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One of the most difficult parts of navigating the stock market for investors is the inherent unpredictability. On February 28th, the United States attacked Iran and began Operation “Epic Fury.
Wall Street surged on Tuesday, lifted by speculation about a potential de-escalation in the Middle East conflict that has sent oil prices soaring and fueled fears of global inflation in recent weeks.
Wall Street closed sharply higher on Tuesday, buoyed by growing speculation that the conflict between the United States and Iran could de-escalate, easing pressure on energy markets and global inflation expectations. All three major US indexes rallied after a report indicated that Donald Trump is willing to end the military campaign against Iran even if the Strait of Hormuz remains largely closed.
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The S&P 500 and Nasdaq now offer quality companies at attractive valuations, making broad US equity exposure compelling for long-term investors. Index heavyweights like NVDA, AAPL, MSFT, AMZN, and GOOGL have experienced EPS growth and multiple compression, improving margin of safety.
Microsoft, Nvidia, and other Magnificent Seven stocks are cheaper relative to the S&P 500, but investors remain uncertain about the durability of the AI trade.
March saw a huge spike in volatility due to a new regional war in the Middle East, which triggered a huge rally in energy and other commodity prices. Global recession risks may hinge on whether the Strait of Hormuz gets reopened for transit over the next month.
Operator: Good day, and thank you for standing by. Welcome to the nCino Fourth Quarter and Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Harrison Masters, Vice President, Investor Relations. Harrison Masters: Good afternoon, and welcome to nCino's Fourth Quarter and Fiscal Year 2026 Earnings Call. With me on today's call are Sean Desmond, nCino's Chief Executive Officer and Greg Orenstein, nCino's Chief Financial Officer. During the course of this conference call, we will make forward-looking statements regarding trends, strategies and the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry and global economic conditions. nCino disclaims any obligation to update or revise any forward-looking statements. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call as well as the earnings presentation on our Investor Relations website at investor.ncino.com. With that, I will turn the call over to Sean. Sean Desmond: Thank you, Harrison, and thank you all for joining us today. I want to start by saying how proud I am of the entire nCino team for the results we achieved in fiscal '26 and especially in the fourth quarter. We exceeded our financial guidance across every key metric and delivered an exceptional ACV result, up 17% year-over-year, which we believe was largely driven by customers embracing our AI strategy and product innovation. The team executed incredibly well, and we're seeing the momentum in the market as more prospects are engaging with and choosing nCino and existing customers are expanding and deepening their commitments with us, in large part because of how we are embedding AI throughout the nCino platform. I'll get into the details shortly, but with over 170 customers of all sizes, including global, enterprise, regional and community banks and credit unions having already purchased AI intelligence units as of the end of fiscal '26, we believe nCino is rapidly becoming the de facto AI platform for financial institutions across the globe. For those of you just getting familiar with our story, nCino plays a mission-critical role for our customers and the global financial services market. Financial institutions will continue to struggle with legacy fragmented systems that limit growth, hinder financial performance, restrict their ability to leverage data as a competitive advantage and create poor user experiences. nCino solves these problems with AI-powered intelligent automation on a unified, scalable platform. We are the only platform for managing lending, onboarding, account opening and portfolio management across all major lines of business for financial institutions across the globe. This is why the nCino platform serves as a system of record for the most critical operations of banks, credit unions and IMBs of all sizes in now over 25 countries. Throughout fiscal '26, I talked about the confidence I had in our team, our technology and strategy and our market-leading position. I also said the foundation was in place and that our fiscal '26 performance would come down to execution, including against our AI strategy. This past year's results only strengthen my conviction about what's ahead for nCino as we walk hand-in-hand with our customers into a new era of AI where data, context, guardrails, security, trust and a deep understanding of how financial institutions operate matter more than ever. As banks further embrace automation and think about using AI as an accelerant to do this, they're choosing nCino because nCino is their process. We connect their data, operate as their system of record and enable them to comply with numerous rules and regulations. nCino is an essential Tier 1 mission-critical platform that amplifies their ability to more profitably generate revenues in a regulatory compliant manner. At the start of fiscal '26, I laid out a few strategic initiatives where I believed we had an opportunity to excel with focused execution. I'm very proud of what the team delivered in these areas, and the fourth quarter put an exclamation point on what was a tremendous year for the company. First, in the U.S. enterprise market, we delivered our best sales quarter in over 4 years, which included a mortgage expansion with a top 40 bank and cross-selling commercial to our largest consumer lending customer. Second, in EMEA, we leaned in with new leadership, a new go-to-market strategy and a clear execution plan. We delivered our largest deal of the year with a marquee net new customer win in Austria, and I'm thrilled with the momentum the EMEA team is seeing. I'm also thrilled with the momentum we continue to see in Japan, as highlighted by the fourth quarter signing of one of the largest banks in the world for a commercial lending transformation. I want to congratulate the Japanese team for tripling their total ACV in fiscal '26 from fiscal '25. Third, it's gratifying to see our existing customers continue to validate our AI strategy as they move to our new platform pricing framework to access our growing AI capabilities. We saw expanded commitments from some of our largest accounts, and our ACV net retention rate improved to 112% or 109% organically and in constant currency, up from 106% in fiscal '25. Consistent with what we saw throughout fiscal '26, we closed a number of early renewals in the fourth quarter, including a fresh 5-year commitment from our largest customer by ACV. And those customer commitments go beyond dollars. Critically, they come with trust. More and more customers are choosing to share data with us because they want the insights and benchmarking that only nCino can deliver. Today, almost 500 financial institution customers representing over $11 trillion in assets have granted nCino the right to process their data into a proprietary and anonymized data set, one that powers the development of our products, fuels best-in-class industry insights and sharpens the accuracy of our intelligent services. This proprietary data set that nCino has carefully aggregated and curated for the better part of a decade gives nCino a unique unmatched global perspective on how to more profitably and efficiently operate a financial institution, how work moves seamlessly through the bank, where bottlenecks form, where exceptions happen and what great looks like at scale. We have already put this data set to work through our product called nCino Operations Analytics, which helps customers pinpoint inefficiencies, track cycle times and win rates and benchmark performance against anonymized peers. That benchmarking provides valuable and actionable insights as customers get a true baseline, a clear path to ongoing operational and process improvements and real-time demonstrable ROI as they adopt our AI capabilities. It also informs how we build AI and deploy agents that are practical, relevant, reliable and trustworthy in real bank environments. And it goes a step further. Because of our API foundation and integration gateway, we can seamlessly connect data across a bank's technology stack as well as the key third parties. That broad 360-degree view of a financial institution's customers has been nCino's calling card in the market since we started the company. Before I turn things over to Greg to talk through our financials in more detail, I want to spend a few minutes addressing the elephant in the room as we have all heard the narrative that AI will replace SaaS. For some categories of software, that may very well be true. But the highly regulated business of banking is different and nCino's position and value proposition in banking is different from what you're seeing across the broader SaaS landscape. Bottom line is we believe AI will be a tremendous tailwind for nCino as it becomes central to how financial institutions operate and compete and how we're scaling and operating the company. Here's how we see the world evolving and how nCino fits in. AI is moving quickly from help me write and help me search to help me complete meaningful productive tasks so I can focus on other work to grow my business more efficiently and profitably. And in a financial institution, the work is not generic. It's onboarding, it's underwriting, it's credit reviews. It's monitoring, assessing and managing risk. It's opening accounts. It's work where the data is sensitive, strictly adhering to the rules is essential. Regulatory compliance is nonnegotiable and the cost of being wrong can be extremely high, not only financially but reputationally. To make all this work, AI needs a foundation to run on. In banking, that foundation is the data and regulatory infrastructure nCino provides. That's why we feel extremely confident about our position. We are the system of record and user experience for many of the most important processes in a financial institution. And every capability has been built with regulatory compliance in mind. As AI becomes more capable, that makes our platform even more relevant because AI needs a place where it can safely understand context and then take action in an efficient, controlled, secure, trusted and regulatory compliant way. You'll hear a lot of discussion in the market about AI commoditizing the application layer. We understand why people raise that point because it's undeniable that AI-driven software makes writing code easier and cheaper. But in the highly regulated mission-critical world of banking, deploying that code in a safe and compliant way is harder. Because of this, we believe AI agents actually increase the value of our underlying platform and system of record. An agent can't operate in a vacuum. It needs trusted data, industry context and guardrails, and it needs to be traceable and auditable. And the platform that connects the user to the data and records the actions taken becomes the natural home for these AI-driven experiences. nCino is that platform. All this leads to how we're approaching AI agents. Our role-based agents, what we call digital partners, were designed to work alongside banking professionals inside the nCino platform, guided by what we've learned from almost a 1.5 decades of usage patterns across our lending customer base and what those patterns mean for speed, consistency and results. Now let me connect that strategy to what we're seeing in the business today. First, adoption is real and usage is growing. While much of the SaaS industry continues to debate how best to respond to the agent economy, community, regional enterprise and global banks, credit unions and IMBs are already using nCino's AI capabilities in production today, not just as a pilot or beta, but as part of how they do lending and banking work. Customers are not just buying AI access, they're using it, and we can see that directly in the increasing consumption of intelligence units on our platform, with banking adviser usage up over 25x in March compared to usage in October. For years, we have said that nCino is not only in the software business, we are in the change management business and moving every customer from contract signing to implementation to pilot to using nCino's AI and production as an integral part of the day job is the sole focus of our forward deployed engineering team. We also continue to see the halo effect we talked about before. nCino's AI innovation and product strategy is showing up as a clear differentiator in competitive conversations. I have mentioned over the past couple of quarters that it's helping drive earlier renewals, and it's becoming another reason new customers are engaging with and choosing nCino and current customers are expanding their relationship with nCino. Second, when we talk about AI, we try to keep it simple. We care about outcomes. The question isn't how many features or how many agents exist. The question is, how much time and money did the financial institution save? How much risk was serviced earlier and mitigated and how much did consistency, efficiency and profitability improve, all while helping to ensure the financial institution operates in accordance with various rules and regulations and provides an enjoyable and compelling user experience for its customers. That's why when we look at banking adviser and our digital partners, we focus on practical wins. In the past, a single relationship review meant painstakingly pulling documentation from systems, manually identifying the relevant data points, followed by hours and hours of analysis. With agentic credit reviews, released as part of the analyst digital partner family last quarter, nCino summarizes in seconds what changed, highlights the drivers, cites the underlying data and helps draft the follow-ups. And the work stays inside nCino with the right permissions, the right documentation and the right audit trail. The bank gets faster answers, more consistent reviews and more capacity for higher-value work, like being in front of customers and growing relationships. This focus on outcomes is exactly why we transitioned our pricing model, and I'm pleased to report that as of the end of fiscal '26, we have already moved approximately 38% of our ACV away from seat-based pricing to platform pricing. Third, our data is not just a competitive moat. It is the foundation for a new category of proprietary intelligence capabilities, benchmarking, predictive risk, operations analytics and other capabilities and products you will hear about as the year progresses that we believe will create entirely new value for our customers and new revenue streams for nCino. We strongly believe that proprietary domain-specific real-world data is the most valuable asset in an AI economy and no other company has the data nCino has. And that data moat compounds with every customer we add in every line of business we expand into. Finally, I want to emphasize something that is especially important in banking. Trust. In a regulated environment, close enough isn't good enough. AI has to be deployed in a way that respects policies and data privacy, aligns with the bank's risk tolerance, which varies from institution to institution and produces results both the institution and regulators can confidently rely on. One of our stockholders recently conveyed, they were reminded how embedded nCino is within a bank's internal and external controls, risk management and governance processes when a top 5 U.S. bank explained to them that they have over 500 exemption workflows configured in nCino that guide every deterministic step of the lending process and that they rely on that process to manage risk, regulatory compliance and audit trials. That's why we're building AI into the nCino platform, where our customers already have the industry context, the controls and the ability to measure outcomes over time. As the Agentic operating system for financial institutions, nCino will be the backbone delivering AI with the same compliance guardrails, the same regulatory audit trails, the same institutional policy logic and the same lending decision framework they have grown to trust and rely on. And that's also why we believe our approach will uniquely scale, not by asking banks to bolt generic AI onto complex processes, but by delivering banking-specific AI that reflects how banks actually operate on a platform that has demonstrated time after time the ability to scale to support some of the largest financial institutions in the world. So stepping back, we feel really good about where we are. While still early, we're seeing strong excitement and increasing momentum in AI adoption and growth in usage as measured by intelligence unit consumption. Our sales pipeline looks great, and we believe our AI agents make nCino even more valuable and sticky to our customers because we connect the user, the process and the data in a trusted, controlled, regulatory compliant environment. In summary, we believe the agent economy expands our addressable market. The outperformance against our financial guidance, the acceleration of ACV bookings, the reacceleration of subscription revenue growth and the improvement and strength of our retention KPIs are all reflections of the impact AI is already having on the business, and we're just getting started. As I wrap up my prepared remarks, I want to welcome a new member to the nCino leadership team. I cannot be prouder of how our sales and marketing teams performed in fiscal '26. And to build on that momentum, we are further investing in our go-to-market organization. Today, we are excited to announce that nCino has hired Keith Kettell as our new Chief Revenue Officer. Keith is a seasoned operator who brings deep financial services, enterprise sales, large global company and scaling expertise to the company. We believe Keith's experience and vision are a great addition to the company to help us further accelerate our subscription revenues growth and take nCino to the next level. With that, I'll hand the call over to Greg to walk through our financial results. Gregory D. Orenstein: Thank you, Sean, and thanks, everyone, for joining us this afternoon to review our fourth quarter and fiscal year 2026 financial results. Please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call. Turning to our fourth quarter results. Total revenues were $149.7 million an increase of 6% year-over-year and $594.8 million for fiscal '26, an increase of 10% over fiscal '25. Subscription revenues were $133.4 million in the fourth quarter, an increase of 7% year-over-year and $523.1 million for the full year an increase of 12% over fiscal '25. Organic subscription revenues were $132.2 million in the fourth quarter, up 6% year-over-year and $505.9 million for fiscal '26, an increase of 8% year-over-year. As a reminder, our fourth quarter organic subscription revenues comparison is negatively impacted by an approximately 3% headwind resulting from onetime subscription revenues that occurred in our international business in the fourth quarter of fiscal '25 as the result of a contract buyout. Please see Slide 14 of our fourth quarter earnings presentation for additional details on the components of our subscription revenues over performance. International total revenues were $32.9 million in the fourth quarter, down 1% year-over-year or down 6% in constant currency. International total revenues were $131.5 million in fiscal '26, up 13% year-over-year or 11% in constant currency. International subscription revenues were $28.4 million in the fourth quarter, up 1% year-over-year or down 4% in constant currency in light of the difficult comparison from the onetime contract buyout last year previously noted. International subscription revenues were $109.5 million in fiscal '26, up 19% year-over-year or 16% in constant currency and 5% organically. We had our largest international gross bookings year in company history and with ACV as a leading indicator of future subscription revenues growth, we look forward to our international subscription revenues growth rate once again being accretive. Professional services revenues were $16.3 million in the fourth quarter, a decrease of 1% year-over-year. Full year professional services revenues were $71.6 million, flat year-over-year. As we have previously highlighted, we are emphasizing professional services gross profit growth over professional services revenues growth and expect to see this reflected within our financial results by the second half of fiscal '27 due in large part to our ongoing initiatives, leveraging AI to accelerate our implementations. Non-GAAP operating income for the fourth quarter of fiscal '26 was $34.7 million or 23% of total revenues compared with $24.4 million or 17% of total revenues in the fourth quarter of fiscal '25. Please see Slide 14 of our fourth quarter earnings presentation for additional details on the components of our non-GAAP operating income over performance. Non-GAAP operating income for the full year was $129.4 million or 22% of total revenues compared with $96.2 million or 18% of total revenues in fiscal '25. Non-GAAP net income attributable to nCino for the fourth quarter of fiscal '26 was $42.8 million or $0.37 per diluted share compared to $22 million or $0.19 per diluted share in the fourth quarter of fiscal '25. Non-GAAP net income attributable to nCino for fiscal '26 was $122.7 million or $1.07 per diluted share compared to $84.5 million or $0.72 per diluted share in fiscal '25. As expected, churn year-over-year continue to trend down towards historic norms and settled to a 3-year low in fiscal '26 of $18.2 million or 4% of prior year subscription revenues. We ended the quarter with cash and cash equivalents of $88.7 million, including restricted cash. Free cash flow was $12.5 million in the fourth quarter of fiscal '26, up from negative $10.4 million in the fourth quarter of fiscal '25. Free cash flow for fiscal '26 was $82.6 million up 55% compared to $53.4 million in fiscal '25. We repurchased approximately 1 million shares of our common stock in the fourth quarter at an average price of $25.84 per share for total consideration of $25 million under the $100 million repurchase authorization announced on December 8, 2025. When added to the stock repurchases made through the third quarter last year, we repurchased a total of approximately 5 million shares of our common stock in fiscal '26 at an average price of $25.18 per share for total consideration of $125 million. In addition to the $75 million that remains available under the December 2025 share repurchase authorization, today we announced a $100 million accelerated share repurchase program. We expect to fund this repurchase program with available free cash flow and with a portion of the $200 million term loan expansion of our existing credit facility, which we also announced today and which was funded by some of our largest customers. A portion of the proceeds from this term loan will also be used to reduce the outstanding balance under our revolving credit facility. We ended the year with 620 customers that contributed greater than $100,000 to fiscal '26 subscription revenues, an increase of 13% from fiscal '25. Of these, 114 contributed more than $1 million to fiscal '26, an increase of 9% from fiscal '25 and 14 contributed more than $5 million to fiscal '26 subscription revenues flat with fiscal '25. ACV as of January 31, 2026, was $602.4 million, an increase of 17% year-over-year. On an organic constant currency basis, ACV grew 13% year-over-year in fiscal '26. ACV net retention rate in fiscal '26 increased to 112% or 109% on an organic constant currency basis, up from an ACV net retention rate of 106% in fiscal '25 and reflecting growing demand for our AI-powered platform and solutions among our customer base and success implementing our new asset-based pricing framework. Subscription revenue retention rate in fiscal '26 was 110% or 106% on an organic constant currency basis compared with a subscription revenue retention rate of 110% in fiscal 2025. Note that the subscription revenue retention rate was negatively impacted by the difficult compares in the third and fourth quarters this past year. Additionally, a significant amount of the existing customer expansion that drove the ACV net retention rate improvement occurred in the fourth quarter, so the subscription revenues from those deals are not yet reflected in the subscription revenue retention rate. Turning to guidance. For the first quarter of fiscal '27, we expect total revenues of $154.5 million to $156.5 million, with subscription revenues of $137 million to $139 million, an increase of 8% and 10%, respectively, at the midpoint of the ranges. Non-GAAP operating income in the first quarter is expected to be approximately $38 million to $40 million. Please note that effective for fiscal '27, we will be providing annual guidance for free cash flow in lieu of quarterly and annual guidance for non-GAAP net income attributable to nCino per share as we believe annual free cash flow is a more meaningful measure of our financial performance. For fiscal year '27, we expect free cash flow of $132 million to $137 million, up 63% year-over-year at the midpoint of the range, which reflects our guidance range for non-GAAP operating income less certain assumptions, including approximately $15 million of interest expense, $6 million in cash taxes and $1.5 million of fixed asset purchases. Please recall that our cash collections from customers is highest in the first quarter, which does introduce seasonality to free cash flow. Turning to ACV. For fiscal year '27, we expect net additions of $60 million to $65 million on a constant currency and organic basis, which would bring our fiscal '27 ending ACV to $662.5 million to $667.5 million, representing 10% ACV growth at the midpoint of the range. After a few difficult years for the banking industry, large deals have again become a healthy part of our business, and our sales performance during the fourth quarter included several multi 7-figure net new and upsell wins. While we are confident in our go-to-market organization and the repeatability of the sales activity that drove these multi 7-figure wins in fiscal '26, these large deals can be inherently difficult to predict in both their timing and eventual sizing. In order to continue to prudently manage expectations on the booking side of the equation, our ACV guidance framework reflects win percentages that are higher than the approach we took for ACV guidance in fiscal '26, but lower than the win percentages we actually achieved last year. Also, recognizing that the fourth quarter has historically been, and we expect it to continue to be the largest gross bookings quarter for us each year, similar to this past year, you should not anticipate quantitative revisions to our ACV guidance throughout the year. For fiscal '27, we expect total revenues of $639 million to $643 million, with subscription revenues of $569 million to $573 million, representing growth of 8% and 9%, respectively, at the midpoint of the ranges. Excluding U.S. mortgage, our guidance assumes 10% to 11% year-over-year subscription revenues growth. Please reference Slide 15 in our earnings presentation for assumptions around our subscription revenues guidance. As you will note, consistent with the guidance philosophy we instituted last year, our guidance assumes approximately 1% growth in U.S. mortgage subscription revenues. While we recognize mortgage industry volume forecasts are currently indexed higher than what this growth rate reflects, for guidance and internal business planning purposes, our intention is to continue to be prudent around expectations for U.S. mortgage. To help you reconcile our subscription revenues guidance with our fiscal '26 ACV result, please consider the following: one, a portion of the ACV booked in fiscal '26 contributed to subscription revenues last year. Two, recall that we define ACV as the highest annualized subscription fee under a customer contract and when subscription fees increase during a contract term, the revenue recognition rules require that they are straight line, which leads to subscription revenues being less than ACV for such contracts. Three, churn experienced in fiscal '26 would have generally been from legacy contracts under our old seat-based activation model, where ACV more closely approximated subscription revenues. And four, subscription revenues from mortgage overages are not included in ACV. We expect non-GAAP operating income for fiscal '27 to be $165 million to $170 million. Finally, I'll leave you with a few additional comments to assist with your modeling that should be construed as supplemental to our formal guidance. First, international subscription revenues are expected to be accretive to overall subscription revenues growth in fiscal '27, beginning with the first quarter. Second, we expect to reduce stock-based compensation expense in fiscal '27 as a percentage of total revenues by approximately 100 basis points year-over-year from the 12% reported in fiscal '26. As a reminder, during our initial Investor Day in September 2023, we referenced a long-term stock-based compensation expense target of 6% to 8% of revenues. Third, effective January 2026, nCino is self-insuring for medical benefits, which may introduce some volatility to health care expenses in fiscal '27 as we make our way through the first year of the program. But ultimately, we expect this approach to be a more cost-effective alternative to traditional third-party insurance. And finally, our subscription revenues outlook includes revenues from both contracted and planned ACV bookings that we attribute to our AI products. Our customers are validating our AI strategy, reinforcing that it is innovative and compelling and the month-over-month increase in the consumption of intelligence units is trending quite well. At the same time, our experience has taught us that overall, financial institutions are going to adopt AI at a very deliberate pace. Accordingly, and consistent with our guidance philosophy, while we expect to sell incremental bundles of intelligence units this year, our fiscal '27 subscription revenues guidance does not yet contemplate this. In closing, I want to thank my nCino colleagues for all of their hard work and efforts successfully executing on our fiscal '26 operating plan. We entered fiscal 2027 with a ton of sales momentum and our sales pipeline, which Sean noted looks great, is up meaningfully from this time last year even after achieving the best gross bookings fourth quarter in company history. The intelligence unit usage trends we are seeing are very exciting and reinforce that our AI capabilities and AI strategy are resonating incredibly well with the market. We have the data, the products, capabilities and global reach, a unique and unmatched AI strategy, a reputation for innovation and for taking care of our customers and a phenomenal customer base that trusts nCino to successfully guide them on this AI journey. It is an incredibly exciting time to be part of nCino, the company leading the financial services industry into the world of AI-powered banking, just as we led the financial services industry into the world of cloud banking. As evidenced by our financial guidance, we feel really good about our headcount and expense plan and our ability to continue generating increasing non-GAAP operating income and free cash flow. Our financial guidance also reflects reaccelerating subscription revenues growth, and we believe the pieces are in place for that upward subscription revenues growth trend to continue. We remain confident that we are on track to achieving Rule of 40 around the fourth quarter of this fiscal year. And while the high end of our financial guidance for fiscal 2027 suggests a Rule of 40 mix of around 10% subscription revenues growth and 30% non-GAAP operating income margin in the fourth quarter, we are keenly focused on driving that mix more towards subscription revenues growth. With that, I will open the line for questions. Operator: [Operator Instructions] Our first question comes from Alex Sklar with Raymond James. Alexander Sklar: Sean or Greg, on the positive sales pipeline commentary and the ACV outlook, can you just frame what you saw in terms of the change in close rates or win rates in the back half of the year versus prior years? You referenced coming in above? And then how you approach the ACV outlook from a pipeline coverage perspective versus last year? Sean Desmond: Yes. Thanks, Alex. First of all, we did highlight early in the year our renewed focus on the execution discipline of pipeline growth and our emphasis and prioritization around demand generation in the marketing machine, right? So I think some of that played out in the back half of the year as our pipeline increased, conversion rates were healthy, but we just had a larger pipeline, and we're seeing that continue into this year over last year as well, and that's why we're so excited about the outlook. Overall, by solution, by geography, it's pretty balanced. And obviously, we're seeing nice momentum in our international business that we highlighted on the call. But I think a lot of it is around the discipline of just pipeline management overall. And when you have a larger pipeline, conversion rates can stay pretty steady and you'll have a larger ACV outcome. Alexander Sklar: Okay. Great. And then, Sean, you gave a lot of great color on the Banking Advisor adoption, 170 customers now on the platform. I think you have over 100 skills now versus 2 a year ago. Can you just frame where you're actually seeing the greatest usage across that portfolio of capabilities and skills? And then in terms of the magnitude of a 25x growth in credit usage versus October, maybe help frame how many of those customers are approaching kind of the upper end of their purchase credit allotment? Sean Desmond: Yes. Listen, first and foremost, our executive leadership team as well as the entire company is maniacally focused on adoption of Banking Advisor and our Agentic solutions. And I think we've been very thoughtful about selling our customers large enough blocks of intelligence units upfront to give them the runway that will enable them to navigate the adoption curve and see the benefits and kind of settle into the new experience, which is really important as you're managing the change. The last thing a customer wants is to feel nickel and dimed when they're adopting something new, right? So we didn't want to put them in a position where we sell blocks in small portions where immediately they have to re-up. And I think we can draw some parallels and analogies to the personal experiences that we have, right, with whatever chat interface you might use. The last thing you want is in the first month to be asked for an increase in your monthly subscription, right? So what we're focused on, first and foremost, is that adoption. And we're pivoting a lot of the energy of the field towards sitting side-by-side with customers and getting them comfortable with that. And then I would expect over time, as this settles in, we'll look into the next block of intelligence units. But in particular, your question around what are we seeing traction in, listen, our agenda credit reviews are really exciting, which falls under our analyst digital partner umbrella. Locate and file has been a mainstay since day 1 that we launched banking advisor, and we're seeing a lot of traction with credit monitoring as well as auto spreading. Operator: Our next question comes from Joe Vruwink with Baird. Joseph Vruwink: Great. Just to stay on some of the AI debates. Lending is a very complicated process. And part of that complexity, I'm sure we can appreciate ties to all the different systems and data and decisions that go into it. I guess the risk is that AI models can be good at orchestration. Are you seeing that type of capability and it starts to eat into nCino's differentiation? Or does it cause you to think about how the platform is currently architected and maybe doing some things differently to match up against what AI makes possible? Sean Desmond: Yes. Thanks, Joe. I appreciate the question and certainly understand a lot of the narrative that's going on in the market today. And some of the realities have changed with the AI capabilities, no doubt. For instance, we all know the coding has never been easier, right? And what we need to focus on is the reality that there's a difference between standing up an overnight user experience and deploying that code and maintaining that code in a highly regulated industry. That's still hard if you weren't built from day 1 in a compliant way for the regulators, if you don't own the workflow, if you don't own the data and you don't have the trust relationship, then these AI tools aren't going to stand you up overnight. All that being said, we've acknowledged that workflow is relative old news. And what we're focused on is an Agentic operating system future where we can instrument the platform with agents that tap into our own embedded intelligent workflows and mine that data and provide a differentiated experience. And we believe that is very unique. And the right question right now is not necessarily who's best positioned to deliver overnight because I've yet to see somebody to take a customer live even in the past year that was threatening that posture this time last year. What I think the right question is who's best and most uniquely positioned to capitalize on AI and banking, and we think that's nCino. Joseph Vruwink: That's helpful. On the Intelligent credits, do you have any metrics you can share maybe around efficiency gains or P&L impact that customers using the credits have seen so far? Or maybe is there a spectrum of outcomes you're seeing between heavy and light users? Can you kind of present to your customer base that here are examples where greater consumption is actually translating into greater benefits and you start to build referenceability in kind of that way. Sean Desmond: Yes. And thanks for highlighting the focus on outcomes that we have here at nCino. Listen, I don't really wake up in the morning excited about people adopting AI. I get excited about them getting real outcomes. And when I talk to bank CEOs, around the world, they care about what impact we can have on their top line and what impact we can have on their bottom line, right? It's all about revenue efficiency and cost savings. And so I think we're seeing really good gains and traction, specifically around credit monitoring, which is why I highlighted that credit analyst. And in some cases, we're seeing months to days and days to minutes in terms of getting [indiscernible]. We plan on highlighting at site some direct outcomes sharing their experiences on leveraging those units. But safe to say that as I wake up every morning with the CEO agent stack of my own that highlights intelligent units consumption, there's a direct correlation between the outcomes our customers are getting and the intelligence units they're drawing down on across the spectrum of banking advisers. Operator: Our next question comes from Michael Infante with Morgan Stanley. Michael Infante: On pricing, obviously, it sounded like a really strong result with 38% of revenue now on the new pricing model. Any incremental commentary you can share just in terms of price realization for the fiscal 4Q renewal cohort versus your plan? And in the instances where customers did push back. Can you sort of speak to some of the instances or initiatives you have in place to retain those customers, either in terms of ancillary product of attach of things like banking adviser and/or lower price realization? Sean Desmond: Yes. On the pricing front, first and foremost, I want to highlight that we started on the pricing journey nearly 3 years ago. And I really point that out because we're not reacting to anything here. We had a vision for how outcomes would be the end game for software companies like nCino. And so we prepared for this. The pricing has now been out there for a little over a year. And what I would tell you is that we are exceeding our internal plans and targets, and that momentum even picked up in Q4 versus the prior quarters. And while nobody likes a price increase and nobody likes change, I think that we're very prepared for that. And by and large, those customers are going very well. I'm proud of our account teams in the field. Those aren't necessarily easy conversations. But what I would say is they're more focused on education and enablement and drawing direct lines to the outcomes that our customers are going to get over time versus the old per user per seat model. So the value exchange is becoming apparent to our customers. And because of that, we're seeing early renewals. We're exceeding our targets, and we're leaning in heavily. It's been really accretive to our business. Michael Infante: Helpful, Sean. And then maybe just a quick follow-up on gross margins. I know it's fairly early in terms of thinking about banking advisory monetization. But do you expect the consumption of those incremental credits to be gross margin accretive? Should we be focusing on incremental gross profit dollars? How are you sort of thinking about the inference cost and customer usage intensity when usage exceeds expectations? Sean Desmond: Yes. Listen, I would absolutely expect these to contribute toward gross margins and really both, right? I mean what we're doing in terms of instrumenting our customers with the ability to come to decisions faster over time. we expect the value exchange to play out, right? And I think they're going to be in a position where they can exchange some of the labor cost and add their labor force to more high-value activities and put their employees in front of the customer, right? And that's where they want to be. And we're going to automate the things that happen in the middle and back office, and that's going to drive margin efficiency for our customers. Ultimately, that will flow through to nCino as well. Gregory D. Orenstein: And Michael, just to add, I mean, one of the benefits of seeing the usage tick up quite well is that it gives us the opportunity to stress test our gross margin model as we ramp up, and so we've been able to see that over the last few months is again 25x from October to March. And again, so far, we feel good about it. Operator: Our next question comes from Chris Kennedy with William Blair. Cristopher Kennedy: Can you provide an update on the credit union initiative? Sean Desmond: Yes, something we're very excited about. We mobilized the team, as you know, early last year that wakes up and sleeps, eats and breathes as well, just that credit union market. I'm proud of the way they've run toward the opportunity, have established relationships and credibility in that space and understands the problems we're solving for those customers. I think that's a matter of really being able to tell the same nCino value proposition story in a way that resonates more deeply with the credit union space, and that's given us the opportunity to even envision how we can think about road map in a different way and how we kind of augment the platform and the experiences that we deliver and think beyond some of the traditional experiences we serve up. So we've got good momentum there. The team is fully activated. The pipeline is growing as we head into this year, and we plan on selling the entire platform to our Credit Union customer base. Cristopher Kennedy: Great. And then just as a follow-up, historically, you've given ACV by category. Can get an update between mortgage, commercial and consumer? Gregory D. Orenstein: Yes, Chris, we don't have that for this call, maybe at another public forum, we'll be able to provide that breakdown for you. Operator: Next question comes from Ryan Tomasello with KBW. Ryan Tomasello: I guess starting with the organic subs guide. You're talking about 10% to 11% growth ex mortgage for the year. I appreciate the commentary on international being accretive this year, but I was hoping you can just put a finer point on the drivers there. Ex mortgage, particularly with respect to the U.S. business ex mortgage in terms of subs growth outlook. Gregory D. Orenstein: Yes. Thanks, Ryan. I mean, overall, I think business perspective, whether it's by product or geo, I think we feel really good about the sales momentum that we're seeing in the market. Our customer base generally is quite healthy. Balance sheets are healthy, lending activity has been up. And I think that is driving, again, demand for nCino -- for our products. And I would also go back to AI is a big driver for that as well. You can't leverage AI. You can't leverage this revolutionary technology unless your house is in order. And that's the business that we're in. We're in coming in and transforming your bank so that you can operate on a platform and to be able to leverage not just your data, but the data that nCino has across our whole customer base that's given us the rights to leverage that data as part of our product offering. I would point you to the appendix in the back of the earnings call presentation that we put up, you'll see a nice walk in terms of our year. And the other thing I'd highlight again is the continued downward trend in churn, which, as we know over the last couple of years, has been unusual for us, right, heightened churn, but that coming back more towards historic norms has been a big positive to getting our growth trajectory back towards an upward motion and one that we can build on. Ryan Tomasello: I appreciate that, Greg. And then just following up, just kind of on the subs cadence for the year. The 1Q guide round numbers looks like 9% to 11% organic subs growth versus 9% to 10% for the full year. Just trying to reconcile that with your comments earlier, Greg, about being confident in being able to continue to drive this acceleration in subs growth and just how we should think about this cadence throughout the year with respect to that Rule of 40 target. Gregory D. Orenstein: Yes. Thanks, Ryan. I think you should assume that mortgage comps in the second and third quarter are a little bit tougher. And so that from a trajectory standpoint is something that you should take into account in your modeling. Operator: Our next question comes from Aaron Kimson with Citizens. Aaron Kimson: Sean, can you talk about why now is the right time to bring Keith in to run sales? And what is type 2 priorities will be in fiscal '27? It seems like the sales team is executing well. Sean Desmond: Sales team is executing phenomenally well. And we are -- we have been marching towards a point in time where we were going to appoint a Global Chief Revenue Officer. That's going to help us scale to $1 billion and beyond in terms of where we're going on the revenue growth side. And that has been in the works for some time. What I would share with you is that we had a model in place where Paul Clarkson, who ran our North America sales operation is stepping aside for personal reasons, and Keith is coming in to consolidate the global org and we'll have a tight partnership not only in North America, but in EMEA and Asia PAC and with our partner organization, and Keith has a lot of experience in these areas. He's been somebody we've known for a long time in our network, not only his days at Salesforce, but also at Alloy. And we're super excited about his leadership. He's not only a great experienced leader who's operated in this vertical and has deep relationships with our customer base, but also is a great culture fit for nCino. So yes, the sales organization is operating fantastically well in large part due to Paul Clarkson's leadership. And Paul is stepping aside for personal reasons and Keith is the perfect guy to step in at this point in time and take us to the next level. Aaron Kimson: Understood. And then as a follow-up, it's good to see the mortgage win with a top 40 bank where they also use your commercial lending, small business lending and treasury products. Are you getting to a point in mortgage sales cycles now where you have a better idea of how the move up market with nCino mortgage is going now that you're 3 quarters in there from when you really rolled it out after the Investor Day last year at nSight and at the larger FIs, you finding that existing relationships and other parts of the bank are helping you get a foot in the door on the mortgage side of the house or that the buyers are just generally separate in those big organizations? Sean Desmond: The answer is yes. We are learning from experiences there. As you know, we made the jump from our mortgage solution in the IMB space full on towards some of the largest banks in the world. And we're excited that we have a top 30 bank in the U.S. on the platform, and that naturally gets the attention of the peer group and the cohorts to the point where we start getting some inbound calls for nCino to participate in forums at that level. We're also getting traction in the community and regional bank space as well as the credit union space with the mortgage solution. And I think our teams now have some of the experience and quite frankly, some of the attitude and confidence that it takes to go aggressively sell that across lines of business. It's not uncommon that I would be meeting with our customer base, whether it's a CEO or Chief Lending Officer, or somebody in the C-suite that would proactively bring up on their side and recommend that we talk to the mortgage leader in their business. So that is happening and it's happening pretty organically. Operator: Our next question comes from Saket Kalia with Barclays. Saket Kalia: A nice finish to the year. Greg, maybe for you. I think we said we've got about 38% of ACV on platform pricing now, which is great to hear. I'm curious, have any of your top 20 banks made that transition yet. And were there any learnings from those customers in particular that you feel you could build upon? Gregory D. Orenstein: Yes. Thanks, Saket. The answer is yes. I mean, I think with every deal, you learn something new. We certainly try to. But to Sean's point, this is something that we started in terms of this pricing transition going back about 3 years. First off, internally and testing with our customers. Again, one of the great things about the wonderful customer base we have as we work very closely with them to get their thoughts and input. And so the rollout has frankly exceeded my expectations, not just from the uplift that we've talked about, but as well just in terms of the execution and you would have heard Sean's prepared remarks, our largest customer by ACV renewed for a 5-year deal, and that would have been on the new platform pricing model. So we do have some of our larger customers already on it. And again, I think it's gone quite well, quite pleased -- we're quite pleased with the execution there. Saket Kalia: That's great to hear. Maybe for my follow-up. It was great to hear you reconfirm the Rule of 40 expectation. Is it may be fair to say that, that rule of 40 is achievable based on the ACV that you've already booked here in fiscal '26? Or is it dependent on some of the new bookings that you anticipate this year as well? Gregory D. Orenstein: It would include some new bookings. Again, the slide I referenced earlier, Saket, in the appendix, I think it's Slide 15, you'll see a nice walk that we tried to lay out, so you could see the contribution from bookings last year and what we came into the year with, which is quite a bit of visibility. But we do have -- we do have some work to do this year. And again, I think as we look at our pipelines, as we look at the activity in the market, and frankly, as we look at the excitement that we see in here and feel around AI, we come into this year feeling good about the plan that we have. And it's actually Slide 16, if you look in that deck. Operator: Our next question comes from Charles Nabhan with Stephens. Charles Nabhan: Just 1 quick one for me. Looking back over the past couple of years, you've done several acquisitions. Wondering if you could provide us an update on the progress you've made on Sandbox and DocFox, any positives or negatives? And just an update on the traction you're getting on those solutions in the market. Sean Desmond: Of course, taking those each on its own from a Sandbox standpoint, that has actually become the foundation and the backbone of our integration gateway and the MCP layer that we expect to control how agents access data in the nCino moat, right? So that's very strategic. We're not necessarily selling -- looking to that as a stand-alone revenue engine, but as a strategic foundational platform that sets us up to be the agentic operating system of the future for banks. So we're really excited about that. And from a DocFox standpoint, we remain very compelled by the opportunity with complex commercial onboarding that continues to come up in nearly every conversation as an adjacent problem our customers are solving to the one that we solve so well around commercial loan origination. And so those opportunities in the pipeline are growing. We have acknowledged in past calls that it was going to take us the better part of the prior fiscal year to complete the technology integration work. And now we're looking to convert some of that pipeline here in the first half of this fiscal year. So we're really excited about onboarding coming into full focus as it's kind of been mainly in the background and the R&D room. Now it's coming into the sales machine. Operator: Our next question comes from Adam Hotchkiss with Goldman Sachs. Adam Hotchkiss: Sean, where are bank CIOs leaning in most to AI from your perspective, whether that's nCino or otherwise? And how does that differ across financial institution side? I'm just curious if smaller to midsized banks or maybe more likely to lean into packaged AI use cases. And are you seeing any appetite for some of the larger banks, in particular, to try to do anything? And how is the -- I'm just trying to understand ultimately what banks are out there trying versus not trying from an experimentation perspective and then how nCino fits into that? Sean Desmond: Sure. And in our landscape and as you've acknowledged, I appreciate the tee up there and market segmentation. Undoubtedly, the further down market you go, the bigger the appetite those customers have for prepackaged solutions that we would serve up the agents, right? And we would actually build and deploy the agents. And what's so powerful about our platform as we render those in the existing workflow, right? At nCino, AI lives in the workflow, so the context is already there. The user doesn't have to change their behavior and the trust and compliance are inherited and the data moat is leveraged. So those banks absolutely get that. As you go upmarket, the same value proposition applies but you absolutely have, what I would say, more curious in experimental groups within the organization who are being chartered with, hey, if we build our own agents, what would that experience look like, right? And those customers, just the same need context, they want trust and compliance and they want to tap into nCino data. So we have thoughtfully architected a platform as we evolve in our journey that would enable customers to do both. And we're seeing enterprise banks that are asking us to actually sit side-by-side and co-develop some of these agents and look at those experiences. So it's all exciting. I do think that what comes up most for me when I'm talking to customers about the outcomes they want to go back to that credit monitoring experience is very powerful. The ability to reduce the time spent analyzing the scores and reams of documentation and data to get to a proactive monitoring position over time, and that's not only upfront to do a deal, but that's maintenance. That's pretty common. And then, of course, you know that we have banking adviser skills embedded across the experiences. So that's one that stands out. They are looking for low-hanging fruit. They are looking for quick wins, and we can serve those up, and that's exactly how we've architected our digital partners. Adam Hotchkiss: Okay. That's really helpful, Sean. And then Greg, just on the Slide 16 that fiscal '27 growth algorithm, I really appreciate the detail there. Any way to think about how that contribution mix between contracted in the prior year and forward bookings compares to ultimately what you did in fiscal '26 just from a mix perspective would be helpful to understand. Gregory D. Orenstein: Yes, Adam, I think you can assume it's comparable. Operator: Next question comes from Terry Tillman with Truist Securities. Terrell Tillman: I'll keep it to 1 question, but as typical, there's probably multi parts to it. On the early renewals, it seems like that's a good sign of the interest in the new innovation. But could you all quantify how much early renewals impacted or benefited the strong 4Q ACV? Or the in-year ACV target? And the kind of the second part of this is with the early renewals, I think you did say that one did a contractual renewal at 5 years. But what is the duration looking like on early renewals versus the original contract? And then just do they tend to consume or sign up for more banking adviser or skills versus the non early renewals? Just double-clicking more on early renewal activity would be great. Gregory D. Orenstein: Yes. So in terms of the renewal trajectory and momentum, I'd point you to the ACV you mentioned that we disclosed going from -- it was 102%, I think back in fiscal '24 up to 106% and then up to 112% or 119% at constant currency organic basis, Terry. So again, really like that trend. And I think that's reflective of, again, the customer relationships that we have and also, again, just the breadth of our product that we can go back to our customers and sell them more. And again, a lot of those discussions actually AI, whether it ends up being an AI discussion or not, being able to go talk about AI provides an opportunity for us to explore where else we may be able to add value to our customer base. And so all that's exciting, and I think all that's helping to drive the momentum that we saw last year and that we came into this year with. Operator: Our next question comes from Koji Ikeda with Bank of America. Unknown Analyst: This is [ George McGrehan ] on for Koji Ikeda. And I know that you guys already talked about the relationship between sub revs and ACV. But I kind of wanted to ask this simplistic question, and apologies if it's a bit redundant, but if you could humor me. So fiscal year '26 sub revenue came in higher than ending fiscal year '25 ACV. But the initial guidance for fiscal year '27 sub revenue doesn't quite get us to ending fiscal year '26 ACV. What's kind of the relationship there? And how would you kind of describe the level of conservatism in this fiscal year '27 sub revenue guide? Gregory D. Orenstein: Yes. Thanks for the question. Just going back to some of the earlier comments, there's a few things to keep in mind when you're trying to reconcile the ACV performance in our sub-rev guide. One is, again, a portion of the ACV that we got actually contributed to subs revs last year. So you need to take that into account. Again, the way that we've always defined ACV is the high point of a contract. And when there's increased pricing during a contract, right, the rev rec rules require you to straight line that. And so your actual revenue is going to be short or fall short of what your ACV is and what that exit contracted amount is would be another thing to take into account. The third thing is churn that we experienced last year would generally have been from our older seat-based pricing model. And the ACV and subscription revenue would have been more aligned under that historic model that we had. And then finally, again, as you think about subs revs, keep in mind that our mortgage overages don't fall into ACV. And so those are some of the deltas to take into account when you're trying to reconcile the ACV performance we had in fiscal '26 and the initial guide that we've given for sub revs for fiscal '27. Operator: Our next question comes from Eleanor Smith with JPMorgan. Eleanor Smith: I think I'll keep it to 1 as well. I know many products can be implemented in a matter of weeks or months. But when you land a large new customer as you did in Japan this quarter, how long does it take to implement a large customer like that? And when do you begin recognizing revenue? Sean Desmond: Sure. And listen, I think on average, it's a reality with the efforts we've put into rotating a lot of our energy in our field, PSO organizations toward our forward deploy engineer as well as applied intelligence groups to reducing overall implementation times. And that's showing up and they're compressing nicely, and we're getting customers live in time frames that are actually exceeding my expectations. Specific to the large Japanese deal, that's a multinational deployment that is probably unique in its own regard with respect to some of the coordination that needs to happen upfront before we even start thinking about deploying nCino. So there's some of that that's happening right now. once we get hands on keyboards with nCino, I expect that we'll hammer through that project in months. But there's a lot of upfront prep work when you're bringing a global organization together across 26 countries that needs to happen, that will probably elongate the time that we can announce something very exciting with respect to a go-live on that particular bank. Gregory D. Orenstein: Yes. Ella, with respect to the rev rec, just recall with platform pricing, it's going to be straight lined over the term. And it would generally start a month or two after contract signing, when we would start billing just based on the terms of the contract. Operator: Our next question comes from Nick Altmann with BTIG. Nicholas Altmann: Just on the renewal base. I know you guys mentioned 38% of the ACV base is renewed to the new pricing. But can you just talk about where you expect that mix to trend as it relates to the 2027 ACV guide and whether that contemplates some continuation in the early renewal activity that you guys have been seeing? Gregory D. Orenstein: Yes. Thanks, Nick. Yes. As it relates to fiscal '27. I mean, we would expect a similar performance as we had in fiscal '26 in terms of the renewal cohort that comes up. Recall historically, the average contract length of our bank operating customers is upwards of 4 years. And so break that down generally a quarter over that 4-year period. We are seeing accelerated renewals. And so I think we're ahead of plan for that. So again, we would expect a similar performance. Keep in mind in terms of the comp because it's a similar performance, you won't see that onetime kind of step-up that we had this past year, which was the first year really of the step-up. And so just keep that in mind from a compare standpoint as move into fiscal '27. Operator: Our next question comes from Ken Suchoski with Autonomous Research. Kenneth Suchoski: I'll keep it to 1 as well. I wanted to dig into the long-term moat of the business a little bit because it seems like people are -- investors are questioning the terminal value of these -- of software companies more broadly. You mentioned how banking is a highly regulated business and how that's different. Could you just talk a little bit about how nCino works -- if and how nCino works with regulators and how that might impact the ability to remain entrenched and prevent new companies from coming into the space? And then secondly, it sounds like data is going to be one of the key sort of aspects to the moat longer term. So are we at the point where the network effects of the data are strong enough to keep nCino in the lead? Or is there this sense of urgency across the business to try to build up that aspect of the moat? Sean Desmond: Thank you. And yes, we do believe that the future long-lasting durable software companies that are going to be the generational companies that can survive inflection points like these are going to be able to deliver AI embedded within existing business processes and in particular, in this banking vertical to lend context and within the guardrails of regulation. And beyond regulation, you have to consider things like security, there's trust and there's that data moat that you talked about. And we believe that what's unique about nCino is we started accumulating this data 14 years ago, right? So we are absolutely not sitting here reacting and aggressively trying to build up our data moat overnight because that was the original vision of nCino. When I joined this company in 2013, I had a conversation with our founding CEO on the power of sitting at the intersection of the things that we do and where we do them. And if we could serve that data up with meaningful insights that would be very compelling. And we just happen to now be in the era of AI. So while other companies are scrambling to deliver user experiences overnight with no foundation of data, we're actually continue to build on 14 years of buildup. And we just -- we're not arrogant about it, but we believe our data moat is unparalleled and unique, and nobody else has the type of contextual view on how capital flows through workflows in financial institutions. So we're excited about that, and we believe that's going to propel us we'd lean into it. As far as the regulation, I would first point you to the fact that we have hundreds of bankers that work at nCino, they come from that world, right? In many cases, sitting in those chairs side-by-side with the chairs of the regulators for careers before software. And that's very unique in terms of how you think about product management. And now in the world of prompt engineering and imagining experiences very quickly, doing that without that human riding shotgun with you is where I'd be nervous, right? That's where you start getting into hallucinating on public cloud data that you think regulation lives in the public cloud. It does not and the bankers understand that. And that's why we're excited about that, and we maintain the relationships with these types of people in the space. Operator: Thank you. I would now like to turn the call back over to Sean Desmond for any closing remarks. Sean Desmond: Thank you all for joining us today. We do look forward to seeing many of you at nSight, which is our annual user conference in May, where we will be showcasing many of these agentic experiences we're talking about with customers on stage delivering outcomes. Hope to see you there. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Purple Innovation Fourth Quarter Full Year 2025 Earnings. [Operator Instructions] I would now like to turn the call over to Stacy Turnof, Investor Relations. Please go ahead. Stacy Turnof: Thank you for joining Purple Innovation's Fourth Quarter and Full Year 2025 Earnings Call. A copy of our earnings press release is available on the Investor Relations section of Purple's website at www.purple.com. Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. You should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings with the SEC. Additionally, today's presentation will reference non-GAAP financial measures such as adjusted gross margin, adjusted operating expenses, adjusted EBITDA, adjusted net loss and adjusted net loss per share. A reconciliation of these measures to the most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer. Robert DeMartini: As we close out 2025, I'm proud of how far the business has come over the past year. While the broader market remains challenging, the progress we're making at Purple is increasingly evident in our results. The fourth quarter marked an important inflection point for the company. Revenue increased approximately 9% year-over-year. We delivered gross profit expansion and profitability improved meaningfully across the business. In the quarter, we generated adjusted EBITDA of approximately $8.8 million and finished the year profitable. This performance was driven by the benefits of the strategic actions we've taken. Those actions include our cost initiatives that are now fully embedded in the business, including consolidating our manufacturing footprint as well as a full quarter of expanded Mattress Firm distribution and a significant expansion of our Costco program. Looking at the full year, 2025 was a period where the business became meaningfully stronger. We continue to build on our path to premium sleep strategy and delivered positive adjusted EBITDA for the year, finishing within the guidance range we established at the beginning of 2025. Importantly, we achieved profitability levels that we haven't seen since 2021. That progress was driven by the execution and by the changes we put in place, not by a recovery in the broader market, which speaks to the durability of the model we've been building. Our focus throughout the year was not on short-term fixes, but on creating a business that can perform more consistently. Taken together, this represents more than a strong finish to the year. It marks a clear shift from defense to offense. Growth, margin expansion and profitability are showing up in the numbers and that's in a market which is down low single digits. The direction is clear, the momentum is real, and we're entering 2026 with a playbook designed to scale profitably as demand continues to improve. We've made meaningful progress across each of our sales channels in 2025. And in the fourth quarter, 2 of our 3 channels delivered positive growth for the second consecutive quarter. Comparable sales in our showrooms increased 8.8% in the quarter and showrooms continued to grow in profitability for the full year. Sales execution improved, the updated selling model gained traction and Rejuvenate 2.0 represented over 50% of showroom mattress revenue during the quarter with more than 80% of showroom's 4-wall profitable for the full year. Wholesale was a key driver in 2025 with a robust 39.8% growth in the fourth quarter. E-commerce performance was mixed during the year and declined in the fourth quarter, though we did see pockets of strength around Black Friday and Cyber Monday. At the same time, we saw solid marketplace performance, particularly on Amazon and meaningful improvements to the website experience tied to our less pain, better sleep positioning. Stepping back, the way we're thinking about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market, rightsizing our cost structure, strengthening the foundation and restoring profitability. Today, we're focused on growth. Going forward, our focus is centered on 3 priorities: deepening our understanding of the consumer, delivering better sleep through product experience and expanded distribution and executing with financial discipline across the business. This approach builds on what's already working and reflects how we're running our business. With that framing, let me walk you through our progress against these priorities and what they mean for the business going forward. Number one, knowing our consumer. Over the past year, we've sharpened our focus on understanding who our consumers are, what matters most to them and how they make their purchase decisions across the channels. Our work is shaping how we communicate, shifting us away from promotionally led messaging towards clear benefit-driven storytelling, focusing on GelFlex Grid technology that helps consumers understand how Purple delivers better sleep. Our less pain, better sleep positioning continues to resonate, providing a consistent consumer-led message that translates across e-commerce, retail and wholesale channels. Importantly, we're focused on reaching our consumers with the right message in the right place at the right point in their decision journey. We're seeing early signs of improved brand momentum with increased awareness, beginning to translate into brand consideration. As a result, we're improving our clarity across touch points, strengthening engagement and supporting higher quality conversion as consumers better understand the value of our product. In e-commerce, we're encouraged by the progress we're making. As part of better meeting consumers where they're shopping, our expanded presence on Amazon is gaining traction. Improvements in availability, delivery speed and conversion are strengthening the consumer experience and broadening our reach particularly among new-to-brand consumers. This expanded assortment is driving a healthy lift in Amazon sales, especially in pillow and seat cushions and introduces new consumers to our technology. We're also seeing this consumer-focused approach resonate through our partnerships. Our participation in Mattress Firm's Sleep Easy marketing campaign drove sales conversion and improved aided awareness scores. At the heart of better sleep is better product. From there, we focus on how we bring innovation to life through the consumer experience and expanded distribution. Innovation remains at the core of Purple's differentiation and our Rejuvenate 2.0 collection continues to validate that approach. Performance exceeded our expectations in 2025 with strong traction across both showrooms and wholesale as retail partners expanded Rejuvenate 2.0 placement on their floors. Through our direct channels, Rejuvenate 2.0 is performing well at an average selling price of almost $5,800, demonstrating our ability to drive demand at meaningfully higher price points and reinforcing the value consumers place on better sleep. We also completed development work on Purple Royale, a new premium offering developed in close partnership with Mattress Firm. This is an important product for us and a meaningful step forward in our premium strategy. Purple Royale is complementary to our Rejuvenate 2.0 collection, with similar price points across the curated floor model lineup. The launch is on track with initial floor models arriving now. The Purple Royale collection was originally planned for over 2,800 slots bringing us to a total of 12,000 slots across Mattress Firm's 2,200 stores. Encouragingly, the quality and design of the final product has exceeded expectations, and as a result, Mattress Firm is adding incremental slots as the product launches. Beyond the product itself, we continue to focus on delivering a differentiated end-to-end consumer experience, anchored by compelling in-store presentations across our own stores and wholesale partners. This includes elevating how we educate our consumers around pain relief and the role of GelFlex Grid technology, which we are seeing drive strong engagement when brought to life through in-store demonstrations and digital content. We're also continuing to strengthen white-glove delivery services to ensure that Purple shows up consistently incredibly whenever the consumer chooses to engage. This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels. Part of delivering better sleep is expanding our distribution presence, meeting more consumers where they shop. The premium innovation is translating directly into expanded distribution. With Purple Royale now launching across Mattress Firm, we've expanded our footprint and deepened our presence across their network. Additionally, we're seeing strong performance with Costco, where our program continues to resonate with members and provide an important opportunity to introduce Purple to new customers at scale. With both Mattress Firm and Costco, our initial launches significantly exceeded expectations, driving immediate demand for expanded placement. In Costco's case, early performance was exceptional, supported by the introduction of unrolled beds on floor displays, which allowed members to see and feel our differentiated product. The strength of those results led Costco to quickly expand the program in the fourth quarter to approximately 450 clubs bringing us to nearly nationwide distribution. We're also making progress in new channels, including Walmart and Sam's Club, which are helping us reach new consumers, diversify demand and drive incremental volume. Importantly, expanding into these large far-reaching retail platforms strengthens distribution for our pillow portfolio and positions us to drive meaningful incremental pillow sales through highly scaled high-traffic partners. And in owned retail, we continue to focus on showroom profitability. In 2025, we closed 4 underperforming stores as part of optimizing the sleep. And looking forward to 2026, we plan to open 7 new stores. Our showrooms continue to be an important part of the model that showcases our GelFlex Grid technology and premium positioning. Our showrooms drive traffic to wholesale locations, helping convert interest into purchases. Finally, let me talk about how we're executing with financial discipline across the business. Last year, our focus was on rightsizing the business, so we could operate profitably at current scale. That work is now behind us. And importantly, the actions we took were structural, not temporary. We're increasingly focused on driving growth from a much stronger foundation. Gross margin improvement remains a key focus, and we continue to see the benefits of the actions we've taken to simplify the business and improve efficiency across sourcing, operations, fulfillment and product quality. Mix has become an increasingly important tailwind led by the growth of Rejuvenate 2.0. The shift towards higher ticket products, combined with strong attachment rates for adjustable smart bases and pillows, is driving higher average transaction values and incremental profit dollars. As a result, the operating discipline we put in place over the past year is now clearly showing up in our margins and profitability. We continue to view 40% gross margins at a sustainable level, and we expect further improvement as we move into 2026 as efficiencies continue to flow through the business. Todd will provide more detail on specific margin drivers and cost actions in his remarks. Turning to our guidance. As we look ahead to 2026, we're entering the year with improved stability and a structurally stronger operating model. For the full year, we expect revenue in the range of $500 million to $520 million and adjusted EBITDA of $20 million to $30 million. This outlook reflects continued momentum in our premium product portfolio, expanded wholesale distribution and the operating leverage in the business as volume grows. Importantly, this guidance is driven by execution, not by a recovery in the broader market. It reflects the progress we've made across product, distribution and operations, with gross margin sustainably above 40% and disciplined expense management we believe we're well positioned to deliver meaningful earnings growth in 2026. Before I close, I'd like to briefly readdress the Board's ongoing review of strategic alternatives. The process remains ongoing, and we've engaged with multiple parties across a broad range of opportunities to maximize shareholder value, including a potential merger, sale or other strategic or financial transaction. We'll continue to evaluate all options and will provide updates as appropriate. As a reminder, we will not be commenting further or taking questions on this topic during today's Q&A. With that, I'll turn the call over to Todd. Todd Vogensen: Thank you, Rob. I'll begin by walking through our fourth quarter financial performance and then the year ended December 31, 2025. Net revenue for the fourth quarter was $140.7 million, representing growth of 9.1% year-over-year. The increase was driven primarily by wholesale, reflecting a full quarter of expanded Mattress Firm placements and continued momentum with Costco, partially offset by a decline in e-commerce. By channel, direct-to-consumer net revenue for the quarter was $71.9 million, down 9.9% compared to last year. Within DTC, showroom revenue increased approximately 4.5%, up for the second consecutive quarter and comparable sales were up 8.8%, reflecting continued strength in Rejuvenate 2.0. E-commerce revenue continued to be down with a decline of 15.3%. Wholesale revenue increased approximately 39.8%, driven by our expansion with Mattress Firm and Costco. Gross margin for the quarter was approximately 41.9%, remaining well above our 40% quarterly margin target and down 100 basis points from last year. We're pleased with the durability of our gross margin, particularly given the strength of last year's results when gross margin rose 970 basis points driven by sourcing initiatives and the profitable liquidation of inventories. Viewed over a 2-year period, gross margin increased by nearly 870 basis points, reflecting durable improvements to the business. The margin continues to be driven by direct material savings, plant efficiencies, restructuring benefits and volume leverage. On an adjusted reported basis, gross margins for the quarter, excluding restructuring costs, was 41.9%, down 300 basis points from last year. Operating expenses for the quarter were $61.2 million, down 2.9% versus $63 million last year. The decrease reflects the benefits from restructuring activities and other cost-savings initiatives. Our fourth quarter adjusted loss per share was $0.02 compared to an adjusted loss per share of $0.11 last year. Adjusted EBITDA in the fourth quarter was $8.8 million, a notable improvement over the $2.9 million EBITDA last year. Turning now to full year results. Net revenue for the full year 2025 was $468.7 million, reflecting a 3.9% decline versus the prior year. By channel, direct-to-consumer net revenue for the year was $261.3 million, down 7.9% compared to last year. For the full year, showrooms generated strength with sales up 1.5% versus last year to $78.5 million and comparable revenue was up 6.6%. We delivered net revenue of up 4% or more in 3 of the past 4 quarters with only the second quarter being impacted by the timing related to the Rejuvenate 2.0 launch. Wholesale has been sequentially improving over the last 4 quarters, up 1.6% versus last year to $207.4 million, benefiting from expanded partnerships and nontraditional revenue streams, while e-commerce remained soft throughout the year. Full year gross margin increased 310 basis points to 40.2% versus last year, reflecting the impact of restructuring, sourcing initiatives and manufacturing efficiencies. On an adjusted basis, full year gross margin, excluding restructuring costs, improved slightly to approximately 40.4%, up approximately 10 basis points year-over-year. Our cost initiatives delivered $25 million in annual savings in 2025, with $25 million to $30 million of sustainable savings expected going forward, giving us greater flexibility to reinvest in marketing and innovation while continuing to expand margins. Just as importantly, it reflects a business that is operating with greater discipline and a structurally stronger cost base. Full year operating expenses declined by 15.3% to $231.6 million, driven by restructuring savings and productivity initiatives. Adjusted net loss was $34.3 million versus an adjusted net loss of $55.1 million in the prior year. Adjusted EBITDA for the full year was $1.9 million, representing a significant improvement versus the adjusted EBITDA loss of $20.8 million last year and adjusted net loss per share in 2025 was $0.32 compared to an adjusted net loss per share of $0.51 in the full year of 2024. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $24.3 million versus $29 million on December 31, 2024. Net inventories on December 31, 2025, were $59.7 million, up 5% compared to December 31, 2024. We're pleased to exit the quarter with cash over $24 million, and we believe we are well positioned from a liquidity standpoint. We also extended our debt maturities from December 31, 2026 to April 30, 2027, enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners. Now let's turn to the outlook. Given that we are through most of the quarter, we will be providing guidance for the first quarter. We plan total revenue to be in the range of $100 million to $105 million and adjusted EBITDA to be in the range of a loss of $7 million to a loss of $4 million. As Rob walked you through earlier, for the year, we expect revenue in the range of $500 million to $520 million and adjusted EBITDA of $20 million to $30 million. We plan for revenue to continue to be driven by strength in Rejuvenate 2.0 as well as our expanded distribution with Mattress Firm and Costco. We also anticipate continued improvement in EBITDA, driven by further operational efficiencies and ongoing restructuring actions benefiting both gross margin and operating expenses. These initiatives are expected to support improved profitability and cash generation, reflecting the full impact of our cost actions, product innovation and expanded distribution. Robert DeMartini: Thank you, Todd. This morning, we filed our annual report on Form 10-K for the fiscal year ended 2025. As disclosed in the filing, our independent auditor has included a going concern qualification. While this notification is not necessarily a surprise, given the liquidity challenges of the past year and our historical cash burn, we want to provide clear context why the decisive, transformative actions we've already taken are expected to continue stabilizing our financial position and driving the business forward. The fruits of our labors are already evident in our recently improved operating and financial performance. Following a rigorous period of restructuring, we achieved profitability levels in the second half of 2025 that we haven't seen since 2021. This momentum is driven by 3 core strategic pillars: supply chain reorganization. We've optimized our footprint to ensure a more agile, cost effective flow of goods. Disciplined cost management. Structural savings initiatives implemented in 2025 have led to significant margin expansion and profitability at revenue targets meaningfully lower than past years. Channel momentum. We're seeing robust volume growth across both our wholesale and showroom channels as our path to premium sleep strategy takes hold. We entered 2026 on much firmer footing. We expect to conclude Q1 '26, historically our seasonally weakest quarter with neutral cash burn. Furthermore, we're grateful for the strong continued support of our lenders. Our recent agreement to extend debt maturities to April 2027 provides us with the runway and the financial flexibility to execute our long-term vision. We believe these factors, combined with our improved liquidity profile, directly address the concerns raised in our 10-K and position us for a year of consistent growth and profitability, as evidenced by our 2026 guidance. We appreciate the patience and the confidence of our shareholders. Like you, we are disappointed by the current stock price. Our team remains focused on executing our clear plan to build on recent business momentum and deliver sustainable shareholder value on your behalf. With that, operator, we can turn it over for questions. Operator: [Operator Instructions] Your first question comes from the line of Brad Thomas with KeyBanc Capital Markets. Bradley Thomas: Rob, I wanted to start off asking about recent trends. There's no question that the fourth quarter showed some nice momentum and your outlook for this full year is very encouraging. It does look like maybe the first quarter had maybe a step back in the pace of the business. Can you just talk a little bit more about what you've been seeing here? Robert DeMartini: Yes, Brad, thank you for the question. And I think there's a couple of things going on. We had a very strong fourth quarter. And the way the fourth quarter shipped, it did impact demand in January as that sell-through and consumption happened. Particularly, we've got the club customer that had a significant buy-in in December that was part of loading the floor, and so there wasn't much follow-up in that. As Todd said, we think we'll be between $100 million and $105 million. And I think the momentum also includes all those floor samples at Mattress Firm going out, and that obviously has a short-term push down on revenue as they sell in at floor sample prices. So we're encouraged. Q1 has always been our weakest quarter. It's not a strong quarter, but we think the momentum in the business dictates the strong rest of the year that we've predicted. Bradley Thomas: And just to be clear, Rob, it sounds like aside from the January, you've seen an improvement in trends of late. Is that fair to assume? Robert DeMartini: Yes. I mean Q1 is not robust by any means, but we've seen us kind of lapping last year right at about equal to comp levels. And obviously, we're close to ending March, and we expect kind of the same performance in March. Bradley Thomas: Great. And then just following up about the outlook for the year, we can obviously back into it a bit through your guidance. But the question is really how to think about the flow-through margin? You've done a great job of improving the cost structure of the business. As you start to drive this volume, how do we think about it flowing through to the bottom line? Todd Vogensen: Yes, flow-through actually should be quite good for us. If you look at the guidance, we're guiding to revenue that's $30 million to $50 million better than last year and looking at EBITDA that's going to be around $20 million to $30 million better. That's a pretty healthy flow-through. I think on a normal basis, our sales should be generating about a 30% flow-through. This year will be a little bit more because we're also seeing margin expansion and a lot of cost control that is helping us along the way. Bradley Thomas: Great. And if I could squeeze in just one more regarding the macro environment as it relates to raw materials. Can you just remind us the degree that you have exposure to petrochemicals or other inputs that may be at risk of some price pressure here? And what are you hearing from suppliers? Todd Vogensen: Yes. So mixed bag, we obviously are not importing oil or anything like that directly, but we do have products that have a petroleum base to it. You can think foam, some of our -- to a lesser degree, the mineral oil that's going into the gel. Overall, we've looked at it. And if the price of oil stays around that $100 a barrel range, effectively, the savings we're going to get this year off of tariffs from being able to get -- well, lower rates on tariffs, but also tariff mitigation would roughly offset the exposure from any oil. We continue to monitor it. We're hearing noises about price increases, but it's just very, very early on at this point. Operator: Your next question comes from the line of Matt Koranda with ROTH Capital. Matt Koranda: I wanted to hear a little bit more about how you're thinking about the seasonality of the year, just given the visibility you have into the product launches with your wholesale partners. So maybe just a little bit more around the ramp that's implied in guidance for the remainder of '26. Todd Vogensen: Yes. So you should see revenue growing -- sorry, Rob. You should see revenue growing pretty consistently across the course of the year. In Q2 -- typically, Q2 would be relatively flat to Q1. But this year, we have the Purple Royale launch at Mattress Firm that literally just got out on floors last week officially. So that will help out the Q2 pace. And then we have a natural build that we see virtually every year going into Q3 and Q4. So it really should build pretty consistently as we go across the course of the year. Matt Koranda: Okay. And then maybe just wanted to hear you unpack the drivers of the flow-through. You mentioned there's likely some more restructuring actions. Does that benefit operating expenses? Or are there gross margin benefits embedded in the actions that you're taking? Are the actions already taken? Or is this incremental stuff that still needs to happen during the second quarter to hit the flow-through sort of that's implied in the '26 EBITDA guide? Todd Vogensen: Yes. So the actions that I kind of referenced were actions that have already been taken at this point. We don't have plans for additional actions that are needed right now. We feel like we're positioned very well for the full year. But we did take a little bit of an action in January that will continue to benefit the operating expense line. And then from a gross margin perspective, we actually just have a very strong team on the operations side of the world that is always looking for room for improvement from an efficiency perspective, overall scrap and yield, looking at sourcing opportunities. There's a number of opportunities that should play out across the course of the year to help that flow through. Operator: Your next question comes from the line of Dan Silverstein with UBS. Daniel Silverstein: Maybe just to start, looking at the sales guidance, up $30 million to $50 million this year. I think the Mattress Firm expansion was supposed to drive around $70 million of additional sales and it sounds like it's doing really well right off the gate. If this is the case, what other areas might be driving a bit of a drag to kind of net out below $70 million? Robert DeMartini: Yes. First of all, I think that the $70 million, we've got to grow into that number. It's probably somewhere between $50 million and $70 million. And obviously, it's just hitting the floor right now. But we've got -- we expect growth from Costco as well. We expect growth from showrooms, modest. And then we have assumed a flat e-commerce business in the roll-up. We want to do better than that. But given the performance of the last few years, we tried to show some conservatism there. Daniel Silverstein: Super helpful. And that was kind of my second question. Why is the Amazon business doing well relative to your own e-com channel? How can you capitalize on this? And how can you reinvigorate your own e-com channel looking ahead? Robert DeMartini: Yes, Dan, I'll separate the 2 questions because they really are different drivers. I mean our own e-commerce business, we've got to figure out a way as we've expanded our availability across both our own showrooms and partner showrooms. The specialness of reaching our product online has been challenged and the product assortment while proving to be a benefit in a physical environment is either a neutral or a negative in a digital environment, and we're still trying to figure that out. So that's what's going on with e-com. On Amazon, it's quite a different situation where because of the cube of mattresses, we have a very underdeveloped shape of business at Amazon. So the progress you're seeing is kind of getting our fair share relative to the pillow business that we have there. And so it is a bit of a development opportunity, and that has to do with availability and prime badging that we're starting to figure out. So it really is 2 different drivers across those otherwise seemingly consistent channels. Operator: [Operator Instructions] Your next question comes from the line of Bobby Griffin with Raymond James. Alessandra Jimenez: This is Alessandra Jimenez on for Bobby Griffin. First, I wanted to follow up on current demand trends. What are you seeing from growth in your retail partners outside of Mattress Firm and the incremental Costco program? Robert DeMartini: Alessandra, on our own business, you're asking not the overall market? Alessandra Jimenez: Yes. Robert DeMartini: Yes. It's a mixed bag. We've got some customers where we're seeing nice growth, and we've got others where we've got to figure out why we're not seeing that. So it is a bit mixed across total sale. I think if you backed out the 2 customers that we spoke about in our script, we're probably seeing a net down about 5%. And I think that's about consistent with the market, but it is definitely mixed in the performance. Alessandra Jimenez: Okay. That's helpful. And then what are you expecting from a cash flow perspective for 2026 on the improved EBITDA profitability? Do you anticipate positive free cash flow for the year? Todd Vogensen: Yes, we would expect positive free cash flow for the year. Apologies, I was getting an echo. Positive free cash flow for the year. And as we look at it, we'll have CapEx that we'll be reinvesting in and $20 million to $30 million of adjusted EBITDA that would get us modestly positive. And coming off of a Q1 where we're ending Q1 with our cash actually equal to where we ended Q4. That's the first time that we've been in that range in over 7 years. So we're off to a good start for the year for sure. Alessandra Jimenez: That's really helpful. And if I can just sneak one more in. I wanted to revisit the showroom channel. It's encouraging to see that strong comp growth. Can you speak to what you're seeing from a demand perspective and what's kind of accelerating there? And then how do you think about the roughly 20% of locations that are not yet 4-wall profitable? Robert DeMartini: Yes, Alessandra, let me try to tackle that. So Scott Kerby, who runs that channel, has been doing an excellent job in establishing a selling system. And what's driving the results is positive mix. As I mentioned in the script, our mattress percent to total of the premium line is now over 50% of dollar revenue. And so that obviously helps the stores be much more profitable. Of the 20% of stores, that's about 9 stores that are not 4-wall profitable, we think at least 5 of those can get there with continued development and maybe 3 to 4 of them we really have to look at and figure out if we have -- are we in the right location with the right rent structure. But it's been mix, tight labor discipline and really looking at the cost structure of those stores that have led to the significant improvement over the last 2 years. Operator: Your next question comes from the line of Brian Nagel with Oppenheimer. Brian Nagel: So I have a couple of questions. First off, just with regard to the newer products, the more innovative products, is that rollout now complete? Or should we expect further rollout here, I guess, through '26? And then my follow-up question, I guess, mostly for Todd. I mean maybe just outline kind of the capital needs from an operational standpoint, the capital needs of the business. Robert DeMartini: All right, Brian, let me take the first one, and then I'll let Todd answer the second one. Yes, that rollout is physically completed. We completed our Rejuvenate rollout probably in the middle of fourth quarter and then started the Royale, which is a curated version of similar price points. The official launch at Mattress Firm was March 20. It's on all the slots that it was aimed for at this point. But we still have significant opportunity to develop that line. I spoke about the percent to total in showrooms. It's much, much lower in wholesale and in e-commerce. And that's a business development opportunity. So we think we can continue to grow that as a percent to total, but the physical expansion is completed, and we're now looking to a very full innovation pipeline for other products starting in early '27. Todd Vogensen: And from a capital needs perspective, I should have said before, our target for the year is $10 million to $12 million in capital. That's just up modestly from the $8 million that we had in 2025. So the base CapEx is going to always be kind of the normal maintenance CapEx that we've had for the past several years, particularly in our operations. We do have a little bit of innovations CapEx this year as we innovate for new products going forward. And then the -- probably the big chunks that are incremental versus last year, with the new products going out this year, we are looking to expand some of the fixtures that go into stores. So you can think about that being the headboards. We have some branded walls that go in and a number of things that just help with the overall environment around the Purple products that we think help sell the products through. And then Rob mentioned, we have 5 new stores that we're planning for this coming year. There's a modest amount of CapEx that goes for those as well. Operator: I will turn the call back over to Robert DeMartini for closing remarks. Robert DeMartini: I just want to thank all of our shareholders and investors and lenders for the support we've gotten and I want to thank the Purple associates for the hard work they've put in on the business. I believe from the Q3 and Q4 results, you can see our turnaround is taking hold, and I want to say thank you to everybody for that. Todd Vogensen: Thank you, operator. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the everplay group plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from everplay group plc. Mikkel, good afternoon, sir. Mikkel Weider: Good afternoon, and thank you very much. And welcome, everyone, to this 2025 results presentation. I am, as mentioned, Mikkel Weider, I'm the CEO of everplay; and with me is, Rashid Varachia, our CFO. We'll take you through the year of 2025 and look a little ahead. But since most of you probably haven't met me before, I should probably say just a few words about myself. So I have started several gaming companies during my life, including Nordisk Games, which grew to 1,300 employees via M&A and organic growth. I was the founder and CEO for 7 years. So we invested in or acquired 9 different game studios, including Avalanche, Supermassive, Raw Fury and MercurySteam. I have been at something like 15 different boards, mostly game companies and worked with games of all sizes from indie games and UGC to AAA. So when they called last year from everplay, I was engaged with a handful of different game companies, but I thought the opportunity sounded a little too exciting. So I really like the strategy and the people I met during the process. So I said, yes. And I started on January 5, just a couple of months ago, and I will talk a little about my early findings and thoughts later in the presentation. But first, let's look at 2025. So 2025 saw solid revenues of GBP 166 million, which is up 5% when excluding physical distribution and the performance of our new releases were really good. We saw an 11% growth in adjusted EBITDA for the year, reaching GBP 48.5 million, of course, which represents a 29% margin, which is up 3.1% from the previous year. We will pay a total dividend for the year of 2.9p per share, representing a payout of GBP 4.2 million in total. We ended the year with almost GBP 52 million in cash despite active M&A activities and dividend payouts. Overall, we are set to grow. We have a very nice pipeline of games coming out, many new partnerships and a strong back catalog. So our strategy remains on track. So what happened more in 2025? Well, we launched 11 new titles. They overall performed very well. They actually generated 80% more revenues than all the new titles in the past year. We signed several new large partnerships. We took a minority stake in Super Media Group connected to a strategic partnership with Bulkhead. We acquired the rights of the popular Hammerwatch franchise, including a range of long-term publishing rights. Now if we look a little at the specific companies, Team17, our largest company, had a very nice year, reached more than GBP 100 million in revenue and 20 million units sold. I would also say the quality of our new releases in 2025 were a lot higher than the previous year, reaching an average user score of 87% compared to only 61% the year before. So a big shout out from me to everyone who worked on these games. Date Everything! was the breakaway hit of the new releases with more than 750,000 copies sold. Yet our back catalog still accounted for 75%, which I think is really good and very high compared to most game studios out there. And I would say it's fair to say that 2026 looks even better with more than 10 new games coming out, which is more than twice the releases of last year and also including some really big ones, Hell Let Loose, Golf With Your Friends 2 and Wardogs. It's worth mentioning that the brunt of releases will come out in the latter part of the year. Now astragon, on the other hand, had a less good year than Team17. We terminated the physical distribution business, which hurt the top line, but streamlined our business. But we also saw underwhelming launches of the 2 main new titles during the year. Seafarer had a rocky launch in early access with several box and issues and Firefighting Simulator: Ignite was a better launch, but still saw less traffic and sales than we hoped for. So we are currently improving and adding content to both games. Seafarer will come out of early access and into full launch at the end of the year and should be in a much better shape at that point. We also lacked important large update for our main titles, which we are changing now onwards. In 2026, we look forward to several new releases, whereas not all have been announced yet. We are cautiously optimistic for the year. Lessons have been learned and more content is coming out. As for Team17, the larger launches will also fall in the second half of the year. So of course, when one company is under delivering, it's, of course, nice to have a portfolio of companies. So we are not too dependent on a few launches. And StoryToys had a really, really great year. Revenues rose an impressive 25% to GBP 30 million. And StoryToys did 740 updates during the year, which is about 3 launches per workday and 40% more than the previous year. And we ended the year with 376,000 active subscribers. Growth came from several places. StoryToys had a highly successful launch of the LEGO DUPLO app, LEGO Bluey app, which had more than 1 million downloads in the first month and also reached #1 in the app stores. StoryToys also secured several new partnerships and license agreements, including some large partnership with both Netflix and Apple. If we look ahead, 2026 has started well. We crossed 300 million downloads in the beginning of the year, and we have a lot of content coming out mostly on existing apps, but also a couple of new and unannounced apps. And now over to Rashid for a more financial review. Rashid Varachia: Lovely. Thank you, Mikkel. Hi, everyone. So group revenues were broadly flat year-on-year at GBP 166 million, but excluding the physical distribution, which we exited during the year, they were 5% up year-on-year. And the growth drivers coming from the success of our new title releases such as Date Everything!, Bluey, Worms Across The Worlds and Apple Arcade and then the new strategic partnership deals with Netflix Games. Team17, as mentioned by Mikkel, was 8% up year-on-year, reaching a record GBP 106 million with 20 million units sold. Six new games drove a 700% increase in new release revenues and outstanding performance from titles such as Date Everything!. Other titles included SWORN and Worms Across The Worlds and Apple Arcade. Back catalog contracted by 13%, mainly due to strong performance from Dredge in 2024 and revenue generated from fewer new title releases in the prior year. astragon was the only division which contracted with a decline of 33%, in part driven by a strategic decision to exit low-margin direct physical distribution. Excluding physical distribution, astragon revenues decreased by 18%. Two new titles were released during the year, Firefighting Simulator: Ignite and Seafarer: The Ship Sim, both performing unfortunately below expectations. But we're expecting the business to bounce back in 2026. And then finally, on StoryToys, outstanding performance where revenues were up 25% to GBP 30.4 million. They released 740 app updates. Subscriber numbers increased to 376,000 with peak monthly active users of 12.9 million, reaching 286 million lifetime downloads. Performance driven by a major new Netflix and Apple game partnerships, including LEGO DUPLO World and Barbie Color Creations, along with 3 launches on Apple Arcade Greats. Next slide, please. Thank you. New release revenue increased 80% to GBP 41 million versus GBP 23 million in FY '24 due to an increased number of titles and stellar performance of Team17 titles and LEGO Bluey from StoryToys. Our back catalog contributed 75% of group revenues, which was in line with its 5-year average. The total back catalog revenue were GBP 125 million, which was a 13% decline versus prior year. This was on the back of an exceptionally strong FY '24, which grew by 27%. First-party IP revenue declined 9% to GBP 56 million, reflecting a softer performance at astragon. Team17 was up 2%, supported by Hell Let Loose and Golf With Your Friends. And finally, on this slide, third-party revenue grew 4% to GBP 110 million with strong contributions from the overcooked franchise, Date Everything!, Dredge and LEGO DUPLO World. Gross profit increased significantly by 10% to GBP 76.3 million, where gross margins increasing by 4.4% to 46%, mainly due to exit from physical distribution business and no material impairment. And just as a reminder, during FY '24, a GBP 4.6 million charge was booked for title impairment. Overall, royalty payments were lower year-on-year due to a favorable sales mix at Team17 and a higher weighting of StoryToys revenue, which carry lower royalty levels. And then finally, expense development costs increased modestly to support expansion onto new subscription services, for example, Worms Across The Worlds on Apple Arcade and LEGO DUPLO World. Significant improvements on adjusted EBITDA, which grew just over 11% to GBP 48.5 million. Adjusted EBITDA margin also increased 3.1%, reflecting higher gross margin and flat admin costs. Acquisition-related adjustments declined from 13.8% to GBP 12.1 million due to the end of acquisition-related incentive payments. And net finance income increased to over GBP 1.2 million, and the effective tax rate increased from 24% to 25.5%. And then finally, adjusted EPS increased 7% to 25.7p. There was an GBP 8.2 million increase to GBP 33.3 million on capitalized development costs. This was due to Team17 and the new titles such as Golf With Your Friends 2, Hell Let Loose: Vietnam and astragon, both Police Sim and Ranger's Path. The current year for cap dev in terms of FY '26 is forecasted to be GBP 45 million. Again, this is mainly due to the investments in first-party IP such as Wardogs, the Hell Let Loose franchise, which we have much better visibility over. However, this has led to an increase in terms of cap dev. And then finally, on cash, our cash position was GBP 51.9 million versus last year and increases were driven by our dividend payment during the year, increased tax and then also increase in acquisition-related payments. But overall, our variances included working capital and capital development. And as mentioned earlier by Mikkel, I'm pleased to announce a 2.9p per share dividend. Mikkel Weider: Yes. And now I wanted to say a couple of words about my first 3 months. It's, of course, always interesting to start in a new business and coming into a company with fresh eyes, so -- and see a little from the outside. So I wanted to take this opportunity to give my view on the company after close to 3 months in. So yes, it's always a little exciting to start a new job. Is everything as good as they told you in the hiring process? Or do you uncover larger problems once you're on the inside? Well, fortunately, I can say that the company is in better shape than I had hoped for. Yes, there is stuff to work on for sure. But overall, I'm very impressed with the company and the organization despite the stock being pretty weak in the recent weeks. There is a good energy, I think, in the company and the culture is strong. While there has been several changes in the management in the last years, especially in Team17, I feel we have a range of great people now to take the company to the next level, and we are well positioned for growth. The back catalog is also as strong as I could have hoped for, which creates stable cash flows and predictability, which is really nice, of course. I already like the vertical strategy of the company with focus divisions before I joined. But getting on the inside, I can really appreciate the focus of each division. If you like an astragon or StoryToys game, you'll most likely like the new games coming out from them as well, and Team17 can also do a lot of cross-promotion between titles. Some of the stuff I would like to focus more on in the coming years are to have a stronger tech focus, including AI. I also like to look more at processes and reutilization. So we want to add more service elements and upsells for evergreen titles, for example, having more paid DLCs attached to our bigger games. And I'm also looking at how we can work more together and create synergies across the group. And of course, we want to do more M&A. So over the last 18 months, my predecessors have worked with different strategic pillars. And I think there overall has been good progress on these pillars in 2025, and these are pillars that I support as well. So there was an ambition to strengthen our first-party IPs that is IPs and games we fully own ourselves, something I definitely think is a good idea. And in 2025, we launched 2 new titles with first-party IPs. And we have 10 projects in the pipeline for our owned IP. So I think there has been good progress there. Another focus has been to find and grow new innovative third-party games that is games made by other companies with their IPs. There has been solid progress here as well. Date Everything! was a breakaway hit, and we have more than 10 new third-party games coming out already in 2026. A third focus has been to be very mindful of costs and to improve margins. Gross margins, they are up 4.4% and adjusted EBITDA was up 3.1%, which makes the company a very profitable one compared to a lot of our peers. And finally, we wanted to drive more growth. Well, adjusting for the removal of physical distribution, the company did see growth after all, and we also managed to acquire IPs and games for the future back catalog. On the organization side, there has been several changes. Aside from having a new CEO, me, if you're in doubt, Team17 promoted Harley Homewood to be the General Manager in November, and he's really doing a good job so far. In Team17, we have recently regrouped our games in 3 overall pillars with a franchise director for each, so we more easily can reutilize knowledge, technology and do cross-promotion within the clusters. In astragon, we have exited the distribution business, but also slimmed the organization overall to focus on the core titles, and we now have a more simplified organization, making it easier to get higher margins again. In general, we want to scale without adding proportionally more people. I think it's important to stay nimble and agile and use technology and processes in smarter ways. An example of that, Team17 has more than twice the amount of launches in 2026 compared to last year, while not adding to the total headcount. I think that is quite impressive. Finally, we have hired a few additional central resources to assist all divisions. And overall, we are creating a stronger foundation for organic growth and acquisitions. As mentioned, I want us to become stronger in tech and AI. And as many of you know, AI has evolved a lot the last months, really empowering developers in tech. New tools and AI will allow us in everplay to, a, create more and larger and richer games while not adding costs; and b, also help us optimize our internal processes and logistics. In general, I actually think AI will result in a greater demand for publishers like us, someone who can help developers games to stand out in the crowd. With more games being launched, discoverability will definitely be key onwards. So in many ways, AI strengthens our reasons to be. In the meantime, it's, of course, very important we follow the evolution closely to reap the fruits, we need to be at least early adopters. We need to be stellar in marketing and publishing, and we need to be very agile and adapt to changing technologies while still doing it in an ethically correct way. We've been working with AI for a while. We have an AI council and AI tools for all our people. And we have various cases across the group, cases we want to expand on and distribute across the group. Some examples, StoryToys are actively using AI in engineering, doing 40,000 lines of code per month. We're also using AI in QA several places, for example, for performance testing and [ automatization ]. But as mentioned overall, we can go further, and I want to empower our employees even more. And now a short break from talking. Let's watch a show reel of some of the games coming out this year. [Presentation] Mikkel Weider: A lot of nice games, if you ask me. So some of the bigger titles this year are Hell Let Loose: Vietnam, Golf With Your Friends 2, Bus Simulator, Silver Pines, Wardogs and some pretty interesting unannounced titles we look forward to presenting later in the year. And now for the last slide of the presentation. Overall, I believe we are well positioned to continue the growth with a strong pipeline and back catalog. As mentioned earlier on, some of the larger games are scheduled for the second part of the year, which gives some additional weight to H2 results. But overall, we are confident we can deliver the adjusted EBITDA for 2026 in line with the current market expectations. Looking to the midterm, we are investing in several of our larger first-party franchises with games coming out over the next couple of years. We are very happy about these investments, and we think they will bring great returns and strengthen our portfolio considerably. And with these words, I think we can conclude the presentation. We will now take questions hosted by James Targett, our Head of Investor Relations. So James, come on board and tell us if you have some questions already. James Targett: Yes. Thank you, Mikkel. I do have some questions, which have come in from shareholders. First of all, your thoughts on capital allocation, particularly how you think about M&A versus share buybacks currently? Mikkel Weider: Do you want to say some words on that, Rashid? Rashid Varachia: Yes. Obviously, capital allocation, very important to us. We're hugely cash generative, and we're always very conscious in terms of how that cash has been deployed. But we also -- it's also important to note last year was the first year whereby we actually reported a dividend payment. And so we will continue in terms of our journey in terms of capital allocation. We want to do M&A, and it's great that we have the funds to do M&A. But in terms of share buyback, it's very unfortunate where we find ourselves with our share position and share price position this week. And it's something that the Board will continue to review and discuss, but no immediate plans for any action on that at the moment. James Targett: Thanks, Rashid. Mikkel, one for you on AI. There's been a lot of narrative over the last few months that AI will disintermediate software businesses, make them less relevant. Could you address that directly for everplay and outline why developers won't be able to go straight to players and bypass Team17 or everplay? Mikkel Weider: Yes. No, no, I think it's a very interesting topic. So first of all, we don't see clear indications that there will be like one person in a basement ticking a button and suddenly having a wonderful game. There will certainly be a lot of low-quality games out there, but games of a certain quality will need like a team around them. However, that -- those teams, they can really be empowered by AI. And we are very used to working with small and agile teams of like 3, 4, 5, 7 people. And I think that's really what you need to make a quite powerful games -- game these days. I would be a little more worried if we had like 300 people working on a AAA game, and we've been working on it for 3 years on a very old engine, and it's coming out in 2 years or something like that. But I actually think we are really well positioned to work with smaller agile teams using powerful tools. Now of course, yes, there will be -- I'm sure there will be a lot more content coming out, but then it will be super important to have someone help kind of like connect the gamers with this content. And here, I think we are, again, really well positioned, helping teams out there where they can focus on making cool games, and we can get them in front of a much bigger audience. So maybe a little like today where everyone of us on this call, we can easily upload a video to YouTube, but is it going to be watched very much? Well, most likely not. And whereas there are some really big content creators out there who are very professional in their output. And that's where we want to be, like either the professional YouTubers or the -- or like closer to the Netflix. And it's not like Netflix has not been able to grow while YouTube was there. So I think we're going to live pretty well actually in that intersection, you can say. But again, we have to be on the top of our game here, like we can't just sit and wait for this to happen, like we're going to actively embrace it. And hopefully, we'll be a disruptor instead of getting disrupted ourselves. I think we have a good chance of that. James Targett: Thanks, Mikkel. Rashid, one for you. Are you concerned about the rise in development costs compared to the previous years? And how does this support the midterm growth? Rashid Varachia: Yes. So not concerned, James, because there's reasons for the increase. We came off the back of '24, whereby it was an all-time low in terms of cap dev. We had impairments back in '23, early part of '24. But this is a growth for our future. So I'm hugely excited. We've got some fantastic new games coming. We've already said this year, there's going to be at least 15 games, 15 new games. And it's investment, as I said earlier, into our first-party titles. And towards the end of last year, we invested in the Super Media Group, the Bulkhead team who are responsible for Wardogs, a fantastic game, massively excited. The games coming out later this year, but that does require capital investment. So a combination of Wardogs, our own IP and the team at StoryToys are also growing significantly. Unfortunately, we can't announce everything on this call, but there's some really great games coming from the StoryToys team as well. So that has led to an increase in cap dev, and the way we like to -- well, how I like to forecast is I'm fairly conservative. That's reflected in the numbers, and we should see growth in future years. Last year, we had 3 upgrades. So all being well, we'll beat the current expectations. James Targett: Thanks, Rashid. A question on how we decide about acquiring IP versus building IP internally. Maybe that's more for you, Mikkel. Mikkel Weider: We'll do both, you could say. Our core business is to build our own like to grow organically and invest in games that we -- as we do today. And then, as Rashid also mentioned, sometimes when we know something is working, we can take -- we can do a bigger investment in that title based on like, let's say, Hell Let Loose. It's such -- there's such a huge fan base. So it feels much more safe to kind of like do more within that IP than trying something completely new. On the M&A side, we are interested in looking around, and we're going to be super structured about it. And we're going to be highly picky with what we potentially buy. We're going to say no and no and no and no, and then maybe we're going to say yes to something because it has to sit really well with us for us to buy something. We are -- would potentially like to buy IPs and games, so assets because we can actually handle assets in our company, which is much better than in my previous company, for example, where we always had to buy like a full team that can handle everything themselves. This time around, we can buy assets and then take care of them for the next 5, 10 years. We can also buy a studio or a company, but then it has to be really fitting with our values and it has to -- that our due diligence has to be very thorough whether we want to take them in or not. And you could say that we -- on our wish list are titles that can bolster our existing divisions and to make a new kind of like forest division would require that it's like really like a standout opportunity. So we'll be active, but very cautious on what we potentially would be buying. And now I'm going to -- I saw a question on the list here as well. And we can, of course, evaluate whether we should buy shares in our own company if we think we are more attractive than anything out there. That's, of course, something to -- we'll be considering along the way as well to get most bang for the buck. James Targett: Rashid, what is the amortization policy for capitalized development costs on larger first-party titles such as Hell Let Loose: Vietnam and Golf With Your Friends 2? Rashid Varachia: Yes, it's very conservative, James. It's 2 years with month 1 being 30% and that hasn't really changed. And it's something which I reviewed when I first came on board. We've taken feedback from PwC as well. And the expectation was we would increase that. But again, with the very nature of how I tend to do things, I'd like to leave it conservative. The Board agrees, we should leave it how it is. But the tail for our titles is much longer than it's ever been. And I think it's a good point -- good place to mention our back catalog because as we said earlier, our back catalog represents nearly 75% of our total revenue. And when we look at our back catalog and we look at the aging of our back catalog, there's still over 50% of our back catalog, which is coming from titles, which is 4 years plus. So a, demonstrating the longevity of our titles, but also the number of titles that we have actually, what I call in the hopper, which is 150-plus titles that we have. So there's no concerns there in terms of our amortization policy. James Targett: Thanks, Rashid. A question from Mikkel. How does everplay, specifically Team17 and astragon focusing on the PC and console business aim to stand out among the growing number of indie and AA releases every year? Mikkel Weider: Well, several answers to that one. One is that we can -- as opposed to most other, we can actually do cross-promotion. So hey, if you like Construction Simulator, you might really like Bus Simulator, for example, like where we stick within our verticals. If you like Hell Let Loose, maybe you're going to love Wardogs. So I think cross-promotion is something that we can do and which is harder for the other. We are great in kind of like getting to a bunch of different platforms, which is quite hard for smaller entities like you don't just immediately get on Xbox or PlayStation or new consoles coming up. So I think the distribution is we have more direct consumer access than a developer typically would have. We know how to operate social media and marketing and outreach and where it gives the most bang for the bucks. Honestly, most developers, they are not very interested in a lot of these things that we are doing, and they are not -- therefore, not very good at it. And we just need to keep being at the forefront of marketing and getting games in front of eyes of other people. So we are also strengthening actually our marketing department, for example, in Team17 because this will be core for us in the future. And then maybe we'll have technology handle some of the -- be more active in other parts of the organization, where -- which is not our core focus. So yes, it's -- we need to keep improving, of course, and being at the forefront. James Targett: Okay. And actually, our last question, maybe one you could both answer to finish with. Is there any particular game this year that you're most excited about? Mikkel Weider: What do you say, Rashid? What are you excited about? Rashid Varachia: I say one, James. I'm going to say 2. I'm going to go Wardogs because it looks fantastic, and it's a bit of me, love a bit of shooting. And then I'm going to go Golf With Your Friends because I'm rubbish playing it. I need to practice a little bit more. Mikkel Weider: You mean you are obviously playing it in real life. Okay. Yes. Okay, then Golf With Your Friends 2 is a little more. Yes, those are good titles. I'm also personally excited about, of course, the Hell Let Loose that we mentioned. I think that like a classical franchise like Bus Simulator has been with us for so many years. And sometimes instead of killing dragons and shooting some, it is actually very, very relaxing and soothing to drive a bus instead. So I think that's going to be good fun. And then, of course, some of the more like indie titles like Silver Pipes, for example, I think looks really exciting. James Targett: Okay. Well, yes, plenty to look forward to. Well, that's all the questions. So yes, Mikkel, over to you. Mikkel Weider: Well, thank you very much, everyone, for joining this call. It's been a pleasure, and thank you so much for banking everplay. Operator: Perfect, guys, if I may just jump back in at this point, and thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of everplay group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. [ Sam Lee ] from Investor Relations of Jiayin Group. Please proceed. Unknown Executive: Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the fourth quarter of 2025. We released our earnings results earlier today. The press release is available on the company's website as well as from Newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures. Please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translation. Please go ahead, Mr. Yan. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] Hello, everyone. Thank you for joining our fourth quarter and full year 2025 earnings conference call. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] 2025 was a pivotal year for the industry, marked by deepening regulation and standardized development. Despite the continuously tightening in external environment, we maintained steady progress with -- for the full year, our loan facilitation volume reached RMB 129 billion, representing a year-on-year increase of approximately 28%. We achieved revenue of RMB 6.22 billion, up approximately 7.3% year-on-year and net income of RMB 1.54 billion, a year-on-year increase of approximately 45.4%, demonstrating our operational resilience amidst a complex environment. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] In the fourth quarter, following the implementation of the new regulation, we observed a continuous decline in comprehensive financing costs alongside higher entry barriers and stricter compliance requirements. In response to this new regulatory landscape, we have proactively collaborated with our funding partners to facilitate necessary adjustments. As of now, we maintain partnerships with 79 financial institutions with an additional 53 currently in negotiations. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] We have consistently adhered to the operating philosophy of compliance as the foundation, quality and efficiency as priority. We proactively adjusted our borrowing acquisition pace this quarter, adding approximately 407,000 new borrowers, reflecting a year-on-year decline. To further enhance the precision of channel management and the efficiency of marketing spend, we implemented cross-functional collaboration to revamp our channel evaluation framework and to continue to optimize onboarding standards, ongoing monitoring and off-boarding processes. Additionally, by establishing a more flexible credit limit management system, implementing targeted reactivation strategies for existing borrowers, we effectively unlocked the repeat borrowing potential among quality borrowers. Repeat borrowing contribution accounted for 79.4% of loan facilitation volume, an increase of 6.7 percentage points compared to the same period last year. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] Since the fourth quarter, risk indicators have remained under pressure. We have been advancing a phased deep restructuring of our risk control strategy, which include multiple rounds of tightening entry criteria, optimizing credit limits and iterating on product offerings. This has allowed us to proactively manage risk exposure and refine borrower segment structures, mitigating the impact of certain external fluctuations on asset quality. As of the end of the fourth quarter, the 90-plus day delinquency ratio was 2.03%. Entering 2026, thanks to precise identification and isolation of tail risk, along with structural optimization of existing asset portfolio, forward-looking risk indicators are showing positive trends. We will continue to build a risk control system that balances long-term stability with short-term dynamics serving as the balance for steady operations. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] On the artificial intelligence front, we made solid progress in 2025 in multimodal, antifraud, AI-powered agents and data intelligence. In 2026, our 4+2 strategy will undergo a key upgrade. We have reorganized our 4 core pillars into 2 main tracks: production and non-production. The production track focuses on core business value creation, covering 3 directions: borrower acquisition, risk management and marketing. We are exploring AI-driven identification and acquisition of high-quality borrower groups, deepening the application of multimodal technologies such as voice print, knowledge graph and anti-fraud and enabling AI-powered content generation and review and marketing. The non-production track aims to improve efficiency and quality in daily operations, covering engineering intelligence, agent assistance and office intelligence. Key initiatives include advancing AI programming from coding completion to autonomous coding, adopting a human-machine collaborative agent model to enhance service quality and efficiency and further upgrading our internal intelligent workplace systems. Meanwhile, our intelligent agent platform and machine learning platform as the 2 foundational infrastructures will continue to provide underlying tooling support for upper layer applications. This strategic upgrade marks a shift in our AI strategy from capability building to value creation, embedding AI more deeply into our business value chain and providing stronger, more sustainable drivers for development. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] In terms of new business expansion, we have continued to focus on 3 dimensions: financial product innovation, partnership model innovation and overseas market. On the product side, we actively expanded into auto-backed loans and digital intelligent micro loans, enriching our credit product portfolio. In partnership models, we connected with leading traffic ecosystem through joint operations, establishing deep strategic partnerships with multiple institutions. Throughout the year, we launched 21 projects with business scale growing month by month. As an early mover in global markets, its strategic value has become increasingly prominent. In 2025, facilitation volume in Indonesia increased by approximately 187% year-on-year, while registered users grew by approximately 119% year-on-year, demonstrating gradual scale effect. Mexico business accelerated significantly in the fourth quarter. For the full year, the total loan facilitation volume grew approximately 105% year-on-year, while registered users up approximately 110% year-on-year, marking a key milestone in validating our business model. We plan to use several countries where we have investment and operational experience as anchors to explore opportunities in other markets. Through cross geography and cross-cycle deployment, we will steadily expand our global footprint. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] The essence of financial inclusion lies not only in the depth of service reach, but also in conveying social value. Over the past year, our philanthropic initiatives reached multiple areas, including youth mental health and support for special needs groups. We directly trained over 30,000 teachers, students and parents covering more than 1,300 schools and conducted mental health assessments for over 60,000 students and teachers, protecting the healthy growth of children through concrete actions. In terms of volunteering services, since the establishment of the Jiayin volunteer service team, we have grown to 120 members, completed 28 activities and accumulated nearly 3,800 hours of service. Our philanthropic practices and social responsibility efforts have received multiple recognition from government departments, authoritative media outlets and social organization. This is not only an affirmation of our commitment to long-termism, but also a core competitive advantage in building trust in our brand. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] Regarding shareholder returns, in 2025, we continue to deliver on our commitment to sharing benefit of our development with our shareholders. During the year, we completed cash dividend distributions totaling USD 41.1 million, representing an increase of over 50% year-on-year. In August, we increased the total quota of the current share repurchase program to no less than USD 80 million. To date, we have repurchased nearly 4.6 million ADS with total value of approximately USD 30.4 million. We will maintain our existing dividend policy and make disciplined use of the remaining repurchase capacity to deliver sustainable returns to shareholders. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] Given the ongoing uncertainty in the macro environment, we maintain a prudent stance and expect loan facilitation volume for the first quarter of 2026 to be between RMB 18.5 billion and RMB 19.5 billion. We will continue to use compliance as our foundation and innovation as our engine to continuously solidify the technological foundation and build resilience against cyclical fluctuations. Dinggui Yan: [Foreign Language] Unknown Executive: [Interpreted] With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead. Chunlin Fan: Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan noted, amid the liquidity tightening and heightened risk volatility following the new regulatory implementation, we have proactively pivoted to prioritize asset quality over expansion to safeguard our long-term stability. Loan facilitation volume in Q4 was RMB 24.2 billion, representing a decrease of 12.6% from the same period of 2024. Our net revenue was RMB 1,090.2 million, representing a decrease of 22.4% from the same period of 2024. Moving on to costs. Facilitation and servicing expense was RMB 328.2 million, representing a decrease of 3.3% from the same period of 2024. Reversal of credit losses of uncollectible assets, loans receivable and others was RMB 20.1 million compared with RMB 1.2 million allowance for credit losses of uncollectible assets, loans receivable and others in the same period of 2024, primarily due to write-back of allowance for oversea contingent guarantees arising from lower expected loss rates. Sales and marketing expense was RMB 498.7 million, representing a decrease of 3.6% from the same period of 2024, primarily driven by the improvement in operational efficiency. General and administrative expense was RMB 66.8 million, representing an increase of 24.4% from the same period of 2024, primarily due to an increase in employee costs. R&D expense was RMB 121.9 million, representing an increase of 21.4% from the same period of 2024, primarily due to an increase in professional service fees and employee costs. Non-GAAP income from operations was RMB 120.4 million compared with RMB 402.4 million in the same period of 2024. Consequently, our net income for the fourth quarter was RMB 100.6 million compared with RMB 275.5 million in the same period of 2024. Our basic and diluted net income per share were both RMB 0.49 compared with RMB 1.30 in the fourth quarter of 2024. Basic and diluted net income per ADS were both RMB 1.96 compared with RMB 5.20 in the fourth quarter of 2024. Each ADS represents 4 Class A ordinary shares of the company. We ended this quarter with RMB 61.8 million in cash and cash equivalents compared with RMB 124.2 million as of September 30, 2025. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer questions. Operator, please proceed. Operator: [Operator Instructions] Our first question comes from Yuxuan Chen with Huatai Securities. Yuxuan Chen: [Foreign Language] I got 2 questions here. The first one is about the risk. Could management share how your risk metrics have been trending in the fourth quarter of 2025 and year-to-date in 2026? Given the recent volatility in the industry, how have you adjusted your customer acquisition strategy? The second one is about the regulation. With the regulatory environment in China continuing to tighten, what are your expectations for growth this year? In particular, how do you see the key metrics like loan facilitation volume and profitability trending? Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] Mr. Chen, I will answer your first question, and Mr. Fan will answer your second question. So as you know, risk for this year is highly related to the regulation. So I won't go into too much detail on the interpretation of the new policy and new regulation because I believe most of the investors in the sector are already quite familiar with the dynamics. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So from Jiayin perspective, compared with the previous cycle, the increase in risk last year was more pronounced and more prolonged. And particularly in the first 4 to 6 weeks leading up to the peak at the new borrower level, we observed the market reached its peak around late September and to early October. So the exact timing is a little bit different across different channels of different quality, but risk levels remain elevated through November before starting to decline in December. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So during this period, we proactively adjusted our channel mix. We tightened our standards in the new borrower models and strategies and control the absolute volume of new borrower acquisition. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So from the repeat borrower side, for the incremental assets from the repeat borrowers, risk peaked in November and then gradually declined starting in December. So in response, we adopted a more selective and disciplined approach to risk management, focusing on higher quality and more resilient borrowers for approval. So we also applied more stringent underwriting and credit limit management for customers who are higher risk with multiple outstanding debt, weaker asset profiles and limited financing capacity, particularly among the near prime or marginal borrowers. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So overall, our structured risk management approach has delivered tangible results. And based on our internal analysis, amid the broad industry-wide risk cycle, our measures contributed to an improvement in risk metrics by approximately 25% to 30%. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] Since January, we have been closely monitoring the overall industry volume trends. Both the platforms and our financial institutional partners are really still digesting the impact of last year's risk volatility. With that said, we're still seeing continued improvement in our new risk vintages. Since your question is on the customer acquisition front, we remain cautious in ramping up volumes. In terms of channel strategy, we're really prioritizing the leading traffic platforms and lower cost acquisition channels so that we can optimize our customer mix for the long term. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So for the second question, I'll hand it over to our CFO, Mr. Charlie Fan. Chunlin Fan: [Foreign Language] Unknown Executive: [Interpreted] So Mr. Chen, your second question is on the effects of the regulation and metrics. So for the full year of 2025, we achieved total facilitation volume of RMB 129 billion, with revenue and net profit reaching RMB 6.2 billion and RMB 1.54 billion, respectively, representing a net margin of 24.7%. Chunlin Fan: [Foreign Language] Unknown Executive: [Interpreted] So we see since the second quarter of 2025, particularly following the formal implementation of the new regulation, industry liquidity has gradually tightened and risk levels have shown a clear upward trend. So against this backdrop, we proactively tightened our standards and restructured our risk management strategies. So after reaching a historical quarterly peak of RMB 37.1 billion in facilitation volume in Q2, we continue to scale back in Q3 and Q4 with Q4 volume declining to RMB 24.2 billion. Revenue and net profit for the quarter were RMB 1.09 billion and RMB 100 million, respectively, with net margin declining to 9.2%. Chunlin Fan: [Foreign Language] Unknown Executive: [Interpreted] Similar to other leading players in the industry, we have faced short-term pressure on profitability due to declining pricing, volatility in risk metrics and diseconomies of scale resulting from rapid volume contraction. Chunlin Fan: [Foreign Language] Unknown Executive: [Interpreted] So with that said, as we've iterated in previous earnings calls, the implementation of the new regulation is expected to raise industry entry barriers and increase market concentration. As a leading platform, we believe that Jiayin technology can navigate through this period of short-term risk volatility and scale adjustment. We are well positioned to enter a new phase of high-quality moderate growth over the medium to long term. And encouragingly, after several quarters of rising risk across the industry, we are beginning to observe the early signs of stabilization and improvement in asset quality. Chunlin Fan: [Foreign Language] Unknown Executive: [Interpreted] So looking ahead, we'll continue to operate with the compliance as our foundation, closely monitoring changes in risk trends and market liquidity and dynamically adjusting our strategy in line with the evolving industry fundamentals. Given that the industry is still undergoing a transition period following the new regulations, we will maintain a high degree of flexibility and review our target on a quarterly basis. As Mr. Yan mentioned, for the first quarter of 2026, we expect the facilitation volume to be in the range of RMB 18.5 billion to RMB 19.5 billion. Operator: Our next question comes from [ Roxy Liu with Kaiyu Capital ]. Unknown Analyst: [Foreign Language] Given the rapid growth of the company's overseas business in 2025, could the management elaborate on Jiayin's strategy road map and the future outlook in the overseas market? Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] Roxy, I'll answer your question on the overseas part. So in today's fintech landscape, the international business has really become a key growth pillar that we're actively cultivating. As Mr. Yan mentioned earlier, our operations in Indonesia and Mexico have both been growing at a strong pace with volumes roughly doubling year-over-year in 2025. So we expect this momentum to continue. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So from the scale perspective, we look to do the same in 2026. So another year of doubling in scale. At the same time, on the quality front, both markets are expected to reach important strategic milestones and moving towards profitability. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] So from a business model perspective, we will continue to deepen our localization strategy, expanding partnerships with local financial institutions and enhancing our ability to serve and empower the local financial ecosystem. At the same time, we'll continue to broaden our collaboration with international financial institutions to capture synergies from our global strategy. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] For the new countries and markets, we've been actively laying the groundwork for expansion into new markets. So we look forward to sharing more progress with you later in 2026. Yifang Xu: [Foreign Language] Unknown Executive: [Interpreted] Thank you. That's my answer on the international part. Operator: Seeing no more questions, I will return the call back to Sam for closing remarks. Please go ahead. Unknown Executive: Thank you, operator, and thank you all for participating on today's call. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Operator: Thank you all again. This concludes the call. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Hello, everyone. Thank you for joining us, and welcome to the Bitgo Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]. I will now hand the call over to Baylor Myers, VP of Corporate Development. Please go ahead. J. Baylor Myers: Good afternoon. Thank you for joining us. Our remarks today will include forward-looking statements, including those regarding our future operating results and financial condition, such as our outlook for the next year, our business strategy and plans, market growth and our objectives for future operations. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ will be included in our SEC filings, including those that are stated in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025, and in our other filings with the SEC. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we'll discuss today will include both GAAP and non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures. Joining me today on the call are Mike Belshe, Founder and CEO; as well as Ed Reginelli, our CFO. With that, I will now turn the call over to Mike. Michael Belshe: Thank you, everyone, for joining Bitgo's first earnings call as a public company. Since this is our first earnings call, I'm going to give a little more background on Bitgo than we will going forward. Some of you may have heard this before during the IPO process. So thank you for your patience as we go through it, but I want to make sure we're all starting from the same place. All right. So when we founded Bitgo over a decade ago, we wanted to create a company that could meaningfully contribute to accelerating the transition to a digital economy. At Bitgo, we believe that digital assets are already fundamentally reshaping the financial system and are going to continue to do so. The ongoing announcements and news from all major traditional firms from Fidelity to Morgan Stanley to SoFi demonstrate that this is true. Since Bitgo's inception, we've been building for a future where all assets will be digital. Early in my own crypto journey, it became clear that the infrastructure to support the shift to digital assets was nonexistent and the ecosystem was incredibly immature. Established financial institutions didn't have a compliant framework, secure custody or even institutional-grade security solutions to rely on. So we set out to build the technology to provide this institutional-grade infrastructure, which could elevate digital assets to a higher level. The product we created is now the industry standard, multi-signature threshold MPC wallets that protect against both theft and loss, and this is what Bitgo was founded on. While other early participants built retail products, we established our track record for building institutional-grade infrastructure. In 2014, we introduced enterprise policy controls to digital asset wallets. In 2018, we launched the first U.S. trust company purpose-built for digital assets. We expanded into prime services and liquidity in 2020 and became the first to support qualified custody under New York DFS framework in 2021. We built a globally regulated platform spanning the U.S., Europe, Asia and the Middle East. As you're probably aware, we recently received our National Bank Charter under the Office of Control of the Currency, OCC. That made Bitgo the first public federally chartered digital asset infrastructure company. And we scaled our business model support over 1,700 assets across thousands of institutions and over 1 million users. Through these accomplishments, we've continued to differentiate Bitgo in the broader digital asset industry. To start, we operate purely as infrastructure. We do not manage exchanges. We do not compete with our clients nor do we have the same kind of exposure to digital assets that retail platforms do. We exist to provide security and compliance that empower institutions to participate in the digital asset economy. Our institutional client base is investing in crypto for the long term and has proven itself much stickier and less impacted by short-term market cycles than retail users. It's also important to note that we didn't enter this industry during or because of a hype cycle. We were built and battle tested through many market cycles, fulfilling a growing and enduring need for our clients. Bottom line, Bitgo today is the digital asset infrastructure company, powering institutions, platforms and nations redefining the global economy, and we stand apart as the premier infrastructure provider. So you can think of us a bit like a hyperscaler for digital assets. We're a one-stop shop, multiproduct platform with institutional-grade infrastructure and mission-critical reliability that our partners can build and scale on regardless of where that takes us globally. We believe that no other company can provide the streamlined and comprehensive suite of solutions that we do. Institutions have been forced many times to piece together providers, opening themselves up to operational risk and increased inefficiency. Our vertical platform was built with security as the foundation and provides wallets, qualified custody, trading, staking, lending, settlement and compliance tools, all within one unified scalable infrastructure. Starting with wallets. These are developed in-house and integrated across our platform, driving client stickiness. We operate regulated trust entities globally and provide qualified custody under the most stringent and rigorous regulatory frameworks in the world. Our Go network allows clients to settle assets 24 hours a day, 7 days a week directly from cold storage, which is a significant differentiator. The liquidity services we offer enable institutions to trade, stake, borrow and lend without commingling assets. We're proud to have one of the largest institutional staking platforms in the world. Finally, we also provide Infrastructure as a Service capabilities. This includes token management, stablecoin issuance and crypto as a service. To briefly recap our most recent results, I'm proud of the impressive revenue growth of 424% we achieved for the full year, driven primarily by digital asset sales and gains in subscriptions and services, partially offset by a decline in staking revenue due to digital asset prices. Obviously, Bitgo is a long-term believer in digital assets, and we evaluate our business performance independent of short-term price volatility. So rather than solely citing the USD value of assets on platform, which fluctuates with market prices independent of our business activity, we'd like to also share coin unit growth and price normalized growth that more directly reflect Bitgo's performance rather than the market's pricing. On a unit basis, BTC on platform grew 8% year-over-year and our top 5 assets by volume grew 3% year-over-year, growth driven entirely by client inflows, not market price movement. On that normalized price basis, assets on platform grew 16% year-over-year. Asset states declined 7% on the same basis. This is a trend we continue to monitor as certain tokens unlock over time. We believe these normalized figures represent Bitgo's strong performance in an otherwise very volatile market. Moving on to our growth strategy. Our platform operates at the center of the digital asset ecosystem with each new integration, new asset and new user making Bitgo more useful, more defensible and more essential. When protocols, fintechs and issuers build on Bitgo, they bring assets and transaction volume onto the platform. That, in turn, increases demand for liquidity, staking services, financing solutions and compliance infrastructure. Growth in assets and flows naturally gives greater engagement across our product suite. And as we expand functionality, whether through new asset support, prime capabilities or infrastructure services, we increase cross-sell opportunities and deepen our client relationships. The result is a scalable platform model that underpins our growth strategy, driving market expansion, client growth and product expansion that reinforce one another, contributing to revenue growth over time. Now starting with market expansion. We are actively replicating our product in markets globally to ensure that we can serve clients wherever they operate. In 2025, we made more regulatory progress in international markets, notably expanding our license in Germany and becoming custody broker in Dubai. At the domestic level, our OCC license supports our expansion in the U.S. and allows us to provide digital asset services to clients across all 50 states under a single national regulatory framework. In 2026, we are actively expanding into additional regions with several new licenses and registrations already in progress in India, South Korea, the U.K. and the Cayman Islands. We see the biggest opportunity for expansion this year in the APAC region, which represents a significant share of global crypto liquidity and has already established regulatory frameworks for digital asset custody and infrastructure. These markets are seeing increased engagement from banks, asset managers and family offices exploring digital assets, stablecoins and tokenized financial products. Because Bitgo already has a strong presence across several of these hubs, we're well positioned to support institutional clients and adoption as it accelerates demand for regulated client custody, settlement and prime services. On to client growth. We've seen tremendous growth in our client base over time due to a number of factors. In 2025, we saw benefits from expanding internationally, which has helped us win more global clients. In 2026, we are focused on expanding Bitgo's role in institutional market infrastructure by increasing our market share in OTC and derivatives while continuing to build next-generation wallet capabilities. At the same time, we're also investing in agentic wallet infrastructure that enables programmable, automated interactions with digital assets, supporting more sophisticated trading, settlement and treasury use cases for institutional clients. Finally, product expansion. During the first half of 2025, we launched our Stablecoin as a Service and our crypto as a Service. We started as the issuer for USD1, which has grown to over $5 billion in market cap since its launch, making one of the fastest-growing stablecoins of all time. We also announced recently that SoFi selected Bitgo's Stablecoin as a Service platform for their SoFi USD stablecoin. Further, we started off 2026 with the launch of our derivatives business, which we believe substantially improves our trade offerings for 2026. So far, we've seen roughly $3 billion in notional trading volume and over $3 million in revenue. We also see opportunities to expand our lending and trading offerings as well as enter tokenized equities as real-world asset tokenization has surpassed $25 billion as of July 2025. Looking ahead, we believe growing regulation of the digital asset industry in the U.S. as evidenced by the passage of the GENIUS Act and ongoing discussions on the CLARITY Act positions us well to increase our total addressable market. As more regulation is in place, we expect to see more traditional firms come to us looking to get involved in the digital asset industry with solutions that are secure and safe. We're seeing this now with our ecosystem team in support of the Canton network, a blockchain designed for traditional finance, where Bitgo has been the sole qualified custodian for some time. All these efforts will help power our product expansion strategy. We also secured exciting partnerships in 2025 that meaningfully raised our profile, including with Fidelity and Bitcoin. We started 2026 off strong. We're supporting Investify with nationwide digital asset investing for banks and credit unions. We're selected for custody and staking with Fidelity's Solana ETF as well as being named for the Bitcoin ETF, and we are accelerating our global ETF partnership with 21 shares. This is a particularly exciting opportunity as we've seen ETF client count grow over 200% year-over-year. Finally, we can't ignore what's coming with tokenized equities. We see several models emerging to tokenize traditional U.S. equities and all of them require the infrastructure that Bitgo has been building. We're proud to be the custodian on the Figure platform, which launched earlier this year to directly issue equities on blockchain through Figures open network. To conclude, I'm proud of our achievements in the fourth quarter and full year 2025, and I'm incredibly excited about the start of our journey as a public company. Being public adds another layer of rigor to our business as we continue to operate with transparency and security. We also believe that access to public markets reinforces Bitgo as the steady-state infrastructure player for institutions. I'm confident Bitgo is uniquely positioned within the crypto industry as the digital asset infrastructure company, and we have the right strategy in place to drive growth and deliver significant value for our shareholders. Finally, I want to thank the Bitgo team for their continued hard work and dedication to our company and mission that's made executing our IPO and achieving our strong financial results possible. I now turn it over to Ed. Edward Reginelli: Thank you, Mike, and thank you all for joining us today. Before reviewing our financial performance, I'd like to build on Mike's discussion of Bitgo's growth drivers and connected to how we generate revenue. Bitgo makes money through 5 revenue drivers: digital asset sales, staking, subscriptions and services, Stablecoin as a Service and interest income. Starting with digital asset sales. We offer a secure, seamless liquidity solution that simplifies the complexities of digital asset trading. Our revenue reflects the total trading volume generated when the company acts as Principal, executing trades on behalf of clients through relationships that Bitgo has with various third-party liquidity providers and exchanges. Second, we earn staking revenue by participating in proof-of-stake blockchain networks where we validate blocks using either our proprietary staking technology or by partnering with our network of 25-plus leading third-party validators. In exchange for providing clients the ability to stake their assets, the company earns blockchain rewards in the form of the network's native tokens. Third, subscriptions and services revenue encompasses our core technologies. Wallet services, cold storage, development fees, lending services and crypto as a service. This service is very sticky and provides stability and predictability in our financials because our technology is highly integrated into our clients' operations. This relationship provides the opportunity to upsell additional products and services. Fourth, Stablecoin as a Service revenue, which is our newest product offering, launched in fiscal year 2025. This service allows institutional clients to issue U.S. dollar-backed stablecoins using our regulated trust infrastructure. We earn implementation and ongoing service fees for the issuance, reserve management and transaction processing of white label stablecoins. Lastly, interest income, which represents interest earned from the company's fiat treasury earned from deposits in various money market products. While we are not entirely immune to market volatility, our diversified revenue model helps insulate us from fluctuations in digital asset prices relative to others in the industry. In addition, a meaningful portion of our revenue is recurring and subscription-based and our performance is driven by a broader set of factors beyond asset prices, including interest rates, industry sentiment and continued investment in emerging ecosystem and products. Finally, our focus on institutional clients results in a stickier customer base, especially through periods of market volatility. Moving on to our results. Fourth quarter total revenue of $6.2 billion increased 440% year-over-year. For the full year, total revenue of $16.2 billion increased 424% year-over-year. Growth in both periods was driven by higher digital asset trading activity, increased subscription and service revenue and the launch of our Stablecoin as-a-Service offering, alongside deeper engagement from existing clients and continued expansion of our client base. This growth was partially offset by a decline in staking revenue due to lower digital asset prices. On our key operational metrics, as of the end of the year, number of clients grew 104% year-over-year to 5,322 and number of users expanded 14% year-over-year to 1.2 million users. Assets on platform of $81.6 billion decreased 9% year-over-year, while assets staked of $15.6 billion decreased 51% year-over-year. These declines were driven by lower digital asset prices. To reiterate what Mike noted earlier, excluding the impact of price by applying consistent pricing across periods, assets on platform increased 16% year-over-year, while assets staked decreased only 7%. On a product level, in the fourth quarter, digital asset sales of $6.0 billion increased 531% year-over-year. For the full year, digital asset sales were $15.6 billion, increasing 513% year-over-year. Growth during both periods was driven by higher digital asset trading activity resulting from the continued growth of our OTC services, the expansion of trading pairs on the platform, increased activity from existing clients and an expanding client base. With digital asset sales, there are corresponding transaction costs. In the fourth quarter, digital asset sales costs were $6.0 billion, resulting in a take rate of roughly 24 basis points. For the full year 2025, digital asset sales costs were $15.5 billion with a take rate of approximately 21 basis points. Staking revenue in the fourth quarter of $58.3 million declined roughly 64% year-over-year. Full year staking revenue of $385.0 million decreased 16% year-over-year. Decreases across both periods were primarily driven by volatility in digital asset prices. Similar to digital asset sales, staking revenue includes corresponding fees. In the fourth quarter, staking fees were $55.4 million, resulting in a take rate of roughly 7%. For the full year 2025, staking fees were $346 million with a take rate of approximately 11%. Subscriptions and services revenue in the fourth quarter of $39.3 million increased 75% year-over-year. Full year subscriptions and services revenue of $121.5 million grew 57% year-over-year, primarily driven by an increase in the number of clients, growth in development fees and higher lending activity. Custody and wallet solution clients increased to 1,534 with an average quarterly spend of [indiscernible] per invoice client. In addition, we exited the year with a lending book of approximately $207.4 million, representing an increase of 114% year-over-year. Stablecoin as a Service revenue was approximately $26.6 million in the fourth quarter with a take rate of approximately 20 basis points on assets under management. For the full year, revenue totaled $66.7 million with a take rate of approximately 16 basis points on assets under management. As a reminder, this service was launched in fiscal year 2025. Finally, interest income was $0.5 million in the fourth quarter, up 34% year-over-year. For the full year, interest income totaled $1.5 million, up 63% year-over-year, primarily driven by increased fiat treasury investments. Total expenses were $6.2 billion for the fourth quarter and $16.1 billion for the full year, principally driven by digital asset sales costs, staking fees and stablecoin sponsor fees as referenced earlier. Fourth quarter compensation and benefits were $27.9 million, up roughly 19% year-over-year and $104.2 million for the full year, up 30%, driven largely by continued investment in our engineering and commercial teams. Fourth quarter general and administrative expenses were $24 million, up 29% year-over-year and $76 million for the full year, up 44% year-over-year, primarily reflecting increased third-party costs associated with our IPO initiative, higher legal expenses and variable costs tied to customers and revenue growth. Net loss in the fourth quarter was $50 million compared to a net income of $129.4 million in the prior year. Net loss for the full year was $14.8 million compared to net income of $156.5 million in the prior year. Losses in both periods were primarily driven by unrealized losses on the company's digital asset treasury due to falling digital asset prices. Fourth quarter adjusted EBITDA of $12.1 million increased 188% year-over-year, while full year adjusted EBITDA of $32.4 million grew 904% year-over-year. We believe we are in the early stages of growth, and our priority is to accelerate revenue while expanding our product capabilities and global footprint. We will continue to make disciplined long-term investments to support these objectives, even if they temper near-term profitability. Fourth quarter diluted loss per share was $1.03 compared to prior year earnings per share of $1.07. Full year diluted loss per share was $0.38 versus earnings per share of $0.90 in the prior year. Moving on to our balance sheet. Our balance sheet remains strong as we ended the year with $318.5 million in total equity. Our balance sheet includes a Bitcoin treasury strategy under which we retain Bitcoin received or acquired in the ordinary course of business and at times, allocate cash flows to purchase additional Bitcoin. We remain confident in this strategy and our long-term approach remains unchanged. Looking ahead, we are committed to a balanced capital allocation strategy over the long term. As we invest to grow the business, we will remain disciplined in the way we allocate capital and operate as a business in order to minimize risk and maintain liquidity. As of December 31, 2025, total diluted shares outstanding were 119.9 million shares. As a reminder, we issued an additional 11 million shares in our January 2026 IPO. We hold no long or short-term debt on our balance sheet since any borrowings are primarily used to fund our lending business and are on a demand basis. Now turning to expectations for the first quarter of 2026. We've been operating as a publicly listed company for about 10 weeks. And while the quarter is not complete yet, we want to be transparent and share insights into the current market conditions. The macro environment in the fourth quarter was challenging, and those conditions have carried into the first quarter. Digital asset prices have remained under pressure and geopolitical tensions in the Middle East have added additional volatility. These macro conditions, along with the decline in digital asset prices have a direct impact on our revenue streams. We are not immune to these dynamics. With that said, our underlying unit-based metrics remain healthy. Our client pipeline is strong and the structural demand for our platform remains intact. As Mike noted, we are executing on our 2026 growth strategy and continue to see strong growth in our client base and pipeline. In our trading business, we expect strong year-over-year growth in the first quarter compared to Q1 2025, supported by the momentum built during fiscal year 2025. We launched our derivatives business in the first quarter of 2026. As spot trading volumes have declined from the fourth quarter of 2025 amid lower digital asset prices and market volatility, client interest in derivatives has increased as a way to generate yield and provide market downside protection. Please note that a portion of our existing spot trading activity is transitioning to derivatives. While spot trading volumes are reported on a gross basis, derivative trading is reported on a net basis. Other areas to highlight include continued growth in our Stablecoin as a Service business, where assets under management exceeded $5 billion during the first quarter, alongside the addition of new notable clients utilizing the service. We expect solid year-over-year growth in subscriptions and services in the first quarter compared to Q1 2025. However, revenue is expected to be lower than the fourth quarter of 2025, primarily due to a decline in development fees, partially offset by strong recurring revenue base from custody and wallet services and increased lending business. Staking fees, which are most directly impacted by digital asset prices are expected to be significantly lower in the first quarter compared to Q1 2025 and down sequentially from Q4 2025. However, we anticipate a meaningful improvement in take rate relative to Q4 2025, driven by the onboarding of a significant token. Bitgo has been around since 2013, and we have experienced many different market environments over the years. I remain confident in our ability to weather the current dynamic macro environment as our near-term opportunities are strong, underpinned by a deep client pipeline and several active projects. With a constructive and evolving regulatory backdrop, we continue to see strong momentum and remain positive on the digital asset industry as a whole. To close, we are pleased with our strong fourth quarter and full year 2025 results, which position us well to continue executing on our long-term growth strategy. We remain confident in our ability to drive client growth, asset growth and product expansion and to deliver long-term value for our shareholders. Thank you for joining us today. I'll now turn it over to the operator for our Q&A session. Operator: [Operator Instructions]. Your first question comes from George Sutton with Craig-Hallum. George Sutton: Congrats on your first quarter. So I wanted to ask on the CLARITY Act, Mike, in terms of -- obviously, we're starting to get some sense of what that might look like. I'm just curious if we could use your informed thought process on what you'd like to see or what you're expecting to see relative to how it will impact your business. Michael Belshe: George, thank you for the question. Let's see. We're excited to see CLARITY pass. We hope that it comes about. I know there's been a lot of debate in the industry about, in particular, some of the relitigation of stablecoin points. From my view, most of the work with CLARITY actually comes in the next 18 months after CLARITY is passed because what it sets up is okay, CFTCs can do most of the work in the regulation. And that's going to really determine the bulk of what matters. So we hope that it passes soon. I would take it in almost any form. I don't think we should be worrying about the interest that's being returned or not returned. I think we need to get to the next stage, which is getting this fully enacted and legislated so that we don't have to worry about whether we have a full path forward from Congress. So we're very much in favor of getting CLARITY passed, and I think we're at the finish line. George Sutton: There was a lot of reference to a very strong client pipeline. I wondered if you could just give us any more sense of what you're seeing from a pipeline perspective. And how much of that is TradFi focused? Michael Belshe: Great question. Glad you asked. So look, I mean, you're reading announcements almost every week, Morgan Stanley, Citibank, et cetera. All of these large major players were not participating in digital assets just a short 18 months ago. And with infrastructure, I think you also know that it goes through a pretty significant amount of process. It goes through an RFI, then it goes through some iterations to an RFP and then finally to a close. So we can't announce everything that's done until the client wants to announce it. But the pipeline has been super strong. And in fact, if anything, I just want to make sure that we have enough sales team out there to make sure that we're connecting with everybody that we need to. So we've been growing the sales team over the last 3 to 4 months, just there's a lot of work out there. Operator: Your next question comes from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: As we look at maybe the broader crypto space, obviously, there's some weakness here. In your prepared remarks, you guys said you guys are a bit different of a platform and business isn't entirely correlated to where digital asset prices are going, but then also alluded to the fact that lower digital asset prices will weigh on some of the segments. Can you maybe frame it a bit better, like which segments are you expecting to kind of be pressured with, call it, broader crypto down 20% year-to-date versus which segments do you think can grow strongly irrespective of, call it, the macro market for crypto? Michael Belshe: Yes. Thanks, Brett. Good to hear from you again. Let's see. I mean, in general, I don't want to sugarcoat it, right? Like the asset prices being down, it affects everybody in the sector. And I think we said during the IPO roadshow, I will say it again, like Bitgo has some amount of correlation to digital asset prices, and you kind of see it in many aspects of our business. We've got a few that are less correlated. One of them is stablecoins, of course. Those are not directly correlated to the crypto prices. The other one is trade volume, which we sell a lot of trade volume in up and down markets, those volumes will increase. So it's not a direct correlation to just the asset prices. But of course, it is a direct correlation to what's going on in the space broadly. Lastly, we do have subscription service -- subscriptions as part of our services. So sometimes people are buying a subscription, which caps a monthly minimum, which includes some amount of custody, some amount of trade volume, et cetera, transaction volume, all under a constant price. So it's a little bit less volatile than the digital asset prices. Brett Knoblauch: Awesome. And then maybe just as a follow-up, you mentioned like agentic wallets, which I think is a really interesting area and kind of a hot topic right now. How do you -- or how are you guys kind of positioned for that with respect to your subscription services product? Is it a different bundle? Is it included in maybe the same package? Just broadly, how should we think about maybe just agentic wallets and Bitgo together? Michael Belshe: Yes. Great. Well, actually, we think the product offering that we have is really well suited actually for all of the Agentic needs and capabilities. So we got our MCP server up by the way we've seen it, like where AI picks up on that and is able to help put together products and code on it. We're watching that carefully to make sure that we fully understand exactly what clients are looking for, and we react to that as quick as we can. Then in terms of why our products are kind of designed for this. I mean when we started doing our institutional-grade wallets back in the beginning, I mean, first, you've got the basic security components, which is how do you have no single point of failure, how do you have protection against loss. But then the next thing you're doing is you're making it work for an institution, a business, a group of people, right? And so there's multiple people on the wallet. There's a policy that you can set. You can say, hey, these types of accesses need these permissions, the other types need these other permissions, you can do it risk-based. This turns out to work really well with agents, right? So the agents are effectively like other participants on the wallet. And you can actually do it in both directions. You can both have the agents spending money on your behalf and then going through your controls to approve. And also, you can do the reverse where you're doing the spending of money and then the agent is kind of watching that. So if you have a large organization and maybe you've federated out different parts of your digital assets to multiple parties, that agent can put other controls on it that you can watch and then they'll decide whether or not to improve. So anyway, I think everything we've built is like perfectly in line for agents. And if you are looking for an agentic wallet, like please try out Bitgo, give us feedback. We are always iterating and improving. Operator: Your next question comes from Joseph Vafi with Canaccord. Joseph Vafi: Congrats to you and to Bitgo on getting to this stage of the journey in the company's evolution. Maybe just staying on the agentic for a second. I've been kind of noodling what's going to move the industry forward other than just spot prices. And I think everyone's been thinking that clarity could be a big driver, but agentic AI combined with programmable money and assets and blockchain are kind of all coming into view here. Do you think that agentic could move the industry forward faster than CLARITY? I'm just trying to get a view from your point of view and then a quick follow-up. Michael Belshe: Well, thanks, Joseph. I think it's a little bit apples and oranges. I think they'll move in different speeds. So first off, on CLARITY, I didn't quite say this in my previous answer. Having done the roadshow, having spoken to all kinds of potential investors, many of whom have not been in the digital asset space very much kind of prior to the unlock of 2025, all of those guys are looking for CLARITY to kind of be the permission that this is not just something where like under the Biden administration, you have one set of regulators and then under the Trump administration, you have a different set of regulators. And under the next administration, we're going to have yet a third set of regulators, each with their own agenda. CLARITY puts a pathway forward where Congress has said, yes, they support this, and they've asked the regulators to officially take on that thing. So I believe there's a significant amount of traditional finance that is very much waiting on CLARITY. And if CLARITY doesn't come through, those folks may be kind of in and out as the market goes up and down. So that's a risk. Let's see, on the agentic side, I think we're going through an early phase where people are learning how to use agents. You see some of the almost [indiscernible] that happens where we're all learning it. We're so excited about it, and yet we're not quite as productive as we hope that we will ultimately be. So I think the innovation and this kind of exploration wave is just starting. Clearly, there are going to be very -- a lot more robots than there are humans, a lot more AI brains than there are human brains. And so I think it's only natural that you will see agents operating on our behalf in all kinds of ways. But we're in the early days of figuring out how those get deployed. So both CLARITY will help us and agents are going to help us grow, but I think they're almost as different paths. Joseph Vafi: All right. And then any other thoughts Ed here? It sounds like take rate may go higher on staking due to adding a new token. Any other color that you may be able to provide there? Edward Reginelli: Yes. So -- on the staking side, we did add a significant token. Canton was the asset we added, and that has brought a tremendous amount of margin to the product line. Also on other product lines, including our trading business, we referenced earlier in the conversation about the introduction of derivatives, and that has been really successful in Q1. So that's also going to help improve margins. And then as we continue to grow our overall customer base, we'll get incremental revenues from subscriptions and services. The difficult part of the business right now from a revenue perspective because it's so tied to digital asset prices is our staking product line. But we still are very confident in that overall product line and expect that to continue to grow. We'll grow adding new assets to the platform, more units. And hopefully, we see a recovery in prices. Operator: Your next question comes from Brian Dobson with Clear Street. Brian Dobson: Congrats on your first quarter. So maybe we can take a step back and a longer view. As you're contemplating, say, the next year or 2 for the business, which global catalyst do you expect to be most meaningful for the company and call it, the sector at large? Michael Belshe: Sure. There's a lot of questions about like digital asset prices. One thing that we're trying to help describe and always open to feedback on this as well is how do you differentiate how the market performed versus how Bitgo performed. And so the reason we were citing earlier, if you take a look at assets under custody from a normalized price perspective, you can either do it normalized at the beginning of the period at the end of the period, it doesn't really matter. Our assets under custody grew 16% during this year, irrespective of the asset price on the market. So hopefully, that indicates we're doing something right. It's not easy to add billions of dollars of new asset into custody. And then where is that next thing going to come from? Look, I think mostly, it's that the TAM is growing. So the regulatory unlock of 2025 started with just what was now legal in the U.S. to do. The second unlock is the increase of participants in the space. And so kind of back to that comment earlier about pretty much every traditional financial firm has a significant investment in digital assets going right now. You've heard me say this before. Larry Fink of BlackRock says every asset, every bond, every token is going to be digitized. I think there's an increasing number of people that believe that. We just had Paul Atkins this week also saying that within 2 years, everything is going to be digital. So this is just a huge growth in the total addressable market for us. And we think as an infrastructure provider, we will be able to serve those clients, whether you're talking about self-custody, whether you're talking about custody, whether you're talking about financial services on top. Operator: Your next question comes from Pete Christiansen with Citibank. Peter Christiansen: Congrats Mike, Ed, Baylor on the successful IPO. I wanted to ask about attach rates. You've had some really impressive client growth over the last couple of quarters. I'm assuming a lot of that is custody led. Can you just give us a sense of how you're seeing the attach rates to some other services, in particular, maybe like prime brokerage, how you're seeing that trend? And then I guess as a follow-up, I want to double tap on TV a little bit. How should we think about Bitgo's competitive moat there? Is it, hey, we've got best-in-class capabilities and it also stretches on to our custody capabilities, what have you? -- but there's other players out there that may have bigger balance sheet. Just help us understand what is the competitive strategy there to grow some of these other ancillary services. Michael Belshe: Sure. Thanks, Pete. I'll take part of this, and I'll hand it to Ed for the attach rates afterwards. So look, I mentioned custody, and I always kind of hate mentioning custody because I don't want people to think of us as just a custodian by any means. We've had significant attach rates across the product lines. I think Ed's got the official stats, but we're really trying to move all of the revenue up the stack. And so that's why we care a lot about the trade volumes increasing significantly on Bitgo. So increasingly, we hope to move as many participants up there. I think when you're helping people make money, whether it's by trading, whether it's by staking or by using their assets, it's a much stronger position to be in. So as it relates to prime brokerage, look, the lending book is larger than it's been in the past. The trading volumes are up. The culmination of these 2 things is where you start to put together and build leverage for your clients. Right now, I'd say that we're still increasing kind of these individual services and then ultimately, we get to prime brokerage. As the competitive moat, I think the difference is a couple of things. A, we have the foundation at the bottom of the stack, which you can actually build on and understand the risk. A lot of prime brokerage is understanding what are the risks that you're taking and too much of the early prime variance that came a few years ago from various players was not adequately taking into account what the risk that's being taken is. Obviously, if you don't have custody -- if you don't have a solid risk around how you're holding it, it's difficult to even talk about like the market risk and counterparty risks that happen on top of it. So we have that strong foundation at the bottom. The fact that our trading volume grew so well in the last year as we finally have turned that on, partially just unlocked by the new regulatory environment here in the United States. We think all of this grows. So we are differentiated in that we do cold storage for that. We've got a solid foundation for that. We support more coins than anybody. I think we have some stats coming out probably in some press releases soon around just how broad the asset support is. I think when you look at other players, they're probably going to start with Bitcoin, they're going to start with Ethereum. And look, Bitgo supports just a much broader spectrum of products today. Ed, do you have the specific numbers on the attach rates on the various services? Edward Reginelli: Yes. So I believe as of end of last year, about 70% of our revenue-generating clients use 2 or more of our products and about 50% use 3 or more. As Mike pointed out, the clients are really focused now on yield-generating activities, and they would much rather be sharing some of those profits compared to just paying for stand-alone services. So we'll continue to keep driving customers of our products stack. And we also appreciate that, too, from the standpoint of increasing our margins. Instead of talking basis points, we're talking percentage points. So we're actively trying to move more and more clients to trading staking, lending and other value-added products that we currently offer. Operator: Your next question comes from Edward Engel with Compass Point. Edward Engel: Could you please talk about the launch of derivatives trading in the first quarter? It looks like it's been a strong start so far, but just wanted to get a better idea of when exactly that was launched and then, I guess, how you see that ramping throughout the year? Michael Belshe: Yes, sure. Yes, we're very pleased with how it's been going so far. Actually, let's see to [indiscernible] say here. Okay. I don't think so. All right. We launched on January 1. And one of the things that, by the way, I want to note you've got this terrible way of like aggregating gross revenue, which includes gross trading of spot then derivatives, of course, is not quite equivalent to trading volume. It's equivalent to the derivatives component. So it makes it hard to tease out. But we've seen substantial clients moving from pure spot trading over to derivatives. We've seen multibillions of trade volume already in 2026, and we just launched it, I guess, 3 months ago. So we think this is where the bulk of our trading volume will be probably in about another year or so, but very happy to be having this offer to our clients. Edward Engel: Great. That's helpful. And then just to try to sneak one in here. Just given that successful launch and then maybe just some of the recent volatility -- is there a world where we could see net trading revenue maybe kind of flat Q-on-Q? I know you said higher year-on-year, just that 1Q is a pretty low base. Michael Belshe: Ed, do you want to take this? Edward Reginelli: Yes. We are projecting that our overall gross trading volume will be down. On a net basis, we will also be down quarter-on-quarter, but will be up substantially versus Q1 of 2025. Q4, we appreciated the benefit of a lot of digital asset trading companies, treasury companies that came to the platform, and we had a tremendous amount of volume through them. What we've seen there is behavior changing. Those same clients are now using our derivative products, looking for yield, looking for market protection. So overall, we are very positive on our trading and derivative business and expect that to be a huge driver of our future growth. Edward Engel: That's great color. Congrats on being a public company. Operator: Your next question comes from Brian Bedell with Deutsche Bank. Brian Bedell: And also congrats on your first quarter here. Very exciting. First question, just on the -- going back to some of your comments, Mike, on CLARITY Act and the pipeline. How do you see that progressing during the year? Obviously, you mentioned that the CLARITY Act can be an unlock for traditional finance firms. And the pipeline is strong coming into 1Q. But do you see this being actioned upon relatively quickly if just the Act passes? Or do you expect more of a lagged response as we go throughout the year? From a revenue perspective, I'm thinking about the custody wallet component of subscription and services. Michael Belshe: We have not seen any slowdown in terms of readiness to adopt digital assets from traditional financial firms. If anything, I'd say it's been just as strong. So I think most people had been expecting CLARITY would get passed kind of over the last 3, 4 months. Maybe the -- probably market would probably tell you exactly what the predicted odds are, maybe that's come down a little bit, but it doesn't seem to have slowed anything down. And I'm not entirely sure that just because we don't -- that even if we didn't get CLARITY, I'm hopeful that it will, but even if we didn't, that it would cause a slowdown. It could. But I guess I just don't know exactly. So far, there's been no slowdown. So I think it's all positive. Remember, these build-outs take a long time, like the decision process for large firms moving into digital assets, the decision alone is 6 to 12 months. After that, there's the build-out and then there's finally the deployment. And usually, when they deploy, they do it kind of on a risk-adjusted basis where they do a small amount first and then grow it slowly. So because they've already started the process, I think it takes a while before they drop out. But I guess we're going to see exactly how they go. So far, it's been no problem. Brian Bedell: Yes. That's great. And then maybe an interesting press release on the Prediction markets venture. And it certainly seems like a differentiated way to go about the market. Can you talk a little bit more about that in terms of the OTC platform and how that -- you expect that to work? Is that going to sit at Bitgo? And then just talk about what types of contracts you're creating? It sounds like it's mostly in the crypto asset class right now. And how you're seeing that institutional demand play out? Michael Belshe: Sure. I think you're referring to our partnership we just announced with Susquehanna, right? Brian Bedell: Yes. Yes, that's absolutely, yes. Michael Belshe: Yes. For those that may not have seen it, we did announce a partnership with Susquehanna that -- you can have your assets at Bitgo and then we can -- through our OTC capabilities, we can help you place investments over at Polymarket and Kalshi, and we do that in partnership with Susquehanna. Look, that's just started. So I don't have any positive data that -- positive or negative to share with you just yet. We did have a lot of reach out and excitement about it. I think it creates a differentiated way to access these markets that wasn't there before. So look, we're excited to see what happens. Why don't you refresh that one for maybe the next quarterly report. Operator: Your next question comes from Dan Dolev with Mizuho. Dan Dolev: And also congrats from our end at Mizuho. Really quick question for you. It sounds like Stablecoin as a Service has been a huge success. I think you -- you recently launched it in the first half of '25, and it's already grown to like a very significant AUM. I think you mentioned $5 billion. So how big could this become? And what are maybe potential new ways to monetize beyond what you're doing today? -- congrats again. Michael Belshe: Great. Thank you for the question, Dan. Yes. So we started with USD1 last year. We helped them get from 0 to fully launched in about 6 weeks on top of the Bitgo Stablecoin as a Service product. It's a modular service. So you can kind of pick and choose some of the components that go into that. We announced just earlier this year that SoFi USD is going to be built on top of the Bitgo Stablecoin as a Service platform as well. I think that will be -- the first Stablecoin as a Service platform, I'll probably get to $1 billion each. SoFi is not there yet, but I think it will be the next one. We think there's tremendous opportunity. Like stablecoins are super easy for pretty much everybody in finance to understand. And in terms of payments, it's just better. I know there's some debate that's going on at the CLARITY Act, whether or not interest gets passed or not, there's a tremendous amount to be done here. So as the payment rails change, that changes how people are moving money locally and internationally, especially if you ever try to wire money internationally, it's very hard. People are opting to use stablecoins. You're going to start hearing like regular people outside of the business talking about, hey, I want to use some tether to send some money to a supplier across the globe. These are real things that are going to happen. At Bitgo, we've got increasing improvements around what we call our mint and burn dashboard, our ability to convert between these stablecoins, so we're going to have kind of an explosion of different stablecoins available and people might have some USDC, but they want to move to USD1. They got some USDT, but they want to move that to SoFi USD. And on the banking side, we haven't even seen the tokenized deposits quite come live yet. If you read up on the SoFi dollar, you can see how they're addressing the combination of both tokenized deposits and stablecoins. So I think we're in the early innings here. I think it's going to completely revolutionize how we're doing payments. I think you're going to see a use for settlements kind of everywhere. And then that will carry over, hopefully, into our Go network in the coming quarters. Operator: Your next question comes from Chris Brendler with Rosenblatt Securities. Christopher Brendler: I also add my congratulations on your first quarter out of the gate. I wanted to ask about the OCC approval process. I think it's now complete, but what does that mean for your business? And sort of which areas can you leverage that new charter? And it seems like it's somewhat unique as well. So it could be a competitive advantage, at least in the near term. I'd love to get a little color there. Michael Belshe: Yes. Thanks, Chris. Yes, for those that didn't notice, we did get converted over to the OCC National charter. So it's Bitgo Bank and Trust at this point. And it's been huge for our business actually. Now interestingly, from an operational point of view, we've been ready for this for quite some time. You probably know we operate multiple regulated custodians around the planet. We've had a couple in the U.S. We have in Switzerland. We have in Germany, we have in Dubai. We have in Singapore, coming hopefully in 2026 in South Korea. So we've built a playbook for how you run these that incorporates, of course, all of the U.S. things that you would expect, but also all of the things from other regulatory regions, et cetera. And I think we've got the most robust custodial platform of anybody in terms of being on top of all the regulatory components. Just being able to call yourself Bitgo Bank and Trust, actually, you're speaking the language of traditional finance. You say the word Bitgo it doesn't say bank in it and people don't quite know exactly what that is. Believe it or not, that does matter. But overall, you can't get a more respected regulatory framework. So it's been great. And of course, it cuts out any ambiguity. I see a few different states are looking to potentially try to regulate stablecoins in their own way, and we could end up with kind of the money transmission licenses of the states, but now it played out for crypto or played out for stablecoins. And by having that national charter, we are immune from that. So it's very good for our business. It's very good for our clients. And I'm proud that it shows that the Bitgo team has met the highest standards that are required. And one last thing that's interesting, we are a fiduciary for our clients' funds that are held at Bitgo Bank & Trust. And when you take a custodial duty over 100% reserve accounts, like what we do, that's fiduciary. Interestingly, when you go to roll up to your bank, he's not a fiduciary to you. It's a depository, it's a different relationship. So we think this is the right relationship for holding on to billions and billions of dollars of assets. Our clients do seem to value it, and it's been really good. One last thing, our crypto-as-a-service product has really taken off in 2026 already. We signed more new clients on crypto as a Service this year than we did all of last year. And we're only 3 months in, I think the OCC charter had a lot to do that. Christopher Brendler: That's fantastic and really looking forward to seeing how that progresses throughout the year. A separate question sort of related to the last question, which is on the Stablecoin as a Service, really great to see the SoFi news. I would love to hear just that pipeline because it feels like stablecoins is an area where it's not as impacted by crypto asset prices volatility. It's not as impacted by the regulatory environment since GENIUS Act is already done, although the interest exemption that fight might have a little bit impact. But I'd love to see more and more stablecoins being issued through Bitgo. And how does that pipeline look as you enter 2026? Michael Belshe: Yes, there's been a number of others. We haven't mentioned them as much because they're not as big of brands, but FY USD launched on top of Bitgo Stablecoin as a Service as well as a few others. There's a healthy pipeline more. Also the conversion component between all these different stablecoins is an area that we've been growing partnerships with some of the existing players everywhere from PayPal to Fidelity. Then in terms of how this grows, there's an interesting point that goes with CLARITY. If you're not allowed to get interest on stablecoins, then it kind of encourages everybody to want to be an issuer. Imagine your role as a bank or a business, you've got some distribution channel of parties and you want to use stablecoins, you've got 2 choices, either use an existing stablecoin, in which case somebody else gets all the interest or you build your own. And then you get to participate and figure out how you're going to use the interest that you get off of the reserves. And a lot of parties that have an existing distribution channel, of course, they want to tap into that. Eventually, I believe I don't know what arc of time it's going to take to get there. Eventually, we will have interest on stablecoins. And when that happens, the calculus changes. Now being an issuer is no longer so much about keeping the interest from your own distribution channel. Instead, you'll pay somebody much like an ETF, you'll pay them an administrative fee, probably 40 to 80 basis points and then you'll be able to get the interest from them. So suddenly, the need to be an issuer will be less. So it's an interesting place where I think, on one hand, we here at Bitgo are very much in favor of, yes, you should be able to provide interest on stablecoins, and that should be the way it works. I don't think that, that's going to happen. I think whether CLARITY Act passes or not, it's going to remain kind of constrained, and that's going to lead to more people wanting to be their own issuers, and that leads to more people wanting Bitgo stablecoin as a service product. Christopher Brendler: I was thinking as well. Operator: Thank you for your participation. That is all the time we have today for the question-and-answer session. I will now turn the call back to Mike Belshe, Founder and CEO, for closing remarks. Michael Belshe: Thank you, everybody, for joining us today. I appreciate your interest and support of Bitgo. Thanks, everybody, for saying congratulations. I think it's not entirely necessary, but it is appreciated. The entire team here at Bitgo works super hard. We've been doing it for 12 years. The people feel we're on a mission to really change the way the financial system works, and we're really proud to be a part of it. So thank you and look forward to keeping in touch with all of you on this journey. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and welcome to the American Shared Hospital Services Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Kirin Smith. Please go ahead. Kirin Smith: Thank you, Chuck, and thank you, everyone, for joining us today. AMS' fourth quarter and full year 2025 earnings press release was issued today before the market opened. If you need a copy, it can be accessed on the company's website at www.ashs.com at Press Releases under the Investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025. The company assumes no obligation to update the information contained in this conference call. Before I turn the call over to management, I'd like to remind everyone about our Q&A policy where we provide each participant the time to ask one question and one follow-up. As always, we'll be happy to take additional questions offline at any time. With that, I'd now like to turn the call over to Ray Stachowiak, Executive Chairman. Ray, please go ahead. Raymond Stachowiak: Thank you, Kirin, and good afternoon, everyone. As I reflect on 2025, I'm reminded of the strength and importance of our health system partnerships, which continue to be our foundation to our business and a key driver of our long-term strategy. Over the past year, we've worked closely with both long-standing and new partners to position our company for success in 2026 and beyond. These alliances have allowed us to expand our clinical capabilities, strengthen our operational foundation and enhance patient access to advanced cancer care. 2025 was a year of transition and investment. While our total revenue remained relatively stable at $28.1 million, the underlying transformation of our business was significant. We continued our shift toward a direct patient care model, which now represents the majority of our revenue and provides a more stable and scalable platform for long-term growth. At the same time, we encountered challenges across certain areas of our business, including physician turnover, reimbursement dynamics and expected headwinds in our Leasing segment. Importantly, we took decisive actions to address all these issues. A key highlight of the year was the strengthening of our partnerships, including our new collaboration with Brown University Health in Rhode Island, which has helped us rebuild our physician base and improve treatment volumes. We're also very pleased to have -- to announce our long-standing relationship with Orlando Health has been extended by a 7-year lease extension for our proton beam radiation therapy system. I would like to highlight our long-standing partnership of over 2 decades with Orlando Health, which clearly exemplifies the long-term nature of our relationships and reflects the ongoing collaboration in delivering advanced cancer treatment services. In addition, as part of our broader focus on strengthening our financial position, we're actively engaged with our lending partners as we evaluate opportunities to enhance our capital structure and support our long-term growth initiatives. We have a long-standing relationship with our lenders and these discussions are constructive and ongoing. Looking ahead, we believe we've laid a strong foundation for future growth, supported by new and old partnerships, expanded clinical capacity and a clear development pipeline. With that, I'll turn the call over to Gary. Gary? Gary Delanois: Thanks, Ray, and good afternoon, everyone. 2025 was a foundational year for American Shared Hospital Services as we expanded our direct patient care services platform and strengthened the operational infrastructure needed to support long-term growth. Our strategy is centered on building and leveraging strong partnerships with leading health systems, and we made meaningful progress on that front throughout the year. In Rhode Island, we worked closely with Brown University Health, Care New England and CharterCARE Health to stabilize and rebuild our radiation oncology physician team. Through these efforts, physician staffing has now been stabilized, and we're beginning to see improvements in treatment volumes, which we expect to continue into 2026. We also took important steps to enhance our operational capabilities, including improving our revenue cycle management infrastructure. This gives us greater control over billing and collections and positions us to improve financial performance over time. From a growth standpoint, our Direct Patient Care Services segment expanded significantly, driven by a full year of operations at our Rhode Island centers and our center in Puebla, Mexico. These centers are increasing patient access to advanced radiation therapy treatment options and are central to our long-term growth strategy. Additionally, we saw strong growth in LINAC treatments with volumes increasing significantly year-over-year, reflecting the contribution from our Rhode Island and Puebla centers. At the same time, Gamma Knife volumes improved on a same-center basis following technology upgrades, while proton therapy treatment volumes reflected variability. Our international business continues to be a strong contributor and meaningful source of future opportunity. In 2025, we successfully relocated our Lima, Peru center and upgraded our Gamma Knife to a state-of-the-art Esprit platform. We continue to deliver strong performance in Puebla, which has exceeded our expectations, and we maintain leadership positions in Ecuador and Peru with the only Gamma Knife centers in those countries. Looking ahead, we see significant opportunity in international markets, including the development of our Guadalajara, Mexico center, which we expect to begin operations in 2026. In Rhode Island, we have also created a clear runway for expansion through our certificate of need approvals for both a new radiation therapy treatment center in Bristol and a proton beam radiation therapy center in Johnston. These projects represent major long-term growth drivers and further strengthen our partnerships with leading health systems in the region. From an operational and financial perspective, we are also focused on strengthening the overall foundation of the business, including improving cash flow generation and aligning our cost structure with the scale of our operations. As Ray mentioned, we're working closely with our lending partners as we continue to invest in the business and position the company for long-term growth. We believe the steps we are taking operationally will support these efforts and enhance our financial flexibility over time. While 2025 included operational challenges, we addressed them directly and made the necessary investments to position the company for improved performance. Our priorities going forward are clear. increase treatment volumes across our existing centers, drive operational efficiencies and margin improvement, expand our footprint through disciplined development and continue to leverage our partnerships to scale our platform. With the foundation we've built, we are optimistic about 2026 and confident in our long-term growth trajectory. With that, I'll turn the call over to Scott. Frech Scott: Thank you, Gary, and good afternoon, everyone. I'll begin with our fourth quarter results, followed by a review of our full year 2025 performance and key financial drivers. For the fourth quarter, total revenue decreased 14.8% to $7.7 million compared to $9.1 million in the prior period. This decline was primarily driven by the expiration of 3 Gamma Knife contracts and lower proton beam radiation therapy volumes. Revenue from our Direct Patient Care Service segment represented 63% of total revenue, increasing 2.6% year-over-year to $4.8 million, driven primarily by increased procedures at our Puebla, Mexico facility and in Rhode Island. Revenue from our Medical Equipment Leasing segment declined 33.9% to $2.9 million, reflecting lower PBRT volumes and contract expirations. Gross margin for the quarter was approximately $906,000 or 12% compared to 35% in Q4 2024, reflecting both lower treatment volumes and the continued shift in revenue mix towards direct patient services. Net loss attributable to the company improved to $631,000 or $0.09 per diluted share compared to a net loss of $1.6 million or $0.23 per diluted share in the prior year period. Adjusted EBITDA was $868,000 for the quarter compared to $3.8 million in Q4 2024. For the full year, total revenue was $28.1 million compared to $28.3 million in 2024. Direct patient care services revenue increased 23.7% to $15.5 million, while leasing revenue declined to $12.6 million, reflecting the company's ongoing strategic transition. For additional perspective, LINAC revenue increased 35.4% to $11.5 million, while Gamma Knife revenue decreased 5.5% to $9.2 million and proton beam radiation therapy revenue declined 26% to $7.4 million. LINAC treatment sessions more than doubled to 28,147 in 2025, the first full year of operation for both Puebla and Rhode Island. Gross margin for the year was $5.1 million or 18% of revenue compared to $9.2 million in 2024, reflecting increased operating costs and lower leasing segment contributions. The net loss attributable to the company was $1.6 million or $0.23 per diluted share compared to net income of $2.2 million in 2024, which included a $3.8 million bargain purchase gain related to the Rhode Island acquisition. Adjusted EBITDA for the full year was $5.5 million compared to $8.9 million in 2024. Turning to the balance sheet. We ended the year with approximately $3.7 million in cash compared to $11.3 million at the end of 2024. The decrease was primarily driven by $7.5 million in capital expenditures related to our Rhode Island expansion and international investments. Total debt at year-end was approximately $17.3 million, primarily associated with our credit facilities. As previously disclosed, certain financial covenants were not met at year-end due to lower profitability during our transition, higher operating costs and reduced leasing contributions. We are in active and constructive discussions with our lender regarding amendments and potential restructuring of our credit facility. Based on these discussions, we believe we will reach an agreement that provides the flexibility needed to support our business plan. While these conditions raise substantial doubt about our ability to continue as a going concern if unresolved, we are confident in our path forward based on our ongoing lender engagement and improved operational performance. Finally, I would like to point out that as of December 31, 2025, our shareholders' equity, including noncontrolling interests, was $24 million or $3.66 per outstanding share compared to $25.2 million or $3.92 per outstanding share at December 31, 2024. And when comparing this to our current market valuation, we'd like to highlight the steep discount in our market value. This concludes the financial review. I'll now turn the call back for Q&A. Operator: [Operator Instructions] And our first question for today will come from Mim Marin with Zacks. Marla Marin: So it seems clear from your remarks and from what we've seen that when you upgrade equipment, which is obviously a positive over the long run. But in the short term, there's a temporary distortion because the absence of that equipment sort of distorts the year-over-year comparability. So first of all, thank you for providing some same-center volumes. I think that's helpful. But long-winded way of getting to the question, which is, as you deepen your footprint in Rhode Island, will you be able to help offset some of that noise by referring patients from one center to another? Or is that just not something that's easily done? Gary Delanois: Well, thank you for your question. That is certainly part of the strategy in Rhode Island. Once we establish the infrastructure that we have in place, we are able to leverage that infrastructure over a bigger footprint, and there are the economies of scale, and that certainly is part of our strategy in building out our regional development in Rhode Island. Marla Marin: Okay. Great. And then one follow-up. So if you could just remind us of the time line for constructing the first new facility in Rhode Island, but also importantly, how early before the center actually opens do you begin initiatives to staff the facility? Gary Delanois: We anticipate that the Bristol facility will come online in late '27 and followed by the proton facility in '28. In terms of staffing, we normally start staffing up several months in advance. Again, that's one of the advantages that we have. We have a team, for instance, of radiation therapists or physicists or dosimetrist, physicians that we can spread over that certainly in the -- at the start or at the initial ramp-up period, so we can very closely manage our expenses. And then as we need to add additional headcount, we'll do that over time as the volumes increase. Marla Marin: So could I sneak one follow-up in very brief follow-up. So should I -- should we interpret that as there really won't be that much downtime for some of the professional staffing because of the time line between hiring and then actually opening the facility and the possibility of utilizing some of those resources at other sites? Gary Delanois: That is correct. Operator: The next question will come from Anthony Marchese with Investor. Anthony Marchese: Question for you regarding the 3 expired contracts. Did you know about these contracts in the last conference call? So I'm trying to figure out why we can't -- why we're constantly surprised with, oh, revenue was lower this quarter because contracts expired. Isn't that something that ordinarily you should give out to investors if you know that these contracts are expiring? Gary Delanois: Ray, I'm just going to ask you just by way of history of other calls, our disclosures on expiring contracts, but we did have 3. And in all 3 of those cases, they were centers, health systems that -- basically decided to do the update themselves rather than utilize us as part of that financing of their capital expenditure. Raymond Stachowiak: Yes. Tony, I think there's nothing new really being disclosed here. We've mentioned it in past calls and disclosures. But when you do a fourth quarter -- well, 2025 comparison to 2024, if those agreements expired in the third quarter '24, you're going to see negative variances when you compare the full year. If they expired in first quarter '25, you're going to see negative variances when you compare fourth quarter '24 against fourth quarter '25. So I think we've been pretty consistent. There's no really new contracts expiring. We have one, but it's low technology, and we're kind of just keeping it extended with low volumes. There's little or no cost to that situation. Anthony Marchese: Right. Right. Okay. And my follow-up question is, do you anticipate being profitable for 2025 -- I'm sorry, 2026 overall? Gary Delanois: Yes, go ahead and please take it. Raymond Stachowiak: Yes, Tony, we really can't speculate on that. We really have not ever been in the habit of giving forward-looking statements. So we really can't comment on that. And those foundational issues have been addressed. We've addressed them. Anthony Marchese: Got it. I assume that your credit agreement or even one that you're -- that you would be entering into at some point, hopefully in the near future. Would that prevent you guys from buying back stock? Gary Delanois: Tony, could you restate the question? I'm not sure. Anthony Marchese: I'm just asking your ability to buy back stock, is that constrained by a credit agreement or you guys have just decided that you don't want to buy back stock? I mean my point is you guys are go out of your way to say that you're trading at half of book, but there's no stock buyback and your directors basically own 0 stock. I mean 2 directors own 2,000 shares, 1 director owns 0. So I don't see a lot of -- and I'm sorry, I have to be so harsh, but as an investor, I like to see the Board aligned with investors. And frankly, 3 of your Board members own virtually 0 stock. And so I'm asking if they're not going to buy stock and show some confidence in the company, then perhaps the company might want to demonstrate some confidence to investors by buying back stock. And so I'm just asking, is that a possibility? Or are you constrained from buying back stock because of other factors? Gary Delanois: Yes. I know Ray's addressed this on prior calls, and I'll turn it over to him. Raymond Stachowiak: Yes. So thanks for the question. In the past, the company has not really been interested in a buyback -- stock buyback program. So under this situation with our lenders, it's unlikely to change that stance. And I have continued to align -- I remain very bullish on the company. I know our stock has not performed. And it's disheartening to report a loss for a year. But I'm still very bullish on the future of our company. Anthony Marchese: I know you are, right? 100%. I know you are. And we've had calls and private calls. I know you -- I guess it would be helpful, and I'll just leave it at this. I'm not trying to "die on the hill" so to speak, on this comment. But my point is it would be really helpful and a show of confidence if the 3 directors who own basically 0 stock would step up and buy something. I mean you got -- you pay them $50,000 a year in compensation. Maybe as a way to preserve cash or extend your cash runway, you might want to consider having them take their compensation in the form of stock as opposed to cash, thereby, I think, helping to align their interests along with mine. And I'll leave it at that. Raymond Stachowiak: Yes. I think it's duly noted. We'll take that under consideration, Tony. Operator: [Operator Instructions] And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Gary Delanois for any closing remarks. Please go ahead. Gary Delanois: Thank you, Chuck, and thank you all for joining us today. 2025 was a year where we laid the foundation for future growth. Through strong partnerships, expanded clinical capacity and targeted operational improvements, we position the company for the next phase of its evolution. While we encountered challenges during the year, we took decisive actions to address them, and we're already seeing the benefits of those efforts. With a strengthened management team, a growing direct patient care services platform and a robust development pipeline, we're optimistic about '26 and beyond. We remain focused on delivering high-quality cancer care, expanding patient access through the advanced treatment technologies and creating long-term value for our shareholders. Thank you again for your continued support and interest in American Shared Hospital Services. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the fourth quarter and full year ended December 31, 2025. Before we begin, let me remind everyone of the company's safe harbor disclaimer. Certain portions of our comments today will concern future expectations, plans and prospects of the company that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements containing verbs such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects or targets and negatives of these words and similar words or expressions. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations. A telephone replay will be available after the call through April 14, 2026, and a webcast replay of today's webinar will also be available for 1 year via the link provided in today's press release as well as on the company's website. Now I'd like to turn the call over to Jones Soda's CEO, Scott Harvey. Scott Harvey: Thank you, Shamali. Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2025 earnings call. 2025 was a transformational year for Jones Soda, culminating in a strong fourth quarter that underscores the progress we've made both operationally and strategically. For the full year, we generated more than $25.3 million in revenue, representing a significant growth over the prior year and reflecting the impact of our expanded distribution, product innovation and operational execution. Throughout the year, channel focus along with operational improvements reinforced the company's foundation. We centralized our warehousing, optimized logistics and implemented just-in-time inventory practices, making the organization leaner and more efficient organization. These actions also reduced costs, enabling us to reinvest in areas of the business that we have the highest impact potential. Strategic divestitures, including the sale of our cannabis business, enabled us to fully focus on scalable beverage operations and sale proceeds reinforce our balance sheet. Partnerships with Bethesda and/or Fallout, Crayola, Folds of Honor, alongside our expansion into the Club Channel, further enhanced the brand's visibility and drove record purchase orders, demonstrating the combined power of operational discipline and strategic growth initiatives. As we closed out the year, we began shipping Fallout the Vault-Tec packs to club stores nationwide, dramatically increasing the availability of our Fallout Inspired beverages. We completed the first of multiple shipments to select locations across Canada as well. Fourth quarter revenues reached $11.7 million, the highest gross sales Jones Soda has ever delivered in its history, underscoring the strong consumer demand and the effectiveness of our strategic initiatives. The operational and strategic foundation we built in 2025 positions Jones Soda to leverage growth opportunities, scale efficiently and drive sustained value across its key business areas in the year ahead. Core soda remains the backbone of our business. Over the course of 2025, we expanded our distribution network, adding new partners and extending our reach in both the U.S. and Canada. Direct store delivery partners serving major national retailers strengthened our presence in key markets. Culturally relevant and collectible product launches drove strong engagement and expanded the Jones brand to reach millions of consumers across North America. Crayola Inspired packs sold out within hours, generating approximately $275,000. Our D2C channel further accelerated momentum with the launch of the Fallout inspired rocket bottles, which sold out within days, creating a meaningful online excitement, reinforcing the value of our partnerships with iconic brands and gaming platforms. As a result of our success of these launches, retailer demand and interest continue to grow with each subsequent release. These results highlight the impact of culturally relevant collectible products while underscoring our focus on disciplined execution within core soda. Operational improvements, including enhanced forecasting, centralized logistics and multi-SKU shipping capabilities enabled us to meet strong demand efficiently, maintain product quality and support continued growth. Modern soda delivered limited growth in 2025 despite operating in an increasingly crowded and competitive category. Demand for better-for-you beverage remains strong, particularly among consumers seeking functional benefits without compromising on taste. Pop Jones a functional soda expanded into 1,500 retail doors, including national chains and consistently performed well in consumer taste evaluations versus comparable offerings. Our work in this category is far from complete. In 2026, we'll introduce new flavors anchored in high-demand core profiles such as Root Beer and Cream Soda while evolving our go-to-market approach. We'll increase localized support for retailers through a focused 4 walls, 4 blocks, 4 miles strategy designed to drive awareness, trial and sustain velocity at the store level. Overall, Modern Soda's performance reinforces that while the category is highly competitive, consumer demand for healthier functional beverage continues to support steady growth and long-term opportunity. In adult beverage, regulatory changes were a key consideration. Federal legislation enacted in 2025 alters the framework for hemp-derived products, including certain intoxicating cannabinoids. While the law is not expected to take effect until late 2026 and enforcement still remains uncertain, we are actively evaluating potential impacts and have developed contingent plans to address a range of outcomes. We are more cautiously moving forward with trusted partners while closely monitoring developments in Washington, D.C. and engaging with industry advocates to determine the appropriate path forward. At the same time, evolving state-by-state regulations continue to create complexity, requiring ongoing vigilance to ensure our products remain compliant. While we do not expect HD9 to be a material growth product line in 2026, we will continue to support our dedicated partners. We remain focused on staying nimble, adapting quickly to regulatory changes while maintaining and supporting our distribution network and ready to enact our contingency plans as regulatory deadlines approach. Spiked Jones also faced challenges in 2025 as distribution declined in certain accounts due to the product's high alcohol by volume and sugar content. In 2026, we plan to reposition the brand with a revised 4% to 5% alcohol by volume, new flavors, refreshed packaging. We also intend to support the brand through a more targeted regional strategy, as mentioned earlier, enable us to launch in a specific market, provide appropriate local marketing support and drive consumer engagement more effectively. Across all of our areas of business, core, modern and adult, we built an operational discipline, drove consumer engagement, creating meaningful momentum heading into 2026. With that performance as context, I'd like to turn the call over to Brian to review our fourth quarter and full year financial results. Brian? Brian Meadows: Thank you, Scott, and good afternoon, everyone. I will first go over our full year 2025 results, starting with revenue. Jones achieved revenues of $25.3 million for the 12 months ended December 31, 2025, compared to $17.8 million in the prior year or a 42% increase in revenue. Two categories stood out to drive the increase. sales of Fallout licensed products to the Club Channel and sale of Fallout products to the direct-to-consumer channels. We also saw some increases in the Pop Jones SKUs. However, this will be a focus in 2026, as Scott has previously stated, to make more material progress in the modern soda category. I'll further discuss the company's outlook for revenue '26 later in my comments. Focusing next on adjusted gross margin. Adjusted gross margin is a non-GAAP measure. It effectively takes GAAP gross profit and adds back onetime inventory provisions and divide that into net sales. Full year adjusted 2025 adjusted gross profit margin was 32% compared to 27% in the prior period. We incurred $1.2 million of onetime inventory write-downs associated with an HD9 business and inventory stranded with a co-man we had a legal dispute with as we previously disclosed. The majority of the write-down was due to the federal legislative changes to the HD9 business enacted in November 2025. Our outlook for the HD9 business as a result of these changes and its impact on the Jones HD9 business in general necessitated a further write-down of our year-end 2025 HD9 inventories to a level that reflects today's HD9 marketplace. The good news here is that we improved our adjusted gross profit margin by 5 percentage points comparing to the prior fiscal year. Gains were driven twofold. Firstly, the reduction in trade spend from 20% incurred in 2024 to 10% on average in 2025. The reduction was achieved through a mix of channels that have lower trade spend as a percentage of gross sales, for example, Club Channel and direct-to-consumer as well as we exited a DSD relationship in Canada that had a very high trade spend negotiated in 2024. This relationship was effectively exited in Q1 2025, and we saw the impact from Q2 onwards. Secondly, we made improvements in the freight and warehousing from 17% of gross sales to 16% of gross sales in 2025. We see continued opportunities to also reduce our product COGS in 2026 based on our increased volumes. And we also see further opportunities to reduce warehousing costs in 2026. However, freight out most likely will be negatively impacted by the higher oil prices we're seeing currently. SG&A. Scott and I took the reins in February 2025. We had quite a challenge in front of us to aggressively cut the burn rate and institute the necessary cash controls urgently. We shared the progress across the last 3 quarters, and I'm pleased to update our shareholders on the full year results from our efforts. Looking at SG&A in total for the year ended December 31, 2025, we reduced SG&A by 14% -- now to dig a little deeper into the truly amazing reductions we achieved as some of the SG&A numbers increased in line with the 42% increase in revenues. For example, the 42% increase in revenues also drove up our broker payments and licensing costs. These 2 items alone increased $0.7 million for the year. If you remove the impact of those 2 items, our SG&A decreased 20% for the full year. More specifically, we took out $2.4 million out of SG&A compared to 2024 in consulting, travel, marketing and promotions, rent and utilities and legal expenses, whilst at the same time, driving up our revenues by over 40%. These decreases were necessary to turn around the Jones business. Scott and I instituted a variety of common sense business controls, including centralized controls over legal contract approvals, purchase orders, marketing expenditures, travel and, of course, cash disbursements. That financial discipline is now entrenched in the Jones business. Further, we also implemented discipline in how we evaluate new business opportunities, product pricing and promotions, all of P&L statements developed for review and approval by Scott and myself. Moving to net loss. Net loss for the 12 months ended December 31, 2025, was $1.8 million compared to $9.9 million in the prior period or an $8.1 million improvement year-over-year or 82% improvement. This is driven primarily by 2 things: the gain on sale of our cannabis business of $3.9 million, but more importantly, the reduction in operating loss of $5 million. Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure, reflects management's view of a more accurate reflection of ongoing cash flow generated or loss from its continuing operations. For the year ended December 31, 2025, adjusted EBITDA was a loss of $2 million compared to an adjusted EBITDA loss in the prior year of $7.2 million or an improvement of $5.2 million or a 72% reduction in adjusted EBITDA loss. Turning to the fourth quarter results. Revenue. Jones achieved revenues of $11.7 million for the quarter ended December 31, 2025, compared to $2.6 million in the prior period or a 450% increase in sales. Two channels stood out to drive the increase, sales of Fallout licensed products to the Club Channel as well as sale of Fallout licensed products in the DTC channels. I'll further discuss the company's outlook for revenue in 2026 later in my comments. Adjusted gross margin, again, non-GAAP measure, for the fourth quarter ended December 31, 2025, adjusted gross margin was 32% compared to 10% in the prior period. As previously discussed, we incurred a $1.2 million onetime inventory write-down associated with our HD9 business. These improvements were also driven by a reduction in trade spend as a percentage of gross revenues and a reduction in COGS and freight and warehousing costs. Trade spend as a percentage of gross sales reduced from 33% in the fourth quarter of 2024 to 10% in the fourth quarter of 2025. COGS as a percentage of gross sales reduced from 71% in Q4 '24 to 54% in the fourth quarter of 2025. We also made improvements in freight and warehousing from 20% of our gross sales to 18% in the quarter -- fourth quarter gross sales in 2025. We see continued opportunities to reduce our product COGS in 2026 based on our increased volumes. We also see some opportunities to further reduce warehousing costs in '26. However, freight out most likely will be negatively impacted by the higher oil prices we are now seeing. SG&A. Looking at SG&A for the fourth quarter, SG&A increased by $0.9 million or 28% up. This increase was primarily attributed to licensing fees on smaller revenues and increased broker payments on increased sales in the fourth quarter. Looking at the net loss for the quarter, it was $2.1 million compared to $4.5 million loss in the prior period or a $2.4 million improvement year-over-year or a 53% improvement. This is driven by the reduction in operating loss entirely of $2.4 million. Adjusted EBITDA for the quarter. For the quarter ended December 31, 2025, adjusted EBITDA was a positive $0.5 million compared to an adjusted EBITDA loss in the prior year of $2.7 million or an improvement of $3.2 million in adjusted EBITDA. Cash on hand, December 31, 2025, we ended the year with $3.6 million in cash on hand compared to $1.3 million at the end of '24. We also increased the size of the line of credit with our lending partner, Two Shores Capital from $5 million to $10 million. As of year-end '25, we had borrowed $3 million on this $10 million line. Subsequent to year-end, we also sold a promissory note owed to Jones from our cannabis business sale, which had a face value of $2 million or $1.4 million. We look at the payments that were associated with that $2 million that would have taken place from 2026 through to 2028 to collect the $2 million, and we determined that having cash in hand now would be the more prudent course of action to further give us the flexibility to finance the expected growth in '26 and help reduce some of the legacy payables. Looking at the outlook for '26, first quarter and 2026 revenue guidance. The following forward-looking statements reflect the company's expectations as of March 31, 2026. They are subject to substantial uncertainty and may be materially affected by many factors, many of which are outside the company's control. Based on the preliminary first quarter results of revenues recognized as of March 30, 2026, the company currently expects first quarter revenues to exceed $12 million or a 260% increase over the prior year first quarter revenues. Additionally, we expect the growth rate on our 2025 full year revenues to exceed 60% for fiscal 2026. Scott, back over to you for final remarks. Scott Harvey: Thanks, Brian. As we enter 2026, we expect our operating environment to remain dynamic, requiring continued laser focus on execution, innovation and discipline and strategic prioritization. Our strategy is clearly focused on our 3 core channels of growth: core soda, modern and adult beverages, where we are prioritized disciplined execution and targeted supported expansion. While our work is not done across these channels by any means, we are encouraged by the progress and remain optimistic given the strength of our innovation pipeline, increasing brand exposure and continued consumer demand. Innovation with each channel is well underway, and we're excited about the new offerings set to roll out across North America during this year, designed to strengthen our portfolio and drive incremental growth as well. Part of our direct-to-consumer and digital expansion strategy in 2026, we'll be reintroducing our D2C platform with a more focused and integrated approach aimed at strengthening consumer engagement and expanding higher-margin channels. Under this initiative, we're launching a new service-based offering and membership programs designed to deepen brand loyalty and increase lifetime customer value. These programs will provide consumers with exclusive access to reduce product pricing in exchange for participation, helping to establish more predictable and reoccurring revenue stream. A key component of our direct-to-consumer and digital expansion effort is the upgrade in our digital infrastructure. We are enhancing the website to deliver a more interactive brand experience, including improved navigation, richer brand storytelling and in addition to tools such as product locator to better connect consumer demand with the retail availability. Together, these initiatives reinforce our ability to capture direct-to-consumer insights, drive incremental revenue and further strengthen our brand ecosystem. Launching our technology enablement and operational integration strategy, we are investing in implementing systems that strengthen our ability to manage the business more effectively across all disciplines. These efforts include upgrading platforms that enhance customer engagement and response time, ensuring we are more connected and responsive to consumer needs across all touch points. In parallel, we're implementing an integrated transportation management solution to improve logistics visibility to optimize costs and drive greater efficiency across our supply chain. We're also advancing the adoption of project management tools and workflows to improve execution, accountability and cross-functional alignment. These systems provide real-time visibility into key initiatives, helping ensure that priorities are delivered on time and in line with our strategic objectives. Collectively, these technology investments are designed to improve operational discipline, enhance decision-making through better data visibility and support the scalable growth across our organization. In addition, we've also added and strengthened our key leadership roles across our sales group, marketing and supply chain, positioning the organization to execute more effectively against our 2026 and long-term objectives. At the same time, we continue to actively identify and attract high-impact talent across the organization to support our next phase of growth, enhance capabilities and elevate overall execution, all the while maintaining a sharp focus on controlling SG&A costs and driving operational leverage. Our focus remains unwavering, delivering channel execution, advancing innovation with each segment, maintaining cost discipline, deepening strategic partnerships and ultimately delivering shareholder value. Finally, and most importantly, I want to acknowledge the Jones teams. I refer to them as our village. Each individual has contributed meaningfully to our progress over the past 12 months. Our achievements would not have been possible without their focus on execution, adaptability and commitment to the brand. And for that, I thank each and every one of them. As we operate in 2026, our 30th anniversary, we expect our success to continue as the brand evolves and progresses. With that, we'll wrap up the call by addressing some of the questions submitted live by the shareholders through our webcast chat. Scott Harvey: That first question that we have relates to the Public Relations website section that we didn't have the correct information for a new IR firm on there. I can update you that, that was corrected this morning, and you will see over the next few weeks an actual transition from the existing company that's actually managing that site to another one. But if you go back and reference that site today, the new IR firm, which is Hayden IR, their information is listed on there. And again, you'll see further improvements as we start to transition that section over the next couple of weeks. Second question, given the global success of Fallout, is there any possibility to roll out products via licensing to countries abroad? Great question. As a matter of fact, we're already working down that path, not necessarily trying to secure a license, but actually exploring what it's going to take in order for us, one, to be able to ship it over water, what each one of these potential countries that we're interested in, what the regulations are, how do we get in there, what the restrictions, the timing and such. So it is a work in progress. It takes time because you want to make sure everything is aligned from paperwork to what kind of pallets you're shipping into these countries. So it's an exciting opportunity for us. We believe that the Fallout and Jones products will play in other countries around the world. But stay tuned, more to come on that, but we are actively pursuing that as we continue throughout the year. Question 3, and Brian, I'll turn this one -- throw this over to you. Can you provide an update on the S-1 process and potential uplisting time line? And how are you thinking about capital needs to support the next phase of growth? Brian Meadows: Thanks, Scott. So the Board and Scott and I are certainly committed to moving forward the S-1 process and uplisting to either NASDAQ or NYSE. We can't give a definitive time line today, but we are -- we do think it could happen in 2026. How we think about capital needs, we certainly have managed to not deploy equity last year despite a very difficult situation to manage through. So again, we thank our operating line partner with Two Shores Capital for their belief and support in us as a management team. And as a result of that, they did expand the line, successfully driven by the success in the Club Channel and DTC that they see. So Scott and I, as we evaluate other growth opportunities, there may be a role for additional equity at some point in the future. Certainly, if we do an uplift process, that would be part of it. But to date, you can see we have worked with our vendors and with our line of credit to support the 42% growth last year. And with the expansion of the line this year, we look like we're in a pretty good shape to manage growth this year. Back to you, Scott. Scott Harvey: Great. Thanks, Brian. Next question, can you comment on store count trends for Pop Jones and Fiesta Jones? Are those channels expanding or holding steady or being optimized? We're currently sitting around about 1,700 stores for the Pop Jones and Fiesta Jones combined product lineup. We have a relaunch plan that we're underway. And as I referenced within my comments, there's got to be a market strategy when we go into these markets. And what we've done in the past is that we were out selling the product. We didn't have the ability to support those. And I think people -- we sort of thought that people would just stumble upon us in the store, but that's not good enough. So when I think -- when I talked about earlier about the 4 walls, 4 blocks, 4 miles, we have to be able to tell consumers when we're into a store. So we're relaunching that strategy. We've got to test markets happening in 2 different states with 2 different markets to really put marketing efforts behind that, being able to communicate to consumers that Pop Jones is there, not only is Pop Jones there, but why you should come in and check out Pop Jones. So -- and the Fiesta segment of that as well. So we're taking a different approach to it. We expect it to accelerate. We're going to relaunch some more core flavors of Jones such as the Cream Soda and the Root Beer in the Pop Jones flavors. So I believe that we'll see some positive results, and it will give us some good trial. If we can go in and win a region, then it gives us something to go to the next region to be able to talk to. So I think strategically on how we go to market and how we reimpact in there is paramount on how we gain success on a go-forward basis. Next question. You demonstrated strong early success with Costco and licensed products. Can you help investors understand the road map to scaling success across national retailers and IP partnerships, including the benchmarks and operational investments required to support that expansion? I can tell you that, yes, we've had some really strong wins where we are currently with our club programs. We do have other club programs that are actually reaching out to us saying, how do we get on -- how do we help and how do we start to utilize some of those partnerships that we have. But it's just not the Fallout and the Fallout and through Bethesda. We also do the fold Honor, we've got Crayola, and we're actively speaking with other potential partnerships to be able to drive that. Currently, the way that we look at it now is that we've got Costco that we're rolling out through our club program and then subsequently, we roll that out through some of our other partners. What we're hoping to and working towards is being able to isolate some of those properties such as Fold of Honors and Crayola and create those experiences for either other clubs or other partnerships that are out there. What those terms look like and operational investments, quite honestly, it all depends. It depends on who you're partnering with, what the requirements are, how big they are. And those are active conversations that we're continuing to have day in and day out with a lot of these potential partnerships that we have. So yes, partnerships is a big thing. But what partnerships also does for us is it gives us the ability to be able to bring impressions of Jones, Jones, the name in front of people. reengaging consumers when they see that name. So yes, we're utilizing partnerships to gain share in some of the outlets that we're in, but we're also getting Jones in front of them. Perfect examples. We launched a Bethesda Fallout SKU. We did a very short stunt of doing a social media post. One social media post reflected on 19 million views of that just because of the partnership that we had. So I look at it as great for our partner, great for Jones because 19 million people got to see our name. So when you start to build impressions and people start to shop in stores, see our name, there's that connection. So super excited about that opportunity. We're going to maximize as much as we can on partnerships, but also using that as a springboard to continue to drive the Jones name into every household. Next question, how are you thinking about expanding core soda portfolio, particularly with respect to new flavors, formats, low-calorie multipack configurations that could drive higher velocity? Dan, great question. Yes, we have new formats. We have new flavors. So I approach the business is you introduce a new flavor, but it's got to replace something, right? And everything that we do, such as we've rolled out with a partnership with Fallout Sunset Sarsaparilla has done phenomenal for us. It's really moving. How does that get into our daily and our core products that we roll out in an everyday item? It will, but something has to fall off the chart because, again, we can't do SKU growth without being able to manage that. So yes, we are looking at different flavors. We've got a few new ones that I'll share with you on the upcoming calls that we'll be rolling out shortly. low calorie ready to go. So that's ready and on the shelf ready to go, and it will be -- you'll start to see some of that in our normal retailers. Multipack configuration, yes, we're looking at a couple of them. Right now, we've got the 12 packs to our club, but there may be a 6-pack coming to a store near you soon. But -- so there are, and we continue to look at that through our new sales leader and our operations leaders that we have and our supply chain is how do we optimize this. But more importantly, how do we get the name Jones in front of consumers when they come to the store. Next question, are there plans to bring successful limited or specialty formats like rocket bottles into a broader retail distribution? Yes, but it has to be the right mix. I can tell you rocket bottles are very unique. And they're not only unique in just the shape and form, but the weight, how they have to be manufactured, the glass itself, where they have to be manufactured, how are they decorated. But when you look at how do you get them into more mass retailers, it's really complicated because not every one of the manufacturers that we work with can run that product down the line. So it gets a little bit more tricky for that. But you'll see rocket bottles will be here for a while. But if there is something that comes up that we can do and we can duplicate to our manufacturers, absolutely take full advantage of everything that we can at the right time. Next question, does the company currently hold rights to expand into more mainstream licensed product like Nuka-Cola? And how should investors think about timing or scale of those opportunities? Well, you will see some more potential Fallout stuff coming out later on this year. We do have Folds of Honor stuff coming out. You'll see a lot of that this summer out there in the stores. Crayola will be making a reappearance again. And again, we have other partnerships that we're in active conversations with. So as soon as those come to life, we will bring those to you as well. Where will they go? I'm a big believer in spreading things out and not just focusing on one specific retailer because what we've learned through this is that other retailers are asking how do I play in this? How do I get involved with this? So it's advantageous for us to continue to build those partnerships and share that with other retailers out there that want that same kind of excitement that we see. Question -- the next question, with the addition of a new CMO, what strategic shifts should we expect to brand positioning, marketing investment and go-to-market execution? Should we expect a redesign or modernization of any of the product lines. Yes, all great questions, right? So I sort of alluded to this 4-wall, 4 blocks, 4 miles. It's really something I'm a firm big believer in that we've got to be able to communicate. We can't just assume we do a display in a store that people are going to come and buy us specifically if you don't go to that store. So the way that our CMO is looking at it in a more holistic thing is how do we get people in their use of social media today because it's so prevalent that's out there. It could be geofencing around stores. But I believe that we'll have more to report out after we complete these test markets that we're doing where we're actually deploying some of these strategies as to how do we reengage or engage consumers that are in this geographic circumference around stores and how do we get them in and one, not only to drive the new experience, but also drive velocities with inside those stores. Next question, how are you thinking about leveraging current trends like 90s nostalgic to accelerate brand awareness and the velocity? Well, Jones is -- that's where we play skateboarders and such, but also Fallout is coming from there. And I think, again, as we start to engage either through like the introduction of Zeroes, fans that may have loved the brand, but can't drink it because of sugar constraints, Zero is a great way. And let me tell you, they're absolutely phenomenal. So I believe by doing some of those things, we can reengage folks in there. We're still doing pictures. We're still doing that. myJones is bigger than life out there as well. So we continue and through our marketing efforts and looking at trends of how do we get involved, but it's got to be the right trend that matches Jones history of who we are. So it's got to be something that really succinct in what we think we are and how we want to be able to operate going forward. But definitely looking at those and to be able to drive brand awareness across all of our consumer bases. Next question, how are you approaching e-commerce fulfillment and channel control across platforms like Amazon, Walmart, Target to improve margin and customer experience? Well, the easy question is, one, we've got to fix what we have today, right? I'm not happy with the way that our D2C platform is operating today, and we've taken that challenge, and we've got -- we've brought in some new folks to help us bring the back of house and the front of house to life, be able to serve consumer needs. I talked about in the first section about subscription base, really signing up folks and signing up consumers so that they get the first look at what's coming out, potential discounts that are. We really got to work on our cost of shipping and such. And we've got a full robust plan in place to be able to start delivering on this here in the near term. And I'll be excited to get it all out in front of you when we're getting ready to launch. So you stay tuned to the website as you start to see things change, but super excited about what that brings to us. Once we get that in place, then that lets us springboard into the Walmarts, the Amazons, the Targets. Once we have a platform that's operating functionally, I don't believe in jumping ahead without making sure that we have the platform that's executing correctly to be able to do so. Next question. Can you provide any update on the regulatory landscape for hemp-derived products, particularly around the potential for a multiyear extension and how do those factors into your planning? I addressed that in the earlier comments. The multiyear extension, I haven't heard about it yet. So I'm always a firm believer on anything that we do. I don't want to be the first one in and I don't want to be the last one out. So we will stay in the game, and we will monitor and monitor what's happening within that environment. Should the extension go, we've got great partners that say, "Hey, if it continues to go, you're going to be our soda guide because you stood with us during these times." So we'll continue to monitor it, but closely monitored because, one, we don't want to be overexposed as well as it goes into effect, it's actually illegal for us to be able to do that. So we'll have to go back to a more of a state-by-state thing. So we've worked through a ton of contingency plans. We stay close to be able to monitor it. State complexity is ramping up because each one of them is starting to position themselves almost like the cannabis business did. As that does, it becomes a little bit more complicated to do scale of anything because each one of the states has their own set of criteria of how they want to, how the boxes are labeled, the cans are labeled, what the milligrams per can, not to bore you with all the details, but it's getting more and more complex as the states start to split apart from the national guidelines based upon what they perceive coming. Next question, can you provide an update on Spiked Jones reformulation and whether the broader or national retail rollout is still planned, including how you're thinking about positioning the segment with an overall portfolio? I talk about our channels. So adult is still a channel that we are not going to abandon. We're examining different ways of bringing Spiked Jones back to the market in its form of reduced alcohol by volume, lower sugar and some other avenues that we're currently exploring. But I still believe that we have a play in that piece. We are looking to get in front of consumers here later on this year as we reformulate the alcohol by volume, look at the flavor profiles as well as continue down some of the other paths that we're talking about internally as to how do we make it more robust. But our channels are our channels. We stay with our channels. I've always said, stay narrow, go deep, and we will continue to do that. and do whatever we can in order to get that to make sure that we're innovative and that we're addressing consumer needs. So stay tuned. More to come on that as we progress throughout the year. Next question. As demand increases, how are you ensuring consistency and customer experience across fulfillment, shipping and direct-to-consumer. I mentioned that earlier in there as well. So we're looking at, one, we've boosted some talent within our D2C on the back of the house and the front of the house. We've partnered with some customer service software to help us get back to consumers when it's needed. But really, it's just reworking the website to make it more friendly and more friendly for users to work as well as easier for us to be able to respond, whether it is a hey, here's your tracking number. Here's what your receipts are, really looking at shipping costs. So again, lots of initiatives going around there. I'm super excited about the 2 individuals that have joined us to help us bring this to life. So again, stay tuned in the works, but I think it's going to be a viable piece for us as we look to launch other innovative things like the rocket bottle. So we need to fix it because it has to work in order for us to be successful in there. Are there investments underway to further strengthen digital infrastructure and online presence? Again, I think that goes to the last question about our D2C piece. Again, in addition to that, when you look at marketing, it's about how do we utilize social media, how do we engage influencers to do the talking for us. And again, we've seen this through some of our club rollouts that, hey, we did one post or we engage with one influencer, and it just exploded across social media. So great learnings for us to be able to do that. And I think we have to be strategic and they have to be meaningful with what is it that we're trying to get out to. And more importantly, we have to be able to understand what's the return that we're getting for any investment that we do on here. So we will not just throw money at influencers, but we definitely have to understand what the return is and how is it impacting our business on a go-forward basis. Next question, are there plans to offer the 12 multipacks through grocery and retailers? 12 packs, really competitive. I think that you'll see some different packs going in there, but I'm not sure 12 packs today will be something that we could do specifically because we're glass and I have not seen any glass 12 pack. doesn't mean that's not a great idea. But it's probably not something that we're looking at in the short term. But I will say stay tuned because you will see some different packs coming through in some of the test markets that we've earmarked for the balance of the year. Next question, do you have any -- do you have a plan for more flavors for Fallout throughout the year? Yes, we do. So not going to peek under the hood at this moment. But yes, there are more flavors coming out. I don't want to ruin the excitement, but stay tuned. It's all exciting for us. I think it's going to be engaging for our consumers, for the Fallout fans, for our consumers with the different flavors that are coming out. But yes, stay tuned. There's more flavors and stuff coming out. Will the company consider canned products like 12-pack cans to reach more customers possibly using the Fallout IP? We've looked at it. We're not there yet. Again, the 12-pack, super competitive with Big Red and Big Blue that are out there. Again, it's a -- you have to have volume in order to drive margins with this. So we have to be very convinced that we have a great path to market to be able to do so. But we'll never say never. But currently, it's not on the docket today. When we've rolled out the -- some of these packs, the inserts in there has driven great success for the consumers. It's drawn great success for the fans that, hey, it's -- I can go out and find this, get something inside there as well as enjoy the phenomenal product that we put in those containers for them. But it's not something that, like I said today, but a great idea, but it will definitely something that we'll keep on the docket on a go-forward basis as well. Does the second quarter have things in the pipeline that will support continued quality revenue growth? Yes, we do. We put a forward-looking statement in there, and we take those things very seriously when we do that. The team has worked really hard with our partners, with our retailers to secure different promotions and such throughout the balance of the year. So yes, there's great stuff coming. And again, we'll be back here in a short 45 days reporting on the success of Q1, and we'll be well into Q2 by that time. And as a matter of fact. Brian Meadows: Can I just add something there, Scott. So I think when I read the questions about continued quarterly revenue growth, I think we have to root ourselves again. We guided for the year 60% revenue growth over 2025 revenues, right? There is seasonality that Jones has typically experienced in the business. So I think I would look at the overall year number. It may ebb and flow a little bit between quarters. And did you want me to go back over some of these other questions. Scott Harvey: Yes, if you could, Brian, that would be great. Brian Meadows: There's a multipart question here. I'm going to take it one piece at a time. Who is the note receivable with? I think it's the question. That is -- we sold our cannabis business in June and the private company called MJ Disrupters purchased it. Part of the sale for $3 million, we took a $2 million -- $2.5 million prom note. And so that was the receivables related to that. What inventory write-down was the impairment coming from, primarily our HD9 business based on the legislative change, we had to look at how our business was performing in the recent months, how much inventory we have on hand and what was the likelihood we were going to sell through that before, let's say, the November deadline happens in 2026. So we thought it was reasonable and prudent to write down the HD9 inventory at year-end. Next part of this was COGS seems incredibly high. Do you expect this to continue in Q1? I would go back to what I said earlier, we actually reduced our COGS to 54% from 71% in the prior year in the fourth quarter. We do see opportunities to further reduce our COGS because we are looking at higher volumes, right? There's a real volume and lower cost relationship in this business. Next part of the -- do we -- once -- there was a question about expected sales in Q1. Today, we guided a minimum of $12 million for Q1. And do we expect to see a GAAP profit? We haven't guided on GAAP profit or EBITDA for 2026. But what I could say is if you look at the fourth quarter, we did generate $0.5 million on $11.7 million in revenue. We see, Scott, I think that -- I think the last one is yours. Scott Harvey: Yes. With the engagement of your new investor relationship, how are you thinking about increasing investor visibility, investor demand? And are you setting a path towards uplisting to a real exchange? We've just transitioned over to Hayden IR. So the point will be is try to get out in front of more investors, have more calls, more visibility. They're a great team. We're super excited to partner with them as our IR firm going forward. So stay tuned. Again, I was going to close the call. Again, any type of questions or comments or one-off calls that you want to have, I'll give you their e-mail address. And again, it's been updated on the website as well. And again, setting -- is there a path that you're setting to uplisting to a real exchange? And I think Brian covered that before. It's always something on our radar. And again, we've done a couple of things that maybe kick that in the gear. But yes, there is that idea to get uplisted to either the NYSE or NASDAQ on a go-forward basis. So more to come on those pieces, but we're super excited about the partnership with the Hayden team and to be able to start to develop that and get us more out in front of the investors and new investors that are interested in the brand based upon the results that we've been able to deliver and we will continue to deliver through the balance of the year. So with that, those are all the questions that we're going to answer at this time. We'd like to thank everyone for taking the time to listen today. I would welcome further questions, and we'd be happy to take your one-on-one calls later this week or early in the next week. Please direct any inquiries to James@haydenir.com. I'd be happy to address accordingly. If I don't speak to you soon, I look forward to addressing you all when we report our first quarter results in May. Thanks again, and have a great day. And Shamali, back to you. Operator: Thank you. And this does conclude today's conference, and you may disconnect your lines at this time. Thank you, and have a great day.
Operator: Greetings, and welcome to the Faraday Future Intelligent Electric Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Schilling, Director of PR and Communications. Thank you, John. You may begin. John Schilling: Good afternoon, everyone, and thank you for joining Faraday Futures' Fourth Quarter and Full Year 2025 Earnings Call. My name is John Schilling, Global Director of Public Relations and Government Affairs here at Faraday Future. Joining me today are our Global Co-CEO, Matthias Aydt; our Global President, Jerry Wang; and our Chief Financial Officer, Koti Meka. Before we begin, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements involve risks and uncertainties that could cause actual results to differ materially. We encourage you to review our SEC filings for a detailed discussion of these risks. We undertake no obligation to update forward-looking statements, except as required by law. Following these prepared remarks, we will address a selection of stockholder questions submitted in advance. With that, I'll turn the call over to Matthias. Matthias Aydt: Thank you, John, and thank you to everyone who is joining us today. 2025 marked a fundamental transition for Faraday Future from strategy to execution. We are now entering early commercialization across both our EV and Robotics businesses, supported by growing demand signals and early validation of our gross margin profile. This is the first time in 12 years from company inception that we can expect to generate revenue with a positive margin. Most importantly, we are evolving beyond the traditional EV company into an embodied EAI ecosystem platform powered by a dual engine model of EAI EV plus EAI Robotics. The EAI strategy and the EAI industry Bridge Strategy are our core strategies. The EAI strategy is a 3-in-1 EAI ecosystem strategy driven by the EAI technology platform consisting of EAI devices, the EAI Brain and open-source, open platform and the EAI decentralized and centralized data factory, forming an open closed-loop EAI ecosystem. The EAI upgrade builds upon the IP and technology foundation of FF's original vehicle business. FF holds over 660 patents. The team is currently reviewing these existing patents to align with the EAI strategy. First, the devices under the EAI strategy, scalable embodied EAI devices for delivery include vehicles and robots. Second, the EAI Brain and open-source, open platform, this creates general purpose, Brain for multimodal embodied AI consisting of the EAI Brain, cerebellum and neural hub powered by EAI foundation models, EAI agents and skill technologies. Through an open-source, open platform we can unite the entire industry, empower each other and unlock massive value. Third, the EAI decentralized, centralized data factory. But on a multimodal all scenario common data infrastructure, this establishes a decentralized and centralized network ecosystem that integrates Web2 data monetization with Web3 data assetization, creating a new data business model. As the first U.S. listed company to achieve scale delivery of both humanoid and biomimetic EAI robot devices, FF not only has a unique first-mover advantage, but can potentially generate a series of chain reactions through this closed-loop ecosystem, internal ecosystem. The 3 businesses, devices, brain and data mutually fuel each other's growth. Mass delivery and adaptation of devices generate vast amounts of data, which enhance the EAI Brain's capabilities which in turn improves EAI terminal products and drives even larger sales, forming a close product technology loop. At the same time, this can reinforce the EAI business and accelerate the realization of fundamental value for the FFAI business. External ecosystem by open-sourcing FF's technology and platform and opening up protocol standards, FF can connect with industry partners and developers while organically linking shareholders, investors and users, creating synergies and co-creating shared value. Bridge strategy. With FF as the industry's bridge, the strategy can integrate global hardware strength with North American AI, R&D advantages, supports localized production and delivers affordable, high-performance intelligent products to target market users. Entering the U.S. Blue Motion market with a relatively asset-light fast iteration approach. The strength of this strategy lies in industrial efficiency and marginal cost benefits driven by deep synergies. Let me now walk through our business update. In the fourth quarter, we continued to move the reservation, production and delivery of EAI devices, highlights in the fourth quarter 2025, reached 2025's most significant milestone, the first FX Super One preproduction vehicle successfully rolled off the company's California AI factory, validating FF's ability to integrate resources across regions, industry and ecosystems, achieved a broad product competitiveness of Super One, a first-class MPV with 130 inches wheel-based flat floor, flexible zero gravity rear seats, FF EAI architecture and the world's first Super EAI F.A.C.E. System, emotional grill interface to be available in pure electric or AI hybrid extended range power options covering both urban and long-distance travel. Mass production preparation is on track as scheduled. A series of certification-related activities proceeded as planned. Additionally, purchase agreements for the first batch of FX Super One parts were signed in October. The final assembly line was completed in December. On the commercial front, we are building a 4-pillar sales architecture covering community, partner, B2B and third-party e-commerce channels. The B2B2C co-creation ecosystem expanded to 6 U.S. states. The cumulative non-binding, non-refundable pre-orders for the FX Super One reached over 11,000 units by the end of 2025. In the Middle East, the region transitioned from initial market entry to early commercial validation following the official launch of the FX Super One on October 28. Football legend, Andrés Iniesta became the world's first owner and co-creation officer in November, helping to strengthen regional influence. We are currently prioritizing deliveries to high-quality co-creation partners including local government entities while establishing operational foundation in Ras Al Khaimah. To support these global efforts, Faraday Finance, Inc. was established in October to provide diversified financing solutions. An application has been filed with the relevant order finance license with the California Department of Financial and Protection and Innovation. Meanwhile, the ultra-luxury FF 91 flagship continues its niche presence with a targeted delivery, and the company has released redesign sketches for our planned FX 4, which is positioned as the RAV 4 Disruptor in the AIEV Era. We also have amazing upgrades on the FFAI technology stack. The system now natively supports over 50 languages and includes real-time web searches with voice synthesis and RAG knowledge-based support. Technical improvements also include an AEC upgrade to support seamless conversation, interruption and the successful migration of end-to-end autonomous driving model. We have developed vision-based 3D object detection and a scalable automated labeling algorithm alongside the implementation of gesture-controlled door entry using the DinoV3 vision model. These are not isolated features. They form the foundation of a scalable cross-terminal intelligence system. Furthermore, FF has submitted a patent for a blockchain and Web3-based vehicle sharing system that allows for one-click sharing, automated credit verification and revenue distribution. Qualigen Therapeutics Inc., an independently operated company strategically invested in and controlled by FF was renamed AIxCrypto Holdings, Inc. NASDAQ AIXC. In November, FF expects to expand brand exposure and low-cost financing channels through potential cooperations with AIXC. Highlights of subsequent events, FF EAI Robotics was launched on February 4, and the deliveries officially commenced in late February. FF became the first listed company in the U.S. to deliver humanoid and bionic robots by March 2026, cumulative shipments of FF EAI Robotics, including predeliveries, reached 22 units, exceeding preset target, accompanied by the start of robot sales revenue and positive product gross margin in the first quarter. As of the launch event, total non-binding, non-refundable pre-orders of FF EAI Robotics reached over 1,200 units. FF EAI robots focus on education, home security and entertainment scenarios to drive product deployment and market awareness. By expanding the existing automotive sales system to include both EAI vehicles and EAI robots, we are maximizing our reach with limited incremental investment. Following the NADA Dealer Summit in January 2026, several memorandums of understanding have been signed with U.S. dealerships. By February 2026, the company upgraded cooperation with its bridge strategic partners, signing agreements for mass production component procurement and engineering services as it enters the final sprint towards full-scale production. In the U.S. market, 800-volt high-voltage drive systems are becoming a core label defining the product strength and technological leadership of high-end electric vehicles. We have already started work on product-related research and development. FFAI has achieved cross-platform sharing EAI vehicles and EAI robotics such as voice dialogue capabilities and multimodal interaction capabilities. Model training platforms and tool chains as well as multimodal environmental perception models have also been shared. Part 3, system building. Now let's discuss our recent progress on system building. Our update in the fourth quarter 2025 focuses on the reinforcement of our internal management systems, talent acquisition and regulatory framework, helping us transition toward AI-driven corporate management, effectively transforming our internal company processes through the integration of advanced AI technologies. We introduced the overall PPTIA governance methodology and implemented it across FFAI. To drive operational efficiency and strategic growth, Faraday Future continues to invest in world-class leadership and infrastructure. On the regulatory and governmental front, our leadership remains proactive in securing the company's position with the domestic policy landscape. FF and FX executives held a series of constructive meetings in Washington, D.C. with several U.S. members of Congress and government officials. These dialogues are essential as we continue to refine our corporate governance and ensure our strategic initiatives are well understood by key stakeholders. A major milestone was reached with the conclusion of the SEC investigation in March 2026, a result that we believe validates the significant reinforcement of our legal and compliance system. In March, our headquarters relocated to Silicon Beach, a strategic move that has significantly enhanced our ability to attract top-tier senior talent in the heart of major technology hub. By combining a validated compliance framework with a high-caliber talented pool and AI enhanced management tools, we have established a resilient organizational foundation to support the next phase of our global expansion. Now I will turn the call over to Koti Meka to discuss the fourth quarter and full year financial updates. Koti Meka: Thank you, Matthias. For the full year 2025, revenue was essentially flat year-over-year. This reflects early-stage commercialization with stable market engagement as we continue to refine our plan. Loss from operations was $32.3 million for the 3 months ending December 31, 2025, and $331 million for the full year 2025, primarily reflecting R&D investments, headcount growth and select asset-related adjustments. Excluding onetime impairments or losses, the operating loss was $185 million, reflecting the company's cost optimization efforts. The onetime asset impairment in 2025 resulted from the strategic shift from the FF 91 program to the planned FF 92 upgrade, along with reorganization and retooling for the FX Super One commercial production. The impaired assets are expected to be redeployed with limited additional investment in retrofitting and upgrades. Operating cash outflow was $107.5 million for the full year 2025, primarily driven by changes in working capital and the operational ramp-up of the FX platform. Financing cash inflow was $161.4 million for the full year 2025, a 100% increase from $80.7 million in 2024. Stockholders' equity was $7.7 million at the end of 2025, primarily impacted by manufacturing optimization expenses, fair value adjustments related to our convertible notes and impairment provisions for certain assets. As a reminder, our capital structure includes equity-linked instruments and as a result, reported figures may experience meaningful noncash volatility period-to-period. I will now turn the call over to Jerry Wang, our Global President, to discuss capital markets updates. Jerry Wang: Thanks, Koti. In 2025, we remain focused on aligning capital deployment with key milestones while maintaining flexibility to support execution and long-term growth. The company achieved a net financing inflow of $161.4 million, demonstrating an ability to raise capital despite a cooling electric vehicle financing environment. Throughout the fourth quarter, leadership maintained close communication with capital markets, participating in multiple conferences and roadshows to enhance visibility and active pursue analyst coverage. This momentum carried into February 2026 when the company successfully hosted an investor event in Hong Kong. During this event, we engaged with over 30 investment institutions to deeply record the result and future road map of the EAI Bridge Strategy, highlighting how the EAI EV plus EAI Robotics Dual Engine approach is driving a significant reevaluation of the company's market worth. We believe the market is beginning to recognize FF not as a traditional EV company, but as an EAI-driven ecosystem platform with a newly launched Robotic business. To optimize the capital structure, the company entered into agreements with several warrant holders in the fourth quarter 2025 to terminate and cancel a total of 44.5 million warrants previously issued under various of security purchase agreements. This decisive move aims to simplify the company's capital structure and reduce potential future share dilution. These structural improvements are being paired with aggressive measures to protect stockholders and investors. In March 2026, the company received a letter from U.S. SEC stating that the SEC has formally closed its investigation, which lasted more than 4 years and decides not to take any enforcement or legal action against the company, YT, Jerry or others. This removes the historical constraints and destabilizing factors that have hindered the company's development and stands as the most powerful and definitive response to illegal short sellers. The company will immediately launch an updated version of its [ term ] pronged transformation initiative to swiftly and cost effectively achieve 4 phased goals: short term, 180 days, mid- to short term, 1 year, midterm, 3 years and long term, 5 years. We will go all out to build sustainable and growing positive cash flow, rebuild market confidence and deliver returns to our shareholders and investors. In addition, on March 20, the company received a notice from NASDAQ regarding a 180-day compliance period to meet its share price listing requirement. We'll do our utmost to regain compliance without resorting to a reverse stock split. We have launched a collective share purchase plan by executives and employees and initiated steps towards legal action against potential illegal short selling as well as the dissemination of false and misleading information intended to manipulate the market and obtain improper gains. This collective action serves as a clear signal of our belief in the company's trajectory and our commitment to actively protecting the interest of the company and all stockholders. I will now hand the call over to Matthias to discuss our 2026 outlook. Matthias Aydt: Thank you, Jerry. Looking ahead to 2026, Faraday Future is focused on deepening strategic execution aimed at driving continuous growth of business and deliveries. In our Robotics division, we have set a clear trajectory for the year with cumulative shipment volume target of over 1,000 units by the end of 2026. Throughout this period, we will continue to ensure the positive product gross margin and ramp up production to prepare for high-volume delivery in the following years. For the FX Super One, our priority remains the enhancement of overall product competitiveness with stable cash flow as a prerequisite. With the initial deployment of the technology-driven ecosystem strategy and deeper open-sourcing of the EAI Brain and technology platform, we expect to generate software-related revenue within 2026. Considering EAI robotics to require considerably less investment than EAI vehicle, we expect the limited additional investment and the positive product gross margin of EAI robotics will improve our 2026 operating cash flow. On the capital and regulatory front, our objectives for 2026 are focused on restoring market confidence and ensuring long-term stability. This includes working towards regaining compliance with NASDAQ's minimum bid price requirement within the applicable 100-day compliance period and actively introducing strategic investments from top-tier global investment institutions. Our systems and corporate governance will undergo a major transformation to support the scale. We are establishing an advanced governance system aimed at maximizing the interest of stockholders and investors while embedding AI governance into our very core. By achieving the systemization and automation of AI governance, including risk identification, compliance control and token cost management, we will enable dynamic monitoring and intelligent optimization of our EV and robotics operations. This AI governance system is designed to achieve cross-regional compliance and optimal resource allocation, effectively transforming our operational capabilities into a core corporate competitiveness and strategic advantage. Simultaneously, we remain in continuous dialogue with government departments regarding the bridge strategy and tariffs to secure policy support and create value by bringing global supply chain capabilities back to the United States. Through these efforts, we are building an ecosystem supporting long-term valuation enhancement and our participation in the formulation of industry standards. In summary, Faraday Future has entered a new phase in 2026 from concept to execution, from single business to dual engine growth, from EV company to EAI ecosystem platform. We are approaching an inflection point toward a positive gross margin of robotics delivery and commercialization scale with continued creation of long-term value. We believe this transition positions us for long-term value creation and a potential re-rating of our market valuation. Thank you. To conclude, I will now hand the call over to John for the Q&A. John Schilling: Thank you to everyone who presented today. As we wrap up, I would like to briefly highlight the materials included in the appendix. In the appendix, you'll find our unaudited balance sheet and financial statements as of and for the 3 months and full year ended December 31, 2025, providing additional detail on our financial position. These materials offer helpful context to supporting everything we have shared today. John Schilling: With that, we would now like to open the floor for Q&A. Question one. Who is buying the robotic products today? And what are the primary use cases driving that demand? Matthias Aydt: Our Robotics business is structured across 3 core layers: robotic device deployment and decentralized data factory as well as the EAI Brain and open-source, open platform. In this context, robot sales represent only one component of our broader strategic architecture, albeit an important or complementary one. The robotic hardware deployment layer encompasses not only direct sales and rental, but also a full suite of user operation services, including aftersales support, spare parts, ecosystem products and financial services. Our goal is to become a U.S.-based leader in early-stage robotics deployment in North America, establishing a strong market presence and defensible moat. In terms of use case scenarios, our target customers span a wide range of industries, including high-end hospitality and vacation rentals, automotive dealership, showrooms, security and patrol, education, entertainment and life performance, agricultural harvesting and research laboratories. We have already achieved early deployment in several of these verticals. Our data factory business has completed its strategic planning and has now entered execution. Within the embodied AI industry, real-world robotic data collection and training serve as a critical complement to simulation-based data and are essential for validation. This creates a closed-loop system between sim to real and real to sim. Our data collection solution is already capable of seamless integration with the NVIDIA Isaac ecosystem. As our robot fleet continues to scale, it will become a key source of high-value data generation. In parallel, we are integrating this capability with AIXC's on-chain infrastructure, creating a differentiated and competitive advantage. On the EAI Brain and open developer platform, we have already made meaningful progress and plan to move into the implementation phase in the near term. John Schilling: Question two. How does your B2B2C model translate into actual revenue generation? Matthias Aydt: The so-called B2B2C model refers to FF working in collaboration with FF partners on the sales side to jointly engage and serve end consumers [ C-end ] users. FF's B2B2C model mainly relies on cooperation with various [ B-side ] commercial partners to convert high-end customers' resources into actual sales revenue. The company works with real estate agencies, high-end clubs, corporate clients, dealers and other partners to reach high net worth individuals through their channels, then completes vehicle sales and delivery to generate direct revenue from car sales. At the same time, the company incentivizes partners to acquire customers through reasonable commission and profit sharing arrangements, which not only lowers its own customer acquisition costs, but also quickly expands order volume. In addition to car sales, the company will also generate recurring revenue through value-added services such as aftersales maintenance, connected car services and automotive financing programs. This light asset model rapidly expands channels, targets high-volume customers and shortens the sales cycle, allowing orders to be converted into cash flow and revenue more quickly. As partner channels expand and delivery efficiency improves, valid orders driven by [ B-side ] referrals will keep growing, serving as an important pillar for the company to improve operating cash flow and restore market confidence. John Schilling: Question three. Following the approval to increase authorized shares, how are you balancing funding needs with dilution sensitivity? What principles are guiding capital allocation? Matthias Aydt: The increase in authorized shares provides us with additional flexibility, but it does not alter our disciplined approach to capital allocation. Our capital deployment remains milestone-driven and sequenced around clear value inflection points. We prioritize return potential, capital efficiency and importantly, the preservation of long-term shareholder value. Importantly, within our business mix, the EAI Robotics business represents a more capital-efficient growth engine compared to the EEI Vehicle business. It operates under a relatively light-asset model, requires less incremental capital and therefore, inherently carries lower dilution risk when funded. In addition, the Robotics business has already demonstrated revenue generation and positive product gross margin. This not only supports internal cash flow dynamics, but also contributes to expanding the company's valuation foundation, enabling the market to more appropriately reflect the intrinsic value of FFAI over time. John Schilling: Question four. What are the next steps for the EAI Brain and open-source, open platform and the data factory? Matthias Aydt: A good question. The FF EAI brain will evolve into a general purpose AI capability that can be migrated and reused across multiple scenarios, multiple tasks and multiple terminal devices, supporting the continuous evolution of vehicles and robots in different applications. Through open-source mechanism, open interfaces and ecosystem collaboration mechanisms, the open-source, open platform will potentially enable more developers, partners and various types of hardware to connect and co-build. By continuously accumulating high-quality scenario data and behavioral data, we will gradually build data commercialization capabilities for model training, capability optimization and industry applications. We plan to enter the AI infrastructure space, secure our first customer and generate revenue. In addition, we plan to actively establish broad partnership with data companies and AI enterprises to jointly promote data circulation, model coke construction and the deployment of scenario-specific capabilities. John Schilling: Question five. What measures will the company take to ensure compliance with share price requirements within 180 days? Matthias Aydt: One of the company's top priorities during the rectification period is to restore compliance with the minimum share price requirement to the greatest extent possible without conducting a reverse stock split. Firstly, the fundamental measure is to rebuild investor confidence through sustained improvement in the company's operating performance. FF Robotic has now commenced deliveries and started generating revenue with positive gross margins, making a positive signal for the company's fundamental operating performance and operating cash flow. We are focusing our strategy on business that enable rapid delivery and quick cash flow generation with a clear and progressively achievable path to profitability. Second, further optimize the company's cost structure and emphasize return on investment. Third, repurchase shares on the open market to signal internal confidence and better balance financing needs and equity dilution through strategic focus. Fourth, continue to strengthen information disclosure to stabilize market expectations and take legal actions against alleged rumor monitoring deformation and malicious stock price manipulation. Suffice it to say, our confidence is stronger today than it was a year ago. We look forward to restoring market confidence through consistent delivery positive margin products. John Schilling: Thank you for your time. This concludes our investor Q&A session. We appreciate all the questions submitted and apologize if we couldn't get to all of them today. We remain committed to maintaining open communication with our investors. That concludes today's conference call. Thank you for all of your participation. Operator: This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.
Operator: Thank you very much, and good afternoon, ladies and gentlemen. Welcome, and thank you for joining our conference on the financial year 2025 results. My name is Jeroen Eijsink, and this is the first time I'm addressing you in my role as Chief Executive Officer of HHLA. I'm very pleased to be here today together with my fellow Executive Board member, Annette Geiss, to guide you through HHLA's performance in the 2025 financial year. Over the past 6 months since assuming the role on October 1, 2025, I've taken the time to get to know HHLA in depth. This has included spending a great deal of my time at our terminals in Hamburg as well as visiting our European subsidiaries such as Metrans and PLT Italy. Above all, I have met many of the people who ensure around the clock that supply chains continue to function. What I have seen during this time is a company with strong substance and committed teams. HHLA is operating in a challenging environment, but it is well positioned to address the challenges ahead. At the same time, I have also gained a clear understanding of where we need to improve and where we will focus our efforts going forward. Let me now briefly summarize the past year 2025. The year was shaped by a demanding market environment. Persistent geopolitical tensions and continued economic weakness in Germany weighed on supply chains and reduced planning certainty. At the same time, global trade flow shifted with declining volumes on North American routes and growth in Far East trades, particularly with China. Another factor during the year was the reorganization of liner services following the formation of new shipping alliances, most notably the launch of The Gemini Cooperation by Hapag-Lloyd and Maersk. In addition, MSC gradually shifted its Hamburg services to HHLA over the course of 2025. For the Port of Hamburg, this resulted in a noticeable reallocation of traffic flows, while all major alliances continue to be handled reliably by HHLA. In this dynamic environment, we focused on strengthening our operational base. We continued to modernize our Hamburg container terminals, building on our automation expertise at CTA and advancing our reorganization and expansion measures at CTB. At the same time, we strengthened our European Intermodal network by further expanding the activities of our Rail subsidiary, Metrans. For instance, we announced the modernization of our terminal in Slovakia and laid the foundation stone for a new site in Hungary in 2025. Most recently, we secured a 50% stake in a Romanian terminal to establish our first intermodal facility there. With investments like these, Metrans strengthened its position in Southeastern Europe. Even in a challenging geopolitical environment, we remain committed to our long-term strategic priorities. These include our continued engagement in Ukraine marked by the acquisition of a majority stake of 60% in the Intermodal Terminal Batiovo. Operationally, this all translated into solid growth. Container throughput increased by more than 5%, while Container transport rose by almost 11%. Supported by this volume growth, both revenue and EBIT made good progress. Revenue in the Port Logistics subgroup increased by about 10% and EBIT rose by more than 20%. At the same time, profit after tax and minority interests was burdened by a one-off and noncash tax effect. It was not cash-effective, but had a significant impact on net income for the year. Against this backdrop, the Executive Board, together with the Supervisory Board have decided to propose to the Annual General Meeting that no dividend will be distributed for the 2025 financial year. The focus remains on financing capabilities and a disciplined capital allocation to support the persistently high-level of strategic investments ahead. With that, I would now like to hand over to Annette, who will take you through the performance of our segments in more detail, starting with the Container segment. Annette Walter: Thank you, Jeroen, and good afternoon, everyone. Let's move directly to the performance of our Container segment. As Jeroen has already mentioned, we recorded overall growth in container throughput of 5.4%. Volumes at the Hamburg container terminals increased by 4.8% to almost 6 million TEU. The key drivers in overseas traffic were volumes to and from the Far East, especially China, as well as South America, Africa, Australia and the Middle East. By contrast, the North America shipping region declined strongly. Volumes in feeder traffic increased significantly year-on-year. This development was supported mainly by traffic with Finland, Poland and other German ports. However, cargo volumes from Estonia, Latvia and the U.K. declined. The proportion of seaborne handling by feeders was slightly above the previous year's level at 19.6%. At our international container terminals, throughput volume rose strongly by 19.2% to 339,000 TEU. Especially in Italy, we saw remarkable volume growth at the HHLA PLT Italy, which really makes us proud. At CTO, we resumed seaborne handling in the third quarter of 2024 and we were able to continue operations throughout 2025, also, still with certain limitations. This base effect leads to the significant year-on-year increase expected for 2025. Volumes at the multifunctional terminal at HHLA TK Estonia declined slightly on the other hand. Segment revenue climbed significantly by 9.0% year-on-year to EUR 843.2 million. This was supported by higher throughput volumes and beneficial shift in the modal split. On top of that, HHLA's international container terminals made a positive contribution to revenue growth with a strong performance of PLT Italy standing out once again. EBIT costs increased by 11.5% compared to the previous year. This was mainly driven by extensive automation efforts, the positive volume trend and correspondingly higher capacity utilization. Personnel expenses also increased, reflecting union negotiated wage settlement and the additional deployment of personnel from the general port operations pool. In addition, expenses for consultancy and related services as well for purchase services, rose strongly. As a result of necessary investments, depreciation expenses increased moderately. The earnings safeguard measures implemented at the Hamburg container terminal since March 2023 had an offsetting effect, but were not sufficient to fully compensate for the cost increases described. Against this backdrop, EBIT declined by 6.4% to EUR 73.6 million, while the EBIT margin decreased by 1.5 percentage points to 8.7%. So let's move on now to the Intermodal segment. Transport volumes in the Intermodal segment made particularly good progress over the year. As a result, container transport rose by 10.9% to 198,200 TEU compared to the previous year. Rail transport rose year-on-year by 11.2% to 171900 TOU. This strong volume growth was largely driven by traffic with the North German seaports as well as traffic in the German-speaking countries. Moreover, the transport volumes of Roland Spedition in the previous year were only included from June onwards. Road transport rose significantly by 8.7% to 263,000 TEU. This development was helped in particular by the recovery of transport volumes in the Hamburg region. With an increase of 12% to EUR 797 million, revenue outperformed the volume development. In addition to routine price adjustments, this was partly due to the further increase in Rail share of the total intermodal transport volume from 86.5% to 86.7%. EBIT increased by 23.9% to EUR 103.7 million. The main reason for this strong EBIT growth was the increase in transport volumes despite an opposing effect from ongoing operational difficulties caused by construction work on major transport roads and congestion at the North-German seaports. Let's turn briefly to the Logistics segment, where we have pooled for instant vehicle logistics consultancy as well as digital and leasing services. In the reporting period, the consolidated companies generated a revenue of EUR 92.8 million, representing an increase of 10.9% compared to the previous year. The rise is attributable to the leasing company for intermodal traffic and to vehicle logistics. After reporting a loss in the previous year, the segment returned to a positive operating result of EUR 6.5 million in 2025. The performance within the segment varied across the individual companies. Whereas the Leasing company and Vehicle Logistics made strong earning contributions, our Innovative business activities fell short of the prior year result. At-equity earnings also made encouraging progress, increasingly by 27.5% to EUR 5.7 million in the reporting period. Coming back to the Port Logistics subgroup as a whole, let's have a look now at our cash flow development. The reporting period, cash flow from operating activities of EUR 257 million mainly comprised earnings before interest and taxes as well as write-downs and write-ups on nonfinancial assets. The main items with an opposing effect were interest payments, trade receivables and other assets as well as income tax payments. Investing activities resulted in a net cash outflow of EUR 307 million, up almost EUR 26 million on the previous year. This development was largely due to payments for investments in large-scale equipment at the Hamburg container terminals as part of our efficiency program. As a result, free cash flow of the Port Logistics subgroup was a negative amount of EUR 50 million. Cash flow from financing activities totaled EUR 0.4 million. On the one hand, new financial loans of EUR 140 million, on the other hand, opposing effects from dividend payments and settlement obligations to shareholders of the parent company and to noncontrolling interest as well as from repayments on bank loans and payments for the redemption of lease liabilities. Overall, our available liquidity at the end of December 2025 remained at a robust level of EUR 180 million. Before I hand back to Jeroen, I would like to briefly address our dividend proposal. At this year's Annual General Meeting, the Executive Board and the Supervisory Board will propose, not to distribute a dividend for the 2025 financial year, neither for the Class A nor the Class S shares. As we already mentioned before, earnings per share are at a very low level. At the same time, we are currently investing at a high level in order to modernize our terminals and ensure that our infrastructure is fit for the years ahead. Against this backdrop, we have decided to retain the available funds within the company to safeguard our ability to invest and to finance our projects. This represents a responsible prioritization in favor of the long-term stability and future strength of HHLA. That concludes my remarks. For the review of our ESG performance, an update on the squeeze-out and an outlook for the 2026 financial year, let me now hand back to you, Jeroen. Jeroen Eijsink: Thank you, Annette. Let me start with the sustainability topic. Sustainability is not an image project for us. It's increasingly becoming a hard competitive factor. Our customers are paying much closer attention to low-carbon supply chains, and we are actively helping them achieve their targets. To do so, we are making investments in three key areas: energy-efficient systems, electrified equipment fleets and automated processes with significantly reduced emissions. There are already very concrete examples of this across our operations. At CTA, our tractor units are now fully electrified. At CTB, automated guided vehicles are helping us to significantly reduce diesel consumption, and at CTT, we are operating hybrid van carriers that are already designed to be converted to battery or hydrogen power. As a result, almost half of our total energy consumption is already covered by renewable sources today. This clearly demonstrates that technological innovation and sustainable solutions go hand-in-hand at HHLA. This is not only an ambitious aspiration, it's operational reality. Accordingly, this is also reflected in our EU taxonomy indicators, where we once again achieved very strong results. All of these measures are decisive steps towards our long-term objective to achieve climate-neutral production across the entire HHLA Group by 2040. Before we turn to the outlook for 2026, I would like to briefly address another topic that has been high on our agenda since the beginning of the year. In addition to our operational and financial performance, the squeeze-out request announced in early January by the Port of Hamburg Beteiligungsgesellschaft SE, HHLA's majority shareholder has required considerable attention. So where do we currently stand in the process? The amount of the cash settlement is currently being determined by an independent expert. Following this, the squeeze-out will require approval by the Annual General Meeting in June. Of course, the Executive Board will accompany this process in a responsible and constructive manner. Let me conclude by briefly addressing the current market situation and our outlook for the 2026 financial year. Recent developments in the Middle East once again pose significant challenges for international shipping. They continue to affect global trade routes, sailing schedules and supply chains and as a consequence, also have an impact on European ports and logistics corridors. At present, we are seeing a market rise in uncertainty. Shipping lines are adjusting schedules at short notice, opting for alternative routes and in some cases, accepting extensive detours. This results in longer transit times, higher operating costs and greater operational complexity along the supply chain. Against this backdrop, the outlook shown on this slide is subject to a degree -- a high degree of uncertainty. At the same time, the progress we've made in recent years in modernizing our infrastructure and expanding our European network provides a solid basis for our expectations for the current financial year. Overall, we expect a positive development for the current financial year. We anticipate a significant year-on-year increase in container throughput and a strong year-on-year increase in container transport. Moreover, strong revenue growth is expected from the Port Logistics subgroup compared to 2025. EBIT is likely to be between EUR 160 million and EUR 180 million. To further increase efficiency and expand capacity in the Container and Intermodal segments, capital expenditure in the Port Logistics subgroup will be in the range of EUR 400 million to EUR 450, around half of this amount will be invested in the Container segment with the majority going to the Hamburg container terminals. These investments will focus on the efficient use of existing terminal space in the Port of Hamburg and the expansion of our foreign terminals. The other half will be used primarily to further expand our own transport and handling capacities for our Intermodal activities. With this outlook for the current year, I would like to close my remarks on our 2025 financial results. Annette and I are both happy to take your questions now. Operator: [Operator Instructions] Ladies and gentlemen, there are no questions at this time. I would like to turn the conference back over to Jeroen Eijsink for any closing remarks. Jeroen Eijsink: Ladies and gentlemen, thank you very much for your interest in HHLA. Before we conclude, I would like to leave you with a closing thought. HHLA remains a central pillar of European logistics. Our international network strengthens our resilience, broadens our positioning, enhances our competitiveness. Our investments consistently focus on reliability, efficiency and sustainability, guided by our commitment to continuously improve customer satisfaction. We are determined to stay on this course. Thank you.
Operator: Greetings. Welcome to the Abra Group's Q4 FY 2025 Performance Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Maria Ricardo, Head of Investor Relations. You may begin. Maria Cristina Ricardo: Thanks, operator. Good morning, and thank you for joining us today. With me are Adrian Neuhauser, Chief Executive Officer of Abra; Manuel Irarrazaval, Chief Financial Officer of Abra; Gabriel Oliva, President of Avianca; Nicolas Alvear, Chief Financial Officer of Avianca; Celso Ferrer, Chief Executive Officer of GOL; and Julien Imbert, Chief Financial Officer of GOL. Our financial statements for the year ended December 31, 2025, as well as the presentation we will reference today are available on our investor website, abragroup.net. This call is being recorded, and a replay will be available shortly after the call concludes. Before we begin, I would like to remind you that on June 6, 2025, GOL successfully emerged from Chapter 11 reorganization, at which point, Abra became the controlling shareholder of GOL and began consolidating its financial results. Accordingly, GOL's results are included in Abra's consolidated financial results from that date forward. To facilitate comparability of financial and operational performance, our remarks today will reference pro forma results as if Avianca and GOL were combined for the full year periods presented for both 2025 and 2024. Today's discussion may include forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control, including those related to the company's current plans, objectives and expectations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. The company assumes no obligation to revise or update any forward-looking statements. We'll begin with an overview of the business, followed by a review of our operational and financial performance for fourth quarter and full year 2025 and closing remarks before opening the call for questions. With that, I will turn the call over to Adrian. Adrian? Adrian Neuhauser: Thank you, Cristina. Everyone, thank you for joining us. If we can turn to Page 4, please. This is the first quarter where we are presenting our consolidated results as a group. We're really excited about this and proud of what we're going to show you. Slide 4, for those of you that have not joined us before, is just a summary of really what we are. We are today the second largest airline group in Latin America with the result of the consolidation of 3 main carriers: Avianca, which is the #1 airline in Colombia, Ecuador and in Central America; GOL, the second largest airline in domestic Brazil; and Wamos, a European ACMI provider. By putting together those groups over a few short years, we've created -- or those airlines over a few short years, we've created the second largest group in the region with over 300 aircraft, 375 routes, over 70 million passengers a year, 30,000 employees. Importantly, the strongest order book in the region, both on the narrow-body and wide-body side and also an agreement in principle to acquire SKY, which would add to our footprint domestic Peru and domestic Chile. Turning to Page 5. What did we achieve this year? First of all, we -- as Maria Cristina highlighted, we successfully completed GOL's restructuring, emerging as the -- with GOL emerging from its bankruptcy as a more sustainable and competitive airline and with Abra resulting as the controlling shareholder of GOL. We continue driving synergies. Today, we have over $180 million cumulative in value creation by increasing coordination across fleet, procurement network, commercial and loyalty. And we strengthened our leadership team as we drive more coordination through the group. We now have a Chief Procurement Officer, Chief Loyalty Officer and Chief Corporate Responsibility Officers at the group level. On the operational side, we announced a robust incremental fleet plan and the expansion of our wide-body strategies, adding 330s and 350s to enable the future growth and drive more efficient operations. We enhanced our value by coordinating our airlines more and beginning the process of aligning our products to drive an improved travel experience and operational excellence. And we continue progress in sustainability, delivering ongoing improvements in fuel efficiency while improving connectivity in the region. What does this mean financially? It means we achieved a pro forma adjusted EBITDAR growth of 26%, $2.7 billion for the year at a 27.4% margin. That's an over 300 basis point increase. We ended the year with liquidity at over $2.5 billion, about 25% of our LTM revenues and net debt to LTM EBITDAR decreasing sequentially to 3.3x. Both of our important additional business units, Cargo and Loyalty delivered strong performance. Cargo, in particular, delivering approximately $1.6 billion revenue generation on a pro forma basis. And importantly, and we'll talk about this later on, we aligned accounting policies across the airlines in line with market standards. Turning to Page 6. So what are we today? As we said, second largest group in the region, both of the key airlines in the region performing admirably, 98.3% schedule completion for Avianca and 99.2% for GOL. Both airlines with some of the strongest on-time performance in the world, continue to drive brand loyalty, one of the largest loyalty programs in the world combined with over 46 million members, a 34% increase in premium customers through our networks, 7% increase in gross billings and the program member share of our total passengers on average at about 50%. We drove an enhanced customer experience. We upgraded our premium offering through Avianca and VIP lounges and Insignia check-in in Bogota, and we enhanced our long-haul Insignia experience on the transatlantic routes. We've rolled out Business Class across the entire Avianca network, and we announced the fleet expansion, adding 7 A330-900s to support international growth for the group. Up to 5 of those will initially go to GOL and 2 to Avianca. Turning to Page 7, consolidated business indicators. ASKs growing nearly 12% on -- for the group with load factors holding at above 80%, passengers increasing by 5%, average fare in the network increasing, PRASK holding almost flat and PAX CASK holding about flat. Turning to Page 8. If you look at the 2 carriers to understand what's going on in the underlying, both carriers showing strong growth in their networks. GOL, if you'll remember, putting its fleet back in the air and recovering its operations as it worked through its bankruptcy, but also an important redesign in the network with GOL increasingly focused on strengthening its Rio hub. Avianca continuing to grow by extending stage length and expanding flights out from Bogota into the rest of the region. Passengers in Avianca decreasing slightly as we extended the stage length over 7%, average fare increasing at GOL, passengers increasing pretty much in line with the growth of the network. PRASK at both companies holding in spite of the very strong network expansion and CASK at both companies -- at Avianca continuing to decrease slightly and at GOL holding basically flat, passing through a little bit of inflation at about 4%. Turning to Page 9, handing it off to Manuel Irarrazaval, our CEO -- our CFO, sorry, to continue with the conversation. Manuel Irarrazaval: Thank you, Adrian, and good morning, everyone. I'll walk you through our financial performance for the full year. Maybe we start in Page 9 on the pro forma revenues. Pro forma revenue for this year has increased 11% to $9.7 billion. That is driven in about 8% by passenger revenue and as Adrian was explaining before, and a very strong increase in other revenues in cargo and others with that increase is about 31%, right? In terms of EBITDAR, we -- the company delivered a very strong pro forma adjusted EBITDAR growing almost 26% to almost $2.7 billion for the full year with a margin of 27%. If you look at that number as of the fourth quarter, in particular, it had a margin of 30.6%, which is a very strong margin and reflects the great performance of bringing in GOL and the improvement of GOL's margin over the fourth quarter and a very favorable seasonality in the fourth. I would like to highlight that we are not highlighting the metrics below EBITDAR as depreciation and interest are available under our current accounting policies and therefore, kind of the year-over-year comparison is not very meaningful. However, the numbers are in the back of this deck. If we go to Page 10 and we look at the balance sheet, we have ended the year with a strong liquidity, almost $2.5 billion of liquidity, which implies a 25% ratio of liquidity over revenues for the year, which we believe is a very strong point. In terms of net debt, we had a 16.6% reduction of net debt over the year, mainly coming from the restructuring of GOL, right? That has taken our net debt to EBITDAR, the net leverage metric down from 5x before in '24 to 3.3x. And this is an important driver for us, and we will continue kind of deleveraging as time goes on. If we go to the next slide, Slide 11, you can see the performance for the fourth quarter in particular. You can see ASKs at 31.2 with a load factor of 82.6%, which has helped us deliver an EBITDAR margin of 30.6%, as I said before, and again, highlight to you the level of leverage and liquidity that we are finishing the year. Going next to Page 12 exactly. I will also I will also touch on the point of the fuel volatility. As you all know, we have been monitoring very closely the events happening in Middle East and the impact that fuel has on our operations. In general terms, in these months, a $1 increase in jet fuel price has resulted in a $70 million impact on our monthly fuel expense, which means that to compensate that, we would need to increase prices in about 10% for every dollar that has increased. What have been we doing? On the right side, you can see that we have hedged 50% of our fuel needs for the months between March and May. putting in place a zero cost collar with a call strike at $2.45. That was a very good protective measure that we took right before the war started. And we have increased that hedging recently with another 14% of the fuel needs until the end of August at a strike price higher, of course, because the market has moved up significantly. In Brazil, in particular, the fuel pricing mechanism going through Petrobras allows the companies to feel the impact of fuel with a month of delay, and that has given the company time to try to pass through some of this into price. We continue to work with -- our commercial teams continue to work very disciplinedly on price management and being able to pass prices over to the tickets and to compensate for the increases of cost. With that, I finish this section on the financial results, and I will pass it over to Gabriel so that he can cover Avianca's full year performance. Gabriel, all yours. Gabriel Oliva: Thank you so much, Manuel, and welcome you all. If you turn to Page 14, I will give you highlights of Avianca's full year performance in 2025. More on the operational level, as Adrian commented, we're pretty proud of what we achieved. We continue expanding our network. We launched 13 new international routes with 4 new, completely new destinations, reaching more than 160 routes finishing the year, 83 destinations in 27 countries. As it was commented before, we finished that reallocation of capacity, moving -- expanding our stage length, moving capacity from Domestic Colombia into international markets, driving more than 7% our stage length and a much more healthier and balanced supply-demand dynamics. We continue -- and we continue investing. We invested and we continue investing in our product and brand loyalty. Right now, we have completed our rollout of Business Class in the entire network, including all our domestic markets. We opened new VIP lounges and dedicated Insignia, which is our transatlantic business class check-in space in Bogota and strengthening our premium customer and loyalty value proposition. And in the operational level, as it was touched upon before, we delivered a very robust performance, which we are proud of, while we navigated 3 industry-wide challenges with the engines that affected most of our family types of aircraft. On the financials, we achieved at Avianca an adjusted EBITDAR of $1.5 billion, which was more than 20% growth year-over-year at 26.5% margin, more than 200 basis points growth year-over-year. As Manuel was saying, on Avianca, we continue reducing our net leverage sequentially to 2.7x and liquidity reached $1.4 billion, which is close to 25% of last 12 months revenues. And that includes a $1,200 million undrawn revolving credit facility. And our business units were very proud of the performance they achieved. Cargo, a strong performance with market dynamics supporting that, and we completed our strategy of a network redesign, refleeting our cargo network right now having 9 A330 freighters across our cargo network. And in Lifemiles, we reached 16 million members and customers by year-end, which is more than 14% growth year-over-year. And at Wamos, we delivered its full year -- first full-year performance within the group, supported by very strong widebody demand. So turning to Nico to get more into the financials. Thank you very much. Nicolas Alvear: Thank you very much, Gabriel, and good morning, everyone. Turning to Slide 15, delving deeper into financial performance. You can see that Avianca generated EBITDAR of about $1.5 billion, up 21% year-over-year, with margins expanding by over 200 basis points to 26.5%. Importantly, fourth quarter EBITDAR, which you can see in the appendix, reached $463 million at a margin of almost 30%, which is about 60 basis points stronger versus last year. So overall, this reflects the combination of disciplined capacity growth, improved network efficiency, continued cost control and higher premium revenue generation driven by the rollout of Business Class across our network and the strengthening of our loyalty program. Also, as Gabriel mentioned, our Cargo business, Lifemiles and Wamos posted remarkable performance during the quarter and the year. You can appreciate that EBITDAR generation translated into continued balance sheet strength with liquidity increasing $110 million to roughly $1.4 billion, representing about 24% of last 12-month revenue. And notably, our net leverage declined to 2.7x, down sequentially from 2.8x in the prior quarter and from 3.3x in the prior year, driven by EBITDAR growth and relatively stable net debt. Between early 2025 and early 2026, we continue to strengthen our capital structure, refinancing approximately $1.75 billion of debt, mostly our bonds to 2028, pushing out maturities to 2030 and 2031 and optimizing the use of our collateral. So overall, our operating performance is giving us greater flexibility to manage through the cycles, continue investing in our business and our customers and contribute to the broader Abra platform. And with that said, I'll turn it over to Celso to discuss GOL's 2025 performance. Celso Ferrer: Thank you, Nico. And moving forward to Page 17. I want to share the GOL highlights for 2025, which was a really transformational year for GOL, as mentioned, marked by a successful completion of the Chapter 11 process in June and strengthening the capital structure of the company, which provides a solid foundation going forward. Operationally, the focus has been on increasing capacity with discipline. We saw a strong year-over-year capacity growth in international markets, reaching more than 13 countries. Domestic growth was supported by 11 aircraft returning to service and improved fleet availability. Importantly, that capacity has been deployed where the demand is strong and where returns justify it, consistent with the strategy that GOL has outlined over the course of the year. At the same time, GOL continues to benefit from its leading position in Brazil with a strong presence in key markets such as Sao Paulo, now more than ever, Rio de Janeiro and Brazil, including slot-constrained airports that support frequency and commercial relevance. The network is a high frequency with strong connectivity that drives both cost efficiently and customer preference, supporting health load factors as capacity increases. GOL is also beginning to selectively expand its long-haul operation in international markets, including the recently announced Rio JFK service. Operational quality remains a clear strength. GOL was the #1 airline in Brazil for on-time performance for the second consecutive year, which supports both customer loyalty and commercial performance. From a commercial perspective, Smiles continue to be the core driving of earnings quality with a large engagement from its base and diversified partnerships ecosystem that supports recurring high-margin cash flow generations. In Cargo, GOLLOG continues to perform very well, supported by the addition of 2 dedicated cargo aircraft, totaling 9 aircraft at the year-end, strengthening the Mercado Livre partnership and benefiting from a strong demand in e-commerce and express logistics. So overall, what you see in GOL is a disciplined recovery, increasing capacity, maintaining strong operational quality and strengthening the business commercial and earnings profile. Julien will speak about our financial results. Julien Imbert: Thank you, Celso. Moving to Slide 18. We are very happy to report that once again, we're outperforming on our plan since emergence. So it's the third quarter that GOL has been outperforming the [ 50 ] that we had published at emergence. If you look at EBITDAR, we reached an EBITDAR of $1.2 billion, which is an increase of 32% versus last year and a margin of above 30%. This is driven mainly by our growth on capacity growth plus price growth in local currency and our continued control on our cost. Liquidity also is ever stronger at $1 billion in liquidity, representing 25% of our last 12 months revenue and a significant increase versus the position of last year with 43% increase versus 2024. Regarding net leverage, we've been able to reduce our net debt over EBITDAR to 3 turns in 2025, accelerating the deleveraging of the company and pursuing our commitment to a healthy balance sheet. We are very happy with those results that underline our purpose of being the first airline for everyone, our clients, our investors and our teams. And we continue to deliver on our plan with consistency and discipline, building an ever stronger goal. With that, I will now turn the call back to Adrian for closing remarks. Adrian Neuhauser: Thanks so much, Julien. So to summarize, and as I said, really, really proud of the network of the results we're delivering this quarter. First of all, a continued focus on customer experience, boosted by differentiation and brand loyalty as we integrate the power of the 2 brands, but also take advantage of the increased connectivity and frankly, of the know-how that each of the 2 companies brings in creating a unified customer experience. Number two, revenue growth and disciplined cost management that drove higher margins; three, adjusted strong adjusted EBITDAR and liquidity and continued balance sheet deleveraging and very, very proud of the results our business units are delivering through the year. With that, I'd like to turn it over to I'd like to turn it over to Q&A. Operator: [Operator Instructions] Your first question for today is from Mike Linenberg with Deutsche Bank. Michael Linenberg: Great way to finish up 2025. And obviously, now as we look into 2026, the high energy prices are kind of the front and center of focus. I saw that you have these hedges, clearly opportunistic. What are you currently paying for jet fuel? I mean I saw that in the context of that $4 per gallon jet fuel hedge. What are we seeing today? And then can you kind of give us a view on how you're thinking about your capacity plan for this year? I mean I know we're starting to see other carriers sort of rethink near-term growth plans as they deal with higher fuel prices. Manuel Irarrazaval: Thanks, Mike, for the question. And yes, I mean, it's been an interesting start of the year with these movements. In terms of what are we paying for fuel today, there is a certain delay in kind of the cost of fuel as kind of our suppliers have some inventory. So we are today kind of spot price today where kind of outside of Brazil, I would say, is around $4, a little bit under that. In terms of the -- that is the fuel price that we're paying without kind of taking into account the hedging, right? In Brazil, it's going to be lower. I don't have the exact number here, but it's going to be lower than that. Then on top of that, you have the compensation that is coming from the hedges, right? From March, April and May, we have -- half of our volume is capped at the $2.45 that I referred to before. So that's what we're paying. And that is mostly -- that is the fuel that is being consumed outside of Brazil, right? And Brazil still hasn't seen -- we're just starting to see kind of the new price -- the price reset now on the 1st of April, right? So you're going to start to see an effect of the price increase going forward, right? Adrian Neuhauser: And so with regard to capacity, Mike, if you were to look at our sales curves today, what you'd see is the following, right? We've started pretty aggressively passing through the increased cost of fuel, right? So we're not relying on the hedges to boost margins. We're basically using them as a way to soften the transition to new pricing as we drive the pricing up. And obviously, there's a lag there, right? If you were to look at pricing in Brazil today, we're up, and I think the industry broadly is up about 30% from where we started a little over a month ago, which if that holds, right, that's pretty much a full pass-through of [ mid-4 ] fuel. Now obviously, because you've sold lots of bookings forward, there's a mix of bookings that you sold at lower prices, bookings that you sold at high prices, and it's going to take the better part of 3 months even with the new pricing levels for your average pricing to catch up. And then the second part of that is how much of that turns into reduced demand because that will ultimately answer your question, right? What we're seeing so far is that the short end of the booking curve is holding up pretty well. And -- but you're seeing the later bookings not come in, right? And the question is, do they show up later? Or do they -- which interestingly, if you think about what later means today, later sort of means the beginning of summer high season, right? And so it's not a crazy bet to assume that they will or do they fall off, right? We've started in Brazil, in particular, thinking about some tactical reductions sort of in the single -- low single-digit percentages of ASKs. But the reality is we don't know yet, right, how elastic is that going to prove and how much we need to react to that, right? So we're looking at it constantly. And as soon as we sort of start to see near-term bookings taper off, that will be a strong sign that we need to cut back on supply, right? On the Avianca side, the pass-through has been, I'd say, less effective. It's a more complex competitive set, right? You have over 20% of your ASKs deployed into Europe. The Europeans are largely hedged. You have 35% of your ASKs deployed into the U.S. The U.S. carriers, in spite of their big talk have actually been slower at sort of driving pricing up, at least in our region [indiscernible] and they've been slow followers as well. So we're slightly under 10% increase in pricing at Avianca. And again, we need to get to sort of the mid-20s, right? So call it 1/3 of the way there. And sort of the same dynamic, right, less to no impact on the near-term bookings, which is interesting because we've been in a low season. But a pretty strong drop-off in the long-term bookings, which is interestingly because -- which is interesting because those are high season bookings, right? So right now, I don't want to sound sanguine because this is obviously an unexpected sort of shock to the system, right? And it's not a positive shock. But between the hedges, between the effectiveness of our ability to pass through and between the near-term booking curve holding up even in low season, we're pretty optimistic about summer demand. You may see us pull back a little bit of capacity here and there, but we haven't yet decided to sort of make wholesale reductions, certainly not into the summer, right? If we see this dynamic holding up for a few more months and then sort of have to extend higher pricing into the much more elastic sort of post-summer shoulder season, that's a different discussion. Michael Linenberg: All right. Well, very encouraging that you guys are -- you appreciate the elasticity and are considering tactical moves if this fuel regime or environment continues, or it persists. So thanks for the thorough answer. Manuel Irarrazaval: Mike, to go back to your question around the fuel, in Brazil, in particular, the price announced by Petrobras for April is BRL 6.85 per liter, right? That translates into about $4.9 per gallon, which remember, that includes a non -- insignificant amount of taxes. And that -- so you have a reference is about a 55% increase against the price that was -- that we paid during March, right? Remember that in Brazil, the price kind of reflects the average of the previous month, right? So you're seeing -- you saw 55% increase when kind of world jet fuel prices increased kind of on spot is more, it's double, right? So it's a moderated increase by Petrobras for the month of April and then probably May, you're going to see the pull back, right? Adrian Neuhauser: And Mike, one more comment on your comment. We are cautious on elasticity. Again, like I said, we're monitoring it. The bigger concern, I think, for everybody should be less the price elasticity side, if you think. If you think about -- and this is an interesting data point, right? Because both GOL and Avianca have been pretty effective in keeping their costs in line and in driving higher loads, a 30% pass-through to fares would put 2026 fares on real terms at the same price we were charging in 2019, right? So you're actually interestingly not talking about sort of taking pricing to where it's never been, you're really sort of catching to inflation. So we are concerned about elasticity, but we're not panicked about it on the price elasticity side, right? If you have to think about what are we monitoring more long term, we're monitoring economic slowdowns and then income elasticity, right? Because that would have a much more significant impact, we believe, on demand than the fare pricing that we're passing through, in particular, when the entire market passes it through as well. Operator: Your next question for today is from Savi Syth with Raymond James. Savanthi Syth: I just -- maybe I appreciate the tactical capacity adjustments you might make. But I was wondering if you could talk a little bit about maybe the core capacity plan at Avianca and GOL this year and kind of where that kind of growth might be focused? Adrian Neuhauser: Sure. Celso, do you want to start with GOL and then we'll hand it to Gabriel for Avianca. Celso Ferrer: Yes, Adrian, I can. Savi, thanks for the question. And we have -- as I mentioned, 2025, we were like catching up the capacity that we lost during the pandemic. And basically, by creating connectivity, design the new network with the entire Abra team focused in regions where GOL used to be strong, but we see even higher potential for the company right now. I can give you two examples. One is Rio, the other one is Salvador that we are -- that both concentrates more than 86% of our growth in 2026. In Rio International, we have created a very strong position, high frequency where we believe if we need to do some tactical reductions, we will be able to recapture most of the demand as the whole industry continues to be and follow the rationalization. So we are monitoring very close. As Adrian mentioned, no decision, and we are not looking for restructuring of the network. We are confident. You saw our results, I mean, with ASK growth and unit revenue growth. So we are, I mean, monitoring close and doing these adjustments so far, okay? Gabriel Oliva: Sorry, Celso, go ahead. Celso Ferrer: No, no, please Gabriel. Please, go ahead. Gabriel Oliva: So on the Avianca side, as we commented and we were talking last year, we did this capacity shift to have a more healthy supply and demand balance, right? We extended the stage length more on the international side, and we did some adjustments in Domestic Colombia. As we think about 2026, our initial plan was a modest growth within the mid-single digits, right? And that comes on really not getting so much narrow-body fleet this year. So adjusting the network throughout the same pattern, but not a high growth. And on the wide-body side, it's really, as I said before, and we commented before, right, last year, we had this -- all these disruptions due to the wide-body engines that we commented on the last call. So it's more about putting our network on the wide-body side that getting all the [ 78s ] and all the 2 A330s that Adrian commented. So in a nutshell, we were not thinking on a high growth in the network this year, and it's basically keeping kind of the same pattern that we were having last year into this year. Operator: [Operator Instructions] Your next question for today is from Pablo Monsivais with Barclays. Pablo Monsivais: Just a quick question in terms of OpEx and CapEx. At this point, are you thinking of any measures to reduce the cash outlays, assuming the situation continues with a very high oil price? Manuel Irarrazaval: Pablo, thank you for the question. We are always looking at ways to optimize our OpEx and CapEx in particular, where kind of the amount of the CapEx around engines has turned to be more significant. We're also looking at ways, Pablo, of taking advantage of facilities or kind of using local facilities to be able to fix engines in Brazil, for example, which would give us also some kind of support in terms of being able to finance those. But yes, we are, of course, working on optimizing the CapEx and the OpEx plans. Operator: Your next question for today is from Guilherme Mendes with JPMorgan. Guilherme Mendes: I appreciate the comments on the first question about the demand outlook. Just following up into that, if you can break it down between different segments, think about leisure and corporate and domestic and international. When you say that you're increasing prices by 30% in Brazil and roughly 10% in Colombia, is this across the board for different segments? Or there's a difference between leisure and corporate and domestic and international? Adrian Neuhauser: No. What I'd say, we can dig into this more, right, offline. But what I'd say is, look, conceptually, it's across the board, right? We've tried to increase across the board. Obviously, there's some self-segmentation, right? If we're saying the shorter end of the booking curve is holding up very strong, the longer end of the booking curve is where we've seen some still TBD, if it's reduced demand or simply delayed demand. The shorter end of the booking curve tends to be more business focused, right? So we're passing through on everything. But what you're seeing is the leisure customer not book up as early as they would. And that's sort of natural, right? You'd expect the people that they thought the summer ticket was going to cost X, right now it's costing 1.3x. They look at it and they say, well, let's wait a bit before we book it and see if it drops, right? So I think there's some sort of self-selection there that's not us segmenting where we raise prices and where we don't, but sort of how people -- how different parts of the market react to changes in our pricing curves. In Colombia, as I said, it's a little different because even though we raise fares across the network and we intend and push for our pricing to go up and hope that our competitors will follow. The nature of the network means that you've got different competitive sets, right? So when you say international, again, our U.S. fares, we've been through -- don't quote me on this, but 3 or 4 price increases. I'd say 3 have stuck and we've had to pull back. And it has to do with whether competitors follow or not, right? And that has to do with sort of the competitive set you're playing against, right? In Europe, the European carriers have been much less willing to raise fares. I think that the position they're taking is they're more hedged and they're using that to try to capture market share. They're also driving some pretty extraordinary margins on their Far East routes, right, as connectivity sort of goes through Europe and avoids the Middle East, that's also giving them some incremental margins and allowing them to not pass through as quickly on the Americas route. So in those cases, we're probably 25% of the way passed through instead of 30%, right? So it depends more on who you're competing against than us segmenting international versus domestic versus what have you. Does that make sense? Guilherme Mendes: Very clear. Operator: Your next question for today is from Gavin McKeown with Amundi. Gavin McKeown: Just last question I have is in relation to the additional hedge that you mentioned. Can you give us any color as to whether or not that was at GOL or at Avianca? Manuel Irarrazaval: No. Look, the hedges themselves, we take them at Avianca, which is the company that has less -- has a more direct impact from changes in fuel prices, right? And of course, the company that has more ease to find with banks and other things, right? So -- but yes, they're being taken at Avianca today. Operator: Your next question for today is from Nicolas Fabiancic with Jefferies. Nicolas Fabiancic: Just had a few quick questions here. On GOL, if you could please expand a little bit about liquidity, especially when we look at liquidity without the credit card receivables, any thoughts there in terms of alternatives, things you could do with the intercompany loan or any contemplated reshuffling of the GOL capital structure at this stage? Regarding Abra, similar question. We have the '29s bond. I see that it's callable in October. So just any updated comments around liability management or refinancing for the Abra '29s or the term loan? And then at Avianca, you've made great progress with the refis there. There is the stub left over for the '28. If you could give us an update on liability management at Avianca. And also, I just wanted to ask about Avianca, the CapEx plan if you could give a little bit more detail on CapEx for 2026. Manuel Irarrazaval: Listen, let me -- thanks, Nicolas. Let me start by addressing Abra in general, and then we can go into the different points, right? The liquidity position that we have across each of the companies is very strong. In the case of Avianca, we have -- we finished the year with $1.4 billion of liquidity. That includes the revolving credit facility. At the level of GOL, we have about $1 billion, which includes the receivables, which, as you know, in Brazil, is a fairly liquid asset that you can get -- you can sell off. It's like having a revolving credit facility. Now in terms of kind of you're asking about the capital structure of GOL itself, there is no plans today to do anything around that. The company is in a strong position and has been deleveraging over time. Of course, we are looking at CapEx and OpEx and kind of how do we make sure that we keep our liquidity levels and our cash levels, in particular, at a reasonable amount going into this. But there is no plans or kind of things that I would comment on doing liability management at this point, right? And that's in general for the group. I think that given kind of the market environment today, I think liability management are not in discussions today. Same thing with Avianca, right? In Avianca, if you remember, we did a couple of refinancing at the beginning of the year. We brought down -- we repaid a big part of the '28 notes with a bond that we did at the beginning of the year and recap that we did in later in January. And there's about $400 million of the '28 notes outstanding. We have no plans on doing anything with those in the short term, right? And our financings at Abra, yes, we're approaching kind of the end of the non-call period, but that's a bigger question. In the market that we have today, I don't see that we're doing anything in the short term. And just to be clear, on the GOL liquidity that you see and the cash that you have there, that is real cash and liquid facilities, right? I mean, and liquid assets. So it's not -- we're just showing you there the cash and the factorable receivables. Anything -- any kind of receivables that is not factorable, we will not include there. Operator: [Operator Instructions] We have reached the end of the question-and-answer session, and I will now turn the call over to Adrian for closing remarks. Adrian Neuhauser: Thank you, everyone, for the time you spend looking at us. Again, really proud of the quarter we've delivered of the evolution of the company as we put it together in a very short time. The synergies we're driving, the growth that we've driven, the margins that we think are second to none in the region. We're really proud of what we've delivered. We're working through the fuel situation, as you can see, pretty effectively, the hedges have put us in a great position to work through it and pass through pricing as we head into summer high season. So all in all, even with the geopolitical backdrop that we're dealing with, very, very excited for what the year will bring. So again, thank you all for spending the time, and we'll be talking to you shortly. Manuel Irarrazaval: Thank you very much. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good evening, and welcome to the Nuvve Holding Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. On today's call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. Earlier today, Nuvve issued a press release announcing its Q4 '25 and FY '25. Following prepared remarks, we will open up the call for questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Nuvve's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in Nuvve's filings with the SEC and in the earnings release issued today, which are available on our website. Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances. With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve. Gregory? Gregory Poilasne: Thank you, and good afternoon to everyone here today. Welcome to our Q4 '25 and Full Year '25 Results Call. 2025 has been a transition year where we have been pivoting from vehicle-to-grid deployments to stationary storage. Stationary battery were not new to Nuvve. We have been managing batteries for a few years in the U.S., for example, at the University of California, San Diego and in Japan with our partner at the time, Toyota Tsusho. Nuvve's platform has been designed to manage batteries from the ground up, either on wheels or stationary with the benefits of aggregation, second by second control and advanced stacking services, including behind-the-meter energy cost optimization, distribution grid support and ancillary services. We also started to integrate artificial intelligence-based functionalities 3 years ago with a focus on forecasting for battery usage and market values. Nuvve has now moved on into a full end-to-end AI-based product development cycle and is currently integrating AI-based project management, sales support and finance functionalities in order to scale our business while we are reducing our cost base. Though we are not stopping our current activities in school bus and fleets, all the market signals we are receiving are confirming that our pivot towards stationary battery deployments is the right path. In Europe, we have recently announced a partnership with OMNIA Global, a Zug Switzerland-based family office. The partnership with OMNIA is really a meeting of the minds as OMNIA has developed a 1 gigawatt plus battery pipeline across multiple countries in Europe that will be deployed over the next 24 months. The purpose of the partnership is to deploy batteries across Europe, batteries that will be owned by Nuvve. We have already announced 3 projects, a 50-megawatt 75-megawatt hour project in Sweden, a 40-megawatt 80-megawatt hour project in Austria, and a 60-megawatt 120-megawatt hour project in Romania. Different process are underway in order for Nuvve to ultimately own these batteries. The combination of these 3 battery projects represents 150 megawatts. Compensation for such battery projects can vary between $250,000 per megawatt per year to more than $500,000 per megawatt per year. This is an extremely exciting opportunity with tremendous upside for Nuvve and our shareholders. In Japan, following the termination of our partnership with Toyota Tsusho, we have then started our own entity, Nuvve Japan. The Japanese market is a less mature market, and therefore, we are pursuing different business models. We recently announced the sale of a 2-megawatt 8-megawatt hour battery for $3.35 million battery in Niigata Prefecture. We have already received a little less than $1 million as a down payment while we are targeting a battery delivery by November 2026. More recently, we have also announced that Nuvve Japan had been selected as the aggregator platform for another 2-megawatt battery projects. Outside of selling and managing batteries, other business models in Japan also include tolling, which is basically a rental agreement with a battery owner, receiving a fixed income on these assets while our advanced platform can generate high return with the battery. Our pipeline of opportunities in Japan has a similar size to our European project pipeline, but over a slightly longer period of time, about 36 to 48 months. Finally, we have similar battery opportunities in the United States, such as Kit Carson in New Mexico, driven by a New Mexico subsidiary. The U.S.-based battery projects don't seem to be moving as fast as projects in Europe and Japan. The exposure of these geographies to the conflict in Iran is making this project even more valuable. This effort to pivot the company started more than a year ago and is now on the verge of paying off. The future of Nuvve in the stationary battery space looks bright. Our partnership with OMNIA Global is absolutely transformative. Our team in Japan is doing an extraordinary job developing the business, and we are looking forward to sharing more with you on our progress very soon with a tight focus on battery deployment and reducing our operating costs. Now I will let David take you through the financial details of the quarter and the year. David? David Robson: Thanks, Gregory. I will start with a recap of fourth quarter 2025 results. In the fourth quarter, we generated total revenues of $1.93 million compared to $1.79 million in the fourth quarter of 2024. The increase was primarily driven by higher product sales and increased grant revenues, partially offset by lower service revenues due to the absence of management fees earned related to the Fresno EV infrastructure project versus the same period last year. Total revenues year-to-date through December 31, 2025, were $4.79 million, which compares to $5.29 million for the prior year period. The year-over-year decrease in revenues was driven by lower service revenues due to the absence of management fees earned related to the Fresno EV infrastructure project this year versus last year, partially offset by higher product revenues and grant revenues. Margins on products, services and grant revenues were 24.2% for the fourth quarter of 2025 compared to 15.8% for the year ago period. Year-to-date margins through December 31, 2025, were 39.1% compared with 33.1% for the year ago period. Margin was positively impacted quarter-over-quarter by a higher mix of grant revenues and improved pricing on product revenues this quarter compared with last year. Excluding grant revenues, margins on product and service revenues increased to 16% for the fourth quarter of 2025 compared to 11.5% in the year ago period. Year-to-date margins, excluding grant revenues through December 31, 2025, was 31% compared to 27.5% in the year ago period. As a reminder, margins can be lumpy from quarter-to-quarter depending on the mix. DC charger gross margins at standard pricing generally range from 15% to 25%, while AC charger gross margins are approximately 50%, but in dollar terms are a small fraction of the revenue of the DC charger. Grid service revenue margins are generally 30%, while software and engineering service margins are as high as 100%. During the fourth quarter of 2025, we determined that certain 125-kilowatt V2G DC Chargers held in inventory and purchased from our former third-party supplier were not conforming to our commercial product reliability standards, and they would no longer be offered for sale domestically. Given the commercial reliability issues of those DC chargers, we recognized a total inventory impairment charge of $3.47 million, reducing the carrying value of those inventories to zero. This inventory impairment loss is presented as a separate line item in the consolidated statements of operations due to its significance. Operating costs, excluding cost of sales and inventory impairment was $3.7 million for the fourth quarter of 2025 compared to $5.9 million for the third quarter of 2025 and $5.9 million for the fourth quarter of 2024. The decline in operating costs during the quarter was primarily driven by lower payroll expenses. Cash operating expenses, excluding cost of sales, inventory impairment, stock compensation and depreciation and amortization was $2 million in the fourth quarter of 2025 versus $5.4 million in the third quarter of 2025 versus $5.2 million in the fourth quarter of 2024. This represents a decrease of $3.4 million in expenses over the same quarter last year. Other income was $0.4 million in the fourth quarter of 2025 compared to $0.5 million in the fourth quarter of 2024. Both periods benefited from noncash gains from the change in the fair value of warrants and debt, offset by interest expense. Net loss attributable to Nuvve common stockholders increased in the fourth quarter of 2025 to $6.1 million from a net loss of $5.1 million in the fourth quarter of 2024. The increase in net loss was primarily a result of onetime inventory impairment charge, partially offset by lower operating expenses previously mentioned. Now turning to our balance sheet. We had approximately $5.5 million in cash as of December 31, 2025, excluding $0.3 million in restricted cash, which represents an increase of $5.1 million from December 2024. The increase during the fourth quarter was primarily the result of capital raised through the issuance of preferred stock and the exercise of warrants totaling $8.1 million, $0.9 million from the sale of its equity investment in DREEV, primarily offset by $4.5 million used in operating activities. Inventories were $0.8 million at December 31, 2025, compared to $4.3 million at the end of the third quarter of 2025. The decline of $3.5 million relates to the $3.47 million impairment charge for 125-kilowatt V2G DC Chargers held in inventory, reducing the carrying value of this inventory to zero. The impaired DC chargers were subsequently transferred to property, plant and equipment at zero carrying value and will be used to support our business development efforts in Taiwan. During the quarter, accounts receivable was flat at $1.1 million at December 31, 2025, compared to the third quarter of 2025. Accounts payable at the end of the fourth quarter of 2025 was $3.4 million, an increase of $0.5 million compared to the third quarter of 2025 of $2.9 million. Accrued expenses at the end of the fourth quarter of 2025 was $1.8 million, a decrease of $3.8 million compared to the third quarter of 2025 of $5.7 million. Now turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregate amount of electrical capacity from the deployment of our V1G and V2G chargers, which are primarily deployed in the electric school bus market in the U.S. and in light-duty fleet deployments in Europe in addition to stationary batteries. Currently, these chargers and batteries are located throughout the United States and Europe. Megawatts under management in the fourth quarter increased 7.5% over the third quarter of 2025 to 28.3 megawatts from 26.4 megawatts and decreased 7.6% compared to the fourth quarter of 2024. In terms of its composition, 0.2 megawatts were from stationary batteries and 28.1 megawatts were from EV chargers. The quarter-over-quarter increase relates to the deployment of DC chargers, while the year-over-year decrease relates to the decommissioning of stationary batteries we managed in California and Japan, offset by the deployment of DC chargers. We continue to expect further growth in our megawatts under management in 2026 as we commission our backlog of customer orders we have earned in addition to new business we anticipate winning, which we have visibility to in our pipeline for both EV chargers and stationary batteries. Now turning to our backlog. At December 31, 2025, our hardware and service backlog decreased to $3.3 million, a decrease of $15.7 million from $18.3 million reported at December 31, 2024. The decrease primarily relates to the termination of the Fresno EV infrastructure project in early February 2026. As we look out to the next several quarters, we expect to see more developments from our Europe and Japan stationary battery projects. We also anticipate improvements in our cash burn resulting from the benefit of lower operating costs compared with last year. That concludes my portion of the prepared remarks. Gregory, back to you to conclude. Gregory Poilasne: Thank you, David. We are confident that our pivot towards stationary storage was the right choice. And we know that moving forward, our success is going through battery deployments, especially in Europe and Japan. Expect to hear more about our deployments soon. Thank you. Operator: [Operator Instructions] Showing no questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Gregory Poilasne for any closing remarks. Gregory Poilasne: Thank you for listening to us today, and we're looking forward to sharing more with you in the near future. Bye-bye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, everyone, and welcome to the Nano Dimension Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Purva Sanariya, Director of Investor Relations. Please go ahead. Purva Sanariya: Thank you, and good afternoon, everyone. Welcome to Nano Dimension's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today is our CEO, Dave Stehlin; and our CFO, John Brenton. Before we begin, I will remind you that certain information provided on this call may contain forward-looking statements within the meaning of Federal Securities Law. Forward-looking statements are not guarantees and involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to be materially different from any future results performance or achievements expressed or implied by the forward-looking statements. The safe harbor statement outlined in today's earnings press release also pertains to statements made on this call. For a discussion of these risks and uncertainties, please refer to our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements, except as required by law. In addition, I would like to point out that we will be discussing non-GAAP results, which exclude certain items and reflect the results of continuing operations. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in the press release available on the company's website. If you have not received a copy of the press release, please view it in the Investor Relations section of the company's website. A replay of today's call will also be available on the Investor Relations section of the company's website. With that, I will turn the call over to Dave. David Stehlin: Thank you, Purva, and good afternoon, everyone. We appreciate you joining us today. I'm pleased to update you on our performance for the Fourth Quarter and Full Year 2025. And more importantly, how we are positioning the company as we move through 2026. Before discussing our results in detail, I want to briefly highlight the progress we made during the second half of 2025, following the meaningful actions we implemented to sharpen the strategic focus of the business. During that period, we streamlined operations, reduced cash burn and aligned resources around forward leading industries and our technologies, where we see the strongest long-term opportunities. We also provided financial guidance for the first time in recent history and exceeded our fourth quarter expectations. In addition, we repurchased more than 14.4 million shares in the last 3.5 months of the year because we believe that our stock is undervalued. As we move into 2026, we're seeing the benefits of these actions reflected in improved execution, stronger engagement with strategic customers and increasing momentum across our priority industry segments while leveraging our partner network to help us drive growth. Additionally, we're continuing to reduce expenses, both by trimming as needed, and more significantly by eliminating costs in areas where we do not see long-term value. This allows us to continue growing in high-value industries while remaining disciplined and capital efficient. Turning to our fourth quarter results. As I mentioned, we delivered performance that exceeded the financial guidance we provided on the third quarter call. This marked our first time providing financial guidance in recent history reflecting improved execution and coordination across the Nano Dimension organization and the strengthening demand of our advanced digital manufacturing solutions, particularly in the key industry segments where we're focused. Momentum during the quarter was generally broad-based with strength in the advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure industries. Customers in these industry segments continue to prioritize solutions that enable faster production cycles, improved supply chain resilience, improve cost efficiency and greater flexibility. These are industry segments that reward suppliers who provide superior solutions and great customer care, and we believe we're well positioned in each of them. For the full year 2025, our performance reflects meaningful progress in shaping Nano Dimension into a more focused advanced manufacturing platform serving these high-value industries. While the second quarter was challenging, including the subsequent bankruptcy of one of the two acquisitions completed during that period, we responded decisively in the second half of the year. We narrowed our focus, executed with greater discipline across the business and strengthened our position in production-oriented additive and digital manufacturing applications. From a market perspective, tariff uncertainty eased as the year progressed, though cautious capital spending continues to create variability in certain sectors. However, our fourth quarter results reflect the benefits of a more focused strategy, sales success and our disciplined execution. We focus on helping our customers accelerate towards scalable production. These are areas where our technologies deliver clear differentiation. Customers are adopting our solutions not only for design flexibility but also for measurable operational benefits, including faster production cycles, improved supply chain resilience, reduced downtime and more efficient use of materials and labor. Our ability to integrate advanced hardware, specialized materials and software enable secure, repeatable production environments that support manufacturing at scale. At the same time, we remain disciplined in how we scale our business. We align resources around the industry segments and product areas where we see the greatest opportunity for durable long-term growth, while continuing to execute cost reduction initiatives that are already delivering results. As we move through 2026, we expect continued progress as we further streamline operations reduce cash burn and invest strategically in these priority industry segments. One example is the automotive industry, where we're seeing large-scale deployments across multiple production sites, helping global organizations accelerate new product releases and lower tooling costs. In a rapidly growing advanced computing and data center space, Nano Solutions are enabling some of the world's largest electronics manufacturers to deliver the most advanced networking gear. These engagements underscore the strategic value of our platforms and differentiated advantages we bring in enabling production at scale. We believe our focused industry segment strategy, differentiated technologies and disciplined operating model position us well for sustained growth. Within our portfolio, our composite and metal manufacturing platform continues to gain momentum across high reliability end markets with especially strong engagements in the defense-related applications. In these defense applications, our customers require secure, repeatable and traceable production, not simply prototyping capability. Our Digital Forge platform integrates advanced hardware Engineered Materials and secure cloud-based software infrastructure to enable distributed manufacturing across facilities while maintaining strict control over data integrity and process consistency. As governments and prime contractors prioritize supply chain resiliency, domestic production capability and tactical edge manufacturing, our platform is increasingly aligned with these three mission-critical requirements. During the fourth quarter and throughout 2025, we expanded deployments of our X7, our FX10 and our FX20 systems with defense programs and research institutions that are supporting long-term advanced manufacturing initiatives. In some cases, FX20 platforms have been incorporated into field deployed manufacturing systems supporting U.S. and allied operations in Europe, enabling localized production of spare parts in supply constrained or operationally complex environments. Another important development during the year was the continued adoption of our FX10 platform. The FX10 is the world's first industrial system capable of producing both high-performance composite and metal parts within the same platform. This capability allows manufacturers to move seamlessly between materials while maintaining industrial-grade precision and repeatability. For customers, this translates to greater flexibility, simplified workflows and the ability to consolidate multiple manufacturing processes into a single system. We're seeing strong interest in the FX10 across aerospace, defense, and advanced industrial segments, where the ability to produce both composite and metal components on the same system is unlocking new production applications and expanding the range of customers able to adopt additive manufacturing. More broadly, defense customers are increasingly prioritizing manufacturing at the tactical edge. For example, with unmanned systems and drone operations. field deployable, additive manufacturing allows units to produce mission-specific components on demand, iterate designs based on operational feedback and maintained assets in disconnected or contested environments. Beyond defense, we continue to see adoption across aerospace and advanced industrial segments. High-performance composite and metal solutions are enabling tooling, fixtures and increasingly demanding structural components. These customers value reliability, material performance and accelerated production cycles, areas where our technology provides clear differentiation. To support this expansion, we've established industry-focused teams with deep domain expertise, complemented by a global network of channel and integration partners. This hybrid go-to-market model allows us to scale efficiently in regulated industries while maintaining operational discipline. More recently, we expanded our partnership with Phillips Corporation to strengthen customer support and accelerate adoption in our industrial additive manufacturing platform across the Southeast United States. This initiative enhances access to the full ecosystem, including hardware, materials in the [ IGRA ] software platform while providing manufacturers with deeper application engineering expertise and faster technical support. The goal is to help customers more effectively deploy our Digital Forge platform to optimize part design, improved material selection and scale additive manufacturing for production applications. Overall, we're encouraged by the continued integration of our composite and metal manufacturing platform into customer workflows and believe we're well positioned to deepen our presence in aerospace, defense, and advanced and high-value industry segments. I'd also like to highlight our SM Tech business, which was a meaningful and growing contributor to both the fourth quarter and the full year 2025 and continues to reinforce its position as a differentiated provider of advanced electronics manufacturing solutions. During the quarter, the business expanded relationships with Tier 1 customers across multiple regions, supporting both new production programs and scaling the existing ones. Demand was driven by applications tied to advanced communications, advanced electronics, automotive, and defense industry segments where high-speed, high-precision assembly and flexibility are critical. SM Tech's product innovation remains a key differentiator. For example, in jetting and dispensing technologies that address increasingly complex and high-volume production environments. Our platforms such as our FOX Ultra, All-in-One and our PUMA Ultra systems allow our customers to improve flexibility reduce changeover times and accelerate development in printed and hybrid electronics. In addition, our collaborations with Inventec Performance Chemicals and other fluidic developers have enhanced high-speed solder paste setting and dispensing capabilities, which strengthens our ability to address the increasing complexity of PC boards. These capabilities are critical as customers and forward-leaning industries seek higher performance, precision and flexibility in electronic manufacturing. Engagement at major industry events across Asia and Europe and the Americas continues to generate strong customer interest and pipeline development, highlighting SM Tech's global relevance technology leadership and ability to scale in dynamic high-valued industry segments. Together, these deployments reflect growing demand for integrated flexibility, software-driven manufacturing solutions, that improve throughput, traceability and material efficiency, areas where our technologies position us well as production requirements become even more dynamic and precision driven. Before I hand it off to John to speak about our financial results, I would like to provide a brief update on several key initiatives. First, regarding the strategic alternatives review process that we announced last September. We recognize that our communications has been limited. This has been intentional to allow the Board and management to conduct a thorough and disciplined evaluation, working with our financial advisors, Guggenheim Securities, and Houlihan Lokey. We've spent a tremendous amount of time working through a broad set of potential paths. We completed a comprehensive review of our product lines, core technologies, market dynamics, and competitive positioning. In a short period of time, we have significantly reduced our losses and improved our product lines and yet we also recognize that a gap remains to achieving sustained profitability. So we expect that in the second quarter, we will make a series of announcements that will make clear our path forward to maximizing shareholder value in a relatively short period of time. Second, as of January 1, 2026, Nano Dimension began reporting as a U.S. domestic issuer. This transition aligns our reporting and governance with U.S. market standards including SEC rules and U.S. GAAP, while maintaining compliance with local requirements for our global operations. By aligning our governance and reporting framework with U.S. standards, we aim to enhance transparency for shareholders, reduce our operational complexity and improve efficiency in managing our global business. We anticipate completing the redomestication process in the first half of 2026, subject to customary approvals. As part of this transition, our first Form 10-K filing time line were shortened from 119 days under SEC rules applicable to foreign private issuers to 75 days as a U.S. domestic issuer. In addition, our transition during 2025 from IFRS to U.S. GAAP added further complexity to our financial reporting process. 2025 was also a highly complex year from a financial reporting and disclosure perspective. We completed two significant acquisitions, Desktop Metal and Markforged, navigated the Chapter 11 process and deconsolidation of Desktop Metal, the continued integration of Markforged and executed a reduction in workforce as part of the post-merger integration. Together, these factors required additional time to ensure accurate, complete and transparent financial reporting and disclosure. We filed our Form 10-K today. As disclosed in our Form 12b-25, we identified a material weakness in internal control over financial reporting, primarily related to resource limitations impacting accounting for and disclosure of business combinations and related valuation analysis. Importantly, while a material weakness is never good news, we have not identified any errors in previously issued financial statements do not expect any restatements and believe that our 2025 reporting results are materially correct. Under the oversight of the Audit Committee, we have implemented a remediation plan to address the material weakness and strengthen our control environment. This includes enhancing our risk assessment processes, adding experienced technical accounting and financial reporting resources and providing targeted training to reinforce consistent execution of controls. We expect to continue executing this plan through 2026 and will validate its effectiveness through ongoing testing as these controls operate over time. We're confident these actions will strengthen our control environment going forward. Finally, on capital allocation. During the fourth quarter, we repurchased approximately 10.9 million shares for approximately $19.2 million and a total of over 14.4 million shares for approximately $24.9 million when factoring in earlier repurchases in late Q3 under our existing authorization of up to $150 million. Given the ongoing strategic process review, the Board is carefully evaluating capital deployment priorities, and we will not be providing forward-looking updates regarding repurchase activity at this time. Our strong balance sheet continues to provide meaningful flexibility as we evaluate opportunities to maximize shareholder value. As we sit here today, we're already at the end of the first quarter of 2026, and activity levels remain consistent with the momentum exiting the fourth quarter, taking into account typical seasonality. This is providing us with increased visibility into near-term demand. Given the nature of our business, which includes a mix of recurring activity and larger strategic orders, we believe annual financial guidance remains the most appropriate framework for setting expectations. John will walk through our outlook in more detail and discuss the underlying assumptions. Overall, our fourth quarter and full year results reflect the benefits of a more focused strategy, disciplined execution and continued investment in differentiating technologies that address real customer needs in high-value markets. With that, I'll turn the call over to John to review our financial results and provide financial guidance for 2026. John? John Brenton: Thank you, Dave. It's a pleasure to be here with you all today. Together with Dave and the global leadership team, we remain focused on executing our key priorities to improve the company's performance and enhance shareholder value. Unless stated otherwise, all numbers I will be discussing today are on a non-GAAP basis and reflect continuing operations. A reminder that the fourth quarter represents the second full quarter of Markforged being included in our consolidated financial results. Desktop Metal is excluded from our non-GAAP results as it is classified as discontinued operations following its Chapter 11 filing and deconsolidation during the third quarter of 2025. Turning to our fourth quarter performance. As Dave mentioned, we delivered results that exceeded the financial guidance we outlined on our third quarter call, reflecting improved execution, stronger demand across our priority industry segments and disciplined cost management. Revenue for the fourth quarter was $35.3 million, representing a year-over-year growth of approximately 142% compared to $14.6 million in the fourth quarter of 2024. This increase was driven primarily by the inclusion of Markforged, which contributed $20.7 million. Excluding Markforged, Nano Dimension's stand-alone revenue was approximately $14.6 million in line with the prior year as underlying growth offset the impact of divestments. On a sequential basis, revenue for the fourth quarter increased approximately 31% from $26.9 million in the third quarter of 2025, driven by improved customer engagement, stronger order activity and continued adoption of our advanced digital manufacturing solutions across key industry segments, including advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure. Gross profit for the quarter was $17.6 million, with an adjusted gross margin of approximately 49.7% compared to $5.3 million and 36.3% in the prior year quarter. This increase was driven primarily by the prior year inclusion of a onetime unfavorable inventory adjustment. Sequentially, gross profit increased approximately 38% from $12.7 million in the third quarter with margin expansion of about 230 basis points from 47.4% reflecting improved product mix and operational efficiencies. Operating expenses for the quarter were $27.3 million, representing a year-over-year increase of approximately 13% from $24.2 million in the fourth quarter of 2024, primarily due to the inclusion of Markforged. However, on a stand-alone basis, Nano Dimension's operating expenses decreased approximately 42% year-over-year, reflecting the benefits of divestments and disciplined cost management. On a sequential basis, operating expenses for the fourth quarter declined over 6% from $29.2 million in the third quarter and more than 16% relative to the previously identified baseline of approximately $32.5 million which reflects second quarter operating expenses adjusted to include a full quarter of Markforged. This decrease reflects our continued cost discipline and efforts to streamline operations across the organization. Adjusted EBITDA for the quarter was a loss of $9.8 million, improving from a loss of $18.9 million in the fourth quarter of 2024 and $16.6 million in the third quarter of 2025, reflecting improved gross margins and disciplined expense management. Turning to our full year results. Revenue for 2025 was $102.4 million, representing approximately 77% year-over-year growth compared to $57.8 million in 2024. Growth was driven by the inclusion of Markforged, which contributed $54.3 million and continued adoption of our solutions across key industry segments partially offset by strategic divestitures and softer demand amid macroeconomic uncertainties, including tariffs. Gross profit for the year was $48.1 million with an adjusted gross margin of approximately 46.9% compared to $26.2 million and 45.4% in the prior year. This growth was primarily driven by the inclusion of Markforged. Operating expenses for the full year were $101 million, representing a year-over-year increase of approximately 12% from $89.8 million, mainly due to the inclusion of Markforged, offset by continued cost discipline across the organization. Adjusted EBITDA for the year was a loss of $53.2 million compared to a loss of $63.6 million in 2024, reflecting increased revenue, improved gross margins and disciplined cost management. Turning to the balance sheet. Our financial position remains exceptionally strong. As of December 31, 2025, total cash, cash equivalents, deposits and marketable equity securities were approximately $459.6 million, down from about $515.5 million at the end of the prior quarter. This change of approximately $55.9 million includes $19.8 million of cash used for share repurchases during the quarter and $24.4 million related to changes in the fair value of marketable equity securities. Looking ahead, I'd like to take a moment to outline our financial guidance. As a reminder, our business generates revenue from recurring book and ship activity and larger strategic orders, which can create some variability in quarterly results. Importantly, this variability reflects timing differences rather than lost revenue. With that in mind, we are taking a disciplined approach to providing guidance, and we'll continue to evaluate providing additional metrics over time. As such, we are implementing annual guidance for 2026. For 2026, we expect revenue in the range of $130 million to $140 million, representing over 30% growth at the midpoint compared to 2025, which included a partial year contribution from Markforged following its acquisition in the second quarter of 2025. This outlook reflects continued momentum across our forward-leaning industry segments, including advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure. We expect, on a non-GAAP basis, gross margin between 46% and 48%, reflecting improvement at the midpoint compared to 2025, driven by operating leverage and continued efficiency across our cost structure. Operating expenses on a non-GAAP basis are expected to be between $106 million and $111 million, reflecting continued cost savings initiatives and disciplined resource management. At the midpoint, this represents modest growth relative to 2025, which included a partial year contribution from Markforged as we continue to balance cost control with targeted investments to support growth. We expect adjusted EBITDA loss between $40 million and $50 million, representing meaningful improvement at the midpoint compared to the $53.2 million loss in 2025, driven by operating leverage as revenue growth outpaces expense growth. In terms of cadence, revenue is expected to be modest in the first half, ramping in the second half, with the first quarter typically the lightest and the fourth quarter the strongest. While full run rate savings from operational improvements remain a 2026 target, we are encouraged by sequential improvement in expenses and expect continued efficiencies to support margin expansion and reduce cash burn throughout the year. I will now hand it back to Dave. David Stehlin: Thank you, John. In summary, our actions we implemented in the second half of 2025 are driving meaningful results today. We believe our momentum is positive and our potential is excellent. We have grown revenue, reduced expenses, one critical new and strategic customers. We've provided financial guidance, repurchased shares and implemented a comprehensive strategic alternatives review that is rapidly progressing toward key decisions. We fully expect that 2026 will bring an excellent opportunity to maximize shareholder value. We look forward to keeping you updated on our progress. With that, operator, please open the line for questions. Operator: At this time, we'll begin the question-and-answer session. [Operator Instructions] Our first question today comes from [ Moshe Sarsari ] from [indiscernible]. Unknown Analyst: Thank you for the very elaborate call. I want to ask -- I see that you closed the Markforged acquisition on April 25 of 2025. That means you had two months in Q2 with Markforged under the Nano Dimension umbrella, plus Q3 and Q4. If I compare total revenue of Markforged in the same time in 2024 to what you reported, revenue at Markforged is actually down compared to 2024. And I say that the rest of Nano Dimension revenue is also down. How does that reconcile with what I just heard about continued momentum? And also, how is that not misleading the first line in the press release is how revenue grew by more than 100%, implying that it's all organic. Well, it's clearly not organic, it's also not growing. David Stehlin: First off, thank you very much for the question. As we're stating about the revenue growth year-over-year, that's comparing the consolidated business now after the acquisition with the prior year, which did not include Markforged. So that's specific to the comparisons to the prior year. As it relates to MarkForged specifically in the fourth quarter, consolidated, the growth that we're talking about is the sequential growth in Q4 over Q3. And the continued improvement within the key areas and product lines that were specified. So that's the improvement that we're speaking of and what we're anticipating continuing into the 2026 year. Unknown Analyst: Right. Again, I'm sorry, it escapes me how writing that the revenue is up by 100% -- more than 100% is not an attempt to mislead the readers. David Stehlin: Moshe, it's definitely not an attempt to mislead. It's the requirements on how we have to compare our actual financials year-over-year before we had Markforged. And then if you read deeper into the press release and what we talked about on the call, we described the various comparisons, both year-over-year with and without Markforged. Unknown Analyst: I see. Okay. What about the share repurchases program? Why are you discontinuing it? . David Stehlin: Yes. As we described in the call, we think that there are better uses for our money at this point, which will become very clear in the second quarter, as we said during the call. That's number one. And there we have not taken it off the table. It's still an option. We're just not going to talk about it in advance. Unknown Analyst: I see. Okay. I just don't understand how buying $2 in something for $1.70. How can you have a better use for the cash than that? Is there anything at all that can be more immediately accretive than buying $1 for $0.85. David Stehlin: Understand the point. And as we said, in Q2, things should become a whole lot more clear. Unknown Analyst: That is very not encouraging, I have to say, it's very abstract, there is no explanation here. It's just a promise that just like the ones we heard from you often that in a few quarters, everything is going to turn around. David Stehlin: Appreciate the question. And as I said, you'll learn a whole lot more in this next quarter. Operator: [Operator Instructions]. And at this time, I'm showing there are no further questions. I'd like to turn the floor back over to Dave for closing remarks. David Stehlin: Thanks for joining us today and for your continued interest in Nano Dimension. Have a great day, and goodbye. Operator: And with that, ladies and gentlemen, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Birchtech Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, March 31, 2026, and the earnings press release accompanying this conference call was issued after market close today. On our call today is Birchtech President and CEO, Richard MacPherson; and CFO, Fiona Fitzmaurice. Before we get started, I'll read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements that are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities laws regarding Birchtech. Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions or other statements relating to its future earnings, activities, events or conditions. These statements are based on current expectations, estimates and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in Birchtech's periodic filings with the U.S. Securities and Exchange Commission or Canadian securities regulators. In addition, such statements could be affected by risks and uncertainties related to factors beyond the company's control that may cause actual results to differ materially from those in forward-looking statements. During today's call, the company will discuss adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is presented as a supplemental measure of the company's performance and exclusive of certain items that the company believes do not reflect the core operations of the company. Such non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial information. Additionally, the company's definition of these measures may differ from those used by other companies, making comparisons across organizations difficult. And finally, this conference call contains time-sensitive information that reflects management's best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this conference call. At this time, I'd like to turn the call over to President and CEO, Richard MacPherson. Richard, the floor is yours. Richard MacPherson: Thank you, operator, and good afternoon, everyone. Welcome to our fourth quarter and full year 2025 financial results conference call. I want to start with a few milestones that reshaped the company's trajectory over the past several months. In February of 2026, we completed our uplisting to the New York American Stock Exchange with a concurrent public offering raising the gross amount of proceeds of approximately $16.6 million, including the partial exercise of the underwriters' overallotment option. That capital raise, combined with a senior exchange listing, materially strengthened our balance sheet and broadened our investor base at a critical time in Birchtech's growth. Now on the legal front, the U.S. District Court for the District of Delaware entered our patent infringement judgment in December of 2025, which increased our judgment amount to approximately $78 million, up from the original $57 million unanimous jury verdict. Post-judgment interest will continue to accrue until this judgment is paid. Although defendants have filed an appeal, they have not posted a bond. Therefore, we have initiated collection proceedings, are pursuing enforcement of our judgment now. Since launching our IP enforcement strategy in 2019, approximately $37 million in license fees and settlements have been received, and we expect to convert other prior infringers into long-term commercial partners. Now turning to operations. Our business delivered fourth quarter revenues of $3.8 million with a 31% gross margin driven by our expanding base of licensed utilities and growing product supply relationships. U.S. coal market has stabilized and recent federal support for continued coal plant operation reinforces demand for proven emissions control solutions like our patented SEA platform. We believe this creates a longer operational runway for our core air quality business. And let me go deeper now into our air business. The SEA platform continues to anchor the company, and this quarter's results reflect the durability of that franchise. What has changed is the nature of the revenue as existing supply contracts expire for those utilities now under Birchtech's license agreements, we will actively work toward gaining their reoccurring product supply as utilities embed our sorbent formulations into their processes and directly benefit from our operational expertise and know-how. Fourth quarter air revenues totaled over $3 million, close to $4 million and mostly derived from product supply. Importantly, we expect to see a change in how utilities engage with us with our goal being that licenses that began as enforcement targets can transition to purchasing activated carbon directly, and we expect the pipeline of supply conversions to continue to grow as power demand increases in the coming years. That transition from legal resolution to commercial partnership was our core objective in our business-first approach patent enforcement efforts that began over 6 years ago. Now over the past year, we've signed several new license agreements, bringing us closer to a critical mass of licensed coal-fired utilities. Each agreement not only validates the uniqueness of our SEA process, but extends revenue visibility through multiyear procurement cycles. As licensees incorporate our sorbent formulations into their ongoing operations, we expect activated carbon sales to become an increasingly significant portion of our revenue, a shift that should drive meaningful year-over-year growth. As I noted earlier, our $78 million final judgment represents the culmination of years of patent enforcement. The defendants have appealed, but we are confident in the strength of our ruling and the thorough judicial review behind it. Collection efforts, as I mentioned, are actively underway. Now related to our air business, U.S. coal power generation is holding steady within a diversified energy mix that values grid reliability as well as domestic fuel supply. Federal policy continues to support the operational longevity of coal-fired plants, which in turn sustains demand for mercury emissions control. Our SEA technology remains the most effective solution globally recognized, and that positions us as an essential partner for utilities committed to running cleaner baseload power. With U.S. mercury emissions the lowest in the world relative to coal power generation, we're pleased to play a significant role in America's clean coal and will continue to do so as long as coal power is produced. For 2026, the Air division's road map centers on 3 objectives: continue converting unlicensed users to our technology into licensees and long-term supply customers while protecting our patents; second, grow reoccurring activated carbon sales to our expanding base of licensed utilities. And thirdly, channel the cash flow from this mature high-margin segment into our scaling of our water purification business. Now taken together, the Air division is a self-funded growth engine, generating the cash and credibility that allow us to invest aggressively in water while continuing to deliver for shareholders. So now let me turn to water, where the story shifted meaningfully since last year. We moved from laboratory validation to real commercial activity, booking our first revenues, signing our first strategic partnership and launching new products. The commercialization of our water treatment solutions began with approximately $0.9 million in purchase orders from a large Mid-Atlantic power utility for filtration system media replacement at 2 locations, removing contaminants from wastewater using our proprietary sorbent media. That engagement validated our technology in a real utility environment and gave us a reference account to build from. We then expanded our reach through a collaboration with Civil & Environmental Consultants, a national engineering firm with over 30 offices and 1,600 team members. Under this arrangement, we provide rapid small-scale column testing through our analytical design center in Grand Forks, North Dakota giving CEC's hundreds of water utility clients nationwide access to our testing and analysis capabilities. This effectively creates a pipeline of future system design and media supply opportunities without Birchtech having to build a direct sales force from scratch. For those less familiar, RSSCT replicates full-scale filter performance in a compressed time frame, enabling utilities to evaluate carbon media options and PFAS removal strategies quickly and cost effectively. Our center is one of the few independent RSSCT labs in the country with the capacity to serve the national market at this level. Beyond those 2 anchors, we hit several additional milestones. In January of 2026, we demonstrated that thermally rejuvenated granular activated carbon performs comparably to virgin carbon for PFAS removal. It was a breakthrough for our carbon rejuvenation program that could dramatically lower life cycle costs for utilities. This week, we just announced our SEA-IX nuclear-grade ion exchange resin product line targeted at an approximate $220 million addressable market, spanning nuclear power, coal-fired utilities and municipal water treatment. Birchtech's water platform covers a broad range of media supply, filtration services, our design centers RSSCT testing and analysis along with carbon rejuvenation and now ion exchange resins. So we have a comprehensive offering that didn't exist 12 months ago. Our approach to the market is completely different than our competitors. We work closely with and through engineering firms such as CEC and others alongside utilities to fully integrate the procurement of appropriate equipment, media and other ancillary services. This collaborative approach to the market will ensure water utilities with an affordable, high-effective clean water solution and will secure Birchtech's strong market position as we continue to build customers and strategic relationships. Now speaking of our design centers that launched our position into the water treatment market with our data-first approach. We are now generating a growing pipeline of lab-scale engagements with water utilities and engineering firms. We are currently participating in a grant-funded research project with a leading national engineering firm, evaluating strategy for managing PFAS contaminated drinking water waste, where Birchtech is leading advanced bench and pilot scale testing of thermal GAC reactivation using our proprietary rotary kiln system that we established in Pennsylvania. Other key projects include our role in the initial phase of a multiphase project where we are collaborating with another major national engineering firm and a large utility focused on carbon reactivation to identify the most appropriate media solutions for the removal of multiple contaminants. Our expertise in activated carbons provides our competitive edge and our ability to support both the engineering firm and the large water utility. And additionally, we're conducting water quality analysis, spent carbon evaluations and RSSCT testing for numerous other utilities to optimize media selection, reactivation protocols and overall treatment performance for PFAS and other contaminants. Each of these engagements is building relationships that have the potential to convert into long-term thermal reactivation partnerships or feed directly into our water treatment services pipeline. This data-first approach ensures that these utilities and engineering firms gain highly accurate and more effective media recommendations and receive full benefit from our unique industry expertise. We look forward to this area of our business becoming a key market differentiator and growth driver. The next chapter is about conversion and scale, turning these early engagements into reoccurring service and product revenue, progressing the development of our first GAC rejuvenation facility and expanding our water treatment solution offerings. Regulatory pressure around PFAS is only intensifying and utilities are actively seeking affordable solutions. Birchtech is now in position to meet that demand with a full suite of water purification technologies that complement our established air business and open a second significant revenue stream for the company. With that, I'd now like to turn the call over to Fiona Fitzmaurice, our Chief Financial Officer, to walk through some key financial details from the fourth quarter of 2025. Fiona? Fiona Fitzmaurice: Thank you, Rick. I will constrain my section to a concise review of the financial results for the fourth quarter. For a full breakdown of our financial results, please view our regulatory filings. Revenues totaled $3.8 million in the fourth quarter as compared to $5.6 million in the same year ago quarter. Product revenues increased 19.8% to $3.6 million as compared to $3 million in the same year ago quarter. The change in revenues was primarily due to a onetime $2.5 million licensing payment from a large Southwest utility in Q4 2024. Gross profit totaled $1.2 million, or 31% of total revenues, in the fourth quarter of 2025 as compared to $3.3 million, or 60% of total revenues, in the same year ago quarter. The change in gross profit was a result of the onetime license fee recognized in Q4 of 2024. This change was partially offset by an increase in product revenue during the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease in gross profit as a percentage of revenues was a result of the onetime license revenue generated in the fourth quarter of 2024 having higher margin. SG&A expenses decreased 42% to $2 million in the fourth quarter of 2025 as compared to $3.4 million in the same year ago quarter. The decrease in expenses was primarily due to lower legal fees in connection with patent litigation. R&D expenses totaled $0.5 million in the fourth quarter of 2025 compared to nil in the same year ago quarter. R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies. Net loss for the fourth quarter of 2025 totaled $0.6 million or $0.03 per basic and diluted share as compared to $1.3 million or $0.07 per basic and diluted share. Adjusted EBITDA, a non-GAAP measure, totaled negative $1.1 million in the fourth quarter of 2025 compared to negative $0.5 million in the fourth quarter of 2024. Cash as of December 31, 2025, totaled $2.2 million with no debt as compared to $3.5 million with no debt as of December 31, 2024. Subsequent to the quarter end, the company completed a $16.6 million capital raise concurrent with its uplisting to the New York Stock Exchange American in February 2026, significantly strengthening our balance sheet. I'd also like to briefly discuss the classification of our profit share liability in the amount of $7.9 million as a current liability on our balance sheet. This is a nonrecourse liability that will not be repaid from cash on hand and is only to be paid from litigation proceeds, including the proceeds of our $78 million final judgment in our patent infringement case. Interest on the judgment amount continues to accrue during this appeal period. Under GAAP accounting rules, the profit share liability is classified as a current liability as the company expects the proceeds from this judgment are likely to be received and the profit share from those proceeds repaid within the next 12 months. So ironically, the positive news of us believing receipt of these funds is likely within the next 12 months causes the profit share to be classified as a current liability, while at the same time not allowing us to reflect in our current financial statements, the expected revenue from the judgment. This completes my prepared comments. Now before we begin our question-and-answer session, I'd like to turn the call back to Rick for some closing remarks. Rick? Richard MacPherson: Thank you, Fiona. So folks to sum up, 2025 was the year Birchtech proved out its next chapter. We have since fortified our balance sheet with a $16.6 million raise in new capital, earned a senior exchange listing on the New York Stock Exchange, secured a $78 million judgment validating our IP and turned our water business from a development stage initiative into a revenue-generating platform with real customers and real orders. The execution plan for 2026 is focused. collect on our judgment, expand our roster of licensed utilities into reoccurring supply customers and obtain offtake agreements to support our first carbon rejuvenation facility. We entered the year from a position of strength, well capitalized, listed on a senior exchange and operating 2 complementary business lines that reinforce each other. The opportunity ahead is substantial, and I'm confident that this team that we have will deliver on it. I look forward to reporting on our continued progress throughout the year. With that, operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Rob Brown with Lake Street Capital. Rob Brown: Congratulations on all the progress. First question's on the air business product revenue, could you give us a sense of what the sort of run rate is on that business as you see it and maybe how it ramps throughout '26 with the customers that you've licensed to this point? Richard MacPherson: Sure. So on the product supply side, we had an increase, as you can see, in that in the last quarter of 2025. I expect to see increases as we go through 2026. The only unknown on that is when the actual contracts that are held by the companies that we just licensed will come up for renewal. As they come up for renewal, we're in a preferred position to vie for that business through RFPs. So I'll be advising the industry as we go along. But I do expect to see growth in that side of the business. I just -- at this point, don't -- I can't put a number on it, but I will expect to be able to do so in the coming month or 2. I do figure that we will be in excess of $20 million on the air side for 2026. Rob Brown: Okay. Great. And then on the remaining customers, I guess, that -- or utilities, I should say, that are potentially infringing or infringing, how many are left to settle that you haven't either got a trial on or settled with yet? What's sort of the remaining amount of potential there? Richard MacPherson: Sure. So there are -- Rob, there are a couple of very large defendants in the Iowa case that have significant product supply potential. And we are now, as you know, working through that case. I would expect that we can get to some decision with those in the first half of 2026. But they have a significant amount of opportunity should we be able to convert them to clients rather than have them remain as defendants. So as far as a specific number, I would expect that the outstanding infringers at this point hold somewhere in the $10 million a year range of supply side business should we secure it. Rob Brown: Okay. Great. Great. And then just maybe moving to the water side business, good progress there. Maybe just a sense of the pipeline of the rejuvenation customers? And maybe can you walk through how that pipeline develops and what are the sort of the steps that it goes through to turn into offtake agreements? Richard MacPherson: Yes. So where we are right now is working through the collaborations with engineering firms. We've been doing a lot of testing and analytical work with their clients. And also, we've been in discussions with a number of different end users, water utilities that would be interested in us either building a rejuvenation center for them on site or in a regional location nearby where we would be able to provide our rejuvenation services to them. We're still in the negotiation side of that. We have yet to sign any actual offtake agreements, but we're in some great discussions right now and continuing to move forward to present that option to a number of different new utilities as well. What's significant is we've basically become the tip of the spear for a lot of these engineering firms with regards to the analytical work that's necessary to be able to go back to their clients and provide some real tight assessment as to what their situation is and what can be done to get ahead of the PFAS problem. So we are a very firm part of the solution of the process. And we think that, that will lead to longer-term work for us, not just the analytical work. And what we're shooting for, of course, is to have the offtake agreements signed where we can do a collaborative effort of building out the regional facilities that we feel they're going to need. So the offtake agreements are the next step to answer your question, in the rejuvenation side of our business now that we've proved that we can do it, and we're doing the analytical work on a one-on-one basis. The next step will be to get the offtake agreements in place that will allow us to move forward with the construction of these facilities. Rob Brown: Okay. And the last question is on the new ion exchange product line. You gave some color on the market opportunity. Is that market sort of the similar customer base? Or would this be a utility customer base? Or just maybe help me understand the customer base that you're going after there? Richard MacPherson: Yes. Actually, it's a totally different market. We're very excited about it. We've had great results with this new product that we've helped to bring to market. And it is a multi-hundred millions of dollars opportunity. We're focused on the power plant side of it at this point, but we expect to be able to expand as well. And we've yet to talk about the water treatment services side of our business. And I think that will show substantial growth this year in real revenues adding to that first $1 million plus of business that we booked to date. So I really think that, that, and we're now looking to hire specialists to represent us in the field on that particular product line, but I've also been looking at and adding others to our team to move our general water treatment materials into the market. So I really think that that's one of our faster-growing aspects in 2026 in terms of adding real revenue to the company. Operator: Thank you. This does conclude our question-and-answer session. I will now hand the call back over to Chairman and CEO, Rick MacPherson, for his closing remarks. Richard MacPherson: Well, folks, thank you again to each of you for joining us on today's earnings conference call. Our IR firm, MZ Group, will be available to assist with any questions that you might have. We look forward to continuing to update you on our progress as we strive to deliver value to my fellow shareholders and execute upon our vision of becoming a leader in the specialty activated carbon space, delivering cleaner air and water to improve our environment. Operator: Ladies and gentlemen, this concludes today's conference. Thank you again for your participation. You may now disconnect your lines.