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Chris Merkel: Hi, everyone. Welcome to Exodus Movement, Inc.'s fourth quarter 2025 earnings call. I am your host, Chris Merkel, and with us today are Exodus Movement, Inc.'s Co-Founder and CEO, JP Richardson, and CFO, James Gernetzke. During today's call, we may make forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may vary materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in forward-looking statements in our earnings press release and our most recent Form 10-K filed with the Securities and Exchange Commission, available on the investor relations portion of our website. We do not undertake any obligation to update forward-looking statements. As always, feel free to visit our social media accounts on X or Reddit to submit questions for our investor relations team after our call. I will now turn the call over to JP to discuss Exodus Movement, Inc.'s fourth quarter and full year 2025. JP Richardson: Thank you everyone for joining. We want to try something a little different today. I have been told multiple times that my opening on earnings calls just does not sound like me, and I think that is a fair criticism, so we are going to keep this more conversational, a lot like how I speak publicly on interviews or even internally in company all-hands calls. So often, I love to tell stories, and today is going to be no different. A couple weeks ago, I took my kids skiing for the first time. My little boy, he is seven years old. And so we are on the bunny slope, where they teach the young kids, and he could barely stand up. He kept falling over and over again. And I am sure many of you with kids can relate to this. But he kept getting up over and over again. Ultimately, he asked about going up on a lift on the mountain to actually go down. His mom looked at him and she goes, son, you are not ready yet, and your dad does not think that you are ready yet. He said to her, he is like, I am going to show him. Meaning me, of course. So me admiring his determination I said, okay. Well, let us go. Go to the top of the mountain. Let us check it out. So we all went up, and he is going up and he went down, and, yeah, he fell a couple times, but he made it down without any issue. It was actually really impressive. Thinking about this moment with my kids and heading into this call today, it is kind of a lot like what 2025 felt like for this company. The market kind of knocked us around. Stock price and Bitcoin price just tested everyone's patience, and every single time the team just kept building. Even when we get knocked down, we just kept building. Focused. We are building the infrastructure that makes us less dependent on market conditions, these very market conditions in the first place. We will walk you through what we built and where we are headed. Let us do a brief look back into 2025. 2025 was the most consequential year in the history of Exodus Movement, Inc. This is because of what we built while the market has been pulling back. As you remember, early 2025, it seems like an eternity now, we rang the bell on the New York Stock Exchange. Ultimately, being on the New York Stock Exchange opened the door for more investors that could not touch us in the OTC markets. We announced Exodus Pay, one of the most important products in the company's history. In November, we closed the Grateful acquisition, and this gave us a live payment sandbox in Latin America, where every lesson in Grateful is making its way back into Exodus Pay. In the same month, we signed the W3C acquisition—I am going to come back to that in a moment. We expanded ExoSwap to more signed partnerships—I am going to talk about that even later. We expanded our tokenized equity to Solana through Superstate's Opening Bell platform. For full-year revenue, we grew 5% to $121.6 million. That growth came from improved monetization and B2B expansion, even as retail activity softened all the way toward the end of the year. Now for ten years, Exodus Movement, Inc. was built on speculation. When crypto is up, we thrive. When crypto pulls back, we feel it, much like what we are seeing in the markets today. As a public company, the stock reflects this reality directly. This model has served us well for a decade, but it is not enough anymore. Everything we did in 2025 was in service of one goal, and that is creating more revenue streams—revenue streams that do not depend on where crypto trades tomorrow. We are becoming a payments company—one that serves people whether Bitcoin is at $30,000 or $130,000. One that earns revenue from the daily financial lives of real people, not just trading activity. The product at the center of the shift is Exodus Pay. Most people use at least three financial apps—I am guessing many of you on this call are going to be very familiar with this. No doubt you have a banking app. You have a payments app like Venmo or Cash App. And you probably have a brokerage app like Robinhood or Fidelity. Exodus Pay makes it one. We are building the product that lets people send, spend, invest, and earn from a single interface. No seed phrases, no blockchain jargon, no L1, L2—which, later on, nobody cares about that stuff. No complexity. Self-custody should feel as easy as tap to pay. And at its core, Exodus Pay is built on stablecoins. Stablecoins are the dollars that move at Internet speed. You may have heard of them. We are making stablecoins usable for everyday payments—groceries, rideshare, restaurants, anywhere Visa or Mastercard is accepted. Again, from speculation-driven swap fees to revenue built on daily utility. What is going to power Exodus Pay is the product of W3C. So let us talk about the W3C acquisition. It remains the centerpiece of our vertical integration strategy. Let me remind everyone why this deal matters in the first place. The first reason this deal matters: we get to own the full payment stack from self-custodial wallet to the spend card at the terminal. No other wallet owns end-to-end payment rails. The second reason is revenue diversification. Our revenue today is heavily tied to swap volume. The third reason is the B2B2C infrastructure for partners. W3C already powers MetaMask, Ledger, OKX, and Kraken in their cards. Owning this infrastructure means Exodus Movement, Inc. can provide card programs and payment rails to other wallets and apps. This means more revenue from partners without acquiring those end users directly. We remain confident in the ability to close in 2026 and are working diligently toward closing. Switching to what seems these days like everybody's favorite topic, AI, because it is reshaping both how we build and what we build. Let us first talk about how we build. I actually write code every single day using Claude Code. Tasks that used to take me months now take me just hours. It is that wild how good these tools are these days. What is true for me here is true for our entire engineering organization. We are pushing hard toward a model where AI ultimately writes all of our code. We are not there yet, but the productivity gains we are seeing so far have already been quite significant. Now with what we build—how we think about the future here—is that we think AI agents represent an entirely new class of customer for Exodus Movement, Inc. These agents are going to need wallet infrastructure. They are going to need to send money, check balances, and make purchases. It is easy, when you think of payments apps like Exodus Pay, to think of the total addressable market as just 8 billion people of the entire world, right? But with AI agents, it will potentially be in the trillions because each one of these agents is going to need a wallet. Exodus Movement, Inc. aims to be the default wallet layer for this world. Let us hit on ExoSwap. ExoSwap continues to be a meaningful volume driver. In Q4, we signed—or in total, have—18 signed partnerships, 11 that are producing, $416 million in Q4 volume, 26% of our quarterly total. This strength shows that our infrastructure is trusted by other major platforms like Ledger and MetaMask. MetaMask just went live in December with Solana. Following the close of W3C, we are going to be able to offer card issuance as well to a lot of these partnerships that are using ExoSwap, especially a lot of the new ones. I want to leave you with this. Our revenue today does not yet reflect the magnitude of what we have built. We have invested significant resources—capital, talent, time—into infrastructure, acquisitions, and product development that have not yet hit the top line. I understand this. I understand the patience it requires from you, our shareholders. I want you to understand what is on the other side. We are shifting from a company built on speculation to a company built on payments—on daily utility, on infrastructure that earns revenue every time someone taps a card, invests into their future, saves for a rainy day, or buys their groceries. That is the company we are building. 2025 laid the foundation, and 2026 is where it starts to come to life. With that, I am going to hand it over to James to walk through our financial results. James, thank you. Let us start with Q4 and full-year revenue and swap volumes. James Gernetzke: Full-year revenue was $121.6 million. That is up 5% from 2024. Q4 revenue was $29.5 million, which represents a 3% decrease from Q3 and a 34% decline from the record Q4 we had a year ago. To put that year-over-year comparison in context, Q4 2024 was our highest revenue quarter in company history, in a quarter where we saw major industry catalysts like the U.S. election and Bitcoin topping $100,000 for the very first time. As a recent industry backdrop, digital asset prices were also in decline for most of Q4 2025 after briefly enjoying early October highs. Full-year swap volume was $6.89 billion, which is a 21% increase from 2024. This is a meaningful increase that demonstrates the underlying growth in the platform, even as digital asset prices declined. Q4 swap volume of $1.59 billion was down 9% sequentially and down 32% year over year, tracking the broader market pullback. ExoSwap, our B2B swaps platform, continued to be a significant volume driver for Exodus Movement, Inc. at $416 million of volume in Q4, or 26% of our total quarterly volume. Our growing B2B swap volume demonstrates that Exodus Movement, Inc. is increasingly a critical piece of infrastructure for the broader ecosystem. With regard to staking and other non-exchange revenue, full-year revenue from staking reached over $4 million for the year, nearly doubling 2024's total. Our improvements to Solana staking in particular drove this acceleration. This is recurring revenue that can be compounded for as long as the assets remain under stake. Fiat onboarding also saw a 28% increase in revenue versus 2024. Quarterly funded users—users who have actually put their money into Exodus Movement, Inc.—finished the year at 1.7 million. That is down 6% from last quarter and 11% from a year ago, reflecting the broader retail environment. Monthly active users at the end of Q4 were 1.5 million, down 35% from the previous year and unchanged sequentially. While monthly active users declined year over year in line with broader retail activity, our funded user base remained resilient, demonstrating the stickiness of our wallet. To pursue ownership of a full payment stack, during 2025, we funded $80 million of debt related to the W3C acquisition. While we initially used the Galaxy credit facility, we made the decision to pay off that debt prior to the end of the year. This resulted in the first reduction of our Bitcoin treasury in quite some time, and during 2026, we have continued to sell digital assets as we prepare for the next disbursement related to the W3C acquisition. As we have stated in the past, we believe that our treasury, including our Bitcoin treasury, is available to fund M&A and other growth initiatives, ultimately growing our Bitcoin treasury. On a related note, we continue to evaluate ways to demonstrate the power of tokenized equity. However, we are pausing our Bitcoin dividend plans as we are prioritizing M&A and other growth initiatives at this time. We remain committed to exploring opportunities afforded to us and our shareholders through tokenized equities as their use continues to grow. Finally, expanding on JP's earlier note regarding ExoSwap, MetaMask is a notable name that we signed towards the end of last year. Their wallet launched support in the final days of 2025 for Bitcoin. Initial results are slowly ramping up as MetaMask users gain familiarity with the new multichain functionality. Chris, with that, let us get back over to you for questions. Chris Merkel: Thank you, James. We will now open for questions. It is time for our analyst questions, and I see we have Andrew James Harte from BTIG. Go ahead, Andrew. Andrew James Harte: Hi. Can you hear me okay? Chris Merkel: Yes. Andrew James Harte: Great. Thanks for taking the question. JP, I thought your comments about agentic payments were really interesting. I think the idea was that agents are going to need the wallet infrastructure to operate out of. I guess, can you just expand on the steps needed to go from where we are today, both in terms of capabilities or potential partnerships or integrations, to make that a reality? That would be very helpful. Thank you. JP Richardson: Yeah. Great question. Ultimately, when you want to enable agents to be able to transact with wallets and send stablecoins, what you want to be able to do is have a world where the company or individuals that are using or leveraging these agents can maintain control over their wallets. I mean, I suppose what you could do, you could just set up an OpenClaude on your Mac mini, right, and have it go hog wild with Exodus Movement, Inc., then that would work today or should work today, right? But, again, what you want is to be able to say, okay, I have this mass amount of agents. Maybe I am a company in the travel industry, right? I am going to have an AI agent doing travel on behalf of consumers. Well, I need to be able to basically either give the consumer the ability to give access to, say, Exodus Movement, Inc. in that AI agent or, as a business, be able to give an AI agent access to a number of wallets that I have full control over and can control the keys as well. Effectively, what that means is that from the consumer perspective—again, I am just going to step into the shoes of an Exodus Pay customer—that means having Exodus Pay or Exodus connect directly to, like, a ChatGPT or a Claude. Actually, that is something that behind the scenes we have had working for a while, but we just want to make sure the user experience works really well. When it comes to the business side—again, that travel agent example—what that ultimately means is that we would have to produce back-end software for these agents to be able to, again, view all these separate wallets. There are a number of angles that we are looking at here. The one that we are most interested in in the short term is empowering consumers that have, again, just Exodus Movement, Inc. on their phone and are able to connect to, again, like, ChatGPT or even, in some cases, maybe even an OpenClaude as these agents become more commercialized and say, go ahead. Spend up to $500. I want you to go look for a flight, the best flight to, I do not know, Florida, right? Whatever it is. That is going to be critical, and to make all that work well and to make sure that the limits and restrictions are in, because, again, you do not—like, the worst-case scenario is if you say, okay, AI agent, you have full access to my wallet, be good with it, and then you find out it went and speculated and bought a bunch of Dogecoin from your entire wallet. You would be pretty upset about that. So there are a lot of security controls that have to come in place as well. Chris Merkel: Alright. Ed Engel from Compass Point is next up. Go ahead, Ed. Ed Engel: Hi. Thanks for taking my question. I just wanted to ask some questions about the cost structure here. Do you mind going through the costs or some of the one-time expenses we might have had in the fourth quarter related to M&A or anything else to call out? And then would it be fair to assume that might continue into the first quarter or maybe into the second quarter until the transaction closes? James Gernetzke: Yes. Obviously, we had the legal costs. There is the interest associated with the Galaxy loan. The interest, obviously, since we paid it off, is not going to continue. There are some legal costs as we go through the regulatory process. There are certainly going to be some legal costs, but my assumption would be that it would be slightly less as we go through that process. But there still will be some for sure. Ed Engel: Let us see. And sorry. And then you said some other one-time costs— James Gernetzke: Yes. And then we have our standard, similar one-time costs that we have seen for non-M&A items from previous quarters. So yes, to answer the question, the M&A continues. We are still out there looking for other businesses and other opportunities. Obviously, we do not have anything to report at this time, and we are very focused on getting W3C closed and integrated. But that does not mean that we are not still working on a pipeline. I would say that in general, I would expect over the next quarter or so that the costs should be slightly lower than previous quarters, but not zero. Chris Merkel: Alright. We have Gareth Gaceta up next. Hi, Gareth. Gareth Gaceta: Hi, guys. Can you hear me alright? Chris Merkel: Yes. Gareth Gaceta: Awesome. I was wondering if you could provide some detail on the drivers to the improved monetization in the ExoSwap in the quarter. Do you guys think that there might be future opportunities for similar expansion, or was it maybe more of a one-time event? James Gernetzke: Yeah. Let me start. I would say that in terms of ExoSwap, we have grown the book of business in terms of the number of partners that we are working with. As we grow that book, you will see different areas, different cost structures, etc., that come with it. Over time, as that product matures, we will start to get to a steady state. We do expect changes in the short term as the book continues to grow. We are pleased with the amount of new deals that have been signed and the work that is going on in that area. Now there are some—because this is a B2B2C, we are relying on the partners, and there is one partner that looks like it is probably going to stop operations over time. You will have those pluses and minuses, but I would say that we are definitely pleased with the direction and the amount of new contracts that have been signed and new partners that have come on. JP Richardson: Alright. Thank you, James. Chris Merkel: We have Michael John Grondahl from Northland. Go ahead, Mike. Michael John Grondahl: Thank you. So sort of two questions, guys. One, I think you mentioned 18 signed ExoSwap partners and 11 operating. When do you think the next, I do not know, the next wave, the next seven, are going to ramp up, and any significant partners in that next wave? And then secondly, I would like to understand better kind of the go-to-market with Exodus Pay. Is that only going to be within sort of ExoSwap and the trading customers, or help us understand how we are going to see that Exodus Pay offering in the real world. James Gernetzke: Let me start with the 11 and the 18. I think that we are seeing steady growth, and it is steady growth right now. In terms of significant names, we are pleased with the mix and the size of different clients that we are getting. Unfortunately, it is a B2B product. We need the client's consent to share the names, and I do not have any larger names that have shared consent to offer you, unfortunately, right now. But I could definitely say—again, just to reiterate—we are pleased at the growth that we have seen in that, and we are looking forward to that continuing for the rest of the year. So JP, on Exodus Pay— JP Richardson: Yeah. Let me hit a little bit more about the partners with ExoSwap here. Even though we cannot announce the names yet, the reality is that yes, we have signed other big partners, and we will be able to announce that in the future, which is going to be great. In addition to that, I think James had mentioned something that is really important: with the ExoSwap partnerships, we have to rely upon the partner's timeline. Often what you see is that the partner in some scenarios might just enable, say, one asset, so you can swap from one pair to the other, and it does not have support for other assets and other blockchains. As we march forward and they get one going—like, oh, wow, this thing is working really well—now let us enable it for these other blockchains and make it work really well there and keep that train going. We are going to see more and more of that, and we already have seen that, with timeframes that we will be able to announce in the future. I anticipate that will be the pattern moving forward: we will sign the partners, then there is the time to integrate, they go live on one blockchain, and then they expand out on additional blockchains. As we mentioned, we have some very big names in the industry that we have been working with for quite some time, and that becomes quite a strong testimonial as we start working with other partnerships. I think that is really important to call out. Now related to the question of—so you referred to it as ExoPay. I am assuming you were talking about Exodus Pay. So ExoPay—now, this is getting confusing—ExoPay is our fiat on-ramp, off-ramp. We have recently renamed that to ExoRamp to separate the confusion. To be very clear here: think of ExoSwap as allowing people to swap from crypto to crypto. ExoRamp allows people to onboard into crypto via a bank account or a debit card, or off-ramp in time. So it is basically fiat on-ramp/off-ramp. Exodus Pay, again, is our initiative to, as earlier in this conversation I had mentioned, bring the world of all these disparate financial apps into one single app, right? The biggest is banking, a payments app like Venmo or Cash App, and then a brokerage app—Robinhood or Fidelity, E*TRADE, whatever you use—all into one application with no crypto complexity whatsoever. Now, when you ask about go-to-market, we had a very early test group that we experimented with, and we had conversations with people at events at ETHDenver. Initial feedback was really good. We are marching forward. In fact, you are going to see something this week that is going to come out about another event that Exodus Pay is going to be a part of. Again, it is about mainstream payments, allowing people to easily use assets like stablecoins anywhere in the world that Visa or Mastercard is accepted, right? That is really important. The big aspect of go-to-market and how we think about Exodus Pay is that we want to align to big cultural moments. I am going to say that again. We want to align with big cultural moments. I wish some of you were not thinking, like, oh, does that mean he is going to go out and pull the trigger on a Super Bowl ad or something like that? We do not have any plans for that, but you never know. No, but we have no plans for that whatsoever. But who knows? When it comes to big cultural moments, there are things that you will see this year that will answer that question. It is about being a part of mainstream conversations, mainstream payment experiences. There is a lot more that we will be able to unpack in future conversations. It is going to be great. Chris Merkel: Alright. Kevin Dede from HC Wainwright. Hi, Kevin. How are you? JP Richardson: Kevin, we cannot hear you if you are speaking. Chris Merkel: Okay. Nope. Still cannot hear. Still cannot hear. Still cannot hear, Kevin. Kevin Darryl Dede: Can you hear me at all now? Chris Merkel: Okay. JP Richardson: Hi, Kevin. Sorry about that. It is tough being a tech analyst and keeping your tech working. Kevin Darryl Dede: So, JP, sort of a two-parter. I am going to think I am going to ask Mike's question in a different way. The progress you are making with ExoSwap clearly indicates that you are embedding yourselves with complementary businesses, right? It is proving the B2B model that you have developed at Exodus Movement, Inc. But with Exodus Pay, it seems to me that—I mean, I hear what you say about leveraging big cultural moments. I get that. But you are taking on a sizable amount of risk in spending versus trying to build a consumer-facing app. I am wondering how you are going to approach that risk, how you plan to allocate capital to it, and how you expect it to roll out. And then I would also like to hear about the roadblocks you have to seeing W3C complete, and the timeframe to that. You did not offer much detail there. JP Richardson: Kevin, can you just unpack the risk bit a bit more? I just want to make sure I really capture your question clearly. Kevin Darryl Dede: Well, in my mind, there is a little bit of controversy over Exodus Movement, Inc.'s development in the B2B world versus a consumer-facing app. And Exodus Pay, I think, is the culmination of your consumer-facing initiatives, and that is clear through today's call. What is not clear is the resources you will dedicate to building a consumer-facing business—arguably the most difficult thing to do in business. So I am just wondering how you are assessing the risk and allocating capital, and developing that capability. JP Richardson: Got it. Okay. You are probably going to hate this answer, but I am going to say it anyway. Exodus Pay is the evolution of what Exodus Movement, Inc. is today. We were born—and the way that we thought about Exodus Movement, Inc. from the early days—was all about empowering consumers to control their wealth. That was the piece of it. From 2015, there was actually—I had a conversation with our cofounder, Daniel, just recently, and he was like, JP, do you remember in the early days when we put our phone number inside the software? I am like, yeah, I do. Is that not crazy? People would call. I am eating dinner with my family, and my kid has got spaghetti pouring out of his mouth, and then the phone is ringing nonstop. I am trying—I am like, oh my gosh. I am eating? I share these stories because Exodus Movement, Inc. was always a company focused on consumer needs. Always. At that moment in time, the technology was not quite where we needed it to be. Regulations were not quite where we needed them to be. Mastercard and Visa were not quite where we needed them to be. The technology has now caught up where you do not have to think about the complexities of secret phrases and which layer you are on. You do not have to care about any of those things. The regulations have now started to catch up, especially with the Genius Act, in embracing stablecoins, right? That is really key and critical. Visa and Mastercard see what is happening, and that is why with W3C—which will be a good segue to talk about W3C in just a moment, per your other question—they see what is happening. That is why there is starting to be the rise of these crypto cards that allow you to connect the card directly to your wallet, your self-custodial wallet, so you have full control and you can go and you can tap to pay anywhere. Again, Exodus Movement, Inc. was always a company built on the consumer experience. I think it is really important to highlight and call out. Now related to W3C, as mentioned in the opening statements, we are very committed to getting this done. Anybody that has been through acquisitions knows there are all sorts of complexities that come with it. With this acquisition, there are a number of subsidiaries that blend into what we are buying as a company, and each one of these subsidiaries has different levels of complexity that we have to ultimately address. James, I am sure you can—you have been a big part of this as well along with me—you can probably add some additional color to this. James Gernetzke: Yeah. I think on the W3C front, we are in front of the regulators right now, and we are progressing toward it on the timeline that we brought up when we signed the deal. In terms of capital allocation, to put a finer point on JP's comments, because Exodus Pay is the evolution of Exodus Movement, Inc., that capital allocation, you should expect it to follow a similar path and the things that we said about our consumer business going forward in different fronts. Obviously, we have allocated a lot of capital to W3C and the B2B side. We still maintain that Amazon AWS playbook, even with the W3C acquisition. JP Richardson: It might be important to mention too that per capital allocation, one aspect that is going to be important here is that because Exodus Movement, Inc., even though we were focused as a consumer app early on, it was more about those in crypto. You are going to allocate capital and think, oh, we are going to target crypto people. Uh-oh, there is a bear market. Better pull back and not think about how to reach the mainstream. That was historically the thought process. But now shifting closer to the mainstream, bear or bull market, it does not matter, right? Because Joe Plumber does not think about the price of Bitcoin. Joe Plumber does not actually even care about the price of Bitcoin. Actually, Joe Plumber may not be our ideal target use case; it is going to be maybe a younger demographic. Let us say some 19-year-old watching college basketball on a Saturday or whatever it is, right? They may not really care about the price of Bitcoin, but they definitely care about how they spend money and how they think about the future. We still have to be thoughtful but yet bold when it comes to capital allocation when reaching that demographic. Chris Merkel: Thank you. There are no more questions. Thanks, JP, James, and all of our analysts for submitting your questions. Please visit our social channels on X and Reddit to submit your questions for management. Our investor relations team is standing by. Thanks for joining us today, and we will see you next quarter.
Operator: Thank you for standing by, and welcome to Wealthfront Corporation's fourth quarter and fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. I would now like to hand the call over to Matthew Moon, Investor Relations. Please go ahead. Matthew Moon: Good afternoon, everyone, and thank you for joining us. Today to discuss Wealthfront Corporation's fourth quarter and full year fiscal 2026 financial results, reflecting the periods ending January 31, 2026. On the line are David Fortunato, our Chief Executive Officer and President, and Alan Imberman, our Chief Financial Officer and Treasurer. After prepared remarks, we will open the line for Q&A. During the course of today's call, we may make forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance that they will prove to be correct. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Wealthfront Corporation files with the Securities and Exchange Commission, including our most recent Form 10-Q. Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP measures. Reconciliations of non-GAAP financial measures to comparable GAAP measures can be found in our press release accompanying this call, which is posted to our Investor Relations website at ir.wealthfront.com. I will now turn the call over to David Fortunato. David Fortunato: Thank you, and good afternoon, everyone. Fiscal 2026 was another successful year in which Wealthfront Corporation continued to deliver on its long-term objective of becoming the leading tech-driven platform for digital natives to turn their savings into wealth. We believe we make the best practices of personal finance accessible at low fees through technology and intuitive and convenient through user-friendly design and automation. At scale, this drives high margins, allowing us to share savings with clients, creating and engendering trust, driving asset retention and low-cost word-of-mouth growth, which once again drives high margins. This flywheel enables us to offer feature enhancements such as our recent ongoing cash APY increases that I will describe in more detail later on, and more broadly, helps our clients save more on every paycheck, earn higher returns on their savings, and borrow at lower rates. We remain grounded in our belief that the best way to build deep, long-term client relationships is to continue to delight clients by offering them more value than anyone else and focusing on their long-term financial outcomes. This informs our product development strategy and keeps us focused on our roadmap regardless of short-term market conditions. At fiscal year-end, total platform assets grew 17% year over year to a record $94.1 billion, with investment advisory assets of $48.7 billion, up 29% year over year, and cash management assets of $45.4 billion, up 7% year over year. Funded clients ended the year at roughly 1,420,000, up 17% year over year, and funded accounts of roughly 1,840,000, up 16% year over year, reflecting 1.3 funded accounts per funded client. Total net deposits in the year ended January 31, 2026 were $6.7 billion, including $400 million in net outflows in the fourth quarter. Fourth quarter figures reflected a cash-to-invest transition environment that resulted in the second-best quarter of total investment advisory cross-product flows, including a second consecutive record quarter of net cross-account transfers from cash to invest. This helped drive annualized organic investment advisory growth to 11% in the quarter, the highest since the market enthusiasm post U.S. election in the quarter ended January 2025, with monthly annualized organic growth accelerating throughout the quarter, ending at 15% in January. Recall, annualized organic growth is calculated as total net deposits in a given period multiplied by an annualization factor based on actual day counts in that period, divided by prior period ending assets. As we will discuss further, cash management net flows began to normalize in mid-January, roughly four weeks after reducing the client rate on December 19 and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and continue up until the April 15 federal tax deadline. On the product development side, we continue to accelerate our product velocity. For example, in the fourth quarter, we bolstered both our cash management and investment advisory offerings, enhanced interoperability between both, and began to offer early access to Wealthfront home lending. For cash management, we introduced automated dividend sweeps from investment advisory accounts to cash management accounts and increased daily withdrawal limits up to $1,000,000 for qualified clients. In December, we began a measured rollout of our proprietary Wealthfront Treasury Money Market Fund, or WLTX X. It offers an attractive after-tax yield alternative for clients and their cash, particularly for clients living in states with high income taxes, given the state tax exemption on U.S. Treasury interest income. As of February, prior to general availability, the money market fund had just over $85 million in AUM. For investment advisory, we expanded availability of fractional shares into automated investing accounts and automated bond portfolios, helping to reduce cash drag and tracking error relative to our target portfolios. We also introduced dividend reinvestment plans as well as a broader list of stocks and ETFs that can be traded in the stock investing account. We continue to see strong uptake, particularly among younger clients, in this investment account. In November, we launched early access to home lending starting in Colorado, and have since expanded to Texas and California, with a full rollout to these states as well as early access in additional states expected to come later this year. We believe we can use technology to deliver a better digital experience and a lower rate, and we are deliberately scaling at a measured pace in order to maximize learnings to optimize our long-term outcomes. We aim to provide our clients home mortgage rates at least 50 basis points better than the national average. While we are in early days, we are proud to have delivered on this objective on average in the states in which we operate today. Beyond new product initiatives, we have increased the base APY on all cash management accounts by five basis points to 3.3% on January 30. Over the course of the past several months, the effective federal funds rate gradually stabilized higher within its target range, allowing us to pass more savings along to our clients. We could have simply taken this benefit for ourselves, but consistent with our business model, we are constantly looking for ways to give back to our clients, deliver better financial outcomes, and build trust. Our focus for Wealthfront Cash is to offer the best cash account experience for young professional savers. In this vein, we launched an incentive in early March in which clients that direct deposit at least $1,000 per month who also have a funded investment account will receive an ongoing 25 basis point boost to their cash APY. We expect this incentive to deepen existing client relationships as well as drive cross-product adoption for those clients using one of the cash management or investment advisory accounts today. We also anticipate new clients to diversify into both of these account types more quickly. Closing with current trends, today we published February metrics. As discussed earlier, when looking at intramonth trends, cash management net outflows peaked in mid-January prior to our five basis point increase to the client base APY. Cash management net outflows significantly improved to only $145 million in February versus $840 million in January. Investment advisory net deposits were $416 million, implying an annualized organic growth rate of 11%. Total net deposits were therefore $271 million in February and, along with market appreciation, led us to another month-end record of total platform assets of $95.2 billion. In turbulent times like these, the time-tested performance of a low-cost diversified index portfolio with the added benefit of automated tax-loss harvesting becomes more apparent. Aggregate investment account returns, most notably our automated investment account, benefited in January and February from the relative outperformance of international equities, contributing to a 2.8% month-over-month growth in January, and 1.7% month-over-month growth in February. Crucially, this performance stands in stark contrast to the returns of speculative asset classes that often falter when market conditions tighten. While others chase fads, our automated investing account is engineered to mitigate volatility and maximize after-tax outcomes. We believe the value of this product is even greater when you consider the strong year-to-date tax losses we have harvested for our clients. February tax-loss harvesting dollars were the highest since the widespread market volatility realized immediately before, during, and after Liberation Day last year. With that, I will now turn the call over to Alan Imberman to go over the financials. Alan Imberman: Thanks, David. Starting with the income statement and a high-level overview for the year. Revenue for fiscal 2026 reached a record $365 million, up 18% year over year. Adjusted EBITDA for fiscal 2026 also hit a new record of $170.7 million, up 20% year over year, reflecting an adjusted EBITDA margin of 47%, up one percentage point year over year. Moving now to the fourth quarter, revenue came in at a quarterly record of $96.1 million, up 16% year over year. Cash management revenue was $69.7 million, up 12% year over year due to both higher average cash management balances measured as the average of beginning and end of quarter figures and a higher annualized fee rate. The average cash management balance in the fourth quarter was $46.2 billion, up 10% year over year, and the annualized cash management fee rate was 60 basis points, up one basis point year over year. When the Fed reduces the Fed funds target rate, we typically wait until the Friday of the following week to reduce the APY we offer our clients. This creates temporary fee compression because the interest rate we receive from banks reprices lower immediately while the interest rate we pay to clients remains constant for a one-week grace period. Additionally, in a declining rate environment, the fee rate is negatively impacted by the inherent mathematical impact of converting annual percentage rates (APR) to annual percentage yields (APY). The inverse of this is true in an increasing rate environment. As David noted, we launched a new incentive in early March in which clients who direct deposit at least $1,000 per month and also have a funded investment account will receive an ongoing cash yield increase of 25 basis points. As a result of both the direct deposit incentive and the five basis points passed along to clients at the end of January, we now expect our first quarter annualized cash management fee rate to be in the range of 57 to 58 basis points. Because April is tax season and our clients are net cash taxpayers, we anticipate significant seasonal cash management net outflows to begin in March and continue up until the April 15 federal tax filing deadline. For context, net cash management outflows in April 2025 were $537 million, and we would expect this figure to be larger this year given the increase in total cash management assets. It may seem counterintuitive, but we are delighted to see tax-related outflows because it reflects the highly attractive financial profile of our clients and also means our clients are comfortable using the cash account to meet near-term liquidity needs, indicating use of the account as a primary operating account that generally gets replenished over time and are typically stickier over the long run. Investment advisory revenue was $25.8 million, up 31% year over year, and surpassed $100 million in annualized revenue for the first time, due primarily to a 30% year over year increase in average investment advisory balances to $47.3 billion. Our annualized investment advisory fee rate was roughly flat at 22 basis points versus the same period last year. Asset growth was driven by both strong markets and net deposits over the trailing twelve months, with organic net deposit growth accelerating throughout the quarter, ending at 15% annualized growth in January. Net cross-account transfer from cash to invest in the quarter set a new record for the second consecutive quarter, reflecting the compelling combination of a broad suite of investment products, overarching platform incentives, and targeted lifecycle marketing campaigns currently in place. Gross profit came in at a quarterly record of $86.6 million, up 17% year over year, reflecting a gross profit margin of 90%. Total GAAP expenses of $310.7 million included $248.3 million in stock-based compensation expense, of which $239 million reflected dual-trigger equity award expense recognized in connection with our IPO. GAAP expenses also included $5.3 million in employer taxes related to these dual-trigger equity awards. Adjusted operating expenses, that is, expenses excluding share-based compensation and employer taxes due to IPO-related equity awards, were $57.1 million, up 15% year over year due primarily to higher product development and general and administrative expense, partially offset by lower marketing expense. Adjusted EBITDA of $44.2 million was up 22% year over year and reflected an adjusted EBITDA margin of 46%, up two percentage points year over year. As we continue to invest in incentives and scale home lending, we expect adjusted EBITDA margins to decline sequentially but remain above 40% for the first fiscal quarter 2027. We continue to demonstrate significant operational and financial discipline, delivering a Rule of 40 metric of 62 for the fourth quarter. This is our fourteenth consecutive quarter, or more than three years, exceeding the Rule of 40 and underscores a business model that has successfully and consistently balanced robust top-line growth with the structural efficiencies of our automated platform. GAAP diluted net income was negative $134.8 million and GAAP diluted earnings per share was negative $1.31, both of which include the one-time impact of dual-trigger equity awards in connection with our IPO of $239 million. We believe that our adjusted EBITDA is a strong proxy for cash flow. For the fourth quarter, net cash provided by operating activities was $33.3 million and free cash flow was $33 million. This results in a free cash flow conversion ratio, that is free cash flow as a percentage of adjusted EBITDA, of 75%. January, however, is a seasonally lower free cash flow period as we pay out the majority of our accrued annual cash bonuses to our employees in that period. For the fiscal year, net cash provided by operating activities was $152.2 million and free cash flow was $151.1 million. This resulted in an annual free cash flow conversion ratio of 88%. Note, both quarterly and annual free cash flow figures are not adjusted for IPO-related expenses; therefore, conversion ratios are lower than they otherwise would have been had the IPO not occurred. Driven primarily by this robust free cash flow generation over the course of the year and over $130 million in net cash proceeds raised in our IPO in December, we continued to strengthen our debt-free balance sheet, ending the period with cash and cash equivalents of $440.8 million. At quarter end, we had roughly 186.5 million diluted shares outstanding. In March, we received board authorization to implement $100 million in share repurchases. We believe repurchasing our stock is attractive at current levels given our robust free cash flow generation, our debt-free capital structure, as well as the multi-decade opportunity to compound wealth with new and existing clients. Over the long term, our excess capital priorities are: invest in organic growth, including infrastructure and automation while also comfortably exceeding minimum capital requirements; evaluate opportunities to repurchase shares; and assess M&A with a preference to build versus buy. Any remaining capital would be added to our surplus reserves in order to bolster resilience and durability. Regarding February metrics, total platform assets ended at another month-end record of $95.2 billion, consisting of $50.0 billion in investment advisory assets, and $45.2 billion in cash management assets. Total net deposits were $271 million, and recall, February only has 28 days in the month. Investment advisory net deposits were $416 million, reflecting organic growth of 11% annualized. We continue to successfully drive cash-to-invest flows, bringing asset-weighted cross-product adoption, that is, assets held by clients with both cash management and investment advisory accounts, to roughly 61.5% at February, up over one percentage point since December. Cash management net flows began to normalize in mid-January, four weeks after reducing the client rate on December 19, and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and to continue up until the April 15 federal tax deadline. In closing, our business is designed to be aligned with the interest of our clients. Simply put, we succeed only when they do. We believe that as long as we continue to deliver products that truly delight our clients, they will engage more broadly with us, entrust us with more of their wealth, and recommend our platform to their friends, family, and coworkers. We are deeply committed to this long-term journey alongside them. With that, we will now open for questions. Operator: Thank you. To ask a question, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. You will be limited to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Ken Worthington of JPMorgan. Your question please, Ken. Ken Worthington: Hi. Good afternoon, and thanks for taking my question. I want to dig further into the rollout of mortgages and see how that is going. So what kind of reception are you getting from your customers in Colorado, where that offering is more seasoned? And can you see, based on the transfer of assets to title companies, how your penetration of eligible customers is looking thus far? David Fortunato: Hey, Ken. How is it going? Yeah. So we are progressing, I think, well. The thing that we are optimizing for—we talked a little bit in the prepared remarks—is less about directly trying to capture all of the volume that we reasonably can in Colorado and really maximizing the learning that we have both with our infrastructure and with the client experience. So as we have launched first in Colorado with the early access period and then in Texas and California, we are really focused on making sure that the experience that we are delivering to clients is good. There are things that we have to improve and we are working on. We have already rolled out a bunch of improvements with more to come. On the rate basis, we feel very good about underpromising and overdelivering on the quality of rate we are giving folks. We are still seeing significant home volume across the country. I think the stat that I saw was more than $400 million of wires to escrow and title companies in our Q4 went off the platform, which obviously is a significant chunk of the outflows that we saw. We have a bunch of things that we need to improve on the digital experience. We are making quick progress, but it is a huge area of focus for us. As we continue to expand the early access period, the real constraint that we have is that the experience that we are offering to clients is one that we feel good about, and we feel the clients will feel good about for the long term. We are not trying to build a transactional mortgage experience. We are trying to build a long-term relationship with clients, of which mortgages is just one step. Ken Worthington: Perfect. And then maybe to follow up, same topic. How do you see the ramp and the rollout to other states and the further penetration in existing states? How does that look as you move through the rest of the year? Is this really kind of an experimental year where you would not expect things to really ramp; it is just sort of getting the infrastructure? Or do you expect things to really ramp as we move throughout the year and as you get more comfortable with the offering? David Fortunato: So we certainly expect to go general availability in Colorado first. That will happen sometime this year. I would expect that we go general availability in Texas and California at some point this year. And I would expect that we launch early access periods in additional states. Exactly what percentage of our client base will be covered by general availability, I am less sure of. Our ability to roll out automation features and balance scaling headcount versus scaling through technology is the kind of core dance that we are doing, where we are trying to really scale with technology and limit headcount growth where needed, except where we are very confident in the volumes that we are seeing, and that is a credible strategy to be able to build sustainable volume over time. Alan Imberman: Thank you. Operator: Our next question comes from the line of Ryan Tomasello of KBW. Your question, please, Ryan. Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Regarding the cash management fee rate guide for 1Q, I believe you said 57 to 58 bps. Is that a reasonable baseline for the remainder of the year, or how should we think about the potential for additional compression there to the extent these incentives you are offering continue to see strong uptake? David Fortunato: Hey, Ryan. Thanks. Yeah. The one thing I would say is the competitive environment has certainly evolved a bit over the last six months. And what we have seen is after the five basis point change and the direct deposit incentive, I think we feel much better about where we are in the competitive environment, and we are seeing that with the transition in cash net flows. As for how we think about the fee rate going forward, I will let Alan take that. Alan Imberman: Yeah, Ryan. So I would say the 57 to 58 is just the first quarter guide. It will really depend on the uptake as to how the rest of the year goes. The thing we like about incentives such as the direct deposit incentive is that we will only have to pay the extra rate when people give us more money or take on this additional incentive by performing the action of direct deposit and funding an investment account. And so as more people adopt it, we do expect to see potentially further degradation in the fee rate, but that would also signal that we have more clients building deeper relationships across the platform with us. And so that is the balance we are looking for there. Ryan Tomasello: Okay. Appreciate that. And then on the account growth, is it possible to isolate the specific trends within the investment advisory side of the business? Obviously, the trends on net deposit organic growth have been quite positive, but I would assume that there are also underlying positive trends on just the actual account growth side within investment advisory. Any color you can provide there? David Fortunato: Yeah. I mean, the investment account growth, as cash-only clients add investment accounts, is a key focus for us in any transition environment. And it has been probably the most significant focus inside of the company over the past three or four months. We focus on the flows because that is what ultimately leads to asset growth and, therefore, revenue growth because of our monetization strategy. But the way that we achieve that flow growth is both growing with clients over the long term and getting more clients to adopt investment products. It is too early to know exactly what the impact will be from the direct deposit incentive that we are trying. I think we are looking forward to being able to talk more about that as we get additional data in, but we have been pleased with the early response. Obviously, direct deposit takes some time to come through. There is a little bit of a lag. So we have not had a direct deposit cycle since that incentive launched. But the past incentives that we have run around investment account adoption, along with the macro environment in January and February being more conducive to investment, have helped our focus on investment cross-product adoption and new client investment growth as well. Operator: Our next question comes from the line of Devin Ryan of Citizens Bank. Please go ahead, Devin. Devin Ryan: Thank you. Hi, David. Hi, Alan. How are you? David Fortunato: Doing well. Thank you. Devin Ryan: Good. Question, another one just kind of cash account. And just some of the outflows kind of late last year, early this year, do you have a sense of whether that money was going toward other online banks paying higher rates, or was it going to brokerages or maybe just, you know, bill pay without kind of gross flows? I would love to get a sense of that. And then do you have a sense of the remaining balances that are maybe more pure rate chasers? And how much of that is remaining? I appreciate that is probably difficult to quantify, but would love to just get some thoughts on that and some of the behavior that you did see kind of late last year into early this year. David Fortunato: Sure. I am happy to give a high-level answer, and then if Alan has anything he wants to add, he can chime in. So what we saw, I think, is broadly consistent with what we had discussed previously, and that is that as rate cuts occur, the larger number of rate cuts that occur in consecutive succession leads to more folks evaluating what they are doing with their cash. So we had three cuts in a row. It takes several weeks for cash net flow activity to normalize post Fed rate cut, which I think we had talked about before. We normally have a really good idea sort of four to six weeks after a rate cut has gone through. One of the interesting things that we saw in January was both: January is a seasonal high period for investing, which I think amplified some of our desire to drive additional cash-to-invest adoption, because January is a great period for folks to reevaluate their finances and think about opening investment accounts. And so we did lean into that in January, and I think some of what you see in the January numbers is that. The other thing I would point out is that the gross versus net distinction in cash flows, especially because of the liquidity features that we offer—free wires, free instant transfers, the ability to send money to escrow and title companies to buy a home—we do a lot of gross flows for cash management. We did a calculation where we look at the recapture rate of those gross flows by client in the quarter, and we are recapturing a majority of the gross withdrawals. That is consistent with what we have seen in prior periods, that we saw from clients in our Q4, and we think it shows the value of the cash management account really sustaining even as clients reach goals. Maybe they are purchasing a house or putting a down payment down. Maybe they are buying a car. They come back to the account, and we do recapture a significant chunk of those assets. I think the sort of high-level question that you asked about what are folks doing with their money is: there are folks that are doing some of all of the things that you described with their money. It is our job to be the best place for our clients to invest for the long term, the best place to save for the long term. We want to deliver the best mortgage experience that they can get anywhere as well. It will take us time to do some of those things, especially the mortgage, but that is really what the focus of the business is—leading with product and delivering the best product and the best value to our clients across their broad financial needs. Devin Ryan: Okay. Great detail. Thank you so much. I guess a follow-up here on the repurchase authorization, $100 million buyback. Can you talk a little bit about expectations, pacing, and intent there? I think it is a strong signal. Obviously, the company has a lot of liquidity here, so in theory, even potentially more behind that. So just love to get a sense of how much is signal versus intent to actually step in and buy shares here down from the IPO price? Alan Imberman: Yeah. Hey, Devin. It is Alan. What I would say is that we think the shares are extremely attractive at the current price. We are in a position, as you mentioned, to have a very strong balance sheet and free cash flow generation such that we can make this investment, and we will compare our ability and our willingness to repurchase against, obviously, other opportunities that we have to invest in. But we do think that we will be purchasers of our shares, especially at the current levels. Operator: Thank you. Our next question comes from the line of Daniel Perlin of RBC Capital Markets. Your question please, Dan. Daniel Perlin: Thanks. Good evening, everyone. I guess I just wanted to kind of circle back a little bit on the home lending side. And I guess the broader context is, I heard everything you said in your prepared remarks, but how do you think that rollout, product reception, and expectations as you think about the ensuing year are going relative to when you kind of addressed investors around the IPO? I mean, it sounds pretty consistent, but it also sounds like there are some nuanced differences maybe. So I just want to make sure I understand that. Thank you. David Fortunato: Sure. So I think we know a lot more about the areas that we need to improve to deliver the best digital experience that we can to clients. And we are putting in focused work on those areas and gradually expanding as we go. We understand a lot more about the operational challenges and where we need to invest to drive operational efficiency so that we can do so as efficiently as possible with as digital a back-end experience as we can. The result of those things is we want to build, like we have with cash and like we have with investments, a sustained low-cost advantage in being able to deliver the products so that we are able to share the savings with clients and get them the best financial outcome. So there is a lot more that we understand with the volume of loans that we have done so far. We will continue to learn and prioritize both the operational efficiency and digital experience wins as we move along, continuing to let people off the early access list and go general availability in Colorado first. I think our understanding and our learnings are generally consistent with what we have communicated in the past. We obviously have a lot more detail now from operating in the space, operating in more states, and doing more loans than we have in the past. Daniel Perlin: Yep. That is great. Just a quick follow-up. So it was really good to see the net deposits turned positive in February. And this pivot, as you guys had telegraphed from cash management to investment advisory, was kind of taking place. I think the question that I have is, you have this weird dynamic right now where the environment may or may not produce lower rates in the near term. It might be sustained for longer. I am just wondering how you guys think about positioning yourselves maybe more in the near term in an environment where that might be the case. It might be an unfair question because it is impossible to answer, but it does feel like there is a lot more volatility around expectations for rates. So just how you are posturing maybe as we go through the next, I guess, couple of quarters. Thank you so much. David Fortunato: Yep. So I think we feel good about our competitive positioning after the five basis point change and the 25 basis point direct deposit incentive. Obviously, we do not know what the market is going to do in the future. We do not know what rates are going to do in the future. We do think that we are well positioned from the investment side because of our focus on global diversification. That has put us in a good position over the last few months, and what we have really seen resonating with clients is in uncertain environments, investing with global diversification is a real selling point. We sort of do not think about positioning ourselves based on what is going to happen over the next few months, but we feel good about our position because of the investments we have made over the last few years in cash, investment, and home lending also, that if rates come down, we feel like we are in a good position to help clients continue to invest or invest more. We feel like we are in a good position to be able to help them buy homes that have become more affordable at lower interest rates while also helping them continue to save for the long term and get access to liquidity as needed using tax-advantaged tools like the Wealthfront money market fund. As we have continued to build out our offering, our goal is really to help clients across the broadest range of financial situations be able to put their savings and investments to work. And that has been the focus, and we feel good about the position because of the diversity. We cannot predict the future, but we can prepare for it, and that is what we have done. Operator: Thank you. Our next question comes from the line of James Jarrow of Goldman Sachs. Your question please, James. James Jarrow: Good afternoon, and thanks for taking the question. Could you just update us on the success of the match programs in the invest business so far? How much has this been driving the flows in that side of the business? And perhaps if you could just also comment on the ROIs there and how you structure that to ensure strong ROIs. David Fortunato: Hey, James. So I would say we are constantly experimenting with incentives. The most successful incentives that we have done for cash-to-invest adoption have actually not been the deposit matches. It has been other types of incentives that we have run to encourage cash-to-invest adoption. We are happy with the initial response to the direct deposit incentive having driven a fair amount of investment account opening. It is still early, and so we will have to see how that evolves over time. We will have to see how that evolves with new clients and if the cross-product adoption rate early in the client tenure improves as we expect it to. I think, generally, our incentives have been successful with the second-best quarter in our history at cross-product flows of cash to invest and a second record quarter of net cross-account transfers from cash to invest. But I do not think that we have overly focused on match as the driver of those. We have looked at a variety of incentives and are pursuing the ones that we feel deliver the best overall outcome to the company and to our clients. James Jarrow: Okay. Thank you so much. That is super helpful. I just wanted to ask a bigger-picture one. So let us say we get to a terminal Fed funds of roughly 3%, which obviously there is uncertainty as to whether we will get there. But how would you think about the right way to model the mix of your client assets across cash versus investment advisory? In other words, what percentage of client assets would you expect to be cash versus investment advisory? Alan Imberman: Hey, James. It is Alan here. Yeah. I think it is a difficult question in the sense that there is more going on than just the level of rates. Clients are accumulating more wealth, and as we have shown in our prospectus, as clients obtain a certain level of cash, they start putting incremental dollars to work and investing, and so you start to see the investment account, which grows faster as well, really continue to grow. And that is what we have seen over the past few quarters. And did not discuss this last time, but investment advisory assets have now overtaken cash assets pretty clearly. And so when we are modeling it, I think it depends on, as well as younger clients coming in who start with cash because they are early in the journey in savings. So I think you have to have more variables than just the level of rates. I think you have to have variables around clients that are coming in and then our existing clients and their behavior. And, again, we have control over that in some of the incentives that we offer. And so that is probably how I would think about it. James Jarrow: Okay. Thanks a lot. Alan Imberman: Thank you. Operator: Our next question comes from the line of Alexander Markgraff of KBW, KBCM. Your question, Alex. Alexander Markgraff: Thanks. Hey, David, Alan, Matt. Thanks for the question. A couple here. I guess just first, David, from a product standpoint, if I look at the releases in 2025, pretty busy. Just sort of curious how you think about calendar 2026 or fiscal 2027 using the sort of digestion year versus carry-forward of velocity framework? And then, Alan, just as a follow-on to that, maybe just some comments on spend priorities in the context of David's comments would be helpful. Thank you. David Fortunato: Hey, Alex. I guess our focus as a product development and technical organization is to be able to build automated products so that we can continue to focus most of our technical talent on delivering new products to clients and improving our existing products. We have a lot left to build. I would say that one of the things that we have seen over the past couple of years is that our roadmap only ever gets longer of things that we want to focus on and we want to get out to our clients. As we continue to build a deeper understanding of our clients' financial situations through both the qualitative and quantitative research that we do into their financial lives, we continue to have new ideas and be excited about those ideas. And so the focus that we have really is on prioritizing and focusing on the things that we think will make the biggest impact to our clients' financial outcomes and have the biggest impact on our business, but we really want to continue to accelerate product velocity, if anything, to continue to get products out to clients and improve the existing product experience so that Wealthfront Corporation is delivering the best value of any provider in the space. Alan Imberman: Yeah. What I would say to add to that in terms of the spend, as I mentioned in the prepared remarks, the investment in home lending as well as our incentives are really where we are putting a lot of resources. We continue to work on incentives and really strengthening the core as well while we invest in home lending. And so that has not changed. We continually look at our business model flywheel and kind of prioritize around that. And so we are continually trying to figure out ways to automate to generate savings, share those savings with clients to help their financial outcomes, build that trust, get them to refer us, and grow with word-of-mouth. And some of that is used through incentives. And so we will continue to use that as our framework for how we invest. Alexander Markgraff: Awesome. I appreciate that. And then, Alan, maybe just a quick follow-up, more sort of model mechanics question on the money market fund. Understanding there are a lot of factors that determine the ramp of that, but just as we see that sort of mix into the model, just a reminder on how that sort of affects the revenue lines would be helpful. Alan Imberman: Yeah. So it will be inside of cash management. We are in a fee waiver period right now. I think starting March 1, the fee is a quarter of a percent on the management fee. And then in terms of, as David mentioned, it offers a really good after-tax yield for folks in states with high income tax. And so we will have to see in terms of the growth once we roll it out to general availability. But that is where it will fit, and that is the monetization on the product. Alexander Markgraff: Awesome. Thank you both. Appreciate it. Operator: Please press *11 on your telephone to ask a question. And as there are no further questions in queue, I would now like to turn the conference back to David Fortunato for closing remarks. Sir? David Fortunato: Thank you. I want to thank everyone for joining the call and for your continued interest in Wealthfront Corporation. We look forward to staying in touch and updating you on our progress in the months ahead. Thanks all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Matthew Moon: Everyone else has left the call.
Narrator: Culture eats AI for breakfast. AI is everywhere, but real transformation is still rare. At CI&T Inc, we do not treat AI as a side initiative. We treat it as structural change. That means integrating AI into how decisions are made, how teams build, and how value flows, end to end. We start by defining where AI truly matters, across value streams, not isolated use cases. We redesigned the software engineering cycle embedding human and AI collaboration to accelerate learning and delivery. We connect strategy, governance, and architecture into one coherent operating model with responsible AI built in from day one. And we orchestrate the ecosystem around it, so platforms, agents, and partners operate as one system, because AI does not scale in fragments; it scales when culture, process, and leadership align. Culture eats AI breakfast. And that is how we make AI transformation real. Good afternoon, and thank you for joining us for CI&T Inc fourth quarter and full year 2025 earnings call. Eduardo Galvan: I am Eduardo Galvan, Director of Investor Relations. Joining me today to discuss our results and strategic milestones are Cesar Gon, our Founder and CEO; Bruno Guicardi, Founder and President for North America and Europe; and Stanley Rodrigues, our CFO. We are excited to share the details of a landmark year for the company. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. These statements, including our business outlook, are based on the management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. We caution you not to place undue reliance on these forward-looking statements as they are valid only as of the date when made. Additionally, we will discuss certain non-GAAP financial measures. We believe these provide a more comprehensive view of our underlying operational performance. For a full reconciliation of these measures to the most directly comparable GAAP metrics, please refer to the tables in our earnings release. Today's session is being recorded, and all participants are currently in a listen-only mode. Following our presentation, we will host a Q&A session. To participate, please submit your question via email to investors@ciandt.com. The full presentation deck is available on our Investor Relations website and a replay of this call will be posted shortly after we conclude it. With that, I am pleased to hand the floor over to our Founder and CEO, Cesar Gon. Good day, everyone. Cesar Gon: It is a privilege to share our results for 2025, our fifth year as a public company. Three years ago, I suggested that while software has been eating the world, AI has fundamentally changed the menu. It is not just another wave. It is a different ocean. In our latest partnership with MIT's Sloan Management Review, we explore why 95% of organizations still see little measurable returns on their AI investment. The companies that successfully scale AI are not necessarily those with the largest budgets, but those brave enough to redesign their culture. The real constraint on change is the speed of learning. We recently published a paper offering a map for organizations willing to close the gap between AI's potential and real-world performance. The manual has changed. The question is whether organizations have the appetite to embrace it. AI adoption is no longer discretionary; it is a structural necessity. Yet we see a clear productivity paradox. Organizations that effectively orchestrate people, processes, and technology can unlock productivity gains of up to 20x, compressing innovation cycles from years into weeks. So why do most companies struggle to capture value? Three reasons. First, the tool trap: treating AI as software instead of transforming the operating model. Second, the learning gap: the real constraint is how fast the workforce learns to work with AI. And third, fragmented governance: without a unified backbone like CI&T Inc Flow, initiatives remain isolated experiments. At CI&T Inc, we know transformation is never just technology. It is fundamentally human. That is what separates the 5% who scale AI from the 95% who only experiment. Success in this new environment requires more than tools; it requires architecture. CI&T Inc has codified decades of lean digital expertise into our AI transformation framework, designed to convert AI potential into financial performance. It focuses on three priorities. First, identify high-impact value streams. Second, define measurable business outcomes. Third, align the operating model to scale AI across the enterprise. This is powered by CI&T Inc Flow, orchestrating humans, AI agents, data, and governance into a single management system. And we have already reskilled our workforce around this model, enabling our clients to scale AI with real business impact. Now let us turn to our financial highlights. In the fourth quarter, CI&T Inc delivered record revenue of $134.3 million, representing 19.3% organic growth compared to Q4 2024. On a constant currency basis, growth was 13.9% year over year, exceeding the top end of our guidance range. Our adjusted EBITDA margin was 18.4%, demonstrating stability and resilience as we continue to scale. Adjusted profit margin reached 14% for the quarter. For the full year 2025, our organic revenue growth at constant currency was 13.2%, positioning CI&T Inc as the fastest-growing company among our peer group. This is high-conviction growth. We continue to invest in the foundations of our future leadership in AI services: our CI&T Inc Flow platform, our people, and our global sales engine. Stanley will provide a deeper dive into our financial metrics shortly. This marked our fifth consecutive quarter of double-digit organic growth, reflecting the compounding impact of our strategy. Our performance is driven by the trust of our strategic enterprise clients and our ability to deliver measurable outcomes in complex environments. Over the past three years, we have embedded AI into our core offerings and are entering what we call the acceleration phase, where our proprietary IP amplifies the value we deliver. As a result, our AI-powered offerings are expanding our pipeline, increasing engagement quality, and growing wallet share within existing accounts. To bring this to life, let us look at a few case studies that demonstrate how we are converting this framework into tangible business outcomes. Narrator: Bula, digital-native fintech, found a new beat in software delivery, and CI&T Inc Flow was not background noise. It was wired into the system. What took months collapsed into weeks. Productivity grew up to 10 times. GenAI, not as hype, but as infrastructure. Every commit is high in rhythm. Every release on tempo. Business momentum with Bula and CI&T Inc. Narrator: Valleys to Coast provides a lifeline for 18,000 residents across the UK, but disconnected systems were limiting their impact, with critical information locked in separate platforms while families on housing lists waited for their homes. CI&T Inc partnered with Valleys to Coast to change that. We built a unified digital platform that connects housing management and repairs in real time, transforming fragmented data into a single, trusted source of truth. This is not just about technology. It is about human and real outcomes. From syncing customer details to accelerating property turnarounds, we are ensuring repairs happen on time and families get their keys faster. With less manual work and clearer data, Valleys to Coast can now reinvest where it matters most, supporting the residents and communities at the heart of its mission. That is the power of connected data. That is CI&T Inc. Valleys to Coast Representative: Working with CI&T Inc, we have improved the lives of real people. We now put the right information in front of our teams instantly, accelerating property turnarounds and reinvesting our time back into the community. Narrator: New York, January NRF 2026, retail's biggest stage. On stage, from production to customer experience, the power of agentic ecosystems. Melissa Minco of CI&T Inc with Tony D'Onofrio of Sensormatic and TD Insights. Real conversations, real execution, CI&T Inc and AI connecting operations to demand. From production to experience, end-to-end systems, connected enterprise. No fluff, just proof. We are at the top, not by narrative, by delivery. CI&T Inc is a leader in the ISG 2025 report, recognized as a leader in enterprise data modernization and AI services in the ISG Provider Lens, AWS Ecosystem Partners 2025. Eduardo Galvan: A global benchmark for evaluating technology providers. Daily excellence, industry recognition. Cesar Gon: This is a moment to look back, not with nostalgia, but with numbers that speak in bold. The CI&T Inc and AWS partnership has evolved year after year. Today, more than 60% of our portfolio runs on AWS. In Latin America alone, the business grew 10 times year over year. We are one of just 19 partners worldwide selected for the AWS Generative AI Partner Innovation Alliance, a global initiative co-creating the next generation of GenAI solutions. BASF, Educas, C6 Bank, not just logos; proof points. CI&T Inc accelerates AWS. AWS amplifies CI&T Inc. The results we are seeing with our clients—collapsing months into weeks and achieving 10x productivity gains—are a testament of what is possible when AI becomes a core capability rather than just hype. To explain how we are crystallizing this success across our global footprint, I will invite Bruno to discuss our evolving delivery model and the strategic offerings driving these outcomes. Thank you. Bruno Guicardi: Pleasure to be here to discuss the evolution of our delivery model and the strength of our global offerings. We finished 2025 with a global team of 8,000 CI&T Inc’ers, averaging 6,400 AI tech professionals over the period, a 14% increase from 2024. These are not just developers. They are consultants, designers, and engineers who empower our clients by blending strategy, customer-centric design, and advanced AI engineering. As Cesar touched upon, people are the heart of an AI-first transformation. Our framework recognizes that this journey is multidimensional. You cannot simply install AI. You must advance people, processes, and technology simultaneously. We believe that breakthroughs in technology can only be sustained if they move in lockstep with organizational maturity. As the services industry evolves into a hybrid of IP and talent, we are empowering our people to be architects of solutions and platforms. Through CI&T Inc Flow, our teams can create, share, and reuse autonomous agents across the entire enterprise. By integrating lean principles and robust governance with our talent and technology, we are enabling our clients to move past simple efficiency gains and toward a complete reinvention of their business models. Now let us see how we are fundamentally redefining the unit economics of software production. CI&T Inc is capturing a massive performance arbitrage. By staying relentlessly ahead of the curve, the productivity gap between CI&T Inc and non-AI or low-performing vendors is widening into a significant competitive moat. We are navigating this through a staged evolution. Today, we are in the AI-augmented phase. We follow AI-native talent. We are already realizing 2x gains in individual productivity across the board. In more mature engagements, we move to AI-coordinated efficiency. By integrating autonomous agents into the workflow, we achieve 5x gains by collapsing lead times across the entire value stream. And we are continuously working towards a 20x performance increase through AI-orchestrated reinvention, where AI coordinates the entire journey from concept to market. This evolution of our delivery engine demands a corresponding evolution in our business model. To capture the value of this 20x potential, we are gradually transitioning our clients to modern engagement models. We are moving beyond time and materials toward fixed price, outcome-based, and consumption-based contracts. This allows us to decouple our revenue from headcount and participate directly in the value we create. We are not just watching the industry change. We are architecting the new standard. To see the technology making this 20x leap a reality today, let us look at our newest offering, the agentic SDLC. Historically, software development was a linear, human-dependent relay race. Our agentic SDLC breaks this model by deploying an ecosystem of autonomous AI agents that mirror key development roles. These agents orchestrate the process to eliminate systemic waste, such as waiting times and handoff errors, while our senior engineers provide the strategic guardrails to ensure every output is enterprise-ready. The backbone of this system is the enterprise knowledge base. This 360-degree data repository enables agents to continuously evolve, making decisions based on each client's specific context. This coordination of agentic speed and human strategic supervision is what unlocks unprecedented performance levels. We partner with clients to map and reinvent their entire SDLC, migrating their legacy processes into our agentic platform. We are already seeing the financial and operational impact of this shift. With a life sciences client, we have secured over 8x productivity gains. We have seen development cycles that previously took 8.5 days collapse to just half a day. With Bula, as seen in our client case video, what used to take months is now delivered in weeks. They achieved up to 10x productivity increases through end-to-end automation across coding, documentation, and testing. Agentic SDLC is a structural engine that allows us to deliver superior value at a lower cost to serve. By compressing product creation cycles from months to days, we are fundamentally shifting our business model. We are moving from a labor-intensive delivery model to an IP-led model where our margins can expand significantly, without traditional constraints of linear headcount growth. Our momentum and competitive edge are being validated by the world's leading ecosystems. 2025 has been a landmark year of recognition. CI&T Inc earned the AWS Generative AI Services Competency seal and was selected as one of only 19 partners worldwide in the AWS GenAI Partner Innovation Alliance, giving us early access to emerging technologies that keep our clients at the forefront of innovation. Our data expertise was also highlighted by Databricks, which recognized CI&T Inc as LATAM Enterprise Data Warehouse Partner of the Year for 2025, underscoring our ability to modernize legacy data foundations into high-value assets for agentic orchestration. Our strategic positioning is consistently validated by the industry's most respected independent analysts, including Forrester, Gartner, Everest, and ISG. Most notably, Forrester has named CI&T Inc a leader in modern application development services for 2025. In the ISG Provider Lens reports, we were recognized as a leader in enterprise data modernization and AI services, while Gartner Peer Insights rates us as a strong performer in custom software development services. Together, these accolades show that CI&T Inc is not simply following market trends, but helping define the new gold standard for our industry. Now I invite Stanley to guide us through our financial performance. Stanley Rodrigues: Thank you, Bruno, and good afternoon, everyone. It is a pleasure to provide more detail on what has been a year of exceptional execution and financial discipline for CI&T Inc. In Q4 2025, we delivered robust revenue of $134.3 million, representing a 19.3% increase on a reported basis, fully organic. On a constant currency basis, we grew 13.9% year over year. This performance is significant, as Cesar mentioned. It marks our fifth consecutive quarter of double-digit organic growth. In a volatile macroeconomic environment, this consistency is a clear differentiator, proving the resilience of our business model. For the full year 2025, total revenue reached $489.7 million, an 11.5% increase over 2024, or 13.2% on a constant currency basis. By balancing high-velocity top line expansion with stable margins, we are successfully compounding value for our shareholders. The narrative for 2025 is defined by the quality and composition of our growth. Our performance is anchored by our two most significant markets. Latin America delivered an outstanding 26.8% revenue growth for the full year, fueled by a rapid acceleration in digital and AI across the region. In North America, we maintained a solid and steady trajectory, with revenue growing 9.2% year over year, reflecting our maturing presence in the world's most competitive tech market. From a vertical perspective, we continue to see strong demand across our core sectors, specifically in financial services and retail and consumer goods verticals, where the demand for measurable AI-driven efficiency is reshaping how technology budgets are allocated. I want to double click on the quality of our client partnerships. At CI&T Inc, our objective is to be the partner of choice for high-impact strategic transformations. The results of this approach are clear. Revenue from our top 10 clients grew 16.5% year over year in 2025. It is important to note that each of these top 10 accounts now generates a minimum of $10 million in annual revenue. This outsized double-digit growth within our most deeply embedded accounts is a powerful market sign. It proves that even in our largest partnerships, we are finding new high-value opportunities to drive impact through the agentic SDLC and AI-driven reinvention. Beyond our existing base, we are equally encouraged by our new client onboarding. Throughout 2025, we saw a consistently strong pipeline and robust conversion rates. This balanced portfolio of regions, loyal top-tier clients, and diverse industries provides us with a very solid foundation for the year ahead. Now let us discuss our profitability and cash flow. For the fourth quarter, adjusted EBITDA reached $24.8 million, an 11.6% increase year over year, resulting in an adjusted EBITDA margin of 18.4%. The margin decline was driven by two specific headwinds: the unfavorable foreign exchange environment and the resumption of payroll taxes in Brazil. In addition, we have been deliberately investing up front in our AI platform, our workforce reskilling, and global sales initiatives as a strategic choice to accelerate our top line growth. For the full year 2025, adjusted EBITDA was $89.4 million, up 9.1% from 2024. This resulted in a full-year margin of 18.3%. In 2025, cash generated from operating activities reached $81.2 million, representing a remarkable 90.8% cash conversion rate from adjusted EBITDA. Our free cash flow totaled $45.8 million, which represents a cash conversion rate of 91.3% from adjusted profit. This level of conversion is a testament to our operational efficiency and disciplined working capital management. It provides us with significant balance sheet flexibility to continue funding our strategic pivot toward an AI, agentic model while maintaining a strong, de-risked financial position. Turning to the next slide, let us look at how our top line momentum translated into bottom line results. For the fourth quarter, adjusted net profit reached $18.8 million, a 41.8% increase year over year. This pushed our adjusted net profit margin to 14%. Consequently, our adjusted diluted earnings per share rose to $0.14, marking a 48% increase from the previous year. For the full year 2025, adjusted profit was $51.9 million, up 16.9% compared to 2024, with margins expanding 50 basis points to 10.6%. Our full-year adjusted diluted earnings per share grew to $0.39, a 20% increase over the prior year. This earnings outperformance was driven by two key factors. First, our disciplined management of SG&A expenses. Second, the strategic execution of our share repurchase program. By reducing the share count at what we believe are highly attractive valuation levels, we have successfully amplified the value delivered to our shareholders. In summary, 2025 was a year of consistent, high-quality execution. We delivered five consecutive quarters of double-digit organic growth, maintained a resilient margin profile, and achieved elite-level cash conversion. Combined with our active buyback program, CI&T Inc is demonstrating its ability to be both a high-growth AI leader and a disciplined compounder of shareholder value. We enter 2026 with a stronger balance sheet, a more efficient delivery model, and a clear path to continued outperformance. I will now turn the call back to Cesar for our business outlook for 2026. Thank you. Cesar Gon: Our 2026 outlook reflects our commitment to sustaining growth while continuing to invest in the shift towards an AI operating model. For Q1 2026, we expect revenue of at least $134.7 million, representing 21.5% growth year over year, or 14.3% at constant currency. For the full year 2026, we expect revenue in the range of $548.4 million to $568 million, implying organic growth of 12% to 16% year over year, with a midpoint of 14%. This includes a favorable FX tailwind of approximately 300 basis points, and we expect our adjusted EBITDA margin to be in the range of 17% to 19%. Before we open for questions, I want to thank all CI&T Inc’ers around the world. Your commitment to innovation, continuous learning, and delivering exceptional value to our clients makes these results possible. With that, we are ready to begin the Q&A session. Thank you. Narrator: The future of business is tech. The future of tech is business. Eduardo Galvan: We solve it. Tech-integrated business solutions. CI&T Inc. We will now open for questions. I will announce each participant's name. Once you hear your name, please unmute your line and ask your question. Then when you are done, please mute your line. The first question comes from Abby from JPMorgan. Abby, please go ahead. Abby: Hi. Nice to see you guys. This is Abby on for me. Thanks for taking my question. So I was wondering if you could walk us through the guide and some of your assumptions. Q1 looks pretty strong, but on a constant currency, organic basis, it seems like it is going to decelerate from this year. So can you just walk us through that? Cesar Gon: Thanks, Abby. Great to see you. Well, I think after five consecutive double-digit growth quarters, we were able to really forecast it. We ended the year with a very strong exit rate, so we are now able to forecast a very strong Q1 and then project continuity almost at the same pace. Our guidance assumes that we will have an average FX rate of 5.3 in terms of Brazilian reais to the US dollar on average along the year. If we look at the low end of our guidance, basically it reflects macro uncertainty, and the high end, where we want to be, reflects our current strong commercial pipeline, 30% higher now than the same period last year, and keeping a very good level of conversion, certainly driven by AI demand and the differentiation achieved for our main offerings. We are seeing Brazil and the US basically expanding at a good pace. This last Q4, we could see our main regions all expanding and also our five main verticals expanding sequentially. So I think it is a good start. Of course, there is a lot of things to do, I think we were able to guide what I believe is the fastest growing, and we will continue to be the fastest growing company among our peer group. Abby: Yeah. That is great. And just as a follow-up, are you guys seeing any impacts from the geopolitical uncertainty so far in Q1? Cesar Gon: So far, no. Even Europe has a very good, strong, solid start for the year. In Brazil and the US, we are also expanding. Abby: Thanks. Great job, guys. Cesar Gon: Thank you. Eduardo Galvan: Thank you, Abby. The next question comes from Leonardo Sintra from Itaú. Leo, please go ahead. Leonardo Sintra: Hi, everyone. Thank you for taking my questions. I just want to check about your expectation regarding the performance from the top one client and your top 10 clients throughout 2026, and if you could give us a little bit more breakdown about the Flow adoption between the different sectors. Thank you. Cesar Gon: Sure. Thank you, Leo. I will start with the segments. Q4 was a very good quarter for our five main verticals. We expanded almost 14% in life sciences as the largest expansion, but even financial services had an amazing year, and we sequentially expanded more than 3%. So we continue to see demand around all our five main verticals. Regarding the top clients, I think also Q4 was basically, on average, we expanded 21% year over year in our top 10 clients. Excluding top one, we expanded 17% year over year, and if you look ex-top 10, it is 18% year over year. So on average, all the cohorts are expanding, and we continue to see our strategy working around our top clients and also the new clients we landed last year. Sequentially, we grew among eight of our top 10 clients from Q3 to Q4, so very solid. And we will see our top one continuing to expand, but for sure less accelerated than last year. Bruno Guicardi: I can take the other one. It was about the Flow adoption rates. We do not see a lot of difference across verticals in AI adoption. It is pretty much, you know, our teams' adoption at this point continues very high, close to 100%. Just really a few laggard clients that do not want it to be used in their environments, which, again, is very minimal. So at this point, it is at full-blown utilization, and as I mentioned in my remarks, we are over the assistant phase and really moving into restructuring processes and workflows to actually deliver a way bigger impact at this point already. Leonardo Sintra: Very clear. Thank you, guys. Eduardo Galvan: Thank you, Leonardo. Our next question comes from Brian Bergen from TD Cowen. Hi, Brian. Brian Bergen: Hey, guys. Good to see you. On the AI and agentic activity and the workloads you are working on there, curious if you can give us a sense of the mix of new work that is the modernized version of what you have always done as high-value custom build solutions, but now leveraging GenAI and the Flow platform, versus newer areas for you like agentic-led managed services where you may be displacing some of the larger legacy vendors? I am just trying to ask this because I am trying to understand the different avenues of demand and how clients are thinking about this right now. Cesar Gon: Sure. Thanks, Brian, for the question. In general terms, we categorize the demand in two groups. The first one, as you mentioned, is we continue to see a big wave of foundational spending. It means large-scale projects regarding upgrading legacy technology applications or data foundations and really accelerating cloud migration. These are foundational moves if you want to explore the full potential of the AI-driven world. And the second, what I believe is a big trend now, is direct AI investment. We see a relevant budget allocation for AI solutions, and then we are talking about hyperfusion around the software demand lifecycle. We see a lot of demand regarding customer experience journeys now reinvented with AI. In Brazil, it is around WhatsApp, but globally it evolves toward conversational commerce and so on. We also see broad programs regarding AI-first transformation. That means looking at the end-to-end business model and structure of our clients and finding out the best way to really build a strong AI strategy around specific value streams or business units. And finally, we also see a growing number of what we call use cases around GenAI, meaning optimizing everything that is labor-intensive or data-intensive. Now business processes can be redesigned and reshaped with the new AI capabilities. So basically two groups: foundational demand and then what we call AI direct investment. Brian Bergen: Okay. And if I could ask a follow-up on margin. Can you comment on the drivers of adjusted EBITDA margin going forward? You have had ramped workforce investments and Flow investments in 2025. It looks like that will persist based on the guide for 2026. Curious how you envision this ultimately playing out, where a crossover point may be for the potential to start recovering margin, particularly gross margin, as you benefit from all these investments and the productivity yourselves? Stanley Rodrigues: Brian, thanks for the question. With regard to gross margin, you are right. In 2025, we saw a play in that gross margin. We saw bold investments toward people, meaning investing in preparation ahead of the strong pipeline we experienced throughout the whole year. We also had investments in AI itself, towards the platform Flow. We also had some headwinds in terms of FX, especially towards the end of the year. We had about 8% devaluation of the real in Q4 itself. If you combine that with investments in sales and efficiency and operating leverage that we saw in 2025, we get to this 18.3% EBITDA. If we go to 2026, the guidance we provided pretty much talks to that. The midpoint talks to that 2025 number. And what that means is we are continuing in that, I would say, winning AI strategy, meaning that we are investing in our AI platform. We are preparing teams ahead of the opportunities that we see in the pipeline. We have a strong pipeline, usually 30% bigger than the same period in the previous year. So this is allowing us, Brian, to expand the wallet share, which is very good, and also acquire new clients. So we are repeating, of course. We are leading in the sector, and that is a winning strategy. We will continue to do that formula, let us say, and that is why we are guiding that range of EBITDA. Brian Bergen: Okay. Understood. Thank you. Eduardo Galvan: Thank you, Brian. Next question comes from Luke Morrison from Canaccord. Hey, Luke. Go ahead. Luke Morrison: Hey, guys. Good to see you. Excellent results. Thank you for taking the question. So maybe I will just start dovetailing somewhat off of Brian's question. Thinking about the productivity improvements you are seeing with Flow, as you think over the long term, over a multiyear period, how do you think about the relationship between headcount growth and revenue growth over time? Should we expect revenue per employee to rise as you roll out these new pricing models and you see more productivity from your existing headcount, or are you thinking this growth phase still requires adding people at roughly the same rate as you are growing? Cesar Gon: Thanks, Luke. I can start here; Bruno, you can add if you want. We see the rise of AI and the agentic solutions as provoking an inevitable space for an evolution in the commercial and pricing models in our industry. In terms of the midterm, we see the future of our industry evolving from basically the time-and-materials model to value-based pricing models, more closely tying the business to business outcomes. And this is, for sure, an opportunity to gradually monetize the intellectual property embedded now in everything we do, and also experiment with different business models for the agentic architecture that, for sure, will dominate the future of IT investment. Proactively, we are introducing all these different approaches with our clients. We have, I would say, encouraging early results. But as I mentioned, we see this as a midterm opportunity. It will translate our superior performance into margin and scalability, and, of course, give our clients more options to better connect outcomes to the investments they are making. So I think it will be gradual, but inevitable, change in our industry. Luke Morrison: Yep. Makes sense. Very helpful. And then maybe just to double-click on the new pricing model evolution, you talked about experimenting with consumption-based subscription models for Flow access at your Analyst Day last October. Maybe just update us on how those conversations are going with clients. Are you seeing a willingness to pay for Flow as a standalone platform, or is that still primarily a differentiator that is helping you win business today? Bruno Guicardi: Primarily it is a differentiator. Of course, with clients, when they see the type of performance, they want to share in the success—like, “I want that for myself.” But we are not leading with that. We are not trying to push a product. They are seeing what our teams can do and the performance of those teams, and they ask, “How are you doing this?” Then we actually enter another sort of engagement, which is more of a transformation engagement: “Let us teach you how to achieve that type of performance,” which includes a different toolset and a different usage—not only our agents, but also the third-party tools available in the market. But again, that is more on the backtrack of them seeing a different performance compared to all the public reports that you can read everywhere. There is a lot of frustration out there on utilizing and transforming AI into real value. When you say you can do 5x, it is usually faced with a lot of skepticism. Our approach is more show than tell: this is what we are actually doing and this is what we are achieving. Then we can break that big wall of skepticism and have those conversations. That has been the approach. Eduardo Galvan: Our next question comes from Cesar Medina from Morgan Stanley. Hi, Medina. Cesar Medina: Hey. Thanks for taking my question. I guess you both—Bruno and Cesar—sort of just answered one of them, but let me ask in a different way. When you are thinking of the changes in trends—Cesar mentioned, for instance, that your main customer will continue to grow robustly but should slow down relative to 2025—can you walk us through the changes in trend that you are seeing between projects that are more discretionary spending versus other projects that are take-out-cost and things like that? That is the first part of the question. The second question: exactly the same thing as changes in trend, but instead of by client, by region. What are you seeing in the US, Brazil, and then new markets? Cesar Gon: Sure. Thank you, Medina, for the questions. We see both trends: foundational investments now with a much better return-on-investment equation regarding legacy and data modernization. We continue to capture these very large-scale endeavors to modernize decades of technical debt in our clients. Then we are seeing also this trend of direct AI investments with different shapes and colors. On average, we see our engagements basically accommodating multiyear contracts with more spot demand. So we do not see meaningful differences in terms of the duration of our engagements or the ticket size in both kinds of demand. Regarding markets, the US and Brazil: we are very confident and very well established in terms of land-and-expand—acquiring new customers in these markets and continuing to increase our wallet share among our global clients. We see our new markets as more exploratory—Europe and Asia—that now represent 10%. We had an amazing Q4 for these regions, but it is even harder to predict. We see a solid forecast for our main markets in North America and Latin America. Cesar Medina: And when you see your pipeline, last year you had a big ramp-up of very large projects for international, like Brazilian customers. When you think of this pipeline, do you have similar opportunities this year, 2026, on that front? Cesar Gon: Yes. And when we say expand, it is a very important game because these large companies—we need to move from one geography to another, from one business unit to another. It is a long-term strategy to continue increasing our wallet share year over year, quarter over quarter, as we establish our reputation. What plays in favor of our approach is Flow and our discipline of metrics. When we can clearly demonstrate the kind of results we are achieving, the natural response from our clients is giving us more opportunities to expand along the way. This is basically the expansion strategy, and as you know, we have very, very large companies operating around the world. So it is fertile soil for long-term expansion. Cesar Medina: Very simple. Thank you. Cesar Gon: Thank you, Medina. Eduardo Galvan: Thank you, Medina. Our next question comes from Gustavo Farias from UBS. Hi, Gustavo. Please go ahead. Gustavo Farias: Can you hear me? Eduardo Galvan: Yes. Now we can. Gustavo Farias: My question is regarding the alternative billing model. When you go from time and materials toward fixed or even outcome-based, there is probably a higher risk-reward profile. If you could comment on which of those alternative models are gaining more traction and what you are experiencing in terms of the effective margin upside gains in each of them, that would be very helpful. Thank you. Cesar Gon: Sure, Gustavo. Thank you. We are experimenting with seven different models now. Basically, it is a hybrid moment where we combine time and materials with price per unit—that is basically throughput—with price per consumption using our agent computing unit for the SaaS agent solutions, and outcome-based. I think it is too early, but of course all these models potentially have a better margin if you know how to execute. We are very confident in our ability to execute these engagements, which allows us to be very confident in the predictability of these new models. Also, it is part of the evolution of services becoming an IP-based game. Flow is not only our management system for AI, but it is also the stack where we are building our vertical solutions, all the IP that tackles specific vertical opportunities by industry. It is part of this evolution. For sure, all these models potentially can increase not only our margins, but our scalability in terms of headcount. But it will be, as I mentioned, an incremental midterm game—not something that is going to happen from Friday to Monday. We are very, very confident in our ability to execute. Gustavo Farias: Great. Thanks. Just a follow-up, if I may. Just to confirm, there is nothing from this potential upside, like you said, embedded in this year's guidance for margins, right? Cesar Gon: For 2026, we are guiding the natural evolution of our pricing models, but we believe that our clients will be, let us say, conservative. They are willing to test different models, but it will take a few years to really see this as a relevant part of our P&L. As I mentioned, it is inevitable not only for CI&T Inc, but for the whole industry. It is just a transition that will take a while, especially because of the cohort of our clients—these large companies—they tend to move in a very consistent and careful way. Gustavo Farias: Alright. Thank you very much, guys. Cesar Gon: Thank you, Gustavo. Eduardo Galvan: Thank you, Gustavo. That concludes our Q&A session. Thank you all for attending our event today. I will now invite Cesar to proceed with his closing remarks. Cesar? Cesar Gon: Sure. Thank you, Galvan. Thanks, Bruno and Stanley, for joining me. Thank you all for joining us today, and of course, a special thank you to all CI&T Inc’ers around the world. Congratulations on another record quarter. Let us keep pushing. And a special thank you also to our clients for choosing CI&T Inc as a partner for this exciting new AI-driven innovation era. Stay well. See you soon.
Operator: Good day, everyone, and welcome to Elutia Inc. Fourth Quarter 2025 Financial Results Call. At this time, all participants are in a listen-only mode. After this presentation, there will be a question-and-answer session. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note this conference is being recorded. Now it is my pleasure to turn the call over to Sonali Fonseca. Please proceed. Sonali Fonseca: Thank you, operator, and thank you all for participating in today’s call. Earlier today, Elutia Inc. released financial results for the fourth quarter and full year ended 12/31/2025. A copy of the press release is available on the company’s website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. All statements contained in this call that do not relate to matters of historical fact or relate to expectations, predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, are based upon our current estimates and various assumptions. These statements include material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For lists and descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Elutia Inc.’s Annual Report on Form 10-K for the year ended 12/31/2024, and in our subsequent periodic reports on Forms 10-Q and 10-K, accessible on the SEC website at www.sec.gov. Such factors may be updated from time to time in Elutia Inc.’s other filings with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, 03/11/2026. Elutia Inc. disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company’s financial results release for the fourth quarter and full year ended 12/31/2025, which is accessible on the SEC’s website and posted on the investors page of the Elutia Inc. website at investors.elutia.com. With that, I will turn the call over to Elutia Inc. CEO, Randy Mills. Randy Mills: Thank you, Sonali. Good evening, and welcome to our fourth quarter 2025 earnings call, from our Gaithersburg, Maryland facility, and I am super glad to be here. Wherever you are, however you may be listening, welcome. We are super glad to have you. I am going to try to keep my comments brief tonight, but on that point, you know I may fail. We have so many exciting things going on in Elutia Inc. right now, and I am eager to share them with you. With that, let us just jump in. Here is a forward-looking statement slide that basically says what Sonali just said. And then really quickly on our conference call, so what is on the agenda today? We are going to go over some of the basics. You may have heard this, but we also have a lot of new callers on the call today, so be patient as we go over things like our mission and what we are good at, where we are headed as a company. We made a couple of announcements in that press release that are kind of important, and so we will be updating some of those things there. Matt is going to then talk about finance topics. And then lastly, we will close the call and take your questions. So let us start out with our mission. Humanizing medicine so patients can thrive without compromise. Humanizing medicine. Humanizing medicine. Every 98 seconds, a woman in this country is diagnosed with an invasive form of breast cancer. That means even if I keep my remarks short today, there will be 18 new cases diagnosed during this call. Three of those are going to die during this call. Ten will have breast reconstruction. And three are going to have a serious complication from that surgery. Who are these people? These are our mothers. These are our wives. These are our friends. And our daughters. You know them. That is humanizing medicine. I am looking around this room right now at a group of brilliant overworked, tired professionals. And the look on every one of their faces is the same. Randy, let us go get at this. So why do we think we can fix this appalling problem? Well, let us look at what we are good at. What we are great at, actually. We are great at combining an optimal biological matrix, and we use the biological matrix to hold an implant in place and regenerate into the patient’s own healthy tissue. That is an essential part of the surgery. But what we do that no one else does is we combine that with powerful antibiotics for sustained antibiotic release that prevents infection and these other complications that we are talking about. Infection is the number one complication of surgery, period. And we have the ability to significantly reduce it. And this is not theoretical. Right? We have already done this. LU Pro, we launched in January. We got it through a 194 VACs in nine months. We got it up to an $18 million run rate because physicians loved it. And most importantly, it worked. So that is what we are doing with 41X in breast reconstruction. We cannot do this without an incredible team and I am super pleased to announce that we have done a great job adding some serious horsepower to our team this last quarter. I would like to welcome Guido Nils as our new board member. He is an operating partner at Edsburg Woodlands and the former Chief Operating Officer of Guiding Corporation. He is also, importantly, a longtime friend and mentor of mine. And we are blessed to have him join the team. I would also like to welcome Pete Ligotti as our new Chief Commercial Officer. Pete joins us with a brilliant 30-year career, including 20 years at Integra. Some more time at NuVasive where he ran a successful business. He is going to be coming in here, and he is going to be spearheading our commercial efforts as we move towards the launch and commercialization of 41X. Welcome to both of these gentlemen, to the Elutia Inc. crew. Okay. So where are we headed? I want to be really clear about all this so everybody understands. We are going to solve a really big problem that exists right down in breast reconstruction, and why this is such a transformational opportunity for us really comes at the intersection of three things. One is, it is a really big market. It is a really big market, and that matters. Breast reconstruction is a $1.5 billion market. But it is also a really big market that is facing an enormous problem. As I said, 15% to 20% of breast reconstruction patients will develop a serious postoperative infection. It is just unacceptable. We can do better. We have to do better. And the good news is that our technology platform is almost purpose built for this specific problem. Our first FDA-cleared drug-eluting bioenvelope turns out to be a really, really great way of addressing breast reconstruction infection. And so that is what we are going to do. So digging in here a little bit, breast reconstruction is a really big market. There are 102,000 breasts reconstructed after mastectomy annually. That means there are a lot of biological meshes that are already being used. Biological meshes are already used in 90% of these surgeries. So what does that mean? It means we do not have to train a surgeon on some brand-new technology to solve their problem. We just take a technology that they are used to, that they are familiar with using, and make it much better so it solves their number one problem. Human ADMs, human acellular dermal products lead this market and they are expensive. We are talking about $7,500 to $9,500 per breast. That makes them 65% or more of the total implant spend during a breast reconstruction procedure. So this is a really, really big market. But it is a market that confronts some very unique challenges. When I talk about the postoperative infection rate being 15% to 20%, people look at me and think, oh, that just could not be. It is. It definitively is. I want to explain just a little bit about why we see such high infection. And I am not going to go through all the slides. Some of you may have seen this. I have a longer series on this. But I do want to show you what is really at the root of this. So in a mastectomy, all of the breast tissue has to get removed. If all of the breast tissue is not removed, the woman’s mastectomy is not complete and they have to go through follow-up and surveillance and mammograms and other types of things and still have the risk for redeveloping breast cancer. So all of this tissue has to be removed. Well, one of the things that you should sort of know about breast tissue is that the blood supply for the anterior, or the front, side of the breast all goes through this breast tissue that has to get cut out. And so when a mastectomy is done and that tissue is removed, the blood vessels and therefore the blood supply for the front half of the breast is removed with it, and that closes off that blood supply. And what does that do? Well, that creates a situation where you have an area of the body that your blood flow cannot reach, where your immune system cannot readily reach, and very importantly, where postoperative antibiotics cannot reach. You can give somebody oral antibiotics or you can give somebody IV antibiotics, but if they do not have a vasculature to a particular area, those antibiotics are not going to flow there. And this is what sets up the very unique problem that we see in breast reconstruction. And that is what leads to these exceedingly high infection rates. As I said, one in three women suffer a serious complication, but 15% to 20% experience infection. This is not one paper. This is not some esoteric citing. This is the registry. This is what all of the data says. In fact, put it into real specific numbers. The registry data says it is 12% to 37%. You want to put the real numbers about it. So when we say 15% to 20%, we are not exaggerating. On that number, if anything, we are being conservative. And this is validated every time we go out and talk, particularly with the academic centers where they really track these numbers very, very closely. That leads up to one in five implant loss, so they have to go back and this whole thing comes out. It leads to a massive economic burden for the hospital, a $48,000 economic burden to the hospital. So the hospital certainly should be highly motivated to address this problem. But I just want to keep in mind and go through our mission here in humanized medicine. We are also talking about a woman that started this journey because she was diagnosed with cancer. Not an augmentation. She was diagnosed with cancer. And the number one goal in that woman’s mind is curing herself from that cancer. And that involves chemotherapy. It involves surgery. It involves radiation sometimes. And when an infection pops up, all of that stops. None of that can go on until that infection is resolved. And so this is a significant problem on so many different fronts. And it is one that, if you cannot tell, we are very, very passionate and committed to solving. So the great thing about this anatomical problem that is set up during the mastectomy is it kind of creates a perfect environment for what we do. So what if we flip the script on this and instead of trying to deliver this antibiotic systemically, we delivered it locally. We actually delivered it where the breast implant and the drain are, through the mesh, which is naturally there anyway to hold the implant in place. Well, the exact opposite would happen. Instead of concentrations being very, very low of antibiotic, the concentrations would be very high. And they would stay high for a long period of time. And then the best part, they would not have any systemic effects. So you could have high therapeutic concentrations of antibiotics right there in the breast site without any of these systemic side effects that you sometimes get when you deliver systemic antibiotics. And this was the concept that we started out with a very long time ago. This was the premise behind EluPro, and when we started using EluPro in humans, we saw it was completely valid. And then we got more data on this specifically in breast reconstruction. So there is some really great data out there on what happens if you deliver antibiotics locally into the breast reconstruction spacers. Two different studies particularly that I will reference here. One of them uses a plaster antibiotic plate. Now that does not sound like a great way to treat a woman who is undergoing breast reconstruction, to put a piece of plaster in her breast. But when the risk of postoperative infection is 15% to 20%, desperate times call for some pretty desperate measures. So they gave this a shot. They impregnated this plaster with this antibiotic and they looked at it in just the general breast reconstruction population. What they saw was a 62% reduction in infection risk. We are talking about going from 12.6% to 4.8%. This is not a small study. We are talking about an n of 593 patients in here. So a significant proof of concept that if you deliver these antibiotics locally, you can do a really, really good job of preventing infection. Another version of this was tried, but in a much, much higher-risk setting. Here, what they were looking at is instead of using these big plates, they used these little plaster beads. Again, they are this plaster material. And they put those into the breast cavity. What they were looking at here were women who had very, very poor, in fact pathologically poor, blood flow to the anterior side of the breast, something we call mastectomy skin necrosis. And this is where there is just literally no blood supply to the front part of the breast, and that front sort of breast tissue starts to die. When that happens, your risk of infection skyrockets. And so here, they saw an 82% reduction in infection. We are talking about going from 36% down to 6%. Again, n of 75 here. You might say, well, I guess maybe this problem is solved. Not really. Even the authors, and these are friends and champions of Elutia Inc. who were behind these studies, will tell you this is a suboptimal solution to a very serious problem. No woman likes that plaster put in there. No plastic surgeon wants to make antibiotic beads off-label in the back part of their surgical center. They do not stay in place. They drop down into the inferior side and into the gutters of the breast. They do not provide uniform coverage, and they elute the antibiotic way, way, way too quickly. But it did show that this concept definitively works. And that is why we created NXT 41X. We are combining these powerful antibiotics, rifampin and minocycline. So these are antibiotics that specifically target the pathogens we know we see in breast infection. And it delivers them in a uniform field for an extended period of time. It might be 30 days. Wow. What is this 30 days about? The drains that are placed at the time of surgery stay in 17 days. And so you want a couple of weeks of extra coverage. That is what that is about. And we combine these powerful sustained antibiotics with an optimal biologic matrix. And that matrix I will refer to as 41. It is just the matrix by itself. And we put those two things together and we made something purpose built for the problem that we are trying to solve, which is postoperative infection in breast cancer surgery. So let us talk about the roadmap and how do we get from here to there. Right now, we have SimpliDerm, which I am going to talk about in just a second, but that is our current product that is used in the breast reconstruction space. It gives us a lot of practical, on-the-floor experience in this space. The real excitement starts with 41 and 41X. So 41 is our base matrix. So when I say NXT 41, I am talking about just the biological matrix alone, without antibiotic. It is a phenomenal matrix in its own right. If we were not a drug-eluting biologics company, we would be talking about this incredible NXT 41, but we cannot leave good enough alone, primarily because it does not solve the biggest problem in breast reconstruction. But what we do is we use 41, from a regulatory standpoint, to set the foundation for 41X. We announced today that we have already submitted to FDA NXT 41. Let me just sort of pause and reality check everybody. We know we are going to get questions from FDA. We know we are going to need to respond to them thoughtfully and professionally, and we know that is probably going to take a little while. So let us be patient. Let us give our incredible R&D team the time to do the professional job they need. If something significant happens, I promise we will update you on it. In the meantime, we expect clearance sometime in 2026 for 41. And that will serve as the platform for NXT 41X, which is the base matrix combined with the rifampin and minocycline. And if we put the timelines together, we expect clearance for NXT 41X towards the end of the first half of 2027. So we are looking at a second-half launch of that product. Okay. What is going on inside the company? Well, you can sort of divide it up into three major workstreams. The first one is obviously development. No surprise here. That group is focused pretty heavily on the approval of a highly differentiated product that significantly improves outcomes in plastic and reconstructive surgery. That starts with our 41 base matrix and rolls seamlessly into our 41X drug-eluting matrix. I said we are here in our beautiful Gaithersburg facility. Well, that allows me to introduce manufacturing, because this is our manufacturing facility here, where we have enough capacity to make 41X for the foreseeable future. I think we have something like $120 million in revenue-generating capacity for 41X with just one shift right now. We have this great manufacturing facility. And then, basically, I could sum up manufacturing’s job right now into two things. One, ensuring adequate supply of perfect quality tissue. And two, driving down cost of goods. So that is what they are working on. And then lastly, we now have Pete Ligotti coming in and heading commercial, building these KOL partnerships. I am going to tell you, we do not have a problem getting a meeting and building strong relationships with our KOLs. We have, and are continuing to build, a very robust KOL team of champions. And there is really no secret to it. We are able to do it not because we have great personalities, but because we are addressing their number one problem and the number one problem that their patients are facing right now. In addition to that, Pete is working on developing health economic models, obviously spending a lot of time on reimbursement strategies, and generally preparing for launch readiness of 41X. So now let us turn a little bit to SimpliDerm. We are exploring SimpliDerm strategic options. We announced that in the press release today. You might ask, well, why now? Well, we have gotten to the point where our confidence with the 41X program really dictates that this is now the time for us to focus all of our time, all of our resources, all of our energy on making sure we do a great job with that platform. SimpliDerm is a great product, and whoever gets this asset is going to get a really, really wonderful product. Acellular dermal matrix that is used in soft tissue reconstruction. It has great handling. It is sterile. It is hydrated and ready to use, which is what the plastic surgeons want. 100 million lives covered is a big deal. Some people think they could introduce their own acellular dermal product really quickly and just get it on the market. It turns out reimbursement in the acellular dermal matrix market is a really big deal. So we have 100 million lives covered across two of the largest payers, Anthem and UnitedHealthcare, as well as nine regional plans. Patent protected, obviously. It is completely standalone. So for us, it is a completely segregable business that does not cause any disruption. And whoever gets it, it is EBITDA accretive. So no incremental capital investment is required. It is really a beautiful plug-and-play technology. We will keep you updated on this, and we will see how that process goes. Lastly, I would not be able to say any of the great things that I am saying today, and we would not have been able to make any of the progress that we are making, without our incredible Elutia Inc. crew. We are proud to be recognized for something we already knew. Elutia Inc. is a great place to work, and we were certified by the Great Place to Work certification. The results, I thought when I saw them, I was really proud. It proved we are a mission-driven organization. We are also a merit-driven organization. 54% women, 62% of our leadership roles are occupied by women. 50% have advanced degrees. We are a brilliant group. Not me. But the team. An entire third of our organization has a doctorate. And we are a committed group. Our average tenure, 6.3 years. The advantages, if you are wondering, so what is the advantage of this Great Place to Work certification? Well, the certification is kind of nice. I guess you can hang it on the wall. But what it means is that, compared to our noncertified peer competitors, we tend to outperform on financial metrics by fourfold. We are able to attract job seekers because of the Great Place to Work certification with a 15 times higher attractiveness, and our turnover of certified workforces is about half that of the regular U.S. workplace. So I am going to end my comments there by thanking this tremendous team for frankly making my job such a joy. And with that, I will stop talking, and I will turn it over to Matt Ferguson. Matt Ferguson: Okay. Thank you, Randy. And before I start my remarks, I would just like to say I so appreciate the passion and the leadership that you brought to the organization, and I support all of the comments that you just made about our mission and our market, our opportunity, and probably most importantly, our team. And with that, we put out our earnings press release today with quite a bit of detail in it, and we will put out our 10-K in a couple of days. That will have even more detail in it. So I am just going to hit a few highlights and not take very long here. But moving into a summary of our fourth quarter financial results, from a revenue perspective, we did $3.3 million in revenue, and that compares to $2.8 million in the year-ago quarter. That is up 16%. So we were very pleased with that performance. That was really driven by the return to direct distribution for both our cardiovascular and our SimpliDerm product lines, as we have talked about. The return to direct distribution has also had a very positive effect on our gross margins. So on an adjusted basis, which is probably the better indication of how things are really performing from a business perspective, we had an adjusted gross margin for the fourth quarter of 66.8%. That was up 12 points from the prior-year quarter, when it was 56.5%. So really nice results there. Our net loss from continuing operations, so that is excluding the bioenvelope business that was divested on October 1, was $6.5 million, versus $7.2 million a year ago. And then probably a more relevant metric in terms of our operating performance, our adjusted EBITDA, which is a non-GAAP metric but excludes certain noncash, nonrecurring, noncore operational metrics, was a loss of $4.2 million in the quarter compared to $3.4 million in the year-ago quarter. On our balance sheet, a lot has changed in the last quarter. As you know, our total cash on hand plus the $8 million that we have in escrow is $44.4 million. So it puts us in a really nice position from an overall cash point of view. That is after having paid off all of our debt with SWK that took place at the beginning of the fourth quarter as well. That was about $28 million that went to pay off that debt. And then just from a share count point of view, we have 42.8 million common shares outstanding as of the end of the year. In addition to that, there are 4.5 million pre-funded warrants that are outstanding, so a total of 47.3 million. And all of those common shares outstanding now are Class A common shares. So what that means is that all of our Class B common shares, which were held by one entity, were converted during the quarter and sold into the market. So that, as you know, is essentially an overhang that is gone now, and we are very pleased to get that behind us. One of the effects that we have seen as that has gotten behind us is that we recently came back into compliance with all of Nasdaq continued listing requirements. We put out that release at the beginning of last week, and I would just like to thank all of our investors out there who have put their trust and their capital into Elutia Inc. and helped support that return to compliance there. So moving on, just to take a step back and at a big-picture level, 2025, and really all of 2025, represented a real strategic reset for the company. And the biggest event in that really was the $88 million sale of our bioenvelope business to Boston Scientific, which, again, allowed us to pay off all of our outstanding senior debt to SWK, left us with $44.4 million of cash on the balance sheet and in escrow that will come in later this year, and it really allows us to be completely focused and extremely well resourced for the continued development and the launch of NXT 41, which we truly believe will be transformational in the market starting next year. So I guess with that, the last thing I would like to mention is just that we have tried to be very active in getting this story out, which we truly believe in. We have been active in getting it out to investors, and we are going to continue to do that. We have two conferences coming up in the next couple of months. The first will be just next week, the Sidoti Small Cap Conference, which is an online conference, and then in May, we have the LD Micro Conference, which is a live conference in Los Angeles. So if any of you are attending those events, we would very much love to meet with you there. So with that, in summary, before turning it over to questions, I would just like to reiterate the three key points of our story. We have a validated technology platform, as has been proven by the sale of our EluPro product and our bioenvelope business last quarter to Boston Scientific for $88 million. We have a truly blockbuster pipeline underway, which is really starting with NXT 41 and a $1.5 billion market. And then we are in a great position from a resource point of view. We have a fantastic team. We have a great facility that we are sitting in here today. And we have a strong balance sheet, which will take us through that approval and into commercialization. So with that, I will open it up to questions, and back to you, Operator, to start that off. Thanks. Operator: Thank you so much. We will now open for questions. As a reminder, to ask a question, simply press 11 to get in the queue and wait for your name to be announced. To remove yourself, press 11 again. We have a question from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed. Frank Takkinen: Great. Thanks for taking the questions. Congrats on all the progress. Congrats on 41 submission to the FDA. I was hoping to start with a few questions around that. I know it is a question along the lines of trying to predict the unpredictable, but as you are working internally, what kind of questions are you preparing for from the FDA, and how do you think about the challenges you might have to go through to get it to market, or if it should be a relatively streamlined process? And then secondly, once you do get 41 across the goal line, how quickly can you shift the filing to 41X and resubmit? Randy Mills: Okay. I am just making some notes, Frank. So, Frank, thanks for the questions. I think everyone should view the review process and respect the review process the way we do. The timelines that we have laid out for clearance are fairly conservative. And they are fairly conservative because we want to make sure that we do a really professional job. Now I would say, first and foremost, we submit a high-quality application with everything in it that we think is necessary for a clearance. We do retain a lot of backup data and supporting data on all the necessary points. But as a matter of sort of regulatory strategy and best practices in regulatory science, you do not over answer a question with FDA. You just be prepared to explain the rationale for the things that you did answer. And so that is really the strategy that we have going on. There is no question that biocompatibility for a product like this is a big question in mind, and a big focus right now in the Food and Drug Administration. We know that. We feel pretty good about our product there. We know that when we get into 41X, if we just remember back to the days from EluPro, that things like in vitro elution were a real big point with them. You probably remember the IVE days, Frank. And so we are prepared for any and all of it, but we are prepared for it in a very humble and respectful way. And that is the timelines we have set up that have that in place. And I would just sort of encourage everyone to just keep that in mind. I would not be pulling forward any timelines until we tell you that is probably a good idea. With regards to how fast we roll into 41X, I would say just to keep in mind the whole purpose of 41 is to improve the efficiency of 41X. We have no intention of commercializing 41. It is not a drug-eluting matrix, and so it does not fit with our high-level thesis. So, really, the only reason that we are doing it is for regulatory efficiency. And therefore, the team will learn from the 41 submission. They will call any audibles that they need to as a result of what we learned from the 41 submission. But clearly, their plan is to go pretty efficiently from 41 into 41X. And if at any point we think that that might not, that 41 might no longer serve that purpose, well then we might change the plan. Right? Even pull forward a 41X submission. But right now, we anticipate, in the timelines, an approval pretty efficiently after 41. Frank Takkinen: Got it. Very helpful color. I was hoping to ask a little bit more about commercial. Appreciate some of the comments you made there. But kind of related to SimpliDerm, I think we have talked about just having experience in that space via SimpliDerm could help the commercial readiness of the organization once 41X is approved. How do you think about balancing that readiness that SimpliDerm could have helped with versus the strategic process? And then at the same time, what are you maybe doing from a commercial readiness perspective in light of that transition that is occurring? Randy Mills: Right. So, Frank, let us go through this with the three things that really help us get ready for 41X. One is just the base understanding of this market, how it works, and that includes the reimbursement. Right? So we have done that. We do know and we do understand how this current market works, how reimbursement works here, who the players are, literally the logistics of a breast reconstruction product. So we think we check that. You will remember, by far, the most important thing in the commercialization of EluPro was the value analysis committees, like the VACs. And I will be completely honest here. We learned more about how to do that with EluPro than probably we learned or are learning from SimpliDerm. My 194 VACs in the time that we did that, I mean, that was so key to the explosive growth of that product. And we feel, and we have a team that understands that. We know what to do from a VAC package standpoint. We feel pretty good about that. The third piece, though, was KOLs, and, you know, key opinion leaders and who are the thought leaders in this space. And here is, Frank, where our thought process has really flipped, and it really started flipping when we were able to go last October to the big plastics and breast meeting in New Orleans and just cold call some of these marquee leaders in the field of plastic and reconstructive surgery and say, hey, would you mind having a conversation with us? We are trying to develop a locally delivering biological matrix for breast reconstruction, you know, deliver antibiotic, try to prevent infection. Our dance card filled. And it filled with some of the brightest, strongest thought leaders in this space, and that continues to this day. We have no problem getting meetings with these KOLs and engaging in very meaningful, very enthusiastic conversations with them on how we can best design, build, and deliver a product that is exactly what we need. And so when that last piece sort of started to happen was when we sort of made the decision we are probably pretty good here and can start moving up, particularly with the progress the R&D team is making with the filings. Frank Takkinen: Yep. Yep. That is perfectly clear. I got it. One last I wanted to ask, Randy. Obviously, the data is really impressive with plate as well as the powder with 60% and 80% plus reductions. How do you think, and it is a speculative question, but how do you think NXT 41X could compare from an infection reduction perspective in relation to some of these other techniques that are being used today? Randy Mills: Yeah. We would be thrilled with a 50% reduction. Anyone would be thrilled with something like that. We have some advantages, though, over those techniques that are delivering those results. Those advantages are uniform distribution. So as I said, with the plates and the beads, those things have mass to them and they notoriously sort of fall down into the breast gutters and do not provide uniform coverage. The second thing is the teams that were doing that work know that antibiotic comes out of that real fast, and therefore it does not provide a particularly long-term coverage. We targeted this 30 days, and we targeted the 30 days because the drains come out at day 17, and if the drains are still in, particularly with this, there is a pistoning that can happen with the drains from the outside to the inside, you are constantly introducing and have the potential to introduce bacteria back into that surgical field. So we felt pretty strongly that you needed to have antibiotic coverage that persisted after the drains were pulled. So we feel like we have probably built a better solution than the ones you are seeing with these really fantastic results. I cannot knock what they are seeing. But I think I want to caution everyone here again to a little bit of humility and perspective. There is a percentage of these cases that have such severe necrosis. This is where the vasculature to the breast is so compromised that it does not matter what you would put in there. The tissue just dies. And in that case, we can add antibiotics all day long, but we are not going to prevent what ultimately is going to become something more like a gangrenous infection and the complications from those. And that is really just an unsolvable, at least at this time, consequence of the base mastectomy. So does that help? Frank Takkinen: Yeah. That is perfect. Appreciate the color. Thanks, guys. Operator: Thank you so much. And ladies and gentlemen, this concludes our Q&A session and our conference for today. Thank you for participating. You may now disconnect.
Operator: Good afternoon, and welcome to the Petco Health and Wellness Company, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Roxanne Meyer, Investor Relations. Please go ahead. Roxanne Meyer: Good afternoon, and welcome to Petco Health and Wellness Company, Inc.'s Fourth Quarter Fiscal 2025 Earnings Conference Call. Joining me on the call today are Joel Anderson, Petco Health and Wellness Company, Inc.'s Chief Executive Officer, and Sabrina Simmons, Petco Health and Wellness Company, Inc.'s Chief Financial Officer. In addition to the earnings release, we have posted a slide presentation on our website at ir.petco.com. I would like to remind everyone that on this call, we will make certain forward-looking statements which are subject to a number of risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include those set out in our earnings materials and SEC filings. In addition, on today's call, we will refer to certain non-GAAP financial measures. Reconciliations of these measures can be found in our earnings release, presentation, and SEC filings. With that, I will turn the call over to Joel. Joel Anderson: Thanks, Roxanne, and good afternoon, everyone. Thank you for joining us to discuss our fourth quarter and full year results. I am pleased to share that Q4 sales were in line with our outlook and we performed better than our adjusted EBITDA quarterly goal. Looking back on 2025, we successfully delivered on our robust agenda to strengthen our economic model and improve retail fundamentals, which resulted in significantly higher cash flow and profitability year over year. Specifically, the year, we achieved a 21% increase in adjusted EBITDA, a 77% increase in operating cash flow. Our healthier EBITDA and opportunistic debt paydown drove a meaningful reduction in our leverage ratio at year end, allowing us to start the year with greater financial flexibility. This was no small feat, and I am exceptionally proud of our team. We collaborated across the organization. We strengthened our culture. We communicated expectations, and we acted with urgency and decisiveness. It is important to note that the majority of our senior leadership team, which is exceptionally well tenured and talented, has only been together for about one year. We enter 2026 with a running start, something we did not have in 2025. Some of the most recent additions to the team include Sabrina Simmons, CFO, who many of you already know; Michael Romanco, Chief Customer and Product Officer; and Joe Venizia, Chief Revenue Officer. The entire team's work has been transformative, and yet we are just getting started. In addition to strengthening our financial foundation in 2025 and rebuilding the leadership team, we completed our Petco North Star strategy, including a comprehensive customer segmentation and needs analysis. This work is already shaping how we prioritize assortment, services, and experiences, and it also informed our updated brand positioning: where the pets go to live their real life. One key takeaway from the segmentation work is the identification of who our most important engaged customers are. That segment we call Passionate Explorers. These are pet parents who are highly invested in their pets and seek innovation, expert support, and a welcoming shopping experience across the full pet journey. 2026 will be informed by this strategy work, and execution will center on four growth pillars I will review in detail later on this call. They are, number one, compelling product driven by increased newness, brand launches, and own brand expansion; number two, services at scale, leveraging our wholly owned vet, grooming, and training ecosystem; number three, trusted store experience, focused on driving traffic, engagement, and basket; and finally, number four, an integrated omnichannel model improving convenience, loyalty, and repeat behavior. With that, I will now turn it over to Sabrina to provide details on our fourth quarter financial performance and our 2026 outlook. Following her remarks, I will discuss the specifics of our growth strategy for 2026, and we will then open it up to your questions. Sabrina Simmons: Thank you, Joel. Good afternoon, everyone. As we have discussed, our primary goal all year was improving profit and cash generation through our economic model, namely expanding gross margin rate, leveraging expense, and expanding operating margin. We are glad to report that we achieved this goal each and every quarter. For the full year 2025, we expanded our gross margin rate 66 basis points to 38.7%, leveraged SG&A 124 basis points to 36.6%, improved our operating profit by $100,000,000 and expanded our operating margin by 190 basis points, increased adjusted EBITDA 21.3% to $408,000,000 with a margin of 6.8%, and we delivered positive GAAP net income for the year. Additionally, free cash flow improved 276% versus the prior year to $187,000,000. These results enabled significant progress in achieving our goal of lowering our leverage ratio. Our net debt to EBITDA improved from 4.2x when we entered the year to 3.0x at the end of 2025. Now turning to the fourth quarter results, which reflect another quarter in which we delivered on our commitments while building a stronger foundation. In line with our outlook, net sales were down 2.4% to $1,520,000,000 with comp sales down 1.6%. As expected, the decline reflects our decision to move away from unprofitable sales, which was our strategy throughout 2025. As a reminder, the difference between total sales and comp is driven by the 25 net store closures in 2024 and the additional net 16 closures in 2025. The number of 2025 closures came in a bit favorable to our expectations, driven by a combination of improved store performance and favorable rent negotiations that supported improved unit economics for those locations. We ended the quarter with 1,382 stores in the U.S. Fourth quarter gross profit dollars were $581,000,000 while our gross margin rate expanded 37 basis points to 38.3%, including the sequential increase in tariff impact, which we anticipated. Moving to SG&A, for the quarter, SG&A was $549,000,000 or 36.2% of net sales, leveraging 62 basis points. The $23,000,000 decline in year-over-year expenses was partially driven by lapping last year's consulting costs. Marketing expenses increased $7,000,000 in the quarter. For Q4, our expanded gross margin and expense leverage resulted in operating margin expansion of 98 basis points, and our operating profit increased $14,000,000 or 83% in the quarter. Adjusted EBITDA increased 10.6% or $10,000,000 to $106,000,000, and our adjusted EBITDA margin expanded 82 basis points to 7.0% of sales. Moving to the balance sheet and cash flow, Q4 ending inventory was down 9.7% versus our 2.4% decline in Q4 sales. We continue to manage inventory with discipline, which is one of the drivers of our improved cash flow profile. For the year, free cash flow was $187,000,000, an increase of $137,000,000 or 276% versus last year. Our ending cash balance was $257,000,000, an increase of $91,000,000 versus last year, including having voluntarily paid down $95,000,000 of debt. As many of you have heard me state, our approach to our debt refinancing was opportunistic, and we are pleased to have executed the refinancing with favorable terms. We replaced a fully variable debt structure with a more optimal mix of fixed and floating, and extended our maturities to 2031, providing us ample flexibility. On our first call together last March, we stated our goal of reducing our leverage ratio to 2.0x or less. We are thrilled with the progress we have made in just one year. As we said, we started fiscal 2025 at over 4.0x, and in just a single year, we have reduced that to 3.0x, enabled by our focus on driving improved profitability and cash flow. With our retail and financial fundamentals strengthened, we are well positioned to turn more of our focus to regrowing top line and driving sustainable profitable growth over the long term. Now turning to our outlook. We are starting the year from a position of strength while continuing to navigate a bumpy macro backdrop. Of note, our guidance assumes that fuel prices normalize by the end of the quarter. For the first quarter, we expect net sales to be down 1% to flat versus the prior year, with comp sales roughly flat at the midpoint of the range, as we begin to build into the growth initiatives Joel will outline in a minute. We expect adjusted EBITDA to be between $92,000,000 and $94,000,000. Now turning to the full year, we expect net sales to be flat to up 1.5% versus last year as our growth initiatives take hold and build over the course of the year. Of note, similar to 2025, we expect net store closures between 15 and 20 in 2026. As is typical, store closures are weighted toward the back half of the year. We estimate the full year spread between total sales and comp sales to be about 50 basis points, though it will vary somewhat by quarter. This expectation implies positive comp sales for the year. We expect adjusted EBITDA to be between $415,000,000 and $430,000,000, with an overall goal of delivering on the economic model for the full year. To provide additional color on other line items, for the full year, we expect net interest expense to be about $125,000,000, capital expenditures of about $140,000,000 with an ongoing focus on ROIC, which we improved in 2025 by three percentage points, depreciation and amortization to be about $200,000,000, similar to last year, and finally, to be helpful with your models, we expect stock comp to increase by a low double-digit percent versus last year. As a reminder, stock comp will remain well below years prior to 2025. In closing, I want to thank our teams for executing on our transformation with great discipline, resulting in our significant growth in profitability and cash flow. I will now turn the call back over to Joel. Joel Anderson: Thank you, Sabrina. With our foundation firmly in place, I am energized to walk you through the specifics of our 2026 strategy that will drive our expected growth. As you know, we outlined a three-phased approach to our turnaround. We laid the foundation in phase one and phase two, and we are now entering phase three, which is about driving sustainable top-line growth. Internally, this phase three strategy is called “Reach for the Sky,” which is all about looking up and driving forward, leveraging our competitive advantages, and capitalizing on the growth opportunities we see across our business. It is also about the opportunity I see for Petco Health and Wellness Company, Inc. to be reimagined and broadened beyond primarily being a commodity-driven business. This is about the blue-sky opportunities Petco Health and Wellness Company, Inc. has to engage with pet families through the ups and downs and the real-life experiences of raising a pet. Our team has tenaciously driven cost savings and now will continue with that same rigor while driving sales and reaching forward. Petco Health and Wellness Company, Inc. is the only national fully integrated and comprehensive pet care ecosystem. Our vision for the Reach for the Sky strategy is centered around leveraging our differentiated store-based model to bolster our competitive positioning, increase relevance, and improve store productivity. We plan to fuel our growth by offering product newness and differentiation as well as further strengthening our community of pets and their humans through our unique store experiences, integrated omnichannel model, and wholly owned services. We are in the early innings of capitalizing on the significant opportunities that we see to gain share of wallet across all our businesses. The groundwork in 2025 has served us well. We expect these initiatives to grow sales and become more impactful as they materialize throughout 2026 and beyond. Now I will outline the detailed framework of our Reach for the Sky plan to drive sales within each of our four pillars. I will begin with our compelling product offering, specifically within consumables. This is roughly half of our business today, and in the U.S. alone, it is a $54,000,000,000 market. I will talk about four key catalysts within consumables to jump-start growth beginning this year. First, fresh food is one of our biggest opportunities. We have been a primary destination for fresh food for a long time and are continuing to build on that foundation by expanding the assortment. This category at Petco Health and Wellness Company, Inc. experienced healthy growth in 2025, and we expect the momentum to continue in 2026. This is an example of a category that exemplifies a significant advantage our store ecosystem brings. Beginning in Q1, we are adding additional freezers amounting to over 1,000 incrementally over the course of the year, which will enable us to expand our range of offers meaningfully. Our focus on driving share of wallet in the fresh food category is intentional. Of note, those that buy fresh food from us make over four more trips per year and spend over 50% more annually than dry-food-only dog customers. Secondly, we will launch new national brands. This area starts with communication. I have personally met with the leaders of several of our key consumables partners. They are aligned with our goals and objectives and excited about the renewed energy and focus of growth at Petco Health and Wellness Company, Inc. At the center of our strategy will be infusing a high degree of newness, including a significant number of new brands and flavors being added this year. The majority of these are launching in the first half. We expect these to generate excitement and customer interest. We look forward to discussing these with you in future quarters. Third, we are increasing the frequency of product drops. Historically, we set consumables merchandise annually with one big cat and dog food reset. As you can imagine, this did not provide our customers with multiple reasons to see what is new at Petco Health and Wellness Company, Inc., and often, we are the last to roll out a new innovation or flavor. We are changing this approach meaningfully by continuously layering in product newness throughout the year, both in consumables and supplies. This is designed to create excitement and freshness of product and will entice our customers to walk our aisles more frequently. And fourth, we are ramping our own brands business. This is within consumables and supplies. Own brands account for about 20% of our sales today and have the potential to become more meaningful over time. As part of our own brand strategy, we will anchor our focus on our strongest seven private labels, which already account for a significant percentage of our own brand sales, therefore leveraging the strength of these brands and increasing their presence and relevance. This focus on owned brands is intended to allow us to go faster and fill in voids our national partners do not have visibility to. In terms of key initiatives in consumables, we plan to offer new formulas and packaging in dog food. In supplies, we will expand our own brands business across categories and offer newness and innovation more broadly, such as in beds, bowls, collars, leads, and toys. And as we have mentioned prior, the margins of owned brands are significantly above that of national brands. In the supplies and the companion animal category specifically, we are introducing new assortments that we believe will further differentiate us from competitors. An example is newness in insects, such as jumping spiders and tarantulas, which we see as a newer pet trend in the United States. This customer basket is also likely to include ancillary supplies and consumables. Additionally, we launched “gardening with your pet” this month, a new category for us in nearly all of our stores. It includes gardening products and plants that provide customers with pet-friendly options. Moving on to our services pillar, we also see abundant opportunities to continue growing our wholly owned services business, which is a key aspect of our differentiated model. Services include vet hospitals, vaccination clinics, grooming, and dog training. This business was a strong performer in 2025, and we are expecting continued growth in 2026. While we took a purposeful pause in constructing new vet hospitals last year, we have been laser focused on improving productivity of our existing locations. In 2025, we optimized a significant number of our approximately 300 hospitals, and we will work on increasing the productivity of the still roughly 25 underutilized locations this year. Know that even after we complete these, there is still a sizable runway for driving higher sales and productivity improvements from these 300, and we will be focused on maximizing their potential. Bottom line here is that we are committed to the vet business as a key growth engine and are in the early innings of assessing the longer-term opening cadence and growth opportunity. That said, you should expect us to start growing our hospitals in 2027. We will keep you updated on plans as they come together. I would like to emphasize that our key competitive advantage in this space is that our vet hospitals are wholly owned and are part of the store. We uniquely have the opportunity to capitalize on retail traffic and to share customer information. As we have discussed prior, the opportunity is twofold: grow the vet business, as well as become a full-service pet needs provider by cross-selling food, prescriptions, and supplies. I am pleased to announce that we are adding technology and functionality beginning later this year and into 2027 to better enable us. The goal is to drive incremental trips and increase sales per customer. We are now operating at a scale that gives us the depth of expertise, breadth of coverage, and overall respect of the industry to be a desired employer of choice for veterinarians and vet techs to grow their careers at Petco Health and Wellness Company, Inc. The third pillar of growth opportunity I want to discuss is our key competitive moat, our differentiated high-touch store ecosystem. Our stores represent a significant portion of our total sales, and so they remain a key focus for us. We have changed leadership, reorganized how we operate, and unified our center-of-store operations with our services. We have also physically brought our stores and services leadership together three times in less than twelve months so that communication can be cascaded with one voice and expectations are clearly aligned. Our goal is to leverage stores to build community, excitement, and customer loyalty through frequent newness, higher levels of customer engagement—such as holding fun events for families and pets—and through wholly owned services that promote repeat visits. The end goal is to drive both traffic and basket. Our marketing efforts will be centered around driving traffic to our stores by building awareness for our product newness and in-store experiences. We will also capitalize on a more engaged customer in stores by focusing on increasing basket size. Specifically, we launched a major training initiative in February for all district and regional managers to promote cross-selling opportunities. This initiative is being cascaded to all stores this quarter. We estimate that successful cross-selling can drive one to two additional trips as well as a higher sales per customer over a six-month period. An example of this is a focus on converting grooming customers to purchase merchandise by giving groomers access to a customer's purchase history across the store. To give a sense as to how impactful this initiative could be, about half our dog customers currently do not buy dog food from us, so you can imagine the opportunity to capture a much greater share of their wallet. What backs our confidence in the long-term viability of the store model is that shopper demographics are also on our side. Industry data tells us that 34% of Gen Z customers shop exclusively in stores. Interestingly, this group's preference for an in-store experience is much higher than Gen X or millennials and is virtually in line with boomer preferences. We see this as a huge long-term opportunity, with the Petco Health and Wellness Company, Inc. model well positioned to capture Gen Z's desire for experiences and connections. Our field leaders are excited about these opportunities, and we will have more to share with you as the year progresses. The final pillar of our Reach for the Sky initiative is centered around integrated omnichannel. We call it integrated omnichannel because a significant portion of customer transactions leverage a combination of our digital capabilities and our stores. We made great progress in 2025 fixing our foundation, including minimizing unprofitable sales, improving e-commerce fill rates, fixing page load time, and adding new capabilities. While we will keep making improvements, it is time we start to grow our digital capabilities in 2026. One of the biggest opportunities we have is to turn up the dial in marketing. We have overhauled our media buying mix, which is taking hold in Q1, and our new branding, “Where the Pets Go,” will become more pronounced as our creative is reimagined to better support this fun-loving energy our physical stores bring to life. Additionally, we will relaunch the loyalty program later this year. Our goal is to offer a more personalized and relevant loyalty experience that is seamlessly integrated within our app. Our results from this initial pilot, which concluded in December, were encouraging. The next wave of our pilot began last week and will run through the spring season. We look forward to sharing an update on our Q1 call. A second key omni sales growth initiative we are excited about is visibility for our repeat delivery customers to now pick up their orders in store, which encourages our fresh food customer to visit our stores more often. This is an example of us leveraging the omnichannel model to maximize our growth opportunity. We believe this will aid in growing traffic, conversion, as well as basket size. In conclusion, I am proud of the long-term strategy we implemented last year to rebuild the foundation of our economic model, recruit an amazing team, and complete a comprehensive customer strategy to fully understand how we can win at Petco Health and Wellness Company, Inc. We delivered significant financial improvements. It is with this backdrop that I am confident in the actions we are taking to drive sustainable sales growth and profitability. We expect to start to see benefits beginning in Q1 and growing throughout the year. Specifically, the outlook that Sabrina provided implies a flat comp in Q1 at the midpoint. This would mark an inflection from the negative comp in Q4. For the full year, our outlook assumes our comps will be positive, with increases modestly above our total sales growth. Importantly, we believe our ability to gain market share is not entirely reliant on a cooperative macro environment or pet industry sales growth. Our Reach for the Sky initiatives are in many ways self-help in nature and designed to further differentiate Petco Health and Wellness Company, Inc.'s merchandise and services versus our peers. We are approaching 2026 the same way we did in 2025. We developed a strategy. We assigned leaders. We track milestones. And we execute. As the months go by, I am confident you will continue to appreciate how driven we are to deliver on our commitments, and I trust that 2025 is a great proof point for what is to come in 2026. I want to thank our teams for their dedication and hard work. While it is hard to single out any one team, the milestones our field teams achieved were truly incredible. We asked a lot of them, and they responded positively to every challenge. Our stores are the heart and soul of Petco Health and Wellness Company, Inc., and it is great to see them playing offense. Collectively, we are well positioned for our Reach for the Sky plan, and I am excited about its potential. Petco Health and Wellness Company, Inc. truly is where the pets go to live their real life. I would now like to open it up for your questions. Operator? Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Michael Lasser with UBS. Please go ahead. Michael Lasser: Good evening. Thank you so much for taking my question. I feel you have provided a lot of great information on the strategy, the focus. How are you thinking about what is going to lead Petco Health and Wellness Company, Inc.'s growth from here? Is it going to be consumables first, which will then translate to the other parts of the business? Is this going to be services-led, which will then translate to other parts of the business? And how have you thought about the need to make further price investments, promotional investments, and other discounts in order to generate same-store sales growth over time? Thank you very much. Joel Anderson: Yeah, thanks, Michael, and really great question. A lot to unpack there. I think it is less about which one is going to lead, and what I hope you took away from what I just took you all through is whereas last year we were telling you what we were going to do to deliver growth, on this call, I showed you how we are going to do it, and we gave, as you said, specific examples in all four pillars. We are working simultaneously, Michael, on all four of them. Having said that, product probably takes the longest because you have your existing product that you have to sell through, then the new product will begin to come in. I can tell you we have about 25 new brands or flavors coming this year, as well as resets throughout all of supplies and many of the other areas like companion animals. All of that will take time throughout the year, and it will happen actually starting this quarter. But I am really pleased that in all four of those pillars, you are going to begin to see change starting right now in Q1. As for your pricing comment, you know what? We started in on that back in 2024, and we really feel like we got our pricing right throughout 2025. It is something that is dynamic, and we are watching it closely, and we will continue to adjust as necessary, but we feel like we have got our pricing in good shape for now. Sabrina Simmons: Yeah, I would just add to that, Michael, that we are definitely focused on delivering healthy margins for the year. It is an important focus, and we will stay competitive, we will stay adaptable, but we have still, you know, nice levers at our disposal to deliver on the healthy margins. We will continue to look, as Joel just said, where needed, we will participate in promos for sure to help drive traffic where appropriate, and then remember, we have this whole initiative of mix, where we are moving toward our own brand, and that should also support delivering on healthy margins. Michael Lasser: Thank you so much. Operator: The next question is from Oliver Wintermantel from Evercore ISI. Please go ahead. Oliver Wintermantel: My first question is about the drivers of the increase of the gross margins. And then as a follow-up—so maybe the first one is for Sabrina—Joel, for you on the growth initiatives, so inventories were down this year, which obviously helped free cash flow. With all these, you know, four pillars of initiatives, do you expect inventories then to increase this year, and what is the impact of that on your free cash flow outlook? Thank you. Sabrina Simmons: Yes, so I will just go through the gross margin levers one more time. We are very focused on delivering healthy margins, and we are going to continue to use and review our pricing. We are going to deliver on promos where appropriate and they make sense and they help us drive traffic in, etcetera. And we are focused on mix. So those are the big levers that will help us deliver on our goal of keeping those gross margins really healthy. With regard to inventory, yes, we did a lot of cleanup in 2025 on inventory. Some of the silver lining, if you will, of the tariff imposition in the spring last year was that it kind of forced us to get very disciplined about cutting off the unproductive tail of SKUs. We are past that now. As we look forward to 2026 for growth, we definitely want to invest inventory behind that. The important thing to us is that we remain disciplined in managing that inventory. So even as we invest in inventory, we will look to keep the growth in inventory at or below sales growth and keep that relationship very tight. Joel Anderson: I think you captured it all. Yep. Thanks, Oliver. Oliver Wintermantel: Thank you. Operator: The next question is from Kaumil S. Gajrawala with Jefferies. Please go ahead. Kaumil S. Gajrawala: Hi. Thank you, first of all, for all the detail on, you know, the plans for 2026. I guess there has been some oscillation over the years between you being specialty and premium and being mainstream. You mentioned a lot of national brands, which sort of makes me imply perhaps more of a mainstream look. But curious, you know, when you think about the brand of PepsiCo and—or sorry, the brand of Petco Health and Wellness Company, Inc.—and what its assortment says about the retailer, how are you thinking about what that assortment is going to say from a branding perspective? And you said something fascinating earlier on, you know, Gen Z's preference to, you know, shop in person, looking similar to baby boomers. Do you have a sense of why that is or what has changed, that generation versus the generations prior? Joel Anderson: Yeah. Look. You are absolutely right. I think in prior years, we narrowed our aperture, and I think as I look forward, we have to be there for all customers. And as a new pet parent adopts a pet, they go through several stages of that life. And, you know, one of those stages might be, I just need to get my dog fed. And as that dog becomes part of the family, they might decide to, you know, upgrade what their dog is being fed for food, and they focus on health and nutrition. And so the focus we have done over the last couple years is really to widen the aperture, and so one of the unique advantages of being a specialty retailer is that we are able to carry that specialty, premiumization, unique product, but we are also there, you know, for the customer that, you know, affordability is their primary need. And so I think we really have widened, and I feel really good about where assortment is today. As for Gen Z, I mean, obviously that is a bigger statement than just as it relates to pets. But, you know, like any good retailer, you have to understand your core customer, and we did the research, and part of that research, we studied, you know, what the makeup was of the age of our customer, and then that, you know, coveted 18 to 34, that younger customer—we skew about five percentage points higher than some of the other pet retailers. And so that happens to work out nicely because what also is a characteristic of that demographic is they like shopping in stores. And so I think there has been more of a return to stores that serves us well with who our demographic is. And, you know, as we did the customer segmentation work, we took advantage of that, and that is something we are really focused on going forward. But it worked out to be a nicely nice fit with who our customer is. Operator: The next question is from Steven Forbes with Guggenheim Securities. Please go ahead. Steven Forbes: Hi, Joel. Given the goal of services at scale, I was curious—like you did with dog food—if you can frame what percentage of your customers today engage in services in some form or fashion. And then, given the customer segmentation work you did around the Passionate Explorer, curious if you can maybe expand on, you know, what you are sort of focused on in 2026 to make sure that specific cohort is engaging. Joel Anderson: Yeah, let me take that cohort first. What we really learned about the Passionate Explorer is that they value discovery, they look for expertise—which plays in nicely to our services side—they seek innovation, and they are also somebody that shops more frequently and spends more with us. So our new merchandise strategy is certainly going to resonate with them: frequency of newness, innovation, the store events, and it also acts as a halo for all the other segments. And services is a really important part of the Passionate Explorer. Obviously, we have a lot of room to grow in services. As an example, you know, the hospital side of it, the vet side of it, it is only in about, you know, 20% of our chain—roughly 300 stores—so lots of room to grow there. Grooming is in all our stores, and, you know, that is an area we talked about on a couple, three calls now, where we have been improving the technology, we have been making it easier to make appointments, and so I see a lot of growth opportunities there as well. But, you know, one of the reasons I have said it many times: services is our moat, a point of differentiation for us, and we are going to keep leaning in on services. Sabrina Simmons: And what I will add to that, Steve, is that what is really important to us is to leverage the whole ecosystem, because what we know is the NSPAC for a customer who engages in more than one channel or in services is five times higher than our other customers. So it is really just expanding our relationship with our customer wherever they want to shop and making sure we are getting that loyalty, retention, and higher spend. Operator: The next question is from Simeon Gutman with Morgan Stanley. Please go ahead. Lauren Ng: Hi, this is Lauren Ng on for Simeon. Thanks for taking our questions. First, you mentioned 50% of dog customers do not buy dog food from Petco Health and Wellness Company, Inc. Curious what parts of your strategy outlined today will capture these customers if they are already loyal to, you know, certain brands and platforms? Will you be able to leverage your private label for this? And just quickly following up, you talked about entering Phase III today. Can you share how much of Phase III is currently implemented versus maybe how much room there is to grow? Joel Anderson: Yeah, great pickup from our prepared remarks. Probably the main reason I shared that with you is, you know, it is always easier to grow if you start with your current customers. And as part of our, you know, deep dive into who our customer is, where they shop with us, how they buy from us, that was a real big insight for us. And so, as an example, you know, prior to just recently, our groomers had no knowledge of whether a customer—a dog customer—bought food from us. And now we have enabled our groomers with technology to see every customer that comes in: when is the last time they bought dog food from us, what type of dog food are they buying, is it helping their sensitive skin or problem they have? And so that is just one example of us being able to cross-sell. And we believe, you know, the first place we are going to see growth is, you know, as Sabrina just alluded to, you know, NSPAC, you know, really growing the net spend per average customer. And I think we have a real opportunity with our dog customers that are not buying food from us today. As for Phase III, I would say from what the customer sees, very little has been implemented yet. From a strategy and teamwork internally, we have workstreams on every one of those I outlined for you today, plus a few others. So they are in various elements of being lit up for the customers. You know, product may be being shipped right now. Some may not come till second or third quarter. But very little of it, and you can see from our guide that, you know, we expect comp store growth to gain as the year goes by. Operator: Again, if you have a question, please press star then one. The next question is from Peter Benedict with Baird. Please go ahead. Peter Benedict: Hi, guys. Thanks for taking the question. So I wanted to—well, two questions. One, I just—Sabrina, if you could expand on kind of the fuel cost comment you made. I think you said something about fuel costs normalized. Just maybe help us understand maybe the variability with all the macro stuff going on with oil, etcetera. And then my second question is on your expanded fresh effort. You mentioned more freezers. I am just trying to understand, is it you are expanding the frozen fresh product? How about the refrigerated or chiller-based fresh? And I am curious, is it new brands, or you are expanding with existing brands? Maybe just expand upon that effort around Fresh a little more, if you would. Thank you so much. Sabrina Simmons: Sure. I will start with the fuel comment. So it has been a bumpy ride the last week or so, so we were just trying to be helpful with regard to, you know, our base assumptions in our forecast. But here is how fuel impacts us, and it is similar to every retailer out there. We have our inbound ocean, and that sort of lags. It comes in later into our P&L through cost of goods sold. And then we have our outbound from our DCs to our stores, a lot of it trucking—that can impact more rapidly. And then we have our parcel shipping that can also be impacted. So we have incorporated in our scenarios in the range we gave absorbing some of the volatility we have seen in gas prices over the last week or so. But, you know, the base assumption is that things start to normalize after Q1. Joel Anderson: Good. And then, you know, as it relates to fresh and frozen, you know, we look at that as one, and it ebbs and flows, and some of it is dependent on when our vendor partners are bringing out new product. And I think the most important fact you should take away from that is I am not just telling you we are going to grow fresh. You are seeing that we are making capital investments, and in this case, the example was the additional freezer coolers. But we also expect fresh to grow as well, and there are several new lines coming out middle of this year. So that is a category that grew significantly in 2025, and we see more growth coming in 2026. And, you know, some customers use it as a topper, some customers use it as a full meal, and so, you know, sometimes you need fresh and sometimes you need frozen depending on how you are using it with your respective pet. But big growth area for us. We are really excited about it. Operator: The next question is from Zachary Fadem with Wells Fargo. Please go ahead. David Lantz: Hey, guys. This is David Lantz on for Zack. Thanks for taking our questions. I guess, first one for me, within the 2026 outlook for top-line growth, what are you assuming for the broader category, and how did your performance stack up to peers in Q4 from a share perspective? And then one more: within Q1 and the midpoint of the guide being flat comp, is there anything we should keep in mind that is embedded within that for stimulus and/or, you know, store closures from winter storms here quarter to date? Joel Anderson: Well, look. I am not going to break it down by, you know, specific areas. I think the focus on our end is to grow overall top-line growth, and some of that will come from consumables, obviously, because that is over 50% of our business. But, you know, we are really—as you can tell from my comments—we have got initiatives in all aspects of the business: services, consumables, companion animal, supplies. And, you know, obviously, with us intentionally reducing, you know, unprofitable sales last year, you know, we gave up some market share. And with our growth this year, we will start to gain that back. Sabrina Simmons: Yeah, and I would just add to that, you know, this year is really more about another self-help year as we look to grow sales. We are not overly reliant—we are not counting on big tailwinds from the sector. I mean, we feel like we have all of these opportunities that Joel outlined, and these initiatives are going to really support our outlook. And, you know, as for how we think about our share, even though, yeah, we gave up a little top line in 2025, we really grew a lot of bottom line. So we have cleaned up the business. We are coming from a strong foundation. There is an opportunity, as Joel said, to first grow share of wallet with our current customers. I think the next opportunity to pick off is sort of small independents and small chains who have about four percentage points of market share in the pet sector. So there are lots of opportunities for us to go after without being overly reliant on any tailwinds. And on Q1, you know what? We have taken into account—there are so many pluses and minuses in this kind of noisy macro we are living through. So, sure, I mean, on the plus side, you have got, like, the tax refunds coming in—all, you know, can only be a positive. On the minus side now, you know, as we just talked about, you have some fuel pressure. So we have kind of tried to bake those scenarios within our guidance, and we do not—we have not been overly reliant on any of those levers because, again, even with the taxes, one does not know how much will go to savings versus spending, etcetera. Now what we like about this environment—or what we like about our customers, I should say—is our customers skew to the higher end of the income spectrum. So that is good news for us because that end of the spectrum can obviously withstand macro changes without it being as large of a percentage to their overall well-being. Joel Anderson: Then as far as weather goes, you know, first quarter is always volatile. It was volatile last year, volatility in it this year. The way I think about it big picture is by the time the quarter is done, the volatility kind of evens out with pluses and minuses, and that is kind of how we thought about it in the guide for this year. Operator: This concludes our question and answer session. I would like to turn the conference back over to Roxanne Meyer for any closing remarks. Roxanne Meyer: Great. I want to thank everyone for joining the call today, and we look forward to updating you on our progress. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and welcome to the biote Corp. Fourth Quarter and Full Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Szymon Serowiecki, Investor Relations. Please go ahead. Szymon Serowiecki: Thank you for joining us today. This afternoon, biote Corp. published financial results for the fourth quarter and full year ended December 31, 2025. This news release is available in the Investor Relations section of the company's website. Hosting today's call are Bret Christensen, Chief Executive Officer, and Bob Peterson, Chief Financial Officer. Before we get started, I would like to remind everyone that management statements during this call include forward-looking statements regarding, among other things, the company's financial results, future performance and growth opportunities, business outlook, strategic plans, anticipated benefits, goals, research and development, manufacturing and commercialization activities, its competitive position, regulatory process operations, benefits of its solutions, anticipated impact of macroeconomic conditions on the business, results of operations and financial conditions, and other matters that do not relate to historical facts. These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainties, some of which are beyond the company's control. Actual results could differ materially from expectations reflected in any forward-looking. These statements are subject to risks, uncertainties, and assumptions that are based on management's current expectations as of today. biote Corp. undertakes no obligation to update them in the future. Therefore, statements should not be relied upon as representing the company's views as of any subsequent date. For discussion of risks and other important facts that could affect their actual results, please refer to our SEC filings available on the SEC's website and in the Investor Relations section of our website as well as risks and other important factors discussed in the earnings release. Management also refers to EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures to provide additional information to investors. A reconciliation of the non-GAAP to GAAP measures is provided in our earnings release with the primary differences being stock-based compensation, fair value adjustments, certain liabilities, and other non-operating expenses. Please refer to our fourth quarter 2025 earnings release for a reconciliation of these non-GAAP measures to the most comparable GAAP measures. I will now turn the call over to Bret Christensen. Bret Christensen: Thank you, Szymon. Thank you all for joining us. I will provide a summary of our key strategic and operational accomplishments in 2025 and discuss our priorities in 2026. Bob will then review our fourth quarter financial results and provide our 2026 financial outlook. After our comments, we will open the call for your questions. 2025 was a pivotal and productive year for biote Corp., marked by important changes to the biote Corp. team, our processes, and our culture. Through our decisive actions, we achieved progress against our strategic plan, and I believe we became a more resilient, more disciplined, more effective organization. These qualities position biote Corp. to drive increased and sustainable growth in the large and underserved market of hormone replacement and therapeutic wellness. As you recall, our top three strategic objectives were, one, prioritizing and accelerating new clinic growth; two, maximizing value from existing top-tier clinics; and three, strengthening accountability and discipline throughout the company. I will begin with our progress on new clinics, which are fundamental to generating consistent revenue and earnings growth over the long term. To accomplish this goal, we rebuilt a significant portion of our commercial team and recruited new leadership and talent who bring fresh energy and a high-performance mindset to our business. To help ensure their success, we have empowered our sales team with upgraded tools and training and designed a new incentive compensation framework that aligns with our high-growth objectives. We also completed the restructuring of our commercial team by geographic region and by sales role. This new structure has two key advantages. One, it enables us to provide a higher level of service to our existing accounts; and two, it allows for us to remain laser-focused on driving new clinic growth and optimizing new practitioner success. We ended 2025 with over 90 salespeople, up from approximately 60 at the time of our sales reorganization last May. I am pleased to report that our new team members are stabilizing clinic attrition and maximizing new clinic starts in the fourth quarter. In addition, from mid-November to present, we have seen an acceleration in the number of practitioners attending our trainings, with all of our training sessions at full capacity. This reflects our recent success in recruiting new practitioners and broadening our training options for them. Because the number of new biote Corp. certified practitioners is typically a leading indicator of procedure growth in the future, we plan to build on this momentum by continuing to invest in our commercial organization in 2026. Our second strategic objective was to maximize value from our top-tier clinics. To accomplish this, we deepened our relationships with existing practitioners, which reinforced our role as an essential partner that is committed to their success. Second, we continue to introduce innovative, science-based solutions that promote patient health span and vitality and advance the standard of care. And third, to minimize unanticipated clinic attrition, we leveraged data analytics to evaluate and refine contract and incentive models that strengthen the longer-term value equation of our top practitioners. Turning now to our third strategic objective. We emphasized accountability and discipline in our pursuit of operational excellence. Most importantly, we have strengthened and refined the internal processes and systems that underpin our operating model. These enhancements improved our data analytics and productivity, enabling more consistent execution. Having strengthened our core capabilities, I am cautiously optimistic we will reaccelerate procedure revenue growth and scale the business with greater efficiency. I would now like to comment on our strategic plans for 2026. Over the past year, we have laid the groundwork for a more efficient and more disciplined operating model, one that positions us to deliver stronger and more consistent financial performance in the years ahead. In 2026, we will focus on advancing the progress we achieved in 2025. For example, we will be making a sizable and necessary investment in our sales and technology capabilities. Specifically, we intend to expand our sales personnel from over 90 at the end of 2025 to approximately 120. Concurrent with this investment in our commercial team, we will be investing in our leading-edge technology platform in 2026. This investment is designed to facilitate a more efficient and seamless practitioner journey from initial training and certification to driving a successful biote Corp. clinic over the long term. We also anticipate that this investment will enhance long-term practitioner retention while expanding sales of our biote Corp. branded dietary supplements and other healthy aging solutions. I am confident now is the right time to make these investments, which we believe are essential to accelerate growth, expand our market opportunity, and further enhance engagement with existing practitioners. While this step-up in expenses will impact our adjusted EBITDA in 2026, we believe these planned investments position our team to reach our long-term strategic, operational, and financial objectives. I will now turn the call over to Bob Peterson to review our fourth quarter results and provide our financial guidance for 2026. Bob Peterson: Thank you, Bret, and good afternoon, everyone. Unless otherwise noted, all quarterly financial comparisons in my prepared remarks are made against the 2024 fourth quarter. Fourth quarter revenue was $46,400,000, a decrease of 6.9%. Procedure revenue declined 13% to $31,800,000, while dietary supplement revenue grew 16% to $11,700,000. Similar to recent quarters, procedure revenue was primarily impacted by a lower number of net new clinic additions and lower procedure volume during 2025. As Bret noted, in 2026, we anticipate increasing our investment in our sales capabilities to capture a larger share of our available market opportunity. Dietary supplement revenue increased 16% to $11,700,000, primarily driven by the continued growth of our e-commerce channel. Dietary supplements represent an important and complementary market growth opportunity, strengthening patient engagement with biote Corp. by meeting their evolving needs for safe and effective healthy aging solutions. Looking forward, we forecast our dietary supplements revenue will grow at a mid to high single-digit rate in 2026. Gross profit margin was 68% compared to 71.8%. The decrease was due to a $1,300,000 charge to inventory during 2025 as a result of the impact of a voluntary recall of specific lots of hormone pellets shipped by Asteria Health. We could see a potential near-term impact to gross margin if our product mix includes more third-party manufacturing. Our long-term goal is to meet customer needs through our Asteria site. Excluding this charge, gross margin reflected the benefit of efficiencies gained from vertical integration of our 503B manufacturing facility and effective cost management. Selling, general, and administrative expenses decreased 25.1% to $24,700,000. The decrease reflected lower legal expense and a temporary decrease in headcount. Net income was $2,600,000. Diluted earnings per share attributed to biote Corp. stockholders was $0.06, compared to net income of $3,500,000 and diluted earnings per share attributed to biote Corp. stockholders of $0.10. Net income for 2025 included a gain of $1,200,000 due to changes in the fair value of the earn-out liabilities. Net income for 2024 included a loss of $800,000 due to changes in the fair value of the earn-out liabilities. Adjusted EBITDA decreased to $11,700,000, with an adjusted EBITDA margin of 25.2%. This compares to adjusted EBITDA of $15,100,000 and adjusted EBITDA margin of 30.3%. Both adjusted EBITDA and adjusted EBITDA margin decreased due to lower sales and reduced gross profit, partially offset by lower operating expenses as a result of our sales reorganization. For the 2025 year, cash flow from operations was $35,200,000. As of 12/31/2025, cash and cash equivalents were $24,100,000. Now turning to our financial outlook for 2026. As previously mentioned, we anticipate investing to advance our sales and technology capabilities. While this planned investment will cause a step-up in operating expenses in the near term, we expect the benefit will be evidenced by an improvement in our procedure revenue expected to start in 2026. With respect to our 2026 revenue guidance, year-on-year procedure revenue is expected to decrease at a mid to high single-digit percentage rate in 2026, which includes a potential revenue and profit impact related to the recall. We anticipate an expected return to year-on-year procedure growth in 2026. Dietary supplement revenue is expected to grow at a mid to high single-digit rate from 2025. Overall, we forecast 2026 revenues above $190,000,000 and adjusted EBITDA of greater than $38,000,000. I will now turn the call back to Bret for his closing remarks. Bret Christensen: Thanks, Bob. I am pleased with the progress the entire biote Corp. team has achieved in the past year. We laid much of the foundational groundwork that I believe will enable us to drive a higher and more consistent level of financial performance. Our planned investments in 2026 represent a key inflection point for biote Corp. that I believe are essential to effectively address our large market opportunity and build long-term, sustainable shareholder value. Operator, let's now open the call for questions. Operator: Thank you. We will now begin the question and answer session. The first question will come from Leszek Sulewski with Truist Securities. Please go ahead. Jeevan: Hey, this is Jeevan on for Les. Thanks for taking our questions. What is your take on the FDA's removal of black box warnings for certain HRTs and maybe how this could potentially impact demand? And then also for the voluntary recall, can you elaborate on any feedback and whether you see this event changing the regulatory bar or competitive dynamics in the space? Bret Christensen: Yeah. Hi, this is Bret. Thanks for the. First, on the black box warning that was removed now really almost just a little less than a year ago, that along with the entire talk track of the FDA seems to be a positive tailwind for us and others. It is a good sign that finally hormone optimization is getting recognized as a great option. It has always been a good option for men and women are getting the attention that they deserve as there are still no FDA-approved options for women for testosterone therapy. So all in all, it is a great thing for us. It reinforces what we have known, that there is no harm that comes from testosterone and a tremendous amount of benefit that patients can get through different modalities of HRT. So it is a good thing. We look for continued support from clinicians and patients alike for awareness. As far as the recall goes, as you know, we, at January, we announced a partial recall, a voluntary recall that we are doing just out of an abundance of caution, working hand in hand with the FDA. So the feedback has been good. We are working hand in hand with the FDA on almost everything that we do. So communication to our customers, taking the product back, refilling those orders, all of that has been done in planning with the FDA. So we are in lockstep with their guidance in this entire recall. Our customers have been responsive, and we are happy with where we are at so far. Operator: The next question will come from Kaitlyn Joan Korich with Jefferies. Please go ahead. Kaitlyn Joan Korich: Hi, everyone. Good evening. Thanks for taking my question. I just wanted to drill into the procedure revenue growth in the first half, and is it purely the number of procedures that will be down while the number of practitioners are ticking higher, or is there also some element of promos or discounting that we should be considering? Any color there, and also, if anything has changed in the competitive environment would be helpful. Thank you. Bret Christensen: Yeah. Hi, Kaitlyn. This is Bret. I will start with that, and then Bob can add some specifics. Throughout last year, we highlighted an increase in attrition. And for us, when we talk about attrition, we are talking about practitioner and clinic attrition. And so while that has been stable for us for years at around 5%, last year, we highlighted that accelerated to high single digits. And so that is where we have exited the year in 2024. The lower volume that we are highlighting in 2026 in the first half until we return to growth in the second half really is just that same attrition that we have experienced at a higher rate in the past. Remember, with an annuity model, we live with that attrition for 12 months. So attrition was higher last year, and mostly that was clinic attrition, which does mean lower volumes. So that is where we exited the year. We anticipate that will change this year. We will return to growth in the second half through volume growth. But the majority of that lower procedure revenue was volume. Bob Peterson: That is right. And I think the only other thing to add there is, as Bret mentioned, we are in the process now of watching some of those new customers that are coming in the door. And wanting to see, he highlighted in the remarks that trainings were full. We will need to continue to watch those individuals to make sure that they are productive and start quickly. I cannot stress enough, we are in the, you know, we are about a month, month and a half into the recall, and we just want to continue to monitor the impact there also. I think that gives a little bit of additional color. Kaitlyn Joan Korich: Got it. Thank you.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Stitch Fix, Inc. second quarter fiscal year 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. I will now hand the call over to Cherryl Valenzuela, Head of Investor Relations. Please go ahead. Cherryl Valenzuela: Good afternoon, and thank you for joining us today for the Stitch Fix, Inc. second quarter fiscal 2026 earnings call. With me on the call are Matt Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer. We have posted complete second quarter 2026 financial results and a press release on the Quarterly Results section of our website, investors.stitchfix.com. We would like to remind everyone that we will be making forward-looking statements on this call which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ, in particular, our press release issued and filed today, as well as our Annual Report on Form 10-K for fiscal 2025 and subsequent periodic reports filed with the SEC. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. Please note that fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to consecutive quarters or year-over-year revenue growth rates on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website and a replay of the call will be available on the website shortly. And now let me turn the call over to Matt. Thanks, Cherryl. Matt Baer: Good afternoon, everyone. Q2 was another strong quarter marked by our fourth consecutive quarter of year-over-year revenue growth. We continue to successfully execute our transformation strategy and are seeing the cumulative impact of those efforts to both strengthen the foundation of our business and reimagine our client experience. The enhancements we have rolled out over the past 18 months, including greater flexibility, meaningful improvements we have made to the quality and breadth of our assortment, and new AI features, are driving increased client engagement and durable revenue growth. As a result, we are solidifying our position in the market and our role as our clients' retailer of choice for apparel, footwear, and accessories. Getting into the specific numbers, revenue exceeded our outlook and grew 9.4% year over year to $341,300,000, supported by broad-based demand that remained resilient across all income cohorts. Revenue per active client reached $577 in Q2, our highest revenue per active client as a public company. We achieved this growth while driving leverage in our business. Q2 was our eighth consecutive quarter with a contribution margin greater than 30%. Adjusted EBITDA also exceeded our outlook and was $15,900,000, or 4.7% of revenue. We also continued to gain market share and significantly outperform the broader U.S. apparel and accessories market during the quarter, highlighting the strength of our value proposition. Our 9.4% year-over-year revenue growth in Q2 contrasts with the 0.5% contraction the total U.S. apparel, footwear, and accessories market sustained in the same period, according to the latest Circana data. Our growth this quarter was anchored by the Fix channel. By leveraging our unique curation capabilities and expert stylists, we have leaned into head-to-toe outfitting and strategic category expansion. This high-touch approach is resonating deeply. Both our women's and men's Fix businesses grew double digits, contributing to a nearly 10% year-over-year increase in Fix average order value, our tenth consecutive quarter of growth. A key driver of this performance is the increased flexibility we have integrated into our service. Adoption of our larger Fixes, which offer up to eight items in a Fix versus the original five, continues to grow. We are also seeing high resonance with other newer formats, such as themed Fixes and Fixes built around a Freestyle item of a client's choosing. The average order value for these Fixes are, in aggregate, nearly double that of a traditional five-item Fix. We have also fundamentally improved the selection of items within each Fix. The growth in Fix average order value was driven by higher average unit retail, which grew 7.7% year over year, our sixth consecutive quarter of growth. The increase was largely fueled by a more compelling assortment and favorable mix. External pricing factors, including tariffs, were not a significant driver of the change. In Q2, we successfully captured seasonal winter demand for warm layers, with outerwear a top growth category in both our women's and men's businesses, up 26% combined. We also saw strong demand for denim, up 17%. In addition, activewear and athleisure were strong contributors to our performance in the quarter, growing 37% year over year combined. We also saw strong demand for special occasion and social events or night-out styles, which grew 46% this quarter. Of note, we have also been expanding our assortment in strategic categories where we are seeing increased demand, such as footwear and accessories. Footwear grew 33% year over year across our men's and women's businesses, with sneakers alone up 46%. Accessories grew 51% year over year across both lines of businesses. As we mentioned last quarter, we believe expanding our relevance in activewear, athleisure, footwear, and accessories can unlock a significant wallet share opportunity. We estimate our fair share within our existing client base in these categories represents approximately $1,000,000,000 in incremental revenue. We also continue to optimize our brand mix. We are pairing more of the brands clients already know and love with private brands that are purpose-built from our data to offer exceptional quality and value. Within our private brands, we saw strong performance from Market & Spruce, Montgomery Post, 41 Hawthorn, and WeWander, with revenue from each up more than 35% year over year. The work we have done to optimize our assortment and brand mix set the stage for a strong holiday performance. This achievement was fueled by a deeper selection of seasonally relevant merchandise and a strategic promotional cadence which delivered record Freestyle sales during the Black Friday/Cyber Monday period and sustained broader momentum through the end of the calendar year. Importantly, we achieved this growth while maintaining strict discipline within our Fix business, driven primarily by our enhanced Freestyle-exclusive promotional capabilities. We continue to be encouraged by our active client trends. This quarter marked our seventh consecutive quarter of improvement in year-over-year active client growth rates, reflecting the disciplined and methodical progress we are making to build a healthier client base. Of note, our men's business, after returning to sequential growth in active clients last quarter, returned to year-over-year growth in Q2. We are also excited by the early results we are seeing from Family Accounts, which enable a client to manage multiple accounts within a single household. This feature is emerging as a lower-cost way to grow family wallet share while unlocking new ways for clients to shop for others and supporting gifting behavior. Our holiday results reinforce our confidence in its potential as an efficient acquisition lever in future key gifting moments. Taking a broader view of our performance, we ended Q2 with active clients of 2,300,000, in line with our expectations. Here are a few highlights. New clients grew year over year for the second consecutive quarter. Three-month LTVs for new clients have now grown year over year for 10 consecutive quarters and remain at three-year highs. Reengaged clients also grew for the second consecutive quarter, and the number of clients on recurring shipments continued to grow year over year. And we also just completed a quarter in which we had the highest retention rate in nearly four years. We are encouraged by the early signals from Stylist Connect, our new platform for near real-time client-stylist collaboration. While still a recent addition, it is already helping us strengthen relationships between our clients and our stylists. Clients who engage in the feature are significantly more likely to request the same stylist for their next Fix. We believe these positive trends confirm the improved quality of our new and returning client cohorts, and will lead to greater client retention, higher revenue predictability, and improved profitability over the long term. We remain on track to deliver positive sequential net adds in Q3. A key driver of our performance is how we are leveraging technology and innovation, and AI specifically. Technology and innovation have been at the core of Stitch Fix, Inc.'s business since day one. Since our founding, Stitch Fix, Inc. has capitalized on the latest technology advancements as well as data science and proprietary algorithms to provide a superior retail experience. Our proprietary data and algorithms remain a competitive advantage. We know more about our clients, their fit, their budget, and their style preferences prior to them ever receiving a Fix. We also have a continuous loop of both direct and indirect data from our clients, as well as nuanced insight on our merchandise assortment and how specific items fit. We have billions of data points to leverage. Because we know our clients so well, we are able to leverage AI to deliver incomparable client experiences. One way we are putting this data to work is through our AI style assistant, which empowers our stylists by helping clients better articulate what they are looking for. This tool captures richer signals that enable our stylist to curate Fixes that better meet each client's specific needs. We are also leveraging AI to inspire clients and help them discover the styles they will love. A clear example is Stitch Fix Vision, our AI-powered styling platform that provides clients with personalized imagery of them in a wide array of shoppable head-to-toe outfit recommendations based on their own style profile and the latest fashion trends. Clients who have engaged with Vision use it on a consistent basis, with 75% returning to use it again in subsequent months, and that engagement has translated into increased sales. We saw an over 100% lift in Freestyle spend over a 90-day period for clients who used the feature. As we further execute our strategy, we are confident in our ability to maintain a balance between growth and profitability. Our unique data-driven model, which combines personalized styling expertise, AI-powered recommendations, and a compelling assortment across Fix and Freestyle, enables us to meet clients where they are while driving both engagement and spend. This integrated approach creates a powerful feedback loop between human insight and technology, strengthening client relationships and improving unit economics over time. The investments we are making in our client experience, AI capabilities, and merchandise mix are designed to drive durable revenue growth while preserving margin integrity. These strategic drivers are performing in line with our expectations, supporting our improved full-year revenue guidance, as we remain focused on finishing the year strong. As the business continues to scale, we believe we will be able to generate increasing leverage and deliver consistent, sustainable profitability over time. I want to thank our team for their focus and execution, and our clients, partners, and shareholders for their support. With that, I will turn it over to David to discuss our financial results and outlook in more detail. Thanks, Matt, and good afternoon, everyone. Our second quarter results reflect continued progress against our strategy and the momentum we are building across the business. David Aufderhaar: We delivered strong revenue growth and disciplined expense management, while continuing to invest in the client experience and innovation. These results underscore the benefits of our methodical approach to strengthening the business and positioning Stitch Fix, Inc. for consistent and sustainable performance over time. Now let's turn to the numbers. Revenue was $341,300,000, up 9.4% year over year, exceeding our outlook. Fix average order value rose 9.8%, driven by more items per Fix and higher AUR, reflecting strong demand for larger Fixes and our improved assortment. We ended Q2 with 2,300,000 active clients, in line with our expectations. Revenue per active client was $577, up 7.4% year over year, marking the eighth consecutive quarter of year-over-year growth and the highest RPAC we have reported as a public company. The growth in RPAC confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients. Gross margin was 43.6%, slightly above the midpoint of our FY26 range of 43% to 44%, with contribution margins remaining strong above 30% for the eighth straight quarter. Advertising was 8.5% of revenue in Q2, slightly below our expected range of 9% to 10%. As we have discussed, we are being deliberate in how we invest, prioritizing efficiency and long-term client quality over near-term volume. Q2 adjusted EBITDA came in at $900,000, or a 4.7% margin, outperforming expectations on strong revenue and disciplined expense management. We ended Q2 with $240,500,000 in cash and investments and no debt. Inventory was $122,100,000, up 11.4% year over year, reflecting investments in our client experience and increased demand. Turning to our outlook for Q3 and FY26. For full-year FY26, we expect total revenue to be between $1,330,000,000 and $1,350,000,000. We expect total adjusted EBITDA for the year to be between $42,000,000 and $50,000,000, and we continue to expect to be free cash flow positive for the full year. For Q3, we expect total revenue to be between $330,000,000 and $335,000,000. We expect Q3 adjusted EBITDA to be between $7,000,000 and $10,000,000. For the second half of the year, we are tightening our revenue guidance range, reflecting greater confidence in the underlying momentum we are seeing, while continuing to be thoughtful and realistic about the environment ahead. We expect growth rates to moderate as we lap a strong two-year AOV stack. We believe there remains opportunity to continue driving steady AOV improvement. Ongoing enhancements to our client experience, including a stronger, more relevant assortment, continued category expansion, increased Fix flexibility, and the use of AI to support more dynamic client engagement, provide a durable foundation for that progress. At the same time, we believe our methodical approach to rebuilding our active client base is working. We are encouraged by continued improvement in active client trends and remain confident that sequential net active client adds will be positive in Q3. Over time, as both AOV and active clients improve, we believe this positions the business for compounding growth. We continue to expect full-year gross margin to be approximately 43% to 44%, and full-year advertising costs to be between 9% and 10% of revenue. In closing, we are encouraged by the progress we are making across the business. Our focus on delivering a strong client experience, rebuilding our active client base with discipline, and maintaining financial rigor is driving improved performance and positioning us well for the remainder of the year. With that, Operator, we can open up the line for Q&A. Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please hold while we compile the Q&A roster. Your first question comes from the line of Dana Lauren Telsey from Telsey Advisory Group. Please go ahead. Dana Lauren Telsey: Hi, everyone. Nice to see the progress. I wanted to get some more color on what you are seeing from the current consumer. It sounds like the AURs are being well accepted. Is that existing brands, new brands? You have brought on new brands over the past couple months. How has that gone? And then we would love to know more about active client growth and, sequentially, how you are thinking about it going forward. Thank you. Matt Baer: Hey, Dana. It is Matt. I appreciate the comments on the progress that we have made. The team has done a phenomenal job driving this really continued outperformance from a revenue growth standpoint, so I appreciate that. I heard about three questions there: just a check-in in terms of how we are seeing the consumer and how that has impacted our AUR performance, the impact between private brands and national brands, and then an update on our active client count. I will answer the first two, and David can jump in with additional color as well as answer the third on that client count piece. In terms of the consumer, one of the things that gives us additional confidence in our ability to continue to perform and sustain this momentum is that we are seeing equally positive performance across all different income cohorts within our client base. We are seeing that strength across the board, and the increase in AUR that we have been able to deliver is really reflective of continuing to improve the quality of our assortment overall. Within our private brand portfolio, we have been investing to deliver an even higher-quality product while maintaining exceptional value for the end consumer, and our clients have really resonated with that. That is why we were excited to share the outsized growth that we are seeing within many of our private brands within our portfolio. We also continue to strategically add market and national brands in order to meet the needs of our clients and fill white space. In addition to the brand piece, something else that we have talked about on prior calls that is part of our merchandise-focused transformation is investing in newness and making sure that we stand for style and trend. In the second quarter, sales from new styles were up roughly 50% year over year. So that investment that we are making into new product is also resonating extremely well with our clients. As you know, having the best assortment is critical for delivering our AOV and revenue growth, so we really do feel good about the work that we have done there and the way that it is helping to drive that performance across the board. David Aufderhaar: And then, Dana, on active clients, first, the results we saw this quarter were definitely in line with our expectations. As a reminder, we have seasonality in our active clients where Q2 and Q4 tend to be a little bit seasonally softer quarters for us around active client growth, and we are certainly encouraged by being able to continue to commit to seeing sequential client growth in Q3, and we are confident we remain on track to do that. Size and shape, we are just returning to quarter-over-quarter growth, so we probably anticipate that Q3 client growth to be a little less than 1% quarter over quarter. But, again, encouraged with those results. And taking a step back, we continue to be encouraged with the overall trends that Matt called out earlier in his remarks around new client acquisition, reengaged clients, and client retention, and that really goes back to that methodical approach that we have been talking about the last few quarters where we are really focused on rebuilding a healthy client base, and that continues to be our focus. One of the metrics I know we have been calling out a lot lately is that 90-day LTV, and that was up 5% year over year. It was the tenth quarter in a row that we have seen year-over-year growth, and so just really confirming that we are bringing healthy clients into the mix. And from a go-forward perspective, we will provide more detail on specific numbers around Q4 next quarter, but our focus continues to be around sustainable, profitable client growth, and using that methodical approach, we absolutely expect year-over-year comps to continue to improve, and our goal is to return to year-over-year active client growth in FY27. So definitely encouraged with the results we are seeing. Matt Baer: Thank you. Operator: Thank you very much for your question. Your next question comes from the line of Dylan Douglas Carden from William Blair. Dylan, your line is now open. Dylan Douglas Carden: Thanks. The comments around revenue per decelerating as you lap harder comparisons. I mean, you already kind of started to lap some of those comparisons. So can you give a sense of what is behind that, or is that just general caution? I have some follow-ups. David Aufderhaar: Yeah, Dylan, are you talking about the back-half revenue comps? Dylan Douglas Carden: Correct. David Aufderhaar: Yeah, I got it. So, over the last couple quarters, I think we have consistently guided to a deceleration in the back half of the year, and, actually, this back-half guide is an improvement from last quarter's guide. But there are a couple factors that I would call out. First is what we have been discussing the last couple of quarters. There are just more challenging AOV comps in the back half of this year. We have had 10 consecutive quarters of AOV growth, and Q3 and Q4 last year had AOV growth of 10% and then 12%. And our guidance in the back half of this fiscal year still assumes healthy AOV growth, but it is probably in the 4% to 6% range. So that is the first factor. The second, when you think about Q2 to Q3, we had a really strong holiday season compared to last year in Q2, and that does not necessarily play forward into future quarters. One data point there: December was our highest revenue comp in the quarter at around 12% year-over-year growth, and the holiday period also created probably a little bit of pull-forward activity from Q3 into Q2. And then, lastly, considering the macro environment and current trends in consumer sentiment and some of the volatility we are seeing, we still think it is prudent to assume some headwinds in spending in the coming quarters. And so all of that is factored into our guide for the year, but again, we are really encouraged with what we are seeing, and we are really encouraged with the guide that we have been able to provide where we raised the low end of the full-year revenue guide. And after significantly increasing our full-year guide last quarter—if, as a reminder, you take the last two quarters and add them together—we raised the midpoint of our revenue guide by about $35,000,000 over those two quarters, and our EBITDA by almost $9,000,000. So still really encouraged with what we are seeing with those trends. Dylan Douglas Carden: Very good. Thank you. And then I am curious on the assortment, Matt, maybe. Do you kind of have it where you want it now, particularly as you start thinking about maybe the women's business with that influx? Matt Baer: Yeah. Hey, Dylan. I appreciate the question. Ensuring that we have best-in-class assortment is a perpetual area of focus for us. We are always going to challenge ourselves to make sure that we have the right brands, the right mix, the right breadth and depth within that, and we are always going to continue to drive an improvement there. We have talked about previously that the initial focus as part of our transformation was more heavily weighted towards our men's business. We feel really good about where we are there, and we also feel great about the progress that we have made across the board within our women's business. As I noted, our women's Fix business was up double digits from a revenue perspective last quarter, which is a really strong signal in terms of the strength there, but also recognition that we still have opportunity to improve the assortment even further, which gives us even greater confidence in our ability to sustain the gains that we are seeing across the board. In addition to that, I would just point us back to something that was in the prepared remarks and that we have talked about previously around this $1,000,000,000 wallet share opportunity that we have with our existing client base across footwear, accessories, activewear, and athleisure. We are delivering outsized growth in those categories, but because of the relatively smaller base that they started at, we still have an exceptional opportunity to continue to lean in there. And that is part of, again, what enables us to increase engagement with clients, deliver success with larger Fixes, increase our wallet share, and ultimately continue to deliver these outsized market share gains that we have delivered. Dylan Douglas Carden: Excellent. And then just last one on the repeat customers that are some of the higher that you have seen. Has that proven out to be greater wallet share across use cases? Is that just spending more on existing categories? How should we think about how people are coming to you more and more? Matt Baer: If I understand the question correctly, Dylan, the work that we do is to ensure that we are able to serve clients across a variety of use cases. And whatever use case that a client comes to us for—for example, if they are starting a new job and we need to update their wardrobe with the appropriate workwear—through that client-stylist relationship, we are also able to navigate them to other use cases. It is why we are excited to share in the prepared remarks the success that we have seen, for example, in social occasion dressing and in night-outs, and that is also why we are seeing that outsized growth in activewear and athleisure as well. Because we have such great assortment across the board for all of these different use cases, that expansion of use cases with our clients continues to be one of the drivers that is helping propel the revenue growth. We are going to continue to lean into that, as well as continue to lean into head-to-toe outfitting across footwear and accessories. Operator: Thank you very much for your question. Your next question comes from the line of Jessica Tian from Bernstein. Jessica, your line is now open. Jessica Tian: Hi, thank you for taking my question and congrats on the quarter. I had a two-part question on the guide. So first on the H2 guide, it looks like the Q2 beat on adjusted EBITDA did not fully flow through to the full-year outlook. Should we read that primarily as conservatism on your part, or is there anything in the underlying margin trend that caused you to hold back some of that upside? And then second, on the Q3 active client sequential inflection, with new clients growing year over year for the second consecutive quarter and five-year-low dormancies last quarter, can you talk about what is driving the expected sequential increase in the adds? Should we think about that improvement as coming more from reduced dormancy, or is it coming more from new clients? Thank you. David Aufderhaar: Yes. Thanks, Jessica. On the EBITDA guide, I think we are really encouraged with increasing the full-year guide. If you look at the full-year guide, I think we increased the low end of the guide by around $4,000,000 and the high end of the guide by $2,000,000. And so we definitely still feel like we have got a very healthy flow-through of EBITDA for the year. On the active clients, on the sequential, I think Matt might have called out in some of his prepared remarks as well, but we are really seeing strength across all three of those cohorts that we tend to call out. New acquisition was up year over year for the second quarter in a row. Reengaging clients was up for the second quarter as well from a year-over-year perspective. And client retention is definitely looking healthier than it has been in quite a long time. And I think that is a big part of our focus—the client retention side—and it almost comes back to that full loop of making sure that we are bringing in those high-LTV clients that engage with the service, and also, for our existing client base, all of the new client features and the improved assortment that Matt called out as well. All of those things just create stickier relationships from a client perspective as well. And so all three of those things are trending in the right direction, and that is why we have felt comfortable really calling out that sequential improvement and the sequential quarter-over-quarter increase in Q3. Operator: Thank you very much for your question. We will now move on to the next question from David Leonard Bellinger from Mizuho. David, your line is now open. David Leonard Bellinger: Hey, everyone. Thank you. I want to ask on the Q3 guidance. Revenue growth up something above 2% at the midpoint. And I think, if I am hearing you correctly, a lot of that deceleration from this quarter has to do with the lapping positive revenue growth last year, some of this AOV uptick. Is there anything else that explains the deceleration? Any other context around the external pressures that you have started to factor into the guidance? You have got gas prices moving up. Is any of that starting to show up in the business? Can you just remind us how gas prices moving higher has historically affected Stitch Fix, Inc.? David Aufderhaar: Yeah, David. I think, outside of the AOV comps we called out earlier—and that is certainly the bigger factor around the change quarter to quarter—I think the second callout was really the holiday period. And so I think that is a big part of the sequentials. We had a really strong holiday period this Q2. That is not necessarily something that plays forward. And then, on the macro side, definitely when you see the consumer sentiment where it is, the February jobs report, gas prices certainly going up—and gas prices, for us, that is not discretionary spend. And so if someone is having to spend more on gas, that just means less in their wallet for discretionary spend like apparel. And so certainly those things we have taken into account in that back-half guide. The other thing that you can see, though, is that because of the point in time where we are this year, you can sort of back into a Q4 guide as well, and we are really encouraged that between Q3 and Q4 you still see an acceleration in that revenue growth as well at the midpoint, where the midpoint in Q4 calculates to something closer to 4%. And so definitely really encouraged with that as we close out the year. Matt Baer: David, what I will add as well is, while not to minimize the impact of gas or challenges on the consumer in the broader macro environment, something that we have talked about previously is just how we are uniquely situated to perform really well if and when the overall wallet for our clients shrinks. Our clients and stylists have a very deep and enduring relationship that allows them to have a real conversation around how budget might be shifting month to month, week to week, quarter to quarter. We have the breadth and depth of assortment across all different price points, so we can meet our clients where they are at any given time. And we continue to see us perform relatively well in those periods where the consumer is potentially challenged. And that is what gives us so much confidence that, wherever the overall market goes, we will continue to be a market share gainer. David Leonard Bellinger: Very helpful. David Leonard Bellinger: My second question, I want to ask about GLP-1 usage. That seems to be a relatively new and positive customer driver. Can you help frame up any exposure to the business? Are these customers more sticky, more engaged? Can you simply get more of them as GLP-1 usage becomes increasingly popular? Thank you. Matt Baer: Yeah, David. I appreciate that question as well. Again, the uniqueness of our service and that superior level of service that we provide each of our clients positions us extremely well to serve clients going through a body transformation, and we have made it a real point of emphasis to market that capability of our service. So we are out in market and have been for a while explaining to consumers that are on a GLP-1 medication that as their body transforms, they have the ability to work with a personal stylist to help ensure that they have everything that they need so that they can dress in clothing that fits at each stage of that weight-loss journey that they are on. We have seen really positive results in terms of how that is helping them improve their confidence, how that is helping them improve their ability to get dressed and outfit themselves on a daily basis. And we have seen that also show up in our data as well. Client mentions of weight loss in their Fix request notes, as an example, have tripled over the last two years. It has actually surged 75% year over year just this past quarter. And what that tells me is that the work that we have been doing to improve the segmentation and targeting within our marketing capabilities is working extremely well, and that the quality and superiority of our service is really resonating with those clients. We will continue to lean in, and we will continue to serve that demographic at a really high level. Operator: Thank you. There are no further questions at this time. I will now turn the call back to Matt Baer, CEO, for closing remarks. Matt Baer: Thanks. To wrap up, as I said, we are incredibly pleased with the strong results we delivered this quarter and the improved guidance that we shared for the back half of the year. We believe we are uniquely positioned to lead in this moment of AI innovation, and that is because of just how seamlessly data science and AI are integrated into our business, how deeply and personally we know our clients, and how holistically we have integrated our expert stylists. Due to the significant improvements we have made to our experience and assortment through our transformation, we are capturing increased market share and outperforming the broader apparel retail market. We are also building a stronger client base, with seven consecutive quarters of improving year-over-year active client trends, and also, as we noted, the expected growth in active client count in the third quarter. We are confident the growth in our business will continue and that this growth will be sustainable. Important to note that since the start of our transformation, we have improved our contribution margins more than 500 basis points, and we have maintained contribution margins above 30% for the last two years. I appreciate everyone's interest in our business and look forward to sharing future updates with each of you in the future. Operator: This concludes today's call. Thank you for attending, and you may now disconnect.
Operator: Hello, and thank you for standing by. My name is Regina, and I will be the conference operator today. At this time, I would like to welcome everyone to the Infinity Natural Resources, Inc. Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Tom Marchetti, Vice President of Investor Relations. Please go ahead. Tom Marchetti: Thank you, operator. Good morning, and thank you for joining Infinity Natural Resources, Inc.’s fourth quarter and full year 2025 earnings conference call. With me today are Zack Arnold, our President and Chief Executive Officer, and David Sproule, our Executive Vice President and Chief Financial Officer. In a moment, Zack and David will present their prepared remarks with a question and answer session to follow. An updated investor presentation has been posted to the Investor Relations section of our website, and we may reference certain slides during today's discussion. A replay of today's call will be available on our website beginning this evening. Before we begin, I would like to remind everybody that today's call may contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. All statements that are not historical facts are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those forward-looking statements. Please review our earnings release and the risk factors discussed in our SEC filings. We will also be referring to certain non-GAAP financial measures. Please refer to our earnings release and investor presentation for important disclosures regarding such measures, including definitions and reconciliations of the most comparable GAAP financial measures. With that, I will turn the call over to Zack. Zack Arnold: Thank you, Tom, and good morning, everyone. Before I begin, I would like to formally welcome Tom Marchetti to our team. Tom will lead our investor relations function and is a great addition to the team. We appreciate everyone joining us today to review Infinity Natural Resources, Inc.’s fourth quarter and full year 2025 results and to discuss our outlook for 2026. Overall, 2025 was another transformational year for Infinity Natural Resources, Inc. Importantly, we did what we said we would do during the IPO process. We continued to add scale. We have significantly increased production, we have grown our operating cash flow, we have expanded our asset base through acquisitions, we have accessed the capital markets, we have entered into strategic partnerships, and we preserved our operational and financial flexibility. We have been busy. Most importantly, our Appalachian platform continues to deliver strong operational and financial execution across both our extensive Utica position in Ohio and Marcellus position in Pennsylvania. Our results during the fourth quarter and year overall are underpinned by our strong well performance across our asset base as well as the disciplined execution of our development program. Our teams remain focused on improving drilling and completion efficiencies, extending lateral lengths, and maintaining capital discipline as we develop our high-quality asset base. Before reviewing our operational activity for the quarter, it is worth highlighting the strength and flexibility of our development portfolio across Appalachia. We have over 390 locations across our portfolio, representing more than ten years of inventory when developed on a two-rig program. Our returns in oil- and liquids-weighted projects are strong, especially true in today's oil environment, and our gas returns are strong as well. Balance and optionality: it is how we build our business in order to maximize value for our shareholders. Well costs are consistent across our position, whether in our Ohio Utica development or our dry gas Marcellus wells, which allows us to allocate capital efficiently across our development opportunities depending on commodity conditions. In addition, much of our drilling and completion design is standardized across our development program; utilizing common equipment and consumables packages allows us to efficiently shift activity between Ohio and Pennsylvania. Combined with our extensive drilling inventory across these development areas, this portfolio provides significant operational, commodity, and financial flexibility as we allocate capital across our assets. As a result, our development program can be adjusted to prioritize the highest-return opportunities while maintaining disciplined growth. During the fourth quarter, we continued to operate one drilling rig across our base asset. We added a second rig in January, bringing our total operated rig count to two, advancing development across our diversified portfolio. During the fourth quarter, net production averaged 45.3 MBOE per day, bringing full-year production to 35.3 MBOE per day, exceeding the high end of our guidance range for fiscal year 2025. When compared to 2024, the company was able to deliver year-over-year growth of approximately 46%. During the fourth quarter, we spudded nine wells totaling approximately 142,000 lateral feet, while finishing completions activities and turning into sales six wells totaling 103,000 lateral feet, evenly split between Ohio oil-weighted projects and Pennsylvania dry gas projects. For the full year, we turned 23 wells into sales, including 12 wells in Pennsylvania and 11 wells in Ohio, reflecting our balanced development approach across our asset base. Our development program continues to emphasize extended lateral development and operational efficiencies that support strong capital returns across both our Utica and Marcellus positions. For calendar year 2025, our average well turned into sales exceeded 15,700 lateral feet. The longer laterals helped to reduce our per-foot drilling cost. It is not just about drilling longer laterals. It is also about cycle times, getting those wells online, and having them track our anticipated well performance. We continue to target six to seven months cycle times on our development projects ranging from three to five wells, which we believe is one of the fastest cycle times in the industry. With regards to well performance, we placed a lot of wells online in 2025. We are pleased with the performance of those wells to date, and they continue to track in line with our type curve expectations across both development areas. Looking forward, we intend to operate two rigs throughout calendar year 2026. While the world is ever changing these days, especially with commodities, we anticipate allocating slightly more capital towards natural gas-weighted development based on wells turned into sales during the year. Approximately 30% of our projected wells turned into sales will be on the asset we recently acquired, developing our rich gas locations in the Utica Shale of Eastern Ohio. Turning to our recent acquisitions, on February 23, we closed the previously announced $1.2 billion acquisition of Ohio Utica assets from Atero Resources and Antero Midstream. This transaction is a highly complementary bolt-on to our existing position in Ohio, adding extensive inventory across multiple phase windows directly adjacent to our legacy acreage, further supporting our long lateral development strategy. Just as importantly, the transactions included ownership in the associated midstream system, which provides us with attractive midstream costs and further reduces well breakevens across the acquired asset. We intend to devote a rig to the development of these assets during the year beginning early in the second quarter, and we expect our first pad from the acquired position to come online during the second quarter. As we begin developing this inventory, we expect to increase production from these assets meaningfully in the coming months and years. Not to be forgotten with all of our activities, we also completed the Chase acquisition, which increased our working interest in our dry gas South Bend field in Pennsylvania. Transactions like this, where we can increase working interest in assets we already operate, are typically among the most attractive investments that we can make using our equity as they increase our exposure to future development and production without requiring incremental corporate overhead or G&A. This acquisition represents another milestone for Infinity Natural Resources, Inc. as it is the first time post-IPO we have used our equity to acquire assets. Together, these transactions expand our development inventory, increase our participation in high-quality drilling projects, and strengthen the strategic position of our Appalachian platform through enhanced infrastructure and marketing advantages. In conjunction with the Antero transaction, Infinity Natural Resources, Inc. successfully issued $350 million of perpetual convertible preferred stock to two highly respected energy investors, Quantum Capital Group and Carnelian Energy Capital. We believe the strong demand from these investors reflects confidence in both the quality of the underlying assets and our long-term development strategy. This hybrid equity structure is consistent with our philosophy of maintaining a strong and flexible balance sheet. We were able to raise significant equity capital above our IPO price while reducing outstanding debt and preserving financial and strategic optionality for the company. Importantly, this capital supported our election to increase our participation in the Ohio Utica acquisition to a 60% working interest, deepening our ownership in an asset we know well and believe strongly in, while maintaining balance sheet discipline as we continue to advance development across our Appalachian platform. Looking more broadly at the market environment, we continue to see strong structural demand for natural gas-associated liquids across North America. Recent geopolitical developments in the Middle East have strengthened crude prices across the forward curve through 2030, representing another opportunity for us to demonstrate the value and flexibility of our unique asset base. With our development activities in the fourth quarter, we have significant oil-weighted volumes planned for 2025. We have taken this opportunity in the commodity markets to lock in attractive oil hedges for 2026 and 2027 using a balance of swaps and collars. Additionally, we are evaluating our development plan as to whether we should accelerate any additional oil projects to take advantage of attractive prices. We cannot predict whether this will be a short-term event, but we will continue to monitor the situation to see if elevated oil prices prove to be longer lasting and warrant additional development of our oil inventory. On a more micro level and for our Ohio Utica liquids production specifically, we are witnessing increased regional demand dynamics. Condensate and other light hydrocarbons produced from liquids-rich plays such as the Utica are used both as refinery feedstock and as diluent for heavier crude oils. As production of heavier barrels from regions such as Canada and Venezuela increases, producers require additional volumes of condensate and other light hydrocarbons to blend those barrels to move them through pipeline systems and into refineries. Given our proximity to regional refining markets and infrastructure, we believe our Ohio Utica liquids production is well positioned to serve this demand. Turning to natural gas, global demand for U.S. LNG continues to expand, and with additional liquefaction capacity expected to come online over the next several years, U.S. natural gas supply is increasingly positioned to serve global energy markets. Domestically, rising electricity demand is expected to drive additional natural gas consumption within the U.S. power sector. Looking ahead, we remain focused on executing a disciplined development program that balances growth with capital efficiency. Our diversified asset base across our Appalachian platform provides flexibility to allocate capital toward the highest-return opportunities depending on market conditions. With that, I will turn the call over to David to review our financial results and outlook. David Sproule: Thank you, Zack, and good morning. Our financial results for the fourth quarter and full year reflect the strong operational execution delivered by our team throughout 2025. During the fourth quarter, net production averaged 45.3 MBOE per day, and we generated adjusted EBITDAX of $94 million, representing adjusted EBITDA margin of approximately $3.76 per Mcfe, or $22.58 per BOE. During the quarter, we realized average prices of $51.22 per barrel for oil, $3.14 per Mcf for natural gas, and $23.56 per barrel for natural gas liquids, with realized pricing reflecting regional market conditions and differentials across Appalachia, consistent with our expectations during the quarter. For the full year, adjusted EBITDA totaled $261 million, reflecting continued production growth combined with disciplined cost management. Operating costs during the quarter averaged $5.56 per BOE, reflecting continued operational efficiency and increasing contribution of natural gas production from Pennsylvania within our overall portfolio. We believe that we maintain one of the lowest operating cost structures in Appalachia, supporting our strong capital efficiency metrics. We continue to witness our costs decline approximately 36% during the fourth quarter when compared to the prior year. As we continue to expand our natural gas volumes in Pennsylvania, we would anticipate experiencing further declines in our overall cost structure as those volumes are on our wholly owned midstream system. During fiscal year 2025, we incurred approximately $326 million in capital expenditures, including drilling and completion CapEx of $274.7 million, land spend of $35.5 million, and midstream and infrastructure investments of approximately $16.1 million. Our development program will pursue strategic opportunities. As Zack mentioned previously, during the fourth quarter, we also completed a $350 million strategic equity investment in the form of a perpetual convertible preferred security, which is convertible into common equity at $21.36 per share, which is above our IPO price, aligning investors with long-term equity value creation. This hybrid structure provides permanent equity capital that allowed us to repay a portion of the revolver borrowings used to finance the Ohio acquisition, while also supporting an increase in our working interest of the transaction to 60%. Importantly, the structure limits immediate dilution to existing shareholders and preserves balance sheet flexibility relative to incremental debt. At year-end, we had net debt of approximately $148 million and total liquidity of approximately $227 million. Before turning to our outlook for 2026, it is important to note that our guidance reflects both the operational progress discussed earlier as well as the capital structure initiatives completed during 2025 and 2026. Our development program is expected to operate two drilling rigs during 2026, including one rig deployed across our legacy assets in Pennsylvania and Ohio, and one rig dedicated to the recently acquired Ohio Utica assets beginning early in the second quarter. This level of activity supports continued production growth while maintaining capital discipline and operational flexibility across both areas. Looking ahead, we expect to continue advancing development across all areas within our portfolio and anticipate turning into sales 31 gross wells during calendar year 2026, consistent with the development plan outlined in our investor presentation. In 2026, we expect to turn four oil-weighted wells in line on our Ohio Utica asset. For 2026, we expect net production to average between 345 and 375 MMcfe per day, representing growth of approximately 70% year-over-year. Development capital expenditures, which are a combination of drilling and completion as well as midstream capital expenditures, are expected to range between $450 million and $500 million. With that, I will turn the call back to Zack for closing remarks. Zack Arnold: Thank you, David. To summarize, 2025 and early 2026 has been a transformative period for Infinity Natural Resources, Inc. as we continue to execute operationally, scale our Appalachian platform through strategic acquisitions, and reinforce the balance sheet with new long-term equity partners. We enter 2026 with a strong operational foundation, expanded development inventory, and a strengthened capital structure. Our position across oil-weighted Ohio Utica, rich gas Ohio Utica opportunities, and dry gas Marcellus and Utica development provides the flexibility to continue delivering sustainable growth and value for our shareholders. Operator, please open the line for questions. We will now begin the question and answer session. Operator: A question, press star then the number one on your telephone keypad. We kindly ask that you please limit your questions to one and one follow-up. Our first question will come from the line of Michael Scialla with Stephens. Please go ahead. Michael Scialla: Hi. Good morning. Wanted to ask about your 2026 plan. Your CapEx guidance is a fair bit above annual assessments. Can you talk about any changes you made from—you gave some soft guidance back in mid-December when you did the call on the Antero acquisition. Any changes that you have made since then? And any things that might be in there that, David, you mentioned—you know, midstream is built into that. I wanted to see if you could break that out at all. Thank you. Zack Arnold: Michael, Zack speaking here. Thank you for that question. I think it is a timely one. First and foremost, I would want to point you back to slide seven and ten of our investor deck showing how well we performed last year. We have had cost improvements from a D&C perspective and continue to have great capital efficiency and EBITDA margin. So this capital guidance range that we are talking about and that you are trying to interpret is not a reflection of drilling cost concerns. We continue to execute very well there, and we are gaining scale, so we expect additional synergies and improvements. What I think is helpful to understand is some things related to the acquisition. First of all, we have an additional 9% of CapEx. Now we took on additional working interest from the Antero deal than what we knew when we were talking before. Also, the first pad out of the gate, the English pad, will be completed by us and the capital borne by us. So that is 19,000 lateral feet on three separate wells. So that is a lot of lateral footage with completions activities that are coming to us. Another point on the Ontario deal, we wanted to make sure we had a rig ready to go as quickly as we could, and we did not want to have the asset close and be looking for a rig. So as a result of that effort, we picked up the rig before close, and that rig has been drilling on INR projects. So effectively running two rigs across our base business for part of this first quarter. So those things are all adding to it that were a little bit different than when we visited before. You talked about midstream. I think that is an important component of this too. And while we do not break that out, we more than doubled the size of our midstream with the acquisition of Antero. We are actively developing in both areas that require midstream investments, and so we will expect to spend money in both areas, PA and Ohio, as we build out midstream. And I think for us, we do not break it out because it is a little bit fungible and it still gives us some flexibility in our pad selection and where we are deploying capital between drilling wells that do not require midstream—maybe you add an extra well to that pad—versus somewhere where you need to add midstream to allocate dollars there. Couple other things just to point out too is we want to make sure we maintain flexibility in that capital guidance for what we did last year, which is pick up working interest. Our land group has been incredibly skilled at the ground game and adding in working interest and lengthening laterals. So we do not want to surprise somebody if we end up with more interest or longer laterals than we talked about. And now that we are running two rigs, the timing component becomes a little bit magnified, where if those rigs gain pace and start drilling faster because we have rigs that are having shorter rig moves because they are staying in Ohio instead of bouncing back and forth between Ohio to PA, for example, and we pull forward a well into the year, and that is another $10 to $15 million that hit your CapEx budget. And those back-of-the-year CapEx spends do not reflect themselves in 2026 production. So a lot of things going on there, but I think for us, we want to make sure we give ourselves the flexibility to react and be able to plan our business without surprising anybody as other projects come up. And there are certainly capital projects we have not budgeted before that I think could be interesting, including for the deep dry gas unit. Michael Scialla: I appreciate that detail, Zack. I guess just to clarify, in terms of well costs, you are not anticipating any OFS inflation or anything. You are still anticipating well costs to at least stay flat or maybe even trend down. Is that right? Zack Arnold: Yes. That is correct. Michael Scialla: Great. And then I wanted to follow up on—you mentioned the Deep Utica, which you have budgeted for this year. Anything more you can add on that play—why you decided to—I know you guys have gone back and forth on when you were going to drill that first well. I guess, what helped you decide to put it in the 2026 plan, and what do you think your exposure there is if the play works? Zack Arnold: Yeah. You know, we wanted to budget for it. We will still maintain the flexibility to choose to do it or not do it as we see gas prices and other factors, maybe oil prices, ripple through our decision-making process. But we set ourselves up with a rig that is capable and experienced at doing this. One of the things we wanted to do was make sure we set ourselves up for success to the greatest extent possible, and we are really excited about some of the deep dry gas Utica experience that we have added to our internal staff and to our field staff as well. When we get to the right project and we do have a permit in hand, we have a rig that is capable and experienced drilling this, we will be positioned to execute. David Sproule: Hey, Michael. This is David Sproule. I think you can look at the development plan that we have, and the development of that well would be towards the latter half of this year. We would not anticipate that well coming online this year. You know, I think we have always been excited about the Utica. That has not changed. It has only been more excitement about what we see in the dry gas Utica. There are plenty of offset development activities to us. We have been watching those. So I think for us, it is just consistent with our overall theme of kind of walking before running with regards to developing it. But we are very excited about the prospectivity therein. Michael Scialla: Sounds good. Appreciate it, guys. Zack Arnold: Thank you. Operator: Our next question comes from the line of Timothy A. Rezvan with KeyBanc Capital Markets. Please go ahead. Timothy A. Rezvan: Good morning, folks, and thanks for taking our questions. Michael actually took some of the ones I was going to hit at, but I want to dig back in on the Deep Utica first. It looks like you have a spud plan or you may have recently spud that well in the Deep Utica. I know there is a Cooper Pad in Armstrong County. Can you give any context? Have you spud this well yet? I recognize you do not plan to complete it this year, but is that definitely happening, or is it still kind of a TBD? Zack Arnold: Yeah. So I will make a sort of technical differentiation here for you. If you are watching stuff online, when you set the conductor it triggers a regulatory spud. So we view that as really just preparation for a true spud and do not want to get anybody confused as to what is specifically going on. I think what David said a moment ago is most accurate—that we have got it really, like, the capital towards the back half of this year and production really not coming in until next as we look at it today. The other thing I would note here, Tim, for you and everybody listening is if you think about our development in the South Bend field, remember, we have multiple horizons that we are targeting. So one of the good things about our position that is unique is that we have dry gas Marcellus there and dry gas Deep Utica. And so as we come in and develop Marcellus, we can come back in and develop Deep Utica. So, you know, consistent with our approach there, consistent with our view of maintaining optionality, that is kind of what you are seeing when you see that alert from a regulatory spud. Timothy A. Rezvan: Okay. Okay. Okay. We will stay tuned. Sounds like nothing imminent on that front. And then I appreciate the comments on CapEx. So Zack, as my follow-up, we talked about a year ago and you mentioned, you know, Infinity wants to stay nimble, but you cannot be schizophrenic, you know, as you sort of chase commodity prices. You know, cycle times seem to be ever shorter and sort of more violent today. How does the board think about that balance—sort of chasing kind of what you are seeing on the screens in a day versus the cycle times you have? How nimble can you be and sort of how locked in is this 2026 program? Zack Arnold: Sure. So I will give a little bit of color as to what we have done and what to expect. So we already this year have turned in line four oil-weighted wells. So it feels like that is—maybe that is a testament as to why you cannot be schizophrenic in your capital deployment, because these wells are now—we are very excited to have them on. If we had been fully focused on natural gas, we would have missed a lot of this exposure. We anticipate another pad coming online by midyear. And so the oil volumes that we are bringing in in this calendar year. As far as how we deploy capital differently, our development plan did not come together in the last two weeks. You know, our development plan has been thoughtfully put together and presented to the board. We really like the projects both in oil and gas. And you will always have the slide in our investor deck where you see the returns at different prices. So we will always evaluate if there is an oil project that we should swap in or tuck in, but it becomes not necessarily always the most prudent thing for us. So we will take some time here. We will see if these prices stay. That is a big part of the question. Is this a blip? We do not want to move the rig from a gas project to an oil project, and it turn out to be a headache. We have seen that on the gas side from time to time. So we will continue to have our land teams and our regulatory teams and our construction teams be prepared for that optionality. And we will see what the next quarter brings. Timothy A. Rezvan: Okay. Thank you. Zack Arnold: Thank you. Operator: Our next question comes from the line of John Freeman with Raymond James. Please go ahead. John Freeman: Morning. Just wanted to flush out maybe how to think about the production cadence as we go through the year. Obviously, appears to be a pretty back-half-weighted program with—you have only got four of the 31 wells coming on in 1Q, and maybe just how to think about how we progress through the rest of the year just to give us a little bit of help on that side. David Sproule: Yeah. I think, John, you know, we think back to some of the comments that Zack made earlier about cycle times, I would push you to think about that. When you bring a rig out and you start drilling holes, it is a good rule of thumb for us that it is kind of six months from spud to turn in line for us—six to seven months after that. So to your point, as we ramp up development, much like what you witnessed in 2025, we would anticipate a considerable ramp through the middle of the year and into the fourth quarter as well. So, you know, we started the year, albeit relatively slow. We have turned in, as Zack noted already, four wells—four very long oil-weighted wells. We will start picking up pace with regards to the turn-in-lines through the balance of the year. John Freeman: Perfect. Thanks. And then just a quick follow-up on that. How many DUCs did you all enter 2026 with? David Sproule: The interesting thing here, John, is the timing of where that calendar falls. I think we entered the year with eight that we had, and we were in the process of drilling a couple more wells during where December 31 fell. Of those eight DUCs that we carried into the year, we have turned into sales four of them. We turned in two wells in Carroll County, and we turned in two wells in Garza County, and we are actively completing the remainder. John Freeman: Got it. Thanks, guys. Nice quarter. David Sproule: Thank you. Appreciate it. Operator: Our next question comes from the line of Sam Cox with RBC Capital Markets. Please go ahead. Sam Cox: Hi. Good morning. Thanks for taking my question. I just wanted to touch on the rig cadence for 2026. Obviously, certain macro conditions—what would need to happen to evaluate a potential third operated rig? Thanks. Zack Arnold: That is a great question, Sam. I think for us, we are cognizant of our portfolio and the returns that we have. So we are really excited about that. I think we are probably more likely to maybe consider additional frac crews, I would say, than drilling rigs at this stage. But it is difficult to say. I mean, honestly, three weeks ago, oil prices were a little bit different than they were during the straight kind of considerations that we are seeing right now. So, you know, if oil prices stay extremely elevated from spot relative throughout the remainder of the year, that is something that we would evaluate. But I want to caution you to think that we are not wind socked here. We are systematically exploiting the reservoirs that we have in a prudent manner. So, you know, we would like to maintain optionality. We built into our forecast the ability to maintain optionality both in natural gas and oil. So we have flexibility to do the right things. But we are going to let other people kind of wind sock with the commodities and make that determination. Today, we are just systematically exploiting what we have. Sam Cox: Got it. No. I appreciate that. Then you also recently added some long-term hedges to the disclosure this time. How are you all thinking about your hedging strategy? David Sproule: Sure. It is always—hedging is always interesting. Right? You always look back with the hindsight of 20/20. You know, it is not shocking—everybody would like to have higher hedging prices. I think we are not speculating on—I mean, we are really not speculating on oil price or natural gas price. What we do is de-risk our development program. You know, if you look on slide eight, you can see the returns that we have here for oil-weighted or natural gas-weighted projects. So when we can get to a situation, whether it be a swap or collar, that we can lock in really attractive discounted returns on investment, we will do that. The other thing I would note is we stay true to our tenets here. You know, we have talked about hedging when the rig shows up. We have talked about hedging when the completion crews show up. Zack was talking about the activities that we had. We entered the year with eight oil-weighted wells that we were completing and turning into sales. So we have layered on hedges. You know, obviously, some of those hedges are a little bit lower than maybe the spot is on 2027, but not by much. But we are looking to systematically de-risk our development plan and lock in those returns as we dedicate to our shareholders, and we have done that. So we are pretty proud of what we have done. Sam Cox: Got it. Appreciate it, guys. Thanks. Operator: And our next question will come from the line of Nicholas Pope with Roth Capital. Please go ahead. Nicholas Pope: Good morning. Fourth quarter saw a big jump in oil volumes. Just three wells brought online in Ohio. I mean, it was obviously, I think, the strongest quarter you all have seen. Just curious if there is anything, I guess, performance-wise from the wells over there in Ohio that you all saw that kind of really supported that, or if it was just really where in the Utica you guys were drilling in the quarter. It was just a really big jump. So just kind of curious if that was performance, timing, or just location that was kind of driving that really strong oil number. Zack Arnold: Well, thank you for noticing. We were really excited with those results too, and I think the projects that we brought in in 2026 were—or 2025, excuse me—were fantastic. Really a testament to the operational team making sure cycle times were fast, and execution of long laterals was done flawlessly. So kudos to them for putting us in a position to talk about these volumes. And then kudos to the land department for making sure that our working interest was high, because volumes are important, but having a high working interest in those volumes is even more critical. And I think from a performance perspective, we do not think those performances are anomalies. That is how we expect to perform, and we are very excited with the way that those projects have worked in the back of the year. Nicholas Pope: That makes sense. Jumping around a little bit, I know you did not provide explicit guidance here. But unit operating cost, gathering cost, were both down throughout the year. SIG acquisition of midstream assets, a lot of capital spend in 2026 implied kind of in the midstream businesses. Directionally, trying to understand where those costs are going with that midstream investment. And is there also going to be line items kind of growing for midstream revenues outside of the operating cost line items? Like, how is that going to be supported? What buckets? David Sproule: Sure. I am going to take the operating cost question first, and then I will come back to the midstream revenue question second. With regards to operating cost, what you have witnessed in 2025 is an increased activity in Pennsylvania as well as managing our costs down in Ohio. So let me unpack that just a little bit. Remember, in Pennsylvania, on our gas assets, our Marcellus assets there, we own the midstream. So we do not have a meaningful GP&T charge. The second thing is volumetrically, the natural gas wells that we put on are significantly larger than the oil-weighted wells that we put into sales in Ohio, just from a petrophysical aspect. So as you think about the blending of that, not only are you blending in a lower cost structure, but you are also blending it in with higher volume. So, naturally, you are seeing some of that decline happen. We have witnessed declines from an LOE, in particular, basis in Ohio. We have seen consistent GP&T in Ohio. But on a blending aspect, you are seeing a decline quarter over quarter and year over year with regards to our overall cost structure for 2025. We would anticipate that to continue as we bring on more natural gas volumes as well as when we bring on more volumes associated with the acquired properties from Montero. Antero properties—again, we own the midstream. So while there are additional expenditures associated with fractionation activities on some of the wells, we can reduce our overall blended cost—or continue to reduce our overall blended cost—by integrating those assets there. Turning to the midstream side, you know, we do generate some third-party midstream revenues on our system. We have done that; you can see that in the line item for revenues that we have for midstream. It is a great opportunity set for us as we think about the future, not only for our assets in Pennsylvania, but our assets that we have acquired from Antero. We have a very large system. Currently today, we are capable of moving upwards of 1.2 Bcf per day of capacity. So we have a very big midstream system that is definitely on our radar and strategic in endeavors to expand volumes associated with third parties onto that system. Nicholas Pope: Got it. That is all very helpful. I appreciate it. I appreciate the time this morning. Thanks, everyone. Operator: This concludes the question and answer session. I will hand the call back over to Zack for any closing comments. Zack Arnold: Alright. Thank you all very much for your interest in Infinity Natural Resources, Inc. We were very excited to talk about the quarter and the upcoming year, and look forward to visiting again soon. Operator: Thank you. This concludes today's call. Thank you all for joining. You may now disconnect.