Financial Data and Key Metrics Changes - Net sales for Q4 2025 increased approximately 10.5% to $1.143 billion from $1.034 billion in Q4 2024, driven by a 9.7% increase in organic sales and a 0.8% contribution from acquisitions [12][15] - Gross profit increased 10.2% to $276.6 million, with gross profit margins decreasing approximately 8 basis points to 24.2% [15] - Adjusted EBITDA for Q4 2025 was $80.3 million, compared to $68.2 million for the prior year [17] - Adjusted net income was $29.9 million or $0.68 per diluted share for Q4 2025, compared to $23.9 million or $0.55 per diluted share for Q4 2024 [17] Business Line Data and Key Metrics Changes - Organic specialty sales grew 6.4% year-over-year, driven by unique placement growth of 4.2% and reported specialty case growth of 3.3% [7] - Excluding the Texas Produce Processing and Packaging Program, specialty case growth was 5.4% compared to the prior year [8] - Pounds in Center of the Plate were approximately 2.4% lower than the prior year, but excluding the Texas Commodity Poultry Program attrition, growth was 7.5% higher [8] Market Data and Key Metrics Changes - Net inflation was 8.3% in Q4 2025, with 3.4% inflation in the specialty category and 16.1% in the center of plate category [13] - Excluding the impact of the Commodity Poultry Program attrition, net inflation in center of the plate was 9.5% [13] Company Strategy and Development Direction - The company aims to continue growing market share and expanding its customer base, focusing on upscale casual to higher-end dining [5][29] - Investments in distribution center capacity expansion and facility consolidation are ongoing, with a focus on operational efficiency and talent acquisition [10][11] - The company is cautiously optimistic about overcoming challenges such as inflation and tariff noise, leveraging a diversified portfolio of suppliers [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance of January 2026 despite challenges from winter weather, indicating a strong recovery in February [21] - The company anticipates revenue growth of 6%-8% for 2026, with a focus on maintaining operating expense leverage [37] - Management remains optimistic about the M&A environment, looking for strategic opportunities while maintaining a strong balance sheet [51][52] Other Important Information - The company achieved over $4 billion in revenue for the first time in its history, with a full-year organic revenue growth of 9.1% [10] - Total liquidity at the end of Q4 2025 was $280.5 million, with net debt to adjusted EBITDA at approximately 2.1 times [18] Q&A Session Summary Question: How have year-to-date sales tracked versus expectations given the winter weather? - Management reported that January was strong, and the storm only temporarily impacted the first week of February, with a strong recovery in the second week [21] Question: Can you discuss the drivers of operating expense leverage? - Management indicated that gross profit margins are expected to remain flat, focusing on growing gross profit dollars higher than adjusted operating expenses [23] Question: What are the biggest challenges or uncertainties for 2026? - Management highlighted inflation, tariff noise, and the need for continued growth as key challenges, but expressed cautious optimism due to a diversified customer base [29] Question: What are the capital allocation priorities for 2026? - Management aims to keep dry powder for potential acquisitions while also returning cash to shareholders opportunistically [31] Question: Any notable regional performance variances? - Management reported strong performance across key markets, including California, Texas, and Florida, with ongoing investments in facilities and sales force [41][42] Question: How is the company leveraging AI for dynamic pricing and customer behavior analysis? - Management stated that AI is ingrained in operations, continuously improving insights into customer behavior and operational efficiencies [49] Question: What is the outlook for the M&A environment? - Management remains cautious but optimistic about finding strategic M&A opportunities that align with the company's growth objectives [51][52]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported record revenue of $3.5 billion, a year-over-year increase of 7.9%, with 3.5% being organic growth [6][19] - Full-year 2025 revenue reached a record $13.2 billion, growing 12.5%, with 3.9% organic growth [7][18] - Adjusted EBITDA for Q4 was $255 million, exceeding guidance, while full-year Adjusted EBITDA was $881 million, an 8% increase [6][19] - Adjusted Diluted Earnings Per Share for the full year was $2.51, with an expected increase of 20% for 2026 [18][21] Business Line Data and Key Metrics Changes - New business wins totaled $1.1 billion in 2025, with significant contracts in life sciences, aerospace, and defense sectors [7][24] - Incremental new business revenue of $774 million is already secured for 2026, representing over 20% growth compared to the previous year [7][26] - The company is focusing on high-growth verticals such as life sciences, aerospace, and technology, with a robust sales pipeline of $2.3 billion [24][26] Market Data and Key Metrics Changes - The company noted strong performance across all regions, with organic revenue growth highlighting the resilience of its contractual business model [19] - The North American market is identified as a key growth lever, with a total addressable market of $250 billion [16][73] - The company is experiencing increased demand in the U.S. market, particularly in strategic verticals [16][73] Company Strategy and Development Direction - The company aims to accelerate organic growth and expand margins through leadership changes and operational improvements [9][17] - A focus on automation, robotics, and AI is central to the company's strategy, with plans to deploy nearly 20,000 robots by the end of 2026 [11][27] - The integration of Wincanton is expected to deliver $60 million in cost synergies by the end of 2026, enhancing operational efficiency [21][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic macro environment, emphasizing the value proposition of contract logistics [96] - The company anticipates a solid foundation for growth in 2026, with a focus on high-margin verticals and improved customer engagement [16][75] - Management highlighted the importance of leveraging AI and automation to drive productivity and cost efficiency [11][84] Other Important Information - The company completed a European bond offering of EUR 500 million to refinance upcoming maturities, strengthening its balance sheet [20] - The company is committed to maintaining disciplined capital expenditure and working capital management to support long-term growth [20] Q&A Session Summary Question: Can you speak to your overall philosophy on ensuring GXO's value is recognized by customers? - Management emphasized the importance of client-aligned solutions to deliver value and pricing power in strategic verticals [30][31] Question: Can you walk through how we should think about the cadence through 2026? - Management indicated that EBITDA phasing reflects project timing, with high visibility due to new business wins [32][33] Question: What does the second half run rate look like as we exit 2026 into 2027? - Management noted a strong pipeline and expects benefits from new business wins to accelerate in the fourth quarter and into 2027 [39][40] Question: What are your macro assumptions baked into the guidance range? - Management is assuming flat volumes in operations for 2026, reflecting a conservative view of the macroeconomic situation [48][49] Question: What are the key items that could impact the high and low ends of your guidance? - Management highlighted the speed of new business implementation and productivity improvements as key factors influencing guidance [53][56]

Kornit Digital (NasdaqGS:KRNT) Q4 2025 Earnings call February 11, 2026 08:30 AM ET Company ParticipantsAndrew Backman - Chief Capital Markets OfficerAssaf Zipori - CFOErik Woodring - Managing Director of Equity ResearchRonen Samuel - CEOTroy Jensen - Managing DirectorConference Call ParticipantsBrian Drab - Partner and Equity Research Analyst of Industrial TechnologyChris Moore - Senior AnalystGreg Palm - Senior Research AnalystJames Ricchiuti - Senior AnalystTavy Rosner - Vice President and Equity Research ...

Financial Data and Key Metrics Changes - Q4 revenues reached $58.9 million, with adjusted EBITDA of $5.5 million, both at the upper end of guidance [6][15] - For the full year 2025, total revenue was $208.2 million, up 2% year-over-year, driven by the expansion of the AIC program [15][16] - Adjusted EBITDA for the full year was $1.5 million compared to $0.3 million in the previous year, indicating a positive trend [17] - Non-GAAP gross margin for Q4 was 50.7%, down from 55.1% in Q4 2024, while for the full year it was 47.2%, down from 48.6% [16][17] Business Line Data and Key Metrics Changes - AIC revenue grew 104% year-over-year, contributing $15.2 million in revenues for the year [15][16] - The company ended the year with approximately $25 million in ARR from the AIC program, supported by multi-year customer commitments [7][15] - Impressions grew at a strong double-digit rate in Q4, with a total of 243 million impressions for the full year, reflecting an 11% growth [5][6] Market Data and Key Metrics Changes - Over 40% of new system deals in 2025 came from net new customers, many of whom were traditional screen printers adopting digital production for the first time [7][8] - The U.S. market showed significant adoption of the Atlas MAX platform among midsize screen printers, indicating a shift towards digital production [8][9] - The footwear market is identified as a significant growth opportunity, with expectations of capturing 2 billion impressions [92][93] Company Strategy and Development Direction - The company aims to transition towards a more recurring ARR model, which is expected to enhance revenue visibility and durability [4][7] - Focus remains on penetrating the screen market and expanding the AIC program while delivering on innovation to support growth beyond 2026 [12][14] - The company plans to introduce new technologies and capabilities in 2026 to expand applications and drive future growth [12][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with a growing pipeline of opportunities and better visibility, expecting low single-digit revenue growth [12][19] - The transition to digital production is seen as a necessity in the apparel industry, driven by changing consumer demands and sustainability concerns [58] - Management highlighted the importance of customer partnerships and the need for continuous innovation to maintain competitive advantage [84] Other Important Information - The company repurchased $27 million in shares under its share purchase program, reflecting a commitment to returning value to shareholders [18] - The company is preparing for a significant event in April 2026, where new technologies and innovations will be unveiled [14][98] Q&A Session Summary Question: Can you provide more color on peak season performance and Apollo? - Management noted strong double-digit impression growth during peak season, with Apollo systems achieving over 90% uptime and high customer satisfaction [24][25] Question: What were the major accomplishments in 2025? - Key achievements included returning to growth, significant expansion of the AIC program, and positive cash flow generation [27][30] Question: How should we think about system placements in 2026? - The company expects to deliver more systems and capacity, indicating strong future revenue potential from ink and services [32] Question: Can you discuss the significance of the Amazon upgrade order? - Management confirmed a strategic relationship with a global customer, with upgrades expected to take place over several quarters [41] Question: What is the outlook for the direct-to-fabric market? - Management acknowledged challenges in 2025 but expressed confidence in a stronger pipeline and innovative solutions for the footwear market [69][70]

Financial Data and Key Metrics Changes - Adjusted after-tax income per diluted share was $1.96, a 51% increase year-over-year [6] - Underwriting income reached $670 million, an increase of 48% year-over-year [6] - For the full year 2025, adjusted after-tax income per diluted share was $7.09, a 43% increase year-over-year [7] - Total adjusted after-tax income for the year was $4 billion, a 24% increase year-over-year [7] - The full year 2025 combined ratio was 90.1%, an improvement of 170 basis points from 2024 [46] Business Line Data and Key Metrics Changes - Global commercial net premiums written grew 3% year-over-year, totaling $17.4 billion [7] - North America Commercial grew net premiums written by 4%, with Retail Property contracting by 8% [8] - International Commercial net premiums written increased by 3%, primarily driven by Property and Global Specialty [8] - Global Personal net premiums written contracted by 3% due to higher ceded premiums under a reinsurance treaty [8] - New business in Global Commercial grew 9% year-over-year, with International new business up 10% [9] Market Data and Key Metrics Changes - North America casualty lines pricing remained favorable, with increases in the mid-teens for wholesale and excess casualty [10] - Retail property pricing was down 10%, and excess and surplus lines pricing was down 13% for the year [10] - International property pricing was up 3%, while energy pricing was down 10% due to abundant capacity [11] - Overall pricing in North America commercial renewal increased by 6%, excluding property [43] Company Strategy and Development Direction - AIG is focused on maintaining disciplined underwriting and capital management while pursuing growth through strategic transactions [12][18] - The company aims to achieve a sub-30% expense ratio by 2027, with a current expense ratio of 31.1% [9][46] - AIG is leveraging GenAI capabilities to enhance underwriting and claims processes, with plans for broader deployment in 2026 [26][30] - The company is positioned for growth through organic initiatives, strategic partnerships, and innovative capital structures [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in AIG's financial strength and liquidity to execute strategic objectives [13] - The company anticipates low- to mid-teens net premiums written growth in General Insurance for 2026 [31] - Management highlighted the importance of maintaining underwriting discipline amid competitive market conditions [10][43] - The leadership transition is expected to support AIG's strategic goals and financial guidance [32][33] Other Important Information - AIG returned $6.8 billion in capital to shareholders, including $5.8 billion in share repurchases and $1 billion in dividends [12] - The company achieved a 12.5% increase in quarterly dividends, marking the third consecutive year of significant dividend growth [12] - AIG's investment strategy has shifted towards higher-yielding assets, resulting in a net investment income increase of 8% year-over-year [11][47] Q&A Session Summary Question: Discussion on expense ratio expectations - Management indicated that the expense ratio is expected to be lower in 2026 compared to 2025, with a focus on managing corporate expenses [54][56] Question: Clarification on net premium written growth sources - Management noted that growth comes from various initiatives, including reinsurance benefits and organic growth, but did not provide specific breakdowns [58][60] Question: Additional details on casualty line margins - Management explained that additional margins in casualty lines are a result of conservative loss cost trend assumptions and macro uncertainties [66][68] Question: Breakdown of interest and dividends in investment portfolio - Management highlighted a significant transformation in the investment portfolio, with a focus on reinvesting in higher yields [70]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $4.93 for the year, consistent with expectations, and EBITDA of $635 million, representing an 11.7% margin [10][15] - Free cash flow improved by 71% to $325 million, achieving a cash conversion rate of 147% [15] - Total net sales for Q4 were $1.3 billion, a 6% year-over-year increase, while full-year net sales grew to $5.4 billion [12][13] Business Line Data and Key Metrics Changes - Environmental Solutions segment sales reached $428 million in Q4, a 14.1% year-over-year growth, with full-year sales increasing by 12.7% [16] - Materials Processing (MP) segment sales were $428 million in Q4, down 2.5% year-over-year, but grew by 2.8% on a like-for-like basis when excluding divested businesses [17] - Aerials segment secured nearly $1 billion in new orders in Q4, up 46% from the prior year, with a positive margin expansion trend [11][18] Market Data and Key Metrics Changes - The company noted strong demand in the Utilities market, with forecasts indicating 8%-15% annual CapEx growth through 2030 [9] - The construction sector is supported by government funding, with a growing pipeline of megaprojects expected to provide tailwinds through at least 2030 [9] - The company has a significant addressable market, collectively spending $200 billion per year on capital equipment across municipalities in the U.S. [9] Company Strategy and Development Direction - The merger with REV Group is seen as a defining milestone, creating a leading specialty equipment manufacturer with a strong manufacturing footprint and technology capabilities [5][6] - The company aims to achieve $75 million in run-rate synergies within two years from the merger, with $37.5 million expected within the next 12 months [7] - A strategic review of the Aerials business is ongoing, with strong inbound interest from potential buyers [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges and highlighted positive momentum across most segments for 2026 [10][20] - The outlook for 2026 includes expected sales growth of approximately 5% on a pro forma basis, with pro forma EBITDA anticipated to grow by about $100 million [20][21] - The effective tax rate is expected to rise to 21% due to higher U.S. dollar income, with EPS guidance for 2026 set between $4.50 and $5 [21] Other Important Information - The company plans to invest over $118 million in capital expenditures to fuel organic growth, focusing on automation and efficiency improvements [24] - The merger has a modest 3% diluted effect on EPS in 2026 due to an increased number of shares outstanding post-merger [21] Q&A Session Summary Question: What is the pricing outlook for the MP segment? - Management indicated a progressive increase in margins driven by pricing, expecting this trend to continue into 2026 [29] Question: How will tariffs impact the Aerials segment? - Management expects flat revenue and margins in 2026 due to ongoing tariff impacts, with a more favorable pricing-cost dynamic anticipated in the second half of the year [31] Question: What is the plan for the REV integration? - The focus is on maintaining operational momentum and throughput, with a strong backlog in the specialty vehicle segment [40] Question: How is the Environmental Solutions segment performing? - The segment is expected to see continued growth, particularly in Utilities, with a strong backlog and improved margins anticipated [50][51] Question: What is the expected capacity increase in Utilities? - The company plans to expand capacity by 20%-30% over the next two years in the Utilities business to meet rising demand [88]

Financial Data and Key Metrics Changes - In 2025, Gross Merchandise Volume (GMV) increased by 29%, reaching $378 billion, while revenue grew by 30% to $11.5 billion, accelerating from 2024's growth of 26% [9][38] - Q4 marked the first quarter with revenue exceeding $3 billion, surpassing total revenue for the entire year of 2020 [10] - Free cash flow for 2025 exceeded $2 billion, achieving a free cash flow margin of 17% [45][46] Business Line Data and Key Metrics Changes - Revenue from Merchant Solutions grew by 35%, driven by strong GMV and increased penetration of Shopify Payments, with $84 billion of GMV processed on Shopify Payments in Q4 [39] - Subscription Solutions revenue increased by 17%, with Monthly Recurring Revenue (MRR) growing by 15% year-over-year [40] - Offline channel revenue grew by 27% to $748 million, while B2B GMV surged by 84% in Q4 and 96% for the year [11][12] Market Data and Key Metrics Changes - North America saw a revenue increase of 28%, now powering over 14% of the U.S. e-commerce market [10] - International revenue grew by 36% year-over-year, with nearly half of the merchant base located outside North America [11] - European merchants experienced a 45% increase in Q4 GMV, indicating strong growth in that region [37] Company Strategy and Development Direction - The company aims to leverage AI to enhance commerce experiences, focusing on creating a new normal in the AI shopping era [5][6] - The Universal Commerce Protocol (UCP) was co-developed with Google to standardize AI shopping experiences, allowing merchants to sell on major AI platforms [7][19] - The strategy includes expanding global reach, with Shopify Payments now available in 60 new countries and the introduction of cryptocurrency options [25] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges faced by merchants in 2025, including tariffs and geopolitical changes, and emphasized the company's role in helping them adapt [32] - The outlook for Q1 2026 anticipates revenue growth in the low 30s year-over-year, driven by robust growth in payments and continued international expansion [47] - Management expressed confidence in the long-term value of the business, supported by a strong balance sheet and a share repurchase program of up to $2 billion [46] Other Important Information - The company reported a gross profit growth of 25% in Q4, with operating expenses improving to 29% of revenue [41][42] - The company has achieved 10 consecutive quarters of double-digit free cash flow margin, reflecting strong operational efficiency [46] Q&A Session Summary Question: Changes in Shopify's ability to monetize transactions through AI surfaces - Management clarified that transactions through AI surfaces will still utilize Shopify's checkout, ensuring consistent monetization for merchants [51][52] Question: Key milestones for agentic commerce adoption - Management noted that orders from AI searches have increased by 15x since January 2025, indicating early adoption and the potential for significant growth [59][60] Question: Economics and competitive dynamics of agentic commerce - Management reiterated that the economics for merchants remain the same regardless of the sales surface, emphasizing the importance of maintaining a reliable backend for transactions [64][66]

Financial Data and Key Metrics Changes - T-Mobile is growing four times faster in service revenue than competitors and twice as quickly on EBITDA, with over $20 billion returned to shareholders [8][9] - Free cash flow generation remains strong, serving as an industry benchmark [8] Business Line Data and Key Metrics Changes - T-Mobile has added over 1 million new prepaid relationships annually, with an ARPA growth of 13% since 2020 [9][10] - The company has successfully transitioned to a 5G standalone core, providing a significant lead over competitors [14][15] Market Data and Key Metrics Changes - T-Mobile's median download speeds are twice as high as the nearest competitor, with a significant lead in network quality as recognized by J.D. Power [17][18] - The company has gained share in markets where competitors have built fiber, indicating strong performance in network seeker demographics [45] Company Strategy and Development Direction - T-Mobile aims to maintain its differentiation by providing the best network, best value, and best customer experience, which is seen as a key driver for growth opportunities [12][40] - The company is focused on expanding its broadband business, targeting 15 million customers by 2030, with significant growth potential in small markets and rural areas [43][55] Management's Comments on Operating Environment and Future Outlook - Management expresses confidence in T-Mobile's growth trajectory, emphasizing the importance of widening differentiation to unlock unparalleled growth opportunities [40][49] - The company is committed to leveraging AI and digital technologies to enhance customer experience and operational efficiency [30][32] Other Important Information - T-Mobile has introduced Live Translate, a real-time voice translation service built into its network, showcasing its commitment to innovation [34][36] - The company is exploring new growth areas such as advertising and financial services, indicating a strategic expansion beyond traditional telecommunications [56][57] Q&A Session Summary Question: What is T-Mobile's strategy for maintaining competitive advantage? - Management highlighted the importance of no trade-offs between network quality, value, and customer experience as a core strategy [12][22] Question: How does T-Mobile plan to grow its broadband business? - The company aims for 15 million broadband customers by 2030, leveraging its ultra-capacity network and focusing on incremental growth [43][55] Question: What role does AI play in T-Mobile's future? - AI is seen as a critical component for personalizing customer experience and improving operational efficiency, with ongoing investments in AI technologies [30][32]

Financial Data and Key Metrics Changes - GAAP net income for Q4 2025 was $7 million or $0.08 per share, while full-year net income was $144 million or $1.72 per share [10] - GAAP book value at the end of Q4 was $19.70 per share, with an economic return on GAAP book value of -0.9% for Q4 and +7.4% for the full year [11] - Earnings available for distribution (EAD) for Q4 was $45 million or $0.53 per share, and for the full year, it was $141 million or $1.68 per share [11] Business Line Data and Key Metrics Changes - The investment portfolio segment reported economic net interest income of $65 million for Q4, with a yield on average interest-earning assets of 5.9% and a net interest spread of 1.4% [12] - HomeXpress funded $1 billion in production during Q4 with a gain-on-sale premium of 358 basis points, and its EBITDA was $11 million for the quarter [13] Market Data and Key Metrics Changes - The company ended the year with $528 million in total cash and unencumbered assets, down from $752 million at the end of Q3 [14] - Agency swap OAS tightened by approximately 22 basis points in Q4, while generic non-QM AAAs firmed by 5 basis points [20] Company Strategy and Development Direction - The company aims to build a hybrid REIT focused on diversification, liquidity, and fee-based income, with a clear plan to grow Agency RMBS and acquire MSRs [5][9] - The acquisition of HomeXpress is expected to enhance capabilities and reach, contributing to a diversified residential platform [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, focusing on unlocking capital and redeploying into earnings-accretive investments [24] - The company anticipates strong demand for non-QM loans and related securitized products, projecting significant growth in the market [25] Other Important Information - Compensation, general, and administrative expenses increased by $22 million year-over-year due to staffing costs related to acquisitions [16] - The company generated over $600 million of capital through portfolio and capital markets activity, supporting its portfolio realignment [18] Q&A Session Summary Question: Update on HomeXpress volume and gain on sale - Management noted typical seasonal reduction in volume but expects a strong first quarter compared to last year, with good gain on sale premiums [32][33] Question: Context for dividend increase - The company balanced dividend size with the need to retain capital for growth, ensuring sufficient EAD coverage [40][41] Question: Originating second liens and non-QM volume outlook - Currently not originating second mortgages but sees significant growth potential in non-QM loans, projecting a 20%-25% market growth in 2026 [46][48] Question: Change in book value and securitized debt - The decline in book value is attributed to faster increases in the value of securitized debt compared to loan values, but this does not affect economic risk [49][50] Question: Credit enhancement levels in securitization trusts - Management does not expect a material decline in credit enhancement levels, viewing securitization as an economic consideration [53][54]

Financial Data and Key Metrics Changes - Revenue for the fourth quarter was $194.7 million, up 9.1% year-over-year, and in line with guidance [21] - Full-year revenue reached $748.4 million, an increase of 12.2% from 2024 [21] - Adjusted EBITDA for the fourth quarter was $42.5 million, an increase of 11.6% year-over-year [28] - Annual recurring revenue (ARR) was $671 million at quarter end, up 11.3% year-over-year [24] - Gross profit for the fourth quarter was $147.4 million, with a gross margin of 75.7% [25] Business Line Data and Key Metrics Changes - Subscription revenue in the fourth quarter increased 8.9% year-over-year to $166.2 million [21] - Services revenue grew 10.2% year-over-year to $28.5 million in the fourth quarter [23] - Cloud revenue for the fourth quarter was $94.6 million, up 23% year-over-year [23] Market Data and Key Metrics Changes - New logos increased by 20% in 2025, indicating healthy revenue from new customers [9] - E-invoicing mandates are expected to drive growth, particularly in the second half of 2026 [39] Company Strategy and Development Direction - The company aims to accelerate revenue growth through AI transformation and innovation [7][10] - Focus on expanding customer success coverage and leveraging AI tools to enhance customer service [9][60] - Plans to broaden the functionality of Smart Categorization and expand into additional industries [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in 2025, including higher customer attrition primarily due to M&A and bankruptcies [8] - Confidence in achieving 2026 revenue guidance of $823.5 million to $831.5 million, with expected cloud revenue growth of 25% [30] - Emphasis on restoring growth and capitalizing on AI and e-invoicing opportunities [20] Other Important Information - The company repurchased approximately $10 million of its shares in the open market [29] - Ended the fourth quarter with over $314 million in unrestricted cash and cash equivalents [29] Q&A Session Summary Question: Can you elaborate on the losses to competitors at the lower end of the market? - Management noted that attrition was higher in 2025, primarily due to M&A and bankruptcies, with the highest churn in smaller customers [35] Question: How confident are you in achieving the guidance for next year? - Management expressed confidence in the guidance, considering various factors and aiming to return to a beat-and-raise cadence [39] Question: What parallels can you draw from your previous experiences that will help at Vertex? - Management highlighted the importance of AI transformation and the need for accuracy in tax compliance, drawing parallels from experiences at Microsoft [44][48] Question: What are your expectations around net retention rates? - Management is focused on improving net retention rates through new product offerings and proactive customer engagement [50] Question: How is the pipeline for 2026 shaping up, particularly with SAP customers? - Management reported steady growth in the SAP pipeline, with ongoing partnerships and win rates remaining strong [55] Question: Have you seen any AI tech budget crowding out affecting entitlement slowdown? - Management has not observed explicit budget crowding out in their business, indicating continued strength in their solutions [88]