call

President Donald Trump says he has been seriously talking with Navy Secretary John Phelan about adding “battleships” with gun-centric armament and heavily armored hulls back into America’s naval force structure. There are immediate questions about the feasibility and practicality of the Navy fielding any sort of battleship, a type of vessel the service has not had in its active inventory since 1992. At the same time, Trump’s comments do touch on real questions about the future of naval guns for major surface warships, especially amid ongoing work globally on railguns, and the potential value of added armor to respond to threats, including cruise missiles and drones.

Trump talked about the prospect of a new battleship for the Navy at an unprecedented all-hands meeting of top U.S. military officers at the Marine Corps’ base in Quantico, Virginia, yesterday. War Secretary Pete Hegseth had called for the gathering and had addressed the attendees first.

“I think we should maybe start thinking about battleships,” Trump said, adding that he had spoken to Secretary Phelan on the matter. “Some people would say, ‘No, that’s old technology.’ I don’t know. I don’t think it’s old technology when you look at those guns.”

“It’s something we’re actually considering, the concept of battleship, nice, six-inch side, solid steel. Not aluminum, aluminum that melts. If it looks at a missile coming at it, [it] starts melting as the missile’s about two miles away,” he continued. “Now those ships, they don’t make them that way anymore, but you look at it, your Secretary [Phelan] likes it, and I’m sort of open to it. And bullets are a lot less expensive than missiles.”

“It’s something we’re seriously considering,” he reiterated. 

It is unclear if Trump was talking about attempting to recommission any of the four ex-Iowa class battleships, which are preserved as museum ships at various locations around the United States, or building new ones. How seriously the Navy is or isn’t looking at a future battleship force of any kind is also not clear.

“The Navy is committed to maintaining a modern and effective fighting force. An updated Battle Force Ship Assessment and Requirements review has been initiated in alignment with the forthcoming National Defense Strategy,” a Navy official told TWZ when asked for more information. “This work is about fielding the right capabilities, with the right numbers and in the right theater. Once force structure decisions are finalized, they will be announced publicly and executed with speed. Until then, internal deliberations will not be previewed.”

The Navy uses the term “Battle Force” to collectively refer to its fleets of aircraft carriers, submarines, major surface combatants, and amphibious warfare ships, as well as combat logistics vessels and some other types of auxiliaries.

In response to additional queries on the matter, the Office of the Secretary of War also redirected us to the Navy.

This is not the first time that Trump has put forward a version of the battleship proposal. A decade ago, speaking from the deck of the former USS Iowa, then-candidate Trump raised the prospect of recommissioning that ship into service should he be elected. Trump won that election, but Iowa remained berthed in the Port of Los Angeles in California, where it still sits today.

On a level, the idea of recommissioning the Iowas reflects past precedent. These were the last battleships built for the Navy, and their main armament initially consisted of nine 16-inch guns, three in each of three turrets, which could hit targets up to around 23 miles away. Each one also had 20 five-inch guns spread across multiple turrets, along with other weapons. The four ships in the class – the USS Iowa, USS New Jersey, USS Missouri, and USS Wisconsin – were first commissioned into service between 1943 and 1944, and they all served during World War II in the Pacific.

Iowa, New Jersey, and Wisconsin were then decommissioned between 1948 and 1949 as part of post-war drawdowns. Two more ships in the class that were still under construction when Japan surrendered were scrapped entirely.

The Navy recommissioned Iowa, New Jersey, and Wisconsin between 1950 and 1951 to serve in the Korean War. All three of those battleships, along with the USS Missouri, were subsequently decommissioned before 1960. New Jersey briefly returned to service once more between 1968 and 1969, taking part in the Vietnam War.

In the 1980s, under President Ronald Reagan, the four Iowas were put through a deep overhaul and upgrade program before being recommissioned yet again. The modifications most notably included launchers for as many as 32 Tomahawk land attack cruise missiles and up to 16 Harpoon anti-ship missiles, something worth emphasizing in light of Trump’s remark that “bullets are a lot less expensive than missiles.” At that time, the ships also received new radars, electronic warfare systems, and other improvements, including Mk 15 Phalanx close-in defensive gun systems.

Until Ticonderoga class cruisers with 122 Mk 41 Vertical Launch System (VLS) cells, as well as upgraded Spruance class destroyers with 61-cell Mk 41 arrays, began entering service in the late 1980s, the modified Iowa design had the largest Tomahawk load of any single ship in the Navy’s inventory.

The four battleships continued to serve through the end of the Cold War, before being decommissioned between 1990 and 1992. Missouri and Wisconsin remained in service just long enough to take part in the Gulf War.

In 2015, there was a case to be made, albeit already increasingly remote, that recommissioning at least some of the Iowas one more time might have been feasible. The former Missouri and New Jersey had been stricken from the Navy’s rolls in 1995 and 1999, respectively, but Iowa and Wisconsin remained in mothballs until 2006. After that, they were turned into floating museums, but Congress only allowed that to happen with the express understanding, enshrined in law, that the U.S. military could ask for them back should the President invoke certain provisions of the National Emergencies Act. In 2007, legislators further clarified that this meant, among other things, that “spare parts and unique equipment, such as 16-inch gun barrels and projectiles, if donated,” could also “be recalled if the battleships are returned to the Navy in the event of a national emergency.”

A debate about the need, or lack thereof, for naval gunfire support to aid in future amphibious operations had been a central factor in the decision to keep the ships in a regenerative state. This was also later tied into the fate of the Zumwalt class stealth destroyers, also known as DDG-1000s, which we will come back to later.

A decade on now, the prospective cost and time to get any of the former Iowa class battleships serviceable again can only have increased, and likely dramatically so. Rehabilitating their now thoroughly dated steam-powered propulsion systems and training personnel to operate them would present particular challenges. TWZ touched on similar issues years ago amid discussions about recommissioning the aircraft carrier USS Kitty Hawk, which first entered service in 1961. The Navy ultimately decided to scrap Kitty Hawk, as well as the ex-USS John F. Kennedy, another ship in its class that had been in mothballs for years.

No country in the world is currently building new warships of a size and with a configuration in line with traditional battleships. Any attempt to do so in the United States would be very costly and manpower intensive. At the end of their final resurrections, the Iowas had over 1,500 crewmen aboard. That is well over five times the crew size of a Arleigh Burke class destroyer. Even assuming automation could cut that number down, making a very large crew commitment to a single surface combatant would be problematic for a Navy that has had trouble in the past meeting recruiting goals.

Beyond all this, in the context of modern naval warfare, there are glaring questions about the basic utility of a very large surface combatant, which would also require a large crew, and that devotes much of its available volume to relatively short-ranged guns. Operating ships like this on a day-to-day basis would be extremely costly and could be otherwise complicated for a U.S. Navy that has struggled to sustain the fleets it has now.

A gun-centric ship would also need to get in very close proximity to use those weapons against any targets at a time when the reach of adversary anti-access and area denial capabilities is only growing. This would only further narrow the scope of operations it could undertake, given that it could easily find itself vastly outranged in many circumstances by threats at sea, ashore, and/or in the air. Such a vessel would already be an obvious high-value target for enemy forces, which would create challenges for more independent operations outside of a larger surface action group.

The future of the very kinds of amphibious operations where naval gunfire support could be most of use is increasingly in question. Since 2020, the U.S. Marine Corps has been engaged in a complete overhaul of force structure centered on new concepts of operations that put significantly less emphasis on deploying via traditional large amphibious warfare ships.

Trump’s comment yesterday that ammunition for naval guns is cheaper per round than a missile is accurate, but this reality does not exist in a vacuum. Missiles have become the dominant naval weapons on larger surface combatants worldwide for attacking targets at sea and on land, as well as in the air, in large part because of the vastly longer reach and precision that they offer over even very large caliber guns. Major surface warships in service today, including in the U.S. Navy, do still typically feature at least one general-purpose main gun, but with a decidedly secondary role to their missile magazines, although these are far smaller than the Iowa class’ main guns. They also generally have arrays of other smaller guns, but for close-in defense.

It is worth noting here that top Navy officials have talked in the past about the need to think about future surface warfare plans outside of the lens of total missile launch capacity, especially as the service’s fleets have contracted in size. A key driver in those discussions has been how to fill the gaps that will come from the retirement of the last of the Ticonderoga class cruisers, now set to come at the end of the decade, which will take hundreds of VLS cells out of service. That being said, large caliber guns historically associated with battleships have not been discussed as any kind of alternative.

Concepts for battleship-like arsenal ships packed with VLS cells, which might also have some degree of secondary gun armament, have been put forward in the past. This rebalancing of capabilities could help just their cost.

We have seen some of this debate play out already in a way with regard to the Zumwalt class stealth destroyers. A pair of 155mm Advanced Gun Systems (AGS) tucked away inside stealthy turrets, and coupled with specialized long-range rounds, were core features of the finalized DDG-1000 design explicitly intended to meet continued demand for naval gunfire support.

However, the intended ammunition from the AGSs became so costly that the Navy decided not to buy any, rendering the AGSs effectively dead weight. The service is now in the process of stripping at least one of the turrets from each of the three DDG-1000s in order to refit them with the ability to launch Intermediate-Range Conventional Prompt Strike (IRCPS) hypersonic missiles.

Defense spending drawdowns immediately following the end of the Cold War led the Navy to severely truncate its overall plans for the Zumwalt class, overall. This is why only three of the ships were ever built, one of which still has yet to be commissioned into service. The DDG-1000 program has seen major cost and significant technical issues amid persistent questions about the expected roles and missions of these ships. The USS Zumwalt, the USS Michael Monsoor, and the future USS Lyndon B. Johnson are all currently assigned to a unit charged primarily with research and development and test and evaluation tasks. How much it will cost to keep this tiny fleet of exotic ships operational remains a burning question.

There is a line of development that could offer significant new capability in the naval gun space: railguns. Weapons of this type, which use electromagnets rather than chemical propellants to launch projectiles at very high speeds, hold the promise of offering a new and flexible way to rapidly engage targets at sea, on land, and in the air, and do so at considerable ranges for a gun. Railguns also offer magazine depth and cost-per-round benefits over missiles.

Between 2005 and 2021, the Navy was actively working toward an operational railgun capability. The estimated unit cost of the rounds for that weapon was pegged at around $100,000. In addition to being cheaper than missiles, this was also much less pricey than the rounds the Navy had been developing for the guns on the DDG-1000s, which had soared to some $800,000 per shell before that effort was axed.

The Navy halted work, at least publicly, on its prototype naval railgun in the early 2020s, citing technical hurdles. Planned at-sea testing had been repeatedly pushed back at that point. Development of the ammunition has continued for use in existing 5-inch naval guns, as well as weapon systems on land.

Other countries, including China, have also been pursuing this capability in recent years. Just this year, Japan has made significant strides in this realm, as TWZ has been following closely. This might presage the coming introduction of a new category of gun-armed naval vessels, which some experts and observers have quipped to be something of a second coming of the battleship.

Trump’s remarks yesterday also touched on the fact that battleships like the Iowa class offered a higher degree of physical armor protection than is found on modern surface combatants. In particular, battleships were historically characterized by thick armor ‘belts’ along the outside and/or on the interior of the hull above and below the waterline. The main belts on the Iowas, made of steel, were 13.5 inches thick, and they also had extensive armoring elsewhere.

Though it is also not clear what the President was necessarily referring to specifically when he mentioned “aluminum,” those comments do reflect a still-ongoing debate when it comes to the construction of naval warships. Aluminum and aluminum alloys offer certain advantages in naval shipbuilding, particularly when it comes to weight and cost. However, there has been much discussion over the years about their relative durability, as well as their lower melting point and fire resistance compared to available steels.

Persistent cracking on the aluminum superstructures on Ticonderoga class cruisers played a real role in the Navy’s decision to insist on all-steel construction for the Arleigh Burke class of destroyers. The service’s all-aluminum Independence class Littoral Combat Ships have notably suffered from cracking over the years, as well.

Whether it means battleship-like protection or not, there is a case to be made for renewed focus on passive armoring of surface warships as the maritime threat ecosystem continues to expand and evolve. A modern take on the armor belts of traditional battleships could provide valuable additional layers of defense against anti-ship cruise missiles, including types with specially designed penetrating warheads.

Even more limited additional armor could also provide useful extra protection against attacks involving lower-tier weapons, especially one-way attack drones, which are in increasing use, even by non-state actors. Iranian-backed Houthi militants in Yemen have shown how dangerous drones can be to ships at sea, especially if they are layered in with cruise and ballistic missiles and other munitions. The Houthis have also demonstrated how much pressure this puts on the missile magazines on modern warships. Those threats would only be magnified in higher-volume attacks in any future high-end conflict, such as one on the Pacific against China.

Added battleship-like armor may be effective in shrugging-off many types of anti-ship missile attacks, but it would still have its limits, especially against anti-ship ballistic missiles capable of drilling down into hardened targets from directly above just as a byproduct of the high speeds they reach in the terminal phase of their flights. Any extra armoring would require many design trades and considerations. The added mass would require larger propulsion and mechanical support systems, which would then push the ship to be even larger and more complex. Speed requirements could be relaxed although presumably the ship would have to keep-up with a carrier strike group, which would require it to meet or exceed the speeds of other ships designed to do so.

The U.S. Navy is in the process now of devising the requirements for its next surface warship, a future destroyer currently referred to as DDG(X). There are few things more central to the design of a naval vessel than what armament it should have and what materials should be used in its construction.

At the very end of last year, the Navy turned some heads with pictures from a ceremony marking the end of Capt. Matt Schroeder’s time as head of the DDG(X) program office, and Mr. Jim Dempsey’s taking over of that role. A cake at the event featured a rendering of the ship with no main gun at all on the bow, something that had been present in previous official artwork. Though it was just a cake, there is no indication that the source image came from an unofficial source. The Navy also does not appear to have clarified since then whether or not this reflects a design concept currently under consideration.

Beyond battleships, President Trump has also taken a very vocal interest in Navy ship design, in general, over the years, which could have other impacts on the service’s plans. At the tail-end of his first term, the President said he had personally intervened to turn the design of the Constellation class frigate from “a terrible-looking ship” into “a yacht with missiles on it.”

“I’m not a fan of some of the ships you do. I’m a very aesthetic person, and I don’t like some of the ships you’re doing, aesthetically,” Trump said during another portion of his remarks just today. “They say, ‘Oh, it’s stealth.’ I say that’s an ugly ship.”

Even before he was confirmed to his post, Navy Secretary Phelan had said Trump was also texting him in the middle of the night to complain about what is commonly called “running rust” on American warships.

In 2017, Trump had also suggested that the Navy should ditch electromagnetic catapults for launching aircraft on its Ford class aircraft carriers and go back to using steam-powered types. The Electromagnetic Aircraft Launch System (EMALS) has been plagued by issues over the years, which the Navy has spent considerable resources working to mitigate.

All of this comes as the Navy continues to struggle, broadly, with acquiring and fielding new warships and otherwise modernizing its fleets, as well as sustaining the vessels in its inventory already. The Constellation class frigate program, which is already three years behind schedule and on track to deliver the first ship nearly a decade after awarding the initial contract, has become a particular poster child for these failings. Constellation was supposed to reduce risk and keep costs relatively low by using an in-production design as a starting point, but the ship now only has around 15 percent commonality with its ‘parent,’ the Franco-Italian Fregata Europea Multi-Missione (FREMM), as you can read more about here.

“All of our programs are a mess, to be honest,” Secretary Phelan told members of Congress during a hearing back in June. “Our best-performing one [program] is six months late and 57 percent over budget.”

The Trump administration and Congress have pushed to try to reverse these trends in recent years, including by working to incentivize U.S. shipbuilders and exploring how foreign companies might be able to assist. The Navy has also put increasing emphasis on acquiring larger numbers of smaller vessels, including multiple tiers of uncrewed types, to help bolster its capabilities and operational capacity, while also maximizing available resources. In the meantime, China, in particular, has been surging ahead in naval warship production, as well as the expansion of its capacity to build those vessels, something TWZ has been sounding the alarm on for some time now.

It’s also important to remember that Trump often makes grand pronouncements about potential future military acquisition efforts that do not come to fruition.

Still, while the idea of the Navy operating battleships again is extremely remote, Trump’s influence could emerge in other ways in the Navy’s shipbuilding plans, especially as DDG(X) evolves.

Contact the author: [email protected]

A LOVE Island star has told of the moment she made a desperate 999 call to “catch a paedophile”.

Series ten star Mal Nicol, who entered as a bombshell in 2023, has claimed she got a predatory male arrested – after spotting him lurking by a children’s park.

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She told fans on TikTok: “We got a paedophile arrested. I literally cannot believe what we witnessed. It was honestly like a movie or something.”

Mal, who was with a friend at the time, was approached by a group of young boys close to a London park who complained about a “creepy man”.

Concerned for their welfare, Mal walked towards the park area in Little Venice, London, to see what was going on for herself.

“Moments later we clearly see that this guy is not okay,” she continued.

“He’s standing by the park swaying, like putting his hand into the park over the fence and trying to high five this little boy who’s about five years old.

“We kind of wanted to distract him and see what he was doing or saying.

“We then saw a mum with her daughter, like a little 3, 4 year old girl who is on a scooter. This guy tries to grab her from behind and the dad jumps in between them both.

“He then goes into the park where there’s a lot of young mums with their like 3 year old girls who are obviously feeling vulnerable and scared.

“So I call 999 and I’m literally so impressed with the police and how fast they came.

“When the officers arrives I was running up to them shouting ‘he’s going to get away, he’s going to get away’.

“I felt like I was in a movie. I’m like running.”

“The police arrested the suspect and Mal was interviewed alongside other witnesses.

“This is happening in London and I just think you have to do something. You can’t just watch. It was crazy.

“He better be put in for time. Like this is not okay.”

Proud Mal added: “Sorry for the long video, but we put a paedophile in jail.”

Image source: The Motley Fool.

DATE

Monday, September 29, 2025 at 5 p.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Rob Katz

Chief Financial Officer — Angela Korch

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

Resort reported EBITDA— $844 million for fiscal 2025, representing 2% growth compared to the prior year.

Fiscal 2026 net income guidance— $221 million to $276 million projected for the upcoming year.

Fiscal 2026 resort reported EBITDA guidance— $842 million to $898 million, including $14 million in one-time resource efficiency costs.

Season pass sales trend— As of September 19, 2025, season pass units decreased approximately 3%, while sales dollars increased approximately 1% compared to September 20, 2024.

Resource Efficiency Transformation Plan— Expected to deliver $38 million in incremental efficiencies for fiscal 2026, targeting over $100 million in annualized efficiencies by year-end.

Cash tax payments guidance— Anticipated at $125 million to $135 million for fiscal 2026.

Capital expenditures for calendar 2025— Planned at $198 million to $203 million in core capital, plus $46 million in growth capital for European resorts and $5 million in real estate projects.

Share repurchases— 1,290,000 shares repurchased (3% of outstanding) at an average price of $156 per share, totaling $200 million.

Quarterly dividend declaration— $2.22 per share dividend payable October 27, 2025, to holders as of October 9, 2025.

Net leverage— Net debt was 3.2x trailing twelve-month total reported EBITDA as of July 31, 2025.

Epic Friend Tickets initiative— New benefit for 2025-2026 Epic Pass holders offers lift tickets at a 50% discount to walk-up prices for the 2025-2026 season; full ticket value can be applied toward a future pass purchase.

Lift ticket revenue outlook— CFO Korch said, “still expect to be slightly positive on lift ticket revenue” despite lower pass visitation.

Liquidity position— Company reported approximately $1.4 billion in total liquidity (cash, revolver, and delayed draw term loan availability) as of July 31, 2025.

Transformative marketing focus— Management stated a shift is underway from email-based to broader digital, social, and influencer engagement aimed at brand building and guest acquisition.

Australia operations— Improved visitation and normalization of weather in Australia are expected to contribute $9 million to resort reported EBITDA growth.

SUMMARY

Vail Resorts(MTN 0.41%) management acknowledged financial underperformance versus expectations, attributing this to changing consumer behaviors and lagging adaptation in guest engagement approaches. The company expects overall skier visitation to be slightly down, driven primarily by an anticipated decline in pass sale units, with incremental lift ticket sales expected to offset only a portion of the decrease. Fiscal 2026 growth initiatives focus on targeted lift ticket strategies, enhanced digital marketing, and increased mobile conversion, with a multi-year timeline projected for material revenue acceleration. Net debt levels and liquidity are described as sufficient to sustain current capital priorities.

CEO Katz explicitly confirmed that visitation is expected “to be down slightly” due to lower pass sales, with a partial offset from new lift ticket initiatives.

Passholder renewals are up among multi-year loyal customers, while first-year and new buyer retention remains a challenge.

CFO Korch indicated that visitation is really the key on both ends when assessing the guidance range, highlighting the outsized impact of traffic on results.

Ancillary revenue capture and improved technology deployment (notably, launches for My Epic app integrations) are planned to boost per-guest monetization and operational efficiency.

Management reported no material geographic or demographic concentration in the weak pass trends, describing softness as broad-based rather than isolated to any segment.

Dividend maintenance is prioritized even at the lower end of guidance, with willingness to allow leverage to go up a little bit if necessary, per CEO Katz.

INDUSTRY GLOSSARY

Epic Friend Tickets: Discounted lift tickets made available to Epic Pass holders for their friends and family, priced at 50% off standard walk-up lift ticket rates, and applicable for future pass conversion.

Resource Efficiency Transformation Plan: Vail Resorts’ cost optimization initiative aimed at achieving over $100 million in annualized cost savings, centering on operational and marketing efficiency.

Full Conference Call Transcript

Angela Korch: Thank you, operator. Good afternoon, and welcome to our fiscal 2025 fourth quarter earnings conference call. Joining me on the call today is Rob Katz, our Chief Executive Officer. Before we begin, let me remind you that some information provided during this call includes forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings. Actual future results may vary materially. Forward-looking statements in our press release issued this afternoon along with our remarks on this call, are made as of today, 09/29/2025. And we undertake no duty to update them as actual events unfold. Today’s remarks also include certain non-GAAP financial measures.

Reconciliations of these measures are provided in the tables included with our press release, which along with our annual report on Form 10-Ks, filed this afternoon with the SEC, are also available on the Investor Relations section of our website www.vailresorts.com. I would now like to turn the call over to Rob for some opening remarks.

Rob Katz: Thank you, Angela. Good afternoon, everyone. Thanks for joining us. Before we discuss our results and fiscal 2026 guidance, I want to share my perspective on where the business stands today and where I see opportunities for future growth after being back in the CEO role for the past four months. I want to start by acknowledging that results from the past season were below expectations, and our season-to-date pass sales growth has been limited. We recognize that we are not yet delivering on the full growth potential that we expect from this business, in particular on revenue growth, in both this past season and in our projected guidance for next year.

That said, I’m confident that we are well-positioned to return to higher growth in fiscal year 2027 and beyond. At the heart of our underperformance is that the way we are connecting with guests has not kept pace with the rapidly evolving consumer landscape. We have not fully capitalized on our competitive advantages nor have we adapted our execution to meet shifting dynamics. For years, email was our most effective channel for reaching and converting guests, leveraging data to deliver efficient and targeted communications. However, as consumer preferences have changed, particularly over the last few years, email effectiveness has significantly declined but we did not make enough progress in shifting to new and emerging marketing channels.

Compounding this, we historically have prioritized transactional call-to-action messaging with our guests and missed the opportunity to tap into the strong emotional connection our guests have with the Epic brand and our individual resorts. This approach was successful during a time period where we were rapidly adding resorts and innovating our pass product portfolio. But over the last few years, we have not benefited from those types of positive news events, and instead have dealt with actually some moments we did not deliver on the operational front. Our approach has not been reaching a broader array of guests in order to amplify brand awareness, attract new guests, and increase guest loyalty.

We’ve also not had enough focus on our lift ticket business. Again, this made sense as we were rapidly growing our pass business, but as we dramatically increased pass penetration, we have not pivoted to bring the same level of focus, creativity, and resources to engaging with guests who, for whatever reason, were not yet ready to purchase a pass before the season. Finally, while we have made great strides in developing and improving our My Epic app, the app does not have native commerce, and we have not been set up to accept either Google Pay or Apple Pay.

However, we are seeing guest engagement dramatically increase in the app and on mobile, yet purchase conversion within both are significantly lower than what we would see on our website and below its potential. I’m fully committed to course-correcting and executing a multiyear strategy that unlocks the full potential of our business. The strategy is rooted in leveraging our strong competitive advantages to drive sustained and profitable growth. We own and operate 42 resorts across almost all regions in North America and Australia, and we have the strongest brands and most popular resorts.

By owning and operating our resorts, we are able to collect extensive data from our guests across all our lines of business throughout the entire network, giving us tools we can leverage in every marketing channel, and use to inform mountain and technology investments in the highest return areas across all our resorts. We can also leverage our integrated model and data to optimize every aspect of our product and pricing approach across all lift access products, passes, and lift tickets, at each resort as well as ancillary revenue, which will continue to be a larger focus for the company going forward. Finally, we are well-positioned to leverage the new technologies that are defining the current market environment.

However, our immediate priority is increasing visitation to our resorts, an essential driver of revenue and ultimately free cash flow. We will continue to invest in our resorts and our employees, consistent with our long-standing focus on delivering exceptional guest experiences. At the same time, we are taking decisive steps that we believe rebuild lift ticket visitation, evolve our guest engagement approach, to better reach and convert guests, and reaccelerate growth of our pass program. All of which are critical to strengthening our long-term financial performance. On the first item, we are focused on rebuilding lift ticket visitation, an essential driver of revenue and long-term growth.

We are strategically enhancing lift ticket offerings, pricing strategies, and our marketing approach aimed at bringing in new guests to our resorts in ways that complement our pass program. In August, we introduced Epic Friend Tickets, a new benefit for the 2025-2026 Epic Pass holders giving them the ability to share discounted lift tickets with family and friends. This not only celebrates the social side of skiing and riding, but it also drives lift ticket sales for new guests that would be attracted to visiting our resorts with their friends and family. Importantly, the full value of the ticket can be applied towards a future pass purchase, making it a powerful tool for future pass conversion.

At the same time, we’re evolving our lift ticket pricing strategy with more targeted adjustments by resort and by time period. This allows us to balance guest access and value while optimizing demand, particularly in off-peak periods, without compromising the strength of our pass program. We are also increasing our media investment with a focus on top-of-funnel awareness of our resorts, to help us reach new audiences and drive incremental visitation throughout the winter. And intend to continue to innovate our lift ticket product offering as we get into the upcoming ski season.

Beyond the expected immediate impact on visitation, lift ticket guests represent a high conversion population for future pass sales, which supports our pass growth in FY ’27 and beyond. Second, we’re evolving our guest engagement strategy to better connect with skiers and riders and drive stronger performance. Our focus is on broadening our reach and modernizing how we engage across channels. We plan to increase our exposure within digital and social platforms and expand our influencer partnerships. We believe this shift will allow us to reach guests where they are, and to fully utilize our guest data to create content that resonates with our guests and drives action.

We’re also aiming to elevate the individual brands of our resorts, by tapping into the emotional connection guests have with each destination. We believe this is an important differentiator in a competitive landscape. Third, we continue to see meaningful opportunities to expand advanced commitment and grow our pass business. Pass price reset ahead of the 2021-2022 season exceeded our expectations in the initial years. And despite some modest declines recently, pass units are expected to be up over 50% fiscal 2026 compared to fiscal 2021. And the same is true for our Epic and Epic Local pass products, which despite recent modest declines, we expect to be up approximately 20% in units, since the 2021 season.

And importantly, we have delivered this strong growth in those products despite significantly expanding other pass options for guests, including our Epic Day Pass products. This growth in our pass program has significantly strengthened our financial resilience and stability. We’re focused on driving long-term guest loyalty, which means ensuring we’re optimizing the pass offering and continue to drive retention and conversion of new guests to the program. Toward that end, while driving lift ticket sales, Epic Friend Tickets is also a new benefit for unlimited pass. We’re also investing in personalized media and influencer channels better target and convert prospective pass buyers.

Because passes were already on sale during the CEO transition, our ability to influence fiscal 2026 pass results was limited. Looking ahead to fiscal 2027, we will be evaluating all aspects of our pass portfolio, including the product offering, pricing, and benefits, in conjunction with our lift ticket products and pricing, with a focus on driving conversion to our highest value highest frequency products, and optimizing our overall lift access revenue growth.

We are also actively searching for a new leader of our marketing organization, and have retitled the role as a Chief Revenue Officer reflecting the clear focus for this leader on driving all aspects of revenue for the company, and are looking for an executive with strong P&L ownership and overall leadership experience. Finally, we will continue to invest in our people and our resorts to ensure we are delivering an experience of a lifetime.

We are uniquely positioned to capitalize on investments in new technologies and processes that make it easier for our guests to engage with each aspect of the physical and digital experience we provide, driving both more value for our guests and revenue opportunities for the company. Vail Resorts, Inc. has delivered incredible stability and has an extraordinary foundation to execute on these opportunities, and generate stronger long-term sustainable growth. We have irreplaceable resorts, an owned and operated business model and robust data infrastructure that enables a sophisticated approach to product and pricing decisions across our resorts.

We continue to execute against our growth strategies of growing the subscription model, unlocking ancillary, transforming resource efficiency, differentiating the guest experience, and expanding the resort network. In addition, we have a resilient business model with demonstrated financial stability and strong free cash flow generation. And a track record of disciplined capital allocation and consistent innovation. Coupled with our passionate and talented teams, we believe we are well-positioned to succeed in the future. These actions taken together with the continued success of our Resource Efficiency Transformation Plan gives me confidence in our ability to deliver long-term sustainable growth and long-term value for our shareholders, our guests, our communities, and our employees in the years ahead.

With that, I will turn it over to Angela to further discuss our financial results and fiscal 2026 outlook.

Angela Korch: Thank you. As Rob mentioned, while our financial results in fiscal 2025 do not reflect the full potential of the company, the results do highlight the stability of the business model and early success of the resource efficiency transformation plan. The company generated $844 million of resort reported EBITDA in fiscal 2025, which represents 2% growth compared to the prior year, despite total 3% across our North American resorts. The results were within the original guidance range for fiscal 2025 per resort reported EBITDA, provided in September 2024, and excluding the CEO transition costs and changes in foreign exchange rates, the result was within 1% of the midpoint of the original resort reported EBITDA guidance range.

Results for our fourth quarter fiscal quarter 2025 were slightly ahead of our expectations with strong cost management, solid demand for our North American summer operations, and improved visitation in Australia relative to the prior year. Now turning to our outlook for fiscal 2026. In fiscal year 2026, we expect net income attributable to Vail Resorts, Inc. to be between $221 million and $276 million and resort reported EBITDA to be between $842 million and $898 million. The guidance includes an estimated $14 million in one-time costs related to the Resource Efficiency Transformation Plan.

We anticipate growth in fiscal 2026 to be driven by price increases, ancillary capture, incremental efficiencies related to the resource efficiency transformation plan, and normalized weather conditions in Australia in 2026, partially offset by lower pass unit sales which are expected to have a negative impact on skier visits relative to the prior year, and cost inflation. Season pass sales through 09/19/2025 for the upcoming North American ski season decreased approximately 3% in units, and increased approximately 1% in sales dollars, as compared to the prior year period 09/20/2024.

The season-to-date trends through 09/19/2025 were generally consistent with the spring selling period, a decline in units driven by less tenured renewing guests, those that had a pass for just one year, and fewer new pass holders. Renewals are up for our more loyal pass holders, those that have had a pass for more than one year. As we enter the final period for season pass sales, we expect our December 2025 season-to-date growth rates to be relatively consistent with our September 2025 season-to-date growth rates. The Resource Efficiency Transformation Plan continues to generate strong results for the company, and we expect to exceed the $100 million in annualized cost efficiencies by the end of fiscal year 2026.

Our fiscal 2026 guidance assumes we will deliver $38 million incremental efficiencies before one-time costs, contributing to the achievement of an expected $75 million of cumulative efficiencies since we announced the plan in September 2024. Finally, in fiscal 2026, we anticipate cash tax payments to be between $125 million to $135 million. As Rob noted, while our guidance for fiscal 2026 reflects growth over the prior year, it does not reflect the full potential of the company. We are committed to positioning the company to unlock stronger and sustainable long-term growth moving forward. Turning to our capital allocation priorities.

Operator: We remain committed to a disciplined and balanced approach

Angela Korch: as stewards of our shareholders’ capital. Our capital allocation priorities remain consistent. First, prioritize investments and enhance our guest and employee experience. Generate strong returns. And second, maintain flexibility to pursue strategic acquisition opportunities. After those top priorities, we return excess capital to shareholders. In support of reinvestment in our resorts, in calendar year 2025, we expect to spend approximately $198 million to $203 million in core capital, before $46 million of growth capital investments at our European resorts, and $5 million of real estate-related capital projects. In addition to this year’s significant investments, we are pleased to announce some select projects from our calendar year 2026 capital plan.

A full capital investment announced planned for December 2025, including a core capital plan consistent with the company’s long-term capital guidance. At Park City, we are continuing the multiyear transformation of the Canyon Village to support a world-class luxury-based village experience. Vail Resorts, Inc. in partnership with the Canyons Village Management Association is replacing the open-air cabriolet transport lift with a modern 10-passenger gondola which will improve the guest experience, reduce weather-related disruptions, and complement the Canyons Village parking garage, a new covered parking structure with over 1,800 spaces being developed by the developer of the Canyons Village. In addition, we plan to resubmit for permits to replace the Eagle and Silverload lifts at Park City Mountain.

To continue our investment in the on-mountain experience, which if approved, would be upgraded for the 2027-2028 North ski season. Planning of additional investments at Park City Mountain across the mountain is underway and additional projects will be announced in the future. The company also remains committed to the multiyear transformation of Vail Mountain. And in calendar year 2026, we will continue to invest in real estate planning to develop the West Lions Head area into the fourth base village in partnership with the town of Vail and developer, East West Partners.

In addition, the company plans to build on the success of its calendar year 2025 lodging investment at the Arabelle at Vail Square with plans to renovate guest rooms at the Lodge at Vail in calendar year 2026. In addition, to further enhance the guest experience across our resorts, the company will be investing in technology enhancements and new functionality for the My Epic app including new in-app commerce functionality, payment platform integrations, to improve mobile conversion, enhanced My Epic assistant functionality, and expansion of the new ski and ride school technology experience. In addition, the company will make technology investments to enhance the integration of My Epic Gear guest experience. Turning to the second priority.

Our balance sheet remains strong and is positioned to enable future strategic acquisition opportunities. As of 07/31/2025, the company’s total liquidity, as measured by total cash plus revolver availability and delayed draw term loan availability was approximately $1.4 billion. The company’s net debt was 3.2 times its trailing twelve-month total reported EBITDA. On 07/02/2025, the company completed its offering of $500 million aggregate principal amount of five and five-eighths percent notes, due in 2030. We used a portion of the proceeds from the offering to repay seasonal borrowings under our revolving credit facility, in addition to the $200 million of share repurchases completed during the quarter.

We intend to use the excess proceeds from the bond issuance together with the $275 million delayed draw term loan for the repurchase or repayment of our outstanding 0% convertible senior notes due 2026 at or prior to their maturity on 01/01/2026. After these priorities, we focus on returning excess capital to shareholders. In the current environment, we look to balance our approach between share repurchases and dividends. The company declared a quarterly cash dividend on Vail Resorts, Inc. common stock, a $2.22 per share dividend will be payable on 10/27/2025 to shareholders of record as of 10/09/2025.

The current dividend level reflects the strong cash flow generation of the business, with any future growth in the dividend dependent on material increases in future cash flow. We also maintain an opportunistic approach to share repurchases based on the value of the shares. As mentioned in the quarter, we repurchased approximately 1,290,000 shares or 3% of outstanding shares at an average price of approximately $156 per share for a total of $200 million. We continue to evaluate the highest return opportunities for capital allocation. Now I’d like to turn the call over to Rob.

Rob Katz: Thanks, Angela. In closing, we greatly appreciate the loyalty of our guests this past season and the continued loyalty of our pass holders who have already committed to next season. With our Australia winter season coming to a close, I would like to thank our frontline team members for their passion and dedication to delivering an incredible experience to our guests. I would also like to thank all of our team members who are working to welcome skiers and riders back to the mountain this coming winter season. We are looking forward to a great upcoming winter season in the US, Canada, and Switzerland. At this time, Angela and I would be happy to answer your questions.

Operator, we are now ready for questions.

Operator: At this time, if you wish to ask a question, please press 1 on your telephone keypad. You may remove yourself from the queue by pressing 2. Again, please limit yourself to one question and one follow-up. We’ll take our first question from Shaun Kelley with Bank of America. Your line is open.

Shaun Kelley: Good afternoon, everyone. Thanks for taking my questions. Rob or Angela, maybe I just wanted to start with kind of the broad backdrop for visitation for this upcoming season. So Rob, in the prepared remarks, you talked a lot about some very, I think, interesting initiatives to start to address the visitation challenges and some you see there. Obviously, the Epic Friend Tickets being a piece there, and I imagine you expect utilization on those to be pretty good.

So can you help us just kind of think about that underlying backdrop and what you’re doing on marketing and, you know, with Epic Friends and contrast that with kind of in the, you know, in the bridge for the year on the financial side, it seemed like the implication was that the expectation given the pass units are down a little bit was that maybe visits are down, but I might be misreading that. So just wondering kind of how you expect really this season to play out from a visitation standpoint given some of the initiatives in play? Thanks.

Rob Katz: Yeah. Thanks, Shaun. Yes. That’s true. We do expect visitation in total for this year to be down slightly. I think that is primarily driven by the decline in pass sales to this point. And while we do think that we’re gonna make a portion of that up with lift ticket sales, you know, it’s not gonna be enough to overcome, in our view, the decline in pass sales to this point. What I would say is that a lot of the things that I mentioned about what we need to do to correct how we engage with guests are things that are multiyear efforts. None of those things are things that happen right away.

Even the Epic Friend piece will take time for our guests to understand what they have for us to communicate with our guests, for them to then increase their utilization to understand the change in terms for that and how they can use it and how they could turn it into a ticket the following year. So we expect to see some benefit from it this year, but, obviously, additional benefit from it in future years. The same is true with our paid media investments. Again, I think, you know, if you’re looking for top-of-funnel brand building efforts, that’s not something that’s gonna happen in a month or two. That’s something that takes more time.

The same is true for getting deeper and more skilled and more sophisticated in all the other marketing channels that we have. So what I would say is I think, you know, in the end of the day, we are starting to prepare for the fiscal 2027 season now. So we have work going on. We’re obviously working on pass sales, but also working on other initiatives. If you kind of back that up, you realize, like, yeah, from the time that some of this started, right, not possible to have a full impact on fiscal 2026.

Shaun Kelley: Got it. Makes complete sense. And then just as my follow-up, and you kind of already touched on a little bit of it. Just for the 2027 and beyond plan, some of the outline for maybe the Chief Revenue Officer and some of the opportunity. But just how big of a change is on the table here, Rob, just in terms of like look, the big initiative done was, you know, to push for volume, to push pass utilization up at the expense a little bit of price. Right? That was sort of the compromise made back during the pandemic.

Is something as fundamental as that shift on the table here as we think about moving forward, whether it be raising the pass price in its entirety to balance out that ecosystem differently or maybe thinking about it differently, just the, you know, possibly charging an add-on, which has been proposed at, you know, a major, you know, kind of high-value resort like, like, Vail, like, just to change the composition of, you know, price versus volume. Just how are you thinking about sort of that very fundamental idea as we turn the page to next year?

Rob Katz: Yeah. I think the way to think about it is I think what we did with the price reset was really kind of a right across the board approach because what we saw was that we felt like all of our pricing was too high in terms of getting the penetration that we wanted in pass. And I think that was the right move at the time, and I think it’s driven actually good success. And, obviously, as we highlighted, you know, we’re still well above where we were before then. But what I would say though is I think what we have not done is we have a lot of different pass products. Right?

So it’s not just the Epic and Epic Local. Right? We have a lot of different pass products for that. We then have child pricing and college pricing and team pricing and regional passes. And then all of those products really sit on top of all of our lift ticket products. And I think what you’re hearing from us is I think what we can do is now, right? Not take a kind of across the board approach to any of this, but actually, resort by resort or pass product by pass product approach.

And there’s technology now that’s available that given our data and what we can put into it, right, where all of a sudden we have a much higher level of confidence in terms of what we can drive with some of these individual moves. It’s, you know, I we have, I don’t know, 200 plus pass products or something like that. We have thousands of lift ticket products. And those have largely been marching in lockstep. We think, actually, there’s an opportunity for us to think much more strategically about it. Again, using, you know, some of the tools that are out there that we all know about.

And so what I’d say is, you know, in a way, the big if we’re cracking something open, it’s not necessarily that we’re looking to take price up or price down per se. It’s that we’re actually cracking this kind of connection that every single product has had to each other over the last fifteen years.

Shaun Kelley: Perfect. Thank you very much.

Operator: We’ll move next to David Katz with Jefferies. Your line is open.

David Katz: With respect to the sort of single-day visitation or the walk-up,

Rob Katz: know, window, one of the debates you know, I’m I’m guess you’re you’re having is on sort of that price. Right? And know, whether any of the strategies around improving walk-up visitation you know, includes adjusting some of the price schedules that are out there or some of the pricing strategies.

Rob Katz: Yeah. What I would say is that I think we look at it, I mean, maybe a little bit more broadly. So right at a at a top-line level, we’re looking at pass. Right? So that’s all the products that are sold before the season begins that are nonrefundable. And then there’s lift tickets, and within lift tickets, we have a lot of different lift tickets, some of which most of which, candidly, are advanced lift tickets. So there’s something that you buy three days in advance, seven days in advance. And so we do put a lot of business through that. And then, yes, we do have people who walk up to buy tickets just that day.

And so we are looking at all of those prices. But, of course, I would say, yeah, we’re we’re still gonna be putting, you know, the Epic Friend Ticket is a 50% discount on the walk-up price. That would, you know, perfectly fit for somebody who wants to make a decision that day. But we think there could be opportunities for us to be more creative about some of the other prices that we have and the kind of advanced windows that we have for them because of when people if you haven’t made your decision by the pass deadline, then it’s a question of when do people start making decisions, you know, for their future trips.

So in the end, some of this is like, we’re trying to kind of tailor this to how people make a decision. You know, it’s not that many people are deciding to go to Vail that day and then, you know, come flying out. So the question is, like, when can we shift price that makes the biggest impact on driving more visitation? I understood. And, you know, interesting about

David Katz: the discussion around you know, media channels, And Yep. Historically, the company has always been particularly advanced at you know, data gathering. How much of this strategy about sort of reaching customers through the right channels

Rob Katz: is also about data gathering that builds intelligence know, for the future? Or is it just the right connection channel?

Rob Katz: Yeah. I think I actually feel really good about the data that we have on our guests. We have extensive data. I think, though, that our you know, we’ve had kind of a maybe not a singular focus, but close to around email because it was obviously we could present the information, the offer, the communication to the guests, in a great way. We could, you know, get in front of them and you know, we made a huge effort, right, to collect emails over the last ten to fifteen years.

And if that channel is still gonna be important for us, but we can use that data now with all the tools that are available to go out and use tons of different, you know, paid media networks, that do personalize. Right? And we can go through other companies that we can kind of bump our list against their list and then make sure we’re delivering the right ad to the right person. Then we can use look-alike modeling right, to even for prospects who we don’t necessarily have in our database. To make sure that we’re targeting the right people. And this is true not only with digital traditional digital media, but TV. Right?

Tons of TV now is are things that you where you can run ads that go down to the individual person. Which is important for us because, obviously, you know, we’re not a mass-marketed type item. And by the way, that’s what then, you know, that’s media. Then you add social media. You use have influencers, boosting influencers, you know, own posts about, you know, your product, and then using that creative to actually just run it you know, in those social media channels at the same time using TikTok. Historically, we have really not been you know, engaged in. And, again, all of these things made total sense.

For a lot of time because obviously we did have a much better, more efficient communication channel. But as things shift, like, we have to be out front of those as well. And take the same level of sophistication and data that we have and just leverage them in different ways.

David Katz: Understood.

David Katz: Thank you very much. Thanks.

Operator: We’ll take our next question from Jeff Stantial with Stifel. Your line is open.

Jeff Stantial: Hey, good afternoon, everyone. Thanks for taking our questions.

Rob Katz: Maybe just starting off on

Jeff Stantial: the initial fiscal 2026 guidance, which is where we’re getting the most questions.

Rob Katz: This afternoon. Angela, you listed out some of the puts and takes that factored in. One that seems to be missing or at least that we didn’t hear was sort of how you’re thinking about lift ticket or window ticket sales this year. So is it your expectation that lift unit sales are down year on year

Rob Katz: again, similar to sort of what we saw this past season and one or two before that. Or is it, like, your expectation that should stabilize on some of these efforts as quickly as fiscal 2026? And then and similarly, just how should we think about sort of the blended price growth or decline just given these changes

Angela Korch: to the to the buddy pass system and the more dynamic pricing strategy, maybe net of typical price taking action that we’ve seen from you historically?

Angela Korch: Yeah. Thanks, Jeff, for the question. Yeah. We did talk about the sun visitation where Rob was commenting on. We do expect some offset to the past visitation to occur on growth on lift ticket visitation. And with our pricing actions, while we’re taking some opportunities to introduce new products like Epic Friends and those, still expect to be slightly positive on lift ticket revenue. I’ll maybe go through some of the other kind of gives and takes that I tried to outline. You know, on the midpoint of the guidance relative to last year, it’s up about $26 million. And we called out, obviously, the resource transformation plan playing a big role in that. It’s up $38 million.

Also, the normalized kind of conditions within Australia being another $9 million. And on top of that, really coming from growth, both the past price growth that we took, but also, you know, our lift ticket prices as part of that as well. And then improved ancillary, those are kind of the positives. Right? And those are being offset by our past unit sales, right, which will have negative impact on visits. And then normal just expense and labor inflation.

Jeff Stantial: That’s great. Thanks for all that extra color, Angela. And then turning over to the Epic Friends you know, changes to the structure there, Rob or Angela. Can you just maybe start off by helping frame for us the materiality of Buddy Pass historically, whether in terms of total units, revenue contribution, just any metrics that you could provide there? And then as we think about sort of the overall return on this on this change, is it your expectation that one-time sort of pricing hit in year one can be recouped by higher volume of lift ticket sales?

Or should we really think about this more as a longer-term investment where the return manifests over time through sort of long-term replenishment of that funnel for new to sport and lapsed skiers and ultimately conversion over to pass sales. Just any extra color there would be great. Thanks.

Rob Katz: Yeah. Sure. So I would say so buddy tickets historically are material part of

Angela Korch: of lift ticket sales. Angela, have we disclosed that before? Yeah. There’s the there’s the

Angela Korch: pie chart in our investor presentation where you can see, right, it’s it’s about 7% of total lift revenue, but right, it is 20% of paid lift ticket. Revenue that comes from those benefit tickets.

Rob Katz: So yeah. So it’s, you know, material, and that gives you kind of a sizing of it. What I would say is I think our view is that

Rob Katz: it is something that we would expect to be

Rob Katz: a positive, right, to the year. We’re not expecting it to be negative to the year.

Rob Katz: Think, obviously, it’s something that’ll grow over time. But we do see that and in large part, it’s because, of course, we’re gonna be giving a discount an additional discount some people who are already using the program. But we’re expecting, right, you know, more people to use the program that we’re gonna promote it in a much more, significant way. Now that the discount is just 50% across the board for everybody, now that we’re giving the discount to pass holders, in the fall, not just pass holders in the spring, And, obviously, have been more clear about the ability to turn it, you know, turn it into the following year for a pass.

So in total, we just feel like, yeah, we will ultimately add more visits, and that is something that is contributing to the lift ticket growth that we’re expecting. For this year as we talked about earlier.

Jeff Stantial: Okay. Thank you very much. Thanks.

Operator: We’ll move next to Stephen Grambling with Morgan Stanley. Your line is open.

Stephen Grambling: Hey, thank you. A couple of follow-ups on the moving parts you ran through in the guidance for the year ahead. Do you generally anticipate that some of the efforts to communicate the new

Stephen Grambling: pricing

Stephen Grambling: and marketing will be incurred

Stephen Grambling: this year, or is that more of a 2027 thing?

Stephen Grambling: So as we think about the potential for recovery and visitation and top line in ’27, will there also be a step up in incremental costs?

Rob Katz: Yeah. I think two things. One is I think we know, there are opportunities actually to offset what you know, as we use more sophisticated technology in our marketing department to actually get more efficient with our overall cost. Which I think is kind of an overall view that we have about the business going forward that we believe that there are continued opportunities for us to drive resource efficiency and marketing is one of those places. And our goal is to take those savings and obviously redeploy them into investments that we think could be more productive.

So while we do see that there’ll be additional investments that we have to make, both within our marketing group and, of course, on the mountain, in our employees, as we, you know, look to take the experience of we also feel like there are other opportunities for us to take cost out of the business. So the investments that we wanna make are not ones that we think should pull down the margin. At all.

Stephen Grambling: That’s helpful. One other follow-up. How are you thinking about the net impacts from the disruption at Park City last year versus this year? Is that a tailwind in your expectations? Or a headwind?

Rob Katz: Yeah. It’s definitely it’s definitely a tail in our mind. Obviously, you know, of course, there could be some guests that didn’t have a good experience and are concerned about returning. But we see, you know, the experience was so challenging last year, and we think the tail from that likely was last season. Where I feel like this year we’re gonna be going in and the team, I think, there has done a great job of preparing for the season. I think we’re in a great spot to deliver a very high level of experience all season long.

I think that’s something that’s, you know, gonna come through and we’re seeing evidence of that, in the broader market bookings as well in Park City. So you know, for us, I think it’s we’re starting off in the right spot, and so we feel like it’s a tailwind.

Stephen Grambling: Great. Thank you.

Operator: We’ll move next to Laurent Vasilescu with BNP Paribas. Your line is open.

Laurent Vasilescu: Good afternoon. Thank you very much for taking my question. The March Investor Day laid out a vision think, on Slide 45 to have past revenues go from 64% of the mix

Laurent Vasilescu: to over 75% over time.

Laurent Vasilescu: Rob, with the comments provided in earlier on the lift tickets, Where do you want that mix rate to go over time? Should it still go over the 75%? Are you happy with that rate at 64 currently?

Rob Katz: I would say, you know, right now, I think my primary focus

Rob Katz: is on overall visitation to the resorts.

Rob Katz: And overall lift revenue. And I think but I would say that I do think you know, there’s yes. There’s some pullback you know, that is maybe to be expected given the kind of rapid growth that we saw know, over the last four years. But I actually feel that, yeah, there’s continued opportunity just like we talked about with Epic Friends tickets and moving people, you know, through lift tickets. Those are all opportunities for us to ultimately convert them into a pass. And so we absolutely are gonna continue to march forward you know, as we get, right, new visits from every source. To convert them and drive our path to the stuff.

It’s ultimately you know, it’s the best deal. It’s the cheapest per day price. And as people get more comfortable, you know, and more willing to commit in advance, we think we could transition them into those products. But, again,

Rob Katz: yeah, it starts with visitation growth, overall visitation growth.

Laurent Vasilescu: Okay. Very helpful. Thank you. And then tonight’s press release outline is that you

Laurent Vasilescu: expect

Laurent Vasilescu: your December 2025 CV date growth rate to be comparable to what you saw for the month of September. Can you maybe comment a bit more about this? What gives you the confidence that the trends remain consistent going forward for the next few months?

Rob Katz: What I would say is every time we put out some color commentary on that, use the trends we’re seeing, how they’re shifting, And it is true that as we go into the last you know, deadlines, it is more heavily weighted to new than renew. So there’s always a little bit more uncertainty. At the same time, obviously, a lot of the selling season is behind you. So we take all of those things, you know, into yeah. An estimate. Right? We use forecasting to come up with what we see going forward.

And it doesn’t mean we’re gonna be precisely accurate time, but we try and give people kind of our best assessment of every piece of data that we have at the moment.

Laurent Vasilescu: Okay. Thank you very much. Best of luck. We’ll move next to Patrick Scholes with Truist Securities.

Operator: Your line is open.

Patrick Scholes: Hi. Thank you. Good afternoon, everyone. I’d like to talk about the dividend coverage. When I run some back of the envelope numbers, and certainly, it could be off in my assumptions here, at the low end of the guide, it looks like the dividend is not fully covered by the free cash flow. Assuming I’m not completely wrong in my calculations, My question is, you know, how comfortable are you taking on some debt assuming you come in at the lower end of the guide? To maintain that dividend and along that line, at what’s net leverage ratios are you comfortable with? Thank you.

Rob Katz: Yeah. We’re very comfortable with the

Rob Katz: current leverage ratios that we have. We think they provide a lot of room for the company

Rob Katz: you know, especially given the stability of the business. So that has given us comfort on our dividend level. And, yeah, we’re we’re certainly comfortable you know, if it means that yeah. Leverage goes up a little bit given the you know, where we’re starting from. That said, I think we’ve been really clear that to show an increase in our current dividend yeah, we need to see a material improvement in free cash flow. But in terms of the current dividend, yeah, we’re we’re comfortable with that.

Patrick Scholes: Oh, okay. So would take on a little bit of leverage if

Patrick Scholes: needed.

Patrick Scholes: If

Patrick Scholes: needed to be in that scenario. Next or my follow-up question here, Curious as to in your past sales, what have been the trends for international guests? I know you’ve got a couple of lot of moving parts there when we say international. You know, kinda depends what country wants to visit us. This moment and what doesn’t. You know, how is that looking say, Mexico versus Europe versus Canadians? You know, what are what are trends you’re seeing? And has sort of the negative rhetoric you know, has that been a an guess, a negative for you? Because you did see some deceleration in pace since your May update. Thank you.

Rob Katz: Yeah. I think what I’d say is the yeah. That certainly no trend there that’s material enough to affect the overall results that we’re talking about. I think we yeah. We’ve not

Rob Katz: seen any specific evidence of a shift per se in

Rob Katz: you know, you know, future international visitation. You know, that, I would say, you know, international visitation has gone down if you look back over the last you know, five, seven, eight years,

Rob Katz: for a whole variety of reasons, some of which was, you know, the dollars, some of which was some of the rhetoric and stuff like that in the past or concerned about visas, this or that.

Rob Katz: But, yeah, at this point, we don’t see that as a yeah, a major issue one way or the other as we go into next

Rob Katz: season. Okay. Thank you.

Patrick Scholes: Thanks. We’ll take our next question from Arpine Kocharyan with UBS.

Operator: Your line is open. Hi. Thank you so much for taking my question. I was wondering if you could give a little bit more color where you’re seeing most weakness in your base and maybe where you’re seeing more sort of a resilient customer and anything else you would highlight on destination versus regional resorts? That you saw in past sales trends? You also talked about, you know, less tenured pass holders maybe not renewing at the same rate. As last year. Anything else you would highlight that you saw in past purchase trends that we should be aware of getting into the season here? And then I have a quick follow-up.

Rob Katz: Yeah. Sure. I think you know, one of the things I would say is that the results that we’re seeing are fairly consistent between

Rob Katz: yeah, a lot of different guest demos geos, half ties, new renew. I mean, yes, we do. We, you know, obviously, have you know, lower renewal rates for one year or less, you know, pass holders. That’s true. But I’d say broadly that maybe the takeaway from the results is this broad-based result in performance which is one of the reasons why, yeah, we pegged sometimes if we’re seeing we have so many different bath products and so many different resorts that yeah, if there’s an issue with one resort or an issue with a region or an issue with a guest group,

Rob Katz: would typically then, you know, see that show up. But when you see it, so broad-based,

Rob Katz: it says one of two things. Either there’s just a broad you know you know, potentially, like, again, you know, we grew the market dramatically. ICON was growing dramatically. You know? And now you’re seeing kind of, like, a maybe a maturation or stability of the overall market. Even if you just look at you know, the NSAA, National Skiery Association data over the last couple of years, it’s the first couple of years in a long time where past visits have actually declined.

Rob Katz: Lift ticket visits have actually increased. That’s where the growth that you saw actually came from.

Rob Katz: And so there’s probably some market maturity, right, because of the rapid growth of the last couple years. And then it’s also why when we talk about our marketing effort, and why we’re not connecting because, obviously, we’re using even though the content is not the same for each guest group, a lot of our marketing approaches are consistent. And why, you know, in my mind, it highlights, right, that’s an opportunity for us as we go forward.

Rob Katz: But, yeah, no. There’s nothing that I can call out specifically about, you know, some group or another. One thing I’ll just add on the consumer piece on renewal

Angela Korch: is we’re not seeing any change in kind of that net migration behavior as well. We’re continuing to see about the same amount of trade up as trade down as we’ve seen over the last few years. So you’re not seeing the renewal base be kind of a people pulling back because of pricing or trading down. We’re not seeing that dynamic within our renewals. Interesting. Thank you. That’s very helpful. Just to go back to the EBITDA bridge, you mostly covered this question earlier. But I was wondering, what needs to happen for you to hit

Operator: the upper end of your guidance range versus midpoint? Obviously talked about more nimble pricing in off-peak, periods, maybe more targeted approach to drive window traffic. It sounds like

Angela Korch: that has the potential to impact lift volume as soon as this season. Is it just a matter of sort of those strategies working for you to hit the upper end of the guidance range?

Operator: Thank you.

Angela Korch: Yeah. I think the range usually, I mean, the biggest driver is always visitation, right, in terms of the range that we put out, because that impacts everything. Right? It impacts all of our ancillary and flows through at a very high rate. So yeah, visitation is really the key for us on both ends of the spectrum of the guidance range.

Operator: Yeah. So what needs to for you to hit the upper end of your visitation guidance?

Rob Katz: I think I mean, I think in the end, there’s obviously opportunity for us to outperform either on pass or on lift ticket visitation. You know, we’ve got

Rob Katz: a number of assumptions that go into how we come up with guidance, and there’s always gonna be a kind of up or down, you know, estimate around each one. And, you know, sometimes things, you know, will work earlier than you think. But, of course, that’s true. You know, sometimes things don’t work as well as you think. So I you know,

Rob Katz: of the reasons why we have a range. It’s it’s, you know, it’s not possible for us to pinpoint exactly. But it’s meant to say that, yeah, that we feel, you know, when we are looking at the totality of the business that this is the most likely range that we’ll wind up in.

Laurent Vasilescu: Thank you.

Patrick Scholes: Thank you.

Operator: We’ll take our next question from Ben Chaiken with Mizuho. Your line is open.

Ben Chaiken: Hey. Thanks for taking my questions. Rob, you mentioned evaluating the past product offering in the release and the Q&A few times. I guess, just taking a different perspective, I guess, where do you see the largest holes with the past? So not asking, like, the strategy necessarily. I think is where the conversation has been. But what are you trying to solve for? Like, where do you think Vail is lacking? To the extent that you do, and where are the largest areas to improve? Thanks.

Rob Katz: Yeah. I think, you know, we’ve got a pretty, broad portfolio. So I it’s not that I feel like you know, we’re missing a particular product but I’m not sure, you know, with that this many products, you know, I’m not sure that we are pricing these products in the optimal way, but either against each other you know, or against kind of the need that we’re looking for each segment. I also think there’s opportunities for us to look at the benefits we provide on our passes. Which, again, largely have not changed that much over the over the years. And, you know, who gets what and why and where and all of that.

I mean, I think and I think what you’re seeing, it’s a little bit like what we said about resource transformation for the company, which is you know, we added a lot of resorts over a relatively short period of time and they’re now taking the opportunity to go back and say, okay. Wait a minute. We can do things a lot smarter than we’ve been doing them when we were just in full acquisition mode. But the same is true for Pat. We’ve added a lot of products. Over a very long period of time and have not really gone back to say, wait a minute.

Like, how do we optimize each one of these price relationships or benefit relationships? So in our minds, that’s you know, it’s it is a product and pricing piece. But it’s not necessarily because we, you know, we see some gaping obvious hole. That we need to fill. I mean, I think if one of the things that we did identify was buddy tickets and ski with a friend tickets and the benefit tickets. And, you know, we that was something that we have identified you know, that it wasn’t simple enough. It wasn’t clear enough. It wasn’t really moving the needle the way we wanted, And so, yes, we certainly addressed that as you saw for this season.

Ben Chaiken: Got it. That’s helpful. And then just one quick follow-up. You’ve mentioned kind of benefits a few times. I guess, what’s your thought process on adding, like, additional member benefits or perks to the past in attempt to increase the year-round utility. I think there’s, you know, a few passes out there provide these other ancillary benefit to pass holders. I mean, it’d be great to get your take on that strategy.

Rob Katz: Yeah. I think I think that’s something that we have absolutely need to look at. I also wanna make sure if we do something that it’s it’s not just like window dressing. That it’s something that really will move the needle. And that, you know, if we’re gonna you know, you know, certainly, if it’s coming from our company and we’re gonna put time and effort and our own energy to it, it’s a third-party benefit, then it has to be, yeah, a partnership that we wanna really get behind. So either one of those, I think, you know, in our mind, it’s know, the primary benefit, obviously, is skiing. And so yeah.

Then once we get beyond that, now it’s you know, when we’ve got our epic mountain rewards, right, which gives people, you know, the 20% discount. On a lot of our ancillary lines of business. So we start going beyond that, like, yes, it needs to be something that should make a difference. But, also, I think we’re in a good moment in time, I think, to start exploring all that.

Ben Chaiken: Thank you.

Laurent Vasilescu: Thanks.

Operator: We’ll move next to Brandt Montour with Barclays. Your line is open.

Brandt Montour: Great. Thanks, everybody. So my first question is on the guidance

Rob Katz: You know, do you guys

Brandt Montour: gave the usual sort of normal weather implied in guide. I just was hoping maybe, Rob, you could

Brandt Montour: put a finer point on that. Is

Brandt Montour: with last year last year seemed like it was really good weather, but was that normal was that better than normal? I know the years prior to that would be would be, firmly worse than normal, but maybe you can just give us a little bit of help with what you what you sort of

Angela Korch: baked in there.

Angela Korch: Yeah. Thanks, Brandt. I would say last year, right, we had a pretty normal ramp across most of our regions where we were able to get terrain open. Kind of on a typical schedule. I actually finished for the year. Right? Q3 actually had kind of a fall off on some of those conditions. But again, that doesn’t usually drive as much of the overall impact as being to get kind of open and train open, you know, ahead of some of those peak seasons. So we didn’t see any unusual disruptions, I would say, like we’ve called out in of the other two years.

So it’s much more of a typical pattern, though I wouldn’t say it was like a Bob average

Angela Korch: snowpack or snowfall year by any means last year.

Brandt Montour: Okay. Great. Thanks for that. And then on the lift ticket strategy and the discussion around that, I think it was know, I think the pitch was pretty clear. You know, the message from you guys today that the optimization opportunity exists. You know, when you think of plan, absorbing this from you guys, you know, you guys, and wanna say it sounds like, you know, discounting or anything like that, but just smarter marketing, smarter pricing.

Brandt Montour: Is there a risk that as you, you know, improve the

Brandt Montour: attractiveness of the lift ticket, You could cannibalize early commitment. I know that would be a little bit on a on a delay because, you know, you’re you’re

Brandt Montour: know, your marketing

Brandt Montour: day tickets after the past selling season. But those same folks are probably gonna overlap

Brandt Montour: know, in terms of who you’re reaching with that marketing. Is that a risk for the following year? Going down that road?

Rob Katz: I mean, I think it’s what I’d say is, yes, it’s a risk in terms of it’s something we pay a lot of attention to. But I think if you look at the differences between window, you know, the walk-up window or advanced lift ticket prices and the price you pay if you buy in advance, If you buy in a pass,

Rob Katz: the season,

Rob Katz: that gap has widened dramatically over the years. In particular when we took pass pricing down four years ago. So I think when you know, there’s in our minds, there’s plenty of room to be more aggressive and creative on lift ticket pricing. Without necessarily sacrificing you know, past business, but it is absolutely something we’re very, you know, cognizant of and pay close attention to.

Brandt Montour: Great. Thanks, everybody.

Laurent Vasilescu: Thanks.

Operator: We’ll take our next question from Chris Woronka with Deutsche Bank. Your line is open.

Chris Woronka: Hey. Good afternoon, Brock. Good afternoon, Angela. So I guess the first question I’m thinking about, Rob, is strategically you know, the idea to kind of go after more volume. You’ve talked about making Ski more accessible to, you know, to a wider range of, people. Is this more about an age number you know, age bucket or certain demographic? I’m I’m I’m trying to kinda square like, what you where those people are going now if they’re not going skiing and know, is price how confident are you? I don’t know if you’ve done survey work or other things around that.

How confident are you that investment in price, so to speak, and other things in the experience is gonna is gonna get those folks to your to your mountains versus what whatever else they’re they’re doing today? Thanks.

Rob Katz: Yeah. Sure. Well, I mean, one is I think, yeah, we need to

Rob Katz: make sure that even within whoever’s going to ski next year, yeah, that we’re getting our fair share representative of the quality of our resorts the quality of how we engage with them, to make sure that we’ve got the right price you know, matrix, right, to optimize our overall lift revenue. And so that I mean, it does start with that. And I would say, I think like this one of the things, know, that’s important to understand about the ski industry is that it’s constantly in flux. So there’s a ton of people every year that go out of this

Rob Katz: industry

Rob Katz: a ton of people every year that come in. Then a ton of people every year that come back or take two years off or three years off. People that take go for two days, the next year could go for four. Right? And so, actually, even within, like, we took the total number of people in let’s just start with The US. That know how to ski, so therefore could take a ski vacation, Yeah. Like, there’s a lot of opportunity to move frequency skier visits within that necessarily kind of convincing somebody who never skis to ski. Right? And so that is really our primary target. And that is a combination. Right? It’s not just price. Right?

Like we’ve gotta get the right message in front of them We’ve gotta make the right emotional connection to them. To their friends or family, to their kids, depending on who it is. And then, yeah, you have to have the right overall mix of value, right, to move some of these folks. Obviously, they are the least committed skier, But, again, it’s not, you know, there’s a huge percentage of the market each year that’s going in and out. So to speak, and a huge percentage that’s moving their frequency. And it’s within all of that, Right? It’s not like we’re selling soap, and everybody’s buying a bar of soap.

And never you know, and now you’re just trying to convince somebody who bought some other brand to buy yours. This is a product that is you know, yeah, that is very much a discretionary vacation choice, and we think there’s real opportunity for us to

Rob Katz: to drive

Rob Katz: overall frequency up. And I would say, you know, when you look at you know I mean and Chris, you know, you go back a long way. I go back a long way. It’s like, yeah, people have been talking about the fact that the ski industry never grows, but two years ago, right, we hit a record. Now people say, oh, well, that’s COVID. But okay. That’s fine maybe, but in the end, right, it was still

Rob Katz: or was it three years ago? I guess that was

Chris Woronka: record. But in the end, right, it shows that there’s enough people in The US to actually do that.

Rob Katz: Right? And so in the end for us, it’s not it’s about getting people out and getting people to the resort and getting more days.

Chris Woronka: Yeah. It makes sense. Thanks for all that Just had a follow-up on CapEx. And the question is kind of you know, almost like what you’re solving for there. I know over time, you guys identify specific projects. There’s a maintenance

Chris Woronka: piece to it. But if I guess, do you think CapEx is there a step function where CapEx

Chris Woronka: you think needs to jump up to try to you know, is that part of your plan to get people back and adding new amenities? Faster, whatever it might be. Or you think, hey. Capital plan is gonna be what it’s gonna be year to year. Constraints based on, you know, where we are in EBITDA, that kind of thing. I’m I’m really just trying to get at whether you think of bigger uptick in CapEx would actually help if it’s necessary or if you plan to do it in the in the near future? Thanks.

Rob Katz: Yeah, I guess I’d say I think after

Rob Katz: we’re always gonna be upgrading Lyft, and we, you know, announce the new Lyft for an year, obviously. And that’s critical. But it can’t I think we need to realize also as a company and as an industry that it can’t just be about Lyft. It’s not the only thing that matters to people. And in our minds, like, one of the things where I think we’re we’re kind of at the beginning of this, and we’ve made some initial forays, but like, we think there’s technology that can make a big difference.

So how people use technology in the digital experience how it makes it easier for them, to rent skis, how it makes it easier for them to connect with their ski instructor. How it makes it easier for them to get food, how it makes it easier for them figure out how to book or get around a resort or you know, overall book a vacation. I think these are all things that are critical that really speak to the entirety of the guest experience when they come to us. And those are things where we really have both a unique advantage. Right? Because, obviously, we own and operate all our resorts. They’re all on a common platform.

And it’s where you invest dollars that actually impact everyone’s experience with all of our resorts. Rather than you know, a singular left. Which affects one resort, for some people who use that lift.

Rob Katz: Now that said,

Rob Katz: have to keep investing in Lyft. When you look back historically, I think you know, you’ve seen us. We have spent a lot of money on Lyft over the last four years. So that’s that’s continuing. We’re still gonna keep proposing Lyft. But I think the differentiator is gonna be in this other area. Where I think it is actually not as capital intensive. Right, as trying to replace every lift on Vail Mountain or something like that. And so it is where we’re putting our focus. At this point, we’re not making any changes to our long-term capital guidance. You know?

But to the extent that we saw opportunities, that made sense to do it, of course, we’d come back to everybody and share that. But at this point, we’re not seeing that.

Brandt Montour: Okay.

Chris Woronka: Very good. Thanks, guys.

Operator: This concludes the Q&A portion of today’s call. I would now like to turn the call back over to Rob Katz for closing remarks.

Rob Katz: Thank you. This concludes our fiscal year-end earnings call. Thanks to everyone who joined us today. Please feel free to contact Angela or me directly should you have any further questions. Thank you for your time this afternoon, and goodbye.

Operator: This concludes today’s Vail Resorts, Inc. fiscal 2025 year-end conference call and webcast. You may now disconnect your line at this time. Have a wonderful day.

Pressure is growing on football’s governing bodies to take action against Israel’s national football team over the war on Gaza.

Turkiye has become the first member of European football’s governing body, UEFA, to publicly call for Israel’s suspension from all football competitions, as pressure ramps up on the sport’s organising bodies to take action over the ongoing war on Gaza in advance of the World Cup 2026.

Turkish Football Federation President Ibrahim Haciosmanoglu on Friday sent a letter to international football leaders urging that “it is now time for FIFA and UEFA to act” – referring to the world and European football governing bodies.

“Despite positioning themselves as defenders of civic values and peace, the sporting world and football institutions have remained silent for far too long,” Haciosmanoglu said, according to Turkiye’s state-run Anadolu news agency.

“Guided by these values, we feel compelled to raise our deep concern regarding the unlawful (and more importantly, completely inhumane and unacceptable) situation being carried out by the State of Israel in Gaza and its surrounding areas,” he added.

UEFA is moving towards a vote on whether to suspend Israel, whose men’s football team is in the middle of attempting to qualify for next year’s World Cup, co-hosted by Mexico, the United States and Canada.

The 20-member UEFA ruling committee is expected to secure a majority to exclude Israel from games if a vote is called.

Unease has grown regarding the apparent double standard of Israel’s treatment and that of Russia, whose national team was banned by both UEFA and FIFA in 2022 following Moscow’s invasion of Ukraine.

Also on Friday, a coalition of 48 high-profile professional athletes called on UEFA to suspend Israel from all football competitions over its assault on Palestinians in Gaza.

France midfielder Paul Pogba and English cricketer Moeen Ali were among 48 signatories to a statement calling for Israel’s suspension, published under the banner of Athletes 4 Peace.

“As professional athletes of diverse backgrounds, faiths, and beliefs, we believe sport must uphold the principles of justice, fairness, and humanity,” read the statement.

“We, the signatories of Athletes 4 Peace, call upon UEFA to immediately suspend Israel from all competitions until it complies with international law and ends its killing of civilians and the widespread starvation,” the athletes added.

The statement also cited the death last month of Suleiman al-Obeid – known as the Palestinian Pele – who, according to the Palestine Football Association, was killed when Israeli forces attacked civilians waiting for humanitarian aid in southern Gaza.

Israel has been a full member of UEFA since 1994 after being expelled from the Asian Football Confederation two decades earlier in a vote initiated by Kuwait and backed by other Arab countries.

It has only qualified for one men’s World Cup – the 1970 competition held in Mexico – when it was knocked out in the group stage without winning a game.

On Thursday, the US Department of State said it would “absolutely work to fully stop any effort to attempt to ban Israel’s national football team” from next year’s World Cup.

Though UEFA is able to stop Israel from participating in games related to European competitions, it cannot stop Israel from competing in FIFA-run World Cup qualifiers.

The head of FIFA, Gianni Infantino, has warm relations with President Donald Trump – visiting the US leader at the White House in March – and so is seen as unlikely to back a move to suspend Israel.

Infantino will chair a meeting of FIFA’s ruling council next Thursday in the Swiss city of Zurich.

DEVELOPING STORYDEVELOPING STORY,

The Colombian leader was filmed joining thousands of pro-Palestinian protesters outside UN headquarters in New York.

The United States Department of State has said it will revoke the visa of Colombian President Gustavo Petro, citing his “reckless and incendiary actions” in relation to a speech he gave to protesters outside the United Nations headquarters in New York City on Friday.

“Earlier today, Colombian president [Gustavo Petro] stood on a NYC [New York City] street and urged U.S. soldiers to disobey orders and incite violence,” the department said in a post on X.

The post did not provide specific details on Petro’s alleged offence, but footage circulated on social media showed the Colombian leader joining thousands of pro-Palestine protesters outside the UN building in Midtown Manhattan.

In one video clip, Petro can be heard saying his country plans to present a resolution to the UN seeking to establish an “army for the salvation of the world”.

In an unofficial translation of his speech to protesters, Petro said that world nations will contribute soldiers to the army, which will “enforce the orders of international justice” and must be “larger” than the US military.

“I ask all of the soldiers of the army of the US not to point their guns at humanity. Disobey the orders of Trump. Obey the orders of humanity,” the Colombian leader said.

Earlier today, Colombian president @petrogustavo stood on a NYC street and urged U.S. soldiers to disobey orders and incite violence.

We will revoke Petro’s visa due to his reckless and incendiary actions.

— Department of State (@StateDept) September 27, 2025

Huge protests took place outside the UN headquarters on Friday as Israeli Prime Minister Benjamin Netanyahu spoke on the fourth day of the UN General Assembly’s General Debate.

The Israeli leader delivered a bombastic speech as he told world leaders Israel must be allowed to “finish the job” in Gaza, where the Israeli army has been accused of perpetrating genocide, and lambasting Western states for their “disgraceful decision” to recognise a Palestinian state.

Petro’s office and Colombia’s Ministry of Foreign Affairs did not immediately respond to requests for comment on the visa revocation from the Reuters news agency.

In a speech to the UN General Assembly on Tuesday, Petro also hit out at US President Donald Trump, saying the US leader was “complicit in genocide” in Gaza and called for “criminal proceedings” over US air attacks on boats in Caribbean waters that Washington has accused of trafficking drugs.

Petro’s social media profile on Friday showed he had reposted several video clips of himself speaking to the pro-Palestinian protesters in New York.

As a young lad growing up in the San Francisco Bay Area town of Pittsburg, my school uniform consisted of corduroys the color of Ash Wednesday, a white dress shirt and a maroon V-neck sweater. I walked west from my family’s apartment on 10th Street, turned left on Montezuma, and arrived about 15 minutes later at the campus of St. Peter Martyr.

My teachers were nuns, the parish priests were Dominicans, and Sunday mass was a celebration of faith, humility and grace.

I am not without sin. I’m an imperfect man and the church is an imperfect institution.

But I’ve been wondering lately what my favorite St. Peter Martyr teachers — Sisters Roberta, Eileen and Estelle — would make of today’s political discourse, in which claims of piety and Christian faith are not always backed by words and deeds, particularly from a certain world leader.

I think if they were teaching today, the nuns would tell everyone in class to get out their pencils and notebooks and write a letter to the president.

So here goes.

Dear President Trump:

Ever hear of St. Peter Martyr School?

Probably not, but I’m an alum. The school was named after St. Peter of Verona, who campaigned against heresy and paid the price when one of the Cathars sunk an ax into his skull (what a way to go). So I guess politics haven’t really changed much over the centuries.

By the way, nice job recently on your presentation at the National Bible Museum, where you launched the “America Prays” initiative to celebrate spirituality and restore “our identity as one nation under God.” And congratulations on your missionary work. I see that you raked in $1.3 million on your “God Bless the USA Bible.”

Love that you said: “To have a great nation, you have to have religion. I believe that so strongly. There has to be something after we go through all of this — and that something is God.”

Well put, Mr. President, and unsurprising, given that you once called the Bible your favorite book. But I know that in my own life, I need to flip back through the pages on occasion to ground myself in the teachings.

So here’s an idea:

I’ll share a Bible verse, and then I’ll follow it with a recent quote from you. Not that I’m judging, or anything. But we might all benefit spiritually by asking whether, in our own lives, God would approve of how we conduct ourselves.

Are you ready?

Corinthians 12: “Love is patient and kind; love does not envy or boast; it is not arrogant or rude.”

Trump: “You know, Biden was always a mean guy, but he was never a smart guy. … You go back 30 years ago, 40 years ago, he was a stupid guy, but he was always a mean son of a bitch.”

Essay Topic: An obsessive need to demean and diminish others is explained by some behavioral therapists as a sign of insecurity, weakness, or an unhappy childhood. Write 500 words, in cursive, on how any of this might apply to you.

Genesis 2:15: “The Lord God took the man and put him in the garden of Eden to work it and keep it.”

Trump: “This climate change, it’s the greatest con job ever perpetrated on the world in my opinion … all of these predictions made by the United Nations and many others, often for bad reasons, were wrong, they were made by stupid people. … If you don’t get away from this green scam, your country’s going to fail.”

Essay Topic: Despite the growing horror of melting icecaps, deadly storms, disappearing coasts and widespread famine, if the Garden of Eden were a national forest, would you lay off Adam or Eve, or both of them, and would anything prevent you from opening the property to drilling?

John 3:17: “But if anyone has the world’s goods and sees his brother in need, yet closes his heart against him, how does God’s love abide in him?”

Trump: “It’s time to end the failed experiment of open borders. You have to end it now. It’s — I can tell you. I’m really good at this stuff. Your countries are going to hell.”

Essay Topic: Given that we probably shouldn’t, as mere mortals, assume divine powers, is condemning someone to hell — or entire countries, in this case — an act of blasphemy?

Leviticus 19: “The foreigner residing among you must be treated as your native-born. Love them as yourself, for you were foreigners in Egypt.”

Trump: “They’re eating the dogs, the people that came in, they’re eating the cats. They’re eating the pets of the people that live there, and this is what’s happening in our country, and it’s a shame.”

Essay Topic: You once said immigrants are “poisoning the blood of our country,” and yet your late mother and two of your three wives were immigrants. Were you ever tempted to have any, or all three of them deported, and if so, in which order?

Psalm 103: “The Lord is compassionate and gracious, slow to anger, abounding in love.”

Trump: “Happy Memorial Day to all, including the scum that spent the last four years trying to destroy our country.”

Essay Topic: Given that Jesus would not likely have called half the population of the United States scum, and that he probably would have protested ICE raids at Home Depots, would you say the son of God was a member of the extreme radical left?

Matthew 5: “You have heard that it was said, ‘Love your neighbor and hate your enemy.’ But I tell you, love your enemies and pray for those who persecute you, that you may be children of your Father in heaven.”

Trump: “I hate my opponent and I don’t want what’s best for them. … I can’t stand my opponent.”

Essay Topic: Which saying do you find the most offensive and probably created by the radical left — turn the other cheek, or treat others as you would have them treat you?

Bonus points: At what age did you begin pulling the wings off of butterflies, and which, if any, of the 10 Commandments have you not broken?

Matthew 23: “Whoever exalts himself will be humbled, and whoever humbles himself will be exalted.”

Trump: “I was saved by God to make America great again.”

Mr. President, you recently said, “I want to try and get to heaven, if possible.”

Hallellujah and amen to that. And yes, it is possible.

But first you must write and recite, 1,000 times, the Act of Contrition. (It’s the prayer that ends with: “I firmly resolve, with the help of Thy grace, to sin no more and to avoid the near occasion of sin. Amen.”)

Sisters Roberta, Eileen and Estelle will be waiting for you at the Pearly Gates. And trust me — they will know if you’ve done your homework.

[email protected]

Asked if Emery had called his players lazy privately, Konsa added: “No. The boss is not a big speaker. Sometimes he keeps himself to himself.

“As players, we have been in the game a long time and we know what we need to do. It is down to us at the end of the day. We are on the pitch, not the manager. We have to figure it out for ourselves as well.”

Speaking before Bologna’s visit to Villa Park in the Europa League on Thursday, Emery said he was “angry” after the match against Sunderland.

“I was frustrated and disappointed but when I analysed it I was getting the balance,” said Emery.

“I am demanding and always trying to understand how we can feel stronger. After the match I told the players we have to be more demanding.”

The draw against Sunderland left Villa 18th in the Premier League and winless in their opening five games, out of the Carabao Cup and having scored just one league goal.

Konsa, though, says the club are not in “crisis”.

“I don’t think we are at the stage where we need to have meetings,” he said. “People will talk about crisis meetings and things like that but we have got a great captain in John McGinn, who really takes the lead in stuff like that.

“After the game, he said a few words to keep us going, to keep encouraging us. Look, we haven’t started the season well. We know that. But I’m sure it’s going to go well soon.”

“It shows how far we have come over the last three years [that people have criticised Villa’s start to the season]”.

NEW YORK — Robot umpires are getting called up to the big leagues next season.

Major League Baseball’s 11-man competition committee on Tuesday approved use of the Automated Ball/Strike System in the major leagues in 2026.

Human plate umpires will still call balls and strikes, but teams can challenge two calls per game and get additional appeals in extra innings. Challenges must be made by a pitcher, catcher or batter — signaled by tapping their helmet or cap — and a team retains its challenge if successful. Reviews will be shown as digital graphics on outfield videoboards.

Adding the robot umps is likely to cut down on ejections. MLB said 61.5% of ejections among players, managers and coaches last year were related to balls and strikes, as were 60.3% this season through Sunday. The figures include ejections for derogatory comments, throwing equipment while protesting calls and inappropriate conduct.

Big league umpires call roughly 94% of pitches correctly, according to UmpScorecards.

“Throughout this process we have worked on deploying the system in a way that’s acceptable to players,” Commissioner Rob Manfred said in a statement. “The strong preference from players for the challenge format over using the technology to call every pitch was a key factor in determining the system we are announcing today.”

ABS, which utilizes Hawk-Eye cameras, has been tested in the minor leagues since 2019. The independent Atlantic League trialed the system at its 2019 All-Star Game and MLB installed the technology for that’s year Arizona Fall League of top prospects. The ABS was tried at eight of nine ballparks of the Low-A Southeast League in 2021, then moved up to Triple-A in 2022.

At Triple-A at the start of the 2023 season, half the games used the robots for ball/strike calls and half had a human making decisions subject to appeals by teams to the ABS.

MLB switched Triple-A to an all-challenge system on June 26, 2024, then used the challenge system this year at 13 spring training ballparks hosting 19 teams for a total of 288 exhibition games. Teams won 52.2% of their ball/strike challenges (617 of 1,182) challenges.

At Triple-A this season, the average challenges per game increased to 4.2 from 3.9 through Sunday and the success rate dropped to 49.5% from 50.6%. Defenses were successful in 53.7% of challenges this year and offenses in 45%.

In the first test at the big League All-Star Game, four of five challenges of plate umpire Dan Iassogna’s calls were successful in July.

Teams in Triple-A do not get additional challenges in extra innings. The proposal approved Tuesday included a provision granting teams one additional challenge each inning if they don’t have challenges remaining.

MLB has experimented with different shapes and interpretations of the strike zone with ABS, including versions that were three-dimensional. Currently, it calls strikes solely based on where the ball crosses the midpoint of the plate, 8.5 inches from the front and the back. The top of the strike zone is 53.5% of batter height and the bottom 27%.

This will be MLB’s first major rule change since sweeping adjustments in 2024. Those included a pitch clock, restrictions on defensive shifts, pitcher disengagements such as pickoff attempts and larger bases.

The challenge system introduces ABS without eliminating pitch framing, a subtle art where catchers use their body and glove to try making borderline pitches look like strikes. Framing has become a critical skill for big league catchers, and there was concern that full-blown ABS would make some strong defensive catchers obsolete. Not that everyone loves it.

“The idea that people get paid for cheating, for stealing strikes, for moving a pitch that’s not a strike into the zone to fool the official and make it a strike is beyond my comprehension,” former manager Bobby Valentine said.

Texas manager Bruce Bochy, a big league catcher from 1978-87, maintained old-school umpires such as Bruce Froemming and Billy Williams never would have accepted pitch framing. He said they would have told him: “‘If you do that again, you’ll never get a strike.’ I’m cutting out some words.”

Management officials on the competition committee include Seattle chairman John Stanton, St. Louis CEO Bill DeWitt Jr., San Francisco chairman Greg Johnson, Colorado CEO Dick Monfort, Toronto CEO Mark Shapiro and Boston chairman Tom Werner.

Players include Arizona’s Corbin Burnes and Zac Gallen, Detroit’s Casey Mize, Seattle’s Cal Raleigh and the New York Yankees’ Austin Slater, with the Chicago Cubs’ Ian Happ at Detroit’s Casey Mize as alternates. The union representatives make their decisions based on input from players on the 30 teams.

Bill Miller is the umpire representative.

Blum writes for the Associated Press.

Image source: The Motley Fool.

DATE

Tuesday, September 23, 2025 at 10 a.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Martin Kay

Chief Financial Officer — Coreen S. Hay

Operator

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

Revenue— $190,000 for the three months ended July 31, 2025, a 34% increase over the same period in 2024, driven by higher portal fees and service revenues exchanged for equity securities.

Customer concentration— One issuer accounted for 73% of total revenue after raising approximately $5 million through the platform between March 24, 2025, and May 30, 2025.

Operating loss— Operating loss of approximately $3.3 million, widening from $2.5 million in the same period of fiscal year ended July 31, 2025.

Loss per share— Loss per share of $1.27, narrowing from $5.10 in the same period of fiscal year ended July 31, 2025.

Cash position— $4.6 million in cash and cash equivalents as of July 31, 2025.

Strategic shift— Management reiterated a transition away from equity-based consulting revenue to focus on scalable business growth.

New advisory boards— The company established a crypto advisory board and a game advisory board to guide integration with blockchain technologies and deepen engagement with online gaming sectors.

SUMMARY

Netcapital(NCPL 2.09%) reported a significant increase in quarterly revenue, primarily attributed to a single issuer’s fundraising success. The company continues to rely heavily on a concentrated customer base, with one issuer responsible for the majority of revenue. Management emphasized ongoing efforts to reposition the business model toward scalable core operations and highlighted the formation of new advisory boards to drive innovation in digital assets and gaming.

CEO Martin Kay stated, “This initiative positions us to play a larger role in fintech and to explore opportunities in decentralized finance, or DeFi.”

Portal and broker-dealer operations serve both issuers and investors, with management expressing intent to enhance these services through blockchain, crypto, and digital asset capabilities.

INDUSTRY GLOSSARY

DeFi (Decentralized Finance): Blockchain-based financial services that operate without traditional central intermediaries, enabling peer-to-peer transactions and programmable contracts.

Full Conference Call Transcript

With that said, I’d like to now turn to our financial results for the first quarter fiscal 2026. We reported revenues of $190,058 for the three months ended July 31, 2025, which was an increase of approximately 34% as compared to $142,227 during the three months ended July 31, 2024. The increase in revenues was primarily attributed to an increase in portal fees and an increase in revenues for the services that we provide in exchange for equity securities during the quarter. One issuer that accounted for 73% of our revenues in the three months ended July 31, 2025, was responsible for the increase. That issuer successfully raised approximately $5 million from March 24, 2025 to May 30, 2025.

We reported an operating loss of approximately $3.3 million compared to an operating loss of approximately $2.5 million for the first quarter of fiscal year 2025. We reported a loss per share of $1.27 compared to a loss per share of $5.10 for the first quarter of fiscal year 2025. As of July 31, 2025, the company had cash and cash equivalents of approximately $4.6 million. I’ll now turn the call over to our CEO, Martin Kay.

Martin Kay: Thank you, Coreen, and thank you again to all our shareholders for being on this call today and for your continued support and interest in the company. As Coreen mentioned earlier, we began the new fiscal year with encouraging results. Revenue and portal fee growth of more than 30% highlights the solid performance of our core business. On our recent fiscal 2025 year-end call, we emphasized the strategic shift in our business model, moving away from equity-based consulting revenue to focus on building a stronger, more scalable business. While fiscal 2025 presented challenges, we’re pleased to see this vision taking shape in the first quarter of fiscal 2026.

We remain committed to driving long-term growth through innovation, execution, and focus to build the best fintech ecosystem. In addition to improved financial performance, we achieved several significant milestones this quarter. We established a crypto advisory board composed of accomplished industry leaders to guide our efforts in integrating blockchain, digital assets, and crypto with traditional finance. This initiative positions us to play a larger role in fintech and to explore opportunities in decentralized finance, or DeFi. We also launched a game advisory board to advance our strategic growth initiatives and deepen engagement with the online game community. This board brings together innovative leaders whose expertise will help us expand our ecosystem and drive long-term growth.

With our Netcapital Funding Portal and our broker-dealer Netcapital Securities Inc., we already serve a broad base of issuers and investors. By enhancing our services through blockchain, crypto, and digital asset innovation, we hope to position the company to help lead the future of private market opportunities for companies raising capital and direct investment opportunities for investors. Thank you again for your support, and we look forward to continuing to share our progress in the months ahead. Operator, we’re ready for questions.

Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you’re listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone at this time. Please hold while we poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Please hold while we poll for questions. Thank you. That concludes our Q&A session.

I’ll now hand the conference back to Martin Kay, CEO, for closing remarks. Please go ahead.

Martin Kay: Thank you. Once again, thanks to all who joined today. We appreciate your continued interest and support of Netcapital. Have a good day.

Operator: Thank you. Everyone, this concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

At the same time that federal immigration enforcement ramped up across the Los Angeles area this summer, calls for help to local police plummeted.

Emergency dispatch data reviewed by The Times show a major decrease in LAPD calls for service in June, during the weeks when sweeps by U.S. Immigration and Customs Enforcement and other federal agencies were met by large street protests in downtown Los Angeles.

In a city where roughly a third of the population is foreign-born, the steep decline in calls adds to long-standing concerns from advocates that aggressive immigration enforcement leads to domestic abuse and other crimes going unreported because victims fear triggering deportations.

In the two weeks after June 6, when the immigration raids kicked off, LAPD calls for service fell 28% compared with the same period last year — an average of roughly 1,200 fewer calls per day.

LAPD officers responded to roughly 44,000 calls for service in that two-week span — versus nearly 61,000 calls during the same days in June 2024.

The calls include reports of serious crimes, such as home break-ins and domestic disputes, along with instances when the public has sought help with noisy neighbors, loud parties and other routine matters.

The data analyzed by The Times do not include all 911 calls — only LAPD calls for service, which are typically registered when a squad car is dispatched. Though multiple people may call 911 in connection with a single incident, in most cases only one LAPD call for service is recorded.

The decrease was especially noticeable for LAPD calls responding to suspected domestic violence and other incidents related to family disputes, which fell this year by 7% and 16%, respectively, after the ICE activity increased. Although family-related calls later began to creep back to 2024 levels, those for domestic incidents kept declining.

National experts said the findings reflect a crisis of public confidence that has followed other controversial incidents. Similar downturns in calls to local police occurred during the first Trump administration, after the 2020 murder of George Floyd in Minneapolis and following the fatal shooting six years earlier of Michael Brown, a Black 18-year-old, in Ferguson, Mo.

It’s hardly surprising that the same thing could happen even in a city where the police force is majority Latino and whose leaders have reaffirmed the city as a sanctuary for immigrants, said Vida Johnson, an associate law professor at Georgetown University.

“You’re going to see fear of law enforcement that is going to last generations,” Johnson said. “And that has the biggest impact on women, because women often are more likely to be victimized, and then more afraid to call for help than men.”

At least some of the decline during the initial two-week period can be explained in part by LAPD going on citywide tactical alert, which allowed the department to have more officers and resources at the ready to deploy to the front lines of the protests. During that time, the department prioritized responding to serious crimes such as shootings and robberies, leading to many other less urgent calls going unanswered.

But that doesn’t explain why calls for service remained down after the department returned to its normal operations. While police call levels began to rise again later in June and early July, they still remained down roughly 5% from the same period in 2024.

The decrease in calls was less pronounced in the nine police districts in South L.A., the San Fernando Valley and the Eastside where Latinos make up the majority of residents, but the data show a persistent dip in domestic violence calls in those areas that remained in the weeks after the immigration enforcement campaign began.

Police calls for service have been on a slow decline for years, a phenomenon that has coincided with a drop in overall crime. LAPD Chief Jim McDonnell and other leaders have tried to emphasize in public remarks that local cops are not allowed to enforce civil immigration laws and only work with federal agents to arrest criminal suspects or quell unrest that threatens public safety.

But Carlos Montes, a longtime organizer with the Boyle Heights-based immigrant advocacy group Centro Community Service Organization, said the sight of LAPD officers standing alongside the feds during recent operations has ensured that even more Angelenos will think twice about calling the police for help.

“In general, in the neighborhood we don’t want to call the cops because they’re not going to solve anything or they’re going to arrest someone, or beat someone or shoot someone,” he said.

LAPD Assistant Chief German Hurtado, the department’s immigration coordinator, acknowledged that it has been a struggle to reassure the public it’s safe to call the police.

“Police are also the most visible form of government, and right now people are not trusting the government,” Hurtado said in an interview last month. “People [are] scared to be deported, and that’s totally understandable. That’s something that we’re going to have to deal with and figure out a way to heal with the community.”

In response to what he called “negative publicity” around the LAPD’s actions in recent weeks, he said the department was stepping up its outreach efforts in various immigrant neighborhoods, with a series of planned listening sessions and other events aimed at educating the public.

The department recently launched a citizens academy for Spanish speakers, and senior lead officers have been out meeting with faith and community leaders trying to get them to reinforce the message that police need victims to cooperate in order to solve crimes.

Marielle Coronel, 24, co-owner of a boxing gym in Sylmar, said she worries about being profiled while being out and about, which has also made her think twice about calling police.

Even though she believes that at least some police officers are trying to help, she said the last few months have been unnerving. She recalled how her parents recently gave her a version of “the talk” that many parents of color have with their children about how to deal with police. Their fears have grown to include unidentified masked men posing as ICE agents, Coronel said.

Her parents insisted that she start carrying her passport with her everywhere she goes and that she not lower her window to anyone unless they clearly identify themselves. Tending to her gym’s front desk one recent afternoon, she said she has taken the advice to heart.

“Even if I am a U.S. citizen, you just don’t know,” she said. “We don’t feel like we have backup from the government.”

United States President Donald Trump has spent the better part of this week touting a TikTok “deal” with China, but experts say it is far from finalised after both sides shared details of his phone call with President Xi Jinping.

The two leaders spoke by phone on Friday, their first call in three months, but there was no announcement of the sale of the popular social media app that has 170 million US users.

While Trump, in a post after the call on Truth Social, said “It was a very good call … appreciate the TikTok approval”, the version from Beijing was not as clear.

“On TikTok, Xi said China’s position is clear: the Chinese government respects the will of firms and welcomes companies to conduct business negotiations on the basis of market rules to reach a solution consistent with Chinese laws and regulations while balancing interests,” according to the meeting summary in Xinhua, the Reuters news agency reported.

Experts were not surprised.

“Trump is the type of person who often announces frameworks or deals to have deals or a deal that still has a lot of details to be worked out, and this seems to be another example of that,” said Rachel Ziemba, adjunct senior fellow at the Center for a New American Security.

The bigger trade deal is likely to wait till Trump and Xi meet on the sidelines of the Asia-Pacific Economic Cooperation forum that starts on October 31 in Gyeongju in South Korea, “if that happens”, added Ziemba.

Despite the lack of any specific developments from Friday’s call, experts agree that the leaders talking is in itself a sign of a thaw, especially as Xi had previously refused to get on the phone with Trump, despite the multiple meetings in Geneva, London and most recently in Madrid.

“At least they have broken ice after a long while, and it seems like they are ready to negotiate other more difficult issues,” said Wei Liang, a professor at Middlebury Institute of International Studies, where she specialises in international trade and Chinese foreign economic policy, among other topics.

Some scholars, she said, had likened the last few months as worse than the peak of the Cold War between the US and the former Soviet Union, where leaders of the two countries at least had a hotline in place.

The call was days after Trump extended, for the fourth time, a deadline for China’s ByteDance to divest its ownership of TikTok or face a ban in the US under a law passed last year with overwhelming bipartisan support and one that was later upheld by the Supreme Court.

“It will be a very complicated transaction, if it happens,” said Robert Rogowsky, adjunct professor of trade and economic diplomacy at Georgetown University’s School of Foreign Service, both because Beijing is reluctant to exit the app and because of the lack of clarity of future owners and rules around that.

“The value of TikTok is the algorithm which selects for us what we want to see, but in a way that is remarkably controlling,” said Rogowsky.

While the focus in debates on TikTok’s ownership has centred around data security, the real problem, instead, is its “ability to influence” viewers through the algorithm, said Rogowsky.

“Think about the power that would confer on the owners, the power of that incredibly sophisticated algorithm that drives people’s viewing, when that is under the control of a political party or groups [aligned with one], gives them tremendous power to influence.”

Middlebury’s Liang adds that it is unlikely that China would let go of the algorithm and expects “a graceful exit” that would allow both the US and China to get what they want from this deal.

China’s ‘stronger, bolder stand’

Any hammering out of a bigger trade deal on the multiple other issues, including US access to rare earth metals and China’s purchase of Russian oil and access to US semiconductor chips, will have to wait for the two leaders to meet, experts say.

“What is clear is that Trump himself is not in a space to impose new tariffs on China, and that is a reflection of the fact that the US government has mixed interests with respect to China, and the Chinese control some very important choke points,” said Ziemba, referring to China’s hold over critical minerals.

Rogowsky agrees that “China is taking a much stronger, bolder stand with regard to the US, partly because that’s the China way.”

But it is also likely that Beijing has some justification for that confidence, he said, referring to Beijing’s directive to businesses to avoid buying chips from US chip giant Nvidia.

“While US is trying to control what sort of chips go to China, they have declined to buy those, probably because they have the technology to design equally good or better and cheaper chips,” he said. Plus, with US dependence on Chinese rare earth metals, Beijing is “feeling strong enough to confront the US”.

US and Chinese presidents to discuss deal to keep popular social media app online in US, trade relations.

Germany says it’s possible to temporarily delay sanctions after E3’s top diplomats hold call with Iranian counterpart.

Germany says the “ball is still in Iran’s court” after the French, British and German foreign ministers held talks by phone with their Iranian counterpart, Abbas Araghchi, regarding Tehran’s nuclear programme.

Wednesday’s phone call came after the European powers last month triggered a 30-day deadline for “snapback” sanctions to come into force in the absence of a negotiated deal on the Iranian nuclear programme.

A German Federal Foreign Office spokesman told the AFP news agency on Wednesday that the offer from the so-called E3 powers “to discuss a temporary extension of the snapback if Iran fulfils certain conditions remains on the table” but added: “At this point, the steps taken by Iran have not been sufficient.”

Before the call, Tehran called for a “positive approach and goodwill” from the E3.

The E3 has been warning Tehran for weeks that United Nations sanctions could be reimposed by October when a 2015 nuclear agreement between Tehran and major powers expires.

A spokesman for Iran’s Ministry of Foreign Affairs has warned that renewing the sanctions would have consequences.

The E3 has accused Tehran of violating provisions of the 2015 nuclear pact, formally known as the Joint Comprehensive Plan of Action (JCPOA). The agreement, which all three countries signed, saw Iran agree to curb its nuclear programme in exchange for a lifting of international sanctions on its economy.

A component of the nuclear deal, the “snapback” mechanism, allows sanctions to be reimposed quickly if Iran is found to be in violation of the accord.

The call, which also included European Union foreign policy chief Kaja Kallas, followed an agreement reached by Iran and the International Atomic Energy Agency (IAEA) last week on resuming cooperation between Tehran and the UN nuclear watchdog, including in principle the inspection of nuclear sites. Iran’s Supreme National Security Council has backed renewed nuclear inspections.

Earlier in the week, Iran was pushing for a resolution prohibiting attacks on nuclear installations at the IAEA’s General Conference, which started on Monday in Vienna and ends on Friday.

According to Iran’s deputy nuclear chief, Behrouz Kamalvandi, who is in Vienna, the United States is putting pressure on member states to block the resolution and has “even threatened the agency that they will cut off assistance to the organisation”.

During a 12-day conflict in June, Israel and the US struck Iranian nuclear facilities, claiming Iran was getting too close to being able to produce a nuclear weapon, and IAEA inspections were interrupted over security concerns and complaints by Tehran.

Resumed cooperation between Iran and the IAEA is one of the three conditions set by European powers to hold off on completing the UN snapback mechanism, which they invoked in August.

“It is a natural expectation that Iran’s positive approach and goodwill should be reciprocated by the European side. … If some European parties start nagging this is not enough, that would mean they do not accept the IAEA,” Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Wednesday.

“We hope that with contacts like today’s and future ones, all parties will come to the conclusion that escalating tensions and perpetuating the current situation is not in anyone’s interest.”

Since US President Donald Trump unilaterally withdrew from the Iranian nuclear deal in 2018 and reimposed sanctions, the Board of Governors of the IAEA has adopted four Western-backed censure resolutions against Iran, which maintains its nuclear programme is for peaceful civilian purposes.

Neither US intelligence nor the IAEA found earlier this year that Iran was pursuing an atomic weapon.

Published on 15/09/2025 – 15:34 GMT+2
•Updated
15:53

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A French liberal MEP has gathered signatures from 20 other lawmakers for a letter seen by Euronews calling on the European Commission to review its commitment made under the EU-US trade agreement to purchase US energy.

In the document— soon to be sent to Commission President Ursula von der Leyen, Trade Commissioner Maroš Šefčovič, and Energy Commissioner Dan Jørgensen—the MEPs led by Christophe Grudler of Renew call on the EU executive to reconsider its pledge to buy $750 billion worth of US energy products over the next three years.

These products include liquefied natural gas (LNG), oil, nuclear fuels, and small modular reactors (SMRs). The signatories argue the deal will undermine the EU’s climate goals, industrial competitiveness, and strategic sovereignty.

“Increasing LNG imports from US shale gas directly undermines our climate agenda and our methane emissions regulation,” the letter says, adding: “LNG is highly polluting when liquefied, shipped across the Atlantic and regasified. Such dependence is a climate time-bomb.”

The initiative was launched by Christophe Grudler, a French MEP from the liberal Renew group.

The letter also warns that beyond energy concerns, the deal risks exposing the EU to “political blackmail”, the US demanding changes to EU climate policies, including the Carbon Border Adjustment Mechanism, under which the bloc will apply levies on the carbon footprint of foreign imports from 1 January 2026.

The energy purchase commitment forms part of the EU-US agreement reached over the summer.

Some MEPs view the arrangement as deeply unbalanced, given that the US continues to impose 15% tariffs on EU goods, while the EU has agreed to make major investments in the US, including in the energy and defence sectors.

‘Economic imbalance’

In their letter to the Commission, MEPs also slam what they describe as the “economic imbalance” created by the pledge to purchase $250 billion’s worth of energy over three years. 

The letter describes this figure as “astronomical” adding: “To put this in perspective, the entire Competitiveness Fund proposed in the MFF amounts to €362 billion over seven years. How can we ask European companies to massively buy from the US while urging them to strengthen our competitiveness at home?”

The inclusion of US small modular reactors in the deal has also raised concerns among MEPs.

“At a time when the EU is building its own SMR supply chain, opening the door to US competitors is total nonsense.”

They further stress that commercial decisions “should remain the prerogative of companies, not be preempted by political pledges.”

Ever since a massive immigration raid on a Hyundai manufacturing site swept up nearly 500 workers in southeast Georgia this month, Rosie Harrison said her organization’s phones have been ringing nonstop with panicked families in need of help.

“We have individuals returning calls every day, but the list doesn’t end,” Harrison said. She runs a nonprofit called Grow Initiative that connects low-income families — immigrant and nonimmigrant alike — with food, housing and educational resources.

Since the raid, Harrison said, “families are experiencing a new level of crisis.”

A majority of the 475 people who were detained in the workplace raid — which U.S. officials have called the largest in two decades — were Korean and have returned to South Korea. But lawyers and social workers say many of the non-Korean immigrants ensnared in the crackdown remain in legal limbo or are otherwise unaccounted for.

As the raid began the morning of Sept. 4, workers almost immediately started calling Migrant Equity Southeast, a local nonprofit that connects immigrants with legal and financial resources. The small organization of approximately 15 employees fielded calls regarding people from Mexico, Guatemala, Colombia, Chile, Ecuador and Venezuela, spokesperson Vanessa Contreras said.

Throughout the day, people described federal agents taking cellphones from workers and putting them in long lines, Contreras said. Some workers hid for hours to avoid capture in air ducts or remote areas of the sprawling property. The Department of Justice said some hid in a nearby sewage pond.

People off-site called the organization frantically seeking the whereabouts of loved ones who worked at the plant and were suddenly unreachable.

Like many of the Koreans who were working there, advocates and lawyers representing the non-Korean workers caught up in the raid say that some who were detained had legal authorization to work in the United States.

Neither the Department of Homeland Security nor Immigration and Customs Enforcement responded to emailed requests for comment Friday. It is not clear how many people detained during the raid remain in custody.

Atlanta-based attorney Charles Kuck, who represents both Korean and non-Korean workers who were detained, said two of his clients were legally working under the Deferred Action for Childhood Arrivals program, known as DACA, which was created under President Obama. One had been released and “should have never been arrested,” he said, while the other was still being held because he was recently charged with driving under the influence.

Another of Kuck’s clients was in the process of seeking asylum, he said, and had the same documents and job as her husband, who was not arrested.

Some even had valid Georgia driver’s licenses, which aren’t available to people in the country illegally, said Rosario Palacios, who has been assisting Migrant Equity Southeast. Some families who called the organization were left without access to transportation because the person who had been detained was the only one who could drive.

“It’s hard to say how they chose who they were going to release and who they were going to take into custody,” Palacios said, adding that some who were arrested didn’t have a so-called alien identification number and were still unaccounted for.

Kuck said the raid is an indication of how far reaching the Trump administration crackdown is, which officials claim is targeting only criminals.

“The redefinition of the word ‘criminal’ to include everybody who is not a citizen, and even some that are, is the problem here,” Kuck said.

Many of the families who called Harrison’s initiative said their detained relatives were the sole breadwinners in the household, leaving them desperate for basics like baby formula and food.

The financial impact of the raid at the construction site for a battery factory that will be operated by HL-GA Battery Co. was compounded by the fact that another large employer in the area — International Paper Co. — is closing at the end of the month, laying off 800 more workers, Harrison said.

Growth Initiative doesn’t check immigration status, Harrison said, but almost all families who have reached out to her have said that their detained loved ones had legal authorization to work in the United States, leaving many confused about why their relative was taken into custody.

“The worst phone calls are the ones where you have children crying, screaming, ‘Where is my mom?’” Harrison said.

Riddle writes for the Associated Press. R

Pow! Bam! Whack!

Sierra Canyon has a defense in high school football that needs comic book treatment.

Call them “The Kaboom Squad.”

At any moment, whether it’s a lineman, linebacker or defensive back delivering the blow, be prepared to be wowed.

With size, quickness and depth, the Trailblazers have shut out opponents for 12 consecutive quarters. The opponents haven’t been bad: JSerra, Oaks Christian and Honolulu Punahou.

Will they go through their 10-game regular-season schedule unscored upon? Absolutely not. But the reason they have three shutouts in lopsided victories is that the second stringers are performing as well as first stringers when coach Jon Ellinghouse clears the bench.

Their 63-0 win over Oaks Christian broadcast on Spectrum only added to the Trailblazers’ reputation.

It’s kaboom time as Sam Amuti of Sierra Canyon High prepares to level a Punahou ballcarrier.

(Craig Weston)

A combination of returnees and transfers gives the Trailblazers a defense with few weaknesses.

Nobody is perfect, and perhaps Downey and star quarterback Oscar Rios will be the first to end the shutout streak on Friday, but this is Sierra Canyon’s best defense since the spring of the 2021 COVID season when the Trailblazers put together 18 consecutive quarters of allowing zero points and gave a scare to St. John Bosco.

All the Trailblazers’ positions are filled with talented starters and quality backups. The defensive line starts with Texas commit Richard Wesley, wearing No. 99, the number of Rams great Aaron Donald. The linebackers have a smart, fearless tackler in Ronen Zamorano. The secondary has so many college-bound players that the players’ NIL deals could pay for a trip to Hawaii. Madden Riordan (USC), Havon Finney Jr. (Louisiana State) and Brandon Lockhart (USC) lead the way. And coming soon when the sit-out period ends on Sept. 29 is kicker Carter Sobel, who was a standout at Chaminade and will add to bad field position for opposing offenses.

Sierra Canyon’s Spencer Parham gets emotional for a defense that hasn’t allowed any points in 12 quarters.

(Craig Weston)

Having seen the physicality of St. John Bosco’s offensive and defensive lines last week in a 21-14 win over Baltimore St. Frances, Sierra Canyon (3-0) still needs to keep progressing to be on the same level of the Trinity League powers needed to win a Southern Section Division 1 championship.

The Trailblazers are definitely closing the gap with the Braves and No. 1 Mater Dei. They get a good tune-up for the Division 1 playoffs with a matchup against Orange Lutheran on Sept. 18, a team they lost to last season 33-26.

Chris Rizzo, a former Taft head coach, is the Trailblazers’ defensive coordinator. He wears his baseball cap backward on the sideline with sunglasses and has many options for defensive packages.

Asked if the defense has any weaknesses, Rizzo said, “We have some weaknesses. We’re not perfect by any means. We’ve got some things we have to fix and keep getting better.”

The defense is also helping Sierra Canyon’s offense improve because it’s so difficult to move the ball during practices.

“It makes our guys better,” Ellinghouse said.

Rizzo declined to reveal which unit he thinks is best. “The secondary is pretty star-studded,” he said. “The defensive line is deep. They embrace the grind and play for each other.”

Only time will tell whether this defense is as good as some think. There’s plenty of games ahead to prove if the Trailblazers are truly The Kaboom Squad.

WASHINGTON — Members of Robert F. Kennedy Jr.’s family are calling for him to step down as Health secretary following a contentious congressional hearing this past week, during which the Trump Cabinet official faced bipartisan questioning about his tumultuous leadership of federal health agencies.

Kennedy’s sister, Kerry Kennedy, and his nephew, Joseph P. Kennedy III, issued scathing statements Friday, calling for him to resign as head of the Health and Human Services Department.

The calls from the prominent Democratic family came a day after Kennedy defended his recent efforts to roll back COVID-19 vaccine recommendations and fire high-level officials at the Centers for Disease Control during a three-hour Senate hearing.

“Robert F. Kennedy Jr. is a threat to the health and wellbeing of every American,” Joseph P. Kennedy III said in a post on X. The former congressman added: “None of us will be spared the pain he is inflicting.” His aunt echoed those claims, saying that “medical decisions belong in the hands of trained and licensed professionals, not incompetent and misguided leadership.”

This is not the first time Kennedy has been the subject of his family’s ire. Several of his relatives had objected to his presidential run in the last campaign, while others wrote to senators earlier this year calling for them to reject his nomination to be President Trump’s Health secretary given his anti-vaccine views they considered disqualifying.

Kennedy, a longtime leader in the anti-vaccine movement, has spent the last seven months implementing his once-niche, grassroots movement at the highest level of America’s public health system. The sweeping changes to the agencies tasked with public health policy and scientific research have resulted in thousands of layoffs and the remaking of vaccine guidelines.

The moves — some of which contradict assurances he made during his confirmation hearings — have rattled medical groups and officials in several Democratic-led states, which have responded with their own vaccine advice.

Health experts said Kennedy’s ‘repeated efforts to undermine science and public health’ have left Americans ‘less safe’.

More than 20 health groups and medical associations have called on Robert F Kennedy Jr to step down as the United States’ health secretary, accusing him of putting lives at risk by disregarding decades of lifesaving science and reversing medical progress.

In a joint statement published on Wednesday, the groups – including the Infectious Diseases Society of America, the American Public Health Association, and the American Association of Immunologists – said Kennedy is forcing Centers for Disease Control and Prevention (CDC) experts to “turn their back on decades of sound science” to further his agenda.

The groups also accused Kennedy of “repeated efforts to undermine science and public health”, leaving Americans “less safe in a multitude of ways”.

“Our country needs leadership that will promote open, honest dialogue, not disregard decades of lifesaving science, spread misinformation, reverse medical progress and decimate programs that keep us safe,” the statement said.

“We are gravely concerned that American people will needlessly suffer and die as a result of policies that turn away from sound interventions,” it added.

The letter comes after multiple former CDC directors said last week that Kennedy’s decisions are putting Americans’ health at risk, after he fired the agency’s director, Susan Monarez, less than a month after she was sworn in.

White House Deputy Press Secretary Kush Desai said Monarez was not “aligned with” President Donald Trump’s agenda and refused to resign, so the White House terminated her.

Monarez’s lawyers said she had been targeted as she “refused to rubber-stamp unscientific, reckless directives and fire dedicated health experts”.

Her departure coincided with the resignations of at least four other top CDC officials in response to Kennedy’s influence over the agency.

In a social media post on Wednesday, Kennedy said his mission was “to restore the CDC’s focus on infectious disease” and “rebuild trust through transparency and competence”.

Kennedy – who has long been accused of spreading anti-vaccine misinformation – has made sweeping changes to US vaccine policies since being appointed by Trump, causing friction with health officials.

In May, he withdrew federal recommendations for COVID shots for pregnant women and healthy children. In June, he also fired all members of the CDC’s expert vaccine advisory panel and replaced them with hand-picked advisers, including fellow anti-vaccine activists.

In August, he then cancelled nearly $500m in funding for mRNA vaccine research in a move health experts said could make the US much more vulnerable to future outbreaks of respiratory viruses.

Kennedy said the US will shift mRNA funding to other vaccine development technologies that are “safer” and “remain effective”.

The International Vaccine Access Center at Johns Hopkins Bloomberg School of Public Health credits mRNA vaccines with preventing millions of deaths from COVID-19, saying the innovative technology has the potential to treat diseases such as cancer and HIV.

Most recently, on August 20, hundreds of federal health employees wrote to Kennedy imploring him to “stop spreading inaccurate health information” and for him to either resign or be fired.

Signatories accused Kennedy of “sowing public mistrust by questioning the integrity and morality” of the CDC’s workforce, including by calling the public health agency a “cesspool of corruption”.

Image source: The Motley Fool.

DATE

Wednesday, September 3, 2025 at 5 p.m. ET

CALL PARTICIPANTS

President & Chief Executive Officer — Antonio Neri

Chief Financial Officer — Marie Myers

Head of Investor Relations — Paul Glaser

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RISKS

Marie Myers noted that networking operating margin declined to 20.8%, down 160 basis points year over year for fiscal Q3 2025 (period ended July 31, 2025), including both Intelligent Edge and Juniper, driven by variable compensation and product-related costs.

GAAP diluted net earnings per share of $0.21 was below guidance of $0.24–$0.29, with $326 million in net costs primarily attributed to Juniper-related acquisition costs, stock-based compensation, and amortization of intangibles, excluded from non-GAAP results.

Net leverage ratio increased to 3.1x pro forma post-acquisition at fiscal Q3 2025; management targets a reduction to around 2x by fiscal 2027, emphasizing debt paydown as a strategic priority.

Marie Myers highlighted that the inclusion of Juniper had an unfavorable impact on the cash conversion cycle, which increased to 35 days from last quarter, and noted “costs that I believe are commented on in Q3 and Q4 and also the increase in OI and E.”

TAKEAWAYS

Total Revenue— $9.1 billion, up 18% year over year and sequentially, with $480 million from one month of Juniper included.

Networking Revenue— $1.7 billion, up 54% year over year; Intelligent Edge revenue alone up 11% year over year, and the networking segment contributed nearly 50% of non-GAAP consolidated operating profit.

Annualized Recurring Revenue (ARR)— $3.1 billion, up 75% year over year including Juniper; Excluding Juniper, ARR grew 40% year over year, mainly driven by software and services.

Server Revenue— $4.9 billion, an all-time high, up 16% year over year and 21% sequentially, with AI systems revenue at $1.6 billion (up 25% year over year and 57% sequentially).

Operating Margin— Non-GAAP operating margin at 8.5%, down 150 basis points year over year, but up 50 basis points quarter over quarter (non-GAAP). Excluding Juniper, non-GAAP operating margin was 8.1% (down 190 basis points year over year, up 10 basis points sequentially).

Free Cash Flow— Free cash flow was $719 million, a significant sequential improvement aided by inventory reduction and higher AI backlog conversion.

AI Orders— Nearly doubled quarter over quarter, with sovereign AI orders up approximately 250% sequentially; record AI backlog at $3.7 billion.

Cost Synergy Commitment— Management affirmed at least $600 million in acquisition-related cost synergies over the next three years, with $200 million expected to be realized next year.

Guidance Updates— Full-year non-GAAP EPS outlook for fiscal 2025 raised to $1.88–$1.92. GAAP EPS revised to $0.42–$0.46 for fiscal 2025; projected constant-currency revenue growth of 14%–16% for fiscal 2025. Fiscal Q4 2025 networking revenue expected to be up over 60% sequentially due to full Juniper inclusion.

Hybrid Cloud Revenue— $1.5 billion, up 11% year over year; Segment operating profit dollars grew 26% with a 70 basis point increase in margin year over year.

SUMMARY

Hewlett Packard Enterprise(HPE 0.75%) reported record total revenue of $9.1 billion following the acquisition ofJuniper Networks(NYSE:JNPR), with all major segments experiencing year-over-year revenue growth and margin expansion in select product lines. Gross margin pressure emerged due to mix shifts in server, networking, and hybrid cloud. Networking became nearly half of consolidated non-GAAP operating profit, demonstrating outsized profitability from business realignment. Robust demand for AI offerings, with a record-setting backlog and new order growth, materially improved free cash flow, which helped lower inventories and better position working capital. Management reaffirmed synergy targets and improved its non-GAAP EPS outlook for fiscal 2025, while also explicitly highlighting the impact of acquisition-related costs and leverage on earnings and capital allocation.

CEO Neri stated, “Our improved profitability flowed through to non-GAAP diluted net earnings per share of $0.44.” near the high end of guidance for non-GAAP diluted net earnings per share, emphasizing earnings quality amid major portfolio shifts.

Management outlined plans for salesforce harmonization by year end, targeting synergy realization and expanded channel reach.

Marie Myers clarified that “free cash flow generation is paramount” underscoring debt reduction and restoring leverage ratios as HPE’s capital allocation priorities post-acquisition.

HPE’s ARR mix is increasingly tilted toward software and services, which now exceeds 81%.

Neri indicated HPE will detail its networking and longer-term AI strategy at the October Securities Analyst Meeting.

INDUSTRY GLOSSARY

ARR (Annualized Recurring Revenue): Run-rate metric measuring recurring subscription, service, and lease revenue accumulated over the prior quarter, scaled to a full year.

SASE (Secure Access Service Edge): Security framework that combines wide area networking (WAN) and network security services in a cloud-native offering.

AUP (Average Unit Price): Average selling price per unit, relevant for analyzing mix shifts and pricing trends in product segments.

SMB (Small and Medium Business): Segment of customers defined by Hewlett Packard Enterprise as organizations smaller than large enterprises, a key networking target.

Gen 11/Gen 12 servers: Hewlett Packard Enterprise’s eleventh and twelfth generation server platforms featuring new processor architectures and enhanced AI capabilities.

Full Conference Call Transcript

Operator: Good afternoon. And welcome to the Fiscal 2025 Third Quarter Hewlett Packard Enterprise Earnings Conference Call. All participants will be in a listen-only mode. Please note that today’s event is being recorded. I would now like to turn the conference over to Paul Glaser, Head of Investor Relations. Please go ahead, sir.

Paul Glaser: Good afternoon. I am Paul Glaser, head of investor relations for Hewlett Packard Enterprise. I would like to welcome you to our fiscal 2025 third quarter earnings conference call with Antonio Neri, HPE’s president and chief executive officer, and Marie Myers, HPE’s chief financial officer. Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations webpage.

Elements of the financial information referenced on this call are forward-looking and are based on our best view of the world and our businesses as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE’s quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2025. For more detailed information, please see the disclaimers on the earnings materials relating to forward-looking statements that involve risks, uncertainties, and assumptions.

Please refer to HPE’s filings with the SEC for a discussion of these risks. For financial information, we have expressed on a non-GAAP basis we have provided reconciliations to the comparable GAAP information on our website. Please refer to the tables and slide presentation accompanying today’s earnings release on our website for details. Throughout this conference call, all revenue growth rates unless noted otherwise, are presented on a year-over-year basis and adjusted to exclude the impact of currency. Antonio and Marie will reference our earnings presentation in their prepared comments.

Finally, I would like to clarify that in the discussion today, any mention of HPE Intelligent Edge will refer to HPE’s prior business segment and network will refer to the combination of Intelligent Edge and Juniper Networks. With that, let me turn it over to Antonio.

Antonio Neri: Thank you, Paul. Good afternoon, everyone. In Q3, we delivered solid results and completed a major milestone. Closing our acquisition of Juniper Networks. Together with Juniper, we will accelerate our momentum across our three strategic business pillars. Networking, cloud, and AI, building a stronger, leaner, and more profitable HPE. In Q3, HPE achieved record-breaking revenue with and without Juniper. Revenue was $9.1 billion, up 18% year over year fueled by strong momentum across AI, networking, and hybrid cloud. We grew revenues year over year across our three largest business segments. Demand was broad-based across our products and services. We increased sequential operating profit dollars in server hybrid cloud and both Intelligent Edge and the new combined networking segment.

We also grew operating profit dollars in financial services on a year-over-year basis. The new combined networking segment accounted for nearly 50% of HPE’s non-GAAP consolidated operating profit. We also improved sequential operating profit margins in server, and hybrid cloud. Our improved profitability flowed through to non-GAAP diluted net earnings per share of $0.44. Free cash flow was $719 million as we significantly lowered our inventory driven by higher AI backlog conversion to revenue and strong supply chain execution. We continue to transform our business through Catalyst, the structural cost-saving program we announced last quarter, including enhancing operational efficiency, simplifying our portfolio, adopting AI, and optimizing our workforce. In Q3, customers continued to demonstrate strong demand for our AI portfolio.

We nearly doubled our AI orders sequentially, driven by sovereign opportunities up approximately 250%. Cumulative orders since Q1 2023 for sovereign and enterprise now account for more than 50% of total AI systems net orders. We exited the quarter with record AI backlog at $3.7 billion. Marie will provide more details on the quarter and our Q4 fiscal year 2025 guide. But first, I would like to provide key Q3 highlights across our business segments. I am incredibly pleased that we closed the Juniper acquisition in July. Integration is progressing well. I have been spending time with Rami and the new combined networking leadership team, which is world-class.

Going forward, we will refer to the combination of our HPE Intelligent Edge segment and Juniper as our new HPE networking segment. Our vision for this segment is clear. To build the best network in business providing customers with a modern secure and AI-driven networking portfolio. Rami and I will discuss our networking strategy in more detail at our upcoming securities analyst meeting in October. On the demand front, the networking market recovery continues. In enterprise, we continue to see robust demand in campus and branch, driven by the wire and wireless refresh, SASE, and data center switching. Wi-Fi seven demand is ramping with orders up triple digits sequentially. In cloud, we see strong demand for networking for AI.

Particularly in data center switching and Juniper PTX routing. Revenue of $1.7 billion increased 54% year over year driven by strong performances in both Intelligent Edge and Juniper. Intelligent Edge revenue increased 11% year over year and 8% quarter over quarter. We generated double-digit year-over-year revenue growth in Campus and Branch, data center switching, automated one, and services. We also grew SASE and security revenue. These strong results contributed to sustained momentum in networking SaaS support services. Operating profit for the networking segment was $360 million up 43% year over year. Benefiting from one month of Juniper results and operating profit dollars expansion in Intelligent Edge. Networking innovation is accelerating across the entire networking portfolio.

Just last week, we introduced new Mist AgenTiC AI native innovations for campus and branch data center switching and automated one. These complement the new agentic AI mesh technology from our HPE Aruba networking portfolio that we announced alongside GreenLake Intelligence at HP Discover in June. Our innovation is being noticed by the market. HPE and Juniper Networks were both recognized again as leaders in the latest 2025 Gartner Magic Quadrant for Enterprise wire and wireless LAN infrastructure. Customers are already taking advantage of the power of our full HPE portfolio with the inclusion of HPE Juniper solutions. For example, early this year, HPE won a multimillion-dollar deal with Spar Austria Group. A leading retailer in Central Europe.

SPAR is building out a digital business services platform underpinned by GreenLake. The full IT stack solution is designed and implemented by HPE Professional Services. It will be fully managed by HPE managed services and includes Aruba switches, Juniper firewalls, Alletra MP storage, plus HPE Clouds ops software including Zerto, OpsRamp, and Morpheus. The solution will enable a cloud-native and AI-driven platform experience. Finally, with respect to integration synergies, we are reiterating at least $600 million in cost synergies over the next three years. In the server segment, market demand is robust across our portfolio.

Revenue of $4.9 billion was an all-time high, increased 16% year over year and 21% quarter over quarter driven by strong conversion of AI orders and solid demand for traditional servers. AI systems revenue of $1.6 billion was also an all-time high. As we completed delivery of a large GB 200 system. Server operating margin improved sequentially benefiting from the changes we made in pricing and discounting early in the year. Which returned traditional server product margins to historical levels. This was partially offset by higher AI mix, including a large deal. As we enter Q4, we continue to expect total server operating margin to be around 10% for the quarter.

AI systems orders increased nearly 100% quarter over quarter, including Middle East sovereign winds and continued traction in enterprise. We have grown enterprise AI orders year over year every quarter. Since the beginning of fiscal 2024. From an innovation perspective, we continue to keep pace with new accelerators technology and time to market customer demands. Last month, we launched HPE servers with the new NVIDIA Pro 6,000 Blackwell and NVIDIA Blackwell Ultra accelerated computing platforms. In traditional servers, customers are continuing to refresh edge infrastructure with more powerful, richly configured servers. As a result, revenue increased double digits year over year on mix shift to HPE Gen 11 and Gen 12 servers.

During the quarter, we expanded the Gen12 compute portfolio to include the latest AMD fifth-generation EPYC processors. The new servers include support for HP compute management with AI-driven lifecycle management. We expect the Gen 12 adoption to accelerate through 2026. In Q3, we also released our next HP nonstop compute solutions for mission-critical workloads. We doubled the memory capacity and doubled the system interconnect bandwidth. Finally, hybrid cloud performance was solid. Revenue of $1.5 billion increased year over year for the fourth consecutive quarter. In addition, operating profit margins were up 70 basis points and operating profit dollars increased 26% year over year. ARR increased 75% compared to Q3 2024 with the inclusion of one month of Juniper results.

On an organic basis, AIR increased 40% in line with our guidance of 35% to 45% CAGR. In storage, we saw robust growth in our IP product portfolio. HPE Alletra MP storage revenue increased triple digits year over year. We have now shipped more than 5,000 Alletra MP arrays to date. We continue to successfully migrate our customer installed base while gaining new customer logos resulting in a one-point gain in the most recently released IDC market share report. Private cloud, we continue to ramp sales of our enterprise AI factory solutions. During Q3, we added twice the number of new private cloud AI customers compared to Q2 with particular interest in our developer configuration.

Software is a core differentiator for our GreenLake cloud for our private cloud portfolio, which is a key contributor to our AIR growth. In June, we announced our new HPE hybrid cloud ops suite software bringing together Morpheus, VM Essentials, OpsRamp, and Zerto. To assist customers from hybrid cloud orchestration virtualization, and observability to continuous data protection. Our cloud software revenue in the quarter increased strong double digits year over year. At Discover Las Vegas, we unveiled GreenLake Intelligence. Our framework for deploying AI agents across cloud and infrastructure to simplify customers’ hybrid IT operations. We also expanded our agentic AI capability in OpsRamp networking and storage. Innovations like these continue to attract new customers to our GreenLake cloud.

In Q3, we added approximately 2,000 new customers bringing our GreenLake cloud customer count to approximately 44,000. In closing, as we look ahead, I am excited for HPE’s next chapter. The completion of our Juniper acquisition, positions us to win in networking as the market enters a new era of IT and business transformation where AI cloud and networking converge. We launched a new brand for HP to reflect this potential. The brand is modern, expresses what our technology and talent make possible and reinforces our relevance with our customers. Our vision for the company is clear. To lead in the AI era through a modern secure cloud-native and AI-driven networking portfolio that accelerates our profitable growth.

We are focused on executing with precision capitalize on the growing opportunities in the market, deliver strong value to our customers and our shareholders. I look forward to providing more details about our strategy our long-term value creation framework at our Securities Analyst Meeting on October 15 at the New York Stock Exchange. I would like now to turn it over to Marie to provide more insights into our quarterly results and full fiscal year guide. Marie?

Marie Myers: Thank you, Antonio, and good afternoon. I’m pleased with our performance this quarter while navigating an evolving market environment. Regarding our results, first, all segments of our business performed well. Our server business has moved past the pricing and discounting issues we reported earlier this year in compute. Hybrid cloud posted its fourth consecutive quarter of year-over-year top-line growth and operating margin expansion. And revenue growth in our Intelligent Edge business is improving as the networking market recovery continues. Second, I’m pleased that we completed our acquisition of Juniper, which will shift our revenue mix towards a higher growth higher margin networking business.

We continue to expect the acquisition to be accretive to our non-GAAP results in year one, enhancing our profitability as we capture synergies and drive new market opportunities with our increased scale. And finally, we made solid progress on our cost reduction initiatives announced last quarter. I’m looking forward to sharing more about the next chapter of our company at our security analyst meeting next month. Let’s talk about the details of the quarter. Third-quarter revenue of $9.1 billion which included Juniper, was up 18% year over year and quarter over quarter. And up 11% excluding Juniper revenue of $480 million. Excluding Juniper, total revenue of $8.7 billion exceeded the high end of our outlook range.

Demand was strong this quarter, and we did not see material demand pull in. Our reported annualized recurring revenue run rate was $3.1 billion including $590 million contributed by Juniper. Reported ARR was up 75% year over year or up 40% excluding Juniper. Software and services ARR, including Juniper, doubled year over year as the mix of this higher margin revenue improves sequentially by 640 basis points to over 81%. Including Juniper, non-GAAP gross margin was 29.9%, down 190 basis points year over year and up 50 basis points quarter over quarter.

On a year-over-year basis, gross margin was impacted by an unfavorable mix within server, networking, and hybrid cloud, which more than offset the benefit margin contribution from one month of Juniper. Excluding Juniper, gross margin was 28.3%. Non-GAAP operating expense, including Juniper as a percentage of revenue, was flat sequentially and declined 40 basis points year over year, reflecting strong revenue performance and disciplined cost management, partially offset by variable compensation. We will continue to manage costs rigorously as we target efficiencies through Catalyst, complemented by at least $600 million at expected Juniper-related cost synergies over the next three years with $200 million expected to be realized next year.

Excluding Juniper, non-GAAP operating expense as a percentage of revenue was 20.2%, down 160 basis points year over year and down 120 basis points sequentially. Driven by strong cost discipline as we grew revenue faster than expenses. Non-GAAP operating margin, including Juniper, was 8.5%. Down 150 basis points year over year primarily due to lower gross margins partially offset by cost management. The 50 basis point sequential improvement was primarily due to the inclusion of Juniper’s results. Excluding Juniper, operating margin was 8.1%, down 190 basis points year over year, but up 10 basis points sequentially.

During the quarter, we generated free cash flow of $790 million including approximately $200 million of deal-related costs, and higher net interest expense, partially offset by improved inventory management. Non-GAAP diluted net earnings per share of $0.44 was toward the high end of our guided range of 40 to 45¢. Our non-GAAP diluted net EPS includes a $0.01 net attributable to consolidating one month of Juniper’s results and the impact of net interest cost related to the acquisition. Q3 GAAP diluted net earnings per share was $0.21 below our guidance of $0.24 to $0.29.

In terms of these results, non-GAAP diluted net earnings per share excludes $326 million in net costs primarily due to Juniper-related acquisition costs, stock-based compensation expense, amortization of intangible assets and acquisition disposition, and other charges. Partially offset by adjustments for taxes, gain from litigation settlement, and other adjustments. Now let’s turn to our segment results. Starting with networking, As previously mentioned, we closed our acquisition of Juniper on July 2. So our Q3 earnings report includes only one month of Juniper’s results. Our Q4 networking results will include our first full quarter of consolidated Juniper financials. We will provide more details regarding our near-term and longer-term strategy and outlook for our networking business and our security analyst meeting.

Next month. Networking revenue for the quarter was $1.7 billion, up 54% year over year up 48% sequentially, and up 11% year over year, excluding Juniper. Strong networking revenue growth was driven by the ongoing recovery in the networking market and consolidation of Juniper’s results for the month of July. While it’s early days, we are pleased with our order growth, and revenue performance we generated across the combined networking business. Reported orders grew strong double digits year over year, including double-digit growth in both campus switching and the SMB markets. Excluding Juniper, Intelligent Edge orders grew a mid-teens percent year over year, Demand in Q3 was strong as sellout increased sequentially and year over year.

Networking operating margin was 20.8%, down 160 basis points year over year. This is inclusive of a 22.7 operating margin from HPE’s former Intelligent Edge business and 15.8% operating margin from Juniper’s networking business. Excluding Juniper, operating margin was down 90 basis points sequentially primarily due to variable compensation, and product-related costs. Server revenue was $4.9 billion, up 16% year over year and up 21% sequentially, above the high end of our guidance range. The quarter-over-quarter revenue increase was driven largely by a double-digit increase in AI systems revenue due to a large AI deal we shipped in the quarter. Augmented by higher AUP from a favorable mix shift in core compute.

In traditional server, revenue increased sequentially driven by volume increases and AUP strings supported by the continued shift to Gen 11 service. Augmented by early yet improving sales of our Gen 12 service. In AI systems, we signed $2.1 billion in net new orders, driven by robust growth in sovereign net new orders, which increased by triple digits both year over year and sequentially, while enterprise net new orders were also up year over year. Together, enterprise and sovereign constitute greater than 50% of our cumulative AI orders since Q1 2023. We generated $1.6 billion of revenue during the quarter up 25% year over year and up 57% sequentially.

Driven by the previously disclosed large AI system that we shipped in the quarter. We finished Q3 with our pipeline at multiple of our $3.7 billion ending backlog. Server operating margin of 6.4% was consistent with our outlook. Margin performance improved sequentially benefiting from the changes we made in pricing and discounting earlier in the year which returned traditional server product margins to historical levels. This was partially offset by higher AI mix, including a large deal and AI inventory. Moving to hybrid cloud. Revenue was $1.5 billion, up 11% year over year the fourth consecutive quarter of double-digit growth. Sequentially, revenue increased 1% consistent with our outlook.

In storage, our HPE Eletro MP platform continues to drive robust growth, achieving triple-digit year-over-year revenue growth for the third consecutive quarter while high double-digit margins expanded sequentially again. In Q3, new logos were up more than three hundred and fifty and grew over 70% year over year. In private cloud, revenue grew strong double digits year over year as we see continued growth in our pipeline for PCAI, where the number of new enterprise customers doubled quarter over quarter. Also, our VM Essentials solutions closed over 120 customers in Q3 and has generated a pipeline exceeding 1,000 interested since its launch last November.

Hybrid cloud operating margin increased 50 basis points sequentially to 5.9% and increased 70 basis points year over year the fourth consecutive quarter that our OP margin has expanded on a year-over-year basis. Lastly, our financial services business generated revenue of $886 million down 1% year over year and flat quarter over quarter. Financing volumes increased 2% year over year to $1.5 billion. Our Q3 loss ratio was 0.7%, and return on equity improved sequentially and year over year to 17.7%. Operating margin of 9.9% increased 90 basis points year over year primarily due to a higher mix of financing versus operating leases. But declined 50 basis points quarter over quarter driven by unfavorable operating expenses despite the higher revenue.

Last quarter, we announced Catalyst, a series of initiatives designed to accelerate growth. Increase efficiency, and make it easier to do business with HPE. Our starting point was at approximate 5% workforce reduction from the exit of Q1 with gross savings of at least $350 million by fiscal year 2027. We are executing well against our plan and expect to achieve our target of 20% of the total savings by fiscal year end 2025. We are taking an AI-first approach to reimagine our key workflows I have started in my own finance organization leveraging AI to increase productivity. Turning to cash flow and capital allocation.

We generated $1.3 billion of operating cash flow in the quarter and free cash flow was a positive $719 million a significant improvement sequentially as expected. At the end of fiscal Q3, inventory totaled $7.2 billion down $933 million sequentially, Excluding July ending Chewterbury inventory of approximately $1 billion Q3 ending standalone HP inventory was $6.2 billion down $1.9 billion sequentially. Reducing inventory levels has been a key priority and we exited q with our balance near our normalized level. Our Q3 cash conversion cycle was positive thirty-five days, up nine days from last quarter.

The inclusion of Jurupa unfavorably impacted our CCC calculation this quarter as it includes only one month of Juniper’s revenue and cost of sales results versus the consolidation of Juniper’s July ending balances. This timing issue obscures both the progress we made improving our CCC and the positive contributions for working capital the business generated on a sequential basis when excluding Juniper. We expect our CCC will improve in Q4 four with a full quarter’s consolidation of Juniper’s financials. As we expect the amount of free cash flow we generate to increase sequentially consistent with typical seasonality.

We returned $171 million to shareholders through dividends but were unable to repurchase shares during the quarter because we were in possession of material non-public information that we have since disclosed. As we prioritize debt reduction, we remain committed to our dividend policy and expect quarterly share repurchases comparable to levels reported in the 2025, partially offsetting share dilution resulting from stock-based compensation. At quarter end and including incremental debt associated with the transaction, our pro forma combined net leverage ratio was 3.1 times. We remain committed to our investment-grade credit rating and intend to reduce our net leverage ratio back to our target in the two times range by the 2027. Now let’s turn to guidance.

We are revising our FY 2025 outlook to incorporate four months of contributions from Juniper Networks. For revenue, we expect constant currency growth of 14% to 16%, estimate currency impacts of 30 basis points up nominally versus last quarter’s estimate. With the inclusion of Chudapur, we expect our non-GAAP gross margin outlook for Q4 to be in the mid-thirty percent range and fiscal 2025 to be above 30%. We expect operating expense to increase sequentially driven by full quarter inclusion of Juniper.

We expect full-year non-GAAP operating margin to be in the upper 9% range at the midpoint benefiting from a sequential improvement in Q4 to the upper 11% range driven by the continued improvement in server margins and the accretive contributions from Juniper. We are revising our FY 2025 GAAP EPS range to $0.42 to $0.46 which includes the impact of Juniper. Are raising our non-GAAP EPS range to $1.88 to $1.92 which reflects accretive contributions from Juniper though minimal for the year. We are reaffirming our estimate of a 2¢ impact from tariffs in the second half of the year. Lastly, we are revising our free cash flow outlook to approximately $700 million.

Excluding Juniper, we expect to generate approximately $1 billion of free cash flow in line with the guidance we provided last quarter. Through the end of Q3, year-to-date free cash flow was a $934 million use of cash. We expect Q4 free cash flow to be up materially quarter over quarter due to better net earnings, in addition to favorable working capital driven by significant improvements in accounts receivable collections. For Q4, we expect revenue to be between $9.7 billion and $10.1 billion. For networking, we expect revenue will be up over 60% quarter over quarter, reflecting a full quarter of Juniper. Expect our networking operating margin in Q4 and fiscal 2025 to be in the low 20% range.

For hybrid cloud, we expect revenue to be roughly flat quarter over quarter with a sequentially improved operating margin in the mid to high single digits. For server, we forecast a mid to high single-digit decline in revenue quarter over quarter driven by a greater than 30% sequential decline in AI systems revenue Following the large deal that shipped in Q3. We expect server operating margin to improve sequentially to around 10% for the quarter, reflecting continued momentum behind our improved execution and an improved mix towards enterprise and sovereign as we continue to focus on profitable growth.

Going forward, we will remain focused on profitable growth in the service segment we’ll continue to assess the optimal balance between volume growth, and margins. We expect GAAP diluted net earnings per share to be between $0.50 and $0.54 and non-GAAP diluted net earnings per share to be between $0.56 and $0.60. Our Q4 EPS outlook reflects a sequential increase in diluted shares outstanding to 1.44 billion, attributable to the conversion of Juniper-related stock-based compensation shares and forward awards. Following the acquisition of Juniper, we now expect Q4 OI and E in the $180 million to $200 million range. We expect Q4 free cash flow to be up sequentially, reflecting typical seasonality, favorable working capital, and increased net earnings.

With that, I look forward to seeing you at SAM in October. And now let me open the floor for questions.

Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Aaron Rakers with Wells Fargo. Please go ahead. Yes. Thanks for taking the question and congrats on the close of the Juniper acquisition.

Aaron Rakers: I guess I want to just dive a little bit deeper into the server margin profile that you guys see. I think Antonio, in your prepared comments, you said that we’ve returned to more of a normalized operating margin on the traditional server line. I guess if I look back, I would assume that’s kind of in that low double-digit, let’s call it, 11% to 13% range I guess if I’m to do that math, it leads me to question the profitability of the AI server business. And so I guess, you know, as you think about that 10%, maybe you can unpack the drivers of getting to that level.

And I you know, how should we think about that AI server you know, margin profile? Thank you.

Antonio Neri: Thank you, Aaron, for the question. First, we are very pleased with the progression we made between Q1 to Q2 to Q3 based on the challenges we experienced in Q1 with price and discounting and as you said, we resolved those issues and the traditional server is back to historical levels around 10-12% as you talked about it. We believe that’s consistent with we see going forward. Remember there is a mix shift in addition to those pricing and discount changes. To GEN-eleven and GEN-twelve the structural of those products is different than gen 10 or gen 10 and a half. Obviously, it has higher AUP, different attach rates and the like.

And that’s gonna be a core foundation as we enter Q4. For delivering at the total server segment the around 10% for the quarter. Now this quarter obviously the mix of AI and in particular one deal and the work we did on inventory had a short term impact that ultimately took that what I call the overall server down to the 6.4% but as we exit that which already recognized then you’re going to get the natural lift into that higher single digit to close to 10%. And then therefore also you have the mix of sovereign and enterprise in the AI revenue conversion.

Because as we move from more a server provider centric revenue conversion to more a sovereign and enterprise revenue conversion in AI obviously we’re going to convert less in aggregate numbers it’s gonna have a different margin profile. And that’s why Maria and I the team are very confident that in Q4, the total server operating margin will be around 10%. So that’s the walk. Aaron.

Marie Myers: I’d just add, Aaron, we also have a robust internal framework that guides us in how we evaluate these AI related deals and prioritize them as well.

Operator: Very good. Thank you, Aaron. Operator, next question please.

Operator: Your next question today will come from Wamsi Mohan with Bank of America. Please go ahead.

Wamsi Mohan: Yes. Thank you so much. Now that Jennifer is closed, can you maybe just talk about some of the early progress on integration and go to market changes that we should expect? And any top line synergies and early customer feedback And Marie, maybe if you could talk about just the longer term opportunity for HPE in AI or Antonio. Just relative to networking versus servers, where do you see the larger opportunity for AI both from a revenue TAM and from a margin or profitability standpoint? Thank you so much.

Antonio Neri: Thank you, Wamsi. So first, we are incredibly pleased we closed the transaction of Juniper I think it was closed at the right time because obviously market recovery is taking place but also we see demand across sub segment of the networking market. And as we commented during my remarks and Marie’s remark, every subsegment on networking had a very strong performance. Whether it was HPE Intelligent Edge standalone or Juniper standalone and obviously on a combined basis, it’s even very, very strong. If you look at Compass and Branch, both companies are doing very well. Both company growing double digits, so that’s very strong. In data center switching and we talked about this during the July 9 call.

Juniper had that record breaking performance in data center switches and also a very good performance in routing which we call it the automated one Security was also up in the single digit year over year revenue growth driven by SASE. Then progress we have made is that is very strong, meaning integration is progressing really well. We have a series of milestones which we call it the employee day one, which is onboarding the employees into our systems. That’s a combination of benefits and other things that have to take place.

And then we have the harmonization of the Salesforce which we call it sales day one and that takes place at the end of this calendar year We already are incentivizing both sales forces to sell both products. And I can tell you the channel community is super excited to be able to sell both products. Because the combination of both products allows them to cover every vertical, every use case in every geography. And the fact of the matter is that the complementarity of the two portfolio allows us to drive strong security integration in our stack in addition to the integration with the rest of the portfolio with server and storage.

So we will be able to talk more about this Wamsi the securities analyst meeting. Rami, will take center stage and walk through the strategy. Early views of the proverb map, how we are driving the Salesforce integration, including our channel ecosystem. And we believe that’s going to be an opportunity as we 2026 and then obviously 2728. Your question about AI, as I think about the AI space, I always ground on three very distinct customer segments. In the service provider segment, and model builders Our strategy is to lead with networking or AI. The opportunity is significant. Juniper is getting traction.

It’s becoming the de facto standard in many of those customers and the opportunity with HP is to expand that footprint. And then we will sell these server products in that unique segment where it makes sense from an accretion from a margin perspective and working capital perspective. If you go to the sovereign space, which we saw this quarter of 200 plus percent growth on a year over year basis, and that sovereign also includes Neo Clouds, We will lead with an integrated rack scale architecture. Meaning networking plus the server business and all the services that comes with it.

And that will allow us to cover multiple type of offerings as customers in that segment may have the need to drive optionality and flexibility. And we have unique conversations with our partners. Then in the enterprise space, through the AI factory engagement with our private cloud AI portfolio which this quarter added 300 plus new logos double from last quarter we will lead with a full integrated stack. And that’s what we did with NVIDIA, the integration. Their software with our GreenLake plus the integrated infrastructure with our IHP Proline and Cray for the GPUs and then our Alletra MP storage or fast object and file plus all the services around it. To lifecycle manage that solution.

So I think at the portfolio level we can service every segment and find the right balance but I think networking us make us now stronger in the AI space because one of the key elements of that IT stack is the network at scale Juniper brings amazing technology both for the data center switching and the routing piece because once you integrate this in a large AI deployment, you need to core aggregate all of this through the leaf and spine into the data center footprint. And that requires also a routing product. So more to come at SAM. Okay. Thank you, Wamsi.

Operator: Next question please.

Operator: Your next question today will come from Samik Chatterjee with JPMorgan. Please go ahead.

Samik Chatterjee: Yes. Hi, thanks for taking my question. Antonio, you talked about just following up here on the Juniper sort of line of topics. Your networking overall margins are taking a bit of a step down to the sort of low 20 range. Where the segment historically has been about mid-twenties. How should we think about with the synergy road map that you have when the segment gets back to that sort of mid-twenties level? Because some of the back of the envelope math and the synergies would suggest you could actually probably go north of that as well long term.

But maybe just lay out the road map for us in terms of how to think about the progress on the margin front from the new set of level that you have post consolidation of Juniper? And, Murray, if I can quickly squeeze in one on cash, get the headwinds terms of closing Juniper on the cash flow this year, but how should we think about of the impact in on next year’s cash flow in relation to any closing costs or integration costs?

Antonio Neri: So I will pass it to Marie because I think will be able to answer both questions.

Marie Myers: Yeah, no worries. Thanks Antonio. Hey Sami, good afternoon. So Just to preface my answer before I get started, I’m going to answer both questions in the context of Q4 and full year ’25 guide. We will provide longer-term update to your questions, particularly around cash as we get into security analyst meeting in early October. So let me unpack first of all, the networking margin rate. So in the quarter, as you recall, we integrated a month of Juniper’s results and our intelligent edge business. We combine them now into one segment called the networking segment. And the combined operating margins were twenty point eight. If you look I think your question was focused specifically at the edge business.

Edge margin, actually, I disclosed in my prepared remarks, was 22.7, and we did see a sequential reduction, and that was really due to two primary factors. One’s variable comp expense, and the other one product related costs. And I did guide the Q4 op range to the low twenties as we get into the quarter. And the reason for that Samik, is obviously Juniper’s rate was a few points below our Intelligent Ed business. So just bear that in mind as you think forward to the networking margin rates. Now with respect to your question on cash flow, you know, we’re confident in our guide for the year.

And I would just say, you think about cash, there’s puts and takes. Now, obviously, you brought up Juniper costs, and we will give more clarity on that as we get through to Sam. Even as we get into Q4, there’s obviously costs that I believe are commented on in Q3 and Q4 and also the increase in OI and E. So all of that taken into account when you think about cash flow. And I just add, look. You know, we are absolutely focused on free cash flow. We’ll give you a lot more detail as we head to security analysts. As you know, our leverage has gone up, and so free cash flow generation is paramount for us.

Antonio Neri: Thanks. I want to reinforce the last point. Because of the integration of Juniper, the ability to generate earnings but also pay down the debt. Our main focus going forward in addition to drive the right balance of growth and operating margins is really free cash flow generation. And so we will be able to talk more about this at some.

Operator: Thank you for the question, Samik. Operator, next question please.

Operator: And your next question today will come from Amit Daryanani with Evercore. Please go ahead.

Amit Daryanani: Good afternoon. Thanks for taking my question. I guess, Antonio, I wanted to get sort of go back to the networking discussion. It sounds like, know, both Intelligent Edge and also Juniper are doing fairly well from a revenue basis. Guess simplistically, do you think about the growth rates for the combined business as we go forward, if you think networking market grows five, 6% a year, how do you think HPE plus Juniper can do And then, you know, really over time, how do you think about product integration on a campus side between Aruba and Mist? Do you think we need to Mist to Aruba, or and have a single product?

Or you think you can have both the products support in the marketplace simultaneously? Thank you.

Antonio Neri: Yeah. Thanks, Amit. Rami and I and the team are very pleased with the momentum both businesses have in the market. That’s a reflection that both offers are very strong. And let’s remind ourselves that’s true for campus and branch but when you go to data center switching and, obviously, the one business that’s 100% Juniper Then in the security space, we have a robust security portfolio because we need to lead with a secure network approach and that’s inclusive of Juniper firewalls, and the secure access service edge or the SSC which both company have very strong offerings. As you recall, in 2020, we acquired Silver Peak. To drive the convergence between SD WAN and security.

But as I think going forward, our goal is to build the best network in business. And that means we’re gonna grow above market. And that’s the reality. We’re gonna explain how that’s gonna be the case over the next three years. And we have an opportunity across AI and cloud and across the infrastructure itself. When I think about the Campos and Branch question, we were very clear with Rami. We’re gonna thoughtfully integrate the Juniper platform and the Aruba Central platform because you need to think about that layer Everything below that, is very straightforward.

There is no confusion because the reality is that we have a very strong robust campus switching portfolio which obviously has a lot of that has the wire piece which is Aruba silicon then Wi Fi access points. I don’t think that’s too complicated, and we’re gonna show what that looks like. And then finally, is the extension into IoT probably five gs which obviously HPE has unique offers. That integration of the cloud and AI ops is where that experience will evolve. But we are not going to leave any customer behind. We’re going to sell both products and you’re gonna see an integration that suddenly happen over time through the AI ops layer.

And that’s the opportunity we have here. And the good news customers want both today and we can serve every market vertical and we can also deploy any type of solution whether it’s cloud based virtual private cloud, meaning sovereign and then on prem. And that’s the opportunity we have ahead of us. And then last but not least on the data center switching side, in addition to networking for AI, we are also working integration in the private cloud, portfolio with the software defined networking components that Juniper brings. Through Fidelma’s hybrid cloud ops suite And then obviously in our storage and server business which require the switch along the way.

Operator: Very good. Thank you, Amit. Operator, next question please.

Operator: Your next question today will come from David Vaught with UBS. Please go ahead.

David Vaught: Great. Thanks guys for taking the question. So Antonio, I want to go back to the networking piece and maybe Marie can chime in on this. I think you talked about the traction that Juniper is getting with some these AI model builders and sort of that part of the network. How much of sort of the opportunity to grow is predicated on traction with those customers? And then maybe along those lines, I think Marie mentioned some product related costs. Was that mix in the networking section? To more, you know, AI centric offerings?

And how do we think about that mix shift going forward from a more enterprise campus centric model to one more hopefully, one more towards an AI model building sort of cloud model going forward? Thank you. Yeah. Thank you.

Antonio Neri: No, the AI opportunity is across all the three segments I mentioned earlier. Right, in networking, which is the service provider where we have the vision to lead with networking there because there is unique value proposition performance, cost, simplicity, lifecycle management. And AI driven capabilities. When you go to the sovereign space, same thesis. That’s even more important because you now drive rack scale integration with the rest of the server business. And then at the enterprise layer, course, we want to integrate the Juniper switch in everything we do in cloud and AI going forward by giving customers choice and flexibility. So the opportunity for networking in AI is across all three segments.

Now in the service provider space, obviously once you lay down the simple analogy I made, you laid the pipes inside the data center and you connect the data center to the rest of the interconnect process then obviously you become the standard And then from that, that solution, hang these amount of GPUs that comes with those deployments.

And so this is why the opportunity is significant and the benefit for Juniper which already had good traction is access to a very a larger number of customers that were not able to access before because we are strategic in many deals Remember, we cover 172 countries and also our heritage in countries and geographies where our mix is shifted to those example Europe and Asia versus North America. There is an opportunity here as we integrate the Salesforce but also integrate the architecture.

Marie Myers: And then, David, just to add on to your question around the product cost that was actually in the Intelligent Edge business that I mentioned that was on a sequential basis. And it was related to a platform transition. Thank you.

Operator: Thank you, David. Operator, next question please.

Operator: Your next question today will come from Eric Woodring with Morgan Stanley. Please go ahead.

Eric Woodring: Hey, guys. Thanks so much for taking my question. Antonio, was wondering if you could maybe just take a step back and share some details on you’re hearing from customers, what you’re seeing in the pipeline as it relates to kind of end market growth for your three core end markets, networking, server, and end And really, what I’m trying to understand is, there are some maybe concerns that the markets could be rolling over. There’s a lot of age infrastructure that can be refreshed. What are you hearing from your customers about prioritizing those types of upgrades?

And from the HPE perspective, you know, if we put network into the side because you’ve talked ad nauseam there, just where do you see the biggest opportunity to take share with the core HPE portfolio in those respective end markets? Thanks so much.

Antonio Neri: Well, you, Eric, and welcome. I know you are starting the coverage of our company just few weeks ago. So we appreciate you spending time with us. My view is that the market is robust We saw that throughout the Q3 order linearity was very consistent. There was nothing unnatural despite sometimes the true tariffs, no tariffs, but Marie commented on that the net impact of that is very minimal for us. At this point in time. And I will say on the server side, let’s start with that. On the traditional server side. There is a refresh going on We saw double digits year over year revenue growth in traditional servers.

Customers are refreshing edge infrastructure with more richly configured servers because they can reduce space and cooling on an aggregate basis. So with introduction on Gen 12 servers, we demonstrate that we can replace seven gen 11 servers and 14 Gen10 servers. And at the same time reducing the power consumption by 65% in addition to increase the security in their because now we support our own internal aisle of seven, which is basically the quantum proof encryption. And so that’s an example of what we see. And that was consistent across all three geos.

Now, there we participate with discipline, and ultimately, it’s a question of volume and margins we demonstrated in Q3 that we can do after the challenge we had in Q1. That’s one example and we believe over time, we believe we are poised to potentially gain share in enterprise. In the hybrid cloud space, huge opportunity through the transition of the virtualization layer. One of the areas people are focused on AI obviously for good reasons, but I can tell you one of the most exciting areas we see is the ability for customers to update or change their virtualization layer because of the rising costs they have seen in the last call it two years.

We have an enormous amount of proof of concepts going on with our Morpheus and VM Essentials. What we really focus there is the conversion from POCs to revenue This quarter we had double digit growth in our entire software portfolio. Which includes ops ramp provides deep observability inside the data center and outside the data center in a multi and multi vendor so that they can use our AI co pilot capabilities that we built inside GreenLake reduce OpEx. So they can reduce OpEx on licenses and can reduce OpEx on running that infrastructure in the way it is observed. So that’s another example of growth that we expect. Private cloud is another areas we expect to grow.

And then storage on our transition to our IP portfolio. This was the third consecutive quarter of triple digits year over year revenue growth in AlletraMP Why that’s happening is because we architected a new platform. That’s totally disaggregated. That provides the most effective block solution for those structural databases while at the same time leverage the same infrastructure and grow that in a scale out architecture into the unstructured data for fast object which is necessary for training or fine tuning rack models especially if you do that on prem and then eventually to do file ingestion. That value proposition is resonating with customers That’s why we gained one point of share in the last report from IDC.

And then in networking, you’re right, we spoke of Notion but I do believe there is a transition anyway in the wire switching. Remember we grew triple digits in Wi Fi seven and when you go to WiFi seven also you need more power at the port level to support those access points. And I believe that’s going to be also another opportunity for us.

Operator: Very good. Thank you, Eric. Welcome. Last question please, operator.

Operator: And your final question today will come from Simon Leopold with Raymond James. Please go ahead.

Simon Leopold: Thanks for taking the question. I wanted to see if you could revisit the topic of Juniper’s position in AI. On the call you hosted in July, Rami had indicated that Juniper had landed some deals in the back end. I’m wondering if you could unpack and give us a little bit more detail on that particular part of the business. Thank you.

Antonio Neri: Yeah. Simon, I think Ron and team have done a great job in lending several customers to become the reference in the networking space above the deployment of NVIDIA Spectrum So obviously inside the rack you have Spectrum SpectrumX all the way down to the NBLINK. With the NVIDIA Blackwell GPUs and the Grace Hopper GPUs. But above that, we have become the standard in some of these very large deployments And we are in a number of conversations with Neo Clouds and other service providers where we want to become the standard in that space. That’s why we believe is a big opportunity in leading with networking for AI in that particular couple of segments.

And so that’s our strategy going forward. And then obviously that will make our servers more attractive because also we will have more integration of the rack scale the sovereign space. And Juniper when the transaction closed had a very nice backlog that they built prior to the acquisition and we expect to unwind up back and new orders as we go forward. And so Rami will be able to explain more about this as we go to the security analyst meeting from a pure architecture perspective and how we are approaching that from a sales perspective. So thank you. Yeah, sorry we’re running out of time but we appreciate your time today.

I hope you take away that we are executing with precision. That we have a clear vision for the company, I am and the management team is very excited about the next chapter of HPE after the closing of the Jouvert transaction. You see the results of Juniper in our numbers with just one month and we’re excited to share more about this when we get at the security analyst meeting in New York, which I know everybody’s wanting to get a framework for twenty six, twenty seven, twenty eight. But beyond that, I’m excited to share our vision and the strategy for the company with this amazing portfolio we built. Thank you very much for your time.

Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Image source: The Motley Fool.

Date

Tuesday, Sept. 2, 2025, at 8 a.m. ET

Call participants

• Chief Executive Officer — William Li
• Chief Financial Officer — Stanley Qu
• Investor Relations — Rui Chen

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Takeaways

• Vehicle deliveries— 72,056 smart EVs delivered in Q2 2025, representing 25.6% year-over-year growth.
• Revenue— Total revenue of RMB19 billion for Q2 2025, up 57.9% quarter over quarter.
• Vehicle sales— RMB16.1 billion in vehicle sales for Q2 2025, reflecting 2.9% year-over-year growth and a 62.3% quarter-over-quarter increase in vehicle sales revenue.
• Other sales— RMB2.9 billion for Q2 2025, a year-over-year growth of 62.6% and a 37.1% increase quarter over quarter.
• Vehicle gross margin— 10.3% vehicle margin.
• Overall gross margin— 10% overall gross margin.
• Non-GAAP operating loss— Adjusted loss from operations was RMB4 billion (non-GAAP), down 14% year over year and 32.1% quarter over quarter (adjusted, non-GAAP).
• Non-GAAP net loss— Adjusted net loss was RMB4.1 billion (non-GAAP), decreasing 9% year over year and 34.3% quarter over quarter (adjusted net loss, non-GAAP).
• Q3 delivery guidance— Management expects 87,000 to 91,000 deliveries, representing 40.7%-47.1% year-over-year growth.
• Q4 delivery target— The company targets average monthly deliveries of 50,000 units, for a quarterly target of 150,000 units across three brands.
• Q4 group vehicle gross margin target— Management expects 16%-17% group vehicle margin, with L90 and ES8 targeted at 20% each.
• R&D expenses— Non-GAAP R&D expense guided at RMB2 billion per quarter for Q3 and Q4.
• SG&A expenses— Non-GAAP SG&A guided to be within 10% of sales revenue in Q4.
• Non-GAAP breakeven guidance— The company expects group non-GAAP operating breakeven in Q4.
• Third-generation platform highlights— CEO Li cited high-voltage architecture, lightweight battery packs, and in-house smart driving chip as major contributors to cost and product efficiency.
• Production ramp— L90 supply chain capacity targeted at 15,000 units per month in October.
• No new model launches for remainder of 2025— Management said no additional model launches or deliveries are planned for the rest of the year, citing full production allocation to existing models.
• Firefly brand— Over 10,000 Firefly deliveries within three months, now the top-selling model in the high-end small bath market.
• Charging & swap network— 3,542 power swap stations and over 27,000 charging points deployed worldwide as of July 2025.

Summary

NIO(NIO 0.70%) reported a 57.9% sequential increase in total revenue, driven primarily by expanding vehicle deliveries and substantial contributions from other sales, including used vehicles, R&D services, and after-sales support. Management reaffirmed momentum with a delivery outlook of up to 91,000 units for Q3 and set aggressive Q4 production targets for the L90 and ES8 models. Cost optimization is being achieved through a revamped organizational structure and deployment of self-developed technology platforms, which underpin sequential improvement in operating and net losses on a non-GAAP basis. The company highlighted non-GAAP targets for Q4 vehicle margin (16%-17%) and brand-level margins (20% for key new models), together with breakeven guidance on a non-GAAP basis, supported by disciplined R&D and SG&A spending. Management outlined no further model launches in 2025, reallocating resources to maximize production output and market responsiveness.

• CEO Li emphasized, “Vehicle gross margin in Q4 is expected to be around 16% to 17% for the entire group to achieve breakeven,” confirming the margin focus embedded in model launches and supply chain management.
• CEO Li stated there is “no major impact” on margins due to exchange of prior offers for upgraded battery standardization.
• Management attributed margin and cost improvements to technology, including proprietary smart driving chips and a 900-volt architecture, that reduce BOM cost and enable aggressive pricing without eroding profitability.
• The self-developed chip NX9031 is positioned to offer chip performance “on par with four flagship chips in the industry,” according to CEO Li, yielding cost savings without disclosing per-unit figures.
• Supply and production capacity were cited as current constraints on further launches, with combined production capacity of all three brands in Q4 expected to be as high as 56,000 units a month to support demand.

Industry glossary

• BOM (Bill of Materials) cost: Total spend on raw materials and components directly attributable to manufacturing a finished product.
• Power swap: NIO’s proprietary technology/platform that enables drivers to exchange depleted EV batteries for fully charged ones at dedicated stations.
• High-voltage (900V) architecture: Vehicle electrical infrastructure designed to improve charging speed, energy efficiency, and support advanced vehicle functionality.
• NX9031: In-house smart driving chip developed and deployed by NIO for advanced autonomous and smart vehicle features.

Full Conference Call Transcript

William Li: Hello, everyone. Thank you for joining NIO’s 2025 Q2 earnings call. In Q2, the company delivered 72,056 smart EVs, up 25.6% year over year. The new brand refreshed four products to model year 2025, further enhancing its product competitiveness. With improved organizational efficiency and growing brand awareness, the Envoy brand is gaining momentum in the mainstream family market. And thanks to the clear product positioning and deep market insight into the high-end small car market, the Firefly has been well received by the target audience. The company delivered 21,017 vehicles in July and 31,305 in August.

The launch of the Envoy L90 in late July and the pre-launch of the new all-new ES8 in late August dropped strong market demand, boosted user confidence, and lifted overall sales. We expect total deliveries in Q3 to range from 87,000 to 91,000, representing a new high of 40.7% to 47.1% growth year over year. On the financial side, vehicle gross margin remained stable while other sales saw significant margin improvements. Moreover, the implementation of the cell business unit mechanism has begun to yield tangible cost reductions and efficiency gains. In Q2, the non-GAAP operating loss narrowed more than 30% quarter over quarter.

Since the start of deliveries in Q2, NIO ET9 has performed strongly in the executive flagship sedan market. Building on continuous R&D investments, NIO was the first to bring the in-house developed smart driving chip and full domain vehicle operating system on production models such as ET9 as well as the 2025 ET5, ET5T, ES6, and EC6. In late June, we rolled out the new world model across all new vehicles equipped with our proprietary smart driving chip.

Within just five months, this in-house developed chip enabled the mass release of functions and the seamless migration of core models and applications across five vehicle models, representing China’s and also the industry’s first full function delivery on a self-developed flagship smart driving chip. On August 21, NIO hosted the product and the technology launch of its core strategic model, the all-new ES8. As an all-around tech flagship SUV designed for the success of business, family, and individuals, the third-generation ES8 is an epitome of NIO’s tech innovation.

The all-new ES8 features original and distinctive design language, class-leading capping and storage space, premium features and comfort experience, flagship safety as well as smart driving and cabin experience ahead of its time. It is the most competitive model in the premium large zero SUV segment, receiving significant attention and recognition from both media and users. Pre-orders have started with test drives starting in mid-September followed by the official launch at NIO Day in late September and deliveries afterward.

On July 31, the Ambo L90, a game-changing product among large three-row family SUVs, was launched with ingenious space and comfort design, all-around smart safety, competitive pricing, and comprehensive charging and swapping services, the Almighty redefines the large zero SUV experience, making it a good fit for large families. The Envoy L90’s sales performance exceeds our expectations. In its first full delivery month, its deliveries reached a history high of 10,575. We are working closely with our supply chain partners for the ramp-up production capacity and keep pace with the strong market demand. L90’s strong market performance has also boosted Ango’s brand awareness and the demand for the L60.

In August, the L60’s order intake also hit a new high this year. As for Firefly, since deliveries begun over 10,000 Firefly has been delivered within just three months. It’s already the best-selling model in the high-end small bath market. Its novel design, flagship-level safety, and agile driving dynamics have been well received. Notably, in recent CIA SI test Firefly together with the ARMOR L60 achieved the highest safety rating ever. We are pleased to see the growing brand awareness is driving growing demand for Firefly.

In terms of product quality in June, MiO ET5 and ET5T ranked segment first in JD Power’s NEV IQF study, while the EC6 and ES6 ranked top two in the premium fab segment in J.D. Power’s NEV appeal study. With outstanding product quality, NIO has been the segment leader in J.D. Power’s quality study for seven consecutive years in 2019. As of now, the company operates 176 NIO Houses and four sixteen NIO Spaces as well as four fourteen Amo stores. On the service side, the company has three eighty-eight service centers and 68 delivery centers. Our sales and service network now operates efficiently and cohesively across all three brands earning recognition from our users.

Regarding charging and swapping, the company has 3,542 power swap stations worldwide, including over 1,000 stations on highways in China and has provided over 84,000,000 swaps to users. By July, the battery swap network had thoroughly covered the highways between major cities in China, connecting five fifty cities with three-minute swaps and eliminating users’ fringe anxieties on long trips. In August, we completed the power swap route along China’s iconic G318 Sichuan Hizhang Highway. NIO and Amo users now can drive their cars and swap all the way to the base camp of Mount Kumolama. Besides, the company has built over 27,000 superchargers and destination chargers. So far, NIO is the car company with the most chargers in China.

In Q2, NIO has entered a new cycle where its continuous investment in technology innovation, infrastructure, and the multi-brand strategy in the past decade begun to translate into market competitiveness. The strong sales momentum of the new All New ES8 and ARMOR L90 proves that our decade-long commitment to the fab roadmap with chargeable, swappable, and upgradable technologies can create user value beyond expectations, increasingly recognized and embraced by a growing base of users. We believe the all-new ES8 and L90 will drive the transition of the large rear wheel SUV market towards full electrification and boost the sales growth across other models.

At the same time with NIO’s continued efforts in the charging and swapping infrastructure, its power swap network now covers major highways and expands into more counties in China. As the network effect of power swap is becoming more evident, over time more users will experience and understand the unique benefits of the NIO Power Swap. Built on the company’s 12 full stack technological capabilities and the nationwide charging and swapping network, the three brands are reaching a broader user base. Starting in Q3, the multi-brand strategy will drive our sales growth and capture greater market shares across the various segments, helping to advance our mission of shaping a sustainable and brighter future.

Since the beginning of this year, the company has focused on systematically enhancing operational efficiency and execution, leading to significant improvement in both R and D as well as sales and service. With rising sales, improving gross margin and the more efficient cost of control, we expect to see a substantial improvement in the company’s financial performance paving the way for the next phase of rapid growth. Thank you for your support. With that, I will now turn the call over to Stanley for Q2’s financial details. Over to you Stanley.

Stanley Qu: Thank you, William. Let’s now review our key financial results for the 2025. Our total revenues reached RMB19 billion, increased 9% year over year and 57.9% quarter over quarter. Vehicle sales were RMB16.1 billion, up 2.9% year over year and 62.3% quarter over quarter. The year-over-year growth was mainly due to higher deliveries, partially offset by a lower average selling price from product mix changes. The quarter-over-quarter increase was mainly from higher deliveries. Other sales were RMB2.9 billion, grew by 62.6% year over year and 37.1% quarter over quarter.

The annual growth was driven by increased sales of used cars, technical R and D services, sales of parts and after-sales of vehicle services at Power Solutions, while the quarter-over-quarter increase was mainly due to the increase in revenues from used cars, technical R and D services, parts accessories and after sales vehicle services. Looking at margins, vehicle margin was 10.3% compared with 12.2% in Q2 last year and 10.2% last quarter. The year-over-year decline was mainly due to changes in product mix, partially offset by lower material cost per unit, while quarter-over-quarter vehicle margin remained stable. Overall gross margin was 10% versus 9.7% in Q2 last year and 7.6% last quarter.

The year-over-year gross margin stayed stable and the quarter-over-quarter increase was mainly attributable to positive mix effect driven by the increase in revenue from used cars and technical R and D services. Turning to OpEx. R and D expenses were RMB3 billion, decreased 6.6% year over year and 5.5% quarter over quarter. The decreases year over year and quarter over quarter was mainly driven by lower design and development costs from different development stages, with the year-over-year also reflecting reduced depreciation and amortization expenses. SG and A expenses were RMB4 billion, up 5.5% year over year and down 9.9% quarter over quarter.

The year-over-year increase was mainly driven by higher personnel costs, rental and related expenses associated with the expansion of sales and service network, partially offset by decreased sales and marketing activities. The quarter over quarter decrease was mainly due to the decrease in personnel costs and marketing and promotional expenses, primarily driven by the company’s comprehensive organizational optimization efforts in marketing and other supporting functions. Loss from operations was RMB4.9 billion, down 5.8% year over year and 23.5% quarter over quarter. Excluding share based compensation expenses and organizational optimization charges, adjusted loss from operation was RMB4 billion, representing a decrease of 14% year over year and 32.1% quarter over quarter.

Net loss was RMB5 billion, showing a decrease of 1% year over year and a decrease of 22% quarter over quarter. Excluding share based compensation expenses and organizational optimization charges, adjusted net loss was RMB4.1 billion, representing a decrease of 9% year over year and 34.3% quarter over quarter. That wraps up our prepared remarks. For more information and the details of our unaudited second quarter 2025 financial results, please refer to our earnings press release. Now I will turn the call over to the operator to start our Q and A session.

Operator: Your first question comes from Geoff Chung from Citi. Please go ahead.

Geoff Chung: Hi, this is Geoff from Citi. Thank you, Li Bin Zhong and Stanley Zhong and congratulate with the good result. My first question is about ES8 and L90’s capacity ramp up pace and the delivery target for the rest of the year. And due to the strong order backlog, can we expect December single month run rate for the group to hit 55,000 unit or above? This is my first question.

William Li: Thank you for the question. It’s true that with the launch of the Envoy L90 and also the new Audio ES8, we actually see a stronger market demand higher than what we’ve expected before the launch. In that case, we’ve been working closely with our supply chain partners to improve and enhance the production capacity throughout the value chain and also the supply chain. Our target is that in October the full supply chain capacity for the Envoy L90 can achieve and reach 15,000 units a month. And for the ES8 as the ramp up of production takes slightly longer, we hope that the full supply chain capacity can achieve 150,000 units in December.

With that by looking at both the demand and the supply availabilities and capacity, our Q4 target is to achieve an average of 50,000 units deliveries per month for all three brands, which means that in Q4 our quarterly delivery target combining all three brands is 150,000 units.

Geoff Chung: Thank you, Li Bin Zhong. So my second question is about the gross profit margin and whether fourth quarter can breakeven at the bottom line level. So if we look at the second quarter, our revenue up 58%, but our gross profit up more than 100% Q on Q. So could you give us more color on the second half vehicle GP margin trend and the non vehicle GP margin trend? And also to be specific, how do you see the L90 and the ES8 GP margin independently? Thank you very much.

William Li: Thank you for the question. I would like to walk you through our Q2 product margin. In terms of the vehicle margin in the second quarter of this year, it was 10.3%. As in the second quarter, we have conducted the model year upgrades on the ET5, ET5T, EC6 and ES6 as the product upgrades happened in the mid and late May. In that case among the 72,000 units we’ve delivered in Q2 only around 20% was contributed by the model year ’25 products. In that case the actual margin improvement contributed by this four models is not that significant in comparison to Q1.

And then in the third quarter as we have the full quarter deliveries for the model year 2025 products as well as the start of deliveries of the L90, which will further help improve the vehicle gross margin. And then in Q4 as William mentioned starting late September, we are going to start the deliveries of the ES8. We expect the vehicle margin to further grow. So Q4 also represents the first full quarter for the deliveries of both L90 and ES8. With that, we expect the Q4 vehicle gross margin to be around 16% to 17% for the entire group to be able to achieve breakeven.

As based on the decade long battery bus tech innovation, the in house developed of core parts and components as well as the continuous efforts in the cost of control and the savings on the supply side as well as the product cost structure, We achieved not only competitive product performance for the L90 and beyond ES8, but also a very competitive cost structure and the pricing point. With that in Q4 our gross margin target for the L90 and ES8 is 20%. In terms of the gross margin of other sales, it’s 8.2 in Q2 and it’s mainly contributed by two factors.

The first is regarding the revenues contributed by our existing users, including via our aftermarket services, our auto financing business as well as the narrowed loss on the power services. And the second factor is regarding the margin contributed by our technological service provided to our partners. With this two combined, we’ve achieved a good and positive gross margin on other sales in Q2. And in terms of the revenues or margin contributed by the technological services we provide to the partners as it is highly dependent on the product and the project stage, the actual revenues contributed may not be consistent from quarter to quarter.

In that case excluding that part, our expectation for the gross margin on other sales is to be breakeven or slightly with a slight loss quarter over quarter.

Geoff Chung: Thank you for the new guidance. Looking forward to the fourth quarter. Thank you.

Operator: Thank you. Your next question comes from Bin Wang from Deutsche Bank. Please go ahead.

Bin Wang: Thank you. I just want to ask for more detail about number four quarter breakeven. Number one is that what’s your R and D expense for number three and number four quarter? I think you actually guide close to billion in the number four quarter. Do you still maintain the same guidance for the number four quarter? And secondly, it’s the same for SG and A. Lastly, what’s the breakeven means? Do you breakeven in the OP level or net profit level? Is GAAP or non GAAP? Thank you very much for my question.

William Li: Thank you for the question. Regarding the breakeven target, our quarterly breakeven target is based on the non GAAP basis. And regarding the R and D and SG and A guidance, starting Q2 this year, we have conducted a series of measures combining our CPU mechanism to control our R and D expenses. Our principle is that without compromising on the major and the core R and D activities and also product planning, we will keep improving the R and D efficiency, which means that without compromising or affecting our major product planning and R and D, we will push for higher efficiencies in the R and D activities.

With that our target for the Q3 and the Q4 R and D expenses on the non-GAAP basis will be RMB2 billion per quarter. And in terms of the SG and A expenses also based on our CPU mechanism we’ve conducted measures to improve the overall SG and A efficiency. In the second quarter, our sales volume is at the magnitude of around 70,000 units. So the SG and A ratio to the sales revenue still accounts for a relatively high percentage. But as in Q3 and Q4, we grow our sales volume and also sales revenue, we expect the percentage of SG and A in the sales revenues to actually coming down to a more reasonable range.

But as in Q3, we’re planning several new product launches, there will also be corresponding marketing and go to market expenses. In that case, in Q3, we are still not able to achieve a breakeven on the SG and A expenses. But in Q4 the non GAAP target for the SG and A expenses will be within 10% of the sales revenue.

Bin Wang: Thank you, Womin.

Operator: Thank you. Your next question comes from Tim Hsiao from Morgan Stanley. Please go ahead.

Tim Hsiao: Hi. This is Tim from Morgan Stanley. Thanks for taking my question. So I have two questions. The first one is about the new model pipeline. Given the robust demand of L90 and ESD that occupied our capacity, well, the company adjust the launch schedule for the upcoming models. And we noticed that the NIO days, has notably moved forward to late September. Can management also share more insight into the updated model pipeline in the following quarters? That’s my first question. Thank you.

William Li: Thank you for the question. It’s true that at the moment we actually prioritize the production of the L90 and also the All new ES8 from the production capacity perspective. For the ARMOR brand, we even have to really give way to the L90 productions and compromising on the production of L60. So that it will find that our L60 users are also waiting up to pick up their cars. So right now we actually have four models with backlog order backlogs accumulated and the users will need to wait for the new car pickup including L90, Onu ES8, L60 and also Firefly.

And regarding the production capacity for the ARMOR product starting October, we expect the capacity to come back to a normal range, mainly supported and fueled by the production capacity of the battery. As in the past several months, we’ve been working closely with our battery partners to ramp up the production capacity. With that in Q4 for the ARMOR brand, we expect the full supply chain production capacity to be around 25,000 units a month. And regarding the new brand for the launch of all new ES8, we also have challenges regarding the supply of the brand new 102 kilowatt hour battery.

As the demand of the ES8 is actually stronger than we expected, then we at the beginning we underestimated the demand for the ES8 and also the volume assumption for the battery packs. We’ve been working closely also with the battery suppliers and partners to secure the supply of this new battery pack. With that in Q4, we expect the full supply chain capacity for the new brand can also achieve a 25,000 units monthly capacity. And regarding FarFly, we are also steadily increased its production and supply capacity. And in Q4, we expect the production capacity to ramp up to up to 6,000 units a month at its peak.

So it means that in Q4, the combined production capacity of all three brands will be as high as 56,000 units a month to be able to support our demand. As we have already dedicated our full capacity to the production of the existing models in the market, So for this year, we will not have any new models launched or delivered to the market. Previously, we’ve mentioned that we plan to also launch the L80 of the Ambu brand. But as now we have run out of all the capacities available, we actually have to decide to delay the deliveries of this new model.

But in terms of the launch or the go to market cadence for the L80, that’s to be decided. In addition to the onboard L80, next year in the coming quarters, we also have another two new models coming under the new brand to also two large SUVs. One is the ES9 as many of the users and the public already know about it and also ES7, a large five seater SUV model. As for the New Day this year, as it is happening in September, the protagonist of this event will be definitely the all new ES8.

Tim Hsiao: Thank you, Lian. My second question is about the pricing strategy and also just a quick follow-up on the margin side. Because we noticed that both the L90 and the new ES8 have launched with aggressive pricing strategies. So I just want to know that will this pricing strategy be extended to all the upcoming models under both brands? And if that’s the case, how should we think about NIO’s gross profit margin trajectory into next year? What would be a more sustainable and ideal equal margin level once all the new models are upgraded next year? That’s my second question. Thank you.

William Li: Thank you for the question. For the entire company as we’ve also previously mentioned for the long term our group level product margin is actually 20%. That’s our target. More specifically on the gross margin by brand for the new brand our target is to achieve 20% vehicle gross margin and even target a higher margin of 25%. And for Anvil, no lower than 15% for the long term and for Firefly around 10%.

For the ES8 and the L90 newly launched this year as well as the new models coming up next year, we also have this we’ll also contribute to this target as at the product definition and design stage we have already prepared for an aggressive pricing strategy and our cost structure can also support such strategy to be able to achieve more competitive pricing of our products without compromising on the product competitiveness itself. This is actually driven and enabled by our decade-long tech innovation, technology accumulation, in house developed parts and systems and also stringent cost control.

Operator: Your question comes from Jing Cheng from CICC. Please go ahead.

Jing Cheng: Thank you for taking my questions. My first question is still about our L90 and also ES8. So we have already seen that these two new models have already demonstrated our enhanced product capability and also very competitive pricing still with a very solid gross profit margin. So besides previously Stanley has already told us of the technology and also the platform upgrades. Could you share more about the underlying successful experience about these two new models such as our changes on maybe supply chain, maybe the dealers networks? This is my first question.

William Li: Regarding the overall product competitiveness on the third generation, it is actually getting stronger and better. And this also allows for more competitive product competitiveness as well as the cost structure. And as we’ve mentioned, this is enabled by our continuous tech innovation. Let’s say the 900 volt high voltage architecture, this platform actually allows for more integrated and a lightweight design that’s not only in the powertrain system as well as the high voltage architecture throughout the vehicle to be able to achieve high performance and the lightweight design. Such lightweight design also allows for improved cost structure and also experience competitiveness.

For example, on the ES8 and also L90 we’ve achieved a huge frunk and also trunk space, such huge storage space is also enabled by the high integration level of our architecture and systems. And another example is regarding the smart technologies, the digital architecture. On the third generation, we adopted the innovative digital architecture with the central computing cluster plus the zonal controllers. This can help achieve a better cost as well as the mass performance and the management. Let me take e fuels as an example. Previously on other older models, there are physical fuse box, which is as heavy as 10 kilos per car and it can take up eight liters of space.

But with eFuse, we are able to integrate them into the master board that can actually manage the power supplies throughout the vehicle at a very detailed and precise level, but still contributing to the mass reduction and cost improvement. So this improvement in both cost structure as well as user experiences are enabled by the tech innovation. Another example is regarding our proprietary smart driving chip. Of course, we’ve made the major upfront investment in the chip development, but the performance of our in house developed smart driving chip NX9031 can achieve the performance that is on par with four flagship chips in the industry.

So R&D-wise, we made investment upfront yet BOM cost wise this smart driving chip can also achieve savings. And another thing is regarding the technology roadmap, mainly the chargeable, swappable and upgradeable technologies for our products. With this, we are able to select the most suitable and optimal battery packs, including its capacity and the size for our users. For example, for some of our peers and competitors, they actually needed to strike a balance between the battery cost and also the battery range. Then they choose the LFP as the chemical system and they make a battery pack of around 90 or 100 kilowatt-hour capacity.

But with that the battery pack is actually very big and heavy. If you look at our battery packs for the Envoy L90, put a 85 kilowatt hour battery inside and for the ES8, a 102-kilowatt-hour battery inside. They can achieve the driving range and performance on par with those peers. But in terms of the mass, the 80 fiveone is only around 400 kilos and the 102 kilowatt hour battery pack is only around 500 kilos. So it is actually around 200 kilos lighter than many of our peers’ solutions. This is also another mass and cost optimizations enabled by our chargeable swappable and upgradable tech solutions.

And in terms of a competitive product in both cost as well as the user experience, I think three things will define the competitiveness of a product. The first is regarding the technology roadmap, the second is regarding the product planning and the third is regarding the product definition itself. And our past practice and experiences prove that our technology roadmap, including our multi-brand strategy, our chargeable, swappable, upgradable solutions, our full stack tech capabilities develop in house as well as our product planning are in general in the right direction. Yet when it comes to the product definition, we did have some lessons learned from the previous generations and platforms.

With that on the third generation with our all new ES8 and L90, we not only draw the best practices from the industry and peers, but also make corrections from within to be able to achieve a better product performance and the success with ES8 and L90 as it is actually drawing the effort of our competitive technology roadmap, reasonable product planning as well as more precise product definition and the market insights that can fit for the users’ needs in the Chinese market. And in terms of the supply chain, this is also playing a very important role in achieving the long term competitiveness of our product cost structure by establishing a win cooperation with our partners.

And in the past one or two years, we’ve also made adjustments to our supply chain and the partner strategy. In general, we look for the partners who believe in the roadmap technology decisions of the company as well as believe in the long term potentials of the company. And we work closely with these partners to jointly define the cost of targets and all types of targets. So for the existing products and also the coming platforms, we will also adopt this principle in our nomination and the sourcing strategy to be able to work with our partners closely.

Stanley Qu: Thank you, Tianjin.

Operator: Thank you. Your next question comes from Ming-Hsun Lee from Bank of America. Please go ahead.

Ming-Hsun Lee: Thank you, Wei Lin, and congrats for the good results. I also have two questions. So my first question is, could you confirm your new model pipeline for 2026? Can I confirm there will be at least five new car, which include ES6, ES7, ES9, L80 and also the second model under the Firefly brand?

William Li: Regarding our product strategy for 2026, as we’ve mentioned, we will focus on three large SUV models for the Envoy and also the new brand. Regarding the ET5, ET5T, ES6 and ES6, as this year we have just upgraded these four models to the model year 2025. For next year, we don’t have major plans to upgrade or facelift these four models. As on the model year 2025, we’ve already upgraded interior, exterior, the smart system is also upgraded to the latest C. S platform with both upgrade in the smart driving chip as well as the operating system. And recently we have also announced to make 100 kilowatt hour battery as a standard configuration on these four models.

We believe that with all these changes the competitiveness of these four models will continue to be strong in the coming quarters. Of course, it doesn’t mean that we will make zero changes to this model. We will still roll out some product calendars as this year earlier this year we have released the Champion Edition for the five and the six series and in the coming year we will also have such special versions and additions for these models. And also for the Firefly brand, we don’t have a plan for the second model next year.

Ming-Hsun Lee: Thank you, William. And my second question is regarding to the operating expense control. So in 2026, what level do we expect for your R and D expense per quarter? Do you think you can maintain around RMB2 billion non GAAP R and D expense per quarter? And also, could you guide your latest CapEx plan for 2025 and 2026? Thank you.

William Li: Regarding the R and D expenses, starting this year we’ve made major efforts based on the CPU mechanism improving our R and D efficiencies and the overall ROI of our R and D activities and investment. For the next year, our quarterly R and D expense non GAAP will be around RMB2 billion to RMB2.5 billion per quarter. That is a reasonable range for us to also maintain our long term competitiveness from the technology perspective. The major liabilities comes from the new model development as we believe that the investment for the foundational level R and D activities and technologies are mostly finished.

And also regarding the CapEx as we haven’t started the operational target discussion and the setting for the next year, I may not have a very clear or precise outlook regarding the CapEx for 2026, but I can share with you two principles we have. The first is regarding the power swap network. In general, we still hope to leverage as much as possible the Huffman’s resources and for the Power Swap network construction. And regarding the R and D CapEx and it’s well, regarding the CapEx on the product, it’s mainly dependent on the overall R and D cadence and also go to market strategies of the new models.

Overall speaking for next year, we hope the CapEx can be similar to the level of this year or if possible achieve even better results next year. But as I’ve emphasized, it’s highly dependent on the overall launch cadence and also R and D cadence of the new models.

Operator: Thank you. Your next question comes from Paul Gong from UBS. Please go ahead.

Paul Gong: Thanks William for taking my question. My first question is regarding the impact of the 100 kilowatt hours of the battery that you are going to adopt across new brands. Can you share with us the financial impacts of this strategy? Definitely, we can see that the competitiveness of the vehicles are getting enhanced because of this 100 kilowatt hours of the battery. But what would be the incremental costs on your front? Thank you. This is my first question.

William Li: Thank you for the question. When we announced the policy changes on the 100-kilowatt-hour battery pack, we’ve already introduced the potential impact or implications on the financials of the product. As when we launched the model year 2025 product, we offered a series of special offers and discounts to our users together with the products. And this time when we make the 100-kilowatt-hour battery standard configuration of the five and the six series, we actually withdraw many of these offers we provided at the launch of the product. And in exchange, we offer the 100-kilowatt-hour battery as a standard configuration.

So from the transactional perspective, there is no major change from the users perspective as well as from the vehicle margin perspective, there is also no major impact. And another impact is more on the sales and the upper funnel of our sales leads for the five and six series after announcing the change on the 100 kilowatt hour battery. We actually observed increases in the upper funnel incoming leads. Of course, this is a newly launched policy in terms of the long term implication, we will still need some time to observe, but overall impact is more positive than negative.

Paul Gong: Okay. So my second question is regarding the impact of switching to your self developed chips. Just now I think William mentioned that it is saving cost and it is also depending on the volume because of the fixed cost versus the volume. So can you give us some color that, for example, if you are delivering 20,000 per month with a new self developed chip, what would be the cost saving on the per car basis If this volume is coming to 50,000 per month, what would be the positive impacts from the cost saving angle due to the switching of the self developed chips? Just want to have the better estimate and sensitivity on that. Thank you.

William Li: Thank you for the question. Regarding the chip R and D expenses and investment as we actually recognize that in our immediate financials and the P and Ls, so it’s actual cost of savings per unit is not really closely tied in the actual volume we sell or actual number of the pieces we sell. As in terms of the production of these chips, we purchased the wafers directly from our chip manufacturing partners. So in that case, cost of saving per unit through the in house developed chip is not tied into the delivery volumes we achieve.

But in comparison to the chip solution we used on the second generation products, achieving the same level of computing performance, the cost is actually more advantageous and competitive with our own solution. And even on the third generation in comparison to the industry flagship smart driving chips, we still have a cost advantage and the competitiveness with our in house solution. But here I will not elaborate on the specific savings achieved per piece.

Paul Gong: Okay, I understood. That is very helpful. Thank you.

Operator: Thank you. Your next question comes from Yuqian Ding from HSBC. Please go ahead.

Yuqian Ding: Thank you, team. The first question would be more exploration on the pricing side. So ES8, L90 attractive pricing, good volume traction. So how does management would evaluate the potential internal cannibalization to the existing portfolio such as ES6 or L60 and the potential splash impact into next year’s new model pipeline?

William Li: As we’ve mentioned, the pricing of strategy for a product is highly dependent on the market competition, the cost structure of the product as well as the volume and the pricing sensitivity of the product in the segment. For the L90 as we’ve mentioned with its launch actually it has helped boosted the sales volume of L60. Right now even for the L60 users they will have to wait for the new cars deliveries and pickup. Actually in August, we even achieved a new high for the order intake of L60 for this year. So the overall impact from L90 on L60 is positive.

Regarding And the all new ES8, as we’ve also mentioned, we have now made the 100 kilowatt hour battery as standard configuration on the five and six series. So the attractive pricing of ES8 is helping boost the brand awareness of the new brand, which can also introduce more attention to the five and the six series. So with this logical and clear pricing system set up for the brand, we believe that the overall impact will also be positive on the new brand. Maybe at the beginning, our fellow will struggle with how to allocate their focuses at the time across different products.

But for the long term, we believe that the impact of these two models and the new models will be positive across the brands and the products. And also as we see strong demand for the Onui S8 and L90, we have also observed the successful product or great product great large three row battery electric SUV models launched not only by NIO, but also by our competitors who used to have only with products in the market. So with all these large three row SUVs coming to the market, we also observed a market trend in the first half of this year.

The growth rate of BAB segment increased by 39% year over year and for RIBS that’s only 14%. If we consider about the sales volume in July and August for the BAF and the RAV respectively, I believe that the growth rate of the BAF will be even faster than that of RAV. In that case, are observing growing competitiveness of the products in the mid and the mid large battery electric SUV segments as this is more well received and also evident to the public.

This is why we say that the golden era of the large fair role battery electric SUV is arriving as with more mature user mindset and also stronger competitiveness of the product, the market is shifting towards that direction. This will also help the long term competitiveness and the popularity of our existing SUV models including ES6 and L60.

Stanley Qu: Thank you, Richard.

Yuqian Ding: Yes, got it. Thank you. The second question is a little bit more exploration on OpEx side. You touched upon the innovation redesign and R and D commitment. So could you give us a little bit more quantification and breakdown in terms of the OpEx cuts target, if there is any? Or just breakdown the cost optimization initiatives seeing a little bit more details? Thank you.

William Li: Thank you for the question. As we’ve introduced towards the Q4 non GAAP breakeven target, our overall principle is that for the R and D expenses without compromising on the major R and D activities and also long term competitiveness, we would like to control the quarterly R and D expenses to be within RMB2 billion for this year and for SG and A ratio to the sales revenue around 10% this year. That’s our target for this year towards the quarterly breakeven.

And for the long term, as we’ve also mentioned, for the year of 2026, our R and D expenses will be around RMB2 billion to RMB2.5 billion per quarter depending on the product go to market and also development cadence. And as for the SG and A expenses, we would like to continue to achieve higher efficiency and utilization of expenses. That’s the overall principle.

Stanley Qu: Thank you, Yuxin.

William Li: Thank you.

Operator: Thank you. Your next question comes from Tina Hou from Goldman Sachs. Please go ahead.

Tina Hou: Thanks management for taking my question. Just a very quick one. So in the longer term, how should we think about the stabilized sales volume of L90 as well as ES8 on a like average monthly basis? Thank you.

William Li: Thank you for the question. As the automotive industry here in China is highly competitive and if you look at the sales trend of the smart electric vehicles, you seldom see any new model that can capture a very stable market share and very major trend or popularity in the market for a very long time. In that case, it’s also difficult for us to really share with you a clear outlook regarding what the stabilized sales volume of the ES8 and L90 will be for the long term. But definitely, we set ourselves a higher target and we will also try the best.

Starting this year for the new and ARMOR brand, we also started to build up the team capabilities by implementing a completely new sales and marketing paradigm. We hope that through this new sales and marketing paradigm, it can actually help us to maintain and capture the market share of our new models as soon as possible to prolong their impact and influence in the market and also to stabilize their winnable and satisfying sales volume in the market against the fierce competition as long as possible.

But as we have just implemented this paradigm and it will also take time for us to understand if it is truly helping us with the stabilization of these two great models ES8 and L90. But overall, we hope that this can achieve a good result that is satisfying to the market, investors and also our users.

Operator: Thank you, William.

Rui Chen: Thank you. As there are no further questions now, I’d like to turn the call back over to the company for closing remarks.

Rui Chen: Thank you again for joining us today. If you have any further questions, please feel free to contact NIO’s Investor Relations team through the contact information on the website. This concludes the conference call. You may now disconnect your lines. Thank you.