Core Viewpoint - The company reported strong financial performance in FY26Q1, with significant year-on-year growth in revenue and net profit, indicating robust demand and operational efficiency [3][6]. Group 1: Financial Performance - In FY26Q1, the company achieved revenue of $575 million, a year-on-year increase of 38.8% [3]. - The net profit attributable to shareholders was $31.28 million, reflecting a year-on-year growth of 174.4% [3]. - Non-GAAP net profit reached $42.05 million, up 42.0% year-on-year [3]. Group 2: Learning Services and Other - The offline small class courses remain the largest revenue contributor in the learning services segment, with stable profit margins [4]. - Enrollment in offline small class courses increased year-on-year, with a retention rate of approximately 80% [4]. - Deferred revenue at the end of FY26Q1 was $968 million, showing a year-on-year growth of 50.8%, indicating resilient demand [4]. Group 3: Content Solutions - Learning device revenue continued to grow in FY26Q1, although it saw a quarter-on-quarter decline due to seasonal factors [5]. - The average selling price of learning devices decreased, attributed to changes in product mix, with the launch of three new series [5]. - The overall weekly active rate for learning devices was around 80%, with an average daily usage time of 1 hour per device [5]. Group 4: Profitability Metrics - The company’s gross margin in FY26Q1 was 54.9%, an increase of 3.1 percentage points year-on-year [6]. - The selling expense ratio was 31.4%, up 1.9 percentage points, primarily due to increased online marketing investments [6]. - Non-GAAP operating profit margin was 4.4%, reflecting a year-on-year increase of 4.2 percentage points [6].

Financial Data and Key Metrics Changes - Revenue for the second quarter was $230 million, an 8% increase over the prior year, while constant currency revenue was approximately $233 million, representing growth of 10% [5][11] - Adjusted EBITDA increased to $93 million, up approximately 8% year over year, with an adjusted EBITDA margin of 40.3% for the quarter [5][11] - Adjusted EPS of $0.89 was up 7% year over year, driven by strong adjusted EBITDA growth and lower interest expense [5][12] - Operating cash flow for the first half of the year was approximately $86 million, with liquidity remaining strong at approximately $485 million as of June 30 [5][6] Business Line Data and Key Metrics Changes - Merchant Acquiring revenue grew 4% year over year to $47.3 million, driven by improved spread and sales volume growth [13] - Payment Services Puerto Rico revenue was $56.4 million, an increase of approximately 4% from the prior year, primarily driven by ATH Mobile and POS transaction growth [14] - Latin America Payments and Solutions revenue increased 15% year over year or 20% on a constant currency basis, benefiting from organic growth and acquisitions [15] - Business Solutions segment revenue increased approximately 4% to $64.5 million, primarily due to projects completed in the prior year [17] Market Data and Key Metrics Changes - The unemployment rate in Puerto Rico remains stable at about 5.2%, and passenger traffic in San Juan Airport was up approximately 11% year over year [6] - In Latin America, the company experienced strong performance in Brazil and Chile, with continued organic growth and contributions from recent acquisitions [15][16] Company Strategy and Development Direction - The company plans to continue focusing on technology modernization, repricing initiatives, and margin optimization to drive growth [28][30] - A refresh of the share repurchase program was approved, allowing the company to repurchase up to $150 million of its common stock through December 31, 2026 [9] - The company expects to return cash to shareholders through dividends and share repurchases while investing in long-term growth opportunities [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to convert opportunities in the active pipeline into wins over the next quarters [8] - The outlook for the second half of the year is better than initially thought, with expectations of continued strong performance in Latin America [34] - The company anticipates revenue growth of 6.6% to 7.6% for the full year, with adjusted EPS expected to grow between 4.87% from the previous year [21][25] Other Important Information - The company’s net debt position at quarter end was $673.6 million, with a weighted average interest rate of approximately 6.55% [20] - The effective tax rate for the quarter was 7.1%, with expectations of a gradual improvement in overall margin [12][24] Q&A Session Summary Question: Update on strategic initiatives and their progress - Management highlighted that the entire segment grew double digits, with significant focus on technology modernization and repricing initiatives [28][30] Question: Outlook for the second half and macroeconomic impacts - Management indicated that the second half outlook is better, with conservatism included regarding potential tariff impacts [34][36] Question: Insights on the active pipeline and business opportunities - Management confirmed a very active organic pipeline and expressed optimism about upcoming announcements [40][42] Question: Performance of ATH Mobile and its growth drivers - Management noted that ATH Mobile's growth of 17% is driven by increased usage and network effects in Puerto Rico [44] Question: Competitive advantages in Latin America - Management emphasized proprietary technology, industry expertise, and a strong local presence as key competitive advantages [63][67]

Financial Data and Key Metrics Changes - For Q3 fiscal 2025, consolidated net sales increased by 4% to $21.5 million compared to Q3 fiscal 2024 [6][15] - Gross margin reached 38.4%, an increase from 38.2% year over year, reflecting a more profitable sales mix [16] - Net income for Q3 fiscal 2025 was $122,000 or $0.01 per diluted share, down from $977,000 or $0.10 per diluted share in Q3 fiscal 2024 [16][17] - Non-GAAP adjusted net income was $228,000 or $0.02 per diluted share compared to $1.1 million or $0.11 per diluted share in the prior year [17] Business Line Data and Key Metrics Changes - Xerus Industrial's net sales increased by 7.1%, while ZERUST Oil and Gas net sales decreased by 5.3%, and Natur Tec net sales declined by 1.2% [6][11] - Natur Tec sales were $5.8 million, representing a 1.2% year-over-year decline but a 16.5% sequential increase from Q2 fiscal 2025 [12] - ZERUST Oil and Gas sales were $1.3 million compared to $1.4 million in the same period last year, with a trailing twelve-month sales increase of 15.4% [10][11] Market Data and Key Metrics Changes - Joint venture sales decreased by 12.9% year over year to $2.3 million, attributed to high energy prices and regional economic pressures in Europe [7] - NTSC China net sales increased by 27.4% to $4.5 million, marking the second highest quarterly revenue since transitioning to a wholly owned subsidiary [8][9] Company Strategy and Development Direction - The company is focused on supporting existing customers, expanding global relationships, and scaling in high-growth markets [5] - Continued investments in the oil and gas business are part of the long-term growth strategy, despite higher operating expenses [5][11] - The company is optimistic about the potential recovery in European markets due to government stimulus packages [7] Management's Comments on Operating Environment and Future Outlook - Management expects improvements in profitability in Q4 fiscal 2025 and continued progress in fiscal 2026 [6] - The company remains committed to long-term growth opportunities and believes that strategic priorities will drive sustainable growth and profitability [19] Other Important Information - As of May 31, 2025, working capital was $21.7 million, including $6.8 million in cash [18] - The Board of Directors declared a quarterly cash dividend of $0.01 per common share [19] Q&A Session Summary Question: Comments on improved quarter and operational profits - Management acknowledged significant improvement in operational profits from Q2 to Q3, with nearly all business units showing progress [22][23] Question: Cost comparison of new technology in oil and gas - Management confirmed that the new technology is cheaper on the front end compared to traditional methods, with easier installation and better long-term protection [24][28] Question: Incremental spending on sales for oil and gas - The company projected an additional $1.3 million in personnel costs for oil and gas over the past twelve months, translating to about $3.4 million in quarterly expenses [32] Question: Profitability of NTSC China - Management confirmed that NTSC China has been profitable for some time, with significant revenue growth observed [36] Question: Developments in compostable packaging - The company is working on improving the water vapor transmission rate of compostable packaging, with potential applications in food packaging expected to generate revenue in the next two years [41][42]

Group 1: Investor Relations Activities - The company held an earnings briefing on May 16, 2025, from 15:00 to 17:00 at the Shanghai Securities News Roadshow Center [3] - Participants included investors engaging in an online exchange, with key company representatives present [3] Group 2: Financial Performance and Plans - The company plans to enhance profits through increased revenue from traditional and specialized textile testing, alongside cost reduction measures [5] - As of the end of 2024, accounts receivable amounted to 78.9468 million [5] Group 3: Cash Flow and Acquisition Plans - The company reported strong operating cash flow and sufficient monetary funds for future operations [5] - Any potential mergers or acquisitions will comply with the relevant regulations and disclosure obligations [5] Group 4: Clientele and Market Position - The company operates in the quality inspection service industry, holding certifications such as CNAS, CAL, and CMA [5] - Its main business includes testing and consulting for textiles, clothing, protective gear, and toys, with a strong influence in functional testing of knitted products and fabrics [5] Group 5: Market Value Management - The company has implemented a market value management system to enhance investor returns and value [7] - A total cash dividend of 33.21 million was distributed during the reporting period [8] - The company conducted multiple investor engagement activities to ensure transparency and understanding of its operations [8]