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Operator: Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now hand over to Craig Marks, Head of Investor Relations, for his opening remarks. Craig Marks: Thank you, and welcome to the Sandoz Full Year Results Call for 2025. Earlier today, we published the press release and an accompanying presentation on our website, which we'll follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer. Please turn to Slide 2. Our results announcement presentation and discussion include forward-looking statements. Please see our disclaimer here. Please turn to Slide 3. Richard will begin today's presentation with the highlights of 2025, followed by an update on the business. Remco will cover the financial performance as well as the guidance for 2026. Following the wrap-up of the presentation, we'll be happy to take your questions. And with that, I will now hand over to Richard. Please turn to Slide 4. Richard Saynor: Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all on the call today. Our second full year as an independent company was a very successful one, and I'm proud to share our achievements. 2026 is a significant year for us as we celebrate some very special anniversaries that reflect our legacy and our future. 20 years ago, Sandoz pioneered the world's first biosimilar, opening the door to advance treatments for more patients and setting new standards for access and affordability. 80 years ago, we transformed a brewery into a penicillin factory, making antibiotics more accessible and saving millions of lives. Kundl remains Europe's last major end-to-end producer of penicillins, a legacy of reliability and innovation. And I'm delighted that we're also celebrating 140 years of Sandoz. These milestones are more than history. They are a source of pride and inspiration as we build our future that remind us of the impact that we have made and the responsibility we carry to continue expanding access for patients everywhere. Please turn to Slide 5. I am proud of the progress that we made last year when we cemented the fundamentals of our long-term growth potential. Let me take you through the 4 key areas where we made meaningful steps forward. We advanced our deep, diversified and industry-leading pipeline last year. Crucially, this pipeline already includes 27 biosimilars. 2025 was also a year of successful launches. We rolled out a number of important medicines like Pyzchiva in the U.S., Afqlir in Europe and Australia and Wyost and Jubbonti in the U.S., Europe, Brazil and Australia. And as the last of our Capital Market Day commitments, I was delighted that we launched Tyruko in the U.S. On the development supply side, we completed the acquisition of Just-Evotec Biologics Europe at the end of the year, which strengthens our technology base and accelerates our ability to scale next-generation biosimilar development and manufacturing. The construction of our biosimilar hub in Slovenia is also progressing very well. And finally, it was a year of strong results across the P&L, cash flow and balance sheet. Net sales grew by 5% at constant currencies to $11.1 billion. Our core EBITDA margin expanded by 160 basis points to 21.7%, driven by improving mix of sales, cost control and operating leverage. The return on our invested capital increased to 14.5%, reflecting growth of 2 percentage points. And finally, we're proposing to increase the dividend per share by 1/3 to CHF 0.80 a share. Now let's move to more details of the growth in net sales, starting with Slide 6. Looking firstly at the full year, net sales surpassed $11 billion for the first time, supported by biosimilar growth of 13% at constant exchange rates. Whilst generics provided a strong foundation for our business, the overall performance reflected the increasing contribution from biosimilars and strong execution across our organization. Biosimilars now represent 30% of total net sales, marking a significant milestone for our business and one we have proudly achieved earlier than expected. I am proud to say that quarter 4 represented our 17th quarter of consecutive growth. Underlying sales up by 7% and biosimilars representing 31% of the total. Please turn to Slide 7. Generics remain a core growth engine for Sandoz. Here, you can see some examples of the many launches last year, such as iron sucrose, rivaroxaban and enoxaparin sodium. We have more than 400 generic assets in development, targeting an originator market worth around $220 billion. Moreover, we're focused on a significant number of LOE opportunities, particularly in oral solids and injectables. Lastly, our global generic footprint includes 4 development centers and 15 in-house manufacturing sites, ensuring agility and reliability in supply. It is worth noting that the adverse impact last year on penicillin B2B business. Asian suppliers engaged in significant price dumping for key penicillin APIs, including some that we sell to other businesses. This impacted the sales value of this part of our business in the second half, and we expect it to continue impacting our generic performance in the first half of 2026. Furthermore, the recently announced introduction of minimum import prices in India for some penicillin APIs may well divert low-priced supply towards Europe, which continues to depend on Asia for key intermediates. Europe's growing dependency on a handful of global suppliers underpins our call for a fundamental shift in how Europe thinks about antibiotics, the backbone of modern medicine, especially given that they're a key part of the continent's security infrastructure. Please turn to Slide 8. Now turning to biosimilars. 2025 was a great year for this key part of our future. We delivered multiple successful launches that reinforced our leadership and execution capabilities. There were 2 major launches for Pyzchiva. Firstly, we launched in the U.S. earlier in the year, which included private label options. Secondly, we introduced the first commercially available auto-injector for ustekinumab in Europe, a major step forward in patient convenience. Next, Tyruko saw strong uptake in Europe and was rolled out across the U.S. in November. We also achieved a significant milestone with Wyost and Jubbonti, the first denosumab biosimilars in the U.S., followed by the launch in Europe in quarter 4. And finally, Afqlir entered the European market at the end of 2025, with the U.S. launch anticipated by quarter 4 this year. And you probably saw the great news last week that the FDA has approved an expanded label for Enzeevu to include multiple retinal indications. I fully expect these launches to perform strongly and contribute meaningful growth for Sandoz. Please turn to Slide 9. Let me now walk you through the continued performance of Pyzchiva and Hyrimoz across our key markets. Starting on the left, Pyzchiva in Europe, we see very solid trajectory. What's particularly encouraging is the sustained increase in biosimilar participation, which continues to expand quarter-after-quarter. This reflects not only strong underlying market growth, but also the faster uptake of ustekinumab biosimilars compared to what we saw with adalimumab. Alongside the auto-injector rollout last year, we're getting ready for more Pyzchiva launches in Europe and international in 2026. Hyrimoz continues to demonstrate strong global growth. Our market share remains stable, and we continue to see strong increases in biosimilar participation. We are very well positioned to benefit from this trend. Please turn to Slide 10. Now let me turn to Tyruko and Omnitrope. Starting with Tyruko, we are very pleased with the continued rate of adoption in Europe. Since launch, our market share has grown steadily, reflecting the strong clinical and economic value proposition of Tyruko as the only biosimilar approved in Europe for relapsing remitting multiple sclerosis. Alongside the recent launch in the U.S. in quarter 4 and additional launches are planned across other markets, we expect uptake to further expand as awareness and familiarity grow. Omnitrope continues to demonstrate exceptional stability and resilience in a highly competitive category. We've maintained the leading global market share, and we're delighted with the performance, especially in the international region. Overall, both medicines showcase the strength and diversity of our portfolio, Tyruko as a high potential launch with accelerating adoption, and Omnitrope as a reliable, long-standing leader in the class. Please turn to Slide 11. Let me now highlight the strong progress that we're making with Wyost and Jubbonti. Firstly, in the U.S., our launch execution has been highly effective. We were able to rapidly leverage our commercial footprint that covers more than 80% of the denosumab market volume to ensure broad visibility and accessibility from day one. We also successfully established average selling pricing, a critical milestone for provider confidence and reimbursement stability. And I want to call out the performance of Wyost and Jubbonti in Canada, where we've taken extremely high levels of share across the denosumab biosimilars. Turning to Europe. The launch at quarter 4 has been progressing well. Our leadership across both hospital and retail channels has helped us execute with speed and precision. This strong on-the-ground presence is enabling us to secure access, build awareness and support physicians as they integrate Wyost and Jubbonti into clinical practice. Overall, being first to market with these medicines has given us a powerful head start, and the early update confirms that our strategy is working. We're well positioned to continue building momentum as access, adoption and payer coverage expand across the regions. Please turn to Slide 12. Our pipeline is where the next wave of growth begins and is designed for high impact. We're advancing targeted development in key biologics and therapies with a clear focus on access areas that matter most to patients and health care systems. In the nearer term, we have several assets already in regulatory review. Looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as Opdivo, Keytruda, Ocrevus and Tecentriq, biosimilars to some of the most widely used biologics today. Finally, we have a significant number of assets in early development. This pipeline positions Sandoz to lead in biosimilars for years to come, delivering scale, innovation and access to patients. Please turn to Slide 13. I am delighted by our sustainability progress in the year. In 2025, we served over 1 billion patients across more than 100 countries, a scale that underscores our global responsibility. Through our portfolio and partnerships, we've delivered $26 billion in savings to health care systems. This is a meaningful relief at a time when affordability pressures continue to rise. We've delivered measurable reductions across our emissions footprint, down 18% in Scope 1, 15% in Scope 2 and 1% in Scope 3. We've also submitted our SBTi targets for validation, covering all emission scopes, reinforcing our commitment to transparent climate action. Finally, on governance and integrity, we strengthened oversight and risk-based controls to ensure swift information decision-making without compromising compliance, and we continue to lead in transparency with open, compliant transfer of value disclosures across more than 36 markets aligned with global codes and standards. Altogether, these achievements reflect who we are as a company driven by purpose, committed to access, anchored in strong values and focused on delivering long-term impact for patients, partners and our people as well as society. Please turn to Slide 14. To secure long-term leadership in biosimilars, we're expanding our pipeline and commercial presence have been accompanied by significant investment in strategic integration and the expansion of in-house capabilities. I'm excited to say that this year, we'll begin to complete building of our end-to-end European biosimilars hub in Slovenia that includes a state-of-the-art technical development center in Ljubljana, a high-tech drug substance production site in Lendava and an aseptic production center in Brnik. These facilities will give us full control over development and manufacturing, ensuring quality and scalability. Secondly, our acquisition of Just-Evotec Biologics in Europe at the end of 2025 marks a major step forward. This brought us more capacity for growth as well as proprietary platform for integrated development and indefinite license to use Just-Evotec's continuous manufacturing technology. Finally, our overall European biosimilar manufacturing network will position us as a unique leader of in-house development and production, strengthening supply security, enabling us to respond quickly to market needs. Together, these investments will allow us to capitalize on the overwhelming biosimilar market opportunities that lie ahead. And with that, I hand over to Remco on Slide 15. Remco Steenbergen: Thank you, Richard, and hello to everyone. Please turn to Slide 16. We delivered strong underlying net sales growth of 6% in 2025, driven by another year of double-digit expansions in biosimilars. Importantly, this momentum was broad-based, with all regions contributing, underscoring the resilience and diversification of our business. Core EBITDA increased by 14%, with a margin expanding by 160 basis points to 21.7%, driven by a favorable mix shift, disciplined cost management and continued operating leverage. On cash generation, we increased management free cash flow by USD 435 million to USD 1.5 billion, reflecting a strong underlying EBITDA performance. We improved core ROIC by 220 basis points, reaching 14.5%. This uplift reflected an improved operating performance and disciplined capital deployment. It's an important indicator that our strategy is delivering not only earnings growth, but equally also high-quality returns. Finally, core diluted EPS grew by 33%, benefiting from the increase in operating profit, reduced financial expenses and a lower effective tax rate. Please turn to Slide 17. Turning to our top line performance in more detail. Our generics business accounted for 70% of the total. The main growth engine, however, continues to be biosimilars, with the results reflecting successful launches and sustained adoption. Regionally, the performance last year was well balanced. Europe remains our largest market, representing 54% of total net sales and delivering on strong underlying demand across both generics and biosimilars. International markets net sales were USD 2.7 billion or 24% of sales, supported by a robust performance in emerging markets and continued expansion of access-driven programs. North America contributed 22% of total net sales. Please turn to Slide 18. Over the full year, the 18% underlying biosimilars growth included encouraging contributions from Pyzchiva and Hyrimoz in Europe and Omnitrope and Hyrimoz in International. In North America, Wyost and Jubbonti got off to a flying start. Generics growth of 2% for the full year reflected many successful recent launches, including paclitaxel in North America, with International performance benefiting from price accretion. In Q4, biosimilars delivered an even stronger underlying growth of 20%, with generic sales up by 2%. Now let's have a look at the performance of our 3 regions on Slide 19. Europe sales grew by 6% in the year and in the quarter. Strong growth in biosimilars continued, partly reflecting successful launches over the past 2 years, including Hyrimoz, Pyzchiva and Tyruko. International sales were up by an underlying 9% in the year and even by 14% in the quarter, with strong contributions from Hyrimoz and Omnitrope. North America sales grew by 5% in the year on an underlying basis and 2% in the quarter, with the latter period adversely affected by the impact of a onetime gross to net generics adjustment in Q4 2024. Please turn to Slide 20. In breaking down the sales performance for 2025, you can see that volumes contributed 8% while price erosion remained at a moderate 3%. Foreign exchange had a positive impact of 2%. Let's now move to the P&L overview on Slide 21. Core gross profit increased by 5%, reaching USD 5.6 billion. A broadly stable gross profit margin of 50.6%, mainly reflected the favorable movement in the mix of sales, offset by price erosion. Core EBITDA growth of 14% at constant currencies was primarily driven by our growth while keeping our SG&A costs in U.S. dollars stable. Going forward, our ambition remains to limit SG&A cost increases to the absolute minimum, while we will support our pipeline through focused and increased D&R investments. Finally, core EPS grew by 1/3. Overall, 2025 was a year of strong profitability, underpinned by biosimilars growth and disciplined execution across the business. This positions us well for continued margin expansion and long-term value creation. Please turn to Slide 22. Moving to the core EBITDA margin performance. This increased by 1.6 percentage points from 20.1% to 21.7%. The favorable mix of sales benefited the margin by 1.3 percentage points, while price erosion had a 1.1 percentage points adverse impact. We reduced the ratio of OpEx to net sales, led by SG&A, reflecting disciplined cost management and the success of our transformation program. This illustrates the progress we are making in leveraging our cost base. From the P&L, now let's move to cash on Slide 23. I was really delighted with the USD 1.5 billion of cash we generated last year, which represented the $435 million increase over the previous year. While we exclude one-off items when focusing on management free cash flow, the performance reflected both the strong uplift in core EBITDA and continued discipline in how we manage working capital, particularly inventory. As Richard mentioned, we have continued to invest in our future, with CapEx in 2025 focused on the biosimilar hub in Slovenia. Please turn to Slide 24. Last year, we successfully further strengthened our balance sheet and improved our maturity profile. A substantially stronger euro and Swiss franc against the U.S. dollar had an adverse impact on net debt, which ended the period at USD 3.6 billion. When excluding the impact of foreign exchange, however, underlying net debt decreased by USD 200 million to USD 3.1 billion. Our strong balance sheet, improved liquidity and investment-grade ratings place Sandoz in a unique and excellent financial position to support our ambitions. Our net debt to core EBITDA ratio improved to 1.5x, reflecting continued balance sheet strengthening. Please turn to Slide 25. Turning to CapEx. We invested around USD 700 million in 2025 with the majority directed towards manufacturing. This reflects our continued build-out of our development and manufacturing vertically integrated biosimilar capabilities. Looking ahead to 2026, our peak year for CapEx investments, we expect an outlay of around USD 1.1 billion. The largest allocation will again be for strengthening our biosimilars capabilities. As Richard stated before, we expect our development in API biosimilar sites to be completed at the end of 2026 before we move to the tech transfer process. We anticipate completing the construction of our biosimilar fill-finish site next year, i.e., 2027. We expect to enhance our biosimilar pipeline through BD&L investments, and we will continue our path to bring our IT infrastructure at a required level. The uplift in IT will enable system upgrades that are designed to drive efficiency, streamline our operations globally and create a more scalable digital backbone. Please turn to Slide 26. One-off cost continue to decline. In 2024, this cost peaked as we completed the bulk of the work related to separation, transformation and the manufacturing footprint. In 2025, one-off cost declined to around USD 0.4 billion, reflecting a lower level of separation-related spending and reduced transformation activities. For 2026, we currently estimate the one-off cost to further decline to around USD 0.3 billion. This means that the one-off cost of USD 0.7 billion for '25 and '26 combined are fully in line with our prior expectations. Please be aware that one-off costs exclude software implementation cost accounting impacts. We're in the process of implementing new future-ready IT systems for Sandoz. Due to the nature of software licenses meeting the accounting definition of Software-as-a-Service, the related implementation costs do not meet the criteria for capitalization as intangible assets under IFRS. We have not guided for these costs historically as the assumption has been that such costs can normally be capitalized. These costs were around $50 million in 2025 and are likely to be similar this year. Please turn to Slide 27. This year, we expect net sales to grow by a mid- to high single-digit percentage in constant currencies, supported by the impact of our recent launches. The core EBITDA margin is targeted to increase by around 100 basis points. We expect price erosion of a low to mid-single-digit percentage. We also anticipate that the adverse dynamics of our penicillin B2B business will unfortunately persist in the first half of 2026. And as a one-off, we'll incur some costs related to the integration of the Just-Evotec business in France. Outside of guidance, we expect a 2 percentage points tailwind to net sales from currency movements. Based on recent spot rates and average rates in January 2026, we do not expect a material impact from currency movements on the core EBITDA margin. Please turn to Slide 28. Our hard work since the spin has led to strong results to date, which position us really well to reach our midterm outlook for 2028, which is unchanged. We have strong momentum, supported by numerous launches across key markets, and there is a clear visibility on the drivers of our margin expansion. And on that happy note, I will hand back to Richard. Please turn to Slide 29. Richard Saynor: Thank you so much, Remco. I'd now like to wrap up the presentation on Slide 30 before we go to questions. I'd like to remind everyone of the huge number of opportunities that lie ahead. The next golden decade presents a tremendous opportunity for Sandoz in both biosimilars and generics. On the biosimilar side, we're targeting more than $320 billion in LOE opportunities, with 27 assets currently in development. These represent approximately $200 billion of originator sales, covering nearly 60% of upcoming LOEs. Combined with the game-changing impact of recent regulatory streamlining, this positions us extremely well to accelerate access and capture more market share. On the generic side, the potential is equally compelling, around $340 billion in LOE opportunities, supported by a pipeline of more than 400 assets. These represent another $220 billion of originator sales or approximately 65% of LOEs over the next decade. And beyond that, we see GLP-1s as a long-term growth driver. Together, these pipelines create a powerful foundation for sustainable growth. Please turn to Slide 31. In 2026, we will continue to strengthen our leadership in affordable medicines by advancing our network, our portfolio and our pipeline. We'll complete the construction of key new biosimilar facilities in Slovenia. And with the strategic acquisition of Just-Evotec Biologics, I am confident that we will consolidate our position as the undisputed leader in biosimilars. Vertical integration will give us clearer control over our pipeline development and underscore our unwavering commitment to expanding access to high-quality, affordable biologics for millions of patients worldwide. At the same time, we will continue to focus on accelerating access for patients. One example will be the launch of Enzeevu in the U.S. by quarter 4, which represents another key addition to our ophthalmology portfolio. And finally, flawless execution remains central to how we operate. Across the organization, we're reinforcing capabilities, executing consistently against our strategic priorities and continue to embed our pioneering culture in everything we do. I am delighted by our progress and by the strong momentum in the business as we move into 2026. I want to express my heartfelt thanks to our colleagues for their dedication and passion which makes such a difference for patients around the world. Thank you so much for listening. Please turn to Slide 32, and I'll ask the operator to open the lines for Q&A. Thank you. Operator: [Operator Instructions] Our first question is from Charlie Haywood from Bank of America. Charlie Haywood: Charlie Haywood, Bank of America. It's on the denosumab flying start that you called out. I think data suggests fourth quarter U.S. denosumab sales trending to around the mid double-digit million dollars per month level. So is that ballpark sensible? And then does your guide reflects an annualization of those fourth quarter levels into '26? Or is there anything we should consider on competition or pricing dynamics that might change that? Richard Saynor: Charlie, thank you. And to answer your question, yes, we were delighted with the launch of denosumab. Obviously, we launched alone in the market. We set our ASP and executed well. I think, look, clearly, we expect volume gains to continue pretty much to that level, if not a little bit higher. But clearly, you've got a significant number of competitors coming in, which will naturally push down the pricing. So I think the net will probably balance out. But clearly, we're delighted where we've started. We're still seeing strong growth and expect a good performance during 2026. Operator: Our next question is from James Gordon from Barclays. James Gordon: James Gordon from Barclays. First one would just be GLP-1s. I heard you talk about it being a longer-term growth driver, but no material contribution in '26. So when do you think you now could resolve and launch in Canada? And what's the plan in Brazil? Is the plan still that you could launch with a vial? And longer term, so Novo's oral Wegovy launch is going well, which is also semaglutide. But will you do oral sema, so it's got the SNAC technology, and it needs more API? Is that also something that's in your plans? Or is a product like that not really attractive for a generic company and the GLP-1 plans you have are just to do injectable? And then second question was just, one other quick one, which is just -- so you have got one ADC, you've got Enhertu in development. And your cost to develop ADCs and bispecific biosimilars, should we think that, that's just a start, and you're going to do quite a lot of ADCs and bispecifics? Or are they still significantly more complicated to develop and more expensive? So Enhertu is a bit of a one-off? Richard Saynor: Great. James, thank you so much, and thank you for getting the GLP question in early. So look, we've not guided because I guess there's so many variables at the moment. We filed in Canada, Brazil and a number of other markets with one or more partners because when we get an approval and we launch a product, we will launch it. I've still said, look, we would look to anticipate to launch it probably in the latter half of this year in Canada, but we're very much dependent on the regulators. And at this point, nobody has got an approved file. Similarly with Brazil. I think in the medium term, yes, it's a very attractive market. But I've never -- I think I commented before, I've never known a product where I don't really understand how the volume dynamics are really going to play out, given that demand is far greater than the market can supply. So I think it's just prudent that we sort of learn as we go a little bit. And I always said I see Canada and Brazil to a lesser or greater extent as sort of a bit of an experiment in terms of how market dynamics will grow. As a generic company, yes, we will focus on bringing any product that we think is an attractive market opportunity, whether it's an injectable asset or in the medium term, an oral presentation of semaglutide. We've not disclosed our pipeline in small molecules, but naturally, we want to cover ideally about 80% of LOE for any product certainly in Europe. And that logic, I can't see would also -- or that logic should also apply to GLPs. But I think we're quite some way from the patent expiring from an oral GLP. And then there's still a dynamic of what that's going to play with the Lilly asset over the next couple of years. So this is really a long journey. We're going to be in it, and we'll make -- we'll share our journey with you as we do it. In terms of ADCs, I think it's less a cost of the development, to be brutally honest. Surprisingly, it's not that technically difficult. You've got to remember, we are a small molecule company and a large molecule company. So our technical ability to link those 2 things is already embedded, whether it's ADCs, bispecifics or even trispecifics. I think the question is more about the regulatory framework. You've got to remember 20 years ago, when we launched the first biosimilar, there wasn't really a regulatory framework about filing and launching biosimilar. That now has radically changed from monoclonals, and you're seeing that progressing quite quickly. We're working closely with the regulators to find the right path. So we do a reasonable amount of study work, but not an excessive amount of study work. And I think at the moment, that's where the cost is. It's not really the technical development. It's more the studies to satisfy the requirements of the regulators. We've not disclosed the quantum. But certainly, look, it's going to be more expensive than a classic monoclonal, but yes, we would expect to expand to that pipeline over the coming years. Operator: Our next question is from Harry Sephton from UBS. Harry Sephton: So I just wanted to touch on Slides 9 and 10 of the presentation. So given the progress on some of those biosimilars, it looks like that you're hitting more peak market share for those. So I would have implied that the strong guidance for the year is more for the more recent launches of denosumab, Tyruko and aflibercept. So would love for you to touch on the progress for denosumab and aflibercept in Europe specifically? And then also for Tyruko in the U.S., given the REMS program that you set up there, what do you expect in terms of the progress or the trajectory of the launch in the U.S.? Richard Saynor: Thank you, Harry. Perhaps I'll start with Tyruko first. Look, we're delighted to have brought that product to the market. I think it was the last piece of the CMD commitment. So very pleased that we delivered that. Our strategy is to -- at this phase to acquire new patients rather than go for convergent patients. I think that way, physicians, clinics really get to work with us on the product. And so that means really the pickup will be incremental rather than switching. So that's very much what we're seeing in the market that we're adopting new patients as they come on board, gaining the confidence. It's well accepted by the clinicians that we're working with. And so we just look forward to sort of a stepped growth over the next few years rather than sort of a rapid conversion of the market, which I think this way will be much more sustainable. Deno in Europe, performing extremely well. Again, I think the data, we've taken a leadership position, a strong response from payers and great acceptance of the product. Obviously, I think in the medium term, how we expand that market, not just in the oncology indication, but also for the osteoporosis indication where, I think, in Europe, because the price differentials are so great, is still an underserved population. So I think there's really nice opportunity to expand and grow that. And then aflibercept has been a very entertaining journey over the last few months. Not with -- also with German court, et cetera, but really delighted with the launch, probably running a little ahead of where we expected in terms of volumes. And then clearly pleased with the recent IP or PI injunction reversal in Germany, which, again, means that we are now back on the market and a number of our competitors are still blocked. So I think we're set up extremely well. I'm very pleased with the early positioning of those products. And then your broader shape, I think, is directionally right. I mean, look, ustekinumab, we're still seeing strong market gains in terms of penetration of the market. Adalimumab is still growing years after LOE. But clearly, the bulk of the growth, you rightly point out, is going to come from our new launches. And I think we almost get a bit complacent, but we've got a -- had a record number of launches into Europe last year with afli, with deno, with uste, again, we're the only one with the autoinjector. Obviously, we're just bringing out a Lucentis biosimilar later into this year. So a great set of positioning to set us up well for growth in '26 and into '27. So built on a solid foundation of the rest of our assets. Operator: Our next question is from Victor Floch from BNP Paribas. Victor Floch: Victor Floch, BNP Paribas. So my first question relates to the recent FTC elements with Express Scripts, which seems to have weakened rebate-driven preferences for highly priced brands and, to some extent, favor lower net cost products. So I just -- so I was wondering whether you see this as structurally affecting the biosimilar market in the U.S.? And is this directionally aligned with the PBM reforms you've been advocating for over the last few years? And my second question relates on to your long-term pipeline with some recent analysis suggesting that some certain originator might be able to delay biosimilar entry longer than expected, leveraging their complex IP situation, and I'm thinking about a Keytruda and semaglutide. So you've been quite vocal in the past regarding the unpredictability of the U.S. market on that front. So I was wondering whether you can discuss whether this impacts your long-term biosimilar plans in the U.S. and whether you continue to call for some reform on this front? Richard Saynor: Okay. Thank you so much, Victor. The technical question you brought up, I'm going to have to come back to you. I think in terms of the rebates and what that impact is. So rather than trying to answer that now and take time, we'll come back separately through Craig. I think the broader question, I mean, environmentally, I think we're moving in a positive direction in the U.S. I mean, clearly, having conversations around PBM reform, patent reform, clearly, the right moves with the FDA. So I think there is never one solution here, but I think certainly, I'm much more optimistic about the direction of travel in the U.S. And again, as I said before, our access to the administration in terms of having a sensible dialogue about delivering sustainable, affordable medicines in the U.S. continues. So I think that's clear. In terms of the long-term pipeline, I think it's a fair question. But as I've always said, in a sense, we define our biologics pipeline with a European lens to the very point that you make because there's so much uncertainty. Obviously, we filed against Amgen on Enbrel because they've managed to create a 31-year patent life. Now that case got overturned last week. We will look -- we're still judging whether we would appeal. And we're all interested now that actually a number of payers are now suing Amgen for abuse of their position as well. So I think there's an environmental shift in the U.S. that this lazy innovation from innovators, particularly in the U.S. market, to prolong and abuse patents is being challenged, both at a Congress and a Senate level, but also from the industry and the payer level. So I'm encouraged. But certainly it's a challenge, but it doesn't change our strategy because really, we define our pipeline from a European point of view, where we generally have a fairly clear sense of when we would bring a product to the market. And then the U.S. becomes a fantastic opportunity rather than the other way around because if we based everything on the U.S., you're always going to end up in court. It's part of the process and part of the system. And as you can see, whenever you go to court, there's a degree of uncertainty. So leveraging our foundations, leveraging Europe and then seizing the significant opportunity in the U.S. has always been our strategy. So hopefully, that answers your question. Remco Steenbergen: Yes. If I can just -- Remco here, just to add to it, correct. In the end of our press release, there's also a table where you see by region the split between generics and biosimilars. And just to reiterate, biosimilars, $3.3 billion out of our $11 billion. That $3.3 billion, 58% is from Europe, 17% is from International, which is 75% of the total, and 25% is from North America. And Europe grew 14% last year in bio. International grew 30%, right? And on a comparable basis, the U.S. was 19%. So just to reiterate the point of Richard, correct, in the approach, also when you look at the numbers and the materiality, the weight is clearly outside the U.S. 75% of our bio portfolio. Operator: Our next question is from Simon Baker from Rothschild & Co. Simon Baker: Two, if I may, please. A couple of big picture questions. Remco, you've given us a lot of quantification of the margin expansion through -- in '26. But I just wonder qualitatively, if you could just give us an update on what's being done, what's to come, the sort of split between mix and cost savings? Just a little bit of color on how things are moving on, that would be great. And then a question really for both of you, possibly. We can see, obviously, how the regulatory changes make development more attractive and cheaper for you. But I just wonder what it means for the in-licensing opportunity. With lower development costs, does that potentially mean others were more likely to go it alone? Or alternatively, does it mean that with those low development costs, more people are likely to try and use your global commercial infrastructure. So I just really want to see how the regulatory changes affect the in-licensing side of things. Richard Saynor: Thank you, Simon. Perhaps if I answer your second question first, I think you've answered it yourself in a way. I think that's certainly our view is, look, yes, it's a reduction in regulatory costs, but it's still significant. You're still talking probably $80 million to $100 million per asset, and you still need manufacturing capability. And then the bit that everybody forgets is you need a commercial footprint in tune with the market that can leverage its scale. And that is always the thing. And a lot of companies really struggle from that clinical to commercial setup and then commercial execution. So we're seeing a significant number of partners coming to us, approaching us, wanting to work with us as a global partner. One signature, they get Europe, international, Europe, strong capability and are the leader in this player. So there's a lot to be said for working with us. So I very much see it as you see it in terms of that opportunity. Remco, do you want to? Remco Steenbergen: Yes. I think with the margin, let's go through the different elements. You've seen the low price erosion are relatively low with minus 3%. We still believe low to mid-single-digit price erosion to remain. Of course, that also requires work. Clearly, the mix improvement with bio growing double digits and generics low single digits, which we expect to continue, but it has a mix improvement, but also within generics, we're looking at mix improvement, that is all on track. The thing within the margin, where we expect in the coming years to step-up is in our cost of goods sold, that the manufacturing savings should pick up versus what you have seen so far. And that is something which we're looking forward for this year. On the D&R expenses, yes, you saw a step up of 40 basis points higher expenses. So we are above $1 billion in '25, that you should expect to continue also in line with what Rich has said before, with the golden decade ahead of us, there's so much opportunity. We want to invest in that opportunity in the right way. And with SG&A, I think we have all the opportunity to keep the increases, as I also said at the beginning, very limited. It was a minus 2% increase in '25. It was something similar in '24. And we really target to keep that at very low single-digit increase also in the years to come and have that leverage with the top line moving along. We're also investing for the long term in our IT infrastructure in order to keep that SG&A and that infrastructure in place, which should also help significantly on the manufacturing side because that can also IT-wise, deliver also cost savings over the longer term. So all in all, I think we're on track, with the only thing you could -- you should expect to pick up are the cost of goods sold unit savings as of this year. I hope that answers your question, Simon. Operator: Our next question is from Urban Fritsche from ZKB. Urban Fritsche: Yes. Can you hear me? Richard Saynor: Yes, we can. Urban Fritsche: Yes. Congrats on the business progress. A couple of questions coming back to generic sema. So it seems like that we will see first generic sema launches in India. While you're not there, my question would be what can you learn from those first launches? What are you looking for in India specifically to then apply to other countries and your launches? And then a pretty open question relating to the new FDA guidance for the biosimilar approval. So how does that reshape some of those internally? What is already visible? And how will it shape going forward? Richard Saynor: First of all, thank you so much for the question. Thank you for the feedback, Urban. I guess, look, it's interesting. I mean, for me, from an India point of view, 2 things is, one, the dynamic -- so how are patients willing to prepare to pay to this product? So in a sense, it almost behaves like a consumer product rather than a classic pharma product. And how elastic is that at what price point? So it's more about trying to understand the volume dynamics and the willingness of patients to pay for our product in India. And it's certainly early days. Demand is significantly higher than the originator was selling to that market. And certainly, as the price points come down, and it's interesting talking to my sort of Indian colleagues who have friends and family in India, just how many people now are wanting or acquiring that drug. The other piece is this is a complicated product. It's a supply chain. It's a cold chain product. So trying to understand how you manage the logistics of managing a high volume cold chain supply product to manage that integrity. So those are really the things that I'm looking at from an Indian point of view. And certainly, it's fascinating. Regarding your second question, I don't think -- I mean, look, the FDA move, I don't think it's structurally changing Sandoz. It's really thinking about how we run clinical trials and what the right data is. We've always had a good relationship with the FDA and the European regulators. And really, it's all of the regulators moving in the same direction at the same time because if only one regulator moved, then it would be a real challenge for us, whereas we're seeing a degree of harmonization in terms of what's expected from Phase II trials, et cetera, and the low or no requirement for Phase III trials. So it's really more about how we phase our trials. And then question is it's an opportunity because clearly, now it's going to cost us less money to develop a biologic, which means we can now develop more biologics. And given as we're about to go into a decade with something like 140 biologics coming off patent, I'm incredibly excited that we can then potentially serve those millions of patients who today don't have a choice. Operator: Our next question is from Sophia Graeff Buhl Nielsen from JPMorgan. Sophia Graeff Buhl Nielsen: So firstly, how significant a growth contributor do you expect biosimilar Lucentis in Europe to be in both 2026 and beyond? Do you expect the dynamics will differ from what we've actually seen in the U.S. context? And then you've touched on this a bit in response to a prior question, but how should we think about the pace of the ramp for Wyost and Jubbonti in Europe this year relative to what we've seen in the U.S. so far? And how do your expectations differ between oncology and osteoporosis settings for this? Richard Saynor: Okay. So first of all, thank you so much for your question, Sophia. I mean, the Lucentis biosimilar, I mean, I guess, modest, it's not the biggest launch. I mean, it's clearly a nice addition. It is not in all markets across Europe. So I think we have rights to the majority of markets because this is a co-licensed product with another party. They have the rights to Germany, which is our largest market. So it's, I would say, modest. Certainly excited to be launching it for all sorts of reasons, but very pleased to be bringing it out to the market for the majority of Europe and a number of international markets. And then deno in Europe, I think it will convert quicker. Naturally, the adoption of biologics in Europe, we're extremely well established. We have the relationships. I think the difference between the U.S. and Europe is really the use in osteoporosis. Given pricing pressures in Europe, most patients were generally on things like bisphosphonates. I think the opportunity now, as the price points come down, to really expand and offer this for osteoporosis is a real opportunity over the next few years. So in short, I think a rapid uptake in the conversion and gain of the oncology market, and then a steady expansion and growth of the osteoporosis market. Whereas the U.S., I think, have a very different dynamic. Clearly there, the osteoporosis market is larger. We're taking a significant proportion very quickly. And again, we look to expand it. And again, perhaps a little better than we anticipated in the oncology indication in terms of the conversion. So different markets, different dynamics, but performing well in both. Thank you so much. And I think with that, we will close the session. Thank you so much for your questions, and look forward to interacting with you over the next few months, and have a great day.
Thomas Russell: All right. Tony, we're ready. Tony Sheehan: Thanks, Tom. Good morning, and welcome to the H1 FY '26 update for Change Financial. My name is Tony Sheehan, CEO of Change, and I'm joined by Tom Russell, Executive Director. Similar to our usual webinar format, Tom and I will run through a presentation and then take Q&A at the end. If you do have any questions, please submit them through the chat function on this webinar. Okay. Just a little bit briefly about Change Financial. So, Change Financial provides innovative and scalable payment solutions for over 150 clients across more than 40 countries. We are a B2B business with 2 core products. The first being Vertexon, which is our Payments as a Service offering, which provides card issuing, card management and transaction processing. Vertexon supports prepaid, debit and credit card issuing, and there are 2 main models under Vertexon, the first one being processing only. Under this model, we provide the technology, which is a card management system to clients to run their card programs. The clients hold the necessary scheme and regulatory licenses to issue cards. So processing only is available globally and supports all major schemes. And we have clients using Vertexon in Southeast Asia and Latin America, including 2 of the largest banks in the Philippines running over 45 million cards on the platform. The second model is processing and issuing. This is only available in Australia and New Zealand. And under this model, clients utilize Vertexon for processing capabilities and leverage our regulatory and scheme licenses and issuing capabilities. So under this model changes the card issuer record and provides treasury, fraud and compliance services. Vertexon generated 85% of the group's revenue in H1. Our other core product is PaySim, so that's software, which enables end-to-end testing of payments platforms, processes and scheme rule compliance. The PaySim software is based on global messaging standards and can be sold globally. PaySim is the default testing standard for EFTPOS in Australia and has a blue-chip client base, including 5 of the top 10 digital payments companies. PaySim contributed 15% of the group's revenue in H1. So importantly, for both the Vertexon and PaySim, they are proprietary payments technology platforms, which are owned and developed in-house by Change. So this is an important -- this is important from a value and control perspective for the company. So, if we look at some highlights, so really strong financial performance in H1 with a record half year revenue result of USD 9.3 million. So that's up 29% on prior year. 70% of revenue is derived from recurring sources. So this provides a very solid base of revenue to grow from. The proportion of revenue from nonrecurring sources increased during the half due to the strong performance from licenses and professional services revenue. So one-off revenue is an important driver of overall financial performance and was a key contributor to the strong financial performance during the half. Our rolling 3-year revenue CAGR to 31 December is now 25%. Underlying EBITDA for the half was USD 1.8 million. So, this is a material improvement on the underlying EBITDA loss of USD 0.5 million in H1 FY '25. The key drivers of this significant improvement in the underlying EBITDA were revenue growth, stable fixed cost base and the U.S. cost outs from the exit of the U.S. operations. Now if we isolate the impact of the U.S. cost-outs, H1 FY '26 underlying EBITDA was USD 1.9 million versus an underlying EBITDA of USD 400,000 in H1 FY '25. So, we also delivered a maiden profit of USD 600,000 for the half. So that's a real key milestone for the company and something we're very, very proud of as well. We are seeing the operating leverage pull-through we've been talking about. We've been talking about this for the last few quarters. We want to continue to drive operating leverage moving forward to generate margin expansion as we continue to scale. So, PaaS is a key driver of our growth, and we have seen strong growth in PaaS metrics across the board. We now have more than 110,000 cards active in Australia and New Zealand. That increase in cards was driven by the Sharesies debit card program in New Zealand, which launched in October and also significant growth in one of our existing fintech clients in the prepaid card space. So, we will continue to drive revenue growth on the PaaS platform through organic growth from our existing clients. Our new clients already signed. So, we're currently onboarding 2 clients and also further client wins. One of our key priorities across the business is growing our PaaS client base in Australia. So, increasing our footprint in Australia will drive scale benefits. So, we have the product and the team in place to add significantly more clients and volume without having to increase our cost base. There's a significant opportunity in market size in Australia as well. So, we want to really replicate that success that we've had in New Zealand and bring it here into Australia as well. Over to you, Tom. Thomas Russell: Okay. Thanks, Tony. So, we cover a lot of this information in our quarterly webinars. So, the slides are here for new investors, but I won't spend too much time going over the same ground. If you do have specific questions, please ask them using the Q&A function, and we are more than happy to answer them at the end. As Tony said, we've had a great growth in our active card numbers with a significant number of new cards added late in the half. Active cards were up 66% versus H1 last year. We obviously finished onboarding and launched a significant fintech client in New Zealand in October last year, and we're also currently launching another significant fintech client who will soon be migrating existing cards across the Change. We report active cards, which is a leading indicator for expected activity, that is transactions and transaction volume. We want clients growing because the PaaS model is designed to support our clients through launch and then their growth is also our growth. The types of fees we earn from our clients are listed there in the bottom left table. Generally, the largest driver of PaaS revenue is a number of transactions, but we also charge for active cards volume fees depending on the type of transaction and other valued fees you see there. Okay. The 2 clients I just mentioned that have recently launched and are in the middle of launching already have a significant cardholder base and the volumes are starting to show in the coming periods. Change is a B2B business and sales cycles can take a while. But importantly, once clients are onboarded, they can be very meaningful from a revenue perspective and as clients go through their own rollout plans and their multiyear deals. One question we get a lot is, are you actually going to be able to compete in market? Why would someone use Change over a competitor? Well, if you look at this chart, 6 of these clients were one of competitors. So the answer is yes, we can and are competing in market. We are winning on features, service and reliability as one of the only options in market now that owns our own technology. So in short, we've already proved we can win clients. The graph here shows that both competitors -- from competitors, banks and other issuer processes, and we can win net new programs. The key focus for us is building up the number of clients on the right that are contracted and going through the onboarding process. We won a new client in Q2, which is just about to start onboarding. And with the momentum building and more of the deals maturing through the pipeline, you should expect to see the box on the right starting to grow again very soon. All that will drive recurring PaaS revenues in the short-term, but also over the medium to long-term. I've presented this slide before as well, including in our full year results. So I'll just quickly touch on the key points for anyone new. Firstly, the scalability of Vertexon. Our clients process and manage over 45 million debit and prepaid cards on the platform, including one client in the Philippines who issued more than 40 million cards. For our Vertexon on-prem clients, we historically sold a one-off license to them. From that point, clients pay an ongoing support and maintenance fee of around 20% for as long as they continue to use the platform. That includes us pushing quarterly updates to them to ensure their system remains compliant with the card scheme mandated changes. Importantly, many of these clients have been with us for more than 10 years. Vertexon is a core system for them when they roll out new features, for example, the Southeast Asian client recently launched a credit card offering. They pay new license fees plus ongoing support and maintenance. Some clients also expand card tiers, which drives additional license revenue. Revenue here is generally not linked to transaction volumes. PaySim operates in a very similar way. Clients pay an upfront license fee for the modules they require and then ongoing support and maintenance to receive quarterly scheme updates. It's highly modular. Clients typically start with 4 or 5 core modules and then they add additional testing functions over time, which drives further license and recurring revenue. Across both products, particularly Vertexon on-prem, we also undertake customization work where required, generating professional services revenue. Talking explicitly to the financials now. It was a great half financially for Change, a record revenue half with USD 9.3 million of revenue or AUD 13.3 million of revenue, which is up 29% on H1 FY '25. PaaS is now the biggest contributor to revenue and Oceania has overtaken Southeast Asia as well as our biggest region in the last 12 to 24 months. I like sneaking this into every presentation, too, but we've had consistent quarter-on-quarter growth now for the better part of 3 years, and we are on track to have doubled the revenue in the business in the last 3 years by the end of FY '26. Pleasingly, revenue was up across the board and recurring revenue continues to build. The revenue waterfall chart here clearly shows where the revenue comes from across the business. The growth in revenue is being driven by our PaaS clients, but also our Vertexon clients who use Vertexon's core system and have had it deployed into their banks for a long time. The team is doing a great job at managing project pipelines, and we are seeing that work and resulting revenue dropping through at higher rates than in previous years. As a reminder, approximately 70% of our global client base pays us in USD, 20% in New Zealand dollars and 10% in AUD. Turning to the profit and loss. So again, USD 9.3 million of revenue in the half. You can also see the benefits of the cost reduction and exiting the U.S. operations, which is now materially completed, and we're in the final stages of the process to wind down the U.S. subsidiary. As we always say, we have the team in place to support significant increase in revenue, and that's the power of the platform. We are now starting to also see the benefits of AI multiplying the scalability of the platform, and Tony will talk through this shortly. Significantly, we recorded a significant step change in underlying EBITDA with a positive result of USD 1.8 million for the half. For context, we made a USD 0.5 million EBITDA loss last year in H1, and we only recorded USD 200,000 for the full year of FY '25, a 9th of the half year result. This clearly shows the inflection point the company is going through. Looking at PaaS margins, these have started to expand as we have advised they would. Margins in FY '25 set around 26%, but in H1 FY '26 have moved to around 30%. We still have heavy onboarding activities, which we continue to expect to have as more clients are onboarded, but the impact of these lower-margin revenues and even costs during onboarding are diluted by higher recurring base of transactional revenue. As we scale, fixed costs like connectivity and digital pay certifications are spread across a larger revenue base and will support ongoing margin expansion. Turning to the balance sheet. At the end of December, we had USD 2.6 million of cash at bank, an additional USD 1.4 million of cash-backed security deposits. As flagged at the full year, we have started splitting out client settlement funds that sit on our balance sheet as well. These relate to our PaaS business. They were USD 2.5 million at 31 December and fluctuate depending on the day of the week. There also is an offsetting liability for USD 2.3 million, which is labeled scheme settlements payable, which we've now split out from other trade and other payables. We also maintain a healthy balance of contracted liabilities. These are already contracted paid for support and maintenance as well as professional services work that will be unlocked over the next 12 months. In the first couple of months of H2, we've also contracted some large projects with Vertexon on-premise clients that are not reflected in that 31 balance. Overall, the balance sheet is in very good shape, and we continue to drive profitable growth. We'll continue to strengthen the balance sheet. In terms of cash flow, the significant improvement has been driven by a significant increase in cash receipts, but also the stable fixed cost base. The increase in operating payments is primarily driven from PaaS COGS as volumes and revenues increased. CapEx has stayed relatively stable with capitalized software development only up slightly on the back of additional revenue-generating features rolled out to clients in the half. As we always point out, given the billing cycle and cash usage cycle in the business, H2 is expected to be much more improved again on a net cash flow perspective and remain on track to hit our target of cash flow positive guidance for the full year. Back over to you, Tony. Tony Sheehan: Thank you, Tom. So just briefly touching on the large market opportunity that we have in front of us. Many of you on the webinar today would have already heard us talk around this, but there are some new people on the call. So, I will go through this, but I'll go through it pretty quickly. There is more details in the appendix. So, we have a very large market opportunity for Vertexon and PaySim. So, what is our focus really to capitalize on these opportunities? We have identified target markets. So, for Vertexon, that is Australia, New Zealand and Southeast Asia. They are the regions that we are gaining traction and winning. For PaySim, it's global as the product can be sold globally without modification. Secondly, we have pivoted towards outbound sales hunting. So, we have reshaped the sales team and pivoted towards outbound sales. So, the BDMs that we have hired over the last 12 months continue to aggressively target outbound sales opportunities. Thirdly, it's growing and leveraging the partner ecosystem, so expand our partner ecosystem and work more closely with existing partners to drive mutual value. That partner ecosystem provides a one-to-many sales approach, which can be very effective for both Vertexon and PaySim. Fourth is cross-sell and upsell. So, work with our existing Vertexon and PaySim clients to drive project work, and for Vertexon clients, continue that journey towards migrating to PaaS or the latest on-premises version. We upsell the modern functionality and features to clients, which also drives incremental revenue across both products. So, if we look at some key operational achievements. So, to deliver on our financial results that Tom has just gone through, we have a clear and focused operational plan. So, some of the notable operational highlights for H1 include from a commercial perspective, we integrated a marketing campaign automation tool and commenced marketing nurtures for Vertexon and PaySim. So, this is to increase brand awareness and lead generation. We expanded our partner ecosystem. So, we signed 3 new PaySim partners and a new BIN sponsored partnership with a global processor. We also launched our first BIN sponsorship client in New Zealand. We've talked about them before, the Sharesies debit card program launched in early October. From a product perspective, we significantly enhanced the Vertexon PaaS digital capabilities. So, we upgraded our digitization offering, and we broadened our SDKs or our software development kit to enable faster and deeper client integration. So that's really key from a sales perspective as well is having a rich SDK, which does make it easier to integrate and offer more functionality. We continue progressing the PaySim modernization project. So, we completed a 64-bit upgrade to increase testing capacity for our clients. We also enhanced the PaySim ISO 222, which is account-to-account payments product offering. So that complements our ISO 8583 offering. And we completed dual domestic EFTPOS network connectivity in New Zealand. So that's important for our debit card programs and in particular, our financial institution clients as well. From an operations perspective, we strengthened the Vertexon PaaS platform monitoring to maintain high availability as volumes continue to scale. We also undertook ongoing high availability infrastructure improvements, again, for continued scaling. Some of the clients that we're in discussions with and one that we've won recently really is around the resilience and stability of our platform. So that is key for us from a business perspective. We also deepened AI integration across the business, and I'm going to talk more in more details around that now in terms of AI. So, if we look at -- looking a little more deeply at AI and what it means for our business. So AI is rapidly evolving on a daily basis. The enhancements in capability, particularly in the last few months is quite extraordinary. So, the evolution of AI has now reached the point where it can create significant opportunity and value for Change. AI is not new to us. So we already utilize AI in products, for example, fraud monitoring and over the last 24 months, have deployed AI to assist development and other business units. Now with the recent transformational improvements in AI, we are changing the way we adopt AI moving forward. We are embedding Agentic AI across development, operations and client delivery. This will enhance structural advantages and drive operating leverage across the business. So, what is the impact we see from embedding Agentic AI across our business? Firstly, it's around defending and deepening the moat. So, we have proprietary platform control. As we mentioned earlier, we own the technology for Vertexon and PaySim. So this enables faster execution versus competitors reliant on third parties. We have over 20 years of institutional trust in our products. So AI improves our resilience and scalability. Embedded proprietary business logic, so compounding advantage as AI trains on our internal data. There are also some things which AI can't shortcut. So for example, scheme certifications and regulatory licenses and compliance. From our perspective, AI strengthens our competitive moat rather than eroding. Secondly is to accelerate revenue, so faster product releases. So development cycles compressed from months to weeks. So, this will accelerate our product road map delivery, which is super exciting. Will enable faster client onboarding through reduced implementation time frames. It will enable more customization capacity. So that's improved -- that will improve our ability to win large and complex deals. And it will also improve client responsiveness, so stronger retention and cross-sell expansion. The third pillar that we see there is really to drive margin expansion and operating leverage. So increased developer productivity, so far greater output per employee. There will be automation assistance with support and reporting, reduced rework and testing cycles. The operational task, automation, so workflow enhancements to reduce manual engagement and also expanded operational capacity. So, AI will augment teams and drive financial efficiency. So, we are in a super exciting period of evolution for our business. In terms of the outlook, so on the back of a strong H1, we upgraded our guidance for FY '26 in late January. Many of you will be aware of that. Revenue is now expected to come in between USD 17.5 million and USD 18.5 million. So, the increased quantum of recurring revenue provides a very solid base for the business. Underlying EBITDA is now expected to come in between USD 3.1 million to USD 3.8 million. So that's a 15% increase at the midpoint compared to previous guidance, which we released in July. We've also maintained our guidance of being cash flow positive for the year. So as Tom mentioned, historically, our cash flow has significantly improved in the second half of the year. We expect that to be the case in FY '26 as well. So overall, it's been a great start to FY '26. Our focus is on growing the business and executing on our operating plan to deliver on our targets for the year. Tom, we might turn over to Q&A. I think we've had some come in. Thomas Russell: Yes. Thanks, Tony. Okay. So. the first one here is from Miles at Veritas Securities, who has recently picked up coverage of the stock. Thanks, Miles. To what extent are AI and automation enhancing your sales and marketing capacity? Tony Sheehan: Yes. So good question there. I think let's start with the marketing. What the -- what AI is enabling us to do is establish content faster, whether that's white papers, whether that's lead generation materials as well. So that's sort of the first pillar is around that content. It will also likely enable us to do AI-powered lead scoring as well. So, we will use signals, web visits, content downloads, engagement frequency to enable targeting to potential clients there. So, it will continuously learn from our CRM data that we have and refine that and refine the nurtures and the campaigns that are going out. And then what we would be hoping that will come out of that as well is the identification of more sales-ready leads earlier. So that directly leads into the sales side of the business as well. I did talk around the enhancements that Agentic AI, we see coming across the business in terms of product delivery, the road map, customizations as well and onboarding -- the speed of onboarding of clients. So, we think that when you combine that with marketing and the product from a sales perspective, we will reduce implementation friction, increase confidence, particularly during those large and complex enterprise procurement processes there and accelerate our sort of revenue recognition for new contracts. Thomas Russell: Thanks, Tony. Next one from Joe at MST. Congrats on the great result and maiden profit. Just wondering if you can give any color on the current sales pipeline. Tony Sheehan: Yes, I'll take that. So, the sales pipeline at the moment is in very good shape. We've got some very good opportunities that are down the bottom of the funnel, so well advanced in Australia, which is great on the PaaS side. Tom mentioned around when we talked around that onboarding slide where you can see the number of clients and building out that box down the bottom right in terms of clients that are signed. We will be looking to really build that out over the coming quarter or 2 as well. So, from a sales perspective, looking very strong there, which is great. We just need to get those conversions and close those deals hopefully in the coming months as well. And then Southeast Asia, we are still seeing good traction up there. We've got some really marquee clients up there, which is driving a lot of our professional services and license sales on the Vertexon on-premises side as well. So, some great opportunities coming through. Joe, needless to say, we just need those to drop through in the coming months as well. Thomas Russell: Thank you. All right. Laf from MST, who also covers the stock. I appreciate the extra color on AI. Can we talk to specifics on the costs and how they may change and investment versus possible savings? I'll let you take that one, Tony. Tony Sheehan: Yes. And Tom, jump in on this as well. So Laf, in terms of where we're at with that AI, that is rolling out in a very accelerated manner across our business. I think in terms of the costs and what that will change, we will be working on that in more detail in the coming sort of couple of months as well as we -- as that rolls out across the business. So, probably a little bit early for us to sort of talk around that investment and possible savings. Tom, I don't know if you've got anything you want to add to that? Thomas Russell: Yes. The only thing I'll say is that the actual AI tools don't cost a huge amount of money. So, it might surprise you, but we're not talking about huge amounts of money to make that investment in AI. We've already started doing that, as Tony said, over the last 12 months in particular, but the additional cost of AI is not great. And I think we can provide a bit more color on that in the coming sort of months to 6 months. Okay. Another question from Laf. Are the 3 wins in PaySim net wins, new wins? Tony Sheehan: Yes. So, they're partner wins, so they are net new partner wins, Laf, on the PaySim side. And so, they're in most of those -- one partner was in Latin America, 2 were in the Middle East as well. So, regions where we can sort of leverage that partner network to sell PaySim licenses in region. Thomas Russell: So, we sell a lot of licenses through partners currently in different parts of the world as well. So, we use them as a distribution channel. And what worked in the pitch for PaySim, how do you seriously move above a less than 0.5% market share? Tony Sheehan: Yes. So, with PaySim, it is extremely functionally rich. So, the software itself, functionally rich. We have resellers that have their own testing tools as well, but they sell PaySim because it is more functionally rich. In terms of how do we move past that 0.5%, we are undertaking a modernization of that product, so to improve the look and feel of that. That's where we would expect our Agentic AI to really accelerate that modernization of PaySim. It's also about direct sales. So, we've moved towards outbound sales hunting with the appointment of new BDMs last year, and that partner network, we talk around that one-to-many partner network for distribution as well. So, it really, Laf, comes from product. So that modernization is very functionally rich. Let's modernize it to improve the look and feel and then direct sales and partner sales, I think the partner sales network, which has been very good for us historically. We need to accelerate that, and that's one of our key focus areas. Thomas Russell: Back to AI. Do you think you can use it for any horizontal opportunities as a new revenue potential? Tony Sheehan: Look, in terms of horizontal opportunities, I mentioned it earlier around accelerating our road map. We have road maps for Vertexon and PaySim. Where I see the AI coming in is the acceleration of that, which is new products and features. So that is revenue potential. So absolutely see AI as accelerating our revenue potential and growth there. Thomas Russell: I've got another question here. What is the cost of remaining listed? Would the company not be better off being privately held? Look, that's something that people ask us from time to time. The cost is probably about USD 400,000 a year in terms of being listed. It's not cheap to be a listed company, which is why you see in the market now companies need to be bigger before they list. Look, it's something the company could consider, but we've got about 2,000 shareholders who I'm not sure would all appreciate being a private company. So, for now, we'll be staying listed. Michael from MST. Can you touch on some of the future products or enhancements you guys may be exploring over the next 12 to 24 months? Tony Sheehan: Yes. So, Michael, from a product perspective, if we have a look at PaySim, the modernization, which I mentioned in the presentation and also some of the last questions there, the modernization look and feel, also building out our ISO 222, which is our account-to-account solution as well. So, what we -- a core function that we have runs on 8583, ISO 8583. What we want to do is build out that functionality around account-to-account payments because that's a growing segment as well. So, that will be the real focus for PaySim. If we have a look at Vertexon, again, we have a long list on our product road map, which we go through with prioritization. Things that we are looking at, I've mentioned that we've significantly enhanced our digital capabilities on the PaaS platform. We will also be looking at loyalty and also account-to-account, so real-time payments to complement our card issuing. We're not going to be someone that competes for account-to-account payments, but it is a complementary offering for our clients around that card issuing. So that's probably some of the key things that we'll be looking at over the next sort of 12 to 24 months. And again, that's where we do expect that acceleration to happen through our sort of rollout of Agent AI. Thomas Russell: Thanks. Last question for now. Sean from Snowble. Does the use of AI affect your hiring decisions? Example, would you look at hiring less due to efficiency gains? So, I might take that one, Tony. So yes, I think that is our expectation. The platform, as everyone knows, is very scalable, and we've always needed to hire a few people to double the revenue, like we said for the future and like we've shown in the last sort of 12 to 24 months. We've had those people there the whole time. The revenue has doubled. We don't need to -- when we sign a new client, go and add more staff necessarily. There will become a point where we do. As we said before, we're sort of going through our AI rollout plan at the moment. It's happening very quickly, something we've been sort of been keeping a very close eye on and how it's going to affect us as a business. So we're well ahead of it. But over the next few months, I think we'll be in a position to talk more about that as we come into towards the end of the financial year. Okay. That's it for questions for now, I think, Tony. Tony Sheehan: Okay. Thank you for the questions, Tom and I always enjoy the engagement from investors and our analysts that cover our stock as well. Thank you for joining. Thanks for taking the time to join us on our H1 update. I look forward to keeping you updated throughout the remainder of FY '26. Lots of exciting things happening in the business. So, we'll keep that coming with our news flow as well and our quarterly updates that we provide.
Operator: Good afternoon. My name is Nadia, and I'll be the conference operator today. I would like to welcome everyone to Paramount's Q4 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Kevin Creighton, Paramount's EVP of Investor Relations. You may now begin your conference call. Kevin Creighton: Good afternoon, and thank you for taking the time to join us for the Paramount Fourth Quarter 2025 Earnings Call. I'm Kevin Creighton, EVP of Corporate Finance and Investor Relations. Joining me today is our Chairman and Chief Executive Officer, David Ellison; our President, Jeff Shell; our Chief Financial Officer, Dennis Cinelli; and our Chief Strategy and Operating Officer, Andy Gordon. As a reminder, we will be making forward-looking statements today that involve risks and uncertainties. Our remarks will also include non-GAAP financial measures, and reconciliations of these measures can be found in our earnings letter or in our trending schedules, which contain supplemental information. These can be found on our Investor Relations website. I'll now turn it over to David for a few brief remarks before we take analyst questions. David Ellison: Thanks, Kevin, and good afternoon, everyone. As you saw in our Q4 results and in the most recent shareholder letter, we ended the fiscal year with a strong first full quarter under our leadership team and positive momentum heading into 2026, meeting or exceeding guidance for the quarter that we laid out in our Q3 letter. It's been a productive 6-plus months since the launch of the new Paramount, and we are pleased with the progress made in a relatively short time. Our North Star priorities continue to guide everything we do, and we're confident we are on the right trajectory and are excited about the opportunities ahead. Before we get to your questions, I did want to take a moment to acknowledge Andy Warren's tenure as our Interim CFO. Andy is widely respected across our organization and the industry, and we are truly fortunate to have had his leadership during this important period. We're incredibly grateful for everything he's done to help position the company for success and appreciate his continued partnership as a strategic adviser. I also want to officially welcome Dennis Cinelli. He brings significant financial and operational experience, having held senior roles at GE, Uber and Scale AI, where he served most recently as CFO. He was also briefly a member of our Board of Directors before assuming his current role. We're thrilled that he's joined our leadership team and look forward to you getting to know him better going forward. Finally, I'll briefly address our proposal to acquire Warner Bros. Discovery. On Monday, we submitted a revised bid of $31 per share, all cash, and we look forward to continuing to engage with their leadership team and Board. While we appreciate that this is obviously something you all have questions about, we won't be commenting further during today's call. With that, I'll turn it back over to Kevin for your questions. Kevin Creighton: All right. Thank you, David. And Nadia, we'll go ahead and open it up for questions. Thank you. Operator: [Operator Instructions] The first question goes to Peter Supino of Wolfe Research. Peter Supino: I wondered if you could comment on your initial experience as the home of UFC on your streaming service. And maybe tie those comments more broadly to your latest thinking on the viability of being something for everyone every day. I think that's your stated strategy in streaming. And obviously, it's an extremely tall competitive order. And I just wondered kind of what you've learned in the last 6 months of owning the asset that makes you more or less confident in that objective. David Ellison: No, absolutely. And really appreciate the question. First, we couldn't be more thrilled about the way the UFC partnership has started. UFC 324 was really a phenomenal start for us. We reached approximately 7 million households across the U.S. and Latin America and was also the platform's largest exclusive live event to date. We've also seen the advertising demand for UFC be strong. And overall, the partnership has really started ahead of expectations. In addition to that, we've really seen UFC fans engage with the vast others of our content offering. They're watching Landman. They're watching other series. So we're really seeing that flywheel work for us. And we also are really seeing it work well with Zuffa Boxing. And we really believe in the theory of actually owning combat sports, having that entire category as a home on Paramount+ is something that's been working really well for us to date. More broadly, we greenlit our 11 original series since we took over 6 months ago and are really seeing strong basically growth in our streaming service, up over 17% year-to-date on Paramount+. So from that standpoint, we're really seeing that momentum to continue and feel really good about the start of the partnership with UFC and Dana White. Peter Supino: Is there anything we want to add on sort of the last 6 months in streaming? Jeffrey Shell: Yes. So first of all, I would just add to the UFC comments that David just made that we're really at the very beginning of this partnership, and we're going to experiment a lot. The beauty of having this sport exclusively and being the exclusive partners of the UFC is we can try lots of stuff. Our upcoming fight in March 7 is going to be partially on CBS, and we look forward to lots of experimentation as we grow the brand. I think the first 6 months on streaming have gone really well. We've seen accelerating growth in Paramount+, doing better and better every quarter. The key now is to get ongoing engagement and the content that I'm sure we're going to talk about later that we have coming is pretty exciting for doing that. From a kind of financial perspective, the ad revenue has been much more promising than we expected. And it's really -- the key now is driving that engagement and that usage because we can monetize it at Paramount+. And so we're feeling pretty good about the momentum we have at streaming so far. Operator: The next question goes to John Hodulik of UBS. John Hodulik: Jeff, maybe for you, a follow-up on the comments on D2C. You guys guided to better profitability next year against some slightly higher subs. What are you seeing in terms of ARPU? There seem to be some moving parts with exiting the hard bundles, but some price increases that translates to better revenue growth. And then on the cost side, just aggregate sort of that commentary on leading to better D2C results. Jeffrey Shell: Yes. Thanks, John. I'm going to actually pass it over to Dennis for this one. Dennis Cinelli: Yes. John, good to meet you, and I'm excited to be here. So thanks, everybody. I think it's -- John, is it helpful probably for us to just frame our guidance overall. which a big part of that is DTC. As we've put out, overall, we expect revenue this year of $30 billion, up 4% year-on-year. DTC is going to be the driver of that. We expect DTC to continue to accelerate growth year-on-year. So growth will accelerate in '26 versus '25. The driver of that is a couple of things. We continue to see subscriber growth, what we're calling underlying healthy subscriber growth accelerate in '26. This will result in better ARPU from a mix shift as well as we realize the price increases in Q1. As we previously mentioned -- as we sort of mentioned, and I want to call this out is we're making this deliberate decision to exit from uneconomic hard bundles. So you'll see that in our subscriber growth this year. But if you take those underlying exits out, we will continue to see net adds grow year-on-year. And just to give you a call out, those uneconomic hard bundles represented less than 2% of Paramount+ revenue in 2025. So coupled with the subscriber growth, we also expect DTC ad revenue to grow this year. We've been talking a lot about how we're investing in programming to drive better engagement, better ad tech as well as the team there that Jeff alluded to. And so we expect to meaningfully recover DTC ad growth in the year. At the same time, back to your question, how that comes together, we are investing in the business, but we expect DTC profitability to improve year-on-year as we both grow revenue and manage our investments. It's worth just taking a step back maybe and talking about the rest of the business. So DTC will be the growth driver. But as we think about the rest of the portfolio we have, right, so TV Media, we expect to see some declines in revenue, mostly in line with the industry headwinds around pay TV, though we expect our advertising revenue decline to be more moderate as we execute overall and better ad sales, we feel really good about the upfronts coming up this year. We also have tailwinds from political spending in 2026. One thing to call out, we do offset some of the -- you do have some impact from our sale of Telefe in Chilevisión. In TV Media overall, I just want to call out, we've been really impressed with the team managing that business in -- while revenues will decline, we expect overall profitability in that business to be stable on both a profit dollars and a margin basis. And then the other thing is the studios, right? So studios, we do expect theatrical revenue to decline. I think we've been very clear overall that we're in a rebuild phase of that business. As we execute that rebuild, we'll see some of that come through in the '26 slate, but most of that will come through in future years. And so even with theatrical revenue dropping down, we do expect better cost management as well as benefits from our licensing deals to drive studio profitability up. So if you put this together, overall, we're reaffirming guidance for the year on both on revenue as well as profit, adjusted EBIT outlook of $3.8 billion. That excludes our $300 million of stock-based compensation but is improving year-on-year driven by both the top line and as we realize our synergies. So we put out there, we will expect to realize $3 billion plus of our synergies. This includes both across our entire business. And so we expect to sort of profitability to improve in DTC and our new studio segment, still margins in TV Media. And I think the last question probably is just like what does that look like beyond '26. And I think without giving specific guidance, we just want to make sure we're here talking about how the team around the table, David on down, we're owner operators. We're investing for long-term value creation, and we expect that to show through over the next many years. Operator: The next question goes to Steven Cahall of Wells Fargo. Steven Cahall: First, just wanted to ask if you've had any conversations yet with the NFL. It's a big topic for investors, especially with you and Fox having so many games on Sunday. And as you're thinking about where that could go in the future, I was wondering if there's any potential for the games on Paramount+, which I think are currently geo-fenced to be available sort of nationwide within that rather than only being on Sunday ticket. So it seems like you've got some opportunities maybe as well as some risks with the NFL renewal. So I would love to know how you're thinking about that. And then just on the outlook for '26 and maybe '27, if we think about free cash flow, I think you've said before that you're committed to investment grade with all 3 rating agencies. I think that implies that on a total basis, including restructuring, you'd be free cash flow positive by next year. So just wondering if I'm thinking about that one correctly. Jeffrey Shell: Thanks, Steve. This is Jeff. I'll take the first and then pass it over to Andy for the second. So we have a great -- you asked have we talked to the NFL. We talk to the NFL almost daily. We have a great relationship with the NFL. We were the very first NFL broadcaster back when it started, and it's been nearly a century of relationship. And during that century, this past year was our most watched year ever, everything clicked this last year for us with the most viewership, the biggest watched game, the biggest watch window, that 425 window nationally for CBS. So everything is really going well with the partnership, and we feel very good about them, and I think they feel very good about us. So we're not particularly concerned. Obviously, there -- it's been widely publicized that there is a renewal discussion coming up. And we don't talk about individual negotiations. But suffice it to say, we feel pretty confident we're going to be in business with the NFL for a long time, and we have properly accounted for what we expect to be whatever impact of that negotiation in our kind of internal forecast going forward. Let me just -- one thing about the geofencing, let's talk about that for a second. One of the unique things about our relationship with the NFL, and I would actually say it's probably similar to Fox's relationship with the NFL is the anchor of their flywheel is really their reach and the anchor of their reach is really the reach of both CBS and Fox on Sunday afternoons. So the way we get the NFL that reach, which has really helped contribute for both of our benefit to the success of the NFL is by our vast array of both owned and operated stations, of which we have 28 and affiliates. And so it's important that those games get regionalized and that we aggregate that viewership and maximize the viewership in each market for the best game, both for us and Fox. And that accrues to the benefit of the NFL and to us and really maximizes the reach on any given Sunday. So I don't think we're going to be doing anything with Peacock -- Paramount+ that's any different. And I don't think that Fox is going to be doing anything different than we are doing on linear, which is to maximize that reach and that regionalization of that window, which I think works for all of us. Maybe pass it over to Andy for the... Andrew Gordon: Yes, sure. Steve, thanks for the second question. Let me take the investment-grade part first, and obviously, it's interrelated with free cash flow conversion. But we -- as we told you in the last quarter, we are absolutely committed to getting to investment-grade credit metrics. This is, of course, relative to our stand-alone position, and we expect to hit those in '27. With regard to free cash flow, I'd just point out that notwithstanding the fact we paid down over $300 million of debt in the first quarter and in addition, have $800 million of restructuring charges, you take the restructuring charges out, we actually are hitting 5% free cash flow conversion this year, which, of course, is not where we want to be. And as we sort of accelerate that into '27 and the out years, we expect to get back to industry norms and hopefully exceed that. That's certainly part of our strategic plan. So I would say there's no real change from that and what we talked about in November. Operator: The next question goes to Robert Fishman of MoffettNathanson. Robert Fishman: When you think about your growth ahead, can you talk about how critical to creating long-term shareholder value to reinvigorate and build upon your core franchises and IP? And if you can comment how Warner Bros. and HBO IP would help accelerate that growth over the next 3 to 5 years, either for a stand-alone Paramount+ or a combined platform with HBO Max? And then on a related note, just how do we think about overall content spending, again, either stand-alone or with Warner Bros., especially factoring in the sports and the long-term strategy to grow that profit and cash flow? Kevin Creighton: Yes. Thanks, Robert, for the question. We won't be answering anything related to Warner, as David mentioned in his opening remarks. So just a reminder for everyone else on the line, but we'll go ahead and how do we think about sort of franchise and long-term value, as we mentioned in the letter. David Ellison: Yes. No, absolutely, so I'll speak to that. And look, as we're the largest shareholder of the Class Bs, we really approach everything through the lens of how do we create long-term basically shareholder value, which really means we're long-term investors, we're long-term owner operators, and we really have a long-term horizon in terms of how we're approaching this. If you step back across all of our businesses, we're actually really pleased about the investments that we're making really going back to our North Star priorities. We talked about streaming. I'll start in the Studio segment. As Dennis said, we inherited a slate that has underperformed. We're going to see significant improvement in the profitability of the film slate this year. But I think if you really look at how we are doubling down on our franchises and really reinvigorating them and reinvesting in them, which is something that we did in partnership when we were -- obviously, when I ran Skydance, and to date, in the little over 6 months that we've been here, we've actually -- we're going to release 16 movies this year versus the 8 films that we inherited. And we're really going to be at a steady state of over 15 movies per year. We've greenlit 11 movies basically since we've been here in the first 6 months, including films like A Quiet Place and Sonic, which is really us doubling down on our franchises. Taylor Sheridan, Pete Berg are hard at work at Call of Duty, which we're really excited about. And we have Scream opening this weekend. Again, going to Paramount+ in addition to the investments that we've obviously made in the UFC and sports, we've actually greenlit 11 original series on top of the incredible slate that we're fortunate enough to step into. And we're also investing significantly in the improved product experience on both P+ and Pluto. So consumers are going to continue to get more incredible content they love and an overall better user experience, which we think will really position ourselves well for growth into the future. And then when you step back and look at our linear really anchored by CBS, we had 8 of the top 10 shows on broadcast, the #1 show in Tracker, the #1 new show in Sheriff County, the #1 news program in 60 minutes. And so we really are seeing strong demand for our content across our portfolios, and we're only seeing that accelerate going forward. So it's been 6 months, but we really do feel good about the work the team has really done to date. And you can expect that to accelerate into the future quickly. Kevin Creighton: How do we think about the content spend for Paramount overall? David Ellison: Yes. So overall content spend -- sorry, I want to make sure that. So we talked about -- we've obviously increased our content spend as we announced last quarter by $1.5 billion, which is really going towards all the things that I talked about, which is really scaling our film slate, scaling our original series, investing more into sports. And we do believe that, that will create long-term shareholder value because, again, like it is a priority for us to make sure that we can win in the content space, make sure that we are the most technologically capable media company and really have the appropriate operational efficiencies across the company. that's what really drives all the decisions here. And I think we're off to a really strong start in the first 6 months. Operator: The next question goes to Rick Prentiss of Raymond James. Ric Prentiss: A question in the letter, you talked about leveraging your IP across the ecosystem. Give us some concrete examples of what you hope to achieve going across film, television, streaming, live experiences, publishing, consumer products and how we might see that? And if you were to benchmark yourself against the peer group, how do you think you are doing as far as monetizing that IP? David Ellison: So it's a great question. And I'll point to a couple of things. Like one, I'll use Teenage Mutant Ninja Turtles as obviously the most recent example of really we're obviously -- we have 2 films that we're obviously making, obviously, in the Turtles landscape, we have series, and we also have consumer products. Huge compliment to obviously, Josh, who came to us from Mattel, who in the first month of basically being at Paramount, created the most significant consumer products partnership in the history of the company, over 5x what have been done to date, which I think is kind of a great example in this quarter of really how we're maximizing our IP across the flywheel that we've created. And one of the other things if you take a step back, I think that we're really proud of is really the Paramount One initiative that we've launched really as a marketing platform. The UFC is one of the first things that we obviously ran through that, where we really activated all of our linear channels, our direct-to-consumer platforms and really the entire ecosystem. to deliver billions of impressions, which really helped drive that launch of UFC 324, which again came in ahead of our expectations and really helped us create the largest live event in the history of Paramount+. And you're going to see us activating that Paramount One ecosystem across a lot of our tent-pole franchises going forward, across our series launches as we really integrate this business to operate as one company. And we're seeing that work incredibly well in the first couple of months. And I just have to really give a tremendous amount of credit to the team that have really been breaking down silos and operating as one business, and the results are incredibly promising. We're still in the beginning, 6 months in, but we're really excited about the trajectory. Operator: The next question goes to Kutgun Maral of Evercore ISI. Kutgun Maral: A few on AI, if I could. First, GenAI is clearly progressing quickly and dramatically. Short-form clips don't threaten the core of your studios today, but future length personalized stories could become feasible. So how are you positioning the company for that evolution? Do you expect content creation to become commoditized? Or do brands and IP become more valuable in this world? And at a high level with AI, maybe you could talk about your guiding principles on licensing and any guardrails? And finally, one of your peers recently outlined a path to bring curated AI-generated short clips into its streaming service. Do you see a future where AI-enabled short-form user-generated or prompted content lives inside Paramount+? David Ellison: So it's a great question. And first, look, I'll kind of step back to where really say like it is -- one of our core goals is to become the most technologically capable media company. And there's no question that AI is going to be a significant transformation across our industry and others. But I want to say that, first and foremost, we are really a home for storytellers, and we are a content company first. And so we really view artificial intelligence as an unbelievable tool for artists that will be a significant unlock on creativity. With that said, we are also big believers that when you really go back to 1992 when -- I believe it was James Cameron and Digital Domain when they basically did away with opticals and actually started getting into digital composites was really the beginning of the kind of software-based CPU pipelines that we've all been iterating off of for the last several decades. And I think there's no question that we're at one of those inflection points where model-driven GPU pipelines are going to get deployed across the business. But again, we really view that as a tool for artists to be able to unlock creativity. When you look at some of the things we're doing internally in terms of how we're investing, when you look at the engineers that we obviously have at the company currently, you can expect us to kind of 10x the size of the headcount that we are basically investing towards this and really want to be in a position where we can be a leader in the industry in terms of how this transformation is shaped. To your question about do I think it will be commoditized, the answer is no. I don't think there's anything that's going to replace artists. I don't think there's anything that's going to replace the creativity of original storytelling. I would actually point towards -- when you look at the value of intellectual property, whether it was Sora on their launch or whether it was Seedance, and I think you saw us obviously defend against both of -- defend our IP against both of those things. But the fact that there was so much engagement around the characters and intellectual property that audiences love, I think, speaks to the value of that intellectual property. And we are in a unique position to be able to take advantage of that. There's nothing I'm really in a position that I can fully elaborate on further. But again, I think when you look at the power of IP enabled by AI is going to be something that is, I think, a tailwind for us as a company, and we're excited to help kind of be key drivers of that innovation. Operator: The next question goes to Michael Morris of Guggenheim. Michael Morris: I wanted to ask about the studio first. Dennis, I think you mentioned an expected decline in theatrical revenue in '26. I'm hoping you can reconcile that with the significant increase that you're expecting in the number of titles being released. And as you think about that decline, does that pertain to the Studio business overall? Or is it only the theatrical component and you expect growth in licensing? And then if I could, just on the Pluto headwinds that you cited, the trend there seems to be well below the CTV industry overall. Is this a business that you expect to turn around as a growth driver? Or is this maybe not core to the future as you see it? Dennis Cinelli: Thanks, Michael. Yes, let me take the first part and then hand over to David. So on the Studio business overall, we will see growth overall on the Studio business on a revenue basis. And that will be driven primarily by the licensing and also combining Skydance into that segment. What I was talking about is theatrical, right? So in theatrical, we are increasing the number of films, but we are comping last year, which was a big output in Mission Impossible. So that's what will drive the theatrical decline year-on-year for 2026. And then the second part of your question, as we think about Pluto, I mean, I think what you'll see is in the DTC segment, right, in Q4, we grew 10% year-on-year. Paramount+ was up 17%, non-Paramount+ was down 16%. And as we call out, that's primarily driven by Pluto, and it's primarily driven by the monetization of Pluto. I think what we should call out is actually Pluto engagement is up. So monthly active users, the engagement of those users is actually up. And so what we're facing is a monetization headwind, which we are addressing, and we addressed that in our guidance. And I think it's worth passing over to David to talk overall about how we think about Pluto and the and our FAST strategy. David Ellison: Yes. And I want to expand on what Dennis said on the studio side. So again, we stepped into last year a film slate that underperformed. We have scaled from 8 movies to 16 releases this year, and it's going to be significantly more profitable. But when you really think about getting our core franchises back online, you don't really see that start to occur until '27 just because of what the life cycle is of obviously making a tent pole. It's 2 years to basically from beginning to release at the earliest. So I would look at -- we're making significant improvements in profitability across our film slate this year. And then in '27, when you start seeing films like A Quiet Place and Sonic, Call of Duty, several of our other franchises that basically we'll be releasing in '27, '28 and beyond, you will see our box office numbers increase. You will see profitability increase. But there is a 2-year life cycle kind of minimum to those big event films. And I actually think the team has done an exceptional job putting us in a good position for this year for the level of growth that we're going to have across our theatrical slate. And then you will see that accelerate significantly into '27. As Dennis said, really looking at Pluto, stepping back, I am a big believer in the FAST space. And I think when you really look at globally, FAST is something that is only going to grow in importance. And when you look at the signs that are also really encouraging on Pluto is we are seeing engagement grow. The headwind we're facing is really monetization, and we're doing several things to correct that. And while Pluto has always been a leader in the FAST space, it's a profitable platform. It was, from our perspective, underinvested in by the previous owners and managers, both in a content standpoint as well as from a product standpoint. And we've also brought in, obviously, new leadership to help us on the advertising side. We have new leadership on the D2C side that are really working really well hand-in-hand to make sure that we improve the product and improve the monetization. Really, our overall streaming convergence that we talked about on our last earnings call, where we had really 3 separate stacks that were running on multiple clouds, all independent of one another, that convergence obviously will be done in the coming quarters. And you will see continued product improvement to both Pluto and P+. And with that, we'll see the monetization curve correct, and we'll really start seeing better monetization, better growth and more in line with peers with expectations to be above. Operator: The final question goes to Bryan Kraft of Deutsche Bank. Bryan Kraft: First on UFC, I know you had cited 7 million MAUs. I was curious as to whether you can give us some color on the number of unique viewers that you had, just given that you have 79 million subs, trying to understand what the percentage of those subscribers overall is that are engaging with UFC at some level. And then secondly, I was wondering if you could talk about what you've been seeing since you completed the acquisition, both in churn and CAC. How are those trending? How much opportunity do you see for improvement in both of those key metrics over the next 1 or 2 years? And how critical is it to improve either or both of those to the long-term economic success of the streaming business? David Ellison: Yes. No, absolutely. So look, I want to reiterate, we're incredibly happy with the way our partnership with the UFC has started. When it goes to the 7 million households across U.S. and Latin America, that was above our expectation. And again, it is the largest exclusive sporting event that we've had, obviously, in Paramount+ history. So -- and we are seeing that momentum continue. In terms of basically churn, we are seeing that trend in the right direction. But I still think there's areas for us to be able to continue to improve, which is why you're seeing us invest the way that we are both in content as well as in the product. We know at 79 million global subscribers, there's a lot of opportunity for growth ahead of us. And when you look at the investments that we're making, again, in the first 6 months, greenlighting 11 original series as well as the work that Dane Glasgow and his team are really doing to significantly improve the product, I think you'll see us improve in all of those metrics going forward. And obviously, we believe those investments will significantly yield long-term shareholder value. So we're pleased about the work to date, but you're only going to see that improve going forward in the future. I mean, Jeff, anything you want to add to that? Jeffrey Shell: No, I just think -- what I would say is there's a seasonality aspect to the business, too. So churn is something that we traditionally saw at Paramount+ really spike up in the summer after the Masters and kind of come back down with the NFL. So 2 of the things we've talked about today that David's talked about, both the UFC and its year-round programming, combined with the increased movie slate, which then pays dividends as it goes to Paramount+ year-round, I think that's going to have a significant impact on churn in addition to the other factors that David just talked about. Dennis Cinelli: And Bryan, just jumping in, this is Dennis. One thing to correct. The stat is 7 million households that engage in UFC 324. Kevin Creighton: Great. Thank you, team, and thank you all for joining the call today. We appreciate it. Feel free to reach out if you have any questions. Operator: Thank you. This now concludes today's call. Thank you all for joining, and you may now disconnect your lines.
Operator: Good afternoon, and welcome to the TaskUs Fourth Quarter and Full Year 2025 Earnings Call. My name is Victor, and I'll be your conference facilitator today. [Operator Instructions] I would now like to introduce Trent Thrash, Senior Vice President of Corporate Development & Investor Relations. Trent, you may begin. Trent Thrash: Hello, everyone, and thank you for joining us for today's earnings call. Joining me are Bryce Maddock, our Co-Founder and Chief Executive Officer; and Balaji Sekar, our Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file. Please note, this call is being simultaneously webcast on the Investor Relations section of our website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of federal securities laws, including, but not limited to, statements regarding our future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statements. Factors that could cause actual results to differ from these forward-looking statements can be found in our Annual Report on Form 10-K, which was filed with the SEC in March of last year. This filing, which may be supplemented with subsequent periodic reports, is accessible on the SEC website and our Investor Relations website. We expect our next 10-K to be filed with the SEC in early March. Any forward-looking statements made on today's conference call, including responses to questions, are based on current expectations as of today, and TaskUs assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. These discussions throughout today's call contain non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, which is available in the IR section of our website. Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce? Bryce Maddock: Thank you, Trent. Good afternoon, everyone, and thank you for joining us. As many of you may have seen, today, we announced that our long-time CFO, Balaji Sekar, is leaving TaskUs at the end of the quarter to pursue another opportunity with a private company outside the industry. So before discussing our 2025 results, I want to sincerely thank Balaji for his service to TaskUs. During Balaji's nearly 10 years at TaskUs, we grew from being a start-up of a few thousand, based exclusively in the Philippines to a global corporation with over 65,000 teammates spread across 13 different countries. Along the way, Balaji was critical to developing our partnership with Blackstone and ultimately leading our successful IPO in 2021. Balaji has been a reliable, trusted adviser to our entire C-suite and our Board of Directors. He's also been an incredible partner to me in the business and someone I'm very proud to call a friend. Balaji will be missed, but we are fortunate to have a deep bench of leadership while we execute on a search for a new CFO. I'm grateful for Balaji's willingness to support a seamless transition by continuing to serve as an adviser to me, our next CFO and Trent Thrash, who will serve as Interim TaskUs CFO. Today, we also announced that we have secured commitments to amend our existing credit agreement to address our upcoming 2027 term loan maturity. As part of this comprehensive refinancing, we will increase our term loan to $500 million and obtain access to a $100 million revolving line of credit. In connection with the refinancing commitments, we also declared a $3.65 per share special dividend payable to all shareholders in March of 2026. Depending on the share count on the record date, we currently estimate the total dividend payment will be approximately $333 million. As we discussed on our Q3 earnings call, these actions are consistent with our desire to return capital to shareholders at a time when we believe the market has fundamentally undervalued our strong track record of performance, including our healthy balance sheet and our consistent revenue, earnings and cash flow generation. Following the closing of the refinancing and payment of the dividend, our balance sheet will have a net debt leverage ratio of approximately 1.5x our 2025 adjusted EBITDA. We believe this is a prudent level of leverage to maintain in the business. Importantly, this dividend does not change our plans to invest aggressively to transform our business for the AI era. With our strong cash generation and the flexible terms of the amended credit agreement, we will have ample room to increase spending and accelerate our transformation. In 2026, we plan to spend more than $25 million on AI transformation and emerging growth initiatives. With that, let's jump into our results. In the fourth quarter, we delivered $313 million in revenue, representing 14.1% year-over-year growth and another quarterly record revenue for TaskUs. As a result of the incredible work of our global teammates, we outperformed the top end of our quarterly guidance by nearly $10 million. In terms of profitability, we delivered $61.4 million in adjusted EBITDA in the quarter for an adjusted EBITDA margin of 19.6%. For the full year 2025, we delivered $1.18 billion in revenue or 19% year-over-year growth and $249.1 million in adjusted EBITDA, representing an adjusted EBITDA margin of 21%. We believe that both our revenue growth and adjusted EBITDA margins are among the best in the industry and that put together, they make TaskUs a clear leader in our space. On behalf of the entire TaskUs leadership team, I want to express my gratitude for our teammates who delivered outstanding results for our clients and drove record-breaking revenue and adjusted EBITDA for our shareholders in 2025. Next, I'll recap some of the highlights from our Q4 and full year 2025 performance before discussing our 2026 outlook. Balaji will then walk through our financials and 2026 guidance in greater detail. Q4 revenues were $313 million, a 14.1% increase on a year-over-year basis. While our largest client grew revenue 18% year-over-year, growth at clients outside our largest client accelerated once again to an annual rate of 12.7%. Our sales and client service teams once again delivered remarkable performance in Q4, positioning us for a solid start to 2026. Approximately 60% of our Q4 signings were driven by wins from existing clients. We were pleased with the level of new and existing client bookings and that our signings were less weighted towards our largest client during the quarter. As a result, overall sales in Q4 were well balanced across our client portfolio and delivery locations. Turning to our service line growth. Q4 Digital Customer Experience revenue increased by 4.8% compared to Q4 of 2024, resulting in over 8% full year growth. DCX growth was driven primarily by our technology and health care verticals. I'm pleased to report that TaskUs was recently named a major contender and star performer in Everest Group's B2B Sales Service Peak Matrix Assessment for 2025. Additionally, for a third year in a row, we were also named a Major Contender and Star Performer in Everest Group's Customer Experience Management Services PEAK Matrix for 2025 for EMEA and a major contender for the Americas. In terms of DCX signings in Q4, despite the ongoing narrative around AI, our sales team continued to see strong demand for CX solutions. We again saw broad-based signings primarily across our financial services, technology, retail and commerce and health care verticals. While we're automating simple, repeatable customer interactions, our customers continue to invest in premium care offerings delivered by talented human beings. Here, we are seeing increases in our clients' investments to support their most valuable customers, intervene in the moments that matter and drive revenue growth through customer success and sales motions. Moving on to Trust & Safety. This service line again delivered strong performance in Q4 with 18% year-over-year quarterly revenue growth, primarily driven by existing client growth in our social media vertical. For the full year, year-over-year growth was even stronger at nearly 24%. We are proud that the quality of our content moderation solutions were again recognized by the Everest Group in 2025 with TaskUs being named a leader for Trust & Safety for a third year in a row. The vast majority of our Q4 Trust & Safety signings were concentrated in both new and existing clients in our financial services, technology and entertainment and gaming verticals, further diversifying this vertical away from our largest client. AI Services continue to be our fastest-growing service line, delivering 46% year-over-year growth in Q4 and nearly 59% for the full year. We believe this growth is a direct reflection of our investments in designing industry-leading solutions in AI safety, AI model development and maintenance and increasingly in our solutions focused on autonomous vehicles and robotics. Q4's remarkable growth was driven by our ability to successfully deliver our AI Services across a broad set of client verticals, including travel and transportation, social media, technology and entertainment and gaming, amongst others. AI Services made up nearly 40% of total signings in Q4. As a result, we believe that AI Services will once again be our fastest-growing service line in 2026. From a vertical perspective, AIS signings were strongest across both new and existing autonomous vehicle, social media and technology clients. Moving on from our service lines. Let's turn to strategy. At the start of last year, I outlined a 3-part blueprint that would reinvent our business for the AI era. Our focus is to transform from a traditional service provider to a hybrid technology plus talent solutions partner. As part of this strategy, we envision a multiyear move away from selling time-based services towards selling solutions that combine agentic technology, consulting and human talent. As we kick off 2026, I want to provide an update on each of the 3 parts of this strategy. How did we do in 2025 and where are we headed in 2026. First, we're doubling down our AI Services offering. At more than $200 million in revenue for 2025, AI Services is our fastest-growing service line, delivering year-over-year revenue growth in excess of 30% for 5 consecutive quarters. Here, we provide the human and technology-led services required to develop AI models. We collect, create and curate the data needed to develop both generative and agentic AI systems. We also evaluate these models, both pre and post deployment to ensure their quality and safety. In 2026, we expect to see significant growth from our AI safety, autonomous vehicles and robotics practices, all areas, we believe, will have enduring growth dynamics well into the future. Second, we are significantly increasing investments in our agentic AI consulting practice to create an enduring new revenue stream from the AI revolution. This involves supporting the development, training, and maintenance of AI agents from partners like Regal and Decagon. These agentic agents automate a portion of client support volumes while humans continue to handle complex, critical and premium interactions. To bring our agentic AI consulting strategy to life, I'd like to highlight a recent success with a client in a regulated industry. This client required a solution that could drive operational efficiencies without compromising the quality and tone their customers expect. They selected TaskUs to implement an AI-enabled workflow solution on top of TaskUs' traditional human-led CX services. We leveraged the combination of technology from one of our partners, TaskUs' deep operational knowledge and our systems integration capabilities to design and deploy agentic conversational automation. We refined call flows, prompts and knowledge content, then integrated the solution into day-to-day operations. The automated experience now handles a defined set of routine rules-based requests with seamless escalation to teammates for complex and sensitive cases. This shift enables our teammates to focus on the interactions where empathy and judgment matter most. This deployment underscores our ability to deliver comprehensive agentic solutions that make our client relationships deeper, stickier and more strategic. In 2026, we expect to begin selling technology plus talent as a combined offering. Here, rather than paying one price for AI agents and another price for humans, our clients will pay a single price per contact. TaskUs will guarantee 100% resolution rate and meaningful per contact savings from day 1. In exchange, our clients will allow us to deploy AI agents. It will be our responsibility to earn back the cost savings and additional margin by increasing the effectiveness of AI agents in these workflows. This model delivers immediate and guaranteed cost savings to clients frustrated by slow AI gains while giving TaskUs the opportunity to expand margins over time. Lastly, the third cornerstone of our strategy for the AI era is the automation of internal workflows and support operations in order to expand margins and elevate our service delivery. Today, from recruitment to training, quality to business intelligence, workforce management to human resources, accounting to finance, TaskUs employs thousands of people to ensure our frontline teammates successfully deliver for clients. Implementing automation and AI in these areas represents a huge opportunity to drive down support ratios and the cost of these services as a percentage of our revenues. A standout success this quarter was deploying AI agents into our talent acquisition engine. We developed an Agentic AI solution that works seamlessly across WhatsApp, Facebook Messenger, SMS and Workday. This agent corresponds with tens of thousands of TaskUs applicants gathering information, walking them through preemployment requirements, conducting candidate assessments and ultimately scheduling them for a final face-to-face interview. The impact has been significant. After launching the AI agent, we've seen a 50% to 60% increase in hiring efficiency per recruiter. By eliminating these mundane administrative tasks, we're simultaneously reducing our cost to hire, improving the applicant experience and freeing our recruiters to focus on high-value candidate interviews, ensuring TaskUs remains the employer of choice. In 2026, our goal is to replicate this success across all of our support teams and dramatically increase the efficiency of our support organization. We're pleased with the strategic progress we're making in the current environment. But as we acknowledged last quarter, our AI transformation journey will not be a straight line. Our increased use of AI agents will automate work performed by human talent and may create short-term revenue headwinds. While our transformation investments will reduce our margins in the near term, ultimately, we believe this 3-part strategy will position TaskUs as an industry leader for business solutions delivered through a combination of technology and talent. Long term, we believe TaskUs can achieve durable double-digit revenue growth while maintaining industry-leading adjusted EBITDA margins. Before handing it over to Balaji for more details on our Q4 results, I want to quickly outline our Q1 and full year 2026 revenue and margin outlook. In Q1, we expect to deliver revenues between $296 million and $298 million, representing year-over-year revenue growth of approximately 7% at the midpoint. As discussed last quarter, Q1 revenue will be impacted by 2 factors on a sequential basis. Consistent with last year, first, we expect an approximately $9 million negative revenue impact from 2 fewer working days in the quarter. And second, we expect a decline in seasonal revenues of approximately $8 million. Combined, this is a total sequential impact of approximately $17 million compared to Q4 of 2025. From a margin perspective, we expect to deliver 19% adjusted EBITDA margins for the first quarter. The decline from Q4 of 2025's 19.6% is driven by the sequential revenue declines I just mentioned, the increase in our AI transformation investments and the geo mix shift as recently signed AI Services contracts ramp in onshore locations where we typically realize lower margins. Turning to the full year. We expect 2026 revenue to approximate $1.21 billion to $1.24 billion, reflecting approximately 3.5% growth at the $1.225 billion midpoint of our guidance range. This deceleration of growth compared to 2025 is primarily driven by our largest client. As many of you are aware, since our Q3 2025 earnings call, our largest client has signaled they intend to leverage AI to drive efficiencies across their organization in 2026. We expect that this effort will impact some of the work that we do for them. With that said, our relationship with our largest client remains very strong. We are one of their largest and most strategic suppliers, and we expect to benefit from vendor consolidation in the medium term. We're also encouraged by the fact that our client continues to turn to us to support emerging initiatives in areas such as AI and augmented reality. We're optimistic about the growth prospects of the rest of the client portfolio in 2026. The growth will be led by the work we're doing for the autonomous vehicle and robotics sectors as well as foundational model developers. Combined, we expect revenue from companies in these categories to more than double in 2026. In our core business, while clients continue to automate simple, repeatable interactions, we're benefiting from vendor consolidation and trends towards outsourcing increasingly sophisticated workflows. As evidence of this, we expect that our top 20 clients outside of our largest client will see revenue grow by approximately 15% in 2026. Turning to margins. Consistent with Q1, we expect our adjusted EBITDA margins for the full year to be impacted by our AI transformation investments and that the timing of these investments will weigh most heavily in the second quarter of 2026. Recall, this transformation will take time, and we anticipate short-term revenue and margin headwinds as we shift to selling AI-led outcome-based solutions that, in some cases, will displace the work performed by our teammates today. We expect that this near-term revenue and margin pressure will improve over the course of 2026, resulting in anticipated full year adjusted EBITDA margins of approximately 19%. With that, I'll hand it over to Balaji to go through the Q4 financials and our 2026 guidance in more detail. Balaji Sekar: Thank you, Bryce. It has been a privilege to serve as the CFO during such a transformative period for the company. I'm incredibly proud of the finance team we have built and the financial rigor we have put in place. While I'm looking forward to my next chapter, I remain a significant shareholder and have total confidence in TaskUs' long-term strategy. I'm working closely with the company over the coming months to ensure a smooth handoff. I will now focus on our full year and Q4 2025 results before moving to 2026 guidance. In the fourth quarter, we earned total revenues of $313 million, once again beating our guidance range of $302.4 million to $304.4 million. Revenue increased by 14.1% compared to the previous year, exceeding our expectation of 10.6% growth at the midpoint of our guidance. Our quarterly performance reflected strong year-over-year growth across all 3 of our service lines and higher-than-expected volumes from both new and existing clients across a broad range of verticals. Full year 2025 revenue increased year-over-year by 19% to $1.184 billion, well above the top end of our guidance range of $1.175 billion. We ended the year with approximately 50% of our 200 clients delivering revenues in excess of $1 million. More importantly, we successfully executed on our strategy of increasing share among our largest clients. Here, we grew our $5 million-plus cohort to 41 clients, up from 38 last year and expanded our $10 million-plus client cohort to 21 compared to 17 in 2024. This performance underscores the importance of diversifying our revenues among many large clients and our ability to capture a greater share in these critical relationships. We continue to have a strong relationship with our largest client, which represents 26% of our total revenues in Q4 compared to 27% in Q3 of 2025 and 25% in Q4 of 2024. As we continue our efforts to diversify our revenue mix, we anticipate our top client revenue concentration will continue to decline over the course of 2026. In Q4, our top 10 and top 20 clients accounted for 59% and 72% of our revenue compared to 57% and 69% in the previous year. In Q4, we saw a 19% year-over-year increase in the number of clients utilizing more than one of our service lines. Revenue from these clients grew approximately 19% year-over-year in Q4, again demonstrating the success of our strategy of cross-selling our suite of specialized services to our clients. In the fourth quarter, we generated 52% of our revenues in the Philippines, 11% of our revenues in the United States, 14% of our revenues from India and 23% of our revenues from the rest of the world. Our global delivery footprint continued to see robust expansion in the fourth quarter. Latin America continued to be our fastest-growing region, expanding by approximately 45% year-over-year in Q4. Europe also delivered strong momentum with growth exceeding 25%. Our Asia Pacific region grew more than 10% year-over-year, led by sustained demand in India and the Philippines. As a reminder, geographic delivery location remains the primary driver of our gross margin, carrying more weight than this specific service line being delivered. We ended the year with approximately 65,500 global teammates, an increase of approximately 1,700 since the end of Q3 2025. Now moving on to our service line performance. In the fourth quarter, our DCX offering generated $172.7 million for a year-over-year increase of 4.8%. From a vertical perspective, DCX's overall growth was primarily attributable to clients in our financial services, health care and technology verticals where our strategic focus again produced solid revenue results. Our Trust & Safety business, which includes our content moderation and financial crime and compliance services, grew by 18.2% compared to Q4 of 2024, resulting in $82.7 million of revenue. Here, growth was predominantly driven by increased revenue from existing clients in our social media vertical. We continue to be excited about the long-term opportunities in this service line. Our AI Services service line growth was 45.9% on a year-over-year basis in Q4, resulting in $57.5 million in revenue. This was primarily a result of growth from existing social media and travel and transportation clients requiring support for their generative AI development, training and testing and autonomous vehicle initiatives. We expect AI Services to be sour fastest-growing service line again in 2026 as a result of recent wins and ongoing demand from developers of autonomous vehicles, robotics and foundational model technologies. Now moving on to profitability. In Q4 of 2025, we earned adjusted EBITDA of $61.4 million, a 19.6% margin compared to $60.1 million of adjusted EBITDA implied by our midpoint guidance. This represents 14.1% year-over-year growth in adjusted EBITDA compared to $53.8 million we achieved in Q4 of 2024 and a consistent year-over-year margin of 19.6%. For the full year, we achieved $249.1 million in adjusted EBITDA and adjusted EBITDA margin of 21%. This exceeded the $247.7 million in adjusted EBITDA implied by the midpoint of our guidance. On a year-over-year basis, we grew adjusted EBITDA by $39.2 million or 18.7%. Our Q4 margins compared to the previous year were impacted by annual wage and benefits cost inflation, including mandatory statutory changes in certain offshore geographies, the addition of new sites, hiring and training initiatives and changing business mix due to higher growth in Latin America and Europe. We also increased our investments in AI transformation in Q4, a trend we will continue to see throughout 2026. These impacts were partially offset by efficiency improvements in both cost of service and overhead functions, which we began implementing earlier in 2025. Cost of service as a percentage of revenue was 63.6% in the fourth quarter compared to 61.9% in the prior year. The year-over-year increase was driven by a number of factors, including costs associated with annual wage and benefits cost inflation, the geography mix shift I just mentioned, and incremental hiring, training and facilities costs related to stronger growth. These factors were partially offset by operational improvements we began implementing earlier in 2025. In the fourth quarter, SG&A expenses were $59.4 million or 19% of revenue compared to $67.8 million or 24.7% of revenue in the prior year. The decrease was primarily driven by lower personnel expenses, including a reduction in stock-based compensation and a reduction in litigation-related expenses. Adjusted net income for the quarter was $37.1 million and adjusted EPS was $0.40. This reflects nearly 30% growth in our adjusted EPS versus the year ago period when we earned adjusted net income of $28.5 million and adjusted EPS of $0.31. Our weighted average share count in both the periods were relatively consistent and therefore, not a material driver of our adjusted EPS improvement. For the full year, adjusted net income was $151.7 million and adjusted EPS was $1.63. This compares to adjusted net income of $118.7 million and $1.29 of adjusted EPS for full year 2024. Now moving on to our balance sheet and cash flow. Cash and cash equivalents were $211.7 million as of December 31, 2025, compared with the December 31, 2024 balance of $192.2 million. Our adjusted net debt leverage ratio declined further in Q4, ending the year at 0.1x of adjusted EBITDA. As a reminder, we calculate this ratio as total debt less cash divided by adjusted EBITDA for the trailing 12-month period. Cash generated from operations for the full year 2025 was $137.2 million as compared to $138.9 million at the end of 2024. Higher net income in 2025 was offset by an increase in working capital related to our strong revenue growth in 2025. For the full year, CapEx was $63.5 million or 5.4% of revenue compared with $39.1 million or 3.9% of revenue in 2024. This full year increase was driven largely by facility expansion due to revenue growth. For the full year, adjusted free cash flow was $89.9 million or 36.1% of adjusted EBITDA. This was below our guidance of approximately $100 million, primarily due to working capital increases required to support our higher 2025 revenue performance compared to guidance. In terms of our financial outlook for the full year, we anticipate full year 2026 total revenues to be in the range of $1.21 billion to $1.24 billion. This represents $1.225 billion and a 3.5% growth at the midpoint of our guidance. We expect to earn full year 2026 adjusted EBITDA margin of approximately 19%. This margin captures the additional investments we are making to embrace generative AI and agentic AI technologies and typical wage inflation in excess of our ability to pass this on to our clients. We expect to achieve approximately $100 million in adjusted free cash flow for 2026. We anticipate capital expenditures will decline slightly in 2026 due to fewer facility expansions, offset by the timing of payments for capital expenditures that started in 2025, routine refresh of technology assets and our continued investments in security infrastructure. As we announced earlier today, we have secured commitments to refinance our existing credit facilities to address the upcoming 2027 maturities and return capital to our shareholders. The $500 million term loan and $100 million revolving credit facility mature in March 2031 and at our election will bear interest of SOFR plus 2.75%. We expect the term loan to fund in March prior to payment of the $3.65 per share special dividend we announced earlier today. For the first quarter of 2026, we anticipate revenues to be in the range of $296 million to $298 million, reflecting approximately 7% year-over-year growth at the midpoint, and we expect to earn an adjusted EBITDA margin of approximately 19%. First quarter revenue and adjusted EBITDA margin will be impacted by lower seasonal revenues and 2 fewer working days in the quarter compared to Q4 of 2025, a combined negative impact of approximately $17 million, along with the strategic investments in our AI transformation that Bryce discussed earlier. Our guidance for the quarter and full year is based on current ForEx rate estimates, so any change to currency rates to the extent not hedged would impact our margins. As a reminder, the majority of our revenue is billed and collected in U.S. dollars, so we do not see the impact of U.S. dollar fluctuations in our revenue. I will now hand it back to Bryce. Bryce Maddock: Thank you, Balaji. Before we take questions, I want to take a moment to highlight another incredible TaskUs teammate story. At TaskUs, our ridiculous culture isn't confined to our sites. It lives and breathes in the passions of our teammates. Miles Nicole Gianan is a quality supervisor at our Lizzy's Watchtower site in Manila, Philippines. He's also the President of TUCLAS, the TaskUs Climbers Association. TUCLAS started with a simple belief, human well-being is deeply connected to the health of the natural world. What began as a group of teammates going for hikes quickly turned into a deeper responsibility to protect the trails and the communities they visited. These hikes evolved into powerful volunteer initiatives, cleanup drives expanded into donation cycles, tree planting and community outreach. In November, TUCLAS summitted Mount Pulag and in early 2026, completed a twin hike featuring trail cleanups and environmental workshops focused on sustainability. This organic movement is a shining example of TUgether We Serve, TaskUs' global campaign where our teammates contribute tens of thousands of hours to volunteer activities in the communities we support. On a personal level, I've been inspired by TUCLAS and recently completed an incredibly rewarding trail cleanup mission of my own. With my 3 young kids in tow, it was a memory that I will never forget. With that, I'll ask the operator to open the line for our question-and-answer session. Operator? Operator: [Operator Instructions] Our first question will come from the line of Jonathan Lee from Guggenheim Partners. Yu Lee: Balaji, it's been a pleasure working with you over the years, wishing you the best and Trent, congratulations on the expanded role here. First, I want to talk through sort of the '26 outlook here. What's contemplated there across the low end and the high end? And how much go get is needed? And can you talk through the expected service line acceleration versus deceleration in the near to medium term? Bryce Maddock: Yes, Jonathan, thank you so much for the question. So as always, we try to put forth an outlook that we feel like we can deliver and exceed. And so as we look at the range here, one of the biggest factors is just getting a sense of where the largest client will go in 2026. As you know, we've been through periods of rapid expansion, as last year, we grew by 41% with our largest client. We've also been through periods where revenue has contracted there, which happened in 2023. And so we've been having conversations with them walking through plans to automate portions of their volume. Clearly, if those plans take effect in a more aggressive fashion that would drive us towards the low end. And if it takes longer, that would drive us towards the high end. The other component here is we're seeing increase in demand for AI Services, both from foundational model developers as well as in our autonomous vehicle and robotics segment. And so those growth rates have been very aggressive. As I mentioned on the call, we saw or we're forecasting that revenue from our AV and foundational model clients will more than double in 2026. And certainly, if we see an acceleration in those growth rates, we would be at or above the high end of the guidance range. From a service line perspective, we anticipate continued growth in AI Services and in our DCX line of business. The line of business that is probably at most -- under most pressure in 2026 due to automation is the Trust & Safety volumes that we have at our largest client. So all that to say that it's the beginning of the year, and we have a track record of setting fairly conservative guidance, and our intention is to go out and really drive towards the high end of what we provided today. Yu Lee: Bryce, just as a follow-up, can you help us understand the types of investments you're looking to make through the year and how you're thinking about layering in those costs over the course of the year? Bryce Maddock: Yes. So we're already underway to expand the team that's focused on our AI transformation. We built out a strong AI consulting organization that is actively deploying pilots and production versions of agentic AI instances to our clients in the customer service space. I gave an example on the call of a really successful implementation with a client in a regulated industry. So that's a large investment for us. We're also continuing to expand our investment in our internal technical team. We believe that we can drive material improvements in our support spending. Very encouraged by the increase in efficiency that we've seen in talent acquisition, where the AI agent that we launched in Q4 has increased our recruiters' ability to hire teammates by 50%. In 2026, we're looking to see similar gains across all of our support organizations from business intelligence, workforce management, quality, our internal help desks. And so we think that will help significantly with margin protection. And then lastly, we're really leaning into AI Services and the demand that we're seeing there from foundational model developers and the autonomous vehicle and robotics segments. And so we're making heavy investments in bringing in talent to lead the go-to-market and consultative functions in those areas. Operator: Our next question will come from the line of Antonio Jaramillo from Morgan Stanley. Antonio Jaramillo: I wanted to first start on pricing. Where are you guys finding opportunities to push through pricing versus where are you guys getting some more pushback? And then this might have been, like, disclosed during the call, but how are you factoring pricing into your margin guidance? Bryce Maddock: Yes, Antonio, thanks for the call. The pricing environment is definitely dynamic at the moment. Given the slow rate of growth in the overall industry, there is more competitiveness in pricing really over the last, I'd say, 18 months than we've seen historically. With that being said, we feel like we're in a premium position, particularly in the services that we're offering in AI Services and some of the premium customer support services that we're offering. Our ability to go and continue to take share based on the quality of our operational delivery is part of what drove that growth story in 2025. Again, we know that there was a huge amount of growth driven from our largest client. But even in Q4, we saw the growth rate from all clients outside of our largest client accelerate again to 12.7% year-over-year. And so I think that's just a testament to the strong operational execution that's giving us an ability to continue to command a premium price. One thing that is weighing on the margins is a continued geo mix shift. So a lot of the work that we're going to be doing in the AI Services space is going to be done onshore. And so as a result of that growth, we tend to have lower margins in our onshore environments versus our offshore environments. And so as we contemplate 2026 revenue, we're seeing an uptick in revenue as a percentage or a percentage of overall revenue in our onshore environments versus our offshore environments like the Philippines and India, where gross margins tend to be higher. And so that's a factor that's weighing on margins, along with just our commitment to continue to invest more aggressively in our AI transformation. Antonio Jaramillo: Yes. That's helpful. And then as a follow-up, like good to see that you're going to see like your top 20 clients grow rev at 15%. Where are they trying to like lean into services across your portfolio? Bryce Maddock: Yes. So again, that stat is that if we exclude our largest client, we expect our top 20 clients, so the clients 2 through 20 to grow revenue 15% year-over-year in 2026, which is consistent with what we saw from that cohort in Q4 of 2025. Really, this is a combination of taking share from competition. We're seeing pretty aggressive vendor consolidation across our biggest customers. Again, here, our strong operational execution is a big part of that story. We're also seeing some exponential growth rates in clients in emerging industries. Here, our relationships with the foundational model developers and the leaders in the autonomous vehicle spaces are driving significant revenue growth. If we look at just clients in those 2 spaces, revenue will more than double in 2026 when compared to 2025. So that's some of the underlying dynamics in that top 20 cohort. Operator: Our next question will come from the line of David Koning from Baird. David Koning: Good job. And I guess, my first question, if we think of the big undertaking of kind of shifting some of the work to different types, when we look out a couple of years, few years maybe, how much of the revenue base at that time will be similar to what it is today? And I guess I'm asking the question, because is what you're adding going to be incremental to what you do today and you'll continue to do a lot of the same things? Or is a lot of it going to replace given your expectation that some of the revenue today will go away? I'm just kind of thinking through the mix of business, how it changes and how that churns. Bryce Maddock: Dave, thanks for the question. So historically, our industry and our business has seen consistent trends of automation and reinvention. And if I think back to when we started TaskUs, the first few clients we had were doing things like transcribing voice mail messages or transcribing receipts, things that have been automated for well over a decade now. And we've been able to grow the business by discovering emergent forms of demand and then going into those forms of demand and developing a real expertise. And so, I'd say that what we're seeing today with all of the excitement around AI is very similar to what we've seen in the past, but just at an accelerated pace. So we're fully aware that the current trend will lead to automation of simple customer service volumes. We're very lucky that most of the customer service work that we're embarking upon doing, we're doing at the moment is, our premium volumes where our clients have been certainly, in some cases, resistant to automating in other cases, actually interested in increasing their investment in these types as they automate simple work types. But I'd say if we look forward a few years to what our customer experience business will look like, it really is going to be that technology plus talent solution-based business. We're going to see our business evolve away from charging for hours to actually charging for outcomes where TaskUs owns the end-to-end experience, whether it's solved by an AI agent or a human expert. If I think about areas where we've got real tailwinds, our AI Services business, which has been the fastest-growing service line for TaskUs for more than 5 quarters and will continue to be our fastest-growing service line as we go into 2026 is a real success story. Because whether it's our foundational model developers, our social media clients or emerging new forms of demand in autonomous vehicles and robotics, we're just seeing huge amounts of demand for data collection, data annotation, evals and other forms of work that are needed to make those endeavors function. And so I think we're going to see that business continue to scale and become a bigger and bigger portion of what we do. I'd say the Trust & Safety business will continue to endure, but this is a business which I think will probably have the lowest growth rate in 2026, given the impact that automation is likely to have on some of those core content moderation volumes. So as we think about where the business will be in 3-plus years' time, I think we'll continue to see DCX transform into being a combination of technology and talent and the AI Services business continue to grow exponentially. David Koning: Yes. All makes sense. And my follow-up, just thinking about interest expense, it seems like there's 2 cash outflows, one being the $333 million dividend. But then it looked in the press release that there was $160 million non-recurring litigation payment that might be made as well. And just putting that in context with the new debt, just is interest expense going to be like $40 million or so going forward? Or how do we think of that? Balaji Sekar: So, Dave, thanks for the question. So in terms of the interest expense, like we called out today, it's going to be SOFR plus 2.75% from an interest cost perspective. And in terms of the -- just a reconciliation in terms of what we're going to be getting is like we will have about $100 million of revolver and about $500 million of new term loan that we're going to be getting. And then about $333 million will be paid out as a dividend. And then just in terms of amortization, what is going to happen is that, we do have a payment holiday starting -- and we'll start paying about Q3 of 2026, then about 5% annually for the first 3 years and then about 7.5% in year 4 and 10% in year 5. And then in terms of interest cost, you're right. That's about approximately what that would be at SOFR plus 2.75%. Operator: Our next question will come from the line of Puneet Jain from JPMorgan. Puneet Jain: So this year's guidance implies like flat to modest positive growth by this year-end. And I know you talked about like headwinds at large client, which will impact growth rates. Is there a way to think about like how much of the existing book of business has exposure to AI-related automation similar to what you expect for the large client? And how much of would have happened by the year-end? Bryce Maddock: Yes. Thank you, Puneet. So obviously, we're not providing quarterly breakdowns of what the rest of the year is going to look like, but our intention is to continue to drive year-over-year revenue growth for every quarter of the year, and the team is obviously working very hard to do that. There -- we understand the concern around AI-related exposure in our business. And clearly, there's been quite a lot of concern about this in really all service businesses off late. What we would say is we continue to see clients lean into automating simple, repeatable work types, and we certainly have been part of that solution in our Agentic AI consulting practice, where we're able to automate a significant portion of inbound calls, e-mails, chats that are fairly simple. But many of these clients are also reinvesting a portion of that savings in improving their customer experience through human interactions for premium customers or in critical care situations. And so we're benefiting from growth across many of our clients. In fact, in -- amongst most of our largest customer experience clients revenue has grown in 2025, and we expect it to grow again in 2026. And so while there is automation taking place, in general, we continue to benefit from growth in industries that I think people felt were kind of squarely at the bull's eye of AI-related automation. In the medium term, we want to be part of the solution. And so growing our agentic AI consulting practice, expanding our AI Services business is going to be part of reinventing TaskUs into the future service provider that we will become. And ultimately, we see ourselves as evolving from being mostly an hourly-based service into an outcome-based solution where people can come and purchase a combination of technology and talent to deliver for their clients. Puneet Jain: Got it. And there has been like a lot of news flow around AI, agentic AI over the last few weeks. Are you seeing like your clients respond to all that news flow with a new sense of urgency? Like is there any change in client behavior as all this news around Anthropic and stuff? Like has that changed your clients' behavior in terms of the speed at which they are moving and trying to embrace some of those AI solutions at all? Bryce Maddock: It certainly has increased excitement. And amongst our clients, we're working actively to leverage that excitement into pilots and production versions of the AI agents that we are selling to customers in partnership with Decagon and with Regal. And also continue to expand our AI Services business, where we're seeing AI winners, foundational model developers, robotics companies, autonomous vehicle companies continue to spend more and more on data collection, data annotation and evals that are necessary to build out their models. As far as the recent news and some of the agents that have been published in the last month or so, I'd say that most of our clients are still in a discovery phase. It's one thing to deploy AI agents as a consumer. It's a very different thing to think about deploying end-to-end autonomous agents into an enterprise environment. So there are security concerns and legal concerns that clients have that I think will make that type of adoption a bit slower. But certainly, it's on the road map for most of our clients. It's something that we expect to see over the medium term. Balaji Sekar: I agree. Bryce, I just wanted to follow up on one of the questions that Dave had on the cash flows. So David, just to clarify, the $160 million is net cash from operating activities that we're expecting for 2026, and that excludes any litigation payment that may happen. So that's the $160 million is actually the cash -- operating cash that we are planning for 2026, just to clarify. Operator: Our next question will come from the line of Maggie Nolan from William Blair. Margaret Nolan: The AI Services, obviously, that's really robust growth, and it sounded like it was a substantial portion of the bookings as well. How sustainable do you view this level of growth? And how big do you think this segment could become in the next couple of years? Balaji Sekar: Bryce maybe -- you maybe on mute. Bryce Maddock: Can you guys hear me? Balaji Sekar: Yes. Bryce Maddock: Okay. Sorry, did not of my answer come through? Margaret Nolan: No, Bryce. I did not hear any... Bryce Maddock: Okay. Great. Sorry about that. Well, it was a brilliant answer, Maggie. I'll do my best to recreate it. So what I was saying about AI Services was, this is certainly the segment that we're the most excited about. When we think about the growth rate that it drove in 2025 and what we expect it to drive in 2026, we're seeing demand from foundational model developers, autonomous vehicle companies and robotics companies, all of which have healthy amounts of funding to spend on continuing to refine and improve their models through the type of work that we're doing, both in data collection, data annotation and in evals. The one call out I would make is that AI Services tends to be more project-based in nature. And there is -- there are some work that we are doing for clients in the social media space that could make revenue growth rates inside the service line choppy at times. With all that being said, we expect AI Services to be our fastest-growing service line in 2026 overall, and it continues to be what we're most excited about in terms of driving growth in the business over the medium term. Margaret Nolan: Okay. Great. And then on the top clients, I mean, obviously, there's a concentration there in your revenue and they're able to probably move, I would assume, faster than maybe other clients in terms of things like, in the past it's been offshoring, now it's automation, those types of things. Can you maybe help us understand how you're assessing the potential for similar things to happen across your client portfolio versus the specific relationship and concentration that you have with that top client? Bryce Maddock: Yes. So first, in terms of the relationship with the top client, it remains very strong. We're one of their core vendors, and we anticipate that over the medium term, we will see vendor consolidation that will benefit TaskUs. As I said earlier, we go through periods of expansion and contraction with our largest client. Last year, revenue grew by 41%. We saw a contraction in 2023 of about 17%. And so as we head into 2026 and they are successfully investing in automating Trust & Safety volumes, we expect revenues to contract somewhat in this year. But as we look out to 2027 and beyond, we believe that we can get back to growth in that relationship. As far as the other clients go, it is true that our largest client is very technically advanced and deploying models aggressively. But the same is true for many, if not most of our clients. We focused historically on high-growth technology businesses, and so these businesses are on the forefront of automation. And despite that, if we look at clients # 2 through 20, we're seeing a forecast for 2026 of about 15% revenue growth. And that's due to vendor consolidation. It's due to us working with these clients through our agentic AI consulting practice to embed solutions that combine technology and talent and just overall strong execution. So I wouldn't say that what's happening at our largest client is a forecast for what's to come in other clients. If anything, I actually think over the medium term, we are in a position to get back to growth with our largest customer and sustain the growth that we're seeing with other large clients. Operator: And with that, this will conclude today's conference call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the RxSight Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Oliver Moravcevic, Vice President of Investor Relations. Please go ahead. Oliver Moravcevic: Thank you, operator. Presenting today are RxSight President and Chief Executive Officer, Dr. Ron Kurtz; and Chief Financial Officer, Mark Wilterding. Earlier today, RxSight released financial results for the 3 months ended December 31, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, February 25, 2026, and will include forward-looking and opinion statements, including predictions, estimates, plans, expectations and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued today in our filings with the Securities and Exchange Commission, or SEC. Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise these forward-looking statements, except as may be required by law. We will also discuss certain non-GAAP financial measures. Disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures can be found in the press release. Please note that this conference call will be available for audio replay on our Investor Relations website. With that, I will turn the call over to Ron. Ron? Ronald Kurtz: Good afternoon, and thank you for joining us today. I'd like to start by both welcoming Mark to his first RxSight earnings call and asking him to kick us off today by reviewing our fourth quarter and full year 2025 financial results, including the key drivers of performance and the trends across the business. After his remarks, I'll discuss the progress our team made in the fourth quarter and outline the steps we are taking to position RxSight for 2026 and beyond. With that, I'll turn the call over to Mark. Mark Wilterding: Thank you, Ron, and good afternoon, everyone. Consistent with our January pre-announcement, RxSight reported fourth quarter 2025 sales of $32.6 million, down 19% year-over-year due to lower LDD sales. As you recall, we had record levels of LDD placements in the year ago period, totaling 83 units globally, accounting for $11 million of sales. In the fourth quarter of 2025, we sold 25 LDD units globally and generated $3 million of LDD revenue. Despite the year-over-year decline in the fourth quarter, we exited 2025 with an LDD installed base of 1,134 units, up 17% from the 971 units installed at the end of 2024. Turning to LALs. During the fourth quarter, we sold 28,611 LALs, down 2% from the year ago period and up 10% sequentially. Procedural volumes translated into LAL sales of $28.2 million in the fourth quarter of 2025, in line with Q4 2024. LAL revenue accounted for an all-time high of 86% of total company sales in the fourth quarter, up from 71% in the year ago period. Higher LAL revenue mix contributed to a gross margin of 77.5% in the fourth quarter of 2025 compared to 71.6% in the year ago period. Fourth quarter 2025 SG&A expenses were $27.7 million, down 2% compared to the prior year period, primarily driven by lower personnel-related expenses, partially offset by continued investments in LAL commercial initiatives. Fourth quarter research and development expenses were $8.9 million, down 3% year-over-year and 2% sequentially, reflecting lower personnel-related expenses, partially offset by continued investment in advancing our research and development pipeline. We reported a net loss in the fourth quarter of 2025 of $9.2 million or $0.22 per basic and diluted share based on 41.2 million weighted average shares outstanding. Stock-based compensation was $7.8 million, resulting in an adjusted net loss of $1.3 million or $0.03 per share. I'll now provide a brief recap of full year 2025 results. Full year sales of $134.5 million increased 4% year-over-year, reflecting a 48% decrease in LDD revenue, partially offset by a 12% increase in LAL sales. 2025 gross profit margin was 76.6% compared to 70.7% in 2024, primarily driven by a higher LAL revenue mix. Total operating expenses were $151.2 million in 2025, up 11% versus 2024. Year-over-year expense growth was driven primarily by higher personnel costs and continued investments in research and development as well as commercial activities to support our long-term strategy. For the full year 2025, we reported a net loss of $38.9 million or $0.95 per share versus a net loss of $27.5 million or $0.71 per share in 2024. Excluding $31.6 million in stock-based compensation expense, our adjusted net loss in 2025 was $7.3 million or $0.18 per basic and diluted share. Moving on to the balance sheet. We ended the year with no debt and approximately $228 million in cash, cash equivalents and short-term investments. Turning to 2026 guidance. Full year revenue guidance of $120 million to $135 million implies a year-over-year decline of approximately 5% at the midpoint of the range, primarily driven by lower LDD sales versus the year ago period. 2026 sales are expected to be the lowest in the first quarter, reflecting typical seasonality and more challenging comparisons in the year ago period. Third quarter 2026 sales will also be subject to seasonality, although we anticipate a rebound in total company sales growth in the second half of the year as growth comparisons ease and commercial initiatives begin to gain traction. We anticipate a relatively small contribution from sales outside of the U.S. in 2026, primarily in the form of early capital placements as we take a methodical approach to expanding our international presence. The team is currently focused on building relationships with key opinion leaders and collecting country-specific clinical data to position the company for more meaningful international sales in 2027 and beyond. Our full year 2026 gross margin guidance is 70% to 72%. This is down from 2025 levels, but consistent with the company's gross profit margin profile in 2024. We've taken a prudent view of our 2026 gross margin guidance to reflect the sell-through of higher cost inventory due to lower than originally anticipated production levels in 2025. However, we expect manufacturing absorption headwinds to ease over time. We expect 2026 operating expenses to be between $150 million and $160 million, representing a 1% decrease at the low end of the range and a 6% increase at the high end compared to the prior year and reflecting our ongoing investment in international expansion in addition to our U.S. sales and marketing efforts. We anticipate that R&D spending will be relatively in line with 2025 levels. Included in our costs, primarily in operating expenses, is noncash stock-based compensation expense in the range of $30 million to $32 million. With that, I'll turn it back to Ron. Ronald Kurtz: Thank you, Mark. Although the full year financial results were below our initial expectations, 2025 was a year of meaningful progress for RxSight, for which I want to thank our 500 employees and thousands of customers as together, we advance the delivery of our life-changing LAL technology around the world. Approximately 5 years after our IPO enabled us to broadly launch adjustability in North America, our clinical outcomes remain best-in-class with doctors and patients continuing to be highly engaged with the technology and with adjustable procedures representing approximately 10% of the U.S. premium market by volume and approximately 15% by revenue, proving that adjustability is no longer a concept but an established category with real commercial and clinical validation. In 2025, following rapid years of expansion that resulted in approximately 25% of U.S. cataract surgeons being trained in this new paradigm, we initiated a number of strategic decisions to strengthen clinical and practice expertise across our user base, sharpening our approach to training, education and support of new and existing practices and doctors. Although we are still early in external validation of this journey, we have been encouraged by recent trends that indicate these efforts are beginning to take hold. More specifically, and as Mark outlined, procedure volumes improved sequentially in the fourth quarter, driven primarily by LAL utilization within our customer base. With over 1,100 LDDs in the field and an even larger number of practitioners, we have more work to do, highlighting our substantial opportunity to further leverage our installed base to drive same-store sales and patient outcomes. At the same time, we have taken a more disciplined approach to capital placements with the goal of continuing to deliver sustainable execution through superior clinical outcomes, strong customer adoption and efficient practice workflows that support long-term success. As we look ahead, our commercial focus is clear: improve utilization within our existing installed base through targeted practice engagement and new education initiatives and expand access to our technology in a measured way through disciplined LDD placement and evolving access models. We believe executing consistently across these areas will return the business to sustainable growth with adjustability uniquely positioned within the premium IOL market to address the unmet needs of both doctors and patients with the clinical thesis underlying this supported by both formal clinical studies and real-world data. To that point, we are pleased to announce that earlier this month, data from our post-approval study were accepted for publication in the Journal of Cataract and Refractive Surgery. The paper by Dr. Jack Holladay reported that 93% of LALIs achieved both spherical equivalent and residual cylinder within half diopters of target, demonstrating statistically superior refractive accuracy compared to historical studies of contemporary toric IOLs. Just as importantly, very similar results were identified in a more than 20,000 eye data registry of LAL cases presented at yesterday's meeting of the American-European Congress of Ophthalmic Surgery by Dr. John Doane, adding compelling big data to the growing body of evidence supporting the LAL platform and the ability of postoperative adjustability to provide unparalleled refractive accuracy across a broad patient population, thereby reducing outliers and enabling refractive customization that together raise patient satisfaction and grow premium procedures. With conventional cataract reimbursements facing continued downward pressure, we believe that the LAL is well positioned to deliver the superior outcomes demanded by patients as well as the enhanced profitability that is increasingly important to sustain ophthalmic practice viability. RxSight remains committed to advancing adjustability to even higher performance levels as evidenced by the approximately 20 FDA approvals in direct support of product development over the past 5 years, with several new submissions planned over the next 18 months. These efforts continue to make LAL technology easier to adopt for a greater range of customers by enhancing the overall value proposition for both doctors and patients. We believe that this historic pace of innovation presents another opportunity to engage with customers as we further the understanding and utilization of already released lens features like ActivShield, LAL+ and expanded IOL powers as well as recently added LDD capabilities and our updated LDD and insertion device platforms with even more innovation to come. Internationally, we are building a durable foundation for long-term success with a focus over the next year on engaging with local clinicians to develop key opinion leaders in Europe, Asia and now Australia, who can generate their own early in-country outcomes and become advocates for adjustability in these major markets where the majority of the global premium IOL procedures are performed. Over time, we believe the growing prevalence of myopia and earlier cataract surgery in international markets represent meaningful long-term tailwinds for the LAL as optimizing binocular vision and refractive accuracy become increasingly important for patients seeking spectacle independence and high-quality visual performance. We are also applying the lessons learned in North America to ensure that our teams and practices are well prepared to succeed as they introduce this paradigm to their patients. In summary, we are encouraged by the progress we saw in the latter part of the year with early signs of improvement and an organization that is better aligned to deliver superior clinical outcomes. At the same time, we are realistic and taking a prudent approach to the durable opportunity RxSight's adjustable platform has created. There is certainly more work to do, and our focus is on delivering consistent performance over time. With an improved commercial structure, a large installed base, continued innovation, early infrastructure in key international markets and a strong balance sheet, we believe we have the foundation in place to execute deliberately and build momentum. We are confident that the LAL platform will continue to help more patients globally, positioning the company to drive strong growth in the years to come as stakeholders increasingly recognize the significant benefits of RxSight's differentiated technology. And with that, I'll ask the operator to open up the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Robbie Marcus with JPMorgan. Alan Liang: This is Alan on for Robbie. Quick question just on the 2026 guide. Curious what you're seeing so far in the underlying health of the market when it comes to both LALs and LDDs. You ended the year with a quarter a little bit better than expected on the LAL front. So curious how we should think about that progressing through 2026 and what's contemplated in the guide? Ronald Kurtz: So I think that -- thanks for the question, Alan. I think that we did see a little bit of an uptick in Q4. I think that we're certainly hoping that, that continues through 2026. The guide obviously takes that into account as a potential. But maybe I'll have Mark comment further on that. Mark Wilterding: Yes, that's right. The guide definitely does take that into account. As you know, we don't give quarterly guidance, but year-to-date trends have been factored into our full year outlook. Remember, when we look back a year ago, Q1 2025 was our best LDD volume quarter and our second best LAL unit volume quarter. And so total company sales increased, I think, about 30% year-over-year. So it's a difficult comparison and wanted to take that into account as well with our guidance. Alan Liang: Got it. And then just a quick follow-up on gross margin. I think in the past, you've talked about high 70s as still being doable from a gross margin perspective going forward. Clearly, you're seeing some near-term pressure from manufacturing variances in 2026. But when I think about 2027 and beyond, is there any reason why you wouldn't be able to see that improve back up to the high 70s? Mark Wilterding: Yes. We do look at this closely, as you can imagine. Longer term, we still do believe that's the case. We've proven that it's possible. We did achieve those types of margin levels last year. Ultimately, I think it really depends on what your assumptions for the mix profile of the business will be. Historically, a lot of the margin growth came from increases in the mix of LALs. And so as they have a higher margin profile, that's obviously worth taking into account. The other thing I'd note from a margin perspective is that international is still early. And so as that ramps, that also has the potential to factor into that long-term gross margin profile of the company. Operator: Your next question comes from the line of Larry Biegelsen with Wells Fargo. Larry Biegelsen: Mark, congrats on the new role. And since this is your first as the new CFO, I'd love to hear your guidance philosophy. And specifically, how much do you expect LDD placements to be down? Is 50% to 60% year-over-year a good range? And what kind of growth are you assuming for LAL volume? Is mid-single digit a good -- mid-single-digit growth a good place to be? And I had one follow-up. Mark Wilterding: Sure. Thanks, Larry. So just starting with guidance philosophy. I think coming into this role, my focus is definitely on setting achievable guidance. It's based on a bottoms-up forecast and in the case of 2026, what we've seen year-to-date in terms of trends. I'd say, as Ron mentioned, we are seeing early signs of improvement, but we want to be realistic and take a prudent approach, and I want to reflect that in the guidance. So there's still work to do, but our focus is on delivering consistent performance over time. You asked a question on LDD assumptions. Our assumption is that we see a slight acceleration from the 2025 exit rate of about 25 units a quarter and that, that should increase through the year with the additional contribution of some OUS units as well. Q1 units, I would expect to be the lowest in terms of LDD sales. As far as LAL unit growth, I think it's fair to assume for the full year somewhere in that kind of low single-digit unit growth range for LALs. Larry Biegelsen: That's super helpful, Mark. On the gross margin, maybe help us a little bit more on that. We've always been under the impression that LALs have a higher gross margin than LDDs. So how long is these manufacturing variances you talked about going to persist? And it does look like pricing was also down on LDDs in Q4, if my math is correct. So help us think about that going forward as well, please. Mark Wilterding: I think in terms of the cadence of gross margin over the course of the year, our expectation is that we will still be working through some of the lower cost inventory in the first quarter of this year. And so for that reason, I think the likelihood of Q1 gross margin being above that range is there. I think, though, as you go through the year, we do anticipate that, that higher-priced inventory will make its way through the system beginning in the second quarter. And so for that reason, we do think that 70% to 72% gross margin is, like I said, prudent place to be for the full year. The anticipated higher LDD unit sales in the second half, and that speaks to, I think, the second part of your question about mix, they are also likely to put some additional pressure on that margin -- gross margin profile. Operator: Your next question comes from the line of David Saxon with Needham & Company. David Saxon: I wanted to follow up on the gross margin. So higher cost inventory starts to flow through in the second quarter. How long does it take for that inventory to kind of flush out and for us to see kind of true underlying unit cost as it relates to LALs? Mark Wilterding: Good question. Thank you. As we said, we think it is transient. We will work our way through it over the course of the year. As I mentioned in response to Larry's question, shows up initially in the second quarter, and then it's something we'll have to contend with in the third and fourth quarter as well. Beyond that, we're monitoring it diligently and following the situation very closely. We think, ultimately, that we have positioned ourselves from an inventory level consistent with our expectations for 2026 and beyond growth. And so I think that is also taken into account in consideration with that guidance. David Saxon: Okay. Great. And then my second is just on the traction you're seeing with this kind of commercial pivot. Would love to just understand what you're seeing, if you have any success stories and what's really kind of playing out that gives you confidence in kind of this back half recovery you talked about in the script? Ronald Kurtz: Yes. Thank you, David. So it's just what you alluded to, we're seeing some early success stories as the teams are able to focus on individual practices and on their individual needs through a structured program. And I think that our belief is that, that will continue as we expand into a larger number of clinical sites. Operator: Your next question comes from the line of Steve Lichtman with William Blair. Steven Lichtman: Ron, I'm wondering on the initiatives, what you're seeing so far about the durability of the initiatives you put in place. I guess I'm wondering how long the more intensive effort needs to be before things change? And when your team moves on, are you still seeing the benefits? Ronald Kurtz: I think it's still early to comment on that, Steve. I think that practices are dynamic. There are changes in doctors, in personnel. And so I think that the concept that we're going to be able to go in and just have a one and done where they're back on track is probably not the correct assumption, but we're going to continue to stay close to our customers. We have other reasons to do that as we continue to add additional capabilities to the technology. And so I think that we'll continue to -- maybe not with the same intensity and it may vary, it will vary depending on the specific needs of the practice, but we're not anticipating that this is going to be a one and done. Steven Lichtman: Sure. Okay. And then just secondly, wondering how you factored in the competitive environment in 2026? And any qualitative comments you can make in terms of what you're seeing out there and again, how you're factoring that in? Ronald Kurtz: Well, we certainly monitor the competitive environment. As you recall, in 2025, we had an unusual situation where we had the 3 biggest competitors all introducing new high-profile multifocal IOLs. We don't necessarily anticipate that. However, there will -- we already know that there are announcements of new premium IOLs, particularly in the presbyopia correcting space by some of the major players and some of the other players in the space. So similar to what we talked about in 2025, these things tend to be episodic and transient. They -- as marketing efforts coalesce around a new product launch. But then over time, the reality of the "new technology" is that they're essentially the same as the old technology, and that leads to a natural kind of return to baseline. Operator: Your next question comes from the line of Aidan Lahey with Bank of America. Aidan Lahey: This is Aidan on for Travis. One question on utilization assumptions for LALs. I know you said volumes up mid-single digits, but maybe I'm doing the math wrong, that implies utilization is down. So maybe you could double-click on that. Mark Wilterding: Yes. Thanks, Aidan, for the question. In terms of LAL unit growth, up in the low single-digit range, I think, is the right way to think about it, which implies utilization stabilizes around 8 lenses per LDD per month. Aidan Lahey: Okay. Great. And then on the premium market as a whole, I think you said that 40% of LAL patients would have otherwise received a non-premium lens. So when we think about the market growth as a whole, how should we think about RSD kind of gain for an incremental point of market growth? Ronald Kurtz: Yes. As we've talked about previously, if you look back over the last 5 years and look at the growth of the premium segment, a very large fraction of that was -- is attributable to the LAL, specifically for the reason that you just outlined that it appeals to patients who don't want -- who either can't or don't want to compromise on quality of vision. And we believe that, that is -- will continue, especially as trends that are going on in the market continue to play out, such as younger demographics seeking earlier cataract surgery and therefore, being less accepting of reductions in contrast vision and other measures of quality of vision that the LAL doesn't impact. So we see those trends continuing. Operator: Your next question comes from the line of Adam Maeder with Piper Sandler. Adam Maeder: Mark, congratulations on the new role. Two for me, one on the guidance, one on international. So on the guidance front, I wanted to ask, I guess, for a little bit more clarification just around sequencing of models for FY '26. Is the right way to think about it Q1 kind of being the low watermark and then quarter-over-quarter sequential growth for the rest of the year? And then I heard recovery in the back half, the comps are also easier. So should we take that to mean positive year-over-year growth in the second half of the year? And then I had a follow-up. Mark Wilterding: Yes. Thanks, Adam. In terms of total company sales, I think the expectation is that Q1, consistent with what we typically see will be the seasonally weaker quarter with some summer-related headwinds also in the third quarter. As far as year-over-year growth rates, we do anticipate that they will improve over the course of the year by quarter based on our assumption of improving fundamentals and also easing year-over-year comparisons. So I think the way you framed it is accurate. Adam Maeder: Okay. Perfect. And then for international, it sounds like there is some modest revenue contribution embedded in the guide from OUS. Can you just help us understand which geographies that's coming from? And would love just the latest update on timing for Japan and China approvals. Ronald Kurtz: So the -- we have -- as we've talked about before, we have received approvals in the European Union, the U.K. as well as some Asian countries, specifically South Korea, Singapore and some of the ASEAN countries and then just recently, Australia. So clearly, the revenue would most likely come from those. We've previously talked about the more lengthy review processes in -- for regulatory approval in China and Japan. We are pursuing those, and we'll have updates for that later in the year. Operator: Your next question comes from the line of Danielle Antalffy with UBS. Danielle Antalffy: Just a question just to get a little bit deeper into the international opportunity here. I'm just curious if you could talk a little bit, I appreciate it's probably early, but the go-to-market strategy you guys are thinking about there and especially from a system placement perspective, just given some of the budgetary constraints internationally and the competitive environment. Ronald Kurtz: Yes. I think that just broadly, the -- as we've talked about, the international market is actually about double the size of the U.S. market and concentrated in approximately 20 individual countries. So it's certainly approachable by a company our size. We've begun to get our regulatory approvals, establish a footprint, whether that's a direct force or through a distributor in those -- where we've gotten those initial approvals. And our focus right now is developing KOLs and clinical data in those markets since we have gotten approvals without having to do a clinical trial like we did in the United States and where we had kind of a built-in I would say, KOL core of approximately 20 sites already. So we need to recreate that, of course. We do want to leverage all the learnings that we've had over the past 5 years, and that's certainly our plan. Danielle Antalffy: Okay. That's helpful. And then just a quick question on the broader market. I mean, we're talking to docs sort of one at a time. So not sure how representative 1 or 2 physicians are. But it seems like the broader market environment is improving for the overall premium IOL segment. And I appreciate you guys are in your own sort of transition here. But curious if you have a view on the broader premium segment of the market? And is that, I don't know if accelerating is the right word, but re-expanding or shifting again after what feels like a '24 that was pretty suppressed from -- I'm sorry, '25, pretty suppressed from a penetration perspective. Ronald Kurtz: Thank you. So I think we've heard from some of the third parties and other players in the market that there was some acceleration in the premium market towards the end in the second half of the year. That would be consistent with our observations. The premium market tends to be more resistant historically to macro headwinds. So although there are some whisperings of those, I think that -- we would hope that those historical trends would continue moving forward. And certainly, with the LAL kind of being at the higher end of the premium market that our customers would be less sensitive to those. Operator: Your next question comes from the line of Tom Stephan with Stifel. Thomas Stephan: I wanted to start sort of on guidance. Ron or Mark, maybe if you can give us, I'll call it, the key fundamental factors or what specifically implied that gets you to the top end of that range? I appreciate the fairly wide range. Just kind of curious what sort of gets you to the top end? Mark Wilterding: Sure, Tom. I can start by taking that. Thanks for the question. I think when we look at the top end of the range or $135 million, it assumes increased traction from some of these internal initiatives that Ron has spent some time talking through and updating you guys on. So that would be, I think, the first assumption. I think beyond that, we would take into account faster utilization uplift with utilization growth especially higher in the second half of the year. And then the third factor would be competitive trialing and your assumptions for that. And so less headwind from competitive trialing would also benefit us, obviously, and lead to the higher end of that range. Anything you'd add there, Ron? Ronald Kurtz: No, I think that's good. Thomas Stephan: Got it. Super helpful. And Ron, maybe to pivot to you. I wanted to ask about innovation in the pipeline. Just curious if there's anything you can discuss or provide sort of on what may be on the come in terms of updates or development progress. I feel like we haven't heard too much of late. And I guess I'll ask directly, are there any new lenses potentially on the horizon for RxSight that we can look forward to? Ronald Kurtz: Well, certainly, depending on the time frame, we'll continue to innovate both on the lens side and on the LDD side as well as other -- some of the other ancillary devices that are associated with our technology. I think that the best way to answer that is to review the pace of innovation that we've had, especially over the last 5 years, more than 20 significant product-related FDA approvals. That pace is really, I think, unheard of in the industry. And we continue to have opportunities even with our already released innovations to continue to penetrate the market with those having over 1,100 systems and 2,500 customers. So even without adding additional, which we do plan to, we continue to have a lot of raw material to work with. And just to put it into more of a historical context, we're about 5 years into this. Typically, the technologies that I've been associated with have 10- to 15-year runs of significant technology innovation. So I still think there are many additional applications that adjustability is going to be beneficial for. Operator: I will now turn the call back over to Ron Kurtz, CEO, for closing remarks. Ronald Kurtz: Well, thank you, operator, and thank you all for your interest in RxSight, and we look forward to updating you on our progress in future quarters. Goodbye. Operator: Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Karoon Energy Limited 2025 Full Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Carri Lockhart, CEO and Managing Director. Please go ahead. Carri Lockhart: Thank you. Good morning, everyone, and thank you for joining our 2025 full year results webcast. My name is Carri Lockhart, CEO and Managing Director of Karoon. I have with me this morning, Ray Church, our CFO; and Ann Diamant, our SVP of Investor Relations. Earlier this morning, we released our 2025 full year results to the market. This presentation should be read in conjunction with the ASX announcement, and I draw your attention to the disclaimers on Slide 2 and notes and definitions on Slide 3. I will move directly to Slide 5, which provides an overview of 2025. We are pleased with Karoon's performance during 2025. We produced 10.3 million BOEs, which was nearly on par with last year despite well issues and natural decline. While our sale revenue and NPAT were lower in 2025, largely due to the softer oil prices, our low-cost, high-margin assets generated $231 million of operating cash flows, demonstrating the robustness of our business. These cash flows underpin the disciplined investment in our organic growth opportunities and healthy returns to shareholders. We paid shareholders $80 million, which includes $35 million in dividends and $45 million in buybacks. Since the second half of 2024, we have purchased and canceled 11% of shares on issue, delivering solid returns to our shareholders. I will share more about our operations, Reserves and Resource base and projects while Ray Church will discuss the 2025 results later in the presentation. Slide 6 summarizes our good safety record and sustainability initiatives. We achieved a year-on-year improvement in both personnel and process safety, which are core to how we run our business. We also reduced our flaring by 41% compared to 2024 as we improved operations and FPSO reliability. We do remain committed to being 100% carbon neutral for Scope 1 and 2 emissions, primarily by surrendering independently verified carbon offsets. This has been achieved since 2021. We will remain relentless in our aim of delivering 0 injuries every day, minimizing our environmental impact where practical and cost-effective and being a positive supporter to the communities in which we work and operate. Moving to Slide 7. We achieved a total shareholder return of 16% in 2025. Our share price appreciated 11%, closing the year at AUD 1.54 per share, and we paid AUD 0.074 per share of dividends unfranked during the year. Our positive share price performance was despite Brent crude price declining 19% and the ASX 200 Energy Index being down 2% over '25. The Board has declared a fully franked final dividend for 2025 of AUD 0.031 per share to be paid on March 31, 2026, bringing the total dividend declared for 2025 to AUD 0.055 per share. On the next slide, we show our capital allocation framework and our priorities to create value for shareholders, which remain unchanged. The on-market buyback program has been reviewed as we enter a period of higher capital-intensive work during the first part of this year as well as oil price volatility. We believe with the strong fundamentals from the base business and our current share price, which, in our view, remains undervalued by the market, it is prudent to continue with the on-market purchases as part of our disciplined approach to capital allocation. As we move to Slide 9, Reserves and Resource growth have been an ongoing thematic for Karoon over the years, and this year is no exception. Reserves increased 7% year-on-year, primarily due to conversion of Bauna 2C to 2P as acquiring the FPSO and reducing operating costs has given us the confidence in being able to produce to late 2030s. As a result, Reserves life has also increased to 7.1 years. Our 2C Contingent Resource saw an increase of 34%, driven by an upgrade in the Neon Resource with improved subsurface characterization and the acquisition of licenses containing the Piracuca field. On Slide 10, our business has a healthy and balanced pipeline of portfolio growth opportunities in different phases of maturity. The short term includes short-cycle project deliveries, primarily at Who Dat in the Gulf of America. The medium term includes Neon and potentially Piracuca, Goia and the Neon West in Brazil, which we are continuing to mature. In the long term, we have a sizable prospective exploration acreage position in the South Santos Basin. I will talk about each of these opportunities in more detail shortly. Now I'd like to hand over to Ray, our CFO, who will run through the financial highlights. Raymond Kenneth Church: Thanks, Carri. Good morning, everyone. I'll move right into Slide 12 and open by saying that in 2025, the FPSO acquisition, oil price impacts on the Petrobras contingent consideration provision and expense treatment of the flotel campaign make it important to look through to the underlying results. Slide 29 in the appendix shows these items in a reconciliation of statutory to underlying results, and I'll now focus on those underlying numbers. With production of 10.3 million BOE marginally down from 2024, 15 offloads took place at Bauna in 2025 versus 16 last year. Revenue was also affected by oil price, resulting in sales of $628.6 million versus $776.5 million in 2024. With costs largely fixed, that revenue reduction flowed directly to underlying EBITDAX and operating cash flow, partly offset by royalty reductions and FPSO lease savings. As you can see, we drew cash to close the year with $143.9 million of net debt, primarily as we funded the FPSO acquisition. I'll say more about cash movements on later slides. Turning to underlying earnings on Slide 13 and to provide more detail, the revenue reduction comprised 2 parts. The first being $100.4 million from realized price as the average liquids price was 14% lower at Bauna and 17% lower at Who Dat and the second being $47.5 million from a sales volume reduction, mostly at Bauna. Production costs improved by a net $7 million through savings of $40 million in FPSO lease D&A and interest costs, offset by roughly $28 million of temporary FPSO transition support costs and $5 million of logistics and nonrecurring mooring line repair costs. Royalties reduced by $7 million in line with price and produced volumes and crude inventory movements were $26 million as a lifting occurred in January 2026. The majority of the increase in net finance and interest costs relates to the accounting treatment of $17.8 million of withholding tax on intra-group funds movements. This is fully offset in income tax expense. Of the remaining $52.4 million, the increase year-on-year is a result of $3.9 million of full year bond interest impacts plus $4.2 million of reduced interest received as we drew down cash. And as I mentioned, income tax expense includes $17.8 million credit for withholding tax, neutralizing the impact on NPAT in the year. Excluding this item from tax expense and profit before tax, the underlying tax expense rate is 33%. This all leads to an underlying NPAT of $107.5 million. Slide 14 provides a per BOE view of the 2024 and 2025 cost structure on a pre-AASB16 basis. Despite the oil price decline, the pretax cash margin remained above 65% per BOE. Unit production costs further reduced to $13.20 and breakeven realized price improved from $33 to $31 per BOE. This reflects the ongoing work to improve topside efficiency, replace natural decline and the emerging FPSO acquisition impacts, and it demonstrates Karoon's leverage to oil price. Moving to Slide 15. As I've already flagged, EBITDAX included the flotel costs and converted after taxes and net finance costs to $231.3 million of operating cash flow, including FPSO lease payments. This provided adequate funding for CapEx investments in the Who Dat sidetrack and SPS-88 as well as the last of the largest Petrobras contingent payments, leaving $57.8 million of free cash from operations. This, combined with our opening cash was then applied to the strategic FPSO acquisition and capital returns to shareholders, resulting in a net drawdown of cash of $135.1 million. This led to the change in net debt mentioned earlier. Moving to liquidity and the balance sheet. Slide 16 shows this cash reduction to close the year with $206.1 million of cash. As no further draw on debt was necessary in the year, the combination of the RBL debt facility and cash leaves us with $546.1 million of total liquidity at year-end. This positions Karoon's balance sheet for the second extended shutdown and flotel campaign and well works at Bauna and Who Dat with approximately 85% of this planned 2026 CapEx expected to be spent in the first half. It will also fund the much reduced contingent consideration and the announced capital returns. I'd like to finally note that the RBL facility amortizes with Reserves and is reassessed in April and October of each year. Thank you. And now I'll hand back over to Carri. Carri Lockhart: Thank you, Ray. Looking forward to 2026, we see the year as having 2 distinct halves. This first half is a period of intense investment and the second half when we aim to realize the benefits of this work. Over the next few months, we will realize on performing essential inspections, maintenance, the annual turnaround, systems revitalization and upgrades on the Bauna FPSO, together with the production riser reinstatement work at Who Dat. Regarding wells, we have 1 well and 1 subsea intervention plan in Brazil aimed at restoring well production and a sidetrack plant at Who Dat. Assuming the operational programs in the first half go as planned and oil prices remain steady, we expect to realize increased facility uptime and production as well as operating cost reductions, in turn, delivering strong cash flow generation. Next slide. The Bauna FPSO acquisition was a very significant milestone for Karoon as it provided us with strategic control over arguably our most important asset. Acquiring the vessel has already led to improved safety, reliability and cost efficiencies. Production from Bauna in 2025 was higher than 2024 despite natural decline and was driven by improved FPSO efficiencies of 95% versus 84.5% in 2024. The acquisition also allowed us to extend field life by 7 years to 2039 and increase our 2P Reserves. As shown on Slide 20, our Brazil operations team are heavily focused on several major concurrent activities during the first half '26, as previously mentioned. Our FPSO revitalization campaign is currently planned over a 4-month window with an option of a 2-month extension if necessary. For most of this time, we will be producing as normal. The annual maintenance turnaround is planned to commence during March and will run for 28 days. Alongside this, we expect to conduct SPS-92 and PRA-2 well activities in late March to early May window. These concurrent offshore activities present both a challenge and an opportunity with safety remaining our highest priority throughout. Simultaneous operations and logistics are being managed via detailed planning and the use of a flotel, which is already on location. The drilling rig is expected to mobilize in the field in second quarter to undertake the SPS-92 ESP well workover. And at peak offshore workforce at Bauna is expected to exceed 700 personnel compared to a typical complement of around 90. On Slide 21, during 2025, our Neon team completed some excellent subsurface work further maturing the Neon development opportunity, resulting in Neon 2C Contingent Resources increasing by 50% to 90.3 million barrels. Additionally, we picked up the nearby Piracuca Resource, which allowed us to book a further $19.6 million of 2C Contingent Resource, while 2U Prospective Resource at the nearby Neon West exploration prospect increased 69% to 25 million barrels unrisked based on technical studies completed in the year. The Neon work was centered on a stand-alone redeployed FPSO development concept. Late last year, our preferred concept option went off the market. Since then, other available FPSO options have been identified, including the strategic ownership of the Bauna FPSO, which may present a more value creative development solution. Our focus over the next few months will be on further assessing and optimizing the Neon development concept in a disciplined project management process, including cost reductions and exploring potential synergies with Bauna and the future development of Piracuca and Goia discoveries as part of the greater Neon area development plan. We are also well into a competitive farm-down process, which is targeting a 30% to 50% interest sell-down in Neon and the surrounding areas. This cost reduction initiative, development concept review and equity farm-down will steer our defined and feed activities and schedule. On Slide 22, Karoon has built a substantial acreage position of over 7,300 square kilometers in recent Brazilian licensing round, all with no associated drilling commitments. We believe this area located in the South Santos Basin has a working petroleum system to support the potential post-salt tertiary play. Although it isn't tested and unproven, our work to date suggests this area and potential targets could potentially be significant if successful. Our leading drill candidate is currently the Eta Front prospect located in S-M-1482, which is supported by seismic direct hydrocarbon indicators. Extensive work remains in the surrounding acreage to assess additional prospectivity. We have begun a farm-down process and have secured a rig option to potentially drill in 2027. This is subject to farm-down results and technical and regulatory requirements. As we move to Slide 23, our non-operated Who Dat asset produced in line with our expectations in 2025. We saw an increase in liquids contribution as the year progressed, finishing with 74% liquids and 26% gas. Our production share on a net revenue interest NRI basis was 2.6 million BOE in 2025, with the natural reservoir decline rate mitigated to 10% relative to 2024. The E6 sidetrack well was successfully drilled and completed under budget with excellent rig performance. The well, which came online in fourth quarter '25 flowed within expectations at a rate of 1,050 BOEs per day on an NRI basis. In early February, a minor leak was detected on 1 of the 6 production risers at Who Dat data floating production system. The riser was immediately shut in and has since undergone inspection and seawater flushing to remove the hydrocarbons. The operator LLOG is currently working to reroute production if feasible and proceed with repairs and reinstatement of the riser. As a result, Who Dat first half production is estimated to be lower than planned. However, the 2026 Who Dat production is currently expected to be within our guidance range of 2.1 million to 2.5 million BOEs on an NRI basis, albeit at the lower end based on current plans for reinstating production from the riser and other activities such as the planned A1 sidetrack, which is estimated to start operations in early Q2. On the next slide, we have 2 potential Who Dat development opportunities in the U.S. Gulf of America. Both are short cycle and are proximal to the existing infrastructure. The joint venture is maturing the Who Dat East opportunity towards a potential final investment decision, which is subject to royalty relief and project commerciality. The preferred development concept is a single well tieback to infrastructure. We expect this could add 3,500 to 5,000 BOE per day of initial flow rate net to Karoon on an NRI basis. The Who Dat South has been undergoing further geologic and geo studies. We believe the Who Dat area has additional potential for value-creating opportunities that leverage the existing infrastructure. Karoon participated in the recent Gulf of America bid round, and we are a parent successful bidder of block Mississippi Canyon 587 near Who Dat South. We plan to purchase additional seismic to further mature the potential prospects on that block once it is rewarded. Our final slide showcases our focus on leveraging our competitive advantages to optimize total shareholder returns. We're doing this by maintaining safe and reliable operations of these high-quality assets and ensuring low-cost and high-margin barrels. Our strong balance sheet provides us with the flexibility to sustain business and balance capital returns with our organic value-accretive portfolio and growth opportunities. I would like to thank all of our staff and contractors for their hard work and dedication to Karoon and to thank our shareholders for their continued support of the company. Ray, Ann and I are now happy to take any questions, first from the telephone lines and then from the online facility. Now I will hand it back to the moderator. Operator: [Operator Instructions] Your first question comes from Dale Koenders with Barrenjoey. Dale Koenders: Carri, I was hoping you could provide a bit more color on the Neon optimization works. What are the cost-out opportunities that are currently being explored and considered? Carri Lockhart: Thanks, Dale. So let me step back on what has changed. We were designing to a stand-alone FPSO concept. And of course, as I mentioned, the vessel went off the market late last year about the time that I arrived. And then at that time, we're also seeing the softer oil prices. And then prior to that, we acquired the Piracuca license, and we completed, of course, this very strategic acquisition of the Bauna. So when you put all these factors together, naturally me coming in, I'm going to ask the question of how do we continue to drive out cost in this project and get it across the finish line, which I firmly believe we can. So it was a good opportunity for us to revisit the concept with a focus on reducing cost and optimizing these plans. So where are we at now? We have 2 parallel processes running. The first is evaluating alternate developments and a disciplined project review that considers the strategic ownership of the Bauna vessel. And I think this can enhance economics. We also have the farm-down process, which has started last year. So the review is kicking off, and it's a very disciplined review. And I think both of these will run their path and the FID timing will logically follow. And we are going to be placed in the economic -- or the economics of the projects and the process of this review process over defined schedule. And I will say coming into this, my experience is that a schedule-driven process is not conducive to maximizing returns. And I do think that there are several different interesting concepts that we're exploring that will improve the project as you see other companies doing in lower oil prices and their projects always come out of the tail end much better. Dale Koenders: I feel like you've preempted my second question by stating schedule-driven processes don't define the best outcome in a success case, what could be an FID date is end of '26 a more realistic outcome? Or how should we think about when the balance sheet might need to support such a project? Carri Lockhart: Again, we'll come forward with more information over the next few months, but I need to get through this review process first. And then hopefully, midyear, we'll have more to share on this. Raymond Kenneth Church: I'll just add Dale, on your balance sheet point, we have obviously run models on existing -- on the previous projections around the project with the plus/minus, I guess, contingent costs and timing. And we're already -- as you know, we're already slowing down the project, I guess, FID date. So it probably fits the balance sheet better, and it probably also supports -- could support if we go ahead, it could support the refi of some of the financing facilities. So it may actually be a little bit better for the balance sheet. Dale Koenders: Yes. And then just final question. You booked Piracuca for the first time, just under 20 million barrels of oil. It was previously referenced could have been 500 million barrels of oil equivalent. Just sort of any comments on what assumptions have been made on that booking and how you think about that resource? Carri Lockhart: Well, again, we're studying that. It's a new license, and we continue to study how this fits in with the broader hub potential concept. And that's one of the concepts that were under review. So we'll have more information in the coming months as this review concludes. Operator: Your next question comes from Henry Meyer with Goldman Sachs. Henry Meyer: Just the Who Dat on the riser leak, could you just share a bit more detail, please, on what scopes needed to repair that and if you see any opportunity to complete it earlier than the second half? Carri Lockhart: Yes. Thanks, Henry. This is in early stages, and it's a very recent development. The operators preliminary plan at this stage is reinstating production. It involves actually 2 steps. The first would be to reroute wells within the next 1 or 2 months that restores the majority of the production with final riser repairs towards the end of the year. But keep in mind, we're still in the -- the operator LLOG is still in the assessment phase, and we'll know more here in I hope the coming weeks. But based on the preliminary information that we have, we still currently believe that we will be within guidance, albeit at the lower end, as I previously mentioned. And some of these losses are offset, of course, by the A1 sidetrack well that will be drilled as well as other activities and certainly contingencies that we already have factored into guidance. Henry Meyer: Okay. And at Bauna, the flotel campaign has been underway for a few weeks, I think. Just any thoughts on how those initial repairs and inspections are comparing to the original expectations? Carri Lockhart: So yes, you are correct. The flotel is currently on target. We do have detailed planning in place to manage the simultaneous operations, as you heard me state that we have potentially over 700 people at peak period going into that field working on this. Nothing out of the ordinary. Of course, it's early. And as we get into inspections, we'll have to continue to assess if there's any other remediation work that comes into play. We do have the contingency that we have an additional 2-month option for the flotel if needed. So I think we have the planning well in place. I think everything is looking as though it should based on our knowledge to date. But we still have an awful lot of work to do, including the turnaround, which is in conjunction with the transition that we're undertaking at this point. On the tail end, some of this work that we're doing is to ensure that the critical systems that we need in place to ensure production reliability and safety will be replaced and upgraded. So I'm very comfortable with the progress that's being made. Operator: Your next question comes from Nik Burns with Jarden Australia. Nik Burns: I had a couple of additional questions around the riser leak at Who Dat. First, can you confirm how much production is coming through the riser that's been impacted here? And secondly, probably a more general question. I guess, riser leak is relatively unusual. If you put your petroleum engineering hat on, Carri, you've been able to gain any confidence in the integrity works undertaken on the Who Dat infrastructure in recent times. I'm conscious there was an issue with the flash gas compressor a couple of years ago or 18 months ago, which also impacted production. And you're about -- as you mentioned, you're about to go through a large campaign to address production and integrity issues in Brazil. I'm just [indiscernible] just after your views on whether there may be a need for increased maintenance on Who Dat going forward as well? Carri Lockhart: Yes. So thank you for those questions. A couple of things. Right now, the riser production, it's somewhere in the range of 30-ish percent. And of course, reinstatement is going to be within 2 different phases where the majority of it should be reinstated hopefully in the next few months and then the rest of the year-end. So again, I want to reinforce that we're not changing our guidance and that we still believe that we're within the lower end. In terms of putting my production engineering hat on and managing mid- and late-life assets, operators, including LLOG [indiscernible], we do have annual periodic shutdowns that we take turnarounds where we're constantly upgrading equipment, and we're constantly making sure that our critical defeat systems are in order. And this isn't going to change. Whether or not you are doing the right amount, I do believe that the operator is a very prudent operator, and we're a prudent JV, and we are doing the right amount. But some of these things are very hard to predict. You can't necessarily see when you're going to have failures a lot of times. And in the case of the riser, it's too early to even understand, at least based on inspection, we don't have the root cause analysis in hand to even understand what actually happened. So was this mechanical or was this more deterioration related. So let's table that. But am I confident that we have integrity on that kit? Yes. Is there always work to do? Yes. And this is just the nature of offshore. Nik Burns: I appreciate the answer there, Carri. And my other question, just on Who Dat more broadly. Harbour Energy announced the completion of the acquisition of Who Dat operator, LLOG a couple of weeks ago. Have you had an opportunity to sit down with Harbour management to discuss their plans and intentions for Who Dat and how the change in ownership could impact or influence future development and investment strategy here? Is there any risk that they want to slow down investment in Who Dat to prioritize other assets within the LLOG portfolio? Or I guess, on the flip side, could -- is there a chance they might want to go harder on investment here? Carri Lockhart: Thank you for that question. No, we engage with the management team all the time on LLOG, and that's not changing with the acquisition with Harbour Energy. I think whether or not they slow down or speed up, those are going to be questions that Harbour will have to answer at the corporate level. That's not just something that I can dictate. So I think it's early. Best I can tell from what I know on this year's plans, we are -- actually see from what we have in our plan a slight acceleration on the A1 sidetrack. So that gives me comfort that our plans are intact, and we're well engaged with the operator. And until there's a different opinion from Harbour, we're going to continue to march forward with what we have in our plans. Operator: [Operator Instructions] Your next question comes from Gordon Ramsay with RBC Capital Markets. Gordon Ramsay: Just had a question on Who Dat East, Carri. You said FID is subject to royalty -- a royalty relief decision. Is that kind of normal practice? Or is this something that is different in terms of moving forward with the project and there's some risk on that? Carri Lockhart: Well, let me start by -- and I'm going to turn this over to Ray for a minute. But let me start with, yes, this is normal practice when you apply for royalty relief, and we are still waiting for the decision. And then once the decision comes in based on what those parameters are for the royalty relief, the JV will reconvene and then run our process through the final commerciality and have a decision at that point. But let me turn this over to Ray. Raymond Kenneth Church: Gordon, just I'd only add that even the Who Dat field itself has royalty relief on it. So the standard rate is commonly reduced on fields. So we're -- it's not an unusual request to make this up to request it. And then if successful, it will be something similar to the royalties we see on Who Dat as well. Gordon Ramsay: Okay. And my second question, I'm very intrigued about the post-salt tertiary oil play in the South Santos Basin. And you've mentioned that a farm-out process is underway. I fully recognize that you're not committed to a well with that acreage, but I would assume that whoever you do bring in, if you do, will end up drilling a well on the block. Is that a fair assumption? And can you give us a feel for the intended timing on that possibly? Carri Lockhart: Yes. So we view this as being actually an exciting play. It is exploration and exploration is complex and sometimes it's a bit of an art form, but we're excited about the area, and we do believe that it has an active working petroleum system. So for the next phase, we do have a farm-down process, as I mentioned, that has just initiated. It's going to take quite some time for companies to come in and assess what we have because this is a very, very sizable acreage position that we have. And in terms of drilling a well, once you have a prospect and you've derisked it, you almost have to drill a well to prove it up because it is exploration, and it is a bit of science and a bit of art. But we don't intend to drill this 100%. And we look to have a more firmer date once we finish the data room and once we finish the geologic assessment that is ongoing to prove up any kind of volumetrics or to assess the volume metrics. Does that answer your question? Gordon Ramsay: Got it. Sounds pretty exciting. And the ideal partner, again, one with strong technical skills and operating capability? Or are you looking for a financial partner? Can you just comment on that? Carri Lockhart: No. Ultimately, it's always beneficial in these cases to have a partner that can offer technical skills because every company has their view and every company has quality engineers and geoscience staff and bringing those together just comes up with a more robust project. So ultimately, we would be looking for a partner that can contribute to the technology piece as well, especially not so much for drilling the well. It's more for if this is a discovery on what this potentially means given the scale of this area if it's play opening. Gordon Ramsay: So early days, but looks pretty exciting to me. Operator: That is all of our audio questions at the moment. I'll now hand over to Ann Diamant for any webcast questions. Ann Diamant: Thank you. There's just one webcast question that's from Derek Becker, who's a shareholder. He asks, if the company's share price is so cheap that we do share buybacks, then why aren't current management showing confidence by also buying shares on market? Carri Lockhart: I'll go ahead and answer this. Management directors do have shareholder requirements in the company. I can refer you to the rem report, but the prior CEO was a significant shareholder. I know Ray sitting here has shares. I just joined the company, and so been in largely a period of blackout. But rest assured, the management does have significant equity stake even via the performance rights. So some of this is personal decisions of individuals. But again, management and directors do have shareholding requirements. Ann Diamant: Thank you. No further questions from the webcast. Operator: Thank you. That does conclude our question-and-answer session today. I'll now hand back the conference to Ms. Lockhart. Carri Lockhart: I want to thank you all for joining today's annual report with Karoon Energy and look forward to further engagements. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Smartgroup Corporation Limited SIQ FY 2025 Results Release. [Operator Instructions] I would now like to hand the conference over to Mr. Scott Wharton, CEO. Please go ahead. Scott Wharton: Great. Thank you, Betsy, and good morning, everyone, and thank you for joining us on the call today. My name is Scott Wharton, and I am the Managing Director and CEO of Smartgroup. Joining me on the call today is Jason King, our Chief Financial Officer. First, I would like to acknowledge the traditional owners of the land on which I'm speaking to you, the Gadigal people of the Eora Nation. As this event is broadcast nationally, I would also like to acknowledge the traditional custodians of the various lands on which you all have joined this call. I recognize their continuing connection to land, waters, and culture, and pay my respects to the Elders past and present. Today, I'll start by providing some of the key highlights of 2025 and a recap of Smartgroup's investment proposition. I'll then talk through the progress we have made across our strategic priorities. Jason will then take you through the full year performance in more detail. To conclude, I'll provide a brief outlook. Now let's turn to Slide 5 of the investor presentation. Smartgroup reported strong financial results with solid operating momentum in 2025. Revenue increased 8% versus 2024 to $329.3 million, and total expenses increased 5% to $182.7 million. The strong revenue growth was underpinned by higher novated leasing volumes, driven by demand-generating activities and new client wins. We also continued to invest to deliver our strategic priorities. We are enhancing our scalable and customer-centric platform that delivers great customer service and experience. EBITDA of $135.3 million was up 14% on pcp, and EBITDA margin was 41% for the year, an increase of 2 percentage points on pcp. NPATA increased by 11% to $80.2 million. Smartgroup also delivered return on equity of 30%, an improvement of 1.2 percentage points on pcp. Our strong financial performance and high level of cash generation have enabled the Board to declare a final fully franked dividend of $0.215 per share. In addition, the Board also declared a fully franked special dividend of $0.12 per share as a further return to shareholders. Together with the $0.195 per share interim ordinary dividend declared in August 2025, this brings fully franked dividends to $0.53 per share, representing 90% of 2025 NPATA. Turning to Slide 6. During the year, Smartgroup continued to retain and attract clients by investing in client relationships, market-leading service, and customer experience. We continued to grow salary packaging customer numbers, novated leases under management, and fleet-managed vehicles to record numbers. Our proposition generated solid novated leasing demand for both electric and internal combustion vehicles. In 2025, battery electric new vehicle orders grew 49% compared to 2024. While the EV share of our novated lease portfolio is growing, ICE vehicles remain an important and growing part of our business. In 2025, the number of ICE new vehicle orders increased 4% compared to 2024. Smartgroup remains actively focused on managing yield while also growing volumes. In 2025, leasing yield was stable compared to 2024. We're also making strong progress against our strategic priorities, and I will speak about this later. In short, we are well on track to achieve our ambition of delivering smarter benefits for a smarter tomorrow. In sustainability, we are proud to have been ranked in the 85th percentile worldwide in the S&P Global Sustainability Assessment. In addition, Smartgroup was again recognized as an inclusive employer by Diversity Council Australia. We've held this citation since 2019. This morning, we also released our 2025 Impact Report, a voluntary report, which contains additional information on our sustainability achievements and progress over the past year, as well as our new 2028 sustainability strategy. These outcomes recognize the importance of ESG and diversity and inclusion to Smartgroup and our customers. Moving to Slide 7. We believe our investment proposition remains highly compelling. Smartgroup's differentiated position underpins our ability to deliver strong growth and sustainable returns over the long term. Smartgroup is a leading employee services and fleet solutions provider with a client base that employs around 2.5 million Australians. Our existing client base represents a significant growth opportunity. In the last 12 months, we provided services to around 584,000 of those people and managed over 120,000 vehicles across novated leasing and fleet. We are the largest salary packaging provider in Australia, and this scale enables us to continue investing in superior customer experience and in the systems and protections that safeguard our customers. Over the last 2 years, we have consistently demonstrated improvements in operating efficiency. In 2025, the number of customers per operations FTE has improved 16% to 1,645. Smartgroup's operating platform continues to demonstrate strong capability in attracting, migrating, and retaining some of the country's largest and most complex clients. Our scalable technology foundations, sector expertise, and customer-centric service model enable seamless transitions for new clients. The group has significant recurring revenues and long-term contracts with clients in attractive and growing segments like government, health, education, and not-for-profit. Our offerings are even more relevant to our customers during tough economic times when people are looking for ways to make the most of their take-home salaries. We have a track record of revenue growth and a resilient and scalable earnings base with strong cash flow conversion. Smartgroup's investment proposition to shareholders is underpinned by our capital-light business model. This model means that we carry relatively low levels of vehicle residual value and credit risk. Combined with our strong balance sheet and high free cash flows, this means that we can pay fully franked dividends to shareholders at the same time as we are investing for growth. Finally, we have articulated a clear set of strategic priorities to drive profitable growth into the future. We are focused on our customers and our core businesses of salary packaging, novated leasing, and fleet, while investing in digital and technology, accelerating growth, and delivering scale efficiencies. Turning to Slide 8. Since we announced our strategic priorities in February 2024, we have delivered strong financial performance. Revenue has grown 31% through disciplined execution of our strategic priorities. This has included continued investment in digital to enhance our customer proposition and stronger account management and business development capabilities. Over the same period, EBITDA increased 35%, reflecting the increased scalability of our operating model. NPATA increased 27%. Turning to Slide 10. This slide recaps Smartgroup's strategic priorities and focus areas as communicated to the market in February of 2024. Smartgroup is committed to delivering smarter benefits for a smarter tomorrow through disciplined execution of its strategic priorities. Our strategy has 4 priorities. The first is centered around digital and technology investments that improve customer experience and driving operational efficiencies in our core salary packaging business. The second priority is focused on leading innovative leasing, where we have delivered tremendous growth since embarking on our strategy. The third is broadening our product range to meet our customers' growing needs. Finally, we are making targeted investments in our fleet business to strengthen its competitiveness and profitability, including enhancements to our product offering. Turning to Slide 11. This slide outlines our strategic road map. While our strategy focuses on the 4 strategic priorities, we have deliberately phased execution. The first phase focused on growth and demand generation to build our leadership position in novated leasing. We've also invested in our front-end digital assets to enhance customer experience and sustainably fuel growth into the future. The second phase, which commenced in 2025, is focused on building a scalable business platform. This phase includes investments in consolidating our brands, removing duplication of operations, modernizing our technology, and automating processes. The third phase focuses on innovation of propositions to meet evolving customer and client needs. We have made good progress. For example, we expanded our novated leasing network through partnerships, including BMW Financial Services and Qantas, and broadened our employee benefits proposition by adding IntelliHub, Count, and Finspo to the platform. Our fleet funding offering has also been expanded with Volkswagen Financial Services Australia. As a result of these 3 phases of focus, and as mentioned at our 2025 half year results, we anticipate EBITDA margin to be in the mid-40s during 2027. Beyond 2027, with sustained investment, particularly in automation and AI, we see opportunities to further elevate business performance. We will continue to develop our product offering to meet evolving customer needs and strengthen our value proposition. Turning to Slide 12. A key focus of Phase 1 of our road map is digital transformation, and I wanted to provide some examples. We have now delivered enhanced market-leading digital solutions, improved customer experience, and expanded our digital reach. As I mentioned in our full year results in 2024, we launched our enhanced car leasing portal, and we also delivered smart.com.au, our new customer digital home. These investments have made it easier for customers to engage with us on their salary packaging and novated leasing needs, how they want and when they want. In 2025, we have delivered our new digital salary packaging sign-up journey, marking a significant milestone in our platform modernization. This digital asset enhances customer onboarding by offering an improved experience that simplifies the sign-up process. Feedback has been positive from clients. We've also developed a new smart app, which is now in testing with customers and will be rolled out in 2026. Importantly, over the last year, we have improved our digital product and technology capabilities to ensure we continuously enhance our digital assets. These capabilities will ensure that our products remain market-leading and continue to meet customer needs into the future. Turning now to Slide 13, which outlines some of the work underway in Phase 2 of our strategic road map. A central objective of Phase 2 is reducing operational complexity. We've already reduced our brand footprint from 8 to 4, and early in 2024, we divested noncore businesses to sharpen our focus. This consolidation allows us to concentrate our marketing investment, better leverage our ongoing investment in product technology, and remove duplication across the organization. Operationally, we're also simplifying the way we serve customers. We've already reduced our contact centers, and we're now on a clear pathway toward a more unified and streamlined contact center operation. We've also made significant progress in enhancing our technology. When we began this journey, we were operating multiple legacy systems inherited through acquisitions, including duplicate product platforms. Today, we've delivered meaningful improvements, with 45% of our compute now running in the cloud. By 2028, we will reach 100% modernization of our technology infrastructure. This reduces operational risk, accelerates the delivery of new digital experiences, and enables future automation. In 2023, our automation activity was limited. In recent years, we have stepped up significantly, introducing AI-driven knowledge management, AI operative intelligence, and automation of key high-volume processes such as claims. We will continue to expand automation as we build out our highly scalable omnichannel operation. As a result, we are already seeing tangible efficiency improvements, including sustained gains in customers per operational FTE. As these initiatives come together, and consolidation, contact center rationalization, full technology modernization, and deeper automation, the efficiency and platform scalability benefits will continue to grow. The third phase of our strategic road map is about enhancing our propositions, expanding benefits, strengthening feature sets, and introducing new products into our operating platform that create even more value across our core markets. Moving to Slide 14, which highlights some examples of what we delivered against our strategic priorities in 2025. Our new digital customer home, smart.com.au, has attracted 3 million total users since launch at the end of 2024, educating and enabling our customers to easily find the information they need to understand our products and services. We also achieved efficiency improvements, including increasing the number of customers per operations FTE by 16% in 2025. In novated leasing, we delivered strong improvements, record customer numbers, as well as ongoing enhancements to our car leasing portal. Small- to medium-sized business clients continue to play an important role in Smartgroup's strategy, with over 1,500 SME clients. Last year, they constituted around 10% of our novated leasing orders. We remain committed to anticipating our customers' needs and forging partnerships to build a service offering that truly resonates with them. And in fleet, we onboarded Volkswagen Financial Services Australia as an external funding provider. We also expanded our fleet team to build capability and drive our next phase of growth. Moving to Slide 15. Smartgroup is well positioned and is unlocking value through scale, disciplined investment, and execution. As we continue to enhance the customer experience and expand our market reach, we are generating operating leverage that benefits clients, partners, and shareholders. This reflects the strength of our leading capital-light digital platform, which connects employers, employees, and partners at scale. These outcomes demonstrate that the delivery of the strategic priorities announced 2 years ago are now translating into sustained improvements in efficiency, scale, and financial performance. Our approach to value creation remains unchanged. Firstly, we are focused on winning additional clients to expand our total addressable market. This is now at around 2.5 million Australian workers. In 2025, we continued to grow our customer base to record numbers. For example, we were successful in winning Monash Health and Grampians Health in Victoria. We were also added to the Transport for New South Wales leasing panel, and we welcomed many new clients across all segments, while retaining all major contracts up for renewal in 2025. Since announcing our strategic priorities, we have grown our eligible employee customer base by over 300,000, which represents a 14% increase between 2023 and 2025. Secondly, we are focused on the organic opportunity to expand the uptake of our packaging and benefits offerings within our eligible customer base to leverage the great work of the operations teams that are already in place to support our clients. Since announcing our strategic priorities, active customer uptake has had a relative improvement of 9%. Our approach for driving uptake is working well and gives us a clear pathway to further organic growth. And finally, we are focused on expanding our products and services to better meet customer needs, as we have already outlined in our strategic priorities. This will increase customer lifetime value. We are making good progress, showing a relative improvement in the cross-sell of our products by 13% since announcing our strategic priorities. In combination, improvements in total eligible customer base, customer uptake, and product cross-sell have underpinned our growth over the past 2 years. We are making strong progress on each front, and these improvements will drive improved financial returns over the medium term. I'll now hand it over to Jason to talk through the key drivers of our financial performance in more detail. Jason King: Thank you, Scott, and good morning to everyone on the call. I'll start on Slide 17 to cover our financial performance in 2025. In 2025, we continued to deliver broad-based growth across product lines, customer segments, and vehicle segments. Our active number of salary packages increased 10% year-on-year to 491,000. Novated leases under management continued to grow, reaching 85,300 leases under management, an increase of 15% year-on-year. Our fleet business reached 35,200 managed vehicles, an increase of 9% year-on-year. Turning to Slide 18. Our novated leasing business continues to show strong growth. In 2025, new lease vehicle orders were up 13%, and total settlements, which include new, used, and refinanced vehicles, were up 7% year-on-year. The amount of pipeline unwind reduced in 2025 relative to 2024. The growth rate in new lease vehicle settlements in 2025 reflects this higher base. Smartgroup remains actively focused on managing yield. In 2025, leasing yield was stable compared to 2024. As we outlined in the first half results, we experienced a modest decline in yield in the first half associated with the increased PHEV volume. However, yield recovered in the second half as we maintained our focus on product attachment rates. Delivery time frames continued to improve in 2025 and on average, are now 35 days. Electric vehicles are becoming more accessible with new models available in the market in 2025. For ICE vehicles, we continue to experience some variation in availability across makes and models. However, we do not currently see vehicle supply as a constraint on our business. Moving to Slide 19. Demand for novated leasing continued to be strong across battery electric vehicles and ICE. Combustion engine vehicles remain an important part of our business, and in 2025, ICE new vehicle orders increased 4% compared to 2024. The federal government electric car discount policy for plug-in hybrid vehicles ended on the 31st of March last year. As a result, PHEV demand accelerated in the first quarter of 2025. Following the end of the discount policy for PHEVs and for this type of vehicle has reduced, but was offset by increased interest in battery electric vehicles. New orders for plug-ins declined 31% year-on-year, while new orders for battery electric vehicles grew 49% year-on-year. As legislated, the government has now commenced a review to assess the electric car discount policy's performance over its first 3 years. The review findings will help inform broader policy development on how to continue expanding electric vehicle choices for more Australians and bring transport emissions down. Smartgroup has been a key enabler of making EV ownership more accessible through novated leasing. Our market-leading offering, digital platforms, and dedicated education initiatives have helped thousands of working Australians understand and benefit from EV leasing, ensuring the government's policy delivers meaningful outcomes for employees and employers across the country. Turning to the P&L on Slide 20. NPATA for 2025 increased 11% compared to 2024 to $80.2 million off the back of sustained revenue growth and improved EBITDA margin. EBITDA grew 14% to $135.3 million, and EBITDA margin was 41%, an increase of 2 percentage points on 2024. EBITDA margin remains a key focus for management, as Scott mentioned earlier. We anticipate EBITDA margin to be in the mid-40s during 2027. However, 2026, in particular, is expected to be a significant year of technology investment and change delivery for the organization to achieve this. Revenue growth was driven by novated leasing and new client wins. In 2025, revenue grew 8% to $329.3 million. Similarly, net revenue grew by 9% to $318 million. Product costs reduced 19% year-on-year through a mix of improved supplier pricing and lower attachment rates. Total expenses increased 5% to $182.7 million. Staff costs increased 3%, reflecting a combination of increased wage costs with lower average headcount. These outcomes were achieved while significantly growing our customer volumes, with active salary packages growing 10% year-on-year. In 2025, Smartgroup serviced 1,645 customers per our operations FTE. Non-staff costs increased 12% and were largely driven by enhanced marketing, lead generation activities, and expenses relating to our technology investments. We remain focused on growth while operating efficiently and differentiating our offering to strengthen our competitive position. Depreciation and amortization expense increased 40% in 2025, mostly driven by capitalized IT development costs to deliver our strategic priorities. Slide 21 highlights our continued strong cash conversion at 122% of NPATA. This was influenced by favorable timing of working capital movements and tax payments, which are outlined in the appendix. Capitalized IT development costs were $12.6 million in 2025, in line with guidance. Our balance sheet on Slide 22 shows that we ended the year with a conservative net debt position of $38.1 million and 0.3x leverage. Since 2021, we have been piloting fleet funding products with selected clients utilizing our balance sheet capacity. This pilot has successfully assisted us to refine our product proposition for this market, and we have moved to providing a more complete offering with the integration of external fleet funding providers. We expect internal funding of this product will, therefore, be significantly lower in the coming years. The business is well positioned. Our low net debt and strong cash generation provides us the flexibility to invest for growth while delivering dividends to shareholders as per our stated policy, which I'll now turn to. As many of you would have seen before, Slide 23 articulates our capital allocation approach to ensure that we deliver long-term sustainable growth and maximize shareholder value. Our strategic priorities provide significant opportunities for Smartgroup's medium- and long-term growth. To ensure we make the most of these opportunities, we will continue to invest in core and digital technologies as well as customer experience improvement initiatives. These necessitate allocating sufficient capital to ensure we can execute well. Similarly, we will maintain flexibility to take advantage of attractive acquisitions, partnerships, and other organic and inorganic growth opportunities. It is our intention to pay fully franked dividends in line with our current policy of 60% to 70% of NPATA, and we will look to return excess capital to shareholders whenever appropriate. Other returns to shareholders may include special dividends or share buybacks. For 2026, we have allocated technology CapEx in the range of $11 million to $13 million, similar to 2025. This represents between 3% and 4% of 2025 revenue. We expect CapEx to remain at current levels in the short term as we deliver our strategic priorities before returning to a more normalized level. Consistent with this capital allocation approach and factors, including our solid returns and cash generation and our meaningful ongoing investments in growth in the business, the Board has declared a final fully franked dividend of $0.215 per share. In addition, the Board has also declared a fully franked special dividend of $0.12 per share. Together with the $0.195 per share interim ordinary dividend declared in August 2025, this brings fully franked dividends to $0.53 per share, representing 90% of 2025 NPATA and an increase of 9% compared to 2024. This special dividend shows Smartgroup's commitment to its capital allocation policy of returning capital to investors where prudent, while ensuring we continue to invest for growth. Finally, as evidence of our disciplined approach to capital management, you can see from this chart on the page, our continued delivery of strong returns on equity for shareholders, which in the last 12 months was 30% after tax. With that, I'll hand back to Scott. Scott Wharton: Great. Thank you, Jason. Moving to Slide 25 and in summary. In 2025, Smartgroup again delivered strong financial results and solid operating momentum through disciplined execution. We delivered record customer numbers across salary packaging, novated leasing, and fleet. These results reflect a business that is performing very well across all meaningful metrics. We will continue to remain focused on driving further growth and scalability through the delivery of our strategic priorities. Turning to Slide 26 and the outlook. We continue to see a supportive environment for further growth. Demand for our products and services is robust. In January, leasing orders and settlements increased compared to pcp. January yield also increased compared to pcp. Our distribution partnerships have received a positive response from clients and customers, validating our strategic direction and unlocking new channels for scalable expansion. As we have said before, 2026 will be a significant year of technology investment and change delivery. This will position the group to realize the scale benefits associated with our strategic priorities. As we have mentioned, we are targeting EBITDA margin to be in the mid-40s during 2027. With sustained investment, including automation and agentic capabilities, we see continued opportunities to further elevate business performance beyond 2027. Through continued strong execution of our strategic priorities, Smartgroup is well positioned for sustained profitable growth, enhancing value for our shareholders. A big thank you to Smartgroup's customers, partners, and, of course, our team. Thank you also to our investors for your ongoing support. I'll now hand back to Betsy for questions. Operator: [Operator Instructions] Your first question today comes from Tim Lawson with Macquarie. Tim Lawson: Just a couple of questions. The growth seems to be pretty strong, both across the salary packaging and novated. Can you just talk about the underlying operating metrics that you're getting there to drive that growth? It seems to be outperforming the market a little bit. And just maybe the conversion to novated would be good as well. Scott Wharton: Yes. No, sure. I agree with your observation, outperforming versus the market. I think let me take you back to Slide 15 from our deck that we went through today. And as we talked about before, as far as organic growth goes, the focus has been firstly growing our TAM, so total addressable market. We've made really good progress there over the past couple of years. Obviously, Tim, as you know, with onboarding clients like the South Australian government through to Monash Health and many, many others. And in fact, if you look over the past couple of years, we've been onboarding new eligible employees at record levels, which is great. It goes to the quality of our digital investments and the customer experience that we're offering in the market. The reputation is coming with that. Then to your question, it's really then down to how do we, with that TAM, which we always aim to keep growing, how do we increase the uptake within our TAM. And a number of areas of focus there. Firstly, through the more traditional means, working with clients to be out educating their employees. That's how we've traditionally done things. That's been enhanced now with much more sophisticated and targeted digital marketing and use of data to target in a personalized way, our marketing to customers. And then also, we've expanded, as we touched on in today's results and our half year update, our partnership network so that we can work with the likes of, say, BMW Financial Services or Qantas to be also out engaging our total addressable market, and again, educating them and drawing them into either salary packaging or novated leasing. And then if we look across then onto the right-hand side, we look at effectively the cross-sell improvement. Really, the number that has been, in addition to what I've already mentioned, are getting far more targeted in our current salary packaging client base, understanding the nature of our clients better, and presenting targeted and tailored offerings around novated leasing to those customers. And that, again, is why our partnerships have been very important and the strengthening of our partnerships because that's enabled us to offer quite often differentiated offers, both in terms of pricing and overall value proposition for specific novated leasing products to those customers to cross-sell to them out of salary packaging. Tim Lawson: That's very clear. Also, just in terms of your margin -- your medium-term margin commentary, can you just talk about what you're assuming there on government policy in terms of the EV FBT benefit for nongovernment, et cetera, workers? Scott Wharton: Yes. And obviously, as you're alluding to, the government was required under the electric car discount policy to do a review. And that review is underway at the moment. We don't know the outcomes of that review. As we look at the medium-term, suffice to say, there's a range that could be impacted by any significant changes to that policy, but we don't anticipate that happening. We'll just need to wait and see what happens from a government perspective. But that being said, I'd point us back to the fact that, and in fact, this slide, Slide 15, is relevant. It shows that we've been able to drive significant growth, and that's not just in EV. It's also been able to drive growth over the past 2 years in combustion engine vehicles. So from our perspective, Tim, to your question, irrespective of EV policy, obviously, the current policy is helpful for demand and will now continue. We've successfully been able to drive growth in combustion engine vehicles through novated leasing, which itself is a fantastic product. So in summary, obviously, there may be some slight swing depending on what, if anything, the government decides to do with the electric car discount policy off the back of this review. But as you would see in the media, even as recently as yesterday, a point that Minister Bowen made out in the media highlighted the success of the policy in driving EV transition in Australia. Tim Lawson: Okay. And just... Scott Wharton: Another point to add to that, Tim, actually, is also with respect to Smartgroup. It's important also to think about the nature of our customer base, which we've talked about before. Teachers, nurses, education, not-for-profit workers, these are people who've got to drive to work, right? And novated leasing is the best way to get into a car, and often for many of these workers, the only way they can get into a car. Tim Lawson: Yes. You're obviously spending, going through the platform transformation as well, but you call out, and there's obviously a number of productivity benefits you're already getting. So you referenced that mid-40s margin target, as you work through that platform spend. Are you seeing further opportunities? Obviously, getting some productivity benefits already, but are you seeing further opportunities to suggest that mid-40s is not enough -- is not high enough? Jason King: Tim, it's Jason. I think we're comfortable that we're on track for what we put out there as a target with the mid-40s. Scott went through the Phase 2 of the strategy road map, what that entails. There's a reasonable amount to be delivered there, but the progress to date has been very good, and that is what has driven the efficiency improvements that we've seen to date. There's more to do. But I think we're pretty comfortable with how we're tracking towards that medium-term goal of getting to mid-40s during 2027. Operator: The next question comes from Phil Chippindale with Ord Minnett. Phillip Chippindale: A couple of questions from me. Just in terms of performance so far for the year. Obviously, the PHEV expiry was 31st of March last year. You've said that January volumes were up. I'm just interested in a February comment. I know I'm not normally one to dwell on such short-termism, but I guess this is we're in the 2 months leading into the PHEV expiry in terms of cycling a tough comp. So I just wanted a comment on how Feb is trading so far. Scott Wharton: Yes. Thanks for the question, Phil. We won't comment on February. What I'd point to, obviously, is that commenting on January, the message we're giving is the year is off to a great start. And on the PHEV numbers, as you would have seen in the slides, not surprisingly, there was a shift in PHEV volumes. It remains a good area of business for us. But what we've seen is customers switch out into then either ICE or battery EV. And net-net, volumes remain very, very strong. And that thematic is continuing into the start of this year, which is great. Phillip Chippindale: Just touching on headcount. I think it was Jason earlier, you mentioned that 2026 is a significant year of IT and change investments in order to achieve your 2027 targets. Can you just give us a sense of what does that look like from a headcount perspective? CY '25 the FTE came down a little bit. But does some of this investment require some additional headcount in the shorter term? Jason King: So yes, you're right. If I look at the 2025 result, we did have modest headcount reduction. What we're doing through the efficiency gains and the technology investment is we're really looking to reinvest that capacity into the capability within the business in order to achieve the next phase, and that next phase being Phase 2 of the platform. So there's more to do, again, in terms of efficiency gains. But what I'd say to the direct question about headcount is we're a growing business. So as far as the efficiency gains, they're coming not from taking costs out of the business but actually growing customer volumes, and we've been able to support much higher customer volumes without having to increase the number of headcount in the last year. And that's really the track that we're on. So whilst we could be adjusting the cost profile of the business in response to external demand changes, at the moment, we're tracking very well as far as growth goes, and that's the way we're positioned. Scott Wharton: And just to add to that, Phil, I'll again draw you back to Slide 13 from our presentation. That's why we were keen to talk a bit more about the Phase 2 work we kicked off last year. We are starting to really see that scalability come through. And that metric at the bottom we provided there, which talks about customers per operations FTE, just brings that to life for you. And obviously, there's other efficiencies that are non-headcount related, but that's something we look at very closely across the business as far as driving scalability in the platform. That name of the game being to get more widgets through the system without increasing headcount, and we're tracking really well there. Phillip Chippindale: Last one for me, just on the contracts. I think, Scott, you earlier mentioned that you retained all the major contracts that were up for renewal in calendar '25. I guess, for the next 12 months, is there particularly significant number of renewals coming up? Just love a comment in terms of just how busy you'll be on that renewal side of things. Jason King: Yes, it's really interesting is that the last 2 years, there were a lot of contracts that came up, and we got through all those renewals. As we disclosed, for example, the ATO was obviously a real bellwether account that went to active RFP. The ATO oversees our policy in many ways as far as salary packaging. And after a very active competitive process, they reappointed us for all their staff for 5 years, which is wonderful. But yes, that thematic flowed through all our other renewals. As we look ahead over the next couple of years, it's a very typical churn. And by the nature of contracts, they are 3 to 5 years, and there's always contracts coming up, but there's nothing abnormal. If anything, by the volume, I think looking back, we've got over the hump of many of the renewals we needed to get through over the past couple of years. Operator: The next question comes from Hayden Nicholson with Bell Potter. Hayden Nicholson: Maybe just coming back to your medium-term EBITDA margin targets and headcounts. Like volumes aside, or just with that in mind, do you think you can -- maybe just can you outline the parameters? And I'm just thinking if we are cycling tougher comps, do you imagine you're going to be able to pull cost out of the business in line with that and some of the efficiencies? Just trying to work out how we build to mid-40s if we have a downturn in the volumes. Jason King: Yes, Hayden, it's Jason. So I think the way that we think about that when we consider strategic planning is that you can hypothesize about different scenarios in the future and what they mean to the business, but they all tend to lead you back to the same place, which is that we should continue to invest in the efficiency of the business because that's the way that we can continue to grow the customers efficiently and have improving operating margins, operating leverage in the business. And the same logic applies in the reverse. So that's why we're so focused on the delivery of the road map. If we are expanding our ability to operate efficiently, that applies to any scenario based on different levels of customer demand. Scott Wharton: And I mean, just to build on that, as we look forward, again, we've been building scalability in the platform, which goes to cost efficiency, but also ability to scale up and scale down capacity more easily as well. And ultimately, though, as we look forward, and obviously, there's a range of things that might evolve in the market over the next few years, but look at the spread of things that might happen, we're really excited about the revenue trajectory that we're on. And why is that? Again, the proof points that we've given today on the momentum that we have, ultimately, that's underpinned by us realizing the benefits of the technology investments that we're making, the customer proposition that we've been sharpening, and we've removed [ Health-e ] from the business and doubled down on our 3 key core propositions around salary packaging, novated leasing, and fleet, and are winning in those propositions. And coupled with much better account management capabilities, much better business development capabilities. I'll just point to, obviously, the revenue line is the one that is particularly important in the equation here for us. Cost is important, but revenue is even more important, and we're confident in the structure that we have and our ability to respond to any changes in the market. Hayden Nicholson: Okay. And then just a follow-up, if I may. Just thinking about growth as well. You're still spitting off good free cash and even just seen in the paper. Are you thinking about M&A at the moment maybe to plug some weakness that could come through, thinking about even just in the near term, March and April comps? Is that something that's on the table or would work? Or should we not think about that as an additional lever to pull? Jason King: I think as we've said pretty consistently, we've got a flexible balance sheet and ability to look at things opportunistically. But we don't feel compelled to do something to achieve the strategic goals that we're pursuing because we've got a lot of capability to achieve that organically. So if there is something that was compelling, we do have an ability to do inorganic. There's nothing active. I know there's always media about this sector, and we try not to get too distracted by that. But we try to stay true to the capital allocation approach, which is we're firstly allocating to the organic plan, but we reserve reasonably substantial capacity for other initiatives if they are compelling. I'd probably just also add, one of the things where we are focusing on the organic opportunity, and we spoke about is the fact that we now have an external fleet funding provider. So we're maintaining our capital-light approach more generally, including in fleet. And again, we're really excited about the opportunity to pursue fleet based on the capabilities and the funding options that we now have. Operator: The next question comes from Chenny Wang with MS. Chenny Wang: Sorry, I was jumping a bit on and off the call. So maybe I did miss this, but I want to come back on EBITDA margins and that midterm guide there. I thought I heard you say for 2026 that it was going to be a significant year of tech investment and change delivery to deliver that mid-40s in '27. Obviously, the January numbers to start this year have looked pretty good. And I guess your outlook is also positive. And with that positive top line momentum, generally, this would translate to margin expansion. But just trying to marry that, I guess, historical trajectory, if you like, with your comments on investments. How should we be thinking about EBITDA margins in 2026, obviously, before that mid-40s in '27? Jason King: Chenny, it's Jason. So yes, as I said before, obviously, increased revenue growth does contribute to the operating leverage. When we're talking about the mid-40s ambition for 2027, the reason we tie that back to the delivery items, and I'm referring here to Page 13, is because that there is the articulation of what we believe we need to achieve to underpin those outcomes. So whilst we are also focused on delivering a result for 2026, the majority of the benefit from the actual program, we feel won't necessarily come in 2026. There will be more organic opportunity for growth in '26, but delivery of these investments is what we're focused on when it comes to that target. Scott Wharton: And I think, Chenny, obviously, and just to build on that, again, some important work to be done this year. But I'd say, obviously, the main game is driving the expansion in 2027, but I'd say that things are pretty stable this year on the EBITDA margin front. But next year, definitively, we're very focused on the EBITDA margin expansion. Chenny Wang: And then maybe just one on the new lease vehicle orders. So look, I don't want to maybe read too much into this, but I do want to pick up on that half-on-half decline of 2%. I'm just curious what you saw there. Was that just seasonality? Yes, was that just seasonality? Or was there something else there? Yes, some color there would be great. Jason King: So yes, I guess you're referring to Slide 18, new car... Chenny Wang: Yes, that's right. Jason King: Yes, there was a modest dip in orders in the second half relative to what was effectively a very strong first half. But as you can see that it's up on pcp. Settlements were up quite strongly on pcp. And as we said in the outlook statement, January was also up on pcp. So we weren't overly concerned by that number. There's still good momentum in the business, I would say. Chenny Wang: Got it. And then maybe just one last one. Just in terms of your order mix. Obviously, I think historically, you've given some color on broad customer mixes, just in terms of that order mix more specifically. Anything you can share in terms of percentage from corporate versus health care, education, government? Jason King: I guess what I'd say is that it's actually pretty broad-based. So looking at the penetration numbers and back to the story about how we are focused on penetration of the customer base and the product uptake, we're achieving that across most sectors. We tend to be more weighted towards health, education. So that, therefore, does, when we're growing, contribute more to the growth. But when we look at the sectors, all the sectors are growing. Operator: This concludes our question-and-answer session. I'll hand the call back over to Mr. Wharton for any closing remarks. Scott Wharton: Great. Thank you, Betsy, and thank you, everyone, for your interest in Smartgroup, and look forward to speaking with many of you over the coming days. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Greetings, and welcome to the Joby Aviation Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Teresa Thuruthiyil, Head of Investor Relations. Teresa, please go ahead. Teresa Thuruthiyil: Thank you. Good afternoon and evening, everyone. Thank you for joining us for Joby Aviation's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. I'm Teresa Thuruthiyil, Joby's Head of Investor Relations. We will begin today with prepared comments from JoeBen Bevirt, Founder and Chief Executive Officer; and Rodrigo Brumana, Chief Financial Officer. For the Q&A portion of today's call, we'll also be joined by our Executive Chairman, Paul Sciarra, and Blade's CEO, Rob Wiesenthal. Please note that our discussion today will include statements regarding future events and financial performance as well as statements of belief, expectation and intent. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a more detailed discussion of these risks and uncertainties, please refer to our filings with the SEC and the safe harbor disclaimer contained in today's shareholder letter. The forward-looking statements included in this call are made only as of the date of this call, and the company does not assume any obligation to update or revise them. Also during the call, we'll refer both to GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our Q4 2025 shareholder letter, which you can find on our Investor Relations website, along with a replay of this call. With all of that said, it is my pleasure to turn the call over to JoeBen. JoeBen Bevirt: Thank you, Teresa, and thank you, everyone, for joining us today. 2026 will mark a key inflection point for Joby. After a year full of rigorous full transition flight testing and meaningful progress across every part of our business, we've begun to shift our focus from how and when we'll go to market to how many aircraft we can produce and where to deploy them. We are seeing unprecedented demand for what we are building, and we continue to benefit from remarkable support from governments, real estate developers and infrastructure partners around the world. We plan to carry our first passengers this year in the UAE as part of our 6-year exclusive access to the Dubai market. And here in the U.S., we expect the government's eIPP program to provide us with the opportunity to demonstrate our service in several locations also this year. Supporting that ambition, I'm pleased to confirm that the first FAA conforming aircraft is now ready to fly, and we have all of the aircraft we intend to use for TIA testing in production. Reaching this point is the result of years of for credit testing at both the equipment and system levels and is proof that our rigorous approach to design and certification is paying off. On certification, more generally, we continue to make excellent progress, posting a record 18-point increase on the FAA side of the Stage 4 of certification. This progress is evidence of both the FAA's commitment to certifying eVTOL aircraft and the maturity of our design. It sets us up to focus on the fifth and final stage of the type certification process as we look ahead to FAA pilots flying our aircraft later this year. And as we build momentum towards market entry, demand for our aircraft and our service has never been higher. Just this quarter, we completed a demo flight alongside Toyota at Mount Fuji and confirmed our participation in an Nomura-led real estate consortium that's working to bring air taxis to Tokyo. We signed an MOU with Red Sea Global and The Helicopter Company, a PIF-backed local operator to establish a test stone for pre-commercial operations in Saudi Arabia. We signed a letter of intent to sell aircraft and services valued at up to $250 million to Kazakhstan. And in Dubai, we completed our first point-to-point flight and announced the first 4 nodes in our initial network with 2 of those vertiports nearing completion at Dubai International Airport and the American University of Dubai. At home in the U.S., we signed an agreement with Metropolis to develop 25 Vertiport sites, and we partnered with communities nationwide to support applications for the eVTOL Integrated Pilot Program, or eIPP, championed by the White House. This program has the potential to materially accelerate the commercialization of advanced air mobility in the U.S. and has already created tremendous interest across the country, including in key markets like Ohio, Florida and Texas. Next week, we are expecting the DOT to choose at least 5 locations where mature aircraft designs like ours will be able to launch operations this year, helping make eVTOL real for the American public. The program is expected to allow commercial cargo and medical services as well as passenger operations, which could also be delivered commercially in due course. The eIPP program could not be a better time for Joby as we fly our conforming aircraft and enter the final stage of certification. It's also one of the key reasons that we've decided to scale manufacturing now so that we're ready to serve the incredible demand ahead. In January, we signed an agreement to purchase a 728,000 square foot production facility in Dayton, Ohio. This facility will complement our recent growth in California and will support our plans to again double production to 4 aircraft per month in 2027. Dayton was home to the world's first aircraft factory, and we're proud to carry that legacy forward as we build the next generation of aircraft just down the road from Wright-Patterson Air Force Base, famous for its commitment to aerospace innovation. Over the last 6 months, we've raised nearly $1.8 billion, which combined with our existing cash balance, gives us the capital we need to deliver on our plans for scaling production. And I'm pleased to say we enjoyed the support of investors, old and new, including continued support from long-term shareholders like Baillie Gifford as well as funds and accounts managed by Counterpoint Global at Morgan Stanley Investment Management for which we're deeply grateful. Their conviction in what we're achieving was matched by many of our other key partners during the quarter. With Delta Airlines, we met a key warrant milestone on the road to commercialization, after which they exercised the first tranche of their warrants as part of our deepening partnership. And just this morning, in Dubai, we debuted the Joby Uber in-app experience, showcasing how riders will be able to seamlessly book a Joby air taxi using the Uber app, building on last year's announcement that our Blade service will also be integrated into the Uber platform. Meanwhile, we continue to plan for a strategic manufacturing alliance with Toyota as we look ahead to scaling production. With the expansion of our California facilities, we redesigned our assembly footprint and production processes to align with Toyota production system principles. Through a nearly 50% reduction in the movement of people and parts, we're streamlining our composite materials production flows, improving efficiency and positioning our system for scalable growth. This quarter, we also flew our turbine electric autonomous VTOL aircraft for the first time, just 3 months after we announced the concept alongside a new partnership with L3Harris. This demonstrator builds on our fully electric air taxi platform and integrates a hybrid turbine powertrain alongside our Superpilot autonomy stack. Getting the aircraft airborne in such a short period of time is testament to the vertical integration that sits at the heart of Joby, and we look forward to taking part in operational demonstrations with government customers planned for this year. With all of this progress, 2026 promises to be a very special year for Joby and for our wider sector. America has been a world leader in aerospace innovation since the Wright Brothers' first flight. And in this, our 250th year, we have the opportunity to once again set the pace and the standard for the world. The U.S. government continues to lean in with bipartisan Aviation Innovation and Global Competitiveness Act helping ensure the FAA applies the critical certification and integration resources needed to bring advanced air mobility to market. The U.S. has also taken bold steps to modernize and accelerate upgrades to the nation's air traffic control system. While we've designed the Joby aircraft to integrate seamlessly into today's airspace, these improvements will help ensure the system is ready for us to scale our service. A couple of weeks ago, we demonstrated the potential of advanced air mobility in our home market with an aircraft bearing the logo of America 250, we flew from our base in Marina across the Monterey Bay, past our headquarters in Santa Cruz to land back where it all began for Joby in the Santa Cruz Mountains. That's a journey that I personally drive on a regular basis and which takes at least an hour longer and often much more on the ground. That simple demonstration was a powerful reminder of how quickly advanced air mobility can make a meaningful difference in people's everyday lives, and we look forward to completing similar flights in other cities across America this year as part of the eIPP program. Much like the early aviation pioneers who traveled from town to town showcasing the promise of flight, we'll be bringing advanced air mobility directly to communities across the country. By conducting flight demonstrations in early markets, engaging local leaders and giving residents a firsthand look at our aircraft, we aim to build excitement, deepen understanding and lay the groundwork for our future service. Before I hand it over to Rodrigo, I'd like to thank the incredible Joby team and our new Blade team members for a remarkable 2025. And as we look ahead to welcoming FAA pilots to fly our aircraft, carrying our first passengers and scaling our manufacturing, I'm confident that 2026 will be another landmark year for Joby. Rodrigo Brumana: Thank you, JoeBen, and good evening, everyone. Q4 capped a year of substantial technical progress, and we entered 2026 with a stronger balance sheet and a clear capital framework. My focus is simple: fund certification, scale manufacturing and support commercial launch while securing our financial runway and preserving flexibility. As JoeBen said, Joby is at an inflection point in its 18-year history and committed to changing the way people move around. Given the maturity of our program, government support, global demand for our technology and our plans to ramp manufacturing, we took the opportunity to strengthen our balance sheet during the fourth quarter and after. We raised approximately $1.8 billion in net proceeds across Q4 and Q1, and we have positioned the company with the capital required to drive the next phase of execution and scale. This additional capital bolsters our balance sheet, giving us additional flexibility to advance certification, manufacturing ramp and commercial readiness without being reactive to short-term market conditions. At the same time, we will continue to allocate capital deliberately. Balance sheet strength does not eliminate discipline, it reinforces it. Now I'll present our fourth quarter and full year financial results in more detail. We ended the fourth quarter of 2025 with cash, cash equivalents and short-term investments totaling $1.4 billion, including $586 million raised through the quarter, reflecting net proceeds from our equity offering and ATM sales. After the quarter ended, we completed a financing that provided net proceeds of approximately $1.2 billion, further strengthening our cash reserves and positioning us well as we enter 2026. The fundraising attracted both existing shareholders such as Baillie Gifford and Morgan Stanley Investment Management and new shareholders with several institutions committing capital across both the equity and the convertible offerings. Our Q4 use of cash, cash equivalents and short-term investments totaled $157 million compared to $147 million in Q3. The $10 million increase was primarily driven by continued investment in certification and manufacturing readiness, including higher program spend to support TIA-related activity, market development activities, along with normal working capital movements and timing of supplier payments. Included in the quarter was approximately $40 million of property and equipment investment, reflecting facility build-out, tooling and production equipment as well as a $3 million investment in our first fully conforming FAA qualified flight simulator developed in partnership with CAE. The simulator is a mandatory component of certification in Part 135 approval. And because aircraft cannot be sold without an improved pilot training solution, it is directly tied to our ability to generate future revenue. Importantly, FAA qualified simulators take years to develop and require deep aircraft data integration. We begun this work in 2022 to ensure the time of delivery would be aligned with our entry into service time line. We plan to add a second full motion simulator later this year as we expand the Joby Flight Academy and build a strong pipeline of pilots to support high-volume commercial operations. This is a great example of how we are deploying capital thoughtfully, holistically and with a long-term perspective. For the full year 2025, use of cash, cash equivalents and short-term investments totaled $539 million, which was within our full year guidance, a testament to our capital deployment discipline. The use of cash in 2025 includes the impact of the Blade acquisition and integration costs. On a GAAP basis, we reported a Q4 net loss of $122 million, a $280 million improvement compared to $401 million net loss in Q3. The quarter-over-quarter improvement was largely driven by $302 million related to a favorable noncash warrant and earn-out revaluation, partially offset by $25 million in higher loss of operations and the netting of miscellaneous items. As a reminder, the fair value revaluation of warrants and earn-out shares is driven primarily by changes in our share price and can introduce significant noncash volatility each quarter. Revenue for the fourth quarter was $31 million, an $8 million increase from Q3, mostly driven by recognizing a full quarter of Blade revenue. The Blade portion of Q4 revenue was $21 million and other revenue was $10 million, reflecting a onetime nonrecurring revenue of about $8 million pertaining to our demonstration flights in Japan for the Toyota event in December. Total operating expenses for the fourth quarter, which include Blade, were $238 million compared to $204 million in Q3. The $34 million quarter-over-quarter increase was primarily driven by higher certification manufacturing spend, continued staffing to support program milestones and a full quarter of Blade operating expenses. Adjusted EBITDA, a non-GAAP metric that we reconcile to net income in our shareholder letter, was a loss of $154 million in the fourth quarter compared to a loss of $133 million in the third quarter or a $21 million increase in loss on a quarter-over-quarter basis. The sequential change reflects the revenue and expense dynamics I described before. As we move into 2026, our approach to capital is disciplined and milestone driven. We are managing our spending to optimize for certification progress, production ramp and commercial readiness. With our full year 2025 results complete, we are updating how we guide cash usage. For 2026, we will guide on a half year basis, which better reflects where we are with the program. We are transitioning from early-stage production into repeatable manufacturing. As we move up the production S-curve, investment decisions increasingly depend on rank performance, supplier readiness, tooling deployment and operational sequencing. We see this as a natural and positive phase of scale. For the first half of 2026, we expect to use $340 million to $370 million in cash, excluding approximately $33 million for onetime purchase of the Ohio building we plan to use for manufacturing. The majority of first half cash usage supports core S4 certification and manufacturing readiness. A smaller portion represents investments that can be sequenced based on milestone progress and commercialization timing. Our recent fundraising enhanced our cash position to execute this plan at pace. As JoeBen stated, we have many timely opportunities this year, including carrying our first passengers in Dubai and opportunities to begin commercialization in the United States in up to 5 states as part of the eIPP program. As certification progresses, production ramps and commercialization accelerates, we have the flexibility to stage levels of spend while maintaining capital discipline. Following our acquisition of Blade's passenger business last year, we are now providing full year revenue guidance. For 2026, we expect total revenue in the range of $105 million to $150 million with the vast majority generated by Blade. The Blade passenger business has operated seamlessly since closing with consistent service levels and customer demand. 2026 will remain a year of testing, learning and continued integration into Joby's broader commercial strategy. As a reminder, the Blade passenger business is highly seasonal with revenue typically peaking in the third quarter during the summer months. We are focused on maintaining operational consistency as we prepare over time to expand the service to incorporate electric air taxis. As we enter 2026, our priorities are clear: advance certification, scale manufacturing responsibly, prepare for commercial launch, deploy capital deliberately. We believe this approach allows Joby to continue to lead the market with both speed and discipline. Thank you for your continued support. Operator, please open the call for questions. Operator: [Operator Instructions] Our first question is coming from Andres Sheppard from Cantor Fitzgerald. Anand Balaji: This is Anand on for Andres. Regarding your revenue guidance for this year, I was wondering, can you give us a sense of how this is comprised? Is this almost all from Blade? And should we expect some seasonality around quarters? Rodrigo Brumana: Yes. Thanks for the question. Yes, mostly Blade, like I said in the prepared remarks. And in terms of seasonality, it will peak during the summer months, particularly in Q3. One way to think about it, when you look at historically, Q2 plus Q3 together will be typically around 60% to 65% of the revenue mix. Anand Balaji: Got it. And secondly, you're guiding cash use of about $355 million at the midpoint for the first half, and I realize you're not guiding for the year, but I'm wondering if you can help share how we should think about the second half since you're ramping up production? Should we expect a higher cash burn in the second half? Rodrigo Brumana: Well, we're transitioning from a prototype manufacturing into a repeatable scaled production. That's primarily the reason that we are guiding. Let me elaborate. We are entering a production S-curve and productivity improves with each unit we produce. But we are very early in that ramp and forecasting the exact slope is challenging and less precise. Because of that, we do have visibility into the first half, so we're providing a high integrity first half baseline instead of a full year with early stage and less precise assumptions. As we progress and accumulate serial production data, we'll gain greater precision on the second half, and we will update later in the year as we get the ramp developed. Operator: Our next question is coming from Chris Pierce from Needham & Company. Christopher Pierce: There seems to be this idea out there that the S4 could may be underwhelmed from a passenger or luggage payload perspective. I just kind of wanted to give you a chance to kind of comment around that. And when you take your test flights, are you putting extra weight in there to confirm sort of the payload that the aircraft can carry? Or is it kind of coming from a mathematical equation at this time? And then how does Bags VIP fit into this equation as well? JoeBen Bevirt: Thanks, Chris. This is JoeBen. So the -- we're really pleased with the way the aircraft has come together. Again, the aircraft that we are preparing to fly is the first aircraft that -- in the eVTOL category that has been built and is preparing for TIA flight tests. And we think this is a monster milestone both for Joby and for the industry. In terms of the capabilities, we've designed this aircraft for service around the metropolitan cities that we're hoping to serve, operating it, for example, layered into the Blade service. And we are very excited about its ability to serve that market. And in terms of the payload of the aircraft, that is something that we expect to -- we designed the aircraft for a pilot and for passengers, and that's our target. It may take us a bit of time to evolve into that, but we are very pleased with the performance and very excited about beginning the TIA flight test. Christopher Pierce: Okay. On the eIPP commentary that you gave, I just want to understand, is there a chance for passenger flight in the U.S.? Or is that something investors shouldn't be looking for? Or is that sort of up in the air based on what you hear back in the next couple of weeks from the FAA? JoeBen Bevirt: We've been hearing very positive inclinations on that. Again, that may phase in over time. But we see the eIPP as a massive opportunity, and we're very, very excited to be hearing more news very shortly on that from the FAA. Operator: [Operator Instructions] Our next question is coming from Kristine Liwag from Morgan Stanley. Jason Holcomb: This is Jason on for Kristine tonight. So Joby has been working closely with the FAA on air traffic control to be able to support higher volume in the airspace once we see eVTOLs receive FAA certification. Can you discuss your role in helping to solve this issue with the FAA and maybe provide some context on what's been solved already versus what work remains in progress? Paul Sciarra: Thanks a lot, Jason. This is Paul. I'll pick this one up. Look, we are very excited about the now sort of bipartisan effort to modernize the way that air traffic control is managed. As you know, there was $12.5 billion that's been allocated as a sort of first tranche against that. And look, I think the majority of that is going to go to shoring up the existing system that we have. But the push that we've been making alongside others in the industry is to ensure that there is an opportunity for some of that money to go to next-gen air traffic control, essentially a system that would start with computers deconflicting the airspace and then the human steps in only if there's some sort of issue that's going on. We think that has huge implications for commercial aviation across the U.S. I mean, we really do think that we should treat our airspace as a national asset and maximizing its utility should be the name of the game. If we can bring down separations, that will increase safety, increase volume for both us and everyone else that's operating that airspace. And we do think that eVTOL has an important role to play. This is a category that is going to be operating from nontraditional airports where you don't have to worry about legacy equipage because there's not a big existing fleet. So therefore, we think it's the perfect test ground for some of these new air traffic control concepts. And we've been working with partners across the industry, including some of the folks that have been sort of tasked with the overall ATC modernization effort to work on the right sort of approach on that front. Now look, we think there's tons of runway with the existing aircraft, train pilots and seat using the existing airspace. But if we have an opportunity to help push the ball forward on a better air traffic control system, we absolutely want to be a part of that. Operator: Our next question is coming from Austin Moeller from Canaccord Genuity. Austin Moeller: So just my first question here. I guess you're expecting to fly the first conforming aircraft shortly. I know there were 5 others still in different phases of construction. So I'd love an update on what phases of assembly those are all in. JoeBen Bevirt: Austin, thank you for the question. This is JoeBen again. Really pleased with the momentum that the manufacturing team is building. You're going to -- you can expect to see those -- the cadence of those coming off the line with increasing regularity over the next few quarters. But really, really pleased to see the maturity of the manufacturing line and the maturity of the conforming processes improving each and every day, and huge shout out to the team, so proud of the work that they've done and the work they're doing and also a shout out to all the DERs and DARs who have been doing phenomenal work and also to the Toyota team members who are working shoulder to shoulder alongside of us, both here and abroad. Austin Moeller: Okay. And as we think about the FAA pilot starting 4 credit tests later this year, how should we be thinking about the FAA accepting the remaining 3% of the means of compliance? Would that happen around the same time period as that? How should we think about the cadence there? JoeBen Bevirt: I think those elements are decoupled. But I think the really key element to highlight and something that maybe we don't spend as much time on is how vitally important all of the component and system level ground testing is. So in parallel to building the conforming aircraft for flight test, which gets a lot of attention, the team and the vertical integration that we've built on our testing process is a real superpower that we have, and the team has just been knocking it out of the park. So this is on the manufacturing side and on the testing side, manufacturing, building conforming test articles. And these test articles are frequently substantially harder to build than the flight articles because they have designed-in defects that have to get very prescriptively built that are different than the normal manufacturing flow. And then those test articles with those designed-in defects get tested according to very rigorous test plans that we've already agreed to with the FAA. Another thing that is really worth pointing out is the 18-point increase on the FAA side of Stage 4. This was a monumental achievement, the most progress that the FAA has ever delivered in the quarter for us. We're so, so grateful. It is a testament to the massive lean in and the attention that we've been getting and also all the hard work that the Joby certification team has done upfront to prepare all of these -- all the certification work and the test plans. Operator: Our next question today is coming from David Zazula from Barclays. Our next question is coming from Savi Syth from Raymond James. Savanthi Syth: If I might, with the commercial operations as stated in Dubai, I was wondering if you could share kind of general time lines and milestones that are being targeted for this year. JoeBen Bevirt: Thank you so much, Savi. So the work is going really well in Dubai. The partnership with the RTA and the work with all of the regulatory bodies in Dubai and the UAE has been going very, very well. As you may have heard, we had a phenomenal event in Dubai today where we announced the integration -- our integration of the Joby air taxi service into the Uber app. And that was a really phenomenal example of the lean-in that we're seeing from all of our partners, so Uber, Delta and Toyota, are leaned into to a degree which they've never been leaned in before. I think this is one of the things that really makes Joby special is the strength of the partners we have and the degree to which they're behind us and excited about what we're building and excited to be shaping the future of transportation together. Savanthi Syth: Okay. And maybe if I could follow up on just the payload comments in that it may take time to evolve. Is that a software kind of evolution? Or is that like just a battery evolution to solve for that? JoeBen Bevirt: I would say that there are both elements there and as well as other upgrades that we expect to happen over time. Operator: Next question today is coming from Amit Dayal from H.C. Wainwright. Amit Dayal: So JoeBen, just on the UAE passenger flight expectations for the end of the year, like what certification requirements need to be followed to accomplish that? JoeBen Bevirt: So this work is layering on top of all the work that we're doing for our FAA certification. So completing all of those component and system ground tests that I'm talking about and also building aircraft that are conforming and which we're ready to put paying passengers in. So we have all the pieces in place. As I said, the relationship with the regulators in Dubai and the UAE are really strong. And we think we're in a great position there. So yes, we think that -- we're very, very excited. And I would also highlight that in addition to Dubai this year, one of the reasons we're ramping manufacturing is because of the incredible demand that we expect to see from the eIPP local markets here in the U.S. Amit Dayal: Understood. And then with respect to the vertical build-out here or in the UAE and other markets, how much of the CapEx will be shouldered by folks who are already sort of the developers, I guess? And do you need to -- or does Joby need to contribute to some of that investment as well? Paul Sciarra: It's Paul. On the UAE specifically, all of the infrastructure is being built out in conjunction with the folks over at RTA. So you've seen, I think, the 2 sites that are currently well underway in terms of development. And there are a number of more that are also sort of coming online in that particular market. When it comes to the broader infrastructure question in markets outside of the UAE, look, we've got a firm footing of existing infrastructure that we can take advantage of from day 1. Actually, post the Blade acquisition, Blade has staffed 10-plus locations, many of which are in the eIPP geographies. So -- or what we expect to be the sort of eIPP geographies. So that's a really great place to sort of begin those operations. Now we announced additional partners where there will be opportunities to leverage their resources just this quarter. So Metropolis was announced, and we're going to be developing 25 additional sites with them. That's a large parking garage owner. They have almost 5,000 parking garages across the U.S. with many of those in these eIPP markets that we're going to be targeting in the short term. So we're going to be working with them to build the next leg of scale of infrastructure sort of beyond that. There may be certain sites where we're using our own capital, but we're going to be really thoughtful and lean far more on the developer ecosystem. And what's been really exciting, I should mention, particularly post-eIPP is that we now have sort of approximate date certain for eVTOL operations in some of these geographies. So we've had a real pull from developers or potential real estate partners that want to kind of get ahead of that sort of rollout, so more news soon on that front. Operator: Our next question today is coming from David Zazula from Barclays. David Zazula: Sorry about the difficulties earlier. Could you talk about the aircraft deployment plan this year, including for those in production, where you're planning on deploying and what the expected use is? JoeBen Bevirt: Thank you, David. So as I spoke about, I think the massive challenge that sits before us is the manufacturing ramp that we're engaged in. And it's going to be a very significant lift. This is to get the TIA aircraft built and then to deliver aircraft for Dubai and aircraft for the eIPP program. But the most important piece, as I touched on, was completing the build on all the test articles. And so that really takes precedence on the manufacturing line is ensuring that each of those test articles is coming out in a timely way because that's the gate to getting FAA pilots onto the aircraft. So that's kind of the sequencing you can think about, but it is a huge lift that the manufacturing team is working through is to get that manufacturing ramped to build those test articles and then to build the aircraft for Dubai and the eIPP. David Zazula: Very helpful. And then could I ask on the Uber side? How has the integration been on the Blade front? Have there been any challenges there? And then what do you think about the commercial opportunity with respect to that integration in this year and maybe into next? Robert Wiesenthal: It's Rob's Wiesenthal, CEO of Blade. Thanks for the question. When this integration gets deployed, which we hope first half this year, when you want to get to the airport, you just have to kind of think about your Blade, not how you get to the departure lounge. It's simple and seamless. And you just literally, you book your Blade on the Uber app and an Uber ground vehicle picks you up and brings you straight to a Blade lounge, you check in and you're off on your 5- to 10-minute flight in New York to JFK or Newark. And we not only expect that this is going to result in growth for Blade airport, but as important, in the not-too-distant future, that helicopter icon on that vehicle selector, which will be a helicopter to start will be swapped for Joby eVTOL. And this is a competitive advantage that no other eVTOL OEM has. So we're really excited about it. Operator: I'd like to turn the floor back over to Teresa for further questions. Teresa Thuruthiyil: Thanks, Kevin, and thanks to all the analysts who asked questions today. This week, we invited members of our Reddit community to send in questions as well. We covered many of these already, but I'd like to get in at least one more if we can. And that question is, what's going on with respect to military and medical applications? How is Joby involved? Paul, do you want to take this one, please? Paul Sciarra: Sure. Yes. So when we think about the overall eIPP footprint that's really set to get announced in just a few weeks, we know that there are going to be 3 components of that. One is going to be cargo, one is going to be medical and the other is going to be passenger. And we intend to obviously deliver aircraft against each of those use cases in as many of the eIPP sites as we're able to deliver against. We think the medical opportunity is a significant interesting sort of adjacency and frankly, one that has important community impact. So we want to make sure that we prioritize it alongside, obviously, these other 2 opportunities as well. Regarding the defense opportunity, look, we announced that we would be developing a hybrid autonomous version of the S4 aircraft for defense customers last summer. We progressed to beginning the flight testing of that variant over the fall, and we continue to work on preparing for on-site customer demonstration shortly, followed by off-site customer demonstrations at their facilities in the fall. I can say that the partnership between Joby and L3 is going great. And I think one of the big significant developments is that we've spent a lot more time with the core customers. So that includes folks like Army, Marines and then to our Navy. And I think we've gotten, and that is not just us, but also the folks at L3, increasing confidence that there are important capability gaps that this aircraft has an opportunity to fill. What I think is also important to note, and this kind of goes against some of the commentary that folks have been talking about, it's really about finding the right aircraft to fill those capability gaps. Folks don't care if it's a variant of a commercial product. And in fact, the focus of the Pentagon is around dual-use technologies that can be very flexibly fielded. So we think we're in a very strong position with a proven aircraft, with proven manufacturing that is ready to ramp and a strong partner on the missionization front to deliver on this increasingly interesting opportunity. Operator: We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
Operator: Good day, and thank you for standing by. Welcome to the Veracyte Fourth Quarter 2025 Financial Results Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Shayla Gorman, Senior Director, Investor Relations. Please go ahead. Shayla Gorman: Good afternoon, everyone, and thank you for joining us today for a discussion of our fourth quarter and full year 2025 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer; and Dr. Phil Febbo, our Chief Medical and Scientific Officer, will join us for Q&A. Veracyte issued a press release earlier this afternoon detailing our fourth quarter and full year 2025 financial results. This release and a copy of the presentation we will review during the call today are available in the Investors section of our website at veracyte.com. Before we begin, I'd like to remind you that statements we make during this call will include 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 they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the Investors section of Veracyte's website. I will now turn the call over to Marc Stapley, Veracyte's CEO. Marc Stapley: Thank you, Shayla, and thank you all for joining us today. Q4 capped off another outstanding year of strong execution for Veracyte with performance across our core businesses that reinforces both the durability of our growth model and the opportunities ahead. I'll review our fourth quarter results, reflect briefly on 2025 and then focus on the growth drivers that give us confidence as we move into 2026. Fourth quarter total revenue was $141 million, representing 19% growth year-over-year. This performance was driven by continued strength in our core testing business, which grew 21% on strong volume and ASP. Decipher volume grew 21% and Afirma grew 12%, together contributing to 16% total testing volume growth. For the full year, we delivered total revenue of $517 million at the high end of our preliminary range and representing 16% growth. During the year, we provided clinically actionable information to nearly 170,000 patients with over 800,000 patients served to date. We remain on track to testing our 1 millionth patient later this year, an important milestone for the company and our team that reflects both the scale and impact of our platform. In addition to our strong revenue and volume growth, we executed against all of the key milestones we set for 2025. We drove continued penetration and share gains, launched Decipher for metastatic patients, expanding our presence in advanced disease and generated meaningful new clinical evidence across endocrinology and neurology. We advanced our pipeline with positive Prosigna outcomes data from the OPTIMA PRELIM study, submitted the technical assessment for TrueMRD and completed enrollment for our NIGHTINGALE lung cancer study. Together, these accomplishments position us well for multiple product launches beginning in 2026. Importantly, we achieved this while delivering industry-leading profitability and cash generation. Adjusted EBITDA margin exceeded 27% in 2025, not only reaching but surpassing our 25% target more than a year ahead of plan. We also completed key operational priorities, including the restructuring of Veracyte SAS and the full transition of all Afirma volume to the more scalable, lower-cost v2 transcriptome platform, improving our operational efficiency in launching new transcriptome-based tests. These actions support the sustainability of our financial profile as we continue to invest in growth. I'm extremely proud of our team's focus on execution and innovation, which enabled us to deliver an outstanding year and reach more patients than ever before. The foundation we've built through the Veracyte Diagnostics platform supports a clear phased expansion strategy anchored by a focused set of drivers contributing to near, mid- and long-term growth. First is the ongoing durable expansion in our core business, Decipher and Afirma, which we believe will support double-digit revenue growth for the foreseeable future. The second phase is our 2026 product expansions with two product launches planned by this summer. We are preparing to launch our inaugural TrueMRD test for patients recovering from muscle invasive bladder cancer, followed by the U.S. launch of Prosigna as an LDT to address early-stage breast cancer patients. The third phase represents our longer-term commitments, including geographic expansion through our IVD strategy and addressing new cancer challenges across the care continuum. Today, I will focus on the first two phases, our core business momentum and the opportunities ahead with our 2026 launches. Starting with Afirma. We delivered approximately 18,250 tests in the fourth quarter, representing 12% volume growth. Throughout the year, we saw a steady pipeline of new account wins and increased utilization per account with the fourth quarter continuing this trend. As of year-end, we believe we have grown Afirma to approximately 38% market share with continued opportunity for further penetration. Importantly, as previously mentioned, we completed the full transition to our v2 transcriptome in the lab during the fourth quarter. Besides being more scalable and cost effective, this new platform enables us to deliver results in challenging cases where we were previously unable due to low RNA. In the fourth quarter, our [ no ] result rate was 2% lower than in the prior quarter, directly contributing to more patients and physicians receiving actionable results to support clinical decision-making. We also saw a steady drumbeat of new publications leveraging data generated from our research [indiscernible] Afirma GRID, which further builds on our extensive body of clinical evidence. The majority of Afirma-related abstracts and publications in 2025 were GRID-related, reinforcing Afirma's position as not only the standard of care in clinical testing, but also what we believe is becoming the primary research platform advancing understanding of thyroid nodules and cancer. This year, we plan to build on this momentum with an updated version of GRID that includes additional signatures designed to support ongoing thyroid nodule research. Given our recent progress, we're confident in Afirma's ability to sustain healthy growth in 2026 and beyond. Turning to Decipher. We delivered approximately 27,200 tests in Q4, marking our 15th consecutive quarter of more than 20% year-over-year volume growth. We reached another record for both the number of quarterly ordering providers and orders per physician. In fact, the number of ordering physicians increased 18% year-over-year in Q4, reflecting Decipher's expanding adoption and its role in supporting treatment decision-making. This momentum has been building throughout the year. Of the more than 300,000 prostate cancer patients tested with Decipher since launch, more than 100,000 were tested in 2025 alone. Decipher is recognized as the only gene expression test with high-quality evidence in NCCN guidelines, which we believe has been an important contributor to this impressive growth. Looking ahead, with the market now penetrated by Decipher at approximately 33%, we remain extremely confident in its ability to sustain strong double-digit growth in 2026 and beyond. This growth outlook is supported by several key drivers. As GRID-enabled research establishes clinical utility for new prostate signatures, we plan to expand our clinical reporting to incorporate these insights. Our first examples are three new predictive signatures, PORTOS, PTEN and PAM 50 that are now widely recognized by key opinion leaders as having utility based on recently published studies. Patients with higher PORTOS scores have been shown to benefit from higher doses of radiation in both post-biopsy and post-RP salvage settings. PTEN used alongside the Decipher score showed promise in the STAMPEDE study for identifying which metastatic patients would benefit from adding chemotherapy. And the BALANCE trial, whose results were presented at ASTRO last fall, found that the PAM 50 molecular signature confidently predicts which patients with recurrent prostate cancer may benefit from hormone therapy with apalutamide in addition to salvage radiation therapy. We are working to add these molecular features to the Decipher report as optional insights, providing additional information for men with high-risk biopsy and RP disease, including those with biochemical recurrence. As a reminder, this patient population has been underserved to date, a trend that we have been focused on improving with augmented clinical evidence supporting Decipher in advanced disease, where its predictive power has been shown to improve patient outcomes. This focus paired with the launch of Decipher metastatic has led to another quarter of more than 30% growth in the combined high-risk RP and metastatic categories, and we believe there remains significant opportunity to expand Decipher's use in advanced disease. Additionally, we view digital pathology and AI-powered analysis as complementary to molecular analysis with the potential for additional data points to provide a more comprehensive assessment of tumor histology. To support further research, we made our digital pathology services and associated AI models available to collaborators last year and have implemented slide scanning as a standard production workflow. We have now scanned over 210,000 slides from over 150,000 patients with outcomes data, representing the majority of our historical data set on Decipher. We plan to leverage this extensive database in combination with whole transcriptomes in an expanding number of collaborations with top academic centers to understand the complementary nature of these two data types in order to continue to evolve our clinical offerings. Generating clinical evidence is a core pillar of our Veracyte Diagnostics platform, and we continue to fuel this flywheel. Decipher Prostate now has more than 100 publications demonstrating its clinical utility and validity across the prostate cancer risk spectrum, plus an additional 100 publications leveraging our research use-only GRID platform. At ASCO GU, data to be presented, including more than 15 abstracts across prostate and bladder cancer, highlight how our platform is contributing to advances in urologic oncology. Multiple abstracts will showcase the power of Decipher GRID to enable novel research, including studies demonstrating how signatures derived from GRID predict adverse outcomes in men on active surveillance. Additionally, several abstracts will be presented, leveraging real-world data on the usage of the Decipher Prostate score in our patient population, including those with metastatic prostate cancer. Moving to bladder cancer. Our Decipher Bladder classifier and associated research use-only GRID data is increasingly being integrated into studies that aim to help researchers identify critical signatures to guide the future of bladder cancer treatment. We're seeing strong momentum generating new clinical evidence for this indication with five abstracts highlighting Decipher Bladder at ASCO GU. We're particularly excited about the findings from the SURE-02 trial, which underscore the importance of molecular subtyping in muscle invasive bladder cancer or MIBC, and support integrating genomic classifiers like Decipher Bladder into clinical trial design and treatment planning. As the field transitions towards more biologically informed evaluation of novel treatment strategies in bladder cancer, we plan to continue investing in this indication to drive future growth. Collectively, these studies highlight how our Decipher tests are increasingly helping guide clinical decision-making, advance biological understanding and accelerate innovation in urologic cancer care. This momentum in bladder cancer extends to our TrueMRD platform, our whole genome sequencing approach to MRD. We remain on track to launch our first indication for MIBC in the first half of this year after completing our technology assessment with MolDX to receive reimbursement, which is in progress. We intend to leverage our strong Decipher brand and channel to serve patients that are treated in the urology and radiation oncology setting, which we believe reaches approximately 70% of MIBC cases. Our initial focus will be on recurrence monitoring in those patients who have completed their initial therapy for MIBC and are not undergoing adjuvant chemotherapy, which we believe is the majority of MIBC patients treated in this setting. We're building a strong and growing body of clinical evidence around our MRD platform. At ASCO GU, TrueMRD will be featured in an oral presentation on a Phase II trial evaluating pembro combined with serial ctDNA monitoring in patients with MIBC that did not undergo radical cystectomy. In this trial, TrueMRD's whole genome sequencing was used during neoadjuvant therapy at restaging and during surveillance to monitor for residual disease, providing more confidence that the cancer was responding to therapy. The results demonstrate that many patients with MIBC may be successfully treated without bladder removal and maintain very low risk of metastatic recurrence. These findings highlight how molecular monitoring may support bladder-sparing treatment strategies while maintaining confidence in managing disease. This therapeutic strategy is being prospectively evaluated in the actively accruing NEO-BLAST study conducted at the University of British Columbia. In addition, there are several other studies that have already been completed across bladder, colorectal and lung cancer as well as other indications. We have a deep pipeline of additional studies underway with 10 in testing or analysis, 13 in contracting and 17 in active planning, spanning MIBC as well as non-muscle invasive bladder cancer, breast, lung, colorectal and immunotherapy treatment response. TrueMRD is a platform that is extensible into other cancer types, and we plan to launch additional indications each year going forward. Our MIBC launch addresses a clinically important market and will serve, we believe, as a foundational proof point that Veracyte is a credible player in this large and expanding space. With strong engagement from leading institutions and encouraging early results, we believe TrueMRD's differentiated approach positions us well to capture meaningful share in the MRD market. Turning now to Prosigna, our second major product launch planned for 2026. Prosigna is based on the well-established and scientifically validated PAM 50 signature, which provides physicians and patients with deeper insights into the biological classification of their cancer and the risk of recurrence to help inform treatment decisions. The opportunity in the U.S. breast cancer market is significant with over 300,000 patients diagnosed each year. Approximately 75% of these patients have early-stage hormone receptor positive disease and would be eligible for Prosigna testing. Clinical data will be an important driver of adoption, and we look forward to the full OPTIMA trial readout, which we expect to be presented at ASCO in June. We believe this data will further strengthen the clinical evidence supporting Prosigna, differentiating it as the next standard in breast cancer prognosis and that numerous ongoing studies will further demonstrate the differentiation of Prosigna in this setting, building on the OPTIMA results. We believe this body of evidence supports the opportunity for Prosigna to capture meaningful share in this market over the next 5 years. We remain on track to launch our LDT for Prosigna over the summer on our new transcriptome lab workflow, the same analytical platform we have built and fully launched for Afirma. To prepare for this, we've begun building out our commercial team, starting with appointing a strong leader for the sales force while also growing our medical science liaison team and engaging KOLs. Meanwhile, our talented marketing team is busy working on all of our prelaunch activities, while our fantastic market access team is working on the Medicare and commercial reimbursement coverage. I couldn't be more excited about our two major product launches this year. The foundation we have built over the last 5 years, including our track record of meeting or exceeding our expectations while expanding our leadership across the cancer care continuum, reinforces the durability of our growth outlook. Our execution across Decipher and Afirma, combined with our ability to navigate through evolving market dynamics reflects the strength and resilience of our operating model. We are entering 2026 with a clear path to sustained double-digit growth, served by a portfolio of tests in prostate, thyroid, bladder and breast. This momentum positions us to deliver lasting value for the patients we serve, the employees who power our mission and our shareholders. With that, I will now turn the call over to Rebecca to review our financial results for the fourth quarter and full year as well as our outlook for 2026. Rebecca Chambers: Thanks, Marc. Q4 was another exceptional quarter with $140.6 million in revenue, an increase of 19% over the prior year period. We grew total volume to approximately 48,000 tests, a 16% increase over the same period in 2024 and generated $52.6 million of cash from operations to end the quarter with $412.9 million of cash and cash equivalents on hand. Testing revenue during the quarter was $135.8 million, an increase of 21% year-over-year, driven by Decipher and Afirma revenue growth of 27% and 16%, respectively. Total testing volume was approximately 45,500 tests, an increase of 16% over the prior year period. Testing ASP was approximately $2,984, an increase of 4% compared to the prior year, driven primarily by the impact of higher prior period collections or PPCs. Normalized ASP was also higher at $2,875, a 1% increase compared to the prior year period after adjusting for the approximate impact of $5 million of PPCs in the quarter. Moving to gross margin and operating expenses. I will discuss our non-GAAP results. Non-GAAP gross margin was 75.1%, up 580 basis points compared to the prior year period. Testing gross margin increased 380 basis points compared to the prior year to 76.1%, driven by operational efficiencies from our v2 transcriptome and higher PPCs. Non-GAAP operating expenses were up 12% year-over-year to $65.1 million. Compared to the prior year, research and development expenses increased by $1.6 million to $19 million, driven primarily by clinical investments. Sales and marketing expenses increased slightly to $23.9 million, given higher travel expense. G&A expenses were up $4.7 million to $22.3 million, primarily due to hiring and expenses in our customer service function to support revenue growth and software teams to support new product development. Moving to profitability. We recorded quarterly GAAP net income of $41.1 million and $66.4 million for the full year 2025. Adjusted EBITDA for the quarter was $42.3 million or 30.1% of revenue, well above our expectations given the benefit of prior period collections. For the full year 2025, our adjusted EBITDA margin was 27.6%, ahead of our target of 25%, which was achieved more than a year ahead of our projections. We increased our cash balance by more than $120 million over the course of the year. These results give us the flexibility to invest in our growth drivers and are a testament to our differentiated financial profile. Turning now to our 2026 outlook. We are reiterating our 2026 total revenue guidance of $570 million to $582 million or 10% to 13% year-over-year growth. This reflects testing revenue growth of 14% to 16% for the year with Afirma growth expected to be in the mid- to high single digits and Decipher growth to be approximately 20%. As always, we have not included PPCs in our guidance, but do have a headwind of approximately $10 million of PPCs we recognized in 2025. We expect adjusted EBITDA margin to be approximately 25% in 2026 and in future years, barring any bespoke investments we decide to make, which, of course, we would communicate as appropriate. We expect Q1 adjusted EBITDA margin to be lower given typical seasonality of expenses, including increased compensation, benefits and payroll tax. As always, we plan our expenses on an annual rather than quarterly basis. In closing, I am thrilled with our progress over the course of 2025. As Marc shared, we delivered on or exceeded all of our 2025 goals, including the Decipher metastatic launch and the transition of Afirma to the v2 transcriptome. With a number of exciting catalysts on the horizon for 2026 and beyond, paired with our differentiated financial position, I am more confident than ever in Veracyte's future and proud to be serving more patients at pivotal points in their cancer journey. We'll now go into the Q&A portion of the call. Operator, please open the lines. Operator: [Operator Instructions] Our first question comes from the line of Subbu Nambi of Guggenheim. Subhalaxmi Nambi: I have two topics. Starting with the guidance question. As we sit here 8 weeks into the year, has your conviction in the guidance evolved in any way? What are the assumptions that drive the high end or low end of the range? And maybe some details on the quarterly cadence? Marc Stapley: Yes. Thanks, Subbu. I'll start. I mean, obviously, we're 8 weeks into the quarter, but only 8 weeks into the year. We've reiterated our guidance, and so you can -- that we gave earlier in the year. So you can see from that, our conviction in our guidance continued to be strong. I'll ask Rebecca to talk a little bit about the seasonality and the potential drivers of the high and low end range. Rebecca Chambers: Yes, happy to do so. Thanks, Marc, and thanks, Subbu. Great to hear your voice. So I think the first thing to be aware of is for the first quarter, sequentially, this is a quarter where we do see seasonal trends. We had obviously an incredibly large prior period collection quarter in the fourth quarter. And historically, if using last year as a proxy, that does not typically tend to repeat in the first quarter. That's typically -- last year, it was around $500,000. So that is one thing to be aware of from a sequential trend perspective. From a volume perspective, Afirma is typically the lowest in the first quarter and followed by the third quarter with the second and fourth quarter being stronger. And with Decipher, it's highly dependent in the first quarter on weather. If you use last year as a proxy, we had -- maybe we were up maybe 100 samples or so sequentially and had a pretty big weather impact in the first quarter of last year. This year, tracking to date is around the same from a weather impact. And so obviously, we'll catch that up throughout the course of the year, but that is something to be aware of on a go-forward basis. What would get us to the high end of the range would be a couple of different things. The first, we do have a no result rate assumption for Afirma in guidance. At the low end, we would assume little to no benefit from the no result rate. At the high end, we would assume about the same level we saw in the fourth quarter. So that would be one thing to take into account. If we do get prior period collections, that's not baked in. That could bias us to the high end. And then obviously, volume outperformance. Specifically, I think Decipher has more -- the error bars are wider on Decipher than Afirma, given the nature of the kind of portion of the adoption curve of where we are at. And so from Decipher perspective, if we were to see more penetration or more share gains, that would obviously lend itself to the high end of the guide as well. Hopefully, that helps. Anything else to add, Marc? Marc Stapley: No, just a reminder that we're not -- in our guide for revenue, we're not guiding for the new product launches for a very simple reason that we expect those to be more of a revenue driver in 2027, but those, of course, aren't included in the guidance either. Subhalaxmi Nambi: Super helpful. One of the goals of the OPTIMA study is to expand the intended use population. What readout is required for this to occur? And if successful, how big would this market be? Marc Stapley: Yes. So I'll start and then I'll hand over to John to talk about the market opportunity here. But the way we describe this is there's the patients, 300,000 patients a year with breast cancer. There's about 75% of them or 225,000 of them that are addressed by what we believe will be the Prosigna indication there. Our first and foremost goal is to penetrate that market as it currently stands and then obviously expand from there. And so you can expand into, for example, premenopausal, you can expand into all the different risk categories within that 225,000. But John, maybe you can just give a little bit more commentary on how OPTIMA is going to address this. John Leite: Yes. So thanks, Subbu. OPTIMA has included in their enrollment criteria up to nine nodes. Currently, Oncotype is approved up to three. We'll have to see what the performance of the test ultimately will be with the OPTIMA trial results before we can provide very directed commentary on how we expect to leverage that data. Marc Stapley: And remember, OPTIMA is expected to read out. We hope at ASCO. Of course, we're hoping that the -- and expecting that the results are positive and that it reads out when we're looking for it to, and we're ready to launch when that happens. Thanks for that question, Subbu. Operator: Our next question comes from the line of Puneet Souda of Leerink Partners. Unknown Analyst: This is Carlos on for Puneet. I've got two questions. So the first one is you had a really healthy beat of your 25% margin target. You were at, I think, 27.6% for the year, but you're guiding to go back down to a long-term target of 25% in 2026. If you could just walk through some of the push and pulls there. Is that just conservatism? Is it true-ups? Is there an increase in OpEx that we should be looking out for? Anything there would be helpful. Marc Stapley: Yes. Thanks for the question. At a high level, we've got two product launches coming this year. And the way I think about it is as we launch those products, if we see an opportunity to invest faster to go faster, we will absolutely want to be able to take that. And so that's one. Obviously, building clinical evidence and clinical studies and so on in -- especially in MRD as we expand into more indications is important. So it's -- I think for us, it's really important to have the flexibility to be able to do that while remaining extremely profitable relative to the industry. And I'm proud of the fact that we got there about a year earlier than we anticipated. I always said a well-run business in this diagnostics industry should be able to get to 25% and sustainably remain there. Rebecca, do you want to add? Rebecca Chambers: Yes. I would just say specifically to the 25% guide versus the 27.6% over the course of 25 Recall, we did have $10 million of prior period collections over the course of 2025. And given we don't imply that in the guide, we wouldn't include that in our OpEx guide either. But we do have significant investments per Marc's point, that all have an incredibly high ROI associated with them. And given we are -- our goal here is to serve as many cancer patients as we can with high-value quality products, we're going to invest in those things. And while they're not necessarily going to be impactful and are included in our guide in 2026, they're absolutely critical for the long-term performance of this organization, and we feel very positively about the benefit they will have both to all of our stakeholders, including patients. And so when it comes down to it, that's what we're focused on, driving revenue growth, driving patient adoption and really serving as many folks as we can. And everything we're investing in here is very high ROI. So that's what I would add. I would just say what we are investing in specifically are those new product introductions, the software and bioinformatics resources required, the commercial resources required, the revenue growth support through our customer service, billing and lab operations team. And again, remember, last year, we did invest in the back half more so than the first half. And so obviously, you have the full year annualization of that impact as well. So I think you can see kind of the opportunity breadth of what we have in front of us is so high. It would almost be foolish not to do our best to invest these dollars. And in things like further Decipher penetration, bolstering Afirma for the long-term [ the ] MRD platform as well as Prosigna and then obviously, the long-term growth drivers, which are a much smaller percentage of the pie vis-a-vis IVD nasal swab at this point in time. Unknown Analyst: Okay. That's really helpful. And then just as one other question. So when we're looking at the Decipher market, you had really great momentum, 27% growth in the fourth quarter, still plenty of penetration to go with the market only 40% penetrated, but the penetration is growing quickly, and we're seeing competitors investing a lot more into their competing assays. One of them that had struggled a bit managed to return to double-digit volume growth that they announced earlier this week, for example. If you could just give a little update on the competitive space that Decipher operates in, what you're seeing, that would be very helpful. I appreciate it. Marc Stapley: Yes, happy to. A couple of kind of macro level things. I mean the way we see the market growing is at about -- from an incidence standpoint, was about 6%. Decipher represents based on our math now coming out of the year of 2025, about 33% market penetration. So as you can see, 1/3 of patients are getting Decipher, more importantly, 2/3 are not. We haven't seen any change in the competitive dynamics or competitive environment at all. In fact, if you look at the way Decipher grew in 2025 and our guide going forward, it's continuing to represent very strong growth. And that's driven by the masses of evidence that we talk about regularly, the NCCN guidelines that we have and where Decipher sits in that. And so we remain extremely confident in Decipher's ongoing growth trajectory, and we're very encouraged when we see how that's -- even coming into this quarter, how that's progressing in the marketplace. Rebecca Chambers: And just one thing to add. I mean, we grew 22,000 tests in 2025 versus 2024. If you look at the other players in the market and do an extrapolation of what you think their total year volumes were, they aren't that far off of what our peer growth was. And so that's just an explanation point to Marc's point that we really are not seeing a difference in competitive dynamics. And recall, there are three players in this market and at least vis-a-vis the preannouncement, I do believe we're seeing kind of maybe share move from one to the other in any given quarter. But again, our competitive dynamics are such that -- are so strong that we don't necessarily even see that noise. Marc Stapley: And maybe just -- Rebecca, remind me, just punctuate one other point. As you look across the NCCN risk spectrum, Decipher is doing and always has done extremely well in the intermediate and low. Low has been, I would say, our second highest and high has probably been the lowest. And I think we've mentioned a few times over the last couple of quarters, how we're seeing since the launch of Decipher metastatic, a nice increase in growth in the high risk. And of course, you've got the RP in the metastatic population there as well. And so with that growing in like the 30% range, it's actually really exciting to see further penetration across the care continuum, which has always been our strategy with all of our tests and particularly with the type of evidence that we generate. Operator: Our next question comes from the line of Bill Bonello of Craig-Hallum Capital Group. William Bonello: Yes. Two things. So to start with, I might come also at the margin question, but probably from the opposite point of view. I mean, just sort of back of the envelope math, it looks like you're giving yourself $10 million to $15 million of incremental investment to launch two products and at some point, you have to put together an entirely new sales force, I would imagine, for breast cancer. So help us understand why that's enough spend to allow you to be competitive with those two products. Rebecca Chambers: I love your question, Bill. Marc is going to answer it, but. Marc Stapley: I mean -- and if anything, I would say, when you talk about the room, that might be room for us to add incremental spend if we need it. Remember what I said, if we want to -- we see an opportunity to go faster, we have the room to go faster. the baseline assumption might even be a little bit less than that. And the reason for that is as we launch these new products, if you think about how 2026 shapes out, we need to add maybe a dozen sales reps at the beginning for the Prosigna side. And then, of course, MRD plays into our existing channel in neurology, where the majority of patients are served in that setting. And so there's not a significant amount of incremental investment there. So beyond the sales team and the market development activities, the bulk of actually launching a new product is in clinical evidence development, and that's been ongoing and is already in the run rate for us and has been for years. And again, it's playing the similar formula to Decipher. Many of the studies that are actually going to drive these products are studies that others will do over time. So I'd say, Bill, the answer to the question is we're confident we can do it with that. And if we need to spend more, we will spend more, and we will go faster. Rebecca Chambers: Yes, I absolutely agreed with Marc. And Bill, you had let's take the math offline because the amount we will be spending year-over-year versus 2025 is significantly higher than the $10 million you cited. So Marc is absolutely right on the drivers of that investment. But yes, the investment, given the gross margin expansion that we expect from the [ UA ] Transcriptome transition allows the math to be much -- to be decently higher than that $10 million cited. William Bonello: Excellent. I've never been good at math. Then the follow-up, which is sort of cheating because it's really a different question. But can you just talk about how you're thinking about capital allocation? I mean you're sitting with a lot of cash and generating really strong cash flow, and it looks like you will continue to do that. Marc Stapley: Yes. Happy to do that. No change in our philosophy around capital allocation. We've been generating cash for a while now. We've had a strong balance sheet. We've made some important decisions, including acquiring C2i in order to drive our MRD platform. And we're continuing to look at opportunities in the marketplace, but our philosophy and our bar hasn't changed one bit. Other than that, as you can see, and we just talked about, there's investment in our ongoing business. We're obviously spending money, as you would expect us to, on organic discovery type of activities and building infrastructure, things like software development and so on. And those are kind of the main ways we think about allocating capital. And so we'll continue to be very deliberate about that. Operator: Our next question comes from the line of Doug Schenkel of Wolfe Research. Douglas Schenkel: The first topic I wanted to dig in on is gross margin, which stepped up by about 200 basis points in the fourth quarter. How much of that can be directly attributed to the v2 transcriptome? And then just one clarification also on gross margin. Rebecca, in your prepared remarks on Q1 adjusted EBITDA margin being lower. Is that an expectation of being lower than the target guidance number for the year or down sequentially from Q4? Rebecca Chambers: Yes. Let me take the back part of that first. So yes, it would be -- we would expect Q1 to be below the guide for the year and definitely lower sequentially, right? You have to remove the PPCs and then obviously, the start of the year costs, whether it's benefits, comp, taxes, health care, et cetera, will impact that. So -- and then obviously, PPC. So yes, absolutely, Q1 should be down sequentially for sure. Vis-a-vis your question on gross margin in Q4, that really is the two things that -- the thing you cited and the thing I cited. So together, we have the perfect answer, Doug. No result rate benefit and the cost benefit from the UA transcriptome as well as the PPCs. And those are -- the PPCs is the larger impact of -- no result rate is the larger impact of the two. Douglas Schenkel: Okay. Second topic is Decipher bladder. Data coming out of ASCO GU looks pretty impressive. Our understanding is most of your Decipher volume is still in prostate today. Can you comment on roughly what percentage of Decipher is bladder and then how you expect that to trend over time? And I guess a big reason, it's probably obvious, but a big reason I'm asking this is on the bladder sparing data being presented at ASCO GU, it does seem like that could support increased use of Decipher into earlier stage or potentially neoadjuvant chemo decision-making workflows. And that could actually support multiple Decipher informed decision points across the bladder care continuum over time. So if that's the case, I could see where this could turn into a much bigger growth driver over time. if I'm thinking about this the right way. So any help there would be appreciated. Marc Stapley: Yes, Doug, I think your question is spot on. And so the way to think about the bladder in the numbers today, it's a very small portion of the total Decipher number that we talk about. And I think we've been relatively consistent in describing how we think about the bladder classifier. We need more evidence, exactly the type of evidence that's coming out at ASCO GU in order to drive the clinical utility of that test in, for example, the neoadjuvant setting that you just described, and then what I really love about it is then you've got this Decipher classifier that can be used at that very early stage. And I've always said, as you move the patient through the care continuum, you have patients who need MRD as well. We have the Decipher -- we will have the TrueMRD tests as well for those patients. So I love that we're filling out that care continuum. And I think it's kind of important to have these be part of the diagnostic and prognostic and predictive workflow as well. Phil, do you want to talk a little bit about some of the interesting things that we're going to see at ASCO GU? Phillip Febbo: Yes. And thanks for the question. So I would say the GU ASCO abstracts in aggregate really demonstrate how understanding the different subtypes of earlier-stage bladder cancer is increasingly becoming part of care because bladder cancer is in this transition where we're really looking at how to maximize response to neoadjuvant therapy to move patients to a bladder-sparing approach. And the studies we'll be presenting kind of shows how our Decipher bladder can inform those decisions and where we see higher proportion of responses in kind of -- in luminal versus nonluminal subtypes. And so not only managing that. Additionally, we see -- you're seeing how we're -- with Decipher Bladder also pairs nicely with the follow-on with our muscle invasive bladder cancer MRD, again, trying to identifying how patients are doing when patients are working towards a bladder sparing approach. So the bottom line is our portfolio of studies showing that understanding the subtypes of bladder cancer help inform that neoadjuvant therapy just increases the interest, and we're getting a lot of interest on that bladder test. Operator: Our next question comes from the line of Kyle Mikson of Canaccord Genuity. Kyle Mikson: Congrats on a strong year. I wanted to start on the '26 guidance. I think Rebecca, in response to Subbu's question, you parsed out Afirma and Decipher expectations for the year with respect to revenue. I think you said mid-single digit to high single digit for Afirma and then Decipher 20% growth you kind of left. So could you just talk about the volume expectations for both of those products for '26? And then any puts and takes for each of those like for Afirma, maybe some volume shifts because of the v2 or Decipher, you have a lot of digital pathology stuff going on. So we would love to hear that. Rebecca Chambers: Yes. Happy to do so, Kyle. Thanks for the question. Effectively, given the prior period -- you can effectively assume that the volume growth number embedded in the guide is higher than the revenue growth guide because of the $10 million of prior period collection impact. So that's the easiest way to think about it. And remind me what the second part of your question was, sorry? Kyle Mikson: I mean it was just kind of like puts and takes for volume growth for the year. There's a lot of kind of exciting stuff on tailwind especially. Rebecca Chambers: Yes. So on the new transcriptome at the low end of the Afirma guide, we would assume no benefit. At the high end, we'd assume kind of what we saw in the fourth quarter. And then on Decipher, there's a lot of different things that we're working on. Obviously, the continuous drumbeat of publications and podium presentations. Obviously, the ASCO GU showing was incredibly strong. We would expect just that flywheel to continue throughout the year. The other thing on the Decipher front is we are working on our new signatures that Marc cited in his prepared remarks. Those may not be necessarily additive to 2026, but will be important as we think about looking to '27 and beyond and continued competitive differentiation. And then the last one I would cite is really kind of on the high-risk biochemical recurrence metastatic side. We've seen a lot of traction there since the ASTRO presentation back in Q3. And I would suspect that, that trend continues, if not, even becomes even stronger as we go throughout the course of 2026 and beyond. Kyle Mikson: Perfect. I had a follow-up on MRD. I was curious what you're doing now to seed the market for the launch for MRD and MIBC in the first half of the year, there's a lot going on in bladder cancer, whether it's on the therapeutic approval side or clinical trial side in MRD. So how are you going to make sure that your voice is heard other than these data and things like that in presentations? Marc Stapley: Yes, I think that's a great question. There are a couple of layers to it. I mean, first and foremost, as you know, our initial test in TrueMRD, which is a platform, is going to be in muscle invasive bladder cancer. And for that, we really already have a lot of voice of the customer and that we are visiting those customers because of Decipher. And so at the appropriate time, and remember, we don't want to obviously distract from our very well-run Decipher business on the prostate side, at the appropriate time and the appropriate accounts, we will be spending time with those customers. We will be describing the clinical studies that have already been done in that setting, and we'll be helping those customers to understand what our TrueMRD offering is and how they're able to use it. John, do you want to add anything with respect to that? John Leite: No, I think you answered it well. I mean the only thing that I would add is we have a standing policy that we would only pursue tests commercially once they're reimbursed. I think what you're hearing here is prudence, not conservatism. We are confident in the performance of the test as we've seen, as we've published. It addresses a meaningful clinical question that physicians are asking, which is how many patients are going to recur post surgery that after neoadjuvant treatment after surgery are intended to be curative. Beyond that, we have lots of studies in the hopper that we continue to pull the Decipher play on, which is to continue to expand clinical utility through evidence. Marc Stapley: Yes. And it's a good time to remind everybody why our test is differentiated. Our TrueMRD test is a whole genome-based approach. And so to John's point, the whole genome data that we're going to generate for every single patient of every single incidence of care during their treatment journey and the recovery journey, more importantly, is going to be valuable data and valuable information that will drive future clinical studies. So over time, you see the Decipher playbook play out over and over again in MRD as well as it does in our whole transcriptome business. Operator: Our next question comes from the line of Andrew Brackmann of William Blair. Andrew Brackmann: Maybe we could actually just pick up where you left off there, Marc, and sort of using the Decipher playbook for TrueMRD as well. I think in the past, you talked about sort of driving some collaborations through GRID on TrueMRD. Can you just remind us sort of how you can sort of replicate some of the learnings on using that GRID platform from other tests like Decipher into TrueMRD? And any similarities or differences as you move from Decipher to TrueMRD? Marc Stapley: Yes. I mean it's a great question. I don't think there's a ton of lessons learned other than the high-level one that making that grid information available is certainly driving and has driven over the years a lot of research. That research is on the existing tests, but also importantly, as you heard when we talked about PORTOS, PTEN and PAM 50 it actually drives research around other biomarkers as well, and we can expand those by adding them to the report, the clinical report over time. So you've got this great workflow of research finds the most interesting outcomes and clinical factors or clinical information that can be deployed as a test, and then it's very simple for us to just add that without even changing the nature of our test at all. And that's why we have this kind of uniform platform that we use across all of our tests. Do you want to add something? John Leite: Yes. So with respect to specifically our MRD, as Marc mentioned, it's whole genome on the tumor, it's also a whole genome on the germline whole genome on the cell-free DNA. That whole genome across -- lets us really track the tumor. So we use the whole genome to provide a clinically validated MRD test that says tumor detected, not detected. If it's detected, it gives a tumor fraction. Because we're doing whole genome, the GRID approach is that we will leverage that additional data through collaborations, through research to look at things like tumor heterogeneity, clonal evolution, the emergence of genome-wide signatures associated with resistance to platinum or other therapies used. That's how our MRD really aligns well with what we've done with Decipher and what we're doing with Afirma, where we do -- we get paid for a transcription signature, but we use the whole transcriptome through research to look at the biology and develop new biomarkers. Marc Stapley: And what I love about this Andrew, is you start in one indication or one risk category and then you expand from there. You start in prognostic and you expand into predictive and so on. And so you fill out the care continuum and you fill out the clinical uses of the test across that care continuum. And I don't see it being any different in MRD than we've demonstrated already in transcriptome. Andrew Brackmann: Okay. All of that's great color here. I'll stick on TrueMRD. This is more sort of housekeeping. Can you just sort of remind us on the reimbursement strategy here? I think you're going after two codes versus sort of the bundle. So can you just level set us on expectations there? And as you sort of think about dollar amounts, I don't know if you're willing to share sort of what defines success for you there. But anything qualitatively you can share with respect to sort of where your mind is at on sort of levels of reimbursement there? Marc Stapley: Yes. Too early on the dollars, but I'll ask John to talk a little bit about the process we're going through. John Leite: Yes. On the reimbursement side, Andrew, as I mentioned, we're looking to pursue recurrence detection post patients who have been treated either with or without neoadjuvant therapy and have undergone a radical cystectomy. Those are management decisions that are made with curative intent. And so as such, it is presumed that the patient is cancer-free. And as such, it does not conform to the NC 90.2 limitation of having to bundle testing for MRD. And so those will be coded and billed individually. So we'll have two main codes. One is the initial landmark setting test that determines the MRD signature, as Phil described earlier as well as then each sequential plasma test is also billed independently. As it relates to pricing, that's something that we're still negotiating through the MolDX process. Marc Stapley: And then Andrew, the population that John laid out based on our own research, we believe it's about 70% of the patients that are seen in our channel. Operator: Our next question comes from the line of Lu Li of UBS. Lu Li: First one on the new product revenue contribution. I understand that it's not included in the guide. I wonder whether you guys have like kind of an internal target that you wanted to hit? And then secondly, on the MRD new indication, you have CRC and lung on the slide. I wonder, is it fair to assume that those will be the next indications? Marc Stapley: Let me start with the second one and then Rebecca, you can go with the first one. But the -- I wouldn't assume no. What I don't want to do yet because it's so dependent on a couple of things, including cohorts is put out a road map for exactly what's coming when. And that's why we've been saying the way we have a new indication every year. We will want to flex and adjust that and have agility to be able to do so on an ongoing basis based on the channel, the clinical evidence, the cohorts, the publications of that evidence, the reimbursement and so on. So we're not going to be more specific about the indications at this point. We have said you should expect us to focus, first and foremost, on indications where we have some channel reach or we're building channel, and that will certainly be a factor over time. Rebecca Chambers: Yes. And on your new product introductions, of course, we have our internal goals. I would highlight them on the MRD front as being more around the customer experience and less around the revenue contribution over the course of 2026. That will obviously become more of a factor in '27 and beyond. But this year, we're really working on ensuring a great customer experience for MRD and various other critical deliverables that we're citing internally. On Prosigna, that is expected to be launched here over the summer and the benefit of that and the expectations for that are going to be highly tied to the OPTIMA readout and the timing of the OPTIMA readout and how that all goes. We have a range of outcomes internally. But again, we're seeding the market, and we aren't going for volume from the get-go. What we're really focused on is KOL engagement and spreading the word and really kind of taking the approach of a top-down KOL engagement and ensuring that, that is where we're really focusing on volume growth from the get-go. Over a 5-year time frame, we do believe this will translate into strong share across the entirety of that market. But again, in 2026, we're looking to build the foundation more so than really AMP revenue from Prosigna and MRD. Lu Li: Yes, that's very helpful. Maybe just a quick question on the Decipher Q4 volume. If you look at it sequential basis, I think that's only up like 500 units. Wondering if there anything to call out or just like why it's like slightly lower than like Q4 '24 number? Rebecca Chambers: Yes, I'm happy to take that one. Effectively, in any given quarter, you can have a day or two of volume that falls on either side of the quarter, right? In Q4 of '24, that was a good guy. In Q4 of '25, it was -- we had a day that didn't get out or day plus actually that didn't get out. So I think that all makes itself up, and that's typical -- that is absolutely typically quarterly impacts and quarterly volatility, and it's not any underlying trend. Over the course of the fourth quarter, we had across every single metric we track just an outstanding quarter. And so I definitely would not -- 500 samples doesn't make me flinch one way or the other, 600, 700, whatever the course may be. But I think that's -- I wouldn't get overly wrapped around that axle. We've had many quarters like this before that fall on one side and folks tend to get a little excited about it. And a quarter or two or three later, it all normalizes. So I wouldn't read into it. Operator: Our next question comes from the line of Tom DeBourcy of Nephron Research. Tom DeBourcy: I actually wanted to ask on, I guess, the testing revenue where I think you're guiding to $10 million to $12 million. And it seems like, I guess, in Q4, you still had biopharma revenue, and I would expect in 2026, while maybe not from the same source, you may also have biopharma revenue, whether it's from MRD or other clinical trials. And so just how to think about product versus biopharma revenue as we -- I guess, there's IVD launches or just, I guess, biopharma onetime revenue? Rebecca Chambers: Yes, happy to answer that, Tom. Implied in the guide is less than $1 million of biopharma revenue, call it, 0 at the low end and 1 at the high end. That's an incredibly specific range. And the reason why it's that specific is because unless something is signed and booked, we don't include it. That's just our philosophy. So obviously, with shutting down the French entity, that was where the vast majority of the biopharma revenue came from. And so we will, obviously, with the Decipher franchise, the MRD franchise, continue to go after biopharma. But this, again, is less about a revenue strategy, and it's much more about evidence strategy, and that's really where we're focused. And so that's not necessarily the driving force. On the product front, we have implied something closer to that around $10 million that you cited. And that is down year-over-year. That's down year-over-year for two reasons. One is we have a new contract manufacturer and obviously, the variable of their ability to produce, we wanted to give ourselves just some wiggle room around. And then the second is we are not selling to U.S. customers ahead of the LDT launch. Let me be very clear. We are not selling the IVD to U.S. customers ahead of the LDT launch. And therefore, that contribution, which was quite small in nature, is not included in the guide. Operator: Our next question comes from the line of Keith Hinton of Freedom Capital Markets. Keith Hinton: Just wanted to follow up quickly on Decipher and bladder, just to make sure that I sort of understood the comment. So based on the exciting data at ASCO GU, is investing additional commercial resources there becoming a near-term priority just based on what you've seen? Or do you feel like you need to see more data? And if so, is there more data that you're aware of in the near term? And then if you do decide to invest commercially there, how much synergy is there with the existing Decipher franchise and the MRD franchise as well? John Leite: Yes, I can take that one. Thank you for the question. No, the answer is no. The rate-limiting step in the growth of Decipher Bladder is not tied to commercial investments per se. As Marc mentioned earlier, there's a very high degree of overlap between bladder cancer patients who are currently managed by the physicians that we call on for Decipher Prostate. We feel we can manage that and have the bandwidth and capacity to manage that through our current channel and sales personnel in our systems. I think the parts that are rate limiting are all this great evidence that you're seeing at ASCO GU still needs to be completed, still needs to be published. And those are, in general, what allows us then to update our own clinical reports and to essentially leverage that great data to see demand and create more demand. Marc Stapley: And then just broadly, our investment in commercial this year will be mostly on the Prosigna LDT U.S. side. And then on MRD to your question, because of the overlap in urology, I think about the MRD investment being in future years as we broaden into other indications. Operator: Our next question comes from the line of Mike Matson of Needham & Company. Michael Matson: I really just have two questions, not to pile on, on the TrueMRD, but I was wondering if you could just tell us the annual number of patients that you think are candidates and then the number of tests per year you would expect to be used on those patients on a given patient? And then the second question is really just on tax rate. So do you expect to start paying taxes in '26? And what would be the appropriate rate to model? So. Rebecca Chambers: I'll take the latter because it's fast and easy. So we always have to pay some state taxes where we've blown through our NOLs, but that's in the run rate. So I wouldn't think too hard about that. But effectively, we are expecting our GAAP and non-GAAP tax rate to be around the mid-single digits this year. So we still have a decent chunk of NOLs to get through. One thing that we'll be talking about over the course of this year as we look at the profitability profile going forward is our valuation allowance, but more to come on that in the back half of the year if we're looking like that might be something that gets released. John Leite: Yes. And on the available market, we're estimating just around 20,000 patients for a SAM. You also have to factor that there's going to be some serial repeat testing on a per patient per episode of care basis. The details of that are still under discussion through our tech assessment with... Operator: Our next question comes from the line of Kallum Titchmarsh of Morgan Stanley. Unknown Analyst: This is Jason on for Kallum. A lot has been asked, so I'll just keep it to one. Maybe on Percepta nasal swab, you recently completed enrollment for the NIGHTINGALE trial. Can you just provide some color on what are the next milestones we should be looking at? Any color you can share on time line for trial completion, data readouts, commercialization and just any milestones we could track? Marc Stapley: Yes, that was one of our key accomplishments in 2025 was getting the final patients enrolled through that study. And now it's a question of -- I think a couple of milestones. One is the follow-up. And of course, you got to wait for at least a year, if not 2, for those patients to be followed up to confirm benign. And then it's getting that publication ready, getting it published, which can take time. And then it's a serial conversation then with MolDX and payers in order to get it reimbursed. And so this is why this one is very clearly in our -- it's not in our 5-year -- 3- to 5-year plan, it's more in our 5- to 10-year plan. Operator: Thank you. This concludes the question-and-answer session. I'd like to thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.
Operator: Good afternoon, and welcome to Sarepta's Fourth Quarter 2025 Earnings Results Call. As a reminder, today's program is being recorded. At this time, I'll turn the call over to Tam Thornton, Sarepta's Director of Investor Relations. Please go ahead. Tamara Thornton: Thank you, operator, and thank you all for joining today's call. Earlier this afternoon, we released our financial results for the fourth quarter of 2025. The press release and slides are available on the Investors section of our website at sarepta.com, and our 10-K will be filed with the Securities and Exchange Commission next Monday. Joining us on the call today are Doug Ingram, Dr. Louise Rodino-Klapac, Patrick Moss and Ryan Wong. After our formal remarks, we'll open the call for Q&A. I'd like to note that during this call, we will be making a number of forward-looking statements. Please refer to Slide 2 on the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Sarepta's control. Actual results could materially differ from these forward-looking statements, and any such risks can materially and adversely affect the business, the results of operations and trading prices for Sarepta's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. As noted on Slide 3, we will discuss non-GAAP financial measures on this webcast. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available on the Investors section of our website. And I'll now turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress. Doug? Douglas Ingram: Thank you, Tam. Good afternoon, and thank you for joining Sarepta Therapeutics Fourth Quarter and Full Year 2025 Financial Results Conference Call. As you will hear today, we've entered 2026 on a strong footing. There are three pillars to our strength. Our first pillar is our financial position. As our CFO, Ryan Wong will discuss in more detail because of the actions we took in 2025, we entered 2026 in a solid financial position with a large and growing cash balance, significant revenue, positive operating cash flow and removal of any near-term debt overhang. We exited 2025 with $954 million in cash and investments, growing $89 million in the fourth quarter. We anticipate under all reasonable scenarios to be cash flow positive and profitable on a non-GAAP basis this year even as we fully invest in our pipeline and our marketed therapies. Our second pillar is our four durable life-improving therapies. As you will have seen, our three approved PMOs have remained stable even in the face of ELEVIDYS cannibalization. We read out the results of our AMONDYS and VYONDYS confirmatory study, ESSENCE late last year, and we have scheduled a meeting with the FDA for later this quarter to discuss the potential to transition those two therapies to a traditional approval. When one considers the PMOs, it is important to recall several things. The PMOs have been serving the Duchenne community well for many years now, in some cases, exceeding a decade. Over these many years, they have been on the market. There has accumulated an exceptional body of published real-world evidence consistently showing the significant disease moderating benefits of these therapies across measures and across organ groups, and ESSENCE is supportive of the risk benefit of these therapies. Patients and their physicians see significant value in the PMOs as represented by year-after-year compliance rates consistently over 90%. Indeed, families are fiercely supportive of these therapies. And importantly, the safety profile of the PMOs over the last decade is stellar. For these reasons, the evidence supports and we think the time has come to transition AMONDYS and VYONDYS to a traditional approval, although we do stand ready to provide additional reasonable prospective real-world evidence if ultimately required. Moving on to ELEVIDYS. The unanticipated in two instances, tragic events of 2025 created uncertainty around ELEVIDYS in the middle of last year, but much of that uncertainty has been cleared by now. While short-lived FDA actions caused questions about the future availability of ELEVIDYS, that is now resolved with an updated label, updated precautions and monitoring and a traditional approval for all ambulatory patients for and over. The FDA has approved our sirolimus pretreatment study for non-ambulatory patients, which is an important step on the potential pathway back to treating non-ambulatory patients, assuming a successful outcome. That trial is already enrolling patients, and we expect results by the end of this year. Once we have the data in hand and assuming its success, we will discuss with the FDA the fastest possible pathway forward to resume commercial dosing in the non-ambulatory populations. Those results will also be an important element of moving forward with our BLA for SRP-9003 to treat LGMD 2E. Over 1,200 patients have already been treated with ELEVIDYS and yet the majority of patients remain to be treated. That is an enormous opportunity. As we address the issues of 2025, we were left with little time to provide balanced information on the safety and efficacy of this simply remarkable therapy. And that information deficit has resulted in some patient and physician hesitation that must be addressed to ensure the greatest number of Duchenne patients benefit from ELEVIDYS. We have well-designed plans to address information deficits so that families and treating physicians are fully armed with accurate and balanced information to inform the decision to treat with ELEVIDYS. In a moment, Patrick Moss, our Chief Commercial Officer, will walk you through our plans. Equally important, the overwhelming evidence that ELEVIDYS significantly alters the course of this disease has only grown over the last year with updated three-year EMBARK data that was universally positive in showing that the gap between ELEVIDYS-treated Duchenne boys and those who unfortunately have not yet been treated grows greater and greater with every passing year. These plans will take some time to execute given both the timing of the plans and the long-cycle nature of START Form 2 infusion. But based on the market research and advisory boards we have conducted, we are confident about our plans. We previously chose not to provide guidance on total net product revenue for 2026, due primarily to the uncertainty on the timing of our ELEVIDYS initiatives. However, we will provide broad guidance today to help investors model the year. Now while it is challenging to perfectly model the exact shape of the revenue curve of a onetime therapy like ELEVIDYS, we believe there is a significant opportunity among the prevalent and incident population over the next three-year horizon. The delay and impact of our initiatives may affect near-term sales, but they should not impact the ultimate opportunity as we expect to pick up those sales as our initiatives result in better understanding of the disease-modifying benefits of this therapy and the compelling need to treat as soon as possible. But that is not to suggest that we will be satisfied before all patients and physicians have the information they need to make informed decisions about this therapy. Regardless of our long-term sales, every day that goes by without treatment, a boy or young man loses muscle that he can never get back. Patrick will discuss this in more detail, but given the timing of the initiatives and the long cycle time for ELEVIDYS, we do not expect that we will begin to see the impact of our educational efforts until at least well into the second half of this year. Looking at the first quarter itself, we should achieve revenue that's about flat to perhaps down 15% from the prior quarter. For total net product revenue for the entire year, we are providing a guidance range of $1.2 billion to $1.4 billion for our approved therapies. To be clear on our expectations, without our educational efforts, we would expect to track to $1.2 billion in net product revenue for the year. Depending on the timing of the initiatives, that could be as high as $1.4 billion if the initiatives more immediately showed impact. But given the long cycle times I just outlined and the resulting quarter-to-quarter variability, we believe that it is prudent to model toward the low end of the range at least for the time being. While we are being disciplined in our near-term projections, our confidence in the ultimate demand for ELEVIDYS and the transformational nature of this therapy remains exceptionally strong, and we believe our initiatives will support this opportunity. Now the third pillar of our company is the strength of our pipeline. We have an exciting siRNA pipeline that is advancing. We have now five clinical stage programs, including our neuromuscular programs for DM1 and FSHD, our pulmonary program for IPF and our CNS programs for SCA2 and now for Huntington's disease. Given the unique approach we are taking with the Arrowhead TRiM platform, these programs hold the potential to be best-in-class. They also hold the potential to bring a better life to more than 160,000 patients in the United States and multiples of that number internationally. We have two additional programs completing preclinical work for deadly CNS diseases, that's SCA1 and SCA3, and we have additional discovery programs with Arrowhead for high-value targets across neuromuscular and cardiac and CNS diseases. We are making good progress with our siRNA programs, and we will have some important updates this year, as Dr. Rodino-Klapac will discuss later in this call. And with that, let me turn the call to our Chief Commercial Officer, Patrick Moss. Patrick? Patrick Moss: Thank you, Doug, and good afternoon, everyone. As preannounced in January, net product revenue for 2025 totaled $1.86 billion, consisting of $966 million from our PMO franchise and $899 million for ELEVIDYS. For the fourth quarter, net product revenues for the PMOs totaled $259 million, which is relatively stable compared to the fourth quarter of 2024. Individual PMO net product revenues were $148 million for EXONDYS 51, $34 million for VYONDYS 53 and $77 million for AMONDYS 45. Turning to the ELEVIDYS performance. Fourth quarter revenues totaled $110 million, impacted by the severe flu season and 6 planned infusions that had to be rescheduled in 2026. Now looking forward, it's important to recognize that the $500 million revenue floor for ELEVIDYS reflected a steady-state mix of incident patients along with a meaningful contribution from the prevalent ambulatory population. The safety events of 2025 reshaped the perceptions of gene therapy and of ELEVIDYS specifically. As a result, it has become more clear to us that 2026 serves as a critical reset year for the ambulatory patient population, where there's an information imbalance and the disease-modifying benefits of ELEVIDYS is less understood. Patients need and deserve a clear and comprehensive understanding of ELEVIDYS' risk-benefit profile to have informed and thoughtful conversations with their physicians. Physicians also deserve to be armed with a full understanding of the data and the totality of the evidence to help patients make the best treatment decisions. Thankfully, we have a robust and growing body of data for ELEVIDYS. Two-year data from EMBARK Part 2 has recently been included in our promotional efforts and a three-year EMBARK top line data was shared last month and will be presented at the upcoming MDA conference. Both the 2- and 3-year data show sustained ELEVIDYS benefits over time with evidence of slow disease progression versus natural history. I do need to emphasize something that matters, something that truly matters to patients, and that's the significance of the muscle MRI data. Our muscle MRI data is powerful in that it provides unbiased evidence showing the difference between those treated with ELEVIDYS versus untreated Duchenne. The muscle MRI data shows that the muscle decline is evident well before functional decline is observed and delaying treatment results in irreversible muscle damage that cannot be restored. This is empirical evidence that reinforces the importance of preserving muscle by treating Duchenne as soon as possible. Clinicians have affirmed their belief in the data and the disease-modifying effects of ELEVIDYS through feedback at advisory boards and conference discussions. Their clinical experience is consistent with the data, yet they believe, as we do, there is still work to be done to ensure patients have a balanced view of the benefit risk profile of ELEVIDYS. Our new commercial initiatives are squarely focused on addressing the information deficit by reengaging with our customers with enhanced messaging and expanded footprint of our field teams. The traditional approval of ELEVIDYS creates a meaningful opportunity to strengthen our commercial messaging and engaging customers in new ways. We have updated our materials with substantial new data from the two-year EMBARK results to improve clarity and support a balanced understanding of ELEVIDYS benefit risk profile. And as a reminder, ELEVIDYS is the only FDA-approved gene therapy for Duchenne and has treated more than 1,200 patients across clinical trials and commercial settings with that number continuing to grow. In addition to updating our messaging, the expansion of our customer-facing teams enables us to go beyond treatment centers to educate referring physicians, patients and their caregivers. Our teams are addressing treatment hesitancy through accurate and clear information with a repetition that supports informed decision-making. The decision by a patient and their caregiver to pursue gene therapy is an important one. Our outreach to clinicians, caregivers and patients is designed to address what's on their minds of each of these stakeholders and support them with educational efforts and resources and data. We remain confident that our new 2026 initiatives will benefit patients while recognizing that it will take time for these efforts to translate into accelerated new patient demand. Unlike chronic therapies, which benefit from an installed base, ELEVIDYS is a onetime therapy and each treatment represents a new patient start. We continue to believe there is significant opportunity for ELEVIDYS and our confidence in capturing that opportunity is supported by emerging green shoots. A meaningful proportion of recent enrollment forms this year have come from sites that have not submitted since last summer and a growing percentage of enrollment forms have come from sites outside of our existing network. While this early traction from new sites is encouraging, we remain focused on executing our commercial initiatives to accelerate demand across the treatment network. The PMO franchise remained stable in 2026, with demand declining modestly year-over-year as patients choose ELEVIDYS. This durability continues to be a testament to the clinical value of protecting muscle to slow the decline of Duchenne through the use of exon skipping therapy and the relentless operational excellence of the team. We are comfortable with the current consensus estimates for our PMO portfolio in 2026. Now in closing, we are energized by the stability of our PMO business and the opportunity created by the traditional approval of ELEVIDYS. The robust long-term data included in our updated ELEVIDYS messaging, our expanded field force and demand from the Duchenne community support our efforts. Our confidence for 2026 is heightened by what we have witnessed, the ability to change the arc of the relentless decline of Duchenne. Our execution is driven by our commitment to serve patients, and we draw our inspirations from them, their families and the clinicians who continue to share their stories on how our treatments are changing what we know about Duchenne. I'll turn the call over to Louise. Louise? Louise Rodino-Klapac: Thanks, Patrick. I'm happy to share with you our progress over the last several months, beginning with our positive top line three-year functional results from Part 1 treated in patients in EMBARK for study SRP-9001-301, our global randomized placebo-controlled Phase III study evaluating ELEVIDYS in ambulatory individuals with Duchenne. Sarepta has led what is the largest and longest running Phase III trial, making ELEVIDYS the most studied gene therapy in Duchenne. We were thrilled to share the results last month, which showed that three years after treatment, patients who received ELEVIDYS in Part 1 of EMBARK demonstrated statistically significant, clinically meaningful and durable efficacy across all key motor function measures, which include North Star Ambulatory Assessment, time to rise and 10-meter walk run when compared to a prespecified propensity weighted untreated external control group. The mean NSAA score remained above baseline at year three for the ELEVIDYS-treated group, while the external control group continued to show the expected age-related decline below their baseline score. Specifically, the ELEVIDYS group showed a 73% slowing of disease progression as measured by time to rise and a 70% slowing of disease progression as measured by the 10-meter walk run when compared to the external control group. The North Star Ambulatory Assessment showed a 4.39 point difference at year three between the treated and external control group with a highly significant p-value of 0.0002. To put into context the importance of these results, please note that functional outcomes like time to rise and 10-meter walk run are prognostic for delayed loss of ambulation. Slowing disease progression is expected to help preserve functional abilities for longer and delay more debilitating stages of disease. The EMBARK data showed that as ELEVIDYS continues to slow disease progression and the cumulative benefits increase over time, a greater divergence from natural history occurs as patients in the external control group progress into the declining phase of the disease. Further, as Dr. Crystal Proud, a pediatric neurologist, EMBARK investigator and someone who has treated many Duchenne patients stated, she has witnessed the transformative impact of ELEVIDYS for her Duchenne patients who can now do many daily activities in ways we would not expect. In children who have not received treatment with ELEVIDYS as they get older, these functions decrease exponentially as the disease progresses. Further, no new safety signals were observed in three years after treatment and no treatment-related serious adverse events were reported, which is consistent with our understanding of the safety profile of ELEVIDYS as evidenced by more than 1,200 patients treated clinically and commercially. These data support ELEVIDYS as a disease-modifying therapy, providing a clear and growing benefit over time in those treated versus those untreated. I'd also like to provide a brief update now on Cohort 8, which is part of our open-label study ENDEAVOR for study SRP-9001-103. As a reminder, as of July 2025, we've treated 155 non-ambulatory patients with ELEVIDYS before dosing was paused. This new cohort, Cohort 8, was designed to assess the impact of a sirolimus treatment regimen on reducing acute liver injury or ALI, and known side effect of all AAV gene therapies. Cohort 8 will enroll approximately 25 U.S. participants who are nonambulatory. Our primary endpoints are dystrophin expression at 12 weeks and the effectiveness of sirolimus on the incidence of ALI. We initiated this trial in late 2025 and are currently screening patients for enrollment. We expect to share findings by the end of 2026. Moving now to the 2026 MDA Clinical and Scientific Conference, which will take place in Orlando, Florida from March 8 through March 11. Sarepta's robust presence at this year's conference will include important highlights across our portfolio. Of note, the three-year EMBARK functional data, including cardiac safety data will be presented. We will also have several presentations from our PMOs demonstrating real-world evidence of long-term benefit along with our Phase III ESSENCE results. Turning now to our PMOs and an update on our exon skipping therapies, VYONDYS 53 and AMONDYS 45 to treat patients with Duchenne amenable to exon 53 or 45 skipping, respectively. We believe the totality of the data we've generated to date with real-world evidence is compelling. Our meeting has been scheduled with FDA, and it will take place towards the end of Q1. We've also submitted a briefing book. Moving now to siRNA. Our DM1 and FSHD programs continue to advance. As announced in November of last year, our Phase I/II single ascending dose and multiple ascending dose clinical study of SRP-1003 to treat DM1 is progressing well. Cohort 1 and Cohort 2 of the study are complete and Cohorts 3 and Cohorts 4 are fully enrolled and ongoing. Dosing in the final cohort, Cohort 5 at 12 mg per kg will be initiated by the end of the month. For FSHD, enrollment in our SAD study is complete and Cohorts 5 and 6 of our MAD study are fully enrolled. We are excited by the potential of these programs to offer differentiated profiles, including better safety and greater muscle concentration over other therapies currently in development. Specifically, we look forward to evaluating our early proof-of-concept data to establish the alpha v beta 6 targeting ligand as a potential best-in-class approach for muscle penetration and corresponding ability to dose at levels required for maximum knockdown. As previously communicated, we plan to announce our preliminary data available from our proof-of-concept studies for DM1 and FSHD programs at the end of this quarter. Of critical importance will be the safety and PK data. We expect to have serum and muscle PK to validate preclinical dose model prediction and evaluate dose response. Preliminary PD data will be valuable to further support our models to inform Phase III trial design. We look forward to sharing these early results with you. Moving now to our Huntington's program, SRP-1005. We've initiated our trial for Huntington's disease using SRP-1005. It's an investigational siRNA therapeutic for the treatment of Huntington's disease. This program utilizes a subcutaneous route of administration, allowing for target engagement in deep brain regions like the striatum, particularly affected in Huntington's. The Huntington's gene located on chromosome 4 produces the Huntington's protein, which is vital for neuronal development signaling and survival. Last month, we announced the submission of our clinical trial application for study SRP-1005-101, also known as INSIGHTT to Medsafe, the New Zealand Medicines and Medical Devices Safety Authority. They have accepted our application, and our next milestone is to commence dosing in the first half of this year. As you can see from this slide, we have numerous value-enhancing milestones coming up over the next 12 to 18 months. We are particularly excited about the promise of our advancing siRNA pipeline and continuing to add to the robust body of evidence for ELEVIDYS and our PMO exon skipping therapies. In closing, I'd like to take a moment to recognize Rare Disease Day, which takes place on Saturday, February 28. We are reminded that when it comes to rare disease, we must look for the unexpected and think beyond the common answer of diagnosis. The zebra has become a symbol for rare diseases, reminding us that like a zebra stripes, every rare disease patient's journey is unique. To those living with rare disease, we see you and we are with you. Thank you, and I'll turn the call over to Ryan Wong for an update on our financials. Ryan? Ryan Wong: [Technical Difficulty] Provided details for the fourth quarter and full year on a GAAP basis as well as a non-GAAP basis. [Technical Difficulty] Available on Sarepta's website for a full financial results. My appreciation to the Sarepta team for their continued dedication and diligence in driving our goals forward. We took decisive actions to reduce our cost structure and proactively address our 2027 debt long-term financial resilience. Operating profit and [Technical Difficulty] 2026 with a solid foundation to execute against our goals of our 2025 performance and share some forward-looking perspective for 2026. For full year 2025, total revenues were $2.2 billion, an increase of 16% year-over-year. This included $1.86 billion in net product revenue and $334 million in collaboration, contract manufacturing and royalty revenue from our partnership with Roche. Looking ahead to 2026, in addition to our net product revenue guidance of $1.2 billion to $1.4 billion, I can share further detail on our expectations for other revenues. As noted in our press release yesterday, ELEVIDYS is now launched in Japan. In Q1 2026, we expect to record a $40 million milestone payment from Roche upon the first commercial sale. Additionally, we anticipate recognizing $325 million of noncash collaboration revenue tied to Roche declining an option for a specific program. Altogether, we expect total collaboration, contract manufacturing and royalty revenues in 2026 to be in the range of $450 million to $550 million. Moving on to gross margin. In the fourth quarter, total cost of sales were $399 million, a significant increase over the prior year. During Q4, we conducted a review of our raw material inventory and adjusted purchase commitments to avoid carrying materials that would expire before use. This review resulted in a $193 million charge consisting of $165 million in noncash reserves for excess inventory and $28 million in purchase commitment cancellation fees. For the full year, cost of sales totaled $840 million. Nearly half of this amount reflects failed production batches, inventory reserves and other period charges associated with recalibrating our go-forward manufacturing plans. Excluding these charges, our unit sales-driven margins were in the low 80% for the year. Despite the immediate impact to margins in 2025, we expect improved margins and fewer period charges in 2026 as production volumes will be significantly lower than in prior years as we were building ELEVIDYS inventory for a broad ambulatory and non-ambulatory population last year. On a unit volume basis, we expect 2026 margins in the high 70% range. Shifting to expenses. Combined non-GAAP R&D and SG&A expense in the fourth quarter were $413 million, driven in part by the $200 million second DM1 milestone under our collaboration with Arrowhead. For the full year, non-GAAP expenses totaled $1.85 billion with $884 million related to the same collaboration. Excluding Arrowhead, our core operating expenses were $965 million. And consistent with the cost reduction targets we announced last July, we are reaffirming our 2026 non-GAAP expense outlook of $800 million to $900 million. Rounding out the P&L for 2025, we reported a GAAP operating loss of $700 million and a non-GAAP operating loss of $492 million. Adjusting for restructuring and the Arrowhead transaction expenses, our underlying business would have delivered its second consecutive year of positive operating profit, $226 million on a GAAP basis and $391 million on a non-GAAP basis. Turning to the balance sheet and cash flow. In the fourth quarter, we completed a second debt exchange transaction, refinancing an additional $291 million of the 2027 notes into 2030. This leaves a remaining $159 million stub that we believe is very manageable given the cash generation profile of our business. We ended the year with $954 million of cash and investments. Ex Arrowhead payments, our base business generated more than $330 million of positive cash flow in 2025. In closing, as we move through 2026, we will continue to focus our resources on initiatives that drive demand for our on-market therapies and advance our pipeline towards key value inflection points. We remain committed to disciplined financial execution and to delivering sustained non-GAAP operating profit and positive cash flow. And now I'll turn the call back to Doug for closing remarks. Doug? Douglas Ingram: Thank you, Ryan. All right. Before we open the call to questions, I want to share an update regarding my own plans. By this summer, I will have had the privilege of leading Sarepta for some nine years now. It has been, without a doubt, the single honor of my professional life to serve along this extraordinary team. Over those nine years, we set audacious goals for ourselves, Chief among them, the goal of lessening the burden and extending the lives of boys and young men with Duchenne muscular dystrophy. And along the way, as you all know, we solved many thorny and scientific and technical problems even as we faced and overcame many exogenous and extraordinary obstacles, challenges that would have undone a less committed, less creative, less resilient organization. And yet this team that works with me and for these families never wavered. They innovated, they executed. They often pulled off what others saw as improbable or even impossible. But because of that commitment, we now have four approved therapies and thousands of boys and young men with Duchenne are living more vibrant lives today than would have been imaginable a decade ago. And that impact now not only for those families, but for those yet to be treated and for a generation of future patients who will benefit from the foundation that we have built. Despite an unusual market dynamic that has not yet caught up, Sarepta is, in fact, stronger today than just about any other point in its history, right? We're on a strong financial footing with four approved therapies, bringing a better life to patients, an exciting pipeline of clinical stage siRNA programs and one of the strongest, most passionate and committed teams in our history. For that reason and after a lot of thoughtful consideration, I have informed the Board that I intend to retire as CEO, and I intend for that to occur by around the end of 2026. This decision was a deeply difficult one for me as this is the most meaningful and rewarding role that one could imagine, and we stand at one of the most exciting moments in our entire history. However, I have family commitments that require my attention, and I will explain them even though I normally a relatively private person, but I'll explain. When I joined Sarepta, I had no personal connection to muscular dystrophy. But through my work at Sarepta, I have developed a zealous passion for our quest to improve the lives of those living with muscular dystrophy. I doubt anyone who knows me would disagree with that. That commitment required nearly my exclusive time in Boston and Cambridge, while my family primarily resides in California. As you know, in late 2024, we entered into a partnership with Arrowhead, and we gained access to a number of very promising therapies, including SRP-1003 for a devastating disease, DM1. Well, subsequent to that partnership in a fairly shocking and certainly ironic twist of fate, my personal commitment to muscular dystrophy has deepened as two of my members of my immediate family have been diagnosed now with myotonic dystrophy DM1. By the end of 2026, the time will have come for me to spend more time in California, focusing on family commitments and addressing the realities of DM1. The Board and I have initiated a comprehensive search for my successor, both internally and externally. We will seek a visionary leader, someone capable of maximizing this team's potential, accelerating our opportunities and one who is unwaveringly committed to this extraordinarily important Sarepta mission that we have. When I eventually leave this role, it will be with complete confidence in this team and in Sarepta's trajectory, first and foremost, in fulfilling our mission to lessen the burden of devastating diseases and ultimately, in delivering the value that our science and execution warrant. Thank you for indulging me. And with that, let's turn the call to questions. Can we open the call for questions now? Operator: [Operator Instructions] In the interest of time and as a courtesy to other analysts, we ask that you please keep your questions to one. [Operator Instructions] First question is from Anupam Rama with JPMorgan. Anupam Rama: Doug, I was wondering if you could speak to how you think about and how the Board thinks about internal versus external candidates as you go into your retirement. The company is in a place where you're still coming out of a tough period for ELEVIDYS in 2025. You've got to defend your PMO franchise. You've got to deliver on the Arrowhead assets, right? And how do you think about continuity with somebody like Ian Estepan, for example, who's been forward-facing with the Street, forward-facing with the patient community, forward-facing with the KOL community, your partners know him versus bringing in someone externally who may break that continuity. Douglas Ingram: Well, thank you for your question, Anupam. Look, I will just say in the broadest of strokes that the Board is looking for both internal candidates, taking that very seriously and looking at external candidates at the same time. Certainly, we're at a very important point in our history. We have a lot to do and a lot of execution to do. And I think we will have to be very mindful that whoever we choose, whether internal or external, understands what we're up against and understands how to execute and understands how to lead this team and shares our cultural values, which while that sounds very soft, is an exceptionally important and important part of this company. And I think the thing that fuels us and allows us to keep going even in the face of oftentimes very challenging obstacles that occur when you're the leader is this patient focus that we have. So I can at least commit to all of you that I and the Board understand where we are as an organization, and we're going to be very thoughtful that we choose a person that can continue to drive us forward and execute these plans and get the most out of this team. I mean I will just linger for a second. And hopefully, any Sarepta employees that are listening to this call will listen and hear me. This is the most exciting time we have as an organization. And this is one of the most impressive teams I've ever had the good fortune of working with, and I've had a lot of teams in my many years. I've been doing this now for three decades, and I've had a lot of really impressive teams that have worked for me. None are as impressive as this team. So we have a lot to execute and a great team and whoever we ultimately choose to be the successor CEO, I'm confident we'll be a person that can drive our plans, can speak as a leader to this great team and can get the most out of an exceptional team. Thank you. Anupam Rama: And Doug, I'm so sorry to hear about your family as well. And so our thoughts are with you. Operator: Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Brian Abrahams: Doug, thanks for the heartfelt message and my best wishes to your family as well. With regards to the kind of renewed efforts around messaging for ELEVIDYS, I guess what are some of the key metrics that you're going to be looking for over maybe the first half of this year that might suggest initial receptivity? And what are some of the takeaways we should think about from some of these signals you discussed with new sites initiating start forms and the return of some sites that hadn't prescribed since the summer? Douglas Ingram: Yes. Both are very good questions. I'm going to turn this over to Patrick for a more detailed answer. In the broadest of strokes, the ultimate signal is going to be embedded in the first and foremost, enrollment forms and then ultimately in infusions, but there are probably many signals we can get long in advance of that through the use of things like regional advisory boards and market research and the like to really see that people are beginning to fully embrace and understand the data on this therapy. I mean it is remarkable how much data we have on the completely trajectory changing benefits that come from this therapy and really be able to contextualize that and for having people fully understand that is an exceptionally important issue. But with that, Patrick, you can provide certainly more detail than I can on this topic. Patrick Moss: Great. And really, what we do is we consider there's value in promotion, right? And so our team is just beginning to get out there and promote the value of ELEVIDYS with our updated traditional label. And so our promotional efforts, they're rooted in the strong data, and that data continues to show the value of restoring dystrophin using ELEVIDYS. But one thing I'd also point out is that this is rare disease and more specifically a onetime therapy in rare disease. So each patient is a new patient. It's not a refill or a script renewal. So efforts do take time. And so a small number of patients can impact performance. And so all those various metrics we do evaluate as we're looking at our performance. Operator: Our next question comes from the line of Ellie Merle with Barclays. Tejas Wein: This is Tejas on for Ellie. For the siRNA readouts in 1Q, are there any particular benchmarks we should keep in mind when we think about target engagement? Should we think of these doses as getting to a therapeutic level? Or if not, what levels could we see that read well to higher doses? Douglas Ingram: I'm going to turn this call over to Dr. Rodino-Klapac. I mean I will say in the broadest of strokes, and again, I'm going to preview this and then Dr. Rodino-Klapac is both going to correct anything I say that is incorrect and also provide far more informed views. But if you think about the main conceive of these therapies, particularly our muscle-directed therapies, DM1 and FSHD, the unique thing about these therapies is that they employ the integrin receptor in a very specific way, which at least preclinically would suggest a number of things that you can do this very safely and that at equivalent doses, you can get much greater muscle concentration, which means that ultimately, you should be able to dose escalate even more significantly with more headroom and you should get much greater and at the same time, safe knockdown and then downstream splicing, which means that in these early days of the readout, the two things we should be looking at most significantly is safety and is muscle concentration because if you have a very safe therapy or a relatively safe therapy and you have great muscle concentration at low doses, then outcomes razor. The rest will come, including the knockdown, the downstream splicing and the functional benefits in the life. So those are the big things to look at, and we'll have more than just that, but those are the big things to look at. But I turn it over to Dr. Rodino-Klapac to provide her views. Louise Rodino-Klapac: Thank you. And I don't need to correct anything. I'll just add a few things and the fact that certainly, we are looking for muscle concentration. And based on our preclinical data, we feel and the data from the SAD data so far that we can continue to dose escalate. The important thing is also getting muscle concentration and also because we're using siRNA and we know how potent they are, we are not limited by the cellular machinery like an ASO where they're reliant on the RNase H in order to create knockdown. And so we -- using siRNA, we are not limited by that. So, taken together, those two things, so both muscle concentration and the ability of siRNA to produce efficient knockdown we feel optimistic based on our preclinical data, we'll be able to continue to dose escalate and potentially provide best-in-class knockdown. So that's what we'll be looking for is consistency with the preclinical data. Most of the data will be the SAD data. Obviously, that's one dose, and we'll continue to get data throughout the year on the MAD as well, which we will further evaluate. Operator: One moment for our next question, that comes from the line of Andrew Tsai with Jefferies. Lin Tsai: I appreciate the updates, Doug, wishing you and your family all the best. So I also wanted to ask on the siRNA readout strategy in general. When would you guys be prepared to start pivotal studies? I think I heard you mention the word pivotal for DM1 and FSHD, would it be right after the full MAD data set in the second half? Or do you need to do more dose expansion work? And then I'm also curious your guys' latest thinking on the accelerated approval pathway for these indications. In DM1, I think one company is going after accelerated and the other full approval. So I would love to know what your guys' stance are. Douglas Ingram: I'll turn this over to Louise. Louise Rodino-Klapac: Yes. So, first on the Phase III. So, in my script, I indicated, yes, we're working towards the Phase III. We'll be doing the -- continuing the MAD study, which will inform that. And at the same time, we are getting ready on the manufacturing side for Phase III, again, so that we can make sure that we are ready to go with commercial-ready material for that Phase III and can move as fast as possible. So we are, as you would predict, moving as fast as possible in terms of the potential for an accelerated approval. It will be facts and circumstances depending on where we're at with the state of the environment with other companies and where they are with approvals. I think with FSHD, for example, there's early potential readouts that would not have a long delay between accelerated and traditional approval. So we are taking our fastest approach regardless of whether we ultimately end up getting an accelerated versus a traditional approval, and we'll do so and make sure that we are collecting the appropriate data, functional data to support both. Operator: Our next question comes from the line of Joe Schwartz with Leerink Partners. Joseph Schwartz: Please accept our condolences and best wishes, Doug, for you and your family. I was wondering if you could talk a little bit about how clinicians are currently risk stratifying patients for ELEVIDYS using things such as liver enzymes, age, weight, steroid exposure, concomitant meds, et cetera. How has your view of ideal candidates changed based on the experience that's building currently? Douglas Ingram: Yes. Let me say one thing, and I'll turn it over to Patrick to answer the detail. I don't think that our view has changed, whether -- what the current state in the market may be before more education occurs, it may be different than that. But just to be clear, we think there's this enormous opportunity. As we said, the vast majority of the addressable ambulatory patient population remains to be dosed, and we're confident that all those patients would benefit. We won't get all of those patients. I'm not unrealistic, but we will -- we can get a lot of those patients when everybody understands the context and understands the benefits of this therapy and understands the compelling need to dose as soon as possible. And I think the muscle MRI data maybe more than any other single piece of objective empirical evidence tells us that you need to dose as soon as possible to save muscle before it's lost. But we have work to do there. And in the interim period, I think, Patrick, maybe you can talk to how you see physicians stratifying patients and excluding and including patients and the like. Patrick Moss: Yes. In addition to that, Doug, what we see is with Duchenne, it's obviously a rare disease that impacts the entirety of the family. And so it's really each patient, they have a unique situation. So there's travel, schedule, siblings. And so all of that is contemplated as the physician and the patient and the family decide whether they're going to move forward and at what rate. Douglas Ingram: We do see, I think, some physicians without more information leaning younger. And so we've got to think about that and work with physicians, show them the data, understand the risk benefit of this therapy so that they and their patients can make better informed decisions across the entire ambulatory spectrum. One additional thing that we cannot and will not promote because it is currently not in our label, but it is occurring exogenous to us is that about 25% of sites today, and I suspect that is growing, are proactively using sirolimus, either prophylactically before dosing or reactively if they see, for instance, an increase in liver enzymes. And that practice may also, over time, impact the patients that physicians see as amenable for this therapy. Operator: Our next question comes from the line of Yigal Nochomovitz with Citigroup. Unknown Analyst: This is [ John Kim ] on for Yigal. Wishing you and your family the very best, Doug. One quick one from us. We're just wondering if you could provide some context on the size of the Japanese market, whether there's any important ordering dynamics to note? And then broadly speaking, any color on the potential for non-ambulatory patient treatment in Japan and what activities -- additional activities you would need to do -- would need to be done to be able to enable that? Douglas Ingram: Yes. Patrick, do you have any perspective on the size of the Japanese market other than the broad perspective that Japan is obviously one of the highest value countries from a pharmaceutical perspective that exists across therapies. But do you have any more information than that? Or should we turn folks to Roche for a better understanding of that? Patrick Moss: I would turn them over to Roche. Douglas Ingram: We're excited, as you all know. Our partner is launching that therapy in Japan. Japan is an extraordinary opportunity, a very large population, very advanced health care system understands the value of therapies and how to price therapies as a culture. And of course, there are a lot of boys and young men in Japan who are living with Duchenne muscular dystrophy who will benefit from this therapy. So we're very excited about not really the opportunity, but the ability to do some good in Japan. Operator: Our next question comes from the line of Salveen Richter with Goldman Sachs. Tommie Reerink: This is Tommie on for Salveen. We were just hoping for some more details on ELEVIDYS quarterly dynamics. So your guidance of the 1Q being flat to 15% down, how do the rescheduled infusions play into that? And just checking on some of the math, assuming $900 million in PMO revenue, giving you an ELEVIDYS range of around $300 million to $500 million. Maybe you can give some more detail on how the timing of that acceleration and kind of magnitude in the second half, as you said. Douglas Ingram: Yes, I'll give the broad strokes and then again, Patrick may have more color for you. As we look across the year, the thing to consider -- first thing to consider on a quarterly basis, if we say we're going to be flat to slightly down is that given this is a rare disease and given the cost per patient, a few patients move one way or the other on the therapy. Also, you'll know that six patients were delayed into 2026 from 2025, but also understand there's always this knock-on effect so that to the extent you're able to dose a patient in the first quarter that was delayed, that will almost inevitably delay another patient. So it doesn't just become additive. But ultimately, there'll be -- the patients will be there. I think we've already -- and Patrick, you'll correct me if I have this number wrong, but we've already dosed three of those patients who were delayed into 2026. And then there's two things to know on those ranges, the sort of $1.2 billion to $1.4 billion, it does relate to the ELEVIDYS far more than the PMOs. The PMOs are very stable. And they're very easy -- they're not they're easier, I should say, to forecast because they are chronic therapy. So you tend to be forecasting on the margins of a therapy as opposed to what you have to do with a onetime therapy like ELEVIDYS, which is basically you start new every quarter, and then you have to forecast that way. So $1.2 billion implies that we're at steady state with no new educational efforts of any benefit. And our educational efforts should drive awareness and understanding of the risk benefits and should drive patients to get in front of the doctors and doctors to be starting in more enrollment forms, and that gets you up to the $1.4 billion. But as we've said, you have to be thoughtful about the lead time on these. The initiatives themselves take lead time. We have already hired up our sales force. We have a contract sales force. We have educational -- these patient educational liaisons that we're going to be hiring. We have promotional material, but all of that requires training and getting out there and getting it through the process, and that takes its own time to be meaningful and impactful. But then the enrollment to infusion time is itself something in the four to the very lowest four months to even six months. So all of that suggests that for planning purposes, you should assume that while we'll get signals that this is really working in the next quarter or two to really see that turn into revenue is going to be something that's going to occur significantly into the second half of this year and then very significantly really in 2027. So that's kind of the delta between the $1.2 billion to the $1.4 billion. Now Patrick, you may have other metrics that you think I've missed. Patrick Moss: Well, yes, I mean, you hit most of them, and I'd really start out to say that with ELEVIDYS, the quarter-to-quarter dynamics, as you mentioned, they can be noisy, right? And so we have to consistently look at performance over the longer arc rather than each quarter. With the identification and screening of the patients and ultimately dosing, that can lead to that variability. But what we're focused on is to ensure that our team is out there executing on our plan. We're out there engaging with physicians, with payers. We're coordinating with the sites, supporting the patients. And all of that remains solid. Douglas Ingram: One other thing to know, we talk a lot about sort of getting the information out there and really educating people, getting to understand the risk benefit of this therapy and understand all of the efficacy data that we really had little time to do in 2025 for all of the reasons you know about. We were dealing with a lot of issues. We were working with the agency. We were getting the label updated and the like. And of course, it didn't allow us the time to really do this. Plus we have more data today than we ever did before. The one-year data look brilliant. The two-year data look exceptional. We just got the three-year data, and it's just the gap is growing and growing and becoming obvious that these patients really, if they understood this data, need to understand that they need to get in there and get infused. But there's another big issue as well on this issue of sort of educating and information. And that is that -- and this -- I find this really troubling. And that is that you have a much better chance of getting infused with ELEVIDYS, if you're a middle class, English-speaking, well educated, there is a real delta that exists where people that are not in the middle class, Spanish speakers, other people in a different socioeconomic environment just may not even have access to any information to be able to make thoughtful decisions about this therapy. We are going to address that this year. We have some very good plans to address that and to really serve the full community, not pieces of the community. One thing on the Spanish-speaking side, we're really focusing in on ensuring that we have a lot of field sales force that speaks Spanish, they can talk to people where they are. We have other thoughts about how we can support people that are struggling, but have children with Duchenne, which is very, very common, frankly. And so that is a sort of a big part of the efforts. It's not merely just more and more information, but really getting information to everybody whose lives will benefit if they understand what this therapy can do for them when they restore shock-absorbing dystrophin into muscles that desperately need it. Operator: One moment for our next question, that comes from the line of Tazeen Ahmad with Bank of America. Tazeen Ahmad: I just wanted to clarify with regards to what you're seeing with PMO use, initially, doctors were saying that they wanted to keep the PMOs on board with patients even after the patients receive ELEVIDYS. Is that still what you're seeing? And is that assumption also embedded in the $1.2 billion to $1.4 billion guidance that you've provided? Douglas Ingram: Probably that thesis is probably not fully embedded in the $1.2 billion to $1.4 billion. But the interesting -- to your interesting point, physicians definitely on hold definitely want their patients to have the full armamentarium of gene therapy and a PMO. We have always taken the view, as you know, because we talked to investors about it over and over again over the long years even before we got launched is that, that may not happen a significant amount of time and the patients may be washed out of the PMOs, predicate to getting the gene therapy, and there will be a significant amount of cannibalization. I would say at this point, there is more dual use of PMOs than gene therapy than I at least would have envisioned. And I think there's a real opportunity here for patients to fully benefit. This's very complicated disease, as we all know. And I think having adjunctive therapies with a gene therapy like a PMO makes a ton of sense, and I think that we might be seeing more, not less of that over time. Patrick, you might provide more detail on that. Patrick Moss: Right. Right now, we're seeing a handful of patients that have been treated with ELEVIDYS go back on PMO. It's not materially embedded in our forecast, but it is something, as Doug mentioned, that is an interesting proposition and something that the physicians are contemplating as they think beyond ELEVIDYS. Tazeen Ahmad: Okay. Thank you. And best wishes to you and your family. Operator: Our next question comes from the line of Mitchell Kapoor with H.C. Wainwright. Mitchell Kapoor: And sorry to hear about your family, Doug, and wishing you and your family the best as you navigate this new journey and also your retirement. I wanted to ask on the early trends you're seeing in 2026 for ELEVIDYS so far, obviously, guiding to flat to down 15% for the quarter. But I want to know what you're seeing on new patient starts, time to infusion, payer behavior, infusion center capacity. And if any of these factors or other factors are measurable performance signals that you're tracking in the next quarter or two to hit that $1.4 billion versus the $1.2 billion guidance. Douglas Ingram: Patrick, I'll turn this to you. Patrick Moss: Yes. And I caution reading too much into really any single quarter. And I mentioned before, ELEVIDYS is not a product that performance unfolds in this like smooth linear quarter-to-quarter way. We are seeing consistent enrollment forms come in. However, it's early. And we're -- with our efforts and our messaging around the new data, expanding the field sales force and really expanding our footprint, we are expecting those efforts to materialize later in 2026. We do have early green shoots, as I mentioned, from prescribers that have paused in the past. But again, that time from enrollment form to infusion is still around 6 months. Operator: One moment for our next question, it comes from the line of Mike Ulz with Morgan Stanley. Michael Ulz: Doug, let me add my best to you and your family as well. Maybe just a follow-up on DM1 and FSHD data you're expecting to share later this quarter. Could you please clarify what PD data we should be anticipating from the slides, it looks like maybe splice correction, we shouldn't expect that, but maybe you can clarify what we might get? And then should we anticipate V-Ht as well? Douglas Ingram: I'll turn this to Louise. Louise Rodino-Klapac: Yes. So in terms of PD for DM1, we will have early DMPK knockdown data. And for FSHD, it will be DUX4 target gene correction in terms of the early data for that. Operator: Our next question comes from the line of Biren Amin with Piper Sandler. Biren Amin: I also wanted to convey my well wishes to you, Doug, and your family. Maybe on the Cohort 8 data, what do you need for FDA to demonstrate safety? I expect it would be clear for acute liver injury, but would FDA also want to see ALT/AST elevations in the trial? And what bar would be acceptable on ALT-AST elevations? And I guess maybe just a second question would be, can you give us the status of ENVISION and when you would hope to restart that trial? Douglas Ingram: Sure. I'll turn this to Louise. Louise Rodino-Klapac: Sure. For the Cohort 8. So we're certainly collecting all liver parameters, which include AST and ALT, and that goes into the calculation of ALI in addition to GDC and others. So certainly, that will be part of the calculation, but that goes into the definition of how we define acute liver injury. So certainly, FDA and us, importantly, will be looking at that. In terms of ENVISION, we expect in the U.S. to first look at some of the Cohort 8 data to help inform restarting that trial. Operator: Our next question comes from the line of Kostas Biliouris with Oppenheimer. Konstantinos Biliouris: Doug, congratulations on a terrific career and sorry to hear about your family members. You turn a nonevent press release into the most important conference call here. Maybe one question from us on DM1, given the relevance. We saw recently a publication from Avidity on DM1. And although they saw drug concentration in muscle in a dose response manner, when it comes to splicing correction, the data were very inconsistent and without any trends across placebo and active arms. Any thoughts on whether this could also happen to your case, if it's a result of variability? And how should we interpret a potential outcome like that if there is muscle concentration, but then the biomarkers are not consistent. Douglas Ingram: Sure. Louise, take that. Louise Rodino-Klapac: Without having read that publication, a few things to note. So based on our preclinical data, we see a correlation between muscle concentration and correction. I do believe that there's some limitations with dosing in their case in terms of how high dose they can get. So that might have played into it. I haven't seen the publication. But what I can say from our preclinical data, we do see a correlation with muscle concentration and correction. Douglas Ingram: I may be missing the most recent data, but I was under the impression that at least at the doses that avidity was capable of dosing to without a dose-limiting toxicity, they didn't see enormous differences in muscle concentration. On the other hand, Dyne did, but then because Dyne's therapy is a PMO, that additional muscle concentration doesn't result in significant additional knockdown because of the requirement that you need the machinery inside of the cell to affect the steroid blocking that occurs with the exon skipping modality of a PMO. So maybe I'm missing something we need to look at it, but at least what we're seeing in our preclinical models is a very clear direct correlation between muscle concentration and the ability to knock down and then downstream splice correction, which, frankly, Occam's razor for an siRNA would tell you that's what you're going to see. Operator: Our next question comes from Ritu Baral with TD Cowen. Joshua Fleishman: Doug, this is Josh Fleishman on the line for Ritu. We send our best wishes to you and your family. How strong has physician and patient interest been in ENDEAVOR Cohort 8 recruitment? And can you give any color on the current extent of enrollment? Douglas Ingram: Sure. Louise, do you want to that? Louise Rodino-Klapac: Yes, certainly, there is a significant interest in Cohort 8. We are in process of screening and haven't dosed yet. We expect to do that soon, but we are on track, as I mentioned, to present data by the end of this year. Operator: Our next question comes from the line of William Pickering with Bernstein. William Pickering: Doug, wishing you and your family well. For DM1, could you clarify if the initial disclosure will include Cohorts 3 and 4? And how much follow-up do you think that you need to see a splicing benefit? In the Avidity New England Journal paper, the authors hypothesized that the 1 mg per kg dose didn't show a splicing benefit despite good DMPK knockdown because the biopsy was at day 45 as compared to biopsy at day 90 for the higher doses that did show a splicing benefit. So just wondering how you think about the length of follow-up you need to see the splicing improvement and if that informed the plan to wait until second half of the year to share that splicing data? Douglas Ingram: Louise, do you want to touch on that? Louise Rodino-Klapac: Yes. So for DM1 to your point, so we'll have the SAD cohort data. We'll have early data on MAD, which will be primarily safety data for that. For the -- in terms of the splicing panel, the CASI-22 for DM1, that will be second half of this year. The DUX4 target gene expression, we will have early data from that in this preliminary readout and then additional data from the MAD cohorts later on in the year. Operator: Our next question comes from the line of Brian Skorney with Baird. Unknown Analyst: This is Luke on for Brian. Thanks, Doug, for your openness on the call and best wishes for you and your family. We have a broader question on the DM1 indication. Just hoping for some insight on understanding of the importance of numerical splice correction data, just thinking about both clinical impact and the perspective of regulators. Is 20% plus still a reasonable sort of bar just in thinking about the current competitive landscape and how that's shaping up? Douglas Ingram: Yes. I'm going to turn this again to Louise, who may have some views on it. The one thing to know on some of this is we need to really understand and fully analyze the FDA's perspective on this. We'll need to have meetings with the FDA, and I do want to be clear that, that is not something we've done. So -- but with that said, Louise, thoughts? Louise Rodino-Klapac: Yes. Based on -- as I mentioned, so we're early on in this. And so we'll be analyzing this first cohort of data to look at the correlation of muscle concentration, splice correction, which we won't have for DM1 just now. And so we'll be analyzing all of that, working with our KOLs to inform our Phase III. So it's early for us to commit ourselves to a threshold in terms of what we think will be meaningful for the Phase III. Operator: Our next question comes from the line of Gil Blum with Needham & Company. Gil Blum: Hope things go well for you, Doug. It's always -- it's not great to hear that people in your family are having issues, especially with an indication like this. The one question that we have is just maybe a clarification as it relates to the LGMD program. Would you need to dose any patients with sirolimus prophylaxis before coming back to that? Or is the data from the DMD study sufficient there? Douglas Ingram: So the short answer is we need to have more conversations with the agency about that. There have been suggestions in telephone calls with the agency that they might want to see a patient dosed with prophylactically with sirolimus. But on the other hand, we'll have had a significant amount of prophylactic dosing with our DMD therapy, and it is exactly the same capsid, so it should be quite relevant. So we'll have to have more discussions with the agency if there is some benefit to, for instance, dosing a patient. This is an ultra-rare disease. So we're not dosing a lot of patients prophylactically as a predicate to a BLA. This is ultra, ultrarare disease. But if we are required to dose a patient, we certainly would do that. But Louise , if you have more color than that, let me know. Louise Rodino-Klapac: Yes. No, I would just add that they specifically wanted to see data from Cohort 8 first and subsequent to that. So we'll have that conversation once we have that data in hand. Operator: Our next question comes from Sami Corwin with William Blair. Samantha Corwin: And Doug, sending our best wishes to you and your family as well. Regarding the PMO guidance, I guess I was curious what your internal assumptions are for competition with some emerging exon skippers and how a lack of conversion to full approval could impact that guidance? And then regarding the ENDEAVOR trial, do you plan on sharing what enrollment in Cohort 8 has been completed? Douglas Ingram: Yes. So I'll save the second part of that question, and Louise can answer that. On the first one, when we think about competition, I think the only credible near midterm potential competition on the exon skippers is Dyne's exon 51 therapy. First of all, the transition from accelerated to traditional or if there was a lack thereof has no impact in a very real sense because remember, if Dyne is capable of getting an approval any time in the near term, it's going to be on the basis of an accelerated approval. So it will be a completely flat playing field with respect to that. And I think that in the event that they are able to get an accelerated approval and with respect to the PMO side of things, you would think that they might be able to. I think we'll have -- that will be real competition, and I think there'll be an interesting play in the marketplace. They'll have some features that they'll certainly be promoting on their therapy. We have a decade of data on ours to support our therapy. And it's extraordinarily well tolerated. Families absolutely fiercely are committed to these PMOs. So I think it will be real competition, and we'll be selling the benefits of our therapy and Dye will be selling the benefits of their therapy. I think that's the real one sort of midterm potential competitor, and it's only for one of our three PMOs, which is, of course, EXONDYS. Operator: [Operator Instructions] Our next question comes from David Hoang with Deutsche Bank. Unknown Analyst: This is [ Sean ] on for David. Our best wishes to you and your family. Just a quick question on the recent announcement of DMD being added to the federal recommended uniform screening panel. Can you give us a sense of how rapid individual states might be rolling out the recommendation in their newborn screening programs and how that will impact the demand for ELEVIDYS going forward? Douglas Ingram: Yes. A couple of thoughts on that. First, before I talk about the mechanics of it, understand that this is fantastic. We've been working towards this day and the patient community has been working for this day for a very long time. So it was a really significant moment to get DMD added to the newborn screening panel. And I also want to give an enormous amount of credit and kudos to the Secretary Kennedy himself, who really spearheaded this after consultation with specific folks from the patient community, understanding the significant value of having this out there, particularly so that at the earliest possible date, patients can benefit from existing therapies, including, for instance, our PMOs, EXONDYS, AMONDYS and VYONDYS, that was explicitly discussed with Secretary Kennedy. So I want to give a lot of kudos to HHS for their willingness to do that. On the timing of this, this is going to be a really significant opportunity, but it is not going to be a near-term opportunity. So don't envision that this is going to have some impact on our guidance this year for two reasons. One, it takes time. I probably can't tell you how much time per state my Head of Government Affairs, Diane, would do a much better job than I will have exactly that timing. But it takes some significant time to roll this out on a state-by-state basis. We already have a significant number of states that have newborn screening, but this will, of course, really expand it with it being on the federal RUSP. The second thing to know, remember, at least as it relates specifically to ELEVIDYS is that ELEVIDYS is for the treatment of boys four years and older. So to really see the benefit of this for the very young patient, we need to lower that age range. And we're working on that and intend to engage in the FDA and have some discussions about that. We think the data that supports going to a younger age is really compelling. We've got not only great expression. We've already proven that our therapy is efficacious. We proved it over and over again, which is really important, by the way. Let's be very clear, one of the things that is so heartening about our therapy is that we have so many clinical trials. And specifically, we have this very large placebo-controlled trial that showed data in one year and two year and three year, taking all that data and then look at the safety for the very young kids and looking at the expression you get with the very young kids. And we think there's a very compelling argument. But to really fully get the benefit of this, we're going to need to adapt that label and that itself will take some time and some discussions. So both of those issues are going to delay the opportunity, but the opportunity is coming. And it is a really big deal. And again, it's very easy to have to criticize. But in this situation, I just want to give enormous kudos to HHS. And I really want to give specific kudos to Secretary Kennedy for his willingness to lead in this area and to focus on trying to create a better life for young boys that have Duchenne muscular dystrophy. And it's important because as we say we say over and over and over again, to the point of almost being trite, time is muscle. And at any stage in this disease, if you can get in there and treat, you can save muscle that will otherwise be forever lost. And that's true of a 3-year-old versus a 4-year-old or a 2-year-old versus a 5-year-old, just as is true of a 9-year-old versus a 12-year-old or an 11-year-old versus a 14-year-old. So this is -- it's a big deal. Operator: Our next question comes from the line of Andy Chen with Wolfe Research. Brandon Frith: This is Brandon on for Andy. Sorry to hear the unfortunate news. One from us. On the Japan launch, are there any early signs such as start forms or other signals that should give us confidence in a positive launch within that region? Douglas Ingram: Yes. We really aren't in a position to provide that information. I think Roche is a perfect group to provide information. I mean I am very excited about the launch, but that really comes more from the basic knowledge that Japan has a very sophisticated health care system. It's a very large population, has a lot of patients that can benefit from this. And I think our partner, Roche, and their subsidiary, Chugai, I think, will do a brilliant job of serving the community in Japan. So I'm excited about it, but I can't give any more detail than that broad stroke. And I think Roche can probably do a much better job of that than I can. Operator: And this concludes our Q&A session, and I will pass it back to Mr. Ingram for closing comments. Douglas Ingram: All right. Well, thank you all very much for spending time with us today. I'm just going to end with the way I started. 2025, as we all will acknowledge, was a difficult year filled with a lot of unexpected obstacles that needed to be overcome. I'm proud of this team for having worked through that and stayed resilient in overcoming them. I'm also proud of us taking the decisions we took in 2025 that put us in a strong position. Everything from the way we worked with the community itself to the fact that we restructured our convertible debt to remove any overhang and we did a restructuring, which painful though it was, really allowed us to focus on the highest value programs, highest value to the patient community and to Sarepta, and I think we're entering 2026 in a really strong place. We're strong financially. We have going on $1 billion in cash and investments. We'll be growing that cash balance over time even as we fully invest in our programs and our commercial launch. We have four therapies that are bringing a better life to patients every single day, really very resilient PMOs are that people love as well as ELEVIDYS, which the evidence on ELEVIDYS and its benefits grows quarter-to- quarter to-quarter, and we're going to make sure that everybody that can benefit from that knows it, and I'm quite confident that's going to have a big impact first on the lives of those patients and then with the benefit on those patients to our investors. And then finally, we have this extraordinarily exciting siRNA pipeline that includes now Huntington's disease, where we've actually started our clinical trial in Huntington's disease, and we'll be dosing patients starting next year -- I mean, sorry, next quarter, not next year, folks. And we're dosing DM1, we're dosing FSHD, we're dosing SCA2. We're dosing IPF. We'll have a readout on IPF later this year as well. So we've got this extraordinarily impactful pipeline as well. And we've got a team that knows how to execute and make the most of this pipeline, bring a better life to these patients as well. And over time, I think that we'll get the benefit of all of this extraordinary work as well. So thank you very much for your time. Look forward to updating you across the course of this year as well. And with that, have a lovely evening. Operator: And this concludes our conference. Thank you for participating, and you may now disconnect.
Operator: Thank you for standing by, and welcome to the Smartgroup Corporation Limited SIQ FY 2025 Results Release. [Operator Instructions] I would now like to hand the conference over to Mr. Scott Wharton, CEO. Please go ahead. Scott Wharton: Great. Thank you, Betsy, and good morning, everyone, and thank you for joining us on the call today. My name is Scott Wharton, and I am the Managing Director and CEO of Smartgroup. Joining me on the call today is Jason King, our Chief Financial Officer. First, I would like to acknowledge the traditional owners of the land on which I'm speaking to you, the Gadigal people of the Eora Nation. As this event is broadcast nationally, I would also like to acknowledge the traditional custodians of the various lands on which you all have joined this call. I recognize their continuing connection to land, waters, and culture, and pay my respects to the Elders past and present. Today, I'll start by providing some of the key highlights of 2025 and a recap of Smartgroup's investment proposition. I'll then talk through the progress we have made across our strategic priorities. Jason will then take you through the full year performance in more detail. To conclude, I'll provide a brief outlook. Now let's turn to Slide 5 of the investor presentation. Smartgroup reported strong financial results with solid operating momentum in 2025. Revenue increased 8% versus 2024 to $329.3 million, and total expenses increased 5% to $182.7 million. The strong revenue growth was underpinned by higher novated leasing volumes, driven by demand-generating activities and new client wins. We also continued to invest to deliver our strategic priorities. We are enhancing our scalable and customer-centric platform that delivers great customer service and experience. EBITDA of $135.3 million was up 14% on pcp, and EBITDA margin was 41% for the year, an increase of 2 percentage points on pcp. NPATA increased by 11% to $80.2 million. Smartgroup also delivered return on equity of 30%, an improvement of 1.2 percentage points on pcp. Our strong financial performance and high level of cash generation have enabled the Board to declare a final fully franked dividend of $0.215 per share. In addition, the Board also declared a fully franked special dividend of $0.12 per share as a further return to shareholders. Together with the $0.195 per share interim ordinary dividend declared in August 2025, this brings fully franked dividends to $0.53 per share, representing 90% of 2025 NPATA. Turning to Slide 6. During the year, Smartgroup continued to retain and attract clients by investing in client relationships, market-leading service, and customer experience. We continued to grow salary packaging customer numbers, novated leases under management, and fleet-managed vehicles to record numbers. Our proposition generated solid novated leasing demand for both electric and internal combustion vehicles. In 2025, battery electric new vehicle orders grew 49% compared to 2024. While the EV share of our novated lease portfolio is growing, ICE vehicles remain an important and growing part of our business. In 2025, the number of ICE new vehicle orders increased 4% compared to 2024. Smartgroup remains actively focused on managing yield while also growing volumes. In 2025, leasing yield was stable compared to 2024. We're also making strong progress against our strategic priorities, and I will speak about this later. In short, we are well on track to achieve our ambition of delivering smarter benefits for a smarter tomorrow. In sustainability, we are proud to have been ranked in the 85th percentile worldwide in the S&P Global Sustainability Assessment. In addition, Smartgroup was again recognized as an inclusive employer by Diversity Council Australia. We've held this citation since 2019. This morning, we also released our 2025 Impact Report, a voluntary report, which contains additional information on our sustainability achievements and progress over the past year, as well as our new 2028 sustainability strategy. These outcomes recognize the importance of ESG and diversity and inclusion to Smartgroup and our customers. Moving to Slide 7. We believe our investment proposition remains highly compelling. Smartgroup's differentiated position underpins our ability to deliver strong growth and sustainable returns over the long term. Smartgroup is a leading employee services and fleet solutions provider with a client base that employs around 2.5 million Australians. Our existing client base represents a significant growth opportunity. In the last 12 months, we provided services to around 584,000 of those people and managed over 120,000 vehicles across novated leasing and fleet. We are the largest salary packaging provider in Australia, and this scale enables us to continue investing in superior customer experience and in the systems and protections that safeguard our customers. Over the last 2 years, we have consistently demonstrated improvements in operating efficiency. In 2025, the number of customers per operations FTE has improved 16% to 1,645. Smartgroup's operating platform continues to demonstrate strong capability in attracting, migrating, and retaining some of the country's largest and most complex clients. Our scalable technology foundations, sector expertise, and customer-centric service model enable seamless transitions for new clients. The group has significant recurring revenues and long-term contracts with clients in attractive and growing segments like government, health, education, and not-for-profit. Our offerings are even more relevant to our customers during tough economic times when people are looking for ways to make the most of their take-home salaries. We have a track record of revenue growth and a resilient and scalable earnings base with strong cash flow conversion. Smartgroup's investment proposition to shareholders is underpinned by our capital-light business model. This model means that we carry relatively low levels of vehicle residual value and credit risk. Combined with our strong balance sheet and high free cash flows, this means that we can pay fully franked dividends to shareholders at the same time as we are investing for growth. Finally, we have articulated a clear set of strategic priorities to drive profitable growth into the future. We are focused on our customers and our core businesses of salary packaging, novated leasing, and fleet, while investing in digital and technology, accelerating growth, and delivering scale efficiencies. Turning to Slide 8. Since we announced our strategic priorities in February 2024, we have delivered strong financial performance. Revenue has grown 31% through disciplined execution of our strategic priorities. This has included continued investment in digital to enhance our customer proposition and stronger account management and business development capabilities. Over the same period, EBITDA increased 35%, reflecting the increased scalability of our operating model. NPATA increased 27%. Turning to Slide 10. This slide recaps Smartgroup's strategic priorities and focus areas as communicated to the market in February of 2024. Smartgroup is committed to delivering smarter benefits for a smarter tomorrow through disciplined execution of its strategic priorities. Our strategy has 4 priorities. The first is centered around digital and technology investments that improve customer experience and driving operational efficiencies in our core salary packaging business. The second priority is focused on leading innovative leasing, where we have delivered tremendous growth since embarking on our strategy. The third is broadening our product range to meet our customers' growing needs. Finally, we are making targeted investments in our fleet business to strengthen its competitiveness and profitability, including enhancements to our product offering. Turning to Slide 11. This slide outlines our strategic road map. While our strategy focuses on the 4 strategic priorities, we have deliberately phased execution. The first phase focused on growth and demand generation to build our leadership position in novated leasing. We've also invested in our front-end digital assets to enhance customer experience and sustainably fuel growth into the future. The second phase, which commenced in 2025, is focused on building a scalable business platform. This phase includes investments in consolidating our brands, removing duplication of operations, modernizing our technology, and automating processes. The third phase focuses on innovation of propositions to meet evolving customer and client needs. We have made good progress. For example, we expanded our novated leasing network through partnerships, including BMW Financial Services and Qantas, and broadened our employee benefits proposition by adding IntelliHub, Count, and Finspo to the platform. Our fleet funding offering has also been expanded with Volkswagen Financial Services Australia. As a result of these 3 phases of focus, and as mentioned at our 2025 half year results, we anticipate EBITDA margin to be in the mid-40s during 2027. Beyond 2027, with sustained investment, particularly in automation and AI, we see opportunities to further elevate business performance. We will continue to develop our product offering to meet evolving customer needs and strengthen our value proposition. Turning to Slide 12. A key focus of Phase 1 of our road map is digital transformation, and I wanted to provide some examples. We have now delivered enhanced market-leading digital solutions, improved customer experience, and expanded our digital reach. As I mentioned in our full year results in 2024, we launched our enhanced car leasing portal, and we also delivered smart.com.au, our new customer digital home. These investments have made it easier for customers to engage with us on their salary packaging and novated leasing needs, how they want and when they want. In 2025, we have delivered our new digital salary packaging sign-up journey, marking a significant milestone in our platform modernization. This digital asset enhances customer onboarding by offering an improved experience that simplifies the sign-up process. Feedback has been positive from clients. We've also developed a new smart app, which is now in testing with customers and will be rolled out in 2026. Importantly, over the last year, we have improved our digital product and technology capabilities to ensure we continuously enhance our digital assets. These capabilities will ensure that our products remain market-leading and continue to meet customer needs into the future. Turning now to Slide 13, which outlines some of the work underway in Phase 2 of our strategic road map. A central objective of Phase 2 is reducing operational complexity. We've already reduced our brand footprint from 8 to 4, and early in 2024, we divested noncore businesses to sharpen our focus. This consolidation allows us to concentrate our marketing investment, better leverage our ongoing investment in product technology, and remove duplication across the organization. Operationally, we're also simplifying the way we serve customers. We've already reduced our contact centers, and we're now on a clear pathway toward a more unified and streamlined contact center operation. We've also made significant progress in enhancing our technology. When we began this journey, we were operating multiple legacy systems inherited through acquisitions, including duplicate product platforms. Today, we've delivered meaningful improvements, with 45% of our compute now running in the cloud. By 2028, we will reach 100% modernization of our technology infrastructure. This reduces operational risk, accelerates the delivery of new digital experiences, and enables future automation. In 2023, our automation activity was limited. In recent years, we have stepped up significantly, introducing AI-driven knowledge management, AI operative intelligence, and automation of key high-volume processes such as claims. We will continue to expand automation as we build out our highly scalable omnichannel operation. As a result, we are already seeing tangible efficiency improvements, including sustained gains in customers per operational FTE. As these initiatives come together, and consolidation, contact center rationalization, full technology modernization, and deeper automation, the efficiency and platform scalability benefits will continue to grow. The third phase of our strategic road map is about enhancing our propositions, expanding benefits, strengthening feature sets, and introducing new products into our operating platform that create even more value across our core markets. Moving to Slide 14, which highlights some examples of what we delivered against our strategic priorities in 2025. Our new digital customer home, smart.com.au, has attracted 3 million total users since launch at the end of 2024, educating and enabling our customers to easily find the information they need to understand our products and services. We also achieved efficiency improvements, including increasing the number of customers per operations FTE by 16% in 2025. In novated leasing, we delivered strong improvements, record customer numbers, as well as ongoing enhancements to our car leasing portal. Small- to medium-sized business clients continue to play an important role in Smartgroup's strategy, with over 1,500 SME clients. Last year, they constituted around 10% of our novated leasing orders. We remain committed to anticipating our customers' needs and forging partnerships to build a service offering that truly resonates with them. And in fleet, we onboarded Volkswagen Financial Services Australia as an external funding provider. We also expanded our fleet team to build capability and drive our next phase of growth. Moving to Slide 15. Smartgroup is well positioned and is unlocking value through scale, disciplined investment, and execution. As we continue to enhance the customer experience and expand our market reach, we are generating operating leverage that benefits clients, partners, and shareholders. This reflects the strength of our leading capital-light digital platform, which connects employers, employees, and partners at scale. These outcomes demonstrate that the delivery of the strategic priorities announced 2 years ago are now translating into sustained improvements in efficiency, scale, and financial performance. Our approach to value creation remains unchanged. Firstly, we are focused on winning additional clients to expand our total addressable market. This is now at around 2.5 million Australian workers. In 2025, we continued to grow our customer base to record numbers. For example, we were successful in winning Monash Health and Grampians Health in Victoria. We were also added to the Transport for New South Wales leasing panel, and we welcomed many new clients across all segments, while retaining all major contracts up for renewal in 2025. Since announcing our strategic priorities, we have grown our eligible employee customer base by over 300,000, which represents a 14% increase between 2023 and 2025. Secondly, we are focused on the organic opportunity to expand the uptake of our packaging and benefits offerings within our eligible customer base to leverage the great work of the operations teams that are already in place to support our clients. Since announcing our strategic priorities, active customer uptake has had a relative improvement of 9%. Our approach for driving uptake is working well and gives us a clear pathway to further organic growth. And finally, we are focused on expanding our products and services to better meet customer needs, as we have already outlined in our strategic priorities. This will increase customer lifetime value. We are making good progress, showing a relative improvement in the cross-sell of our products by 13% since announcing our strategic priorities. In combination, improvements in total eligible customer base, customer uptake, and product cross-sell have underpinned our growth over the past 2 years. We are making strong progress on each front, and these improvements will drive improved financial returns over the medium term. I'll now hand it over to Jason to talk through the key drivers of our financial performance in more detail. Jason King: Thank you, Scott, and good morning to everyone on the call. I'll start on Slide 17 to cover our financial performance in 2025. In 2025, we continued to deliver broad-based growth across product lines, customer segments, and vehicle segments. Our active number of salary packages increased 10% year-on-year to 491,000. Novated leases under management continued to grow, reaching 85,300 leases under management, an increase of 15% year-on-year. Our fleet business reached 35,200 managed vehicles, an increase of 9% year-on-year. Turning to Slide 18. Our novated leasing business continues to show strong growth. In 2025, new lease vehicle orders were up 13%, and total settlements, which include new, used, and refinanced vehicles, were up 7% year-on-year. The amount of pipeline unwind reduced in 2025 relative to 2024. The growth rate in new lease vehicle settlements in 2025 reflects this higher base. Smartgroup remains actively focused on managing yield. In 2025, leasing yield was stable compared to 2024. As we outlined in the first half results, we experienced a modest decline in yield in the first half associated with the increased PHEV volume. However, yield recovered in the second half as we maintained our focus on product attachment rates. Delivery time frames continued to improve in 2025 and on average, are now 35 days. Electric vehicles are becoming more accessible with new models available in the market in 2025. For ICE vehicles, we continue to experience some variation in availability across makes and models. However, we do not currently see vehicle supply as a constraint on our business. Moving to Slide 19. Demand for novated leasing continued to be strong across battery electric vehicles and ICE. Combustion engine vehicles remain an important part of our business, and in 2025, ICE new vehicle orders increased 4% compared to 2024. The federal government electric car discount policy for plug-in hybrid vehicles ended on the 31st of March last year. As a result, PHEV demand accelerated in the first quarter of 2025. Following the end of the discount policy for PHEVs and for this type of vehicle has reduced, but was offset by increased interest in battery electric vehicles. New orders for plug-ins declined 31% year-on-year, while new orders for battery electric vehicles grew 49% year-on-year. As legislated, the government has now commenced a review to assess the electric car discount policy's performance over its first 3 years. The review findings will help inform broader policy development on how to continue expanding electric vehicle choices for more Australians and bring transport emissions down. Smartgroup has been a key enabler of making EV ownership more accessible through novated leasing. Our market-leading offering, digital platforms, and dedicated education initiatives have helped thousands of working Australians understand and benefit from EV leasing, ensuring the government's policy delivers meaningful outcomes for employees and employers across the country. Turning to the P&L on Slide 20. NPATA for 2025 increased 11% compared to 2024 to $80.2 million off the back of sustained revenue growth and improved EBITDA margin. EBITDA grew 14% to $135.3 million, and EBITDA margin was 41%, an increase of 2 percentage points on 2024. EBITDA margin remains a key focus for management, as Scott mentioned earlier. We anticipate EBITDA margin to be in the mid-40s during 2027. However, 2026, in particular, is expected to be a significant year of technology investment and change delivery for the organization to achieve this. Revenue growth was driven by novated leasing and new client wins. In 2025, revenue grew 8% to $329.3 million. Similarly, net revenue grew by 9% to $318 million. Product costs reduced 19% year-on-year through a mix of improved supplier pricing and lower attachment rates. Total expenses increased 5% to $182.7 million. Staff costs increased 3%, reflecting a combination of increased wage costs with lower average headcount. These outcomes were achieved while significantly growing our customer volumes, with active salary packages growing 10% year-on-year. In 2025, Smartgroup serviced 1,645 customers per our operations FTE. Non-staff costs increased 12% and were largely driven by enhanced marketing, lead generation activities, and expenses relating to our technology investments. We remain focused on growth while operating efficiently and differentiating our offering to strengthen our competitive position. Depreciation and amortization expense increased 40% in 2025, mostly driven by capitalized IT development costs to deliver our strategic priorities. Slide 21 highlights our continued strong cash conversion at 122% of NPATA. This was influenced by favorable timing of working capital movements and tax payments, which are outlined in the appendix. Capitalized IT development costs were $12.6 million in 2025, in line with guidance. Our balance sheet on Slide 22 shows that we ended the year with a conservative net debt position of $38.1 million and 0.3x leverage. Since 2021, we have been piloting fleet funding products with selected clients utilizing our balance sheet capacity. This pilot has successfully assisted us to refine our product proposition for this market, and we have moved to providing a more complete offering with the integration of external fleet funding providers. We expect internal funding of this product will, therefore, be significantly lower in the coming years. The business is well positioned. Our low net debt and strong cash generation provides us the flexibility to invest for growth while delivering dividends to shareholders as per our stated policy, which I'll now turn to. As many of you would have seen before, Slide 23 articulates our capital allocation approach to ensure that we deliver long-term sustainable growth and maximize shareholder value. Our strategic priorities provide significant opportunities for Smartgroup's medium- and long-term growth. To ensure we make the most of these opportunities, we will continue to invest in core and digital technologies as well as customer experience improvement initiatives. These necessitate allocating sufficient capital to ensure we can execute well. Similarly, we will maintain flexibility to take advantage of attractive acquisitions, partnerships, and other organic and inorganic growth opportunities. It is our intention to pay fully franked dividends in line with our current policy of 60% to 70% of NPATA, and we will look to return excess capital to shareholders whenever appropriate. Other returns to shareholders may include special dividends or share buybacks. For 2026, we have allocated technology CapEx in the range of $11 million to $13 million, similar to 2025. This represents between 3% and 4% of 2025 revenue. We expect CapEx to remain at current levels in the short term as we deliver our strategic priorities before returning to a more normalized level. Consistent with this capital allocation approach and factors, including our solid returns and cash generation and our meaningful ongoing investments in growth in the business, the Board has declared a final fully franked dividend of $0.215 per share. In addition, the Board has also declared a fully franked special dividend of $0.12 per share. Together with the $0.195 per share interim ordinary dividend declared in August 2025, this brings fully franked dividends to $0.53 per share, representing 90% of 2025 NPATA and an increase of 9% compared to 2024. This special dividend shows Smartgroup's commitment to its capital allocation policy of returning capital to investors where prudent, while ensuring we continue to invest for growth. Finally, as evidence of our disciplined approach to capital management, you can see from this chart on the page, our continued delivery of strong returns on equity for shareholders, which in the last 12 months was 30% after tax. With that, I'll hand back to Scott. Scott Wharton: Great. Thank you, Jason. Moving to Slide 25 and in summary. In 2025, Smartgroup again delivered strong financial results and solid operating momentum through disciplined execution. We delivered record customer numbers across salary packaging, novated leasing, and fleet. These results reflect a business that is performing very well across all meaningful metrics. We will continue to remain focused on driving further growth and scalability through the delivery of our strategic priorities. Turning to Slide 26 and the outlook. We continue to see a supportive environment for further growth. Demand for our products and services is robust. In January, leasing orders and settlements increased compared to pcp. January yield also increased compared to pcp. Our distribution partnerships have received a positive response from clients and customers, validating our strategic direction and unlocking new channels for scalable expansion. As we have said before, 2026 will be a significant year of technology investment and change delivery. This will position the group to realize the scale benefits associated with our strategic priorities. As we have mentioned, we are targeting EBITDA margin to be in the mid-40s during 2027. With sustained investment, including automation and agentic capabilities, we see continued opportunities to further elevate business performance beyond 2027. Through continued strong execution of our strategic priorities, Smartgroup is well positioned for sustained profitable growth, enhancing value for our shareholders. A big thank you to Smartgroup's customers, partners, and, of course, our team. Thank you also to our investors for your ongoing support. I'll now hand back to Betsy for questions. Operator: [Operator Instructions] Your first question today comes from Tim Lawson with Macquarie. Tim Lawson: Just a couple of questions. The growth seems to be pretty strong, both across the salary packaging and novated. Can you just talk about the underlying operating metrics that you're getting there to drive that growth? It seems to be outperforming the market a little bit. And just maybe the conversion to novated would be good as well. Scott Wharton: Yes. No, sure. I agree with your observation, outperforming versus the market. I think let me take you back to Slide 15 from our deck that we went through today. And as we talked about before, as far as organic growth goes, the focus has been firstly growing our TAM, so total addressable market. We've made really good progress there over the past couple of years. Obviously, Tim, as you know, with onboarding clients like the South Australian government through to Monash Health and many, many others. And in fact, if you look over the past couple of years, we've been onboarding new eligible employees at record levels, which is great. It goes to the quality of our digital investments and the customer experience that we're offering in the market. The reputation is coming with that. Then to your question, it's really then down to how do we, with that TAM, which we always aim to keep growing, how do we increase the uptake within our TAM. And a number of areas of focus there. Firstly, through the more traditional means, working with clients to be out educating their employees. That's how we've traditionally done things. That's been enhanced now with much more sophisticated and targeted digital marketing and use of data to target in a personalized way, our marketing to customers. And then also, we've expanded, as we touched on in today's results and our half year update, our partnership network so that we can work with the likes of, say, BMW Financial Services or Qantas to be also out engaging our total addressable market, and again, educating them and drawing them into either salary packaging or novated leasing. And then if we look across then onto the right-hand side, we look at effectively the cross-sell improvement. Really, the number that has been, in addition to what I've already mentioned, are getting far more targeted in our current salary packaging client base, understanding the nature of our clients better, and presenting targeted and tailored offerings around novated leasing to those customers. And that, again, is why our partnerships have been very important and the strengthening of our partnerships because that's enabled us to offer quite often differentiated offers, both in terms of pricing and overall value proposition for specific novated leasing products to those customers to cross-sell to them out of salary packaging. Tim Lawson: That's very clear. Also, just in terms of your margin -- your medium-term margin commentary, can you just talk about what you're assuming there on government policy in terms of the EV FBT benefit for nongovernment, et cetera, workers? Scott Wharton: Yes. And obviously, as you're alluding to, the government was required under the electric car discount policy to do a review. And that review is underway at the moment. We don't know the outcomes of that review. As we look at the medium-term, suffice to say, there's a range that could be impacted by any significant changes to that policy, but we don't anticipate that happening. We'll just need to wait and see what happens from a government perspective. But that being said, I'd point us back to the fact that, and in fact, this slide, Slide 15, is relevant. It shows that we've been able to drive significant growth, and that's not just in EV. It's also been able to drive growth over the past 2 years in combustion engine vehicles. So from our perspective, Tim, to your question, irrespective of EV policy, obviously, the current policy is helpful for demand and will now continue. We've successfully been able to drive growth in combustion engine vehicles through novated leasing, which itself is a fantastic product. So in summary, obviously, there may be some slight swing depending on what, if anything, the government decides to do with the electric car discount policy off the back of this review. But as you would see in the media, even as recently as yesterday, a point that Minister Bowen made out in the media highlighted the success of the policy in driving EV transition in Australia. Tim Lawson: Okay. And just... Scott Wharton: Another point to add to that, Tim, actually, is also with respect to Smartgroup. It's important also to think about the nature of our customer base, which we've talked about before. Teachers, nurses, education, not-for-profit workers, these are people who've got to drive to work, right? And novated leasing is the best way to get into a car, and often for many of these workers, the only way they can get into a car. Tim Lawson: Yes. You're obviously spending, going through the platform transformation as well, but you call out, and there's obviously a number of productivity benefits you're already getting. So you referenced that mid-40s margin target, as you work through that platform spend. Are you seeing further opportunities? Obviously, getting some productivity benefits already, but are you seeing further opportunities to suggest that mid-40s is not enough -- is not high enough? Jason King: Tim, it's Jason. I think we're comfortable that we're on track for what we put out there as a target with the mid-40s. Scott went through the Phase 2 of the strategy road map, what that entails. There's a reasonable amount to be delivered there, but the progress to date has been very good, and that is what has driven the efficiency improvements that we've seen to date. There's more to do. But I think we're pretty comfortable with how we're tracking towards that medium-term goal of getting to mid-40s during 2027. Operator: The next question comes from Phil Chippindale with Ord Minnett. Phillip Chippindale: A couple of questions from me. Just in terms of performance so far for the year. Obviously, the PHEV expiry was 31st of March last year. You've said that January volumes were up. I'm just interested in a February comment. I know I'm not normally one to dwell on such short-termism, but I guess this is we're in the 2 months leading into the PHEV expiry in terms of cycling a tough comp. So I just wanted a comment on how Feb is trading so far. Scott Wharton: Yes. Thanks for the question, Phil. We won't comment on February. What I'd point to, obviously, is that commenting on January, the message we're giving is the year is off to a great start. And on the PHEV numbers, as you would have seen in the slides, not surprisingly, there was a shift in PHEV volumes. It remains a good area of business for us. But what we've seen is customers switch out into then either ICE or battery EV. And net-net, volumes remain very, very strong. And that thematic is continuing into the start of this year, which is great. Phillip Chippindale: Just touching on headcount. I think it was Jason earlier, you mentioned that 2026 is a significant year of IT and change investments in order to achieve your 2027 targets. Can you just give us a sense of what does that look like from a headcount perspective? CY '25 the FTE came down a little bit. But does some of this investment require some additional headcount in the shorter term? Jason King: So yes, you're right. If I look at the 2025 result, we did have modest headcount reduction. What we're doing through the efficiency gains and the technology investment is we're really looking to reinvest that capacity into the capability within the business in order to achieve the next phase, and that next phase being Phase 2 of the platform. So there's more to do, again, in terms of efficiency gains. But what I'd say to the direct question about headcount is we're a growing business. So as far as the efficiency gains, they're coming not from taking costs out of the business but actually growing customer volumes, and we've been able to support much higher customer volumes without having to increase the number of headcount in the last year. And that's really the track that we're on. So whilst we could be adjusting the cost profile of the business in response to external demand changes, at the moment, we're tracking very well as far as growth goes, and that's the way we're positioned. Scott Wharton: And just to add to that, Phil, I'll again draw you back to Slide 13 from our presentation. That's why we were keen to talk a bit more about the Phase 2 work we kicked off last year. We are starting to really see that scalability come through. And that metric at the bottom we provided there, which talks about customers per operations FTE, just brings that to life for you. And obviously, there's other efficiencies that are non-headcount related, but that's something we look at very closely across the business as far as driving scalability in the platform. That name of the game being to get more widgets through the system without increasing headcount, and we're tracking really well there. Phillip Chippindale: Last one for me, just on the contracts. I think, Scott, you earlier mentioned that you retained all the major contracts that were up for renewal in calendar '25. I guess, for the next 12 months, is there particularly significant number of renewals coming up? Just love a comment in terms of just how busy you'll be on that renewal side of things. Jason King: Yes, it's really interesting is that the last 2 years, there were a lot of contracts that came up, and we got through all those renewals. As we disclosed, for example, the ATO was obviously a real bellwether account that went to active RFP. The ATO oversees our policy in many ways as far as salary packaging. And after a very active competitive process, they reappointed us for all their staff for 5 years, which is wonderful. But yes, that thematic flowed through all our other renewals. As we look ahead over the next couple of years, it's a very typical churn. And by the nature of contracts, they are 3 to 5 years, and there's always contracts coming up, but there's nothing abnormal. If anything, by the volume, I think looking back, we've got over the hump of many of the renewals we needed to get through over the past couple of years. Operator: The next question comes from Hayden Nicholson with Bell Potter. Hayden Nicholson: Maybe just coming back to your medium-term EBITDA margin targets and headcounts. Like volumes aside, or just with that in mind, do you think you can -- maybe just can you outline the parameters? And I'm just thinking if we are cycling tougher comps, do you imagine you're going to be able to pull cost out of the business in line with that and some of the efficiencies? Just trying to work out how we build to mid-40s if we have a downturn in the volumes. Jason King: Yes, Hayden, it's Jason. So I think the way that we think about that when we consider strategic planning is that you can hypothesize about different scenarios in the future and what they mean to the business, but they all tend to lead you back to the same place, which is that we should continue to invest in the efficiency of the business because that's the way that we can continue to grow the customers efficiently and have improving operating margins, operating leverage in the business. And the same logic applies in the reverse. So that's why we're so focused on the delivery of the road map. If we are expanding our ability to operate efficiently, that applies to any scenario based on different levels of customer demand. Scott Wharton: And I mean, just to build on that, as we look forward, again, we've been building scalability in the platform, which goes to cost efficiency, but also ability to scale up and scale down capacity more easily as well. And ultimately, though, as we look forward, and obviously, there's a range of things that might evolve in the market over the next few years, but look at the spread of things that might happen, we're really excited about the revenue trajectory that we're on. And why is that? Again, the proof points that we've given today on the momentum that we have, ultimately, that's underpinned by us realizing the benefits of the technology investments that we're making, the customer proposition that we've been sharpening, and we've removed [ Health-e ] from the business and doubled down on our 3 key core propositions around salary packaging, novated leasing, and fleet, and are winning in those propositions. And coupled with much better account management capabilities, much better business development capabilities. I'll just point to, obviously, the revenue line is the one that is particularly important in the equation here for us. Cost is important, but revenue is even more important, and we're confident in the structure that we have and our ability to respond to any changes in the market. Hayden Nicholson: Okay. And then just a follow-up, if I may. Just thinking about growth as well. You're still spitting off good free cash and even just seen in the paper. Are you thinking about M&A at the moment maybe to plug some weakness that could come through, thinking about even just in the near term, March and April comps? Is that something that's on the table or would work? Or should we not think about that as an additional lever to pull? Jason King: I think as we've said pretty consistently, we've got a flexible balance sheet and ability to look at things opportunistically. But we don't feel compelled to do something to achieve the strategic goals that we're pursuing because we've got a lot of capability to achieve that organically. So if there is something that was compelling, we do have an ability to do inorganic. There's nothing active. I know there's always media about this sector, and we try not to get too distracted by that. But we try to stay true to the capital allocation approach, which is we're firstly allocating to the organic plan, but we reserve reasonably substantial capacity for other initiatives if they are compelling. I'd probably just also add, one of the things where we are focusing on the organic opportunity, and we spoke about is the fact that we now have an external fleet funding provider. So we're maintaining our capital-light approach more generally, including in fleet. And again, we're really excited about the opportunity to pursue fleet based on the capabilities and the funding options that we now have. Operator: The next question comes from Chenny Wang with MS. Chenny Wang: Sorry, I was jumping a bit on and off the call. So maybe I did miss this, but I want to come back on EBITDA margins and that midterm guide there. I thought I heard you say for 2026 that it was going to be a significant year of tech investment and change delivery to deliver that mid-40s in '27. Obviously, the January numbers to start this year have looked pretty good. And I guess your outlook is also positive. And with that positive top line momentum, generally, this would translate to margin expansion. But just trying to marry that, I guess, historical trajectory, if you like, with your comments on investments. How should we be thinking about EBITDA margins in 2026, obviously, before that mid-40s in '27? Jason King: Chenny, it's Jason. So yes, as I said before, obviously, increased revenue growth does contribute to the operating leverage. When we're talking about the mid-40s ambition for 2027, the reason we tie that back to the delivery items, and I'm referring here to Page 13, is because that there is the articulation of what we believe we need to achieve to underpin those outcomes. So whilst we are also focused on delivering a result for 2026, the majority of the benefit from the actual program, we feel won't necessarily come in 2026. There will be more organic opportunity for growth in '26, but delivery of these investments is what we're focused on when it comes to that target. Scott Wharton: And I think, Chenny, obviously, and just to build on that, again, some important work to be done this year. But I'd say, obviously, the main game is driving the expansion in 2027, but I'd say that things are pretty stable this year on the EBITDA margin front. But next year, definitively, we're very focused on the EBITDA margin expansion. Chenny Wang: And then maybe just one on the new lease vehicle orders. So look, I don't want to maybe read too much into this, but I do want to pick up on that half-on-half decline of 2%. I'm just curious what you saw there. Was that just seasonality? Yes, was that just seasonality? Or was there something else there? Yes, some color there would be great. Jason King: So yes, I guess you're referring to Slide 18, new car... Chenny Wang: Yes, that's right. Jason King: Yes, there was a modest dip in orders in the second half relative to what was effectively a very strong first half. But as you can see that it's up on pcp. Settlements were up quite strongly on pcp. And as we said in the outlook statement, January was also up on pcp. So we weren't overly concerned by that number. There's still good momentum in the business, I would say. Chenny Wang: Got it. And then maybe just one last one. Just in terms of your order mix. Obviously, I think historically, you've given some color on broad customer mixes, just in terms of that order mix more specifically. Anything you can share in terms of percentage from corporate versus health care, education, government? Jason King: I guess what I'd say is that it's actually pretty broad-based. So looking at the penetration numbers and back to the story about how we are focused on penetration of the customer base and the product uptake, we're achieving that across most sectors. We tend to be more weighted towards health, education. So that, therefore, does, when we're growing, contribute more to the growth. But when we look at the sectors, all the sectors are growing. Operator: This concludes our question-and-answer session. I'll hand the call back over to Mr. Wharton for any closing remarks. Scott Wharton: Great. Thank you, Betsy, and thank you, everyone, for your interest in Smartgroup, and look forward to speaking with many of you over the coming days. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.