In this podcast, Motley Fool Chief Investment Officer Andy Cross and contributor Rich Lumelleau chat with Martin Reeves about:

• The like button's invention and implications.
• Innovation in the digital age.
• The role of imagination in business strategy.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

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A full transcript is below.

Where to invest $1,000 right now

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This podcast was recorded on August 10, 2025.

Martin Reeves: I was fascinated by the elegance and the simplicity of the Like button in terms of how could a dozen lines of JavaScript code, which is the Like button change so much about how we transact, how we communicate, how we relate?

Mac Greer: That was Martin Reeves, business strategist, advisor, and author of several books, including Your Strategy Needs a Strategy, The Imagination Machine, and his most recent, Like The Button that Changed the World. I'm Motley Fool Producer Mac Greer. Now, recently, Motley Fool contributor Rich Lumelleau and Motley Fool Chief Investment Officer Andy Cross caught up with Reeves and talked business, Imagination, and, yes, the Like button.

Andy Cross: Let's just jump in with very recently, you and Bob Goodson released a book called, Like The Button that Changed the World, which looks at how digital systems have reshaped human behavior, identity, society, all catalyzed by quite simply the Like button. What sparked the idea for the book? I have to say, I love this comment from you. It was brilliant in its simplicity. Let's talk a little bit about it.

Martin Reeves: Now you've answered the question. It is an unusual thing to write a book about it, I think, because it's an apparently trivial object that we maybe don't pay much attention to, but I was fascinated by the the elegance and the simplicity of the Like button in terms of how could a dozen lines of JavaScript code, which is the Like button change so much about how we transact, how we communicate, how we relate? Then, of course, all of the negative social side effects and the revolution in advertising and social media. It's just incredible that such a small thing could trigger so many changes. But the more proximal reason is, I was actually getting to know Bob Goodson, my co author, who originally was a medieval literature scholar who show I ended up as a Silicon Valley entrepreneur and CEO. We were just getting to know each other, and I discovered in our coffee conversation that he was a bit of an avid collector.

You couldn't even say hoarder. He's collected every train receipt since he was 10-years-old, and he was moving. To make conversation, I said to him, you must be finding interesting things in your boxes, Bob. He said, yes, and he pulled out a sketchbook. There was a dated sketch of the Like button that I immediately recognized was about five years before I'd known Facebook to have rolled out the button. I said to Bob, are you telling me you invented the Like button, Bob? He gave me a very strange response. He didn't say yes or no. He said, no, of course, not. Maybe, I'm not sure. I thought how could you not be sure whether you invented for Like button or not? This 30 minute conversation we had extended to a whole day until we thrown out of the last closing restaurant in Mill Valley. Essentially, by the end of it, we had a plan to write a book about the fascinating and winding story of the invention of the Like button.

Andy Cross: It's amazing. That's a great background. I love how you explore how it basically flattened human nuance into binary approval, like or not like. What would you say your takeaway as you wrote the book are some of the broader consequences of this binary outcome?

Martin Reeves: Well, the actual story like, why the thumbs up and who invented the Like button is fascinating enough. Then what does it tell us about the nature of inventions like a second layer. The surface story is essentially, that it's very hard to say, even after three years of research who invented the Like button because a whole community of pioneers and early Web 2.0 companies were looking at similar challenges at roughly the same time, and they all had different versions of things that contributed to the Like button. The essential problem was that in the nuclear winter following the dot com bust, this idea of Web 2.0 emerged, but there are a couple of problems with Web 2.0, the idea of the web where users generate the content. One of them principally being that the users were not generating any content. That was one problem to solve. The second problem to solve was that this was pre broadband. This is around the year 2000, this was pre broadband. Anything you did to communicate with anyone, like displaying a Like button or whatever, would likely trigger a page refresh.

The last thing you wanted to do in a conversation was trigger a page refresh because you would lose 20 seconds. You'd probably lose whatever person was doing, what they were doing on your website. That was a technical problem, and many businesses were facing different versions of this. Bob Goodson was one of the people that came up with this dated sketch of the Like button. The problem he was trying to solve as the employee number 1 of Yelp was that the people were not submitting restaurant reviews for Yelp's business model. They didn't have a lot of money. It was a start-up. What other currency? There's a currency of recognition. What happens if we allow people to complement the reviews of others? But you couldn't trigger a page refresh. The answer was, do the computation locally in the browser in JavaScript. But that was not why JavaScript was designed. This was like an unintended feature of JavaScript. Then other people were doing at the same time, like I'm not sure whether you remember a site called Hot or Not or rather salacious site voted on the appearance of your colleagues and your friends. It was a voting. Voting is the same problem which is, how do I display my vote? How do I vote on things and how do I get a counter on my vote and page refresh the same problem. Community of people innovated. Why the thumbs up gesture? That's also pretty interesting. I presume you're both American. Ask anyone American, what is the very origin of the Like button? They're likely to say the colosseum of ancient Rome, where people voted on the fate of the fallen gladiators.

The reason that they think that that is the case is that there was a famous painting in 1870 that was very popular with the rising American middle class that displayed the vestal virgins in the colosseum giving the thumbs down gesture. But we know for a fact that this was not what the Romans did. The Romans probably did more something like the sheath thumb and the downward pointing thumb. But for dramatic effect, this French painter actually had these gestures, and then it became a linguistic fact. In fact, it was reinforced in the very year that Bob drew his sketch by the gladiator movie, Gladiator I, which Ridley Scott originally intended to turn down because he didn't want to do what he called a sandals and toga movie. [laughs] But he was shown the very same painting that created this myth of the Romans did this and this and he was persuaded by the drama of the painting to actually make the movie. The cultural history of the Like button is also interesting. That, if you like, is some of the story of how did the Like button come about? But I think it tells us a lot also about how does innovation really work out? Does technological innovation really work?

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Andy Cross: Well, Martin, not just innovation, but creativity, just the simple design of thumbs up or thumbs down has had really second order effects in lots of different ways. When you look at the arc of history of the Like button, the extent of that, does it surprise you the second order effects of such a simple design?

Martin Reeves: Yeah, and I've delved into why was that the case? What are the effects of this little invention, the Like button? It's spread like wildfire. Nobody spent a penny on promoting it. We never needed an instruction manual. It just took off. It became a universal, you could call it, linguistic standard for the Web 2.0. It spread well beyond social media. Now every shopping site every B2B site, FedEx and customer analytics, your Netflix movies, everybody.

Andy Cross: The Motley Fool, we have a button on our sites.

Martin Reeves: You have a button? No if you look really hard, you can find some people have a heart or some people have a thumbs down but, but basically, the de facto standard globally is the thumbs up. What does it tell us about these things? It tells us a number of things, I think. I'm not sure how you were educated, but at my school, when we studied science, I heard heroic stories of individual creative geniuses like Sir Alexander Graham Bell and the telephone and Sir Humphry Davy and the miner safety lamp with great foresight in a moment, a flash of inspiration inventing something. One moment we didn't have the thing they invented, and then the next moment we had the blueprint for the invention that would solve some major social problem. It tells us that, actually, innovation is not generally like that. Because this was absolutely a community of innovators and there's good science that shows that this is the norm rather than the exception. Also, I interviewed all of these people, or my co author, Bob did, and one characteristic of all of these pioneering interviews is that not a single one of these pioneers of the Like button actually had any great foresight over the eventual impact of the Like button. In fact, something really strange happened when we tried to talk to these pioneers about the Like button.

They'd say what day are you talking about? Because there was not such a thing in their minds as the afternoon when they invented the Like button. How they thought about this was that particular day, I was just trying to solve a tactical challenge, just like every other day. It just so happened that this tactical challenge I solved may have contributed to something bigger. Absolutely, no one would say this will create the monetization model for the social media industry. This will create enormous social side effects. This will change how we interact. We only came across one person and we looked very hard that had the foresight of the end state, and it was not a technologist. Can you guess who it was? It was a science fiction author, Gary Steiner. Gary Steiner at the very beginning of the social media revolution, was writing a novel called The True Sad Love Story. That's a great science fiction novel, and he foresaw how all of this would play out. We asked him how he could possibly do that. It turns out that he was asking a different question. The technologists were basically asking, how do I solve my tactical problem, or what can the technology do? He asked a different question. He said, well, assuming this thing, the Like button does what it's purported to do, what will humans do with it? Of course, the answer, using his knowledge of humanity was, they'll lie with it, they'll steal with it, they'll beg, steal, borrow, imitate, flatter. They will do all of the human things. If you factor that into the equation, you can see dimly then what might become of this. You might have this world where people are evaluating other over the social web, where kids are spending too much time on screens, where there's this strange virtualization of reality, people prefer to comment on a video of a steak and a glass of wine rather than actually consume a physical one, and he foresaw all of that.

But he was the only person, not any of the technologists. The other big thing about the Like button is that there was an interesting philosophy going on, which was a bit unconventional. A book was published in 2000 that was very influential in Silicon Valley called Don't Make Me Think. The idea was that if you have something innovative, do not make it look new. Do not talk about the Wiz Bang features, reduce friction, make it seem ordinary. What's more ordinary than the thumbs up gesture? I don't need to know about the JavaScript code or the advanced functionality. It's like, great I can already do it. This became quite an influential philosophy, and I think it applies to the Apple Watch, if you think about it. The Apple Watch is not a watch. But by making it seem like a watch, it's like, it's no big deal. I'll buy one of those. If I said, would you like to buy an advanced supercomputer on your wrist with extremely interesting programming, you'd probably say, well, I don't think I understand that.

Andy Cross: The same with our phones, I think, too. I was like, when are we going to stop calling our phones, actual phones considering the amount of time we talk on them, compared to the amount of times we hold them or I don't know, 1%?

Martin Reeves: Well, it's a really important issue for innovators, I think. I talk about this in one of my other books, The Imagination Machine. There is a critical moment when I call it the moment when a thing becomes a thing, the thing that didn't have a name gets a name, the fax machine, the Apple Watch. I think you have three ways you can go in how you name things, and I think it's very strategic how successful the invention is going to be. One of them is you can emphasize familiarity. You can say it's not new, it's just a watch. Or you can go functional. You can say, you will never guess what this thing is, this fax machine thing. I'm going to actually describe in the name. I call it a facsimile machine. Creates facsimiles of pieces of paper. I said, now I know what it does. Or you can go overboard in emphasizing novelty. Think about the French connection T shirt, the FCUK T shirt. You do the double take you think you read an obscene word, and there's absolutely nothing new about a T shirt. But it grabs the attention to call it FCUK. Under what circumstances would you use one of these philosophies rather than another? That's a really important decision. In the case of the Like button, the important thing was that it was familiar. It was quickly adoptable. It became a human linguistic currency. Compliments were given, compliments were received, and this enabled the social net. That probably didn't even feel like a decision at the time, not an explicit decision to the innovators, but that's what was going on.

Andy Cross: It's interesting when you talk about how, like there was no Eureka moment where they said, that was the day I worked on the Like button. It's like a rock band when they're arguing should this song be on the album or not? Then it turns out, they throw it on at somebody's insistence, and it becomes like a smash number 1 hit. They were like, really? That was the number 1 hit? It sounds a little bit like that when you describe the genesis of it. I have to ask the question. Is it possible to try to foresee that next Like button that has just such a huge impact, or is that just too good?

Martin Reeves: I've actually done some serious mathematical work with the London Institute of Mathematical Sciences on what I call the mathematical signature or serendipity. What is it? Is it randomness? Is it a pattern that is predictable, is it a pattern that we can understand but not predict? It seems to be a pattern that we can't predict. It's not randomness. If you look at how fields evolve in terms of innovations, and you can apply this to anything. You can apply this to jazz bands. What are the composition of successful rock and jazz bands? You can apply it to films. You can apply it to recipes. You can apply it to software stacks. We've done all of that, and it looks like innovation is mostly the recombination of existing elements. Some of those combinations turn out to have incredible utility, and some of them don't it's very hard to predict. We can't predict it, I'd say, in general. But we can adopt the right mental model. If you say, I'd buy it basically, innovation is serendipitous. What can you do to promote serendipity? Serendipity is the technical definition is unanticipated favorable outcomes, unpredictable favorable outcomes. Well, you can increase the number of collisions which is the more recombinations you've done, the more shots on goal, the more likely one of them have a probability of going into the goal.

The trouble is that's normally expensive. The second thing you can do is you can reduce the costs of playing around with ideas. Lego, the toy company has a philosophy of learning through play. It applies surely to its toys and its child customers or users, but it also applies actually to the management model. The idea is continuously experiment and informal experiment and discover new combinations. A third thing you can do is to go external. Is it more likely that you will invent something inside a company or outside a company? The famous Andy Grove quote, I think it was Andy Grove, wasn't it, that said that, like most of the smart people are out there, not in here. The like story basically is a story of parallel loosely connected community of innovation. If you were entirely introverted as a company, you wouldn't be accessing that you might call it collective intelligence. But you can do things like acqui-hire. You can look at who's doing what, and you can hire them. There's a lot of that going on right now with AI and the big AI players. They're trying to steal the people with the ideas and the abilities. You can be very mentally flexible. Often the famous psychology experiment where somebody in like a gorilla suit runs across a basketball court, and because people are not expecting it, they actually don't see it. We see what we expect to see. Some companies actually train their executives in close observation, the idea of thinking more like a novelist than an accountant to actually observe the details, because by definition, these unusual recombinations that turn out to be hit products, they're an anomaly, they're the needle in the haystack. Your mind has to be primed to, we may not have the best thing forever. There may be a needle in a haystack. You looking for pattern breaking and this is supported by psychological research that basically says that the human imagination is triggered by pattern breaking, by surprise. We're extremely good at exception detection. We need to surprise ourselves, and the sure way of avoiding surprising yourself is not to look out the window to be entirely introverted, which is, by the way, what many large corporations are. They're basically looking internally.

Mac Greer: That was Martin Reeves. The book is, Like The Button that Changed the World. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy or sell stock based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money Team, I'm Mac Greer. Thanks for listening, and we will see you tomorrow.

The Motley Fool has a disclosure policy.

Key Points

• Geopolitical tensions have helped push gold higher.

• Fortuna Mining has gotten out of Burkina Faso, but is exploring in other areas.

• 10 stocks we like better than Fortuna Mining ›

It's currently a golden era for gold.

The yellow metal has soared to new all-time highs this year and is dragging a gold mining stock worth watching up with it. Indeed, the price of gold is up 28% year to date, compared with about 10% for the S&P 500.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Gold is considered a safe haven investment that typically performs better when risk assets like stocks are falling. It tends to move in the opposite direction of broad indexes like the S&P 500.

But the recent run-up in the price of gold has not been driven by investors avoiding market risk (indeed, both gold and the S&P 500 are up significantly over the past 52 weeks). Instead, the precious metal's current rise began soon after Russia invaded Ukraine in early 2022 and the U.S. froze Russia's foreign exchange reserves.

Pushing gold

Spooked by that sanction, the central banks of many countries, including Russia, China, and India began massive purchases of gold in order to diversify away from the dollar -- and minimize the ability of the U.S. to weaponize the greenback. Central banks are reportedly buying 80 metric tons of gold a month, about $8.5 billion at current prices.

Plus, multiple policy actions by the Trump administration have weakened the dollar, pushing down its value relative to other major currencies. They include a new tariff regime, which has turned many international investors off of dollar-based assets and caused the greenback to fall, as well as Trump's "big, beautiful bill," which will significantly increase U.S. deficits and has sent many investors elsewhere. In fact, Trump has repeatedly said he wants a weaker dollar because it will boost exports.

As a result, the U.S. Dollar Index (DXY), which compares the dollar to a basket of other major currencies, is down almost 10% year to date. And because gold is priced in dollars globally, when the dollar falls it boosts demand for gold -- and consequently its price rises.

U.S. investors looking to get in on the gold rush and build a hedge against a potential stock market pullback, correction, or outright bear market can look to gold-related stocks as well as the metal itself.

Shine your light on this miner

One of the best gold mining stocks is Fortuna Mining (NYSE: FSM), which is up 70% year to date through Aug. 15 and about 155% over the past 18 months.

Based in Vancouver, Canada, Fortuna currently operates three mines in Cote d'Ivoire, Argentina, and Peru. And it's exploring additional sites in Senegal, Cote d'Ivoire, Argentina, Mexico, and Peru.

The company produced about 370,000 ounces of gold last year, 13% more than the year before. In the most recent quarter, production from ongoing operations came to about 62,000 ounces, 10% higher than the same quarter last year.

Overall production has been down this year but only because of the company's divestiture in the Yaramoko mine in Burkina Faso. That exit is considered a big positive for Fortuna, given that the mine had just a year of reserves remaining and civil strife in the country threatens foreign operations.

Fortuna released second-quarter results released on Aug. 6, and the stock dropped 12% the next day, but has since rebounded.

On the good news front, just ahead of its earnings report, Fortuna announced that its Diamba Sud mine in the West Africa country of Senegal contains an estimated 724,000 ounces of gold, which is 53% higher than last year's estimate. In addition, there are potentially another 285,000 ounces in the mine that have not yet been confirmed.

Fortuna's stock often moves on announcements of newly discovered reserves and also rises as the price of gold does, though over the past year it has outpaced gold.

FSM data by YCharts

There are many gold miner stocks, but Fortuna is considered one of the best due to operation efficiency, strong organic growth and financials, and disciplined management. Investors will want to watch the development of its Senegal project closely.

Gold is hot at the moment for geopolitical reasons. Investors can use gold miner stocks both to hedge against a possible correction in the market and to rack up some serious gains.

Should you invest $1,000 in Fortuna Mining right now?

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Matthew Benjamin has no position in the stocks mentioned in this article. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• Nvidia stock has rebounded from its lows earlier this year, and expectations are mighty high as earnings come into view.

• While competition is rising, Nvidia remains well positioned to capitalize on a number of emerging infrastructure opportunities.

• Nvidia stock remains attractively priced compared to prior levels seen during the artificial intelligence (AI) revolution.

• 10 stocks we like better than Nvidia ›

Over the past several weeks, companies across every industry have released financial earnings and operating results for the second calendar quarter of 2025. For many investors, all eyes were on big tech.

Spending patterns from these behemoths don't just signal the health of the overall macroeconomic environment -- they also shed light on the most closely watched theme in the market: artificial intelligence (AI).

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While most of AI's power players have already reported, the ultimate industry bellwether, Nvidia (NASDAQ: NVDA), has yet to step up to the plate. The semiconductor giant is scheduled to announce results on Aug. 27, and expectations could not be higher.

Let's explore how Nvidia stock typically reacts during earnings season, and assess whether now might be the time for investors to seize the opportunity.

How does Nvidia stock generally perform after earnings?

The chart below illustrates Nvidia's price action over the past three years, with purple "E" markers indicating earnings dates.

NVDA data by YCharts

With just one exception, every earnings release has been followed by a surge in buying activity, underscoring the market's unrelenting appetite for Nvidia stock.

The lone outlier came earlier this year, when concerns about competition from Chinese models -- namely DeepSeek -- combined with uncertainty over President Donald Trump's new tariff agenda cast doubt on Nvidia's outlook. These worries fueled a narrative of caution that briefly interrupted the company's otherwise robust momentum.

As recent trends make clear, however, those fears have largely faded -- replaced by new investor enthusiasm. The broader takeaway is undeniable: Nvidia has been a standout winner over the last few years, with its share price climbing in lockstep with the rise of AI.

What should investors be listening for on Nvidia's earnings call?

During the AI boom, Nvidia's business has primarily been fueled by unprecedented demand for its graphics processing units (GPUs) and CUDA software system. Despite rising competition in the GPU landscape from Advanced Micro Devices and the upcoming release of custom ASICs from Broadcom, I still see a number of compelling catalysts that could fuel long-term growth for Nvidia.

Chip demand from hyperscalers

Earlier this year, investors learned that Meta Platforms and Alphabet plan to significantly expand their AI capital expenditure (capex) budgets. Meta made a $14.3 billion investment in Scale AI, while also launching a new initiative, dubbed Meta Superintelligence Labs (MSL). Meanwhile, Alphabet continues to ramp up spending on servers and data center buildouts -- clear accelerating tailwinds for AI infrastructure. They are not alone, however. Amazon and Microsoft also maintain massive capex commitments, bringing the combined total among the four hyperscalers to an estimated $340 billion on AI infrastructure spending this year alone.

Sovereign AI

Shortly after President Trump's inauguration in January, leaders from Oracle, OpenAI, and SoftBank gathered in the Oval Office to unveil Project Stargate -- a landmark $500 billion initiative to build out AI infrastructure in the United States. Countries across the Middle East -- such as the United Arab Emirates and Kingdom of Saudi Arabia -- have launched their own Stargate-style projects, each with massive funding commitments. Nvidia's industry-leading chipsets and data center expertise serve as the AI backbone to bring these efforts to life.

New life in China

For much of 2025, China has been Nvidia's biggest obstacle. A newly structured agreement with the U.S. government now allows Nvidia to reenter this critical market, with the company remitting 15% of its Chinese sales back to Washington. While the arrangement may appear costly upon first glance, Nvidia's superior pricing power in the chip market positions the company to absorb this expense with minimal impact on profit margins. Nvidia's ability to offset these fees ensures that doing business in China remains a net positive for shareholders.

Emerging applications

Beyond infrastructure, a new wave of opportunities is emerging as more advanced AI use cases take shape. For example, Tesla's push to scale its robotaxi business -- and its decision to replace the in-house Dojo system with one powered by Nvidia -- underscores the company's critical role in more sophisticated applications such as autonomous vehicles. Meanwhile, Tesla and other developers are racing to commercialize AI-powered robotics applications -- a market that Nvidia CEO Jensen Huang thinks could be worth multiple trillions in the long run. Looking even further ahead, the rising momentum around quantum computing points to the need for next-generation hardware and software -- inspiring Nvidia to continue innovating in order to remain at the forefront of the next chapter of the AI story.

Is Nvidia stock a buy before Aug. 27?

The chart below tracks Nvidia's forward price-to-earnings (P/E) multiple throughout the AI revolution. While the company's valuation has expanded recently, shares still trade at a discount compared to prior forward earnings peaks.

NVDA PE Ratio (Forward) data by YCharts

This suggests that much of the growth from the catalysts discussed above is not yet fully priced into Nvidia's stock price. In other words, there could be meaningful valuation upside ahead as these opportunities scale and contribute to Nvidia's growth.

While Nvidia's surge over the last three years has been generational, the company's long-term tailwinds give reason to believe that the rally is far from over.

For investors, the focus should not be on trying to time the perfect entry point. Instead, buying the stock at different price points over time -- a strategy known as dollar-cost averaging (DCA) -- remains an effective approach to building a position in one of the defining winners of the AI era.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,106,071!*

Now, it’s worth noting Stock Advisor’s total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• The company trumpeted a fresh investment into an artificial intelligence developer.

• This is Latent AI, which specializes in what Voyager calls "mission-critical intelligence."

• 10 stocks we like better than Voyager Technologies ›

Space and defense stock Voyager Technologies (NYSE: VOYG) took off like a rocket packed with fuel on Monday. The company's shares gained more than 13% in value after it divulged an investment into an artificial intelligence (AI) business. That trajectory was far more impressive than that of the bellwether S&P 500 index, which only cruised flat that trading session.

Time for an AI investment

Monday morning, Voyager announced that investment, which is being channeled into privately held company Latent AI. Voyager described Latent AI as a developer that "optimizes AI for contested and constrained environments, bringing faster, smarter and more resilient decision-making to the edge."

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Although it's obviously proud of this move, Voyager did not provide any specifics about the deal. It did not provide the amount it's plowing into Latent AI nor what stake in the company it might now hold.

It did say that with the new funds coming in, Latent AI will have scope to accelerate development of its AI and to "broaden their hardware reach." The goal is to put AI-ready processors in Voyager-built craft.

Nevertheless, Latent AI feels like it'll be a good fit for Voyager, which aims to develop and build space stations. As the former company concentrates on AI that quickly produces output in high-pressure situations, its solutions might serve space missions very well.

Voyage into the unknown

Without details of the deal, it's hard to make a fully educated guess as to how it'll affect the fundamentals of Voyager, which has consistently posted net losses of late. I don't feel it'll be a make-or-break event for the company. However, if the partnership between the two businesses is fruitful, it could give Voyager quite the technological edge.

Should you invest $1,000 in Voyager Technologies right now?

Before you buy stock in Voyager Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Voyager Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,106,071!*

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*Stock Advisor returns as of August 18, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Explore the exciting world of Oracle (NYSE: ORCL) with our contributing expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market trends and potential investment opportunities!
*Stock prices used were the prices of Jul. 23, 2025. The video was published on Aug. 18, 2025.

Should you invest $1,000 in Oracle right now?

Before you buy stock in Oracle, consider this:

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Oracle wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,106,071!*

Now, it’s worth noting Stock Advisor’s total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Anand Chokkavelu, CFA has no position in any of the stocks mentioned. Jose Najarro has positions in Oracle. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.

In this podcast, Motley Fool retirement expert Robert Brokamp chats with Wes Moss about the financial and nonfinancial metrics and habits of the happiest retirees.

Also in this episode:

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

• How the current bull market compares to those of the past.
• Estimates for the future returns from stocks.
• How to make more on your cash.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,070%* — a market-crushing outperformance compared to 184% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 18, 2025

This podcast was recorded on August 09, 2025.

Robert Brokamp: How does the current bull market compare to those of the past? What can we learn from the happiest retirees? You're listening to the Saturday Personal Finance Edition of Motley Fool Money. I'm Robert Brokamp. This week is part 1 of my discussion with financial advisor and author Wes Moss, about his research on the financial and non-financial characteristics of a fulfilling retirement. But first, let's start with last week and money. Our first item comes from Jurrien Timmer, director of Global Macro at Fidelity Investments, who puts out an interesting report each week, and his recent edition pointed out that the current bull market in US stocks that began in October of 2022 is now 33 months old and has produced an 84% gain. No, the tariff tantrum from this past spring didn't technically end the bull market, though it came pretty close. According to Timmer, since 1960, the median bull market lasts 30 months and produces gains of 90%.

The current run is right about at the median in terms of length and gains. However, what's somewhat different this time is breadth. Not all stocks are posting extraordinary gains, and Timmer wrote that only 35% of stocks are outperforming the index. He found that only two bull markets had similarly low breadth figures, and they were the 1970-1973 rise of the so-called 50/50 and the 1998-2000 tech boom. Both of those bull markets were followed by bear markets that cut the S&P 500 value in half. This current bull market has been driven primarily by tech-oriented growth stocks with a heavy emphasis on AI related companies, which brings us to our next item, and it comes from Renaissance Macro Research, also known as RenMac, which calculated that investment in AI, including both equipment and software, has added more to GDP growth this year than consumer spending. That's really remarkable because consumer spending usually drives 70% of the economy. There are two main takeaways here, at least in my opinion. One is that investment in AI has been massive, but also that consumer spending and demand is sluggish.

To quote a recent Wall Street Journal article, "Consumer spending stagnated in the first half of this year, according to federal data issued last week and the CEOs of Chipotle, Kroger, and Procter & Gamble, among others, who are telling investors that their customers are more strapped or appear to feel that way." The bottom line here is that if it were not for capital expenditures related to AI, both the stock market and the economy would not be looking nearly as rosy. Now we come to the number of the week, or actually numbers, and they are 3.3%-5.3%. That is the range of annualized returns that Vanguard expects from US equities over the next decade, according to a recent report. That, of course, is well below the historical long-term average of 10% and below the 15.3% the S&P 500 has returned on average over the last five years. The reason for Vanguard's lower expectations while US stocks trade well above the firm's estimate of the market's fair value. However, they do expect returns that are around 2% points higher from value stocks, small-cap stocks, and non-US developed stocks. Now, Vanguard isn't alone with their muted expectations. Just about any firm that estimates the future returns from stocks expects that they will be below average. That includes some of my colleagues here at The Motley Fool, specifically the analysts in our Hidden Gem service. In a recent article, they provided their estimate for returns from the S&P 500 for the next five years, and their range is 7.8%-8.2%. More optimistic than Vanguard's expectations for the next decade, but below average nonetheless for various reasons, including that US equities account for 60% of the value of all equities worldwide, that is more than 10% points above the historical norm. The S&P 500's PE ratio is more than 30% above the historical average.

Then there's the Buffett indicator, which is the ratio of the entire value of the stock market to GDP. It's like a price-to-sales ratio for the market. The current reading is 210%, which is more than twice the historical norm. What should you do with all these prognostications? Well, there's no guarantee they'll be right. It's very difficult to predict what the market will do, and many firms have expected sub-average returns from US stocks for the past several years, and, frankly, they've been proven wrong. Here's why I think these estimates matter. Over the last couple of Saturday episodes, I've encouraged you to use online tools to calculate whether you're on track to reach your financial goals. I named a couple of specific tools to consider. But whatever tool you use, you generally have to input a projected return on your investments. At current valuations, I think it's likely too optimistic to assume you'll earn 10% a year over the next 5-10 years. When I run my numbers, I assume my investments will earn 5%-6% while I'm still working and then around 5% in retirement. Then I adjust my monthly savings requirements accordingly. I hope my portfolio has higher returns, but I don't want my retirement or other goals relying on double-digit annual gains. Next up, my discussion with Wes Moss when Motley Fool Money returns.

We all want a happy, healthy, and wealthy retirement. But what does a research say about what it takes to achieve those goals? Well, here to tell us is Wes Moss, a certified financial planner practitioner, the host of the Retire Sooner podcast, and the author of What the Happiest Retirees Know. Wes, welcome to Motley Fool Money.

Wes Moss: Robert, so good to be here. Very good. Excited.

Robert Brokamp: Well, I'm glad to hear that. I'm excited for you to share a lot of what you've learned because you've been working on this for years. You've been doing multiple surveys of retirees and near retirees for many years. Plus, you've been an actual financial advisor for more than two decades, and you've determined that the happiest retirees tend to have certain habits, have certain characteristics. But let's start with what inspired you to start doing this research.

Wes Moss: When I was a new dad, I remember there was a popular book, and it was called Happiest Baby on the Block. Supposedly, that book helped you soothe your baby and make everything easier.

Robert Brokamp: Did it work for you?

Wes Moss: No, it didn't work. [laughs] When I first heard this, I thought, well, how do they know if the baby's happy? They didn't. You can't ask a baby. You can't talk to a baby. I guess, of course, the parent can determine, yeah, my kid was happy. They cried less than they maybe otherwise would. But it just reminded me or made me think, well, why wouldn't somebody write a book called The Happiest Retiree on the Block? What if we were to be able to go talk to 1,000 or 2,000 retirees, divide them up into two camps, happy versus unhappy, and then study the habits between those two groups? That was the original idea. It came from a baby book. It morphed into a long, really journey. It's been 15 plus years now of researching the financial habits, the consumer habits, the lifestyle habits, the social habits, all together that tips folks, if we look at America as a population. My most recent research study, again, is mapped to the US census, so it's statistically significant differences between these two very different groups, and we all want to end up in the happy, not the unhappy retiree group. I've continued that research, and I think it's a powerful guide to have the financial side of retirement, which you do such an amazing job of simplifying and having people be able to digest it and understand it. But then pairing all the lifestyle social community side and putting those two together so that we have this fruitful free retirement.

Robert Brokamp: Let's start with a topic that probably first comes to mind for most people, which of course is money. How much in terms of just liquid investable assets? Not net worth, but the liquid investable assets, do the happiest retirees tend to have?

Wes Moss: When I first did this, again, let's go back approximately 15 years. The way I looked at it in the very first book I did about this called You Can Retire Sooner Than You Think: Five Money Secrets of the Happiest Retirees. There was this inflection point that I found, and you can look at the data a million different ways, but you can look at the average, you can look at the median. I found that the median, at that time, this is, again, a long time ago, the median to crossover from the unhappy to the happy group, well, the median was $500,000. Now, that's not net worth. That's liquid retirement assets. That was the number I used for a very long time. That was controversy in a couple of ways. One, I remember getting feedback. That's so much money. That's for rich people. It takes forever to get to that. Then on the other side of the equation was that's not nearly enough. But 500K, that's not going to do it. The number, I don't know if some people didn't like the number. Some people like the number. That was where I stood for a long period of time. If you go back to, let's say, 2013, and you'd been in a balanced fund, let's call it a 60/40 allocation, 60 stock, 40 bond, and you withdrew funds from that. You started with 500, you took out 4% rule, so you started with 20K and ratchet it up for inflation. That would be approximately, depending on where you are, but I'm generalizing here, you wouldn't have 500. You would have taken out about 300, and you'd still have about $1 million left.

Robert Brokamp: Wow.

Wes Moss: As low as that sounded back then, it very likely work if somebody had taken that approach. Again, there's lots of variation there, but it's very realistic that that could have worked out. Today, I look at it in a more nuanced way. The way the research now in the most recent study is a little more nuanced, and I think of it in three zones. Here, it's the red, yellow, and green zone. The happy retirees want to get to the green zone. When it comes to liquid net worth, those numbers, I look at them a little differently today. You're in the red zone, meaning that you're well below the happiness baseline in America. It's like the opposite of Alpha. You're way under the happiness base zone if you have less than 100K. That makes sense. The yellow zone from 100K to just under a million, happiness levels are around the US baseline, slightly above, but just let's call it normal happiness in America. But once you cross into the green zone, which is the million-dollar category and up $3 million category, that's where you see happiness levels well above the US happiness baseline. That is the zone I want people to really focus in on. Today, that number is $1 million plus. It used to be 500, but we all know we've gone through massive inflation, so it makes sense that those numbers would be bigger or more significant, but that's where we stand today. I also look at income data, again, getting into that green zone for American families. This is for all income combined. Social Security, pension, whether you have rental income, etc, plus investment income, we want to get to the 100K and above. That's what gets us to the green zone. There's a lot of other financial habits, but those are two of the big ones that get us from red to yellow, and eventually to green, and that's where we want to be.

Robert Brokamp: Those are investable assets. What else did you learn about other ways that the happiest retirees manage their money apart from just their portfolios?

Wes Moss: There's a couple of things. One, I've always been interested in mortgage data because Americans have a weight, and it's really our biggest bill. You could argue that healthcare can be similar or higher nowadays. But really, for most of our lives, a mortgage and paying for our shelter is the number one big bill. What I found in the most recent data is that either a paid off mortgage or a mortgage that's going to be paid off or scheduled to be paid off within nine years or less, which is still a fair amount of time. That's what gets people into that happiness green zone. There's something very powerful about seeing the light at the end of the tunnel. Multiple and diversified income streams. Happy retirees tend to have more and different streams of income, so that they have diversification of how they're getting paid. Those are two financial habits beyond a portfolio that really, really tip the scales toward financial peace and feeling confident in financial decisions.

Robert Brokamp: I think one underappreciated aspect of having the mortgage paid off by the time you retire is that it lowers your expenses. In retirement, the more your expenses, the more you have to take out of your portfolio, the more that you have to take from your traditional IRA, which increases your taxes. If you have a $2,000 mortgage, you're paying $24,000 a year. You take $24,000 out of your traditional IRA, you've just bumped up your tax bill by over $5,000 if you're in the 22% tax bracket. You did that this year. The following year, you have to pay that tax bill. Where's that money going to come from? You have to take more money out of your traditional IRA, which will affect your tax bill the following year.

Wes Moss: Exactly.

Robert Brokamp: The real value to going into retirement with lower expenses, because you can leave more of your money alone.

Wes Moss: Keeping your tax bracket as low as possible. The other thing, Robert, that I think is really impacts almost all of us, and was really eye-opening from the last research study I did, is that people are very afraid of running out of money in America. I see it at every asset level. Now, naturally, as you would expect, the percentage of people worried about "Running out of money goes down as asset levels go up." But it's still really prevalent, even in the million-dollar category. Almost 50% of Americans that have $1 million or more, are worried about running out of money. Even in the three million-plus category, still one in four people worried one of their top financial fears is running out of money. Obviously, it's not just about having a larger nest egg and lots of cushion. There's more to it than that. That's what was so eye-opening about the most recent research I did is that that doesn't three million plus doesn't necessarily solve that fear and anxiety of running out, or it doesn't solve it for everybody. There's more to the story.

Robert Brokamp: It's time for our get it done segment. Now, you surely heard the phrase cold, hard, cash. Harkens back to the days when cash came mostly in the form of coins. In fact, the roots of the phrase go back as far as the 1600s. But as far as I'm concerned, cash is warm and cozy, like a comfortable bed at the end of a long day. Now, I know that cash isn't very exciting. Perhaps it might help to reframe it in terms of the many benefits it provides. You can think of it as dry powder, a means to buy stocks when the market is down. Portfolio flotation device because it holds up your portfolio when most investments are sinking. It could be a family protection plan, a source of funds in case of income disruption or expense eruption, or you can just think of it as a heated blanket because it can help you sleep at night. Oh, that's said, there's a lot of cash out there, not earning very much. According to the FDIC, here are the average interest rates on typical bank products. For checking account, the average rate is 0.07%. Savings account is 0.38%, one-year CD 1.63%, and three-year CD 1.34%. Dear listener, you can do much better. With a little effort, you should be able to earn close to or above 4% on many baking products. Several websites highlight higher-yielding options. We have one here at The Motley Fool, which you can visit by going to fool.com/money/banks. Then there's the cash in your brokerage account. The default cash option may be paying you little to nothing.

Check with your broker to see if you have access to a higher-yielding sweep account. Other options to consider are money market funds, individual treasury bills, or ETFs that invest in treasury bills, such as the iShares 0-3-month treasury bond ETF with the ticker SGOV. Just keep in mind that funds, ETFs, T-bills, bonds in general they might not be quite as liquid as cash, so it might take a day or two for a sell order to settle. Also, they aren't backed by the FDIC, as most cash products are that you get from a bank. Now, as you may have read, there's a lot of drama these days about if and when the Federal Reserve will cut rates. The futures market currently predicts that a 0.75% reduction in the Fed funds rate is the likeliest scenario by the end of 2025. If that happens, rates on cash accounts with variable rates, such as savings accounts, money markets, those are going to head lower. It might make sense to lock in current rates with some of your cash allocation by buying CDs or individual treasuries. Plus, keep in mind that treasuries have the added benefit of being free of state income taxes. That's the show. Make sure you tune in next Saturday for part 2 of my discussion with Wes Moss.

Thanks to Dan Boyd, who's the engineer for this episode. As always, people on the show may have interest in the stocks or funds they talk about. The Motley Fool may have formal recommendations for or against. But don't buy or sell investments based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our Fool advertising disclosure, please check out our show notes. I'm Robert Brokamp. Fool On, everybody.

Robert Brokamp has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Kroger and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Key Points

• Soho House has signed a $2.7 billion take-private agreement with a consortium investors, including Ashton Kutcher.

• Kutcher will join Soho House's board as part of the deal.

• Investors who aren't already shareholders have limited options.

• 10 stocks we like better than Soho House & Co Inc. ›

Actor Ashton Kutcher starred in films like No Strings Attached (2011), Dude, Where's My Car? (2000), and What Happens in Vegas (2008), but now he's set to be the star of a corporate boardroom.

Kutcher is leading a consortium of investors who are part of a $2.7 billion deal to take high-end membership club Soho House (NYSE: SHCO) private. As part of the deal, Kutcher will take a seat on Soho House's board.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Here's what investors need to know.

Some strings attached

Soho House shareholders will receive $9 in cash per share when the deal closes. That represents an 83% premium over the pre-offer share price of $4.91 a share. The stock hasn't traded at that level since June 2022, although it's lower than the company's initial public offering (IPO) price of $14 per share from July 2021. It also represents a significant upside to the stock's Friday close of $7.64 a share.

So, besides Ashton Kutcher, who are the buyers?

Kutcher's consortium is partnering with MCR, the third-largest owner-operator of hotels in the U.S. While the bulk of MCR's portfolio consists of branded mid-priced hotels like Homewood Suites and Residence Inn, in recent years it has begun purchasing higher-end properties. In 2015, it bought the iconic Eero Saarinen-designed TWA hotel at JFK Airport and in 2023 it purchased the historic Gramercy Park Hotel in New York City. Soho House, a membership club offering exclusive access to a global portfolio of high-end vacation properties, spas, and coworking spaces, will further expand its high-end portfolio.

As part of the deal, MCR's chairman and CEO, Tyler Morse, will take a seat on Soho House's board, along with Kutcher. The company is also getting a new CFO, Neil Thomson, who has spent 30 years in the hospitality industry.

Dude, where's my update?

The announcement took Wall Street by surprise, since it had been more than six months since the company had provided any new information about its potential privatization.

On Dec. 19 of last year, Soho House announced it had received an offer from an unidentified "third-party consortium" to take the company private. That announcement caused the share price to immediately jump 47%, from $4.91 to $7.22. In its 2024 earnings release, Soho House included a "transaction update," that read, in part, "The Company set up a Special Committee to assess the offer and the parties continue to assess the offer and a potential transaction, however no assurances can be given that the Special Committee's assessment will result in any change in strategy, or if a transaction will be undertaken."

Investors hoping for additional details were disappointed: Soho House's Q1 earnings release on May 9 and its Q2 earnings release on Aug. 8 just gave that same "transaction update," reprinted verbatim.

Then, on Aug. 18, just 10 days after its Q2 earnings report, Soho House surprised everyone by announcing that it had signed a definitive agreement with the investor group that includes Kutcher and MCR.

What happens in arbitrage

So, is there any way for investors to cash in on this deal?

If you're not already a Soho House shareholder, the upside is pretty limited. Shares are currently trading at about $8.80, just 2% below the offer price, indicating the market believes there's a high likelihood of the transaction succeeding (which is unsurprising, since the company name-checked several major shareholders as being on board). A 2% upside isn't much, especially considering you'd have to wait until the deal closes to cash in.

If you are a Soho House shareholder, it may make sense for you -- depending on your investment goals and financial situation -- to sell your shares now. The alternative is to wait until the deal closes in exchange for a few measly percentage points of arbitrage, but you may earn more by putting that money into more promising investments now.

Investors who missed the boat on Soho House may want to consider other beaten-down online property platforms like Airbnb or Marriott Vacations Worldwide, both of which are down more than 40% from their five-year highs.

Should you invest $1,000 in Soho House & Co Inc. right now?

Before you buy stock in Soho House & Co Inc., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Soho House & Co Inc. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,106,071!*

Now, it’s worth noting Stock Advisor’s total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

John Bromels has positions in Airbnb. The Motley Fool has positions in and recommends Airbnb. The Motley Fool has a disclosure policy.

Date

Aug. 18, 2025 at 5 p.m. ET

Call participants

Chief Executive Officer — Thiago Maffra

Chief Financial Officer — Victor Mansur

Operator

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

Risks

Thiago Maffra explicitly stated, "2025 has demonstrated to be more challenging than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way," signaling a difficult operating environment affecting growth initiatives.

CFO Victor Mansur noted, "If the banks that give credit to their clients keep asking for investments in terms of reciprocity, we may suffer a bit more in Q3 and Q4 2025 since we are not going into this business," highlighting risk of continued corporate net outflows.

"Bear in mind, that we can have a change in tax rules which can impact currently tax-exempt fixed income instruments," Maffra stated, flagging regulatory uncertainty that may influence product demand and capital market activity.

Takeaways

Total client assets (AUM + AUA)-- BRL 1.9 trillion as of the latest quarter, representing 17% year-over-year growth.

Gross revenues-- BRL 4.7 billion, up 4% year-over-year and 2% sequentially in Q2 2025.

Retail revenue contribution-- 77% of total gross revenues came from the retail business in Q2 2025.

Net income-- BRL 1.3 billion, up 18% year-over-year and marking the highest quarterly figure in company history for Q2 2025.

Return on equity (ROE)-- 24.4% for the quarter, expanding 223 basis points year-over-year.

Capital ratio (BIS)-- 20.1%, up 110 basis points quarter-over-quarter in Q2 2025.

Active clients-- 4.7 million as of the latest quarter, up 2% year-over-year.

Diluted earnings per share (EPS)-- Diluted EPS grew 22% year-over-year in Q2 2025, outpacing net income growth due to share buyback execution.

SG&A expenses-- BRL 1.6 billion in Q2 2025, up 10% year-over-year and sequentially, mainly due to higher marketing and technology investments.

Efficiency ratio-- Improved to 34.5% for the last twelve months, a 161 basis point improvement versus the prior year.

Retail net new money-- Positive inflows in retail were offset by a $6 billion outflow in the corporate and institutional segments in Q2 2025, due to tighter liquidity and increased reciprocity requirements from banks for credit lines.

Retail credit card TPV-- Credit card volume grew 8% year-over-year in Q2 2025; affluent and private banking card offerings were launched.

Life insurance written premiums-- 45% year-over-year growth as of the latest quarter, with management highlighting early-stage potential.

Retirement plan client assets-- BRL 86 billion, up 15% year-over-year in Q2 2025.

New retail product revenues (FX, global investments, digital account, consortium)-- $256 million, up 146% year-over-year in Q2 2025, with consortium gaining traction from a zero base.

Issue services revenue-- Down 30% year-over-year and 5% quarter-over-quarter in Q2 2025 versus the all-time high in Q2 2024, due to softer DCM activity.

Corporate revenues-- Up 14% year-over-year and stable quarter-over-quarter, buoyed by derivatives solutions in Q2 2025.

Fee-based model penetration-- 5% of total client assets as of Q2 2025, with potential for gradual growth toward 7%-8% in the coming years.

Share buyback program-- BRL 1 billion buyback program to be executed through next year, with a target for total capital returns above 50% of net income for 2025 and 2026.

Summary

XP(NASDAQ:XP) delivered record net income (GAAP) and expanded profitability in Q2 2025, achieving significant increases in retail-driven revenues and asset growth despite a challenging macroeconomic environment and headwinds in the corporate and institutional segments. Management reaffirmed its 10% top-line growth target for this year, supported by new products, channel diversification, and ongoing expansion of sales teams, while warning of potential volatility from upcoming tax policy changes and continued pressure on corporate net new money. Shareholder returns remain a top priority through both elevated capital ratios and a defined buyback, even as SG&A increases outpaced revenue growth due to marketing and technology outlays.

Maffra said, "we are convinced that we have a more sustainable revenue model and profitability is a consequence," highlighting management's confidence in the business model's adaptability.

Mansur noted, "the EPS growth pace was again faster than our net income growth" in Q2 2025, directly linking share buybacks to EPS expansion.

Management outlined that while fee-based models lower take rates slightly, they drive higher wallet share per client, likely compensating for revenue compression over time.

Upcoming tax regulation changes could alter DCM market conditions and affect asset warehousing strategy, as highlighted by both Maffra and Mansur.

Retail cross-selling and the rollout of new verticals—especially in insurance, retirement, and global products—are driving incremental revenue streams and diversification benefits.

Corporate and institutional segment outflows were described as closely tied to banks' requirements for investment reciprocity tied to lending activity, a risk that may persist.

The efficiency ratio has improved by 161 basis points year-over-year to 34.5% for the last twelve months, but guidance calls for near-term stability in light of ongoing investments in platform and personnel expansion.

Industry glossary

GCM (Global Capital Markets): Segment encompassing primary and secondary debt and equity capital markets origination and distribution activities.

DCM (Debt Capital Markets): Area focused on the structuring, issuance, and distribution of debt securities for corporate and institutional clients.

AUM (Assets Under Management): Total market value of investments managed on behalf of clients.

AUA (Assets Under Administration): Assets that a financial institution administers or holds on behalf of clients, without managing investment decisions.

IFA (Independent Financial Adviser): A financial adviser not tied to a single provider who offers clients a range of product choices and is remunerated by transactional or fee-based models.

TPV (Total Payment Volume): Aggregate value of transactions processed through credit cards or payment services.

BIS ratio: Regulatory capital adequacy ratio calculated under Basel guidelines, indicating the strength of a financial institution's capital base relative to risk-weighted assets.

CET1 (Common Equity Tier 1): Core measure of a bank's financial strength from a regulator's point of view, focusing on common equity capital relative to risk-weighted assets.

VaR (Value at Risk): Metric indicating the maximum expected loss with a given confidence level over a specified time horizon.

Take rate: The proportion of client assets from which recurring revenues are generated.

Full Conference Call Transcript

Thiago Maffra: Good evening, everyone. I appreciate you all joining us today for the second quarter 2025 earnings call. So half the year is already behind us, but there is much more to come. We are still working hard, I would say, in an obsessed way to keep evolving our clients' journey experience and product offering. 2025 has demonstrated to be more challenging than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way. As a result, we are continuously increasing our profitability. Now analyzing the main KPIs. The first one is client assets, AUM, and AUA, for which we posted BRL1.9 trillion, a 17% growth year over year.

Total advisers accounted for 18,200, representing flat figures year over year. On active clients, we posted 4,700,000 clients, with 2% growth year over year. During the quarter, gross revenues marked BRL4.7 billion with a 4% growth year over year. EBT year over year is 5% lower, reaching BRL1.3 billion, mainly because last year, we had positive impacts from overhead, turning this quarter not like for like. And on the bottom line, it's another record. We achieved the highest net income in our history, reaching BRL1.321 billion. It represents an 18% year over year growth. On profitability, we achieved 24.4% ROE during the quarter, a 223 bps expansion versus the second quarter of 2024. 10 out of 11 quarters posting growth.

This means 10 out of 11 quarters posting consecutive growth. On capital ratio, we printed a comfortable level at 20.1%, representing an increase of 110 bps quarter over quarter. Regarding diluted EPS, we posted 22% growth year over year, another in which it grew faster than net income, driven by our share buyback program execution. As we speak, we still have a share buyback program of BRL1 billion to be executed until next year. As I mentioned during last quarters, our capital distribution plan is aligned with our guidance, and we will operate the business with a base ratio between 16-19%. Now let's see more details on the next slides.

Since last quarter, we have been sharing new info to provide a better understanding of our ecosystem, considering institutional clients in total client assets and provided assets under management from our asset management business and AUA from our fund administration business. Said that, our total clients AUM and AUA comprehend almost BRL1.9 trillion, which represented a 17% growth year over year. On the right hand of the slide, is presented how net new money evolved. This net new money is only related to client assets. This quarter, we marked billion dollars in retail net new money and minus $6 billion in corporate and institutional.

It's important to mention that during the second quarter, SMEs and large corporates net new money reflected the dynamics of the current macro scenario. First, due to payment of higher interest expense, companies have less liquidity than before. Second, in order to minimize this liquidity constraint, some companies withdrew part of their investments with us as they were used in reciprocity for credit lines with other players. On the retail side, the lower tax-exempt volumes in GCM impacted primary offerings allocation and consequently the net new money coming from individuals. We keep developing our product offering and capabilities to constantly offer the best investment alternatives to clients, which should drive higher net new money in the long term.

I would say that the current environment has proven to be more challenging than we expected at the beginning of the year, especially for investment banking origination activity. However, we still have a better GCM pipeline for the second half of the year, new investment products offering, and other initiatives supporting our efforts to achieve retail net new money averaging $20 billion per quarter this year. On the next slide, let's delve into our retail strategy. Here, I would like to address some topics which are connected to our business model. Today, the company presents a more complete ecosystem with retail, institutional, and corporate divisions fully integrated to generate investment opportunities. This benefits us in many instances.

One of them is the fixed income platform in which we are much more complete now, being one of the largest distributors of midsized banks' time deposits. Second, innovative in developing new instruments such as the Boundary Pack Structure Notes. And third, also having a robust wholesale bank franchise with a corporate secured book to serve retail clients. As part of our business model, to engage clients on another level, we also launched new verticals in strengthening our investments portfolio while attending clients' demand in banking, insurance, retirement plans, global account, FX, and now consortium. This competitive ecosystem enabled us to present higher profitability during the last years.

And there is much more to do since we will keep investing in channel diversification, expanding sales teams, improving our product platform experience, with a more accurate client offering, and improving our intelligent segmentation. Recently, we also launched new guidelines to the AFAs, sharing our knowledge, tools, and methodologies, focusing on an opportunity to increase productivity, responsiveness, and efficiency. And independently, if it's through XP internal teams or AFAs, we also developed and agreed in a new and more comprehensive way to serve our clients. New rules are aligned with one objective, to improve client experience. Our main goal is to keep serving clients with excellence no matter in which channel or remuneration model they have chosen.

With this new way of growing business, we are convinced that we have a more sustainable revenue model and profitability is a consequence. For sure, the current diversified ecosystem defines XP as a defensive business with long-term growth. We are confident that our unique business model will keep evolving to achieve our long-term goals, which is to become the leader in investments in Brazil. Moving to the next slide. We see on the left-hand side how we serve clients with different models, channels, and how XP is remunerated. By the way, we have already launched a fee-based model a long time ago, anticipating what's becoming reality today.

It means that IFAs and internal advisers can attend clients with transactional fees or fee-based model, according to clients' preference. We also have RIAs and consultants which work in a fee-based model, attending clients with asset custody in different platforms. What we see today from the client perspective is a higher demand for fee-based model when compared to the recent past. Today, the fee-based model represents only 5% of our total client assets. Looking at developed markets, for example, the US, the fee-based model achieved around 50% share of clients' assets. If this is a trend in Brazil, we are ready to serve our clients.

Our capacity to attend clients with different models differentiates us from competitors and it's translated into more share of wallet and longer lifetime. Moving now to the next slide, about retail cross-sell. As we have stated before, we have implemented new initiatives and products to diversify our revenue streams during the last years. Starting with credit card, it grew 8% year over year marking billion in TPV during the quarter. As we anticipated last quarter, we launched new products targeting affluent and private banking clients. We estimate that with the new value proposition, cards should accelerate in the next years. Life insurance written premiums posted 45% growth year over year.

As we said in recent quarters, our insurance business is a growth avenue which is still at its early stage. Since it presents a huge penetration potential, we understand that we'll keep growing at a fast pace on a quarterly basis. On retirement plans, our client assets posted 15% growth year over year on the second quarter and reached BRL86 billion. We keep expanding our sales force to increase our relevance in this industry, since our market share is mid-single digit and there is a relevant addressable market to penetrate during the next years. In new products, we consider FX, global investments, digital account, and consortium.

Altogether, they presented 146% growth year over year, with revenues reaching $256 million this quarter. It's important to note that consortium came from scratch and it's gaining traction month after month. Moving to the next slide, we will address our wholesale bank evolution. Taking GCM into consideration, this quarter we saw decent industry volumes, but not close to last year's. Coupled with that, some players became more aggressive in pricing, trying to gain market share, and therefore resulting in lower fees. Finally, tax-incentivized products have lost share in total industry volumes during this quarter. For the next quarter, the pipeline is solid, we have more opportunities and there is a chance to reaccelerate our revenue growth.

Regarding XP's broker dealer, it was another positive quarter, and we became the leader in the local industry with 17% market share. As we saw this quarter, we still expect to see improvements bit by bit until 2026. This quarter, we kept the same size of our corporate securities book with BRL34 billion. Bear in mind, that we can have a change in tax rules which can impact currently tax-exempt fixed income instruments. We are now expecting to increase this book during the year. The rationale behind this is that companies will try to anticipate their debt issuance before the change.

Also for next year, with elections in sight, we are likely to see increasing volatility and therefore a reduction in corporate clients' appetite for new issuance. So our strategy, that being the case, is to keep this warehouse book and sell it to our retail clients during the next year. To conclude my presentation, I would like to reinforce that our innovative offering, advisory model, costs, and capital discipline, are translating into higher profitability, even considering the more challenging scenario. Our ecosystem is way more complete than years ago, and there is a big opportunity in front of us to expand our core business, our retail cross-sell, and our wholesale activity.

We are confident that by executing this, we reach our goals regarding market leadership in investments and also regarding our long-term growth. Now I will hand it over to Victor who will provide a deeper look into our financial performance this quarter. And I will be back for the Q&A session.

Victor Mansur: Thank you, Thiago. Good evening, everyone. It's a pleasure to be here with you to discuss our financial performance for 2025. Starting with total gross revenues. Total gross revenues for the quarter reached BRL4.7 billion, representing a 4% increase year over year and a 2% increase quarter over quarter. It was another quarter that retail gained in total revenues, now representing 77% out of total. This quarter, once again, our main driver for retail growth year over year were fixed income and other retail, which includes retail's new verticals, such as global accounts and consortium. On the wholesale bank, corporate was the highlight, partially offsetting the negative impacts on issue services due to a tough comp from 2Q 2024.

I will share more details during the next slides. Retail revenue posted billion in the quarter, a 9% growth year over year and a 4% growth quarter over quarter. The quarter growth was mainly driven by equities, which presented a higher ADTV in the period. Equities printed slightly more than BRL1 billion, with several percent growth quarter over quarter. A year over year perspective, fixed income was the main contributor, growing 20% and reaching BRL988 million in revenue. It's important to mention that in other retail concepts, the main contributor is the float per month durations, where we had higher average volumes if high interest rates during the quarter.

Now let's move to the next slides with corporate and issue services. Before moving to the quarter results, it's important to mention that on 2Q 2024, we posted all-time high corporate financial services revenues backed by a strong DCM activity. Therefore, have a tough comp for this quarter. Issue services presented million, minus 30% year over year and a minus 5% quarter over quarter. On the other hand, corporate revenues posted a solid 14% increase year over year and was flat quarter over quarter. It reached million, supported by our capacity to offer different solutions to our clients, mainly if derivatives. Moving on to the next slides, we will explore our SG&A and efficiency ratios.

Our SG&A expenses totaled BRL1.56 billion in this quarter with a 10% growth year over year and also quarter over quarter. We keep investing in our business and this quarter, we had a higher expense in the non-people category. Most of it explained by marketing and technology investments. During the quarter, despite this slower pace in your revenue growth, our operational cost discipline supported our efficiency ratio at 34.5% last twelve months. When compared to last year, efficiency ratio improved 161 basis points.

We will keep our plan to improve our business efficiency, and this will come in parallel with new investments that will continue to be made aiming to enhance our tech platform, our product offerings, and sales team expansion. Moving to the next slide, let's see our EBT. Just to recap, last year, we had positive EBT impact from the overhead related to the head of certain assets and liabilities. Therefore, EBT is not like for like one or comparison. On 2Q 2025, we printed BRL1.3 billion EBT, which represented a 4% increase quarter over quarter. Even considering the issue services impact on our revenues, we are able to expand our EBITDA margin by 50 basis points.

On the next slide, we see the net income. Net income achieved BRL1.3 billion, an 18% growth year over year and a 7% growth quarter over quarter. Net margin expanded by approximately 130 basis points quarter over quarter and 320 basis points year over year, reaching 29.7% in 2Q 2025. In your revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate. This translated into a new record high net income for a quarter, with significant EPS growth. Let's focus on earnings per share and ROE details over the next slides. Our diluted EPS in 2Q 2025 reached BRL2.46 per share.

As we continue the execution of our share buyback program, canceling the respective shares acquired, the EPS growth pace was again faster than our net income growth. In the quarter, our diluted EPS posted 22% growth while our net income grew 18%. Both on a year over year basis. Our OTE market 30.1%. Two ninety basis points higher year over year. Our ROE grew on a yearly and a quarterly basis reaching 24.4%. This represents two thirty basis points increase in comparison to the same quarter last year. These numbers I have just mentioned are important indicators that we keep generating consistent income returns to our shareholders. Finally, moving to capital management.

As we have planned, we keep our target of distributing dividends and securing share buyback programs. Combined, their volumes should be above 50% of net income for 2025 and 2026. We already have a share buyback program of BRL1 billion to be executed until next year, and new announcements will be made according to the Board of Directors' decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation. And we can see on the left-hand side that our BIS ratio in a very comfortable level of 20.1%. On the same rationale, our CET1 is at 18.5%, which is way higher than peers' average of 12%.

On the high hand side of the slide, we can see that our total RWA to total asset ratio was 27%. Which represents the third reduction in a row and 4% lower year over year. Total RWA remained steady quarter over quarter and grew 9.8% year over year, reaching BRL101 billion. As I said last quarter, RWA should grow at a moderate pace when compared to net income, and it was the case in this quarter. Since net income posted 18% growth year over year. As Maffra said before, the potential new tax regulation may change the DCM dynamics and therefore impacting our willingness to warehouse assets to distribute during the 4Q and 2026.

It's important to highlight that our VaR marked 13 basis points of our or R28 million dollars demonstrating our risk discipline since it was 4% lower year over year. And now we can go to the Q&A.

Operator: Okay. We're going to start our Q&A session. And the first question is from Eduardo Rosman from BTG. Eduardo, you may proceed.

Eduardo Rosman: Hi. Hi, everyone. Now my question here is on capital generation and dividends and buybacks. Right? So just help us understand a little bit more your capital generation because it seems that you've been able to improve it this quarter. Actually, you are growing your capital base, I think, faster than your net income. Right? So you're still way below the level this year the level of buybacks and dividends when compared to last year. Right? So can we see an acceleration of that now in the second quarter? How do you see that? We see that you have this soft guidance of above 50%, you know, for 2025 and 2026. But can you please help us with more details?

Thanks.

Victor Mansur: Hi, Rosman. Good evening, Thank you for your question. First dividing the answer here in some parts. First one, as we anticipated the net income would grow a bit faster than the RWA over this year. Delivering some leverage in capital terms. And I think that was the case. Also, as you comment we didn't distribute as much of the net income as we generated over this quarter. The second part, we are still capturing a bit of leverage over the 4.966 new regulation. And the benefit will be delivered over the year in the DRC and market risk, principally in the credit spread risk inside of market risk.

The second part will be delivered over the risk-weighted assets operational risk. Also, we expect to see that over the next quarters. Another part here talking about the trend for the year. We expected to see the RWA growing slower than the net income. And the new tax regulation may change a bit the dynamics of the DCM market. And depending on how it goes, we may warehouse a bit faster than initially expected to take advantage of the demand from clients to issue before the regulation takes place in 2026.

Even though we don't expect any of those to impact our targeting our target to pay more than percent of our profit this year because we still have a lot of spare capital. And remember here, our CET1 ratio is at 18% and the average of the industry is at 12%. So a lot of space So we may announce the rest of the payout over the rest of the year. And the discussion between dividends and buybacks depend on the price of the stock, and we need to discuss that for board.

Eduardo Rosman: Crystal clear. Thanks a lot, Victor.

Operator: Next question is from Yuri Fernandes, JPMorgan. Yuri, you may proceed.

Yuri Fernandes: Thank you, Victor. I have a question regarding our corporate like, corporate lending strategy. I know it's something small for you. But you have been discussing new products, new strategies, and a question I have is if corporate really matters, for the entire ecosystem, when we go through your AUT, we see that the commercial is the portion, like, not growing as much and, like, actually, it creates an AUC and that's the money the same. So just trying to understand if you how is your perception about corporate training and if you believe this could be something that is missing for your ecosystem and your trucking? Thank you.

Victor Mansur: Hi, Yuri. This is Victor. Thank you for the question. Our idea, incorporate lending is the same as other product we originate to sell. You may see the corporate book growing, but everything that we put in, we expect to put out at some moment in time. So the growth you see in the credit portfolio is exactly that. The portfolio grew hopefully BRL3 billion. And that will go under a securitization and we're going to sell those assets over the next quarters.

Yuri Fernandes: No, thank you, Victor. But I don't believe like being more or less active here it's it's you know, could be more helpful for your operation.

Victor Mansur: Yeah. Yes. It could, but the same as kept markets we have our risk appetite and if you are buying credit to sell or originate a security to sell, it occupies the same risk space. So we are not going to increase our portfolio over our risk appetite because of any other strategy because they use the same pocket.

Yuri Fernandes: You know? Perfect. Thank you.

Operator: Okay. Next question is from Thiago Batista, UBS. Thiago, you may proceed.

Thiago Batista: Hi, guys. Can you hear me?

Thiago Maffra: Yes. We can.

Thiago Batista: Okay. Hi, Thiago. I have two questions. Maffra, in the beginning, you commented about the new initiatives to try to speed up the net new money on XP in the second half of the year. Can you give us a little bit of more details about those initiatives? Second one, about the guidance for next year. Are you still comfortable with the guidance that you gave, I would say, two year two or three years ago? If you look to consensus for this year on top line, consensus is something close BRL20 billion of top line. So to achieve the low end, you need to expand 14%, 1.5% next year.

Seems it's still feasible, but, I wanted to hear, for you guys, if guidance for next year is still, achievable.

Thiago Maffra: Thank you for the question, Thiago. The first question about, net new money. As we mentioned on the presentation, we still see the $20 billion per quarter in retail as a reasonable level for the next, quarters. Of course, if see a change in the macro environment, starting, interest rate cuts or, something like that, we should see the $20 billion accelerating. But for now, that's the level that we are, comfortable. Of course, this quarter, was a little bit tougher on SMBs and corporate lending, but on and corporate segment, but we are confident that the $20 billion is, it's a good it's to a good level. How we get there?

There are a lot of, initiatives in the company. If you go back a few years, I would say that the main one was channel diversification. Back in 2021, we only had one channel, what we call the B2B, the IFA channel. Today, we have the internal advisers. We have the RIA model. So if you look the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So one of the, levers here.

The second one when you have, a tougher, environment, and higher interest rates competing with product, CGs from the banks, especially the tax-exempt ones, it's not that easy. So all the time, we are creating new products to compete with the banks. We just launched some new products here this quarter. They are performing very well. It's a type of fund with senior trench and it's a Selic rate here and tax-exempt. So it's a very good one. So we are all the time trying to create products to compete with the banks. And we do also partnership with some of the public banks and some other banks, through auctions or through bilateral distribution.

So all the time, we are trying to originate products I would say the third one in probably the most short term and effective, tool here It's how we increase the productivity of our IFAs. Okay? So we have been investing a lot of time. As I said, on the first quarter, now helping the IFA channel to increase productivity through technology, through sales management. We have some people in some of the operations and we are seeing the numbers starting to pick up.

And the last one, but it's more like I would say, medium term, we have been investing a lot on increasing the level of service, the way of serving our clients through financial planning, through wealth planning, session, tax planning, and so on. We have created our own internal models. We have been training all day at face. But I would say here is more like a medium term especially on the current scenario where buying SCG at 15%, it's, probably, a good option for some of the investors, and it's harder to make them move to XP.

But on the medium term and long term, for me, this is the biggest, opportunity we have, like, increasing the way of serving in the market and creating a new level of servicing investment in Brazil. And the second question was guidance for next year. Yeah. Yeah. We are still pursuing the guidance for year. Of course, right now, we are, like, pursuing the bottom of the guidance, okay? But we are still pursuing. For this year, we believe that the number for revenue that we are pursuing is still around 10%. Of course, you saw the numbers for the first half of the year. They are a little bit lower, five and a half percent.

Against, 10, but we are very that the numbers will accelerate on the second half. And the growth rate will be higher on the second half than the first one. Okay.

Thiago Batista: Thanks, Thiago. That's very clear.

Operator: Okay. Next question is from Mario Pierry, Bank of America. Mario, you may proceed.

Mario Pierry: Hey, guys. Thanks for taking my question. Maffra, can you give us a little bit more color on the inflows so far in the third quarter? Because, again, it sounds as if you're confident that you can return to this $20 billion per quarter. Are you seeing have you seen so far the first half of this quarter a number close to that level that gives you confidence? So that's my first question. My second question is related to your EBITDA margin. Yes, it continues to improve. However, you are still are below, right, your medium-term guidance, and seems like revenues are growing a little less than you anticipated. Even though you're still maintaining the plus 10% for this year.

Is there anything you can do on the cost side if the revenues don't come through this year? Thank you.

Thiago Maffra: Thank you, Mario, for the question. We'll take the first one. We cannot talk about the net new money for the quarter. So far, but, my answer for you will be we are confident in delivering the $20 billion, or around $20 billion for the next quarters? As I mentioned before.

Victor Mansur: And hi, Mario. Taking the second part here about EBT and SG&A. First, talking about EBT. Our product and the EBT depends on the product mix as we discussed it before. And also the tax rate. And the trend in both of them should be trading around the quarter if the market keeps the way it is. And talking about SG&A, we delivered a lot of reduction in the efficiency ratio over the last two years, almost 400 basis points. And since we keep investing in strategic areas as new advisers and technology and you name it, we may see the index more flattish over this year.

It's valid to reinforce our commitment to cost control and the efficiency even though but we are not gonna stop investing in your core because of a bit more of unpredictable levels of revenue coming from their Wholesale Banking size. As Maffra said, 02/1926, there is a lot of time to the end of 02/1926. And for now, we are comfortable if the levels

Mario Pierry: Okay. That's clear, Victor. Let me rephrase the first question then. When we look at inflows during the second quarter, did you see an improving pattern throughout the quarter? On a monthly basis, are you seeing inflows improving? Or did you see them improving in the quarter? Or is it relatively you know, the same amount of inflows per month?

Thiago Maffra: Mario, I will give you the same answer that I gave before. I believe we can deliver the $20 billion. If you get the last quarter, it was $16 billion. I imagine that one customer or two could make the difference here. So $20 billion, it's the number here, and around $20 billion, could be a little bit higher or a little bit lower. Okay? But that's the pace right now.

Mario Pierry: Okay. Thank you.

Operator: Okay. Next question is from Marcelo Mizrahi, Bradesco BBI. Marcelo, you may proceed.

Marcelo Mizrahi: Hello, everyone. Thanks for the opportunity to do the question here. So my question is regarding, again, about the corporate portfolio. Which was a huge growth in a quarterly basis. And not too much in a yearly basis. But just to understand what's the what's the tribe of this credit, what's happening exactly here. And looking forward, another question is regarding the net new money of the corporates. To understand, if there are any new strategy here, is if there are any news here to justify this net new money negative on the corporate side? Thank you.

Victor Mansur: Thank you for the question. Victor here. The first part sorry, the first part about credit portfolio. As we said before, those are credit we originated to sell. So basically, those are operations we did with corporates and we originate receivables that will be securitized and then sold to our client base. That's something that we did before over the other quarters. And it's the same that we're gonna do again. So we expect to sell that. And talking about the corporate, the new money, the I think the problem here is the dynamics of the market. We are seeing we begin to see that in the first quarter and then the trend intensified a bit in the second quarter.

What we are seeing the banks that give credit to the companies, they are asking for a reciprocity in terms of investments to deliver some credit lines. Since we are not in this business and we are not able to give the main product that is credit, we are seeing the money flow to banks that usually have some products as cash flows, anticipation of cards and etcetera. So that's basically the that's basically the case.

Marcelo Mizrahi: Okay. Thank you.

Operator: Moving to the next question. Tito Labarta from Goldman. Tito, you may proceed.

Tito Labarta: Hi. Good evening. Thanks for the call. I'm taking the call. My question, just following up a little bit more on the revenue growth right? I mean, you're maintaining the 10% for this year, around 10%. Maffra, you said it should accelerate. The second half of the year. If you break that down, right, retail growing 9% year over year. 11 that's a big closer. I guess, first, do you think retail in and of itself will accelerate in the second half of the year? Or two, is it more the issuer services, the corporate and all the other lines you expect? Mean, those obviously still accelerates given the somewhat weak. First half of the year.

But just so we can break out between retail and other revenues and which lines can drive that revenue growth closer to 10%? Thank you.

Victor Mansur: Hi, Tito. This is Victor. So basically, we can break that revenue growth between the first half of the year and the second half is three factors. The first one is very easy to explain. We have 6% more business days, so more business days, we have more trading days, more interest rates over our capital and clients cash. And also a higher SILIQ rate in the second half of the year against the first. That's the first part of the explanation. The second one, is the new verticals and new advisers.

So basically, we keep hiring advisers, and we have a lot of products that are still in rollout and are growing a lot as international investments, consortium and other products in the new verticals portfolio. And the last one that is more volatile is the product mix If we have a second quarter, if a DCM that is stronger, and more primary offering from funds, we may see a lift in retail revenues and also new issues services revenues. So basically, those are the three components and why we are expecting to have higher revenues in the second half against the first.

Tito Labarta: Great. No. That's helpful, Victor. Just one quick follow-up. Maybe on the fixed income revenues, which are still strong, like 20% year over year, although it did fall a little bit in the quarter. I mean, mentioned higher rates. How do you think about are you getting to sort of like the peak level on the fixed income or can that still continue to outpace the other segments just on a relative basis? I see the fintech and other than relative to the other, just given the review on the website.

Victor Mansur: Okay, Tito. I heard the first part of the but the second was, a bit confusing here. But I will try to answer here. First, in fixed income, it's important to mention that for retail clients, we are in the highest ever Selic rate in almost twenty years. So we are in the highest level the cycle. So in the perception of the clients they never had interest rates spot interest rates that is so that's as high as now. So why is important to mention that? Because clients, they don't go longer in duration when that happens.

If this slope in the interest rate curve, So what we are seeing is an increase in volume but decreasing ROA given that duration profile. So when interest rate starts falling or the interest rate has a more normal shape, we may see the duration going higher again and the ROA increasing. But that's a bit of the dynamics of fixed income right now. And what can change that over the second half of the year? Is the DCM market and the primary offerings that may go to market if the pipeline goes as it is because of the new tax regulation. So a lot of primary options attract clients, and we may see they get longer in duration again.

So, basically, we expect the fixed income line to perform keep your performance well And depending on the primary market and the same, we may see this number a bit higher.

Tito Labarta: Thanks. That's good.

Operator: Next question is from Arnaud Shirazi from Citi.

Arnaud Shirazi: Hi, all. I have two questions here. My first one is related to non-people related expenses. We saw a 38% year on year increase. I know that it was by marketing and also technology, but it seems a little bit too much for me. And, also, the second one is related to tax. How would the tax increase is on offshore funds has been evolving? And what drove the positive income tax rate for this quarter? Thank you.

Victor Mansur: Thank you. Thank you for question. First here talking about SG&A. We had a lot of investments in marketing. We had some events that are the first time that we're doing the size that we did. We had the B2B experience is event for all our IFAs network outside of Brazil where we announced some important measures for the year. And second is the gas is agro business event here in Brazil that we sponsored and very important to us because we get closer to the clients that issue taxes and notes, corporations that are able to issue taxes and notes.

Also, investments in markets to get our reputation a bit more stronger and more visible over all brands and newspapers and etcetera. In terms of technology, it's one of events that we did in terms of cloud and other kinds of tech. And talking about the trend over the year, keep in mind the next quarter, have the or main event of the year, the expert. So also another quarter if no people expenses that are higher than comparison quarter over quarter.

Moving to tax rates, I think we talked in a few opportunities that given the dynamic of the market and the product mix, if the market making activity and secondary market a bit more stronger than investment banking and broker dealer revenues. There are tax rate should be trading around 15% and that was basically the case. Now we closed at 14 something over the last twelve months. And if the product mix keep the way it is, that's the number that we may see, over the year.

Arnaud Shirazi: Thank you. But as related to offshore tax, the potential increase, what the thoughts?

Victor Mansur: Ah, okay. Perfect. I think as any other financial institution in Brazil, there is a lot of ways to plan our tax structure and we are confident that the impact will be marginal in your business.

Arnaud Shirazi: Thank you.

Operator: Okay. Next question is from Neha Agarwala from HSBC. Neha, you may proceed.

Neha Agarwala: Thank you for taking my question. Just one again, sorry to go back to this, but the corporate net new money was significantly weak versus what you saw in the seen in the previous quarters. I understand the volatility, but anything specific this quarter that led to this big, decline compared to previous quarter? And should we expect more of that next quarter, or was this like a one-off trend with some one-off moves? And my second question is, you talked a bit about the fee-based model, and that's only 5% of your AUC, and that's been growing. Can you talk a bit more about what impact we could see from that on your take rate, if any? Thank you.

Victor Mansur: Okay. Thank you. Thank you, Neha. I will take the first one. I think the corporate dynamic is a bit there what I said. If the banks that give credit to their clients keep asking for investments in terms of reciprocity. We may suffer a bit more in the third Q and 4Q since we are not going to this business. But also, it's important to remember that the ROA of this money is extremely low. So, the impacts in revenues to losing that money, they are not relevant. But it's very hard to predict what we are gonna see over the next quarters. As you say, these are more volatile cash.

Thiago Maffra: Hi, Neha. This is Thiago. Thank you for your question. I will take the second part. When do you think about fee-based model, I believe there is evolution about, the model in Brazil. If we get the US market, for example, today, if you look in terms of AUC, it's $70.30, but in terms of revenues is more like $50.50. Okay? In Brazil, as I mentioned, it's still very small. Okay, but it's growing. As I mentioned in the presentation, today, we are prepared for to offer to our clients any kind of model, consultancy, fee-based, IFR IFA model, transactional-based model. We can serve our clients in different ways and charge in different ways, okay?

So we are agnostic, and we offer what's best for our clients. What we expect for the next years, as I mentioned at the beginning of the year, this year was to grow, I would say, from 3%, 4% to 7%, 8%. Okay? So it's growing. And but it's gonna be a long journey here. It's not going to happen like from one day to the other, but we'll grow. And again, we are the best platform to offer all the models to our clients, and we believe being agnostic to models is a real differentiation to serve our clients better. But thinking about revenues, if you look only the take rate it goes down, a little bit.

Not a lot, but it goes down. Okay? But usually, it comes with a higher share of wallet. So, usually, when we start to serve a client to a fee-based model, or to, consolidation of, funds outside of XP, usually, the AUC or the wallet or all the money that we oversee if it's not a 100% here. Because today, we offer that model. We consolidate what's outside of XP. Usually, you make more money or, I would say, equal money in terms of revenue. Because you increase the size of the wallet. Okay?

So I would say, if, in the next quarters or years, we'll start to see the take rate going a little bit down but at a very slow pace. But the share of wallet per client will increase. And compensate the lower take rate.

Neha Agarwala: Very clear. Thank you so much.

Operator: Okay. Next question is from Pedro Leduc, Itau BBA. Leduc, you may proceed.

Pedro Leduc: Okay. Good evening, everyone. Thank you so much for the call and taking the question. I would like to explore the gross margin a little bit more, expand that Q on Q when I try to look at the moving pieces here. IFA commission incentives get nicely diluted. So I was trying to dig into this trend a little bit more. What drove it? If you were related to maybe the lower pace of net new money or the mix of your revenue movements or more equities, less fixed income, Just trying to get a sense of what is driving this gross margin expansion and how to think about it in the second half. Thank you.

Victor Mansur: Hi, Leduc. Thank you for your question. I think here, first talking about some events. As we said before, the expected credit losses should be trading a bit lower than last quarter, and that trend should remain like that, around BRL9 million to BRL100 million. And the second point was a bit higher than average sales tax and that should go back to the average and not expect the number to go to be as high as that. And the margin should go as normalizing when you look in the last twelve months. Yeah. And the channel mix is also important to mention.

And as the internal sales force keep growing, but also, that's a trend that you're gonna see improving over quarters. But if you look at the last twelve months, that's the pace. That should be expecting for the rest of the year.

Pedro Leduc: Thank you.

Operator: Okay. Next question is from Daniel Vaz from Bank of Safra. Vaz, you may proceed.

Daniel Vaz: Thank you. What is it? Yep. One Enrich opportunities, you mentioned that the picture see productivity has been much stronger than the B2B. Right? So the B2C has been a large for focus recently, and you standardize probably an approach for selling for the sales team. Right? So seems more well structured right now. When it comes to the B2B I think the productivity has deteriorated. Like, over the years. So I wanna hear from you first if you're seeing net outflows from this channel from the B2B. And secondly, if you could tell us a bit your diagnostic right on the B2B channel if you need a higher focus right now to maybe refresh or review this model.

So this has been in the press recently regarding M&As on the advisory a lot of mandates. Would be good to hear from you the diagnostic. Thank you.

Thiago Maffra: Thank you for the question. As we have said in the past, for us, it's not, one channel or the other. We believe in having multiple channels for, different reasons. But when we look the B2B channel, the B2B channel specifically, as you mentioned, the productivity was, very low. It's too low when compared, like, to, two years ago, one year and a half. Or more ago. But it's getting back. It's improving, bit by bit. It's not gonna change a lot from one quarter to the other, but it's improving.

So everything that we have been done a lot of efforts and energy that we have put, on the channel since, last, the end of last year and more specifically at the beginning of this year. It's paying off, and we are starting to see the performance of B2B channel improving. So that's why we are confident on the $20 billion. Okay?

Daniel Vaz: Okay. So a follow-up. So you don't need a refresh or a review in this the way you operate in this model, right, as you did in the B2C?

Thiago Maffra: It's just, a normal, evolution. You have, like, to evolve the model. We just announced back in on the B2B experience, the big event that we do annually for the B2B channel. JZero was in Mendoza. And we announced some, changes on the way of serving clients. So I would say minimum standards of, serving our clients. So allocation, number, and ways, points of contact with the customers, And so I would say more like a franchisee model where we have, minimal standards. And we just announced that, like, two months ago. So it's an evolution. It's not like a big change.

Daniel Vaz: Okay. Thank you.

Operator: Okay. We are at the time. So the name of the company would like to thank you all for participating in our second quarter 2025 earnings call. Any further questions will be more than welcome. Just look for the IR team and we keep in touch, and see you soon. Thank you very much.

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XP(NASDAQ:XP) reported second quarter 2025 results on Aug. 18, 2025, delivering record net income of BRL1.321 billion, up 18% year over year, and a return on equity of 24.4%. Total client assets under management and administration reached BRL1.9 trillion, up 17% year over year, while gross revenues rose 4% to BRL4.7 billion, and diluted EPS increased 22% year over year. The following highlights focus on profitability drivers, capital allocation, and channel diversification shaping the long-term investment case.

XP net margin expands to record high

Net income margin reached 29.7% in the quarter, with SG&A expenses growing 10% year over year due to ongoing investments in technology and marketing. The Common Equity Tier 1 (CET1) capital ratio rose to 18.5%, well above the Brazilian sector average of 12%, providing significant capital flexibility.

"Net income reached BRL1.3 billion, an 18% increase year over year and a 7% increase quarter over quarter. Net margin expanded by approximately 130 basis points quarter over quarter and 320 basis points year over year, reaching 29.7% in 2Q 2025. In your revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate. This translated into a new record high net income for a quarter, with significant EPS growth."
-- Victor Mansur, CFO

This margin expansion, despite investment banking headwinds, demonstrates the resilience and scalability of XP’s diversified business model, supporting long-term value creation even in challenging market conditions.

XP capital allocation boosts shareholder returns

XP maintained a BRL1 billion share buyback program and committed to distributing over 50% of net income in both 2025 and 2026. Diluted EPS grew 22% year over year, outpacing net income growth due to the shrinking share base from buybacks.

"Combined, their volumes should be above 50% of net income for 2025 and 2026. We already have a share buyback program of BRL1 billion to be executed until next year, and new announcements will be made according to the Board of Directors' decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation. And we can see on the left-hand side that our BIS ratio in a very comfortable level of 20.1%. On the same rationale, our CET1 is at 18.5%, which is way higher than peers' average of 12%."
-- Victor Mansur, CFO

This disciplined capital deployment supports robust shareholder returns while preserving a strong regulatory buffer for future growth or macroeconomic uncertainty.

Channel diversification drives asset growth

XP increased active clients by 2% year over year to 4.7 million, with more than half of new asset inflows now coming from internal advisers and the Registered Investment Adviser (RIA) model, a shift from exclusive reliance on the B2B Independent Financial Adviser (IFA) channel in 2021.

"If you go back a few years, I would say that the main one was channel diversification. Back in 2021, we only had one channel, what we call the B2B, the IFA channel. Today, we have the internal advisers. We have the RIA model. So if you look the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So one of the, levers here."
-- Thiago Maffra, CEO

This evolution in distribution channels enhances the durability of XP’s growth and supports its market leadership ambitions.

Looking Ahead

Management reaffirmed its target of approximately 10% full-year revenue growth for 2025 and aims for an average of BRL20 billion in retail net new money per quarter, subject to macroeconomic conditions. The company expects to complete its remaining BRL1 billion share buyback and continue distributing over 50% of net income through dividends and repurchases in 2025 and 2026. Management anticipates higher revenue acceleration in the second half of 2025 compared to the first half.

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Key Points

• Positive news from a rival sparked a sympathy rally.

• This was aided by a positive research note published by an analyst.

• 10 stocks we like better than Viking Therapeutics ›

Good news from a peer and a positive analyst update were the elements driving Viking Therapeutics (NASDAQ: VKTX) stock higher on the first trading day of the week.

The clinical-stage biotech, closely watched by some because of its investigational weight-loss drug VK2735, saw its share price improve by more than 5% as a result. By contrast, the S&P 500 index basically traded flat across the trading session.

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What's good for the goose...

The news driving Viking and other obesity drug developers came from a leading company in that space, Wegovy maker Novo Nordisk.

Late Friday, the Denmark-based pharmaceutical announced that Wegovy earned approval from the U.S. Food and Drug Administration (FDA) to treat a new indication, noncirrhotic metabolic dysfunction-associated steatohepatitis (MASH), a liver disorder.

Companies like Viking and Novo Nordisk have been on the radar of many of an investor because of the obvious side benefits to obesity drugs. The latter company earning a fresh approval to treat a medical issue besides obesity provides a significant morale boost to shareholders of weight loss drug developers.

Bullish stance reiterated

Also improving sentiment on Viking stock was that new analyst note. Monday morning before market open, Piper Sandler's Biren Amin reiterated his overweight (buy, in other words) recommendation and $71-per-share price target on the biotech.

Amin's focus, according to reports, wasn't Novo Nordisk's recent news; rather, he was cheered by the prospects for VK2735. Viking is putting an oral version of the medication through clinical trials, and the readout of a phase 3 study is expected within this calendar quarter. In his estimation, if oral VK2735 continues to do well in testing and is brought to market, it could garner sales of $2.1 billion.

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Key Points

• After announcing a huge deal last week, TeraWulf said today that Google is now expanding the deal.

• Google will now back up to $3.2 billion in exchange for stock warrants that would give Google a roughly 14% stake in the company.

• TeraWulf also announced a $400 million raise that could dilute the stock.

• 10 stocks we like better than TeraWulf ›

Shares of TeraWulf (NASDAQ: WULF) jumped Monday, finishing the day up 4.6%. The spike comes as the S&P 500 and Nasdaq Composite were little changed.

TeraWulf, a Bitcoin miner and high-performance computing (HPC) data center company, announced that Alphabet's Google has committed to providing an additional $1.4 billion in backstop after announcing it would guarantee $1.8 billion last week.

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TeraWulf expands its deal

TeraWulf announced a major deal last week with Fluidstack, an artificial intelligence (AI) cloud provider. TeraWulf will provide 200 megawatts of compute power at its data center in New York.

As part of the deal, Google said that it would guarantee up to $1.8 billion if Fluidstack fails to make good on its lease obligations. That number is now $3.2 billion. Google will be awarded stock warrants that would give it a roughly 14% stake in TeraWulf if exercised. This backstop will help TeraWulf finance a major data center expansion, giving creditors more faith if things go south.

AI Data center building is white hot

There is a gap between the amount of computing supply for AI and demand. That is leading to an enormous race to build new capacity, and companies like TeraWulf are reaping the benefits. They are, however, still unprofitable, and these buildouts are insanely expensive. They are relying on heavy amounts of debt to finance their growth, making them extremely sensitive to any significant downturns in AI demand. The company is also using stock sales to raise capital, announcing today that it will raise $400 million in a private placement that is likely to dilute shareholder value. I would avoid TeraWulf and other data center companies like it.

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Palo Alto Networks(NASDAQ:PANW) reported fourth-quarter 2025 earnings on August 18, 2025, with revenue rising 16% year-over-year to $2.54 billion. Platformization deals reached new highs, next-generation security annual recurring revenue (ARR) climbed 32% year-over-year to $5.58 billion, and operating margins exceeded 30% for the first time. This summary provides detailed insights on the company’s transition to software firewalls, sustained free cash flow margin expansion, and the strategic CyberArk acquisition.

Software firewalls accelerate Palo Alto Networks product revenue

Product revenue increased 19% year-over-year, with 56% of product revenue in the quarter sourced from software-based form factors, reflecting a significant shift away from hardware. Over the trailing twelve months, software accounted for more than 40% of total product revenue, with software firewalls and secure access service edge (SASE) driving demand, especially among large enterprise and cloud customers.

"Our software firewall market share is nearly 50%, our product is native in all major public clouds. This quarter, signed a $60 million deal significantly expanded our partnership with a leading US based cloud provider, all in, we generated 9 figures and deals across the major cloud service providers in Q4."
— Nikesh Arora, Chairman and Chief Executive Officer

The rapid adoption of cloud-native software firewalls positions the company as a leader as enterprises migrate to hybrid and multi-cloud environments, increasing customer lifetime value and scalability compared to legacy hardware appliances.

Palo Alto Networks expands margins and free cash flow

Operating margin expanded by 340 basis points to over 30% in the fourth quarter of fiscal 2025, with annual operating margin reaching 28.8% for the year, surpassing guidance as product and software-as-a-service (SaaS) growth scaled efficiently. Free cash flow reached $3.5 billion in fiscal 2025, representing a 38% margin, and management now targets an adjusted free cash flow margin of 38%-39% for fiscal 2026 and 40% or higher for the combined company with CyberArk by fiscal 2028, demonstrating resilient profit generation despite deferred payment transitions and a rising software mix.

"We have expanded our operating margins by almost 1,000 basis points since FY2022 and we expect to continue to deliver expanded operating efficiencies fiscal year 2026 and beyond. Our ability to expand operating margins have enabled us to deliver sustained high free cash flow margins while steadily managing an increase in demand for deferred payments. We've been moving through this transition since fiscal 2021, and as we lap deals with deferred payments from prior period, we have an increased visibility into our future free cash flows. As I mentioned earlier, we delivered $3.5 billion of free cash flow at 38% margin in fiscal year 2025. We had visibility to approximately 40% of that free cash flow from deferred payments on deals signed prior to the fiscal year. We continued through this transition to deferred payments in fiscal 2025, and we expect about half of our fiscal 2026 free cash flow to come from deferred payment deals signed in fiscal 2025 or earlier."
— Deepak Golechha, Chief Financial Officer

The company’s disciplined cost structure, high recurring software revenue, and effective management of billing cycles support a rare combination of strong top-line growth and sector-leading free cash flow conversion, reinforcing long-term value creation.

CyberArk acquisition strengthens identity security strategy

The proposed acquisition of CyberArk marks a proactive expansion into identity security, an area reaching an inflection point due to artificial intelligence (AI) transformations across enterprise infrastructure. Management aims to integrate CyberArk’s privileged access management (PAM) capabilities—serving over 8 million privileged users and more than 50 Fortune 500 clients—with the company’s platformized approach and 75,000-customer base.

"We are strategically entering this category now to define the next chapter of cybersecurity for the AI era. We look forward to providing more details on our strategy once we close the transaction. Before I hand over to Deepak, I wanna take a moment to speak from the heart on the important leadership announcement we made today. Our founder, our first innovator and a true tight knuckles industry, Nirzuk, has decided to retire after more than twenty years."
— Nikesh Arora, Chairman and Chief Executive Officer

This transaction positions the company for leadership in converged network, cloud, and identity security, expanding its total addressable market, cross-selling opportunities, and competitive advantages as identity threats intensify with the proliferation of AI agents and machine identities.

Looking Ahead

Management guides for revenue between $10.475 billion and $10.525 billion in fiscal 2026, up 14% year-over-year, next-generation security ARR of $7 billion to $7.1 billion in fiscal 2026 (up 26%-27% year-over-year), and operating margin of 29.2%-29.7% in fiscal 2026. Adjusted free cash flow margin is forecast at 38%-39% in fiscal 2026, with 40% or higher targeted for the combined entity with CyberArk by fiscal 2028. Product revenue growth in fiscal 2026 is projected in the low teens, with first-quarter fiscal 2026 product revenue expected to rise approximately 20% year-over-year; management will continue to focus on consolidating security platforms, scaling software, and capitalizing on AI-driven opportunities.

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Key Points

• The right-leaning media company has settled a large defamation lawsuit filed against it.

• It will pay $67 million per the terms of the arrangement.

• 10 stocks we like better than Newsmax ›

On a rather forgettable Monday for the stock exchange, the performance of media company Newsmax (NYSE: NMAX) was exceptional. On news that it had settled a high-profile lawsuit, relieved investors piled into the stock to lift it to a 15% gain on the day. This made it quite the outlier, as the S&P 500 index essentially closed flat that trading session.

Making peace for $67 million

That morning, Newsmax announced that it had reached a settlement with Dominion Voting Systems, which in 2021 brought a defamation lawsuit against the company. Dominion accused Newsmax of making defamatory statements about its business, particularly in connection with its involvement in the 2020 presidential election. The settlement amount is $67 million.

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Newsmax said that this figure would be paid out in installments over the course of three of the company's fiscal years. It added that the payments would be funded through its revenue.

While $67 million is a considerable amount, it's far less than the $1.6 billion in damages Dominion was originally seeking. It's little wonder that investors were so cheered by the news.

Settlements are the way

In its press release on the settlement, Newsmax continued to insist that it was not in the wrong. It wrote that "it was critically important for the American people to hear both sides of the election disputes that arose in 2020. We stand by our coverage as fair, balanced, and conducted within professional standards of journalism."

This lawsuit isn't the only significant one Newsmax has seen fit to settle with opponents recently. Earlier this year it agreed to pay around $40 million in cash and grant a five-year warrant for 2,000 shares of preferred stock to Smartmatic, another voting systems company that brought a similar lawsuit against the media company.

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Key Points

• Revenue climbed 157% year over year to $1.8 million (GAAP), but missed analyst estimates by 27.5% (GAAP).

• Earnings per share (GAAP) improved to $(1.53), beating the prior-year quarter but falling short of the consensus estimate by 59.4% (GAAP).

• First international revenues booked, U.S. hospital count expanded, and cost reductions in research and development and selling, general, and administrative expenses drove a lower net loss.

• These 10 stocks could mint the next wave of millionaires ›

Beyond Air (NASDAQ:XAIR), a medical device company focused on nitric oxide therapies, released its Q1 fiscal 2026 results on August 18, 2025. The key highlight was a 157% rise in GAAP revenue compared to the prior-year quarter, reaching $1.8 million. However, this result missed analyst estimates, which were set at $2.48 million. Earnings per share were $(1.53), short of expectations for a narrower $(0.96) GAAP loss, but improved from the prior year’s GAAP $(5.32) per share result. The quarter featured notable international sales for the first time, expanding global hospital placements and progress on regulatory submission for next-generation products. Despite these gains and sizable reductions in operating expenses, the quarter saw a larger net loss (GAAP) than forecasted, and cash reserves tightened, raising near-term liquidity questions.

Metric	Q1 FY26 (ended Jun 30, 2025)	Q1 FY26 Estimate	Q1 FY25 (ended Jun 30, 2024)	Y/Y Change
EPS (GAAP)	$(1.53)	$(0.96)	$(5.32)	71.2 %
Revenue (GAAP)	$1.76 million	$2.48 million	$0.68 million	157.8 %
Gross Profit (GAAP)	$0.16 million		$(0.33) million	$0.49 million
Research and Development Expense	$3.1 million		$6.01 million	(48.6 %)
Cash, Cash Equivalents & Marketable Securities (end of period)	$6.46 million			N/A

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.

Business overview and key success factors

Beyond Air (NASDAQ:XAIR) is a medical technology company developing and commercializing systems that generate and deliver nitric oxide gas for use in hospitals. Its central platform is the LungFit product family, which generates nitric oxide from ambient air for respiratory treatments, eliminating the traditional need for high-pressure gas cylinders. The company’s products target conditions like persistent pulmonary hypertension in newborns and severe lung infections, and its pipeline extends to oncology and neurological disorders.

Recently, the company’s main focus has included regulatory approvals for its core device, increasing commercial adoption in both U.S. and international markets, and responsibly expanding into new therapeutic areas. Achieving robust regulatory clearances, accelerating clinical trial progress, and establishing distribution agreements for hospital placements are all key success factors. Financial stability and maintaining the company’s Nasdaq listing are also crucial as Beyond Air seeks to scale revenue while managing cash burn.

Quarter in review: International growth, product momentum, and expense reductions

The period marked significant GAAP revenue growth, driven by higher sales of the LungFit PH platform. U.S. adoption continued to anchor results, with the company expanding to 45 hospital clients and executed a national group purchasing agreement with Premier, Inc, granting access to about 3,000 hospitals. These agreements help streamline the sales process and can accelerate adoption by hospitals through pre-negotiated terms and broader access.

For the first time, Beyond Air recognized international sales of its LungFit PH device and consumable Smart Filters, following recent regulatory approvals in regions across Europe, the Middle East, and Asia. Distribution deals were signed in countries such as India, Italy, and Ukraine in the months leading up to June 2025, extending reach to over 30 countries and potential access to more than 2 billion people. Shipments to international distributors were targeted mostly for demonstration purposes, with expectations for direct hospital consumption and higher revenues in the second half of fiscal 2026 as local regulatory and tender processes advance.

Operating expenses, including research and development and selling, general, and administrative costs, fell sharply from the prior-year period. Notably, research and development expenses dropped by nearly half, while SG&A expenses decreased by 34.7% compared to Q1 fiscal 2025, primarily reflecting lower salaries, stock-based compensation, and reduced marketing outlays. Cost reductions and increased revenue translated to the first positive gross profit, reversing a gross loss in the year-ago period. Despite these savings, net loss remained sizable, reflecting ongoing investment to support international expansion and pipeline development.

The company made regulatory progress by submitting a premarket approval (PMA) supplement for its next-generation LungFit PH device to the U.S. Food and Drug Administration in June 2025. This newer model is designed for transportation, with a more compact form, improved interface, and lower maintenance, potentially opening emergency and critical care use cases. The company also advanced its pipeline of novel therapies, completing the first phase of a study using ultra-high concentration nitric oxide in solid tumor cancers, and reporting preclinical progress in neurological drug development through its NeuroNOS program. In this area, it secured orphan drug designation from the FDA for its lead compound in autism spectrum disorder, which can offer benefits like tax credits and market exclusivity.

Financial stability, Nasdaq compliance, and market dynamics

Cash burn remains a key concern. Net cash used for operations reached $4.7 million, resulting in an end-of-period cash and securities position of $6.5 million. Debt repayments are not required until October 2026, providing some short-term relief, but the company’s runway is highly dependent on meeting sales targets and maintaining spending discipline, with cash and equivalents of $6.5 million.

The company underwent a 1-for-20 reverse stock split in July 2025 to comply with Nasdaq’s minimum bid requirements. Management continues to describe its competitive advantage as stemming from LungFit’s cylinder-free nitric oxide supply, which offers logistical and cost benefits over cylinder-based solutions from established rivals such as Mallinckrodt, Linde Group, and Air Liquide. The company also began offering a “razor/razor blade” business model, where hospitals purchase devices and buy replacement consumable filters regularly. This approach aims to build recurring revenue and encourage broader adoption.

The company does not currently pay a dividend.

Looking at markets and competition, the company's main rivals in nitric oxide therapy remain focused on cylinder-based systems. Management noted no major shifts in hospital contract terms or market strategy from competitors’ recent launches, with its non-cylinder system providing a logistical edge, especially for international hospitals in regions with barriers to cylinder supply.

Outlook and what to watch

Management reiterated its full-year revenue guidance for fiscal 2026 in the range of $12 million to $16 million. Management expects the trajectory of sales to support sustained double-digit sequential revenue growth. Further efficiency in operating expenses is anticipated, with costs slated to rise only to support expanded revenue. However, after a quarter where revenues and earnings fell significantly short of expectations, pressure is on to deliver a much stronger back half to meet the high end of the outlook range.

No additional forward-looking profit or cash flow metrics were provided for the year. Management did not announce or declare a dividend for the quarter.

Looking ahead, investors and industry observers should monitor progress on key regulatory approvals, particularly the FDA review of the second-generation LungFit PH system as well as label expansions in cardiac surgery and emergency transport. Conversion of international distribution agreements into material hospital placements and revenue is crucial for sustaining growth. Sustained focus on operating cost control and improvements in cash burn will also be central in managing the company’s risk profile through the remainder of fiscal 2026.

XAIR does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Date

Monday, Aug. 18, 2025 at 4:30 p.m. ET

Call participants

Chief Executive Officer — Olivier Taelman

Chief Financial Officer — John Landry

Head of Investor Relations — Pearson Dennis

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

Takeaways

FDA PMA approval-- GENEO system received premarket approval for commercial sale in the United States, authorizing the first and only bilateral AGNS (autoglossal nerve stimulation) therapy for obstructive sleep apnea (OSA) in the US.

Revenue-- $1.4 million in 2025, a 73.8% increase over 2024.

Gross margin-- 63.4% in 2025, unchanged from 2024.

Operating loss-- $21.2 million in 2025, compared to $14.2 million in 2024, attributed to accelerated commercial investments in the US market.

Cash position-- $45.9 million as of June 30, 2025, down from $67.3 million at March 31, 2025, with $29.3 million of term debt capacity remaining, available in two tranches.

US commercial launch-- Commercial activities have begun, with a 50-person commercial team targeting 350-400 high-volume AGNS implanting accounts, accounting for 75%-80% of total US AGNS market revenue.

Physician training-- Over 100 US physicians trained at launch, with regular weekly sessions ongoing to build clinical adoption.

Patient compliance and satisfaction-- Published DREAM study data show device compliance of 85.9% and patient satisfaction of 90%.

Regulatory label differentiation-- The GENEO system is not contraindicated for patients with complete concentric collapse (CCC), although the US label includes a warning since US-specific CCC effectiveness is not yet established.

Reimbursement pathway-- GENEO uses CPT code 64568, the same as its main competitor, recognized by both commercial and government payers for OSA indication; initial pre-authorization approvals have been secured.

Patent litigation-- Nyxoah reported that Inspire Medical has initiated a patent lawsuit prior to GDUFA approval, but stated this "will not impact our US commercial launch."

Access study enrollment-- Enrollment in the US access study for CCC indication was purposefully stopped, as management determined the cohort offers adequate statistical power for PMA supplement submission.

Commercial expansion plans-- The US field team starts with 25 territory managers, each with responsibility for 4-6 accounts, with approximately 15 additional managers to be added each quarter, scaling coverage toward all high-volume implanting sites.

Differentiated label-- Management claimed FDA approval included a label reflecting both positional OSA efficacy and absence of CCC contraindication, emphasizing "bilateral stimulation is making a difference compared to unilateral stimulation."

US pricing-- Tied to the shared CPT code structure.

GLP-1 market dynamics-- Management expects the GENEO patient pool "will grow, not shrink," as GLP-1 drugs could move higher-BMI patients into the device's efficacy range (BMI <32), according to commentary during the Q2 2025 earnings call.

Post-launch metrics-- Leading indicators being tracked include number of physicians trained, value analysis committee (VAC) submissions, and pre-authorization approvals.

Physician engagement model-- Before physician training, candidates must present five eligible patient cases, supporting immediate post-training implant procedures.

Future CCC label expansion-- Management expects to submit a PMA supplement after the twelve-month follow-up of access study patients, as stated on the Q2 2025 earnings call, with possible FDA label addition for CCC at the end of 2026 or early 2027.

Summary

The transcript revealedNyxoah(NASDAQ:NYXH)’s entry into the US OSA market after obtaining FDA PMA approval for its GENEO system, which is now commercially available. Gross margin in 2025 was 63.4%, unchanged from 2024, and a significant operating loss for 2025, attributed to US commercialization investments. The company’s unique regulatory label allows bilateral AGNS therapy and avoids a CCC contraindication, underscoring a pivotal competitive positioning. Management articulated a focused commercial and reimbursement strategy, highlighted positive clinical adoption and compliance rates, and outlined near-term expansion through increased sales force and VAC processes, all while addressing patent litigation risks and anticipating label updates for CCC indications.

John Landry stated, "we could expect to see potentially the SG and A spend nearly double in 2026 over the levels seen in 2025."

CEO Olivier Taelman explained GENEO’s immediate commercial rollout concentrated on high-volume implanting sites, with a sequential ramp in both targeted accounts and territory managers.

The company confirmed initial rapid VAC and pre-authorization approvals, despite variable timelines for full account onboarding, some of which can extend up to nine months.

Management specified that CCC patients remain an off-label use for GENEO in the US, with promotion expressly limited to on-label indications until further regulatory approval.

Demand for the device is driven, in part, by the absence of an implanted battery, distinguishing GENEO from competitors in patient and physician outreach.

Industry glossary

AGNS (Autoglossal nerve stimulation): A device therapy delivering electrical stimulation to the hypoglossal nerve to treat obstructive sleep apnea.

OSA (Obstructive sleep apnea): A sleep disorder marked by repetitive airway obstruction and disrupted breathing during sleep.

CCC (Complete concentric collapse): A specific upper airway collapse pattern relevant for device therapy eligibility and regulatory labeling.

VAC (Value analysis committee): Multi-disciplinary hospital group evaluating new medical devices for clinical and economic benefit prior to purchase or adoption.

DREAM study: Nyxoah's pivotal trial evaluating GENEO device safety, efficacy, compliance, and patient-reported outcomes in OSA treatment.

PMA (Premarket approval): The FDA’s regulatory process for authorizing new medical device commercialization in the US.

CPT code 64568: Billing code used in the US for hypoglossal nerve stimulation device implantation.

Full Conference Call Transcript

Pearson Dennis: Thank you. Good afternoon, everyone, and I welcome you to our second quarter 2025 earnings call. Participating from the company today will be Olivier Taelman, Chief Executive Officer, and John Landry, Chief Financial Officer. During the call, we will discuss our operating activities and review our second quarter 2025 financial results released after U.S. market closing today. After which, we will host a question and answer session. The press release can be found on the Investor Relations section of our website. This call is being recorded and will be archived in the Events section on the Investor Relations tab of our website.

We begin, I'd like to remind you that any statements that relate to expectations or predictions of future events, market trends, results, or performance are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These forward-looking statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these forward-looking statements.

For a list and description of our risks and uncertainties associated with our business, please refer to the risk factors section of our form 20-F filed with the Securities and Exchange Commission on 03/20/2025. With that, I will now turn the call over to Olivier.

Olivier Taelman: Thank you, Pearson. Good day, everyone, and thank you for joining us for our second quarter 2025 earnings call. I'm extremely proud to announce that we received FDA PMA approval for our GENEO system in the United States. This result was the culmination of persistence, strong regulatory, and clinical execution supported by the entire passionate and committed Nyxoah S.A. team. For US patients suffering from obstructive sleep apnea or OSA, the GENEO system provides them with a significant advance from currently available treatment options. For physicians, they now have a choice to select the optimal AGNS therapy for their patients. For Nyxoah S.A., it marks the beginning of an exciting journey in the US.

This PMA approval confirms the safety and effectiveness of our innovative technology and authorized commercial distribution in the US, which now has actively begun. The GENEO system becomes the first and only bilateral AGNS therapy approved in the US for treatment of OSA. It's also important to note that the GENEO system is not contraindicated for patients suffering from complete concentric collapse or CCC. And all of these key differentiators represent off-label highlights of the ability to treat patients with positional OSA. This is important as according to published data, a patient's AHI score can double when a patient sleeps in a supine position on their back.

Adding this another label serves as a validation of the clinical outcomes for more pivotal dream study which met its primary endpoints regardless of a patient's sleep position. Also note, that complete concentric collapse of CCC is not contraindicated but is included as a warning in the company's label as the safety and effectiveness of patients suffering from CCC has not yet been established for the GENEO system based on US specific clinical data. Our goal is, however, to monitor to make GENEO available for US patients suffering from CCC as soon as possible. Therefore, we strategically elected to stop enrollment in the access study.

We believe that the number of patients enrolled in access will have enough statistical power to draw meaningful conclusions on our effectiveness complete concentric collapsed patients. In addition, we see great results in real life data from patients in Europe where our CE Mark already includes an indication for CCC patients. I'm also pleased to report that our dream study was published by the Journal of Clinical Sleep Medicine, which is a leading journal for the sleep community. I'd like to highlight a couple of data points that were published for the first time which demonstrate a high level of patient satisfaction. The device demonstrated compliance of 85.9% and the patient satisfaction was scored at 90%.

This data confirms our early experience in Europe and we believe the publication of the DREAM study will strengthen our US launch and will also give us access to new international markets. Immediately, upon receiving FDA approval, we started our focused US launch with a commercial organization with over 50 highly talented and experienced professionals. This team is now executing on our two-pronged launch strategy. They will target high volume hypoglossal nerve stimulation implanting centers, where they will position GENEO as a differentiated option for patients suffering from OSA. And they will focus on developing strong referral networks with physicians managing large populations of moderate to severe OSA patients who quit CPAP but are in need of treatment.

Our US sales team is already actively engaging with these targeted sites, working through the value analysis committee and pre-authorization approval processes. From a launch execution perspective, I am very pleased to report that already in the first week, we received several VAC and pre-authorization approvals. It's also very exciting to see multiple physicians with patients lined up who are running quickly to become the first to implant the GENEO commercially in the US. Regarding reimbursement, we have identified the use of CPT code 64568, which has been recognized by commercial and government payers for the OSA indication.

This is the same CPT code used by our competitor, and we feel confident that we will be able to differentiate ourselves via our unique technology benefits and patient focus. As a result of our ongoing work with the American Academy of Otolaryngology and participation in the FDA's early payer feedback program, educating CMS and major commercial payers on the clinical impact GENEO can have on their OSA patients, positions us well for acceptance of pre-authorization submissions in the near term and favorable coverage decisions in the long term. With over 100 physicians in the US already trained and additional weekly training sessions scheduled, there is strong momentum building in the medical community.

Organizational traction in the marketplace is demonstrated by the many physicians lining up patients for a GENEO implant in just our first week of commercialization. This early interest gives us confidence in the success of our US launch. We have also identified demand from patients who are hesitant about receiving an implanted battery which requires the need for subsequent surgery to replace this battery. The GENEO system addresses this need with its unique and less invasive design. There has recently been a lot of discussion on the potential impact of GLP-1 on the AGNS market.

Contrary to our competitor, we have strategically limited our patient population to those with a BMI below 32, since that is where the efficacy for GENEO is proven. As a result, we believe that the eligible GENEO patient population will grow, not shrink. This belief is based on third-month study data showing GLP-1's ability to bring patients with high BMIs of 37 and above down to a BMI level where clinical data demonstrate that GENEO is effective. Without GLP-1s, we would never be able to treat this high BMI patient population. While there might be patients with lower BMIs dropping out of the potential AGNS patient population, this will be outweighed by a significant number who become eligible for AGNS.

On another topic, prior to GDUFA approval, Inspire Medical initiated a patent lawsuit against Nyxoah S.A. Since Nyxoah S.A. was founded, we have invested significantly in our IP portfolio and we will vigorously defend ourselves in this matter and have the means to do so. This patent lawsuit will not impact our US commercial launch, which is already underway and generating a lot of enthusiasm in the marketplace. To conclude my opening remarks, I want to emphasize that the FDA approval marks a pivotal moment for Nyxoah S.A. Our bilateral stimulation technology offers a truly differentiated solution that makes us unique for patients.

We believe GENEO can fundamentally improve the quality of life of OSA patients by giving them a good night's sleep. With the current ongoing momentum, and physicians already lining up patients for GENEO, we are confident in our ability to execute a successful US launch. With that, I'll turn the call over to our CFO, John Landry, for a financial update.

John Landry: Thank you, Olivier. We recorded revenue of €1,300,000 in 2025 compared to €800,000 in 2024 for an increase of 73.8%. Gross margin in 2025 was 63.4%, or essentially flat to 2024. Total operating loss for 2025 was €19,900,000 versus €13,300,000 in 2024. This was driven by the acceleration in the company's commercial investments in the US in preparation for post-FDA commercial launch. Our cash position, including cash, cash equivalents, and financial assets, was €43,000,000 at 06/30/2025, compared to €63,000,000 at 03/31/2025. We also have €27,500,000 available to us under our term debt facility, which can be drawn down in two equal tranches of €13,750,000 each, subject to certain milestones.

With that, I'd now like to hand the call back to Olivier to discuss his thoughts on the remainder of 2025.

Olivier Taelman: Thank you, John. Before we conclude, I want to emphasize that this FDA approval represents a truly historic moment for Nyxoah S.A. I would like to thank all Nyxoah S.A. employees for their persistence and effort in making this happen. We have now officially entered the US OSA market with our innovative GENEO solution, and the launch is actively ongoing. The enthusiastic response from physicians and their patients reinforces our confidence in the success of this US launch. We believe the remainder of 2025 will be a transformative period as we establish GENEO in the US market and advance our mission of making sleep simple for patients worldwide.

We look forward to updating you on our progress on our next earnings calls. With that, I would now like to open the line for questions.

Operator: Thank you. Ladies and gentlemen, as a reminder to ask a question, please press 11 on your telephone, and then wait for your name to be announced. To withdraw your question, please press 11 again.

Jon Block: Our first question comes from the line of Jon Block with Stifel. Your line is open.

Jon Block: Obviously, big congratulations to you and the team. I'll start off just any year-end '25 metrics you know, any indicators to focus on. Trade positions. I don't know. I'll throw that one out there even though I know you said you already have, I think, it was over 100. Can we be getting a glimpse to that? The number of certified centers, the number of implants? I know it's early days, but just as we think about over the next three or four months, you know, where our eyes or where our focus should be as we think about exiting '25 in regards to the GENEO launch? Thank you.

John Landry: Yeah. Thanks for the question, Jon. In terms of some of the leading indicators that we're tracking, obviously we mentioned today the number of physicians trained. That's going to be something that we keep a close eye on as that's obviously a leading indicator. We'll also be looking at the number of value analysis committee applications that we submit to the various institutions over time as that's also another leading indicator. Think over time we'll be looking at some other metrics vis a vis maybe number of accounts opened or pre-authorization approvals received. However, at this point in time, we're still working through that and we'll share more on our next quarterly call with all of you.

Jon Block: Fair enough. Thanks for that. And then I'll sort of pivot. Olivier, this one might be for you, but just you know, obviously, was the approval, but then there was also I don't know. I mean, in call it, like, the favorable label that went along with the approval. So you talk about how you expect to leverage the differentiated label, you know, such as no triple C contraindication, the sleep positional data. You know, I know if it's more of a commercial question, if you would, but how do you expect to capitalize on that in the go-to-market we think about over the next handful of quarters. Thank you.

Olivier Taelman: Thank you, Jon, for this question as well. Yeah, clearly it was for us. But an important win to also see this differentiation reflected in the label. As our mission is always to make sleep simple, and that starts also by being certain that we can protect patients throughout the entire night regardless of what position they are in. And that is why positional OSA is so important that also there we can continue showing a highly effective technology and therapy. And so forth, GENEO is the only technology that is offering this. So that comes to the supine data and the positional OSA.

When it comes to CCC, of course, there is extremely encouraging to see that also FDA is recognizing this. By not giving us a contraindication. Contrary to competition. And as you know, with access, there we also did great work. We had our PIs implanting a significant number so now we can closely we can stop the enrollment earlier because also there, we would like to advance on bringing this and making it available for CCC patients in the US. So both are reflected in the label. I know that you and many of your colleagues had questions on this in the past.

And, again, it is confirming what we were telling you that bilateral stimulation is making a difference compared to unilateral stimulation. And that this definitely will also help convince physicians when they have to choose between the two available AGNS technologies.

Jon Block: Alright. Great color. Thanks. I'll hang up more, but I'll hop back in the queue for now. Thanks, guys.

Olivier Taelman: Thank you, Jon. Please stand by for our next question.

Operator: Our next question comes from the line of Adam Maeder with Piper Sandler. Your line is open.

Kyle: This is Kyle on for Adam. Thanks for taking the questions, and extend our congrats on FDA approval as well. Maybe just first to double click a little bit on the commercial strategy, that you discussed in your prepared remarks. Was somebody to get an idea of which accounts you're kind of aiming to target first. Are they, you know, kind of centers from the dream study? Some of the high volume implanters? Can you just give us kind of any color around the accounts and the strategy there?

Olivier Taelman: Yes. No, no, definitely. As I mentioned in the script, we have a two-pronged approach. So first of all, we go and our sales team will focus on high volume, but also stimulation implanting accounts. Maybe as a quick reminder to this, you know that in the US, there are roughly 1,400 implanting accounts offering AGNS, but it stays a very concentrated market, meaning that 350 to 400 of these are high volume accounts and are representing 75 to 80% of the total revenue. So those are the accounts the team will be focused on. We start with a team of 50 commercial people. Of which 25 are territory managers.

They will all have four to six of these accounts, and we have built what we call a scalable technology. So every quarter, we will add a number of territory managers and increase the number of accounts so that we can cover as soon as possible all 400 of those high volume implanting accounts. So that is what we call, you know, focused launch. Next, and I think as important, is also strengthening the referral parts. And the way we are doing this in that technique, so it's totally different compared to the way it's done in the past in the sense that we will focus on patients that have moderate to severe OSA and are quitting CPAP.

And also there, focusing on those specific patient groups will definitely strengthen the trust and confidence of physicians, and will also further make sure that patients in need for treatment will get a sleep surgeon that can help them with the solution. So that's all we plan to go forward with our launch strategy.

Kyle: That's super helpful. Thanks for the color there. Maybe just for my second question, to shift over to reimbursement a little bit, is there just how do you plan to go about that process here looking forward? Is there any logistical considerations you know, around, like, the work that you're doing with the different payers? And then maybe more specifically, when can we expect to see some onboarding of some of the larger payers? Would it be fair by the end of this year, or it kind of more of a 2026 story? Thanks again, guys.

John Landry: Yes. Thanks, Kyle. I can take this question. So, in terms of our reimbursement strategy, we have a comprehensive reimbursement strategy. So, we're using, as you may be aware, an established CPT code. At launch, we're using the 64568 code. We've worked closely with the AAO on that particular code. We've participated in the FDA's early payer feedback program. And we're also been working with engaging CMS in major commercial payers in the US around this particular code. So as we work through this multifaceted approach and strategy, we expect these decisions will start coming in first for the pre-authorizations. We'd expect some of those to come in this year.

Clearly, I think we mentioned we had our first one now, but we expect more of those to come in over the balance of the year. And then as we start moving into more of coverage decisions, if you will, that'll be probably more of a 2026 item, Kyle.

Kyle: Perfect. Thank you.

Olivier Taelman: Welcome. Please stand by for our next question.

Operator: Our next question comes from the line of Suraj Kalia with Oppenheimer. Your line is open.

Suraj Kalia: Hey, Olivier. John, can you hear me all right?

Olivier Taelman: Yes. We can. Hello, Suraj.

Suraj Kalia: Perfect. Gentlemen, congrats on the approval. I know it's been a long time coming. And on the label. So, Olivier, quick one. Let me start out. You mentioned system enrollment has been stopped. I presume that the SME chimed in and helped you all reach that decision.

Olivier Taelman: Yeah. So when it comes to the access study, in fact, we reach a significant number of patients that are already implanted that gives us the confidence that if we have to draw statistically conclusions that are statistically forward enough, right, to use this terminology that we have more than enough patients. Maybe to give you some background Suraj on this, and I'm looking also what is going what is happening in the OSFIRE study. We know that the number of patients that we are having, we have already more than doubled the number of patients that have an where they're also looking at CCC patients.

So that's just a side comment but I think important information for you to know as well. And then the next thing on this why we make this decision is we wanna help patients with CCC in the US as well. Like we are doing in Europe in a very successful way, like we demonstrated in Australia, the better sleep study. And therefore, here, we cannot wait. And when you have enough patients implanted, we do think it is so well calculated decision to stop earlier and that we can activate the twelve-month follow-up time frame.

So by same time, same period next year, will be able to publish those data then we submit a PMA supplement, and we should already be able to '26 beginning latest beginning '27 also to add this to our label in the US and be able to help CCC patients. That are currently contraindicated for AGNS.

Suraj Kalia: Got it. Will it be a I'll question, please? So just the second one for me. This how are you thinking about patient outreach and packaging of the products specifically Supine, CCC, lack of a battery, what's the How are you thinking about packaging this? Do you think you're making it back even it's the same inspired Yes. Makes sense. So you'll intend launching a targeted approach for bilateral.

Olivier Taelman: So first of all, Suraj, we will further leverage on our clinical data. I think this is this is really important. So that we look at patient phenotypes when we know we are extremely efficient. You know, the adult patient population, then when it comes to AHI, and I would like to point this out in dream of AHI range, it's 15 to 65. Which is already different compared to competition where it's 20 to 50. So there, we're already able to install to demonstrate a strong number 15 to 65. So that is one aspect.

Another aspect is what we learned in market research is that for physicians is extremely important to know that their patients will be protected through o gen iodide. So this is something that is not only resonating well with ENT surgeons, but it's very well resonating with sick physicians who have to refer patients. Because they see this effect when they stop studying polysomnography sleep exams They see exactly when a patient is in what position So it's a great benefit being able to show protection throughout the night for a sleep physician providing them confidence when they refer a specific patient all the way to an ENT surgeon for the genome.

And then last, when it comes to the outreach, yes, we have a focused launch. We start with 25 territory managers. They hook up four to six centers. I think I already explained concentrated the business still is in the in the US, and we will scale quarter after quarter by adding roughly 15 new territory managers and each time adding up to 75 new implant sites. And that, to John's point, will only also become one of our key metrics in measuring our success going forward. And it gives us the ability in short term also to reach all 350 to 400 high volume sites. Hope this is answering your question.

Suraj Kalia: Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Ross Osborn with Cantor Fitzgerald. Your line is open.

Matthew Park: This is Matthew Park on for Ross today. Thanks for taking the questions, and congrats again on FDA approval. So starting off with Olivier on back approvals, how should we think about a reasonable pace for account openings through the remainder of '25 and into '26? And then are there any headwinds here that we should be mindful of?

Olivier Taelman: Yes. No, it's an excellent question in the sense that what the team did really successfully is to augmenting also the VAC committees by time they need in order to reach a decision. What we learned is you have some that go extremely fast. As I already mentioned, we have the first time we have several of those fast track committees where we already passed the VAC committee. But you also have number of VAC committee that will really take their time, and time can go up to nine months in some in some advantage and so in some cases.

So here, will focus and follow the segmentation The fastest, of course, there we are currently immediately, and that's how we further scale up. And I do not want to set expectations on saying this is the precise number that we will achieve by the end of this year. It is clear that, you know, targeted approach all the hospitals that we are targeting, they also will go to the VAC and we expect all of them to gain us an approval in the coming six months.

Matthew Park: Got it. That's super helpful. And then, that one for John here. You know, as we're thinking about spending the back half of the year and into '26 as you guys filled out commercial infrastructure in the US, can you kind of walk us through some of the puts and takes around operating leverage that we should be mindful of?

John Landry: Sure, absolutely. From an OpEx perspective, we don't provide specific guidance, but maybe you can provide some color in terms of how we're thinking about the investment levels. So for so the back half of this year, in terms of OpEx spend, we'd expect to see R and D continue at pretty consistent rate and then maybe be a little bit up year over year. Considering some of the investments we're making in the IP litigation front. From an SG and A perspective, that will be considering the investments that we made in our sales and commercial efforts in the US with the 50 highly talented professionals we have in that organization.

And then as we look at 2026 from an overall investment level perspective, we'd expect the majority of the increase next year to be in the way of SG and A as we increase the size of commercial organization, again, by expanding it by those scalable units 15 territory managers over the course of the year. So you know, we could expect to see potentially the SG and A spend nearly double in 2026 over the levels seen in 2025.

Matthew Park: Got it. Thanks for the color. Congrats again, guys.

Olivier Taelman: Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of David Rescott with Baird. Your line is open.

David Rescott: Great. Thanks for taking the questions, and congrats on the approval here. Wanted to ask first on reimbursement, the VAC, the prior auth processes that you've called out. In the prepared remarks. I guess, you just help us understand what considerations go into those, VAC and prior auth, you know, conversations? Are you definitively kinda locked in to reimbursement there? Did Is that fully ironed out? Just how do we think about what the prior auth and back processes are, relative to kind of what the underlying CPT code and commercial coverage cost?

John Landry: Sure. Yes. Thanks for the question, David. Yes. So early on, it's clearly early on in the process. But in terms of the approvals that we received, vis a vis the VAC and or the pre-authorizations that answer is yes. So we've gone through the process. I think really what we're looking to do there is demonstrate the clinical efficacy and the effectiveness of the technology. Certainly, utilizing the HTNS code, the 64568 code on the CPT side, And we've been able to have success in demonstrating that at least in this early stage to those hospitals and accounts and centers where we've completed the VAC.

And as Olivier mentioned, there are various lengths of process for these VACs as well as the pre-authorization process. The VAC approvals can range anywhere from very short periods of time up to nine months. And you know, on the pre-authorization process, it's, you know, extended as well. So that's where we're at this point in time, and forward to continuing to build this body of approvals.

Olivier Taelman: And maybe in addition to this, if you allow me to add, AGNS is no there is no longer one company that is offering an AGNS solution. I mean, with GENEO, we enter the market. There is no option to choose. And that's why today, as of today, there is an AGNS treatment solution there are different companies offering this. And I think that's also important. So the previous work done in the past it was also linked to AGNS. So all the faculties, they recognize this. And they know what it is and what it can do.

And as of today, there are two companies who can offer solution, and it's up to their physicians that will decide together with the patient solution they will choose.

David Rescott: Okay. Great. And then maybe on the, you know, DCC patient, population, you know, you've got the no contraindication. You know, there's the warning that it wasn't tested, but you have access, that is coming. One, I guess I don't know if you if you called out a timeline. I might have missed it on the access side for when that data should read out. But I guess how do we think about the patients that are on the CCC side that can get treated you know, today versus those that you can kinda go after and target once you have access kinda fully in hand.

Olivier Taelman: So when it comes to the access trial, now we stop the enrollment. So the time clock for twelve months can start. So twelve months from now, we will have the data of all access patients, and then based on this study data, we will submit the PMA supplement. Normally, this takes roughly another six months before FDA grants you a supplement. So if you do the math, earliest end of Q4 2026 beginning Q1 2027, we could have CCC patients added to the label. Today, having no contraindications, I will vary I thought that FDA is recognizing already that CCC, it's something where they would like to see US specific data before adding the label.

But where they also recognize the fact that CCC should not be a contraindication. And I think that's an important first step in the direction in opening it up in the US market for patients also OSA patients suffering from CCC.

David Rescott: Okay. So would it be fair to assume that you know, can start treating NCCD patients, say, since there is no contraindication, maybe pump the gas, on that once you have access out and the PMA supplement in? Or, in the near term, are you really kinda just waiting for the access results?

Olivier Taelman: Thank you. So in the near so we are waiting for the excess results and let me be very clear on this one. We would not promote an off-label indication. And today's CCC, It's Also For GENEO Off Label In The US. So we would never ever promote this. But on the other hand, it is clear that it's on a contraindication and it is in the warning section of our labeling. So physicians, they know what this needs.

David Rescott: Okay. Perfect. Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Michael Polark with Wolfe Research. Your line is open.

Michael Polark: I have two First one, pricing. Can you confirm as you launch now in the US, intent to price at Inspire's level $25,000 Or has the thought process on pricing changed?

Olivier Taelman: No. Indeed. So we use the same CPT code. And we are following also the class strategy that it comes with the CPT code. To your point.

Michael Polark: What I figured. Just thought it worth clarifying as we go into launch. And then my second question is if you look to open accounts, is there an ask you're making of these surgeons You invest in them, you train them, you're gonna be, you know, targeting and competing for patients, on their behalf. That's an investment that you make. What kind of return do you ask of these initial centers, if anything? And I'm just thinking, like, look. They're they're all in the business of hypoglossal nerve stem. They have large wallets.

What is a share of wallet that you're you're wanting kind of a maybe not as a firm commitment, but a soft commitment from these surgeons as you get going this initial cohort? Is it is it 10%, 20%? Is it more? I'd love a feel for how you go about those initial conversations and signing up this initial group of their planters. Thank you.

Olivier Taelman: Thank you, Mike, for this And it's also a question, of course, as you can imagine, that we internally discussed as well because we have a lot of demand from positions for HMO to be trained on the on the technology. And we can unfortunately not train all of them at the same time. So what we are asking is before a physician is eligible, like, to join the training or invited for a training, they need to come with five patients. Clearly defined patients, and we use the criteria as the same criteria as in the dream study. So we ask them to come with five patient cases, then they get the training.

We can already discuss those five patients so they can be implanted right after they go back after being trained. That's what we do. When it comes to much share, because you are removing also the last 10 of 20% market share, Honestly, we don't at this stage.

We do think that if they are well trained, high quality training, they do their five cases meaning that they will all go through their surgical learning curve, then we are convinced that they will make the right decision when patients are coming and that also patients will know if they can choose a bilateral stimulation with a single incision You know, all the different differentiated factors, full body MRI compatibility, that we will be able to capture a lot of patients with our GENEO.

Michael Polark: Thank you for the color.

Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I will now turn the call back over to Olivier Taelman for closing remarks.

Olivier Taelman: Thank you again for your time today. And your continued support of Nyxoah S.A. As I mentioned in the beginning, this is the most exciting time in our in our company history. We are so excited to be able to launch in the in the US. I will also not forget on international markets where we're also making good progress but it's clear that the market is in the US. And finally, after so many months, years of orthographic I'm pleased that we can answer this and then the entire team is extremely exciting. So you will and I will look forward also updating you on our progress in the coming months.

So thank you all again, and have a nice day.

Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

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Nyxoah(NASDAQ:NYXH) reported second quarter 2025 earnings on August 18, 2025, highlighting FDA Pre-Market Approval (PMA) for its GENEO system, revenue grew 73.8% year-over-year to €1.3 million, and active steps toward full-scale commercialization in the U.S. The company invested significantly in commercial infrastructure, ending June with €43 million in cash and access to an additional €27.5 million from a term debt facility, while reporting a €19.9 million operating loss, with the increase driven by commercial investments in the U.S. ahead of the post-FDA commercial launch. The call detailed strategic differentiators, reimbursement progress, and timelines for expanding patient eligibility and product labeling, setting the stage for accelerated market penetration.

Nyxoah secures FDA approval and U.S. launch

The GENEO system is now the first and only bilateral hypoglossal nerve stimulation (AGNS) therapy approved in the U.S. for obstructive sleep apnea (OSA), positioning the company as a direct competitor to Inspire Medical. Nyxoah immediately launched with a commercial team of 50 professionals, targeting over 350 high-volume U.S. implanting accounts, representing 75%-80% of market revenue.

"I'm extremely proud to announce that we received FDA PMA approval for our GENEO system in the United States. This result was the culmination of persistence, strong regulatory, and clinical execution supported by the entire passionate and committed Nyxoah S.A. team. For US patients suffering from obstructive sleep apnea or OSA, the GENEO system provides them with a significant advance from currently available treatment options. For physicians, they now have a choice to select the optimal AGNS therapy for their patients. For Nyxoah S.A, it marks the beginning of an exciting journey in the US. This PMA approval confirms the safety and effectiveness of our innovative technology and authorized commercial distribution in the US, which now has actively begun."
-- Olivier Taelman, Chief Executive Officer

The approval unlocks immediate revenue opportunities in the largest global market, making commercial traction and differentiation versus the incumbent critical to the long-term growth thesis.

GENEO system achieves early commercial and clinical milestones

Nyxoah reported that over 100 U.S. physicians are already trained, with additional weekly sessions scheduled, and received initial value analysis committee (VAC) and payer pre-authorization approvals in the first week of U.S. commercialization. The company highlighted 85.9% device compliance, and 90% patient satisfaction rates published in the DREAM study.

"Immediately, upon receiving FDA approval, we started our focused US launch with a commercial organization with over 50 highly talented and experienced professionals. This team is now executing on our two-pronged launch strategy. They will target high volume hypoglossal nerve stimulation implanting centers, where they will position GENEO as a differentiated option for patients suffering from OSA. And they will focus on developing strong referral networks with physicians managing large populations of moderate to severe OSA patients who quit CPAP but are in need of treatment. Our US sales team is already actively engaging with these targeted sites, working through the value analysis committee and pre-authorization approval processes. From a launch execution perspective, I am very pleased to report that already in the first week, we received several VAC and pre-authorization approvals. It's also very exciting to see multiple physicians with patients lined up who are running quickly to become the first to implant the GENEO commercially in the US."
-- Olivier Taelman, Chief Executive Officer

Rapid channel engagement and immediate sales pipeline formation demonstrate early organizational traction in the market.

Nyxoah targets further indication expansion while managing resource allocation

The company strategically stopped enrollment in its ACCESS study, believing it had enough patients to demonstrate statistical efficacy for treating complete concentric collapse (CCC) OSA; under current U.S. labeling, GENEO is not contraindicated but carries a warning for CCC patients, pending further U.S.-specific clinical evidence. The company expects to submit new data and potentially secure FDA label expansion in late fourth quarter 2026 or early first quarter 2027 (calendar), while maintaining strict adherence to on-label promotion and focused indication targeting.

"So when it comes to the access trial, now we stop the enrollment. So the time clock for twelve months can start. So twelve months from now, we will have the data of all access patients, and then based on this study data, we will submit the PMA supplement. Normally, this takes roughly another six months before FDA grants you a supplement. So if you do the math, earliest end of Q4 2026 beginning Q1 2027, we could have CCC patients added to the label. Today, having no contraindications, I will vary I thought that FDA is recognizing already that CCC, it's something where they would like to see US specific data before adding the label. But where they also recognize the fact that CCC should not be a contraindication. And I think that's an important first step in the direction in opening it up in the US market for patients also OSA patients suffering from CCC."
-- Olivier Taelman, Chief Executive Officer

This signals disciplined execution and provides a potential future growth lever once data supports formal label expansion.

Looking Ahead

No explicit implant or revenue forecasts for year-end 2025 were provided. Coverage decisions by major U.S. payers are expected to materialize starting in 2026, while coverage for CCC OSA patients could be added to the label by the end of fourth quarter 2026 or the beginning of first quarter 2027 (calendar), subject to clinical readout and successful FDA supplement approval. No concrete forward guidance on revenue, implant numbers, or margin trajectory was provided.

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Key Points

• An analyst raised his price target on the stock by 12%.

• He's not recommending it as a buy, however.

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UnitedHealth Group (NYSE: UNH), by far the health insurance stock that's gotten most of the market's attention over the past few trading sessions, had a good Monday on the exchange. Its shares added nearly 2% in value that trading session on news of an analyst's price target raise. That bump was high enough to top the S&P 500's (SNPINDEX: ^GSPC) flatline performance.

The Berkshire bump

UnitedHealth was a star stock late last week, when it was revealed that Warren Buffett's Berkshire Hathaway had taken a $1.6 billion stake in the company's equity. On Monday, lingering positive sentiment on UnitedHealth was boosted by that price target bump.

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It came from Bank of America Securities' Kevin Fischbeck, who made a fairly generous lift in his fair value assessment to $325 from his preceding level of $290. This didn't make him a bull on the stock, however, as he held fast to his existing neutral recommendation.

Interestingly, according to reports, Fischbeck's move wasn't necessarily based on the Buffett team's entrance into the stock. The Berkshire buy, according to the analyst, is merely confirmation that the company is undervalued. In his view, UnitedHealth and other big companies that run managed care organizations (MCOs) have seen only temporary slumps in profitability lately.

Not a great pick for the short term

Given that, wrote Fischbeck, investors patient enough to hold UnitedHealth for five years or so could see meaningful share price gains. The pundit feels that the company doesn't have good prospects for achieving this within a shorter time frame -- a key reason for maintaining his neutral stance.

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Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

Key Points

• GAAP revenue for Q3 FY2025 missed analyst expectations, Revenue for the quarter ended June 30, 2025 declined 2.3% year over year.

• Profitability eroded, with both operating and net losses widening over the prior year.

• Core AI-driven products, especially HawkSearch, showed double-digit revenue growth (though no specific time period was provided) and strong customer retention.

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Bridgeline Digital (NASDAQ:BLIN), a software provider specializing in AI-powered search and digital experience solutions, reported Q3 FY2025 results on August 18, 2025. The headline news from the release: GAAP revenue declined slightly to $3.85 million in Q3 FY2025, falling short of the $3.93 million GAAP estimate, while GAAP earnings per share met expectations at $(0.02). Profitability was under pressure as year-over-year operating and net losses both increased (GAAP). The period reflected strong momentum in its AI-driven core products but also ongoing challenges from declining legacy services. Overall, the quarter showed flat GAAP total revenue for 9M FY2025, margin contraction, and higher operating investment, all while Bridgeline positioned itself for future growth.

Metric	Q3 FY2025(ended June 30, 2025)	Q3 Estimate	Q3 FY2024(ended June 30, 2024)	Y/Y Change
EPS (GAAP)	$(0.07)	$(0.02)	$(0.03)	(133.3%)
Revenue (GAAP)	$3.85 million	$3.93 million	$3.94 million	(2.3%)
Gross Margin	66%		69%	(3 pp)
Operating Loss	$(0.69 million)		$(0.38 million)	(81.6%)
Adjusted EBITDA	$(0.33 million)		$3,000	-11100%

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.

Business Overview and Growth Drivers

Bridgeline Digital develops cloud-based software for search, content management, and analytics, with a main focus on using artificial intelligence (AI) to help businesses improve their digital presence and e-commerce performance. The product portfolio includes HawkSearch (an AI-powered site search platform) and WooRank (digital marketing analytics).

The company's recent strategy centers on pivoting toward subscription-based and AI-driven offerings, reducing reliance on legacy professional services. Success depends on strong R&D investment, innovation in search and analytics, continued expansion of AI capabilities like Smart Search and Smart Response, and building long-term, recurring revenue from subscription contracts. Bridgeline emphasizes personalized solutions and the ability to tailor its platforms for e-commerce and B2B clients across many industries.

Quarterly Performance and Key Developments

For the period ended June 30, 2025, GAAP total revenue was $3.85 million for the quarter ended June 30, 2025, a decrease from $3.9 million in the prior year period, missing analyst expectations by $0.125 million (GAAP). Core product revenue increased while services revenue declined. GAAP subscription and licenses revenue, now representing 81% of the total, grew 4% to $3.1 million in Q3 FY2025, while Services revenue dropped to $0.7 million for the quarter ended June 30, 2025 from $0.9 million in the prior year period.

HawkSearch, the AI-powered search solution, now accounts for over 60% of company revenue as of Q3 FY2025. Bridgeline’s leadership noted that its core product net revenue retention (NRR) reached 114% in Q3 FY2025, indicating not just stable customer retention but expansion on existing accounts. In enterprise software, NRR above 100 % means new and upsold business more than offset any losses from churn, a sign of successful product adoption.

Profitability metrics weakened. GAAP gross margin dropped to 66% in Q3 FY2025, a decrease of 3 percentage points year over year. Operating loss widened to $0.7 million, and net loss reached $0.79 million. Management cited greater investment in sales and marketing, funded by a prior $2 million capital raise, as a key contributor to higher operating expenses in Q2 FY2025. Adjusted EBITDA was negative $0.33 million in Q3 FY2025, compared to slightly positive in the prior year period.

The product development pipeline was active. Notable updates included the launch of HawkSearch MCP (Model Context Protocol), supporting AI Agents to work with merchandisers, and expanded language support to over 50 languages. New tools like the AI Workbench, Smart Response, and advanced analytics enable users to push real-time search improvements without needing extra developer support. The company highlighted major customers during the quarter: a Fortune 100 technology company, a top US electrical distributor, and Ivystone Group chose HawkSearch for highly tailored, AI-driven commerce experiences.

The quarter also saw increased customer acquisition activity. Sixteen new subscription contracts were booked in Q3 FY2025, totaling $1.7 million in contract value and adding over $600,000 to annual recurring revenue. Management tied the boost in deal flow directly to ramped-up lead generation and sales-prospecting efforts. Sales cycles remain short at about 120 days from first contact to close, which positions Bridgeline to translate new contracts into revenue quickly as marketing investment bears fruit.

No material one-time charges, unusual income, or changes to dividend policy were noted.

Looking Ahead: Strategy, Guidance, and Investor Focus

Looking to the rest of fiscal 2025 and beyond, Bridgeline’s management did not provide quantitative forward guidance in the third-quarter release. Instead, leadership reiterated that “relatively flat” total revenue is expected to persist in the near term (second half of FY2025) as core product growth continues to be balanced by declines in non-core services. The impact of expanded sales and marketing spend is projected to become visible in Q1 FY2026, with management expects a noticeable rise in new customer acquisition and annual recurring revenue as this investment matures through the sales cycle in Q1 FY2026.

Investors and observers should pay close attention to the ratio of core to non-core revenue, as the company’s ability to drive sustainable growth relies heavily on continued customer adoption and upsell of AI-driven subscription services. Margins and expenses will also be critical to track given the ongoing strategic spending increase. No explicit changes in forward-looking metrics or financial targets were provided this quarter. BLIN does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Flexsteel Industries (NASDAQ:FLXS) delivered adjusted earnings per share of $1.40, beating the $0.84 consensus estimate by 66.7% (non-GAAP).

• Revenue reached $114.6 million, surpassing expectations and marking the seventh consecutive quarter of sales growth.

• Profitability benefited from non-recurring foreign currency gains and asset sales, while management highlighted new tariff risks for fiscal 2026.

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Flexsteel Industries (NASDAQ:FLXS), a manufacturer of residential upholstered furniture, reported results for the quarter ended June 30, 2025, on Aug. 18, 2025. The headline news was a clear beat on both adjusted (non-GAAP) earnings per share (EPS) and GAAP revenue versus Wall Street expectations.

Earnings per share came in at $1.40 (adjusted), significantly ahead of the $0.84 consensus estimate (non-GAAP). Revenue (GAAP) totaled $114.6 million, also exceeding the analysts' GAAP forecast of $111.82 million. The quarter marked the company's seventh straight period of year-over-year sales growth and the highest quarterly adjusted EPS (non-GAAP) on record for the company. While operating performance was strong, the results included notable one-time gains from both foreign currency translation and an asset sale. Management highlighted these non-recurring benefits and flagged significant new tariff risks entering FY2026.

Metric	Q4 2025	Q4 2025 Estimate	Q4 2024	Y/Y Change
EPS (Adjusted, Non-GAAP)	$1.40	$0.84	$0.75	86.7%
Revenue	$114.6 million	$111.82 million	$110.8 million	3.4%
Adjusted Operating Margin	9.0%		5.6%	3.4 pp
Net Income	$10.7 million		$4.9 million	117.9%
Cash Flow from Operations	$15.6 million			N/A

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report.

Company Overview and Key Business Focus

The company designs, manufactures, and markets residential furniture, with a reputation for quality rooted in its patented Blue Steel Spring technology. Its core products include sofas, chairs, and other upholstered seating, catering to a range of price points and customer needs across the United States.

The company relies on a dual manufacturing strategy that combines domestic production with offshore sourcing, allowing it to flex its supply chain for efficiency and responsiveness. Recent efforts have focused on optimizing manufacturing in Mexico, streamlining its U.S. footprint, and investing in innovation. Effective supply chain management, cost discipline, and consistent product development are all critical for success in Flexsteel's competitive, price-sensitive industry.

Quarterly Performance: Key Highlights and Drivers

The quarter saw Flexsteel post its seventh consecutive period of year-over-year sales growth, with GAAP revenue of $114.6 million exceeding both last year and internal guidance. The revenue figure (GAAP) grew by 3.4%, a result that management attributed to strong new product launches and ongoing market share gains. Over half of the company's sales now stem from products launched in the last several years, underscoring the importance of innovation in Flexsteel's portfolio.

Margins improved sharply, as adjusted operating margin reached 9.0%, up from 5.6% in the prior-year quarter. Management credited this increase to operational efficiencies and sales leverage. However, A significant portion of the gross margin improvement was due to a favorable shift in exchange rates for peso-denominated assets from Mexican operations. This foreign currency translation added a 3-percentage-point benefit, which may not recur in future periods.

Net income (GAAP) more than doubled compared to Q4 FY2024, rising to $10.7 million. The quarter's profitability also reflected a $3.7 million gain from the sale of an ancillary building at the Huntingburg, Indiana, distribution complex. Removing this and other non-recurring effects, adjusted net income was $7.9 million.

Disciplined cost management was evident, with selling, general, and administrative expenses falling to 15.0% of sales compared to 17.0% in Q4 FY2024. Flexsteel's dual manufacturing approach -- using both Mexican and Vietnamese sources -- helped the company balance efficiency and flexibility, though the latter now represents a source of risk because of exposure to new U.S. import tariffs.

Product mix dynamics also played a role. Meanwhile, ready-to-assemble offerings under the "Homestyles" brand had a declining footprint in the product lineup.

Supply chain management remained a central focus due to the risk of a 20% tariff on Vietnamese imports. About 55% of Flexsteel's revenue is tied to sourcing from Vietnam as of Q3 FY2025. Management acknowledged that these tariffs could present significant risks to both cost structures and demand going forward. The company has started to implement modest tariff surcharges for some product lines but continues to hold pricing steady for made-to-order items produced in Mexico.

On the cash flow side, Flexsteel generated $15.6 million in operating cash. The company exited the quarter with $40.0 million in cash and no borrowings on its secured credit line, compared to $4.8 million drawn as of June 30, 2024. Inventory levels decreased 7.7% as of June 30, 2025, compared to June 30, 2024. Capital expenditures for FY2025 totaled $3.3 million.

Outlook and Forward Guidance

Looking ahead to Q1 FY2026, management guided for net sales between $105 million and $110 million. This signals expected sales growth of 1% to 6% versus prior-year levels. However, the outlook assumes a potential drop in GAAP operating margin to the 5.5% to 7.0% range, reflecting anticipated pressure from tariffs and a more cautious consumer environment. Free cash flow is expected to be between negative $5 million and zero, suggesting possible cash outflows as the company navigates the effects of tariffs. The company highlighted that escalating tariffs on Vietnamese goods remain the main risk to both demand and profitability in the coming quarters.

The company did not provide full-year guidance for fiscal 2026. It was clear that management remains focused on supply chain adjustments, sourcing diversification, and new product launches to counteract external pressures, yet uncertainty about the scale and timing of potential tariff impacts led leaders to emphasize a cautious stance.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Key Points

• Revenue (GAAP) declined 11.1% year over year, driven mainly by lower vegan cheese and frozen dessert sales.

• Gross margin improved to 30% for the thirteen weeks ended June 28, 2025, aided by price increases and lower operating expenses, despite lower sales.

• Net loss narrowed to $(7,000) for the thirteen weeks ended June 28, 2025, and the company ended the quarter with no debt and $350,000 in cash as of June 28, 2025.

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Tofutti Brands (OTC:TOFB), a plant-based food company recognized for dairy-free cheese alternatives and frozen desserts, released its earnings for the quarter ended June 28, 2025, on August 18, 2025. The headline news was an 11% drop in net sales for the thirteen weeks ended June 28, 2025 compared to the same period in 2024, with reported net sales of $2.03 million (GAAP) but a narrowed net loss of $(7,000) (GAAP). There were no analyst estimates to benchmark results against. The company’s margin management and smaller loss signal operational discipline, but shrinking sales highlight market share and competitive hurdles for the quarter.

Metric	Q2 2025(13 weeks ended June 28, 2025)	Q2 2024(13 weeks ended June 29, 2024)	Y/Y Change
Revenue (GAAP)	$2.03 million	$2.28 million	(11.1%)
Gross Profit	$0.62 million	$0.67 million	(7.3%)
Gross Margin	30%	29%	+1.0 pp
Net Loss	$(7,000)	$(32,000)	78.1%
EPS (GAAP; Diluted)	$(0.00)	$(0.01)	0.01

Business Overview and Focus Areas

Tofutti Brands makes and sells dairy-free, vegan food products, concentrating on cheese alternatives and frozen desserts that look and taste like traditional dairy foods. Its product portfolio includes spreadable cheese substitutes, cheese slices, and a wide variety of plant-based frozen desserts.

The company’s success depends on its ability to innovate and adapt. It aims to serve health-conscious consumers and those following vegan, kosher, or halal diets. Key factors include product development, strong distribution channels, reliable production through co-packers, and strict regulatory compliance.

Quarter Highlights and Financial Developments

Net sales decreased by 11% for the thirteen weeks ended June 28, 2025 compared to the same period in 2024, mainly due to lower sales of vegan cheese and frozen desserts. Vegan cheese sales decreased to $1,708,000 in the thirteen weeks ended June 28, 2025 from $1,926,000 in the same period in 2024, which the company attributes to "increased competition in the vegan cheese category." Management also cited "proposed new tariffs" as a disruption, saying these caused its two largest U.S. customers to pause regular purchasing. This reliance on a handful of large buyers poses a sales concentration risk for the future.

Gross profit was down in absolute terms, but the gross margin (GAAP) improved 1 percentage point to 30%. This rise was due to price increases implemented at the end of FY2024, which carried into the first half of FY2025. Operating expenses decreased by 9.8% for the thirteen weeks ended June 28, 2025 compared to the same period in 2024, Selling and warehouse costs fell to $188,000 for the thirteen weeks ended June 28, 2025 from $250,000 in the same period in 2024. General and administrative expenses and selling costs both saw reductions. An uptick in marketing and research spending, including an increase in research and development (R&D) to $39,000 from $22,000 (GAAP, Q2 2025 vs Q2 2024), shows some reinvestment in brand and product activity even as revenues fell.

The net result was an improved, though still negative, bottom line. Net loss narrowed to $(7,000), down from $(32,000) in the same period last year. Year-to-date, the loss stood at $(169,000). The company reported $350,000 in cash as of June 28, 2025, and $2.73 million of working capital as of June 28, 2025. Tofutti disclosed no outstanding debt. However, inventories rose to $2.21 million as of June 28, 2025, from $1.88 million at December 28, 2024.

Product innovation remains an area of strategic importance, with the company highlighting over 25 dairy-free foods in its lineup. However, the earnings release did not announce any important new launches or major innovations. There was no clear sign of impact on demand, as sales continued to decline. The absence of explicit updates on co-packer relationships—essential partners who manufacture products for the brand—leaves one area of vulnerability unchanged. The filing reports regulatory compliance, specifically with FDA labeling rules and SQF certification (a food safety standard). All of its products are certified Kosher-parve, while all vegan cheese products and Tofutti Cuties are also certified Halal. No new issues surfaced here. Market competition, especially in plant-based cheese alternatives, was repeatedly flagged by management as the key drag on sales performance. This trend continues to threaten Tofutti’s market share and underlines the need for distinctive innovation and better customer reach.

Outlook and What to Watch

Tofutti Brands did not provide any forward-looking financial guidance for the next quarter or fiscal year. Management’s commentary remained generic, with no clear targets or new initiatives revealed for the remainder of fiscal 2025.

Investors will want to monitor sales trends in the vegan cheese and frozen dessert segments, future pricing changes, and inventory levels. It does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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