'd say. John Stubbington: Yes. To add that, I don't think that we -- in terms of talking about the future, we don't give future guidance other than what we've given. Our underlying model is still strong. We're just seeing 1 or 2 little signs, mild headwinds and little operational things that we need to sort out. I don't think that affects our underlying -- the underlying strength of our overall model. And one of the great things about Medicover in terms of our model is our diversity. And because of our diversity, we can do things like India and move everything on. So the business is sound. Mattias Vadsten: I think that is a very good answer. I will probably squeeze in one last one. I mean price health slightly less in Q3 vis-a-vis Q2. This is a development we have expected for some time. Will this development continue in Q4 and into 2026 with less price contribution? John Stubbington: Yes, I think we've got a good price volume mix in our divisions. It's slightly different at the moment in the current cycle. There's higher price in Healthcare Services and lower price in Diagnostics, higher volumes in Diagnostics, lower volumes versus Diagnostics and Healthcare services. That's kind of a natural cycles that change over periods of time. We've had, as you know, going back in the short-term history, quite a lot of inflationary factors that have been higher than a normal kind of cycle. And I think all you're seeing is that those inflationary factors are coming down. So you've seen that in the price impact. And it's health care. Health care has a hell of a lot of people that want health care, and there's a limited amount of people that can deliver health care. And those limited amount of people will always be saying, well, I'm adding value to society. You need to give me to pay me what I'm worth and those pressures will always be there. So I would expect that we will come down and then those pressures will hit again, and we'll start to adjust as appropriate. You know as a team, our position when it comes to pricing. We feel that we're really good value for customers. We believe that we deliver a really good service considering the prices that people pay. And to be able to do that consistently, we have to be able to adjust our pricing so that the medical profession and the people delivering this get an appropriate pay to be able to stay with us to deliver this for the long term consistently. Operator: The next question comes from Kristofer Liljeberg from Carnegie. Kristofer Liljeberg-Svensson: Two questions, I think. Coming back to your comment here about margins in the Q4. If I phrase it like this, you have the phasing effects, hospital opening strike, et cetera. So maybe if you could give us some more help how much lower margin we should assume in Q4 than third quarter? Do you think it will be more like what you saw in Q1 or somewhere between Q1 and what you have had in the last 2 quarters? Anand Patel: Yes. I think Q3 is clearly an outlier, I would say. Sometimes you have a great quarter. I think somewhere between Q1 and Q2 are probably sensible in terms of an assumption in terms of margin rate accretion year-on-year for Q4. Kristofer Liljeberg-Svensson: Great. And also coming back to a previous question here, growth outlook for next year. I noticed that you mentioned Hungary being a negative impact, of course. But if we were to adjust for that, would that make you more confident to be able growing double digits in 2026 over 2025? John Stubbington: Yes. I think we're not sitting here sending a big message that's saying our business has fundamentally changed. We -- I've sent a message, which is just saying over the next couple of quarters, there's a few things that we just need to navigate. But I don't think that affects our long-term position. So we're a growth company. Everybody knows we're a growth company. We're a much bigger company now, of course. So those percentages are tougher to get. But I would fully expect us to over that period, be in a zone that people are used to. Anand Patel: Yes. So just to add to that, we've always said we're very focused on organic growth, and that clearly excludes acquisitions, that clearly excludes disposals. So if you look at the organic growth numbers, which excludes Hungary for Q3, the numbers are 12.4%. And we'll carry on reporting against our organic growth numbers. And I think rather than look at the total growth, which is a bit muted in the month, as John says, nearly 10%, 9.6% for Healthcare Services, the organic growth number is more pertinent. That's all we're saying. Kristofer Liljeberg-Svensson: Okay. Good. Could I -- just one more. As CapEx investments are going up here a bit again, how should we think about depreciation as a percentage of sales? It has trended down somewhat from the peak 2 years ago. Will it continue down or even out at current levels? Anand Patel: Yes. So look, I'm not going to talk about next year's depreciation charge because at some stage, we'll give guidance for 2026 CapEx, which we're not going to do today. I think I mentioned earlier that our CapEx this year will be 6.5% to 7%. So there'll be some spend in Q4. You can do the math on that. But there will be minimal flow-through from that. I would thought it's just a timing effect from '25 into '26, and we'll talk about next year when we're ready to talk about 2026 and future targets. Operator: The next question comes from Kane Slutzkin from Deutsche Bank. Kane Slutzkin: Just on target, just wondering the sort of '23 to '25 target is obviously quite stale now. I'm just wondering, will you be unveiling sort of fresh midterm targets maybe for '26 to '28 when you report year-end? And then just can you provide some color on the acquired businesses, how they have been performing and the synergies you may or may not be getting there? John Stubbington: Yes. I mean we've never -- we've been pretty consistent about guidance saying that we want to hit the numbers that we need to hit first. Once we've done that, we'll make the decisions about when and where we issue the new guidance, but we're fully aware that everybody expects us to do so. So we hit the number and then we'll share. So that's the same as we said in the past 2 quarters, I think. And then in the acquired business is very positive for us, a little bit slower with SYNLAB because it's a bit more of a difficult integration that you have to do, whereas the Healthcare Services side in terms of CityFit it's almost immediate. So the fact that people were going to -- going to their gym locations and now going to the same locations that we own the business makes the synergy come almost from day 1. So that's performing really, really well. SYNLAB, there's a number of countries there. So as you would expect, as you're doing different things in different countries, some of them have gone really, really well. Some of them take a little bit more time. But the maturity of that will start to come through. There's nothing that we're sitting here saying that is a negative from these businesses perspective. It's a positive contribution to our model and the team are doing well in terms of pushing forward to get the synergies that we planned with just a slight delay. Anand Patel: I guess the only thing I'd add to that, if you look in the Q3 report, what we have done somewhere at the back is split out the revenue and the net profit from the acquisitions group together. And what you can see is actually if you calculate the margin rate, which I'm not going to do for you, it's accretive versus company levels, which we said it would be anyway. So we're pleased. I said there's always more we can do. We haven't split out in the report, just to be very clear. But you can see in the pack that yes, it's contributing on a healthy basis to our business and is margin accretive. Kane Slutzkin: Great. Sorry, just one last one. Could you just remind us where you are on the potential listing of the Indian business? Is that still in play? John Stubbington: Yes. I mean we've -- I mean, your questions are going to get more and more intense as we go through each quarter from this point forward. We -- December 12, I think, announced that we would explore this. At that stage, we said it would take up to 2 years. Obviously, we're approaching the anniversary of December 12. So people will be expecting more. It's one of those things that it takes a bit of time in India. We're doing our prep work. The team are doing well on that, pushing forward. Now we need the performance to accelerate a bit. We're at the business end of that. So we've had a few setbacks, as everybody knows as we've gone through the year. But as I said earlier, our underlying trend of recruitment in India has been strong, and that's one of the reasons why we opened Sangeeth. It's one of the -- sorry, one of the reasons we opened the hospital in Q3. One of the reasons why we have pushed forward opening another hospital into Q4, which originally was planned for 2026, which again, as a consequence of that, will create some losses in our Q4. But we think it's the right thing to do because we've got some good momentum. So strike doesn't really help us again. Currency doesn't really help us again in terms of positions, but nothing has changed from our perspective. As soon as it does, we will inform you. Operator: The next question comes from Bram Buring from Wood. Bram Buring: Most of my questions have been answered, but I wanted to ask about admin costs in the quarter. I was a bit surprised to see that they were down Q-on-Q. Is that -- is there something specific behind that? Or should we continue to expect admin costs to be closer to this 3Q level than what we've seen more recently? Anand Patel: No, no, I would assume it's a seasonality thing. There's nothing specific. We did admin costs in Q3 per se, I would say. So I would look at the 9-month number and assume that's a better trend for the full year. Operator: The next question comes from [ Bola Dimmer from SurePath ]. Unknown Analyst: Two questions on India, please. You mentioned you're changing the share of this private pay in India in your revenue. Can you tell us what is your current revenue split between private pay and public pay in India? And what is your target split in this regard? Anand Patel: Yes. So look, we don't disclose that information. I think the one thing I would say is that the reason -- one of the reasons for Medicover being totally successful in the past and present is due to the diversity that John mentioned. So it's good to have an even split of fee-for-service versus insured versus public pay. So that means that when one area has a downturn, then the other kind of has an upturn normally. So we don't guide on that, but we're building the right split for us to make sure that we can not be subject to any specific area. Unknown Analyst: Okay. Also, when I look at your peers, which operate in the similar regions in India like Aster DM or KIMS, their revenue per bed is twice higher than yours. Could you share, I mean, your thoughts on the reason behind this big gap? Is it just the question of maturity effect or location or actually the split between public and private? John Stubbington: Well, you've kind of answered your own question, which is really good in terms of there is maturity. So you tick on maturity and there is location that takes into a factor. I mean, if you go back in time, I think we have shared and said that one of the approaches that we've got for India is to try and do more of our operations in Tier 1 cities and more of our operations in larger hospitals. If you're in Tier 1 and if you're in larger hospitals, you will find that the types of things that you can do are more comprehensive and the pricing of being in a Tier 1 city versus 2 and 3 is very, very different. And one of the things that people should find attractive about us as we go through the IPO is the fact that we're behind, and therefore, that's going to mature up. So you kind of answered your own question. I'm just confirming what you said. Unknown Analyst: Okay. Great. And the last one on the CE, I assume. So you mentioned this more cautious consumer. Could you, I mean, kind of elaborate, is this slowdown mostly visible in the funded private pay or public pay? John Stubbington: No, no. It's very much related to out-of-pocket fee-for-service line where people are deciding themselves whether they pay or whether they don't pay. We're seeing some signs in certain lines, not in all lines, some are going really, really well, really, really strong. And we've shared it with you so that you're aware of it. And from our perspective, it isn't anything that's particularly fantastically new that we haven't seen in our 30-year history or I haven't seen in my 15-, 16-year now history with Medicover. It's just that we -- when this happens, we have to get a little bit more creative. We have to repurpose a bit and we have to do things with our pricing and our proposition, which we will do. But usually, if that trend kind of continues, it will take -- we'll probably see a little bit of softness maybe in the Q4, Q1 as we move forward. But from a long-term perspective, from our business perspective, we have got a really solid business with a very broad base of propositions that we offer to people. This is not something that is a major concern for us over the long term. Our business hasn't fundamentally changed. We've just shared a little bit more information with you. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments. Hanna Bjellquist: Thank you very much. We have a few questions in the chat. And the first one is how do you see the outlook for 2026 for the Polish market in context of the savings announced by the ministry. Apart from the impact on public revenues, do you see any impact in other areas, laboratory diagnostic subscription? John Stubbington: Yes. There's going to be a lot of noise from the ministry currently. There's a new Minister of Health. She's looking at lots of things and has got a good track record in some of the things that she's done. So there's going to be lots of noise of different statements and different positions that are taken. It takes a bit of time usually once a statement said, even if they then say they want to do it, it takes a little bit of time to filter through into market conditions. Also, I think some of this was announced this morning or just recently in terms of looking for savings within the NFZ spend. Versus competition, we, in terms of our mix, have less than most of our competition because our focus has always been on other lines not related to governmental funds. So even if there is adjustments there, we won't be affected as much as our competition. And historically, we've always found ways if the government are paying less, the underlying demand is still the same. You can't say to yourself, I haven't got a health issue. You can't ignore it, but often that means that the health issue gets bigger. So these kind of things will happen. We're used to them happening. I don't see it as being a fundamentally big shift for us. Hanna Bjellquist: I think we have been through mentioned about the consumer behavior. We have also talked about India and the mix. Could you remind us about the background of Hungary? John Stubbington: Yes, it's just a historic position for us. We withdrew from Hungary a long, long time ago. And when we did, we offered -- we carried on with a partnership that we had together from an insurance perspective that we always knew would come to an end. They've scaled considerably. And as a consequence of that, wanted to move in a direction where we were no longer the partner, and we've always planned for that. So it's been a planned position, probably lasted longer than we thought and was a very fruitful partnership with a really good team, and we wish them the best of luck, and it helps us because now we've got more management time to focus on other opportunities that we have. So it's a good thing for us. We mentioned it a lot today because the figures are affected by it. But as we go forward, that will wash out, and we'll just move on. Anand Patel: And from a cost perspective, all these costs were dealt with in Q2. So there's no impact in Q3 numbers. And actually, it was, let's say, a small profit as a consequence of the transfer. Hanna Bjellquist: And we have talked about the Indian strike, but we do not want to give you any numbers, state any impact on the revenue and EBITDA, but we have mentioned it before. John Stubbington: Okay. Well, thank you very much, everybody. Today, we shared a little bit more in terms of some of our thinking around Q4, Q1. And from a 2026 perspective, we are a really solid, strong business. If you look at what we've delivered in Q1, Q2, Q3 this year, they're really exciting numbers. They're really positive numbers. There's a degree of consistency. You can see our operational leverage coming through. A bit of that is going to be affected by the fact we're doing new openings. A bit of that is going to be affected by the consumer caution we talked about and a little bit by the need to increase supply for our funded customers, which is absolutely the right thing to do. We have to look after our customers. They come to us for health care, and we intend to deliver good health care. And if that means we need to invest more, we will do it, which is great. So we're on a good trend. We anticipate that trend will continue, and we look forward to sharing how we do in Q4. Thank you very much.
Unknown Executive: Ladies and gentlemen, thank you very much for joining us today, taking time out to presumably busy schedule. Now, we would like to begin TMC's FY '26 Q2 Financial Results Briefing. I am [indiscernible] from Corporate Communications, pleased to be your MC today. Now I would like to invite our Chief Financial Officer, Kenta Kon, for his presentation. Kon-san, over to you. Kenta Kon: Good afternoon, ladies and gentlemen. Thank you for the introduction. I am Kon. Before I begin, I would like to start by sincerely thanking our customers around the world, who love Toyota cars; our shareholders, who support our efforts; our dealers and buyers and our other stakeholders. Here is a summary of Q2 results. Our operating income for the first half of this fiscal year was JPY 2 trillion. Despite the impact of U.S. tariffs, strong demand supported by the competitiveness of products has led to increased sales volumes, mainly in Japan and North America and has expanded value chain profits. The full year operating income forecast is JPY 3.4 trillion, despite the impact of the U.S. tariffs, we have continued to build upon our improvement efforts, such as increasing sales volume, improving costs and expanding value chain profits. We are steadily translating comprehensive future investments into improved productivity and increased returns with a strong focus on improving the breakeven volume. As for shareholder returns, to reward our long-term shareholders, the interim dividend is raised to JPY 45 per share, and the full year dividend forecast is JPY 95 per share. As announced at the Japan Mobility Show 2025, we will clearly define the 5 brands of the Toyota Group with clear directions. A diverse range of products, meet the needs of each individual customers and thereby expanding choice for our customers. I will now delve into our financial results for the period ended September 2025. Consolidated vehicle sales for the first half reached 4,783,000 units or 105% of the same period last year. Toyota and Lexus vehicle sales totaled 5,267,000 units or 104.7% compared to the previous fiscal year. Thanks to a strong demand from customers around the world, vehicle sales increased mainly in Japan and North America. The ratio of electrified vehicles rose to 46.9%, driven mainly by strong HEV sales in regions such as North America and China. Consolidated financial results. Sales revenues of JPY 24,630.7 billion; operating income, JPY 2,005.6 billion; income before income taxes, JPY 2,478.1 billion; and net income of JPY 1,773.4 billion. The factors that impacted operating income year-on-year, are shown on the slide. Next, the geographical operating income. In Japan, operating income decreased mainly due to the impact of exchange rate fluctuations and increased expenses in North America, it decreased because of the impact of the U.S. tariffs. Other regions saw an increase, mainly due to higher sales volume, improved model mix and other factors. Our China business saw increase in operating income and share of profit of investments accounted for using the equity method. Operating income in the Financial Services segment increased largely due to an increase in loan balances. Now, we will move on to the shareholder returns. We will raise the interim dividend by JPY 5 compared to the previous fiscal year to JPY 45 per share. The forecasted full year dividend will also be increased by JPY 5, reaching JPY 95 per share. We will continue to increase dividends in a stable and continuous manner to reward our long-term shareholders. As for share repurchases, in June of this year, we passed the resolution to establish a repurchase program of approximately JPY 3.2 trillion as part of taking Toyota Industries Corporation private. Therefore, no new share repurchase program will be established at this time. We will continue to conduct flexible repurchases of shares, considering factors such as common stock prices. Next, I'll explain the forecast for the fiscal year ending March '26. Consolidated vehicle sales remain unchanged from the previous forecast. Toyota Lexus vehicle sales has been revised upward by 100,000 units to 10.5 million units. Through the strong competitiveness of our products, we will capture even more robust demand, particularly in North America. Next, let me explain the full year consolidated forecast. We have adopted the full year ForEx rate assumptions of JPY 146 per dollar and JPY 169 per euro. Our forecast for the full year consolidated performance are sales revenues of JPY 49 trillion, operating income of JPY 3,400 billion, income before income taxes of JPY 4,180 billion, and net income of JPY 2,930 billion. The factors impacting operating income year-on-year are as stated on the slide, despite the impact of U.S. tariffs amounting to JPY 1.45 trillion improvement efforts such as increasing volume, model mix, cost reductions and expanding value chain profits are expected to result in a positive impact of JPY 0.9 trillion. To maintain and strengthen our earnings power, we will work with all stakeholders, including suppliers and dealers to leverage results of the strengthening of our operational foundations to further improve productivity. I believe, everyone here has seen the models we unveiled at the Japan Mobility Show. These cars speak more for themselves than I ever could. Each and every product is something that could not be created overnight. Toyota is a company managed through its products, which are the results of long-term efforts built up by many people. Our products were created by our development teams, production teams, suppliers, dealers, and of course, our customers and the market. The first half financial results reflect these efforts, and our cars have generated solid profits. And now, in addition to Toyota, Lexus, Daihatsu and GR, we are able to introduce the new Century brand. By having each brand take on clearer roles within the Toyota Group to form complementary relationships, we can expand customers' choices even further with a diverse range of products that meet the needs of each individual. We hope you will continue to have even higher expectations for the Toyota Group moving forward. A diverse range of products supported by such strong brands has led to 150 million units owned by our customers worldwide, and the value chain business has expanded to the order of JPY 2 trillion in operating income. This is the result of the efforts by our teams on the front lines in service, sales finance, used car sales, insurance, and other areas to maximize the value of each vehicle, supported by product strengths, such as ease of repair and strong supply of parts, as well as high residual values. The new RAV4 is the first to adopt Arene, a platform designed to efficiently develop software. RAV4 is our best-selling global model, with annual sales of 1 million units. We deliberately chose to lead with this challenging model. By utilizing the vast amount of data collected from roads and vehicles across the world, we will develop and refine SDVs together with our customers. By adding our SDV strategy to the virtuous cycle of the new cars and value chain businesses, we will further strengthen our profit foundation. Over the past two years, we have grappled with certification issues and lack of capacity head-on, carrying out to reinforce our operational foundation. As a result, we have thoroughly focused on safety and quality while securing additional capacity, leading to a stable production. On the other hand, investments in human resources and future-oriented investments have expanded, and, combined with the impact of U.S. tariffs, our break-even volume has risen significantly. To bring our break-even volume back onto a downward trend, we are launching a company-wide initiative. We will review the allocation of people, materials, and capital, and turn the results of the reinforcement of our operational foundations into earning power. We will pursue waste-free, value-added work and improve productivity, and also continue to focus on improving the break-even volume. This concludes my explanation of the financial results. Thank you. Unknown Executive: Thank you very much, Kon-san. Now we would like to open the floor for questions. Let's prepare the stage. Unknown Executive: [Operator Instructions] Your questions will be addressed by our Chief Financial Officer, Kenta Kon as well as our COO, Takanori Azuma from the accounting group. Please allow them to be seated as they respond to your questions. [Operator Instructions] In the second row in the middle section, please. Unknown Analyst: I am Taguchi from Nikkan Kogyo Shimbun. Two questions. Number one, first of all, for the past several years, you are focusing on earning power. There must have been various external factors. But how have you raised your earning power with those efforts? And how has that been reflected in these Q2 results? Now 15% in September is something that we heard about the U.S. tariffs, as determined. And further, throughout the year, how do you plan to minimize the impact? I am sure you're working in various fronts, but probably you can tell us your directions. Kenta Kon: Thank you very much for your questions. Well, earning power. So the first question was how our efforts have delivered, and that certainly is a question about our financial results themselves. As I mentioned in my presentation, JPY 2 trillion and JPY 3.4 trillion in operating income is what we have announced. We do have external factors, of course, but we do have global customers with very strong demand for products. And we feel that day in, day out, because of the high quality and the power of our products, which has been the result of our accumulated efforts. Regionally, North America, as you know, because of the impact of the tariffs, the situation is not rosy although I cannot share with you other than North America, for example, China, Europe, Asian markets and Africa. These markets, although the situation is not easy, but in terms of both revenues and sales volumes, we have seen some healthy situations. Brazil experienced some typhoons and hurricanes, but yesterday, we announced the restarting of the production. Actually, that has been brought forward by tremendous efforts made on the -- in the front line of our business, and that certainly is a part, a very important part of our earning power. In terms of our value chain, JPY 2 trillion annually is the revenues that we can expect for 150 million cars being owned, of course, is the basis of that value chain revenues. But once again, that represents the power of our products. Residual value of used cars, for example, is maintained very high. And also, Toyota vehicles are often said as being very easy to repair, because that concept is already built in, in the design of the cars. The repair personnel is involved in design so that easy to repair is an important part of our product, although it is not visible from outside. All of those components put together have been integrated into our earning power and that's the Q2 results. As for the second question of your is about the impact of the U.S. tariffs, how we responded successfully. I think I showed you some slide about that. Did I? Well, JPY 1.45 trillion is the impact from the U.S. tariffs. At the beginning of the year, our President, Sato-san talked about this. We really should not panic and try and respond hastily by raising prices of the cars. That's not our way. For each vehicle, each model, each region, we will scrutinize the competitive landscape and the market, and we carefully determine the price point. And as you can see on this slide, and of course, the efforts were not solely made to respond to the tariffs, but as you can see on the right-hand side, our improvement efforts amounted to JPY 90 million -- excuse me, JPY 900 billion, JPY 900 billion. And of course, that includes strong sales reflecting the strong capacity of the product as well as the value chain revenues. Do you have anything to add? Probably not. Thank you for your question. Unknown Executive: So next to the previous questioner. Mizuno from Yomiuri Newspaper. Mizuno Tetsuya: My question is to Kon-san. The Chinese semiconductors, the Nexperia, they shift Nexperia. What sort of countermeasures are you taking against that shortfall? Has it impacted you? And what sort of measures do you intend to take going forward, please? Unknown Executive: Mizuno-san. If you could ask 2 questions at once? Or are you satisfied with just one? Mizuno Tetsuya: Just one is fine. Kenta Kon: Well, most recently, we have not seen any impact so far, but we do know that there's a risk. Therefore, we're trying to scope the impact and the areas where the impact would be felt, and we are currently monitoring the situation very closely. And of course, this is not only for Toyota, but it's, I think, for the entire supply chain, and we're looking for alternatives and what other options have available. We are researching such alternatives, and also monitoring very closely the impact situation. Unknown Executive: May I have the person with the white jacket in front? Unknown Attendee: I'm [indiscernible] from TV Tokyo. I have two questions, for Kon-san. Number one, about the U.S. market forecast. For the entire year, you have made some changes or not, no, you have not made any changes. But according to researchers, after October because of the tariffs, car prices could rise in the general U.S. market. So how do you view the North American market going forward? The second question is about what you mentioned in the second part of your presentation, earning power in order to regain the downward trend, the all-out efforts will be made. What sort of efforts will you be making in terms of breakeven volumes, for example, what level would you like to bring it back by what time frame? Kenta Kon: Thank you very much for your questions. As for the North American markets going forward, as you mentioned and very rightly so the volumes that we expect have not been changed from the previous announcements. As we hear from the U.S., we see lots of very strong demand for our products. You may know this, the sales incentives tend to be really low, reflecting the strong value of our products. Still, we can barely cover the demand, and our inventory level tends to be rather low. And of course, on the front line, they are doing their very best in producing the number of cars needed. In terms of sales, therefore, we expect very healthy situations going forward. Now about the breakeven volumes in our earning power. I said that we will be making an all-on efforts involving different and various activities and initiatives. There are so many, I don't know, which one should take the highest priority, but enhancing the value-add work, eliminating wasteful tasks. For example, wasteful time of meetings with lots of people involved without much contributions. And of course, we'll be very careful in determining price point and increased sales certainly reduces breakeven volumes, our value chain revenues as well. We do not have the clear goals in terms of quantities, but we have seen this trend of increasing breakeven volumes, and we would like to see it decline. Unknown Executive: Second or third row from the back, yes. Unknown Attendee: Chikauka from Nikkei CrossTech. I have two questions as well. First question about hybrid. Hybrid is growing quite rapidly. So going forward, do you have any expectations about the future growth of hybrid going forward? As for EV, in 2030, 3.5 million units, I think is your base volume and you don't intend to change that base volume? That's the first question. Second question is about the price pass-through of tariff costs, tariffs basically speaking, or in essence, should be borne by the U.S. side. That is my recognition. If so, well, you mentioned that there's a strong demand for Toyota, which means that perhaps 15% of the entire tariff could be passed through to prices, and then for Toyota and for your cooperating companies that would lead to increased profit and would be beneficial for both. So would you say this is not as simple as that? Could you tell me your thinking on this point, on this issue? Kenta Kon: Yes. May I? Regarding hybrid vehicles, it is growing very rapidly. And would that continue going forward? I guess is the gist of your question. Well, we believe that growth will continue. And I can't say, but from what I hear of from my observations of the market, the request for increased production toward hybrids and the demand from customers for hybrids is very strong. So we would like to accommodate such requests through production -- through increased production and accommodate the customers' requests, thereby increasing our volume for hybrids, I believe. As for BEV, well, we're looking at the actual demand, and it seems that compared to our initial estimations, things are actually declining. That is -- there's a shortfall against our expectations. And therefore, we have to look at the customer and market situation to at an appropriate timing, deliver good products that meet their needs. And the next one was about the price pass-through of tariff costs. Well, if you say that because you have such competitive product, if you increase your prices by 15%, it will be beneficial for all you said, but for many years, in the case of Toyota, we have many cars that's really been loved and used by our customers. For example, Carola, Hilux, Surf, or 4Runner in the United States or Highland Cruiser -- these -- we have many, many different models, and many customers are loyal to these brands. They continue to use them for many, many years, and many of our customers are fans of our cars, which means that for us to price these vehicles out of the expectations of customers is very difficult for us to do. So we want to enhance the value of these cars in order to charge the customers an appropriate price that meets that value, because if you outprice the customers' expectations, you can really lose their loyalty. So our method would be to take it step by step. As for hybrids, in 2025, I think somebody said it will reach 5 million units. Perhaps it was a goal that somebody mentioned, I'm sorry, I'm not quite sure about this, but 5 million in 2020-something, do you have a goal like that, a numerical target? You mean hybrids. Yes, hybrids. Really, well, at least I don't have any numbers firsthand on when we will reach 5 million, but the hybrid ratio amongst our -- sorry, 4.46 million units this year, that's about 200,000 unit up from last year. So this pace of growth, I think, we will -- we should maintain this pace of growth going forward. Unknown Executive: Now person in the second row, in this section, please. Unknown Attendee: I am Nakano from Nishinippon Daily. Now I have two questions. The first question is about Kandamachi in Fukuoka Prefecture. The battery plan for EVs. In April, you were to be -- to sign the MoU with the Prefecture, but now it has been prolonged and postponed to autumn. What is the progress? And also, 2028 start of operation that has been planned as well as the production capacity? Have there been any changes to your original plans? The next question is about taxes. Under Takaichi -- Prime Minister Takaichi, the tax treatment Minister has been appointed and some special measures could be taken in terms of taxes. And what is the view on that situation? And also, with the outlook for any preferential tax treatment. Do you have any outlook for that? Unknown Executive: Thank you very much for your questions. As for the first question, Fukuoka Kanda battery factory, ongoing study continues. So I heard that is. Now we are talking with the Fukuoka government and stakeholders in Fukuoka Prefecture currently. As for the taxation, well, we have seen the changes in the administration in this country. Now there are various taxes involved in automotives and revising and changing of those taxes have been something that JAMA and other organizations have been advocating towards the government, Well, when it comes to taxes, we have to consider how we may be able to maintain monozukuri in production in this country in a healthy way. It's very important for the entire industry, not only for the automotives. I hope any form of taxes will be able to enhance domestic demand for the industrial products. Therefore, it is my belief that JAMA will continue to advocate for that. Unknown Executive: Then the person in white at the very back of the room. Unknown Attendee: From Kyoto, my name is Tokumitsu. I also have two questions. First question, the Japan Mobility Show is now on, and I saw the exhibit there. And the Century branding has come to a milestone, I think, but I think that some of these pilot cars are also viewed toward mass production. So do they represent the future production plans of Toyota. The second question is about the impact of tariffs? You said it was of JPY 1.4 trillion, but now that's been increased to JPY 1.45 trillion. So a slight increase. And in August, the -- you had calculated on a reduction in auto tariffs, but you did make that modification after the imposition of the actual tariffs in September. Is that the reason for this slight increase is the question? Kenta Kon: Regarding the Japan Mobility Show, thank you very much for coming to our booth at the Japan Mobility Show. As you said, well, I don't know if we intend to mass produce all of them. But of course, several of these models overall be marketed in the future, at least I believe they will be. And I think this attest to the strength of our product competitiveness. That's it in a nutshell, but especially the Century brand was launched. We were able to launch a totally new brand called Century, which I thought was a very big step forward, because currently, new car names, new models are very hard to come by. But to start from starting a totally new brand, I think, was a major initiative in the company, and it's also a big message from us. The launch -- you may have heard the presentation to launch Century, our Chairman, Toyota said this is the pride of Japan. He said, Century, the car and the brand is the pride of Japan, he said. So from that perspective, it goes beyond just car model. I mean, I think, in Toyota, it represents not just a model, but something beyond that. So I do hope that you will take it as such. Regarding the second question, may I address that question? In the first quarter, it was JPY 1.4 trillion, but now we've added 5 million. And as you said, from mid-September, there was a 15% tariff imposed. That is a tariff level was decreased. So this is based on the recalculation of the impact of tariffs and the tariff impact will hit not only Toyota, but also our suppliers and about 70% of part and components -- well, the components and parts manufacturers account for 70% of the market. So we want to work together with them to overcome this. When I visit the suppliers, each supplier has, for example, embarked on labor-saving and also changing their processes, et cetera, to challenge new initiatives to address the impact. So in addition to the product competitiveness, we would like to master our forces together as a manufacturing industry to overcome the tariff issue. Unknown Executive: The person on the left, please. Unknown Attendee: I am Toyoshima, WBS TV Tokyo. Kon-san, I have some questions for you. As a result of the U.S.-Japan tariff agreement. What do you think of it? Well, actually, the end result was as Toyota had expected, 15%, but now you are expecting the JPY 5 million in negative increase, is it because you have taken the very conservative way of revisiting your numbers? Or is a situation really, really difficult? Well, shortly after the announcement of your Q2 results, your stock price went up a little bit, but now it began to decline. Probably the market expected more of the improvement in revenues and profit, but how do you view that? Are there any risks of downward revisions going forward or upward revisions. Any of you? Kenta Kon: Thank you very much for your questions. Well, to be honest with you, what do we review the situation? Well, they are striking the agreement itself is something that we are extremely thankful to the government officials. Without anything being decided, we really cannot plan on production in the automotive industry, which certainly is a very big industry. So uncertainties would not lead us to focus, cannot plan on cost reduction, cannot plan anything. Therefore, I really would like to thank all those people who are involved in the negotiations. And it is not a small improvement. And certainly, we will have to work on what we can do, both short term and mid- to long term in order to make further improvement, not only North America, but procurement, production, sales and marketing, all of us have to work together to bring about some positive results. Are you relieved? Or do you still see the situation to be rather difficult? Well, I would say both. Well, upward revision or downward revision possibilities. Actually, we are often called being very conservative in our projections, but I do believe we are being pretty neutral about this. But of course, towards the end of the year, we certainly do make efforts so that we can provide you with the -- even the slightest upside. Thank you very much for your questions. Unknown Executive: Now we'd like to entertain questions from participants online. And after that, we'll come back to the people in the audience for questions. [Operator Instructions] Okay. Terasaki-san from Best Car, please. Unknown Attendee: Can you hear me? Unknown Executive: Yes, we hear you. Unknown Attendee: This is Terasaki from the Editorial Department of Best Car I have two questions. First question. Well, it's been mentioned several times about the value chain and that it takes up a big portion of your operating profit. And looking at the graph, from 2020 for 5 years, you've probably increased your operating profit from value chain by double. You're doing many things. I think, of course, value of used cars is increasing. But 5 years ago, I believe the residual value of your used cars was still very high, but the operating profit doubling, I think, is something really a tremendous feat. So specifically, what pushed up the operating income so much? And you have 150 million cars in position. That's quite a large number, but 5 years ago, I think you had similar numbers. So what changed to boost the operating profit in the value chain so much over the past 5 years to the extent that you can disclose? That's the first question. Second question, since this is a good opportunity, you talked about the Japan Mobility Show, but in the booth in the Southern Hall, it was a very popular in Century. There was a 40-minute waiting line to view the Century. And so for the mobility show as a whole, I think the Japanese market will be boosted and galvanized. So if you could, Kon-san, talk about your impressions about the heat at the Mobility Show? Takanori Azuma: Yes. First question will be addressed by myself, Azuma. The value chain, well, about 7 years ago, for the employees and to the outside, the -- then President talked about leveraging on the ownership and 6,000 stores and overseas 16,000 dealership network, leveraging that strong dealership network to communicate one-to-one basis with our customers. And that declaration was made in 2017 or '16. And then we started Tinto, and about 5 years ago, the car ownership was a little more than JPY 100 million. But over the last 5 years, thanks to you, new car sales has been increasing 10 million a year. And also, our ownership of our cars has also increased. And against that backdrop in Europe, we extended our guarantee period so that we can entice customers to come to our dealers more often. And as the years go by, our -- we lose contact with our customers, but we wanted to recapture that content -- contact, sorry, to have them come to our dealers and purchase supplies and accessories. And that cycle has now begun to turn, and that's now expanding from Europe to the other regions. So that's one major initiative that led to this. And in Asia, we offer second part that is more inexpensive accessories and supplies and also financial services are provided. So we want to utilize the dealership network to extend our touch points with the customers. And just the head office telling these regions what to do, you'll not come up with good ideas, but such good practices are now being leveraged across various regions, and we are building on these good practices, sharing these good practices, and that's leading, I think, to the very good results we are seeing today. Kenta Kon: About the Japan Mobility Show. Thank you very much for your attendance. And my question about the Japan Mobility Show was your question. Well, we had such a large turnout so many customers who were viewing our cars with joy. And I was very, very happy to see the delight on their faces. The Japan Mobility Show, Motor Show, well, I think all across the world, you see regions where the scope or scale of these mobility shows are being reduced. And they're shifting toward the electronics and the electrical components of cars. But in Japan, we call this a Mobility Show. It's a show for mobility, and to have so many people come and delight in these exhibits and have fun. We were really encouraged and heartened by them. And looking at the smiles on the faces of customers, we are very, very happy ourselves. Unknown Executive: Now let's come back to the on-site journalists. In the middle section, the second row from the front. Unknown Attendee: I am [ Matsumi from Trinity Daily ]. About the United States, I have 2 questions. President Trump the other day talked about $10 billion investment for Toyota to build a new plant in the United States. So what is your take on what he had said? And have you made any changes to your investment plan in the United States? So that's the first question. Second question, the U.S. government talked about Toyota expanding its dealers network to sell other brands' cars. Is it true? And if you -- if it is, when are you starting that effort? Kenta Kon: Thank you for your questions. For one thing, $10 billion, I read that in news. Now the United States really wants to see employment increasing and customers should be served with next generation of cars and services. Therefore, we do plan sizable investment plan going forward. I cannot really say it's $10 billion, but I would say Toyota will continue to make a sizable investment in the United States. I have to limit myself to that. Now in terms of Toyota's dealership to sell imported cars, well, Toyota makes cars in the United States. So we are considering doing something about the Toyota cars made in the United States. Now how about other OEMs? Vehicles being sold in Toyota's dealers network. Well, it is not for us to decide. But if there are any demand or requests for that end, then we may consider it. Unknown Executive: Yes, the person in front of the microphone with a spectacle. Unknown Attendee: Ohira from Asahi newspaper. It's related to that. I have 2 questions on tariffs. First question. Toyota, you're considering selling U.S.-made cars in Japan and that was announced when President Trump came to Japan. But considering the briskness of the U.S. market and also the U.S. and Japan production capabilities and cost of transportation, it doesn't seem to be very economically rational. So what would be the goal or what was the motivation of doing this if you're going to do it? Also, second question in relation to that, the -- for the cars assembled in the United States, conventionally, you are procuring parts from across North America. Now these parts may be replaced by U.S. domestic made parts. Are you considering such a shift? Or have you already started such initiatives? Kenta Kon: Yes. Thank you. First question -- I'd like to address the first question about the economic rationale, what's the meaning of -- or rationale behind engaging in reverse imports. As you say, when you look at the economic situation currently, it may not be such an economically rational initiative. But it may deliver to Japanese customers products that are not easily available in Japan. And of course, the model segments, et cetera, and how to price these models, what sort of supply structure we will take, there are many challenges. So we will consider all these challenges to consider what sort of business we can make out of that offering. So we are currently making preparations now. So that's it for the first question. Takanori Azuma: Thank you. Regarding the second question about the local production in the United States, and of course, this is not just limited to the United States, but in all regions of the world, we want to produce locally and procure locally so that we can manufacture cars on that basis in each region. For example, this year, in North Carolina, we have built a battery plant, which was a major decision, and this led to increasing the local procurement rate in North America. So our plan to produce locally as much as possible remains unchanged. We would like to move -- make efforts toward that end going forward. Unknown Attendee: How about Mexico? How about replacing with the Mexican parts? Are you considering such a possibility? Takanori Azuma: Well, currently, we have no concrete plans to do that yet. But let me consider the suppliers who have already made forays into the local market and the manufacturing they do there. And of course, they are hiring employees, and they have to, of course, create a livelihood of their families as well. Therefore, I think we'll have to take all that into consideration when we make such decisions. Unknown Executive: The 2 people who have raised their hands will be the last to ask questions. Let's begin with you. Unknown Attendee: I am Fukui from Nikkan Jidosha. I have 2 questions. So your sales remains brisk because of your product competitiveness. Even the ever better cars that you have advocated for the past 10 years certainly delivered the results. Now at the Mobility Show, you announced a new brand strategy, which sounds a bit futuristic. In 2024, you experienced the certification irregularities. And at the time, you revisited your product plans altogether. And you launched various projects to do so, revisited them and some projects, I understand, have been either delayed or canceled. What sort of impact do you see now out of that because development takes 2 to 3 years? Your healthy product portfolio towards the latter half of 2020s, do you think you will be able to maintain momentum and that would impact your profitability? So I would like to learn your midterm view. In relation with that, your investment in the United States has been mentioned this year, for the year, you increased number to about -- by 130 units, but then your production plan remains at around 10 million and in United States, you have a very low inventory level because your cars are selling so well. So how do you plan on your capacity increase in terms of production? Because just increasing the capacity would only increase your fixed cost. So how do you plan to go over 10 million vehicles? Do you plan to enhance your alliance within the group and to be more efficient in procurement of components? So what's your plan going forward? Kenta Kon: Thank you very much for your questions. About the product competitiveness for the midterm future, it seems that you may have a question about that. Well, 2 years ago, we did experience the certification irregularities, and we put on lots of efforts in reinforcing our foundation. Well, sometimes we had to halt our production lines. So 2 years ago, 1 year ago, we experienced that quite frequently. That is not about the product competitiveness, but it was about the production. But certainly, those hiccups we experienced in the past, but they have decreased -- they have been decreasing very rapidly. It is still increasing the fixed cost rapidly will have a future impact. Therefore, we really have to be careful when we plan for that. For example, it may be an impact of 1 second or 2 seconds on the production line, but we have to make steady efforts in order to enhance our productivity step by step. We are not talking about thousands or hundreds of thousands of vehicles or million vehicles to increase in our production. So when it comes to the product competitiveness in the midterm, we will make sure that we will maintain that going forward. That's all from myself. Anything would you like to add? Unknown Executive: Final question, the person in the very front row. Unknown Attendee: Yao from Nihon Keizai newspaper. I have also 2 questions as well. First question. Your management is based on product and region. So one of your access is, of course, the region and you want to be the best in town. So compared to other manufacturers you have a revenue structure that's not biased in particular countries or regions. So what sort of impact do you feel from the tariffs on this regional-based sales operation? And another is related to this. You -- about maintaining the production capacity of 3 million units a year domestically in Japan. In the previous financial results, you also announced about the new construction in Toyota City of a factory, but due to increased tariffs by the United States, your export costs will increase. And I believe that you announced that you will adjust destinations to adjust for that. So how do you intend to work towards maintaining the 3 million units production capacity in the domestic market in Japan? Takanori Azuma: So I'd like to address the first question. Well, we manage our company based on product and also region, and we are also managing company based on that. And about 10 years ago, we were skewed on North America. More than half of our sales was from the United States and the remainder from the rest of the world. But if we had been imposed such tariffs with the same sort of situation, then the impact would have been much larger. So we have to think first about the customers in each region to engage in our business operations, and that's done by the regions. The same for revenue Lexus customers, GR customers and the mini car companies, each are attended to by each of these divisions or regions. So the regions are working hard not against each other, but in a balanced manner, and that's why we have a very good revenue structure. For example, in Africa, in the past, Africa was part of the other -- the rest of the world. Also, Latin America was the same. But these regions have been referred or transferred to Toyota Tsusho and with Zephyr I think it's being run by -- that business is run by people who think first about Africa. So they support very high revenues in Africa. And in the earnings report, Japan, Asia, Europe, Africa and the other regions, and the other regions are actually leading the revenue for us. And within Asia, India and also in Europe, there were some very difficult regions where Toyota were using these markets to polish our products, but now these regions are seeing an increase in revenue. So we're very well balanced in terms of regions. And so all of Toyota is making a global effort to accommodate the U.S. tariffs. And so we would like to ask each of the regions to actually focus on their respective regions and the businesses there. Kenta Kon: Regarding the 3 million production capacity and our strategy vis-a-vis local production, well, 3 million units domestically is a very, very important goal for Toyota. We have the field, genba, right next to the production facilities, which enables us to turn that cycle very rapidly. And that would help monozukuri or manufacturing prowess in Toyota. And so that becomes a source of our global competitiveness, I believe. Of course, to safeguard monozukuri or manufacturing in Japan, we need to maintain or retain a significant amount of domestic production because if that declines and then the supply chain will also weaken that could lead to or impact jobs and others. So we have to earn foreign currency and purchase resources to run the domestic business. I think that's how we survive. And so domestic production in Japan must be safeguarded and protected. On the other hand, local production is important too in many ways. And I think to manufacture where the customers are, to sell where there is a market for the product or to produce where there's a market for the product. And also, we must develop components and parts or vehicles that match those needs. And then that's best produced locally. So in Japan and non-Japan areas, perhaps we can allocate the production of different models. That sort of adjustment is done. But we don't intend to transfer something drastically from Japan to the United States or overseas to Japan. We're not discussing such drastic measures. We will continue as we have in the past. Thank you. Unknown Executive: Thank you very much, ladies and gentlemen. It is now time to close the session. Thank you very much for being with us today. Please excuse the presenters. With this, we would like to conclude TMC's FY '26 Q2 Financial Results Briefing. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Stefan Wikstrand: Good morning, everyone, and welcome to our Q3 earnings call. Whilst the attendee list is starting to fill up here, I just want to point out that we will do this call as usual. So, we'll start with a brief presentation of the quarter. And then we'll go into a Q&A section where you can ask questions. [Operator Instructions] I think the attendee list is done, and everyone connected. So, with that, I will then hand over to our CEO, Vlad Suglobov. Vladislav Suglobov: Good morning, everyone, and welcome to our third quarter results call. And we obviously have also Stefan, our CFO, with us today. And let's begin by giving you a brief overview of this morning's report. We are pleased with the quarter's overall performance. In USD, revenue increased 0.2% sequentially in comparison to Q2. It's been a while since it happened when we had sequential revenue growth. The change of the trend is attributed to product improvements that we made in Q1 and Q2, and the gradual expansion of user acquisition spend, which was made possible thanks to these improvements in our products, namely in Sherlock. And Sherlock was the highlight of the quarter, achieving 5.6% growth sequentially in USD terms. Year-over-year, over the last 3 quarters, it went from minus 7.3% in Q1 to minus 3.5% in Q2 and then to plus 7.9%, almost 8% in Q3 in USD terms. So, with the positive changes that we've made to the game in Q1 and Q2, we were able to increase profitable user acquisition spend, and our new management and marketing helped bring energy to this process. And now the game seems to be on the trajectory for at least moderate growth. And the game accounts for about 29% of our net revenue. It's 1 of our 3 pillars of our revenue generation. So, this is a welcome change that should help our top-line dynamic. And if we look at the other 2 pillars of our portfolio and revenue generation, Jewels' family of games had a stable performance quarter-to-quarter, but it declined year-over-year. And Hidden City was down 5.2% sequentially in the quarter and down 14.1% year-over-year. So, not as good performance as Sherlock, but again, we did the changes, successful changes on Sherlock. And so, we were able to expand user acquisition there, and the dynamic of the game has changed. And now we have to work on the other 2 pillars of our revenue generation to try to achieve the same. So, our actively managed portfolio of games together increased 2.6% sequentially in USD terms. So, this positive dynamic of Sherlock, which is quite strong, actually shines through a more mediocre performance of the rest of the portfolio. And now that we have made these improvements to Sherlock, we will, of course, turn our attention to Jewel's family of games and Hidden City to try and use the lessons that we've learned on Sherlock to try and improve the dynamic of these 2 other games. And hopefully, will help us turn around the trend in our top line. In other news, monthly average gross revenue per paying user was at a new record of USD 70.8. And again, during the quarter, one of the tools that we used to turn around the performance of the top line is user acquisition. And we increased UA spend in the quarter to 21% compared to 19% in the previous quarter and also 19% a year ago in Q3. And if you look at how our user acquisition spend was evolving over the last few quarters, we kind of hit a minimum outside of our -- or very close to the bottom bracket of the range we previously communicated. And from there, with the help of the changes and the new management and the marketing and adding new advertising channels, we started increasing the spend, and we went all the way up to 21%, which is very close to the upper bracket of the previously communicated range, 17% to 22%. And during the fourth quarter, we think that we will have to go outside of that range, but probably not higher than 25% of revenue, most likely not higher than 25% of revenue. So, our goal is to continue this momentum and expand user acquisition to invest profitably in the growth of the portfolio revenue through existing and new games and primarily Sherlock, in order to turn around the top-line dynamic. The gross margin reached a record 71.2% in the quarter, up from 68.8% last year, thanks to the continued success of G5 Store. And we remain debt-free and continue to have strong, solid cash flow, and something we are very proud of. Now let's take a closer look at G5 Store, which continues to show remarkable growth. As you know, one of the key advantages of G5 Store is lower payment processing fees, which are in the low single digits. That's quite a contrast to the 12% to 30% fees typically charged by third-party application stores. The cost efficiency directly contributes to our improved profitability and the expansion of our gross margin. G5 Store is our third-largest source of revenue. And during the quarter, it accounted for 24.7%, so almost 1/4 of total net revenue of the company, up significantly from 17.1% last year. And it's a great milestone for us when we launched G5 Store some 5 years ago. I don't think we really thought it will be responsible for the quarter of all revenue generation in the company. And yet here we are, and it continues to grow quite substantially. Gross revenue growth in USD terms was 30% year-over-year in G5 Store and 6% sequentially. In addition to the G5 Store, we've also seen steady growth in our web shop. And web shop is a module that allows our players on mobile platforms to pay directly to G5 through their browser, through our payment processing, which obviously dramatically lowers the payment processing fee because mobile application stores, they charge the highest processing fees. And during the quarter, the revenue flowing through web shop accounted for 3% of total net revenue from mobile platforms, an improvement compared to 2.6% in Q2. We believe and we are optimistic that this percentage can continue to increase in the coming quarters, boosting our gross margin further in addition to the effect that we're getting from G5 Store. And last quarter, we mentioned that G5 Store will start to scale its revenue by licensing and distributing third-party games that are or were successful in mobile platforms. We have signed a few of these deals, and we aim to release the first game from other developers on G5 Store before the end of the year. This will bring much desired incremental revenue to mobile game developers while further expanding the reach and scale of G5 Store operations. And now G5 Store is 25% of our business, it is at a size where its strong continued growth may start positively affecting the overall top line dynamic and help us with the plan to turn the situation over to growth, obviously. Now let's look in a bit more detail on the quarter, leading up to a record gross margin. Own games accounted for over 73% of net revenue, and active own games accounted for 66% of total net revenue, up from 63% last year. Gross margin reached a record high of 71.2%, up from 68.8% a year ago, primarily as we discussed, due to the continued growth of G5 Store and with some help from the G5 web shop. Monthly average gross revenue per paying user reached a new all-time high of USD 70.8. This is compared to the last year's figure of USD 64.9. So, this continued growth of this particular key metric reflects the continued trend for the improvement of the underlying quality of the audience. We are in a situation where a relatively small number of high-paying users, high-paying players in key countries, drives a substantial part of the revenue, while acquiring other types of players in other countries is not economically justified. And so, the overall player numbers, therefore, decline. But as long as that gold cohort remains with us, as long as we can refill it with user acquisition and retain them for a long enough period of time, the fundamentals of the company will be healthy. So, in the future, you may see a situation where there is actually growth in revenue, but the audience metrics are still trending down. That would not be something abnormal. And G5 Store is another factor which affects these numbers because generally in G5 Store, we have higher paying players compared to mobile and overall smaller player numbers than on mobile to generate the same amount of revenue. So as G5 Store continues to become a larger and larger part of our revenue, the overall user numbers shrink. But again, this really doesn't mean that there is anything wrong as long as we have our golden cohort of users, and we know how to find them, and we know how to retain them and we know how to monetize them. As you remember, in free-to-play games, there's only a small number of people that actually play for the experience. So now let's look at the operating profit for the quarter on the next slide. And operating profit for the period came in at SEK 12.6 million compared to SEK 22.9 million last year, and this resulted in an EBIT margin of 5.5%, down from last year. The lower EBIT was only marginally impacted by foreign exchange revaluations. More importantly, we have deployed more capital into user acquisition during the quarter, which increased, as I mentioned, 2 percentage points compared to both previous quarter and as well as compared to last year. And this obviously had a negative impact on EBIT. However, as mentioned before, the positive changes we've made to Sherlock made it possible to expand profitable user acquisition from lower levels and turn around the game’s revenue performance. The long-term vision here is that as long as we can continue to acquire users profitably and increase the acquisition of users profitably, it does make sense for us, obviously, to do that. And we will grow back gradually to a higher profitability through that, through increasing our top line, but also with the trends in the G5 Store and G5 web shop, we'll also see in the future the expansion of the gross margin. It's been happening very reliably over the quarters, which will also help us restore profitability eventually once we have fixed the top line trend situation. During the quarter, the net capitalization impact on earnings was SEK 0.6 million compared to minus SEK 5.4 million last year. Now let's turn to talk about our cash position. Capitalization impact on cash flow was minus SEK 23.2 million, less than SEK 25.5 million last year. The movement of working capital was negative SEK 1.7 million compared to positive SEK 27.2 million last year. And total cash flow during the third quarter was SEK 10.4 million, down from SEK 53.3 million last year. Total cash at the end of the period stood at a strong SEK 247 million despite the buybacks of SEK 8.4 million that we made during the quarter. All right. Let's move on to the final slide and discuss some final thoughts on the outlook from here. So, we will continue to implement our core strategy of improving the metrics of our active games of our existing revenue pillars, which will make expanding profitable UA possible in order to turn around the trend of the revenue of these pillar games and through that, our portfolio. We also see positive momentum going into the seasonally strong Q4 and Q1. So hopefully, we'll have some help from that. In Q4, because of this, we may go as high as 25% of UA reinvestment from gross revenue. The increase will help us optimize for growth while maintaining profitability. That's the aim. And as we've said before, we will notify the market when we venture out of the range of 17% to 22% of UA to gross revenue, which is what we now plan on doing, and that's why we are communicating it clearly. During the quarter, we made 14 iterations on several games in our new game pipeline. Among notable developments, there was a discontinuation of 1 game after it failed to reach sufficient metrics, while another game passed early soft launch with promising metrics. This new game is moving forward to more advanced stages in the funnel, and we look forward to seeing further development of this concept in the next quarter. Twilight Land is now in the late-stage soft launch phase. And we have achieved very good early metrics and good midterm metrics in this game, but we need more work on the long-term metrics, and we need more observation of these long-term metrics and a few more tests. And tests at this stage of soft launch take a little bit more time because you have to wait for the players to get to the point which you're trying to measure. So, we expect that over the next several months, we will gradually increase user acquisition on Twilight Land while still doing some more tests and doing some iterations on the game. Then this increase in Twilight Land is another reason why we think we will go to a higher level of user acquisition expenses in the Q4. And through our recent initiative to expand the G5 Store with the distribution of third-party games on the platform, we have made agreements to bring third-party games to G5 Store. The teams are actively working on preparing their games for release on G5 Store and the first release, as I mentioned, is set to happen before the end of the year. And as I mentioned again, both the size of G5 Store and the speed of expansion will continue to have a positive effect on our top line dynamic. And now the store is much bigger, so it will be much easier for this effect to sort of shine through the overall revenue mix to the top line dynamic. The G5 Store growth and also growth of the flow of payments from mobile users through G5 web shop will continue to help us boost our gross margin. And we will, of course, continue to focus on operational efficiencies in development and marketing, including continued integration of generative AI where it makes sense. And it actually makes sense. Tools are getting better. Throughout all of this, we maintain strong financial discipline. We continue to generate solid cash flow and maintain a strong net cash position, which gives us the flexibility to execute on strategic initiatives that will strengthen the foundation for future growth. I'd like to end the presentation by thanking you for following G5 and also thanking the whole G5 team for their outstanding efforts in delivering this quarter's result. This concludes our presentation, and let's open the call for questions, which I think we already have. Stefan Wikstrand: Yes. And I will just repeat if you want to raise a question verbally, you raise your hand. We have already -- I will get back to that in a minute. You can also ask questions in the Q&A box that [indiscernible] has also done already. We'll get back to that one as well. But I will start by inviting Simon Jönsson from ABG to ask his question. Simon Jönsson: Hope you can hear me. I want to first off revisit the UA spending and the guidance you provided for Q4. Of course, very interesting. And I understand that the increase in Q3 was mainly Sherlock, but the further increase you expect in Q4, is that also Sherlock primarily you think? Or is it primarily other active games? Because, yeah, you said Twilight Land needs more time, so that shouldn't be the main UA driver, I think, at least. Please correct me if I'm wrong. Vladislav Suglobov: That is right. The primary driver will be -- is Sherlock. And then number two is likely going to be Hidden City because the games are quite close in terms of the genre and the mechanics. And so, we've tried, so to speak, transferring some of the successful things that we've done on Sherlock to Hidden City, and the game is quite responsive to that. So, we expect that this will continue, and we will be able to spend more on user acquisition in Hidden City. It is more difficult with Jewels family of games, Jewels of Rome, specifically, our experiments of transferring our findings from Sherlock to Jewels of Rome did not really work out. But over the next few months, we will be trying different approaches. It may or may not have effect on Q4 user acquisition, probably not. It's a short period of time until the end of the year. And then a little bit is Twilight Land. And then we don't know exactly how much, but we felt that it would be prudent to communicate that we might be exceeding the range. We basically do not want to be held back in Q4 by the 22% or having to deliver exactly 22%. And as we said, we will communicate if we think that we will exceed the range, and we think we will exceed the range for these reasons. Simon Jönsson: All right. And a follow-up on that. Since you have made changes to Sherlock earlier this year that sort of prompted this growth, have you already done similar changes to Hidden City? Is that correctly? Vladislav Suglobov: It's in early stages. So, the report covers Q3, so we discussed mostly Q3. But it's quite straightforward that if you have fixed one hidden object game, you might actually be able to fix another hidden object game as well. So, it's natural to think that we would try to do that, and we have some encouraging signs. Simon Jönsson: All right. Makes sense. Just on a final note on new releases since you said you need some more time on Twilight Land. Should we still view Twilight Land as sort of the main upcoming game, you think? Or are there others that have sort of catch up? Or yes, what's the near-term outlook coming quarters? Vladislav Suglobov: Yes. Well, it's the most complete and the most ready of the new games. Another game that was probably the second by completeness was discontinued during the quarter due to not having reached the metrics. And then the 2 other games, 1 of them already successfully passed through the initial soft launch stages with great results, I would say, unprecedented results for us. So, we're quite optimistic about this game, but it's still in the early development stages. With regard to Twilight Land potential or the potential of early -- of other games that are in earlier stages, it is -- again, it is hard to say. We try to only allow the games that have a chance of scaling to certain benchmark that we have of meaningful monthly revenue. So, in that sense, Twilight still -- we've not given hope on this game. So, it has some really good things going about it, but we have to work more on the certain longer-term metrics. And that's the situation. And we will find out in the next few months, I think. Stefan Wikstrand: Then we have Hjalmar from Redeye. There we go. Hjalmar go ahead. Hjalmar Ahlberg: Maybe just first a quick follow-up on Twilight. Would you say that, I mean, there's a small chance that the game is not being launched or that's rather a thing about when it's being launched? Vladislav Suglobov: That's a great question. I think there's still some chance that it will not be launched, and it always exists. I think until we are totally happy about the metrics. I would say, to be totally honest, I think there's still a chance that it will not be launched. But also, I think that so far, we have achieved really good results with the game on the early and medium-term LTV progression that there's also a very good chance that we will resolve the rest, and it will be launched. But we will have to wait and find out. I'm also not the person actively hands on working in the game. I know the overall situation and what is good and what is holding up. But it is difficult for me not being on the team to know exactly the chances or how they feel about that. And if you work on games for a long period of time, you always get attached to games. So, I reserve the right to say, well, this is not good enough or if we cannot reach the metrics that we think we should be reaching, and it takes too much time. But at the same time, I still -- part of me believes the team can turn this around, and we will find out which reality is going to happen. Hjalmar Ahlberg: And with your new guidance, so to say, for UA in Q4, I guess it's -- I mean, difficult to say how top line will respond in the short term. But other than that, would you say that you aim to remain stable in terms of other OpEx and so on, just to get some flavor on what to expect in terms of EBIT margin in the short term. Vladislav Suglobov: Yes. I think we are quite stable in terms of OpEx and other parameters from quarter-to-quarter. So I think there are no big changes are expected. Hjalmar Ahlberg: Right. And also, regarding the launch of third-party games, I think this was asked in Q2 as well, but have you decided how you will report this? Will it be similar to your own games in terms of gross margin, UA and so on? Just to understand how it will look financially. I guess it's a small impact in Q4, but if you can give some information and update on that. Vladislav Suglobov: Yes, it's probably a small impact in Q4. But yes, we'll be reporting exactly the same way that we report on our existing games. Hjalmar Ahlberg: All right. And also, regarding this kind of new UA approach and more focus on higher paying users. Are these kind of players that are coming from other games? Or is it like a growing user base overall? Is that something you can have any insight to? Vladislav Suglobov: Well, this is the -- the way I think about it, and we are discovering more about our user, about this golden cohort, so to speak, is the -- this is the audience that sometimes has been with us for a very long time and played several games. And sometimes this is the audience that we have acquired relatively recently. But the key differentiator for us is that the person not only plays the game for a long period of time, but they also fall into this schedule of repeated purchases that are aligned with their play cycle or every week or every couple of weeks. And some people wait for like very special deals and then buy in bulk. Some other people are more like impulse buyers. But in the end, one uniting characteristic is that they can afford to pay in these games. It's not that much money, by the way, taken on a per week or per month basis. And they are -- they seem to be okay and happily doing that for quite a long period of time. And the way our games are structured is that you can enjoy them for years. So, I mean, these users, they're mainly from the United States and Western Europe. This is where there's the highest concentration of them. But this is also where it is quite difficult to acquire organic traffic, right? Because these are highly valued users and advertisers of the whole world are after them, whether on PC or on mobile platforms. And then if you look at other countries with lower value per user, we sometimes get the influx of people from countries where historically, we cannot really find these gold cohort users. And then these players may not be as engaged or they make payments, but those are relatively small, but they inflate our user numbers and user metrics without bringing any substantial contribution to the company's revenue. And I think the overall situation in the mobile marketing ecosystem is that it evolves towards fully valuing the user, right, for the product that can make -- justify paying for that user and making profit on them. And so, we can justify paying and be competitive in the market and paying for these users and then turn a healthy profit on them. And we cannot actually justify buying in cheaper geographies, at least for now, in many cheaper geographies, the users are way cheaper there, but they also don't fall into this pattern, so they don't recoup the investment. So naturally, we skew towards buying fewer but more valuable and profitable users. And I guess, in the countries where our games don't work as well, then those users are better sold, so to speak, to some other business that can extract better profit from them, right? So, kind of that's the way the -- I think the ecosystem evolves, and it's natural that when we go from the times of receiving a lot of big numbers of users in early days of mobile gaming. But over time, we're sort of looking at consolidating the user base towards the type of users that actually is driving the revenue of the company. So at least this is the view from my perspective, looking at how mobile marketing is evolving. And yes, and then if we look at the demographics of these users, again, we discussed the countries, but they are predominantly female players of age 35 plus or even higher depending on the platform, we tend to have even more pronounced characteristics on G5 Store, where these tend to be players and payers who are even older and are even more -- skew even more female. Hjalmar Ahlberg: All right. And also, can you give some -- I mean, you indicated that 25% of UA for Q4 and that you will be in the higher end of your range. Is that kind of an indication for 2026 as well? Or will you change depending on how you perform in the coming quarters? Vladislav Suglobov: I would say that if it works out and the aim here is to kind of bottom out now, right, and then to grow out from here, we'd be happy to keep UA spend at that level if we can be certain that we are driving the growth that will make us profitable eventually. I would rather not be reducing that. On the other hand, if we feel that we are unable to deploy this much capital in Q4 for whatever reason, be it the market or the fact that we weren't able to continue improving the characteristics of games, then it will be good news for the margin in the short term, but this would also mean that maybe long term, it's not the best thing in the long run, right? Because the way out of here is expanding the acquisition that is fundamentally profitable and that will drive the increase in the top line. Hjalmar Ahlberg: Got it. And also, a final one, I forgot if you can give any information on the third-party games. Are those games that are already available on other platforms? Or is it completely new games? Vladislav Suglobov: Yes. Those are games that already exist, that exist on mobile that make good enough money there and the developers are looking to make incremental revenue, and we believe that they can make good incremental revenue that makes sense for them to port these games over to G5 Store. So, the good thing here is that the timeline of bringing this game to G5 Store is way, way shorter than developing a game from scratch, which can last years. In this case, we are talking months. And then the -- it's not as capital intensive, obviously, compared to creating a game from scratch from 0. So, we look forward to the first releases. We -- again, G5 Store continues growing. We see we are achieving amazing results like 25% for our games on average, 25% of revenue is coming from G5 Store, any developer out there would like to generate 25% extra incremental revenue, right? Wouldn't they? Even if this extra 25% are shared with the distributor, it's still an amazing deal in the market where it's difficult to find new users. It's difficult to find growth. And so, all this incremental revenue basically becomes also your incremental margin. So, I think it's a great opportunity for developers and for us. And again, the first games are coming to G5 Store relatively quickly. So, we'll see how it works out, but we're optimistic. Stefan Wikstrand: [Operator Instructions] We have 2 questions another popping into the Q&A. Vladislav Suglobov: We have 3 now. Stefan Wikstrand: Now, we have 3. Vladislav Suglobov: Okay. Let's start from the top. So, [indiscernible] is asking sales and marketing, excluding user acquisition, decreased to SEK 9.7 million from SEK 15 million. Why did the costs come down? Is the new lower level the new normal? We should expect to continue going forward. Stefan, can you remind me, does that increase -- does that line include the staff also? Stefan Wikstrand: Yes. Vladislav Suglobov: It does. Yes. So, we've done -- so user acquisition expenses went up year-over-year, 19% to 21%. But in absolute terms, I think they actually declined by 7% or so, right, because the revenue is smaller. So, user acquisition was larger last year, not as a percentage of revenue, but as an absolute number, at least in SEK. That's what I saw on the first page. I think it was minus 7%. But Stefan, correct me if I'm wrong. And then another important thing that has changed year-over-year is that we've done the rightsizing of marketing somewhere between Q1 and Q3. I think we finished with that this year. Obviously, the company has seen times where we were much larger, so we needed more people to manage this complexity. And with the decline of top line over several years, we thought that it's a good time to rightsize marketing and also with the change of management to sort of make it more efficient, more focused, more energetic. And I think it worked out given the results in Q3. But the -- yes, that basically explains the numbers, right? Stefan, am I missing? Stefan Wikstrand: No, I can only concur with that. And those changes that Vlad mentioned on kind of rightsizing the team occurred primarily in Q1 and Q2. We saw some effect in Q2, but the full effect is kind of seen in Q3. So that's why it's kind of on a lower run rate. And I think, yes, you should expect these levels rather than anything else going forward. Vladislav Suglobov: That's right. Okay. Let's move on to the next one. This is from Erik. And the question is on the G5 Store, obviously, gross margins are favorable, but do you see any difference in KPIs versus the traditional platforms in terms of user retention, ARPU or other? Yes, we do. I think we mentioned that the metrics of G5 Store across the board are way better than on mobile platforms. We have higher revenue per user. Even the difference in the processing fee does not explain the difference. So, like the gross amount is also higher. And then we retain a larger portion of that. We see higher retention rates as well. And those are 2 main things for us, right? The -- how much people are paying the average check and how well they are retained by the game. And that's why we are deriving quite a substantial revenue from G5 Store, having substantially smaller number of people actually playing through G5 Store. There seems to be a double effect here. There's obviously some selection effect where we feel that -- and we can track that some users who are very loyal to G5 games, they may begin playing on other platforms, but eventually, they will settle on G5 Store, and we make sure to incentivize players to transition to G5 Store as much as we can because it makes sense for us to have this direct connection to the player. Not everyone does it, but people who do it, they seem to be the most trusting and the most loyal customers of the company. And therefore, it's natural that they sort of inflate the overall metrics. But there also seems to be conversion of our earlier users into G5 Store by means of ways that we cannot even track. We just noticed that players were playing some time ago on other platforms and some other games and then they have decided to try and download from G5 Store. We also see people -- we also see new players converting to G5 Store. But another thing that we see is that even accounting for that, the metrics still seem to be higher. And this is where we continue to have the explanation is that our games, the type of games that we make, these very high-quality, high-resolution games with a lot of stuff happening on the screen, they appeal to older demographic and older demographic or more mature demographic, however you put it. And they, on average, prefer to enjoy this game on a large screen. It's a more premium feeling. You have more justification for spending money. You enjoy it way more. And this is really -- large screens is really where our games shine and where they are really competitive as an experience compared to games made for mobile with the scale down, let's use the word more primitive graphics. It's really a different experience on a large screen. And so, there's -- we think that this premium effect explains the difference in monetization and retention as well. So, the next question is, you mentioned in the report that Jewel's family of games likely need 6, 8 months to refresh the product. Is this something that is required before you can scale UA for the franchise? Well, nothing will prevent us from trying to scale UA for the franchise in the meantime. But the effect of that would be most pronounced if we were able to implement the changes in the game that would be -- that will improve the metrics. One of the challenges that we have is that in order to be able to conduct multiple tests and measurements, you need enough users, and you need enough players. And with this trend towards smaller number of high-paying players, we need larger cohorts of these to make conclusive decision whether or not the change in the game was positive. Or I would just say that we will be able to do these changes, iterations in a more educated and faster way if we had enough inflow of new users. So, we might actually increase user acquisition spend on these games sort of ahead of the improvements in our efforts to make the iterations and have measurable results faster. Okay. We have next question from [indiscernible] again. If you release a game on G5 Store, will you own the customer data? Will the gamer be able to transfer progress to mobile? Or will he or she lose progress if he or she switched to mobile? So, look, we're getting into the details of our contracts with the developers. I wouldn't like to do that. They're confidential, but we obviously are thinking about these questions, and we're trying to make a fair deal here, which would make sense for us as the party bringing users to the table, but as well to the developer and their main interest is incremental revenue, really, not user data. So that's the way I see this should work, and we try to align the agreements in accordance to these principles. And once again, I think the -- if you think of smaller developers, it's great to have that business, but it's also not so great in the sense that you have to -- you are very dependent on Apple or Google or any distribution stores, but you're also very dependent on advertising companies and incremental revenue is very hard to find. So, they really want that incremental revenue, and we can give it to them. And I think that's an important point in the discussion when we have it with them. The next question is, is the company focused on releasing in U.S. and Europe? Or are there any plans to translate and release current and future games to Asia, Japan and China? So, first of all, all our games are localized in Japanese and in Mandarin and Cantonese. So, they're not unavailable there. They are available. Historically, we had some big successes in Japan. Unfortunately, we were not able to replicate them later on. We are working on bringing our games to China. And hopefully, there will be some announcements in the coming quarters, but there's not much that I can say now. Yes, that's the end of the list. No more hands, no more questions. I think that's it. Stefan Wikstrand: I think that's it. Vladislav Suglobov: All right. Stefan Wikstrand: Okay. Well, then, any final remarks before we wrap up? Vladislav Suglobov: No. Thank you, everyone, for spending your morning with us. And thank you for following G5. We'll talk soon. Stefan Wikstrand: Thank you. Bye.
Trond Fiskum: Okay. Then I think we start again. So welcome to everyone participating here at this live event at Arctic. And of course, welcome also to those participating online. Sorry for the technical difficulties that we had here. I want to thank Arctic as well for allowing us to have this earnings call at their facilities. So we jump straight into the key points for the quarter. We have had good EBIT growth and significant cash flow improvement in the quarter in spite of the challenging market. As most other players in the market, automotive industry, Kongsberg Automotive has faced also a challenging situation with the market. And as a consequence, our revenues are down around 10% comparing to third quarter last year. So we had EUR 162.9 million in turnover in Q3 versus EUR 181.6 million last year. And this is a direct result of the market situation in the global vehicle industry. The largest impact is in the market in North America due to the ongoing tariff situation there. That has caused higher costs, market uncertainties and therefore, also a lower demand. And in spite of those lower revenues, we see an improved EBIT of EUR 4.9 million in the quarter. This is up from EUR 1.1 million same quarter last year, which is a solid improvement from both previous quarters and also from Q3 last year. On cash flow, we see also a positive trend. We delivered EUR 6.6 million in positive cash flow, which is EUR 11.8 million improvement from Q3 last year. Cost reductions, we are moving forward with our programs according to schedule. On tariffs, we have been able to mitigate the costs this quarter and the net impact of tariff cost this year is -- or this quarter is close to 0. And then we have some challenges on warranties, and we will get back to that in later in the presentation. Here we take a closer look at the financials, comparing those in the quarter versus the last 4 quarters. On revenues, we see the 10% drop in Q3, which is, as mentioned, caused by the market situation. We also have a currency effect due to a weaker dollar of around EUR 5.4 million, which is an implication of the business that we have in North America where the contracts are in U.S. dollar. On EBIT, we see the positive trend. We do see the dip in Q2 where we had significant warranty accruals. That was the main reason for the drop, but you see the underlying improvement going back from Q3 last year until now. We also have some warranty accruals in this quarter. Erik will talk a little bit more about that later. But the positive thing here is that we've been able to improve EBIT in spite of lower revenues, which is good. It's not on the level far from where we want to be. There's still a lot of work ahead, but it's a positive indication. Free cash flow, positive trend also here. And you see the positive trend on the last 12 months. So last 12 months, we are close to 0 now due to the positive result in this quarter, a result of lower cost base reduced -- some reduced net working capital due to lower sales and also more cash discipline when it comes to investments. So overall, I would say, a positive indication on the -- trend on the profitability and cash flow that is very important for us. And as previously announced, we have the cost reduction efforts, which will give us around EUR 40 million in improved cost base and a 4% to 5% improvement on EBIT on stable revenues. The cost saving programs are moving forward according to plan. We have completed the program that we launched in '24. We have completed the program that we launched at the beginning of '25, and we are on track with the program that we launched in May, which will be completed fully by Q3 '26. We start to see the good results of these programs, which also Erik will show in the EBIT bridge later in the presentation. And also due to the lower market activity, we are also making additional adjustments in the cost base to align with the demand and to safeguard our profitability. This is mainly impacting manufacturing locations. On business wins, we report a business win with an estimated lifetime revenue of around EUR 34 million. This is lower than previous quarter and also during 2024. What we do see is that there is a lower activity in the market when it comes to new contracts. This is a consequence of the tariff situation and that the focus has been more on managing that situation and also the lower demand. We also see some of our customer programs being postponed. We have a strong focus on market activities. We keep a very tight dialogue with our customers. And we do continue with a good and strong pipeline of opportunities. And very importantly, we have not lost any major contract opportunities during '25. So it's a number that we would like to see higher, but it's also a number I'm not too concerned about due to the current situation and the good pipeline opportunities that we still have. On the business wins, we also have done the revision of our investor policy. We have had a discussion with the Board of Directors and decided that we will only announce strategically important business wins going forward, and our investor policy will be updated to reflect this. Warranty cost. This is an area that remains a concern for us. We reported in Q3 -- or Q2 increased warranty accrual. In Q3, we have a total warranty cost of EUR 2.7 million of which EUR 2.5 million is increased accruals for future expenses. And due to the situation that we uncovered in Q2, we conducted quite a comprehensive review of our exposure to warranty liabilities across our entire product portfolio and also -- and our customer base. And as a result, unfortunately, we have uncovered some additional risks on further and future warranty liabilities. The problems we see here is not primarily related to our ability to deliver quality products. The challenge here is historically unfavorable contractual terms when it comes to warranty and also that warranty management has not been very optimal. This is disappointing, and it may potentially impact our profitability going forward. Those that have been responsible for this are no longer a part of the company, as they were a part of the leadership change that took place in the beginning of the year. It's very hard to make any estimates on the net value of the total liabilities that we may be held accountable for. It's quite complex and a lot of different potential outcomes here. And we are working very hard to address these forthcomings. We have also implemented a much more proactive approach to warranty management and strengthened the team there. And at this point, we are -- and cannot disclose any further details due to the ongoing discussions we have with affected customers. And as soon as we have more information, we will provide that, when we have more clarity on the potential financial impact. Tariffs, we have previously communicated that we will recover 100% of the tariff cost. That has been a clear ambition for us, and we were very much aware that this was not an easy task. The process with our customers are -- can be challenging, have been challenging. They request a lot of documentation, and there are also some tough negotiations that are taking place. We have been very firm and consistent in all our customer negotiations, and that has been basically that we cannot absorb this cost and tariff-related cost has to be passed on to the end consumer. That's been a consistent message, both in the U.S. where we have the biggest impact, but also in China, where we have also some impact of the tariffs that have been implemented there. The approach has given good results. In Q3, we had 0 net impact of the tariff cost. We continue to have some costs that we have not been compensated for yet, but we have agreements in place with our customers. So it's more a question of time to get that compensation. And for those of you that follow the automotive business and industry closely, you would have heard about Nexperia, which is a Chinese semiconductor manufacturer that has put a halt on export to -- out of China because of a dispute and the situation in the Netherlands. So this caused quite a lot of disruptions in the industry. KA also have some products that are directly impacted by the semiconductors. We have been proactively managing the situation and been able to secure supply of the semiconductors so we have had no issues related to that situation. And as previously announced and communicated, the main concern here for us is not the direct cost impact of the tariffs. We have been able to mitigate that. The concern here is the impact that we have already seen materialized on the market demand. Then some other highlights in the quarter. Two of the acquisitions that we have previously announced, the first one is Chassis Autonomy, which is a transaction that we completed in the quarter. We now own 100% of the company and full integration is ongoing. It is a very interesting technology. We received a lot of interest from potential customers. So we're very excited about the Steer-by-Wire technology. This, we expect to play an important part of Kongsberg Automotive's future. The transaction and all payments of the shares were done in the quarter and the net cash effect of the transaction was positive also in the quarter. The acquisition of the 25% share of -- the remaining share of our joint venture in China with Dongfeng and Nissan was also completed. We have now full ownership of that company, and that also means all our operations in China. This gives us more flexibility and strategic options in that important market. And also this transaction was fully paid in Q3. Last on this slide is the renewal of the EUR 25 million loan facility. We have agreed to renew that. That is a loan facility we have with NordLB that was established in 2020. It was set to mature in January '26. And this we have agreed to renew with 1 more year with the same interest terms. Okay. Now looking a bit forward. We have to deal with the current challenges and also look forward, of course. And we have been working very hard during the quarter to work on a new strategic direction for Kongsberg Automotive. End of September, we had a strategy seminar with the Board of Directors. This is still some work in progress, but a key outcome of that seminar was that we decided that the business -- let's say, business unit, Driveline is no longer going to be considered as noncore. Instead, we recognize that this is a business that continue to create value for Kongsberg Automotive, and we will continue to pursue opportunities within that area to win new businesses, extend current contracts and to optimize the pricing. This is also reflected in our financial reporting. So you will see that the numbers from Driveline is not now reported separately, but reported as a part of the business area Drive Control Systems. We continue working on the strategy, and the plan is to present this on the Capital Markets Day on December 16 in Kongsberg. So you are hereby all invited to that event. I think it will be a great event with some very interesting updates about our strategic goals, our strategies to achieve those goals. And we also give you some hands-on insights and a look at the products that will be a key part of Kongsberg Automotive going forward at our tech center that is also located in Kongsberg. Let's see. We are also trying to see if we can get some opportunities for some test driving. We are checking the possibilities. We will let you know. So we also organize some transport from Oslo, and we will have lunch. So yes, I hope to see as many as possible on that event. And we will provide more practical information about this during November, and you will see that from us. Okay. We continue to stay focused on our priorities for '25. We continue to adjust our cost base, as you have seen, and we are taking the additional necessary steps to adjust the menu level further because of the market volumes. We continue to focus on generating cash -- positive cash flow with disciplined CapEx management and targeted reduction of net working capital. We have made changes in the leadership on the top level. We start from the top. We do need to continue working on strengthening the leadership teams across the entire organization. That is a very important priority for us. We need strong leaders and strong teams to -- with the right competencies, values and mindset, supported by clear structure of accountability and responsibility. We're also working on the future with innovations and profitable growth. We have a very strong focus on customer needs and very tight dialogue with them on, I would say, every -- all levels. And this is also very important for us to understand what their needs are going forward and how we can create value in that, let's say, space of opportunities. We do believe that KA is well positioned to deliver long-term and sustainable financial performance. The 2026 priorities, together with the longer-term goals and strategies will be shared during the Capital Markets Day in December. So that was the summary, and I will hand over to Erik to go through the financial updates. Erik Magelssen: Thank you, Trond. Can you hear me? Trond Fiskum: Yes. Erik Magelssen: Good. Also on the webcast? Trond Fiskum: Yes. Erik Magelssen: I was last in KA from 1999 to 2006, and it's very motivating and interesting to be back. I think what we're trying to do is to merge the best of how KA was managed and run in those days back then and then with the new best practices and processes. So I think we're trying to see -- starting to see some truth of that, and that's very motivated and interesting. I'll take you through some more of the figures. As commented by Trond, the Driveline segment is now part of Drive Control Systems and is no longer defined as noncore. And this is also the way that we, as management, run and manage that business. You see the revenue level in Q3 was EUR 95.1 million, and before the negative currency translation effect, it was around EUR 99 million and still lower than the EUR 110 million in Q3 '24. So the revenue is also lower than Q2 '25, and that is also what we communicated in Q2. We did expect the second half of this year to be weaker and lower sales than the first half year. Even though we have lower sales, we record a higher EBIT in Q2 '25 compared to Q3 '24, driven by lower operating costs and lower warranty accruals. I will also comment upon that later. The net effect of tariff cost in this quarter is 0 isolated, which is good. And I think it's the first quarter when we have that. But we still have a balance of tariff costs that we will get reimbursed from our customers, and that is ongoing work. So then on the other business area, Flow Control Systems, the revenue is significantly lower than in Q2 '25. But if you kind of adjust for the currency translation effects, it's not so much lower than Q3 '24. In this business area, we had an impairment made in Q3 of EUR 1 million so then we had an EBIT of EUR 4 million before that impairment. And the reason why we do impairment of development asset is part of streamlining our R&D portfolio and where we want to focus our resources. So it's part of that ongoing strategy process that also Trond referred to. And the reduction in operating cost reduces the effect of -- we have a lost contribution. So ending up in an EBIT of EUR 3 million in Q3. On this EBIT bridge, just pointing out some points, you see the effect of the lower operating cost compared to the same period in '24 with a plus EUR 4.8 million and plus EUR 12.4 million. And this effectively mitigates the effect of the lower volume and mix, which is good. And as I commented, the net effect of tariff cost was 0 in Q3. And year-to-date, we have -- EUR 2.9 million we're going to get reimbursement. The warranty cost in Q3, as Trond mentioned, was EUR 2.7 million. And in Q3 '24, it was EUR 7.2 million. So that's the bridge effect of EUR 4.5 million that you have there. So this is just to underline that we do have warranty costs also in this quarter in 2025. Both in Q3 '24 and in the earlier quarters, there were a reversal of impairments done. So that explains the majority of that bridge effect of impairment, then ending up from an EBIT of EUR 4.9 million then in Q3 '25, which is significantly higher than the EUR 1.1 million in Q3 last year. So coming from a negative EBIT of EUR 8.3 million in Q3 '24, with the effects we see here, we end up with a positive EBIT of EUR 1.6 million in Q3 '25, then driven by the lower -- the higher EBIT, the lower net currency loss and tax effects. And this is also, of course, driving the cash flow together with the operating result, which we'll see coming into now. So the positive result in profitability and working capital effects contributes to the net positive cash flow of EUR 6.6 million in Q3 '25. And looking back just compared to Q3 '24, we have higher cash from operations, lower investment levels and positive currency effect. And this also gives, which is very positive, a significant increase in the 12-month trend, which is now close to 0. And then in line with what we have communicated, one of our key priorities is to generate positive cash flow. And that is much more important than actually having positive results. You have to get the cash flow coming out of that. That's much more potential in Kongsberg Automotive on both on the working capital side and the whole capital employed area. So just to underline that, that we start to see here that we are moving into a positive cash flow situation. And that improved cash flow and profitability also materializes in the reduction in net interest-bearing debt and then reduction in the leverage ratio, the blue line here, which is the key in relation to the bond loan that we have where we have a covenant level. So we see we go from -- it's been increasing since Q4 '24 from 2.1 up to 3.1 and now we have 2.6 in this quarter here. Everything we do on profitability improvements, cash flow will kind of materialize in net interest-bearing debt and this -- the leverage ratio we measure here. And as to the return on capital employed of 1.7% that we have in Q3 is, of course, not satisfactory and also a key priority for us to improve. The equity ratio increased from 30.7% to 31%. And as our improvement programs continue, giving increased profitability, the equity ratio will also continue to increase. And it is kind of continued work for us to achieve reductions in capital employed. And we want this to be an integrated part of the operations in the business area and something that we do every day and that we will follow up the business areas on every day and then instead of doing this kind of -- on a kind of piecemeal basis. So that's very ingrained in us to get this as part of the daily work to get inventory down, accounts receivable down and only do the good and best investment levels. So I think, all in all, a positive quarter for us, positive results, fairly good cash flow, positive cash flow increase in the 12-month trend. We do have challenges and difficulties, but we are managing a positive result -- increased result with a significantly lower revenue level, which is kind of our -- we -- the only thing we really can control is our own costs. And then we have to manage with the market that we have. When the market picks up again, we will be positioned to kind of get a very good profitability level out of that. I think, Trond, that brings us into the summary and outlook. Trond Fiskum: Okay. Thank you, Erik. So to summarize our presentation, just quickly go through the key points again. We do see that we have the positive trend on EBIT and cash flow in spite of a challenging market. We do see that the cost reduction programs are going according to schedule and that we are taking additional measures due to the market situation. The tariff costs are being effectively mitigated. And we have the warranty liabilities that we are addressing, and we will provide updates as soon as we have more clarity on the financial impact. And we will hold the Capital Markets Day on December 16, where you are all invited and we will share some exciting news on strategic goals and the strategies. So I hope as many can participate on that event as possible. We want to emphasize the messages that we've given in the previous earnings call, that is to restore value creation for our shareholders. That remains a key priority for us. We are very much focused on that and find the balance between short-term and longer-term priorities. We do believe strongly in the future of KA, and we are very determined to succeed so we can realize the full potential of KA. And we do believe that we are on the right path. We see some positive indications here. But it's important also to remember, this is not a sprint, it's a marathon. We have a lot of work ahead of us. The numbers are going in the right direction, but they're far from where we want to be. I would say the positive thing here, we do see that there is a lot of things to work with. There's a lot of improvement opportunities. Yes, there are some challenges. But eventually, we will solve them and also with some help from the market, we will see stronger financial results. Regarding the outlook in the shorter term, we do have no changes on the EBIT outlook. We expect the EBIT to surpass both first half this year and second half last year. The rest of the year, we do see a stable outlook compared to Q3. For 2026, we are cautiously optimistic, but we are very also aware that there's a lot of uncertainties. The market scenario is very hard to predict. We don't know what is the next coming from the other side of the Atlantic. So it's something we are monitoring very tightly, and we're managing the situation, and we're prepared for any scenario, I would say. But as a base case, it's cautiously optimistic. I think that concludes our presentation, and we are ready for the Q&A. We have questions that can be done and made also here in the room and also on the web. Therese Skurdal: So let's get started with the first question from the webcast. What is the reason that Driveline is now considered no -- noncore? Trond Fiskum: Driveline, as mentioned, we had a strategic review with the Board. What we see from Driveline business is that it is a business that creates value for us. It is profitable. We do also see opportunities in that area that we can capture without too big efforts. There are also opportunities to extend profitable contracts. There are possibilities to optimize pricing. And we also see that the customer base is important for us for new products that we are developing and launching. So that is the reason why we have made that decision. Therese Skurdal: Thank you. So next question, why will KA change the new business win reporting going forward? Erik Magelssen: Yes, I can answer that. Just to underline, as we also mentioned, that we will continue to announce strategically important contracts. They can be fairly small. They can be quite small, but it depends on the market, the type of contract, new type of customers. And we will always summarize the business win in the quarterly reports and then more -- a bit more detail than we do now. But I think the fact is that KA at any given time, we'll have a number of contracts that are being renewed. Now some contracts expire and we get into new contracts, big and small, but I think that doing this change. We're doing it to get a better communication with the market and improved communication because it's better to kind of summarize this in the quarterly reports instead of kind of doing piecemeal announcements of certain business wins. So just to underline that we will continue to report strategically important contracts that will also mean very significant ones in value, and we will always summarize it in the quarterly reports. And this is also in line with our peers, and I think what our larger companies on Oslo Stock Exchange do. We're kind of aligning more with that. Therese Skurdal: Thank you. Is there any questions here in the audience? Unknown Attendee: Given the challenging market and I guess, declining revenue growth on your current revenue base, how much could you improve profitability with improved product mix, but also potential further cost improvements? Trond Fiskum: There is -- I cannot give you a number at this point, but there are obviously opportunities to improve. So if you take the current cost base and assume that we can capture both of the market and volume growth without adding much fixed costs can give a quite positive case. So that will be an ambition going forward. And then you can do the math. But -- and then it depends on the market development. What we do see is that there's a lot of uncertainties in the short term. In the longer term, we do expect growth. And then the question is how big growth that will be. I think we are well positioned to capture that growth. And we will then work very hard to maintain our cost base and not increase our cost base further. And then we can have a good gearing effect. I don't -- when it comes to product mix, I think it's more on the revenues overall. And of course, we will work to optimize both our variable cost and pricing going forward. And when it comes to also profitability, a key element here is to resolve our challenges when it comes to warranty and remove that from our current cost base. So yes, there are challenges also on the warranty, but I also remember that it has been a part of our cost base over the last years. So it also represents an improvement opportunity for us. Therese Skurdal: Any further questions here in the room? Unknown Attendee: Regarding the new business that we have bought, what is the business cases in those 3 -- sorry, 2 parts, Chassis Autonomy and the China part? Trond Fiskum: Chassis Autonomy has a Steer-by-Wire technology that has a very interesting, let's say, future. There's a big demand for it. The forecast estimated need for -- and market development for that kind of technology is very large. By 2035, the estimate is more than EUR 3 billion. And the target is to capture a meaningful portion of that market. Specific ambitions and targets, I would like to come back to you on that on the Capital Markets Day, and then we can share more information. That will be one of the products that we will highlight in that event. And then we'll talk more about how we see that market developing and what is our business case. But it's a new development. There are always risks when it comes to taking on that. But we do believe that we have both the customer relationships, we have the technology and the capabilities to take that technology to the market. And so far, I would say the interest is very strong. So it looks very promising. But we'll come back to this on the Capital Markets Day, and we'll share more insights about that on that event. On the China case, we had a situation where our joint venture partners wanted to leave the joint venture. So we decided to make the acquisition. The alternative would have not been so very positive for us not to buy that share, someone else could have done it. And now we have the flexibility and, let's say, the possibilities to look at alternatives and strategic alternatives for that market that we didn't have before. Also there, we are working on a strategy that we will be able to share on the Capital Markets Day regarding China. I don't have the exact numbers, if you were asking for that, but we will share the strategic rationale and what our plans are for both those 2 businesses on the Capital Markets Day. Therese Skurdal: So let's take a question from the webcast. Have your demand to pass on 100% of the tariff cost affected your new business wins? Trond Fiskum: The answer is no. I cannot say that. I think those discussions have been very constructive, very -- I will say, we've been very firm, but I don't see that the tariff discussions as such has had any impact on our business wins. Therese Skurdal: Thank you. How is the merger between the 2 factories in Sweden coming along? Trond Fiskum: It's moving forward. The merger between those 2 plants to move Ljungsarp plant into Mullsjö is moving forward according to plan. We have monthly reviews with the team. And the plan is to conclude that transfer by Q3 next year. So that move is going according to plan. Therese Skurdal: Any more questions here in the room? Unknown Attendee: You have proven today that you are able to manage the situation in the market reducing costs. If the market increases again or when the market increases again, will you be able to keep the cost base as you have it today? Or do you need to also parallel increase the cost so -- how do you see that in the future? Trond Fiskum: The clear ambition is to maintain the cost base as we have today. We know that there are some costs on our fixed cost base that are, let's say, semi-variables. But the clear ambition is to maintain the cost base as it is today, that we will work very hard to achieve. There are new technologies like AI and other technologies that can enable us to do that. It will be -- can be challenging if the volume increases are significant, but that will be a clear ambition to maintain the cost base as low as we can. There are further opportunities to streamline our operations so that is also work in progress. But what I can confirm is that, that will be an ambition, definitely. Erik Magelssen: Yes. Just to supplement on that, that is ambition. I think, to a large extent, we will be able to do that. And of course, we will increase cost later than earlier. So we'll kind of always drag it along and then we have to make sure that we will deliver the project in the right quality to the customer at the right time. So -- but that will be the clear ambition. That's also part of the benefit that we get from all these cost reduction programs that we will try to find better and smarter ways to work with the people and the cost base that we have, but -- yes. Unknown Attendee: I have to take the opportunity to congratulate and applaud what you have done so far. It's looking really promising for our shareholders. Trond Fiskum: Thank you. Therese Skurdal: So no further questions in the webcast too. If there are no further questions here in the room, we can conclude. Trond Fiskum: Then thank you very much for your participation. Thank you for Arctic again for hosting this for us at their facilities. That was excellent. And have an excellent day.
Operator: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Nexi 9 Months 2025 Financial Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir. Paolo Bertoluzzo: Good morning to everyone, and welcome to our 9-month results call for 2025. As usual, I'm here with Bernardo Mingrone, our Deputy GM and Chief Financial Officer, with Stefania Mantegazza leading IR, and a few more members of our team who may help to answer your questions as needed. As usual, we'll start with a summary of the key messages. I will hand over to Bernardo to cover the results in more detail, and I will come back for the closing remarks and, most importantly, to answer to your questions. Let me jump to Page 3 with the summary of the key messages. First of all, we continue to deliver profitable growth for the 9 months in the quarter. Revenues are up 2.8% for the 9 months and 1.8% in the quarter. As anticipated in the third quarter, we see more material effects of the extraordinary events that we had anticipated when we provided the guidance in March this year. More precisely, we are talking about the bank losses from the past and some key bank contract price renegotiation effects. These effects will peak probably in Q4 this year, and then we will start slowing down across 2026 with a more material reduction in the second half. The underlying growth, therefore, net of this effect, is at about 6% year-on-year, both in the 9 months and in the quarter. Merchant solutions revenues are up 2.7% in the 9 months and 0.6% versus the same quarter last year, with underlying growth being at around 5% to 6% in both the 9 months and the third quarter. EBITDA is growing at about 3.5% in the 9 months, with a 35-basis point margin expansion. The quarter results in terms of margin are a bit affected by the revenue mix that sees a stronger IS and some operating cost phasing. Second key message: We continue to shape Nexi for future profitable growth, 3 key points that we want to underline. We continue to progress our strategy execution in the integrated payment space, the space of convergence across payments and software. As discussed in the past, our strategy is based on partnerships with ISVs. And since the beginning of the year, we have added about 50 partners, ISV partners to our pool, that is about 500 across all our geographies. Second key message that we want to reiterate, we continue to build a stronger multichannel approach to the Italian market, obviously, deleveraging our very strong partnerships with the Italian banks, but also adding to this strong channel also complementary channels, targeting more precisely SMEs, which is our core focus. And these complementary channels by now represent year-to-date about 26% of our total new sales. Last but not least, we want to underline that merchant solutions in Germany is growing double-digit in the 9 months, with even acceleration in the third quarter, supported by customer base and market share growth. And we really want to stress this performance in Germany because, obviously, there's a lot of debate around how strong players like Nexi are in competing with the newer players focused on SMEs, the single platform, and all of that. And clearly, the performance in Germany shows very well that we can compete, we can win effectively and have accelerated growth as well. The third key message we want to deliver is that we continue to create value for our shareholders. Across '24 and '25, we did delivered EUR 1.1 billion of capital to our shareholders while becoming, at the same time, an investment-grade issuer since the end of last year. Net financial debt is now down to 2.6x EBITDA, notwithstanding the fact that we have returned in the year already EUR 600 million to shareholders as a remuneration, which is a 20% increase versus the previous year. Obviously, in March '26, we will talk about the capital allocation for 2026 on the back of the more than EUR 800 million cash that we will generate in 2025. Coming to guidance, we confirm we will land revenues in the low to mid-single-digit year-on-year growth space. We confirm that we will generate excess cash for more than EUR 800 million with a high degree of confidence. As far as the margin is concerned, for sure, it will be positive with Q3 with Q4, by the way, seeing a margin expansion better than Q3. Where it will land precisely will depend on the volumes we will see in Q4 and the business mix that we will see in Q4. In any case, we are talking about only a few million euros here and there. Let me now hand over to Bernardo to go through the results more in detail. Bernardo Mingrone: Thanks, Paolo. Good morning. Starting on Slide #5 with revenues. As Paolo has already mentioned, this quarter was significantly impacted by discontinuities as expected. This has been accelerating throughout the course of the year. You can see the revenue growth in the quarter of 1.8% is distant from our underlying growth of 6%, and this gap is widening compared to the 9 months. So, as we said, this is the highest impact we've had year-to-date, and the peak is expected to be reached in the coming quarter. With regards to EBITDA and EBITDA margin, EBITDA is growing. The margin, and please remember, we're always talking about an EBITDA margin north of 57%, suffered in the quarter from what I would characterize as a slightly different revenue mix than what we might have planned with a bigger contribution coming from issuing the merchant solutions and also a bit of phasing effect on some costs, which might have spilled over from one quarter to the other, which is impacting the margin accretion. However, for the year, we are positive at 35 basis points. Moving on to merchant solutions on the next slide. We have growth in the quarter. Again, here, this is the business unit on which the negative impact coming from the discontinuities we've talked about that impacts us the most. You can see the underlying growth is mid-single digit. Overall, I think we can point to continued growth in international scheme volumes, albeit with a softer summer. We have a slightly unfavorable volume mix, as I was mentioning earlier, as a group, but also within merchant solutions, with some pricing and mix effects in e-commerce in Poland. We're talking about -- sorry, just a few million euros here, but that makes a difference, obviously, in terms of year-on-year growth. I think more importantly, from a volumes perspective, Poland, but more importantly, also Germany, which is growing in the quarter in the mid-teens, have shown a robust performance. We continue to grow our franchise in the most valuable segment of SMEs. We continue to upsell and cross-sell the value-added products and services. And indeed, we're making progress on the ISV partnerships front with more than 50 signed in the 9 months and the year-to-date. Issuing solutions had a very strong quarter, 6.5%, 6.6% growth. This is usual. It is being sustained by volume growth, the international debit product in Italy, upselling, and cross-selling throughout the group. I think it's fair to say that part of this higher performance in the quarter than for the 9 months will be reversed in the fourth quarter. We expect it to benefit less from year-on-year project work, which, as you know, as we've discussed in the past, it's very hard to predict in which quarter they will be booked. And we're also expecting in the fourth quarter to see the first effects of some in-sourcing from a large Nordic client that we've spoken of many times in the past. This is something a decision which goes back 3 or 4 years and has been postponed a number of times is now kicking in. So, the fourth quarter is softer than the third, but a strong year-to-date and expected for the full year in any event on issuing. DBS is the business unit which has the most reliance on, let's say, project work or one-off billings. So, it's lumpier. I don't read too much in the quarterly performance. Overall, for the year, we expect growth and a good performance from the business unit. Indeed, we recently launched in October, a very important piece as part of our payments business, the verification of PE, which affects hundreds of banks across Europe. We're the largest player in the space, and this was a big success for us. From a geographic perspective, it doesn't surprise -- shouldn't surprise that Italy is the region which was impacted the most by the discontinuities, the Italian banks that we've spoken of so many times. Nordics, I would say, good performance in the low single-digit area, but benefiting from continued progress on selling value-added products and services to our client base. DACH, I would say, very strong performance in Germany, slightly less so in Switzerland, but overall, good performance from the region and CSC, which is probably the most impacted by the softer summer and what I said earlier about Poland. Finally, before handing the floor back to Paolo, on costs. Costs grew about 3% in the quarter. HR costs still showing the benefits of the initiatives which were put in place last year and continue to be implemented during the course of this year. Slight growth coming on the non-HR costs, which is the one most impacted by volume growth, by inflation, by the growth of our business in general. But as you know, we manage our cost base as a whole. And you can see the 2% growth for the 9 months is pretty much in line with our expectations, and I don't expect the final part of the year to be any different. Actually, the fourth quarter expect to be better than the third and probably better than the 9 months to date. So, I think other than the phasing effect, which I mentioned earlier, which has to do with intra-group VAT and the timing of these things. And again, we're talking about a few millions of euros here and there. I would expect strong cost performance for 2025. So let me hand the floor back to Paolo for his final remarks. Paolo Bertoluzzo: Thank you, Bernardo. Let me just reiterate Page 11, the messages that I already anticipated on guidance. We will end our top line growth in the low to mid-single-digit space with underlying growth acceleration. Cash -- excess cash, will generate at least the EUR 800 million that we committed to with a high degree of confidence. And as far as the margin is concerned, for sure, it will be positive. We expect the Q4 performance in terms of margin expansion to be better than Q3. Where exactly it will land will depend on the dynamics in Q4. But in any case, we are talking about a few million euros shifting here and there. Let me close from where I started, 3 key messages on Page 13. We continue to deliver profitable growth across the business. We continue to shape Nexi for future profitable growth. And again, the 3 topics that really want to underline is the progress in integrated payment space across geographies, the continued acceleration of the newer channels in Italy together with continued good performance of the bank partnerships as well. And last but not least, a very strong performance and improving day by day in Germany for merchant services. And last but not least, continue to stay very focused on value creation. We're returning this year EUR 600 million to our shareholders in March. We'll talk about what we will do for 2026 on the back of a strong increase of excess cash generated in 2025. Last but not least, let me anticipate and invite you actually to the Capital Market Day that we will have at the beginning of March, more precisely, the current plan date is the 5th of March. Let me stop here, and let's open to your questions. Operator: [Operator Instructions] The first question is from Grégoire Hermann, Barclays. Grégoire Hermann: Just 3 of them, please. Just on the guidance, can you confirm whether you need reacceleration in Q4 to meet the EBITDA guidance or simply the cost reversal that you mentioned that you expect in Q4 is enough for you to meet that cadence? And then I think on the revenue, the guidance still leaves a pretty wide range for Q4. Can you comment whether you expect a reacceleration in Q4 there? And finally, on issuing solutions, you mentioned some phasing effects -- would you be able to quantify this phasing effect, please? Paolo Bertoluzzo: Greg, this is Paolo. Thank you for your question. Let me just comment on guidance, and then I'll pass to Bernardo on the issuing effect. As both Bernardo and I said, in Q4, we expect to see the peak of these extraordinary effects. And therefore, it's going to be difficult unless we surprise ourselves to see an acceleration of revenues in Q4. Nevertheless, we expect to see positive revenues in Q4. And in particular, we expect to see some instead acceleration from merchant services. Again, it will depend very much on November and December that, as you know, are very much peak months in our industry. While as anticipated by Bernardo, we've seen some reversing on some phasing in issuing that instead in the Q4 will perform not as good as in Q3 and year-to-date. Let me pass over to Bernardo. Bernardo Mingrone: Grégoire, I mean, as Paolo was saying, I think let me just add to his comments. I mean, in terms of the evolution of revenues during the course of the year, I would highlight what we put in the slide in terms of the underlying revenue growth, which has been pretty homogeneous throughout the quarters. Quarter 1 was probably a little lower than Quarter 2 and Quarter 3 was similar to Quarter 1 in terms of the underlying. And that's pretty homogeneous. Where you get the big gap between reported and underlying is this effect of banks which are exiting. And I think we spoke of this other times. I mean we do our best to slow this down as much as possible to hold on to clients which are being migrated from our platform to others as much as possible. But the impact of this is that we have a longer period of time in which there's a gap between underlying and reported. And the shape of this curve, this gap is very hard to predict. I mean it really depends on our efforts and also on the banks trying to migrate these customers' efforts. So, it's very hard to call the basis point how it's going to impact. However, with regards to issuing, going back to the issuing question, we're talking about single-digit million euros of impact coming from project work, which was probably in the fourth quarter compared to the -- or gap between year-on-year fourth quarter and fourth quarter at this point compared to third quarter and third quarter because that's what we're talking about. And we have a similar impact, something which is less than EUR 10 million in a year coming from the migration away from this Nordic customer. So how quickly they migrate away from us, I mean, it's really up to them and how that impacts us in the fourth quarter, we will see. But those are the 2 impacts. Operator: The next question is from Josh Levin, Autonomous Research. Josh Levin: Two questions from me. First, any views on what PSD 3 and PSR might mean for Nexi and the broader European payments landscape? And then second of all, I guess it's refreshing to have a call where the scripted remarks don't talk about AI. But to the extent you can, are you able so far to internally quantify the impact of AI on any of your unit economics? Paolo Bertoluzzo: Thank you for your both questions. Actually, we don't talk about that a lot in the call, and I'm very happy to cover both. PSD 3, PSR, I think, we don't see any material effects directly on the business and so on and so forth. If anything, we see some positive effect because the new regulations are creating further complexities into our business. And ultimately, our company is in the business of simplifying payments for our customers, being merchants, corporates, banks and so on and so forth. And the reality is that the more complexity is around, the better positioned are large players like us versus the smaller ones that normally struggle to follow through on the complexity. So, in general, we believe this is going to be something positive for us. On AI, we are all in, in AI since, I would say, 1.5 years ago. This year, we already see the contribution across, I would say, mainly technology expenses, both CapEx and OpEx for double-digit million euros. Let me not be precise in this specific case. For next year, we are planning much more than that, and this is across technology development, software development, software testing, infrastructure management, operations, onboarding, marketing, back-office processes, general productivity. We are all over the place on this. And we really believe that this will be a great contributor to increasing efficiency across the company and also obviously enabling us to invest more into growth over time as well as supporting continued margin expansion and cash generation. Obviously, we are also very much into leveraging AI for product innovation and differentiation. And most importantly, we are deeply into the topic of Agentic commerce, which, as we all know, will become relevant over time for the e-commerce part of the business. And on this front, we are participating both on the big tech initiatives. We are one of the few European companies cooperating with Google in the setting of the new standards on the Agentic side of commerce. But at the same time, we're deeply involved with international schemes, Mastercard and Visa in setting the future rules that are fundamental in defining how Agentic commerce will work. And clearly, this will be very much also European-specific or in any case, continent-specific because they will have to be consistent with European regulation. And again, given the position we have, we believe we are in a good place to be able to shape this and be a protagonist in this space as well. Operator: The next question is from Hannes Leitner at Jefferies. Hannes Leitner: Can you give us an update on the Sabadell joint venture given the Spanish banks have been not merging? And then can you talk about the 2026 expectation? Current consensus is just looking for a slight acceleration, but your headwinds with the Italian banking contract should come out of the base. So maybe you can talk there a little bit about the expectation from project work, the issuing contract ramping down and the underlying market trend growth you see, that would be it. Paolo Bertoluzzo: Let me take both questions. Sabadell, finally, after, I think, 2 years, we have seen what has been the conclusion. Sabadell remains an independent bank. We are obviously happy to see it. And again, here, let me lay down the facts as clearly as I can, even if we discuss them in the past with many of you. First of all, we have no commitment whatsoever any longer across the 2 of us because this was an old deal that was happening in old market conditions. And therefore, there is no obligation any longer among the 2 parties. We are in great relationships. a great relationship, and we have agreed this very, very friendly. At the same time, we continue to consider Spain an interesting market for a company like Nexi. And honestly, we continue to consider Sabadell a fantastic potential partner in Spain, given how focused they are on payments, given how focused they are on SME, given how deeply entrenched into the local ecosystem they are. And therefore, we will continue to have conversations with them to see if there are new opportunities to do something together on completely new terms, potentially also completely different business model. So great relationship, still interested in doing something at different terms. We will see. We'll see where it lands in the coming months. We are very, very relaxed about it and actually happy to have the opportunity to have the conversation. As far as 2026 is concerned, obviously, as you can imagine, we are working on our budget for next year. We'll talk about it in March together with the guidance. I can only reiterate what both Bernardo and I said as far as risk is concerned, we should always remember that our performance this year is materially affected by these exceptional events. And therefore, the dynamic will really depend on how these events come into place and then unwind over time. As we said, we see these events peaking in Q4 this year, then continuing at a slightly lower level in the first half of next year and then slowing down towards the last part of the year. Therefore, we would expect this - the overall effect on a yearly basis to be probably a bit less than what we have seen this year, and this should support with our underlying growth continuing should support some acceleration, but this is a topic for March. Hannes Leitner: Maybe just a quick follow-up on German performance. Was this kind of also driven by one of your competitors basically being in the spotlight with credit downgrades? Or is that all organic initiatives? Paolo Bertoluzzo: No, no, no. It's all organic initiatives. This is growth coming from effective products in the market, competitive products in the market, a strong focus on the most valuable segments being SME and in particular, the mid- part of SMEs and the more national corporates, mid-corporates, supported by a strong and focused investment in go-to-market and in sales and honestly, a strong team in place in the market. It's all organic. And by the way, we are winning not just against, I think, the incumbent you in mind, but a little bit more across the board. Maybe coming back on your questions around guidance into next year. As I think we have anticipated in March as well, this year, a lot of the effect that we have seen from these exceptionals has to do with merchant services in Italy in particular. Next year, we should see less impact into merchant services and more into issuing given this phasing. So, let's see how it evolves. Operator: The next question is from Sébastien Sztabowicz, Kepler Cheuvreux. Sébastien Sztabowicz: On pricing environment, you mentioned a little bit more pricing pressure in Poland, if I'm right. Have you seen any kind of changes in the competitive landscape, new players being a bit more aggressive in some of your markets, whether it is traditional PSPs or some digital players or commerce platform coming to the market? That would be the first question. The second one, in terms of contract renewal, do you have any major contract renewal coming into the next 12 to 18 months to understand if there is more downside risk to your revenue on top of what you expect already from the contract ramping down at Banco BPM and other discontinuities? Paolo Bertoluzzo: Thank you for the 2 questions. On pricing pressure from new players and so on and so forth. I think what we are seeing in Polish e-commerce that again, we're really talking about a few million euros here, which just made it explicit to you and transparent to you because in the quarter and in the region. In merchant services, they have some -- a few basis points impact. But in the scheme of things, that are totally marginal. Honestly, we don't see any major change in dynamics. Obviously, there is more pressure in various countries from these newer players more focused on SMEs. We are competitive in the market. We have to stay competitive. We do what we need to stay competitive. I think the performance in Germany is showcasing it very well. Poland, we continue to take share also in this environment. Obviously, in places like Italy and Denmark where we are by far the leaders in the market, we are more attacked by these players that we are, by definition, the more visible ones. But that's the reason why we are ramping up our direct sales channels next to the -- and in partnership with the bank ones to help us remain and stay competitive versus these players that normally have a direct go-to-market as well. So, we believe we are overall well set up to compete in that space, and we will continue, obviously, to invest to stay competitive. As far as the second question is concerned on contract renewals, I think we did comment a little bit on this topic last time. We have won the renewals on 100% of the deals that were up for renewal over the last 15 months by now or something like that. I think we said 12, 3 months ago. So, I guess now it's 15%. Going forward, we see much, much less of potential renegotiations or situations coming. I think probably the one that is worth mentioning is going to be the renewal of the Monte dei Paschi distribution agreement on the book in 2027. We have a great relationship with the bank and don't forget that the book is ours. So, we're really talking about the distribution agreement because we did buy the merchant book back in 2017. So, but obviously, we will do whatever we can to continue the great relationship we have with them, and we just renewed other contracts with them only a few weeks ago. Operator: The next question is from Aditya Buddhavarapu, Bank of America. Aditya Buddhavarapu: Could you just clarify the comments on Q4? Did you say at the beginning of the Q&A that you expect an acceleration in merchant services? Maybe I didn't fully capture that. So, if you could just clarify that. And then also just related to that, can you talk about what you've seen so far in Q4 in terms of volumes? I know October is probably a smaller month, but any color on what you're seeing on volumes or the broader macro would be interesting. Second question, you talked a lot about the ISV partnerships, and you have about 500 in place right now. How big are those partnerships in terms of your overall volumes today and how fast are they growing? Any color would be appreciated. And then finally, just on the underlying acceleration you talked about in 2026. Could you just talk about again the drivers there? What should help to improve that? Paolo Bertoluzzo: Let me take the 3 of them. Q4 MS reacceleration, probably, yes. We are talking about small numbers again here. Let's be clear. We're always talking about a few million euros shifting here and there. And that should be supported by the various initiatives that we are doing, but also from the fact that at least in Italy, in terms of volume, we should start seeing some reversal of the strong impact that we had so far on MS, in particular, from the Banco now recently from the Cassa Centrale. So that should happen. As we also said, instead we will start seeing more impact on IS over the next few quarters. Then let's see what happens. If I look at the volume dynamics in October in Italy, we already see a little bit of better volume growth. So, it looks like it's moving in the right direction. But again, very early to say. Again, never forget that the fourth quarter is really, really shaped by what happens at Christmas and Black Friday. So, let's see what happens. On ISVs, it's difficult to give a number because the classification of what an ISVs versus an ISO versus an ECR provider is very, very complicated. So, we don't want to be stuck to numbers that then change over time and then confuse you. Let me just give you a little bit of the flavor here. We are talking a lot about this topic because we believe that long-term, it will be impacting our industry also in our geographies. However, this is a topic that in terms of overall impact is extremely small and fragmented across Europe at this stage, at least the Europe that we see. Nothing to do with the U.S. It's coming slowly. It's coming in a very differentiated way across the various markets. This topic of ISVs and therefore, the materiality of it is more visible in the Nordics, where this started a bit earlier. As you know, the Nordics are super digitalized as economies and therefore, also SMEs are digitalizing faster. And that's the reason why we see it there faster as a dynamic. Germany is very much behind the Nordic situation, even if we start to see obviously more focus there. In Germany, what is still big is ISOs, resellers, these types of dynamics, which are not precisely IVs. Poland, I would say, is more or less in the state of Germany. And last but not least, Southern Europe, Italy, but also Greece, Croatia and the other markets where we are present, this is really, really, really small. Obviously, we are working to take position, but you hardly see these volumes. A lot of players are trying to get organized to do this, but they are still in the process. And obviously, we are in the process of working with many of them. As far as 2023 is concerned, I can only reiterate what I said before in terms of the market risk dynamics. Again, as we said in the past, we see our underlying growth remaining solid in the mid-single-digit plus and ideally accelerating on the back of the market share gains here and there, plus the initiatives to increase value for our merchants with softer merchant financing and the various topics we discussed in the past. The profile of precise will, therefore, depend very much on what happens on these exceptional events that we discussed in the past. Again, as I said before, this should ease out, especially towards the end of 2026. If it happens the way we see it happening as we speak, the overall impact should be a bit lower than this year. And therefore, this should support some reacceleration. But again, on the back of strong underlying. Operator: The next question is from Alexandre Faure, BNP Paribas. Alexandre Faure: I have 2, 3 questions, if I may. One is going back on this commentary you made on both discontinuities having reached or reaching peak pressure in Q4. Just a little surprised because to your point, it feels like issuing will come under pressure next year. You mentioned that renegotiation in the Nordics, but I think Banco BPM was also supposed to migrate off next year? So, is this being pushed a little bit? Just trying to get a sense of the latest timing there. And maybe relating to that, how should we think of any potential lingering margin headwind if we have some of those lucrative relationships continuing to dwindle in 2026? And my last question is completely separate topic that you touched on earlier, Agentic Commerce. Just curious, Paolo, how you think about it more broadly, looking maybe 3, 4 years out? Would you view this as an opportunity to take further share away, maybe from banks who might struggle to keep up? And beyond share dynamics, how would you view Agentic Commerce impacting yields and margin. I think there's more work you need to do, maybe you'll be able to price for that. So, any thoughts there, much appreciated. Paolo Bertoluzzo: Alexandre, thank you for your 3 questions, or maybe 2 plus 1. First of all, on the discontinuities in Q4, again, we don't have full control of the phasing of all these things. You're right in saying that most of the effects from Banco issuing are expected at some point into next year. To be honest with you, we don't have a full visibility because we understand the supplier they've chosen is behind plan. We may start to see something on a part of it in the last quarter. But again, it's not just Banco. There are smaller things as well. So that is why, if you combine everything, we expect to see the last quarter this year as the one with the highest impact. And again, as I said, into next year, then from this peak, we expect to have basically the first and the second quarter starting to slow down, probably more similar to the third quarter this year, and then instead having a material reduction towards the year-end. But again, the exact phasing is not depending on us. And by the way, we fight as much as we can to make this happen as late as possible and as small as possible. As far as margin headwinds into next year, clearly, this dynamic put pressure on margin. The simple fact that we will expand EBITDA margin this year tells you that as we do all of that, we also have a number of initiatives that increase margin, that the new things we are doing are margin contributing. And by the way, we continue to do a pretty hard work on efficiency as usual, but obviously, even more in the case of the environment we're in. And that's one of the reasons why I think, as I was answering to the question of Josh, in the very beginning, we are so focused on AI and lever also to create space for margin expansion and also reinvestment. As we look into next year, this is exactly what we're looking at. I think ultimately, we're we'll be landing on margin next year will depend very much also on where and how much we decide to invest ourselves into the various topics that we have been talking about in this call as well. Agentic Commerce, listen, I think it's a super fascinating topic. Let's be very clear. I think if people tell you they know exactly what will happen, how it will happen, and so on and so forth, they may be stretching it a little bit. It's super complex. And by the way, to a certain extent, we like complexity because, as we said in the past and also today, it's always an advantage for people that are really focused on that scale with competence in this environment. But let me try to add a few comments here. First of all, never forget that ecommerce for Nexi is maybe unfortunately, a relatively small thing in the sense that we are talking about 5% to 10% of our total revenues, growing nicely. And this is clearly one of our growth engines, but is a relatively smaller part of our portfolio, point # 1. On that basis, we see, as you mentioned rightly so, this complexity potentially being an asset for us because, again, the smaller players, the banks in general, will struggle to be a part of this "Potential revolution in ecommerce". Clearly, our partner banks in Italy will benefit from our efforts, and we'll be partnering with them also on this front. I want to be very, very clear. But never forget that ultimately, we are partnering with banks in Italy, Greece, and Croatia elsewhere. Banks are competitors. And therefore, we believe that we really struggle to keep up in this space, or at least many of them. To be honest with you then, how this will develop will depend very much on customers. And when I'm talking customers, I'm talking about consumers, the ones that buy stuff. Because if you really want to be extreme version of Agentic Commerce, which is the one where not only you start the commerce activity from AI, from agents, but you complete the transaction, including the payments in an agent-to-agent dynamic, that really requires a big leap of faith from the customer that basically has to trust an agent fully for spending his or her money. And I think that this is maybe one day possible, maybe for certain verticals and product categories. But honestly, how big it will be in the future, I think, is really something that we will need to see. In any case, we are investing in this space, and we will be organizing ourselves in this space for obviously, enabling merchants in any case to be able to interact with agents, because maybe it is going to be just a small thing. But our role is to help merchants to accept any type of transaction, any type of payments, also the ones coming through agents. At the same time, we're already working on what we can do on the issuing side to make sure that our products, our cards are Agentic Commerce-ready. Therefore, we see a lot of work that we can do to enable all of this. I'm sure we'll talk about it again many times in the future. Operator: The next question is from Justin Forsythe from UBS. Justin Forsythe: Just a few here for me. I want to hit first fiscalization in Italy. If I'm not mistaken, I believe that's meant to take place and become enacted, I believe, January of next year. Do you see that as a potential forcing factor for greater adoption of software-led payments in Italy and/or potential for Nexi and Nexi's ISV partners to grow? Second question is around the Zip Pay partnership in Ireland, which I believe you helped roll out this application within your DBS solutions business. Maybe you could talk a little bit about how you won that, what the monetization and rollout timing looks like there? And just more broadly speaking, how you see the go-forward opportunities within DBS. And whether you see this as a business line that's strategic to you longer-term and add synergies across your other business lines? And maybe updated thoughts on what you plan to do with that asset, if anything? I know there's been some news on that subject. And finally, just a real quick cleanup question for you, Bernardo. If I have the math right, it seems like you had 0% growth in international schemes in the quarter. I know you noted some softness in Southern Europe. Also, I'm sure that has to do with the bank M&A as well in MS. But maybe if you could provide a normalized number there and/or also, I know we were commenting on trends in October month-to-date. Maybe you could add Germany and the Nordics to that as well, if you don't mind. Thank you very much. Paolo Bertoluzzo: Hi Justin, I'll let Bernardo take the last question. On fiscalization, yes, it's right. It's happening. It will happen in a few months, but it will happen in such a way that will not require merchants to change neither the cash register nor their acceptance solutions because the reconciliation will be done by the tax, basically authorities, the tax authority technology in basically the cloud. And therefore, the only thing that merchants will have to do is going to be to connect in the cloud, to associate in the cloud, their cash register, which is already connected. Don't forget here, maybe let me make one step back because -- so that everybody can follow this conversation. In Italy as well as in other places, there is already the obligation to have your cash register connected with the tax authorities, okay? The new news that will be implemented into next year is that there will be a connection in between what the terminal is transacting on digital payments, the point-of-sale terminal and what the cash register is registering and is transacting. And this connection in between -- clearly, this is intended to avoid certain behaviors for tax avoidance that we're playing with the 2 devices being not connected. Now this connection will happen in the cloud. And therefore, there is no need for changing the ECR. There is no change for changing your cash register. There is no need to change your acceptance solutions, your point-of-sale terminal. The connection will happen in the cloud. The merchants will simply need to register in the cloud the 2, if you like, components and associate the 2 of them. Obviously, we will be helping. We're already helping the merchants that we will be able to do it with Nexi in one click through our digital assets in the cloud, okay? Around the market, as you can imagine, you have some ECR vendors that are claiming that you need to change everything and so on and so forth. But honestly, that's a marginal, I would say, commercially aggressive behavior, but that's not -- that's absolutely not needed. So, we believe that this dynamic of digitization of merchants will continue with its own pace that in Italy so far is relatively slow. And honestly, we will try to accelerate ourselves through our partnerships with our own initiatives but should not see a material change because of digitalization. On this account-to-account instant pay-based service that we have developed with the Irish banks, I think it's a nice service. We are very proud of being chosen by them and by a number of other countries also outside of Europe. I would love to tell you it's big and growing. The reality is that it's relatively small, you don't sit into the big scheme of things, but it is something that, again, we are very proud of and we'll continue to pursue because ultimately, whenever we are chosen by central banks, and we're chosen by bank consortia is always a great testimony of the value that we can create and how deep we are into technology and modern solutions. As far as DBS is concerned, more broadly, we are where we were every single time we talked about it. There are areas of this business that are less strategic, and we'll continuously review the portfolio and pursue certain potential sales. But again, this has already happened, will continue to happen on a one-to-one basis. Last one, Bernardo. Bernardo Mingrone: So Justin, I think I presume you referred to that 1% growth of value managed transactions in the 9 months that we reported is on Slide 6. I couldn't find the 0% you're referring to. But I think your question was --- Justin Forsythe: Bernardo, just to clarify, I was just saying that international schemes in the 9 months was -- what was it, about 5%. And I think that implies something close to 0 for the 3Q. Bernardo Mingrone: Yes. Okay. Fine. I mean it's -- in general, I mean, there's a recast, as you can see in the database due to the fact that we're aligning, let's say, the -- as we re-platform across the group, in particular in Italy, we have recast some of the historic volumes just to make sure they're 100% aligned with the revenue. I mean the revenues were always 100% correct. The volumes, maybe we had more than -- we were calculating maybe more than 1x some kind of volumes because they were driving certain revenues. And that probably gives you the impact you're referring to. But in general, I think the crux of the question was about the impact of the banks that are leaving the portfolio. So, the underlying, let's say, volume. And I would say that in Italy, that weighs probably 5 percentage points more or less, and it's about half that at the group level. So, if you look at it at the Italian level, it's twice what it is at the group level. Justin Forsythe: And the last piece of that was just on the Nordics and Germany in October, if there's any additional comments there. Thanks. Bernardo Mingrone: In October, Germany, as we mentioned, for the first 9 months for the third quarter is performing very well, mid-teens in terms of growth. I think the acquiring volumes are strong. Post terminals may be lumpier. But in general, I think even October is a strong month continuing on the -- like the rest of the year. And Poland, if you look at physical acquiring and ecommerce, both volumes are strong. As I said, when we called out Poland, we're talking about more of a pricing stroke, let's say, shift to marketplaces, larger customers on ecommerce compared to smaller customers, which has a pricing effect. But on volume growth, Poland is performing pretty well as well. Paolo Bertoluzzo: I think in general, the way you should see it, Justin, is Nordics trailing around mid-single-digit volume growth, maybe a bit short of that, but around mid-single digit, which is pretty good for a market that is already penetrated where we have a strong leadership position. And instead, Germany and also Poland, by the way, in the high single-digit type of space. Operator: The last question is from Gabriele Venturi, Banca Akros. Gabriele Venturi: Could you please comment on potential risk and impacts that could arise from possible M&A developments that could involve Credit Agricole Italia and BPM or BPM and the new Mediobanca Monte dei Paschi? Thank you. Paolo Bertoluzzo: Well, listen, you know better than I do that the situation is super, super open, and there are many options that we can read in the media, then obviously, we are just spectators to all of this. The only thing I can comment is that we have a very strong partnership with Credit Agricole that has just been renewed for the next 3 to 4 years across issuing and acquiring to 2029 and the performance with them is super strong and relationship is great. Same goes on for Monte dei Paschi, where, as I said, we just renewed a part of the issuing contracts. The other part is longer-term, and we'll have in the coming months a conversation on how to extend the merchant book distribution agreement while the merchant book itself is already ours. So, both parties, we have strong relationship. You know where Banco is eating to. So, let's see, it's very difficult for us to provide any further comments. We are, I think, in a strong position with both Credit Agricole and Monte dei Paschi. Operator: Mr. Bertoluzzo, there are no more questions registered at this time. I turn the conference back to you for any closing remarks. Paolo Bertoluzzo: Well, thank you again for attending this call. And most importantly, looking forward to seeing you in early March for not just results, but for the Capital Market Day. We plan to have in the same day a quick update on Q4 results, but then obviously looking to strategy and longer-term outlook for the company. And in that context, we will provide the guidance for 2026 and also capital allocation, our commitment for 2026 on the back of a very strong cash generation this year that is expected to land with EUR 100 more million of cash generated versus last year. Thank you very much and looking forward to seeing you over the next few hours and days in many conversations. Thank you. Operator: Thank you. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.
Operator: Hello, and welcome to the Group Bouygues 9 Months 2025 Results Call. [Operator Instructions] Now I will hand the conference over to Frederique Delavaud, Head of Investor Relations. Please go ahead. Frederique Delavaud: Good morning, everyone, and thank you for joining us for the presentation of Bouygues 9 months 2025 results. This presentation will be led by Pascal Grange, Deputy CEO of the Bouygues Group; Stéphane Stoll, who, as you know, was appointed CFO of the Bouygues Group beginning of August; and Christian Lecoq, CFO of Bouygues Telecom. Following their presentation, they will be answering your questions. Pascal, I'll let you start this call. Pascal Grangé: Thank you, Frederique, and good morning, everyone. Before listing our highlights, I would like to recall that, as we have already mentioned since the beginning of the year, the global macroeconomic and geopolitical environment remains very uncertain, notably in France. That being said, I want to highlight that group expects for 2025, a slight increase in sales year-on-year, excluding exchange rate effects and a slight increase in COPA year-on-year. These expectations are reflected in the group's 9 months results that are strong. Looking at the main indicators for the 9 months, we can see that. First, group sales were up 0.9% year-on-year, notably driven by the construction businesses. Q3 group sales were stable year-on-year given ForEx, which had an impact of around minus EUR 50 million over the quarter. Second, COPA increase year-on-year was notable in the first 9 months 2025. The increase was driven by the construction businesses and Equans. Third, excluding the exceptional income tax surcharge for large companies in France of EUR 60 million, the net result attributable to the group was up year-on-year. I'll remind you that the effects on the net profit attributable to the group of the French Finance law and the Social Security Financing law, which was passed during the first quarter of 2025, including mainly the exceptional income tax surcharge for large companies in France had been estimated at around EUR 100 million for the full year 2025. This is still our evaluation to date, and EUR 80 million already been recorded in the first 9 months 2025. Fourth, the group benefits from a particularly robust financial structure. At end September 2025, our net debt improved versus end September 2024. And in September [Technical Difficulty] Standard & Poor's revised our negative to stable the outlook associated with its A- credit rating. Let's now have a look at our key figures on Slide 5. Group sales in the first 9 months [Technical Difficulty] '25 stood at EUR 41.9 billion, up 0.9% year-on-year. This increase was notably driven by Bouygues Construction, Colas and Bouygues Telecom with the contribution of La Poste Telecom. In the first 9 months '25, the group COPA increased by EUR 95 million year-on-year and reached EUR 1,814 million. This increase was led by the construction businesses on Equans, TFA and Bouygues Telecom [Technical Difficulty] COPA being down year-on-year. The net profit attributable to the group was EUR 675 million. This amount is not comparable to that of the 9 months 2024 as it includes the exceptional income tax surcharge for large companies in France, minus EUR 60 million. Excluding this surcharge on a comparable basis, the net profit attributable to the group would have been up EUR 48 million year-on-year at EUR 735 million. Last, Net debt was EUR 7.6 billion, an improvement of EUR 856 million year-on-year. This is a very good performance, in particular, if we consider the amount of net acquisitions made over the year, mainly including Bouygues Telecom's acquisition of La Poste Telecom for almost EUR 1 billion. This is a theoretical vision, of course. But without these acquisitions, our net debt would have been improved by EUR 1.9 billion year-on-year. Let's now turn to the review of operations [Technical Difficulty] on Slide 8. Let's begin [Technical Difficulty] in the construction businesses. You can see that at end September 2025, the backlog was at a very high level of EUR 32.1 billion, providing good [Technical Difficulty]. Looking into details on Slide 9, let's start with Colas backlog, which was up EUR 1.4 billion year-on-year at EUR 14.2 billion, with Rail backlog up 31% year-on-year. In roads, the backlog was up 2% year-on-year, of which French and international backlogs were respectively down 3% and up 4% year-on-year. At constant exchange rates, the backlog was up 12% year-on-year. To be noted that the backlog [Technical Difficulty] to be executed in the current year and next year was up around EUR 400 million year-on-year. At Bouygues Telecom -- Bouygues Construction, the backlog stood at EUR 17.2 billion, down EUR 0.7 billion year-on-year, but stable compared to end June 2025. Civil works was down 14% year-on-year. And in building, the French backlog was up 12%, and the international backlog was up 1%. At constant exchange rates, the backlog was down 3% year-on-year. It is important to notice that EUR 17.2 billion is a very high level of backlog. At end September 2025, the backlog to be executed in the current year and next year was down around EUR 200 million year-on-year. However, additional significant contracts are expected by mid-2026, notably internationally, which will support the level of the backlog. In that respect, you probably read this morning that Bouygues Construction will carry out the civil engineering works for two new EPRs at Sizewell C nuclear power station in the U.K. as part of a civil work alliance. The share of Bouygues Construction in this construction is estimated at around EUR 3.3 billion. This is [Technical Difficulty] very good news. To be noticed that the scope of works will be carried out through the delivery of a series of work orders, and so Bouygues Construction will book the related orders as they are instructed starting from [Technical Difficulty] fourth quarter. [Technical Difficulty] at Bouygues Immobilier, the backlog was at EUR 0.7 billion at end September 2025, down EUR 0.3 billion year-on-year. The decrease of around EUR 70 million in backlog since June 2025 is mainly due to the deconsolidation of activities in Poland in July 2025. Moving to Slide 10. I will make a few comments on the strong commercial activity in the construction businesses. First, at [Technical Difficulty] level, the order intake [Technical Difficulty] was at EUR 10.8 billion. In Road activities, this order intake was slightly up with a slight decrease in Mainland France as expected in the pre local elections here, and it was up [indiscernible] internationally with significant [Technical Difficulty] awarded in Q3 in Morocco, in the U.S. and in Canada. In Rail, the order intake was up strongly in the first 9 months with also notably a significant contract awarded in the U.K. in Q3. Then [Technical Difficulty] construction level, the order intake in the first 9 months reached EUR 6.8 billion, driven largely by the contracts of less than EUR 100 million. Several large contracts were awarded in 9 months 2025, including [Technical Difficulty] three contracts for more than EUR 100 million in Q3. Do not forget that year-on-year change in order intake at Bouygues Construction is not representative, given fluctuations in the award of large contracts. As a reminder, 9 months 2024 order intake included several major contracts, notably the Torrens to Darlington Highway contract worth more than EUR 2 billion, creating a particularly strong basis of comparison. And as I already mentioned in previous calls, please also note that additional significant contracts are expected by mid-2026. At Bouygues Immobilier, residential reservations stood at EUR 0.9 billion at end September 2025. To be noted, an improvement year-on-year [Technical Difficulty] residential unit reservations [Technical Difficulty] and stable in volume in a still changing market environment and a decrease in block reservations. Two small positive signs are to be noted. Sell-off and cancellation rates improved year-on-year. Last, as we have already said many times, the commercial property market remains at a standstill. Now let's have a look at sales on Slide 11. Sales were up 2% year-on-year and 3% like-for-like at constant exchange rates. First, sales were up 1% year-on-year at EUR 11.9 billion, driven by Rail up 12%. This growth being supported notably by Egypt, France and Germany. Roads were stable with France up 2%, EMEA up 2%, Asia Pacific strongly up 19%, and North America down 5%. Colas sales were up 2% year-on-year at constant exchange rates. Second, Bouygues Construction sales were up 4% year-on-year [indiscernible] driven by its three segments of activity, all up year-on-year. Bouygues Construction sales were up 5% year-on-year at constant exchange rates. Last, at Bouygues Immobilier, sales were down 6% [Technical Difficulty] EUR 0.9 billion with residential property down 4% year-on-year, restated for the disposal of activities in Poland. Next slide. Current operating profit from activities of the construction businesses was EUR 591 million, improving EUR 115 million compared to 9 months 2024, driven by the three business segments. COPA at Colas was slightly up year-on-year, improving by EUR 11 million with the [indiscernible] margin from activities improving 0.1 points at 2.7%. COPA at Bouygues Construction was strongly up year-on-year, increasing by EUR 45 million and with 0.4 points COPA margin improvement at 3.3%. At Bouygues Immobilier level, COPA was up EUR 59 million year-on-year. It includes some one-off items, representing a global amount of EUR 27 million with the disposal of Poland activities in particular. Now I'll hand over to [Technical Difficulty] who will comment Equans results. Stéphane Stoll: Thank you, Pascal. Good morning, everyone. Let's move to Slide 14. Equans backlog at end of September 2025 was stable year-on-year at EUR 25.8 billion. Order [Technical Difficulty] 9 months of 2025 stood at EUR 13.9 billion, a high level close to the one of September 2024. It is worth noticing that order intake in contracts of less than EUR 5 million was up year-on-year [Technical Difficulty] representing more than 2/3 [Technical Difficulty] intake. On the other hand, order intake in projects of more than EUR 5 million was down year-on-year, reflecting a high basis of comparison in 2024 and a wait-and-see stance in some areas of activity, notably in [Technical Difficulty] data centers in Europe and on the EV market. In parallel, we continue to observe a gradual improvement in the order intake margin. As for sales, they were down 2% year-on-year in the 9 months 2025. This essentially reflects three main items. First, [indiscernible] the continued careful selection of [Technical Difficulty]. Second, a proactive exit from nonstrategic activities, notably the new business in the U.K. that we mentioned in the previous publications. And third, a temporary slowdown in relation to the wait-and-see stance in data centers and gigafactories I mentioned earlier. First 9 months sales were also impacted by a negative exchange effect of minus EUR 55 million. This effect concentrated in Q3, sales being impacted by a negative minus EUR 66 million over the quarter. As such, Q3 sales down 4.2% year-on-year were down 2.8% year-on-year at constant exchange rates. Equans contribution to the group's COPA represented EUR 565 million, a significant increase of EUR 91 million year-on-year with a 4.1% COPA margin up 0.7 points year-on-year, confirming the continued successful execution of the Perform plan. Let me finally give you some updates on our recent M&A developments. Equans secured four bolt-on acquisitions in this quarter in Germany, Austria, Italy and North America, around EUR 180 million of full year sales. These acquisitions are in line with the strategy shared during the Capital Market Day back in 2023. To end with Equans on Slide 15, let me just add that in [Technical Difficulty] 2025, Equans will continue its strategic plan and is aiming at achieving a slight decrease in sales versus 2024 at constant exchange rate given: one, the proactive exit from remaining nonstrategic and nonperforming activities; and second, the temporary slowdown in some areas of activity. And Equans is also aiming at achieving a margin from activities close to 4.3%, up from the 4.2% mentioned end of July. Finally, Equans confirmed it is targeting a cash conversion rate, which is COPA to cash flow before working capital requirement of between 80% and 100%. And as a reminder, Equans aims to gradually catch up with the organic growth of sector peers and to achieve a margin from activities of 5% in 2025. Now Christian is going to detail Bouygues Telecom's main figures. Christian Lecoq: Thank you, Stéphane, and good morning, everyone. Before turning to Slide 17 and entering into the 9 months and the third quarter performance of Bouygues Telecom, I would like to say a few words about the integration of La Poste Telecom within Bouygues Telecom. It has now been 1 year since we [Technical Difficulty] completed the acquisition of La Poste Telecom [Technical Difficulty] have already achieved several successful milestones, notably: first, the strengthening of our mobile business, thanks to La Poste Telecom's customer base and the vast distribution network of over 6,000 post office of La Poste Group; and second, the promising [Technical Difficulty] fixed commercial offers [Technical Difficulty] in September 2025. Since October 2025, new La Poste Mobile's customers have access to Bouygues Telecom's mobile network and can benefit from [Technical Difficulty] services such as 5G or [Technical Difficulty]. That being said, performance has remained this quarter, solid and fixed, as you can see on Slide 17. FTTH continued to experience strong growth with 371,000 new customers during the first 9 months [Technical Difficulty] third quarter. With a total of 4.6 million customers, FTTH customers represented 85% of our fixed customer base, up from 79% 1 year ago. This is the result of a wider FTTH [Technical Difficulty] combined with the excellent quality of our network and services. As we have already achieved a very high level of migrations from DSL to FTTH, we will certainly observe a logical slowdown in these migrations in the coming quarters. Please also note that the target of 40 million FTTH premises marketed have been reached more than 1 year ahead of schedule, which is also a very good achievement. You can also see that we had a total of 5.3 million fixed customers at end September 2025. This represents an increase of 184,000 customers in the 9 months, of which 79,000 in the third quarter. This good momentum is driven by both: first, B.iG and B&YOU Pure Fibre offers with customer satisfaction improving and churn lowering. And second, as I have already mentioned, the promising launch of the fixed commercial offers of La Poste Telecom in September 2025. The momentum remained also good on value with fixed ABPU up EUR 0.2 year-on-year at EUR 33.4 per client and per month. As you can see on Slide 18, the commercial performance was good in mobile in a mature and still competitive market. We observed ongoing positive effects of B.iG on customer satisfaction and churn, and continued growth of converged households and [Technical Difficulty] per household. At September 2025, Bouygues Telecom had 18.5 million mobile plan customers, excluding MtoM; thanks to 231,000 new customers in the first 9 months, of which 125,000 in third quarter. Mobile ABPU, including La Poste Telecom, was stable versus Q2 2025 at EUR 17.3 per client and per month. It reflects continued low pricing for new customers in the low-end segment and the dilutive effect of La Poste Telecom as expected. Let's have a look at the key figures on Slide 19. As a reminder, La Poste Telecom has been consolidated in Bouygues Telecom's financial statements since 1st November 2024. That being said, we achieved a 5% growth in sales billed to customer year-on-year, broadly stable, excluding La Poste Telecom. Total sales were up 4% year-on-year with 3% growth in other sales. EBITDA, after leases, was stable year-on-year at EUR 1,505 million. This stability is explained by an increase in sales billed to customers and ongoing efforts to control costs, compensated by second, higher energy costs due to the end of very favorable hedging conditions between 2020 and 2024. The current operating profit from activities was down EUR 94 million at EUR 509 million, reflecting the increase in G&A in line with our CapEx trajectory and of course, the higher energy costs I already mentioned. Last, you can notice that gross CapEx was EUR 1,036 million in 9 months 2025. I'll remind you that the CapEx are nonlinear over the year. Moving to Slide 20. Let me remind you Bouygues Telecom's 2025 targets. First, sales billed to customers, including La Poste Telecom, would be higher than in 2024. Second, sales billed to customers like-to-like, excluding La Poste Telecom, are expected to be close to the level of 2024. The figure will be either slightly higher or slightly slower, depending on the duration and intensity of the competitive pressure currently [Technical Difficulty]. Third, EBITDA after leases will be broadly stable compared to 2024. In 2025, Bouygues Telecom will no longer benefit from the very favorable low hedged energy prices arranged in 2020 and 2021. La Poste Telecom’'s contribution to EBITDA after leases will be limited in 2025, with the full effect expected from 2028. And last, gross capital expenditures, excluding frequencies, is expected at around EUR 1.5 billion, including [Technical Difficulty] expenditure related to -- for the migration of La Poste Telecom Mobile customers. Pascal, I now let you share a few words on TF1. Pascal Grangé: Thank you, Christian. Turning to Slide 22. Let's talk briefly about TF1's results, which were released on the 30th [Technical Difficulty]. First, the TF1 Group reinforced its audience leadership. Among them, the total audience share among women under 50 who are purchasing decision-makers was at 33.8%, up [Technical Difficulty] the total audience share among individuals aged 25 to 49 was at 30.7%, up 0.7 points. Second, in the 9 months 2025, [Technical Difficulty] were stable year-on-year. Media sales decreased by 1% year-on-year with advertising revenues down 2%, and the continued strong growth momentum for TF1+, up 41% year-on-year. Studio TF1 posted revenues up 11% year-on-year, including a EUR 25 million contribution from JPG. Third, COPA amounted to EUR 191 million, slightly down EUR 7 million, and COPA margin was at 11.9% in 9 months '25, down 0.5 points year-on-year. It includes a cost of program of EUR 662 million. The slight decrease versus the 9 months 2024 was due notably to the base effect related to the EURO 2024 football tournament. Please also note that there was a capital gain of EUR 17 million in relation with the disposal of My Little Paris and PlayTwo recorded in Q3 2025. As a reminder, in Q3 2024 [Technical Difficulty] had a capital gain of EUR 27 million in relation to the disposal of the Ushuaia brand license. Turning to Slide 23. I will end by saying that the TF1 Group confirmed the following targets. A strong double-digit revenue growth in digital. On the dividend side, aiming for a growing dividend policy in the coming years. After observing that domestic instability adversely impacted ad market in October, first indications are also below expectations in November visibility until year-end. As such, TF1 has adjusted its 2025 guidance for margin from activities to a level between 10.5% and 11.5%. Previously, TF1 Group was targeting a broadly stable margin from activities compared to 2024, which was 12.6%. Stéphane, I'm now going to -- Stéphane is now going to comment on the group's key financial figures. Stéphane Stoll: [Technical Difficulty] start with the P&L on Slide 25. We have already discussed 9 months sales and current operating profit from activities at the beginning of this call. I will thus focus on the bottom part of the P&L this morning. First, PPA was minus EUR 77 million, [Technical Difficulty] includes mainly EUR 35 million recorded at Bouygues SA level in relation to Equans, and EUR 26 million recorded at Bouygues Telecom level. Second, other operating income and expenses, which do not reflect operational activity were negative at minus EUR 151 million end of September 2025. This amount is largely due to, on the one hand, noncurrent charges in relation to the Equans management incentive plan, which represented EUR 66 million, an amount split between Equans and Bouygues SA. On the other hand, some provision recorded at Bouygues Construction and Colas, respectively, in relation to a change in regulation in U.K. and to recent developments relating to an international project at Colas Rail dating back to 2011. Third, financial result, which comprise [Technical Difficulty] cost of net debt, interest expense on lease obligation and other financial income and expenses stood at minus EUR 305 million, an amount close but a bit higher than to that of the 9 months of 2024. Fourth, a tax charge was recorded for EUR 443 million, higher than last year in relation to higher operational results. This amount excludes the EUR 71 million of exceptional income tax surcharge for large companies in France. Fifth, [Technical Difficulty] the tax surcharge on the net result attributable to the group was minus EUR 60 million, leading this result to reach EUR 675 million, down EUR 12 million versus last year. Excluding this tax surcharge, the net result attributable to the group [Technical Difficulty] have been up EUR 48 million this year, as already mentioned by Pascal. Let's now turn to Slide 26 to describe the net debt evolution between end of December 2024 and end of September 2025. As you can see, net debt increased by around EUR 1.6 billion since the end of 2024. This negative change is quite usual and related to the seasonality of our activities. The good news is that the magnitude of the increase in the net debt is significantly lower than that of last year, which was around EUR 2.2 billion. This increase includes, first, acquisitions net of disposals totaling minus EUR 118 million achieved at Colas, Equans, Bouygues Immobilier and TF1, as well as investment in joint ventures at Bouygues Telecom and purchase of TF1 shares. Second, capital transactions and other for EUR 155 million including largely exercise of stock option. Third, dividends for a total of EUR 864 million, including EUR 755 million from Bouygues' shareholder, the remaining part being almost entirely paid to Bouygues Telecom and TF1 minority shareholders. And last, minus EUR 725 million from operations that I will comment on the next slide. So turning to the change in net debt [Technical Difficulty] for the first 9 months of 2025 on this Slide 27, you can observe that it breaks down as follows. On the one hand, net cash flow, including lease expense stood at EUR 2.7 billion, an improvement of EUR 162 million compared to the first 9 months [Technical Difficulty]. And on the other hand, net CapEx was EUR 1.5 billion, a slightly lower amount compared to the first 9 months of 2024. As such, our free cash flow before working capital requirements was EUR 1.2 billion, [Technical Difficulty] higher versus last year. on the chart that the change in working capital requirements and other stood at minus EUR 1.9 billion, a usual negative change at this period of the year. I will now turn our attention to the group financial structure on Slide 28. You can see the group maintained a very high level of liquidity at EUR 14.4 billion, which comprised EUR 3.1 billion in cash and equivalents, and EUR 11.3 billion in undrawn medium- and long-term credit facilities. Both shareholders' equity and net debt improved significantly versus end of September 2024. As a result, net gearing reached 53% at end of September 2025, an improvement compared to 61% at end of September 2024. And you can see from the chart on the right-hand side that the debt maturity schedule is well spread over time. I remind you that our next bond redemption is in October 2026. Last, I want to highlight that the group benefits from the strong credit ratings. At Standard & Poor's, our rating is A-, and the outlook associated to this rating has been revised in September from negative to stable. At Moody's, our rating is A3 with a stable outlook. Pascal, I'm giving you back the floor for the conclusion. Pascal Grangé: Indeed, I will end this presentation on Slide 30 by saying that in a very uncertain global environment, the group's six business segments continued to prove their ability to keep pace with developments in their respective markets. They also pursues their efforts to improve profitability. [Technical Difficulty] we are targeting a slight increase in current operating profit from activities versus 2024. Second, [Technical Difficulty] we specified that group's 2025 sales are expected to be slightly up versus 2024 at constant exchange rates. And that given fluctuations in currencies, notably those related to the U.S. dollar, group sales as published are now expected to be close to the level of 2024. I'll remind you that previously, the group -- the Bouygues Group was targeting for 2025 a slight increase in sales and in current operating profit from activities versus 2024. Last, the effects on profit -- on the net profit attributable to the group of the French Finance law and the Social Security financing law [Technical Difficulty] first quarter of 2025, remain estimated to date at around EUR 100 million for 2025. We have finished our presentation, and we thank you for your attention. We are now with Stéphane and Christian ready to answer your questions. Operator, please open the floor for questions. Operator: [Operator Instructions] The next question comes from Carlos Caburrasi from Kepler Cheuvreux. Carlos Caburrasi: Just a quick one from my side. You're again upgrading Equans 2025 margin target, but your 2027 view remains unchanged. So I was wondering if there's anything here that we're missing or if it's likely that by 2027, the margin will be above 5%. And if you allow me, hypothetically, where do you see Equans' margin by 2030? Does 6%, 7% seem a reasonable assumption? Stéphane Stoll: Well, we -- nothing changed since our last publication. We are indeed very pleased that Equans is moving down to 4.3% this year. We confirm that our target for now for 2027 margin [Technical Difficulty] at 5% as per our guidance from -- dating back from Capital Market Day in 2023. We are confident that we will be able to achieve this 5% margin. For now, we don't want to communicate anything else. And as to your question to the 2030 margin at Equans, let me simply state as we already stated in our last publication, that we see no reason why Equans would not be capable of achieving margins which [Technical Difficulty] are close or similar to the one that's our aim, mid long term. So that's what I can answer to your two questions. Operator: The next question comes from Mathieu Robilliard from Barclays. Mathieu Robilliard: I had a few questions. First, if I may ask, I mean you made an offer, along with other players for Altice assets. Yes, the offer was refused. You didn't change your beat. I just wanted to check if you could confirm you're still in discussion with Altice at the moment? The second one was on taxes. You flagged the impact of the change in the corporate tax in 2025, there's no discussions in the French Parliament, but 2026 would be about the same. So obviously, this has not been finalized and a lot of things can still change. But in principle, if the current proposal was to be passed, does it mean that the corporate tax that you pay in 2026 would be similar to the impact you saw in 2025 about EUR 100 million? And lastly, on telecoms, I had a question about the ARPU. So Christian, you mentioned that the ARPU including La Poste, it's flat quarter-on-quarter. I was wondering if we look at ARPU, excluding La Poste, what was the trend in Q3 compared to Q2? Is it getting a bit worse? Is it stabilizing? Obviously, it's a very competitive environment, but any color in terms of the more recent trends would be great. Pascal Grangé: First, I will answer to the question related to taxes. In fact, if the current law was to be passed this year, we will have an additional impact this year related to the -- that this additional tax is based on level of tax [Technical Difficulty] this year. So we will have to renew a new charge of around approximately EUR 40 million to EUR 50 million this year. I mean [Technical Difficulty] we have the remaining part. Overall, it will be a bit lower because -- overall the second part of this additional tax will be paid in 2026. Stéphane Stoll: Okay. On the Altice situation, as you rightly mentioned, we -- and as you know, we submitted a joint offer on October 14. And then as you know, this offer was promptly rejected by Altice on the next day. So for now, to be honest, we are not in discussion. We are hopeful that we are capable of entering into [Technical Difficulty] in the coming weeks. Since we believe that this EUR 17 billion offer that we submitted to be quite attractive for at least two major reasons: it offers a valuation of significantly more than EUR 21 billion for Altice, taking into account the valuation of the assets, which are not part of our proposal, such as XP Fibre. It thus represents a significant premium compared to the value estimated by brokers. As you know, some EUR 17 billion increase [Technical Difficulty] synergies leads to an attractive equity value for Altice shareholders. And on the -- we also believe it's an attractive offer because it provides a global solution for most of Altice France assets. So I believe -- we believe it represents a credible [Technical Difficulty] very lengthy and highly uncertain. So we are not in discussion for now, but we are still hopeful that we will be capable of entering such discussion into the near future. Christian Lecoq: Regarding mobile ABPU, mobile ABPU for Bouygues Telecom excluding La Poste Telecom, was at EUR 18.4, so plus EUR 0.1 compared to Q2, 2025. You can find all the figures at the end of the presentation in the annex on the website. I'll just remind you that usually in Q3, ABPU is better or higher because of roaming impact. We have positive roaming impact in Q4. Operator: The next question comes from Rohit Modi from Citi. Rohit Modi: I've got two basically. Firstly, on your guidance -- full year guidance. I understand the revenue guidance, flat revenue guidance would imply a decline -- kind of decline in revenue in 4Q, but your COPA guidance, slight increase still leaves some room for a decline or upside. I mean, if you can directionally guide us how we should see COPA, whether it's declining, flat or continue to increase in 4Q. That would be great. Second question is, again, sorry, on consolidation. Just trying to understand what happens in a no-deal scenario. How do you see -- are there any assets that can still go ahead and buy from SFR without having the consortium going for a joint bid? And how do you see the market if there is a no deal? Is that getting worse from here? Or you see the same kind of conditions? Stéphane Stoll: Okay. On your first question regarding the full year guidance, what we can simply say for the Q4 2025 COPA, of course, this quarter is not [Technical Difficulty] So it's difficult to answer. But I'll remind you that Q4 2024 COPA was EUR 816 million and Q4 2025 COPA would probably in the same order of magnitude than this Q4 2024. Pascal Grangé: Please, I'll remind you that, in fact, there is no -- we have some exchange rate effects, but this exchange rate effects does not affect our profitability, in fact, because, in fact, we are very local. So [Technical Difficulty] our expenses are in the same current -- the currency of our revenues. So there is no ForEx significant impact, I mean. Stéphane Stoll: On the consolidation and the no-deal scenario, [Technical Difficulty] this is still possibility. So what will change the market will remain as it is today with four competitors, and we believe that Bouygues Telecom will be capable of delivering its continued [Technical Difficulty] it's current state and delivering results in line with the strategy. So nothing more specific to comment, I believe, on this specific topic. Rohit Modi: And will there be any other effect that in case there is no group deal you can still buy from SFR that SFR will be willing to sell? Stéphane Stoll: For now, our consortium stands, our offer was confirmed. We are hopeful that we are -- we'll be still capable of entering into construction discussion with Altice in the coming weeks. It's -- we believe this deal to be of interest for all stakeholders. And so we are hopeful that we will be able at some point in time to convince Altice to change its mind. Operator: [Operator Instructions] The next question comes from Mollie Witcombe from Goldman Sachs. Mollie Witcombe: Just a couple of questions from me, please. Firstly, I'm just wondering how you're thinking about group capital allocation and shareholder remuneration in the context of the French offer. How long do you wait before looking to pursue potential other options in other businesses? Are you still looking at potential M&A options in other businesses even as this is kind of ticking along in the background? And then my second question is just on Equans top line trends. You have talked about the connection to the slowdown in data centers, et cetera. I'm just wondering, do you feel that this is more industry-wide? Is there a kind of reason why Equans in particular, is seeing this trend? And how you're thinking about it going into next year? Should we expect this to continue into kind of H1 and beyond? Or how should we think about this in the midterm? Pascal Grangé: I will answer your first question. In fact, you have seen that our financial structure is very strong and the idea of maintaining a very strong financial structure is to be able to deliver [Technical Difficulty] all our business lines. And so we have obviously this important project of consolidation of the telecom market in France. But in the meantime, we are studying and we are working on some M&A for the other business lines. There is no relationship of these different of -- the development of all business lines is independent of what we do on SFR. So [Technical Difficulty] and we have some [Technical Difficulty] either in construction, in Equans, in Colas, no issue in that respect. Stéphane Stoll: As you know, we communicated on a significant acquisition that we are pursuing in the U.S. for Colas. And as I mentioned, we [Technical Difficulty] secured Q3 quarter at Equans for bolt-on acquisitions in Germany, Austria, Italy and the U.S. So confirming the strategy of bolt-on acquisition that we presented back in 2023. On trends, we certainly believe that the temporary slowdown that I mentioned on the data centers in Europe and the EV battery gigafactory [Technical Difficulty] is definitely industry-wide specific to Equans. Having said that, we still believe that fundamentally, the markets on which Equans operates are strong and will provide interesting development opportunities. So we do not expect any further significant slowdown for now. And so that -- we believe that Equans is on a continued path. We mentioned and we confirm that we expect to -- we expect Equans to get close to its peers in terms also of organic growth. [Technical Difficulty] the plan, and we are not worried at all for next year. Equans markets are resilient. We are at the heart of three long-lasting transition, energy transition, industry transition, digital transition, and that will not change. Operator: The next question comes from Eric Ravary from CIC. Eric Ravary: Two from my side. First one is on Bouygues Construction, it's very strong COPA figure in Q3. Could you give us any comment on this performance? Is it linked to one specific project? And second question is on Equans. Could you give us the share of data centers and gigafactories in the order intake in the 2024 to assess what is a decrease of all of the order intake in '25? Pascal Grangé: First, I will answer on Bouygues Construction. In fact, our aim for -- there is a Bouygues Construction cycle in projects, which are huge projects and the profitability could vary from 1 year to the other. But there is no very specific items this year, explaining the improvement of the profitability. We have a strategic plan in order to have Bouygues Construction raising profitability to 3% to 3.5%. So we are in that range, and this is due to that strategic plan. But no very specific reason. It's a good performance for Bouygues Construction for Equans. Stéphane Stoll: On the gigafactories, as you know, just to answer your -- I don't have precise numbers available, but just gigafactories in Europe with the failure of Northvolt last year, the market is at a halt. So we don't have any significant order intake this year on this specific market, which explains the slowdown that we mentioned. And on the data center business, what we can say in general numbers is that we -- the order of magnitude of our revenues in this business is -- will be this year around EUR 800 million, and it's down more or less EUR 150 million year-to-year. Having said that, we believe we see a very positive trend this time in terms of order intake in data centers in the U.S. While the market is slow in Europe, this might change in the coming months, but it is quite strong in the U.S. and we were able to secure first project in U.S. and in Canada. And this will spell strong revenues next year in this business in the U.S. and Canada. Overall, we are not concerned by the trends, mid-term trends, especially in data center, whether in Europe or in the U.S. Of course, gigafactories, this remains probably -- will remain a slow market next year. Operator: The next question comes from Stéphane Beyazian from ODDO BHF. Stéphane Beyazian: Yes. I was wondering if you set -- if you have set yourself a deadline for getting to an agreement on the Altice bid or basically talks could resume whenever could be 1 month, in 3 months or in 6 months. Second question, I was also wondering how important infrastructure assets of SFR are in your offer. According to the press, Altice is considering to sell some of its infrastructure assets. And I was wondering if such a sale would make a deal easier or more difficulty in the future. Christian Lecoq: So regarding your second question, we share with two kinds of networks. The first one is the mobile network in medium dense area. I understood what I read in the press that the mobile network is not concerned by the willingness of SFR to sell some part of its network. The [Technical Difficulty] kind of network is the fiber network [Technical Difficulty] the horizontal part of the network. It's quite a small network and is not a problem for us if this network belongs to someone else. So no problem for... Stéphane Stoll: And on the time line for now, we don't have any specific time line in mind, and it's whenever it will happen indeed, so. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Pascal Grangé: Thank you for joining us today. We'll be announcing full year 2025 results on 26th of February 2026. Should you have any question, please contact our Investor Relations team [Technical Difficulty] contacting for the press release and on our website. Thank you.
Operator: Hello, and welcome to the Royal Vopak Third Quarter 2025 Update. [Operator Instructions] This call is being recorded. I'm pleased to present Fatjona Topciu, Head of Investor Relations. Please go ahead with your meeting. Fatjona Topciu: Good morning, everyone, and welcome to our Q3 2025 results analyst call. My name is Fatjona Topciu, Head of IR. Our CEO, Dick Richelle; and CFO, Michiel Gilsing, will guide you through our latest results. We will refer to the Q3 2025 analyst presentation, which you can follow on screen and download from our website. After the presentation, we will have the opportunity for Q&A. A replay of the webcast will be made available on our website as well. Before we start, I would like to refer to the disclaimer content of the forward-looking statements, which you are familiar with. I would like to remind you that we may make forward-looking statements during the presentation, which involve certain risks and uncertainties. Accordingly, this is applicable to the entire call, including the answers provided to questions during the Q&A. And with that, I would like to hand over the call to Dick. D.J.M. Richelle: Thank you very much, Fatjona, and good morning to all of you. Thanks for joining us in the call this morning. Let's start with the key priorities of our strategy framework towards 2030. We continue to focus on improving the performance of our existing portfolio. This includes both our sustainability efforts and our financial results with an operating cash return target for the portfolio of above 13% throughout the cycle. As part of our grow and accelerate strategic pillars, we continue to invest in attractive opportunities in the market with a total proportional investment ambition of EUR 4 billion by 2030. Our Improve, Grow, Accelerate strategy underpins our well-diversified and resilient portfolio and provides a solid foundation to continuing to deliver value to all our stakeholders. Moving to the key highlights for the first 9 months of this year. Let's first start on the improved side. Year-to-date, demand for our services remained healthy across the entire portfolio, and that resulted in a proportional occupancy rate of 91% with continued high satisfaction from our customers. We reported strong financial performance, growing our proportional EBITDA to EUR 902 million and an operating cash return of 16.2%. At the same time, our proportional operating free cash flow per share increased by 4.3% year-on-year to EUR 5.56, demonstrating our strong cash generation. Supported by a resilient portfolio and business performance offsetting around EUR 30 million of negative currency translation impact compared to last year, we confirm our full year proportional EBITDA outlook in the range of EUR 1.17 billion to EUR 1.2 billion. We're making good progress in growing our gas and industrial footprint. We invest in additional throughput capacity at the REEF terminal in West Canada, while at the same time, we're making good progress in the terminal constructing together with our partner, AltaGas. In China, we're strengthening our industrial position with the expansion of 2 industrial terminals in Caojing and in Haiteng. We're expanding LNG infrastructure in Colombia at SPEC terminal. And in India, our joint venture, AVTL, announced the development of a greenfield LPG import terminal in Mumbai, including a bottling plant and storage for liquid products as well. AVTL also acquired 75% of LPG Hindustan terminal in Haldia. We're pleased to see the developments at multiple locations in the fast-growing Indian market. So far, since we announced our ambition to grow in gas and industrial terminals globally, we've committed EUR 1.6 billion. So now let's move to accelerate investments for the energy transition infrastructure. In Oman, we signed a joint venture agreement with OQ to develop and operate energy storage and terminal infrastructure. With our partner, we look forward to developing infrastructure at the strategic location of Duqm and jointly supporting sustainable industrial growth. The investment in Malaysia related to low carbon fuels is progressing, and we look forward to start construction early 2026. So far, since we announced our growth program for Accelerate, we've committed EUR 256 million in energy transition infrastructure. Now looking at our financial performance for the different terminal types we operate. We see an overall strong performance with higher results compared to the same period last year. Gas markets were stable with our terminals being supported by long-term contracts, mainly due to some planned out-of-service capacity, a positive one-off last year and the temporary challenges at EemsEnergyTerminal, the results of the gas segment went down on a year-to-year basis. In the Industrial segment, growth is contributing. And together with the one-off in the second quarter, we see 15% increase in this attractive and strategic segment on a year-to-year basis. Chemical markets remain weak, while our terminals continue to perform relatively stable despite some locations seeing lower occupancy rates. Energy markets, which we serve with our oil terminals continue to see strong demand, especially in the hubs like Rotterdam and Singapore. All in all, this has led to an increased proportional EBITDA of EUR 902 million and a strong operating cash return of 16.2% for the first 9 months of 2025. To mention some highlights in our strategic pillar of improve, we are pleased to see an expansion commissioned at our inland Lesedi terminal in South Africa, where we increased our terminal capacity by 40%, supporting the region with distribution of clean petroleum fuels. In Spain, our joint venture divested the Barcelona terminal, which was storing petroleum, chemical and vegetable oil products. And in a continued effort to improve our sustainability performance, we invest in a sustainable heating system at our Vlissingen terminal in the Netherlands, significantly reducing the emissions and decreasing operating costs. Now let's move to the growth investments to start with an update on this year's proportional growth CapEx spend. Year-to-date, we spent EUR 447 million on growth, and we expect this number to be around EUR 700 million for the full year, a significant increase from 2024. This figure reflects our share of investments, but not our equity contribution. Since the start of our Improve, Grow and Accelerate strategy, we've committed a total of EUR 1.9 billion. EUR 502 million of this EUR 1.9 billion has been committed since the beginning of this year. We're well underway to invest EUR 4 billion towards 2030, which we aim to allocate in opportunities that meet our investment criteria. On this slide, we highlight the investment commitments that we've taken during the third quarter. We're investing around the world with a total proportional investment commitment of EUR 188 million only this quarter. We're progressing on our LPG terminal in Canada and building a new terminal in India. In Colombia, LNG regasification capacity is expanded at SPEC terminal. And in China, our leading industrial position is strengthened with expansions in Caojing and Haiteng. All these investments around the world will do together with partners. Now let's take a closer look at the REEF terminal in West Canada. Construction work is progressing well, and the project is on track to be commissioned at the end of 2026 within budget. We're investing an additional EUR 34 million to increase the throughput capacity of the terminal, leveraging the common infrastructure of the terminal such as the constructed jetty. This additional throughput capacity will become available in the second half of 2027. In the meantime, we will continue to investigate together with our partner, AltaGas, potential optimizations of the terminal and a next phase of expansions. In Colombia, our SPEC terminal plays an important role in ensuring local energy security. With an investment of EUR 25 million, the regasification capacity will be expanded by 33%. This additional capacity will diversify SPEC business offering to new industrial customers and get connected to the country's gas grid. This investment is backed by long-term contracts and will deliver attractive operating cash returns upon completion. We're delivering on growth with multiple expansions at existing and new locations, and our capability to deliver will ensure project execution in the coming -- in the years to come, with multiple key investments coming online that will support future growth. We're on track to have both REEF and the fourth tank at Gate commissioned by the end of 2026. And further down the line, multiple expansions and new terminals will follow, supporting long-term stable and growing returns. To wrap it up, we presented strong results this quarter, supported by a healthy demand for infrastructure and leading to an operating cash return of 16.2% year-to-date. We continue to deliver growth with our key growth projects on track and new expansions announced. And we're pleased to confirm our outlook despite a negative currency translation effect of EUR 30 million. With that, I'd like to hand it over to Michiel to give more details on the year-to-date and third quarter numbers. Michiel Gilsing: Thank you, Dick. And also from my side, good morning to all of you. In the third quarter, we saw continued strong performance from our resilient portfolio. Our proportional operating free cash flow per share has increased by 4.3% year-on-year, driven by continued high demand for our storage infrastructure, increased EBITDA and our share buyback programs. These results highlight the strength of our well-diversified portfolio, particularly in times of increased uncertainty and volatility. Simultaneously, we continue to ramp up our investments in attractive and accretive growth projects while returning value to our shareholders. Let's take a closer look at the performance of the portfolio during the third quarter of this year. I would like to start with a reminder that in the second quarter of this year, we reported a one-off EUR 22 million, which was related to a commercial resolution in our Asia and Middle East business unit. This needs to be considered when comparing the third quarter with the second quarter results on a proportional revenue and EBITDA level. The proportional occupancy in Q3 was 90.3%. This decrease compared to Q2 is mainly related to a temporary impact caused by the timing of some contract renewal. We recorded proportional revenues of EUR 467 million during Q3. Excluding the one-off, on an autonomous basis, the lower occupancy was offset by improved pricing, leading to an increase in revenues. Proportional EBITDA in Q3 decreased to EUR 287 million, again caused by the one-off in Q2. On an autonomous basis, EBITDA increased by 0.4% quarter-on-quarter, indicating strong performance of our existing operating assets. And finally, our cash flow generation remains strong, which we will highlight in detail later in this presentation. As mentioned, the translation effect of foreign currencies remains a headwind to our results. If we look at the proportional EBITDA split by currency, we can see that 27% of our EBITDA is generated in euro, which means that for the remainder of the EBITDA, we face translation risks in our P&L. Comparing our results on a constant currency basis, we can clearly see that our results this year have been strong. Also, it provides additional context for our Q3 performance. Excluding one-off in the second quarter, our performance in Q3 was in line with Q2 and above Q1. Back to our global network. This slide provides a more detailed breakdown of the proportional EBITDA generated by our business units in the different regions. Excluding negative currency exchange effects of EUR 18 million and EUR 2 million divestment impact, proportional EBITDA increased by 3.2% versus year-to-date 2024. A large part of this growth can be explained by the strong contribution of EUR 17 million from our growth projects, particularly in China and the Netherlands. Additionally, we saw particularly strong performance from our Asia and Middle East business unit, which is primarily driven by the result of a commercial resolution in the second quarter. Across the remaining business units, the performance was relatively stable with some weakness in the Netherlands related to the out-of-service capacity and the temporary challenges in EemsEnergyTerminal, for which we are pleased that a technical solution has been identified and is expected to be completed by early next year, while the terminal remains fully operational. Moving on to the cash flow generation. We are continuously focused on generating predictable growing cash flows to create shareholder value for our shareholders. We achieved this by growing our revenues while maintaining high EBITDA margins and strong EBITDA to cash conversion. Despite a strong currency headwind, we saw slightly higher proportional revenues year-on-year. Since costs were stable, our proportional EBITDA margin improved by 20 basis points. The cash conversion of our portfolio, which indicates the portion of EBITDA that is converted into proportional cash flow slightly decreased to 71.4% due to an increase of operating CapEx. The proportional operating free cash flow per share increased by 4.3%, driven primarily by the reduced share count following our share buyback programs in '24 and '25. Finally, we realized a stable operating cash flow return of 16.2%, well above our long-term target of 13%. Q4 is characterized by higher operating CapEx spend, hence, operating cash return for the full year is expected to be in line with the prior year. Moving on from proportional figures to consolidated figures. We get a good picture of the cash flow that becomes available for capital allocation at the holding level. Our cash flow from operations, which includes upstream dividends from our joint ventures remains strong, showing a 2% year-on-year increase. After deducting operating CapEx and IFRS 16 lease payments from the CFFO, we arrive at a consolidated operating free cash flow of EUR 557 million, equivalent to EUR 4.82 per share. Factoring in the increase in net debt and all finance and tax-related cash flows, we arrive at free cash flow of EUR 618 million. This represents the available cash that we can strategically allocate to pay dividend, to invest in growth or to buy back our own shares. In the first 9 months of the year, we have used roughly half of our available cash flow to distribute value to shareholders. As we have completed our share buyback program for the year and paid our annual dividend, cash available in the fourth quarter will be primarily used for growth investments. This all in line with our long-term capital allocation policy that aims to deliver value to our shareholders while pursuing growth opportunities at the same time. Our capital allocation framework consists of 4 distinct pillars, aiming to maintain a robust balance sheet, distribute value to shareholders, invest in attractive growth opportunities and yearly evaluate share buyback programs. In the next part of the presentation, I will briefly highlight the developments on our key capital allocation achievements. Starting at our first priority, the balance sheet. Proportional leverage, which reflects the economic share of the joint venture debt versus the part of the EBITDA of the joint ventures decreased slightly to 2.56x compared to the end of 2024 when it was at 2.67x. If we exclude the impact of assets under construction, which do not contribute yet to the EBITDA, proportional leverage is at 2.12x, which is the lowest level in the last 5 years. Our ambition for the proportional leverage range is between 2.5 and 3x. To facilitate the development of growth opportunities that enhance cash return, Vopak's proportional leverage may temporarily fluctuate between 3 and 3.5 during the construction period, which can last 2 to 3 years. Additionally, we maintain control of our financing expenses by limiting the exposure to volatility in interest rates. We achieved this by borrowing predominantly at fixed rates, around 80%. As mentioned, we have the long-term ambition to generate reliable and attractive returns for our shareholders. This is why we increased our dividend per share by 6.7% to EUR 1.60 in 2025, adding to our long track record of annual dividend distributions. On top of that, we updated our capital allocation policy to include share buyback programs. Over the last 2 years, we have successfully completed 2 programs with a total value of EUR 400 million and as a result, decreasing our share count by 8.3%. Considering both the dividends paid and the share buyback programs, we have offered an average shareholder yield of 8.1% in the period '24, '25. Investing in growth opportunities is an important part of our capital allocation policy. As highlighted during our recent Capital Markets Day in March, we have the ambition to invest EUR 4 billion on a proportional basis by 2030 to grow our base in gas and industrial terminals and to accelerate towards energy and transition infrastructure. At this point, we have already committed around EUR 1.9 billion to growth investments since 2022, of which EUR 526 million has been commissioned and is contributing to our results. And as you can see in the graph, we are ramping up our investments significantly this year with expected proportional growth CapEx of around EUR 700 million. We continue to see attractive growth opportunities in the market that we will pursue in order to grow the cash generation of our portfolio. Our ambition remains unchanged to actively support our customers with infrastructure for the ongoing energy transition and to invest when opportunities arise at returns in line with our portfolio ambition. We see this as an opportunity to invest rather than a target to spend. In India, our joint venture, AVTL, announced an investment in a greenfield terminal at the JPNA port in Mumbai. This terminal with capacity for LPG storage, a bottling plant and capacity for liquid storage is a strategic investment serving the fast-developing Hinterland. The investment, of which EUR 70 million is Vopak's share is funded by the proceeds from the listing and is expected to be commissioned in phases starting mid-2026. Also, AVTL acquired 75% of the Hindustan LPG terminal for a total amount of EUR 100 million, which is equal to a proportional investment of EUR 42 million for Vopak. Upon the closing of the transaction, our share in this terminal will effectively rise to 31.67% from the 24% we own currently. On the Vopak holding level, we expect a cash in of EUR 32 million following the closing of the transaction. The acquisition will allow AVTL to expand its business at the Haldia location in LPG storage. For Vopak, this is another showcase on how we create and unlock value for our shareholders while optimizing our joint venture structure and controlling the cash flow at the holding level. That brings me to the full year outlook of 2025. We confirm our financial outlook with a proportional EBITDA range of EUR 1.17 billion to EUR 1.2 billion, subject to market uncertainty and currency exchange movements. We expect proportional operating CapEx of below EUR 300 million and proportional growth CapEx of around EUR 700 million for 2025. For the longer term, our ambition remains unchanged. We aim to invest EUR 4 billion proportional growth CapEx in industrial, gas and energy transition infrastructure by 2030, while generating at least 13% operating cash return from the portfolio. Our ambition, as mentioned, for the proportional leverage range is between 2.5 and 3x. Bringing it all together in this slide, we had a strong Q3 performance and delivered on our financial performance with a healthy occupancy rate and a record high proportional EBITDA for the first 9 months of the year. With regards to our growth ambition, we are well on track to invest EUR 4 billion proportional growth CapEx by 2030. We remain committed to capture opportunities to grow in industrial and gas terminals and accelerate towards infrastructure for the energy transition. Our well-diversified portfolio caters for uncertainty and volatility in the market. As a result of that, we are confirming our outlook. These factors, combined with a strong capital allocation framework create value to our shareholders, leading to an increase of free cash flow per share of 4.3% compared to last year. This concludes my remarks in the presentation, and I would like to hand back to Dick for the Q&A. D.J.M. Richelle: Thank you, Michiel. With that, I'd like to ask the operator to please open the line for question and answers. Operator: [Operator Instructions] And now we're going to take our first question, and it comes from the line of Kristof Samoy from KBC Securities. Kristof Samoy: I will start with 2. Can you elaborate a little bit on the contract renewals that you commented on during the presentation and the impact it had on occupancy rates and how you see that picking up again in the fourth quarter? And then as a general remark, it's more of a, let's say, a strategic question. What's the impact that you see on your industry of the potential for a Power of Siberia Gas Line 2? And what could the potential impact be on your ongoing business development activities? These are my first 2 questions. D.J.M. Richelle: Can you maybe before we answer, maybe repeat the second question? We couldn't quite hear it. The impact of what? Kristof Samoy: The Power of Siberia, the gas pipeline between Russia and China. D.J.M. Richelle: Okay. Yes. Okay. Well, maybe if I start with the contract renewals, that's basically in Fujairah and in Rotterdam. So it's oil storage, where we are like rolling over a contract from one party to the other. So it's a temporary occupancy consequence, as you see. And we have -- we're in the process now of rolling it over to new contracts. So that should happen in Q4 and the beginning of 2026. So fundamentally, it's not something that we're concerned about. Then maybe to the impact of the power line or the LNG connection between Russia and China. I think the way we look at it is if you consider of the main infrastructure that we have on LNG today in Western Europe, that's basically Gate and EemsEnergyTerminal. They are already fully dependent on the LNG imports that are coming from countries other than coming from Russia. So I don't think that has a big impact. I think we look still very comfortable and positive towards the medium- to long-term outlook for that infrastructure. And with what's happening between Russia directly and China is not having a major impact or not expected to have any impact on our plans for LNG in the different parts. As you can see in Colombia, as you can see with the plans that we have and the developments going on in Australia, in Pakistan, they're all kind of like individual market dynamics that we understand well and have no impact from the developments that you're describing. Operator: Now we take our next question -- and it comes from the line of David Kerstens from Jefferies. David Kerstens: I've got 2 questions, please. I think you highlighted in the press release that the -- or in the presentation that the impact of the lower occupancy was offset by better pricing and higher throughput revenues. Can you indicate where in the portfolio you see this higher pricing and where throughput revenue increases? And then also the second question, I think the contribution from growth projects on proportional EBITDA increased to EUR 17 million year-to-date, I think, versus EUR 9 million in the first half of the year. How do you expect this figure to develop for the remainder of the year and for 2026 and 2027, given that the project pipeline is now nicely building up. And I think in the past, you used to give a rough ballpark number what you expect from growth projects on EBITDA. Those are my 2 questions. D.J.M. Richelle: Yes. Thanks, David. I'll take the first one, and I'll leave Michiel to do the second one. So on the first one on the better pricing and throughput, that's mainly in the main oil terminals. We see that we still have quite a bit of an opportunity to do our pricing quite well. If you look at particular throughput levels, we've seen some additional throughput in the Vlissingen terminal because we've added actually more capacity in Vlissingen. And you also see that AVTL has seen a bit more throughput in this last quarter. So by and large, I think positive developments in that area. But I think the main one that stands out, although not to be exaggerated, but I think the one that stands out is still some power that we have on the oil side in the hub locations, mainly. David Kerstens: Pricing power, yes. D.J.M. Richelle: Yes. Operator: Now we're going to take our next question. Michiel Gilsing: Next question is on the proportional EBITDA contribution of growth projects. So indeed, the first 3 quarters were around EUR 17 million. So for the last quarter, you may expect another close to EUR 10 million contribution. Operator: And now we're going to take the question from Jeremy Kincaid from Van Lanschot Kempen. Jeremy Kincaid: I have 2 questions. Firstly, on Australia, you obviously announced that you've entered into an exclusive agreement with Seapeak. I was just wondering if you could provide an update on the potential time line going forward for that project. And in particular, I know regulatory approvals are important there. So an update on the time line would be helpful. And then secondly, Michiel, you said that the Asian and Middle East business was stronger this quarter due to a commercial resolution. Are you able to provide a little bit of color as to what that was? D.J.M. Richelle: Sure. Jeremy, maybe on Australia, to start off with, the project is developing well, as we indicate. We have a really good team in place and everything lined up to actually move forward with the permit application that is being prepared at this moment. That is, as you rightfully indicate, a lengthy and a very -- I wouldn't say lengthy, but a diligent process in that part of Australia, and we go through that. So the time line, but that obviously is subject to how the permit process is developing. The time line we expect towards the end of 2026 to have more clarity on this and to be able to hopefully move forward with the project at that time. But as I said, that depends a bit on how some of the developments on the permit are moving ahead. I think the attractiveness of the project for us is because of the location that we found for our import facility. We get good support both from the government and from all the interested parties in Australia. So we have good hopes that this project will move forward. But obviously, we have to move diligently through the approval and the permitting processes, which is happening at this moment. So happy to continue to update you in the following quarters. Michiel Gilsing: Yes. Jeremy, on the commercial resolution, effectively, that took place in Q2. So it was announced in Q2 as well. So it wasn't in Q3, but it had to do with the commercial settlement of a significant contract we have in that region in Malaysia. And as a result, we had a one-off gain of EUR 22 million. So that's effectively what happened. I can't give you all the details of this, but it's a one-off. It's a good commercial settlement, and it impacted Q2 positively. But as a result, Q3 looks weaker than Q2. Operator: Now we are going to take our next question and it comes from the line of Berkelder from AAOB. Thijs Berkelder: Thijs Berkelder, ABN AMRO ODDO BHF. I have a question on your growth CapEx. You're guiding for EUR 700 million proportional growth CapEx. What is the guidance on consolidated growth CapEx just for the modeling? The second question is on leverage. Looking at your share price, it also is clear to you probably that European investors simply want to eliminate their own economy and prefer share buybacks far over long-term strong growth CapEx plans. So looking at your leverage being at the low end of the range, what are you expecting for year-end? And is it logical to assume that the new share buyback announcement will come in? Finally, apart from Australia, can you maybe give an update on your growth projects in South Africa, in EemsEnergy and in battery storage Netherlands? Michiel Gilsing: Yes, on the -- let me start with the second question because the first question, I don't know by the top of my head, to be honest. So we need to see whether we can find a number and whether we're able to disclose it. Then on the leverage and the share buyback, yes, obviously, we prefer to grow the company because we think that the EBITDA multiples, which we can realize on the growth projects are still quite attractive. Obviously, if you look at the trading multiple of the company is historically quite low at the moment. So that still makes it attractive to do share buybacks, but growth is still prioritized over share buybacks. But definitely, we will -- like we have done in the last 2 years, yes, we will always have a positive look at the share buyback if there is room to do it. We're going through our budget process in the coming months, update our long-term financials, see what the available room is. Obviously, a lower leverage helps us there. So that's the guidance I can give at the moment, Thijs. And on the consolidated growth CapEx, it is going to be somewhere around EUR 300 million to EUR 350 million. D.J.M. Richelle: And then maybe, Thijs, on the last question, so update on South Africa, on Eems, on batteries. In terms of projects South Africa LNG fundamentals still continue to look very attractive. I think time lines is something that have to be watched given the fact that in order to build a power plant that the LNG would support or would basically supply into needs to get also the permit and we've seen that there's some delay on the permit process of the power plant. So that's what we continue to follow. Again, fundamentals still look attractive. The role that we can play looks very attractive. We need to work through these topics. I think that's on South Africa. On Eems, as we say, happy that we have the compressors identified and being put into motion to have 2026 onwards, at least the technical challenge, the temporary technical challenge solved as we indicated. And I think we're going through the renewal process for Eems at the end of 2027, and that's an ongoing process. And the third one was on batteries for the Netherlands. As we've indicated before, we have a few -- 2 to be specific battery positions that we are currently developing. That's in the Netherlands. We also have a few in Belgium, and we're developing all of them individually in the course of our normal project development funnel, expecting the first investment, if everything moves in the right direction, somewhere in the course of 2026. That's the idea. So we continue to develop this field. There are opportunities, the role that we can play. We're actually confirming the attractiveness. And let's see how the development cycle plays out and how big this can become for us. Thijs Berkelder: Maybe one additional question on growth CapEx. Are you also looking at acquisitive investments such as New Fortress has assets for sale. Is Vopak interested there? Or are you in talks on other acquisitive moves? D.J.M. Richelle: If we were, this would probably not be the right moment to share that with you. We're always looking at a lot of opportunities, Thijs. There's a lot of people that there that we get from people that have great ideas on what potentially could be done. And I think as long as it makes strategic sense for us as a company, we will definitely consider those and that could be in, I would say, the so-called more traditional space of our business, and it could also be in a little bit more adventurous pieces. But that could also, for instance, be on the battery space. We continue to keep our eyes wide open and make the right moves as we think we can get there. Operator: And the question comes from the line of Dirk Verbiesen from ING. Dirk Verbiesen: I also have some questions. Maybe I'll start on the, let's say, the cost restructuring program, the ongoing program. What are your expectations for Q4? And is this, let's say, a program to counter maybe inflationary pressures on an ongoing basis? Or should we see some benefits structurally visible in EBITDA, let's say, as from 2026? That's my first question. Second question I have is on Eems. And the announcement on Exmar and the floating gasification facility. Let's say, what is the -- maybe to get an idea on the size and scale of your commitments in this future prospect. Maybe you can share some there. And then on Oman, it is positioned in Accelerate as a potential project. But I also read that there are traditional energy flows as well. So maybe some clarification there on what the actual mix may look like and also in terms of timing on firm commitments, FIDs and so on from your side? Michiel Gilsing: Yes. Let me start with the first question and then hand it over to Dick for EemsEnergy and the Oman question. Yes, on the cost restructuring, indeed, we have quite a bit of a cost focus, didn't start this year, but already 1.5 years ago, we took out one layer in the organization. So we have reduced the number of layers in the company. So basically, every business unit, which originally reported to the division and then the division to the Executive Board, every business unit now reports to either Dick or myself. So that is a benefit where we like to control, let's say, the support functions of the business. Presently, we're in the process of looking at the global office, and we expect -- while you can -- we see it already in the monthly results that the cost is coming down of the global office, and that's going to continue in 2026. So those will be structural benefits, and we're also looking at our IT organization because we have commissioned most of our own systems on terminals where we would like to commission it. So IT department goes into a different phase. That's where we carefully look at the cash out of IT, which should also lead to structural benefits and more from 2026 because that program still has to be sort of designed. And then we have all kind of business initiatives to indeed keep the cost under control, energy management, making sure that we are smart in operating CapEx, carefully look at the way we build our projects, so to really look at each and every angle to improve the business. Part of that is maybe to cope with inflation pressure. But for us, it is really to continuously focus on areas where we can still improve the cash flow performance of the company. That's the most important thing. And then in a structural manner because the markets are quite good. The results have gone up quite a bit from a cash flow point of view over the last 3, 4 years, adding EUR 250 million cash flow to where we were in 2021. But we obviously want to make sure that we also run the company in a very efficient and effective manner. And thereby, we see still opportunities to increase our free cash flow while we are running at a high occupancy level. D.J.M. Richelle: And maybe, Dirk, on the other 2 questions, maybe first one on Eems, Indeed, so the current setup in Eems is we have 2 FSRUs. One is the one owned by Exmar and then the other one through a bit of a difficult structure, but in the end, owned by also New Fortress Energy. And that's the one that we're going to now replace in the renewal process. So after 2027, we will replace that FSRU with an FSRU from Exmar. The commitment that we have today is that we work together with Exmar on the renewal process, so the permit renewal and the customer contract renewal. That's a process that we currently go through. And that is a process that obviously, in terms of commitment, the individual commitment, we would not disclose what the individual commitment is to Exmar, but we have exclusivity on the right FSRUs to make sure that we can go through this process and make sure that we get the renewal done and then have the 2 Exmar FSRUs in place in Eems. So that's the process that we currently go through, and that's why we've announced to have that -- to reach that agreement with Exmar. I think that's one. And then the other question you asked was on Oman. And that's a joint venture that we signed with OQ. It's in the Port of Duqm and Duqm has a few attractive parts. And I think the fundamental attractiveness of Duqm sits in the fact that the renewable energy is very competitive over there simply because of the climatological circumstances of that part of Oman. So hence, the concentration of the country to produce green ammonia for exports is really focused on that part of Duqm instead of allowing all the individual producers of the potential green hydrogen, green ammonia to build their own infrastructure. The Omani government has basically said, let's bring one specialist in and make sure that we share the infrastructure in the export port of Duqm. So that's the overall plan. In the meantime, and in the initial phases of the development over there, we expect that there's, for example, a huge potential for also LPG exports in the country and specifically through the port of Duqm. So that's the reason why for now, we've classified it as a fundamental long-term investment under the Accelerate. Yes, if the first investments come in and sit in LPG, we would probably reclassify part of that investment. But I think the key message here is it's a new country. I think the role that we as Vopak can play is really a very good role, and it's an attractive country for us to be in, and we expect quite a bit from that in the future. So excited about it. Dirk Verbiesen: Okay. That's very helpful. Maybe on the restructuring efforts you are implementing, is there another expectation for Q4 of a few million? And how long will this program last as an exception that you can apply it as an exceptional charge? Michiel Gilsing: Yes. In exceptional, something still may happen in Q4 because the program is indeed ongoing. And as I said, more to come. The impact in Q4 will be -- the positive impact of lower cost will be a bit in line with what we have seen in Q3. And then obviously, any further benefits of this program are going to be included in the outlook of next year for '26. But definitely, we aim, as I said, not to be only to see an impact in '26, but also definitely beyond '26. Operator: [Operator Instructions] And the question comes from the line of Kristof Samoy from KBC Securities. Kristof Samoy: Yes. I have 2 further questions. First of all, I still need to do some number crunching on the operational cash returns. But can you maybe detail already a little bit what is the reason of the drop in the OCR quarter-on-quarter? And then secondly, what about the Vopak Energy Park in Antwerp? How is this project progressing? And is there any material change following the outcome of the IMO meeting, which was not very favorable in terms of alternative marine fuels? Michiel Gilsing: Yes. Thank you, Kristof. Let me tackle the one on the OCR, and then I hand it over to Dick for the Antwerp major development. Yes, by nature, but that maybe sounds a bit strange. But by nature, you see within Vopak always the cash return of the first quarter is the highest, and then it sort of gradually goes down during the year. And the reason for that is that most of the operating CapEx is effectively spent in Q4. So the pattern most of the time is like we spend around 10% of our operating CapEx in the first quarter and then 20% in the second, 30% in the third and 40% in the fourth. And that has to do with budget approvals with people need to design it and then start to really come on speed in the second half of the year. And as a result, if you deduct the operating CapEx from the cash flow generated by the business, effectively, if the business is relatively stable, you will notice that the cash per quarter effectively goes a bit down versus the capital employed, which is relatively stable. And as a result, the OCR gradually goes down from Q1 to ultimately Q4. And then on average, we think that it's going to land somewhere around 15% for the year. D.J.M. Richelle: Maybe Kristof, on the energy park in Antwerp, continued exciting development. How excited can you be for a land that is empty? Well, that's exactly why we are excited for it because all the infrastructure that was on the land has been demolished successfully over the past period. We're now in the phase of the necessary cleanup and that soil cleanup that is currently going on with a massive project, which is going according to plan and in line, obviously, with all the obligations that we have assumed when we acquired the site, and that goes well. I think that's on the pure progress on where the land is developing. Then on the commercial side and the development side of the land, there's a few angles that we take. There's an opportunity to host a green plastics producer over there that uses methanol as a feedstock. And that project is developing well. So we would host basically the plant on our site and build the necessary storage and infrastructure capacity needed to go to and from the plant. That's together with Vioneo. So that's one. And we're looking at ammonia and CO2 developments that look attractive, but depends a bit on the regulatory framework on how fast these developments would allow people to commit for it. I think the location continues to be very attractive for us. The outlook continues to be for us very attractive and interesting. And then specifically on the IMO, yes, that will take probably a little bit more time for people to get sufficient clarity on what needs to happen over there. The fact that we potentially would have a methanol import opportunity to support the plant. I was just speaking about, gives us the opportunity, obviously, to expand in further methanol storage in Antwerp at this particular site. So I think, by and large, good progress on the pure development of the land and then the commercial opportunities are for us also attractive. Batteries, by the way, is also an opportunity that we see over there. There's land available, good power connection available, and we will definitely pursue all the options that we have to really turn this into Vopak Energy Park in Antwerp. So I hope that helps. Operator: Now we're going to take our next question. And the question comes from the line of Thijs Berkelder from ODDO BHF. Thijs Berkelder: Question on cash in the fourth quarter related to some items. Did you already receive the shareholder loans from the Indian JV back? And how much was that? Then you're indicating you will receive EUR 32 million back related to Hindustan LPG. What is roughly the proceeds from the divestment of Barcelona? And did you make any divestments yet in the Vopak Venture entities? Michiel Gilsing: Yes. On the shareholder loan, so the application has gone to the authorities to get approval, but that's a bit of -- as I mentioned before, it's a bit of a longer process than you would hope for. But that amount is going to be around EUR 40 million. So we hope that, that is still going to be approved by the year-end, but I can't guarantee that, to be honest. So with the Haldia sales and dividend, which we will still get out of Haldia, we expect that shareholder loan plus Haldia is going to be around EUR 75 million cash in for the holding. The Barcelona cash in was relatively small because a lot of that money has been used to also repay some of the debt. So we will get some additional money, but it's lower than -- it's only a few million there. And on the Vopak Ventures, yes, good that you mentioned it, Thijs, because effectively, we have been able to reduce the portfolio already quite a bit. So some cash has come in, but it's somewhere between EUR 5 million and EUR 10 million. So the portfolio is relatively small at the moment. So basically, we have decided the likelihood that we can sell the portfolio in one lot is pretty low because of the size of the portfolio. So basically, we're going to -- what we're going to do going forward is step by step, we will reduce the portfolio to a lower amount. And in the fourth quarter, we will also look at, okay, what's still the value of the portfolio versus what we think we can still realize and then we will update the market on that as well. Thijs Berkelder: And it means a potential impairment of EUR 10 million or so? Michiel Gilsing: That could happen, but too early to tell because we need to go through the process. That's a Q4 process. But yes, I don't have any guidance on that yet, but I will update as soon as I have that. Operator: Now we will take our next question and the question comes from the line of Dirk Verbiesen from ING. Dirk Verbiesen: Yes. One follow-up, if I may. The remarks about the technical challenges in Eems and the solution or let's say, the problems have been identified. Is that -- is there a -- has that changed in a way that now a solution is found? Or is it more the same, let's say, tone of voice from Q2? Or have there been any developments there? D.J.M. Richelle: No same tone of voice, Dirk. What we've indicated is a temporary technical challenge. The solution for that challenge has been identified before Q3, and that sits in the acquisition of the procurement of additional compressor capacity. And that capacity is not typically something you buy off the shelf. That takes a little bit of time before they get in, and they are expected to be in service at the end of this year. And therefore, we expect to go back to a different and a normal type operation in -- as from 2026. So more or less in line. I think what we're more specific about now is probably the time line on when we expect it to be done, but all according to at least the plan that we have. Operator: Dear speakers, there are no further questions for today. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Trond Fiskum: Okay. Then I think we start again. So welcome to everyone participating here at this live event at Arctic. And of course, welcome also to those participating online. Sorry for the technical difficulties that we had here. I want to thank Arctic as well for allowing us to have this earnings call at their facilities. So we jump straight into the key points for the quarter. We have had good EBIT growth and significant cash flow improvement in the quarter in spite of the challenging market. As most other players in the market, automotive industry, Kongsberg Automotive has faced also a challenging situation with the market. And as a consequence, our revenues are down around 10% comparing to third quarter last year. So we had EUR 162.9 million in turnover in Q3 versus EUR 181.6 million last year. And this is a direct result of the market situation in the global vehicle industry. The largest impact is in the market in North America due to the ongoing tariff situation there. That has caused higher costs, market uncertainties and therefore, also a lower demand. And in spite of those lower revenues, we see an improved EBIT of EUR 4.9 million in the quarter. This is up from EUR 1.1 million same quarter last year, which is a solid improvement from both previous quarters and also from Q3 last year. On cash flow, we see also a positive trend. We delivered EUR 6.6 million in positive cash flow, which is EUR 11.8 million improvement from Q3 last year. Cost reductions, we are moving forward with our programs according to schedule. On tariffs, we have been able to mitigate the costs this quarter and the net impact of tariff cost this year is -- or this quarter is close to 0. And then we have some challenges on warranties, and we will get back to that in later in the presentation. Here we take a closer look at the financials, comparing those in the quarter versus the last 4 quarters. On revenues, we see the 10% drop in Q3, which is, as mentioned, caused by the market situation. We also have a currency effect due to a weaker dollar of around EUR 5.4 million, which is an implication of the business that we have in North America where the contracts are in U.S. dollar. On EBIT, we see the positive trend. We do see the dip in Q2 where we had significant warranty accruals. That was the main reason for the drop, but you see the underlying improvement going back from Q3 last year until now. We also have some warranty accruals in this quarter. Erik will talk a little bit more about that later. But the positive thing here is that we've been able to improve EBIT in spite of lower revenues, which is good. It's not on the level far from where we want to be. There's still a lot of work ahead, but it's a positive indication. Free cash flow, positive trend also here. And you see the positive trend on the last 12 months. So last 12 months, we are close to 0 now due to the positive result in this quarter, a result of lower cost base reduced -- some reduced net working capital due to lower sales and also more cash discipline when it comes to investments. So overall, I would say, a positive indication on the -- trend on the profitability and cash flow that is very important for us. And as previously announced, we have the cost reduction efforts, which will give us around EUR 40 million in improved cost base and a 4% to 5% improvement on EBIT on stable revenues. The cost saving programs are moving forward according to plan. We have completed the program that we launched in '24. We have completed the program that we launched at the beginning of '25, and we are on track with the program that we launched in May, which will be completed fully by Q3 '26. We start to see the good results of these programs, which also Erik will show in the EBIT bridge later in the presentation. And also due to the lower market activity, we are also making additional adjustments in the cost base to align with the demand and to safeguard our profitability. This is mainly impacting manufacturing locations. On business wins, we report a business win with an estimated lifetime revenue of around EUR 34 million. This is lower than previous quarter and also during 2024. What we do see is that there is a lower activity in the market when it comes to new contracts. This is a consequence of the tariff situation and that the focus has been more on managing that situation and also the lower demand. We also see some of our customer programs being postponed. We have a strong focus on market activities. We keep a very tight dialogue with our customers. And we do continue with a good and strong pipeline of opportunities. And very importantly, we have not lost any major contract opportunities during '25. So it's a number that we would like to see higher, but it's also a number I'm not too concerned about due to the current situation and the good pipeline opportunities that we still have. On the business wins, we also have done the revision of our investor policy. We have had a discussion with the Board of Directors and decided that we will only announce strategically important business wins going forward, and our investor policy will be updated to reflect this. Warranty cost. This is an area that remains a concern for us. We reported in Q3 -- or Q2 increased warranty accrual. In Q3, we have a total warranty cost of EUR 2.7 million of which EUR 2.5 million is increased accruals for future expenses. And due to the situation that we uncovered in Q2, we conducted quite a comprehensive review of our exposure to warranty liabilities across our entire product portfolio and also -- and our customer base. And as a result, unfortunately, we have uncovered some additional risks on further and future warranty liabilities. The problems we see here is not primarily related to our ability to deliver quality products. The challenge here is historically unfavorable contractual terms when it comes to warranty and also that warranty management has not been very optimal. This is disappointing, and it may potentially impact our profitability going forward. Those that have been responsible for this are no longer a part of the company, as they were a part of the leadership change that took place in the beginning of the year. It's very hard to make any estimates on the net value of the total liabilities that we may be held accountable for. It's quite complex and a lot of different potential outcomes here. And we are working very hard to address these forthcomings. We have also implemented a much more proactive approach to warranty management and strengthened the team there. And at this point, we are -- and cannot disclose any further details due to the ongoing discussions we have with affected customers. And as soon as we have more information, we will provide that, when we have more clarity on the potential financial impact. Tariffs, we have previously communicated that we will recover 100% of the tariff cost. That has been a clear ambition for us, and we were very much aware that this was not an easy task. The process with our customers are -- can be challenging, have been challenging. They request a lot of documentation, and there are also some tough negotiations that are taking place. We have been very firm and consistent in all our customer negotiations, and that has been basically that we cannot absorb this cost and tariff-related cost has to be passed on to the end consumer. That's been a consistent message, both in the U.S. where we have the biggest impact, but also in China, where we have also some impact of the tariffs that have been implemented there. The approach has given good results. In Q3, we had 0 net impact of the tariff cost. We continue to have some costs that we have not been compensated for yet, but we have agreements in place with our customers. So it's more a question of time to get that compensation. And for those of you that follow the automotive business and industry closely, you would have heard about Nexperia, which is a Chinese semiconductor manufacturer that has put a halt on export to -- out of China because of a dispute and the situation in the Netherlands. So this caused quite a lot of disruptions in the industry. KA also have some products that are directly impacted by the semiconductors. We have been proactively managing the situation and been able to secure supply of the semiconductors so we have had no issues related to that situation. And as previously announced and communicated, the main concern here for us is not the direct cost impact of the tariffs. We have been able to mitigate that. The concern here is the impact that we have already seen materialized on the market demand. Then some other highlights in the quarter. Two of the acquisitions that we have previously announced, the first one is Chassis Autonomy, which is a transaction that we completed in the quarter. We now own 100% of the company and full integration is ongoing. It is a very interesting technology. We received a lot of interest from potential customers. So we're very excited about the Steer-by-Wire technology. This, we expect to play an important part of Kongsberg Automotive's future. The transaction and all payments of the shares were done in the quarter and the net cash effect of the transaction was positive also in the quarter. The acquisition of the 25% share of -- the remaining share of our joint venture in China with Dongfeng and Nissan was also completed. We have now full ownership of that company, and that also means all our operations in China. This gives us more flexibility and strategic options in that important market. And also this transaction was fully paid in Q3. Last on this slide is the renewal of the EUR 25 million loan facility. We have agreed to renew that. That is a loan facility we have with NordLB that was established in 2020. It was set to mature in January '26. And this we have agreed to renew with 1 more year with the same interest terms. Okay. Now looking a bit forward. We have to deal with the current challenges and also look forward, of course. And we have been working very hard during the quarter to work on a new strategic direction for Kongsberg Automotive. End of September, we had a strategy seminar with the Board of Directors. This is still some work in progress, but a key outcome of that seminar was that we decided that the business -- let's say, business unit, Driveline is no longer going to be considered as noncore. Instead, we recognize that this is a business that continue to create value for Kongsberg Automotive, and we will continue to pursue opportunities within that area to win new businesses, extend current contracts and to optimize the pricing. This is also reflected in our financial reporting. So you will see that the numbers from Driveline is not now reported separately, but reported as a part of the business area Drive Control Systems. We continue working on the strategy, and the plan is to present this on the Capital Markets Day on December 16 in Kongsberg. So you are hereby all invited to that event. I think it will be a great event with some very interesting updates about our strategic goals, our strategies to achieve those goals. And we also give you some hands-on insights and a look at the products that will be a key part of Kongsberg Automotive going forward at our tech center that is also located in Kongsberg. Let's see. We are also trying to see if we can get some opportunities for some test driving. We are checking the possibilities. We will let you know. So we also organize some transport from Oslo, and we will have lunch. So yes, I hope to see as many as possible on that event. And we will provide more practical information about this during November, and you will see that from us. Okay. We continue to stay focused on our priorities for '25. We continue to adjust our cost base, as you have seen, and we are taking the additional necessary steps to adjust the menu level further because of the market volumes. We continue to focus on generating cash -- positive cash flow with disciplined CapEx management and targeted reduction of net working capital. We have made changes in the leadership on the top level. We start from the top. We do need to continue working on strengthening the leadership teams across the entire organization. That is a very important priority for us. We need strong leaders and strong teams to -- with the right competencies, values and mindset, supported by clear structure of accountability and responsibility. We're also working on the future with innovations and profitable growth. We have a very strong focus on customer needs and very tight dialogue with them on, I would say, every -- all levels. And this is also very important for us to understand what their needs are going forward and how we can create value in that, let's say, space of opportunities. We do believe that KA is well positioned to deliver long-term and sustainable financial performance. The 2026 priorities, together with the longer-term goals and strategies will be shared during the Capital Markets Day in December. So that was the summary, and I will hand over to Erik to go through the financial updates. Erik Magelssen: Thank you, Trond. Can you hear me? Trond Fiskum: Yes. Erik Magelssen: Good. Also on the webcast? Trond Fiskum: Yes. Erik Magelssen: I was last in KA from 1999 to 2006, and it's very motivating and interesting to be back. I think what we're trying to do is to merge the best of how KA was managed and run in those days back then and then with the new best practices and processes. So I think we're trying to see -- starting to see some truth of that, and that's very motivated and interesting. I'll take you through some more of the figures. As commented by Trond, the Driveline segment is now part of Drive Control Systems and is no longer defined as noncore. And this is also the way that we, as management, run and manage that business. You see the revenue level in Q3 was EUR 95.1 million, and before the negative currency translation effect, it was around EUR 99 million and still lower than the EUR 110 million in Q3 '24. So the revenue is also lower than Q2 '25, and that is also what we communicated in Q2. We did expect the second half of this year to be weaker and lower sales than the first half year. Even though we have lower sales, we record a higher EBIT in Q2 '25 compared to Q3 '24, driven by lower operating costs and lower warranty accruals. I will also comment upon that later. The net effect of tariff cost in this quarter is 0 isolated, which is good. And I think it's the first quarter when we have that. But we still have a balance of tariff costs that we will get reimbursed from our customers, and that is ongoing work. So then on the other business area, Flow Control Systems, the revenue is significantly lower than in Q2 '25. But if you kind of adjust for the currency translation effects, it's not so much lower than Q3 '24. In this business area, we had an impairment made in Q3 of EUR 1 million so then we had an EBIT of EUR 4 million before that impairment. And the reason why we do impairment of development asset is part of streamlining our R&D portfolio and where we want to focus our resources. So it's part of that ongoing strategy process that also Trond referred to. And the reduction in operating cost reduces the effect of -- we have a lost contribution. So ending up in an EBIT of EUR 3 million in Q3. On this EBIT bridge, just pointing out some points, you see the effect of the lower operating cost compared to the same period in '24 with a plus EUR 4.8 million and plus EUR 12.4 million. And this effectively mitigates the effect of the lower volume and mix, which is good. And as I commented, the net effect of tariff cost was 0 in Q3. And year-to-date, we have -- EUR 2.9 million we're going to get reimbursement. The warranty cost in Q3, as Trond mentioned, was EUR 2.7 million. And in Q3 '24, it was EUR 7.2 million. So that's the bridge effect of EUR 4.5 million that you have there. So this is just to underline that we do have warranty costs also in this quarter in 2025. Both in Q3 '24 and in the earlier quarters, there were a reversal of impairments done. So that explains the majority of that bridge effect of impairment, then ending up from an EBIT of EUR 4.9 million then in Q3 '25, which is significantly higher than the EUR 1.1 million in Q3 last year. So coming from a negative EBIT of EUR 8.3 million in Q3 '24, with the effects we see here, we end up with a positive EBIT of EUR 1.6 million in Q3 '25, then driven by the lower -- the higher EBIT, the lower net currency loss and tax effects. And this is also, of course, driving the cash flow together with the operating result, which we'll see coming into now. So the positive result in profitability and working capital effects contributes to the net positive cash flow of EUR 6.6 million in Q3 '25. And looking back just compared to Q3 '24, we have higher cash from operations, lower investment levels and positive currency effect. And this also gives, which is very positive, a significant increase in the 12-month trend, which is now close to 0. And then in line with what we have communicated, one of our key priorities is to generate positive cash flow. And that is much more important than actually having positive results. You have to get the cash flow coming out of that. That's much more potential in Kongsberg Automotive on both on the working capital side and the whole capital employed area. So just to underline that, that we start to see here that we are moving into a positive cash flow situation. And that improved cash flow and profitability also materializes in the reduction in net interest-bearing debt and then reduction in the leverage ratio, the blue line here, which is the key in relation to the bond loan that we have where we have a covenant level. So we see we go from -- it's been increasing since Q4 '24 from 2.1 up to 3.1 and now we have 2.6 in this quarter here. Everything we do on profitability improvements, cash flow will kind of materialize in net interest-bearing debt and this -- the leverage ratio we measure here. And as to the return on capital employed of 1.7% that we have in Q3 is, of course, not satisfactory and also a key priority for us to improve. The equity ratio increased from 30.7% to 31%. And as our improvement programs continue, giving increased profitability, the equity ratio will also continue to increase. And it is kind of continued work for us to achieve reductions in capital employed. And we want this to be an integrated part of the operations in the business area and something that we do every day and that we will follow up the business areas on every day and then instead of doing this kind of -- on a kind of piecemeal basis. So that's very ingrained in us to get this as part of the daily work to get inventory down, accounts receivable down and only do the good and best investment levels. So I think, all in all, a positive quarter for us, positive results, fairly good cash flow, positive cash flow increase in the 12-month trend. We do have challenges and difficulties, but we are managing a positive result -- increased result with a significantly lower revenue level, which is kind of our -- we -- the only thing we really can control is our own costs. And then we have to manage with the market that we have. When the market picks up again, we will be positioned to kind of get a very good profitability level out of that. I think, Trond, that brings us into the summary and outlook. Trond Fiskum: Okay. Thank you, Erik. So to summarize our presentation, just quickly go through the key points again. We do see that we have the positive trend on EBIT and cash flow in spite of a challenging market. We do see that the cost reduction programs are going according to schedule and that we are taking additional measures due to the market situation. The tariff costs are being effectively mitigated. And we have the warranty liabilities that we are addressing, and we will provide updates as soon as we have more clarity on the financial impact. And we will hold the Capital Markets Day on December 16, where you are all invited and we will share some exciting news on strategic goals and the strategies. So I hope as many can participate on that event as possible. We want to emphasize the messages that we've given in the previous earnings call, that is to restore value creation for our shareholders. That remains a key priority for us. We are very much focused on that and find the balance between short-term and longer-term priorities. We do believe strongly in the future of KA, and we are very determined to succeed so we can realize the full potential of KA. And we do believe that we are on the right path. We see some positive indications here. But it's important also to remember, this is not a sprint, it's a marathon. We have a lot of work ahead of us. The numbers are going in the right direction, but they're far from where we want to be. I would say the positive thing here, we do see that there is a lot of things to work with. There's a lot of improvement opportunities. Yes, there are some challenges. But eventually, we will solve them and also with some help from the market, we will see stronger financial results. Regarding the outlook in the shorter term, we do have no changes on the EBIT outlook. We expect the EBIT to surpass both first half this year and second half last year. The rest of the year, we do see a stable outlook compared to Q3. For 2026, we are cautiously optimistic, but we are very also aware that there's a lot of uncertainties. The market scenario is very hard to predict. We don't know what is the next coming from the other side of the Atlantic. So it's something we are monitoring very tightly, and we're managing the situation, and we're prepared for any scenario, I would say. But as a base case, it's cautiously optimistic. I think that concludes our presentation, and we are ready for the Q&A. We have questions that can be done and made also here in the room and also on the web. Therese Skurdal: So let's get started with the first question from the webcast. What is the reason that Driveline is now considered no -- noncore? Trond Fiskum: Driveline, as mentioned, we had a strategic review with the Board. What we see from Driveline business is that it is a business that creates value for us. It is profitable. We do also see opportunities in that area that we can capture without too big efforts. There are also opportunities to extend profitable contracts. There are possibilities to optimize pricing. And we also see that the customer base is important for us for new products that we are developing and launching. So that is the reason why we have made that decision. Therese Skurdal: Thank you. So next question, why will KA change the new business win reporting going forward? Erik Magelssen: Yes, I can answer that. Just to underline, as we also mentioned, that we will continue to announce strategically important contracts. They can be fairly small. They can be quite small, but it depends on the market, the type of contract, new type of customers. And we will always summarize the business win in the quarterly reports and then more -- a bit more detail than we do now. But I think the fact is that KA at any given time, we'll have a number of contracts that are being renewed. Now some contracts expire and we get into new contracts, big and small, but I think that doing this change. We're doing it to get a better communication with the market and improved communication because it's better to kind of summarize this in the quarterly reports instead of kind of doing piecemeal announcements of certain business wins. So just to underline that we will continue to report strategically important contracts that will also mean very significant ones in value, and we will always summarize it in the quarterly reports. And this is also in line with our peers, and I think what our larger companies on Oslo Stock Exchange do. We're kind of aligning more with that. Therese Skurdal: Thank you. Is there any questions here in the audience? Unknown Attendee: Given the challenging market and I guess, declining revenue growth on your current revenue base, how much could you improve profitability with improved product mix, but also potential further cost improvements? Trond Fiskum: There is -- I cannot give you a number at this point, but there are obviously opportunities to improve. So if you take the current cost base and assume that we can capture both of the market and volume growth without adding much fixed costs can give a quite positive case. So that will be an ambition going forward. And then you can do the math. But -- and then it depends on the market development. What we do see is that there's a lot of uncertainties in the short term. In the longer term, we do expect growth. And then the question is how big growth that will be. I think we are well positioned to capture that growth. And we will then work very hard to maintain our cost base and not increase our cost base further. And then we can have a good gearing effect. I don't -- when it comes to product mix, I think it's more on the revenues overall. And of course, we will work to optimize both our variable cost and pricing going forward. And when it comes to also profitability, a key element here is to resolve our challenges when it comes to warranty and remove that from our current cost base. So yes, there are challenges also on the warranty, but I also remember that it has been a part of our cost base over the last years. So it also represents an improvement opportunity for us. Therese Skurdal: Any further questions here in the room? Unknown Attendee: Regarding the new business that we have bought, what is the business cases in those 3 -- sorry, 2 parts, Chassis Autonomy and the China part? Trond Fiskum: Chassis Autonomy has a Steer-by-Wire technology that has a very interesting, let's say, future. There's a big demand for it. The forecast estimated need for -- and market development for that kind of technology is very large. By 2035, the estimate is more than EUR 3 billion. And the target is to capture a meaningful portion of that market. Specific ambitions and targets, I would like to come back to you on that on the Capital Markets Day, and then we can share more information. That will be one of the products that we will highlight in that event. And then we'll talk more about how we see that market developing and what is our business case. But it's a new development. There are always risks when it comes to taking on that. But we do believe that we have both the customer relationships, we have the technology and the capabilities to take that technology to the market. And so far, I would say the interest is very strong. So it looks very promising. But we'll come back to this on the Capital Markets Day, and we'll share more insights about that on that event. On the China case, we had a situation where our joint venture partners wanted to leave the joint venture. So we decided to make the acquisition. The alternative would have not been so very positive for us not to buy that share, someone else could have done it. And now we have the flexibility and, let's say, the possibilities to look at alternatives and strategic alternatives for that market that we didn't have before. Also there, we are working on a strategy that we will be able to share on the Capital Markets Day regarding China. I don't have the exact numbers, if you were asking for that, but we will share the strategic rationale and what our plans are for both those 2 businesses on the Capital Markets Day. Therese Skurdal: So let's take a question from the webcast. Have your demand to pass on 100% of the tariff cost affected your new business wins? Trond Fiskum: The answer is no. I cannot say that. I think those discussions have been very constructive, very -- I will say, we've been very firm, but I don't see that the tariff discussions as such has had any impact on our business wins. Therese Skurdal: Thank you. How is the merger between the 2 factories in Sweden coming along? Trond Fiskum: It's moving forward. The merger between those 2 plants to move Ljungsarp plant into Mullsjö is moving forward according to plan. We have monthly reviews with the team. And the plan is to conclude that transfer by Q3 next year. So that move is going according to plan. Therese Skurdal: Any more questions here in the room? Unknown Attendee: You have proven today that you are able to manage the situation in the market reducing costs. If the market increases again or when the market increases again, will you be able to keep the cost base as you have it today? Or do you need to also parallel increase the cost so -- how do you see that in the future? Trond Fiskum: The clear ambition is to maintain the cost base as we have today. We know that there are some costs on our fixed cost base that are, let's say, semi-variables. But the clear ambition is to maintain the cost base as it is today, that we will work very hard to achieve. There are new technologies like AI and other technologies that can enable us to do that. It will be -- can be challenging if the volume increases are significant, but that will be a clear ambition to maintain the cost base as low as we can. There are further opportunities to streamline our operations so that is also work in progress. But what I can confirm is that, that will be an ambition, definitely. Erik Magelssen: Yes. Just to supplement on that, that is ambition. I think, to a large extent, we will be able to do that. And of course, we will increase cost later than earlier. So we'll kind of always drag it along and then we have to make sure that we will deliver the project in the right quality to the customer at the right time. So -- but that will be the clear ambition. That's also part of the benefit that we get from all these cost reduction programs that we will try to find better and smarter ways to work with the people and the cost base that we have, but -- yes. Unknown Attendee: I have to take the opportunity to congratulate and applaud what you have done so far. It's looking really promising for our shareholders. Trond Fiskum: Thank you. Therese Skurdal: So no further questions in the webcast too. If there are no further questions here in the room, we can conclude. Trond Fiskum: Then thank you very much for your participation. Thank you for Arctic again for hosting this for us at their facilities. That was excellent. And have an excellent day.
Operator: " Jack Khattar: " Timothy Dec: " Peter Vozzo: " Lin Tsai: " Jefferies LLC, Research Division Annabel Samimy: " Stifel, Nicolaus & Company, Incorporated, Research Division David Amsellem: " Piper Sandler & Co., Research Division Pavan Patel: " BofA Securities, Research Division Stacy Ku: " TD Cowen, Research Division Operator: Good afternoon, and welcome to the Supernus Pharmaceuticals Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the conference over to Peter Vozzo of ICR Healthcare Investor Relations representative for Supernus Pharmaceuticals. You may now begin. Peter Vozzo: Thank you, Raven. Good afternoon, everyone, and thank you for joining us today for Supernus Pharmaceuticals Third Quarter 2025 Financial Results Conference Call. Today, after the close of the market, the company issued a press release announcing these results. On the call with me today are Supernus Chief Executive Officer, Jack Khattar; Chief Financial Officer, Tim Dec. Today's call is being made available via the Investor Relations section of the company's website at www.ir.supernus.com. During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Supernus' current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company's latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those who may be listening to the replay, this call is being held and recorded on November 4, 2025. Since then, the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. Supernus declines any obligation to update these forward-looking statements, except as required by applicable securities laws. I will now turn the call over to Jack. Jack Khattar: Thank you, Peter. Supernus delivered strong operating results in the third quarter, reflecting continued momentum from Qelbree and GOCOVRI, collaboration revenues from Zurzuvae and an encouraging start to the launch of Onapgo. With these 4 growth products, we have built a solid foundation for a new phase of accelerated growth for the company. During the third quarter of 2025, these 4 growth products accounted for approximately 78% of total revenues. Starting with Onapgo. -- during the third quarter of 2025, Onapgo generated net sales of $6.8 million, up from $1.6 million in the second quarter. From launch through September 30, 2025, more than 1,300 enrollment forms were submitted by over 450 prescribers. Initial feedback from prescribers has been positive regarding the product and its performance. In addition, prescribers appreciate the high level of service provided by Supernus in its Circle of Care program. Due to stronger-than-expected demand for Onapgo, supplier constraints are impacting the company's ability to fully meet this demand. As a result of this supply imbalance, the company is prioritizing care for patients currently on Onapgo. This requires pausing delivery to patients who have not started on ACO. The company is working to build adequate inventory and resume new patient initiation as soon as possible, and we will provide timely updates as progress is made in resolving the supply constraint. Switching now to Zurzuvae. Collaboration revenue from Zurzuvae was $20.2 million in the third quarter of 2025, representing approximately 2 months of collaboration revenue since the closing of the Sage acquisition on July 31, 2025. Full third quarter 2025 U.S. sales of Zurzuvae as reported by our partner, Biogen, increased approximately 150% compared to the same period in 2024 and approximately 19% compared to the second quarter of 2025. We anticipate that the integration of Sage will be substantially completed by the end of this year. We continue to expect potential synergies up to $200 million on an annual basis by mid-2026. Regarding Qelbree, the brand had another robust performance in the third quarter of 2025 with 23% growth in prescriptions as reported by IQVIA and 31% growth in net sales compared to same period last year. The total ADHD market continues to experience healthy growth with an increase of 12% in prescriptions in the third quarter of 2025 compared to third quarter 2024. Prescription growth for the same period in the adult segment was 16%, outpacing the 5% growth in the pediatric segment. Qelbree had a strong back-to-school season with pediatric prescriptions growing by 19% in the third quarter compared to the same period last year, while at the same time, posting robust third quarter prescription growth in adults of 32%. In addition, the number of prescribers in the third quarter grew by 18% compared to the same period last year. Switching to GOCOVRI, the product continues its strong performance on the back of the momentum it had in the first half of this year. Net sales grew by 15% in the third quarter 2025 compared to the same period last year behind growth in prescriptions and number of prescribers. Moving on to R&D. For our SPN-443 program, we have selected ADHD as the lead indication. We expect to initiate a Phase I single ascending, multiple ascending dose study in adult healthy volunteers in 2026. We are on track to initiate a follow-on Phase IIb multicenter randomized, double-blind, placebo-controlled trial with SPN-820 in approximately 200 adults with major depressive disorder by the end of 2025. This study will examine the safety and tolerability of SPN-820 and its efficacy at a dose of 2,400 milligram given intermittently twice per week as an adjunctive treatment in the current baseline antidepressant therapy. Our Phase IIb randomized, double-blind, placebo-controlled study of SPN-817 is ongoing with a targeted enrollment of approximately 258 adult patients with treatment-resistant focal seizures. This trial utilizes 3-milligram and 4-milligram twice daily doses. Finally, corporate development will continue to be a top priority for us as we look for additional strategic opportunities to further strengthen our future growth and leadership position in CNS through additional revenue-generating products or late-stage pipeline product candidates. With that, I will now turn the call over to Tim. Timothy Dec: Thank you, Jack. Good afternoon, everyone. As I review our third quarter 2025 results, please refer to today's press release that was issued earlier today. Total revenue for the third quarter of 2025 was $192.1 million compared to $175.7 million in the same quarter last year. Total revenue in the third quarter of 2025 was comprised of net product sales of $168.5 million, collaboration revenues associated with Zurzuvae of $20.2 million and royalty, licensing and other revenues of $3.4 million. Please note, collaboration revenues represent approximately 50% of the sales of Zurzuvae reported by Biogen. During the third quarter of 2025, collaboration revenues represented approximately 2 months of sales reported by Supernus from the closing of the Sage acquisition on July 31, 2025. Excluding net product sales of Trokendi XR and Oxtellar XR, total revenue for the third quarter of 2025 increased 30% compared to the same quarter last year. This increase was primarily due to the increase in net product sales of our growth products, Qelbree and GOCOVRI as well as from the launch of Onapgo in April 2025 and the additional collaboration revenues from Zurzuvae. For the third quarter of 2025, combined R&D and SG&A expenses were $209 million as compared to $98.8 million for the same quarter last year. Operating loss on a GAAP basis for the third quarter of 2025 was $60.2 million as compared to operating earnings of $40.9 million for the same quarter last year. The change was primarily due to higher SG&A expenses, which included approximately $70 million of acquisition-related costs from the Sage acquisition, approximately $30 million of Sage operating costs in Q3 2025 and incremental intangible asset amortization from ZurZuVAe and Onapgo. GAAP net loss was $45.1 million for the third quarter of 2025 or a loss of $0.80 per diluted share compared to GAAP net earnings of $38.5 million or $0.69 per diluted share in the same quarter last year. On a non-GAAP basis, which excludes amortization intangibles, share-based compensation, contingent consideration, depreciation and acquisition-related costs, adjusted operating earnings for the third quarter of 2025 was $41.9 million compared to $67.7 million in the same quarter of the prior year. Total revenues for the 9 months ended September 30, 2025, were $507.4 million compared to $487.7 million in the same period last year. Total revenues were comprised of net product sales of $468.5 million, Zurzuvae-related collaboration revenues of $20.2 million and royalty licensing and other revenues of $18.7 million. Excluding net product sales of Trokendi XR and Oxtellar XR, total revenues for the 9 months ended September 30, 2025, increased 25% compared to the same period last year. Combined R&D and SG&A expenses for the 9 months ended September 30, 2025, were $441.6 million as compared to $322.3 million for the same period last year. The change was primarily due to higher SG&A expenses, which includes approximately $70 million of acquisition-related costs from the Sage acquisition and $30 million related to Sage operating costs recorded since the closing of the acquisition on July 31. Operating loss on a GAAP basis for the 9 months ended September 30, 2025, was $58.3 million as compared to operating earnings of $60.3 million for the same period last year. GAAP net loss was $34.4 million for the 9 months ended September 30, 2025, or a loss of $0.61 per diluted share compared to GAAP net earnings of $58.5 million or $1.05 per diluted share in the same period last year. On a non-GAAP basis, which excludes amortization of intangibles and share-based compensation, contingent consideration, depreciation and acquisition-related costs, adjusted operating earnings were $110.2 million compared to $135.4 million for the same period last year. As of September 30, 2025, the company had approximately $281 million in cash, cash equivalents and marketable securities compared to $454 million as of December 31, 2024. The decrease was primarily due to the funding of the Sage acquisition, partially offset by cash generated from operations. The company's balance sheet remains strong with no debt and significant financial flexibility for potential M&A or other growth opportunities. And as Jack mentioned, the integration of Sage is on track and will be substantially complete by year-end. Now turning to guidance. We are updating our full year 2025 financial guidance primarily to reflect Supernus' strong performance in the first 9 months of the year. We expect total revenue to range from $685 million to $705 million, up from the previous range of $670 million to $700 million, comprised of net product sales, Zurzuvae collaboration revenues and royalty and licensing revenues. Note that total revenue guidance for full year 2025 assumes approximately $75 million to $85 million of combined net sales of Trokendi XR and Oxtellar XR, up from $65 million to $75 million previously. For the full year 2025, we expect combined R&D and SG&A expenses to range from $505 million to $530 million, unchanged from the previous range. Overall, we expect full year 2025 operating loss in the range of $65 million to $75 million. compared to the previous range of an operating loss of $70 million to $80 million. And finally, we expect non-GAAP operating earnings to range from $125 million to $145 million, up from the previous guidance of $105 million to $135 million. Please refer to the earnings press release issued prior to this call that identifies the various ranges of reconciling items between GAAP and non-GAAP. With that, I will now turn the call back over to the operator for Q&A. Operator? Operator: [Operator Instructions] So it looks like our first question will come from Andrew Tsai with Jefferies Institute. Lin Tsai: Nice execution this quarter. I wanted to ask on Onapgo. It sounds like it's off to a strong start. And so if you guys could have met all the patient demand this quarter, there were no supply constraints, how many more patients would have received Onapgo? And where would the sales have been? Jack Khattar: Yes. Andrew, I'll take that. It's a little bit hard to project these numbers, obviously, as far as to exactly the number of patients we would have had. But -- the big picture here is the product has been doing amazingly well, exceeding all expectations from a demand perspective and the response from the physician community, the patient and Parkinson's community has been phenomenal. And we are very committed, obviously, to this product. And our key focus right now is to make sure we take care of our existing patients. And we have about slightly more than 400 patients. So we've had significant growth also in the number of patients, obviously, from the last quarter. And as I mentioned earlier, I mean, the feedback regarding the product has been really good. The high level of service we are providing patients and physicians is very much noticeable and very much appreciated in the marketplace because these products need and patients need attention and they care, and that's what we're trying to do here. So regarding the supply issue, I mean, we will deal with it. That is something we'll be able to overcome. No question about it. We're very committed to Onapgo on the long term as a product. And as I mentioned, I mean, the opportunity here is vast. If you look at the European experience, apomorphine infusion devices have been available for more than 2 decades actually and have served and helped thousands and thousands of patients. And our intention is nothing less than duplicating that kind of success in the U.S. because we know there are a lot of patients in the U.S. who need and could really take advantage of a product like this. So -- so that's really where we are. But definitely, I mean, we're very much focused on addressing the supply constraint. And hopefully, we'll be able to get everybody who's in the pipeline, so to speak, and start initiating patients again. Lin Tsai: And secondly, as a follow-up, just to manage Street expectations, is the supply constraint in such a way where we should be thinking that Q4 might be softer relative to Q3? Or could it still grow because you still have supply, I guess. Like I'm trying to gauge whether there's a potential bolus in Q4 or whether it could actually be softer actually. I don't know how to think about it. But any color would be helpful. Jack Khattar: Yes. Yes. I mean the situation changes by the hour because we're working around the clock literally with our suppliers trying to line up more batches, line up more deliveries. So it's -- and it's a very fluid situation. But since you asked the question, I mean, earlier way back when we launched, people asked me, is on NONAPGO built into the annual guidance? And I said, yes, it's in the high single digit for the year. And obviously, we're pretty much already there in a way with the third quarter cumulative year-to-date, we have about $8.4 million. Certainly, we'll have shipments in the fourth quarter, no question about it. It's really hard for me now to tell you today. Is it going to be higher? Is it going to be slightly lower, a little bit more lower because we truly don't know yet, and we don't have a clear picture at this point. Operator: We will now hear from Stacy Ku from TD Cowen. Stacy Ku: Nice quarter. Congrats on the nice quarter. Some follow-ups on an Onapgo. First, maybe walk through for us what the rate limiting steps are -- and then more specifically, what is the high and low end in terms of the amount of time that you think you'll need to resolve this issue? So just some type of range as you're talking about all these different details, which we very much appreciate. So that's the first question. And then the second, of course, ZURZUVAE was approved ahead of Onapgo. But just given this really high patient demand and it seems like the inability to address what the patients are asking for, are we going to expect this to persist? Or are they going to be absorbed by the competitor? So that's the second question. And then third, maybe just off topic from ANOPKo.be just help us understand margins. They have looked pretty healthy for this quarter. So just help us understand where they're going to settle as more products are coming on board versus where they are currently. Jack Khattar: Yes, sure. Yes. I mean the key rate-limiting steps or issues, the constraints we're talking about, it's really a lot of it is capacity. Again, because of the significant demand, it's a high-quality problem, but obviously, we need to address it and make sure we catch up because to your second question, we know patients when we have the enrollment forms, clearly, there is a period of time anyway that happens before initiation, but we do have patients waiting for initiation. So obviously, we're working very diligently to do this as quickly as possible so we can initiate and go back to initiating patients. But we're trying to preserve right now the inventory we have. And of course, we have deliveries coming in, but we're trying to preserve that inventory for people who are already on therapy because, obviously, these are existing patients we need to take care of. Whether -- so the patients, a lot of them, I guess, will wait. Some of them may end up going somewhere else. That's okay because once we are back on track, I mean, again, back to the fact that the product is a great product. It's something that is very much needed in this marketplace, specifically because apomorphine is a molecule that treats Parkinson's like any other molecule. It's not another levodopa/carbidopa. It's very much differentiated and there is a need for it. So we will be able to go through this situation and get that on track at some point. As far as the margins, the margins on ONAPGO will end up being pretty close similar to APOKYN from a manufacturing perspective, gross margins because it's under the same setup and partnership with our partner in Europe, who is the licensor. So it's very similar to the APOKYN setup. Stacy Ku: Okay. And just to confirm, when you talk about capacity, are you talking about the device or the actual API? Just help us understand what is the supply limitation? Jack Khattar: Yes, sure. Yes, the issue is related more to the cartridge, the filling of the cartridges. So that's -- on the pumps, we have no issues with the pump. It's more scheduling, getting enough production time at the CRO, specifically on the cartridges, the drug cartridge. Operator: Our next question comes from David Amsellem from Piper Sandler. David Amsellem: So I have Onapgo question and then also a Zurzuvae question. So on Onapgo, just coming back to the previous questions about potential lost business to a competitor. Have you -- I guess the question here is, what have you heard in the field regarding that? And I guess, in real time, can you give us a sense of how much of your patients that -- where PEFs have already been submitted, do you expect to keep? Is that the vast majority? Is it something less? Just help us understand how to think about that and the potential for lost business with some more granularity. So that's number one. And then secondly, on Zurzuvae, can you tell us how many reps you have detailing the product, your plans for sales force expansion? And also the -- your willingness, I guess, and motivation to try to acquire the other 50% of the asset that your partner has. How are you thinking about that? Jack Khattar: Yes. Starting with on Onapgo, I mean, as far as the potential loss, this is a fairly recent situation we're dealing with. So it's not like we've had a long time to evaluate or we've had a lot of feedback from the field around this issue. So it's a little bit hard for me, obviously, to predict what the potential loss. But again, at the end of the day, big picture, given how good this product is and the need for it, of course, you're always concerned you're going to lose some of your patients to competitors or other products, obviously, out there. But if these patients really need a product like this, once we come back and we do have the inventory, we have a good confidence that we can get a lot of these patients back into the product and so forth. And we're talking because basically of experience. I mean, the patients who are on Onapgo, the experience we've seen in Europe for more than 2 decades, as I mentioned earlier, the differentiation of the molecule versus the other treatments out there, that really speaks volumes for the need for a product like this, but not only the need, but also the validation from a clinical and medical perspective that this is a product that really helps patients out there. So all these factors, hopefully, will obviously limit, reduces, minimizes any potential loss for patients as time goes on. So regarding Zurzuvae number of reps, I mean, we haven't really disclosed that. Biogen hasn't disclosed it. But it's really as far as -- I mean, this is a specialty area, OB/GYN. So you could, in a way, guess how big the sales force. It can be -- obviously, there's a limited number of OB/GYNs you can go after in the U.S. And the expansion, I mean, it just happened in the fourth quarter of last year into the first quarter of this year. So we just had the expansion, we meaning Sage and our partner, Biogen. And I think, obviously, we're starting to see a lot of the fruits of that expansion, given that the product and the growth of the product with its great performance so far. Would we consider more expansion? I mean, everything is always open as an option for us. Certainly, that is something we will have to discuss with our partner, Biogen, in making these type of decisions. Now typically, on our products on Supernus, as you guys probably well know and remember, I mean, we typically take expansions one step at a time, make sure the first expansion, we got the return on it. It is really proving to be a wise approach and then whether it verifies another expansion or not. And we'll approach this the same way, and we'll discuss it with our partner as far as potential future expansions. And then as far as our willingness to get the other 50%, I mean, look, we're extremely happy with the 50% we own. The 50% we purchased on its own merited the deal that we did, obviously. Again, we have a great relationship with our partner, Biogen. I mean, anything could be discussed at any time. So I never say no, but I can't give you a definite answer clearly that we will definitely get it or not. So -- but I mean, we -- this product is a great product and the potential. The 50% on its own is a great opportunity for us. The 100%, yes, will be a bigger opportunity. That's for sure. Operator: Our next question comes from Pavan Patel from BofA Securities. Pavan Patel: First on net pricing on Onapgo. Can you talk about how we should think about the current gross net deductions versus steady state? And given 2/3 of the patient segment is Medicare, would you expect a 35% gross net deduction? Or could pricing look better on a steady-state basis? And if you can speak to what that gross net deduction looks like currently? And then second question, I think, Jack, at a recent Berger conference, you mentioned from a BD perspective that you would look at assets with synergies to the recent Sage acquisition. Can you provide some more details on that? Does that mean women's health, which is historically a very tough competitive space to play in or other assets like depression? Jack Khattar: Yes, sure. Regarding the price, I mean, all I can tell you at this point because obviously, this is -- it moves and it will move around as the launch gets more cemented as the reimbursement things are more in place as time goes on. I mean, on a WACC basis, we expect the annual cost for a patient is probably going to be around $105,000, $100,000, very much in line with the other products in this space. So as far as the gross to net, another quarter or so will give us a little bit more of a better assessment as to where it might be heading. It is not very, very high. So your numbers are not too far off. It might be a little bit lower than that, but we'll see where it lands eventually. And hopefully, we'll be able to give people a little bit more guidance. On the BD side, we are, as I mentioned in my prepared remarks, we are very much focused on more potential acquisitions and doing BD. And our priorities haven't really changed as far as what type of assets, meaning commercial stage will be our top priority, whether that is in CNS, across neurology, psychiatry and now, of course, to your point, across women's health, given that, that's another vertical that we just now have within the company. We have a great infrastructure from a commercial perspective. So if we can find something in women's health that makes a lot of sense, absolutely, that is something we will be considering. But aside from that, clearly, in neurology, whether it's neurology, psychiatry or movement disorder specialists, that is also synergistic with Parkinson's. So all these areas are obviously things that we look at. And we're very open to rare diseases as well because, again, from a patient support, we have a great infrastructure around the Parkinson's franchise that we have and great services. So we can clearly execute very well around rare diseases as well. So we're very focused on all that. Clearly, the women's health opens up a whole new area for us that before the Sage acquisition was not something we would have looked at, obviously, probably more seriously. But it's an interesting acquisition that we did with Sage that it gave us another vertical that we can look at, and it got us there through a CNS product. So yes, I mean, it really increases the number of opportunities. In general, I mean, and we're starting to really look at women's health, yes, you might be right. I mean, the number of opportunities may not be too numerous out there. But with time and diligence, we'll probably be able to find something only time will tell clearly. Pavan Patel: And if I could just ask a follow-up question as well. On AbbVie's call, their R&D had walked us through some key differences between Vyalev and Onapgo. And our own work shows that even though Vyalev is expected to capture the bulk of share here, there's a patient segment in which patients would benefit from Onapgo therapy. Maybe if you can help us better understand what is that niche that you're hoping to carve out? And what's the messaging here from your sales force to the movement disorder specialists that treat these patients? Jack Khattar: Yes, sure. And I looked at what AbbVie mentioned at their earnings call. And we try not to make comparisons, obviously, because there are no head-to-head trials. So it's unfair to any of the products to make such kind of comparisons. We just tell people look at the labels on both products and make your own conclusions, so to speak. But at the end of the day, to us, what really matters is how is it being used and what's the feedback you're getting from the marketplace. I mean that's really what differentiates your product versus another product is the performance of that product, the level of service we are providing that surrounds that product clearly. And as I mentioned earlier, I mean, apomorphine is apomorphine, and it has incredible characteristics from a mechanistic perspective, how it works -- it's a very unique molecule that penetrates the brain and it doesn't have any protein competition. So in other words, it has great penetration. It doesn't need metabolic conversion and it acts like dopamine. So typically, the metabolic conversion for those of you who are very close to Parkinson's are typically done by the presynaptic neurons. And as time goes on, what happens to these neurons, right? So when you have a molecule that acts exactly like dopamine and really penetrates the brain very well and directly acts on the postsynaptic dopamine receptors and at the same time, has -- structurally, it's very similar to dopamine. I mean, that's really a great molecule. And not too many drugs in the Parkinson's space have that clearly from a mechanism point of view and so forth. So that strongly differentiates apomorphine from the other molecules. And again, as I mentioned, as far as our service, I mean, I could say we have maybe best-in-class service surrounding our patients, taking care of our patients, making sure we have great initiation, training, follow-ups, titration, all that is done in-person nurses that really surround our patients with care. Operator: So... Our next question comes from Annabel Samimy from Stifel. Annabel Samimy: Good quarter. Just going back to Onapgo and the reception to it, physicians are clearly interested in the apomorphine molecule else this wouldn't have seen such high demand. So when you think of the patients that are going on treatment or enrolling -- filling out the inpatient enrollment forms, are these patients that have already been on some form of apomorphine? And is there, I guess, a temporary option to lock them into treatment with apomorphine while you're getting supply up and running so that you can sort of not lose them to a potential levodopa/carbidopa pump. Can you just talk about the dynamics there for a minute, if there's a middle ground there until they get on board and you have the capacity? Jack Khattar: Yes. I mean they're very different products, APOKYN and Onapgo. APOKYN clearly is for acute treatment of acute episodes. It's a single bolus injection, so to speak. Now Onapgo has that capability of giving you a bolus injection. But if you're trying to give an Onapgo patient an APOKYN product, APOKYN is not going to give you, of course, the continuous infusion, so to speak. So it's a little bit -- there are different products. Clearly, from a medical perspective, I mean, the physician will have to decide is APOKYN or would APOKYN be helpful for that patient? I mean that will be decided by the physician, of course, on a case-by-case scenario. As far as the typical patient we are getting on -- on ONAPGO, yes, some of them are used to apomorphine have used apomorphine before because we know we have actually APOKYN patients who are on Onapgo. And they have gotten or some of the forms are on patients from APOKYN. So we -- yes, the answer is yes. It's not a huge portion. It's -- we estimate it somewhere in the 15%, 17% is coming from APOKYN. So yes, these patients would be -- would have had exposure on apomorphine, either used to it or what have you and obviously -- and we've said historically, you might remember, people were asking about cannibalization and potential of cannibalization on APOKYN. We always said those patients who potentially are taking maybe 3 injections a day or 4 injections a day, they may choose to put a pump instead of doing multiple injections a day. So -- and that portion of the business, we always estimated it's probably in the 15% domain. Annabel Samimy: Okay. Got it. And just -- I know that one other point of differentiation you've always pointed to is the safety. Is that resonating with physicians at all? Or they're mostly focused on the type of molecule that they want to move forward with as far as next stage of treatment? Jack Khattar: Yes. I mean, clearly, again, back to making comparisons and so forth. I mean, if you look at the side effects and the labels of both products, obviously, there are big differences in key areas across the label. And physicians, of course, I mean, they've had scenarios probably. Some patients have some of these reactions, whether on onapgo or on Vylev or vice versa or what have you. So I mean, at the end of the day, the things that are really driving what we believe is driving and on a recent survey, I mean, we looked at it and it says basically that the top reasons that is driving physicians to prescribe, number one is the significant improvement they are expecting and would expect from Onapgo for any daily good on time. I mean that's really the top reason they look at and consider when they're considering Onapgo. And then the second is really the positive impact on the quality of life that this product. And a lot of these are based on, of course, our data, the clinical studies and so forth from the products. It's resonating with these physicians. So the sustained also improvement through like week 52. So a lot of these messages we're getting back from the surveys we're doing as to what are the top reasons they think about and the top reasons why they will be considering prescribing kind of ties into the data on the product and the efficacy of the product. Annabel Samimy: Got it. And then just one other question going back to expanding into the OB/GYN space. Clearly, it's an interesting area as a first point of contact. And I'm just wondering if you -- expanding into the space, has there been any resistance from Biogen here? Or are they on board with this potential expansion? And do you have any sense of timing when that can happen? Jack Khattar: So you mean expansion of Supernus into other areas in women's health? Annabel Samimy: No, into the OB/GYN market as a target audience. Jack Khattar: On Zurzuvae. Annabel Samimy: Yes, yes. Jack Khattar: Yes. Yes. I mean as far as the expansion of our current sales force on Zurzuvae, definitely, I mean, that is something we will work very closely with Biogen. No question about it. I mean all the decisions around -- this is a great and has been a great, great partnership with Biogen across board. So that is something we'll work and we'll have to work very closely with them. As far as us, Supernus expanding into women's health into other areas with different brands in women's health, obviously, that is more of an independent decision that we can take on our own. Annabel Samimy: Yes. No, I was referring specifically to Zurzuvae. And the timing -- is there any timing on that? Or that's just a future goal? Jack Khattar: Yes. I mean we don't have any specific -- I mean, we treat Zurzuvae like we treat our brands. I mean we're constantly evaluating. We look at it periodically. Do we need to expand the sales force? If so, how big, how small of an expansion. So I mean, we're constantly doing that across all our brands. So I don't have a specific timing. Now we just got an expansion that just happened basically beginning of this year, more or less, we, meaning us and Biogen on Zurzuvae, right? So we're evaluating that. Did that make a huge impact? Obviously, it is making an impact, as you can see from the results quarter-over-quarter, -- of course, in addition to the fact we have a lot of other programs happening. It's not just the sales force. So that is a continuous evaluation. I don't have a specific timing to tell you. Definitely, we'll do it in '26 or mid-'26 or '27. I truly don't have that. Operator: I am showing no further questions at this time. I would now like to turn it back over to Mr. Jack Khattar for closing remarks. Jack Khattar: Thank you for joining us on this call today. Supernus has a diversified portfolio of growth products where our future success is not solely dependent on one single product. Qelbree's success to date and future growth is augmented by continued growth from GOCOVRI and early growth from Zurzuvae and Onapgo, 2 products that were launched less than 2 years ago and that have significant market opportunity. Regarding Onapgo, the company will provide timely updates as progress is made in resolving the supply constraint. We are very focused on these 4 products and on advancing our pipeline to position Supernus as a long-term growth company while generating strong cash flows behind the strength of our expanded product portfolio and through the efficiency of our operations. Thanks again for joining us this afternoon. Operator: Perfect. I will now close -- thank you so much for the conference today. This does conclude the program. You may now disconnect.
Operator: Hello, and welcome to the Clearway Energy, Inc.'s Third Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce Senior Director, Investor Relations, Akil Marsh. Akil Marsh: Thank you for taking the time to join Clearway Energy, Inc.'s third quarter call. With me today are Craig Cornelius, the company's President and CEO; and Sarah Rubenstein, the company's CFO. Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation. In particular, please note that we may refer to both offered and committed transactions in today's oral presentation and also may discuss such transactions during the question-and-answer portion of today's conference. Please refer to the safe harbor in today's presentation for a description of the categories of potential transactions and related risks, contingencies and uncertainties. With that, I'll hand it over to Craig. Craig Cornelius: Thank you, Akil. We appreciate everyone joining us today. Clearway is well positioned to deliver on its near- and long-term growth objectives as it proves out the inherent strength of its enterprise business model and harnesses the advantages of being a well-prepared supplier of choice amidst an emerging renaissance in the U.S. power sector. For 2025, we've narrowed our financial guidance to the top half of our originally set range, following a strong third quarter performance and the addition of well-performing drop-downs to our operating fleet. Out to 2027, we have line of sight to delivering our increased CAFD per share target of $2.70 or better, building from the successful execution of multiple acquisitions and sound preparation of multiple repowerings and sponsor developed drop-downs. And today, we're also establishing a 2030 financial target, setting a CAFD per share goal of $2.90 to $3.10 per share, which translates to a 7% to 8% growth CAGR from our 2025 guidance midpoint, reflecting the extensive progress we've made across our growth pathways and the confidence we have in their prospective success in the years to come. Growth in both the medium and long term reflects the strong traction we've made in supporting the energy needs of our country's digital infrastructure build-out and reindustrialization. We expect this to be a core driver of Clearway's growth outlook well into the 2030s. To fund this abundant opportunity set, as we've noted in the past, we'll increasingly use retained cash flow as a funding source while prudently using debt and modest equity issuances to extend our position of strength. To that end, our long-term payout ratio beyond 2030 is targeted to be less than 70%, a goal we are targeting while continuing our commitment to maintain competitive EPS growth in the long term. With the robust growth trajectory we see ahead through this decade and into the next, today's materials are geared towards giving you more visibility into where that growth will come from and how it will be conservatively funded with the goal of allowing the investment community to value Clearway with full recognition of what we see ahead. Turning to Slide 6. To reiterate key strengths of our enterprise, we have a proven track record at both Clearway Energy, Inc. and Clearway Group of being best-in-class owners and developers of energy assets here in the United States. Clearway Energy, Inc. offers a total return value proposition within the listed infrastructure space that's superior to most peers, driven by our diverse and sizable operating portfolio, steady cash flows and our advantaged position to deliver growth across multiple pathways. Clearway Group has grown its late-stage pipeline by 4x since 2017 and benefits from strategic relationships with customers and suppliers, putting it in a prime position to advance and offer attractive projects to Clearway Energy, Inc. for years to come. This success and strong alignment between the 2 companies that make up our enterprise have been key to our enterprise's growth over 12 years of strong and reliable history. As you'll see in more detail in the coming slides, this combination of enterprise alignment and bountiful accretive growth opportunities underpins our confidence in meeting our growth targets in 2030 and beyond. Turning to Slide 7. Turning to the building blocks of our growth outlook through 2030, we have a clear line of sight secured by successful commercialization of substantially all development projects planned for CWEN funding in the 2026 and 2027 COD vintages. Attractive CAFD yields are expected for these projects through long-term and favorably structured revenue contracts, secured equipment supply and clear path to permits and interconnection. Looking further out, Clearway Group's development program in 2028 and 2029 includes a total project volume of over 6.5 gigawatts, far in excess of what is needed to meet the top end of our 2030 goal. Focusing on the approximately 4.5 gigawatts of late-stage projects planned for 2028 and 2029, we expect those projects to target recurring asset CAFD of $40,000 per megawatt or greater and to enable CWEN investment at CAFD yields on average of 10.5% or better, in line with the current market for recently commercialized projects and recent drop-down offers, equating to approximately $180 million of recurring asset CAFD potential, that opportunity set is substantially larger than what is required to meet the top end of our 2030 CAFD per share goal. Turning to Slide 8. Our enterprise is advantageously positioned for growth well beyond 2030, given Clearway Group's best-in-class development pipeline and the technological and market resilience of its embedded projects. Projects are being developed at increasing scale in response to power market demand and will be commercialized with CWEN's growth objectives and investment mandate front of mind. As discussed in past quarters, our pipeline has been built for resilience through massive safe harbor investments, present geographic positioning and thoughtful procurement. Clearway has also established itself as a proven supplier of choice for utilities and hyperscalers to meet mission-critical data center demand with 1.8 gigawatts of PPAs executed and awarded to support data center loads during the last year. From this position and using pre-existing development and operating assets as a nucleus for its work, Clearway Group is now developing multi-technology generation complexes to serve gigawatt class co-located data centers across 5 states with the potential for these developments to create accretive investment opportunities for Clearway Energy, Inc. in the early 2030s. Configurations for these complexes range from approximately 1 gigawatt up to almost 5 gigawatts across multiple technologies with commercial operation stages coming online as soon as 2028 and spanning into the 2030s. The ultimate design and capacity of these complexes is subject to a number of factors. But if the enterprise is successful at bringing online just one of these large multi-generation complexes, a single one alone could allow CWEN to meet its growth objectives for multiple years in the 2030s while aligning with our capital allocation framework. Given our growth outlook and funding position, it is our view that the market could more significantly value the longevity and diversified enabling pathways of our growth outlook beyond 2030. To give our investors the ability to see that future growth potential as clearly as we do, we're aiming now to provide more visibility into the illustrative financial building blocks we plan to use to deliver durable growth well into the 2030s. As much as other power companies, if not more so, we expect that the location of our assets and their financial structures will allow our operating portfolio to benefit from rising power prices in the decade ahead. As our initial PPAs expire, our projects will be free of project level debt, which we structure to amortize at the conclusion of PPAs, making a higher power price scenario, a potential tailwind for recurring annual cash flow contribution. Additionally, while we plan with conservative assumptions for corporate and project refinancings, opportunistic execution may result in upside relative to our planned expectations. We have routinely demonstrated execution of project and corporate maturities at financing costs favorable to assumptions we incorporate into our long-term goals. We are cognizant of the many moving pieces that determine our operating portfolio's earnings power year-to-year. But over the long term, we believe the environment is shaping up to allow us to deliver low single-digit annual growth in cash flow from our existing portfolio. On top of this, we will have the opportunity to invest in growth across multiple redundant pathways in fleet enhancement, sponsor developed projects and third-party asset M&A, allocating capital across those pathways based on which investments will create the highest risk-adjusted return for Clearway Energy, Inc. By deploying 30% or more of a growing stream of retained cash flows towards growth at CAFD yields greater than 10%, we can achieve another 3 to 5 percentage points of annual growth in the long term. Finally, we can, in the long term, deliver at least 1% to 3% in compounding growth in CAFD per share through new project investments that are funded with corporate capital raised through the prudent issuance of corporate debt instruments and equity. Our track record has demonstrated the ability to create projects that deliver meaningful accretion relative to our cost for corporate capital. We have demonstrated the ability to sustain that accretion across multiple market cycles for over a decade. And we also have demonstrated a consistent commitment to prudence in the way we manage our balance sheet and judiciousness in the way we plan for and execute equity issuances. Through this simple and sustainable model and with an abundance of attractive growth opportunities ahead of us, we look forward to delivering our long-term growth target of 5% to 8-plus percentage growth well into the 2030s. Turning to Slide 11. We have continued to make progress across our redundant growth pathways, methodically executing on our prior commitments and extending our road map for growth with our trademark development craftsmanship. Our fleet optimization initiatives continue to strengthen our ability to achieve our 2030 target. Since last quarter, Mt. Storm started construction, a new long-term PPA was advanced for San Juan Mesa and safe harbor investments were made to enable 2 additional future repowerings that can be implemented over 2027 to 2029. We are now in a position where every project that is able to be repowered through 2027 can be and towards the implementation of a program that will aim to have repowered over 1 gigawatt of wind by 2029, with the majority of our wind fleet by that year being repowered or newly constructed this decade and in a strong position to perform for the decade ahead. Turning to Slide 12. Our sponsor-enabled growth program has also continued its forward progress with all previously committed investments funded in construction or on track for completion at attractive CAFD yields. All drop-downs that have commenced commercial operations in 2025 are fully funded with initial operational results showing excellent performance and anticipated CAFD contributions and CAFD yields exceeding these levels initially communicated at the time of investment commitment. This outcome was driven by further revenue contract and cost optimization as well as supportive project financing markets. Committed or recently offered drop-downs planned for COD in 2026 all remain on track for completion in that year with accretive prospective returns for CWEN. And additional sponsor developed drop-down opportunities for the 2020 COD and funding year are now coming into view. The Royal Slope project in Washington State has now been identified as a CWEN investment opportunity after executing a 20-year PPA and a 20-year energy storage agreement with the utility expecting significant data center demand growth in the region. And an additional WUB located battery storage resource has been identified as a potential additional future drop-down investment opportunity for CWEN in 2027. Turning to Slide 13. The last year has been a successful period of complementary and synergistic third-party M&A for Clearway with 3 transactions consummated at CAFD yields above 12%. Our early October announcement of the Deriva Solar portfolio acquisition capped off a fruitful year of disciplined acquisition engagement in a market environment that favored our strengths as an enterprise. The transaction leverages our core strengths in operating solar assets cost efficiently across the country and especially in California. It also positions us to enhance value in the 2030s through battery hybridizations at targeted sites and through the ability to offer solar energy and capacity value alongside our market-leading franchise for operating in new wind and PJM. Turning to Slide 14. Our 2030 CAFD per share target is built upon the strong building blocks discussed earlier. From the 2025 midpoint of guidance, we've spent the last year executing across our growth pathways through fleet improvements, enhanced capacity revenues, drop-downs and third-party M&A such that we now see a path to achieve the top end or better of our previously set 2027 target range of $2.50 to $2.70 in CAFD per share. Beyond 2027, CAFD per share growth will be further increased through what promises to be a very fruitful year of repowering investments in 2027, potential investments in now identified sponsor-enabled drop-down opportunities for the same year and the sizable late-stage pipeline Clearway Group is developing for completion in 2028 and 2029. Notable items that would net out against incremental asset CAFD from growth include the issuance of corporate debt to fund growth and the refinancing of our corporate bonds due in 2031, both of which we have conservatively accounted for in our targets. We also expect to issue modest equity to fund growth in line with our demonstrated practices and with the prospective cost of such issuance incorporated into our 2030 target. While our target represents a robust growth compound annual growth rate from 2025 levels, we will continue to evaluate the potential to prudently and methodically improve on that outlook over time through our fleet enhancement and sponsor development pathways and also through additional third-party M&A, which is not incorporated into our target setting and would continue to be subject to a rigorous standard for financial accretion. With that, I'll turn it over to Sarah, who will walk through our financial summary and provide additional detail on our financing outlook through 2030. Sarah Rubenstein: Thank you, Craig. Turning to Slide 16. For the third quarter, Clearway delivered adjusted EBITDA of $385 million and cash available for distribution or CAFD of $166 million. Year-to-date, we've generated $980 million of adjusted EBITDA and $395 million of CAFD. In our Renewables and Storage segment, wind resources in key regions tracked close to median expectations, while solar benefited from the execution and timing of growth investments. Flexible generation also performed in line with sensitivities. Turning to our balance sheet. We executed $50 million of opportunistic discrete equity issuances at accretive levels since the last earnings call through our ATM and dividend reinvestment and direct stock purchase plan. This reflects our continued commitment to capital discipline and our ability to access markets efficiently to support growth. Given the strong year-to-date performance and our expectations for the remainder of 2025, we are narrowing our 2025 CAFD guidance range to $420 million to $440 million. We're also establishing our 2026 CAFD guidance range at $470 million to $510 million. This guidance incorporates incremental contributions from drop-downs and third-party M&A as we continue to execute on our growth strategy. As in past years, our guidance midpoint assumes P50 renewable production expectations and the range reflects the potential variability in resource performance, energy pricing and timing of growth investments. As a last note on this slide, I'd like to note that our definition of CAFD is a conservative metric that represents the ongoing sustainable cash flow generation of our business and has been consistently applied throughout our history and remains unchanged. We have historically used this metric to measure the amount of cash available to distribute to our shareholders. In the interest of making our financial metrics more recognizable across peer benchmarks, we may now sometimes reference cash available for distribution interchangeably with free cash flow, a term that is more recognizable and commonly used among industry peers. The terms represent the same financial metrics, and you may see them used interchangeably beginning with these earnings materials. Turning to Slide 17. With the establishment of our 2030 CAFD per share target range, we wanted to provide greater granularity on potential funding sources and corporate capital deployment in 2026 through 2029 in support of our growth targets to achieve the target range of $2.90 to $3.10 in CAFD per share in 2030. Clearway continues to have a prudent capital allocation model to support our long-term objectives. First, utilizing retained cash flow, which will provide a greater contribution as supported by a payout ratio trending towards 70% by 2030. Next, we fund growth with corporate debt, while ensuring prudent corporate leverage, targeting a 4 to 4.5x ratio of corporate debt to EBITDA, in line with our target credit ratings. To round out our funding plan, we plan to issue moderate discrete amounts of equity when accretive in an amount that as a percentage of our public float is consistent with funding plans observed among listed utilities. Given our position of strength, opportunistic 2025 equity issuances and excess pro forma debt capacity, we have the flexibility to time the placement of future equity issuances and have the flexibility to utilize alternative sources to withstand temporary market volatility, if necessary. We do believe the discrete placement of equity at attractive levels when markets are conducive will provide a path to derisk our 4-year funding plan. This funding strategy, combined with our abundant set of high-return investment opportunities positions us well to achieve our 2030 CAFD per share target. Turning to Slide 18. To meet our goals in 2030 and beyond, our capital allocation framework is designed to create a virtuous cycle of sustainable and resilient growth. As the payout ratio decreases and goes below 70% long term, retained cash flows become a greater source of funding for accretive investments that can allow us to sustainably meet our 5% to 8% plus long-term annual growth objective. As we grow our earnings power from accretive investments and retained cash flows expand, this positive feedback loop repeats itself. With our long-term capital allocation framework, we believe we have more clarity into how we can fund our long-term growth, supported by our sponsor's abundant set of high-return opportunities. And from this position of strength, we will prudently use corporate debt and discrete equity to aim for the top end or better of our long-term targets. And with that, I'll turn the call back over to Craig for closing remarks. Craig Cornelius: Thanks, Sarah. Turning to Slide 20. We have decisively delivered a clear path to achieving our updated 2025 guidance and our 2027 target range. We've now established a 2030 growth target, demonstrating a 7% to 8% compound annual growth rate that matches up with the best in premium companies in the listed infrastructure and utility community. Our team has done an incredible job advancing our growth pathways and establishing strong visibility into how we can meet the 2030 target range we have set today. In the quarters ahead, you can expect that we will continue to operate our fleet with excellence, delivering predictable cash flow and payment of committed dividends, execute with trademark craftsmanship on the completion of the projects we have identified to enable our growth plans for the near term through 2027, further crystallize and communicate our road map to fulfill our 2030 targets through the fleet enhancement initiatives and growth investments we will complete over 2028 and 2029, demonstrate that our funding strategy is being executed in a way that is financially prudent and accretive and show each year how the enterprise we have created in Clearway has one of the most diversified and promising models in the U.S. power sector for delivering sustained profit growth alongside competitive dividend growth as we extend the strong performance of this model through the end of this decade and into the decade to come. Operator, you may open the lines for questions. Operator: [Operator Instructions] And our first question comes from the line of Dimple Gosai with Bank of America. Dimple Gosai: The first one was something on the slides that kind of caught my attention here. You flagged development of flexible gas paired with renewables near hyperscaler clusters. Can you give us a sense of timing of these opportunities and what returns do these hybrid data center complexes target and how you think of the risk return profile compared to traditional renewables? And then I have a follow-up. Craig Cornelius: Yes, sure. We've noted at the beginning of this year that we would be undertaking work to complement our existing pipeline of renewable and battery development assets and operating assets with other complementary resources that could help serve the growing co-located data center loads that the digital infrastructure community has a need to supply. And over the course of the year, we have done the work to assess which of our pre-existing development and operating assets were positioned in locations that were most responsive to the needs of our current and prospective customers in that community. And the projects that you see noted here exhibit the same geographic footprint that you'd seen noted earlier this year. and represent work that Clearway Group is doing to create a subset of investment opportunities that would likely be accessible to Clearway Energy, Inc. in 2030 and beyond. The plans we've laid out today and the goals we've set out to 2030 don't depend on any of these complexes being realized. We can hit the goals we've outlined building and developing the same projects that make up the fleet that we have today with the same type of contracting structures that we employ in our operating fleet and in our newly offered drop-down assets. For those complexes that do include potential flexible generation resources, our objective is to create a complementary gas resource that enables load following and highly contracted resources that are responsive to both the needs of interconnecting utilities, regulators and data center customers. And it may be the case that in any given complex situation, the best owner of a flexible generation resource may, in fact, be the interconnecting utility or a Clearway enterprise component. In all cases, we would envision those resources as being contracted if part of our enterprise complex in the long run and exhibiting risk-adjusted returns that are at least as good, if not superior to those you see reflected on other drop-downs today. So they're part of our long-run future. They're part of our being a responsive energy supplier that our customers can choose to do business with across the country. And they are part of how we can sustain substantial compounding growth for Clearway Energy, Inc. in the decade ahead. And we look forward to creating those projects and again, in a way that would be entirely consistent with our pre-existing capital allocation framework. Dimple Gosai: And the follow-up is repowering appears to be delivering 10% to 12% CAFD yields, which is super attractive here. Can you give us a sense of the timing of contribution and the size of that opportunity as it relates to Mt. Storm, Goat Mountain and San Juan Mesa? I believe there's sales and repurchasing mechanisms that's associated with these. Craig Cornelius: Yes. The majority of the repowering campaign, as you will note in our materials, will occur through investments that Clearway Energy, Inc. will make in 2027. And so their CAFD contribution will largely be reflected in the difference between the top end of $2.70 in CAFD per share in 2027 and our goal of delivering $2.90 to $3.10 in CAFD per share or better in 2030. You'll see most of the CAFD uplift from those assets reflected in our 2028 financial year. And we've noted the incremental CAFD contribution and the CAFD yields that you could expect to see from each of those projects individually. In every case, we're pleased to note, including through the PPA that we'd signed actually just earlier today for San Juan Mesa, that the PPA tenors on these projects and the terms of these PPAs are quite attractive. So in addition to the incremental CAFD they'll contribute and the high CAFD yield at which we're deploying capital, we're creating great longevity and contract profile for our wind fleet with these new PPAs and these new repowerings. Operator: Our next question comes from the line of Justin Clare with ROTH Capital Partners. Justin Clare: So I guess just following up on the prior line of questioning there and then some comments you made in your prepared remarks. I'm wondering what you're seeing in terms of the potential for PPA renewals, so not necessarily just for repowering, but for other projects in your pipeline. With the increase in power pricing that we're seeing, wondering if there's demand from offtakers to renew and extend PPAs at an earlier time than you might typically expect and whether or not that's something that could lead to growth in your revenue or CAFD in the coming few years? Craig Cornelius: Yes. Thanks for the question. You noted that last year, as an example of the line of questioning you're posing that we were able to extend the power purchase agreement for our Wildorado project and do so with a CAFD contribution that is part of the overall landscape of CAFD accretion that supports our 2030 goals. And that was probably a first notable instance of the trend that you're asking about, but likely not the last. More likely than not, that opportunity for extension in our wind fleet will mostly contribute to longevity and compounding of cash flow in 2030 and beyond because substantially all of our existing renewable fleet is fully contracted through to the end of this decade. And as part of any contract extension negotiations that we may undertake with customers, we will be focused on assuring that the cash flow contribution from any given asset will remain at least as high, if not higher, than we would otherwise expect under our existing revenue contracts between now and 2030. But most definitely, we see that as a potential benefit. What's apparent in the case of Mt. Storm is that we were able to convert a shorter-term defined quantity hedge to a long-term PPA. We do have some other assets in our fleet that exhibit a similar commercial profile. And for that subset of assets, we may be in a position to be able to undertake an adaptation or optimization in their revenue contracting profile between now and 2030 that could both enhance cash flow and reduce interannual variability. But when we think of the recontracting and extension opportunity, we think of it principally as a driver of our ability to deliver a long-term compounding 5% to 8% plus growth rate beyond 2030, where per the math that we'd outlined in the presentation, we'll aim for our existing operating fleet to continue to grow its CAFD per share contribution by 1% to 2%. Justin Clare: Okay. Got it. That's really helpful. And then I just had a follow-up on the 2030 targets. When I look at the 2030 CAFD per share target and then I compare that to the high end of the 2027 CAFD per share range, I calculate a CAGR between the 2 of just over 3.5%. So it's a little bit below the growth anticipated through '27 and a little bit below the growth anticipated in 2030 onward. So just wondering if that's the right interpretation and if you might be able to bridge why growth might slow in those few years before reaccelerating? Craig Cornelius: Yes. I think as you've observed over time, we have a culture of setting goals that we know exactly how to hit. And then as we complete commercialization actions that allow us to fulfill those goals, then we further revisit or update those. And one of the things that we're quite proud of is the fact that between October last year and October this year, we increased our CAFD per share expectations from $2.40 to $2.60 in CAFD per share in 2027 to $2.50 to $2.70 to $2.70 or better, all in the space of 1 year. And what you can see in that is that we have a systematic culture of setting goals that should be attractive to our investors and then revisiting them and ideally updating and increasing them as we complete individual contributing actions. We look to that 7% to 8% CAFD per share growth goal through 2030 is very much at the leading edge of what you see amongst premium utilities today. If we were to be compounding, as you noted, from $2.70, let's say, a 6% growth rate out to 2030, that would take you to, say, $0.10 a share above that range that we'd articulated. And we will certainly look as a company to what series of actions and growth investments and execution will allow us as we move forward between now and 2030 to continue to compound across our portfolio systematically at that 5% to 8% range. And as you can see from what we've outlined in our development and investment opportunity set, in total, the total amount of projects that Clearway Group is developing, which are potentially recipients of investments from Clearway Energy, Inc. in 2028 and 2029 would meaningfully exceed the amount of projects that Clearway Energy, Inc. would need to invest in to hit the top end of our existing $2.90 to $3.10 per share goal. So bottom line, we feel quite good about our opportunity set. We feel great about what 7% to 8% compound annual growth from 2025 represents. We feel that the investment opportunity set in front of us is quite robust. We've demonstrated a culture of setting goals, hitting them and then revisiting and increasing them. And we intend as a company to continue on with that excellent track record. Operator: Our next question comes from the line of Steve Fleishman with Wolfe Research. Steven Fleishman: I was going to ask that same question. So I appreciate the answer you just gave there. But Craig, just one other question. It does seem like maybe you're in a kind of a target-rich environment, both from your developer parent, but also just the M&A environment. So maybe you could first talk a little bit about how much more M&A opportunity are you seeing? And then secondly, just how are you thinking about just funding kind of those upside type opportunities if you start having billions more to invest in, just can you use this framework the same way for that incremental investment? And just how you're kind of managing that? Craig Cornelius: Yes. Well, I think to start with, and it's also reflected in the way that we've sought to articulate long-term goals and an accompanying capital allocation framework. We are mindful of the important contact we have with our investors to progressively demonstrate how our business model will continue to sustainably grow across cycles using financing sources that are demonstrably within our means. So when we think about growth goals, when we think about any individual incremental capital commitment, we're looking first to assure that we're able to successfully execute on it with financing sources that are accretive materially relative to the cash yield that we have on an investment. You've seen that's absolutely been true for each of the incremental M&A investments that we've announced here this year relative to our weighted average cost of capital at spreads that approach 500 basis points. And so in an environment where it's possible for us to sensibly acquire assets that fit with our fleet and with our investment mandate and which we can add value to, we'll want to continue to assess whether for our shareholders, it's sensible for us to make those incremental investments and reflect their addition in our long-term profit goals. But we also want to be judicious about assuring that what we are digesting at any given point in time is constant with what our investors would like to see us committing to and the magnitude of corresponding securities issuance that would come with funding them. I think one of the things that we have done through, in particular, the 1/3 of the acquisitions that we announced this year is to use it to help us look forward to a point in the future where the payout ratio in our business model is declining. Something that we reflect on is the great power of a payout ratio that's declining down to 70% or 65% and how much compounding CAFD per share growth, a payout ratio at those lower levels can enable us to fund just from our own operating sources without much in the way of equity issuance. So I think if we were to see anything that would be sensible for further acquisition, the standards we'd be applying look like the same ones that we applied to the deals that we did this year, meaning they have to be meaningfully accretive. We have to have significant synergistic value we're able to apply and extract. The funding of the investment needs to be demonstrably within our ability and, I guess, a manageable bite size. And to the extent that we are acquiring additional assets, we would look to devote their incremental cash flow, in particular, towards reducing our payout ratio and increasing the self-funding nature of our business model. Operator: Our next question comes from the line of Heidi Hauch with BNP Paribas. Heidi Hauch: Helpful detail on the long-term outlook. I just wanted to kind of take the other end of the previous question in terms of how you're thinking about asset dispositions in terms of the broader funding strategy. Is this core to the strategy? Should we think of any specific asset or portfolios as most eligible? And would this offset any equity issuance needed or help to drive incremental growth? Craig Cornelius: Yes. We have not incorporated planned disposition of assets into our capital allocation framework. or the funding sources that we assume to be able to tap into in order to deliver on our long-term growth goals. But as fiduciaries, we always remain cognizant of whether we are the best owner of an asset or whether it would be more accretive for our shareholders to selectively dispose of assets in our fleet. We certainly have done that at large scale in the context of the district thermal segment divestiture that we completed some years ago, but have also done that at very small scales around individual renewable plants that just weren't a great fit for our fleet. As we go forward to next year, we will always remain mindful of whether there are relatively small contributors to our fleet, which may be more highly valued by other buyers for whom those assets might be more significant. And there may be targeted opportunities along those lines to call it, enhance operating efficiency in our fleet by reducing project count in select areas or by conveying an asset to someone else who sees a greater strategic interest in it. What we look at in situations like that is how much CAFD a project is contributing to us, what our outlook is in long-term net present value. and whether someone else who is buying the project from us would buy it at a CAFD yield that's accretive relative to the value that's embedded in our shares today and would assign a terminal value to the asset that's higher than what we do. And in instances where that's possible, we will selectively determine that, that's in the best interest of the shareholders to dispose of an asset along those lines. But a core asset harvesting campaign to fund our growth is not part of our plan. And we feel quite good about the long-term outlook for our fleet. So the assets that are in our fleet, we're kind of enthused to own as we look out into the 2030s. Heidi Hauch: Great. That's helpful. And then secondly, going back to the data center opportunity, specifically with developing natural gas. Firstly, how soon should we expect Clearway to kind of update or formalize these contracts maybe given the extended equipment lead times for natural gas? And then secondly, just more broadly, what is driving Clearway to kind of get involved with developing flexible generation in addition to kind of the legacy renewable development? Is this driven from demand from hyperscalers or utilities or customer conversations? Just kind of curious on the broader strategy there. Craig Cornelius: Yes. The bulk of our business is to develop assets that are reflective of our deep expertise and our track record for both asset development and operation. And we are mindful that in California, we have a great existence proof for what a flexible generation fleet can do to complement renewable resources and provide a combined highly reliable increment of baseload capacity. When we think about the flexible generation fleet that we have in California and the totality of our emissions footprint, as a business, more than 95% of the megawatt hours that we generate are emissions-free. But fully 1/4, if not more, of our operating cash flow comes from a flexible generation fleet that's absolutely essential to the state of California and which has facilitated what are quite favorable reliability statistics for the state as a whole as low marginal cost renewable energy grows as it's a fraction of loads served in the state. So that's the business model that we are selectively looking to emulate in individual areas where our customers would like for us to serve them renewables and where they recognize that complementary gas helps those renewables get built and deliver into the system combined capacity that's needed. What you should know, though, and what you should focus on is that the mainstay of our business, by far the bulk of the 30 gigawatt pipeline that we maintain today, the entirety of the 11 gigawatt pipeline that we have of late-stage assets for completion over the next 7 years are renewable and battery projects in places where those are the least cost best fit resources for customers who want to buy their attributes in long-term contracts. And the plan that we've laid out, the goals that we've set and will meet through 2030 is underpinned entirely with those asset types. So the flexible generation resources that we now have in development are additional to that core capability that we have. They will help create opportunity for carbon-free resources to serve growing load in places where data centers absolutely are needed in the gigawatt scale. And they're part of how we make this business model continue to grow and compound, not just through the next 5 years, but through the next 10. Operator: Our next question comes from the line of Mark Jarvi with CIBC. Mark Jarvi: Just, Craig, on the data center energy complex facilities, do any of those build off of the existing renewable and battery installations or those new development sites? Craig Cornelius: All of them build off of either existing operating facilities or renewable and battery sites that we had in development more than 5 years ago. Mark Jarvi: So will there be a contract on existing assets? And then does that factor in the ability to drive higher returns off of those types of projects? Craig Cornelius: Yes. I think what creates an opportunity to deliver higher returns really from all the projects that we have in our development footprint today is the ability to bring a power plant online at size with credibility. And I think when we look across the footprint that we highlighted on Page 8 of our earnings materials, when you look across the footprint that we've outlined per our custom in our appendix, you will see that the average size of renewable and storage projects in our pipeline has grown appreciably. You'll see that the total quantity of late-stage projects that we have that are constructable over the next 5 years has grown significantly. You'll see that most of them are entirely storage or include a storage component. You should see that solar amongst the renewable resources is by far the largest share relative to wind in that development footprint. And what is allowing us to produce good returns today, what's allowing us to get longer PPAs, what's allowing us to deliver CAFD yields for CWEN that are higher than they have been historically are all the fact that we've got a power plant that we can construct that we can credibly bring online in the near term. And in some ways, the bigger the power plant, the greater contribution it can make to capacity and energy needs now, the higher return we can produce. So for these larger complexes, those same attributes will show up likely later in our development program into the time period after 2030. But what will make those complexes successful are the same things that are making it possible for us to develop so much over the balance of the decade between now and 2030 at high returns, which is that we know how to build power plants. We've demonstrated that we can build them when others can't. We know how to operate them. We have a robust position of interconnection queues. We've been developing the projects in places where renewables and batteries are least-cost, best-fit resources. And that those things are worth a lot, whether it's to a utility or a data center company today. Operator: And our next question comes from the line of Nelson Ng with RBC Capital Markets. Nelson Ng: Congrats on a strong quarter. So just a quick clarification on your 2030 outlook. Can you just give some more details in terms of what you're assuming for your flexible generation portfolio? And maybe just give an update on how contracted those assets are now? Craig Cornelius: Yes. When we set the range, we said it as is our philosophy at a level where we are confident we can meet the range in current market conditions for our open position, and that's reflected in that range of $290 million to $310 million. The corresponding levels look similar to what our fleet was contributing, the flexible generation fleet was contributing in 2024 and 2025. And we intend to be able to ultimately harvest even more value or aim to harvest even more value from that segment in those out years than we would need to in order to hit the range that we've articulated of $2.90 to $3.10 in CAFD per share. We are optimistic about the value that those assets will harvest in the market informed by a few key data points. First, just the marginal cost of 4-hour storage, which we're contracting extensively in the state for newly built resources and it's still very solidly in the double digits and low to even sort of mid-double digits in cost. Second, because of the ongoing increase in demand forecast, not just for CAISO, but for adjacent markets that have historically been sources of capacity for CISO and the substantially costlier profile for long-duration storage that could potentially try to -- that would be really needed to substitute for the attributes of the thermal resources. So we feel really comfortable about the durable value in our fleet, which is one of the state's most modern and most reliable and exhibits comparatively high capacity values as compared to peer capacity. And that puts us in a position to be patient in our optimization of incremental resource adequacy contracts and also clear eyed and the goal of having them contribute even more than is embedded in the $2.90 to $3.10 in CAFD per share, which we could most definitely execute within today's market environment. Nelson Ng: Okay. Great. And then just a quick follow-up question. So obviously, your development pipeline is a lot larger than what CWEN needs to hit its targets or even to exceed the targets moderately. So in terms of drop-downs and transactions, should we expect to see CWEN buy like 50% of future projects or like something much lower than 100%? Craig Cornelius: I think we both sometimes drop assets with 100% equity interest for Clearway Energy, Inc. and in some instances, have consummated equity partnerships that work like you've just described. everything we have developed and identified for potential CWEN investment through 2027 is planned for 100% CWEN equity investment. As we look later into the decade, we'll certainly be evaluating the capital allocation framework for CWEN and its embedded funding capacity and looking at how we pace development assets in relation to that funding capacity. What we have often done in the past where we've had an exceedance of development pipeline relative to CWEN's funding capacity is to selectively move our best development assets to successive periods of time where they fit neatly into CWEN's plan. And we will also look at whether there are complementary funding sources that help sustain the growth profile for CWEN while capitalizing projects that have to be built on a firm time line. What our mainstay has been throughout our history is that we use simple financing structures that will deliver predictable financial performance for CWEN. And that basic principle is what will guide what we build and how we capitalize it with CWEN over time. Operator: And our last question comes from the line of Corinne Blanchard with Deutsche Bank. Corinne Blanchard: Most of them have been answered, but maybe a quick one. I think we saw Clearway Group having now 27 gigawatts in the pipeline. And I think last quarter, it was about 29. Can you just talk about what caused that decrease? And I think as well we're seeing like early stage has decreased what prospect has increased. So just trying to understand if there's a pushback in some of those projects. Craig Cornelius: Yes. Our disclosure aim to clarify that the pipeline in Clearway Group today is actually 30 gigawatts. That's up from 29 in the last quarter. And we noted that 27 gigawatts was a pro forma pipeline level that we would expect to be at after certain select harmonization of development assets that are not necessary for the enterprise to hit its goals over the next 3 to 4 years. What you should see is that we've now dialed in a specific set of projects that we're planning on constructing over the course of the next 7 years in the late-stage pipeline progression that we have on that same page, which in total, still quite meaningfully exceeds the total quantity that Clearway Energy, Inc. needs for Clearway Group to develop and build for its plan to be realized. So in point of fact, the pipeline that we have today is up quarter-over-quarter, but we've wanted to set expectations that we would selectively harvest individual assets that are not essential to executing on the goals that we have for the next 5 years. Operator: Thank you. I'll now hand the call back over to President and CEO, Craig Cornelius, for any closing remarks. Craig Cornelius: Thank you, everyone, for joining us today and for your ongoing support of Clearway. We look forward to continuing to deliver with excellence in the quarters ahead as we strive to set the gold standard for sustainably growing mission-critical energy companies here in America. Operator, you can close the call. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Welcome to the Medicover Q3 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, John Stubbington; and CFO, Anand Patel. Please go ahead. John Stubbington: Good morning, everybody. John here. Welcome to our Q3 report. And I'd like to start with thanking all of our people for producing a really good result. So thank you for all your hard work. Q1, I described as strong. Q2, I described as stronger. I think Q3, what we're seeing here is a really good, solid, consistent and healthy performance. If you look on the right-hand side, you can see growth is a good performance at 12.1%, especially when you consider that Hungary no longer is in these numbers. So that's quite a pleasing position for us. If you look at EBITDA, it's very respectable increase of 32%, which is really, really positive for us. And you can see that coming through with the adjusted margin of 17.2%. Moving up by 14.6% is really, really solid and quite an impressive performance by the team. We'll talk about that a little bit later on because there's some other sort of factors that are pushing that forward and pushing that back, and we'll try and give you a bit more context on that. Operating cash flows, again, very healthy at EUR 98.8 million, a positive movement of 36.7%, which is, again, really pleasing for us and good to see is what we need. So that's really, really good. And as predicted, we talked about our leverage that as we did the acquisitions that, that would come down. And we see that, that is coming down despite the fact that we did our 2 biggest deals ever in Q2 and which has been very positive for us. So Healthcare Services being driven by high organic growth and the improvements coming through the fact that we've put so much extra capacity on in this area, the utilization of the assets is starting to be seen. When you start, you put all the staff on, you put all the facilities on, you're ready to take customers. But it takes time for customers to come. And more importantly, it takes time for customers to come back, and we did that in many different places across the world. And Diagnostic Services is really, really pleasing to see their performance. They've had quite a lot of headwinds that have affected them and they're navigating them really well, and I'm really pleased with the team to be able to see them do that. And I note to the bottom about our greenhouse gas emissions that we've had those validated, which is a good part of that journey. So if we forward -- and if we move forward and look at our revenue positions, basically, if you look at the bars and look at the percentages, really good solid growth there, 19.5%, 19.8%, 12.1%, which looks a little bit lower. But again, we need to take into consideration Hungary and the fact that we've got a bigger base. So we're really pleased with that progression, and we're really pleased, most importantly, with the consistency of that. If we look at our revenue by country, there's some slight mix change here. Some of this, again, driven by Hungary. I seem to be saying Hungary a lot and a little bit driven by currency from an Indian perspective. And then revenue by payer, relatively consistent, a little bit of a change in terms of the growth rates. The consumer segment, 58% is a really important part of what we do. And of course, at times with consumers, you'll find people being very active, times being a little bit cautious, and we're watching those particular conditions. As we go to Healthcare Services, Healthcare Services revenue growth of 9.6%, feels really strange to be able to talk about Healthcare Services and see single rather than double digit. But of course, if you adjust that for Hungary, we go back up to 12.4%, which I think is good, steady growth. Revenues at EUR 406.5 million, which is very respectable revenue by country. It's pretty pleasing across the board that you see Romania, 16%, Poland at 17% and India, again, affected by currency. So it looks a little bit different. Strong development in terms of sport and wellness and in our ambulatory clinics in Poland, which contributed to the drive of the revenue in fee-for-service. And we've got good progression in terms of the public revenues that we've got in Romania and some of the Polish hospitals. We launched a new hospital in Hyderabad. And of course, as we launch new capacity, that has an impact in terms of the profitability. Again, we're investing in the staff. We're investing in the facility. We're putting out the capacity before the customers come. And whilst the growth in India is a little bit lower than some people may have expected at 8.8% in local currency, some of this is driven by a conscious change in terms of the way that we're steering the business in terms of having less governmental pay, which puts that down. But our underlying trend in India in terms of doctor recruitment is really, really strong. And that's one of the reasons why we've decided to pull forward the planned hospital for next year into this year because we feel that we've got good momentum in terms of the recruitment. We can take advantage of that, and we can get faster growth. So we'll see that come through in Q4. And again, that's 2 new big hospitals that will go on to the -- on to our network and having those through will have an impact in terms of a little bit of drain on our profitability and margins. One word of caution, we talked about the strong margin. Part of that is created by our funded business where there's been a slower phasing of recruitment of doctors. That happens from time to time. There's nothing that is particularly unusual for us, but we will catch up on that. That puts a little bit of extra power into the margin, which will adjust as we go through Q1 -- Q4 and Q1. And that's one of the reasons why we've talked through that, that might happen over the next coming quarters. Membership is okay. Membership is pretty good. If we look at it from a -- without having Hungary involved, we've got growth of 2%. But at the same time, we want to balance this by sharing with you for the first time the number of relationships we have because you can see our fee-for-service line is much higher now in terms of its percentage of our business. And it's really about relationships as well as what being about memberships for us because if we can establish a relationship, we get people that come to us sometimes funded, sometimes through fee-for-service and sometimes through paying out of pocket. And you've got a mix here of different relationships being funded NFZ, some of our benefit customers for loyalty, et cetera. And we'll continue to publish this number so that you can see how that progresses. This doesn't affect this quarter, but you can see that there was a strike in Andhra Pradesh in India in October. That meant that all the hospitals in that location were not taking inpatient stays for governmental pay. Obviously, that will have a slight effect on us in the fourth quarter, but was probably needed to be able to make sure that the government did pay some of their bills, which can take quite a bit of time to settle. All the indicators on the right-hand side from our Healthcare Services are pretty good and a positive progression from the team. So thank you very much. Diagnostic Services, they continued with their strong momentum across the business. And as I say, I'm really, really pleased with the team. Revenue increased by 17.8%, which is pretty impressive. So well done to them. Organic growth at 12.4%, which is still solid and really good for this segment. Strong demand from fee-for-service, which is very positive for us because that's the big part of our revenue stream. Germany, which everybody has been concerned about, worried about and watching with a close eye. We continue to watch it with a close eye, but the team have navigated that really, really well, and we're seeing increasing volumes there, which is helping us adjust as well as our initiatives to be able to drive efficiency. And overall, we've got an increase in tests, which, again, is quite impressive, and that's really positive for us. So revenue, EUR 191.7 million, very pleasing. If you look at the progression by country, there's strong percentage growth there in each of the countries. So congratulations to the team. And I know Germany is 5%. Considering the reform, I think that's pretty good for them. Margin, great to see some improvement here. We've got operational leverage. We'll continue to get that operational leverage if we continue with the lab growth, very solid number of tests. And again, really pleasing strong and good growth in the fee-for-service segment. You can see at 24%. So overall, pretty good. I'll hand over now to Anand, who will talk you through some of the details of the financials. Anand Patel: Thank you, John. Good morning, everyone. So pleased to report on another good quarter for Medicover building on the momentum and themes of prior quarters. So as a reminder of those themes, one, we've got double-digit organic revenue growth again; two, margin expansion across all profit measures; three, strong and consistent performance across both business units. We've mentioned previously from John that we've normalized leverage back down to 3.2, so in line with the guidance we've given in prior quarters. And in the quarter, we've also seen an improvement in our ROIC numbers and in our cash. In terms of overall, so from an organic growth perspective, so I'll talk about organic growth to kind of strip out the Hungary effect, and Hungary will obviously impact our numbers in terms of year-on-year growth overall for the next 3 quarters. So organic revenue growth was 12.4%, which is very pleasing. In terms of EBIT, particularly impressed and pleased with that number internally. So we've got EBIT of EUR 42.8 million with a margin of 7.2%, a lot higher than last year. You'll remember in Q3 last year, we did some impairments. But actually, even if you kind of do a like-for-like comparison, putting back in the impairments for want of a better phrase, we still got healthy margin accretion across the EBIT lines. So very pleased with that, and that actually flows through to our EPS pretty well. From an EBITDA perspective, growing faster than revenues, as you can imagine, due to the margin expansion of 260 basis points. So EBITDA at EUR 98.2 million. And finally, as I mentioned just previously, the earnings per share was very strong in the quarter as well. Again, we've seen consistent growth in earnings per share during the year, and we further did that in Q3 as well. In terms of Healthcare, again, 12.4% organic growth, price driving 7.5%, but still strong volume growth as well as you can see. EBITDAaL growth I'll talk about EUR 50.5 million, which is up and margin rate is up 260 basis points year-on-year. I guess the only other thing I'll talk about on this slide, particularly is the loss from the immature hospitals. So you can see that actually the loss in Q3 is EUR 2.7 million. That is the same charge as we had in Q2. But we've seen really healthy underlying performance in the like-for-like hospitals. What has happened in the quarter is that we've opened a new hospital in India, which is additive in terms of making a loss. But actually, there's been a really strong improvement in the flow and profitability build of the other hospitals. And finally, going back to what John's point was with regards to utilizing our capacity, you can see that flowing through in terms of the medical cost ratios coming down as well. In terms of Diagnostics, I think John touched on it, so really pleasing performance again. So again, organic growth of 12.4%. Here, price accounts for 3%. And as you know, due to the German reform, we've got price reductions in Germany. But actually, overall, even in Germany and across the whole of Diagnostics, we've got strong volume growth is what I'd say. In terms of the other measures, I'd say EBIT growth, again, pretty strong in Germany and in total DS. So we grew to EUR 20.6 million with strong margin rate accretion. And the pleasing thing to note in Germany, because Germany is roughly 50% of DS, that actually, as I said, revenues were up, volumes were up despite the margin contraction -- sorry, the price reduction and overall margins in Germany were up year-on-year as well. So with all the challenges, I think the team are doing a really good job in managing that. In terms of other metrics, I've mentioned leverage. We'll talk about guidance for the full year on the next slide. Tax rate is in line with prior expectations. So previously, we've said our ETR will be between 26% and 30%, and we remain in line with that guidance. Strong net cash flow driven by the improvement in margins flowing through into the cash in our business. So we're pleased about that with a really good performance in free recurring cash flow, which I'll talk about in the next slide. But actually, in the quarter, recurring cash flow was 9.4% of revenue, which is a lot higher than last year. And finally, in terms of ROIC, as you can see, 12.3%. You'll remember at year-end '24, we reported a 6.7% number. So really strong improvement through the year. In terms of CapEx, you can see in the quarter, we had spend of EUR 46.3 million. That is 7.8% of revenues. There's a bit of a catch-up you would have seen in prior quarters, but the numbers were lower. So there's a bit of catch-up in Q3. In terms of full year guidance just to manage now, we kind of say that the number will be between 6.5% to 7%, but broadly in line with what we've said previously. We have mentioned that actually there is kind of clear blue water between our free cash flow as we improve that versus our organic growth investment. So that's pleasing to see and hopefully we'll build on that in the future. In terms of the split of CapEx spend, so you can see in the quarter, the lion's share of the CapEx spend was spent in Healthcare Services. We have in the hospital, there's some land. And overall, the medical space we've got at the end of the quarter is 988,000 square meters. And the final slide from me. So in terms of guidance for the full year and our targets that we mentioned previously, our position is unchanged. So obviously, with the quarter to go, I'd hope it would be. So we've previously said we're going to beat the target, and we continue to say we're going to do so. So as a reminder, we will beat the organic growth revenue numbers of EUR 2.2 billion, the adjusted organic EBITDA of EUR 350 million. We will have leverage below 3.5x and you have seen that we're kind of guiding to, that's what we were 3.2x at the end of Q3, and we'll be below 3.5x at the end of the year. And in the bottom corner, you can see the metrics that we gave in terms of EBIT and adjusted EBITDA, and we'll beat those as well. So in summary for me, a really good quarter, and I'll hand back to John. John Stubbington: Thanks, Anand. So key takeaways. We continue to deliver solid organic growth driven by both divisions, which is really, really good. We've got consistent margin expansion driven by the improved utilization. Customers are coming to users. Customers are coming back. On top of that, we have got a number of efficiency initiatives that are really needed in health care to be able to manage the way that people want to consume more. The maturity in our network can be seen in the hospitals. The fact that we're putting 1 or 2 more on, I think that if you look back at the average losses per hospital, it will probably help you model that as you go forward. Our leverage has normalized, so as promised, as committed to and starting to come back into our guidance. There's some mild headwinds that we're seeing. There's nothing unusual in those. We're commenting on them so that you're aware of them, and we fully expect to be able to navigate through. Thank you very much. Operator: [Operator Instructions] The next question comes from Julia Angeli Strand from Handelsbanken. Julia Strand: Can you hear me? John Stubbington: Yes. Julia Strand: Yes. So my first question relates to India. So what made you change the mix to a more private segment? Is this just to reflect changed consumer behavior? Or is this strike related? John Stubbington: No. I think that over the course of our discussions as we've developed things, we've always said that we wanted to get more cash, more insurance and start to manage some of the ROCE to appropriate kind of levels. Everybody knows if you operate in India, the payment cycle from the governmental pay takes a little bit of time. We will -- it's an important part of Indian society to be able to provide these services. So we will continue to provide these services. It's just that as we grow our network and we grow our doctor capacity, we have the ability to change that mix while still being good providers of that service. And we're just seeing the beginnings of that starting to flow through. And that's just affected the mix and therefore, affected the growth. I mean we could accelerate growth very fast by doing much more ROCE. But again, that would affect our cash flow. So it's a conscious decision as we move forward with our plans to accelerate. Julia Strand: Okay. That's clear. And then on the strike, where do you -- do you think that this strike could come back? Or has this been resolved? John Stubbington: This is not unusual in terms of the health care community taking action because the government payment cycle can be infrequent and can be lengthy. And sometimes it goes too far. When it goes too far, the people take action. I think we've seen this once before in our time there. So it's not something that happens particularly frequently. This was in one state. So we should point out to one state. I can't remember whether I stated it was in one state, but it's only in one state, Andhra and now is resolved in terms of they're no longer on strike, but it was there through October. So we'll see that being a little bit of a setback for us. It shouldn't be massive, massive, massive, but it's there. Julia Strand: Okay. Understood. And then just lastly, before I get back into the queue. The EBITDA loss in Q4, should that stay on the same level as in this quarter? Or should it be higher considering you're doing more openings? John Stubbington: Yes, it's going to be higher. You're talking about -- currently, you see an opening in Q3, but of course, you haven't got a full quarter of that opening in Q3. And then we're going to add on another hospital. And when you put the hospital on, you have a period where you actually recruited the staff before you've even opened the hospital. So you'll see some of those expenses start to come through for the next hospital as well as a full maturity of the new hospital. And whilst the -- we fully expect the other hospitals to do well, I would be surprised if they cover that off. You've now got a good history in terms of this particular line where we shared quite a bit of data. I would imagine that from a modeling perspective, you should be able to put that through your numbers in terms of averages because I think it would be appropriate to use that if you want to guide it. Operator: The next question comes from Mattias Vadsten from SEB. Mattias Vadsten: I have a few. So first one, you talked about early indications of a more cautious sort of consumer behavior. I think this needs to be captured a little bit. If you could provide the details, what you're seeing? And more generally in the business, would you say sort of double-digit organic sales growth is still doable as we move into 2026 and the general trajectory for Medicover? That's the first one. John Stubbington: Yes. I mean we are a little bit more cautious on the consumer line. That's only because we're seeing a bit of consumer behavior in some of our product lines, which is not dramatic, but there's enough there for us to be able to feel that we should share that with you. It's not unusual for us. So we're not sitting here saying we're seeing something that's a massive change that we need to adjust to, but we always have to adapt. So when we see these things, we have to adapt our pricing. We have to adapt our promotions. We have to adapt the way that we push things through. So we'll probably see us dealing with that over the course of Q4, Q1. And as we move longer term, we fully expect that a healthier -- the normal kind of Medicover cycle starts to come through. You asked about double digit. It'd be interesting for us to see, but we'll be around that mark, I would have thought in terms of the performance. We've got the Hungary adjustment, which does affect us whether we like it or not and 1 or 2 other things. So we'll have to wait and see what happens. Mattias Vadsten: And the next one relates to Germany. So long question short, do you see less competition in that country now? Or is this sort of yet to materialize except that there are fewer actors in the market? John Stubbington: I've said all the time about reform that there's good and bad things about reform. Reform kind of like drives you to do more efficiency, and we've done all that kind of thing and reform cuts off the tail. And as it cuts off the tail, bigger providers are there. I still think it's too early in the cycle to be able to see all of that. We're in the third quarter of this reform. But what you are seeing is an increasing volume. If you're seeing those increasing volumes, I think that kind of indicates the shift in the market conditions that we kind of expected to happen related to what you're intimating. But I think in terms of doing an analysis that demonstrates statistically that, that has happened, it's a bit too early. Mattias Vadsten: And jumping on to my next question relating to margins. If we look on the lease adjusted EBITDA, EBITDA margin, it's up by a significant 2.1 percentage point in the first 9 months, 2025. I appreciate this is not the nature of the business to be able to perform each year. So I fully understand it will moderate. I'm just after what you mean by this comment. And then if we look into 2026, just throwing out something like 0.5 percentage point margin expansion. Is this something that is doable? I mean I appreciate that this rate that you've shown this year is not possible to sustain. So what do you mean by those comments? Anand Patel: I'll start and I'll let John finish. So look, I think what we have seen consistently this year is margin expansion, let's say, in excess of 150 basis points per quarter. Yes. So we kind of would assume that's a sensible number to aspire to in Q4 at the very least, I guess, in terms of the short term. So we saw no underlying changes in the momentum of those themes. There's still capacity that we can fill in terms of the space. So John said previously, I've said previously, there's still clear headroom in terms of us upping our utilization levels, and we can still maximize those facilities. I guess in the short term, it depends on your take on the moderation numbers. So John is talking about a strike in India that's kind of happened in Q4. That will moderate revenues naturally, which means the flow-through in Q4 won't be as much as it was before and a slight change potentially in behavior from a consumer perspective. So does that mean that 0.5% margin rate accretion in 2026 is a sensible number? I think it's probably a little bit more, but we're just being cautious in terms of we see kind of a little bit more headwinds, I guess, in the short term rather than in the longer term over 2026. We've still got ample opportunity to grow our margins is what I'd say. John Stubbington: Yes. To add that, I don't think that we -- in terms of talking about the future, we don't give future guidance other than what we've given. Our underlying model is still strong. We're just seeing 1 or 2 little signs, mild headwinds and little operational things that we need to sort out. I don't think that affects our underlying -- the underlying strength of our overall model. And one of the great things about Medicover in terms of our model is our diversity. And because of our diversity, we can do things like India and move everything on. So the business is sound. Mattias Vadsten: I think that is a very good answer. I will probably squeeze in one last one. I mean price health slightly less in Q3 vis-a-vis Q2. This is a development we have expected for some time. Will this development continue in Q4 and into 2026 with less price contribution? John Stubbington: Yes, I think we've got a good price volume mix in our divisions. It's slightly different at the moment in the current cycle. There's higher price in Healthcare Services and lower price in Diagnostics, higher volumes in Diagnostics, lower volumes versus Diagnostics and Healthcare services. That's kind of a natural cycles that change over periods of time. We've had, as you know, going back in the short-term history, quite a lot of inflationary factors that have been higher than a normal kind of cycle. And I think all you're seeing is that those inflationary factors are coming down. So you've seen that in the price impact. And it's health care. Health care has a hell of a lot of people that want health care, and there's a limited amount of people that can deliver health care. And those limited amount of people will always be saying, well, I'm adding value to society. You need to give me to pay me what I'm worth and those pressures will always be there. So I would expect that we will come down and then those pressures will hit again, and we'll start to adjust as appropriate. You know as a team, our position when it comes to pricing. We feel that we're really good value for customers. We believe that we deliver a really good service considering the prices that people pay. And to be able to do that consistently, we have to be able to adjust our pricing so that the medical profession and the people delivering this get an appropriate pay to be able to stay with us to deliver this for the long term consistently. Operator: The next question comes from Kristofer Liljeberg from Carnegie. Kristofer Liljeberg-Svensson: Two questions, I think. Coming back to your comment here about margins in the Q4. If I phrase it like this, you have the phasing effects, hospital opening strike, et cetera. So maybe if you could give us some more help how much lower margin we should assume in Q4 than third quarter? Do you think it will be more like what you saw in Q1 or somewhere between Q1 and what you have had in the last 2 quarters? Anand Patel: Yes. I think Q3 is clearly an outlier, I would say. Sometimes you have a great quarter. I think somewhere between Q1 and Q2 are probably sensible in terms of an assumption in terms of margin rate accretion year-on-year for Q4. Kristofer Liljeberg-Svensson: Great. And also coming back to a previous question here, growth outlook for next year. I noticed that you mentioned Hungary being a negative impact, of course. But if we were to adjust for that, would that make you more confident to be able growing double digits in 2026 over 2025? John Stubbington: Yes. I think we're not sitting here sending a big message that's saying our business has fundamentally changed. We -- I've sent a message, which is just saying over the next couple of quarters, there's a few things that we just need to navigate. But I don't think that affects our long-term position. So we're a growth company. Everybody knows we're a growth company. We're a much bigger company now, of course. So those percentages are tougher to get. But I would fully expect us to over that period, be in a zone that people are used to. Anand Patel: Yes. So just to add to that, we've always said we're very focused on organic growth, and that clearly excludes acquisitions, that clearly excludes disposals. So if you look at the organic growth numbers, which excludes Hungary for Q3, the numbers are 12.4%. And we'll carry on reporting against our organic growth numbers. And I think rather than look at the total growth, which is a bit muted in the month, as John says, nearly 10%, 9.6% for Healthcare Services, the organic growth number is more pertinent. That's all we're saying. Kristofer Liljeberg-Svensson: Okay. Good. Could I -- just one more. As CapEx investments are going up here a bit again, how should we think about depreciation as a percentage of sales? It has trended down somewhat from the peak 2 years ago. Will it continue down or even out at current levels? Anand Patel: Yes. So look, I'm not going to talk about next year's depreciation charge because at some stage, we'll give guidance for 2026 CapEx, which we're not going to do today. I think I mentioned earlier that our CapEx this year will be 6.5% to 7%. So there'll be some spend in Q4. You can do the math on that. But there will be minimal flow-through from that. I would thought it's just a timing effect from '25 into '26, and we'll talk about next year when we're ready to talk about 2026 and future targets. Operator: The next question comes from Kane Slutzkin from Deutsche Bank. Kane Slutzkin: Just on target, just wondering the sort of '23 to '25 target is obviously quite stale now. I'm just wondering, will you be unveiling sort of fresh midterm targets maybe for '26 to '28 when you report year-end? And then just can you provide some color on the acquired businesses, how they have been performing and the synergies you may or may not be getting there? John Stubbington: Yes. I mean we've never -- we've been pretty consistent about guidance saying that we want to hit the numbers that we need to hit first. Once we've done that, we'll make the decisions about when and where we issue the new guidance, but we're fully aware that everybody expects us to do so. So we hit the number and then we'll share. So that's the same as we said in the past 2 quarters, I think. And then in the acquired business is very positive for us, a little bit slower with SYNLAB because it's a bit more of a difficult integration that you have to do, whereas the Healthcare Services side in terms of CityFit it's almost immediate. So the fact that people were going to -- going to their gym locations and now going to the same locations that we own the business makes the synergy come almost from day 1. So that's performing really, really well. SYNLAB, there's a number of countries there. So as you would expect, as you're doing different things in different countries, some of them have gone really, really well. Some of them take a little bit more time. But the maturity of that will start to come through. There's nothing that we're sitting here saying that is a negative from these businesses perspective. It's a positive contribution to our model and the team are doing well in terms of pushing forward to get the synergies that we planned with just a slight delay. Anand Patel: I guess the only thing I'd add to that, if you look in the Q3 report, what we have done somewhere at the back is split out the revenue and the net profit from the acquisitions group together. And what you can see is actually if you calculate the margin rate, which I'm not going to do for you, it's accretive versus company levels, which we said it would be anyway. So we're pleased. I said there's always more we can do. We haven't split out in the report, just to be very clear. But you can see in the pack that yes, it's contributing on a healthy basis to our business and is margin accretive. Kane Slutzkin: Great. Sorry, just one last one. Could you just remind us where you are on the potential listing of the Indian business? Is that still in play? John Stubbington: Yes. I mean we've -- I mean, your questions are going to get more and more intense as we go through each quarter from this point forward. We -- December 12, I think, announced that we would explore this. At that stage, we said it would take up to 2 years. Obviously, we're approaching the anniversary of December 12. So people will be expecting more. It's one of those things that it takes a bit of time in India. We're doing our prep work. The team are doing well on that, pushing forward. Now we need the performance to accelerate a bit. We're at the business end of that. So we've had a few setbacks, as everybody knows as we've gone through the year. But as I said earlier, our underlying trend of recruitment in India has been strong, and that's one of the reasons why we opened Sangeeth. It's one of the -- sorry, one of the reasons we opened the hospital in Q3. One of the reasons why we have pushed forward opening another hospital into Q4, which originally was planned for 2026, which again, as a consequence of that, will create some losses in our Q4. But we think it's the right thing to do because we've got some good momentum. So strike doesn't really help us again. Currency doesn't really help us again in terms of positions, but nothing has changed from our perspective. As soon as it does, we will inform you. Operator: The next question comes from Bram Buring from Wood. Bram Buring: Most of my questions have been answered, but I wanted to ask about admin costs in the quarter. I was a bit surprised to see that they were down Q-on-Q. Is that -- is there something specific behind that? Or should we continue to expect admin costs to be closer to this 3Q level than what we've seen more recently? Anand Patel: No, no, I would assume it's a seasonality thing. There's nothing specific. We did admin costs in Q3 per se, I would say. So I would look at the 9-month number and assume that's a better trend for the full year. Operator: The next question comes from [ Bola Dimmer from SurePath ]. Unknown Analyst: Two questions on India, please. You mentioned you're changing the share of this private pay in India in your revenue. Can you tell us what is your current revenue split between private pay and public pay in India? And what is your target split in this regard? Anand Patel: Yes. So look, we don't disclose that information. I think the one thing I would say is that the reason -- one of the reasons for Medicover being totally successful in the past and present is due to the diversity that John mentioned. So it's good to have an even split of fee-for-service versus insured versus public pay. So that means that when one area has a downturn, then the other kind of has an upturn normally. So we don't guide on that, but we're building the right split for us to make sure that we can not be subject to any specific area. Unknown Analyst: Okay. Also, when I look at your peers, which operate in the similar regions in India like Aster DM or KIMS, their revenue per bed is twice higher than yours. Could you share, I mean, your thoughts on the reason behind this big gap? Is it just the question of maturity effect or location or actually the split between public and private? John Stubbington: Well, you've kind of answered your own question, which is really good in terms of there is maturity. So you tick on maturity and there is location that takes into a factor. I mean, if you go back in time, I think we have shared and said that one of the approaches that we've got for India is to try and do more of our operations in Tier 1 cities and more of our operations in larger hospitals. If you're in Tier 1 and if you're in larger hospitals, you will find that the types of things that you can do are more comprehensive and the pricing of being in a Tier 1 city versus 2 and 3 is very, very different. And one of the things that people should find attractive about us as we go through the IPO is the fact that we're behind, and therefore, that's going to mature up. So you kind of answered your own question. I'm just confirming what you said. Unknown Analyst: Okay. Great. And the last one on the CE, I assume. So you mentioned this more cautious consumer. Could you, I mean, kind of elaborate, is this slowdown mostly visible in the funded private pay or public pay? John Stubbington: No, no. It's very much related to out-of-pocket fee-for-service line where people are deciding themselves whether they pay or whether they don't pay. We're seeing some signs in certain lines, not in all lines, some are going really, really well, really, really strong. And we've shared it with you so that you're aware of it. And from our perspective, it isn't anything that's particularly fantastically new that we haven't seen in our 30-year history or I haven't seen in my 15-, 16-year now history with Medicover. It's just that we -- when this happens, we have to get a little bit more creative. We have to repurpose a bit and we have to do things with our pricing and our proposition, which we will do. But usually, if that trend kind of continues, it will take -- we'll probably see a little bit of softness maybe in the Q4, Q1 as we move forward. But from a long-term perspective, from our business perspective, we have got a really solid business with a very broad base of propositions that we offer to people. This is not something that is a major concern for us over the long term. Our business hasn't fundamentally changed. We've just shared a little bit more information with you. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments. Hanna Bjellquist: Thank you very much. We have a few questions in the chat. And the first one is how do you see the outlook for 2026 for the Polish market in context of the savings announced by the ministry. Apart from the impact on public revenues, do you see any impact in other areas, laboratory diagnostic subscription? John Stubbington: Yes. There's going to be a lot of noise from the ministry currently. There's a new Minister of Health. She's looking at lots of things and has got a good track record in some of the things that she's done. So there's going to be lots of noise of different statements and different positions that are taken. It takes a bit of time usually once a statement said, even if they then say they want to do it, it takes a little bit of time to filter through into market conditions. Also, I think some of this was announced this morning or just recently in terms of looking for savings within the NFZ spend. Versus competition, we, in terms of our mix, have less than most of our competition because our focus has always been on other lines not related to governmental funds. So even if there is adjustments there, we won't be affected as much as our competition. And historically, we've always found ways if the government are paying less, the underlying demand is still the same. You can't say to yourself, I haven't got a health issue. You can't ignore it, but often that means that the health issue gets bigger. So these kind of things will happen. We're used to them happening. I don't see it as being a fundamentally big shift for us. Hanna Bjellquist: I think we have been through mentioned about the consumer behavior. We have also talked about India and the mix. Could you remind us about the background of Hungary? John Stubbington: Yes, it's just a historic position for us. We withdrew from Hungary a long, long time ago. And when we did, we offered -- we carried on with a partnership that we had together from an insurance perspective that we always knew would come to an end. They've scaled considerably. And as a consequence of that, wanted to move in a direction where we were no longer the partner, and we've always planned for that. So it's been a planned position, probably lasted longer than we thought and was a very fruitful partnership with a really good team, and we wish them the best of luck, and it helps us because now we've got more management time to focus on other opportunities that we have. So it's a good thing for us. We mentioned it a lot today because the figures are affected by it. But as we go forward, that will wash out, and we'll just move on. Anand Patel: And from a cost perspective, all these costs were dealt with in Q2. So there's no impact in Q3 numbers. And actually, it was, let's say, a small profit as a consequence of the transfer. Hanna Bjellquist: And we have talked about the Indian strike, but we do not want to give you any numbers, state any impact on the revenue and EBITDA, but we have mentioned it before. John Stubbington: Okay. Well, thank you very much, everybody. Today, we shared a little bit more in terms of some of our thinking around Q4, Q1. And from a 2026 perspective, we are a really solid, strong business. If you look at what we've delivered in Q1, Q2, Q3 this year, they're really exciting numbers. They're really positive numbers. There's a degree of consistency. You can see our operational leverage coming through. A bit of that is going to be affected by the fact we're doing new openings. A bit of that is going to be affected by the consumer caution we talked about and a little bit by the need to increase supply for our funded customers, which is absolutely the right thing to do. We have to look after our customers. They come to us for health care, and we intend to deliver good health care. And if that means we need to invest more, we will do it, which is great. So we're on a good trend. We anticipate that trend will continue, and we look forward to sharing how we do in Q4. Thank you very much.
Operator: Welcome to the SuRo Capital's Third Quarter 2025 Earnings Call. My name is Alan, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Ben Miller, to begin today's conference. Thank you. Ben Miller: Thank you for joining us on today's call. I'm joined today by the Chairman and Chief Executive Officer of SuRo Capital, Mark Klein; and Chief Financial Officer, Allison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events and Presentations. Today's call is being recorded and broadcast live on our website, www.surocap.com. Replay information is included in our press release issued today. This call is the property of SuRo Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today's earnings press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance or financial -- or future financial condition or results and involve a number of risks, estimates and uncertainties, including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry and the global economy that would cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including, but not limited to, those described from time to time in the company's filings with the SEC. Management does not undertake to update such looking forward statements unless required to do so by law. To obtain copies of SuRo Capital's SEC filings, please visit our website at www.surocap.com or the SEC's website at sec.gov. Now I'd like to turn the call over to Mark Klein. Mark Klein: Thank you, Ben. The third quarter was another strong period for SuRo Capital, extending the rapid acceleration we have seen across public and private technology markets, particularly in artificial intelligence and digital infrastructure. Despite intermittent market volatility and ongoing geopolitical uncertainty, investor conviction in the AI build-out remained exceptionally strong. As outlined in our recent white paper, AI infrastructure, the great mobilization of our time. We view this as a generational shift where capital deployment in AI infrastructure is larger in scale than many historic national mobilizations, such as the New Deal and the Apollo Space program. As of September 30, 2025, our net asset value was $9.23 per share compared to $9.18 per share on June 30 or $8.93 on a dividend-adjusted basis and $6.73 per share at the end of the third quarter of '24 or $6.48 on a dividend-adjusted basis. About 18 months ago, we made a deliberate decision to focus on AI infrastructure, the compute, networking and data layers that make modern AI possible. That decision guided our strategy and led to cornerstone investments that have since proven transformative. Our initial position began with CoreWeave, followed by OpenAI and soon after VAST Data. Each reflected our belief that as AI scaled, the demand for compute, storage and power would accelerate faster than most anticipated. At the time, relatively few investors were focused on these areas. We saw opportunity where others hesitated. We acted early, built conviction and invested behind teams we believe would define the next wave of computing. Many saw CoreWeave as too specialized with a complicated capital structure or VAST Data as another storage play, but we saw companies at the bedrock of a new wave of innovation with incredible tech teams growing customer traction and the beginning of a generational computing cycle. That early conviction has since been validated as these companies have emerged as core enablers of the AI economy. That conviction has translated directly into results across our key holdings. CoreWeave has gone from a relative unknown to one of the fastest-growing infrastructure providers in the world, now trading at approximately 3x its IPO price. We have prudently taken some profits, but still own over 40% of our position in CoreWeave. OpenAI, the engine behind such -- so much of today's AI innovation is reportedly contemplating a $1 trillion IPO, over 6x our initial entry valuation and more than 3x the value at which we marked the position at the end of the third quarter. VAST Data, once quietly building in the background, is now at the center of AI's data infrastructure conversation and reportedly in discussions for a raise at a valuation more than 3x our entry point. Our portfolio reflects a conviction-driven approach anchored in high-impact themes like AI infrastructure and innovation, giving investors unique access to category-defining companies driving this transformation. These results stem from a disciplined process, research-driven, conviction-led and patient. We leaned in when others hesitated, stayed confident when the market was uncertain and believe the opportunity ahead remains even greater. With that backdrop, let me turn to how this strategy is playing out across our portfolio, beginning with our exposure to AI infrastructure and foundational models. Please turn to Slide 4. In October, OpenAI completed a major restructuring forming OpenAI Group PBC, a public benefit corporation. This simplified its prior cap profit model and complex share structure, enhancing transparency, governance and flexibility for future capital formation. This restructuring also positions OpenAI for broader participation in public markets and long-term scalability. Following the restructuring, Reuters and Bloomberg have reported that OpenAI is preparing for a potential initial public offering that could value the company at up to $1 trillion, one of the largest in history. If completed, the offering could raise more than $60 billion according to those reports or over twice the $26 billion raised in the Saudi Aramco public offering in 2019. At the potential $1 trillion valuation referenced in recent media reports, our exposure to OpenAI could represent roughly 1/3 of the net assets on a pro forma basis, assuming no material changes in other holdings. For clarity, our current third quarter -- in our third quarter reporting, SuRo Capital's Q3 valuation and NAV are reflective of the previously announced $300 billion money round as confirmations of the higher $500 billion valuation occurred after the close of the quarter. We view OpenAI as one of the defining companies of this era, an organization that continues to set the pace of innovation while reshaping global infrastructure demand. Today, it stands as the world's largest private company, expanding rapidly as AI becomes embedded in daily life and redefines workflows. The company's scale, reach and capital intensity exemplify the structural shifts now underway across AI, and we believe that through our significant exposure as well as our other AI-relating holdings, SuRo offers one of the most direct ways for public market investors to participate in and benefit from this era of transformational growth. We expect continued investor interest in SuRo Capital's portfolio as a differentiated way to gain exposure to OpenAI and the broader AI infrastructure powering this generational shift. Turning to infrastructure and compute. CoreWeave remains a defining position within our portfolio and the largest single investment cost in SuRo Capital's history. As of quarter end, it remains our largest position at fair value and one of the primary beneficiaries of accelerating demand for AI infrastructure. During the quarter, we monetized approximately 16.6% of our position in CW Opportunity 2, generating $7.2 million in net proceeds, including $4.7 million in realized gains. Subsequent to quarter end, we realized additional net proceeds of $7 million and realized gains of $5.3 million while maintaining a meaningful stake in the position. We expect continued monetizations from investment following the distribution subject to quarter end, we hold over 40% of our original position in CoreWeave. CoreWeave has emerged as one of the fastest-growing infrastructure providers in the world, driven by record GPU demand and partnerships with OpenAI, Microsoft and Google, including long-term supply agreements for NVIDIA's Blackwell GPUs and contracts totaling roughly $22 billion with OpenAI alone. The market continues to validate our early conviction that AI workload growth would rapidly outpace traditional cloud capacity, creating sustained demand for specialized infrastructure providers, with reports from McKinsey & Company and the U.S. Department of Energy projecting continued growth in AI-related data center power moving forward. CoreWeave remains central to what we called the great mobilization of compute. Beyond compute infrastructure, we are also seeing innovation across emerging digital and financial systems, including a new investment we made during the quarter and during the quarter. Please turn to Slide 5. Consistent with our commitment to invest early in category-defining infrastructure. In September, we made a $5 million investment in HL Digital Assets, Inc., which holds a position in HYPE, the digital token of Hyperliquid, a decentralized exchange designed for transparent, high-speed derivative and spot trading on chain. Hyperliquid has quickly become one of the fastest-growing decentralized exchanges by trading and user adoption, offering low latency execution and advanced liquidity infrastructure. In recent weeks, HYPE has seen increased attention following its listing on Robinhood's crypto platform, which expanded access and drove a notable uptick in token trading volume and liquidity. Reports have also indicated that Hyperliquid Strategies, a newly listed company, is targeting a raise of approximately $1 billion to support its treasury holdings and token accumulation strategy, further underscoring growing institutional interest in the platform. These developments have contributed to a stronger market momentum for HYPE and reinforce our view of Hyperliquid's growing importance within the decentralized financial infrastructure landscape. Hyperliquid represents the next generation of decentralized financial infrastructure, bringing institutional-grade performance to on-chain markets. We view this as a natural extension of our broader investment strategy, reflecting our focus on foundational systems that enable digital markets to scale efficiently. Shifting from our infrastructure layer holdings, our consumer and fintech portfolio companies continue to represent an important component of our overall investment mix and include several that are advancing towards larger scale. Starting with WHOOP, which continues to strengthen its position at the intersection of health, performance and technology. In October of 2025, WHOOP announced Advanced Labs, a new offering that combines clinician-reviewed blood testing with continuous wearable data, expanding its platform into diagnostics and precision health. This evolution reflects a broader industry trend toward integrating biometric data with AI-driven analysis to help transform health information into actionable insights. As technology companies continue to advance, these integrated systems moving from reactive tracking toward more proactive, personalized and valuable health insights. It underscores WHOOP's ability to connect hardware data and health science in ways that deepen engagement and expand its addressable market. Moving to Canva. The company remains one of the most recognizable private software platforms globally, with approximately $3.3 billion in annual recurring revenue and more than 240 million monthly active subscribers. Our initial investment gave us early access to a company redefining design collaboration for teams and enterprises worldwide. The company continues to deliver strong financial performance and recently completed an employer tender valuing it at about $42 billion. Following the success of Figma's IPO, Canva's scale, growth and profitability highlights its potential to be one of the next major public design platforms. Canva remains a standout performer within our portfolio and a company we are closely tracking as it relates to potential monetization opportunities. Lastly, I would like to highlight Liquid Death, an existing portfolio company where we made a $0.25 million follow-on investment in July through a convertible note. Liquid Death continues to scale its unconventional brand in premium beverages and recently announced its Sparkling Energy line, scheduled for a January '26 launch, expanding its portfolio beyond water and tea. We remain excited about the company's growth trajectory as it continues to expand into new growth and strengthen its position in the premium beverage market. With the overall of -- with that overview of key portfolio developments, I will now turn to financial and portfolio updates. Consistent with our commitment to enhance shareholder value, our Board of Directors took several steps this quarter to strengthen our capital structure and support long-term returns. First, our Board declared a $0.25 per share cash dividend paid to shareholders of record as of November 21, with a payment date of December 5. This underscores our confidence in both the strength of our portfolio and our liquidity position. Based on the size and timing of anticipated near-term future monetizations, we expect to declare and pay additional dividends in either the fourth quarter or early in the first quarter of 2026. Based on -- building on these actions, our Board approved an extension of our existing share repurchase authorization, providing ongoing flexibility to buy back shares opportunistically. In addition, our Board authorized an additional repurchase of our 6% notes due December 30, 2026, allowing us to buy back the remaining outstanding notes. These measures reflect our ongoing focus on optimizing our capital structure and delivering shareholder value. As exciting as these results are, the story is far from over. The AI revolution, which we have called the great mobilization is still in its early innings and the opportunities ahead are among the largest and most transformative we have seen. Every layer of the computing stack, from chips and networks to data and applications, is being redefined. Our approach remains the same: identify the foundational layers of change early, back the best teams building in those spaces, and hold with conviction as values compound over time. We are not just celebrating success. We are positioning for what is next because while it has been an extraordinary run so far, the most exciting part is still -- is that we are still just getting started. Thank you for your continued support. I will now turn the call over to Allison Green to review our financials. Allison Green: Thank you, Mark. I would like to follow Mark's update with a review of our investment activity and portfolio company realizations during and subsequent to Q3, a high-level review of our investment portfolio as of quarter end, including the investment theme breakdown of our portfolio, and a more detailed review of our third quarter financial results, including our current liquidity as of September 30. I'll also touch on notable items during the third quarter and subsequent to quarter end, including our recent dividend and the declaration of an additional dividend, capital raised, and shares issued via the at-the-market offering, or ATM program and recent Board-approved updates to the note repurchase program and the share repurchase program. Please turn to Slide 6. As Mark mentioned, on September 18, we made an approximately $5 million investment in the preferred shares of HL Digital Assets, Inc. HL Digital Assets, Inc.'s primary purpose is to invest in HYPE, the digital token of Hyperliquid. The $5 million does not include prepaid expenses paid at the time of the investment or other capitalized costs of the transaction. During the quarter, we also made a $250,000 follow-on investment in Liquid Death's recent 4.12% Series S convertible notes due June 2028. This follow-on investment brings our aggregate investment in Liquid Death to approximately $10.3 million to date. During the third quarter, we received distributions from CW Opportunity 2 LP following the lifting of sales restrictions on the publicly traded CoreWeave stock held by the fund on August 15. CW Opportunity 2 LP is an SPV for which the Class A membership interest is solely invested in the Class A common shares of CoreWeave, Inc. SuRo Capital is invested in the Class A common shares of CoreWeave, Inc. through its investment in the Class A membership interest of CW Opportunity 2 LP. The 2 third quarter distributions totaled approximately $7.2 million and were categorized in aggregate as approximately $2.5 million return of capital and $4.7 million gain. The aggregate third quarter distribution represented approximately 16.6% of our $15 million investment in CW Opportunity 2 LP. As of quarter end, we continue to have an exposure to CoreWeave through our remaining 83.4% of our initial investment in CW Opportunity 2 LP. During the third quarter, following the successful merger of GrabAGun Digital Holdings, Inc. and Colombier Sponsor II LLC in mid-July, we sold 395,512 public warrants of GrabAGun Digital Holdings for net proceeds of approximately $660,000, resulting in a realized gain of approximately $537,000. GrabAGun public shares are anticipated to be unrestricted in January 2026. As of quarter end, we hold 1,204,488 remaining public warrants and 1,000,040 public common shares, or approximately 75% of our original position. Subsequent to quarter end to date, SuRo Capital has received 2 additional distributions from CW Opportunity 2 LP, totaling approximately $7 million. In aggregate, the distributions were categorized as approximately $1.7 million return of capital and $5.3 million gain. The aggregate-to-date distributions totaled $14.2 million and represent approximately 28.2% of our $15 million investment in CW Opportunity 2 LP. Currently, SuRo Capital retains approximately 71.8% of our investment in CW Opportunity 2 LP. Additionally, subsequent to quarter end on October 16, Rebric Inc. doing business under the name Compliable, approved a plan to dissolve the company. As a result, SuRo Capital realized a loss of approximately $1 million on the position. Finally, subsequent to quarter end, we received a distribution from True Global Ventures 4 Plus Venture Capital Fund for approximately $137,000. I would now like to turn to our portfolio as of quarter end. Please turn to Slide 7. Our top 5 positions as of September 30 were CW Opportunity 2 LP, WHOOP, OpenAI, Blink Health and Learneo. These positions accounted for approximately 52% of the investment portfolio at fair value. Additionally, as of September 30, our top 10 positions accounted for approximately 75% of the investment portfolio. Please turn to Slide 8. Segmented by 7 general investment themes, the top allocation of our investment portfolio at September 30 was to artificial intelligence, infrastructure and applications, representing approximately 30% of the investment portfolio at fair value. Consumer goods and services and Software-as-a-Service were the next 2 largest categories with approximately 20% and 19% of our portfolio, respectively. 11% of our portfolio was invested in financial technology and services, and education technology companies accounted for approximately 10% of the fair value of our portfolio. The logistics and supply chain category accounted for approximately 8% of the fair value of our portfolio and SuRo Capital Sports accounted for approximately 2% as of September 30. Please turn to Slide 9. We ended the third quarter 2025 with a net asset value of approximately $231.8 million or $9.23 per share, which is consistent with our financial reporting. This compares to a dividend adjusted NAV of $8.93 per share as of June 30. The increase was driven primarily by valuation appreciation in several of our top positions. More specifically, the increase in NAV per share from $9.18 at the end of the second quarter was primarily attributable to a $0.23 per share increase driven by the net unrealized appreciation of our investment portfolio during the third quarter, a $0.21 per share increase due to net realized gain on the sale of investments and a $0.03 per share increase from the impact of stock-based compensation during the third quarter. These increases were offset by a $0.25 per share decrease due to the cash dividend declared and paid during Q3, a $0.14 per share decrease due to net investment loss and a $0.03 per share decrease from the impact of the issuance of common stock during the quarter. During Q3, we sold 1,230,984 shares under the ATM program at a weighted average price of $8.78 per share for gross proceeds of approximately $10.8 million and net proceeds of approximately $10.6 million after deducting commissions to the agents on shares sold. As of quarter end, up to approximately $88 million in aggregate amount of the shares remain available for sale under the ATM program. At September 30, 2025, and currently, there are 25,119,091 shares of the company's common stock outstanding. Regarding our liquidity as of quarter end. We had approximately $58.3 million of liquid assets, including approximately $54.6 million in cash and approximately $3.7 million in unrestricted public securities. Not included in our unrestricted public securities are approximately $41.9 million of public securities subject to lockup or other sales restrictions as of quarter end. This represents our investment in CoreWeave via our Class A interest of CW Opportunity 2 and our currently restricted public common shares of GrabAGun. Next, I'd like to provide more detail on the recent Board-approved updates to the note repurchase program and the share repurchase program. On October 29, SuRo Capital's Board of Directors approved an extension of the discretionary note repurchase program, which allows us to repurchase up to an additional $40 million, or the remaining aggregate principal amount of our 6% notes due 2026 through open market purchases, including block purchases, in such a manner as will comply with the provisions of the Investment Company Act of 1940, as amended, and the Securities Exchange Act of 1934, as amended. As Mark mentioned earlier, SuRo Capital is committed to initiatives that enhance shareholder value. As such, on October 29, our Board of Directors authorized an extension of the company's discretionary share repurchase program until the earlier of October 31, 2026, or the repurchase of $64.3 million in aggregate amount of the company's common stock. The dollar value of shares that may yet be purchased by the company under the share repurchase program is approximately $25 million. Since the inception of the share repurchase program in August 2017, we have repurchased a total of 6 million shares of our common stock for a total deployment of approximately $39.3 million of the $64.3 million authorized by the Board. Approximately $25 million remain authorized under the share repurchase program now set to expire on October 31, 2026. Finally, I'd like to conclude with additional commentary on our recent dividend declaration. On July 3, SuRo Capital's Board of Directors declared a cash dividend of $0.25 per share paid on July 31 to the company's common stockholders of record as of the close of business on July 21. This dividend was generally attributable to the successful monetization of public securities and other promising developments in our investment portfolio. Subsequent to quarter end, on November 3, SuRo Capital's Board of Directors declared a cash dividend of $0.25 per share payable on December 5 to the company's common stockholders of record as of the close of business on November 21. The date of declaration and amount of any dividends or distributions, including any future distributions are subject to the sole discretion of SuRo Capital's Board of Directors. The aggregate amount of distributions declared and paid by SuRo Capital will be fully taxable to stockholders. The tax character of SuRo Capital's distributions cannot be finally determined until the close of SuRo Capital's taxable year, which is December 31. SuRo Capital will not report the actual tax characteristics of each year's distributions annually to stockholders. Will report the characteristics of each year's distributions annually to stockholders and the IRS on Form 1099-DIV subsequent to year-end. As a result of the $0.25 per share cash dividend paid on July 31 to stockholders of record as of the close of business on July 21, effective as of July 21, the conversion rate applicable to the 6.5% convertible notes due 2029 was adjusted to $7.53 per share or 132.7530 shares of the company's common stock for $1,000 principal amount of the 6.5% convertible notes due 2029, from the initial conversion price of $7.75 per share or 129.0323 shares of the company's common stock for $1,000 principal amount of the 6.5% convertible notes due 2029, which had been effective since issuance. The adjustment to the conversion rate of the 6.5% convertible notes due 2029 was made pursuant to the note purchase agreement governing the 6.5% convertible notes. The conversion rate will again be adjusted for the most recently declared dividend pursuant to the note purchase agreement and effective as determined by the note purchase agreement. That concludes my comments. We would like to thank you for your interest and support of SuRo Capital. Now I will turn the call over to the operator to start the Q&A session. Operator? Operator: [Operator Instructions] We will take our first question from Brian McKenna, Citizens. Brian Mckenna: So just a few questions on a couple of your largest investments. So on CoreWeave, it looks like you sold another $7 million thus far in the fourth quarter. What's the remaining fair value on that investment as it stands today? And then is there a way to think about the time line around monetizing the rest of CoreWeave? And then just on WHOOP, it's great to see this got marked up again. Fair value is approaching $30 million. You've probably made 2.5x plus on your investment. So what's been driving the strong outperformance here in the markups? And then is there any way to think about a potential IPO of that company? Mark Klein: Great questions, Brian. Thank you. Let me -- WHOOP is -- we'll do first. WHOOP continues to perform quite well in all metrics. WHOOP also trades fairly actively in secondary markets. So it's their increased positive performance in their financial performance as well as some of the other trading in the company, have led to valuation changes. As far as an IPO in WHOOP, I don't know when they would IPO or when they would raise another round of capital. As you may note, one of its competitors, Oura raised money at an $11-plus billion valuation, which is considerably higher than what we're looking at as valuation for WHOOP. In respect to CoreWeave, the fair value of our investments as of 9/30 is about $37 million. And this has been monetized over time by the manager of the CW Opportunity Fund, and their monetizations can be tracked by their Form 4 filings. Thank you. And thank you for your support, Brian. Operator: We will take our next question from Marvin Fong, BTIG. Marvin Fong: Maybe just a couple on, I guess, under the topic of portfolio management here. But as you -- as the CoreWeave position gets sold down, what's sort of the way you'd like to manage the portfolio in terms of your AI exposure? I mean now that WHOOP could potentially be like -- well, it wouldn't be given where OpenAI is prospectively going to be marked at. But just aggregating all of your AI compute and data and infrastructure investments, is there a thinking that you'd like to keep that as the majority of the portfolio or anything like that? Just curious how we should kind of think about deploying additional capital into the AI space. Mark Klein: Thanks, Marvin. And again, thanks for your ongoing interest and support. You're correct. Our ongoing monetization of side of CoreWeave outside of the equation, obviously, the increased value of OpenAI and what that could look like at $500 billion or now the talked about $1 trillion would make the size of that investment way disproportionate in our portfolio. We continue to spend a lot of time in AI infrastructure space, in the application area, in the AI overlay over -- in existing software companies, and we will continue to do so. I think some of the other areas that we are spending time are in the cybersecurity area, where we find that there's a lot of interesting companies that have increased in value, but probably not at the rate of some of the AI companies. So hopefully, that answers your question. Operator: There are no questions on the line. I will hand over back to your host for the closing remarks. Mark Klein: Well, thank all of you for spending time with us this afternoon. Obviously, the markets have been a bit volatile today. I appreciate your thoughts, your ongoing support. As always, I'm available to chat with any of you. Feel free to give me a call or send an e-mail through our IR portal. We are extremely excited about our portfolio. Hopefully, that came through in our call today. It's been a great year, and we do actually anticipate this success not only to continue but accelerate as we look into 2026. Again, thank you all very much. Operator: Thank you for joining today's call. You may now disconnect.
Operator: Ladies and gentlemen, good morning, and welcome to the analyst conference call on the Third Quarter 2025 Results of Ahold Delhaize. Please note this call is being webcast and recorded. [Operator Instructions] During this call, Ahold Delhaize anticipates making projections and forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause our actual results to differ materially from future results expressed or implied by such forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of Ahold Delhaize. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP. John-Paul O'Meara: Thank you very much, Sharon, and I'm delighted to welcome you all today to our Q3 2025 results from sunny Zaandam. On today's call are Frans Muller, our President and CEO; and Jolanda Poots-Bijl, our CFO. After a brief presentation, we will open the call for questions. In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the Investors section of our website at aholddelhaize.com, which also provides extra disclosures and details for your convenience. [Operator Instructions] To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, over to you, Frans. Frans Muller: Thank you, JP, and good morning to all of you indeed from a sunny Zaandam. As you will have seen in our interim release this morning, our 2025 year-to-date performance is a great proof of the potential and value creation we are excited about with our Growing Together strategy. From a macro, social and political perspective, there's a lot going on in the world, the effects of which are felt in our stores every day in real time. With rising inflation, stagnating economic growth and changes in government policy, which, in some cases, are becoming more frequent and more unpredictable, the business and customer climate is for sure, volatile. Whether it is the current delay to the distribution of SNAP benefits and rising health and medical costs in the U.S., timing of the food stamp payments schedule in Romania, the recent limitations on the grocery trade market implemented by the government in Serbia, this creates uncertainty. Tough choices and headwinds for consumers and businesses alike. At the same time, the industry is evolving, be it omnichannel, data, AI and mechanization. Those companies, and I would include Ahold Delhaize in that group, who are at the forefront of these changes, who are well prepared, well invested and can leverage the experience and creativity of their people, those companies will outperform. Therefore, to ensure we continue to sell successfully in this dynamic, I believe 3 things are essential to keep the rather steady: flexibility, resilience and culture. These qualities become truly powerful when they are aligned behind a focused and well-articulated plan, which is exactly what our Growing Together strategy provides. It connects how we serve customers, run our operations, invest in our people and deliver strong financial performance, all while advancing our commitment to health, sustainability and responsible growth. So let me share a few examples how this tangibly shows up across our business in how we innovate for customers, build trust through transparency and act responsibility -- responsibly in our communities. The flexibility comes to life through our work in our own brands, where we adapt quickly to evolving customer needs and local market dynamics. And by harmonizing assortments, accelerating innovation and aligning product development across our regions, our teams can respond faster and with greater position to what customers want compared to competition. This agility helps us deliver differentiated value and quality while simplifying operations and improving profitability. All of our brands have seen year-over-year growth in own brand penetration. And in both regions, we are seeing own brand sales growth outpaced the rest of the store in both dollars or euros or units. But this is not the time to sit back and relax. And therefore, we are stepping up our own brand game and have undertaken a comprehensive cross-functional and cross-regional view to identify further opportunities. We will lean into this more heavily as we move through the next seasons. We have the biggest own brand share of store growth opportunity in the U.S. Some of the foundational work put in place to sustain momentum in 2026 and beyond includes, for example, the review of our 90% of our categories to harmonize assortments, align product specs and reduce supply complexity. The identification of a pipeline for new products in high-growth categories and the activation of commercial plans across the brands to raise own brand awareness and drive higher consistency and efficiency in execution. In Europe, we are building on a very strong position with own brand share already around 50%, 5-0 percent. Therefore, we are concentrating on further strengthening competitiveness through continued assortment harmonization, expansion of our health-oriented brands like Nature's Promise and Terra and the expansion of our everyday low-price products or how we call them Price Favorites. All our European brands now have a minimum of 900 Price Favorite products across their assortments. Through our family of great local brands, we have unparalleled proximity and rich anonymized data to loyalty programs that gives us a real-time understanding of what matters most to our customers. And during challenging times, it's important that our customers do not have to choose between eating an healthy and nutritious meal and paying their rent. This mindset keeps our people motivated and connected to our purpose. Resilience for our customers comes from transparency, being open and consistent about the value, quality and health choices we provide. We strengthen trust by clearly communicating nutritional information, offering price certainty and helping customers to make -- to be informed, affordable and healthy decisions. Here, visibility and education are equally important. Customers increasingly value the healthy options accessible across our brands. They also appreciate the simplicity of easily identifying the health differences between comparable products, such as with the Guiding Stars in the U.S. and NutriScores in Europe, nutritional rating systems used for our own brand products. In the U.S., we are partnering with Circana to expand the accessibility of the system to a broader range of suppliers. Albert Heijn in the Netherlands is revamping its fresh product aisle, expanding its offering with more convenience, new snacks and ready-made meal kits. It's also introducing new fresh food packages to inspire customers to prepare fresh and nutritious meals more quickly and easily. Maxi Serbia held its third Healthy Food Every Day school program to encourage healthy eating amongst children. And in the program, students across Serbia learn about the importance of a balanced diet, eating fruit and vegetables and physical activity. And finally, our culture is reflected in how we show up for our communities. Those partnerships with organizations such as The Global FoodBanking Network and local initiatives like Food Lion Feeds and Hannaford school pantries, we help families access nutritious food and reduce waste across our value chain. It has been just over a year since Ahold Delhaize partnered with The Global FoodBanking Network. And since then, we have provided the equivalent of 2.9 million meals to those in need. Hannaford, its 200th school-based food pantry for students in need, and they launched that recently and through partnership with school districts, food banks and hunger relief organizations, the program has helped expand food access for students from preschool through college. As part of its annual Great Pantry Makeover initiatives, the Food Lion Feeds program restocked 33 food pantries to better serve neighbors experiencing food insecurity. More than 92,000 pounds of food items were donated and associates contribute more than 1,500 volunteer hours. And don't forget, by 2032, Food Lion has committed to donate 3 billion of cumulative meals. Albert Heijn held their annual "you can't learn on empty stomach" campaign, where customers could buy healthy breakfast or dinner products at a discount and donate them to the Dutch food banks. And through the campaign, more than 350,000 products were donated. These efforts are not site projects. They are part of who we are. They demonstrate that our culture of care and connection extends well beyond our stores and that we define success by the positive impact we create. Delivering for our customer communities today sets the standard for how we build the business for tomorrow. We are translating the same flexibility, resilience and culture into our physical network, supply chain infrastructure and technology investments, expanding and densifying its growth markets, modernizing logistics and embedding AI-driven innovation that will enhance both customer experience and productivity. Our U.S. brands are solidifying their real estate pipelines to accelerate new store openings in the coming years. We see the strongest opportunity for growth in the markets served by our Food Lion brand. In some of our markets like Raleigh and Charlotte, we have seen population growth of 7% to 8% in the past 5 years, and that is not slowing. Having achieved its 52nd consecutive quarter of same-store sales growth, Food Lion is well positioned to extend its record performance. Today, Food Lion is launching their omnichannel remodels at 153 stores in the Charlotte market. These remodels enhance the omnichannel shopping experience and include items like updated assortments and easy meal solutions that they're ready to cook or eat and, of course, are priced right. Self-checkouts for an enhanced and efficient shopping experience and e-commerce options for all customers through Food Lion To-Go or a store pickup. This is now the third market to complete the omnichannel remodels, where we have previously launched remodels in Raleigh and Wilmington, we continue to see strong sales performance with average weekly sales outpacing non-remodeled stores. Construction is therefore also underway on 92 store remodels in the Greensboro market, which will be launched in 2026. In Europe, Delhaize Belgium is expanding its footprint with another 8 new supermarkets that will open in '26 under the brand's affiliate model. The new stores complement Delhaize existing network and reinforce our growth ambitions in Belgium. Additionally, we expect the Delfood transaction, which is -- which are the former Louis Delhaize stores to close in the first quarter 2026, allowing Delhaize to further differentiate itself in the convenience store segment. We also continue to make good progress on the integration of Profi, where we see a strong future growth path. Over the past 3 years, the brand has opened over 200 stores and intends to ramp up expansion in the next 3 years. A few of the things we have done this year to set ourselves up for future success include like things like introducing our own brand assortment to Profi customers, enhancing value and differentiation, expanding Profi's strong quick meal service offerings of coffee, fresh pastries and convenient meals and those options also to our Mega Image and our Shop & Go stores and to meet, therefore, evolving customer needs. And we slowed our cadence of store openings to finalize the commitments we made to the competition authority. At the same time, our Romanian teams have used the time to identify optimal locations for each of our local brands to ensure we leverage their unique strength and create a better fit to local market dynamics. And you will see accelerated growth in 2026 on this front. With our customer value proposition advancing and our footprint ambitions taking shape, let me spend a few minutes on where we are on strengthening capabilities that will support the next phase of growth. The same flexibility, resilience and culture that guide our brands also drive how we invest in infrastructure, automation, technology and data. These enablers make us more efficient, deepen our customer relationship and ensure we use our data to create a faster and more connected business. So here are a few examples to illustrate this. To facilitate growing capacity demands, 2 weeks ago, we announced plans for Ahold Delhaize USA to build a new state-of-the-art distribution center in Burlington, North Carolina. The new facility, which will add over 1 million of square feet of distribution center space is expected to begin operations in 2029. To maximize efficiency, the site will leverage proven supply chain mechanization technology. And this investment is within the scope and parameters of the Growing Together financial network. Our culture of innovation is also providing new and powerful ways to interact and serve our customers as we will explore use cases for new technologies and business process improvement. With the rapid developments in AI, we see many opportunities to accelerate across selected domains of our business, focusing on the ones that can have a real impact on our business. And I'm confident that under the leadership of our new CTO, Jan Brecht, we will make fast progress building the right foundational AI platforms that will enable effective future scaling of winning AI solutions. Our teams will scale our proprietary retail media platform, Edge, to our U.S. brands in the coming year. This is an important step as retail media becomes an increasing effective way to create a relevant customer experience and provide additional revenue streams. The platform powers on-site display, sponsored search and in-store digital screens and has already proven successful at several of our European brands. As 2025 draws to a close, I'm proud of our progress and more importantly, that we have sustained and strengthened brand equity and leading market positions across the portfolio. I'm confident we are doing the right things to reinforce our strategic levers to capture growth, volume and market share. And at the same time, we are staying close to our customers and associates working hard to navigate these turbulent times together successfully. As we turn our attention to delivering a strong holiday experience for our customers, prioritizing value, healthy assortments, convenience and everything they need to create their own special and unique holiday moments, I also wish you happy holidays, starting with Thanksgiving in only a couple of weeks. Now over to Jolanda to talk more about the specifics of our third quarter and provide more color on our outlook. Jolanda Poots-Bijl: Thank you, Frans, and indeed, good morning to everyone. We've delivered a strong quarter, steady sales growth, solid execution and continued progress on our Growing Together ambitions. What I'm particularly proud of is our ability to deliver a balanced and consistent performance in a dynamic environment. The backbone is our passionate and dedicated people, supported by a strong portfolio of brands that stay close to their customers and local markets. By combining that deep local insight with the scale and capabilities of our group, we continue to adapt quickly, find efficiencies and create opportunities in real time. This balance of flexibility, resilience and culture is what underpins our financial strength and long-term value creation. Let's have a look at the key underlying results for the quarter, as shown on Slide 17. Net sales grew 6.1% to EUR 22.5 billion. This reflects good momentum across our regions, fueled by our growth model and strategic priorities, which have been a key catalyst contributing to a solid volume performance. The closure of Stop & Shop stores and the cessation of tobacco sales in Belgium negatively impacted net sales growth by 0.7 percentage points. Underlying operating margin was 4.1%. Strong performance in the U.S. more than offset the first-time consolidation of Profi and planned strategic price investments in the U.S. Diluted underlying earnings per share was EUR 0.67, up 8.7% at actual rates. Higher underlying operating profit and the impact from the share buyback program was partially offset by higher taxes and finance expenses. Slide 18 shows our results on an IFRS reported basis for Q3, which were EUR 31 million lower than our underlying results, primarily due to impairment charges on operating stores in the U.S. and an adjustment on the losses related to the affiliation in Belgium. Let's now turn to our regional performance. On Slide 19, you see comparable sales growth by region, including and excluding weather, calendar and other effects, which shows we delivered another solid quarter of steady sales growth. Looking at the regions in more detail. U.S. net sales were EUR 12.9 billion, an increase of 1.9%. Comparable sales, excluding gas, increased 3.1%, excluding a negative impact from weather of 0.2 percentage points. This reflects solid comparable performance and continued customer momentum. In addition to the positive impact from comparable sales, net sales were negatively impacted by the following: around 80 basis points from the impact of Stop & Shop closures and around 20 basis points from a decline in gasoline sales. The underlying operating margin in the U.S. was 4.6%, excuse me. Excluding nonrecurring items, margins were up 20 basis points from the prior year due to higher sales leverage and careful timing of promotions using our learnings heading into the holiday season. This more than offset our price investments and the dilutive impact from a change in sales mix from online and pharmacy sales. The nonrecurring items, including a release of a provision on our self-insurance program. This primarily resulted from continued improvements in workplace safety. Given all the stresses in the health and medical market, creating a healthy, safe workplace is equally a vital part of what we do as a company. The Stop & Shop team has been laser-focused on executing their pricing strategy and have extended key elements and refinements to an additional 88 stores in Massachusetts. At the same time, our associates are improving the quality of service and in-store execution, optimizing promotional effectiveness and tightening day-to-day operations, while there's plenty of work ahead of us, I am encouraged by the positive first response from customers, which we see in our improved Promoter Scores. As we close out the year, I expect our fourth quarter U.S. margin to be roughly in line with the prior year as we continue to invest in value, service and in the customer experience, ensuring sustained momentum into the new year. Turning now to Europe. Sales were EUR 9.6 billion, an increase of 12.4%. The integration of Profi had a positive impact of 9.1%. Adjusted comparable sales growth was 3.4%, excluding the impact of 0.6 percentage points from tobacco. We expect to see a similar impact for the coming 2 quarters when we cycle the tobacco regulation in Belgium coming into effect. As we saw in Q3, comparable sales growth eased, partly due to some of the macro effects Frans mentioned earlier. Also, to a certain extent, as we begin to comp our own successes of the past years in the region. In the CEE region, we expect to see slightly lower growth persist as market growth is pressured due to rising inflation, which, in this case, is more policy-driven, for example, VAT increases in Romania than supply driven. Underlying operating margin in Europe was 3.9%, stable versus last year. Margin improvements in Belgium and better labor productivity in general were offset by the impact of the first-year consolidation of Profi and lower profitability levels in Serbia due to the new governmental degree on grocery industry pricing. The decree started from September 1 and remains in effect until February 2026. Given this new headwind, as we look into the fourth quarter, we expect that the margin profile for Europe will be at a similar level to that of the third quarter. I remain encouraged by how our local brands continue to balance affordability and innovation while protecting profitability, a clear sign of operational resilience. Our relative performance remains strong, and we continue to see the long-term growth and margin opportunities in line with our Growing Together plan, particularly as we drive more alignment of best practices and leverage our scale. Our omnichannel ecosystems continue to drive growth and differentiation and help us build market share. During the quarter, online grocery sales grew 15.4% in the U.S. and 11.9% in Europe, marking a sixth consecutive quarter of double-digit online growth. In the U.S., this reflects our disciplined store-first model, which we pivoted to in 2023. This strategy supports enhanced convenience, delivery immediacy, optionality, order quality and profitability. With over 2,000 stores across our network, our customers can shop nearly the full store assortment and can take advantage of our same-day fulfillment options. Over the past 3 years, we've seen same-day delivery increase from 65% of our orders to nearly 90%. We also completed the rollout of PRISM at Food Lion and Hannaford. And with that, all 5 U.S. brands are now on our proprietary platform, which will amplify speed and impact of innovation in omnichannel convenience for our customers. As online further evolves, so too will our operations and infrastructure with it. We will further evaluate our fulfillment operations to optimize the customer experience and improve online profitability. At Albert Heijn, double-digit growth was supported by a 10% increase in orders. To support its growth, Albert Heijn has announced its real-time delivery slot system to offer personalized delivery windows during checkout based on location and order history. Using AI, this system dynamically recalculates routes and time slots to minimize emissions and maximize efficiency even as orders come in. bol enjoyed another strong quarter, growing 8.4% and is on track to deliver a very good year. As the clear #1 in the market with a reliable assortment, local relevance and growing network of international partners, bol is a well-skilled and innovative e-commerce business with the personality of a great local brand. During the quarter, bol launched branded shelves, a new self-service advertising product, giving sales partners and suppliers their own digital storefront. This marks the next step in bol's development as a full-fledged media mail platform. Moving on to Slide 23. Q3 free cash flow was EUR 389 million lower year-on-year due to phasing and lease repayments. Even with headwinds from foreign currency, we remain on track to deliver on our full year 2025 free cash flow commitments. Our strong balance sheet gives us the flexibility and resilience to keep investing in the business while also returning cash to our shareholders. In that context, we are pleased to reconfirm the continuation of our EUR 1 billion annual share buyback program for 2026, underlining our confidence in future cash generation and earnings growth. Alongside financial results, we continue to advance our healthy community and planet ambitions. Our MSCI AA and Sustainalytics low-risk ratings have been reaffirmed, reflecting consistent ESG performance. Through initiatives such as the Healthy Future Academy, we are equipping associates with knowledge, skills and confidence to further integrate health and sustainability in their daily work. The program takes learners on a journey from farm to plate, covering topics like nature and climate, circularity and health throughout Ahold Delhaize value chain. Across our brands, we're making healthier and sustainable products more affordable and accessible. From Delhaize Belgium reformulated own brand canned vegetables to new hybrid meat and plant-based products. In addition, we continue to foster collaboration with suppliers across our value chain to support regenerative farming and reduce greenhouse gas emissions. Ahold Delhaize USA recently introduced their partnership with Danone North America and The Nature Conservancy aiming to reduce methane from yogurt production over the next 5 years. This follows earlier partnerships with Kellanova, General Mills and Campbell Soup. These examples show how commercial performance across our brands and responsibilities go hand-in-hand. As we move into Q4, our priorities are clear: deliver a strong holiday season, serving our customers with healthy and affordable products. I'm confident that our strong foundations, dedicated associates and customer-first mindset enable us to deliver on our promises for the year, which you can see reiterated on Slide 25. As it is important to track underlying operational performance in both our reporting and our outlook, for 2026, we will align our external guidance to a currency-neutral basis, which is also more attuned to market practice for multicurrency companies. In summary, our strong year-to-date performance reflects a company that is flexible in execution, resilient in performance and guided by a culture of accountability and care. These qualities, together with our clear strategic focus, position us well to continue driving sustainable growth and long-term value creation. And with that, I thank you for tuning in. And Sharon, please open the lines for questions. Operator: [Operator Instructions] And your first question today comes from the line of Robert Jan Vos from ABN AMRO ODDO BHF. Robert Vos: I have 2. Since you mentioned it as one of the reasons for the strong margin expansion in the U.S. in Q4, could you quantify the impact of the timing of the promotional activities in the U.S. in Q3? And my second question is, you talked about the growth in Europe and that it is expected to be a bit more subdued going forward. It was 2.8% in the quarter. However, if we look at food inflation levels in the countries of presence, these are generally a bit higher than that. So that indicates some negative volumes. Can you elaborate on this, please? Those were my 2 questions. Frans Muller: Robert Jan, Jolanda takes the first question, then I take the second one. Jolanda Poots-Bijl: Okay, Robert Jan. Yes, the Q4 question you asked about the promo phasing. As we indicated, our Q3 results were impacted by one-offs of 20 basis points in the U.S., and this 20 basis points is related to the release of the provision that I talked about and the promo phasing, and that's the guidance we can give you on this front. Frans Muller: And on the European margins, they are corrected 3.4% in Europe for the quarter compared to a comparable of 2.8%, which we report. And it has to do with the timing and phasing effects of nonrecurring items from last year. Robert Vos: That's clear. But can you maybe elaborate a little bit on volumes? Were they still positive in most brands? Frans Muller: Yes. Volumes year-to-date, we have positive volumes, and we also expect that will be the same for the fourth quarter. Operator: We will now take the next question, and the question comes from the line of Sreedhar Mahamkali from UBS. Sreedhar Mahamkali: Perhaps if you can talk a little bit about the comments you made, Frans, on the real estate team pulling together pipeline and the warehouse [ Burlington ] you made $860 million. If you can help us understand what we should be thinking about the growth in terms of new footage new stores, maybe next year or the year after, how we should be thinking about what sort of magnitude? That's the first one. Second one is just a bit more of a request to clarify the U.S. margin drivers in the quarter. I know you've talked about 20 basis points. But did you just say, I think the 20 basis points refers both to the provision release and the promo shift? Or was the provision release 20 basis points and then the rest is in the underlying 20 basis points improvement? And the real question there, I guess, for me is, is the provision release a longer-term realizing you provisioned very, very prudently, and this could be there in a year, 2 years', 3 years' time? Frans Muller: Thank you, Sreedhar, for your questions. Jolanda will take up the second one or partially the third one. On the first question on the DC, the DC for Food Lion in the Carolinas is, of course, an evidence of our success, I would almost say. We grow very fast with Food Lion and have also future plans to grow further, both in store remodels like the 153 we just launched in Charlotte, but also with new store openings like we said before. And those new store openings, that is organic growth for Food Lion and the store remodels and the increased success of Food Lion needs more capacity, which is a good thing. The other thing is that we also said in our Grow Together strategy for the 4 years period that we will remodel 1,000 stores in the U.S. So we are on the path of growth. And when we talk about store growth, then we talk about Food Lion, Hannaford and The GIANT Company. And let's not forget that we are in the southern part of the East Coast, where both we see population growth and GDP growth as well. So we're in a very good spot there, and that's why we need more capacity. So it's a logical effect of our success. Jolanda Poots-Bijl: Thank you, Sreedhar, for asking that question on the U.S. margin. The 20 basis points is indeed a combination of the promo phasing that we referred to and the release of the provision. And then your next question on the provision, that's a provision that is reassessed every year, but we do not expect at this point further releases on that provision. So it's a one-off, and that's why we refer to it. Operator: Your next question comes from the line of Rob Joyce from BNP Paribas. Robert Joyce: I'm going to go with 3 as well. So just looking through the kind of SNAP impact from the payment pause, which is probably a [ P ] of one event. Do we now think the U.S. margin has reached a point where it should be kind of broadly flat going forward and looking into 2026? And do you think you are gaining share in the U.S. and can continue to gain share at this kind of margin level? That's still in the U.S. And then in terms of Europe, I mean, it looks like you're suggesting margins should be down, give or take, 50 basis points in the fourth quarter. How do we think about that flowing into next year? Is that a drag on margins we should think about for 2026? Or is 2026 a Europe margin growth on the back of some of those Profi synergies in particular? Jolanda Poots-Bijl: Thank you for the questions asked. First, starting with the U.S. margin profile, which we disclosed will be for Q4 comparable to the prior year, which was 4.2%. We envision to maintain our cadence of price investments, continuation of the sales mix. Bear in mind, [ Rx ] and online are growing double digit. And there's indeed the promo shift from Q3 to Q4 that we see there. If I look at the European Q4 margin, as I disclosed in my statement just now, we expect the Q4 European margin profile to be comparable to Q3 this year, which was around 3.8%. And there you see the impact of the first-year consolidation of Profi. We discussed in previous calls that Profi, the closure of the transaction was somewhat later than we hoped for, and therefore, the synergies also kick in somewhat later. The second impact in the European margin profile is Serbia, the decree that I talked about, which is in there. Overall, as we say, we're steadfast on our commitments to deliver on our Growing Together strategy with an average of 4% margin over the whole period and a 4% growth CAGR, and I don't see any reason to deviate from that. So confident for the next year. And of course, we will provide detailed guidance in February going forward. Robert Joyce: Sorry, just to follow up on that U.S. margin. The question on the market share. Do you think you're taking market share now in the U.S.? And are you kind of at the right level to continue taking share? Frans Muller: We take market share in the U.S. We also see with the latest numbers on grocery development that we trend better than the market. And I think this has to do with the price investments we made, the online performance where we have a very strong penetration. So I think we can confirm that we gain market share in the U.S. geography as a whole. Jolanda Poots-Bijl: We also expect positive volumes in Q3 for the U.S. as well. So yes. Frans Muller: That's what I said before. So the Q4 trend is the year-to-date is positive volume that will prolong for the Q4. And I'm also happy we had yesterday our total Stop & Shop team with us. And also from them, we see now that they trade positive volumes as well. So that's going in the right direction. Operator: Your next question comes from the line of William Woods from Bernstein. William Woods: The first one is on Stop & Shop. I suppose, are you happy that you've done enough at Stop & Shop to date to sustain that turnaround? And I suppose what have you learned and adapted as you've rolled out this strategy? And then the second one is just a shorter-term question on SNAP. How are you thinking about the impact of SNAP at the moment? What are your latest conversations on that? Frans Muller: So Jolanda will say a few things about the nutritional assist programs. I will say a few things more about Stop & Shop. So you were faster on your feet already talking about Stop & Shop than I thought. So I was saying a few things about Stop & Shop because we are excited about the development there. The team was with us, and we had a full report yesterday as we see from them every month with our full management board because this supports an important project. The Stop & Shop team has now invested -- price invested in 70% of their fleet. And like Jolanda mentioned before, 88 new stores to be price-invested in Massachusetts. We have improved execution in our stores, availability, fresh performance and that topic, we work hard on productivity and execution. We closed last year 32 loss-making stores, as we earlier said to you. We have already a very strong online performance with Stop & Shop and a good 10% penetration. And we also see, if you look at the market numbers that we gained volumes that our NPS are trading very nicely up. And also the team with Roger's leadership has also renewed, and we see also there a lot of energy and positivism. Having said all that, that does not mean that we have not still a lot of things to do. And that's what I mentioned before, the type of turnarounds need more time. But good evidence. Team is enthusiastic and energized about the results we see. So I'm optimistic going forward. But again, we come back to you next quarter on this topic, too. Jolanda Poots-Bijl: Yes. Thank you, William, for the question on SNAP. First of all, we think it's quite disappointment, very disappointing for those impacted, those families in need, especially with the winter and holiday season ahead of us. Thus far, for the business, we do not see material impact. We, of course, will closely monitor developments going forward, and we will stay close to our communities. Yesterday, Food Lion released that they've contributed an additional EUR 1 million in support to help the communities they operate in. And also our whole focus on reduction of prices, the price investments of EUR 1 billion in 4 years' time will also support these families. So closely monitoring impact. That's what we're doing. William Woods: But just to clarify on the SNAP impact, if it doesn't get paid or only half of it gets paid, so you're just saying that there's no material impact to Q4. Is that right? Jolanda Poots-Bijl: That's not what I said, William, exactly. I said thus far, we don't see a material impact, and we closely monitor developments going forward. And we remained -- okay. Operator: [Operator Instructions] We will now go to our next question, and our next question today comes from the line of Fernand de Boer from Degroof Petercam. Fernand de Boer: Maybe to come back on the SNAP impact. Could you quantify? Because I think a couple of years ago, you did quantify how much SNAP was of your U.S. sales? And that's the first question. And the second one is on the Netherlands with bol. At this moment is still going very well, I think. But also Amazon recently announced a huge investment program for the Netherlands. Do you see this market changing? And how are you going to prepare for the investment of Amazon? Jolanda Poots-Bijl: Thank you for the question. The SNAP penetration, that's the only quantification that I could provide at this point in time. It's a very -- at a very low level in our company. So it's at one of the lowest levels since a few years pre-COVID. So low penetration, no material impact thus far, and we will monitor just like you what's really happening in the next few months. Frans Muller: And at the same time, Fernand, like Jolanda mentioned before, we did a lot of things on value and price investments. If it's our own brands, if it's investing in our prices. And we're very fortunate that we have a very good relationship with Feeding America and our local food banks to make sure that we can support those families and communities in need. That is now our first priority. And then we monitor the situation how this will evolve, the shutdown and therefore, also the connected SNAP funding. Talking about Amazon and bol, it's a competitive environment. It's -- we see every quarter something new in this beautiful online space in the Netherlands. But I just would like to come back to the facts and how we prepared for that. bol has an 8.4% growth, which is, therefore, growing roughly double how the marketplace is growing for general merchandise. So we're gaining share again. Like Jolanda already mentioned, we're up for a very good year for bol, both top line and bottom line. The company does a great job in adding new categories like refurbished, for example. And the company is also under the leadership of Maite made a very nice transition from Margaret, it was successful, Margaret in her leadership to Maite into the future, and it has gone very smooth. 46,000 partners on the platform, and we increasingly develop the relationship. We talk about logistics viable, advertising viable. So we make bol an even better platform for them to compete with. And we also see that the number of suppliers, the number of partners on the platform is increasing, and we also have a very nice tap into Chinese and Asian suppliers directly on the platform, which gives us a great advantage. You have seen with all the other Chinese players that there is a little bit lower strength because of European regulation on quality and on trading. And that's why also people recognize that bol in its quality assessment, quality and compliance with the European law that they're very much in line and that is for more and more customers and asset. And just look, Fernand, I don't know if it's for your -- for family members or nephews and nieces, just look at the sensational toys catalog over Christmas for Sinterklaas here, 3 million copies out and sensational good toy catalog. So with Black Friday coming up, with Sinterklaas, with Christmas coming up, bol is super prepared for the season, and I'm very confident that we have a very strong run there as well. So yes, we see people investing, making announcements. We look at our own thing and our own strength to see where we can improve both pricing, both value, both logistics and services. And that's why I sound -- and you can hear that. That's why I sound quite enthusiastic, excited about this business. And I'm very proud about the bol team, how they progressed so far. Fernand de Boer: May I do one follow-up on the promotions. Why did you change the strategy there? Why did you do the phasing? Is it simply more to get in Q4 and a little bit less in Q3? Or how does that work? Jolanda Poots-Bijl: Yes, you're referring to the promotions for the U.S., right? Fernand de Boer: Yes, yes. Jolanda Poots-Bijl: Yes, yes, exactly. That promo phasing, as we call it, we're just learning from our promos, optimizing and heading into the holiday season, we shifted a bit of that promo atmosphere into the Q4 quarter based on the learnings we had. But it's also -- don't make too big a thing out of it. It's trending over time. You adjust where you think you can optimize your returns, and that's just what's going on. Frans Muller: And $1 billion price investments, $1 billion price investment for the U.S. in our total Growing Together plan, that is absolutely our commitment, and we are in line with that commitment. Operator: We will now take our final question for today. And the final question comes from the line of Maxime Stranart from ING Bank. Maxime Stranart: I hope you can hear me well. So 2 questions for me as well. Firstly, looking at the U.S., it looks like your comment on Hannaford posting consecutive quarters of growth has disappeared from the release. So I just want to inquire there what has happened with Hannaford precisely. And secondly, looking at Europe, you have decreased your guidance for Profi for full year sales. Anything we should read into it and how it would translate into growth in 2026? That would be all for me. Frans Muller: Yes. So thanks for your engaged question on our beautiful brand, Hannaford in the Northeast. [indiscernible] but also this quarter was another consecutive quarter of same-store sales increase. So strong as they go and going strong. So don't have any second thoughts. A few things on Profi, Jolanda? Jolanda Poots-Bijl: Yes. You asked about the sales profile for this year on Profi. That has been impacted more by macroeconomic factors than anything else. It's the VAT being increased with 2% in Romania, which, of course, impacts sales. And the food vouchers in Romania, the timing of that provision to customers has changed and impacted sales somewhat. There was also a small increase -- a small impact because the 87 stores that we are selling is related to the transaction with Profi happened somewhat earlier than we projected. So it's now in November, and we planned for it in January, which is all good, of course. Is there anything that would impact our structural guidance on the growth for Profi? Not at all. So it's macroeconomic and some of the stores that needed to be sold earlier in timing than we predicted earlier onwards. Frans Muller: Just quickly ChatGPT the data -- data on Hannaford, so super proud. It was the 17th consecutive quarter for growth -- comparable sales growth for Hannaford. So that is then also that data point with you. Operator: We have a follow-up question from Rob Joyce, BNP Paribas. Robert Joyce: Just a couple of quick follow-ups. I think -- sorry if I just missed it in that last Profi answer, but are we still expecting Profi from 2026 to be back in a position of kind of expanding profitability and growing there? And then the second question was, I just had a few questions about the U.S. slowing in the most recent months. Have you seen any sort of change in the trajectory of the U.S. business there? Any underlying weakness in the consumer? Frans Muller: Yes. On the U.S., thanks for that question. I think we gave you already the data that we are -- if you look at Nielsen numbers that although the market is a little bit softer that we did better than the market. So we gained share. And inflation in U.S. at the moment is roughly in 2.5% food at home. So I think we see that we are very well positioned there, but the market was slightly softer. But in that slightly softness, we gained share. Jolanda Poots-Bijl: And the question around Profi, we're very happy to have Profi in our family of great local brands. We will invest in opening up stores going forward intensely because we really see that there is an opportunity for Profi to grow going forward. And as we stated earlier, Profi is expected to come into the average European margin levels in 2 to 3 years going forward with the synergies that we are now realizing and that will impact 2026 positively already. Frans Muller: And synergies come in better than planned, by the way. So also the teams are very successfully working on that. Jolanda Poots-Bijl: On a positive note by our CEO. Frans Muller: No. But I think we have a little bit of experience with integrating businesses, I think. And it's never easy. It's the cultural component, the people component, the network, the synergies. And at the same time, also keep on accelerating your growth because Profi is a growth machine for us and 200 stores in the last years. That means also as from '26, we start growing again fiercely because that market gives quite some opportunities, especially with the business model of Profi and in the rural areas. That's why this is strategically the right move. That's why we're close to EUR 5 billion in Romania in sales #2, and that's the planning we have. Operator: Thank you. I will now hand the call back to JP for closing remarks. John-Paul O'Meara: Thank you very much, Sharon, and thank you all for joining us today. We look forward to catching up with you in the coming weeks. And just to reiterate, a happy holidays to everyone that we don't see between now and the end of the year. Jolanda Poots-Bijl: Thanks for joining us. Frans Muller: Thank you. All the best to you. Have a good week. Bye-bye. Operator: Thank you. 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 Flywire Third Quarter 2025 Earnings 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, Masha Kahn, Vice President of Investor Relations. Please go ahead. Maria Kahn: Thank you, and good afternoon. With us on today's call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Cosmin Pitigoi, Chief Financial Officer. Our third quarter 2025 earnings press release, supplemental presentation, and when filed Form 10-Q can be found at ir.flywire.com. During the call, we'll be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We'll also be discussing certain non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro. Michael Massaro: Thanks, Masha. This quarter reinforced Flywire's leadership as a trusted partner for modern payments. Our results underscore Flywire's strong execution, resilient business model and expanding client demand across markets, supported by macro conditions that were better than expected. We signed more than 200 new clients across our 4 verticals, a clear sign of both the consistency of our execution and the global relevance of our products and platform. Flywire continued to win where it matters the most, winning new clients, expanding existing client relationships, and doing so across verticals and across geographies. Our focus remains on three priorities: optimize go-to-market excellence, accelerate product innovation, and cultivate high-performing teams. And in Q3, we delivered across all three. Our sales, client success and operations teams executed at a high level, keeping us on track to exceed our ARR contract signing goals for the year. Flywire is increasingly the partner of choice for organizations looking to modernize complex payment flows, consolidate vendors and drive measurable ROI. Our diversification strategy is delivering results with education growth now extending well beyond our traditional Big 4 markets. More than half of our new education wins this year came from outside those markets, reflecting the strength of our global reach. Within education, our Student Financial Software platform was a major growth driver in Q3 as institutions continue to consolidate all payments with Flywire to improve collections and protect revenue. Our Collection Management solution within SFS has helped institutions recover more than $360 million in past due tuition, deliver $72 million in pre-collection savings, and preserve over 177,000 student enrollments, demonstrating our impact on both institutional health and student success. Our value proposition is clear and differentiated. We bring together industry-specific software and deep expertise in payments into one integrated offering. This unique combination positions Flywire as a comprehensive solution partner with our ability to solve the most complex domestic and international payment challenges often becoming the entry point to deeper client relationships. In our travel vertical, client momentum remains strong, helping to grow this business into a meaningful contributor to total company revenue. Our integration of Sertifi continues to unlock new workflows, cross-sell opportunities and incremental monetization potential. In health care, revenue growth approached our organic corporate average in the third quarter, driven by recent wins with large enterprise customers. B2B continues to grow at multiples of overall company revenue growth, reflecting strong demand for our invoice-to-cash capabilities. Product innovation remains a key priority as we continue to leverage technology across the business to deliver results. Our teams are using AI to drive greater scale, efficiency and precision. From automated prototyping and code conversion that reduce migrations from months to weeks to data-driven insights that enhance the client experience. We are also seeing growing interest from clients in expanding their use of Flywire solutions as they look to streamline more of their payment operations through a single trusted partner. Our success reflects years of investment in go-to-market execution, product innovation and a culture built on relentless client focus. Flywire's evolution from a cross-border payments company to a diversified global software and payments leader is well underway, and the opportunity ahead is significant as we aim to deepen client relationships, expand market share and drive durable high-margin growth. Finally, none of this happens without our FlyMates. Their creativity, discipline and focus on results drive our performance and client success every day. Together, we have built a culture that values accountability, impact and growth, reflected in high engagement and talent across our teams. Flywire is built for the long term, resilient, scalable and positioned to lead. With that, I'll turn the call over to Rob to share more on our operational performance for the quarter. Rob Orgel: Good evening, everyone. We are delighted to share the results of a strong third quarter of 2025, reflecting Flywire's resilience, disciplined execution, and continued global competitive momentum, all amid a macro backdrop that was better than expected. Starting in global education, we continue to see strong momentum driven by strategic upsells, geographic expansion and deepening partnerships. We just completed our peak quarter with excellent execution, helping clients streamline payment operations and delivering great payer experiences. Our deeper integrations with China's UnionPay, Indian loan providers and agent networks are enhancing retention and engagement across key markets. Now, let me zoom into key geographies. Starting with our largest market, the U.K., we continue to see strong demand from international students choosing to study in the U.K., and Flywire is expanding its presence with several new client wins, including Heriot-Watt University and Royal Holloway, together representing roughly 39,000 students with around 11,000 international students. We also signed a new StudyLink deal with De Montfort University, further strengthening our regional footprint. Momentum continues with our U.S. federal loans disbursement offering for U.K. universities. Seven new U.K. clients signed this quarter, bringing the total to 15 since launch. Our SFS pipeline for Agresso Unit4 institutions remain strong with all 3 development partners for our Unit4 integration now live and delivering excellent results. This differentiated capability positions Flywire as the only comprehensive platform serving both domestic and international payment needs, enabling us to win broader institutional relationships and capture significantly greater wallet share. Our U.K. strategy focuses on deeper integrations that position us as the sole channel for all significant university domestic and international payment flows, either through a unified payment portal powered by our SFS solution or by integrating into existing portals for tuition and accommodation billing. The U.K. represents approximately 1/4 of Flywire total revenues and grew above the organic corporate average growth rate in the third quarter. We see substantial runway ahead across three key areas. First, domestic payment expansion. With only 12 U.K. clients currently at what we believe to be 90% plus Flywire adoption, there is considerable room to capture a higher share of payment flows at existing institutions. Second, we see runway for SFS for finance systems integrations. A large portion of U.K. universities manage student invoices in systems like Unit4 without student-facing portals. Flywire's SFS fills this critical gap, enabling real-time payment reconciliation and consolidated billing across all student charges. Third, we see runway for optimizing international payment flows. Billions in tuition payments currently appear as domestic transactions, despite being funded by parents abroad. By improving the payer journey, we can shift more of these flows to cross-border transactions through our network, capturing higher-margin revenue. Note that we've included additional detail on U.K. strategies in the earnings supplement. Turning to the United States. Financial pressures continue to weigh on U.S. educational institutions. As schools look to improve cash flow and efficiency, demand for Flywire's full suite of solutions continues to accelerate. We are deepening partnerships with leading universities. Notably, Penn State University is expanding its relationship, now adopting our full suite SFS platform for billing, payments, payment plans and third-party invoicing. Our Collection Management module of SFS also helps institutions streamline receivables and reduce administrative workload with clients like DePaul University calling Flywire invaluable to their business. This expansion reflects the value Flywire delivers in improving financial operations and enhancing the payment experience for students, families and staff. And importantly, opportunity for growth isn't just coming from long-standing relationships. There are more than 3,000 U.S. institutions that aren't Flywire clients, and we've recently signed 2 full suite SFS deals with community colleges that don't have many international students, but want to modernize their domestic payments. For them, it will bring the full benefits of SFS, and for us, it's an emerging path to securing more software and domestic revenue in a large and mostly new segment for Flywire. Our SFS pipeline remains very strong. Through Q3 2025, we've signed more than double the ARR versus the full prior year cohort. We just hosted our second annual Fusion conference, bringing together nearly 100 U.S. higher education institutions. When finance leaders from universities get on stage and talk about the ROI achieved through Flywire suite of products, it sends a strong message to the broader market. Universities must embrace change and technical innovation to stay competitive. Turning to Australia and Canada. In Australia, Q3 performance was significantly better than expected, growing above our organic corporate average growth rate during the quarter, driven by resilient demand at top universities that continue to attract students despite visa fee increases. New and upsell wins through StudyLink, including Swinburne University and Flinders University, further strengthened our position. StudyLink is helping institutions accelerate offer letter turnaround times and enhance the student experience. As a result of our expansions with StudyLink, alongside our direct selling efforts, Flywire's higher education market share in Australia's total education payment sector has expanded significantly over the past 12 months. In Canada, existing Flywire clients that previously used our platform, primarily for cross-border payments, are increasingly expanding into domestic payment flows. This trend is helping diversify revenue and offset softer international volume. During the quarter, Flywire successfully enabled domestic processing for clients such as Fanshawe College and Georgian College, deepening relationships with these institutions and broadening payment coverage across their campuses. Moving on to our progress outside the Big 4 markets. Flywire continues to see students applying to a broader range of study destinations as students hedge against potential policy changes in traditional English-speaking markets. As a result, we anticipate sustained growth outside the Big 4, Australia, Canada, the U.K. and the U.S., with strong momentum already underway across APAC and EMEA. These regions are driving diversified expansion as institutions attract more international students and modernize their payment ecosystems. In Asia, Flywire is accelerating growth in Singapore, Japan and South Korea. In Singapore, our OneDoor model continues to gain traction with Nanyang Technological University, or NTU, and the Singapore Institute of Management, or SIM, both live on Flywire for domestic and cross-border payments. In Japan and Korea, we are expanding beyond language providers into public higher education institutions, aligning with government initiatives to significantly increase international student enrollment over the next several years. In EMEA, Flywire continues to broaden its education ecosystem, deepening its footprint in higher education and adjacent segments such as private K-12, sports academies and student housing. A landmark partnership with Inspired Education Group, one of the world's largest private K-12 networks, underscores our ability to combine local expertise with global scale to manage complex cross-border payment flows. Beyond academia, Flywire is enabling leading sports academies and student housing providers across Europe to manage tuition, training and living expenses through a single seamless platform. Across these regions, Flywire's combination of local market expertise, integrated technology, and trusted partnerships continues to drive strong diversified growth and reinforce our leadership in international education payments. Moving on to our travel vertical. The travel vertical continues to grow through targeted client integrations and tailored payment solutions. To give a few client examples, Quasar Expeditions integrated Flywire with PEAK 15, simplifying bookings, payments and reconciliation while offering transparent multicurrency pricing. In Indonesia, BaliSuperHost went live with Flywire, benefiting from lower card fees, local currency payments and dynamic 3DS to boost international bookings. In Australia, Southern World's DMC integration reduced FX fees, highlighting Flywire's global payment capabilities. Bigger picture, travel delivered a standout quarter, significantly exceeding Q3 bookings plan and achieving strong year-over-year revenue growth, driven by continued momentum in destination management companies and luxury accommodations and robust performance across APAC, supported by new wins in Thailand, Australia and Indonesia. Moving on to Sertifi. Sertifi provides hotels and travel operators a streamlined way to capture incremental revenue by reducing payment friction and operational inefficiencies. It is designed to decrease turnaround times on payments and contract signatures, lowering reconciliation and manual data entry, reduces chargebacks, and improves transparency between sales and finance teams. Features like secure online portals, ACH payments, fraud prevention, multicurrency support and automated reminders enhance efficiency and the guest experience. As an example from among many client wins, one key upsell was a master services agreement with Aimbridge, the world's largest property management company covering over 1,400 locations, a strong validation of Sertifi's value. Our strategy to expand globally and cross-sell is progressing with Flywire scale reassuring enterprise clients like Marriott, Hilton, Hyatt, IHG and Choice that we can drive revenue growth, operational improvements and broader adoption outside the U.S. I'd also like to provide an update on health care. Health care continues to build momentum, as we expand our integrated payments, financing and affordability platform. A key driver of growth during the quarter was the early ramp of our new payment processing capabilities on behalf of Cleveland Clinic, a previously referenced new marquee client that we can now share the name. With nearly 6 million patient visits per year across more than 200 locations worldwide, Cleveland Clinic is now live with initial phases of implementation in the U.S. and the U.K., including MyChart payments with point-of-sale rollout underway across its U.S. locations. We're also seeing strong new client activity. This quarter, Cook County Health selected Flywire's health care affordability and integrated payment solution to consolidate vendors, accelerate cash collections and improve yield. These wins underscore the strength of our value proposition, and our ability to drive measurable financial and operational outcomes for leading health systems. Our new payment processing offering will operate at lower gross margins than the rest of the health care solutions, but it is helping us win deals, establish scale and add long-term revenue durability. In B2B, Flywire has evolved beyond a global payments network offering into an all-in-one invoice-to-cash platform with leading integrated payments capabilities. We unify receivables and invoicing across more than 140 currencies, provide transparent pricing, flexible payment options and seamless ERP integration backed by dedicated support and compliance teams. At the same time, the software plus payments proposition is so compelling that it is well-suited for entirely domestic businesses as well, and we are winning nicely in those opportunities as well. It's been 1 year since we acquired Invoiced, a move that opened the door to over $1 billion in payment volume opportunities within the Invoiced installed base. Since then, we've delivered meaningful synergies by combining Invoiced's automation and billing tools with Flywire's global payment rails, driving strong ARR growth across clients. A great recent example of success with Invoiced this quarter is KnowBe4, a global leader in human risk management operating in more than 200 countries. With Flywire's Invoiced platform, KnowBe4 expects to achieve over 95% auto reconciliation, centralized global billing and enterprise-grade compliance. One year later, we feel really good about Invoiced and how it has served as a catalyst accelerating Flywire's transformation into a leading global invoice-to-cash and payments platform. It's another great example by Flywire of software drives value in payments. I will now pass it over to Cosmin to talk about our financial performance and outlook. Cosmin? Cosmin Pitigoi: Thank you, Rob, and good evening, everyone. Today, I'll provide an overview of our third quarter results and share our outlook for the fourth quarter. We exceeded the top end of our revenue and adjusted EBITDA guidance, supported by better-than-expected macro conditions across key education markets, including Australia and the U.S. as well as a stronger peak in the U.K., upside in B2B, early go-lives and operational excellence in our payments network. As a result, we're raising our full year revenue and EBITDA guidance. Turning to our performance in the third quarter. Revenue less ancillary services was $194 million in Q3, representing a 26% year-over-year FX-neutral growth or 28% on a spot basis. Sertifi contributed almost $13 million in Q3, adding approximately 8 points of growth. Our Q3 results, once again, exceeded expectations, demonstrating our ability to thrive in a dynamic macro environment. This performance was driven by better-than-expected macro conditions across Australia and the U.S., a stronger peak in the U.K., along with continued robust underlying growth across the rest of the business. To further unpack the drivers, Australia significantly outpaced organic corporate average revenue growth in Q3 as resilient demand for top universities, new client wins, and upsells drove substantial market share expansion despite an increased $2,000 visa fee and soft caps affecting broad visa trends. The U.K. market had a strong peak season, driven by demand from India, China, the U.S., South Korea and Mexico. Early wins and integrations like Tribal ERP helped outperform visa trends. Some Q4 activity possibly shifted into Q3 due to the extended October Golden Week holiday in China, so a more normalized view of growth comes from combining Q3 and Q4 results. Our U.S. education business exceeded our expectations with first year international payers declining by slightly less than the 20% visa decline that we anticipated. The trends in the U.S. underscore solid demand for undergraduate programs in the past academic year, especially at academically rigorous institutions. However, trends were uneven across different corridors. For example, we saw a strong performance in China, Lat Am, South Korea and Hong Kong, but weaker numbers from Indian students, which could be attributed to visa issues. Canada higher education headwinds shaved 2 points of growth due to continued weak demand. However, this weakness was baked into our guide, and we'll continue to remain prudent in our expectations for Canada given weak demand, especially from Indian students. B2B, health care and travel were all slightly stronger than our expectations, thanks to go-lives and stronger-than-expected ramp-up in volumes. Fueled by a robust education peak season, total payment volume climbed to $13.9 billion, 26% higher year-over-year and almost double the average of the last 2 quarters, highlighting the growing strength and scalability of our platform. From a modernization standpoint, our spreads have remained relatively consistent and in line with the last several reporting quarters. Operationally, we're scaling smoothly without proportional cost increases. Our contact rate dropped in the mid-teens year-over-year, meaning fewer escalations despite processing significantly more volume. This efficiency is driven by AI automation, which pushed our self-service rate to 41%, up 28% year-over-year. We're successfully decoupling growth from support costs, protecting margins as we scale. Breaking down our revenue streams, transaction revenue is largely derived from fees tied to payment volume, while platform and other revenues mainly reflect software subscription and usage-based fees. Starting with transaction revenue, we saw a 24.4% year-over-year increase, approximately 4 percentage points of which were attributable to Sertifi. Transaction-related payment volume was up 30.9%, 3 percentage points of which were attributable to Sertifi, primarily in our education vertical as well as travel. Platform and other revenues increased 56% year-over-year, primarily driven by the platform fees that do not carry payment volumes, specifically revenues associated with Sertifi, which were $7.8 million and improving growth in our health care revenues. Platform-related payment volumes of $2.4 billion were up 9% year-over-year, lower than platform revenue growth as some of our software revenues do not have associated TPV volumes. Adjusted gross profit increased to $127.5 million during the quarter, up 25% year-over-year. Adjusted gross profit margin was 65.7% for Q3 2025, which is a decline of about 170 basis points, compared to Q3 2024. Our business mix continues to exert downward pressure driven by travel and B2B verticals growing faster, which have higher credit card usage, along with domestic transaction growth in the education vertical. Foreign exchange fluctuations during transaction settlements, including the positive effect of less than $1 million seen this quarter in gross margin are largely counterbalanced by FX hedges recorded in operating expenses, softening the overall impact on adjusted EBITDA. Adjusted EBITDA increase was approximately $5 million above the midpoint of our guide and grew to $57.1 million for the quarter, compared to $42.2 million in Q3 2024. Adjusted EBITDA margin was up 155 bps year-over-year, beating the high end of our previous guidance range. We continue to balance top line growth with long-term productivity and margin expansion by focusing on optimizing operations and support functions. In Q3, sales and marketing spend was $32 million or 16.6% of revenue, improving approximately 120 bps year-over-year as we maintain go-to-market investments in travel and B2B while streamlining for stronger LTV to CAC performance. G&A spend was $27 million or 13.9% of revenue, improving modestly year-over-year, but meaningfully lower as we compare year-to-date trends driven by operating leverage and continued investment in automation and systems, including Sertifi integration. Technology and development spend was $12 million or 6.4% of revenue, improving approximately 160 bps year-over-year as we scale our platform and enhance engineering productivity. While the majority of the gross profit flowed through to adjusted EBITDA this quarter, we continue to drive operating leverage while making targeted reinvestments in platforms, including Sertifi integration, systems and automation initiatives, data architecture and analytics and go-to-market expansion. To close out the income statement, GAAP net income in Q3 was $29.6 million, down roughly $9 million year-over-year due to lapping of a onetime tax benefit in the third quarter of 2024 and timing of tax provision reversals. We expect full year GAAP net income to remain positive around the high single-digit millions. Our balance sheet remains strong. We ended the quarter with $212 million of cash, cash equivalents and investments, with just $15 million of outstanding debt, we intend to pay down soon. Turning to capital allocation, we generated strong cash flow in Q3 and repurchased 0.8 million shares for approximately $10 million under our share repurchase program, keeping total fully diluted share count within our guided range below 3% for the year. Having passed the peak of our post-IPO stock-based compensation vesting schedule, stock-based compensation expenses as a percent of revenue are trending down on track to be approximately 12% for the year. We expect stock-based compensation growth to remain below gross profit margin growth as the business continues to scale in the near term and expect to continue managing dilution in a disciplined manner. Now shifting towards guidance for Q4 2025 and our early thoughts around next submission cycle for the education vertical. Some context as we enter Q4 2025. As noted previously, tuition payment patterns can shift slightly from year-to-year around major holidays. In 2025, the October Golden Week holiday extended to 8 days due to the overlap of China's National Day and the mid-autumn festival, which was longer and later than in prior years, causing some payment activity to be concentrated in Q3 prior to the start of the holidays rather than in Q4. We do not expect this temporary shift in payment timing to have a material effect on our overall annual results, but it may impact comparisons between the affected quarters. For a clear and more normalized view of growth, it's best to evaluate performance across the second half, combining Q3 and Q4 results. Hence, for full year 2025, we expect FX-neutral revenue to grow in the range of 23% to 25% year-over-year, including Sertifi. Excluding Sertifi, we expect revenue less ancillary services growth in the range of 14% to 16% year-over-year. For 2025, we're updating our full year adjusted EBITDA margin expansion outlook to a range of 330 to 370 bps. This reflects OpEx efficiencies and cost discipline across the organization, supporting a trajectory towards sustained GAAP net income profitability growth as we move into next year and beyond. On FX, with weaker U.S. rates as of September 30, we now expect the FX impact on full year revenue to be around a positive 1.5% and about 3% for the fourth quarter. Turning to Q4 2025. We expect FX-neutral revenue to grow 23% to 27% year-over-year on a reported basis or 13% to 15% when excluding Sertifi, and expect adjusted EBITDA margin to increase 50 to 200 bps year-over-year. On gross margin expectations into Q4, just a couple of dynamics to note. First, last year's Q4 gross profit margin benefited from $2.7 million in FX on settlement gains, which should be normalized for a comparable view. And secondly, we previously indicated gross profit margin would decline in the range of 100 to 200 bps headwind annually due to mix. As we see our newer verticals growing faster along with strong domestic expansion, these mix shifts are expected to create further margin pressure towards the higher end of that range. Looking ahead to 2026. While we are not yet guiding and we are still going through our usual detailed planning process, we wanted to provide some preliminary thoughts. Agents tell us that students are applying to more destinations, but demand from Indian students for U.S. and Canadian institutions remain under pressure. We're gaining great traction with clients outside the Big 4. However, it is important to note the tuition differences across different geographies. Macro-related headwinds are expected to persist, driven mainly by U.S. policy uncertainty, creating a mid-single-digit pressure into 2026, relatively similar to our current full year and Q4 2025 exit growth assumptions. We also expect both Canada and Australia revenue growth to run below organic corporate average, with Canada particularly impacted by ongoing demand softness. In closing, we remain agile and disciplined in managing our costs while leveraging the strength of our diversified business model. This diversification allows us to balance investments, allocate capital to the high ROI projects, and scale the business even amid volatility of headlines and government policies. We're confident in our differentiated products, the breadth of our growth opportunities across all verticals, and our ability to deliver meaningful and sustained shareholder value. I'll now turn it back over to operator for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Cris Kennedy with William Blair. Cristopher Kennedy: Rob, you mentioned 12 clients in the U.K. are at 90% penetration. Can you just provide a little bit of more perspective on that metric relative to the U.S. or any other market you want to talk about? Rob Orgel: Yes. Cris, good to hear from you. So what we've described in our U.K. strategy for some time now has been about trying to move all the money. And so we have a set of potential methods that we use for achieving that objective. You can see there's a slide in the earnings supplement that sort of outlines how all that works. And thus far, we've managed to get at least 12 clients in our view over that mark. And we view that as sort of one of the core elements of our strategy going forward, and it's a strategy that works both for our clients and for us in that by consolidating with us, they get all the benefits of our platform, serving their efficiency, their administrative efficiency, they get cost savings, and we deliver a superior quality experience for the students. So whether we accomplish that through SFS, whether we accomplish that through things like integration through Tribal, it's all part of that same objective of moving all the money, and we see a lot of opportunity to do that for more clients. Cristopher Kennedy: Got it. And then just as a follow-up, Cosmin, can you just talk about the preliminary initial outlook for 2026 again? I think you talked about mid-single-digit pressure relative to the fourth quarter run rate? Or is that consistent with the fourth quarter run rate? Cosmin Pitigoi: Yes. Thanks, Cris. So pretty consistent with the fourth quarter, I would say, in general, with that mid-single-digit growth -- impact to growth. I would say, however, think of that as more coming from the U.S. is obviously, Canada is going to be still somewhat negative, but not as big of an impact. So we feel that the mid-single digit with kind of that exit growth rate that you see in our Q4 guidance around that 14% is the right way to think about it. But think of the mid-single-digit headwind is more U.S. with Canada and Australia being still negative, but a little bit less of an impact in addition to, again, we're watching the U.K. numbers. But as we think about -- as you think about the mid-single digit, we feel that it's quite a prudent approach, and we feel good about sort of where we are in terms of adjusting for what we're seeing in the environment out there. Operator: Our next question comes from the line of John Davis with Raymond James. John Davis: Mike, I kind of want to follow up a little bit on Cris' question, but just taking a big step back, it feels like we're past peak geopolitical headwinds, yet you're kind of implying similar headwind in '26 versus '25. Maybe just talk a little bit about that. What's conservatism versus what are you worried about in the U.S.? Obviously, there's a lot of unknown, but it does feel like we're hopefully over the hump. But would just love to square being past geopolitical headwinds with a similar headwind to growth in '26. Michael Massaro: Yes. JD, thanks for the question. I mean I think obviously, as Cosmin has always said, we're trying to be very data-centric in how kind of we look at the future and have a level of prudence in it. I think if you look at Australia and the U.S., there are 2 good examples of where headlines didn't quite jive with what we saw play out in those 2 markets, right? Things were more positive than probably what the headlines looked like a few months back. If you look at Canada, I think it played out, obviously, over the last 18 months in a very similar way, quite negative. And so I think we've seen both sides of it. I said if you just start looking out, right, from my perspective, over the next multiple years, like we're really excited to keep building the company, right? We just see a huge opportunity. I think we've proven our ability to navigate complex times between COVID, between some of this macro geopolitical risk in the last 18 months. We have a diversified business, multiple industries, multiple sectors, products, revenue streams, and we just continue to win. So I think as I sit here, I just think we keep continuing to prove we can navigate this environment. We're going to do so with a level of prudence per what Cosmin said. But I couldn't be more happy with how things are going and the opportunity I see ahead. John Davis: Okay. And then just new wins, pretty consistent 200 clients, plus or minus a quarter here. It feels like that's been the run rate for a while now. So clearly, having success. But Mike, just talk a little bit about -- I'm just trying to think things forward. It feels like NRR should probably get a little bit better as geopolitical headwinds pass. Maybe talk about new logo growth. Are these -- as we think about kind of ACV or size of client, are there any kind of material changes there, maybe where are those 200 new clients concentrated from a vertical perspective? Rob Orgel: JD, it's Rob. I'll step in on this one. The growth continues to be strong and diversified. So if you look at this quarter, you'd see that EDU beat out travel in ARR signed, but travel beat out EDU in total deals signed. If you look across geographies, they're diverse in both. We called out that more than half the wins in the EDU space were outside the big 4 markets, but that obviously means there's lots of good traction inside the Big 4 as well, some of which we called out in talking about SFS and similar wins. If you look over on the travel side, particular strength across APAC, across EMEA, across DMCs, across accommodations. So again, nicely diversified. Average deal size is going up over the comparable prior period. We feel very good about our achievement against our ARR goals for the year. So overall, the team continues to execute very, very well, nicely diversified wins across all the verticals. John Davis: Okay. And I'll squeeze one more in for Cosmin, if I can. I think year-to-date incremental margins have been roughly 40%, Cosmin, before the fourth quarter guide by our math is incrementals of roughly 20%. Are there any sort of incremental investments planned in the fourth quarter or anything seasonally that we should think about as we think about fourth quarter margins? Cosmin Pitigoi: Yes. I think, Dave, stepping back, I look at the full year margins, incremental margins, as you said, sort of being well above that 30% and as you know, Q3, Q4, there is seasonality. But in the first half, obviously, we were very prudent as we looked at OpEx and investments given the macro. And so as I said in my prepared remarks, we've invested in targeted ways in Q3. But as you look ahead in terms of a normalized kind of incremental margins, again, that being EBITDA over revenue. Q3 is probably a good way to look at it. So think of it as kind of in the mid-30s kind of range looking ahead and also for the year in terms of kind of where we are in terms of normal incremental margins. And again, with OpEx being very sort of disciplined as always, growing well below what I look at as gross profit growth is what I compare to. So that's the way I sort of look at it is OpEx to gross profit growth to ensure we continue driving that sort of mid-30s incremental margins growth. Operator: Our next question comes from the line of Nate Svensson with Deutsche Bank Securities. Christopher Svensson: Nice results. I wanted to ask about SFS. Obviously, continues to chug along. I think I heard 7 new clients signed in the U.K. I think in the past, you said each of these should be maybe in the low single-digit millions of annual revenue. I guess my question is more just on the time it takes to implement these wins and get them to ramp. I guess, for the deals you just announced, do you have to wait until the next academic year for them to start hitting the P&L? Or can they go live quicker than that? Just understanding those dynamics would be helpful. Rob Orgel: Rob here. So let me jump in. Let me first just start with a couple of numbers just to make sure we level set on sort of the deal counts. So for the U.S., we're at 11 SFS for the year. Some of those are live, some of those continue and will ramp either later this year or into next. In the U.K., we have 4 SFS clients live at this point. And we're -- what I announced on this call was the live count for the U.S. loan disbursement product. So that's a different product that helps support our U.K. universities. So in terms of average deal size, what we always talk about is the opportunity to grow at a given institution. So you'll see in the earnings supplement, there's a slide there that talks about the gross profit multiplier that these schools all represent. And so I think the last part of your question, the timing of that is often going to focus around where those semester and due dates are. So our goal and typically our clients' goal is to get live comfortably ahead of whatever their next peak or their next enrollment period is going to be. Just like no retailer will launch a new platform in the middle of like Christmas holidays, a school wants to get a platform in ahead of that peak period. So that's what we're always working towards and have been very successful in doing that. So what you'd see from those next batch of deals and things that we do in the future, we'll always be working to get those live in time for typically their next peak period. Christopher Svensson: That's super helpful. Appreciate it. I guess for the follow-up, this is going back again to the macro, and I know we've touched on it on a bunch of calls. But I guess I just want to understand the mechanics of the flow-through, how lower international students coming into the U.S. or any other particular country in 1 year impacts the financial metrics for Flywire in the outer years, right? So maybe some sort of breakdown or unpacking of the revenue impact to your model from first year students versus second, third or fourth year students, just how that flows through, how we should think about things like NRR, stuff like that as we move forward and as one of the prior questions implied, hopefully get past the worst of these macro headwinds. Cosmin Pitigoi: Yes, it's Cosmin. So let me try to approach that assume from a U.S. perspective. What we've told you before is if you look at U.S. international revenue, call it, roughly $80 million, roughly just half or less of that is first year. So as we look at it from new cohorts versus existing, that gives you a sense for the dynamics there. And so when we assume for this year, for example, before that 20% decline, if that continues into the future, as you can imagine, some of that impacts the second, third and fourth year and so forth, graduating classes. However, in that mid-single-digit headwind that I mentioned for this year, but also into next year and sort of looking at Q4 exit, that already basically accounts for that graduating class being smaller as that kind of decline flows through. So we've already accounted for that and actually assumed an even larger decline than that into next year. So we've already taken that view into the numbers and still feel pretty good again that the rest of the business is growing fast enough to offset that, as you can see, for example, for the Q4 guide in that 14% and then full year this year on the mid-teens growth. But again, that -- the way we look at it is, obviously, that first year and the graduating classes, we've accounted for that, but that's a little bit of the dynamics there overall. And look, in terms of NRR question, obviously, with where we are in terms of growth in the mid-teens, NRR will be below that. But again, still feel quite good about where we've kind of assumed in terms of being very prudent around the guide overall. And as we look ahead, accounting for all those dynamics, including the future graduating cohorts. Operator: Our next question comes from the line of Dan Perlin with RBC Capital Markets. Daniel Perlin: Nice results here. I wanted to just -- I don't know, maybe reconcile a little bit. So you have 50% of the new education wins that are coming outside of the big 4. And presumably, obviously, those types of transactions might be smaller institutions, maybe not quite the same level of revenues and so forth. But it does sound like you're having a lot of success. Australia was one of the markets you talked about where you're really seeing pretty material market share gains. So maybe can you just help us understand like the maybe weighted average contribution that we should be expecting? Like you've got all these new wins that are coming from maybe smaller markets. But at the same time, it does seem like you're having some pretty material success expanding into these same existing big 4 markets with deeper penetration and kind of wallet share. So just trying to weigh the 2 pieces of that. Rob Orgel: Yes. Maybe I can help a little bit with that. So obviously, we did call out success in Australia qualifies as one of the big 4. But as you focus on outside the big 4, there's a trend out there for sure where people out in the education ecosystem are now calling it sort of the big 10 or even the big 14 as they talk about adding more schools to that group. As we look for us and we sort of define sort of the group that way, we're now sort of talking about what's the mid-teens percent -- low to mid-teens percent of our education business and growing at a pace that sort of significantly exceeds the corporate average. So you're right in calling out that while some of those deals are smaller in sort of their absolute size, we're winning a lot of them, and they are good deals. And as a result, they are contributing meaningfully from what is a good piece of the business and growing very quickly. Michael Massaro: Yes. And Dan, this is Mike. I'd just add that having come back from multiple client events, international trips, there's a lot of good interest in just doing more with Flywire around the world. And so I think we have this huge footprint of clients in many geographies, and it's really up to us to introduce the right software products and the right payment solutions in those markets over time, and there's a lot of room to run in that opportunity. So we're excited we're seeing the traction, but really excited about just what that means for the future road map and growth in the future. Daniel Perlin: Yes. No, it looks great. I guess a quick question for Cosmin. So on the sales and marketing, as we just kind of think about kind of framing the context of what that might materialize into in the current environment versus maybe where you were. So like that number clearly is getting optimized to your point, at 16.6% and you look at that on a year-over-year comparison, it's obviously down. But at the same time, it does sound like you've kind of maybe hit trough periods with some of these international cross-border accounts. You got a lot of new business really across all of your segments. And I'm just wondering how do you think about spending into kind of the go-to-market motion to the extent that maybe we are past the worst? Cosmin Pitigoi: Yes. I think in general, look, we've invested in this area, and we're being very targeted around balancing, obviously, not just the top line and the TAM opportunity with the profitability side. And so as you look at kind of overall the 16.6% this quarter, we're driving productivity in those areas, but that we are definitely investing in the areas in the geos and verticals where we see the opportunity. We talked about domestic U.K. travel outside the U.S. So I would say we're certainly investing in those areas, but we're also being more efficient. One of the investments you saw around data and that architecture analytics allows us to sort of be very, very targeted around how and where we invest. And so that's one of the areas, again, that you'll see us continue to invest in, but also be more efficient. We don't need to grow the same level of gross profit, certainly not with revenue in terms of investments, but yet still find those areas of growth and go after it ambitiously. So we feel pretty good. And the sales team, as you heard, is executing quite well, and the pipeline remains quite large. So we feel pretty good about those investments even with the efficiencies that we're seeing driven in the sales and marketing areas. Operator: Our next question comes from the line of Jeff Cantwell with Seaport Research. Jeffrey Cantwell: I wanted to follow on some of the earlier questions. I want to take another shot. In your education business, the change right now where international students are increasingly attending schools outside your core 4, is that temporary? Or do you think that's the new paradigm going forward? How do you size that opportunity? I'm just curious if you could talk about volumes or revenue as you maybe start to see less international students in the U.S., for example, but those students are now attending schools outside the U.S. Any additional color there would be great. Cosmin Pitigoi: Yes. Thanks, Jeff. So I'll start and then we can see if anyone wants to pile on. But I would say, look, if you look at overall U.S., as I said, about $80 million of overall revenue in cross-border with about half of that being first years, and so we've assumed a decline in that. And I think as you look at our -- my stated assumption for next year, I would assume that, that decline continues to be in that range or larger. Again, we've assumed the other cohorts similarly being impacted. But we do know that those students will generally want to go somewhere else. So we've talked about the demand for other geographies, certainly outside the U.S., but outside the big 4. And we have products and we have a footprint in all those markets. So even with lower tuition in those markets, we feel good that we can, again, capture that volume, but it would be obviously at a different tuition rate. But again, as you look longer term, while, again, we feel good that we've captured those dynamics quite well for this year and into next year. The longer-term opportunity for us is certainly -- remains quite large, again, outside the U.S. As those trends, we feel, especially for Indian students, as we talked about coming to the U.S. and looking at other destinations, for example, specifically, we feel that, that will continue to play out. Michael Massaro: And Jeff, I'd just say, this is Mike. Over the long term, I'd just continue to say student interest in education is not waning, right? As different levels of affluence happen around the world, I think people want to see their children educated. They want to have them get the best education in the best environment in a receptive environment. And so I think there's still strong interest in the United States. I think there's some lack of clarity in some of the policy. And hopefully, as that stuff clears up, you'll see those numbers continue to come in over the long term. And I think at the same time, Flywire is positioned well because we've got clients in 40-plus countries, and we'll be there where students choose to go in the meantime. Jeffrey Cantwell: Okay. Great. Appreciate it. And then on your commentary about 2026, combine that with what you stated about your GAAP profitability going forward, my question is, are you saying that every quarter next year should be GAAP profitable? The reason I'm asking is because typically, your Q2 GAAP net income, for example, is negative just due to seasonality. But I would think perhaps maybe what certifies future impact and the operational excellence you're highlighting today, that now can maybe swing to positive. Do you mind just confirming that or giving us any additional color there? And then lastly, Mike, when you think about the next dollar of investment at Flywire these days, I'm curious where does it go? Cosmin Pitigoi: I'll be quick on my side before I pass it to Mike. But yes, I'd say, look, we're not guiding '26 yet. But for now, I would say still seasonality will lean towards Q3, but we feel good that we'll continue to see increased profitability. And again, we'll update you early next year as part of our regular guidance around the seasonality of that. Michael Massaro: And Jeff, just on your last one for me, we're so fortunate to have the choices that we have, right? We see great areas of opportunity to invest organically in the business. The payback in our go-to-market investments is great. The opportunities our product and tech teams see in developing new products or enhancing new products is strong. Cosmin's called out some of the automation and AI work we're doing to improve and scale the company. Those are all great areas of potential dollar investment for us, makes the choices a little more difficult, but they're all great choices. We continue to obviously think that we're not quite valued properly. And I think that gives us an opportunity when it comes to buyback and Cosmin will be opportunistic there. And then hopefully, people are seeing we just have a track record of finding great targets. And so although not our primary focus, we're focused on integrating in the deals we have. We're still active in looking. And so we've got those hard choices to make across those areas, but we have lots of great organic investments, and that's kind of #1 priority for us. Operator: Our next question comes from the line of Tien-Tsin Huang with JPMorgan. Tien-Tsin Huang: Great sales execution here. I get the question a lot, and I may have -- we may have discussed this before, but just on the domestic payments opportunity within EDU, just remind us of the general ARR there? And what's the pitch to win? I mean is it price? Is it increasingly more payment design that bursar offices are caring about just because of things being complex and you bring something different to the table than what an incumbent solution might offer? Just trying to better understand why -- what your right to win is there. Rob Orgel: Tien-Tsin, it's Rob here. I feel this very strongly having just come back from our Fusion conference where we had clients up on stage telling the story of their experience with Flywire and speaking to the audience there of their peers. And in that conversation, they really focus in on a couple of things, right? There is absolutely sort of back-office efficiency and benefits that they get from software that just reconciles better, offers more flexible payment plans, service their students better in terms of things that help the back office efficiency. But they really do care about the student experience. They really do care about affordability. There's a lot of pressure out there on students and the kinds of things we can do with payment plans really matter. And then you put all of that in the context of our full suite and it's helping them on things like overdue payments, which are served by our collection management platform. And it's all in one integrated sort of modern tech platform. I think what we saw at the Fusion event was folks standing up saying, this was a great experience deploying it. This is a great experience operating it and the benefits are very real for clients. So it is not about sort of the cost saving on the payment. It's about the overall benefit of all the things I just said. Operator: This concludes the question-and-answer session. Thank you all for your participation on today's call. This does conclude today's conference. You may now disconnect.