Immatics (NasdaqCM:IMTX) Update / Briefing November 12, 2025 08:30 AM ET Company ParticipantsGraig Suvannavejh - Managing DirectorCarsten Reinhardt - Chief Development OfficerJames Shin - Director of Biopharma Equity ResearchJonathan Chang - Senior Managing DirectorHarpreet Singh - CEOConference Call ParticipantsPaul Jeng - Research AnalystEric Schmidt - Biotechnology AnalystClara Dong - VP and Equity Research Analyst in BiotechnologyNone - AnalystSebastiaan van der Schoot - Equity Research Analyst of Life ...

Financial Data and Key Metrics Changes - Third quarter revenue reached $473.9 million, showing substantial year-over-year growth, primarily due to two months of NV5's contribution following the acquisition [14] - On a combined basis, year-to-date growth was approximately 4.7%, with a 2.4% growth rate if the acquisition had occurred on January 1, 2024 [14] - Adjusted EBITDA for the third quarter was $77.3 million, representing an adjusted EBITDA margin of 16.3%, compared to $51.3 million with a margin of 16.9% in the prior year [17] Business Line Data and Key Metrics Changes - The inspection and mitigation segment generated approximately $293 million in revenue, down about 3% year-over-year, while the consulting engineering segment contributed approximately $122 million during the two-month period post-acquisition [15] - The geospatial segment contributed about $62 million during the same period, with a potential full quarter revenue of approximately $90 million, reflecting a 4% increase year-over-year [16] Market Data and Key Metrics Changes - The data center work for hyperscaler clients more than doubled over the trailing 12 months, driven by accelerating demand from AI and cloud infrastructure buildouts [8] - Infrastructure investments supporting grid modernization and energy transition are creating new opportunities across all three segments [9] Company Strategy and Development Direction - The company aims to expand the markets served and services provided within the TIC and engineering space, focusing on a unified platform dedicated to reliability, innovation, and service excellence [5][7] - The integration of Acuren and NV5 is expected to create meaningful synergies and enhance capabilities across critical asset lifecycle management [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth drivers, including aging infrastructure and increasing regulatory complexity, which are expected to support demand for services [25] - The company reaffirmed its full-year 2025 guidance, expecting revenue in the range of $1.530 billion to $1.565 billion and adjusted EBITDA between $240 million and $250 million [20] Other Important Information - The company completed a $250 million private placement to strengthen its balance sheet and provide flexibility for growth opportunities [18] - The integration program is progressing well, with an increased cost synergy target from $20 million to $25 million expected to be realized by mid-2027 [21][22] Q&A Session Summary Question: What is the reasonable range for annual free cash flow after integration? - Management indicated that the business is a high-free cash flow business with low CapEx and high margins, but specific guidance on free cash flow has not been provided [30] Question: Is the $400 million revenue target for data centers still in place? - Management confirmed that the data center business has seen over 100% growth year-to-date and is a significant focus area, with potential for accelerated growth due to the combination with Acuren [32][33] Question: What is the status of exiting lower-margin customer contracts? - Management noted that the softness in the third quarter was primarily timing-related and that they are actively managing relationships to improve margins [35] Question: How has the government shutdown impacted the geospatial segment? - Management reported limited impact from the government shutdown, with optimism for a quick return to normal operations [40] Question: What are the expectations for the inspection and mitigation segment's turnaround activity? - Management indicated that turnaround activity has not materially changed and is primarily affected by the timing of LNG projects [44] Question: Can you elaborate on the drivers for the increased synergy target? - Management clarified that the increased target is purely cost synergies, focusing on back-office support and organizational efficiency [48]

Financial Data and Key Metrics Changes - Third quarter revenue reached $473.9 million, showing substantial year-over-year growth, primarily due to two months of NV5's contribution following the acquisition [14] - On a combined year-to-date basis, revenue growth was approximately 4.7% [14] - Adjusted EBITDA for the third quarter was $77.3 million, with an adjusted EBITDA margin of 16.3%, compared to $51.3 million and a margin of 16.9% in the prior year [17] - Total liquidity as of September 30, 2025, was $282.9 million, including cash and cash equivalents of $164.4 million [18] Business Line Data and Key Metrics Changes - The inspection and mitigation segment generated approximately $293 million in revenue, down about 3% from the prior year [15] - The consulting engineering segment contributed approximately $122 million during the two-month period following the acquisition, with a potential full quarter revenue of approximately $189 million, reflecting an 11% increase year-over-year [15] - The geospatial segment contributed about $62 million during the same two-month period, with a potential full quarter revenue of about $90 million, approximately 4% higher than the last year [16] Market Data and Key Metrics Changes - The data center work for hyperscaler clients more than doubled over the trailing 12 months, driven by demand from AI and cloud infrastructure buildouts [8] - Infrastructure investments supporting grid modernization and energy transition are creating new opportunities across all three segments [9] Company Strategy and Development Direction - The company aims to expand the markets served and services provided within the TIC and engineering space, focusing on reliability, innovation, and service excellence [5] - The strategic vision includes supporting clients across the full lifecycle of critical assets and infrastructure, leveraging combined capabilities for enhanced service delivery [7] - The integration of Acuren and NV5 is expected to create meaningful synergies and enhance competitive positioning in the market [6][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth drivers, including aging infrastructure and increasing regulatory complexity [25] - The company reaffirmed its full-year 2025 guidance, expecting revenue in the range of $1.530 billion to $1.565 billion and adjusted EBITDA between $240 million and $250 million [20] - Management highlighted the importance of disciplined execution and capturing synergies to drive long-term value creation [12][19] Other Important Information - The company has increased its cost synergy target from $20 million to $25 million, expected to be fully realized by mid-2027 [21] - The balance sheet is solid, with a focus on using free cash flow to reduce leverage over time [19] Q&A Session Summary Question: What is the reasonable range for annual free cash flow after integration? - Management indicated that the business is a high-free cash flow business with low CapEx and high margins, but specific guidance on free cash flow has not been provided yet [30] Question: Is the $400 million revenue target for data centers still in place? - Management confirmed that the data center business has seen over 100% growth year-to-date and is a significant focus area [32] Question: What is the status of exiting lower margin customer contracts? - Management stated that they are continuing to evaluate relationships and may exit those that do not meet margin expectations, with a focus on growth opportunities heading into 2026 [34] Question: What impact has the government shutdown had on the geospatial segment? - Management reported limited impact from the government shutdown, with optimism for a quick return to normal operations [40] Question: What are the expectations for the chemical market's softness? - Management hopes for stabilization in the chemical space and is modeling similar conditions for Q4 and into next year [62]

Financial Data and Key Metrics Changes - Revenue increased by 11% year over year to $72 million, aligning with expectations [5][11] - Customer base grew 15% year over year to over 6,000 ARR customers [5] - Reported eighth consecutive quarter of positive free cash flow, generating $43 million over the past eight quarters [9][12] - Normalized free cash flow for the quarter was $3 million, with a 4% free cash flow margin [12] - Remaining performance obligations (RPO) totaled $268 million at the end of Q3, up 26% year over year [12] Business Line Data and Key Metrics Changes - ARR from GenAI Intelligence products grew rapidly to over $1 million since the launch in April [6] - App Intelligence ARR increased to above $10 million, with over 580 customers using the product [8] - 58% of ARR is contracted under multi-year contracts, up from 45% last year, indicating revenue durability [11] Market Data and Key Metrics Changes - Overall net revenue retention (NRR) was 98% across all customers and 105% for customers with over $100,000 of ARR [12] - Gross revenue retention (GRR) showed improving trends, reaching the highest level in two years [12] Company Strategy and Development Direction - Focus on three high-impact opportunities: GenAI intelligence, data selling for LLM, and AI agents [5][6] - Launched Web Intelligence 4.0, integrating GenAI capabilities into the web intelligence solution [6][8] - Investment in go-to-market strategies is ramping, with 30% more sellers than the previous year [9] Management's Comments on Operating Environment and Future Outlook - Management reiterated guidance for 2025 revenues, expecting total revenue in the range of $285 million to $288 million, representing 15% year-over-year growth at the midpoint [13] - Raised non-GAAP operating profit guidance to between $8.5 million and $9.5 million, reflecting disciplined execution [13] - Confidence in converting large data contracts for LLMs into ARR deals in the future [19][20] Other Important Information - New CFO Ron Verrett will join in December, bringing over 20 years of finance experience [10] - The company is focused on delivering profitable growth and achieving long-term profit and free cash flow targets [9] Q&A Session Summary Question: Can you talk about your gross revenue retention? - Management noted that NRR reflects expansion primarily from large contracts booked in previous quarters, which may not yet show in NRR [16][17] Question: How is the LLM data selling evolving? - Management confirmed that the process of converting one-time data sales into ARR deals is lengthy but expressed confidence in future conversions [18][19] Question: Where are App Intelligence customers coming from? - Majority of App Intelligence customers are cross-sell from existing clients, leveraging their existing digital data needs [23][25] Question: Why did RPU decline slightly? - RPU was impacted by the addition of new customers, particularly larger ones, which may not yet reflect in revenue [32][33] Question: Any impact on demand for web intelligence due to SEO traffic decline? - Management observed increased demand for solutions as companies seek to fill gaps from declining SEO traffic [35][36] Question: Can you highlight any customer conversations around GenAI products? - There is significant interest in GenAI optimization products, with customers keen to understand brand perceptions and sentiment [50][52] Question: Any changes in the mix between enterprise and mid-market customers? - No significant changes in the customer mix between SMB and enterprise were observed [56] Question: How should we think about next year? - Guidance for next year will be provided in the next quarter, with a focus on ongoing engagement with large data contracts [72][73]

Financial Data and Key Metrics Changes - As of September 30, 2025, the company had cash, cash equivalents, restricted cash, and short-term investments totaling $207.5 million, providing significant financial flexibility for the ZEVASKYN commercial launch [15] - Research and development (R&D) spending for Q3 2025 was $4.2 million, a decrease from $8.9 million in Q3 2024, primarily due to costs capitalized into inventory and reclassification of certain costs to selling, general, and administrative expenses (SG&A) [16] - SG&A expenses increased to $19.3 million in Q3 2025 from $6.4 million in Q3 2024, reflecting the reclassification of R&D expenses and increased costs associated with the commercial launch [16] - The net loss for Q3 2025 was $5.2 million, or -$0.10 per share, compared to a net loss of $30.3 million, or -$0.63 per share, in Q3 2024 [16] Business Line Data and Key Metrics Changes - The ZEVASKYN commercial launch is progressing, with growing patient demand and the activation of a third qualified treatment center (QTC), Children's Hospital Colorado [5][12] - The number of identified eligible patients at QTCs has more than doubled to approximately 30, up from over 12 previously reported [11] - The company has received ZEVASKYN Product Order Forms (ZPOFs) for 12 patients, indicating strong interest and movement towards treatment [10] Market Data and Key Metrics Changes - ZEVASKYN has received coverage decisions from all major commercial payers, covering over 80% of commercially insured lives, and has baseline coverage across all 51 state Medicaid programs [13] - A permanent product J-code for ZEVASKYN will be established by CMS effective January 1, 2026, which is expected to simplify claims and reimbursement processing [14] Company Strategy and Development Direction - The company is focused on scaling the ZEVASKYN commercial launch to meet patient demand and expanding its QTC network [5] - The management is actively discussing the onboarding of additional EB centers across the U.S. to further expand ZEVASKYN's geographic footprint [12] - The company aims to achieve profitability in the first half of 2026, despite the delay in the first patient treatment [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 launch goals based on trends in patient demand and market access, despite a temporary delay in the first patient treatment [5][6] - The management highlighted the importance of maintaining high-quality standards in manufacturing personalized drug products [8] - The company is encouraged by the doubling of identified patients and the favorable payer landscape for ZEVASKYN [19] Other Important Information - The company has paused collecting additional patient biopsies to investigate and optimize a release assay that encountered performance issues [9] - The gene therapy program for X-linked retinoschisis, ABO-503, has been selected for the FDA Rare Disease Endpoint Advancement Pilot Program, which may accelerate development [18] Q&A Session Summary Question: Expected timeline for patients to receive treatment - Management indicated that several patients have already been scheduled for biopsy in November and early 2026, with treatment expected to follow if all paperwork is completed [24][26] Question: Impact on profitability timeline due to treatment delays - Management does not foresee a significant impact on the timeline for achieving profitability, maintaining guidance for the first half of 2026 [30] Question: Status of routine maintenance shutdown - The company confirmed a planned shutdown for routine maintenance starting mid-December and lasting about a month [34][35] Question: Biopsy collection during optimization pause - No biopsies were collected during the pause; the company prioritized resolving the assay issue before proceeding [36] Question: Lead time for ZEVASKYN Product Order Forms - Management expects the lead time to decrease as more patients progress through the treatment process and payer policies become established [39][42] Question: Attrition rate among patients with ZPOFs - Management anticipates a high conversion rate for patients with ZPOFs, as these are motivated patients who have expressed interest in treatment [47][49] Question: Prior authorization process for RDEB patients - The prior authorization process involves clinical and financial discussions, with most payers following inclusion/exclusion criteria from clinical trials [52] Question: Revenue recognition timeline - Revenue is recognized when the product is administered to the patient, with cash flow considerations varying by site [58]

Financial Data and Key Metrics Changes - For the First Quarter of fiscal 2026, consolidated same-store sales increased by 0.9%, driven by pricing actions and improved execution at the salon level [4] - Adjusted EBITDA for the first fiscal quarter was $8 million, up from $7.6 million a year ago, reflecting a $400,000 improvement [4][14] - Total First Quarter Revenue was $59 million, an increase of 28% or $12.9 million compared to the prior year [11] - GAAP Operating Income increased to $5.9 million, up from $2.1 million in the year-ago quarter [13] - Cash From Operations was $2.3 million, a $3.6 million improvement compared to a use of cash by operations of $1.3 million in the prior year [16][17] Business Line Data and Key Metrics Changes - Same-store sales for Supercuts were up 2.5% for the first fiscal quarter, with loyalty program participation growing from 36% to 40% [4][5] - Adjusted EBITDA for the Company-Owned Salon Segment improved by $1.9 million year-over-year to $1.6 million for the quarter [15] - Adjusted EBITDA for the franchise segment decreased by $1.6 million to $6.4 million, primarily due to lower royalties and fees [15] Market Data and Key Metrics Changes - The company experienced a net decrease of 757 franchise locations compared to the previous year, with approximately 300 related to the Align salons that converted from franchise to company-owned [12] - The performance gap between closed stores and top-performing units was approximately $350,000, indicating strong potential within the system [12] Company Strategy and Development Direction - The company is focused on the holistic transformation of the Supercuts brand and optimizing sales and profitability in its company-owned salon portfolio [3] - Key initiatives include enhancing operational performance, reinforcing brand leadership, and driving technology and digital acceleration across the business [8] - The company is piloting brand-specific initiatives to strengthen performance across its portfolio [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the progress made in improving profitability and generating positive cash flow [9] - The company anticipates a meaningful increase in unrestricted cash generated from core operations compared to fiscal year 2025 [17] - Management is encouraged by the signals that their actions are taking hold, indicating a positive trajectory for the company [10] Other Important Information - The company has received questions regarding the potential to refinance existing debt, indicating that current economics do not support such a move in the near term [21] - The company expects G&A expenses to be in the range of $40 million-$43 million for the year, including G&A associated with the Align transaction [37] Q&A Session Summary Question: Can you provide more details about pricing actions and their impact on traffic? - Management indicated that franchisees have begun to take further pricing actions based on a competitive pricing survey, with no significant changes in traffic trends observed [23][24] Question: Can you talk about traffic trends at Supercuts and Smart Style? - Management noted improvements in traffic trends at Supercuts, while acknowledging opportunities for improvement at Smart Style [26] Question: Regarding store closures, should we expect a reduction in closures this year? - Management confirmed that closures have reduced by half compared to the previous year, but did not provide specific guidance on future closures [31] Question: Can you provide insight into G&A for this year? - Management expects G&A to be in the range of $40 million-$43 million, including G&A associated with the Align transaction [37] Question: What is the status of the CEO search? - Management anticipates a decision on the CEO search in the coming months, with the interim CEO actively engaged in the process [42]

Financial Data and Key Metrics Changes - GlobalFoundries reported third-quarter revenue of $1.688 billion, flat compared to the prior quarter and a 3% decrease year-over-year [30] - Gross profit for the third quarter was $439 million, resulting in a gross margin of approximately 26%, which expanded sequentially and year-over-year by about 80 and 130 basis points respectively [33] - Operating profit was $260 million, with an operating margin of 15.4%, at the high end of the guidance range and 180 basis points above the prior year period [34] - Net income for the third quarter was $232 million, an increase of approximately 1% from the prior year period, translating to diluted earnings of $0.41 per share [35] Business Line Data and Key Metrics Changes - Automotive revenue decreased approximately 17% sequentially but increased 20% year-over-year, driven by share and content expansion [31] - Smart mobile devices revenue increased approximately 10% sequentially but decreased approximately 13% year-over-year, primarily due to one-time pricing adjustments [30][31] - Home and industrial IoT revenue decreased approximately 14% sequentially and 16% year-over-year, mainly due to a reduction in wafer revenue associated with aerospace and defense applications [31] - Communications infrastructure and data center revenue increased approximately 2% sequentially and 32% year-over-year, with expectations for low 20s percentage growth in 2025 [32] Market Data and Key Metrics Changes - Automotive represented approximately 18% of the quarter's total revenue, with strong momentum and new design wins from 12 unique customers [24] - Smart mobile devices accounted for approximately 45% of the quarter's total revenue, with significant design wins for the newly launched CIPIC platform [25] - Home and industrial IoT represented approximately 15% of the quarter's total revenue, with partnerships aimed at producing next-generation smart sensors [27] - Communications infrastructure and data center represented approximately 10% of the quarter's total revenue, with new optical networking design wins [28] Company Strategy and Development Direction - GlobalFoundries is focusing on scaling AI in data centers and expanding its optical networking capabilities, estimating a 40% CAGR for the serviceable addressable market through 2030 [8][9] - The company is committed to reshoring semiconductor supply chains to the US, with a $16 billion investment to expand US manufacturing capabilities [14][15] - The strategy includes diversifying the business towards high-margin product platforms, with automotive expected to approach $1.5 billion in annual revenue by 2025 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture long-term trends driving the industry, emphasizing the importance of differentiated technologies and a resilient global footprint [17] - The ongoing geopolitical conflicts and supply chain challenges are prompting customers to seek non-China, non-Taiwan supply chains, which GlobalFoundries is well-positioned to support [13][14] - The company anticipates strong growth in silicon photonics and physical AI applications, projecting the semiconductor SAM for physical AI to exceed $18 billion by 2030 [12] Other Important Information - Cash flow from operations for the third quarter was $595 million, with CapEx at $189 million, representing roughly 11% of revenue [35] - The company maintains a strong balance sheet with approximately $4.2 billion in cash and cash equivalents and total debt of $1.2 billion [36] - Guidance for the fourth quarter includes expected revenue of $1.8 billion, with gross margin projected at approximately 28.5% [36] Q&A Session Summary Question: Long-term differentiation of silicon photonics business - Management highlighted that GlobalFoundries has been early in developing silicon photonics, focusing on best-in-class device performance and building an ecosystem for customer support [44] Question: Capital and CapEx needs for silicon photonics growth - Management indicated that while specific CapEx guidance for 2026 is not available, an increase in CapEx is expected to support the ramp in demand for silicon photonics [46][48] Question: Revenue guidance for smart mobile devices - Management noted that smart mobile devices are expected to see a low double-digit percentage decline year-over-year, influenced by previous pricing adjustments [53] Question: Onshoring demand and pipeline - Management reported a strong pipeline for US onshoring, with significant customer announcements indicating a potential $15 billion to $20 billion spend in the addressable market [61] Question: GaN strategy and competition - Management expressed excitement about GaN technology, emphasizing its critical role in data centers and infrastructure, and differentiating their strategy from competitors like TSMC [67][70]

Financial Data and Key Metrics Changes - The company reported record revenue of $104.3 million for Q3 2025, a significant increase of $77.5 million year-over-year [7][18] - Net income reached $108.6 million, translating to $1.26 per diluted share, a substantial improvement from a net loss of $2.8 million in Q3 2024 [21][22] - Adjusted EBITDA for Q3 2025 was $71.8 million, up from a loss of $2 million in the same quarter last year [22][23] - The company raised its full-year revenue guidance from a minimum of $375 million to a range of $390 million-$410 million [7][8] Business Line Data and Key Metrics Changes - DefenCath sales accounted for $88.8 million of the total revenue, reflecting strong performance and utilization growth [18][19] - The Melinta portfolio contributed approximately $15.5 million in revenue for September 2025, with $12.8 million from Melinta portfolio sales [19] Market Data and Key Metrics Changes - The company is focusing on expanding DefenCath's utilization in the outpatient hemodialysis segment and planning for post-TDAPA add-on periods starting July 2026 [9][10] - The total addressable market for REZZAYO, aimed at immune-compromised patients, is estimated to exceed $2 billion [10][11] - The anticipated market for DefenCath in preventing CLABSI for patients receiving total parenteral nutrition is projected at up to $750 million [11] Company Strategy and Development Direction - The acquisition of Melinta Therapeutics is seen as transformational, creating a diversified specialty pharmaceutical company with a broad product portfolio [5][6] - The company is rebranding as CorMedix Therapeutics to reflect its commitment to developing novel therapies [6] - The integration of operations is progressing faster than expected, with projected synergies of approximately $30 million expected to be realized by the end of 2025 [5][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future profitability, supported by a substantial tax benefit of $59.7 million [22] - The company is optimistic about capturing synergies from the Melinta acquisition and expects significant cash generation in Q4 2025 [24][25] - Management highlighted the importance of real-world evidence data in negotiations with Medicare Advantage payers for future growth [33][46] Other Important Information - The company is expanding clinical study sites for the Nutri-Guard clinical study in Turkey to expedite enrollment timelines [15][16] - The integration of personnel across all functional areas is complete, with systems integration expected to finish in 2026 [17] Q&A Session Summary Question: Inventory stocking versus utilization in Q3 for DefenCath - Management indicated that smaller customers are holding about two to three weeks of inventory, while larger customers are at three to four weeks [29] Question: Guidance for next year and potential seasonality - Management noted that there is no historic seasonality in hemodialysis and that they are still assessing the full year for 2026 [30][31] Question: Real-world evidence and pricing negotiations for post-TDAPA - Management clarified that real-world evidence will be most applicable for Medicare Advantage and that traditional Medicare has limited negotiation opportunities [33][34] Question: Utilization and patient demographics for LDO - Management reported that utilization is higher than the initial target of 6,000 patients, primarily among fee-for-service patients [38] Question: Pricing dynamics for DefenCath in Q3 - Management acknowledged slight price erosion quarter-over-quarter but noted significant volume growth offsetting this [56] Question: Legislation affecting TDAPA reimbursement - Management mentioned a bipartisan bill proposing changes to TDAPA, which could incentivize innovation and extend the ASP-based pricing period [58]

Financial Data and Key Metrics Changes - The company's GMV for Q3 was $37.8 billion, reflecting a 9% year-over-year increase, while the first nine months totaled $108.4 billion, up 7% year-over-year [12] - Q3 revenue reached a record $81.9 million, a 4% increase year-over-year, with year-to-date revenue of $245.3 million, up 5% year-over-year [13] - Non-GAAP gross profit for Q3 was $41.5 million, a 5% year-over-year increase, translating to a gross profit margin of approximately 51%, up 1% from the previous year [16] - Adjusted EBITDA for Q3 was $5.6 million, representing a margin of approximately 7%, with expectations for a margin of approximately 15% in Q4 [18][21] Business Line Data and Key Metrics Changes - The money transfer and payments category grew approximately 100% year-over-year in Q3, driven by new business activity [14] - The tickets and travel category grew 6% in Q3, while the fashion and luxury category saw a 13% increase [13][14] - The home category contracted by approximately 70% year-over-year, but growth is expected to return in Q4 [15] Market Data and Key Metrics Changes - In the U.S., revenue declined 12% year-over-year, primarily due to the contraction in the home category [15] - APAC region grew approximately 55% year-over-year, while other Americas (Canada and Latin America) grew approximately 18% year-over-year [15][16] - EMEA region grew approximately 19% year-over-year, with strong performance in fashion and luxury, tickets and travel, and money transfer and payments [16] Company Strategy and Development Direction - The company is focused on enhancing machine learning capabilities and has shifted approximately 70% of its models to autonomous training, which is expected to improve scalability and performance [6][7] - The company is investing in new product developments, including Adaptive Checkout, which has shown significant improvements in conversion rates for merchants [9] - The strategy includes targeting specific verticals and geographic regions for expansion, with a focus on mid-market opportunities [26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for a healthy holiday season, supported by resilient consumer spending and strong performance in key categories [10][11] - The company raised the bottom end of its revenue guidance for the second consecutive quarter, now anticipating revenue between $338 million and $346 million for the full year [21] - Management highlighted the importance of navigating complexities introduced by agentic commerce and the potential for increased demand for their services [60] Other Important Information - The company ended Q3 with $325 million in cash and investments, maintaining zero debt and achieving quarterly free cash flows of $13.4 million [19] - Share repurchase activity included 5.2 million shares for approximately $25.3 million in Q3, with a total of 14.2 million shares repurchased for approximately $69.2 million in the first nine months [20] Q&A Session Summary Question: Momentum as the year ends - Management expects strong performance from both upselling existing merchants and acquiring new clients [24] Question: Emerging verticals for 2026 - The company is focused on specific large verticals and geographic regions for expansion, considering both product fit and distribution strategies [26] Question: Revenue contribution from non-Chargeback Guarantee products - Non-Chargeback Guarantee products have shown strong growth, over 100%, contributing positively to long-term contracts and new business [28] Question: Long-term margin profile - The long-term margin profile varies based on product mix, with a focus on increasing gross profit dollars [30] Question: Gross margin trajectory into next year - Recent model improvements are expected to improve performance, but there may be headwinds from new categories and regions [34] Question: One-time expense impacts in Q3 - Positive impacts were related to payroll adjustments and reserve duties, with expectations for operating expenses around $39 million in Q4 [36] Question: Growing stablecoin adoption - The company sees stablecoins and crypto introducing complexity for merchants, which could drive demand for their services [39] Question: Agentic commerce opportunities and threats - Agentic commerce could increase demand for services due to complexity, but there is a risk if transactions move away from traditional e-commerce [60]

Financial Data and Key Metrics Changes - As of September 30, 2025, the company had cash, cash equivalents, restricted cash, and short-term investments totaling $207.5 million, providing significant financial flexibility for the ZEVASKYN commercial launch [15] - Research and development (R&D) spending for Q3 2025 was $4.2 million, a decrease from $8.9 million in Q3 2024, primarily due to costs capitalized into inventory and reclassification of certain costs to selling, general, and administrative expenses (SG&A) [16] - SG&A expenses increased to $19.3 million in Q3 2025 from $6.4 million in Q3 2024, reflecting the reclassification of R&D expenses and increased costs associated with the commercial launch [16] - The net loss for Q3 2025 was $5.2 million, or negative $0.10 per share, compared to a net loss of $30.3 million, or negative $0.63 per share, in Q3 2024 [16] Business Line Data and Key Metrics Changes - The ZEVASKYN commercial launch is progressing, with the first patient treatment delayed to Q4 2025 due to optimization of a product release assay, but demand is growing [5][6] - The number of identified eligible patients at qualified treatment centers (QTCs) has more than doubled to approximately 30, up from over 12 previously reported [11] - The activation of Children's Hospital Colorado as a QTC brings the total to three, alongside Lurie Children's Hospital of Chicago and Lucille Packard Children's Hospital Stanford [12] Market Data and Key Metrics Changes - ZEVASKYN has received positive coverage decisions from major commercial payers, covering over 80% of commercially insured lives, and has baseline coverage across all 51 state Medicaid programs effective October 1, 2025 [13] - A permanent product J-code for ZEVASKYN will be established by CMS effective January 1, 2026, simplifying claims and reimbursement processing [14] Company Strategy and Development Direction - The company is focused on scaling the ZEVASKYN commercial launch to meet patient demand and expanding its QTC network [5][6] - The management team has been strengthened with the appointment of Dr. James A. Gao as Senior Vice President, Head of Clinical Development and Medical Affairs, to advance the pipeline [18] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving 2026 launch goals despite the delay in the first patient treatment, citing trends in patient demand and market access [5][6] - The company expects to maintain a profitable business in the first half of 2026, with no significant impact from the treatment delay [29] Other Important Information - The company paused collecting additional patient biopsies to investigate a performance issue with a release assay, resuming in November 2023 [9] - The company plans to participate in the Stifel 2025 Healthcare Conference following the earnings call [16] Q&A Session Summary Question: Expected timeline for patients to receive treatment - Management indicated that several patients have already received prior authorizations and are scheduled for biopsies in November and early 2026 [24] Question: Impact on profitability timeline due to treatment delay - Management does not foresee a significant impact on the timeline to profitability, maintaining guidance for the first half of 2026 [29] Question: Routine maintenance shutdown of the plant - A shutdown for routine maintenance is scheduled for mid-December to early January, as mandated by the FDA [32] Question: Current lead time for ZEVASKYN Product Order Forms - The current lead time is about three months, but management expects this to decrease as more patients progress through the process [36] Question: Attrition rate among patients with ZEVASKYN Product Order Forms - Management expects a high conversion rate among patients who have received ZPOFs, as these are motivated patients [44] Question: Prior authorization process for RDEB patients - The prior authorization process involves clinical and financial discussions, with most payers following inclusion/exclusion criteria from clinical trials [50] Question: Biopsies and sterility release criteria - Management confirmed that they have resumed biopsies and are not guiding on the number of biopsies completed yet [54] Question: Patients on background Vyjuvek or Filsuvez - Management does not have visibility into the exact number of patients currently on these treatments but expects many to be [58] Question: UMass not listed as a QTC - Different sites have various reasons for not being onboarded, including financial constraints and trade policy differences [62]