Financial Data and Key Metrics Changes - Adjusted total revenues reached $43.5 million, an increase of 30% over the second quarter [5] - Net interest income increased over 8% compared to the linked quarter and was up 40% compared to the third quarter of 2023 [6] - Net interest margin on a fully tax-equivalent basis increased 8 basis points to 2.12% [6][14] - The company reported a net loss of $41.6 million, or $0.476 per diluted share, with an adjusted net loss of $12.5 million, or $1.43 per diluted share [13] Business Line Data and Key Metrics Changes - The gain on sale of SBA loans generated $10.6 million in revenue, rebounding strongly in the third quarter [10] - Commercial loan balances were up $115 million, or 3.2%, while total loan balances increased by $105 million, or 2.4% [8] - Total revenue from fintech initiatives was up 14% compared to the second quarter and up 130% from the third quarter of 2024 [12] Market Data and Key Metrics Changes - Total delinquencies were 35 basis points as of September 30, down from 62 basis points in the second quarter [7] - Non-performing loans totaled $53.3 million at the end of the third quarter, up $9.7 million from the linked quarter [19] - The allowance for credit losses increased to $59.9 million, up $13.4 million, or almost 30% from the second quarter [20] Company Strategy and Development Direction - The company executed strategic actions that had a near-term negative impact on earnings but strengthened its financial position for future growth [6] - The focus remains on enhancing net interest margin and achieving a 1% return on average assets [7] - The company is exploring fintech opportunities and leasing opportunities that yield higher returns compared to previous investments [75] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the credit outlook, indicating that delinquencies are trending down and the worst may be behind them [30][33] - The company anticipates loan balances to increase at an unannualized rate of 4% to 6% in the fourth quarter [23] - The macro environment remains uncertain, but customer activity is stabilizing, and lending teams are performing well [80] Other Important Information - The company completed the sale of $837 million of single-tenant lease financing loans, which had a net loss of $37.8 million [22] - The company has proactively secured SBA authorizations for loans in its pipeline prior to the government shutdown [10] Q&A Session Summary Question: What is the credit outlook? - Management indicated that delinquencies are decreasing, with only four delinquent accounts in the franchise finance portfolio [30] Question: How are you managing the government shutdown's impact? - The company secured authorizations for loans before the shutdown and can continue to fund loans where authorization exists [41] Question: Can you provide insights on the franchise finance portfolio? - An external audit showed no downgrades and two upgrades in the franchise finance portfolio, boosting confidence [46]

Financial Data and Key Metrics Changes - Total revenues for Q4 were $141.4 million, a 14% year-over-year increase, and $540.7 million for fiscal '25, a 13% increase over fiscal '24 [44] - Subscription revenues were $125 million in Q4, a 16% year-over-year increase, and $469.2 million for the full year, a 15% increase year-over-year [44] - Non-GAAP operating income for fiscal '25 was $96.2 million, or 18% of total revenues, compared to $61.8 million, or 13% of total revenues in fiscal '24 [47] - Non-GAAP net income for Q4 was $13.9 million, or $0.12 per diluted share, compared to $23.8 million, or $0.21 per diluted share in Q4 of fiscal '24 [48] Business Line Data and Key Metrics Changes - The Consumer Lending business saw momentum with over 20 new deals in Q4, including two large banks with $80 billion and $50 billion in assets [33] - Professional services revenue was $16.4 million in Q4, a 1% year-over-year increase, and $71.5 million for the full year, a 7% increase year-over-year [44] Market Data and Key Metrics Changes - Non-U.S. total revenues were $33.3 million in Q4, up 34% year-over-year, and $116.2 million for fiscal '25, up 30% year-over-year [45] - The company ended fiscal '25 with 549 customers contributing over $100,000 to subscription revenues, a 10% increase from fiscal '24 [51] Company Strategy and Development Direction - The company aims to evolve into the worldwide leader in AI banking, focusing on leveraging data, analytics, and AI to drive efficiency [6][11] - The strategy includes enhancing the product portfolio with AI-driven solutions and expanding into consumer, small business, and mortgage opportunities [29][34] - The company is focused on executing a disciplined approach to capital allocation and aligning product roadmaps with market needs [30] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic headwinds have eased, and customers are forecasting growth in loan portfolios and deposit positions [39] - The company expects improved gross bookings growth as the year progresses, leading to subscription revenue growth reacceleration in fiscal '27 [23][39] - Management acknowledged challenges in execution and sales momentum but expressed confidence in overcoming these issues [19][40] Other Important Information - The company closed the acquisition of Sandbox Banking for $52.5 million, which is expected to enhance integration capabilities and reduce implementation timelines [50] - The company introduced a new pricing framework, with approximately 15% of ACV on platform pricing as of January 31, 2025 [53] Q&A Session Summary Question: Customer willingness to invest in 2025 - Management indicated that customers are turning the corner on previous headwinds and are focusing on improving efficiency, which aligns with the company's value proposition [84] Question: Difference between ACV and revenue growth rates - Management explained that revenue growth is a lagging indicator, while ACV growth is a leading indicator, with various headwinds impacting revenue projections for fiscal '26 [85][86] Question: Go-to-market investments and sales capacity - Management confirmed that they are solidifying their internal team and making intentional moves to reaccelerate growth in sales leadership and marketing functions [95][96]