Financial Data and Key Metrics Changes - The company ended 2025 with cash equivalents and investments of $656.6 million, a significant increase from $198.2 million at the end of 2024, indicating strong liquidity to support operations into 2028 [12] - R&D expenses for 2025 were $132 million, down from $168.6 million in 2024, primarily due to a reduction in preclinical and clinical costs following the conclusion of the lorundrostat pivotal program [13][14] - G&A expenses increased to $38.6 million in 2025 from $23.8 million in 2024, driven by higher compensation and professional fees [15] - The net loss for 2025 was $154.7 million, an improvement from a net loss of $177.8 million in 2024 [16] Business Line Data and Key Metrics Changes - The company is focused on the development of lorundrostat, which has shown promising results in clinical trials for treating uncontrolled and resistant hypertension [6][10] - The NDA for lorundrostat was accepted by the FDA, with a PDUFA target action date set for December 22, 2026, marking a significant milestone for the company [5] Market Data and Key Metrics Changes - Uncontrolled and resistant hypertension affects over 20 million people in the U.S., representing a substantial market opportunity for lorundrostat [7] - The company is actively engaging with payers to ensure access for lorundrostat, particularly targeting its use in third-line or later treatment settings [20] Company Strategy and Development Direction - The company aims to position lorundrostat as a best-in-class therapy for hypertension, with plans for market access and payer engagement to support its launch [8][10] - There is an emphasis on expanding medical communications and increasing peer-reviewed publications to drive awareness and uptake of lorundrostat [8] - The company is exploring additional indications for lorundrostat, including comorbid conditions related to hypertension, such as chronic kidney disease and obstructive sleep apnea [10][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market opportunity for lorundrostat, particularly in light of the unmet needs in resistant hypertension [19] - The company is optimistic about payer access and believes that the comprehensive dataset supporting lorundrostat will resonate with prescribers [20] - Management highlighted the importance of ongoing clinical development and the potential for lorundrostat to address various comorbidities associated with hypertension [10][66] Other Important Information - The company has begun planning for the commercial launch of lorundrostat, including expanding its medical affairs capabilities and preparing for potential partnerships [36][92] - The company is evaluating the potential for international submissions and partnerships to maximize the value of lorundrostat [56][92] Q&A Session Summary Question: What are the company's expectations regarding the competitive launch of lorundrostat? - Management acknowledged the competitive landscape and expressed interest in learning from competitors' pricing and market strategies while emphasizing the significant market opportunity for lorundrostat [19] Question: How confident is the company in payer access for lorundrostat? - Management expressed strong confidence in the value proposition of lorundrostat and ongoing positive dialogues with payers [20] Question: What is the company's strategy regarding commercial capabilities and potential partnerships? - Management indicated that they are building commercial capabilities while exploring partnerships, emphasizing the importance of ensuring rapid uptake upon approval [36][92] Question: How does the company plan to differentiate lorundrostat in the market? - Management discussed the comprehensive data supporting lorundrostat and the targeted approach to prescribers, focusing on specific subsegments of the hypertension market [42][43] Question: What are the company's thoughts on pricing strategy? - Management stated that it is too early to provide specifics on pricing but indicated that the value proposition resonates with payers for both third and fourth-line treatments [62] Question: What are the company's plans for exploring additional indications for lorundrostat? - Management confirmed ongoing evaluations of potential indications related to aldosterone dysregulation and the importance of addressing comorbidities associated with hypertension [66]

Financial Data and Key Metrics Changes - For Q4, net sales were $273 million, up 9% compared to expectations, indicating better performance than anticipated [26] - Gross margin was reported at 41%, slightly higher than guidance, maintaining above 40% for seven of the last eight quarters [26] - SG&A expenses decreased by 12% year-over-year to $91 million [27] - Adjusted EBITDA for Q4 was $23 million, at the high end of expectations [27] Business Line Data and Key Metrics Changes - Funko's core product lines are expected to grow in high single digits year-over-year, while Loungefly is projected to decline in double digits due to SKU cuts [28][29] - The Bitty Pop! product line has shown strong growth, contributing positively to sales [31] Market Data and Key Metrics Changes - In the EU, sales increased by 20% from January 2025 to January 2026, outperforming market growth [22] - The company is the second largest collectible brand by market share in the EU, following Pokémon [22] Company Strategy and Development Direction - The "Make Culture POP!" strategy focuses on participating in cultural moments and expanding into new markets, particularly in Asia and Latin America [10][25] - A new Chief International Officer has been appointed to drive growth in Asia and Latin America, targeting significant toy markets [24] - The company is exploring original content creation as a long-term growth driver, leveraging partnerships with major studios [35][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, citing a strong entertainment slate and trends in collectibles, licensed IP, and kidult demographics as growth drivers [32][33] - The company expects net sales to be flat to up 3% in 2026, with a substantial improvement in profitability [28][30] Other Important Information - The company has launched a new program called HyperStrike to quickly design and manufacture products in response to pop culture moments [16] - Funko has renewed licenses with major studios, ensuring a strong lineup for the upcoming film slate [45] Q&A Session Summary Question: Describe the shape of the flat to +3% guidance past Q1 - The guidance is expected to be consistent throughout the year, with Q2 anticipated to show growth over last year [34] Question: To what extent does Funko view original content creation as a growth driver? - Original content creation is seen as a serious long-term growth driver, with a focus on storytelling through partnerships with major studios [35] Question: Does Funko need to use any of its extended credit agreement in 2026? - The company does not expect to need additional borrowing and plans to manage on operating cash flows [38] Question: Can you break out the POS trends and inventory restocking domestically versus Europe? - Double-digit growth in POS sales was observed in Europe, with improving trends in the U.S. throughout Q4 [39] Question: What would you highlight as the key initiatives to drive top line results and margin versus 2025? - Key initiatives include leveraging the content slate, expanding international growth, and launching new products [40]

Financial Data and Key Metrics Changes - Revenue for the full year 2025 was $237.3 million, a significant increase from $28.7 million in 2024, primarily driven by government contracts and the Dynavax collaboration [35] - Cash equivalents and investments at the end of the fourth quarter were $63.8 million, with an expected cash runway into the second quarter of 2027 [36] Business Line Data and Key Metrics Changes - The partnership with Dynavax for the oral COVID-19 vaccine candidate includes a $25 million upfront payment and a $5 million equity investment, with potential future payments totaling up to $700 million [8][11] - The oral norovirus vaccine candidate has shown promising results in clinical studies, with significant increases in IgA levels in both serum and breast milk [24][28] Market Data and Key Metrics Changes - The partnership with Dynavax, now a Sanofi company, is expected to enhance collaboration and development efforts in the vaccine space [9] - The ongoing phase 2b trial of the oral COVID-19 vaccine candidate is crucial for assessing its efficacy compared to mRNA vaccines [14] Company Strategy and Development Direction - The company is focused on managing financial resources effectively, pursuing strategic partnerships, and reducing operating costs to extend cash runway [12][36] - Priorities for 2026 include executing data collection for the COVID-19 clinical trial and securing funding for the norovirus program [38][39] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the potential of the COVID-19 and norovirus oral vaccine programs to provide public health benefits and create shareholder value [37] - The company is committed to realizing the value of its oral pill vaccine platform, which is seen as a disruptive technology in addressing public health challenges [39] Other Important Information - The company has entered into a lease termination agreement to reduce operating expenses, allowing for better allocation of financial resources [13] - The results from the 400-participant sentinel cohort of the COVID-19 trial are expected to be reported in early Q2 2026, with further data from the 5,000-participant KP2 cohort anticipated in Q4 2026 [17][20] Q&A Session Summary Question: Delay in 400-person sentinel cohort data - Management acknowledged a slight delay in reporting the 400-person sentinel cohort data, now expected in early Q2 instead of late Q1, due to discussions with BARDA [44][46] Question: Next steps after sentinel data - Management explained that after the sentinel data is available, Dynavax will decide on further development based on the phase 2 data package submitted to the FDA [53][55] Question: Regulatory input on norovirus candidate - Management confirmed ongoing discussions with the FDA regarding the endpoints for the next phase 2 study of the norovirus vaccine [60][61]

Financial Data and Key Metrics Changes - As of December 31, 2025, cash equivalents and marketable securities totaled approximately $318.1 million, a significant increase from approximately $151.5 million as of December 31, 2024 [26] - Revenue for the fourth quarter of 2025 was $0, compared to approximately $11.1 million for the same period in 2024, and full-year revenue for 2025 was also $0, down from approximately $22.3 million in 2024 [26][27] - Total operating expenses for Q4 2025 were approximately $29.2 million, up from approximately $18.8 million in Q4 2024, and full-year operating expenses for 2025 were approximately $108.1 million, compared to approximately $64.8 million in 2024 [27][28] - Net loss for Q4 2025 was approximately $30.2 million, compared to a net loss of approximately $7.1 million in Q4 2024, and the full-year net loss for 2025 was approximately $105 million, up from approximately $40.5 million in 2024 [28][29] Business Line Data and Key Metrics Changes - The company is focused on advancing Deramiocel toward potential approval for Duchenne muscular dystrophy (DMD) in the U.S., with a Biologics License Application (BLA) under review by the FDA [5][6] - The HOPE-3 trial, a pivotal phase 3 study, enrolled 106 patients and met its primary efficacy endpoint, showing a 91% slowing of disease progression in evaluable patients [9][10] - The company aims to position Deramiocel to treat as many eligible patients as possible, with a focus on both skeletal and cardiac disease manifestations of DMD [6][7] Market Data and Key Metrics Changes - The FDA has accepted the BLA for review with a target action date of August 22, 2026, marking a significant regulatory milestone for the company [5][17] - The company is preparing for a potential commercial launch and has completed its FDA pre-license inspection for its manufacturing facility [18][19] Company Strategy and Development Direction - The company is building an infrastructure to support the launch and commercialization of Deramiocel while expanding its pipeline to treat other indications [8][20] - The company is also exploring potential expansion into other diseases, initially focusing on Becker muscular dystrophy [21] - The company is committed to maintaining a disciplined approach to execution and investing in its pipeline to operate as a world-class commercial biotech company [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the data supporting Deramiocel and its potential to become a foundational therapy for DMD [16][24] - The company believes it is well-positioned for growth, with a strong balance sheet and operational readiness for commercial launch [8][25] - Management highlighted the importance of addressing the unmet need in the DMD community and the urgency to provide Deramiocel to patients [19][70] Other Important Information - The company completed a public offering in December 2025, resulting in net proceeds of approximately $162 million, which strengthens its financial position [26] - The company is also working on its exosome platform, with ongoing studies related to a COVID vaccine and plans for future therapeutic applications [22][101] Q&A Session Summary Question: Anticipation of Ad Com and Commercial Preparation - Management indicated that there has been no movement towards an Advisory Committee meeting at this point, and they are preparing for commercial readiness regardless [33][34] Question: Labeling Discussions and Expectations - Management noted that they have not had detailed labeling discussions yet but believe the data supports a label for both DMD and cardiomyopathy [36][52] Question: Cohorts in HOPE-3 Trial - Management clarified that the FDA considers the two cohorts of the HOPE-3 trial as one clinical trial, and both cohorts showed statistically significant results [44] Question: Transition of Clinical Trial Patients to Commercial Drug - Management confirmed that they expect to transition all clinical trial patients to the commercial drug and are planning for market access to facilitate this [67][70] Question: Early Intervention and Labeling - Management emphasized the importance of early intervention and is focusing on younger patients, although obtaining a prevention label is challenging [76] Question: Manufacturing Capacity and Expansion Plans - Management is actively planning to expand manufacturing capabilities to accommodate more patients as needed [70][71]

Financial Data and Key Metrics Changes - Fiscal year 2026 marked a significant milestone for the company, achieving over $1 billion in revenue, growing 22% year-over-year, and delivering full-year operating profitability with an operating margin of 3.5% [8][33] - In Q4, revenue grew 20% year-over-year to $271 million, with total ARR increasing by 22% and a record addition of $64 million in net new ARR [33][34] - The company maintained a gross margin of 78% in Q4, with an operating margin of 6%, reflecting a 450 basis point year-over-year improvement [35][36] Business Line Data and Key Metrics Changes - Non-endpoint solutions surpassed half of total annual bookings in fiscal 2026, indicating a diverse customer outcome from the Singularity Platform [10] - The percentage of enterprise customers using three or more solutions increased to 65%, with those using four or more solutions more than doubling to 42% [11] - ARR from Prompt Security more than doubled sequentially in Q4, showcasing strong demand for AI security solutions [15] Market Data and Key Metrics Changes - International markets grew 30% and represented 40% of total revenue, reflecting strong global demand [34] - The company saw a 20% year-over-year increase in customers with ARR of $1 million or more, reaching 153 customers in Q4 [34] - The dollar-based net retention rate for customers with $100,000 or more in ARR was 109%, driven by continued adoption of the broader platform [35] Company Strategy and Development Direction - The company is focused on achieving the Rule of 40, driven by durable growth and higher profitability, while emphasizing AI-native security as a long-term growth driver [9][39] - The strategy includes optimizing the sales force and leveraging partnerships to enhance market presence, particularly in the managed security ecosystem [26][41] - The company aims to balance growth opportunities with maintaining a responsible financial profile, positioning itself as a leader in the AI-first security landscape [31][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for the platform and the potential for further growth, particularly in AI security and on-premise solutions [61][62] - The evolving macroeconomic environment and geopolitical uncertainties are being monitored, as they may influence deal timing and sales cycles [39] - The company is committed to maximizing business potential while ensuring that security remains a strategic enabler of AI innovation [42] Other Important Information - The company ended the fiscal year with $770 million in cash equivalents and no debt, allowing for opportunistic share repurchases [37] - A new Chief Financial Officer, Sonali Parekh, has been appointed to lead the next phase of the company's financial strategy [31][32] Q&A Session Summary Question: Dynamics around growth and partner-led deals - Management noted that record fourth quarter net new ARR growth demonstrated solid demand and execution consistency, with no significant change in business dynamics between partners and end customers [45][46] Question: Clarification on profit margins - Management explained that free cash flow can be lumpy due to the timing of larger deals, but overall cash collection has improved significantly [49][50] Question: Adoption of new products and NRR - Management indicated that the stable NRR reflects a focus on new logo business, with significant expansion opportunities within the customer base [52][53] Question: Update on endpoint security and competitive landscape - Endpoint security remains a strong growth driver, with double-digit growth and increasing share, particularly in the context of generative AI [57][58] Question: Priorities for the new CFO - The new CFO will focus on durable growth and optimizing the go-to-market strategy, balancing growth opportunities with financial discipline [60][62] Question: Drivers of new ARR improvement - Management highlighted a shift towards a more balanced revenue seasonality and traction in endpoint security as key drivers for improved new ARR [65][66] Question: Stability of gross margins - Management confirmed that gross margins are stable and at the high end of long-term targets, with no expected changes [69] Question: Details on the Cloudflare deal - The deal with Cloudflare was driven by the company's unique capabilities and the need for proven, scalable solutions in the context of AI adoption [71][75]

Financial Data and Key Metrics Changes - For Q4 2025, total revenues were $2.2 million, a 76% increase from $1.3 million in Q4 2024, primarily due to higher unit sales of M400 smart glasses and increased engineering services sales [20] - For the full year 2025, total revenues were $6.3 million, up 9% from $5.8 million in 2024, with product sales increasing by 4% year-over-year [21] - The net loss attributable to common shareholders for Q4 2025 was $8.7 million or $0.12 per share, compared to a net loss of $13.7 million or $0.16 per share in Q4 2024 [25] - For the full year 2025, the net loss was $32.3 million or $0.42 per share, significantly improved from a net loss of $73.5 million or $1.08 per share in 2024 [26] Business Line Data and Key Metrics Changes - Engineering services sales for 2025 were $1.6 million, up 27% from $1.3 million in 2024, indicating growth in this segment [21] - Research and development expenses rose 31% to $12.6 million in 2025, driven by increased costs related to the new LX1 smart glasses and waveguide products [22] - Sales and marketing costs decreased to $5.5 million in 2025 from $8.2 million in 2024, a reduction of 33% [23] Market Data and Key Metrics Changes - The enterprise markets are becoming more mature and ROI-driven, with customers focused on solutions that improve workflow efficiency and enhance safety [17] - The defense and security agencies segment is seeing growth in active programs and discussions, with production orders starting to come in [12] Company Strategy and Development Direction - The company is focusing on its OEM products and waveguide technology as key growth engines, with a strategic shift towards more selective investment in branded products [7][9] - Vuzix aims to leverage its waveguide technology for scalable production, positioning itself for the next generation of AI and AR-enabled smart glasses [8][16] - The company is prioritizing R&D resources towards waveguides, Quanta-related programs, and funded OEM programs to maximize strategic advantages [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for 2026, particularly in the OEM and waveguide business, expecting revenues to surpass those from the branded enterprise side [33] - The company anticipates multiple new business partnerships and orders throughout 2026, indicating a robust pipeline of opportunities [35] Other Important Information - Vuzix completed the second and third tranches of Quanta's investment, totaling $20 million, which validates its waveguide roadmap and manufacturing capabilities [14] - The company ended 2025 with a cash position of $21.2 million and no current or long-term debt, indicating improved financial health [26][27] Q&A Session Summary Question: Expectations for 2026 revenue and significant sources - Management expects OEM and waveguide business to grow quarter after quarter, potentially surpassing enterprise branded revenues by year-end [33] Question: Anticipation of additional orders and announcements in 2026 - Management indicated that there would likely be several announcements regarding orders and partnerships throughout 2026, contributing to new business opportunities [35]

Financial Data and Key Metrics Changes - Research and development (R&D) expenses in Q4 2025 totaled $9.9 million, up from $6 million in Q4 2024, with full-year R&D expenses reaching $33.7 million compared to $19.4 million in 2024, primarily due to higher clinical trial and manufacturing costs for soquelitinib and increased personnel costs [4] - The net loss for Q4 2025 was $12.3 million, slightly higher than the net loss of $12.1 million in Q4 2024, with total stock compensation expense increasing to $1.6 million from $0.8 million in the same period [5] - As of December 31, 2025, cash equivalents and marketable securities totaled $56.8 million, up from $52 million at the end of 2024, with pro forma cash including recent financing reaching approximately $246 million, extending the cash runway into Q2 2028 [6][7] Business Line Data and Key Metrics Changes - Significant progress was made in the development of soquelitinib, with promising results from clinical trials in peripheral T-cell lymphoma and atopic dermatitis, indicating its potential as a leading therapy for these conditions [8][9] - The phase I trial results for soquelitinib showed a mean percent reduction in EASI of 72% versus 40% for placebo, with 75% of patients achieving EASI 75 [12] Market Data and Key Metrics Changes - The company is entering 2026 with ongoing enrollment in its phase III PTCL trial and a recently initiated phase II atopic dermatitis trial, with plans to expand into mid-stage trials for other inflammatory diseases later in the year [9][10] - Market research indicates that soquelitinib's profile could significantly advance treatment options for patients with atopic dermatitis, with a unique mechanism of action and favorable safety profile [11][22] Company Strategy and Development Direction - The company aims to leverage the unique mechanism of action of soquelitinib to address multiple inflammatory diseases and cancers, with ongoing trials and data presentations planned for 2026 [9][28] - The strategy includes expanding into additional indications such as hidradenitis suppurativa and asthma, with a focus on the drug's durability and efficacy in patients who have failed prior therapies [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of soquelitinib, highlighting its promising clinical data and the opportunity to unlock its full potential in various immune inflammatory diseases [28] - The company is optimistic about the upcoming data readouts from ongoing trials, which are expected to provide further insights into the drug's efficacy and safety [9][34] Other Important Information - The company plans to present additional data from its phase I clinical trials at upcoming medical meetings, emphasizing the importance of biomarker results and the drug's mechanism of action [23][24] - Collaboration with Angel Pharmaceuticals for a phase Ib/II trial in China is ongoing, with initial data expected later this year [24] Q&A Session Summary Question: Regarding the upcoming data readouts for PTCL and the China study - Management anticipates initial data from Angel Pharmaceuticals' trial later this year, with further data expected in mid-2027 from the phase II study [32][34] Question: Expectations for the SID meeting presentation - Management indicated that the presentation will focus on durability and new biomarkers related to soquelitinib's mechanism of action [38][39] Question: Efficacy benchmarks for the phase II trial in hidradenitis suppurativa - Management expects efficacy to be comparable or better than existing biologics, with ongoing assessments to determine optimal dosing [42] Question: Insights on the ALPS trial and its implications for other indications - Management noted that while ALPS results are promising, they do not directly predict outcomes for other diseases but indicate the drug's potential in managing aberrant autoinflammatory responses [68] Question: Durability of response in the phase II trial - The phase II trial includes a follow-up period of 90 days post-treatment, although the primary endpoint focuses on EASI scores at 12 weeks [94][96] Question: Target populations for the upcoming asthma study - Management is considering a broad patient population for the asthma study, without restricting to specific subtypes, and is still finalizing the study protocol [100]

Financial Data and Key Metrics Changes - For Q4 2025, total revenue was $82.4 million, a decrease of 1.3% year-over-year, but an improvement from the double-digit decline in Q3 [10] - Consumables revenue increased to $57.7 million from $56.7 million, representing a growth of 1.7% year-over-year [10] - Device revenue was $24.7 million, down 7.9% year-over-year, but showed improvement compared to Q3 [10] - Adjusted gross margin expanded to 67.4%, while GAAP gross margin increased to 64.4% [11] - Adjusted EBITDA for Q4 was $15 million, up from $9 million in the prior year, indicating a margin expansion of approximately 700 basis points [11] - For the full year, net sales were $300.8 million, down from $334.3 million in 2024, with consumables revenue totaling $212.7 million and device revenue at $88.1 million [21] Business Line Data and Key Metrics Changes - The installed base of systems reached over 36,000 globally, with more than 1,000 devices placed in Q4 [12] - The capital equipment segment continues to face pressure, consistent with broader macroeconomic conditions [10] Market Data and Key Metrics Changes - The U.S. med spa market has grown from approximately 1,600 locations in 2010 to over 13,000 today, indicating significant market expansion [7] - Consumer demographics are evolving, with increased engagement from men, Gen Z, and younger consumers [7] Company Strategy and Development Direction - The company aims to shift from a device placement model to a device utilization model to drive long-term growth [9] - Key strategic priorities include salesforce excellence, marketing discipline, and focused innovation [14] - The company plans to enhance its commercial model by improving provider education and marketing strategies [16][17] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the aesthetic category, noting that demand for non-invasive treatments continues to grow globally [12] - The first half of 2026 is expected to be modestly below the prior year, with a stronger trajectory anticipated in the second half [19][25] - The company expects to return to growth in 2027 as operational changes take effect [28] Other Important Information - The company has strengthened its balance sheet and improved its cost structure, exiting 2025 as a stronger entity [20] - Adjusted EBITDA for the full year increased significantly to $45.1 million from $12.3 million in the prior year [21] Q&A Session Summary Question: Guidance for 2026 and sales organization overhaul - Management expects revenue to be flat year-on-year, with adjusted EBITDA slightly below 2025 due to reinvestment in R&D [32][33] Question: Underlying market environment assumptions - Consumer spending remains selective, with a focus on clinically proven results at accessible price points [37] - The medical segment continues to grow, driven by med spas using HydraFacial to attract patients [39] Question: Churn trends and marketing to new demographics - Churn improved in Q4 to about 1.1%, with expectations to hold flat year-over-year [44] - The company is addressing the needs of new demographics entering the category, focusing on outcome-driven protocols [47] Question: New system launch timeline and features - The next-generation HydraFacial is planned for launch in 2028, aimed at providing compelling reasons for upgrades [53] Question: Pricing strategy and consumable utilization - A 5% price increase on consumables was well-received, with no significant complaints [73] - Providers who understand how to prescribe boosters use them three times more than those who do not [74]

Financial Data and Key Metrics Changes - Research and development (R&D) expenses in Q4 2025 totaled $9.9 million, up from $6 million in Q4 2024. For the full year 2025, R&D expenses were $33.7 million compared to $19.4 million in 2024, primarily due to higher clinical trial and manufacturing costs associated with soquelitinib and increased personnel costs [4][5] - The net loss for Q4 2025 was $12.3 million, slightly higher than the net loss of $12.1 million in Q4 2024. Non-cash losses included $0.7 million in Q4 2025 and $2.2 million in Q4 2024 from equity method investments [5] - As of December 31, 2025, cash equivalents and marketable securities totaled $56.8 million, an increase from $52 million at the end of 2024. Following a public offering, pro forma cash was approximately $246 million, extending the cash runway into Q2 2028 [6][7] Business Line Data and Key Metrics Changes - Significant progress was made in the development of soquelitinib, with promising results from clinical trials in peripheral T-cell lymphoma and atopic dermatitis. The company is entering 2026 with ongoing enrollment in a phase 3 PTCL trial and a newly initiated phase 2 atopic dermatitis trial [8][9] - The phase 1 trial results for soquelitinib showed a mean percent reduction in EASI of 72% versus 40% for placebo, with 75% of patients achieving EASI 75 [12][13] Market Data and Key Metrics Changes - The company is focusing on expanding soquelitinib's application in various inflammatory diseases, including hidradenitis suppurativa and asthma, with plans to initiate trials later in 2026 [9][26] - The market research indicates that soquelitinib's profile could significantly advance treatment options for patients with atopic dermatitis, particularly due to its oral administration and novel mechanism of action [11][21] Company Strategy and Development Direction - The company aims to leverage the unique mechanism of action of soquelitinib to address multiple inflammatory diseases and cancers, with a strong focus on clinical data and biomarker analysis to support its therapeutic potential [21][27] - The strategy includes expanding into mid-stage trials for other inflammatory diseases and maintaining a robust pipeline for soquelitinib, which is expected to be a leading option for treating moderate to severe atopic dermatitis [9][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of soquelitinib, highlighting its safety profile and efficacy in patients who have failed prior therapies. The company anticipates significant data readouts in 2026 that will inform future development [9][27] - The management team emphasized the importance of ongoing clinical trials and the potential for soquelitinib to provide durable responses in patients, which could change treatment paradigms in inflammatory diseases [27][98] Other Important Information - The company plans to present additional data from the phase 1 clinical trial at the Society for Investigative Dermatology annual meeting, focusing on biomarker results and durability of response [22] - The phase 2 trial in atopic dermatitis will enroll 200 patients, with results expected in mid-2027, while the PTCL trial will have an interim analysis later this year [24][25] Q&A Session Summary Question: Regarding the upcoming data readouts for PTCL and the China study - Management anticipates initial data from Angel Pharmaceuticals' trial later this year, with further data expected in 2027. The PTCL trial will have an interim review later this year [32][34] Question: Expectations for the SID meeting presentation - Management indicated that the durability of response and new biomarkers will be key focuses of the presentation [38][39] Question: Efficacy benchmarks for the phase 2 trial in hidradenitis suppurativa - Management expects efficacy to be comparable or better than existing biologics in the market [42] Question: Updates on the phase 2 trial in atopic dermatitis - The phase 2 trial is blinded and randomized, with no interim data expected until completion. However, updates from the Angel trial will provide interim insights [52][53] Question: Insights on the ALPS trial and its implications - Management noted that while ALPS results are promising, they do not directly predict outcomes for other indications but indicate the drug's activity in autoimmune responses [70][71] Question: Durability of response in the phase 2 trial - The phase 2 trial includes a follow-up period of 90 days post-treatment, but the primary endpoint will focus on EASI scores at 12 weeks [96][99] Question: Asthma trial design considerations - Management is considering a broad patient population for the asthma trial, without restricting to TH2 high patients, and is still finalizing the protocol [100][102]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $8.3 million, up 18.3% year-over-year, marking the seasonally strongest quarter due to holidays [15] - Advertising revenue increased by 18.3% for the quarter, driven by strong growth in the Zedge Marketplace, despite lower ad revenue at Emojipedia [16] - GAAP loss from operations was $2.9 million, compared to a loss of $2.2 million last year, with a non-cash impairment charge of $3.7 million related to Emojipedia [21] - Non-GAAP net income was $0.8 million, with an EPS of $0.06, compared to a loss of $0.2 million and a loss per share of $0.01 last year [21] - Cash strengthened to $19.1 million with zero debt, and free cash flow yield remains in the double digits [13][22] Business Line Data and Key Metrics Changes - Zedge Marketplace revenue was up over 21% year-over-year, driven by strong advertising CPMs and subscription revenue [15] - Zedge Plus subscription revenue increased by 33% year-over-year, with the net active subscriber base growing by 49% to nearly 1.2 million subscribers [17] - Deferred revenue reached $6 million, up 5% sequentially and 39% year-over-year, reflecting future revenue with a 100% gross margin [17] - Zedge Premium GTV was up 15.7% from the year-ago quarter, and ARPM increased by 47.6%, indicating improved monetization efficiency [18] Market Data and Key Metrics Changes - The company is experiencing MAU contraction but is focused on acquiring higher-value users and monetizing the audience more effectively [5] - The operational focus includes building a high-quality outbound pipeline and better qualifying inbound requests [9] Company Strategy and Development Direction - The company aims to strengthen monetization in the marketplace, build DataSeeds deliberately, and expand the innovation pipeline in a disciplined manner [14] - Investments in optimizing ad inventory and subscription offerings are yielding positive results, with a focus on innovation in AI training data through DataSeeds.AI [5][7] - The company is exploring multimodal data, including images, audio, and video, to enhance its offerings [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential of DataSeeds.AI and the ongoing interest from enterprise customers [8] - The company is cautious about scaling operations to avoid impacting profitability while building infrastructure and operational rigor [10] - Management acknowledged structural headwinds affecting Emojipedia and the need to adapt to changes in the search landscape [12] Other Important Information - The company has launched two more alpha products, bringing the total to four out of six planned for the fiscal year [11] - The cost of revenue was 6.8% of revenue, up from 6.4% last year due to increased production costs [19] - SG&A expenses decreased by about 6% to $6.7 million for the quarter, reflecting net savings from restructuring [20] Q&A Session Summary Question: Insights on DataSeeds and pipeline delivery - Management indicated that the progression of deals in DataSeeds.AI depends on successful proof of concepts and customer needs, with attractive margins thus far [26][28] Question: Updates on alpha product launches - Management shared that the new products are built on an evolving foundation for modular development, allowing for faster market entry [31][32] Question: Subscription revenue trends - The ongoing investment in optimizing subscription offerings is driving growth, with a focus on attracting prospective subscribers [34] Question: Zedge Marketplace performance - The strong performance is attributed to the overlap with year-end advertising spend and enhanced data science efforts for user segmentation [36][38] Question: Strategy for increasing active users - The company is employing new marketing strategies, testing product features, and utilizing data science to attract new users [40] Question: Progress on Tapedeck and music catalog - Management emphasized the importance of building a substantial and diverse music catalog to attract users, with ongoing efforts to promote the app [42][44]