Giuliano Bologna

Giuliano Bologna asked about the drivers behind the strong Q4 2025 revenue improvement and whether this momentum is expected to continue into 2026. He also inquired about the factors contributing to the projected slight cash usage in Q1 2026 despite strong free cash flow guidance, the upside potential for digital-only ARPU after reaching a new high, the expected contribution of AI licensing revenue in 2026 (from existing and new deals), and details on 2026 debt paydown expectations and First Lien Net Leverage targets.

Answer

Mike Reed, Chairman and CEO, confirmed continued digital revenue growth, improved audience engagement, AI licensing deals, better digital subscription trends, and expected DMS revenue growth in H2 2026 as key drivers for 2026. Trisha Gosser, CFO, attributed Q1 cash usage to seasonality, timing, and minor interest payment changes, while reiterating strong Q1 EBITDA growth. Kristin Roberts, President, highlighted smarter pricing, better retention, and an expanding product set like 'Play' for further ARPU growth. Mike Reed added that AI licensing would be a multiyear growth category, driven by both existing and new deals, though with potential lumpiness. Trisha Gosser stated that 2026 debt paydown would be primarily from operating performance and free cash flow, targeting closer to 2x First Lien Net Leverage by year-end.

Giuliano Bologna asked for more details on 2026 debt paydown expectations and the target for First Lien Net Leverage, given the strong progress in 2025.

Answer

CFO Trisha Gosser highlighted the repayment of approximately $135 million in long-term debt in 2025, reducing First Lien Net Leverage to 2.4x. She stated that 2026 debt reduction will be primarily funded by operating performance and double-digit free cash flow growth, aiming to bring First Lien Net Leverage much closer to 2x by year-end.

Giuliano Bologna inquired about the factors driving module production to exceed original targets in 2025. He also asked if sales shifting from Q4 to Q1 had any specific impact on the fourth-quarter 2025 results.

Answer

COO Stacy Kuperus attributed the increased module production to disciplined execution focused on people (Montreal Training Academy, 220 trainees, improved graduation rates), parts (investments in Pacific Aerodynamic, Prime Engine Accessories, in-house repair, OEM agreement), and process (Palantir partnership, AI-driven insights, cross-shop collaboration). CEO Joe Adams confirmed that Q4 2025 aerospace products EBITDA was slightly lower than expected due to a lag between costs and productivity from adding over 100 employees, and some customers preferring Q1 delivery, causing a few engines to slide from 2025 to 2026.

Giuliano Bologna asked for an expansion on FTAI Aviation Ltd. operating as a 'spread business' in both weak and strong markets, and sought clarification on how the cash flow statement would change with the transition to industrial accounting, specifically regarding gains on sale moving to operating cash flow.

Answer

Joe Adams, Chairman and CEO of FTAI Aviation, described the business as having two areas: manufacturing (buying, rebuilding, and selling engines for a spread) and asset management. He noted that in a soft market, they can acquire cheaper inventory and accelerate market share gains. Angela Nam, CFO and CAO, confirmed that approximately $722 million in cash proceeds from asset sales would be reclassified from investing to operating activities for the nine months ended 9/30, aligning with the GAAP cash flow statement going forward.

Giuliano Bologna asked for an expansion on FTAI Aviation Ltd. operating as a 'spread business' in both weak and strong markets, and sought clarification on how the cash flow statement would change with industrial accounting, specifically regarding the reclassification of gains on sale from investing to operating activities.

Answer

Joe Adams, Chairman and CEO, described FTAI's business as manufacturing (buying, rebuilding, and selling engines for a spread) and asset management (raising capital to acquire aircraft and commit volume). He noted that in a soft market, cheaper acquisitions can accelerate market share gains. Angela Nam, CFO and CAO, confirmed that with industrial accounting, approximately $722 million in cash proceeds from asset sales would move from investing to operating activities, aligning with GAAP cash flow statements, with inventory purchases already classified as operating.

Giuliano Bologna of Compass Point inquired about the specific drivers behind the accelerating growth in the Aerospace Products segment, the durability of these trends, and any potential industry trigger events that could fuel further growth.

Answer

Joseph Adams, Chairman, CEO & Director, identified the core growth driver as airlines seeking to avoid the cost and risk of managing their own engine shop visits. He stated that trends like aging platforms and fleet fragmentation favor FTAI's scale-based model. David Moreno, COO, added that the Strategic Capital Initiative (SCI) acts as a significant accelerant by exposing more airlines to their services, which in turn drives cross-selling opportunities and market share gains.

Giuliano Bologna from Compass inquired about additional levers MGIC could utilize to enhance returns on capital, particularly in an environment of relatively flat insurance in force growth. He also asked about potential divergences in premium rates between older, lower-WAC vintages and newer, higher-coupon vintages, and how this might affect the average premium rate.

Answer

CFO and Chief Risk Officer Nathan Colson emphasized that bolstering the reinsurance program is the primary lever for improving returns on capital, as it offers attractive costs and better risk-adjusted returns on equity. Regarding premium rates, Mr. Colson stated that average rates have been stable for several years. He noted that earlier vintages with lower coupons had lower credit risk and thus lower premium rates, while recent vintages are purchase-dominated. He clarified that a refinance into a loan with lower credit characteristics would lead to a lower premium in a risk-based pricing market.

Giuliano Bologna asked about other levers MGIC could pull to improve returns on capital, especially given the environment of relatively flat insurance in force. He also inquired about any significant divergence in premium rates between older, lower-weighted average coupon (WAC) vintages and more recent vintages, and how this might impact the average premium rate throughout the year.

Answer

Nathan Colson, Chief Financial Officer and Chief Risk Officer, highlighted that bolstering the reinsurance program with attractive costs for in-force and future new business is the biggest lever, as it provides better returns on equity than on a return on capital basis. Regarding premium rates, Mr. Colson stated that average premium rates have been relatively flat for the last five or six years. He noted that lower coupon books from 2020-2021 had lower credit risk and thus lower premium rates, while recent higher coupon books are purchase-dominated with higher LTVs. He clarified that refinance activity into loans with lower capital charges would result in lower premiums for that specific loan.

Giuliano Bologna inquired about the desired scale or profitability threshold for Rithm Capital's asset management business before a potential C Corp conversion. He also asked about the stability of gain on sale margins, particularly from recapture in the consumer direct channel.

Answer

Michael Nierenberg (Chairman, CEO and President, Rithm Capital) explained that there isn't a specific monetary target for scale, but rather a focus on achieving a valuation comparable to leading asset managers by growing prudently and delivering performance. Baron Silverstein (President and COO, Newrez) reiterated that connecting with their 4 million customers and driving their brand will continue to be a key driver for recapture and overall business growth and stability.

Giuliano Bologna asked about the desired scale for Rithm Capital's asset management business and any profitability targets or thresholds for converting to a C Corp. He also inquired about the mortgage side, specifically the positive lift from recapture in the consumer direct channel and its role as a driver of stability for consolidated gain on sale margins.

Answer

Michael Nierenberg, Chairman, CEO and President of Rithm Capital, stated there's no specific amount for scale but emphasized meeting market expectations for Fee-Related Earnings (FRE) and being valued among the best, expecting to reach that point within the next year. Michael Nierenberg and Baron Silverstein, President and COO of Newrez, affirmed that recapture in the consumer direct channel is a key driver for business growth and stability, emphasizing continued investment in brand and customer connection.

Giuliano Bologna from Compass Point Research asked about the pro forma impact of fair value accounting on marketing expenses as a percentage of volume for Q3 and Q4 2025, given the elimination of deferrals. He also sought confirmation on the expected re-acceleration of loan volumes after Q1 2026, with a significant step-up into Q3 and Q4.

Answer

VP, Head of FPandA, and Investor Relations Artem Nalyvailo explained that pro forma marketing spend would have been higher, but this is offset by non-deferred origination fees, resulting in a net positive impact. He confirmed that the expected re-acceleration of volumes in the latter half of 2026 is accurate, driven by normal seasonality, new business lines, and successful marketing investments.

Giuliano Bologna asked about the pro forma impact of marketing expenses under fair value accounting (without deferrals) and the implied re-acceleration of origination volumes after Q1.

Answer

VP, Head of FP&A, and Investor Relations Artem Nalivayko noted that marketing expenses would have been higher without deferrals, but origination fees are also no longer deferred, making LendingClub a net beneficiary. He confirmed the expectation for origination volumes to re-accelerate significantly after Q1, driven by normal seasonality, new business lines, and marketing investments.

Giuliano Bologna inquired about LendingClub's marketing spend efficiency, noting that the marketing spend as a percentage of volume (calculated at 1.55%) remains lower than expected despite efforts to push new marketing channels and anticipated increases for 2026 growth.

Answer

CEO Scott Sanborn highlighted significant ongoing opportunities in marketing, noting that LendingClub is still early in optimizing new channels like direct mail. He emphasized that the overall efficiency is boosted by repeat customers, who represent roughly 50% of volume and have much lower acquisition costs, effectively offsetting the spend on new member acquisition and contributing to overall lifetime value.

Giuliano Bologna asked about LendingClub's strategy for balancing the growth of its marketplace demand (structured certificates, whole loan sales) versus the growth of its held-for-investment portfolio, considering its significant capital and liquidity. He also inquired about the efficiency of marketing spend, which remained low at 1.55% of volume despite new channel pushes, and how this percentage might evolve given anticipated growth in 2026.

Answer

CFO Drew LaBenne explained that the goal is to grow originations sufficiently to satisfy both balance sheet growth and marketplace investor demand, acknowledging a balancing act while originations ramp up. CEO Scott Sanborn noted significant opportunity in marketing, with efforts yielding positive results in new channels like direct mail. He highlighted that repeat customers, who are lower cost and lower credit risk, contribute to scaling at an equivalent pace, driving up lifetime value and the ability to invest more in acquisition.

Giuliano Bologna asked for insights into the expected volumes for strategic partnerships and loan sales in 2026, the projected balance and NIM impact of the held-for-sale (HFS) book, and how increased loan sales might alter the portfolio's seasoning.

Answer

CFO Pete Graham detailed that the first strategic partnership has a minimum commitment of $2 billion in new originations, roughly 30% of total originations, with seasonality. Seasoned portfolio sales will follow historical approaches. The HFS book balance will vary quarterly, peaking in Q4 and lowest in Q2, impacting NIM. He also noted that new originations going off-book would gradually make the bank's portfolio slightly more seasoned, but not dramatically.

Giuliano Bologna asked about the new partnership program's accounting, specifically if loans would continuously flow into 'held for sale' status beyond the initial transaction. He also inquired about the magnitude of loans that would need to be moved to 'held for sale' to align with the updated guidance range, and the accounting impact of structural changes in forbearance and modifications on interest rate reversals and charge-offs.

Answer

CFO Pete Graham confirmed the intent for a multi-year partnership where a portion of new originations would ideally flow into this new arrangement. He reiterated that the specific notional amount of loans moved to 'held for sale' for guidance purposes is not disclosed. Pete Graham also explained that the shift from short-term forbearance to programmatic modification tools is designed to manage stress effectively, with promising performance metrics and expected high success rates as borrowers graduate.

Giuliano Bologna asked if the designation of loans as 'held for sale' for the new partnership program would be a one-time event for the initial sale or an ongoing flow for future originations. He also attempted to dimensionalize the amount of loans that would need to be moved to 'held for sale' to align with the updated guidance range, suggesting a figure well into the $1 billion to $2 billion range. Finally, he inquired about the accounting impact of the shift from forbearance to modifications, specifically if it would lead to less interest rate reversals and a net benefit despite potentially higher charge-offs.

Answer

CFO Pete Graham clarified that the intent is to create a multi-year partnership, with the initial loans being the start, and ideally, a portion of new originations would flow into this new partnership over time. Regarding the amount of loans, he stated that the simple math would involve the reserve rate multiplied by a notional number, which has not been disclosed. On the accounting impact, Pete Graham explained that the overall levels of borrowers in forbearance versus modification programs are relatively consistent. The company substituted short-term, judgmental forbearance with a more programmatic modification tool, which is proving fit for purpose with promising performance metrics, and they expect high success as borrowers graduate.

Giuliano Bologna of Compass Point Research & Trading, LLC asked about the implications of a much larger mix of graduate loans, including whether they might be sold separately and their relative credit characteristics. He also sought to clarify the market share assumption for the graduate loan opportunity.

Answer

CFO Pete Graham explained that based on bureau data, the credit profile of the new opportunity is similar to their existing programs and that grad loans are typically a lower-loss, higher-return product. CEO Jonathan Witter clarified that Sallie Mae's current market share in the smaller private grad loan market is already high, around 67%, and they see no reason they shouldn't maintain that share in the expanded market.

Giuliano Bologna of Compass Point asked about the potential for wallet partnerships to enable offline transactions and how this could drive incremental GMV growth and differentiate Affirm's underwriting.

Answer

Founder & CEO Max Levchin expressed strong excitement for the enormous offline opportunity, noting that major wallets share this interest. He identified the key challenges as consumer awareness and technical 'tender delivery' integration, both of which Affirm is actively solving. He believes the market is now primed to promote BNPL as a key conversion driver in-store.

Giuliano Bologna asked about the specific synergies from combining the TransStar and Wheeling railroads, the strategic value of diversification for the rail platform, and the company's forward-looking priorities after achieving several major 2025 goals, including potential future M&A targets.

Answer

Ken Nicholson, CEO & President, detailed the $20 million in expected annual cost savings from network efficiencies and purchasing power. He emphasized that the acquisition is a 'game changer' for the rail platform's valuation, as increased customer and commodity diversification supports a higher trading multiple, in line with industry peers. Looking ahead, Nicholson stated the focus is on growing the freight rail segment through further 'chunky' acquisitions, with a long-term vision of monetizing other stabilized assets and potentially becoming a pure-play publicly traded freight rail company.

Giuliano Bologna of Compass Point inquired about Gannett's timeline for achieving flat revenue, details of the $100 million cost reduction program, the impact of AI search on audience traffic, updates on the Google ad tech antitrust case, the path to restoring digital subscriber revenue growth, and trends in AI content licensing deals.

Answer

CEO Mike Reed projected flat revenues in early 2026, driven by improving print trends, strong digital advertising, and new deals like AddressUSA and Perplexity. CFO Tricia Gosser detailed that the cost program targets automation, outsourcing, and facility consolidation. President of Gannett Media Kristin Roberts noted that despite AI search changes, Gannett's audience is growing due to a proactive multi-platform strategy and that the digital subscription business is focused on profitability and ARPU growth, expecting sequential revenue growth in H2 2025. Mike Reed also expressed confidence in the Google antitrust case and noted a positive momentum shift toward publishers in AI content licensing negotiations.

Giuliano Bologna of Compass Point Research & Trading LLC inquired about Gannett's outlook, asking when revenues might turn flat, for details on the $100 million cost reduction program, and about the company's experience with audience traffic from AI search. He also requested updates on the Google ad tech antitrust case, the timeline for returning to digital subscriber revenue growth, and the current landscape for AI content licensing deals.

Answer

CEO Mike Reed projected revenues would flatten in early 2026, driven by improving print trends, strong digital advertising, and new deals like Perplexity and AddressUSA. CFO Trisha Gosser detailed that the cost program focuses on automation, outsourcing, and consolidating print facilities. President of Gannett Media Kristin Roberts stated that despite AI search changes, Gannett's audience is growing due to a proactive strategy of diversifying traffic and blocking unauthorized scraping. Mike Reed also provided positive updates on various ad tech legal cases and noted a momentum shift toward publishers in AI content licensing negotiations. Kristin Roberts added that while digital subscriber revenue growth will take a few quarters, ARPU is already growing, and sequential revenue growth is expected in Q3 and Q4.