NIQ Global Intelligence Stock

Good morning, and welcome to NIQ's Third Quarter 2026 Earnings Conference Call. This call is scheduled to last approximately 1 hour. [Operator Instructions]

With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead.

Thank you. Hello, everyone, and welcome to NIQ's Third Quarter 2026 Earnings Call. Joining me today are our CEO, Jim Peck; and CFO, Mike Burwell. Following Jim's and Mike's prepared remarks, we'll open the line for Q&A with Jim, Mike and our Chief AI and Product Officer, Troy Treangen.

As a reminder, today's remarks will include forward-looking statements regarding our expectations and outlook. Actual results may differ materially from those expressed or implied in these statements. For information about factors that could cause actual results to differ materially, please refer to today's earnings press release and our SEC filings. We undertake no obligation to update any forward-looking statements made on this call, except as required by law.

During this call, we will also discuss both GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings press release, which is available on our Investor Relations website. A replay of this call will also be available there. And finally, unless otherwise noted, revenue growth rates mentioned on this call are in organic constant currency and are compared with the prior year period.

And with that, I'll turn the call over to Jim.

Thank you, Will. Good morning, everyone. Q3 was a milestone quarter for NIQ. There were several key takeaways: ongoing demand for our solutions, our resilient business and relentless execution in a dynamic operating environment, and our strengthening financial profile. We also announced a new agentic commerce partnership with Google, which I'll cover in detail shortly.

Some financial highlights. It was our sixth consecutive quarter exceeding the top end of our guidance across all key metrics. We grew organic constant currency revenue growth by 5.8%, our 11th straight quarter of mid-single-digit growth. Adjusted EBITDA grew 17.8%, and we expanded adjusted EBITDA margin by 230 basis points year-over-year to 23.6%. We delivered positive GAAP earnings per share for the first time since our IPO. We generated levered free cash flow of $181 million and adjusted earnings per share of $0.30, both considerably above expectations. We achieved 2.9x leverage, reaching our sub-3 tier times milestone a quarter ahead of schedule. And our recently announced $150 million share repurchase authorization adds return of capital to a disciplined capital allocation framework.

So we continue to deliver from the top line to the bottom line and strengthen our balance sheet. We're raising full year 2026 guidance to reflect year-to-date outperformance. And with a strong core, real AI momentum and our new partnership with Google putting NIQ Data at the center of agentic commerce, we believe 2027 begins a new phase of durable, profitable growth.

Looking at the quarter from a segment perspective. Americas grew 11.5% with broad strength across intelligence and activation. In North America, we had several key wins with key retailers. We won our first ever convenience retail collaboration with Maverik, displacing the incumbent across more than 830 stores in 20 states. We established a full store data partnership with a leading department store and off-price retailer, representing roughly $15 billion in retail sales. We also expanded our bev alc retail collaboration with a global mass merchandise retailer. In Latin America, we won competitive business from a global CPG leader across 5 markets, renewed and expanded a global spirits maker in Mexico, and we scaled a clothing partnership nearly eightfold from a single brand pilot into a multi-brand program.

EMEA grew 2.9%, and we continue to work closely with clients impacted by the ongoing conflict in that region. Despite the challenge, EMEA delivered some of our strongest wins of the quarter. In Western Europe, a global home furnishings retailer signed a landmark 8-figure 3-year activation renewal of its global program, expanding across more than 60 markets, our largest deal of the quarter. This relationship spans nearly 25 years and has always run on annual renewals. This was the first ever multiyear commitment made even as they were under real budget pressure and reviewing their all-around spend. We also won a European frozen food maker from the incumbent in a high 7-figure multiyear deal. And in the Middle East, despite the volatile landscape, we renewed a global telecom operator's customer experience program, extending a 15-year partnership.

APAC grew 0.2% as a tough year-over-year growth comparison masked the progress we continue to make in that region. A global social commerce platform went live with us across 6 markets after a year-long build. We also opened up a new vertical, adding our first agricultural sector client in Vietnam. Our go-forward APAC strategy remains intact: develop retailer relationships and win collaborations, improve coverage and improve data quality. We made progress this year and believe we're on the right path to make APAC a more consistent growth contributor.

Zooming out, while our segment growth rates differ today, we believe growth rates can converge over time. Americas growth reflects strong upsell of Full View and cross-sell traction for our activation offerings as well as initial demand for our AI-native solutions. As the EMEA conflict abates and our APAC strategy takes hold, we believe growth can broaden over time.

Turning to growth by product. We saw strength across intelligence and Activation. Intelligence grew 5.5% on new wins and strong upsell motion. Client demand for NIQ's Full View drove 20% plus growth in e-commerce and consumer panel. Measurement wins stood out. We anchored the largest retail census undertaken in South Africa and Nigeria, each covering roughly 180,000 outlets, and displaced the incumbent at a global sparkling wine leader expanding it from 12 to 23 markets in a high 7-figure deal.

Activation growth accelerated for the third straight quarter, up 7%. Analytics is a prime space for agentic tools when coupled with NIQ's decision-grade data. Marquee wins in the quarter included a competitive takeaway in Japan and a region-wide creator effectiveness study for a major technology platform. Growth remains resilient, thanks to our global reach and diverse offerings. Clients need NIQ in every environment, and that need increases in an AI world. Clients are accessing AI-powered NIQ intelligence several new ways through NIQ applications, through our new solutions that embed NIQ intelligence directly into their AI platforms and the LLM tools they already use. And with ConnectAI, some of our largest and most sophisticated AI builder customers are embedding NIQ intelligence deep inside their own AI applications and workflows.

Over the past year, we've shown how NIQ's AI value builds for clients in stages from usage to adoption to deep integration and now to incremental revenue. Here's where each stands. Data usage comes first. It's the leading indicator we began sharing late last year. Client use of NIQ data is growing roughly 20% a year, and clients are engaging with our new AI features. Some recent proof points include, more than half of our Discovery users engaged with AI features in Q3, double what we saw in Q2. Since August, we added global measurement and U.S. panel data sets to U.S. retail measurement, increasing the number of data sets available to Optiq users by 13-fold.

We also beta-launched MCP connections across 4 major LLMs, Claude, ChatGPT, Gemini and Copilot. Users can now access automated insights and AI-powered reports, and we have more enhancements planned over the coming quarters.

Next, the data usage is turning into AI product adoption. Nearly 60% of our top 100 clients now buy at least one of our AI-powered applications. BASES AI and Retail Analytics, our first wave of AI-native innovation over the past year plus. Revenue from these products is up 28% year-to-date and roughly 74% of AI-native revenue comes from clients who bought our solutions in 2025, a sign these solutions are driving cross-sell. And we're gaining traction with our new AI-native solutions launched this year. In less than 6 months, we have reached 10 charter commitments with AI Builder, including Mars Snacking and Purina. We're earning revenue from these initial projects and as we progress and deliver value, stand to turn these into even bigger commitments over time. And we have a global pipeline of 79 qualified proof of concepts behind them, spanning categories like food, beverage, personal care, pet care and beauty across every region in which we operate.

Now let me describe how we're going about deep integration. Clients choose NIQ because while AI models are abundant, AI that drives value can't be bought as software. It has to be built from the inside and with granular trusted data and lots of it. With Optiq Bridge and ConnectAI now launched, our forward deployed engineers are working side-by-side with our clients, and in some cases, their integration partners to build and enable AI products that plug directly into their enterprise workflows. In One Charter program engagement, we match clients' product records to NIQ data covering 96% of their category's retail sales, the foundation that lets their systems and the market speak one language. We're now embedding NIQ's harmonization and innovation frameworks directly into the client's own agents and workflows, powering their AI-driven innovation decisions.

With a global beverage leader, we're building an innovative system that matches their product data to NIQ's measurement to guide post-launch decisions. In partnership with OpenAI DeployCo, we're building an AI agent to automate commerce intelligence workflows for manufacturers, starting with U.S. Beauty and planning to expand into additional categories in 2027. And every deployment creates a path to additional data consumption and product subscriptions after go-live.

As NIQ intelligence flows into clients' AI tools, copilots and LLMs, NIQ moves from mission-critical input to critical business infrastructure. And that value is already starting to show up in our results. Just months after launch, we're beginning to monetize. We expect about 1/10 of a point of growth from these AI solutions in 2026, which remains a foundation-building year. We're gaining adoption, building pipeline, expanding partnerships and validating our monetization models. That momentum builds into 2027. We're not setting formal 2027 guidance today, but we believe our new AI-native product suite can contribute about 0.25 to 0.5 point of growth.

Our new AI products are putting us at the table with clients CIOs and CTOs as they build their own AI tools as a trusted partner and thought leader on how to maximize AI value. Because Optiq Bridge and ConnectAI connect NIQ's data directly into their AI environments, we're opening technology budget pools we haven't historically accessed. A leading global consulting firm sized the prize. It estimates technology budgets at the top 100 global manufacturers will grow from roughly $60 billion in 2024 to approximately $90 billion in 2030.

Capturing even a small share of the incremental spend positions us for $500 million to $1 billion of potential growth as we unlock new revenue streams from consumption-based revenue to data licensing to implementation fees to agentic service fees, and that's before widening the aperture to our 23,000-plus clients. So we think our progress is showing that AI tools are only as good as the data that powers them, and we believe no one has granular consumer intelligence like NIQ.

Our proprietary permission harmonized data is the critical ground truth, and we think our advantage compounds as client adoption grows. We're pleased with our early progress this year, and we look forward to scaling with clients in 2027. And nothing illustrates that better than our new partnership with Google and one of the most important developments of the quarter. It extends everything I just described, taking NIQ intelligence beyond our clients' own AI tools and into the consumer-facing AI experiences where shopping decisions are increasingly made.

This partnership will integrate NIQ's granular proprietary semantic data spanning more than 265 million products in 90 countries into their shopping graph. The first order objective is to strengthen product discovery and local availability. When a consumer asks an LLM for something like the best fragrance-free sunscreen for sensitive skin nearby, our shared goal is to drive more sales for retailers and brands at a stronger ROI than other channels.

Stepping back a bit, AI is changing how consumers shop and what it takes for our brand and retailer clients to compete and win. AI assistants increasingly help consumers discover, compare and decide what to buy. Agentic commerce goes further, acting on the shopper's behalf, and the channel is growing fast. NIQ and World Data Lab report that nearly 3/4 of shoppers use AI for product discovery. McKinsey estimates that AI agents could mediate $3 trillion to $5 trillion in global consumer goods commerce by 2030, including up to $1 trillion in the U.S. An opportunity in agentic is the same as has been in other new channels. lead the change, help brands and retailers understand the shift, act on it and measure the results.

We're advancing that work in 3 areas. First is measurement, helping manufacturer and retailer clients see where AI is in changing demand and choice. We're building products to help clients understand their presence in AI shopping journeys, competitive performance and the connection to purchase behavior. We entered a data partnership in the U.S. in Q3, and we plan to expand in other markets in 2027.

Next is agentic commerce readiness, helping products get discovered and accurately recommended. We're building capabilities to assess how brands appear in AI shopping experiences, identify gaps in product content and distribution and prioritize fixes. Our product intelligence suite helps connect verified product facts to the needs shoppers express in natural language. Measuring the outcomes will help establish whether those improvements translate into stronger visibility and incremental sales.

Third is store intelligence, where we connect shopper intent on agentic channels to where products can be bought. By connecting to AI platform commerce feeds such as Google Merchant Center, our store intelligence links agent recommendations to retail locations and local offers. It helps AI shopping experience answer a practical question.

Where can I buy this sunscreen nearby? We're already working with clients. We're designing an initial pilot with a global consumer health leader to benchmark its brand's agentic commerce readiness, identify what influences AI recommendations, prioritize improvements and test their sales impact. There are more than a couple of dozen brand and retailer customers in the pipeline. So with Google as a marquee validation of our data, we're building great momentum in our 3-pillar AI growth strategy and positioning the business ahead of significant potential growth.

Lastly, AI is working on the cost side, too. This quarter, we substantially completed the actions under our 2026 restructuring program. Heading into 2027, we're actively identifying additional AI-driven operational efficiencies across our data operations, engineering, commercial and support functions. Our approach remains disciplined, identify and harvest efficiency, reinvest a portion in long-term growth initiatives such as building our AI capabilities and expand profitability. Any measures we choose to take will come with compelling payback of less than 1 year.

In closing, we're aiming to finish strong in 2026 and are entering 2027 with exciting opportunities ahead, including our new partnership with Google, which positions NIQ data at the heart of how consumers will discover and buy products in an AI world.

With that, I'll hand it to Mike.

Thanks, Jim, and good morning, everyone. I'll take you behind the numbers Jim covered, growth and margin drivers, our ongoing free cash flow inflection and our balance sheet now strong enough to support capital returns.

Starting with revenue. Q3 reported revenue grew 6.3% or 5.8% in organic constant currency. This quarter's growth is again powered by our revenue algorithm, retention, pricing and cross-sell and upsell, contributing across both intelligence and activation. In a more volatile macro environment, the recurring subscription-weighted nature of our revenue base continues to provide stability and visibility. On the bottom line, positive GAAP net income of $36 million or $0.12 per share was a result of higher operating income, lower interest expense and lower stock compensation versus an IPO charge-heavy Q3 2025 and net gains from M&A and deconsolidation activities.

Adjusted earnings per share of $0.30 was again above the top end of our guidance range. Even without these onetime items, GAAP earnings would have been positive for the quarter. Adjusted EBITDA of $264 million was driven by our increased operating leverage, AI-enabled automation benefits and execution of our 2026 productivity program, which continues to improve the efficiency of our largely fixed cost base. That profitability is now converting to cash. Leverage free cash flow was $181 million in Q3. This brings our year-to-date leverage free cash flow to $132 million, $187 million improvement over the same period last year.

As expected, Q3 itself was modestly below the prior year quarter, which had benefited from the timing of vendor payments. I'll come back to that. The year-to-date improvement is the clear inflection driven by higher EBITDA flow-through, improved working capital from client prepayments and stronger collections and lower interest expense as we deleverage.

Digging deeper into Q3 results from a segment perspective, Americas grew 13.8% on a reported basis or 11.5% organic constant currency to $463 million. Our growth algorithm is working, client retention, pricing, upselling motion with consumer panel and e-commerce and higher activation cross-sell. In North America, we believe we're gaining share on 2 fronts: a largest share of our clients' wallets and competitive share through takeaways like Maverik. Americas adjusted EBITDA grew 16.3% to $145.4 million, with margin expanding 70 basis points to 31.4%.

EMEA revenue increased 1.4% reported or 2.9% organic constant currency to $491.2 million. This reflects the combination of pricing and upselling our Full View offerings more than offsetting softer ad hoc project demand amidst the ongoing Middle East conflict. EMEA adjusted EBITDA increased 5.5% to $165.3 million, with margin expanding 140 basis points to 33.7%.

APAC revenue grew 2.4% to $164.9 million reported, while growth was basically flat in organic constant currency against a difficult year-over-year comparison. We saw ongoing demand for Full View as well as our analytics and innovation solutions. New economy wins stood out, a social commerce platform scaling across 6 markets and an inventory optimization upsell with a leading Indonesian convenience retailer. APAC adjusted EBITDA rose 13.7% to $34 million, with margin up 200 basis points to 20.6%, the largest margin expansion of our 3 regions this quarter.

Looking at growth by product, Intelligence grew 5.5%, delivering 5% plus growth for the 11th quarter in a row. Annualized Intelligence subscription revenue growth also grew 5.5% to $3.1 billion with solid revenue retention at 105% NDR and a 99% GDR. These results signal durable, sticky demand for our measurement-based solutions, and we keep layering new subscription growth onto that base. For example, this quarter, a leading European frozen food maker consolidated all of its retail measurement data onto NIQ, winning back 3 markets from the incumbent.

Within Activation, Jim mentioned continued demand for our analytics and innovation offerings across all regions. Q3 growth was led by Americas. Our year-to-date performance and pipeline reflects overall industry trends. Specifically, increased demand for AI-led analytics more than offsetting soft demand for legacy survey-based consumer insight projects. Also, our new retailer collaborations, such as Maverik in the U.S. this quarter, and Unlimitail global media last quarter added a layer of growth that we expect to build through 2027 as we lap our big retailer collaboration win from Q4 last year.

Moving down the P&L. Q3 operating expenses declined 6.9%, driven by lower SG&A expenses as we continue to realize benefits from our legacy transformation programs, along with lower stock-based compensation expense versus the prior year period, which included IPO-related charges. We continue to find additional savings opportunities across SG&A. AI-led productivity gains now span data operations, engineering, commercial and G&A support functions. We're doing more with less.

For example, corporate costs not allocated to our segments declined 7.7% this quarter to $81.1 million, reflecting this continued cost discipline. Onetime and restructuring costs totaled approximately $9 million in the quarter, including $6 million from the 2026 program. This program as well as our legacy NIQ and GfK transformation programs are now complete. We've accrued approximately $77 million in cost to achieve. From a cash standpoint, we incurred $35 million cash outlay for this program year-to-date and expect the balance to be paid out in the fourth quarter of 2026 and the first half of 2027. These programs delivered roughly half of year-over-year margin expansion in Q3.

As we move into 2027, we're likely to pursue additional investments that carry a less than 1-year payback supporting increased structural efficiency moving forward. Across other line items. Depreciation and amortization was $141.5 million for the quarter or 13% of revenue, in line with prior quarters. GAAP interest expense was $54 million, $24 million lower than the prior year, reflecting lower debt balances and our transformed post-IPO capital structure. Changes in foreign currency resulted in a loss of approximately $7 million compared to a $19 million loss in Q3 2025. The lower loss reflects favorable foreign currency movements, particularly between the U.S. dollar and the euro, which resulted in lower remeasurement losses in the current period. Income tax expense was approximately $30 million, modestly below prior quarters, reflecting a more favorable jurisdictional earnings mix.

Turning to liquidity and free cash flow. As of September 30, 2026, we had total available liquidity of approximately $1.3 billion, including $573 million in cash and cash equivalents and $748 million on our undrawn revolver. Cash flow from operating activity was $254 million. CapEx was $73 million or 6.5% of revenue, reflecting continued investment in our growth priorities, AI capabilities, our technology platform and proprietary data assets like our omnichannel consumer panels. Leverage free cash flow was $181 million in Q3 and $132 million year-to-date. The modest year-over-year decline in Q3 reflects the timing of vendor payments benefiting Q3 2025 and higher cash paid for capital expenditures to support growth investments.

I'll note that while we raised our full year cash flow guidance implies Q4 will step down versus Q3 due to the timing of tax obligations, CapEx and certain vendor payments, the midpoint implies roughly $303 million of leverage free cash flow in the second half, up $3 million versus our prior guidance. This is the cash flow inflection we've been building toward. After years of transformation investment, this business is now meaningfully more cash generative. The cash brought net debt to $3 billion and net leverage to 2.9x, a quarter ahead of plan. It also now enables us to fund a measured return of capital through our new $150 million repurchase authorization.

To be clear, reaching 2.9x is a positive milestone, but is not an end goal. We don't have a specific new net leverage target to share with you today. I'll tell you that deleveraging remains a top priority. We'll continue to balance that along with disciplined organic growth investments, strategic M&A and opportunistic share repurchases.

Now turning to guidance. Our raised outlook is rooted in our year-to-date overperformance, supported by core strength and disciplined execution. As a reminder, our guidance philosophy is to endeavor to provide ranges that we believe we can achieve. For Q4, we expect reported revenue growth of 5.2% to 5.5%. OCC revenue growth of 5.4% to 5.7%, consistent with our full year range. Two things to keep in mind. In Q4, we lap a big retailer collaboration win from last year, and Q4 typically carries a higher mix of ad hoc activation work, which is harder to forecast than our majority recurring subscription base. Adjusted EBITDA margin of 26.3% to 26.7%, reflecting our typical Q4 revenue and cost seasonality as well as continued operating leverage. Adjusted earnings per basic and diluted share of $0.43 to $0.47.

For the full year 2026, we now expect reported revenue growth of 7.5% to 7.7%, OCC revenue growth of 5.5% to 5.7%, adjusted EBITDA growth of 16% to 17%, driving margins of 23.6% to 23.8%, adjusted earnings per basic and diluted share of $1.16 to $1.20, a roughly 8% increase at the midpoint. Leverage free cash flow of $249 million to $257 million, up roughly $3 million at the midpoint. And to update some of the full year 2026 modeling assumptions, we expect D&A of $600 million to $605 million, GAAP interest expense of approximately $210 million to $215 million, income tax expense of $155 million to $160 million or roughly 15% of EBITDA, share count of approximately 300 million and CapEx at 6.5% to 7% of revenue.

And although we're not providing a full year 2027 outlook today, I'll provide some early views to help you think about your models. Overall, we expect our financial profile to strengthen further in 2027. This includes durable mid-single-digit growth with potential AI upside, steady margin expansion driven by operating leverage post major transformation over the past few years, increased free cash flow and better conversion and a balanced approach to deleveraging and capital allocation.

We foresee OCC growth building through the year due to several potential factors. These include new wins scaling, APAC improvements taking hold and increasing contribution from our AI-native offerings. As Jim mentioned, we believe these offerings can contribute 0.25 to 0.5 point of growth next year. Of course, the mix by region and product may shift quarter-to-quarter since about 1/3 of our business is ad hoc and the global backdrop remains dynamic. We expect typical quarterly seasonality on cash flow, including a seasonal cash low point in Q1 as a result of our typical front half weighted tech and IT expenses and back half weighted revenue contribution.

Further to cash flow, while we expect to be a user of cash in Q1, we expect a significant year-over-year improvement in that period as part of our overall growth for the year. This view is inclusive of any incremental AI-led productivity measures we may take, and we continue to prioritize onetime investments that carry 1-year payback.

In closing, Q3 showed our business resilience and increasing AI progress. We delivered durable growth, margin expansion, cash flow and a balance sheet now strong enough to support broader capital allocation. We're focused on closing out a strong 2026 and believe we are well positioned for 2027.

With that, operator, let's open the call to Q&A.

[Operator Instructions] Your first question comes from the line of Manav Patnaik with Barclays.

Jim, I just wanted to zoom into the 0.25 to 0.5 point of growth that you said comes from the, I guess, your AI solutions. Just to clarify, like these are brand-new AI-native solutions? Or are these AI enhancements to your existing solutions? And is it cannibalizing some of your other smaller solutions as well, i.e., is this a net incremental growth rate you're giving us?

Yes. So I think you're referring to when we said we're not guiding, but I said what it could be next year. No. So what -- it is a combination of all those things. So we're -- I think just to step back, Manav, to our strategy. So the Full View remains, right? Our need and our clients' need for us to still capture all the consumer spending that is happening that is relevant in the world because that is what really is fueling AI. And I know that's a cliche, but it is, in fact, the truth of what's really happening. And so we're staying very focused on that.

And then what's happening with our clients. Now, yes, we're using and integrating AI into our products like Discover through Optiq. We're creating ways for them to tap in a very efficient way into our information into their world through things like AI Builder. And then what's probably most exciting for me anyway is we're also beginning to become their forward deployed engineering group, let's call it, that's helping them understand how they can organize their own information in concert with ours.

And the vignettes I'll give you there are -- I was at C360 earlier this year. That's our big user conference. And we had been preparing up to that point by hiring the right people, by putting the right infrastructure in place to help our clients in the implementation of their AI. So hiring someone who understands how to manage and lead forward-deployed engineers in the way that we need them, putting infrastructure in place. While I was there in the hallways, in the main speaker auditoriums, I was stopped so many times by clients to say, we need your help because we really can't do this on our own. And we realized that you guys know how we think about our data. And so since then, we've announced and talked about these 10 proof of concepts.

Those are real dollars. Those are real let's call them, forward deployed engineering engagements where we -- our data is being used in new ways. There are new budget pools. Those are not cannibalizing other sales that we do. And since we've spoken or since we talked about the script of this call, we said we had 79 new opportunities. That number is up to 100. So these are very real. They're very practical and they're right in our wheelhouse. So I'm really excited about the fact that we're tapping into these new budgets, and this is not cannibalizing the other things that we do.

And I know that was a little bit of a long-winded answer, Manav, but it's really important. And I'd like to bring Troy Treangen, our Chief Product Officer, who also leads all our AI efforts kind of architect behind it to give his view in an answer to your question. And he may take us a little further down the road and then we'll let you follow up.

All right. Hello, everybody. So 2 things to piggyback on what Jim said is the capabilities that we're building are across the 3 segments that we talked about in the last couple of calls, right? We have our beginners, we have our buyers and we have our builders. And we are building capability across all 3 of them. When Mike and Jim were talking about that number for next year, it includes those features and functions and applications in those 3 respective areas.

Just another anecdote, since we've launched the broader program of deployed engineers and going into this new space over the last couple of quarters, we are talking to new folks at clients. I happen to be sitting here in New Jersey today, and we're meeting -- I'm meeting with the Chief AI Officer and some of those teams, which historically has not been where we've had conversations. I was an account lead many, many years ago for some of our larger accounts, and we didn't have those conversations. So they are unlocking new budgets. We are building new capabilities within our world, but also helping our clients within their worlds. And I think the pipeline is building extremely well, and I'm excited about what's going to happen here in 2027.

Got it. Super helpful. Maybe just to close the loop, Mike, from your perspective, I think you tried to quantify it, but maybe I missed it, but just the AI benefit on the margin front, how should we think of that in terms of what's in the margin performance today and kind of that guidance you've given for the longer term?

Yes, Manav. So when we have given guidance that in the midterm, we would get to the mid-20s in terms of margins, and then we see a path to moving ourselves to 30% margins, although we haven't defined a time frame to it, we will endeavor to do that as we ultimately provide future guidance. But that's -- this is going to be a key ingredient to it. It's -- what we're seeing is continue to see that revenue happen and AI is from a cost standpoint is continue to drive almost half of our benefits overall.

So we're continuing to drive it on the top line, as Jim and Troy talked about, but we're also delivering it on the bottom line in terms of what we're doing internally, whether it be coding or looking at our back-office activities, we're continuing to drive cost improvements, as I said in the opening, that have definitely paybacks less than 1 year.

Your next question comes from the line of Kevin McVeigh with UBS.

Congratulations on the results and really great execution. I want to follow up on that because I think it's really, really important. Jim, I think if I heard you right, you talked about an incremental $500 million to $1 billion of revenue from an AI perspective. And any sense of how that starts to scale? I mean, obviously, some starting to come in '27. But is that all North American and appreciating the fact that geographically, clients trigger different base and evolution of consumption. But just any sense of how that comes in geographically? And is there incremental upside to that as you start to see just more innovative consumption patterns and maybe some of the more emerging market areas, if we could start there?

Yes. So as kind of a foundation for that -- to answer that question, our customers really are local and country-specific and each country operates a little bit differently. It's not even by region, right? And so we're very much organized to face off with them locally by country and then also where they're global or where they have global needs globally. And we just recently did a, let's call it, an AI boot camp where we're teaching our sellers how to approach customers in each of the dimensions we talked about with AI. So AI that's right built into our Discover product, AI capabilities or, let's say, integration capabilities that allow them to use these tools on our data in a controlled way and then the actual POCs that we're doing.

And this wasn't just done in the U.S., it was done around the world. And so while the demand comes largely from the U.S. and Western Europe, where these are the headquarters of the biggest and most well-funded manufacturers and retailers in the world, that's the early demand. It's also showing up across all the regions and all the countries. And if anything, we're having to prioritize which ones we want to make sure we do first because as we do each of these POCs, we are learning ourselves. And we're able to reuse both the learning and the actual, let's call it, code or the actual capabilities to repeat each of those POCs.

And I'll make another point. The POC is a onetime engagement that as we have success in which we are, those turn into long-term new revenue subscription-based products or, let's say, capabilities that our clients are taking in that are in addition to our, let's call it, our traditional capabilities.

It's super helpful. And then just one quick follow-up. Mike, great to see the buyback. Any sense of -- is that opportunistic? Or just any thoughts as to deployment around that?

Yes, Kevin. So when we looked at it and said now that we've reached the target that we had put in place a quarter early in terms of our leverage below 3x at 2.9, we view that as another tool in our toolkit to it. So look, our -- as I said, our main focus is continuing to delever and continue to pay down debt. But it just gives us another, as I say, tool in the toolkit. So nothing that's going to happen here immediately. But nonetheless, we're going to continue to be opportunistic in terms of thinking about it. And we think it is the right point in terms of looking at our financials and the strength of our financials to put that tool in the toolkit. So that was the thinking behind it, Kevin.

Your next question comes from the line of Curtis Nagle with Bank of America.

Great. I'll start with a model question and then move to one on AI. So I guess just for the 4Q or guide growth, I think you noted there's some sensitivity on just, I suppose, the unpredictability of activation. Could you just maybe, I guess, give some of the puts and takes there? And then just, I guess, the degree of sensitivity embedded within the guidance? And then I'll have a follow-up.

Yes. I think Mike will take this, but I'll just start like I always do when we talk about guidance. As you know, I am probably a relatively conservative guider. And so we always want to make sure that we guide to something we have very, very, very clear line of sight to achieving, always knowing there's probably a little upside there. So with that as context, Mike, do you want to go ahead and jump in?

Sure, Jim. Curt, so as you rightly pointed out, when you look at our activation growth, we see a large portion of that happens in the fourth quarter. That's due to seasonality. We have many of our clients that's what their buying patterns are, and that's what happens in the fourth quarter. We also -- we had a large activation project that we're lapsing in the fourth quarter overall.

So look, we raised slightly for the full year versus where our previous guidance was, as Jim said. So when you bring that all together, you come away and say, look, we set guidance up that we're going to -- we know we have line of sight to, to deliver. We knew we do have more activation -- in Q4, there is seasonally strong in terms of what happens in the fourth quarter, and we are lapsing an activation project that was there that we had in the fourth quarter last year. So that's how we think about it.

Okay. Fair enough. And then yes, I guess, agentic, obviously, a huge topic. So as agents like Muse become more prevalent. I guess at this point, are you beginning to see any changes in terms of how consumers discover products? How are NIQ clients thinking different about engaging them? And then I guess, just for you in terms of sort of the biggest monetization opportunities on top of that.

So Troy, do you want to jump in and take this one?

Yes. So agentic commerce, as you know, is a growing channel. I think we've had studies that have came out recently, and I think it was even mentioned in the prebuilt part of the comments before that majority of people in the U.S. and many markets around the world are already using agents or LLMs to actually discover products. The opportunity for us in this space is all around content management. And that's where these partnerships come in place and are important.

So for example, if you go out and go search for a high-protein snack that got a clean label, that needs a definition and understanding which products actually meet that expectation is where we come into play. And so agentic will continue to adjust, right? Right now, it's primarily on Discovery and then people are actually buying the products themselves. Over time, likely the things that Muse that you referenced, there are more agents actually doing that. But regardless of those 2 scenarios, you got to understand which products actually meet the criteria of the question, which is not always on a package, and that's where we come into play for the first part.

The second part is in the agentic space, like it is another channel that we need to measure. And so our core part of our business and our Full View is all trying to figure out where does volume go. So if it's coming from a brick-and-mortar store and now switching to online and now switching to agents within an online space, like that's our job to measure. And that's the other part of monetization that we're going after. And Jim mentioned that earlier with our partnerships in the U.S., but then also we'll have more outside the U.S. and then we're also building capabilities ourselves to go after that part of it as well.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets.

I wanted to drill down further on the EMEA geography. You mentioned some of the challenges there. I was just wondering how are the conversations with clients progressing now in the fourth quarter? And how do you think about the visibility for growth in EMEA, particularly as we get into 2027?

Yes. I want to make sure I -- the first part of that question broke up just a little bit. Are you asking how we're thinking about growth in EMEA? Okay. Yes. So we -- if you take out kind of the ad hoc world there, which was fairly significantly impacted by the war because it's creating kind of uncertainty with the consumer and uncertainty in what they're doing. And so our clients are saying, I'd rather not spend my money right now trying to understand things when I believe they're going to change. And so that hasn't caused them to stop using information, of course, and our intelligence business continues and subscription business continues to operate really well there or to perform really well there.

They are saying, let's wait a little bit for us to get in the market doing some of our analytics and doing some of our surveys. I think over time, that as things normalize, that will come back and we will normalize our growth in EMEA. And so -- and by the way, EMEA includes Western Europe as well, and we're seeing really good growth in our -- let's say, our Full View with our panels and e-com and also equally good demand, let's call it, for our AI-based solutions.

That's very helpful color. And then I wanted to focus on the ConnectAI, really good traction there with 10 new clients and 79 in the pipeline. As you mentioned, there is some initial project revenue, but can you help us understand the incremental opportunity there as the clients adopt the GenAI solutions?

Sure. Troy, do you want to jump in?

Yes. So like we mentioned, like the 10 charters that are kicking off now, they're set up in a couple of different ways. One, there's initial setup and development revenue and expense, I guess, to the client. That is what Jim was referring to earlier. But what happens post that is there's ongoing 1 of 3 things, if not all of them. One is about data expansion. So many of these charters are uncovering that more data is needed to solve that internal workflow that the client is working to implement. So there's an incremental data licensing that comes along with them.

The second is ongoing token or transaction fees to keep that capability up and running because some of that development is calling our back-end services to actually make a call. So that's the second. And then the third, which is actually probably the one I'm most excited about right now, which is as we're getting in and actually uncovering some of these use cases, more and more use cases within that initial engagement are popping up. So then it's about broader expansion. And that's where we continue to grow to the client. We said over 80, which Jim said is also going to 100 in the last couple of days. We don't expect that to slow down.

We're seeing that all around the world as well. It's in the U.S. It's in Western Europe, of course, but we're seeing it in all markets, some level of engagement to actually integrate and do these types of services within our ConnectAI portfolio, but then also our 4-point engineer engagements. So that's kind of how that's playing out. I think Mike referenced the numbers a little bit in '27 and that what we're shooting for and expecting. But there's -- the momentum has been fantastic, and I couldn't be more excited about it.

Your next question comes from the line of Andrew Nicholas with William Blair.

I wanted to ask on annualized subscription growth. It moderated a bit this quarter despite what's been really stable retention and strong panel and e-commerce growth. So just curious what else kind of underlying that moderation is going on? And what would drive subscription growth higher in 2027 specifically?

Yes. So Andrew, Go ahead, Jim. Sorry. Go ahead.

No, no, no, go ahead, Mike. You go ahead. Go ahead.

Yes. So when I look at that, it's over $3 billion in terms of subscription revenue growth. It's at that 5.5% when you look at it on an annualized basis. And as you rightly pointed out, 105% NDR and 99% GDR, I mean we feel very, very sticky. But I'd go back to what Jim and Troy have said, as we continue to move in the AI space and our forward deployed engineers are working to -- in those different buying groups, we're working with them. But also part of that then becomes more subscription, more revenue, more data and our Full View data is being provided or signed up for that's going to continue to drive that subscription revenue going forward.

So I feel good about where we are and that growth rate at that 5.5%, in that 5.5% to 6% range, but the opportunity going forward is just going to continue to see that overall. So that's what I think will continue to drive that as we look in '27 and beyond.

Appreciate that. And then maybe just a question to help me better understand for my follow-up. On the Google partnership, how does that kind of get monetized? Is that a route to getting more data to inform your products? Or is there actual kind of consumption-based dynamics tied to that relationship? Obviously, something that sounds like you're pretty excited about coming out of the quarter.

Yes. Yes. So there -- I'm going to let -- again, let Troy jump in, but there are a lot of, let's say, multiple dimensions of how we would monetize that. One is Google simply has recognized the value of our information in the way they're operating their business, so they're taking in our information. In addition to that, they're realizing that our information will help them in their agentic commerce journey using it to kind of inform consumers what -- let's say, what is in the product or what's hot and also where they can actually buy it.

And then we should just be measuring that channel, right, which is not just Google, but the whole agentic channel. And so it really covers a very broad dimension. The relationship is big for us, and I think meaningful for them as well, even as big as they are. So that's why we're really excited about it.

Troy, do you -- Troy, again, has been very engaged in this along with many of us. What is your view?

Yes. So there's 3 ways that, that partnership is important and monetizes with us. Number one, like Jim said, they do license more data assets from us that are part of their Google Shopping and their agentic broader frameworks. So that's one, which goes to the points Jim just said. The second is we're working on many additional product opportunities, which together, which will unlock some things that we'll announce in 2027. And then third, what it does is it is an input, right? So as we're -- as Jim was talking about, like we need to measure the channels, like we need to measure how many sales are done through Gemini versus ChatGPT versus whatever else source on the major LLMs, but also within the LLMs or the chat environments of retailers specifically.

So that's part of data in that we will then use those assets to create products and sell to manufacturers and other retailers, et cetera. So all 3 of them are engagements. I think over time, the individual products and things will tweak because it's early on. agentic Commerce is still relatively new, but progress is there. And again, you'll see more announcements from us in the coming months, I'm sure, within this framework.

We have reached the end of the Q&A session. I will now turn the call back to CEO, Jim Peck, for closing remarks.

Yes. Just to reiterate that we're feeling really good about our business. I think I've used the word execution machine before, and that continues to be part of who we are and who I am. And I really feel good about the position we put ourselves in to continue with our Full View strategy and which will always be fundamental to what we're providing to our clients and to the world in conjunction with how we're leveraging AI both externally, which we've talked a lot about, but also internally to drive good top line growth and continued top line growth and also to continue to expand margins. So I feel like we're in a really good spot, and you'll hear more from us going forward. And thank you all for the great questions, and we'll see you next time.

This concludes today's call. Thank you for attending. You may now disconnect.

Good evening, and welcome to NIQ's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead.

Thank you. Hello, everyone, and welcome to NIQ's Second Quarter 2026 Earnings Call. Joining me today are CEO, Jim Peck; and CFO, Mike Burwell. Following Jim's and Mike's prepared remarks, we'll open the line for Q&A with Jim, Mike and our Chief AI and Product Officer, Troy [ Treangan ].

As a reminder, today's remarks will include forward-looking statements regarding our expectations and outlook. Actual results may differ materially from those expressed or implied in these statements.

For information about factors that could cause actual results to differ materially, please refer to today's earnings press release and our SEC filings. We undertake no obligation to update any forward-looking statements made on this call, except as required by law.

During this call, we will also discuss both GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings press release, which is available on our Investor Relations website.

A replay of this call will also be available there. And finally, unless otherwise noted, revenue growth rates mentioned on this call are compared with prior year period.

And with that, I'll turn the call over to Jim.

Thank you, Will. Good afternoon, everyone. Before I begin, I just want to apologize. I have a cold, and so I'm sure my voice is a little bit raspy and we'll just do the best we can.

Q2 marked our fifth consecutive quarter, exceeding the top end of our guidance across all key metrics. We accelerated organic constant currency revenue growth to 5.8%grew adjusted EBITDA nearly 22% and expanded adjusted EBITDA margin 270 basis points to 23.3%. Adjusted earnings per share came in at $0.27, well above the top end of our range. Levered free cash flow inflected positive at $74.1 million, and we reduced leverage to 3.1x. That's progression from top to bottom line.

We are raising full year 2026 guidance across the board, reflecting our upside performance and positive outlook. It's been a year since our IPO and several things stand out: Strong demand for our solutions our structural advantages and our strengthening financial profile, including durable growth and retention with 10 consecutive quarters of 5% plus growth in organic constant currency and strong Q2 retention at 105% NDR and 99% GDR. This is a strong core with emerging AI growth opportunities.

We're also seeing expanded margins approaching our mid-20s target with a longer-term path into the 30s, increased profitability, tracking to more than $1 billion of adjusted EBITDA and more than $1 of adjusted EPS this year, inflecting cash flow in our raised outlook for $245 million to $255 million and continued deleveraging on track to achieve our sub-3x target.

We're delivering results today while reinvesting in competitive differentiation in our future, AI-native innovation, consumer panel expansion, technology platform enhancements and disciplined tuck-in M&A.

As I've described on our recent calls, NIQ sits on one of the world's most defensible data assets in our view, decades of permission harmonized data and vertical-specific context layer across consumer, retail and market intelligence. We believe that combination is impractical, if not impossible, to replicate.

Last quarter, I outlined how NIQ Intelligence drives client decision-making and how AI adoption is creating additional growth opportunities. Today, it's about progress we're making on our innovation road map. Optiq, Bridge and Connect AI, deliver NIQ Intelligence, the ground truth layer that enterprise AI runs on and to clients' decision flows. Whether through our tools and LLM or their own, we're moving up the AI value chain from informing decisions to executing them.

The balance of my remarks today will cover three areas: First, how a broadly healthy client demand environment is driving our core growth; second, our progress laying the foundation for additional AI-powered growth; and third, our progress expanding profitability by embedding AI across our organization.

On point one, clients are buying more NIQ. Looking at our regions. Americas OCC growth led the way, growing 8.3%. EMEA OCC growth accelerated to 4.9%. And in both, we saw new wins and strong upselling of our intelligent solutions.

In the U.S., a leading coffee manufacturer consolidated onto NIQ from 2 encumbered providers at once. They told us why: Our AI capabilities and product road map as well as the seamless unified full view experience across every data set.

In EMEA, leading Swiss and U.K. grocers paired measurement with consumer panel to get the full view. And a major U.K. grocer came back to us from a competitor on that same value proposition, choosing our new product granularity and e-commerce expertise.

APAC returned to 1.9% OCC growth. Here, we saw a strong activation, cross-sell and early improvement in China, Japan and Korea from the retailer relationships and partnerships we outlined last quarter. In Vietnam, we won back a global CPG manufacturer from a competitor mid pilot by designing a tailored measurement plus field solution in weeks, not quarters.

That is the pattern across the region. We start with granular measurement data and expand into analytics to power go-forward decisions. We also beat 2 major global incumbents doing the largest [ going global ] contract in that market to date, helping a major automaker expand overseas.

We also recently acquired [ Yimian ], an e-commerce data and insights business in China and Southeast Asia. It strengthens our digital commerce capabilities accelerates the full view and extends NIQ into adjacent opportunities like agented commerce in these markets.

We also opened new categories and buyer types that were not in NIQ's a couple of years ago. a global ad tech platform licensed our purchase data to power privacy safe campaign planning at scale, selecting NIQ over a direct competitor and traditional panel providers; and [ limit tail ] , a leading European retail media platform chose NIQ to measure business outcomes across its multi-retailer, multi-country network, our first client of its kind. Ad tech and retail media are newer adjacent demand pools proof our data travels well beyond CPG.

Growth was not only strong by region, but by product. Q2 Intelligence growth reaccelerated to 5.7% on new wins and strong upselling motion, particularly in e-commerce and consumer panel. And annualized intelligence subscription revenue, our version of ARR, grew 5.8% in Q2 and eclipsed the $3 billion mark.

Activation OCC growth accelerated for a second straight quarter to 6.1%, signaling our commercial and go-to-market efforts are working. A few proof points. In North America, a global convenience retailer expanded its renewal into SKU-level analytics, price and promotion and category management across more than a dozen countries, adding over $5 million of incremental value.

In the Middle East, a regional manufacturer layered shopper and consumption analytics onto its core measurement subscription, and we took that work back from a competitor across 3 markets. And a global personal care leader extended its worldwide agreement, adding analytics and servicing on top of core measurement.

Within activation, demand remains strong for our analytics and innovation-based solutions. Year-to-date, these solutions were nearly 60% of activation revenue and grew low double digits.

Looking deeper, our AI-native solutions, [ Base's ] AI and retail activate drove meaningful share of that growth. This growth isn't a one-off. It's driven by newer AI native offerings that feed directly from our proprietary core data. And that data is growing fast. We added 4.3 trillion consumer transaction data records per week in Q2, 23% faster than last year. This spans 260 million product items with 10.5 billion product attributes in our 160 petabyte data engine, all rooted in NIQ's vertical-specific expertise.

That granularity benefits our entire portfolio. In fact, more than 90% of our revenues derived from this proprietary data. and our capabilities are increasingly at the floor as client AI adoption accelerates.

Let me share some proof points from our first wave. Data point consumption on our platform grew 25% year-over-year. Roughly 51% of our top 100 clients now use at least one of our AI native solutions, and the number of clients using them has grown 64% year-to-date.

This is also translating into financial results. Revenue from AI native solutions grew by 34% in Q2, and more than 80% of AI native revenue comes from recurring clients, a good sign of stickiness and long-term value.

Clients are at the center of everything we do, and we're focused on doing more. In June, our annual flagship client event, [ C360 ] through more than 600 CPD, tech and durables and retailer decision-makers from across the globe. Their message was clear: Help them cut through the fragmented data and disconnected systems and decide faster in a fast-changing consumer landscape and help them capitalize on their AI strategies.

Which brings me to my second point, our progress laying the foundation for additional AI-powered profitable growth. Last quarter, I described our 3-pillar strategy to fuel the future of trusted AI. In Q2 and year-to-date, we accelerated innovation to deliver AI native value for clients and our business. And our first pillar, building NIQ AI applications for smarter app count, at C360, we announced Optic Suite, our Insights Assistance and NIQ Cadence, our Gen AI native marketing effectiveness platform.

Aligned to our second pillar, NIQ IP that fuels AI. We announced the launch of Optiq, Bridge and Connect AI suite, which embed decision grade nIQ intelligence directly into market-leading applications, AI-powered workflows and the enterprise. We've also progressed MCP access and integrations with all of the leading AI platforms, so clients can reach secure, govern and IQ intelligence directly through these platforms.

These launches let us meet clients exactly where they are. whether they're an AI buyer of NIQ solutions directly or through an LLM or an [ ad ] builder embedding NIQ within their own AI environment. Importantly, every solution has permission service layers built in. Clients can embed NiQ intelligence into their AI use cases while keeping the NIQ decoder, the IP, methodologies and models that power our differentiated analytics.

And last week, we announced the first charter clients for Connect AI. These include [ Purina ], a global personal hygiene company; a leading beauty company and 2 global beverage companies. Each is working with a dedicated NIQ engineering and data science team to build AI ready intelligence infrastructure and decision workflows inside their own environment.

Early client demand has been strong. Our pipeline has grown quickly to 49 live opportunities, including our charter clients and active discussions with many of our top clients. It is also broad-based across FMCG and tech and durables as well as with clients large and small. We plan to add more charter clients, including retailers, in the next phase.

We are also in active discussions on several AI partnerships with major players that can accelerate our objectives. These include a partnership leveraging forward-deployed engineering expertise to accelerate deployment of Optiq, Bridge and discussion with multiple partners around our genic commerce measurement launch targeted for later this year.

And on our third pillar, powering commerce intelligence and agentic commerce, we see a long-term growth opportunity. AI is playing a bigger and bigger role in consumer shopping, moving from answering questions to influencing commercial's decisions to helping execute them. As that happens, NIQ's granular content on product attributes, availability, pricing and consumer preferences moves directly into the commerce flow and rises in value.

Our capabilities span product intelligence and availability, channel and media measurement and a genetic transaction integration, positioning NIQ, we believe, to play an operative role in the next phase of AI-powered commerce.

During Q2, we built toward that future. an IQ commerce lab is establishing the data, API and measurement infrastructure for AI-driven commerce. We launched Product Intelligence, the first offering in our commercial intelligence portfolio. It resolves fragmented product data under a single structured layer. This allows AI commerce systems to accurately identify, compare and recommend products to drive shopping conversion.

Taken together, we believe this wave of AI launches positions us for significant growth. 2026 is a foundation building year, driving early adoption, expanding partnerships, validating monetization models and scaling our first client implementations. Over time, we look to layer on additional revenue streams, premium AI-ready data, usage-based AI services, AI native applications like Optiq, Bridge and Connect AI; as well as AI deployment services.

While we expect these initiatives to contribute some revenue in 2026, our raised 2026 outlook does not assume a material contribution from them. This year is about building. We expect to begin scaling commercially in 2027 and beyond.

Leading that effort is [ Irina Steen ], who joined us as our Chief AI Commercial Officer in July from Palantir, where she scaled technology and analytics businesses. She's partnering with Troy and the team to drive our next chapter of AI-powered client value. and I look forward to you meeting her in the future.

So our core revenue base is strong, and we're building AI value on top of it, which brings me to my third point. The benefits of AI-led operating efficiency. AI is accelerating our ability to build, deliver and support our products and our clients.

We're seeing AI-led productivity gains across data operations, engineering, commercial and support functions, contributing roughly half of the 270 basis points of year-over-year margin expansion in Q2. And in the first half, we completed the vast majority of actions under our 2026 restructuring program. achieving most of the $70 million to $80 million of expected run rate savings. These are structural efficiency gains with less than 1-year payback, and we believe we've only scratched the surface. We're pursuing additional efficiencies across our largest expense areas, prioritizing these that carry little to no onetime cost to achieve. We'll remain disciplined, harvest efficiently, reinvest a portion in long-term growth and expand profitably.

As I outlined last quarter, the path from the mid-20 margins into the 30s is fundamentally about flowing durable revenue growth across a largely fixed cost base that we're making more efficient. As a result, every incremental dollar of revenue should carry higher margin than the last.

To close, we are doing what we said we would do. And as I've said before in a previous call, we are going to show you that we're an execution machine, driving our core algorithm, expanding margins, raising EPS inflecting cash flow and laying the foundation for AI native monetization and operating efficiency into 2027 and beyond.

Thank you to NIQ's associates worldwide for delivering a great quarter. I'm excited about what we're building.

With that, I'll hand it to Mike to cover our detailed Q2 financials and our raised full year outlook.

Thanks, Jim, and good morning, everyone. As Jim outlined, it was a stronger quarter Results exceeded our expectations and our guidance across every key metric. Revenue grew 5.8% in organic constant currency. Adjusted EBITDA grew 21.9%, and margins expanded by 270 basis points to 23.3%. Adjusted EPS was $0.27 and leveraged free cash flow improved by $137 million to positive $74.1 million.

Taken together, these results reflect disciplined execution, improving profitability and continued progress toward a stronger balance sheet. Our raised guidance reflects continued strength in our core business and AI-driven efficiencies from our 2026 cost program starting to ripple through our cost structure. I'll cover the details after walking through our strong top and bottom line results.

Q2 reported revenue accelerating to 8% growth or $1.1 billion, 5.8% Organic constant currency. This growth came from execution of our revenue growth algorithm, strong retention, pricing and cross-selling and upselling with contribution across intelligence and activation.

Net loss was $30.5 million, while adjusted net income improved by $80 million on a year-over-year basis to $78.7 million. Consolidated adjusted EBITDA grew 21.9% and year-over-year to $262 million, and we expanded margins 270 basis points to 23.3%. This came from increased operating leverage as well as AI-enabled automation benefits and our 2026 productivity program, making our largely fixed cost base more efficient.

From a segment perspective, our largest markets continue to lead the way. Americas grew 8.3% on organic constant currency, driven by intelligence and cross-selling our activation solutions. In the U.S., a global personal care company consolidated its retail analytics work with NIQ, displacing a legacy provider on the strength of our data quality and analytical depth. Americas adjusted EBITDA grew 10.5% to $143 million with margins of 31.4%.

Our EMEA segment grew 4.9% in organic constant currency, with the same drivers as we saw in Americas. EMEA adjusted EBITDA grew to 26.1% to $179 million with margins expanding 550 basis points to 35.3%.

And our APAC region returned to year-over-year growth, up 1.9% in organic constant currency, a meaningful sequential improvement from Q1 and and in line with the trajectory we outlined in May. Growth was driven by improving commercial momentum and cross-sell for our analytics and innovation-based activation solutions as well as improvement in key markets that Jim cited earlier. APAC adjusted EBITDA increased 9.2% to $32 million with margins expanding 120 basis points to 19.8%.

So strong results. Americas and EMEA signal competitive strength and APAC is recovering. Outside Americas performance remains solid despite the ongoing conflict in the Middle East. We believe Q2 demonstrates healthy client demand for both our measurement and analytics solutions and any macro backdrop. We believe our top line results demonstrate that our revenue growth algorithm is working.

From a product perspective, Q2 was our tenth straight quarter of intelligence revenue growth above 5% and annualized intelligent subscription growth above 5.5%, extending our performance track record. As Jim highlighted, annualized Intelligent subscription revenue exceeded $3 billion, up 5.8% and continued strong net and gross dollar retention underscores our mission criticality with our clients.

Activation revenue improved for the second straight quarter, growing 6.1% in organic constant currency. Looking deeper across all regions, we've seen low double-digit growth in our analytics and innovation-based offerings. This has been driven by traction, scaling our retail analytics wins in Americas as well as high single-digit growth in APAC. Overall, we see broadly healthy client pipeline for our activation solutions.

Looking down the P&L. Q2 operating expenses increased by 5.7%, driven primarily by targeted investments in data coverage and granularity and to a lesser extent, by onetime costs related to our 2026 restructuring program. Excluding these charges, operating expenses grew much slower than reported revenue growth, demonstrating the ongoing cost discipline and increasing operating leverage across the business.

Onetime restructuring costs totaled approximately $36 million in the quarter, $15 million came from our 2026 restructuring program and the balance from our legacy NIQ and [ GFK ] transformation initiatives and onetime deal-related costs. These legacy transformation programs continue to roll off as per plan.

As Jim mentioned, we've completed nearly all of our 2026 program actions in the first half. and we're tracking towards a $75 million cost to achieve target for 2026. These actions, which have less than 1-year payback, are setting us up for increased structural cost efficiency for years to come.

From a cash standpoint, we incurred $20 million cash outlay for this program in the first half. We expect the majority of the balance to be paid out in the second half of 2026. This program has less than a 1-year payback and we expect to continue to identify additional efficiency opportunities as we move forward.

Depreciation and amortization was $154 million for the quarter, approximately 14% of revenue, in line with prior quarters. If I look below the operating line, GAAP interest expense was $55 million, $40 million lower than the prior year, reflecting lower debt balances and our transformed post-IPO capital structure.

Changes in foreign currency resulted in a de minimis gain in Q2 compared to a $57 million gain in Q2 of 2025, a period that contains significant FX volatility. The lower gain primarily reflects less foreign currency impact on the remeasurement of foreign currency-denominated debt.

Income tax expense was $38 million or approximately 14% of adjusted EBITDA, roughly in line with expectations we provided. The net loss was $30.5 million, primarily reflecting lower FX gains versus Q2 of 2025. Adjusted net income improved by $80.3 million to positive $78.7 million, driven primarily by higher adjusted EBITDA and lower interest expense. Correspondingly, Q2 adjusted EPS came in very strong at $0.27, well ahead of our guidance and consensus.

If I turn to liquidity and free cash flow, as of June 30, we had $417 million in cash and cash equivalents and $747 million available revolver capacity resulting in total available liquidity of approximately $1.2 billion. We remain undrawn on this revolver during the quarter.

Cash flow from operating activities was $140.1 million versus a use of [ $8.6 million ] in Q2 2025. Capital expenditures were $66 million reflecting continued investment in strategic growth initiatives, such as building our AI capabilities, expanding our technology platform and growing our data assets such as our omnichannel consumer panels.

Leverage free cash flow was positive to $74.1 million in Q2, up $137.3 million on a year-over-year basis and $197.3 million versus Q1. This is driven by revenue growth and stronger flow-through, given prudent cost management; as well as improved working capital and lower cash interest expense. I'd also note that we saw a particular outperformance from net working capital execution versus what underpinned our Q2 guidance in May.

Our 2026 is the strong cash flow inflection we've previewed since our IPO. And and our raised full year 2026 free cash flow guidance implies approximately $300 million of leverage free cash flow generation in the second half alone. This factors into our strong Q2 outperformance from working capital execution and aligns with our broader guidance philosophy of providing expectations we believe we can achieve, if not outperform.

Net debt was $3.1 billion at quarter end, our net leverage ratio improved to approximately 3.1x, down from 3.4x at the end of Q1. We remain firmly on track to achieve our net leverage target by the end of 2026.

And a quick note on capital allocation. Our capital priorities of the business are unchanged: fund growth, expand margins and particularly pay down debt. We have successfully reinvested some of our cost program savings to fuel our AI growth strategy and we'll continue to pursue strategic tuck-in M&A where we see compelling returns.

As cash builds, we gain capital allocation flexibility. This is strengthening ahead of expectations in 2026 and and positions us well as we head into 2027. We will update you on our 2027 priorities as those plans firm up.

Now before getting into guidance details, a quick reminder about our guidance philosophy. The strong back half and higher full year 2026 outlook is grounded in our first half overperformance. If that momentum continues, we expect to finish at or modestly above the top of our ranges. And we've set that range at the level we believe is appropriate.

So for the third quarter, we expect reported revenue growth of approximately 4.9% to 5.3%, organic constant currency revenue growth of approximately 5.2% to 5.5%, adjusted EBITDA growth of 15% to 17%, driving margins of 23% to 23.5%; and adjusted EPS of $0.22 to $0.24.

Our raised full year 2026 expectations include reported revenue growth of 7.1% to 7.4%, organic constant currency revenue growth of 5.2% to 5.6%, adjusted EBITDA growth of 15% to 17%, driving margins of 23.5% to 23.9%; adjusted earnings per share of $1.08 to $1.12, a more than 13% increase at the midpoint; leveraged free cash flow of $245 million to $255 million, up approximately $8 million at the midpoint and we expect to be below 3x net leverage by year-end.

Our raised guidance reflects our business outperformance and favorable foreign currency from Q2 as well as our [ EMN ] acquisition. I'll also note that we hit the ground running, integrating [ EMN ] into our business and their solutions into our distribution channels.

Based on our reported results and our Q3 and full year guidance, our implied Q4 outlook reflects OCC growth in line with our Q3 expectations, EBITDA margin expansion on a year-over-year basis, implying approximately 370 basis points of improvement versus Q3 2026, reflecting our typical Q4 revenue and cost seasonality; and adjusted EPS nearly double our Q3 expectation.

I'll note that our full year 2026 modeling assumptions remain unchanged: Depreciation and amortization of $614 million to $619 million. GAAP net interest expense of $230 million to $235 million, income tax expense of $165 million to $170 million. diluted share count of approximately $300 million and CapEx of 6.5% to 7% of revenue.

In closing, it was a strong quarter. We're delivering on our promises. Our financials are strengthening. We're executing well on our core offerings, and we're building additional monetization opportunities on top.

With that, operator, we're ready for Q&A.

[Operator Instructions] Your first question comes from the line of Manav Patni with Barclays. Please go ahead.

I just wanted to ask about just the general trends in the quarter. If you look, I think the Intel subscription growth remain strong, [ virtual ] activation and I guess the transaction piece of Intel that release did well this quarter.

So just trying to appreciate how much of that pull forward you talked about last time or push forward rather in April? And how sustainable these kind of growth rates are in activation maybe for the second half of the year?

Sure. Sure, Manav. This is Jim here. We're going to -- we'll let Mike take that one right out of the gate.

Thanks, Manav. So we're excited about the growth that we saw in both intelligence and activation for the quarter. intelligence at 5.7% and activation at 6.1%, we're continuing to continue to see that momentum build.

In particular, when we look at our APAC business, we saw it improve to 1.9% here in Q2, and we expect that to continue to contribute overall growth, which will help both on intelligence and activation as that continues to grow overall.

As I highlighted, our e-commerce and [ CPS ] growth rates are very, very strong, call it, north of 30% in terms of the growth rates associated with those two areas in particular. And we should see those continue to move both our intelligence in particular and to some degree, activation. So we're very excited about it.

And as you know, 80% of that -- our business is 3- to 5-year contracts. We're continuing to grow that in terms of win backs in the marketplace, as we highlighted in the course of our prepared remarks. And so we're very excited about what we're seeing in the business. I appreciate the question that you've asked, and we continue to see real good results as it relates to both intelligence and activation.

Okay. Got it. And Jim, maybe just on Connect AI, just just help me visualize exactly what you're building for clients and perhaps how that gets monetized?

Sure. So I'll -- [ Humana ] I'll give you a little lead in. And we have Troy in here, our Chief Product Officer, I want to make sure you get to hear directly from him.

But what we started seeing really later last year and then as we came into this year, just being in conversations with our clients is they're trying to figure out how to accelerate their ability to innovate, of course, how to save money, how to do better price erosion, how to do everything better than they had before by using all the assets at their disposal.

And what they clearly understood as they need our information and our models inside their world. What we started finding out is they also needed our know-how and how to integrate information together. And they were finding this out because they were coming to us and saying, "Hey, the x integrator needs help."

And so these charter deals that you heard us announce are a lot about that. They are about new use cases, by the way, with new budgets inside our clients' world where we're helping them do the things that they normally do every day, just better, faster and cheaper.

So I'll turn it over to Troy to give you more color. I think this is a really important thing for us to spend time on.

Yes. So our Connect AI services are specifically for one of our segment -- AI segments. And that AI segment is our AI Builder segment that Jim just talked about. So these are a series of clients that want to bring insights and analytics into their environments and use that NIQ intelligence to amplify those workflows.

So like Jim mentioned, we announced our first charter clients last week, [ Grena ] was the first one that's named. But that group also includes a global personal hygiene company, a leading beauty company and 2 global beverage companies. We're going to be adding more charter clients through the end of this year, which will include retailers.

Each charter client ultimately gets dedicated engineers and data scientists that help make our intelligence work within their workflows. So what this means is they actually help write code and connect their environments to ours.

And Jim also mentioned in his remarks that our new products have permission service layers built in. This creates additional value and we are the decoding and the certified answer for things around our data and our intelligence.

And like it was already said, but already say it again, demand has come fast. 49 live opportunities in the pipeline many more active discussions are in process. And I think soon, you'll see retailers and other clients into the mix.

And then on top of that, we also have active discussions on several AI partnerships to scale this even further. One, leveraging for deployed engineers expertise to speed up our development for our solutions that we'll bring to market. And then we have multiple partners around Agentic commerce measurement and touchpoints, and that product will be launched later this year. More to come on that soon.

So the charter phase is all about proving the value and hardening a repeatable model. It's deep, it's sticky, and it's where we see the biggest middle to the long-term opportunity in our space.

Your next question comes from the line of Kevin McVay with UBS.

Congratulations on the results. I wonder, just given the trends in the organic constant currency growth, maybe just talk to activation because -- and [Audio Gap] because that looks really good. And on the intelligence side, too, even off a tougher comp, you saw a real nice reacceleration is really really important. So maybe you can just revisit that a little bit.

Kevin, you broke up just a tiny bit in there. I think your -- this is Jim, your question in essence, your question in essence is, tell me about intelligence and activation growth and how you feel about it? Is that...

That's exactly right. Really just and even off tougher comps, you saw a real nice reacceleration. So maybe just a little bit on that because it's really nice to see that.

All right. So appreciate it, Kevin. It's Mike. I mean when we look at intelligence, and I mentioned we saw the rebound associated with APAC at the 1.9% growth. And One of the things that we did, and we mentioned this a bit in Q1, was we improved our coverage. We signed up a couple more retailers that we specifically talked about in Q1, and we're starting to see that starting to pay off and see it in the growth that we're seeing in intelligence.

And we're continuing to win in the marketplace. Those are continuing to add. And as I had mentioned a little bit during my prepared remarks and to Manav's question, when you look at really what's been happening in e-com and our panel on demand has just been really been very attractive to the marketplace and have been growing at plus 30%. So all those are contributing to our intelligence growth, and we're continuing to see that happen.

On the activation side, people are very interested in our analytics solutions, in particular, And our AI base screener is just one example that's happening in our Basis portfolio as well. So as I said in my comments, both of those business lines are growing at greater than double digit overall. And so the demand has been very strong for activation.

So that's what we're seeing overall, Kevin, and we're very excited about what's happening in both of those areas. and as well as what Troy had mentioned previously.

And then just real quick, as you're facing in AI, any way to think about AI -- where it is from a geographical perspective in terms of just coverage and how we should think about that over the balance of the year?

So you're talking about like maybe whereas the most initial penetration, is that fair?

Yes. Yes, that's exactly right.

So yes, for sure, it's in the U.S., right, but not exclusively at all to the U.S. I think the bigger more look at our C360 conference, which is mostly a U.S.-based conference, the same both formally and informally in our little conversations as our clients help us move faster. We see what you can do. We, like what you're doing, which you told us on stage. How can you help me move faster internally to navigate what I've got to navigate to use these AI tools, not only on your data, but your data combined with our data?

So I think they're much more in [indiscernible] as Troy said, with the builder. They're our builders and they're in a position to move quickly. But the pipeline is there in Western Europe, for sure; in Asia, for sure; even EMEA because these tools work. And our data is primed to be able to be used to take advantage of it.

And so it's not just in our builder product, but it's also in our Optiq products within [ Discover ], and we're releasing some new capabilities yet this month that people are going to be able to take advantage of if they so choose, and we believe they will. So it's really broad-based.

The whole world is dealing with AI, as you know. But as far as the charter things that we've talked about, that's primarily U.S. But the pipeline has plenty of global opportunities as well.

Your next question comes from the line of Alexander Hess with JPMorgan.

Thank you, operator. I wanted to maybe just dive into something maybe to start with the call-outs that [ CBS], I understand it's the consumer panel business, and then e-com grew north of 30%.

As intelligence growing in the mid-single digits, does that imply you have products in sort of traditional measurement and in retail analytics that are maybe growing below that number or notably below that number? Or is that just not the right way to think about it? Just want to clarify how you guys bucket that call out specifically.

So the core business, what we call our RMS business, is primarily in intelligence. I think the number is the number there. And of course, [ CPS ] and e-com are portions that are growing faster. But as a percentage of the total revenue, they're much smaller, right? And so I wouldn't think of it that way, Alex. I would say that the number you're seeing stands on its own, and it reflects what I believe is a good, healthy reoccurring revenue stream.

And I'll just remind you that none of that number -- while there's a little AI-based revenue in that number, none of our guidance forward is really reflecting that yet. We're being cautious to see how fast the stuff is taking up. But that will just -- we consider that intelligence revenue, by the way, for the most part. That will just pick that number up.

Awesome. And then can you give us an update on a full view measurement, client count, any recent traction? Obviously, you guys put out some press releases about integrating some more Amazon 3P data in certain categories. But just anything on full view measurement in 2Q and your outlook for beyond Q2?

Yes. So we -- I don't have the exact number in front of me, but we know that it's more than 200 clients now have taken up the full view measure. And that strategy, which we've embarked on 5 years ago, is much more expansive than just Amazon sales and share or Costco or whatever.

And so strong -- it's the foundation of what we do, not only driving -- we're getting more adoption but it also helps us with our annual renewal cycle, and it's proving to be quite good.

I think the insight behind that question is we have our foot in that world, and it's important that we always have what we call the full view, so the most holistic view of this consumer shopping behavior. If we lose that, we lose what is the essence of who we are. That is what enables AI.

So we have our foot in the other world firmly now. I think trying to demonstrate that the full view plus these AI capabilities that are going to keep us super relevant to our clients and also allow us to grow. And our route of that is we're now in more -- even more use cases. I think there was a theory will be in last note, we're in more use cases and there are obvious use cases now. And we're also kind of getting access to more budgets within our clients. So we're not arguing over the same dollar. So I'd like to talk about both those things together now.

And we do have multiple product enhancements that are coming for full view measurement. You referenced 1 like -- there's many more coming in the back half of this year.

Your next question comes from the line of Kyle Peterson with Needham.

Great. Good afternoon and nice results. wanted to start off on the data consumption disclosure to get to plus 25% year-to-date, It's really good to see. I guess how can we think about this over the medium term? Is this something that drives higher consumption across the product base and then push revenue higher? Or is this like a more highly correlated things from the AI products? I'm just trying to, I guess, parse through the link between consumption and revenue over the medium term.

Sure, Kyle. First, thanks for noticing our results and a good question. So what it really does is, in my view, measure our relevance with our clients. And any notion that it's not relevant. I think it's just proven by that, they're only consuming more and more and more because the more granular the data, the more depth in the data or breadth, I should say, on the data, the better any tool is going to work.

And so they continue to use Discover and it's, let's say, the more traditional analytics, which are quite powerful. But they are also experimenting in some cases, are actually doing in some cases and using our data points inside their world, they're sophisticated enough to do that.

So I think it's an overall measure of how our relevance continues to grow within our clients. And I don't know if we measured that thing that far in the past, but I can tell you that, that number hasn't been that.

So I think it's just showing how in the double digits or kind of high double digits. I think you'll see that trend continue because it's like this insatiable demand for what we have. And as they're seeing their results get better, especially combined with some of their own assets only they have for themselves with our data at a granular level, they're seeing that they can make pretty profound changes either making themselves more cost efficient or innovating more quickly and driving the top line.

Great. That's very helpful. And then I guess maybe if we could switch gears over to kind of how some of your client conversations are evolving, are you guys seeing any change or growth in budget for demand-based solutions may be away from traditional marketing or kind of SKU-based placement?

Obviously, it seems like agentic commerce and data-based product development decisioning is definitely becoming increasingly prevalent. So I guess like how are you -- is that playing out at all in your kind of client discussions? And if so, how is that potentially translating into field conversion or total?

Yes. So yes, for sure. And I'll give [indiscernible] a chance to mention Irina that we just recently brought in he the word for Palantir doing a lot of the same things is going to work with us on. And that's a direct reaction/anticipation of the demand for what's now being called for deployed engineers, but engineers who are in our clients' world helping them use our core services in new ways integrated with theirs.

So that conversations [Audio Gap] are new, they're new budgets. I've been in many, but Troy has been even more than I have, maybe, Troy, you can elaborate on it.

Yes. So it is a different client base. So typically, it's not the market research teams that are using these types of resources. It definitely comes from the Chief Data Officers, Chief Technology Officers. And that's what these products -- this whole series of [indiscernible] services with the deployment plan around it is intended to go after.

Completely different, like I said, completely different budgets. They're enabling multiple different workflows throughout a client's organization, and that's the untapped demand that's been talked about a lot here today.

Your next question comes from the line of Andrew Nicholas with William Blair.

Good afternoon. I wanted to ask about AI as kind of a benefit to the data assets that you have specifically. I hear you on the productization piece, the efficiency piece and the insatiable demand from clients.

But is the product -- or I guess the data estate that you have being augmented by the technology, are you able to gather more informathion, more detailed, more attributes? I would imagine that would be beneficial long term as well and hoping you could speak to that specifically.

Yes. So you hit on one of the core key strategies here. So when you -- when we talk about these AI set of components, there's four buckets of product capability that we have beneath it.

One of them is all around, which you referenced the last second here, was a premium AI-ready data solutions. This is all about collecting data faster and coding and characterizing them faster, getting more breadth and depth.

And I think a couple of questions ago, we talked about a full view measurement, and that's how you expand out to even coding that was referenced and some of these other things. You can do it at faster scale and get more breadth of depth of characteristics and facts around the data sets we have. The more you get, the more AI tools can filter and do correlations and causations on consumer response and sales and all the things you would imagine.

The second tier is all of a series of services that use those data attributes to help harmonize and enrich data within their environments. So we combine those characteristics and further in [ RIPS ]. So that's the second part where AI comes into play because it can do it at faster scale, whether that's using web content or other sentiment data that exists, bring those in and can add it to the product.

And then the third, which we talked about, that we put it in our applications and solutions like Optiq, Bridge, Cadence, Connect AI services. And then lastly, it's the AI deployed engineers and data scientists that sit on top that we just mentioned in the last question.

So it's all four of those things coming together to create and optimize the workflow, and that's the end-to-end product design.

Very helpful. And then for my follow-up, a few -- well, a multipart question maybe on margins. I guess, first, Mike, is there anything you could say about what was realized in terms of synergies in the second quarter?

And then in EMEA, in particular, like a really, really nice step-up year-over-year. It looks like that margin profile is higher than than the other 2 segments. So if you could just speak to the strength there, the drivers and any reason for that to be structurally higher than U.S. or APAC long term [indiscernible] Americas or APAC long term?

Sure. So on the overall margins, up 270 basis points, the p[ 23.3% ] when you look at it, really restructuring actions, the flow-through that we had had on the NIQ transformation; in aggregate, those drove about half of the improvement in margins and the other half then has come from the revenue growth on our fixed cost base. Roughly 80% of our costs are fixed, and you're getting that margin flow-through to that [ 23.3% ] overall that we had for the quarter.

And embedded in that is EMEA or EMEA at that 550 basis points improvement. We've continued to manage our cost base effectively in that market, which has been a key view of us overall for the company, but specifically that being our largest business. And therefore, we've been very focused on managing that team has done a great job in terms of managing costs overall.

The other thing I'd say, there's a little bit of timing that's happened in our activation solutions there. just in terms of the costs associated with the variable costs associated with those projects, just a little bit of timing that's benefited us in Q2 overall.

So hopefully, that gives you some insight to it. But as you did see, we did raise our full year guidance on our margins as well.

Your next question comes from the line of Curtis Nagel with Bank of America.

Okay. Great. First kind of a more short-term question and then a longer one. First, just would you be able to clarify just how much of the cash restructuring costs you'll bear in 3Q and the free cash? And how to think about the flow from 3Q to 4Q? Just want to make sure we get the puts and takes there, right?

Yes. I mean if -- just if you look at the cash spend that happened, Curt, as it relates to the programs, it was $28 million in Q1 and $24 million in Q2. I would say that $50 million, the rough spend that you're looking out over the rest of the year, I think about 70% of that is probably going to land in Q3 in terms of thinking about the numbers.

Okay. Very good. And I guess just the next one, just thinking about -- I think you had mentioned a potential scope for more AI efficiencies in the cost base. I think just kind of think about long term, how much quicker does that potentially pull you to your above 30% EBITDA target margin range?

Yes. So this is Jim. I don't think we've put an exact time frame on the above 30, but we do have line of sight to it, and it's definitely driven by the continued understanding, practical understanding and use of AI, among other efficiency programs within our company, but AI is a big part of it.

And it makes sense for us as you can -- it's kind of logical. We do a lot of work with data. And the more we automate that, the cheaper it's going to get or the more we use AI, let's call it, to do things will be faster and cheaper. We write a lot of code. So the more we use AI, the more we're going to be able to write code faster.

And then we do have a people-heavy company where a lot of the things that we do can be made more efficient through the use of AI, whether it's customer success or even the administering of the sales process itself or HR and hiring. I can keep going on. It affects every part of our business.

And so we're in the very early innings of taking advantage of that. It's already shown up, as you've seen in some pretty juicy jumps in our EBITDA margins. So you can just say there's -- I don't think we've exhausted anywhere near our ability to generate more margin going forward? SP-24

Your next question comes from the line of Shlomo Rosenbaum with Stifel.

I want to focus a little bit more on the cash flow. Your cash flow clearly did well, actually crushed it. And for the rest of the year, you're talking about another $50 million of cash restructuring payments. In the second half, you're still generating $300 million of free cash flow.

If I'm thinking about the business in the longer term, how much -- can you quantify the total, what you would call onetime-ish cash payments that are going to be absorbed in the guided free cash flow that we should not see on a regular basis? So I mean, the $240 million, $255 million, is that with these restructuring payments, without the restructuring payments? And how should someone be thinking about the cash flow when I move into '27? Because pretty strong even with a bunch of these onetime-ish stuff.

So Shlomo, the numbers that we guided to for the full year include those payments in those numbers overall, which just to remind back $300 million over the second half of the year, we increased it as part of our improved guidance for the full year by roughly $8 million in terms of delivering it and does capture the spend associated with it.

Look, right now, we're continuing to drive our onetime items down. That's been our stated goal and consistently and going back to our overall capital allocation view, which is, first is make sure we're paying down our debt, and we're getting it below 3x, and that's from that cash. The NIQ GFK integration is really behind us. So that really winds itself down.

The 2026 program is efficient. And really kind of picking up on Jim's comments back, look, we're going to continue to look at efficiencies across the business with 1-year paybacks. I think it's just a prudent thing to do. So we're going to continue to evaluate those types of items.

So I think it's difficult to say with any certainty at this point. We'll talk about '27 when we firmed up those plans to it. But we're going to be smart about it, and we've had a people-intensive business, and we've got great people. But we may not need as many. And so as we have turnover, we may not be filling those spots in terms of thinking about it going forward. And so not all actions carry OTIs. And so that's what we'll continue to evaluate.

So I'm trying to give you as much color as I can, Shlomo, in terms of thinking about it. Hopefully, that's helpful.

Okay. And then just what I'm trying to bridge and think about the guidance versus the last quarter, on the revenue side just in general. How much of the guidance changes FX versus how much is the acquisition that you made? It looks like you raised it organic by 20 to 30 basis points. But beyond that, could you give us a little bit more color so we can kind of track FX changes?

So the FX impacts when you look at Q2, we're not that -- obviously, we're way down from where if you looked at it in the prior years. I mean Q2, Americas impact from FX was 3%. EMEA was 2%. APAC was basically flat. So there were pretty really minor FX impacts in Q2. And right now, based on -- when we're looking at the forward rates, we don't see a big FX impacts really through the rest of the year as opposed to Q2 of 2025 when it was -- FX was jumping around pretty good with some of the policies that were happening in the world. So that's what I'd say.

Your next question comes from the line of Jason Haas with Wells Fargo.

I'm curious if you could give us a sense for what percentage of your data is now available for MCP consumption -- and what does the pricing model look for that? Are you charging customers more for access to the data be in MGP? Is there a consumption-based pricing model there? Can you just unpack that a bit?

Yes. So we're -- this is Jim. We'll start with pricing. We're going to be experimenting with several different kinds of pricing models. Some are consumption-based, some are not. And I think as far as we'll probably take that one right now because we'll I'm sure we'll be explaining to that more and more as we learn.

But we know the demand is there, and that's part of these charters that we're doing. They're just the beginning of an engagement with these clients to see how much value we're creating inside their world, which we believe is going to be very meaningful and big TAM for us.

I don't know if you want to give more about the actual data that's touchable.

Yes. So our product for MCP consumption, that's Optiq, Bridge, that's the product that we announced at C360. It's being launched in full kind of product mode here at the very beginning of September with our official launch. We're in beta right now.

The data that's in there is primarily U.S. and beta mode. But we have releases scheduled throughout the rest of this year to get all of our retail measurement around the world and also our consumer panel data as access through that mechanism. So that's part of the product launch, like I said in early September. And then you'll continue to have releases every few weeks with the goal to get ultimately all of our data assets set up through the core platform but across IQ.

Okay. That's great to hear. And then as a follow-up, it sounded like you teased a product that's going to track genetic commerce measurement, I think, is what you referred to. Can you just explain what that is? I'm trying to envision when consumers shop agentically, how are you going to go about collecting that data?

So yes, we will. I think you guys know, agentic commerce is an emerging channel. We measure the market. So we will be having products that we'll be launching here that cover that channel as a -- like it is just another channel. Within that, though, we're also going to measure share of prompt, share of discovery will also have share of accuracy of those results, clicks and then ultimately, conversion. So that's the product that I guess I teased a little bit, more to come shortly.

Your final question comes from the line of Jeff Meuler with Baird.

Can you just go into more detail on the retailer monetization opportunity? My understanding is that historically, it's been more of a value exchange and you're getting data, so you're monetizing the retailer side of the equation less. But is that changing because there's an opportunity for you to provide significantly more value for them through the AI solutions and other things you've been doing as part of the transformation?

Yes. So the short answer is yes. And it's not just AI, it's the consumer panels, it's other data sets that we don't necessarily highlight in these calls. But as they're trying to build their own, let's say, right to win in agent commerce, they're seeing the value of having the kind of information we have about characteristics of products, understanding consumers better.

And these are the big players, where there has been more of an exchange, I think, is what you're calling it of trading barter or whatever you want to call it. But we also are seeing good engagement with midsized to smaller players, who are also going to be able to make use of our tools.

So I think our value with these clients is just increasing just like they are with the CPGs and the tech and durable guys based on the kind of data we have and now the more use cases that they can apply it to.

Agenetic commerce is still figuring itself out, but we're right in the middle of that, and we're kind of learning with them as we go. And our conversations now are much more strategic versus transactional. And then they're saying, "Wow, I didn't realize you could do this." And so that's driving more penetration in almost every retailer.

Got it. And then on the AI monetization strategy, I get that it's going to be evolving and you're going to be experimenting and you're focused on driving adoption. Is there some sort of like on these like early adopters. Is there some sort of like short-duration trial period where capped on volumes or there's some discounted pricing. And then at some point in '27, it flips to more normal monetization levels? Or how should we think about that?

Well, we're very concerned, I guess, or not the right the -- we're very interested or that's right where and ensuring that they do use the tools and they do see the power and the tools right away and not getting some cut up in some of the way the LLM are doing their thing, which are scaring folks and using too many tokens or whatever, right?

So our experimentation is that first saying, is it generating the value for them. And then we have various ways based on all the different kinds of work we do with them anyway on contract renegotiations or otherwise, or we can say, if you want to continue using these kind of tools, of course, there will be a compensation for us for you to use them.

And so that's the way you should think about the consumption base. And that comes really in two ways: One is using it online and transacting or having access to information through, let's call them, APIs, where they can get at our data, but then they pay for it for that particular use case for that particular point in time.

Thank you all for joining. It's been about a year now since our IPO. And certainly, the world has changed quite a bit. And I think we have anticipated some of it, reacted to some of it, but you're seeing it not only in our results financially, but in the way we're able to talk about our business with real-world examples of what we're doing, serve our clients in this world where we're providing both the full view and these AI capabilities to become even more relevant. So we look forward to the next call.

This concludes today's call. Thank you for attending. You may now disconnect.

All right. Thanks to everyone for joining. Appreciate it. My name is Andrew Nicholas, and I'm the business services analyst here at William Blair. Before getting started, I'm required to inform you that for a complete list of research disclosures and potential conflicts of interest, please visit our website at williamblair.com.

With that out of the way, very pleased to welcome NIQ to the 46th Annual William Blair Growth Stock Conference. NIQ is a global consumer intelligence company that synthesizes retail, e-com and consumer panel data to provide a comprehensive view of how consumers shop and what drives purchasing behavior. I have CFO, Mike Burwell, Chief Product Officer, Troy Treangen and here with us today. And we're going to just give you an overview of the business, walk through a few key topics and hopefully give you a better appreciation for the company.

So maybe I'll start with you, Mike, or maybe you could help me with that and provide a brief company overview and walk through the 2 main segments, the Intelligence and Activation segment, and what you're doing for customers there?

Yes. Glad to do it and glad to be here. Look, NIQ is a global system of record for consumer commerce. We deliver the full view of consumer shopping globally overall. We do that for 23,000 brands. We work with over 9,000 retailers. And look, our top 5 clients have been with us literally over 75 years. We cover $7.4 trillion of consumer spending around the world. We operate in 90-plus countries. And we have almost 5.5 million panelists that are giving information as to why they're making those decisions or purchase decisions. And we have 253 million items that we track.

I think interestingly enough, we're processing 4 trillion transactions a week in terms of consumer transactions, and that's up from 3.4 trillion a year ago. And our AI is helping us process that in a much more expeditious fashion each and every day.

When we break our business down really in 2 segments: our Intelligence segment, which is really a measurement-based solution as to what where, how much is really a recurring revenue stream. Think about it as 3- to 5-year contracts with annual escalators that are included into it. So that's 80% of our business. The other 20% we call Activation, analytics-based solutions that really feeds off that data to answer the questions as to what's -- why did you -- first is, what was purchased and then why did you purchase it? What else was in your basket? So you can help make different decisions and analytics associated with it.

So look, we're deeply embedded in clients' workflows. When you look at us from a NDR standpoint, we're 104%. But if you look at us from a GDR standpoint, we're 99%. We have very little client churn of our 23,000 clients. So we're very deeply embedded into our clients' workflows and decision processes.

Perfect. Troy, thank you for joining us today. Can you talk about the client value proposition, how you're evolving that, and maybe more simply, what makes your data mission-critical, important to clients and why you have 75-year plus client relationships all over the place?

So like we're 100% rooted in a trusted decision grade data set. If you think about the industries that we play in, you need detailed transaction information for a brand to actually work with a retailer to get it on shelf and actually get it in consumers' hands. So that's the key around the topic there. But then when you get into the actions, there's pricing, there's promotions, there's assortment, there's understanding incrementality of items if you have this item versus that item, all of those analytics are built on top of that trusted coordinated asset.

And then how things are evolving in the world of AI is important. The whole objective here is to -- everybody wants to use AI to do things faster and make decisions faster. And in order to do that, you need to have trusted data that is more granular than it ever has been because you don't want to make decisions on a price, what -- where -- which consumer you want to actually target, you need more granularity. That's how the businesses have -- that's how the world is evolving. And that's where we're putting our energy from just a broader value proposition kind of trend and action list.

We are doing many POCs right now with clients that actually tackle that in more granularity and detail. So that's ultimately the value prop.

And maybe just to give a little bit more context for the audience, like maybe walk through some examples of what the decisions that NIQ data is helping clients with? I mean, you mentioned promotions, pricing, but maybe some examples just to hit it home.

Yes. So you got to think of a manufacturer and a retail in a couple of different lenses. The first lens is they need the data to understand how they're performing and where they want to make their strategic investments? So that's the first bucket of items. It's kind of called internal operations. But more importantly is what I kind of referenced in the last answer, which is how do you actually make decisions with a retailer or where you want to target your advertising to know where consumer shopping behaviors are shifting. That's what's very, very important to kind of go do.

So you asked for a specific example, I'll give you one. More and more data -- or more and more shoppers are actually buying things on TikTok shop or there's an emerging trend of people doing discovery within ChatGPT or Claude or whatever to find which products they want to buy. In order to actually get that content and make the right recommendations, you need to have really good product reference data. You need to have availability of those products where they can pick those things up. Those are all parts of that algorithm to make sure when you get that answer, it's a realistic answer and an answer that you can action on to meet that expectation.

Very helpful. And so taking all this together, you come up with a business model. Can you walk through the revenue growth algorithm? Mike, I think there's multiple components of that, but I'll let you go through it.

Sure. So when I think about our overall revenue algorithm, we've been in mid-single digits for the last 9 quarters. When we look at it, it's roughly 2 to 3 points are coming from price. As I said, 80% of the business is subscription-based with annual escalators that are in there in terms of pricing that's negotiated not over the life of that contract, but each and every year. Another 2 to 3 points are really coming from cross-sell and upsell.

When we look at our innovative products that we have to be in place, those innovative products we're bringing them into our ecosystem and driving it. And then lastly is coming from new end products or end markets in terms of what it is that we're doing. So when we look at what we're doing in packaging, what we're doing in government, what we're doing in financial services, each of those are new end markets, and we're getting about 1 point there. So that's really the -- we're kind of looking at a 5% to 6% kind of revenue growth range, and that's really the driver of that algorithm.

And can you talk a little bit more about kind of product innovation within that growth algorithm? Or how important is that to sustaining growth? What are the areas of the business that are fastest growing now?

So e-commerce, we had acquired 8 companies in the e-commerce space. Our e-commerce, as we reported on our first quarter, our earnings was greater than 30% growth. We're also seeing panels and panels are growing greater than 15%. We're -- two areas that we've invested in, and we're continuing to see that. Troy is leading all the efforts that's going on in -- more and more in the AI world in terms of revenue. And I think that's really what we're seeing the next supercharge that's coming. We've launched our AI BASES Screener in the marketplace, which is really looking at synthetic consumers. I've got a new concept idea, we're working with over 70 clients and 2,300 concepts to bring that to life and evaluate that, where before it was taken months, now we're doing it in a matter of minutes. In fact, one of our clients has referenced that it's cut their cycle time in half to be able to evaluate new product concepts overall. So that's just the beginning in terms of where we are, our journey of innovative new products.

I think during the first quarter, on the call, you also highlighted some competitive win backs, which, at least during the IPO process, you kind of hadn't included in your expectations, so really good momentum there. Can you speak to what's driving that, what brings the customer back after having left maybe a couple of years ago?

I think it's -- they're continuing to see the value proposition that we're bringing to the marketplace. And based on our value prop, I look at Americas, which is we kind of split that market with our competitor, and our market in the United States grew 9.3%. I look at what's -- as I mentioned, e-com and panels growing at 30%-plus and 15%, respectively. And I would say in Europe, EMEA, overall, we have brought together both panel information as well as measurement information. We're the only ones have it. It sits in our product Discover and being able to evaluate it. And clients are saying, "I don't want to deal with 2 suppliers. What you're delivering to me, it really differentiates that decision process, and therefore, it's differentiated." And ultimately, we delivered 17 7-figure wins in the first quarter alone.

So I feel very good about the momentum that we're seeing overall. And as I say, with what Troy is building and leading, the AI world here is really only going to supercharge where we're going to go going forward.

That's a great segue. So it wouldn't be a conference Q&A in 2026 without some AI discussions. So Troy, maybe to level set, and we've written this several times. I mean a big part of the investor community is focused on how proprietary the data is, how the data is accumulated, how difficult it would be to replicate? So can you spend some time talking about how it's sourced, how it's differentiated, what's proprietary, what's analytics and maybe we'll go from there?

Yes. Look, -- so over 90% of our data is actually proprietary. And it's all built on 3 foundational layers. Number one, it's on governed retailer relationships. There's a trust factor in our industry, like there's over 160 retailers in the U.S. All those retailers share that data with us and expect us to treat it in a way where we protect certain aspects of that, right? So that governed relationship is very, very important. And I just talked about 1 market, think of doing that in 90 markets. So that's a lot.

The second thing is we have consumer panels that are all over the world, where you have a trusted relationship with the consumers that are actually keeping track of all the things that they buy with their receipts and all that, that we then collect on top of it. And that's the second part. And then the third part, which is kind of under -- it's not talked about as much because it's not a [indiscernible] is all of the glue and the decoders that make all that data talk together. We call that our product Content a lot of the times. So when we say that this sparkling water is in this category of water, like that all of that matching and mapping across all the difference retailers, all the consumer receipts that come in makes it so we can get a trend and data within that. So that's ultimately our moat in all the markets that we play. That's the core capability.

Now how do you actually activate that with AI is what's -- is the next phase. You either do core analytics to make -- to determine some of the things we've already talked about, which is what's the right price, what's the right place that you put this product? All of those things are analytics that help manufacturers and brands figure out what to do. The second layer is AI enablers, which is all about, like I mentioned already, speed to those decisions. how much faster can you make these decisions? And how often can you pick up what new trends are showing up in the marketplace to be able to react to those.

I was -- we were having a meeting just a little bit ago, and I gave the example that we're now actually monitoring trends, especially from the Asia part of the world. We actually just had a thought leadership study that came out about East Meets West, what beauty trends are happening in Asia, what other trends are happening in Korea? And can you adapt those and bring those products to the U.S. to capitalize on that same type of thing, which is a very common thing these days. So that's where AI helps understand the trend, but also then react to the trend and adjust it in our products so we can deliver faster insights.

Are there any kind of regulatory considerations to kind of keep in mind when it comes to managing data, selling this data that could be supplemental to the moat?

So I think there's nothing really regulatory that we have to worry about within our business. We do have certain things we obviously got to protect. And that -- when I'm saying protect, that's more of a relationship protection than a broader government kind of issue there. So it's actually a positive, I think, for us that we have this trust with these relationships, we can use that to our advantage.

Great. So maybe I'll ask Troy. Mike highlighted some of the product innovation that's already happened on the AI front, but maybe you could spend a little bit more time talking about product innovation tied to AI to date? It sounds like those are driving some competitive wins, some win backs, but maybe a little bit more on what products are out there that are new and maybe even what's in the pipeline?

Yes. So from -- we break up our products into 2 big buckets like we've already said. So we have our Activation set of products, which are AI native products like he already mentioned like AI Screener that was where you actually can go out and understand what innovation you can bring to market. You understand it from synthetic respondents, those are basically AI digital twins, and you can actually make innovation faster and bring it to market. He already gave some stats on that. So that's one example. We also got these things called product developers. They are different things. it's -- think of this space, it's all around how do you actually work with the manufacturer and how do they create innovation faster in the market, whether that's a new twist on flavor or whether that's a completely new item that you want to bring in the category. There's a series of products that we're launching, and we'll continue to build in that space, primarily on the things we talked about, which is how do you make decisions faster, how do you bring innovation faster, how do you get some insight that you need to need to uncover.

And the other thing to just say in that space that's very, very important, granularity is key to making those decisions. Think about [indiscernible] in your lives today everything is becoming very micro for a brand and a consumer of what they want to buy. 10 years ago or so, like a P&G or some company can mass market products. You just go out and say, I want to have just this one water. That's it. All consumers, that's what they want. I'm going to make it. That's not how it works anymore. Everything is getting micro targeted to specific demographics, specific areas of the country. Most retailers in the U.S. now allow a percentage of their store to be local assortment. So store managers now have the ability just to bring in their own products based on the demographic that sits around that store.

So all of those things, when you talk about bringing some like AI capabilities to determine those, that's Bucket 1. The other part, though, which is in our core business, which is on our measurement assets, which is, he already mentioned Discover, we actually have 3 different buckets of products that we're working on that spot. We are saying, how are we building better AI in our tools to deliver those insights? So we have this thing we call OPTIC. We have -- which is our AI chat interface. We had built that on top of our components so people can navigate our assets easier and faster. That's Bucket 1. We'll have some more announcements right around the corner about some innovations that we're launching. And the second bucket in that space is all around what we talk about delivering AI capabilities with our clients and in our clients' environments. So we work with them and have products where we allow a manufacturer, retailer partner of ours to actually connect their environment to our environment so they can activate those AI components faster.

So maybe they have an AI set of models or they have their own chat interface that they want to use, so we plug and connect those as another way to consume those assets. And then third is all around working with the leading, call it, LLM tools so you can actually connect to our assets within those. So next week, we've actually already launched it, so it's not anything super private, but we're going to highlight it next week in our conference. Like right within Claude, you can actually connect to our environment to actually use Claude capabilities to understand what's happening in NIQ trends, the data that we provide and do some level of analysis.

So the point I'm just trying to make there is, we have a 3-pronged approach, our tools, our clients' tools and then also leading market tools, all 3 of them we're innovating and building capabilities within.

And maybe this that final bucket is where you find agentic commerce. It seems like that's an area that you're really excited about. You guys spoke to it quite a bit on the last earnings call. Maybe you could flesh out that opportunity. Why is it important? Why do you see the market going that way? And why is NIQ?

So agentic commerce is just another channel that's evolving. So again, if you go back 50 years ago or 20 years ago, almost all the groceries and anything that you would buy was obviously through a brick-and-mortar store. That's obviously evolved to be more e-comm, which is a big general bucket, which says you go to a website or use something to go get that and get it delivered to you. But e-comm is evolving. If you go back to -- social commerce was an emerging trend within the last couple of years. That's the definition of like TikTok shop, right? So you're in a social media kind of base platform. It's got a store. You're doing live shopping or whatever the new trend is and then those are sold. That's just an evolution of kind of an e-com type thing.

Agentic commerce is that next evolution, which is on top of that, when I'm in an LLM and I'm just doing product discovery, and I want to buy it, that's just another channel to us. So when we talk about agentic commerce is our whole value proposition as a company is to measure where people are buying things and informing with our partners what's happening and what decisions to make like we've kind of talked about. That channel is shifting. So we will innovate and create products in that space. So that's the first part.

The second thing that's really important in agentic commerce is it changes the way -- the data -- the granularity of data that's needed to transact in that environment is way more granular than all the other channels have been. Because if you think about what you do is you go in there and say, I want to go buy, we use this example, a high-protein granola bar. It's easy. Usually a product says those things, right? So you could filter out, you can do a web search that's already collected through various pages. I know it. They say high protein on the package, so you can kind of filter it.

But the next set of questions that people usually ask these days are not specific about how many calories is in this. They want something that is derived, which is what we call derived on top of it. So I want something that's heart healthy. I want something that's a clean label. I want something like that. That question is not an easy question to answer. You have to understand what are all the ingredients of this product, what other trends are in the marketplace that you got to connect that data with. Then in order to filter that question to what you're actually asking for, you need a new set of data capabilities to be able to do that.

Now in the old world, again, you would make that conclusion and just do it on your own. You would say, what is clean label, you do the research. The LLMs are allowing to interpret that and do that for you, which, again, it needs those assets to do it. So that granularity is very, very important.

So when we think about agentic commerce from a product standpoint, we have 4 buckets that we're going after. There is the discovery part. So as you as -- I'm sure -- there was just a recent study that we put out. Over 50% of shoppers are already using an LLM to do product discovery. I mean that's a pretty big number already how quick this has been. But it's like how do you actually report on that? What's the share of discovery? How many people went out and searched for the sparkling water last week within the various LLMs? So that's product development Number 1 is share of discovery, share of components. Then there's a quality metrics in there. When the results that they got back, did they actually meet that requirement and expectation of what they were asking for?

So going back to my clean label example, if they ask for products with a clean label, did -- what come back, whether they're they actually clean labels, was it a good or a positive or negative? So that's Bucket 2. Bucket 3 is where did they leave from that LLM? Did they actually go to a website to buy it? Or did they just drop and then they may be bought it in a store. That's still some path to purchase stuff to figure out, but that's Bucket 3 of product innovation. And then Bucket 4, which is what we've always done, which is the measurement of that channel. And the measurement of that channel is important because when I was talking earlier about it's just a new channel that's emerging, people want to understand where that volume is shifting from.

You, as a consumer, are not going to buy everything on an agentic commerce incremental, right? It's like, yes, I used to buy 100 units of this water at Costco or pick a store, now I'm not. I'm only buying 80 units from Costco, but I'm now buying 20 through an LLM based service [indiscernible] do it, right? There's a shift that happens. There will be some incrementality, don't get me wrong, but it's not 100%.

So you got to understand that in there. So long answer, but the big 4 points are the whole thing about measuring discovery on what's happening, but also the quality of it, where they're going from that discovery, so where did they actually go click, and then fourth is you got to measure the sales, do they actually get that conversion. All those things are very, very important for a brand or a retailer to understand, to actually know how to talk to the right consumers, market to them in the right way and all that. And that's -- at a high level, that's what our business is. It's just this emerging channel is just changing dynamics a little bit.

And there's a lot of different ways for people to interact with the data. Customers are now interacting in a bunch of different ways, whether it's in your tools, in their own environments. We're talking about all that. So like at a bigger picture level, how do you see kind of data usage evolving? And does that impact the way that you price for that or the pricing models...

Yes. I mean the commercial model is starting to shift, right? It's not just us doing that. The industry is shifting, which is we call it a hybrid model, which is there's a base set of fees that to get going, and then there's consumption-based models on top of it, exact same way that you would buy Claude license today, right? You have a certain number that you have and then you get a certain amount of consumption. And when you run out of those credits or tokens, you got to buy more. Same type of way that our business will evolve and has already started to evolve. So that's kind of the trend on the commercial side of things or the commercialization and the pricing side.

But the second part of that question really is around how are we ensuring that -- demand is increasing with the data asset, right? We already talked about that in the data usage overall. But we're not going to be requiring people to always use our tools to go do that. We allow, like I said earlier, all 3 different options. So however you want to consume it, we are completely happy. We'll fit into your supply chains. We'll do our own. We'll work with partners, and like I said, the Claudes and all those things out there to do it. And then our monetization will be consistent, and we can pick up transactions and revenue from all 3 of those buckets.

Great. Thank you. We have about 5 minutes or so. I want to make sure we hit margins because that's a huge part of the story, I think. So Mike, can you talk about -- I mean, there's been quite a bit of progress on the margin front over the past several years or since the carve-out. Can you kind of just talk about that and the runway?

Sure. So at the time of the carve-out, this was March 2021, the margins in this business were looking roughly around 13%. We reported at the end of the first quarter at 21%, which is a 150-basis-point improvement through the fourth quarter of last year. We've given guidance that our margins will be 23.5% to 23.8% by the end of this year and that our midterm guidance will be at 25%. And we see a path to ultimately 30% margins in the business. What's happened in the first quarter has really been the GfK integration that we've had going on as well as our productivity actions that we've done, and that drove about 100 basis points of margin improvement. And with our fixed cost base, at 80% fixed cost base and the 9 quarters of mid-single-digit revenue growth, we're driving roughly about 50 basis points of margin improvement overall.

So we continue to see very good opportunities within margin, and we've only gotten started really on the AI side. We are coding more and more being done through AI. As I look at our back office actions and opportunities, they're real, and we're going to continue to see more drive as it relates to margins going forward.

Great. How about capital allocation? I think it would be helpful for a newly public company to kind of just walk through your framework there, how it's evolved since going public, where you sit in terms of the balance sheet and how you expect to use cash going forward?

Sure. So we were -- we had put at the IPO date that we would get our leverage down to 3.5 by the end of 2025. We were at 3.4 in terms of where we ended the end of 2025. We put the target to be below 3 by the end of this year. We're on track to get there. That's Number 1 on our mindset. Our TTM was $130 million positive through Q1. Q1 is a low point for us. We pay bonuses. More of our IT payments and more of our data costs are actually happened in the first quarter and then the cash flow ramps up through the rest of the year.

When we look at share buybacks, we only have about 15% float in the business right now. So the opportunity to do share buybacks, we just don't see it as a great opportunity. We put things in place to be able to do that at some point, but we're just not executing on it until we get our debt paid down.

In terms of acquisitions, we will continue to look at deals that make sense. We did 2 deals last year, Gastrograph and M-Trix. One was an ingredients business and the other one was really a supply chain business. Think about them in the $25 million to $50 million kind of range and equally in that kind of revenue range. But when you bring them into our distribution channel, they're accretive really fast.

So we don't see a big transformational deals. We see -- we don't see that we have a product gap. We don't see we got a geographic gap, but we see these opportunities that are really going to accelerate our business, and those things are in place.

So if I kind of recap back -- going back saying, debt paydown is Number 1 focus right now. We're going to continue to look at acquisitions that make sense in terms of what's happening. We'll always keep opportunities open to think about when would we do a share buyback? When might we think about dividends? Those things are on the table for, us. But right now, Number 1 is focused on getting that debt paid down.

Great. Maybe 1 more I'll squeeze in just on kind of guidance and guidance philosophy. As a public company, to this point, you've been very successful in outperforming your expectation, Street consensus. Can you speak to that philosophy? What you're going to have out there in your guidance now? And maybe upside or downside to what you have out there for the full year?

Yes. So both Jim and I, and this isn't our first rodeo in terms of being senior executives at a public company. So our philosophy is to make sure we put expectations out there that we can meet or exceed and make sure we're consistent about that, and we think that's the right way to set it up. Having said that, we don't want to be overly cautious either. So we're trying to make sure we set that bar at the right level. So for the last 4 quarters, we've met our -- the objectives that we've put out there, we've done that. Going forward, when we looked at the first quarter, for ourselves, we had a couple of wars going on. We're looking at our competitors that were almost a lot of them were a beat and hold, if you will, in terms of thinking about it.

And so we evaluated that ourselves and said, that's probably where we need to be at this point in time. But we're not giving up in terms of what the year is going to look like. I said on the first quarter earnings call, April look very good, better than what we saw in the first quarter. So we'll reflect our guidance going forward based on what we see happening overall. And we know it's important to be able to make sure we give the right guidance as we think about our future.

Perfect. With that, we'll wrap it up. Thank you to both of you for being here and engaging with me. Thanks to everyone in the audience. We're going to be moving to Richardson for the breakout for anyone who's interested. Thank you.

Get going. I'm Jeff Meuler, Baird's information solutions analyst. Pleased to introduce NIQ or Nielsen IQ, which is a leading consumer spending intelligence company with a 360-degree view of the global consumer. The company provides must-have data and solutions for consumer products companies and retailers globally with a subscription-centric revenue model. It's a transformation story under current management with significant proof points, and we think a lot of runway to get into it. I have Mike Burwell, the company's CFO, on stage with me. Mike, thanks for being here. To start, for those that aren't familiar with NIQ, just help us understand, and I think this kind of goes a long way to AI defensibility and opportunity, but help us understand your information stories and resources and why AI isn't a risk to you as the market appears to be pricing in?

Thanks, Jeff, and thanks for having me here. Look, when I think about us, we are a mission-critical system for the largest consumer brands and retailers overall. We are deeply embedded in our clients' decision processes. Frankly, and many of them would tell you that they can't operate without us. We're very sticky for our 23,000 clients. And when I say sticky, I think about our NDR is 104%, and it's been in that 104%, 105% range, and our GDR is at 99% and so there's not a lot of customer churn that's in place that is evidence of that. Clients are increasingly engaging us in terms of how critical we are to their infrastructure and our information.

So I guess maybe to cut to the chase, when I look at our data moat, I think about us is scale. We're operating in 90 countries. We have 4 trillion transactions, data transactions we process a week and 253 million product solutions that we have. E-comm in terms of that we're having overall 9,000 retailers, 5.5 million panelists, and our data is such that you can make decisions based on it. We cannot have hallucinations associated with our data. People are making multimillion-dollar decisions. We're in their workflows every single day. So that's our company.

All right. And as we think about -- I think you also -- like some of the data you're aggregating on your own, some of it you're getting through like auditors in emerging markets. You also get information from retailers. So what is the monetization with -- or what is the relationship with retailers in terms of like what are you providing them? Or how are you getting the data from them? And then who else has access to that in terms of your primary competitors? And how do you differentiate from them?

Yes. So think about in the retail world, as I said, 9,000 retailers we're getting data from 90% of our data is proprietary. And as you pointed out, Jeff, I mean, we have -- we're counting -- we're going out in bodegas in India and saying, here's beginning inventory, here's ending inventory, give me your purchases and we're back getting into sales. And we're doing that in 90 countries around the world. So that data is very proprietary in terms of being able to do that. With our retailers, they're our clients and customers, but we also trade and barter with them. So that is that they're providing information to us, and we're ultimately providing them back information on their operations and their stores and are very key customers, particularly in the activation world. So look, it's a dual-sided relationship. It's a structural advantage from my standpoint, and it drives a business flywheel when I think about it overall.

So there may be some investors in here that have a prior perception of the company from when it was owned by Nielsen Holdings. At that time, revenue had contracted 3 of the final 4 years of ownership. Within about a year of the change in control, NIQ revenue is growing 3% organically. It's grown 6% organically each of the last couple of years, and you've been expanding EBITDA margins. So a lot of improvement. Just what were the most important operating changes or other changes at the company to kind of drive the beginning of that transformation?

So one is that we spent about $1 billion putting in place a modern commerce intelligence and when I say that about half of that was technology behind us, done, rolled out 23,000 clients. It's happened. Second is that we acquired 8 businesses in the e-commerce space, which was a gap that we really needed to fill overall. So that really kind of accumulated that $1 billion. Second was we needed to improve the products that we had overall. We had done the GfK acquisition. So it really added tech and durables where we have been doing fast-moving consumer goods, tech and durables, batteries, tires, et cetera. GfK was the gold standard in that space, in our opinion. And now we put it under our hood in terms of thinking about it.

I would say the management group. Jim Peck had assembled a group of people that he had worked with at TransUnion before. He brought in a few newbies like me as part of the team, but a lot of people that he had worked with before, and I wouldn't consider myself a newbie at this point, having been working with him for almost 4 years. And I would also say that our operating efficiency is a key ingredient in terms of margin improvement. The margins have gone from 13% to 21% in terms of this last quarter. We see further opportunity to get to 25% in the midterm and 30% beyond that. So we continue to see margin growth in this business overall.

And what did you change in terms of consumer panel because I think that you're pretty unique relative to some others, not only on your geographic coverage and having global, but you're also unique on having bringing consumer panel into the mix as a complement to the product information that you get from retailers.

Yes. So we're not a point solution. When we looked at it, we have panelists that tell us what was purchased. And well, measurement is telling us what was purchased, panelists are telling why it was purchased and what else is in the basket. And so we have 5.5 million panelists and in particular, that solution, we're the only ones that have that baked into our Discover platform, that software to be able to tell you what was purchased and why it was purchased, so that you can make decisions, action points to improve your operations whether it's price, promotion, supply chain, et cetera, that we're providing you that insight.

So you've generally been delivering on results, but your stock traded off last quarter in reaction to what I'll call a beat and hold quarter. I think it's because Intelligence revenue growth decelerated. So what drove the deceleration? And just anything else that you've been picking up on as you've had additional conversations with investors post the quarter where maybe there's some misunderstanding.

Yes. Well, look, we talked about contract renewals that timed up between Q1 and Q2. Q4, there is a little bit of a ad hoc revenue that sits in our intelligence overall revenue stream that I look at as very normalized in terms of where we sit for our Q1. What we did see is a bit of slowness in our APAC business and why? What we had focused on is that our coverage had dropped a little bit in APAC. We'd signed up 2 grocery retailers in Asia Pacific. So you're going to see that improve, and it's already improved in April in terms of offsetting that. Second is that we signed an arrangement with INTAGE in Japan that allows us to deal with Japanese clients, both outbound and inbound clients, and we really see that as a further revenue stream. So really the drop on that was really being driven by APAC, Jeff. And I think you're going to see that all the things and actions that we put in place, you're going to see that trend differently through the rest of the year.

And what specifically is the contract renewal timing factor? Were there some like clients that were on hiatus for a period of time and they took a big step down in revenue? Or is this more about like the timing of onboarding upselling revenue? Just what's the timing factor?

So we weren't going to give in just to -- on pricing because we believe our product is valuable, and there are certain clients, they want to be a bit more difficult in terms of that timing. So it just fell -- it flipped into April as opposed to have to have it done by March. And so we were just holding strong in terms of our view as to our value proposition and the pricing.

Okay. So when you noted on the call or I guess, in the press release that growth accelerated in April, that's the big factor that drove that acceleration, and you've already kind of seen those contract renewals come through?

Absolutely the case.

Okay. And then on APAC, that's about a data expansion that you then later monetize? Or I guess, how quickly can the data expansion partnerships improve monetization?

So it takes a couple of quarters because you're -- those contracts are in place. But in the analytics side of the equation, now you're able to provide additional insight and information to that revenue stream. So we were minus 3.5% for APAC in the first quarter. It's already positive in April, and we'll continue to see it move in a positive direction through the rest of the year.

And what's your views on current market conditions in your end markets? And how impactful is that even to you? Obviously, there were concerns going into March on consumer health and geopolitical, EMEA is your largest geographic reporting segment. So what's your view on the end market health? And to what degree does that even matter for your growth?

Yes, it's a great question. When we look at the end markets themselves, yes, there has been challenges with some of those end markets. But what we've seen in our business is that, that only intensifies the need for data. And so what we have not seen really any impact to it. When you look at the value proposition of us being to a very small percentage of their spend to the value equation that the end market is getting from us and as they're seeing the market change, they really just want to know our analytics. They want to know our insights. And so we're not seeing any change in demand despite the changes in the end markets.

Okay. So we talked a bit about the intelligence revenue. The other bucket of revenue is activation. I think some investors kind of think about intelligence as being more subscription-centric and they think about activation as being more variable, what are the big product offerings in activation and how variable is it year-to-year?

Yes. So the activation revenue itself, just to maybe demystify it a bit in that is that 80% of it is what I call reoccurring. And when I say reoccurring, why is that, that's revenue streams or clients that we're doing business with every single year, buying similar products in similar countries 3 years in a row. So that's why I look at that 80%. Now they are contracting that in 1-year increments, but that's what we see happening. The product offerings in activation generally fall into 3 particular buckets. One is our analytics business and analytics has another component called retail analytics, but I'll just call it analytics overall.

And that analytics is insight. So you want real-time data to make decisions and insights in terms of what's happening. And that business has been growing very, very well for us. In particular, we just signed an arrangement we had announced with Wakefern for additional analytics and that particular space have been very, very positive. Second is AI, well, BASES and BASES is a well-known brand in terms of innovation and innovative products. But where I was going with it is that we've launched AI BASES screener, where we've loaded up consumer data and in that consumer data that we've had for years and years, you're now able to look at synthetic consumers and be able to launch and think about innovative new products.

So we've done that with over 70 clients so far in terms of AI BASES screener. They've evaluated over 2,300 concepts in the marketplace. And in fact, Reckitt has said that it's reduced their cycle time by 65% in terms of being able to take a concept and bring it to market. So we're seeing great traction happening in that. And last is our consumer market insights, which is really looking at brand trackers, brand analysis that we're able to do overall. So those are the really the components of activation. One last thing I would say, Jeff, when you think about our activation revenue itself, 78% of that activation revenue is coming from intelligence clients. But of the intelligence clients, only 40% are selling into activation clients. So there's another 60% of opportunity that's there. So cross-sell, upsell is a very important opportunity that we still see in our Activation business overall.

And to what extent does activation solutions kind of leverage the core data assets and therefore, you're really the only one or maybe one of your few competitors can provide a similar solution versus something that like a broader consultancy or something could provide?

Yes, we're the only ones. So when you look at that data, that's what it's really relied on. Again, coming back to that 90% proprietary data. The clients want to know on a real-time basis, I'll use an example. So a particular client had some changes happen in Mexico, given some of the challenges that were happening politically. And they needed to jump on it immediately in terms of looking at analytics information. We were able to do that very quickly, given our insights, analysis, et cetera, and it was all based on that proprietary information in terms of how should they change their price promotion and manage their market share changes that they saw, which were double-digit declines in a very quick period of time, and they were able to stem that through the use of our data.

And just a broader competitive question we get asked from some investors about Circana is a name that they may know just who else do you see? And I guess, where do you see Circana, like which parts of your market do you see them in? And where do you not see them?

Yes. So we're the only ones that are operating in 90 countries. So again, I haven't done a latest analysis in the last week on Circana. But last time I looked, they were operating in 23 countries, and they were only doing panel information in the U.S. principally. So when you look at us, we're the only ones that have the e-comm data. We're the only ones that have the measurement data. We're only the ones that bring panel data together. Kantar, our numerator are using panel information, but they have no measurement situation. So from our standpoint, we're the only ones operating in 90 countries. We're the only ones that bring both panel measurement data together and ultimately bring it into our solution to Discover.

And I guess the other point to me would be EMEA and Americas have been some of your fastest growth geographies the last few years. And to the extent to which you have more direct competition, those are the markets that they would.

And I appreciate you bringing that up, Jeff. In fact, we were 9.3% revenue growth in the Americas and a little over 4% in EMEA.

So help us understand where NIQ is harnessing AI today and talk through what your prior tech transformation was? And to what extent is it an AI enabler?

Yes. So what we -- our prior -- let me start with the second question first. The prior technology that we put in place was Discover. Discover then allowed our clients to be able to look at their information real time with a different UX and UI interface than they had previously. Before, it was a lot of spreadsheets, a lot of connect information, et cetera, but it wasn't really easily accessible and not very easy to analyze where it really simplified all that. And our competitor had a product in the marketplace called Liquid Data. From our perspective, it was a very good product, but we wanted to take it to another level. And I think we did that. Always technology can be a bit of an arms race, but in our mind, we've moved ahead, at least in our opinion, to it. But we've added -- to your first question back to AI, we talked about AI BASES screener, but what we've added to the platform today is AI analysts.

So we have 40 personas associated with AI analysts. And with those personas, there's roughly a little around 227 questions that are normally asked because we sit at our clients. We understand what those key questions are. And then we can't be wrong. We can't have hallucinations. How could we analyze that better? And these different personas or these 40 personas, we know the right questions and we can then respond to particular clients' needs or asks. And the other one then is chat. So with chat, you want to be able to have natural language questioning and query of the data and that's -- you're able to do that real time to be in place. So those are the things that we've enhanced as it relates to the platform and where it sits today. Again, I think we took it a long ways to where it is, and we're going to continue to look at it. But I would say 70% of our CapEx today is focused on growth, of which the platform is part of that and 30% is keep the lights on or kind of consistent stuff.

And how do you monetize those enhancements? Are they like discrete premium upsells? Is it value realization through the core subscription? Just how does AI monetization work?

So the AI monetization today is just -- it's negotiations in terms of where we are. We're looking at 5 proof of concepts that we have in place that we're working on that we'll continue to discuss at our next earnings call how well we're doing on that. But we look at those as real game changers in terms of where the conversations are going with our clients. We've bifurcated our clients into 3 buckets. We call them AI builders, AI buyers, AI beginners. The AI builders, we're working with them on infrastructure connections. We are not just data feeds. We're giving them solutions. Our data is proprietary. So we're not just giving that to like an LLM in terms of thinking about it, but we're working with what that's going to look like in the future. And it's very clear to me we're having different conversations with the AI buyers, different buying groups, CTOs, et cetera, as opposed to just brand managers and CMOs in terms of how valuable our data is and how important it is in the decision criteria going forward. So that's the things that I'm seeing happen.

You've also been talking about, hey, the world may be moving towards agentic commerce. What's the opportunity for you there?

Yes, we see it as a pretty exciting opportunity. Agentic Commerce, we announced NIQ Commerce Lab in a press release that we had done here in the last 6 weeks. What that is, is setting up the data sets such that agentic commerce can use it. We're the only ones that know if indeed your son has a peanut allergy and you want to buy a protein bar, we understand all the ingredients that are in that product. We understand the supply chain in terms of where that product is. So you're going to click on it and say that's what I'm interested in. That's what I want to buy. And ultimately, that's going to be a fee for us as part of that click fee. And today, that's not in any of our numbers and any of our revenue streams, and we only see it as upside as we are just starting on that journey.

Okay. And if there's any audience questions, you can either raise your hand or you can e-mail them into [email protected]. Let's do the productivity side from AI. You have a lot of people. Some of this is because of emerging market data aggregation, but you also do a lot of data aggregation. Some of it's like a web scrape to complement some of your really proprietary data sets. Just what are the opportunities, either in data aggregation or more broadly for the business from AI driving productivity or efficiency?

Yes. So on the data side, if I just look at last year, if we were sitting here, we were processing 3.4 trillion transactions a week. Today, we're processing 4 trillion transactions a week. That is being done and coded by AI. We have not added headcount to do that additional coding. So it's -- that's driving additional productivity for us. As many companies in our back office, we're continuing to go after it. I think about it in my world in the finance world. Our contracts are fairly complex. We have MSAs and LSAs in those contracts. I had people pulling out, this is what needs to be built. This is the detailed components, et cetera.

With AI, I can put it and drop it almost in Excel, it looks like an Excel spreadsheet. I'm able to then summarize that very quickly. I've taken 20 people out of our organization just as a small example in terms of productivity. So I see further build in terms of productivity. We've said on a margin standpoint, we would be to 25% in the midterm. We've guided to 23.8% at the high end of our range for this current year. And AI is going to be a big contributor as we ultimately see us on a path to 30% margins. And we're continuing to work on what all those building blocks are to get there.

And what are the other outsized margin drivers that are still left to tap? I feel like you've made a lot of margin progress. You've generally been raising your margin targets since the IPO less than a year ago. I think there's still some transformation happening. There's an expense takeout program. I think there's still some synergies from a deal. So just help us with the other building blocks because the margin story could be differentiated in terms of order of magnitude of expansion relative to most information solutions companies in public markets the next few years.

Yes. So we have 38,000 people in our company today. We don't think that, that's the right number going forward. So that's going to be one of the biggest pieces of it. We'll be continuing to manage our attrition and continue to look at productivity. The GfK integration will be the last year this year, a little bit -- just a little bit in the beginning of next year, which has been driving the margin improvement. But at mid-single-digit revenue growth and 80% fixed cost base, you're driving 50 basis points of margin improvement every single year to be in place. So the combination of AI and our revenue growth with our fixed cost base will continue to drive those margin improvements. And we'll continue to give guidance to you and others, Jeff, going forward in terms of what that looks like.

So you provide some solutions for retailers, some of that's monetization, some of that's bartering for data. You predominantly monetize consumer products companies, but you have really rich view of the consumer that I think would be of interest to a lot of other user types. Just which of those have you started to see -- or well, collectively, like which other payers are meaningful to you or which payer types are you seeing the most meaningful growth in lately?

Yes. I mean we're seeing new end markets. So we're seeing financial services is continue to be a very rich, target-rich environment for us. Packaging, you may say, what about packaging, but every -- a lot of things are put into packaging. It's not much of the incremental expense for us, and we're able to enlight people in terms of thinking about those things. Frankly, some of the governments we've been selling to have been out there in terms of thinking about it. But I would really come back to this a genic AI is a really big opportunity for us, and we're very focused on it and the conversations that are happening there. I mean the data itself, we think has many, many use cases, but those are probably the biggest ones.

How far out does it feel -- I know this is a guess, but where you're going to be able to more discretely talk about AI impacts on consolidated revenue from AI-ready data that's selling at a premium or AI native products or I don't know what the right metric is going to be, but is that like a year out? Is...

We'll start talking about it at our next earnings call. and then we'll continue to build on that going forward. It's -- I mean, we've taken people out of their -- it's not a side-of-the-desk project inside our company. We're very focused on it. We've taken some of our best talent to focus on it. These 5 proofs of concepts that we have are live and active today. Jim and I are very focused on delivering that and delivering what we consider to be, I'll call them pilots and being able to extrapolate from those pilots going forward and giving our investors insight in terms of where we're going and what's happening.

And just what can you say about who your customer base is and which are the customers that are customer types or any sort of qualitative commentary on who you're starting to do some of the most innovative proofs of concepts with?

Yes. I would say the most innovative right now is, like I said, I kind of bifurcated our 23,000 clients into these buckets, AI builders, buyers and beginners. And the builders are really the more sophisticated clients. Think about them as Fortune 500 companies that are -- have their own data lakes and their own views. This is not about just hooking up a hose and a data feed. We're giving them real insights and decision criteria to be in place. And so that's what we're going to -- we're continuing to work with them on in terms of what that's going to mean going forward. So it is how do we connect our infrastructure, how is it that we give them those insights, how do we monetize this in the right way? No one always wants to pay you more. But nonetheless, that's the negotiation that's happening, and that's based on the value proposition.

And your customer base includes like the world's largest consumer products companies and some of them have been with you for like a century.

100 years, since the beginning.

And your client concentration, I think, would imply that you have a customer that does like $100 million of business with you per year.

But have no one customer more than 5%. Yes, no one actually more than 3%.

Talk us through free cash flow. It's been a good margin story. You went through a CapEx cycle related to the tech transformation that you're now on the other side of. So it should become a really good free cash flow story. Just talk us through that in the next couple of years and what it could look like.

Yes. So in 2025, we delivered a small amount of free cash flow, call it, less than $50 million. This year, we've guided to $235 million to $250 million of free cash flow. On a TTM basis, we're $130 million through the first quarter. First quarter is our low point. We pay bonuses. We pay more of our IT payments, and we pay some of our of our data costs in the first quarter. That's the low point, and it's just going to build out through the rest of the year. And then as you look into '27, you're going to only see -- continue to see it accelerate by margin improvement, by our overall reduction in onetime items that we've continued to have and to continue to see a real inflection point in terms of free cash flow. And we said we would have our leverage down below 3 by the end of 2026.

The company has acquired or done several acquisitions since the change in control, and it seems like those acquisitions have gone well. What's the current landscape? Are there any holes left to plug or what's the M&A strategy?

Yes. So we have no -- and we're in 90 countries. We have no geographic gaps. We have no data gaps with the e-comm acquisitions that we had done, the deals that we had done. But we did do a deal last year, M-Trix. M-Trix really is a supply chain business in Latin America, and we also did an ingredients business that we acquired. In all cases, we look at these and bring them into our distribution channel that they should be accretive within a year. These are not big, big giant deals. We don't see a big transformation deal on the horizon for us, but we continue to see these types of deals that we can bring into our distribution network, make sure they're accretive literally within the first year and continue to drive incremental revenue and profitability for the company.

Okay. So I think it's a good margin and free cash flow story. Revenue growth, you've brought it up a lot. I think to a lot of people, 5% to 6% revenue growth is solid for a subscription business where you're an industry standard. But some people look for a little bit more as we financial analysts always do. What do you view as kind of the few biggest potential factors that could accelerate your growth in the next few years?

Yes. I think pricing has continued opportunity for us overall in the business, just based on the value proposition that we continue to deliver to the marketplace. I think what we're seeing in e-comm, e-comm growth continues to be very, very strong. I think we still have untapped possibilities in our SMB business. that we see out there. And agentic commerce, as I said, is not even on the -- we haven't even started to layer that in yet. And then lastly, the supercharge is really what we're seeing in AI. We're going to get this pricing right for sure in terms of setting this up. AI with the proprietary data that we have is going to be a catalyst for us, not a detraction.

All right. I think that's a good place to wrap up. Please join me in thanking Mike for his insights on NIQ.

Hello, and welcome to JPMorgan's Technology, Media and Telecommunications Conference. We're delighted to help us kick off TMC. We are joined by NIQ Global Intelligence. Although NIQ returned to public markets just last year, the company has been a leading tech innovator in consumer intelligence for over 100 years now.

NIQ has a vast data estate, which includes information from over 8,900 retailers in 88 countries, proprietary panels spanning 5.5 million-plus global shoppers, billions of consumer furnished e-receipts each year and critical product-level reference and descriptive data on over 246 million SKUs spanning 10 billion-plus product. Joining us on stage this morning are Jim Peck, NIQ's CEO and Chairman; and Mike Burwell, CFO of NIQ. Welcome, Jim and Mike.

Thank you.

Thank you.

[Operator Instructions] So let's start off with Jim.

Jim, you've got a lot of experience leading public companies, especially tech companies in the public markets. How are you thinking about your business and the world that you operate in today?

Yes. So I guess I have been doing this for a long time now. The fundamental thing I look for in any company, but especially in our kind of company is the information we have and the insights that we have is it -- do they matter? Do they matter to our clients? And so clearly, they do, right? And clearly, they're unique.

Clearly, they give insights that no one else can do. And our clients use them every day. So that's the next thing you look for. Are we relevant inside our customers' world? And we remain extremely relevant inside our customers' world, whether they're doing pricing, promotion, assortment, innovation, basically, all their decisions on how they're trying to interact with the consumer.

And so we sit right in between the retailer and the consumer and the manufacturer of the brand in that nice little triangle, collecting all the transactions that are happening. So we really know what's being purchased, we really know what the products are, we really know what the pricing is, we really know where they're sold, we really know who's buying them. And that lets us help our clients understand what's happening, but we can also help them understand and predict the future.

What happens if I change my price from A to B in this part of Brooklyn selling pizza sauce. We answer -- you are likely going to get more share because your competition is not running promotion and pricing. So we can help them understand what's going on in their world and then predict the future. And so even in a world like today, where I am getting a lot of questions about the Middle East situation or other situations that are going on.

And I think you said 100 years, even in the last 5 years, there have been a lot of things that have gone on in the world, and our business has remained strong because while those things are big problems for the world, our clients are still thinking how do I get consumers to understand, what I'm able to offer them, how do I price it so that they'll buy it, what outlet are they trying to buy, and whether it's e-com or in the store or even as it's coming Agentic Commerce.

So they're still fighting their battle every day trying to win with the consumer. And so our underlying business drivers are going very well and are very strong. So activation is performing well. Intelligence is performing well. We let people know about our April results early because the trends are going very much in the right direction, and we feel good about our year.

I would say when I'm sitting with clients now, while we are worried or they can be worried about a situation in the Strait of Hormuz and how it's affecting them, what they're really thinking about, especially the bigger ones, is how they are going to take advantage of AI to win, how they're going to take advantage of it better than their competitors to win, how is agentic Commerce going to affect them? How are they perceived by these different LLMs? How do the LLMs perceive them without anybody kind of watching? And we're built to play in that space. And so what I'm seeing happening is AI is opening up even more opportunities for us. There are more use cases opening up for us, and we're well positioned to take advantage of it.

Got it. So maybe we'll start with AI, and we'll come back to agentic Commerce momentarily. But you're definitely in an interesting spot. Obviously, I would expect your data to be the kind of asset that AI really needs to function well in your domain, which consumer intelligence, consumer product measurement. Where should NIQ be slotted or viewed in the AI beneficiary debate?

Yes. So I guess there's this notion that's formed up that like black and white AI winners and losers and things like that. I can't disagree more that we're somehow on the wrong side of that equation. We're the beneficiary of a whole new set of use cases that can come up or that have come up. And not -- but let's go back one. Clients aren't saying, "Oh, now that there's AI, I don't need to understand pricing and promotion. I don't need to understand assortment. I don't need to understand what consumers are doing. I don't need to know the truth and the source of the truth."

We still remain that. And AI just makes it happen faster. And like I said, we're in discussions with clients right now, and we call them the AI builders. These are the folks who have the capital. You'd expect the brand names. I won't say their names, but these are the folks who have the capital to build their infrastructure to link all their data sources together. And they realized more and more just how important we are to that infrastructure. So we're not just a data feed, we're also a semantic layer, giving them context for how the data all fits together.

Our models help them predict the future. They're trying to build bigger and better models now that do things like link their innovation engine to their supply chain. And as they're building those POCs, they're saying, well, NielsenIQ, we didn't realize you could make this happen really fast. And so we're working with partners in the infrastructure space like the Snowflakes of the world, let's call them, to do one part of that job.

But our part of that job is, yes, to provide information and analytics but we're also providing context. And so we're just -- we're even tapping into new budgets, which I think is really important. Chief Insights Officer, Chief Marketing Officer, they know who we are every second of every day. The CEO, the CFO know who we are. But now the CTO is getting real interested because they have to take advantage of what's going on with AI. And to do that, they need their data structures to be done right.

And I'll just add, fortunately, 5 years ago, we saw a lot of this coming. We didn't know quite how it was going to work, and we invested a ton of money in our infrastructure to get our data right and to get our, let's call it, APIs. It's more complicated the effort, but to get access to our data right to feed this new kind of way people or companies are using our data.

Got it. And maybe I'm editorializing here for a second, but it does seem like one of the things that gets lost in the sauce is that you have -- I mentioned the 100-year-plus history. There's a huge level of trust that your clients have in your data and how you collect it and how you present it. It's not gathered through one method. It's multimodal. And you can't web scrape to that. It -- it's just not physically possible.

It's not out there, okay? You just can't do it. And I guess there's bits and pieces, but I mean, I challenge anyone to go ahead and try. It's not going to work. And we have the source of the truth and it's $7.4 trillion of spending. We have one of the largest databases in the world. None of that matters other than that it's a lot. But what matters is it's relevant. It's the truth. And you could take an LLM right now and run it against whatever is out there and you're not going to get facts. You'll get answers, but you won't get the facts. And our clients need us to be right because if they make wrong decisions, it costs them millions and millions of dollars.

And so I think we're the fuel that feeds AI. But of course, we're using AI in our own right and helping our clients just work faster. They're not working necessarily differently like, hey, we're not going to worry about pricing anymore. No, they have to worry about that. They just want to worry about it faster.

Got it. Got it. And so AI has been a big topic in info services land for Andrew Steinman and I and for our coverage companies like NIQ. But uniquely, you guys are sort of unique among our coverage companies and that you're very focused on the idea of Agentic Commerce.

So can you walk through what NIQ's right to win is in Agentic Commerce? How does that play to your strengths? I know you guys like to use the tagline and you help them see the full view of customer demand. So how does Agentic and your sort of mission to help clients see the full view, how does that intertwine?

So Agentic Commerce, the different LLMs are -- I'm sure you guys use these and you ask it a question, "Hey, get me a protein powder that has no peanut oils in it, that is super clean and I want it now, right? Tell me where I can get it, right?" And so what we're able to do is we understand the ingredients of all the products. We also understand derived attributes like this has got a clean label, verified clean label.

This is heart-healthy. And so we are able to tell the LLM what is in these products. We're also able to tell the brand itself, hey, this is how you're perceived by the LLM. So we understand what's the product. We understand what the consumers are doing. So we're able to inform the LLM, hey, this is -- these are the products. But guess what, these are the ones that are hottest for a male over 60 years old, who's looking for a protein shake in Boston, right?

And so we understand what -- who the consumers are that are actually buying. Of course, we understand all the price comparisons. And we also understand where you can fulfill the order, which is really important. You can't do that reliably, you're going to lose faith in the LLM and you're going to go somewhere else. And so we are already talking with these players about how we can fit in that transaction stream, right? And so we're not just telling them what's happened, we're also helping them fulfill. And so that allows us to take our place there. The other part of that whole infrastructure is the brands need to know what's working and not.

And so we will continue to provide the measurement information that says, yes, this -- because you did this with this LLM, you actually got outperformed a different method of fulfilling your orders for your clients. And so that's what we've been doing for 100 years. But in this case, it's like a whole new revenue stream that we are going to tap into because it's that obvious that we should be playing in that transaction stream.

Got it. So look, it sounds like you guys have -- your strategy is in a good spot. Your product innovation, I think it's enough research from you guys to say that's in a really, really good spot. Mike will get to the financials in a second. But obviously, from the quarter -- the last few quarters you guys have had as a newly public company, those are in a really good spot and getting better every quarter. But the stock price is not. So how are you thinking about your stock right now? What's the Street sort of missing in your opinion?

Well, I don't -- can't put myself exactly in their shoes because I don't understand it. We're about to get to $1 billion in EBITDA, $1 of adjusted EPS, like these measures that we've traditionally used to drive value and multiples don't seem to be being followed, right?

And so is it frustrating? Certainly, it's frustrating. Is it personal? Yes. This is our company. And I think that we're just going to keep performing. I can control and we can control what we can. We know we're going to execute. I think I said last time with Andrew, we're an execution machine. We're going to keep at that. We know that there are more and more opportunities opening up for us in this AI world that we feel really good about it. And we know that the core business is operating the way it should, both in activation and intelligence. So it seems to me that this is artificially something is happening out there where people are kind of waiting and seeing. And so what can we do there? Just keep performing.

Interestingly, the stock market may actually be a lagging indicator in this case. So Mike, I want to go over to you. You and the team, you covered a lot of ground on the earnings call late last week. We're only a few days removed from the call. So I just wanted to make sure that anything you wanted to convey or clarify to investors, key takeaways or other points of note that you just want to make sure that people came away with after sort of a -- you guys are very transparent with a lot of what's going on in your business, but just anything you want to drill down on especially.

Yes, I appreciate that, Alex. Yes. I mean I think -- look, I think our financial story is pretty simple. Ultimately, our financials are healthy and they are improving. And when I look at it, look, we've had 9 quarters of mid-single-digit growth overall. In fact, as Jim mentioned, when we look at April, our organic constant currency growth is already above what we delivered in the first quarter overall.

So when I look at it, our overall client demand for both our activation as well as our intelligence solutions is very, very strong. And look, when I look at our overall algorithm, renewals, when we have our pricing and cross-sell and upsell that's actually happening is going very, very well. In fact, we see even more upside to it. Jim touched on Agentic Commerce. When we look at win-backs, takeaways, and what AI is going to do for us, we continue to see upside in terms of revenue growth overall for the business. The thing I'd really want to make sure I stress is there are a couple of points from the earnings call. And that is that our intelligence business is very strong.

Why do I say that? We grew Americas at 9.3%; 9.3%, which is a market we have other competition in. Our APAC business was a little bit soft, but it was driven by 1 specific thing, and that is that China grocery retailers, we needed to improve coverage. We've gone and executed that. You're going to see that improve over the rest of the year. And also then we have subscription revenue. So when I look at intelligence and look at the subscription revenue as part of intelligence, that grew 6% in Q1. When I look at that, that's almost $3 billion in revenue. When I look at the metrics, our NDR is sitting there at 104%, and our GDR is 99%. So we're getting price. We don't have much churn in that base that's happening overall.

So at the end of the day, we executed well in the quarter and maybe just 1 last thing, Alex. When I look at our activation revenue, our activation revenue grew 5.3% in the quarter. Why? Our analytics business is strong. Our analytics business is what you saw drive that growth in the first quarter. We're comfortable with what's happening there. So at the end of the day, what we're doing is we're continuing it. As Jim said, we're seeing that revenue growth happen with our fixed cost base, and we're translating that into EPS, and we're translating that as an inflection point into free cash flow going forward.

Got it. That's super helpful. That's super helpful, Mike. So maybe I'll challenge you with one then.

Sure.

So you guys did raise your restructuring target for the year. You're going to do a little bit more, get a little bit more savings out of that on a sort of a gross basis, but you didn't raise your margin yet. Can you walk investors through -- is that because maybe some of the flow-through happens in '27 now?

That's right. It does happen in '27, but maybe just a couple of philosophical comments. Just to frame the conversation, I'll come back to your specific question. So look, Jim and I, in our past, have led public companies. We understand the importance of delivering on our promises. And we've been clear about driving that overall since we started the road show. And if we look back, we've exceeded the top end of our guidance on all metrics for 4 quarters in a row, right?

So our goal is to continue to execute. As Jim said, we're an execution machine, and we're going to continue to be that. So look, as we think about guidance, we simply balance our recent overperformance with a dynamic backdrop and our -- that's our guidance approach. But equally, if you look at the incremental amounts we're talking about is $15 million. So I mean part of that is not all -- some of that will roll into '27. And to your point, that's the reason.

Got it. And you guys have traditionally had very high and very quick payback period on your restructuring program. I think it's fair.

Pay- is currently less than a year out.

Understood. So maybe we'll go down to sort of, perhaps, actually we think free cash flow is the most important way to measure your business at this juncture. Was thin coming out of the gate at the IPO or let's say, looking -- with a look back at the -- at the point of IPO, then you immediately sort of started gushing cash the front half of the -- back half of last year. Obviously, there's a seasonal dynamic, 1Q was net negative but was expected, at least for me, this year, it looks like you guys are really well situated again on free cash flow, just looking at the year as a whole.

You're guiding for $235 million to $250 million.

Walk us through exiting this year, looking to next year, how we should think about free cash flow inflection. And obviously, that sort of goes hand-in-hand for you guys with progressively continuing to delever. So how to think about those 2 dynamics?

Yes. So Alex, we've said at the IPO, by the end of last year, we would get below 3.5x leverage. And we said by the end of this year, we'd be below 3x. Sitting here, we were below that at the end of last year. At the end of the first quarter, we're at 3.4x leverage. We have an absolute direct path to be below 3x by the end of this year. And in fact, if you look at it from a TTM standpoint, we're almost $130 million of free cash flow through the first quarter.

What's driving that? What you see in the first quarter, as you rightly pointed out, you see the seasonality of it in terms of we pay our IT payments, our data payments and if indeed, we are successful, bonus payments in the first quarter. So that's a traditionally low period of time, and then it builds through the rest of the year.

With interest expense, we've refinanced all our debt. We're below -- we've reduced the run rate interest costs by $100 million for the business. Our EBITDA growth is continuing -- will continue to build, particularly traditionally, as you said, seasonality low point in Q1, high point in Q4 and restructuring normalization costs are really in the front half that will leverage themselves out overall.

So we feel very good about the free cash flow of $235 million to $250 million that we forecasted for the year. And then as I said, if you look at it from a TTM standpoint, we're sitting there at $130 million through the end of the first quarter.

Got it. That's awesome. So we're going to take a quick break to see if there's any Q&A. It either comes in via the iPad here, or live within the room. And if not, I'll sort of dive into a few more specific points of question.

All right. We're going to dive into some specific questions then. So one of the things that you guys do on your earnings calls is you speak to momentum that you have in core sort of solution sets that are -- shall we say, you guys have substantively and deeply enhanced post Jim Peck, Mike Burwell, Rohit Kapoor era. Can you walk investors through what the most sort of important products they should be watching and understanding and benchmarking your performance on the panel on demand, things like that.

Yes. So I guess in the here and now, we talk about the full view. And that's a simple way for us to convey both internally and externally who we are relative to what we want to know about the consumer. We want to know the full view, the most holistic view of shopping behavior globally. And in the last 5 years, that still means the shift to e-com and really making sure that we have complete coverage globally in that space. So our e-com products have grown, I think it's 33% recently. And we're just -- we're very much in the beginning innings of that cross-sell, upsell. Why? Some clients didn't believe they had to think about that. But now there's much more commerce even going on and things that normally aren't e-com related.

And so we're shifted, they're saying, okay, I better get with the program here, right? And so that's one thing. And then our omni product, which is really both understanding what's selling, but understanding through what channel and then having demographic information. It's primarily a U.S.-based product. That's also selling very well, not only to brands, but also to retailers. This is the omni shopper consumer panel. All part of the full view.

And then in addition to that, there's a module that looks at Amazon, that is very unique in that we're able to get very granular information and integrate it in with our overall data, point-of-sale data and clients really like that, of course, right, because it's so granular and can help them understand exactly what's happening, including other retailers for that matter.

So those are really an important set of products, not only in the U.S., but globally. And where the magic happens is those really are nice on their own, but when you integrate all the information together. So customer, here's what's going on in this market, here's what's sold. But now we're overlaying and here's who bought it and here's why.

So we know that -- can, I guess, continue with this example. We know that you're losing share in Brooklyn, in your pizza sauce, and it's because you are losing every male who's over 50 years old and you're losing them because a new brand just came out and people are shifting to that brand. And by the way, they're also selling products that are related. So there's a bundle of products happening.

So then of course, the customer can react to that or our customer can react to that. And so having what's happening and why it's happening really matter. So I think those are the important -- some of the important solutions for now.

The other important solutions are the beta launches of our kind of chat capability and our analytics capability within our Discover platform, which are going over quite well. I think equally important, our clients are like, yes, we need that, okay? But we also need something where you're helping us build our infrastructure, which I referred to, the AI builder. That's super exciting because it's now.

And how long it's going to take to implement, that's kind of in the hands of our customers, but we're in the middle of 5-plus proof of concepts on how we can help them organize their own information, help them build the infrastructure with partners and how they can start having access to our information and even more in different ways, which isn't part of their current pricing, isn't part of their current contract. So those are new avenues for growth. So I would keep my eye on that.

Hope you don't mind if I raise the point for you. But it's interesting to me that you have the -- you guys are sort of one of one in measuring consumer retail measurement globally. And then on the panel -- you really are also one of one in providing both point-of-sale retail measurement and consumer panel information from sort of one source of truth, right? There's separate panel providers, separate measurement providers, neither at your scale, but there are other providers. And then you're the only people who provide panel on demand. So you can go into the Discover platform.

Which is what I described.

Yes, yes. And go into this 5 Ys or what have you and really do that. And there is -- people often ask me about the competitive set, and I say, at a certain point it really is just NIQ, you need certain kind of answers, and you really need to dig into it, especially with the global framework.

It's the 2 things combined where you're saying the example I gave with the simple example around the Brooklyn pizza sauce. That's really important. And that -- to know that and to know it like really quickly is exactly what our clients want, and they want it fast and they want it at scale.

And again, back to AI, instead of them having to ask for it, which in the past, you would do because of just the sheer time it would take to cull through all this data to try and pick up what you think they're thinking. Now with AI, you can more quickly deliver them. Here's what you should be worrying about. You're going to have to ask, here's what we should be worrying about. And so that's the direction we're going.

And the reason we're in beta mode is we got to be right. This is a really important point. We can't -- and no one can implement things that are -- if you give -- like you can be confident, but if the answer is not right, clients are going to find out really fast. And so we've released this in beta mode so they can start understanding and get to help us, to make sure we're training things correctly. And there's a lot of excitement about it. That's...

That's awesome. So maybe one thing that all these solutions have in common is we're talking predominantly about your intelligence business and particularly the subscription side, which has really, really robust retention net and gross dollar numbers, and there's clear momentum there. But the -- that's about 2/3 of your business. You have about another 1/3 of your business that is both sort of more intelligent solutions sold. I don't want to say piecemeal, but not on an annualized subscription basis. And then you also have the activation business. Mike, maybe you can walk us through sort of how the revenue dynamics work in those 2 businesses and how somebody should think about the recurring nature of those solutions, those offerings.

Yes. So I think 80% of the business, to be exact, Alex, is a subscription. Thinking about them as 3- to 5-year contracts with annual escalators that are included in those contracts. So those pricing contracts are set up that way. And as we talked about, when you look at our GDR, I mean, our churn level is less than 1%. And that 1% is really SMB businesses that get sold, bought, come in, go away. It's a very low churn rate. So our renewals are very high. It's a very sticky subscription business. And as you said, in 90 countries in terms of wherein we're operating.

When we look at our activation business, a lot of that is very sticky, too. It's the same clients of that remaining 20%, almost 80% of that is the same clients buying similar services every year. There are only 1-year contracts that are in place. So there's a stickiness to even our activation business. And when you look within the activation business, we think about a couple of dynamics that are happening there. So one is our -- Jim talked about our -- some of our AI products solution sets that are out there, but our AI BASES Screener, when you're -- -- BASES is a very well-known brand in the marketplace in terms of thinking about innovative new products. Now with AI BASES Screener, we're able to help clients think about those products very quickly in terms of what they want to introduce to the marketplace. And we're getting a lot of acceptance in rate of that, and that's flowing through in that activation revenue, that 5.3% we talked about in terms of first quarter.

But also our -- when you think about our analytics solutions are very powerful, particularly when you link them back with the insights that we have from our measurement business and being able to do those analytics faster, as Jim said, on the fly, and we've seen that demand being very, very strong.

So I guess that's what I'm trying to break down just to maybe kind of summarize back. When you look at our revenue base, 80% of the 3- to 5-year contracts with annual escalators that are in place; other 20%, of that 20%, 80% of that is very sticky, same clients buying similar services year in and year out. And then within that, one last click, you've got innovative new services that are happening, particularly as it relates to AI BASES Screener as well as what's happening in the analytics front.

That's really, really thoughtful.

We're going to give just a point that I wanted to make really -- so we sit on this very granular data. And when we give insights to our clients, it's at a kind of a summarized level because you just possibly can't give them every little piece of information. And so when they get the answer, that's a point in time. But they need to know every -- they need updated information constantly, what's going on, what's going on? And they have to reach back into our world to get back to the granular data.

So it's not like they -- once they get access to data, then like, okay, now we can just run our own analytics, and we don't need NielsenIQ anymore. That's just not the case because they don't have access to that granular-level data. And the reasons they don't are partly technical, just the sheer amount. And partly, that's the way our partners want it. They have really trusted relationships with us. They don't want all that information revealed to the world in any form. And so they're like as long as it's operating within your -- the context of your business, NielsenIQ, we're good, but don't give it away, right? Don't give it out. And so there's structural, I guess, guardrails that make it impossible for clients to say "we don't need you anymore, right?" And so that's why our analytics lives on.

Awesome. So we're going to open it up to the audience one more time to see if there's any last minute questions. Please... We have a gentleman in the right.

Okay. So you've been public for almost a year, right? When we talk to your clients, they all talk about how important you are in the ecosystem, how important you are to them. When we look at your financial performance, right, you've delivered or exceeded on basically everything that you've told the market; yet AI has happened, investors have sold first and figured out later. And so when we look at your performance, right, and what you've accomplished and what your clients say, it's a real dichotomy from what the market is doing.

And so in a minute, like what is your sales pitch to an investor as to why they need to own NIQ stock? And what's the long-term value creation path that everyone is missing?

Yes. So first, you nailed the thing right upfront. We've been with our current investors. We've been with analysts. If you talk to our clients and they're telling us now more than ever, your clients are telling us how important the information and insights you provide them are to the way they run their business.

And so we continue to be well positioned in the most meaningful part -- some of the most meaningful parts of their business operations. They're not changing the way -- the things they need to do, they're changing the way they do it, and our information is right there to enable them. And that's going to create this sustain, this steady growth curve that we have. And AI will unlock even more for us. So that's going to be a tailwind. And so we believe we should see our revenue accelerate over time because of AI because there are specific use cases that we are not -- that are not in our numbers today that are going to happen.

And so we're in good shape there, and we know from our clients that we're in good shape. They know even more given the context we provide them to run their business, how important we are. And then you take the other parts of AI.

So how -- talk about our margins. We're on a march to 25%, then it's going to be a march to 30%. We're a company that is very ripe to get more and more efficient with the use of AI. We understand how to use it. We need to use it right. And so you're going to see both, I think, our top line be steady but accelerating, and you're going to see our margins expand and you're going to see our cash flow continue to get better.

So all the metrics are in place for us to continue to operate. Not to mention that we're absurdly low in as far as what we're trading as our multiple. I can't really even process it, frankly. But I can do this. I can control what I can control, and you have a management team and a group of people and a team of people at NielsenIQ who get it, and we're going to deliver. We're going to deliver for investors, we're going to deliver for clients, and that's what we can control. So that's why I would put my dollars into NIQ.

I think we -- that's a great place to wrap it up for the day. All right. Thank you guys so much.

Thank you.

Mike and Jim, thank you so much for your time today.

Good morning, and welcome to NIQ's First Quarter 2026 Earnings Conference Call. [Operator Instructions]

With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to NIQ's First Quarter 2026 Earnings Call. Joining me today are CEO, Jim Peck; CFO, Mike Burwell; and Chief Product Officer, Troy Treangen. Following Jim's and Mike's prepared remarks, we'll open the line for Q&A.

As a reminder, today's remarks will include forward-looking statements regarding our expectations and outlook. Actual results may differ materially from those expressed or implied in these statements. For information about factors that could cause actual results to differ materially please refer to today's earnings press release and our SEC filings. We undertake no obligation to update any forward-looking statements made on this call, except as required by law.

During this call, we will also discuss both GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings press release, which is available on our IR website. A replay of this call will also be available there.

And finally, a few housekeeping items. Unless otherwise noted, growth rates mentioned on this call are compared with the prior year period. In addition, a supplemental file is posted alongside our Form 10-Q and earnings release, reflecting the retrospective reallocation of revenue and costs from our end-to-end businesses, which are now reported based on geographic location. These changes had no impact on our consolidated financial statements.

And with that, I'll turn the call over to Jim.

Thank you, Will. Good morning, everyone. At NIQ, we power mission-critical consumer commerce decisions globally. Our ecosystem connects brands, retailers and consumers across 90 countries and $7.4 trillion of consumer spending, an unmatched position with enduring value. Our first quarter results reflect this. We delivered organic constant currency revenue growth of 5.1%, expanded adjusted EBITDA margin by 150 basis points to 21%, and generated meaningful free cash flow improvement, all while accelerating our AI investments. These are not separate stories. Our ability to grow revenue, expand margins and invest in AI reflects the strength of our business model and financial profile.

On recent earnings calls, I've outlined how AI is a profitable growth enabler for NIQ and how our data is permissioned and governed. Today, I will discuss our views on the evolving AI landscape where AI agents increasingly mediate commerce and how it can advantage NIQ and create structural tailwinds for our business. I'll cover four areas: one, our context layer that makes our proprietary data decision-grade; two, how AI is already driving measurable growth and deepening our partnerships; three, how agentic commerce is a transformative new channel that further amplifies NIQ's leading role; and four, how all this can translate to faster profitable growth over the long term.

On the first point, our foundation is a clear advantage. We have nearly 9,000 retailer partnerships across 90 countries, 5.5 million consumer panelists and 253 million product items in our database. Because our data is permissioned, governed and not publicly available, it's a differentiated asset that is impractical to replicate. But the deeper advantage is what we build on top. Every week, NIQ harmonizes 4 trillion data records on consumer purchases from fragmented retailer feeds, proprietary panels, traditional trade and e-commerce receipts and creates a unified deduplicated view of the market down to the SKU level.

We then add context that makes the data intelligible and actionable. Specifically, our semantic framework encodes how consumer markets actually work across categories, products, substitutes, promotions and retail relationships, embedding NIQ's vertical expertise directly into the data. This transforms raw data into a proprietary system that can be understood and acted on. With our context, AI can interpret data correctly, reason across it and generate decision-grade answers to critical business questions. Because our intelligence is constantly refreshed with the latest ground truth, clients can deploy it across their enterprises with confidence.

We deliver intelligence directly to our clients' point of decision. Today, this happens through Discover, our client tools, and shared clean rooms and increasingly, through direct integrations into clients' AI systems and autonomous agent workflows. Even our most sophisticated clients with strong internal data science teams are leaning in with NIQ. Building a complete dynamic commerce intelligence layer is expensive, complex and time-intensive. Our specialized vertical expertise and interconnected data position NIQ as the highest quality, most decision-ready partner in the market.

We believe our context layer is increasingly essential infrastructure for the AI era. It informs not only what happened but drives what to do next across growth strategy, innovation and emerging agentic channels. As AI agents begin to influence and execute transactions, NIQ's intelligence can help determine what brands and products get seen, selected and sold.

We're building the commerce of tomorrow from a position of embedded strength. Clients use NIQ as a system of record to make everyday pricing, assortment, promotion and competitive decisions. In Q1, that role strengthened. For example, in Q1, we closed 17 7-figure wins averaging 3 years in duration. In Americas, we took multiple accounts from an established competitor with clients pointing to the strength of NIQ's Full View platform and the quality of our service. This included several high 7-figure renewals and expansions, including with a large multinational food manufacturer and the win back of a major global beverage manufacturer across multiple markets.

In EMEA, our largest Q1 wins included Retail Measurement and Consumer Panel within a single integrated relationship, multiproduct adoption that differentiates from point solution competitors and drives long-term customer retention. Following a formal competitive RFP, a leading global financial services client renewed for the seventh consecutive year. In Eastern Europe, we monetized a new loyalty data product across 15 brand clients in a market where no other provider can deliver this level of granularity.

In APAC, one of our 8-figure renewals was a 5-year global commitment with a leading tech and durables enterprise client that will anchor its worldwide category strategy to our Intelligence and Activation solutions. And across markets, we accelerated eCommerce revenue growth to 33%.

We also expanded Full View Measurement to 209 clients, reinforcing NIQ's role at the center of omnichannel decision-making. We extended our leadership in high-growth verticals and strengthening the Retailer side of our ecosystem. For example, in Beauty, leading specialty retailer, Ulta selected NIQ as its primary insights panel provider; expanding our Full View of Beauty in a vertical that's growing approximately 10% annually with online growth running roughly 6x faster.

On the Retailer front, we scaled manufacturer participation in our Wakefern Retailer Analytics program in the U.S. On the tech side, we introduced Activate Lite, our software platform that helps small and mid-sized retailers access decision-grade retail intelligence and activation tools without building a full analytics stack.

In new verticals, we expanded our media Marketing Mix offering into three additional categories: Auto, Telecom and Retail. Clients turn to NIQ at their most consequential moments. For example, in Q1, multiple global consumer products companies used NIQ data as a primary input to M&A due diligence. They chose NIQ for data quality, credibility and speed, reinforcing NIQ not just as a measurement provider, but as a trusted strategic partner when the stakes are highest, a role that's hard to displace.

NIQ's embeddedness compounds. Creating high switching costs and strong retention. Q1 net dollar retention was 104%, gross retention was 99%, and annualized subscription revenue was $2.9 billion, up 5.9% and Q1 was our ninth consecutive quarter of durable subscription growth, reflecting the stickiness of our relationships.

And this stickiness increases as we develop our new AI capabilities. In Intelligence, the global beverage manufacturer, we won back in Americas, cited Ask Arthur and our Advanced Analytics roadmap and AI-driven capabilities as the deciding factor. A leading CPG chose NIQ over multiple competitors for a growth strategy engagement, specifically because of our AI-powered integration of qualitative and quantitative intelligence. Just a few examples, but multiple exist.

In Activation, less than a year since launch, more than 70 clients have embedded our AI-native solutions, BASES AI Screener and Product Developer into their workflows. Clients have tested more than 2,300 product concepts, helping accelerate their innovation, development, and delivery. And adoption continues to broaden globally with these AI-native solutions now in use across 27 countries.

Clients are seeing strong value. For example, global leader in hygiene and health products, Reckitt cited 65% faster consumer research innovation velocity at 50% lower cost through AI screener.

We continue to see rapid NIQ data consumption, including our top clients engaging with our AI-native applications and increasing spend faster than non-adopters, clear signals of NIQ's value.

BASES AI is just the beginning. Our go-forward vision is organized around a single purpose to fuel the future of trusted AI. We seek to achieve this through our 3-pillar AI strategy. The first pillar is to deliver NIQ IP that fuels AI. This pillar makes NIQ's most valuable proprietary assets, data, models, coefficients, product, content and analytical constructs, available as licensable infrastructure for clients building and operating their own AI systems. It is delivered through an API- and MCP-first governed architecture. That architecture reflects our more than $1 billion invested in platform transformation and strategic acquisitions since 2021.

Second, we're building AI applications for smarter outcomes. This pillar delivers purpose-built tools across specific commercial use cases ranging from everyday insights and growth strategy to innovation, brand and media, digital shelf and price and promotion. We made strides on this front in Q1. We beta launched Arthur AI Analyst within our Discover platform.

We also beta launched Arthur Chat to clients, providing them with a conversational AI experience that unifies Discover and Full View into a single intelligence interface powered by NIQ consumer intelligence. These beta launches plus the capabilities on our product road map throughout 2026 and into 2027, lay the foundation for usage-based monetization.

Our third pillar is delivering Commerce Intelligence. Let me describe this in detail. Over the past decade, consumer shopping has moved from in-store to omnichannel to social and quick channels. Each wave added complexity, making NIQ's measurement capabilities more critical. The same is happening with agentic, which is estimated to be the most significant structural shift since the advent of e-commerce. McKinsey estimates up to $1 trillion in U.S. consumer revenue could be orchestrated by AI agents by 2030 with global potential of $3 trillion to $5 trillion.

NIQ's own research shows 74% of shoppers are already using AI for some form of product discovery, and consumer openness to AI-assisted purchasing rises from 40% to 50% to 70% to 85% after a single positive experience. NIQ is advantageously positioned for this shift. As agents move from search assistants to autonomous transaction engines, discovering, evaluating and buying on behalf of consumers, the intelligence layer they rely on becomes the layer commerce runs on. NIQ is building that layer.

Let me make this concrete. A consumer asks an AI shopping agent to plan a week of high protein, heart healthy groceries within a set budget. Using NIQ's granular product content the agent recommends comparable options with more protein, stronger heart health attributes and a better price. Those recommendations are powered by NIQ intelligence across product attributes consumer demand, pricing and availability. This is the vision we are building towards.

For decades, NIQ has been a leader in measurement and analytics. In an increasingly agentic world our granular proprietary measurement data amplifies NIQ's value in several ways. And our product content is structured, enriched and AI-ready, making a brand discoverable and selectable in an agent's recommendation set. That would be NIQ ensuring our client wins the agentic shelf. And when an agent cross-references consumer preference models to personalize a result, that would be NIQ intelligence driving conversion. And when an AI agent wants to have higher confidence that the products it is recommending for same-day delivery are available, that would be NIQ data and infrastructure powering the match.

Our Commerce Intelligence strategy is tied to three pillars: product intelligence and availability, channel and media measurement and agentic transaction integration. Together, these form the data and measurement foundation required for AI-driven commerce to operate reliably at scale. We launched NIQ Commerce Labs to support our agentic commerce vision and advance our thought leadership on proposed industry standards, driving collaboration and feedback and sharing learnings and prototypes. Inside NIQ, we are building agentic commerce measurement standards grounded in our vertical expertise.

Lastly, we believe our position at the nexus of consumer commerce makes NIQ central to the AI value creation stack. We are engaging with all the major players across the ecosystem accordingly. At the infrastructure layer, we completed a proof of concept with Snowflake on clean room data sharing and have begun a follow-on sprint using production data. At the distribution and application layer, we are in active discussions with several leading AI platforms. Our discussions reflect a consistent recognition that governed permissioned data is essential for AI to work effectively.

Let me bring this together financially. Our advantaged position creates incremental monetization opportunity. We have now delivered 5% plus organic constant currency revenue growth for nine consecutive quarters. That consistency is supported not only by strong retention, cross-sell, up-sell and adjacent market expansion but also by pricing power. In Q1, a leading global management consulting firm renewed its NIQ relationship at a 50% price increase. While anecdotal, we believe that reflects the mission-critical role our data plays in client workflows.

Looking forward, as we continue to build the Commerce Intelligence foundation, we see AI revenue upside through new features, faster product releases and usage-based monetization models. Add to that, our ability to do more with less, and we see a clear path to margins in the 30s over time. We began our transformation journey in 2020 at 13% margins. We exited 2025 at 22%. Today, we reaffirmed full year 2026 guidance approaching 24%, bringing us closer to our midterm target of mid-20%.

Our AI investments are delivering measurable tracked results across the business today. In engineering, we have deployed AI-assisted development tools across more than 2,600 engineers. We are scaling output, faster time to market, higher productivity without adding headcount. That is direct operating leverage flowing through our cost structure. In operations, we are deploying agentic AI across our data collection and coding workflows, the work that powers every product we deliver. Recently, an AI-powered coding system operated at extreme scale on a major global retailer data challenge, compressing timelines and reducing delivery costs. In customer support, AI-driven automation is running ahead of plan through ticket deflection, automated resolution and translation tools now live across our global support operations. These are durable reductions in cost to serve.

We're unlocking productivity gains from our 2026 cost program and now expect $70 million to $80 million of annual run rate savings versus our 2025 expense base. As I mentioned in February, this program signals a prominent next phase for NIQ, reflecting our commitment to leveraging AI, automation, advanced digital tools and data-driven processes to streamline operations, enhance agility and reinforce competitive advantages. We'll continue to actively identify opportunities to structurally improve margins and drive long-term free cash flow. The path to long-term margins in the 30s is fundamentally about scale. As revenue grows, we can spread a largely fixed and increasingly productive cost base across a larger business.

Commerce intelligence and agentic AI help on both sides of the equation. They create new revenue opportunities through new products, new customer types, such as AI platforms and ecosystem partners, deeper client embedment and usage-based monetization and they reduce cost to serve through efficiency and process reinvention. As a result, each incremental dollar of revenue should carry higher margin than the last. That is the path from the mid-20s to the 30s and it is already underway.

So let me conclude by bringing this all together. We believe NIQ is well positioned to win in AI. Our AI-ready data, expanding AI-native product suite and deepening ecosystem partnerships strengthen that position. And because NIQ is embedded in mission-critical client workflows, we believe we are uniquely positioned to lead as agentic commerce emerges. Not only as the gold standard in measurement and analytics, but increasingly as a conversion catalyst. We also have a strong and improving financial foundation with upside as we execute.

In closing, Q1 was a solid start to the year, and we're excited about the long-term future we're building. I want to thank NIQ associates worldwide for their expertise and dedication. I'm confident in our team, our position and our strategy to create value for clients, partners and shareholders.

With that, I'll turn it over to Mike.

Thanks, Jim, and good morning, everyone. We have a solid start to 2026 with first quarter results exceeding our expectations. Revenue grew 5.1% on an organic constant currency basis, adjusted EBITDA increased 19.1% and margins expanded to 21%, all reflecting continued ongoing disciplined execution. We also delivered meaningful year-over-year improvements in free cash flow and maintained a strong balance sheet position.

In our earnings release this morning, we revised upwards our full year guidance for reported revenue and adjusted EBITDA, largely due to positive FX movements. Based on our first quarter outperformance and generally healthy underlying demand trends, balanced against the dynamic and uncertain market and prudent guidance approach. All other financial guidance remains unchanged versus what we provided in late February. This outlook reflects our continued progress, durable revenue growth, attractive margin expansion, free cash flow generation and deleveraging.

I'll start with a brief walk-through of our first quarter results, then cover liquidity and free cash flow and finish with our detailed outlook for Q2 and the year. Q1 revenue grew 11.1% reported to $1.1 billion or 5.1% on an organic constant currency basis, exceeding the top end of our guidance and in line with consensus. Growth was driven by value-based pricing, strong retention and continued cross-sell and up-sell of new capabilities with contributions across both Intelligence and Activation.

Net loss and adjusted net income improved by $29.7 million and $47.9 million, respectively, year-over-year. Adjusted EBITDA growth accelerated to 19.1% year-over-year to $224.8 million with margins expanding 150 basis points year-over-year to 21%. Margin expansion was driven by profitable revenue growth, disciplined cost management, operating leverage and early benefits from AI-enabled automation and our 2026 productivity initiatives.

From a segment perspective, Americas revenue grew 9.3% in organic constant currency, driven by both Intelligence and Activation. In the U.S., we reinforced intelligence leadership through key renewals and competitive wins, including renewed long-standing agreements with a global media holding company and a leading management consulting firm and takeaways with a multinational packaged foods producer and a regional salty snack manufacturer. Both choosing NIQ for a more integrated full channel view through our Discover-led platform. In Lat Am, we bolstered pricing with the rollout of Market Track Pro in Brazil. Americas adjusted EBITDA grew 13.2% to $122.5 million, with margins flat year-over-year, driven by timing-related expense allocations that we expect to normalize over the balance of the year.

EMEA revenue grew 4.6% on an OCC basis, driven primarily by strong intelligence renewal momentum, pricing and cross-sell/up-sell despite the ongoing conflict in the Middle East. We delivered several large multiyear agreements combining Retail Measurement, Consumer Panel and eCommerce. Reinforcing NIQ's role as a trusted full view partner.

In Southern Europe, we achieved a meaningful intelligence win back with a global beverage and refreshment leader, renewing and displacing a competitor through stronger local execution and faster insight delivery.

EMEA adjusted EBITDA grew 24.0% to $155.2 million, with margins expanding 270 basis points to 31.8%, reflecting profitable revenue growth, disciplined cost management and benefits from ongoing efficiency initiatives, including restructuring actions.

APAC revenue declined 3.6% on an organic constant currency basis. As we navigate the early stages of turnaround in this region, we are beginning to see early returns from investments focused on improving retailer relationships and data coverage. For example, in China, we expanded our retail ecosystem by partnering with one of the country's largest grocery retail chains and a scaled convenience store operator, significantly broadening our modern trade and convenience coverage.

In Japan, we partnered with leading market research and data analytics firm, INTAGE, in a mutual sales collaboration that pairs its nationwide retail store panel data with NIQ's global Retail Measurement Services footprint across 100-plus countries and regions. Building on our tech and durables presence, the partnership expands our reach in CPG and helps clients close historic comparability gaps between Japan and global markets. Supporting global companies expanding into Japan and Japan-based companies growing internationally.

Our internal forecast reflects an improving trajectory in APAC over the course of the year as these retailer partnerships contribute to data coverage improvements and client confidence. APAC adjusted EBITDA increased 10.1% to $34.8 million, with margins expanding 230 basis points to 22.7%, reflecting early turnaround benefit.

From a product perspective, Intelligence revenue grew 5.1% in OCC. As Jim mentioned, we've seen continued strong growth in eCommerce and Consumer Panel, reinforcing client demand for our full view value proposition. Annualized Intelligence subscription revenue reached $2.9 billion, growing 5.9%. NDR was 104% and GDR improved to 99%, underscoring the durability of our revenue algorithm and the mission criticality of our solutions. Activation revenue accelerated materially to 5.3% in OCC. This reflects strong new client wins, including scaling our Wakefern Retail Analytics program we signed last fall as well as converting some of our project backlog that was delayed from late 2025.

While it's a bit early to expect Q1's growth to repeat every quarter, we do expect that the operational changes Jim described in February and a healthy forward pipeline can drive steady growth improvement.

Now I'll walk you through the details of our P&L. Q1 operating expenses increased 14%, driven by higher restructuring costs related to the 2026 program. Excluding these charges, operating expenses grew well below reported revenue growth of 11.1%, reflecting continued cost discipline and operational efficiencies. One-time and restructuring costs totaled approximately $80 million in the quarter. Of this amount, $55 million was driven by expenses associated with the 2026 program announced last quarter. Depreciation and amortization was $153.7 million for the quarter, approximately 14% of our revenue, in line with prior quarters.

Below the operating line, GAAP interest expense was $58.5 million, $25 million lower compared to prior year, driven by lower debt balances from transforming our capital structure through our IPO and successful debt refinancing. Changes in foreign currency resulted in a $5.6 million gain in the period compared to a $32 million gain last year, driven primarily by remeasurement of our debt obligations held in foreign currencies. Income tax expense was $25.6 million or approximately 11% of adjusted EBITDA and reflecting a favorable earnings mix across jurisdictions during the quarter.

Net loss attributable to NIQ improved by $29.7 million year-over-year, while adjusted net income improved by $47.9 million, resulting in positive adjusted net income of $43.4 million, driven primarily by higher adjusted EBITDA and lower interest expense. Adjusted EPS was $0.15, well ahead of both guidance and consensus of $0.10.

As of March 31, 2026, the company had $362.3 million in cash and cash equivalents and $747.5 million of available revolver capacity, resulting in total available liquidity of $1.1 billion. Cash used in operating activities was $63.6 million in Q1, a $90 million improvement due to higher profitability, improved net working capital and lower interest. Cash used in investing activities was $59.2 million in Q1 2026 and compared to $3.7 million in Q1 2025, a period in which we received roughly $62 million of proceeds from our Netquest divestiture.

Capital expenditures were $59.6 million in the first quarter, largely flat to last year, representing about 5.5% of revenue. I'll note that Q1 is typically a lighter CapEx quarter and we continue to expect CapEx of 6.5% to 7% of revenue this year based on our growth investments in Consumer Panels, our platform and our AI capabilities. As a result, levered free cash flow increased by $93.1 million year-over-year in Q1, reflecting stronger revenue flow through to adjusted EBITDA, improved working capital performance and lower interest expense following transforming our capital structure, partially offset by cash costs related to the 2026 restructuring program we announced in February.

Our cash flow performance was in line with consensus and with our estimates shared with the research analysts leading up to our IPO. A strong result considering those estimates did not contemplate our 2026 restructuring program. Also, we remained undrawn on our revolver during Q1 and which, as we've noted before, is our seasonal cash low point due to variable compensation, IT payments and data costs. We believe our Q1 performance continues to demonstrate our powerful levered free cash flow inflection and we're on track to deliver material, positive free cash flow this year.

Net debt remained broadly stable at $3.2 billion at the end of Q1. We have hedged roughly 60% of our term loans and ended the quarter with an all-in weighted average interest rate of approximately 5%, benefiting from lower spreads during the period. Our net leverage ratio remained broadly stable at approximately 3.4x despite Q1 being our seasonal cash flow low point. We remain committed to achieving our net leverage ratio target below 3.0x at the end of 2026.

Now turning to our guidance. As I mentioned, we have revised upwards our full year guidance for reported revenue and adjusted EBITDA, largely due to positive FX movements. All other financial guidance remains unchanged. Execution remains strong, supporting our outlook even as the macro environment remains uncertain. I'll note that Q2 has started well, with April organic constant currency growth ahead of Q1. Our guidance balances Q1 outperformance and healthy underlying demand trends against a dynamic market backdrop and prudent guidance approach.

With that as a backdrop, for the second quarter, we expect reported revenue growth of approximately 6.0% to 6.3%. Organic constant currency revenue growth of approximately 4.9% to 5.2%, adjusted EBITDA growth of 12% to 14%, driving margin of 22.0% to 22.2%, adjusted EPS of $0.19 to $0.21. For the full year, we expect reported revenue and adjusted EBITDA to be higher compared to prior guidance largely due to FX. The rest of it remains unchanged, reported revenue growth of approximately 6.4% to 6.7%, organic constant currency revenue growth of approximately 5.0% to 5.3%. And adjusted EBITDA growth of 14% to 16%, driving margin of 23.5% to 23.8%, adjusted EPS of $0.95 to $0.99. Levered free cash flow of $235 million to $250 million and our net leverage ratio tracking to below 3x by year-end.

Full year restructuring costs associated with the 2026 program announced last quarter are now expected to be approximately $65 million to $75 million. The increase is primarily driven by incremental costs associated with actions identified to integrate AI throughout our operations. The majority of these incremental costs are expected to be executed in Q2, and we now expect approximately $70 million to $80 million of annualized run rate cost savings by the end of 2026. Moving forward, we expect to continue to identify additional efficiency opportunities.

Other full year 2026 modeling assumptions remain unchanged from prior guidance. Depreciation and amortization of $614 million to $619 million, approximately 14% of revenue. GAAP net interest expense of approximately 16% of adjusted EBITDA, implying net interest expense of $230 million to $235 million. Income tax expense of $165 million to $170 million, a diluted share count of approximately 300 million and CapEx at approximately 6.5% to 7% of revenue focused on our top growth initiatives, panel build-out, platform enhancements and AI capabilities.

Lastly, I will address our capital allocation priorities. Our approach is clear: first, continue deleveraging to less than 3x, which we expect to achieve by year-end 2026. Second, pursue targeted tuck-in M&A across geographies, categories and capabilities where we see compelling return profiles. I'll note that we do not currently have a share repurchase authorization in place, but we are very unsatisfied with the dislocation in our stock. As we deleverage the business in 2026 and into 2027, we will continue to assess the full range of ways to return capital to shareholders, and we'll provide an update at the appropriate time. Our ongoing free cash flow inflection gives us confidence in our ability to execute our long-term oriented profitable growth strategy.

In conclusion, Q1 was a solid start to the year. We remain focused on what we can control, strengthening our financial profile and investing prudently against long-term opportunities.

With that, operator, we're ready to open the call for Q&A.

[Operator Instructions] Your first question comes from the line of Manav Patnaik from Barclays.

Jim, I wanted to ask about how you would describe the client behavior today -- in today's environment. And obviously, the market is making assumptions on how they might react given AI and the macros and everything. But just what are you seeing a lot of PR from your end? So clearly things are going good, but any color there would be appreciated.

Sure. Sure, Manav. Thanks for the question. I think you might be talking about some of the world events, let's call them, that are going on that are certainly very serious as far as their impact on the world. But I think what we're seeing is an affirmation that no matter what is going on, and there's always going to be something, given we're in 90 countries, that NIQ is mission-critical in all economic [ climates. ] And our guidance really reflects that kind of condition.

And I have been traveling quite a bit. And I've noticed that like, when I was in Asia Pac about 1.5 months ago. While our clients are certainly impacted by what's going on in the Middle East, their minds are certainly going to be thinking about navigating that. And certainly, them and, in fact, our clients in the Middle East are deciding how they're going to spend their money, but they're still going to spend their money and it may cause a temporary impact to their businesses, but they're really thinking about the big, big picture right now. And that is how AI is going to impact their ability to do business.

And while they're thinking about that picture, they're still doing the things that they're going to continue to do to figure out how to help consumers understand what they're selling and then to get them to buy. So the pricing and promotion, their assortment, their demand decisions. All that stuff is still going on while the world continues to turn. So we're seeing good steady demand as always, with a twist of -- they're trying to figure out not just today, but tomorrow and we're talking about agentic commerce, for example, how they're going to win in the new world.

And I've also been with a significant number of clients as they're deciding how they're going to spend their capital in AI. And it's very heartening for our business to see that they're coming to an even fuller realization how not only our data itself, but the context we provide around the data, which I described, is fundamental to how they're going to connect their own information and other information inside their shops and by providing them kind of a semantic layer, by providing them our brain power and our data they're going to be able to move much more quickly. And so we're seeing a lot of proof of concept and something we call AI builder, and we certainly described a lot about agentic commerce.

So while these things are going on in the world with our clients, of course, and they have to face them day-to-day just like we do. We don't see them reducing demand in any significant way. And we see them actually thinking about the bigger picture, which is going to help us accelerate our growth.

Okay. Got it. That's super helpful. And then maybe just another quick one. The comments on April being better than 1Q. I'm guessing a lot of that is kind of the timing of the macro events, but can you just help maybe appreciate seasonality on 1Q versus the rest of the year?

Sure. Manav, it's Mike. Maybe just when you think about our seasonality, traditionally, you've seen Q1 as our lowest quarter. But when we look at -- what we've seen already in April, our April revenues has been stronger from a -- when we look at our Intelligence business already and overall has been a greater revenue growth than what we saw for the first quarter. So we're seeing strength already starting in Q2. Seasonality, Q1 is generally our lowest quarter of the year, with Q4 being the highest quarter. And so we're seeing that overall, and as I say, seeing strength already in Q2 starting off with April being very strong.

Your next question comes from the line of Kyle Peterson from Needham.

Great. I wanted to touch on the agentic opportunity. I really appreciate you guys giving all the additional detail, both in the materials and the prepared remarks, I think it seems like it's an underappreciated part of the story here. So I guess, could you maybe expand a little more on how quickly this is maybe evolving and gaining momentum during client conversations maybe compared to some past new products and such kind of how quickly is this getting more eyeballs and attention? And how should we think about where this will start to contribute to the P&L? Is this in kind of value-based pricing? Is it upsell cross-sell new logos or all of the above?

Sure. So, good question, a lot of questions in there. I'm going to introduce Troy Treangen, he's our Chief Product Officer, to dive into the agentic component. But let's start with AI generally, we are seeing, as I commented earlier, our clients taking their capital and saying, how can I string together more of my information more of my processes together to get -- to basically do business quicker. And we're seeing them ask us, please help us because we see that you have the way you look at the world, the semantic layer, the way you look at data is what we need to help string together our own business.

And I think we can't put a specific date on these things because we're doing proof of concepts, but those things are real. They will be based likely on a combination of -- a hybrid combination of subscription-based pricing and then usage-based pricing. So there'll be tiers, which will enable us to grow and probably some type of fee associated with actually bringing our world into their world. And so that I see coming sooner than later.

With regards to agentic commerce, I think that's going to evolve rapidly. It may come in fits and starts. And we certainly have a huge role to play there, just like we do across any of the commerce or any of the, let's say, the omni shopper or wherever consumers shop. So Troy, do you want to jump from here?

Yes. So hello, everybody, it's Troy. So I've been in this industry for just about 30 years, and I've never been more confident about the capabilities that we've built over the last several years and what's coming to, I mean, amplify and take advantage of this dynamic shift here. And I think it's shown in just the results that Jim and Mike have talked through in the other remarks.

But how we're tackling this is it's in broader three buckets. It's all about bucket one being product discovery and availability. It's using our rich product content and allowing our retailers manufacturers and the LLMs directly to use that content, so consumers can find the products that actually fit their needs. And that detailed product content is now fully live in 30 markets, and we have more market going to continue to expand in the coming years. And there was many more markets that were added just in 2025 and early '26 alone.

The second bucket for agentic commerce is all around channel and media measurement. Agentic commerce is projected to be a $1 trillion industry in the U.S., and our own research shows that at 74% of shoppers are already using agentic commerce to make product discovery recommendations. And agentic commerce is going to be a channel like every other channel that we measure. That's what we do. And then on the media side, we'll do the media ROI and marketing effectiveness things like we do in the broader marketplace.

And the last bucket of agentic commerce is all around the commerce activation activities, which is embedding the intelligence to allow for better purchase dynamics, path to purchase recommendations and just be embedded in the workflows. And that ties back to the comments that Jim just made.

So in general, the point is the agentic shift is here. We are set up for -- very, very well and the foundation and the granularity of data we have to enable this, and it's coming now. It's not coming in 2030. Clients -- we are working with clients now and all the context Jim just mentioned.

Your next question comes from the line of Kevin McVeigh from UBS.

Congratulations on the results. I guess as you're implementing the AI across the organization, does that come phased based on geography with North America being first and then internationally? Or is it based on what the client need is? And just tied into that -- and just one question in addition to that, how are you thinking about the margin opportunity philosophically in terms of how much would be reinvestment in the business versus sharing that with institutional investors?

Sure, Kevin. So let me take your geographical question. I think you're talking about how we're doing that externally, and we can also talk about it internally. Certainly, global companies, global clients who have lots of capital to put at this, are leading the way many of them are headquartered in the U.S. And so a lot of the thought leadership on their front or the readiness on their front comes from the United States, but I wouldn't say that it's going to start there and sweep the rest of the world.

I mentioned I was in Asia Pac for about a week. And our businesses are really doing well there outside of China, where we've had to kind of relook at our Full View, let's call it itself, right? And so we're doing some things there to bolster that. But they're just as -- clients in Asia Pac, for example, are just as interested in leveraging AI across their business, the big ones internally. And then clients, let's say, that are more in the category, they don't really have that capital to do those things themselves, are very interested in how we're integrating AI capabilities into our Discover product through what -- as you know, we're calling Arthur.

So it's not -- I would call it maybe the larger clients have more wood behind the arrow in their ability to leverage AI, and we're right in the middle of that. And it's been almost exhilarating. I would say, to sit through the meetings where they're saying, "Wow, this is what you are enabling." We didn't think of you that way before. We thought of you in our insights, we thought of your marketing, but not necessarily in our IT space. And so we're getting to a whole new set of buyers. So that's that. And that opportunity is unfolding before us, and we're prepared for it because we've done all the good hard work to make sure our data and our metadata and our models are prepared to do that.

As far as how we use it internally, we've already made a lot of progress, as you know, relative to expanding our margins. I still think there's a lot of runway ahead of us. We're having a lot -- a tremendous amount of epiphany internally, as these tools evolve, I was just at an OpenAI Frontier Conference last week, it was kind of learning with the rest of the folks in the room about how to leverage these tools like really deeply in the organization. So people are making things happen on their own, but we're doing it in a structured way. I think you'll see us -- I'd say we're still -- as much progress as we've made, we're still in the early innings of all this, and we have a lot of runway ahead of us.

Your next question comes from the line of Shlomo Rosenbaum from Stifel.

Jim, I wanted to just start by touching on the volume versus pricing dynamic in the AI environment that we're discussing. And it seems like the growth in the quarter was more weighted towards pricing versus the long-term dynamic of -- or expectation of being more balanced. And I wanted to know, are you seeing pricing going up specifically because of AI? Or is there something else going on? And you mentioned like a large consulting client that took a 50% increase. Did that include something specific for AI, where you're putting together like AI-ready data? We are seeing other firms that are able to really up price because of that AI-ready data, and I'm trying to understand how that fits into your pricing versus volume dynamic? And just overall, how you're expecting that to improve the revenue growth for the company?

Sure. So somewhere, I think, in our deck, we mentioned that we -- clients who are using AI are buying more and more of our services. And so as they see that they're able to get more and more value, it does make our, let's call it, pricing and negotiation position stronger because the value of what we bring to the table is even more self-evident. And our renewals go much more smoothly because they're not as much focused on the kind of the old way of doing things. They're trying to figure out for themselves how they're going to use AI internally and with our information combined to create a ton of value and they're seeing that happen.

The specific deal that you mentioned with the 50% price increase, again, driven by the fact that we're able to say, look, we know the value you're getting out of this. So as you know, our Full View strategy, we're always gathering more and more information, more and more context, more and more semantic layer, more and more -- building more and more models. What's happening is, though, with AI, it's being able to be used more, even more so. And the value is becoming, like I said, self-evident. So I think what's happening is there's less friction on the pricing and you're going to see that trend continue. And then we've got to do the good hard work of putting in place more usage-based and consumption-based models as our clients evolve their use of our information inside their shops essentially.

And Shlomo, it's Mike. I would just add to Jim's comment there. Look, our revenue algorithm remains intact. It's balanced between the three components that we've continually talked about since the IPO. Price, cross-sell and up-sell, and that we're continuing to grow in our adjacent verticals. And AI, as Jim highlighted, has continued to be a big component of that and helping us generate new wins. But I guess I would just reiterate that balanced algorithm is important in terms of what we're driving overall.

Okay. Great. And Mike, maybe just one more on the housekeeping. You mentioned I think it was $55 million in one-time expenses from the restructuring program. How much were cash costs? And are you expecting the rest of the cash costs to come out primarily in the second quarter as well? I'm just trying to think about the pacing of the free cash flow through the year.

Yes. You'll see more of that cash flow happen in Q2. I'd reference you back, Shlomo. And when you look at our Q, look at footnote 11. And in there, we highlight out the restructuring charges and the cash cost payments that have happened. So it will give you a very good reconciliation of it, but just as a reference point. But yes, you're going to see more of that cash cost go out here in Q2 overall.

Your next question comes from the line of Andrew Nicholas from William Blair.

To stay on the AI topic, I mean, a lot of positive comments here today. I think one of the questions that I'm kind of thinking through is the impact from a competitive landscape perspective. Are you noticing -- it sounds like interest from clients, but to what extent is your investment in the AI capabilities of the platform, a differentiator on the client win side? And is this something that you would expect to be a share shift kind of catalysts over the next couple of years? Or is it something that kind of lifts all boats in the industry from a supply and demand perspective? Because I know some of your larger competitors are also rolling out tools, although I don't have a great sense of just the different capabilities relative to one another.

Sure. So it's a good question. Going back to the basics, we -- through all of the shifts in technology have to have the Full View, right? So we have to understand consumer shopping behavior better than anyone else, and we have to put information around that and build the models around that and build the delivery mechanisms around that, that enable our clients to do their jobs every day. And so we never lose sight of that, right? Because if we lose that, that's our big differentiator.

And we also have to be really, really good at not only AI, but other kinds of technologies to extract value from the information that we provide to integrate it quickly and easily into our clients' workflows as their need to compete by being faster and smarter and cheaper within their -- and their internal operations continues to evolve. So it's really a combination of both that's going to set us apart and continue to set us apart.

I would say that at the global nature of our business, the deep understanding we have of our clients because we understand how to deliver information to them in the context within which they run our business is enabling us to take a bigger footprint because they're realizing having a bunch of suppliers isn't really helpful, right? And if we can -- as we continue to evolve and do a lot of things, that they need. They're saying, well, let's consolidate, and it's allowing us to take a bigger footprint.

And some of our takeaways have been directly related to our ability to show the Full View. At the same time, we're able to show how using, let's say, AI-based technologies to continue to draw data -- sorry, insights out of the information quickly is showing us to be differentiated. So it's really helping us on both fronts, I'd say, as far as doing more cross-sell and up-sell, but also taking share.

Great. That's helpful. And then for my follow-up, and Mike, I think you touched on it a little bit in the prepared remarks, but maybe just more directly, is there a way for us to think about how much of the Activation strength in the quarter was timing or maybe projects that spilled over from second half of '25 versus anything specific to overall business momentum building in the first quarter?

Yes, no problem. So look, when we look at that acceleration of 5.3% organic constant currency growth, for the first quarter for Activation, it reflects both our backlog catch-up as you referenced, and real operational improvement. Q1 included some conversion of those project backlogs. But look, from a structural standpoint, 78% of our Activation revenue comes from Intelligence clients and 40% of our Intelligence clients currently buy Activation products and AI tools and improving what we're seeing as an overall pipeline. So without getting into all the specifics, nonetheless, we feel very good about the cross-sell runway that we have in front of us is substantial. And we're continuing to see improvements as it relates to the curve, but we thought it was appropriate to make sure you heard that part of that was a backlog that happened from Q4 that moved into Q1 overall.

Our final question comes from the line of Jeff Meuler from Baird.

So eCommerce revenue growth, obviously doing really well for you lately. Can you talk about eCommerce data aggregation as AI capabilities advance both the opportunity for you? And maybe talk through the -- your sustainable advantage and where it lies relative to competitors or upstarts that may be AI-enabled on going after that data?

Sure. I'm going to have Troy jump in here. So we can let him -- you can hear his voice and let him participate. But let me -- before we say that. So e-com is just another channel for us. And it's an extremely important channel. It is sold separately as an up-sell, cross-sell, and it's -- as our clients, some of whom haven't viewed e-com as a significant channel are realizing, oh, this is a significant channel. We have a tremendous amount of upside. So in the baseball analogy, we're in the early innings on being able to capitalize on that, not only in the U.S. but globally. And Troy, why don't you jump on the kind of competitive aspects of what makes us special in context of the Full View.

I think the other thing to add here is the breadth of the capabilities we have in e-com. It's not just a basic one product that we deliver within that space, whether it's digital shelf, digital purchases, whether it's the coverage we deliver through all the different mechanisms of eCommerce with agentic commerce and social commerce just...

[Technical Difficulty]

Ladies and gentlemen, please hold for technical difficulty.

Guys, I think we lost Troy somehow. And I'll just try and finish up. I think he was talking about the scope of the e-com data that we have across the significant number of actual, let's call it, point-of-sale providers, but also in our Consumer Panel data, which really gives us an advantage. And then, of course, it's on a global scale, and we have a significant number of consumers. And then it's the integration of that information together with the other channels that really gives us our advantage.

So it's not -- we always worry about what's going on in the world in the competition, but there really isn't like a single upstart is going to say, here just use us for here, but use NIQ for everything else. I don't see that as a significant competitor for us in this space.

Got it. And then on the...

Go ahead, Jeff.

Let's go ahead and let him follow up.

Go ahead, Jeff. Go ahead, sorry.

Just on margin and talking about getting margins into the 30s over time, obviously, making good progress towards the medium term, mid-20s target. Once you get to the mid-20s, is there some framework we should be thinking about either in terms of time line to get into the 30s or like annual rate of expansion past mid-20s?

Yes. So Jeff, we haven't given a time line to get to the 30s yet. But what we talked about in previous quarters and during the IPO process itself was with our fixed cost structure and continued mid-single-digit revenue growth, we should generate 50 to 100 basis points continued margin improvement with the tools that Jim referenced that we're seeing, those are accelerants. And accelerants to revenue growth, accelerants to managing costs, et cetera, and we're continuing to recalibrate it. So we definitely see a path to getting to those 30s. We will continue to update you and the rest of the analysts on our time line to that. But nonetheless, we haven't defined that yet, but we definitely have a path to it and we'll continue to communicate that out into the future.

Yes. I'll close with this. I'd like you guys to think of our company as very target-rich when it comes to AI and how it can make us more efficient, how it can make us do a better job for our clients and how it really allows us to even draw more value out of our information. And so it's going to be a combination of accelerated growth and also how we are using AI and then frankly, other tools to get even more efficient.

This concludes the question-and-answer portion of today's call. I will now hand the conference over to Jim Peck for closing remarks.

Thanks, everyone, for joining us today. We're at an exciting time. We are at the forefront of an exciting secular growth opportunity and are rapidly laying the foundation to capitalize on our leading position in commerce intelligence and agentic commerce. I'm excited by what we're building and the value we can create. And I look forward to updating you on our progress on future calls.

This concludes today's call. Thank you all for attending. You may now disconnect.

I am part of the business and information services team here at BofA. This session will be on NIQ Global Intelligence, and I'm pleased to have the Chief Financial Officer, Mike Burwell with us . We're going to construct this session as a fireside conversation, and we'll [indiscernible] go the sort of questions if time permits. So thanks, Mike, for joining us.

Glad to be here.

So it's been almost 8 months since NIQ has gone public. It seems like the first year of a company going public is really the time that sets the building block for the years to come. Now with several quarters of public performance, what has been the biggest misconception and how the investment community perceives NIQ full view compared to your internal reality?

Yes. I think the biggest misconception is that NIQ is a static data provider. Internally, we see the business is becoming more embedded more differentiated and frankly, more valuable as our clients continue to operationalize AI. In fact, our client behavior tells really -- to me, a real compelling story and that is that a 105% of our net -- we have 105% net dollar retention. We have 98% gross dollar retention, over 30% increase year-over-year in terms of our data being used by our clients. So when I think about that, that's not about commoditization. Really, frankly, that's deeper embedment that we're seeing actually in our clients.

We're also seeing roughly 2/3 of our top clients, or top 50 clients using one of our AI native products. We've launched 3 in the marketplace today, and that's not AI-enabled, this is just in terms of AI being used as stand-alone products. I guess I just -- when I think about our AI BASES Screener, our AI developer and now AI analysts, which we launched last weekend, these are AI native products that we are seeing adopted already in the marketplace.

And also, when I think about our full view, it's more than just data. It's more than just data and that it's governed, it's permissioned, it's harmonized systems of records across 90 markets. So as we see AI move in more and more into high state decisions, we cannot have hallucinations. It's important for us to be in that role to be able to help our clients be successful. So when I think about it, what AI is doing for us is continue to drive durable revenue growth and ultimate value for all our stakeholders, including our investors.

Perfect. And then the IPO and the subsequent debt refinancing has fundamentally transformed the capital structure. From a CFO's perspective, how do you balance the need for short-term public market consistency with the long-term technology investments to required to maintain your leading market share?

Yes. I think it's not an either/or question that you're putting forth, which is how do you make the short-term consistency commitments that we've made to our investors but equally make sure we're investing for the long term. And the good news is we spent well over $400 million investing in our platform, and we did that before we went public in terms of really bringing that platform to life. But equally, when I look at the fourth quarter of last year, we did 410 basis points improvement in our margins.

At the same time, we continue to invest and we continue to invest in AI. We continue to expand our panels. We continue to invest in our full view capabilities. So look, we set and looked to set guidance that we can hit. So that's what we set up in terms of the short-term view. But over the long-term view, making sure we will continue to invest in this platform for the future.

And when you look at just on a CapEx standpoint, we're looking to spend 6.5% to 7% consistently going forward, of which 70% of that's growth capital, the other 30% really being maintenance capital in terms of what it is that we're looking to spend on. So I think we're balancing both that short term and long term, and that's why I use that word and as opposed to or.

Got it. Great to clarify. Another AI question. A common theme across the Intel services space has been AI and the replicability of data. For those of us in the room who are a bit newer to the story, can you walk us through how you ensure NIQ's data remains proprietary and for parts of the data asset that may not be as proprietary? How is the embedded list of the data, make it difficult for customers to switch?

So our advantage is scale, breadth and granularity of our data engine. And the complexity and governance of unifying thousands of data sources into a permission system clients can rely on daily for making major operational decisions and run their business. Now said another way, what we're teeing up is we cannot have hallucinations. People are making multimillion-dollar decisions based on our data, and we can't be wrong. So it's something we take very seriously. So when we think about scale, we're operating in 90 countries in terms of what we're operating in.

When I think about breadth, we're bringing in retail data, consumer panel data, e-receipt data, e-commerce data, we're bringing that all together and harmonizing it in a proprietary product that really builds a reference data later that people are able to access. And that's what creates this, what I call decision-grade intelligence for our clients. Look, we have strong governance. So it's our data. Now you just can't use it in any way you want. And we've made those commitments to the various data sources that we've entered into to be able to get that information.

And look, we see our clients have embedded it operationally into their business practices, whether it's pricing, whether it's promotions, whether it's supply chain, all those workflows are absolutely what we're seeing happen across our client base. So look, we're very well embedded on changing us out or switching us or simply saying you're going to book an LLM model to this is not an easy feat and not something that we see happening.

And building on that prior question, in an era where data scraping is common, why is direct from retailer data still the gold standard for enterprise demand?

Yes. Look, when I think about high-price decisions or very important decisions, call them high-stakes decisions, if you will, look, it requires trusted, permissioned and reconciled data and not just scraping information. Now we do web scraping, too, just to be clear, but it's in the context of putting it all together. It's not just taking some fragmented information, you're going to summarize that and project it to the future and have some client making decisions on it. We just don't see that to be the case.

So when you said that gold standard around retail data, I think it's a gold standard around all the data that we bring into the house and how it is that we look at and make sure it's accurate, how can you harmonize it, how can I put it into metadata. It's not just data, it's how do I take that data and turn it into advice and help our clients make better decisions. So look, as AI increases, the cost of being wrong continues to raise. And look, the value of what I would call enterprise-grade data only goes up. and it plays directly to our strengths overall.

Got it. And earlier, you mentioned that of the top 50 clients that you have, I think 2/3 you said was adopting AI native products. Does this suggest the moat is widening as your data becomes more deeply embedded in your clients' own proprietary AI models?

Yes. Yes, it does. I mean if AI widens the moat by increasing embedment as we see it being embedded and usage intensity. As you quoted those numbers, as we look at the clients, our top 50 clients are adopting over 2/3 of our AI native products. We also see those clients then are the same clients that are increasing their spend with us as opposed to non-adopters. Data consumption is up 30% on a year-over-year basis.

And just to put it in context, we process 4 trillion transactions a week in terms of data sources that we bring into our platform, up from $3.4 trillion 12 months earlier. So a tremendous amount of data. But the role that we play is an important role in terms of being able to harmonize that data, bring that data to life, and it's only increasing that moat when you think about people using that 30%, and you're seeing that increase happening with the AI native products.

Great. And then I just want to switch over to your medium-term outlook of mid-single-digit organic revenue growth. It's built on a signs of retention, cross-sell, upsell, innovation, pricing and penetration to new markets. Can you walk us through what parts you are most excited about in terms of upside opportunity? And where in the algorithm can you see sustained level of outperformance?

Yes. I'm excited about our business overall, but I'll break it down in a few points. So one, when I look at our intelligence business, it's remained durable. And with our pricing that we have to be in place and our renewals, we've seen that for the last almost 7 quarters at greater than 6% revenue growth. So we feel good about what we're seeing as it relates to our core intelligence business.

Our activation demand is intact. We've seen certain clients defer a little bit of their timing of those projects, but we don't see any difference in terms of demand in the marketplace overall. As I said earlier, as you look at our top 50 clients, 2/3 of them are adopting our AI native products. And so we feel good about our activation business and continue to see that grow into the future.

And what I'm most excited about, and you asked that in your question, is our new capabilities. When I think about AI BASES Screener and how I can develop new products and get them to market, one of our clients in the market has touted it that they can develop new products 65% faster by using AI BASES Screener because they're able to look at synthetic consumers, where before it would take you weeks or months to be able to evaluate that product in the marketplace, now you can do it in a matter of minutes.

When I look at our AI development in terms of being able to develop that new product and bring it to market and managing those supply chains is something that we're able to do even faster for our clients and helping them. And equally, the new product offering that we have coming out as it relates to AI analyst is really looking at personas, over 40 personas that are out there. And say you're a brand manager, we're going to help you ask the right questions to be able to do this in a democratized way where before you may need to be an NIQ specialist to be able to do it, now you're able to ask natural language questions and get responses based on your persona.

Now we haven't launched all those -- all 40 personas yet, but we've just launched a few in the marketplace, but we're going to see those overall. So look, I'm not counting on upside in our model, just to be clear. So as you think about it, but I think the building blocks are in place when I look back and say, look at our intelligence business, look at our activation business and look what I really see in terms of our new capabilities overall and probably last but not least, to think about our new verticals, I feel good about what our growth algorithm looks like going forward.

Awesome. A lot to be excited about. I think while intelligence growth has been robust, activation, like you said, has been fairly flat over the year. You're taking decisive actions to return activation growth in 2026. I know you mentioned that you're not seeing -- you're seeing a deferment, not really a delay in customers there. So can you just walk us through what is needed internally in client behavior for them to see confidence and for you guys to see confidence in this?

Yes. I mean, look, activation softness to date has been driven by project timing and uneven client conditions, not demand erosion or some people have put forth to us that it's AI disintermediation. Again, I go back to that 60% of our top 50 clients using an AI native product today. I mean, so the demand is there. It's increasing engagement and repeat usage. But to be fair, we have sharpened our focus on a few -- number of offerings we've had.

We've had over 64 offerings in this space. We're looking at narrowing down that. We're also improving our discipline in terms of how we convert those leads into revenue and wins, which I think directly deals with some of the past friction points. So look, in a nutshell, I look at it, our demand is intact, execution is improving. Activation is well positioned to grow in 2026, and that's our expectation.

Great. Let's switch really quickly to margins. It seems like during the era where NIQ was private among the transformation steps was cash data costs, which is now about 15% of revenue from 21% back in 2021. From a CFO's perspective, is there a theoretical floor for these data costs? Or will continued AI scaling drive that percentage evenly?

Yes. As a CFO, I probably should never say there's a floor, to be fair. But I mean, I just go back to the fact that you quoted on our data costs back in 2021 were 21% of revenue. Today, they're -- for the last year-end, they were 15%. The biggest impact of that has been the value proposition that we're bringing back to clients. So when you think about data, we get data roughly 4 ways. We buy the data, we rev share the data, we get the data for free or we trade and barter the data. So many of our retailers want feedback back on their operations. And so we enter into those arrangements.

Because of the value proposition that we're giving to them with our platform and their ability to be able to leverage that capability that we have, we're able to negotiate different deals than we've had in the past. So to me, it speaks to that data going down is something that's just enhanced capabilities, the quality of the product and what our clients are thinking about it from a value standpoint overall. So to me, it continues to support our margin expansion.

Some people have asked me and maybe just how do you compare yourself to other clients? And what's the right margin for the business overall? We've looked at it and said, if you look at many of our peers, if you will, in a broader case that, that margin looks more like 40%. And we said in the midterm that we would get to the mid-20s, and we're spending 15% on data cost that's stitching you right in that bucket, but we're not willing to stop there.

We're looking to continue to drive with our revenue growth algorithm and 80% fixed cost base to continue to drive margin improvement. And in fact, we've put forth a 200 basis point improvement in margins in our guidance for 2026, of which half is going to come from our AI productivity actions and the other half is going to come from just revenue growth and with that fixed cost base to continue to see that improve.

It just leads into my next question about your 2026 margin. You just touched on it briefly, but just as you think about not just 2026 margin, but the longer-term cadence in '27 and '28, how should investors think about the cadence there? And what are some of the factors that will unlock margin expansion?

Yes. So we look at back to '25, we improved margins by 320 basis points for '25. We improved them by 410 basis points in the fourth quarter of '25. And we put forth a 200 basis point improvement for 2026. And then beyond that, what I think is we ought to generate 50 to 100 basis points improvement with our revenue growth algorithm and our fixed cost base. So right now, that's what we continue to see. I mean, I won't say forever. But nonetheless, in our foreseeable future in the years that you talked about, we should continue to see that kind of margin improvement.

Got it. Part of the IPO story has been to use the proceeds to reduce your leverage, with the target set to sub 3x by the end of 2026, once you hit those targets, how do you see the appetite for capital allocation adjust, if any? How would you manage interesting data assets that come up on the M&A block during that debt paydown period?

Yes. So we had set a target to get below 3.5x by the end of '25. We ended the year at 3.25x. And as you said, we've put forth to get below 3x by the end of '26. And we were free cash flow positive at the end of '25, and then we'll see the further inflection as it relates to 2026 and beyond. We were looking probably 2 to 4 M&A deals a year, but we don't see them as big deals. We don't see any place that we've got a void in terms of geographic point we don't have or data that we don't have to be in place.

But we are seeing opportunistic deals coming our way. We did 2 deals last year. And when we look at these deals that they're going to be accretive in year 1. They're going to be tuck-ins when you bring them into our distribution channel that we're going to be able to really drive them pretty quickly overall. And so when we look at that, we'll look to continue to generate that free cash flow, use that cash flow to pay down debt and continue to drive it below 3.

We will continue to look at that capital or cash flow to look at these tuck-in M&A deals overall. And look, the goal is flexibility at the end of the day, is to allocate capital where we see the most value, and we'll continue to do that going forward. But that's kind of our philosophy and thinking about it at this point.

Got it. 2025 is described as an inflection point. And like you mentioned, you achieved positive free cash flow ahead of schedule. How does that early inflection change your day-to-day strategic flexibility and ability to pursue opportunistic growth in the current environment?

Yes. I mean positive cash flow gives me more optionality for sure. So I'm not looking to change our discipline around making sure we're continuing to drive free cash flow into the future. As I looked at the second half of '25, we put forth what kind of free cash flow we're going to drive, and we were going to be positive over the second half of '25, and we delivered $315 million of free cash flow over the second half of 2025.

And as a result of that, what's that position us? It's lower interest expense significantly, both from the deleveraging of the IPO as well as the refinancings that we had done. And equally, the onetime items that we've had, we're structurally continue to drive those down. We know that, that's important for our investors, and it's important for us going forward to make sure the earnings line up with cash, and there's not a lot of adjustments associated with that.

But at the end of the day, this free cash flow gives us the ultimate ability to invest, to delever and respond opportunistically to the things that are actually happening in the marketplace. So look, I don't think we want to stretch the balance sheet, but we want to put the balance sheet in the right shape, and I think we're headed in that direction overall.

Great. And before we end our conversation here and open up for questions, I'd like to do a quick word association to something we're doing with the presenters this year at our conference. So tell me the first thing that comes to your mind, I'm going to say the following, going public.

A lot of work.

Data costs.

Going down.

AI.

Misconstrued by the market.

Got it. And the last one, your CEO, Jim Peck.

Awesome. Best CEO I've worked with, and I've worked with several.

Perfect. Let's open the floor up for questions, if any.

I have a question. Everyone is talking about AI risk. What -- have you seen anybody even try to use whatever tool? And then if they were to try to do that, could you charge like some sort of access fee because they're not going to just go cold turkey, like completely shut you and start -- it's going to be -- because I'm hearing some of the firms -- some of the software companies, that's what you're doing. They're like, okay, fine, you want to go start using AI tools, but you want to get our data and you're going to have to pay for the data then.

Yes. So what I see is kind of a bit back, people view that they can get access to our data. It's our data. It's permissioned only by us. And we spent a lot of time cultivating those various data sources over time. So we're not just going to give them to someone's LLM model and let them go roll with these things. But we have looked at segmenting our clients into kind of 3 buckets. I call it AI builders, which are the more sophisticated people that want to use it. We call it AI buyers and then AI beginners. And so you've got different flavors of clients and how they're using AI.

But ultimately, it's a permissioned data. It's not just about data, it's also about advice that we're bringing into it. And what I mean by that is you're looking at what was purchased, but why was it purchased? What else was in the basket? How am I giving you those insights to make those decision points? So look, we're continuing to work with our clients and want to be adaptable, but we're not just giving our data away. And frankly, without our permission, you can't use it. And so we have no one client that's greater than 3% of our revenue. So that's the reality of what's happening.

And so how are you going to get the data? You just can't get it without going through us. And then how we get that data is, we've got Bodegas where we're going in India and beginning inventory, ending inventory, give me your purchases and I back into your sales, and we have a whole field force that's going out in terms of doing that stuff or how you compare e-commerce receipts between various suppliers to match them up is not easy work, that's been going on for years. So this proprietary data we have is unique. And so we're not giving it up easily without making sure we're getting paid for it.

Yes. And the next question is if you have [indiscernible] but then you're telling me your data costs are going down. So like how are you getting it cheaper if -- I was just trying, if it's proprietary, then people should be asking more for.

Yes. Well, it's going down because we're giving a greater value proposition to it. They're able to use it in an easier way. So assume you're Walmart just as an example. And we're getting those detailer POS reads every single day from them, but also they want impacts of what's going on in their particular stores. So we're giving them access to our Discover platform, and they're able to ask in a natural language process that allows that value creation for that store manager or that individual that's responsible for that area to be able to get that value creation a lot higher. So that trade-off is changing every single day. So I'm not sure that impacts the proprietary data as much as it's just a value exchange that's going on.

I think we have time for one more question.

[indiscernible] CPG marketing spending environment kind of weak [indiscernible]?

Yes. So the CPG environment has been weak for a period of time. But what we've seen is you need more data to be able to -- if you're going to reduce your advertising spend or your trade promotion spend, you need our data, you're not going to fly blind to make those decisions. So we're a small portion in the grand scheme of that spend. And as a result of it, we're seeing that demand happen as they're thinking about cuts or alternatives or can I delay this for a year. They're not flying blind. They want our insights to be able to make those decisions.

All right. That's all the time we have. So thank you so much, Mike for joining.

Thanks.

Good morning, and welcome to NIQ's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions].

With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to NIQ's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are CEO, Jim Peck; CFO, Mike Burwell; and Chief Product Officer, Troy Treangen. Following Jim and Mike's prepared remarks, Jim, Mike and Troy will take your Q&A.

As a reminder, our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release. Any forward-looking statements that we make on this call are based on our assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Also, during this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release which is available on our IR website, investors.nielseniq.com. A replay of this call will also be available on our IR site. And unless otherwise noted, growth rates mentioned on this call are versus the comparable prior year period.

And with that, I'll now hand the call over to Jim.

Thank you, Will. Good morning, everyone, and thank you for joining us. 2025 was a defining year for NIQ. We entered the public markets executed consistently against our profitable growth strategy and exceeded all key financial targets set at our IPO. 5.7% organic constant currency revenue growth, expanding adjusted EBITDA margins 320 basis points to nearly 22% generating $350 million of free cash flow in the back half and achieving free cash flow positive ahead of schedule. And we deleveraged to 3.25x EBITDA. These results demonstrate our strengthening business model and disciplined execution.

For the balance of my remarks, I will address how NIQ is positioned to win in an AI world. I'll reinforce how AI strengthens NIQ in 3 ways: First, how our governed data mode and domain expertise make AI work for clients. AI models require precise governed data to high stakes decisions across the enterprise. From pricing and assortment to innovation, trade allocation and advertising. This is exactly where NIQ operates.

Second, how we're using AI to drive revenue growth and product innovation more deeply embedding at the application layer to serve clients. And third, our AI delivers structural operating efficiency across our business. First, the scale, breadth and depth of our data mode advantages us. We now cover $7.4 trillion in consumer spending worldwide. We aggregate consumer shopping data across offline and online sources, point-of-sale data from thousands of retailers and millions of stores across developed and emerging markets. proprietary traditional trade data through our NIQ field network, digital commerce assets and the largest global e-receipt panel. Our Connect engine ingests codified, categorizes and enriches approximately 4 trillion data records per week, up from 3.1 trillion just a year ago.

We generate substantial proprietary metadata across more than 240 million items and tens of millions of product attributes. This context layer is critical to client decision-making. It is continually refreshed, standardized and enriched to provide a current comparable view of consumer behavior. Beyond that, the proprietary and permission data we ingest and the intelligence we create are governed by long-standing agreements with retailers and manufacturers.

These are not merely contractual arrangements. They reflect decades of trusted relationships and rigorous data stewardship. This governance framework defines how our most AI forward clients embed NIQ's decision grade intelligence directly into their pricing, innovation and operating management systems. It also reinforces NIQ as central to responsible enterprise-ready AI deployment. We enter client data and NIQ intelligence remain protected, permissioned and used only with explicit authorization. And as leading AI companies have acknowledged this week, domain embedded governed systems are essential for AI to work effectively.

Strict governance principles also underpin our strategic partnerships with the likes of Microsoft, Google and Snowflake integrating NIQ intelligence into enterprise AI environment. as AI moves from insight generation to operational deployment, NIQ's trusted, govern data and domain expertise provide clients a decisive advantage securely turning intelligence into mission-critical action. This has been NIQ's strength for decades. We see measurable adoption across our largest clients.

Client data consumption grew more than 30% year-over-year, a leading indicator of deeper workflow embedment. More than 60% of our top 50 clients adopted at least one AI native NIQ product, increasing platform penetration across our largest accounts. And Adopters of NIQ AI products are growing their investment in NIQ 30% faster than nonadopters, demonstrating clear monetization leverage from AI integration. Put simply, increased AI adoption strengthens NIQ's role inside enterprise decision systems.

Second, AI is driving meaningful revenue today and accelerating innovation across our platform. Total intelligence revenue grew 7.1% in organic constant currency in 2025, led by continued strength in EMEA and Americas. Retention and expansion remained strong with net dollar retention of 105%, gross retention of 98% and annualized subscription revenue growth of 6.6%, our seventh consecutive quarter above 6%. Several of our new capabilities are now growing at double-digit rates, reflecting strong client adoption.

E-commerce is a clear example of this momentum. Revenue growth accelerated to 32% in 2025, and cross-sell penetration increased to 29% of intelligence clients, up from 19% last year. AI enabled us to expand our full view measurement capabilities including broader Amazon coverage and a new read into a large U.S. club retailer. We ended the year with more than 190 full view measurement clients and expect continued growth in 2026.

In consumer panel, we delivered strong renewals and accelerated competitive share gains in Western Europe and Latin America. In the U.S., we expanded our omni shopper panel to an industry-leading 250,000 panelists with a clear path to scale further using AI. Panel revenue grew low double digits in 2025, and we are increasing investment in 2026 to expand coverage and capture additional market share. When paired with our measurement data, our panel assets power our differentiated full view value proposition.

This was central to 8-figure renewals with several multinational consumer product companies, Full View anchors their pricing, promotion, assortment and category growth strategies across highly competitive markets. Also, our AI analytics and forward-looking capabilities position us not just as a measurement provider, but as a transformation partner as clients move toward predictive and automated decision-making.

We also saw a strong performance in adjacent and high-growth markets. In new verticals, AI enabled expansion in packaging and rapid scaling of our media offerings. Along with government and financial services, these verticals delivered mid-teens growth in 2025. Finally, SMB grew at high teen rates, supported by strong retention across geographies. We continue to scale AI-driven go-to-market capabilities, including expanding an AI agent pilot to 66 markets improving targeting and future growth potential.

In activation, we're seeing the continued strong client adoption of our new Gen AI native offerings. Bacy's AI screener expanded to 209 categories and we more than doubled the client base to 36 in Q4. Client engagement increased as well with more than 1,000 innovations tested last year. Basic product developer adoption increased as well in Q4, and we cross sold 35 of our largest clients in 2025. This early success underscores the central role our AI platform plays in helping clients innovate and grow. While these AI solutions grow from a small base, our activation revenue was flat in 2025. This reflects varied project timing as some clients navigate an uneven landscape. However, retention is high and pipeline demand remains solid, reflecting growth potential, not displacement.

In 2025, 78% of activation revenue came from clients that buy intelligence and 40% of our intelligence clients by activation, implying large cross-sell upside. In 2026, we've taken decisive action to capture this opportunity, strengthening activation leadership, sharpening go-to-market focus and embedding AI tools to improve pipeline management and conversion. Our data mode positions us at the forefront of AI innovation.

For example, in 2026, we were evolving Discover into an AI-powered intelligence hub that recommends NIQ products, data and analysis tailored to specific client needs. In January, we beta launched our Agentic AI analyst feature in Discover, enabling natural language interaction across our data sets for more than [ 40 ] client personas, including pricing, distribution, account performance and shopper analysis.

As engagement and cross-selling accelerate, we are evaluating new pricing models in 2026. These include usage-based approaches and an AI innovation index that better align pricing with the value we create. So our proprietary permission data is becoming more essential. Our applications are becoming smarter, our workflow is more automated. As AI embed into enterprise decision systems where clients have billions of dollars at stake, NIQ becomes even more mission-critical.

The third benefit to NIQ is also taking shape, measurable cost efficiency. As previewed in November, we accelerated the use of advanced technologies, including AI to drive operational excellence. For example, AI-assisted automation and data operations reduces manual effort and improves quality. In Germany, Agentic AI now codes tens of thousands of products in hours instead of days cutting data costs by nearly 70% and accelerated our product insights launch to 4 new European markets.

AI tools and engineering delivers roughly a 10% productivity uplift and 25% faster time to market and to scale output across more than 2,200 engineers without adding headcount and directly supporting margin expansion.

In sales, AI enables sellers with 40% faster access to sales materials, reduced time to proposals, better pipeline management, and less administrative workload. This is increasing time spent selling and we see ample opportunity to further optimize our sales motions in 2026.

In customer support, we upgraded AI search across 3,000-plus documents and expanded AI-assisted ticket resolution cutting manual workload by 17% and improving response times and quality. While driving 81% self-serve via NIQ service suite, and we are also continuing to deploy AI tools across finance, legal and HR to automate repeatable work. AI is driving structural cost efficiencies, underpinning our confidence in continued margin and free cash flow expansion in 2026 and beyond, which brings me to our new 2026 -- optimization program announced today, these actions signal a prominent next phase for NIQ, reflecting our commitment to leveraging AI, automation, advanced digital tools and data-driven processes to streamline operations, enhance agility and reinforce competitive advantages.

While this program increases onetime investments in 2026, the result is a structurally stronger margin profile and a greater free cash flow over time. As free cash flow runs in 2026, our capital allocation philosophy remains consistent. Prioritizing deleveraging while investing for durable growth. We will also continue to pursue targeted accretive tuck-in acquisitions that advance our strategic growth priorities, complement our product road map and expand our geographic footprint. We will maintain our disciplined growth-oriented CapEx at 6.5% to 7% of revenue focused on panel expansion, platform enhancements and AI capabilities.

Looking ahead, our 2026 strategic priorities are clear. Execute our revenue growth algorithm against areas of strength, invest prudently and drive the next phase of AI benefits. Mike will discuss our 2026 outlook in more detail, but highlights include a 5-plus percent organic revenue growth, meaningful adjusted EBITDA margin expansion to more than 23.5%, $235 million to $250 million of levered free cash flow. And continued deleverage towards [ sub-3x ] by the end of 2026.

Intelligence growth remains durable, activation returns to growth. AI becomes increasingly embedded both in our revenue engine and our cost structure. In closing, 2025 was an inflection point. We strengthened our growth, expanded margins, generated positive free cash flow and strengthened our balance sheet and advance our AI leadership.

Before I turn the call over to Mike, I want to acknowledge Tracey Massey's decision to step down as COO for personal reasons. Over the past several years, Tracey strengthened our client-focused commercial organization and we'll continue to act as a trusted adviser to me and the rest of the management team. I want to thank Tracey for her contributions. I'm taking this opportunity to step further into the business, and I remain fully committed to driving its continued success. We're streamlining our operating motion as we enter 2026 with a strong unified leadership team and clear momentum.

I want to thank NIQ associates worldwide for their expertise and dedication in 2025 and I look forward to what we're going to achieve together in 2026. With that, I'll turn it over to Mike.

Thanks, Jim, and good morning, everyone. 2025 was a strong year with 5.7% growth margins expanding to nearly 22% and $315 million of back half free cash flow, achieving free cash flow positively ahead of schedule. We exceeded the guidance we provided at our IPO and in November. We also strengthened our balance sheet through debt repayment and reduced leverage.

Our 2026 guidance builds on this momentum, reflecting accelerated technology, adoption and continued progress on growth margins, free cash flow and deleveraging. As we dig into our Q4 results, our Q4 organic constant currency revenue grew 5.7% to $1.1 billion. Adjusted EBITDA growth accelerated to 30% to $289.2 million, and we expanded adjusted EBITDA margin by 410 basis points to 25.4%, driven by profitable revenue growth integration and early AI-driven efficiencies.

From a segment perspective, EMEA was our strongest performing region with intelligence driving renewals, value-based pricing, cross-sell, upsell and continued expansion into new verticals. EMEA grew 7.5% on an organic constant currency basis. Americas grew 5.7% and supported by broad-based intelligence momentum.

APAC grew modestly at 1.2%, and we're optimistic about the 2026 as our investments in retailer relationships and data coverage take hold. From a product perspective, total intelligence revenue grew 7.7% in organic constant currency. Annualized intelligence subscription revenue increased 6.6% and marking our seventh consecutive quarter of 6%-plus growth. Our net dollar retention and gross dollar retention at 105% and 98%, respectively, underscore the durability of our revenue algorithm and the mission fatality of our solutions. Our highly reoccurring activation revenue remains sticky with strong retention. While project timing remains varied, our new AI products are growing. As Jim noted earlier, we've also taken decisive actions to further improve growth in 2026.

Now I'll walk you through the details of our P&L. On expenses, our Q4 total expenses were roughly flat, driven by continued cost discipline, operational efficiencies and lower restructuring costs. OpEx grew only 1% for the full year and were flat excluding the onetime stock-based comp charge in Q3 related to our initial public offering. Total onetime and restructuring costs were $53 million in Q4. Full year onetime costs were $136 million, in line with our IPO guidance. Depreciation and amortization was $163 million for the quarter and $632 million for the year, approximately 14% of our revenue. The increase is primarily driven by changes in foreign currency, and to a lesser extent, higher amortization from our 2025 M&

A. As I look below the operating line, Q4 GAAP interest expense was $60.7 million, driven by lower debt balances from our IPO and our 3 successful debt refinancing in the past 18 months. Our Q4 changes in foreign currency resulted in a $7.7 million gain in the period versus a $31.3 million loss last year, driven primarily by remeasurement of our debt obligations held in foreign currencies.

Our Q4 income tax expense was $54.2 million or approximately 15% of adjusted EBITDA in 2025, in line with our IPO expectations. Full year 2025 net loss and adjusted net loss improved by $445 million and $211 million on a year-over-year basis, respectively, reaching positive adjusted net income of $61.9 million.

As I turn to liquidity, we finished 2025 with cash and cash equivalents of $518.8 million as well as $750 million of revolver capacity for $1.3 billion of total liquidity. And I'll remind everyone that Q1 is seasonally lowest point for us from a cash flow standpoint, primarily due to the timing of certain tech vendor payments as well as variable compensation payments.

Our term loans totaled [ $3.6 billion ] in USD at the end of Q4. We have hedged roughly 80% and have an all-in weighted average rate of approximately 5.4% as spreads decreased during the period. Turning to free cash flow. Q4 cash provided by operating activities was $188.7 million, up more than $120 million versus 2024 from higher profitability and lower interest expense. CapEx was $262.9 million or 6.3% of revenue, down from 7.5% last year.

Approximately 70% remains focused on long-term growth including consumer panels, platform and AI. We delivered $90.9 million of levered free cash flow in Q4 and $315 million in the back half, exceeding the top end of our guidance by $40 million, driven by strong EBITDA flow-through and improved working capital. We ended the year at 3.25 net leverage ahead of our 3.5% target. In 2026, our capital allocation philosophy remains disciplined and balanced. We continue to prioritize deleveraging, while selectively reinvesting in high-return growth areas.

Now turning to our guidance. For the first quarter, we expect reported revenue growth of approximately 8.6% to 8.9%. We expect organic constant currency revenue growth of approximately 4.5% to 4.8% and consistent with the durable growth algorithm outlined at our IPO. Adjusted EBITDA growth of approximately 16% to 18% and applied adjusted EBITDA margin of 20.9% to 21.1% approximately 150 basis points on a year-over-year basis. Adjusted earnings per share of $0.08 to $0.10, improving from a $0.05 loss in Q1 of 2025.

Turning to the full year. We expect reported revenue growth of approximately 5.7% to 6%. We expect organic constant currency revenue growth of approximately 5% to 5.3%. The adjusted EBITDA growth of 14% to 16%, driven by operating leverage. Adjusted EBITDA margin of 23.5% to 23.8%, approximately 200 basis points of year-over-year expansion at the midpoint, ahead of our IPO guidance.

Adjusted earnings per share of $0.95 to $0.99, up from $0.23 in 2025. And levered free cash flow of approximately $235 million to $250 million, also ahead of our IPO target and net leverage tracking to below 3x by the year-end. To further support modeling assumptions, we expect depreciation and amortization of $614 million to $619 million or approximately 14% of revenue.

GAAP net interest expense of $230 million to $235 million. down from $37.6 million in 2025. As a reminder, GAAP net interest expense includes interest on our term loans and other obligations as well as amortization of debt issuance costs and the discount on our debt. Income tax expense of $165 million to $170 million or roughly 16% of adjusted EBITDA, diluted share count of approximately $300 million, consistent with our IPO assumptions. CapEx is approximately 6.5% to 7% of revenue.

Lastly, some comments on the 2026 cost optimization program. We exceeded expectations at the IPO and are launching this program from a position of strength. It is incremental to the restructuring actions outlined at the IPO, accelerates progress towards our midterm targets and increases free cash flow capacity beginning in 2027. We've already begun executing organizational changes to reduce complexity and improve agility and efficiency. We expect $55 million to $65 million of annual run rate cost savings versus our 325 expense base with the majority realized in 1 year.

The program is self-funded with total cost of $50 million to $60 million, largely cash. Actions are front half weighted in 2026 and with margin and free cash flow benefits building through the back half and into 2027. For transparency, costs were reported in a separate 2026 program expense line with certain costs excluded from adjusted results. Consistent with prior restructuring actions. Based on this program, we continue to see additional efficiency opportunities. The capacity created enables selective reinvestment and strategic priorities while continuing to expand adjusted EBITDA margins and free cash flow. In conclusion, we are pleased with our performance and confident in our 2026 outlook.

With that, operator, ready to open the call for Q&A.

[Operator Instructions]. And your first question comes from Manav Patnaik with Barclays.

Jim, I just wanted to touch on -- like a data problems question basically. I think you used the word government data, Thompson -- CEO earlier this week used the word fiduciary data. So I just wondered if you have a double click on the importance of that. And also, you talked about the relationship with the retailers and manufacturers. Just how I guess the question we get is, could those clients give their data to new competitors basically.

Yes. So okay. Manav, with regards to the words governed or fiduciary or stewardship, I think the world kind of underestimate just how important that is. And we have relationships with literally tens of thousands of providers, let's say, retailers and others, some big, some small, that have evolved over time. And the way -- the reason they're trusted is they aren't really interested in just king their data to anybody because they don't want to be exposed. And so we have very sophisticated methods of understanding where they feel like they have entitlement issues or their own governance, and we're able to put those in place across all the jurisdictions that we serve.

So having that trusted or governed intelligence layer is something that has taken time to build not only from, let's say, a technical standpoint but also from a relationship standpoint. And I think it's fair to say not ever easily replicable in any short period of time.

And I think that was even acknowledged this week. As you know, a lot of the AI companies are speaking about this. And what struck me is they acknowledge that domain enabled, which means you actually understand what you're trying to do with the client, govern systems are essential to AI working effectively. And that's exactly what we do. We understand our both our customers and the people who provide, let's say, we understand what their concerns are relative to access to information and governing information. We understand how it fits in our clients' workflows. So we make sure they're able to use it appropriately and correctly.

And then we deliver those insights to them right into their workflow. So we're really deeply embedded into those workflows. We could jump in deeper here. I'll maybe let you guide me. We have our Chief Product Officer on the phone. If you would like to get us to talk a little more about how we -- what we do with the information and how we deliver to clients, we can do that or I can let you -- I'll pause for another question.

Yes. I mean I think that's fine. Maybe I'll save that for someone to follow up. But the other question I had was you obviously gave a bunch of examples on how AI is helping your -- I guess, your revenue pipeline. I was just hoping what are the puts and takes to that? A lot of the questions you get is this could be at least deflationary pressure from all the AI technology out there. So maybe just remind us of what you think pricing is today and how that plays a role going forward as well?

Sure. So given some of the data on our net dollar retention and even just our growth, you can tell we're not experiencing any pricing pressure, certainly not any related to AI. And I think you're asking me about what -- how does that drive our revenue maybe. But it does underpin most all of our revenue given that we've been using AI or various analytics delivery sites to our clients for many, many years now. So it's embedded in our offering that supports our retention, it sports cross-sell, upsell.

But in the very, very short run. What we're doing now is -- which shows financial impact, it's actually helping with our margin expansion. And we're stepping into having it be more discrete revenue line items. So we're certainly not seeing any revenue compression associated with it.

And Manav, I would just add to Jim's comments. When you look back at our net dollar retention at 105 and our growth retention at 98%, and our subscription growth continues is above 6% for the last 7 quarters. I guess to me, Manav, I guess I just point to that fact in terms of what that means from a from pricing standpoint.

Your next question comes from the line of Alexander Hess with JPMorgan.

Jim, Mike, I want to start with the 30% call out in the prepared remarks on data consumption increases. Maybe you could walk us through how you define that, what's included in that and what that says about the state of your business today just as a starting point?

Yes. So I think you're asking for a particular formula on how we're...

I think I'm just asking like what's the -- what is that -- what should that signal to the market about the state of your business and the level of demand you're seeing amidst all of the current discussions around AI, around newly public, so people are still learning you guys? Like what does that 30% number really tell?

Yes. So what it's telling us is that as the world continues to move forward at the rate it's moving forward with the demand for our data is just increasing. There's not some kind of -- and it's not just our data. It's our insights and it's how we're delivering it to our clients and how we're embedding ourselves in their workflows. So there's not some kind of demand problem. And I'm anxious to get Troy a little bit involved in this conversation. Troy, why don't you share your view?

Troy, we can't hear you.

[Technical Difficulty]

I think we're having some technical issues there with Troy.

That's all right. But maybe you can also -- as we look at the into '26, you could touch on. It sounds like you've spoken to taking this restructuring action and some position of strength. But sort of what signals are you seeing in the market that are telling you that here and now is the time to be undertaking an incremental restructuring program I know you guys have said what this will mean for you fundamentally on the financials coming out of this, but operationally, and this is sort of done what should investors sort of be watching for, for the size that this is a high ROI project?

Yes. So regarding the restructuring, I don't know if it's an external market signal. It's something that we've been pursuing internally, and we'll always continue to pursue internally is getting more and more efficient. I think we had a fundamental step change in using AI internally that we probably didn't realize at the very beginning of the year last year, right? We didn't realize how fast we were going to be able to get there.

And so we're -- the money we're using for the restructuring is really about severance and taking the people out of our cost structure associated with being much more efficient. And it pays off all in the year, so it's an easy ROI decision to make, right? And I make it every time. and I'd make it again because we're returning -- we're really getting the return this year.

So it sounds like net-net, you're seeing AI benefits both on the top line and through demand and on the expense line through incremental efficiency opportunities I think it's quite -- that seems pretty straightforward. Just maybe if you'll permit a quick follow-up for those 2 questions. Is there anything you think that the market right now doesn't understand. Obviously, there is a native of data companies today's movers and all that -- I asked about this. Just anything else you want to mark to sort of understand about your positioning entering '26.

I think -- well, I think I said it all in my notes, but I'll just reaffirm that we feel like we're very much on our front foot with regards to the question you just asked and the question or the question of the day on AI. And I think -- I'm going to say it again, I think I don't want to put my own work. I'll put it in the words of the people who are the LLM companies. They acknowledge that domain enabled government systems are essential to AI working effectively.

And so domain enabled, so we understand how our customers work. We're deeply embedded in our customers' workflows. They're not just plugging our data from nowhere. It's embedded in what they do. The data they can be assured that they're using data that is allowed to be used for the uses that it's been used for that it's correct. And that is all essential for any analytics to work effectively and, of course, AI. So I think we're just kind of right in the very good sweet spot of having the data that fuels this stuff, having the capabilities to apply to the data and then ensuring that the data is protected and governed appropriately. So they're effectively not doing anything wrong that they shouldn't be with it.

Your next question comes from the line of Kevin McVeigh with UBS.

Congratulations on the results. You had a comment on kind of clients shifting from insight to operational deployment. Is that shifting the workflow or consumption in terms of how they're using the NIQ data. It's just pretty interesting because obviously, you're seeing accelerated adoption. But just anything from a behavioral perspective is you're shifting from insight to the point.

Yes. So the way I look at it, we're working with our biggest clients. We actually call them builders of AI, right, because they're not just users, they're going to build things internally. And we are working with them to even more deeply penetrate our data into their workflows and helping them understand how our data can even unlock more value. And I should really say our data and analytics, unlocking more value across their whole set of operations, so connecting their innovation to their supply chains, to their pricing. It's just embedding us more deeply into their workflows. And that's what we're seeing.

That's super helpful. And then just 1 quick for Mike. Obviously, the restructuring -- the cash flow component. So I mean the free cash flow guidance would have been even that much stronger, if not for the $55 million to $65 million, right? So if you adjust for that, it would have been kind of $290 million to $310 million, something like that.

Yes. That's right, Kevin. I mean, we -- that's inclusive of it. But as Jim said, we look at that 1-year return to it. So you're going to see that additional cash flow inflection continue into 2027 and beyond.

Your next question comes from the line of Curtis Nagle with Bank of America.

Great. So just thinking about the org rev guide, maybe any commentary you can give in terms of how to think about performance by region, generally in line with '25, should we think maybe North America catches up a little bit relative to EMEA, even just on comps. But yes, any way you can kind of disaggregate that and given the thoughts would be helpful.

Sure. So Kurt, look, we don't give guidance specifically related to it. I know you're trying to get some indication of it. I think the trends that you're seeing I think makes sense as it relates to North America and EMEA. We're continuing to make investments as Jim and I both mentioned as it relates to APAC in terms of our coverage that we would look to continue to see progress moving in that direction.

But I think if you kind of look at those trend lines that you've seen in each of those regions, I think those are pretty good views as we're really guiding overall in terms of thinking about it.

Okay. And then maybe just a very quick follow-up on the restructuring. Just in terms of, I guess, the flow through, right, from your restructuring actions, what should we expect in terms of realization, right, in '26? I know you'll be at a $60 million run rate by the end of the year. But yes, anything more you could talk to the actual flow through. kind of as the year progresses?

Sure. When we looked at the restructuring itself, if you look at it in our guidance, we said roughly 200 basis points improvement in our margins is the guidance that we had from [ '25 to '26 ]. And just a reminder, back, that's about $80 million above our IPO model and $50 million above the latest consensus -- when we look at that, that's roughly about 140 basis points is coming from the restructuring action and the rest from our continued operating performance. So look, the revenue beat a big piece of that has driven from a reported standpoint as it relates to FX, and it doesn't necessarily flow through on a one-on-one basis. So just kind of repeating back, we're -- that's what we're looking at. We also try to be -- put numbers out there that we make sure we believe that we hit in terms of our overall guidance. And as you can see from our history here, we're trying to make sure we put in a beat-and-raise cadence in terms of thinking about how we give guidance. Hopefully, Curt, that's helpful.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets.

I just wanted to focus on the full view measurement. You talked about some really good significant progress there with 190 clients. Can you talk about the pipeline, also initial feedback from the clients that have already adopted but also a pipeline for that product going forward?

Yes. So the full view measure is our way of describing a view of the customer shopping behavior across all channels. And a significant part of that is our Amazon read, which we have at a very detailed level that no one else has and certain, let's say, club purchasing that goes on combined with our omni shopper panel combined, which is demographic data, combined with other panel data that we have on e-commerce.

And so what we're able to provide our clients is the full view of consumer shopping behavior, which is exactly what they want because they want to understand what's happening at a very detailed level. across the market and then they want to understand what's happening specifically in what store and what city and then how they can link that to demographic information so they can understand, for example, not only how -- I don't know, let's say there's spaghetti sauce is selling, but they're also trying to understand why is it selling that way and to who is it selling that way. And so we're able to get down into that level of detail and then even compare it to what else is going on in the market, so they can understand they have new competition, if they have pricing issues, they have promotion issues.

So that's why it's really taken off, not only for manufacturers, but also for retailers who are also trying to understand the same thing. And so we are getting incremental revenue from that it's also just reaffirming the massive need our clients have for as much detailed level data as they can. I know I went on a little there. I think Troy is back. Troy, would you want to add anything to that?

Yes. I want to add just one thing on full view measurement. So it's not just a U.S.-only thing. It is a global product strategy that we have. And what we do is we combine retail measurement data with consumer behavior data from our panels, including receipt data and other alternative methods to ultimately figure out who buys where they shop and what behavior shifts happen.

So to Jim's comments that I just mentioned is we want -- we deliver signals to clients at very granular levels to be able to activate against those consumer shifts. And that's ultimately the adjective. We have many clients today like I think it was mentioned, 190 clients today, and the pipeline is very strong. And like I said, it's not only U.S., it's many, many markets across the world that we're combining all those assets to give that full view.

That's great color. And maybe just as a follow-up on the activation side. You talked about some impact from the project timing and the pipeline obviously continues to remain really strong. Can you talk about how we should think about the activation trends in '26.

Sure. Yes. So we -- what we alluded to in activation was our I think you could say last year, our clients were kind of trying to figure out where to spend their money. And as you know, we have a broad offering across a broad portfolio of activation solutions. And as they were doing that, we're -- we can control what we can control. So we control our ability to execute we can control how we go to market, but we can't necessarily control our clients' ability to execute and sometimes we're dependent on them for data or dependent on them for expected outcomes.

And there -- I think it's fair to say there's a little confusion on where they want to spend the money. But right now, -- the pipeline is strong. We have very clear visibility into that. We know the demand is there. We have taken some steps heading into '26, strengthening the leadership strengthening in our go-to-market. I'm not just saying this because it's got the word AI in it, actually using AI to help us streamline our processes and be able to execute more quickly, which all is under our control and which affects our revenue. So I think the base of your question though is probably about demand and our pipeline is strong. And we're feeling good about the business going forward.

Your next question comes from the line of Kyle Peterson with Needham & Company.

Great. I wanted to start out on panels business. It seems like that remains a real bright spot for you guys. So just any more color there on what has driven kind of that sustained outperformance? And do you think there's still a good amount of runway there where it can be growing faster than the rest of the business? Just any more context there would be really helpful.

Yes. So our panel business is global. And so global and local at the same time, right? So we're addressing many different countries, but it is a country-by-country build of our consumer panel. What we have that no one else really has is the market data or the RMS data integrated with the panel data. And as Troy just described, we can tell what's going on broadly in the market, and then we can do shy down into specifically what's causing that to happen by understanding the actual people who are doing the buying, right, because that's our consumer panel. So last year, we've integrated those things into our Discover platform. And that's what's driving the demand. So it's -- it's exactly what our customers have said they've always wanted, and we put it in place and now we're just reaping the benefits of that.

Great. That's really helpful. And then I guess just a follow-up here. I wanted to ask on the APAC region. I know the growth there has been a little more lackluster. So I guess just is -- how should we think about a return back to growth that's more in line with Americas is in EMEA there? Or in what initiatives either need to happen or macro impacts, just -- how should we think about the path back to maybe mid-single-digit growth in?

Yes. So first of all, in our guidance, we haven't assumed some type of huge comeback, okay? We're reflecting a more steady come back. So we don't have that risk in our plan. So I just -- I think that's important to note. And APAC, of course, is not just one thing. It's a diverse set of many countries and cultures that we're serving. And certainly, India and China still are big, big opportunities for us. And we're just -- what we're -- the plan is, it's just to steadily address our coverage in each of those markets. And get ourselves engaged in the quick -- with the call, Troy.

Quick commerce.

The Quick commerce. I keep calling quick marketing. With quick commerce that's happening, especially in India, but also in China. And so we've had to just make some more, I think, we changed the leadership. I mean just like we do anywhere else, we had to steadily go and create relationships with the right companies and show them where we're adding value and increase our coverage. And so I think just by doing that, you're going to see a nice click up. And we're not doing this in a vacuum. We're doing this with our clients big and small in the region, we're saying this is what we need to do better business ourselves in China or to do better business ourselves in India or Korea or Vietnam.

And I think I would say that we were just a little behind where we were in some of the other countries, getting our coverage and our -- even our analytics capabilities on top of that where they need to be. But we have a very clear plan right now, we're executing it.

Your next question comes from the line of Andrew Nicholas with William Blair.

I wanted to touch on guidance a little bit further. I think OCC growth expectations, 5%, 5.3% obviously encouraging and a good number. But looking at intelligence, it looks like the annualized intelligence subscription revenue has been growing 6% to 7%. And so I'm just wondering if I hear you on the activation front and the project timing and the pipeline. But is it fair for us to think about activations acceleration or recovery being incremental to the current outlook? Or just kind of how we should think about conservatism from that light because intelligence is has been really, really strong over the past couple of quarters.

Yes. So I -- we'll just speak generally about our guidance approach, and I think those of you who know me, we guide to what we feel very certain of. Some might call it conservative, but we're -- that's the pattern that you've seen from me and you've seen from the company already. And so you can, that's the same philosophy that we had into this year with. And I think I had to say that any one specific thing is incremental to our guidance. I don't I think I would just say the overall approach we have, I'll come back to what I just add is to do what we say we're going to do -- we certainly are incented on higher numbers. We're certainly incented on higher activation numbers than you might be reflected in our guidance. But what we're guiding to is what we're comfortable with.

Makes sense. And then for my second question, just hoping you could kind of help us frame the growth of GfK in 2025. It's been a part of your business in supplying in '23 that has consistently accelerated year-to-year. Can you talk about how '25 kind of wrapped up and holistically, how you're thinking about that over the next couple of years?

Sure. So GfK, as you know, way back when, as a long time ago. We had quite a bit of a period where we were under examination from the European Union. And so they came out of the gates pretty weak in '23, '24. We got them back to good growth in '25. And we're planning the same kind of performance in '26. So good contribution good customer demand, same kind of customer demand that you have in tech and durables that you have in the CPG client base. there is an interesting demand there for some of our activation tools, which these clients have never had access to. And so we're kind of working on that and ramping that up as well.

Your next question comes from the line of Jason Haas with Wells Fargo.

I'm curious if you're seeing a trend of clients maybe still buying your data but consuming it more through their own tools or third-party tools. And then I'm curious your philosophy on where you're putting your incremental investment dollars. Are you still planning to invest heavily on the activation side to improve those analytical tools? Or does it make sense to really focus more on the data side and building out those proprietary data sets.

Yes. So I started to think about your second part of your question before I lost on the first part. Can you repeat the first part again?

Yes, there's some tied together, but I'm curious if you're seeing a trend of clients assuming the data more through...

Like I said, we have a set of clients. I like the persona we give them as they're the builders. They're going to have the money, the capital to try and figure out how to stitch together all the different parts of their operations. And we're right there with them as they work with different providers who help them with their back-end data integration matters.

And what we're seeing is they're asking us to help them, help them understand how they can integrate, help them understand how they can leverage our data even more as they link together. Let's say, hey, they come up with a really interesting innovation, but they didn't do the work to understand their supply chain could actually build the product. And so we're -- that's just one example of how we're getting more involved in their workflows, trying to stitch those 2 things together to say and get to market much faster.

So I'd say we're learning with them as they go. And we are creating relationships with the companies you'd expect us to who they're going to use, whether it's for their data integration needs or their AI needs. And so we're just right in the middle of their ecosystem, and we're learning with them, which is of course, helping us not only apply that to them, but then we can understand how the midsized players who can't really afford to do that kind of stuff, how we can help them use products like our Discover platform even more effectively. Of course, we're integrating our AI capabilities into Discover as we speak.

And then the second question was...

I think you answered it pretty well. Is there -- I guess, one part on the first one, is there a trend where you're seeing your clients increasingly use some of these third-party tools to analyze the data. Has that been a shift that's taking place?

No, no. No -- if anything, they do like working with 1 provider who they know knows them. And when they do use alternative providers, it's usually not -- it's something we don't do, right? But they do need us to help them very often with doing -- the data is quite complex and understanding the context for it is really important. And I'll get back to this AI comment. That's exactly what the LLM are saying if we don't understand the data and we don't understand the context, our AI but doesn't work and if we don't have the data. So we need these players like Nielsen IQ and others to make AI work effectively. And so we're not really seeing a shift away from us. We're just -- actually, we're seeing more of, hey, can you help us?

Okay. That's great to hear. And if I could add a follow-up question. I'm just curious on how you think about the pace of organic growth through the year because the guidance seems to imply a softer start and then an acceleration through the year. So can you just talk about what drives that acceleration?

Yes. Mike, do you want to take that one?

Sure. So Jason, we said from a guidance standpoint, as Jim said, we want to make sure we know exactly what's happening what we see is we get a lot of our renewals that are done in the first quarter. And then we have great visibility to those through the rest of the year. So that's what you see is a little bit lower number in our guide in Q1 and then really you're seeing accelerate over the second half of the year.

That's all the time we have for questions today. I will now turn it back over to Jim for closing comments.

Yes. Okay. So thanks, everybody, for joining us today. We're excited about our progress and looking forward to another good run in 2026. And I'd just like to thank our clients, everyone who works with us and our investors, and we look forward to seeing you again in May. Bye-bye.

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.

This is Alex Hess covering for services, information services data book, our quarterly firm is up here. It's going to be 30 minutes with me asking questions of Jim and Mike. Welcome back.

Thank you.

This is a new reiteration of Ultimate Services Investor Conference with...

I think I was sitting here in this very thing about 8 years ago.

I could imagine. Welcome back.

So this is actually kind of a big picture question just to kind of start out with, Jim. Like as you've returned to this space, and you've returned to public markets and NIQ returned to public markets from its previous reiteration of public markets. What has surprised you? When I say surprised, I mean things that you were surprised either favorably or unfavorably on as you've begun this NIQ journey.

Yes. So well, I think the big thing we all know that it feels a little surprising is I guess the interpretation of what AI is going to do to the whole information systems or information services industry. I think I'll start with what's not a surprise. I do feel like in our discussions with our investors, they get that we're an execution machine. They get that, when we say we're going to do something and grow X percent and we're going to expand our margins, there's kind of a method behind all of that. They get, we're mission-critical for our clients. They get that we're the market leader.

What surprises me though is a bit of the overreaction to AI somehow that it's going to dis-intermediate information systems companies when all AI really is, is a large language model that's searching for the next best word statistically that is based 100% on the data that it's fed. And so it seems like for a company like ours, who collects 3.8 trillion terabytes of information and transactions a week, perfect because we're going to be able to train our own large language models and do our own analytics and take advantage of that in a big way that's going to help our clients and already is.

And so I feel like we're performing. We're doing what we said we're going to do. Our clients are very happy with what we're doing. And it's getting overshadowed, but I think the whole industry is getting overshadowed by a bit of fear. But we're here for the long haul. We're solid. We have a moat around our data. We can get into all that, Alex, if you want to. And we're just going to take advantage of AI to expand our capacity and our ability to do things for our clients. Not for someone to somehow encroach on us.

Okay. So we'll definitely hit on AI. Jim, just for some people that might be new, just describe NIQ's kind of data positioning, data analytics positioning within consumer packaged goods and the retail industry. And particularly, what makes NIQ a modern information services provider?

So we are the global leader in consumer buying behavior or consumer insights. And we serve 23,000 clients around the world. We literally do business with every relevant manufacturer in Tech and Durables and in fast-moving packaged goods. Our mantra, if you could put it in two words, we call it the full view. And what we're saying is we want to have 360 view of consumer shopping behavior, and that drives our actions. So we invest constantly in getting all the transactions that we can, and that's about $7.2 trillion right now annual spend of what the consumer is doing.

So we get that information, of course, through retailers. We get e-com reads. We have the biggest e-com panel in the world. In undeveloped markets, we have a whole network of people that go into the stores and track what's selling and not selling. And we have consumer panels or demographic consumer panels. And all that adds up to the biggest footprint of any company in the world relative to consumer shopping behavior by far.

We bring that into our world, we call it the ecosystem of NIQ and then we harmonize that information. We code that information to turn it in a way that our clients can understand it. And then, of course, we act upon that with human intelligence and artificial intelligence and deliver that information to our clients through like you guys probably know Bloomberg terminals. They have a Discover terminal that's on all the time, and that's what they're looking at because they could see real time what's going on in their world.

We also give it to a machine-to-machine or basically any way that they need to process it. A lot of this stuff is on -- it's just there on demand. And for sure, looks back and we can tell them what's happened 1 hour ago, what's happened yesterday with their market share and how they're doing against their competitors. But with the level of granularity we have, we're also enabling them to look forward. So what if I changed my pricing in Brooklyn for my spaghetti sauce tomorrow, what do you think would happen? Would I sell more? Or would I sell less? Or is my competitor running a promotion? And should I be running a promotion?

So we're into that level of granularity. That's the intelligence part of our business. Then we have another part of our business called Activate, in which we're doing special analytical studies around innovation. So I'm X company, and I want to put a new hemp drink into the market or a new blueberry drink in the market. How do you think this is going to go, NielsenIQ? And we use a product called BASES and now it's enabled by AI, BASES AI, to help our clients understand how this new product might be received in the market. We do pricing and promotion studies. We do shelf, both digital shelf and physical shelf display analytics.

And that -- so those are kind of how the two parts of our business go together, and we take up a pretty massive footprint in our clients. And I think it's very easily fair to say, we are mission critical. Our clients use us every day to make their day-to-day decisions. They make decisions on how they're going to pay people and they make decisions on where they want to go next.

I definitely agree with the mission critical point. Could you just kind of remind just how we got back to mid-single-digit growth? Obviously, when I covered Nielsen, the division that NIO is, didn't have it. And so like -- was it better retention? Was it better pricing? Or are you selling more to the same customer, new customers? What got us back to this mid-single-digit growth algorithm?

And you know this from my previous slides. I'm an engineer and I figure what drives growth is, you got to retain your clients, you've got to get price increases, you got to get new clients. You got to upsell and cross-sell new cool stuff to your current clients and you got to penetrate new markets possibly. So we just said, this is our formula, what have we got to do to make that happen. So we knew when we bought the company that their technology was no good and that was manifesting in poor delivery to its clients, still surviving but shrinking.

So we spent nearly $1 billion on revamping all our -- creating one data lake, putting in a new platform we call Discover that our clients love. And the result of that is when we went to get renewals, they were happy and not unhappy, and so therefore, they renewed. Not only would they renew, they would actually pay their mandatory price increases or their colo price increases. So right there, we went from negative to a positive 2.5% growth year-on-year overall.

And then the other part of our growth equation is innovation. So we knew our clients needed more coverage in e-com. We need -- know they needed more consumer panels, which is demographic data and what consumers are buying. We knew that if we fixed our analytics products, they would buy more from us because they want to. And so that's driving another, let's say, 1.5% to 2% of our growth. So we had to teach our people how to sell -- cross-sell, upsell and we had to actually have the products. So that's in place. And then we expanded into new markets. And for us, the small and medium-sized business market, we were completely ignoring.

But in our database, we have all the data on every -- as soon as someone sells something, we know they're there. And so we arm our salespeople with leads and with interesting facts to go call these small and medium-sized businesses and so that business is growing 20% for us actually now. And that, combined with penetration in financial services and government and in media, is, let's say, adding another 1% of growth. And that gets us to our mid-single to -- steady, mid-single-digit growth and kind of I'm all about using as much science as possible, let's call it, to understand how you're going to grow and then you do the things that feed those equations for growth, and that's usually really cool products that are really relevant that are helping our clients make money.

A couple of times in your answers, you mentioned panels. You mentioned a quick full view, which you guys also call full view measurement. When I think back again to the olden days of Nielsen Buy business. One of the big challenges in the power of the consortium was it was missing Costco and Amazon. And you guys have rolled out panel-based products, Amazon sales and share, full view measurement for Costco. Is it fair to say that it's still early days for these products? Or is it already a market success and the road ahead is just tailwind?

Yes. So we -- our version of those products allows us to get down at the SKU level. So we know the exact product that's selling and when it's selling, what price it's selling at. And those companies in the U.S., we work with Amazon everywhere. And in the U.S., they don't really give out SKU level data down to that level. You can look in the past and get market share data kind of at a summarized level and that's interesting. But what our clients want to do is predict the future. You can only do that with granular data.

And so we have come up with a methodology to do that, and we're the only ones who are doing that. And we have -- right now, we have about 100 fairly sizable clients who have bought and are using that. And so we have to stay with it.

Your clients with the Amazon product?

Both, both. And we have to -- we have to stay with it. None of this stuff is static, right? So we've got to keep at it and keep getting better and better and better at it, but it's already providing, our clients clearly see the value in that information.

So you didn't quite say, it's still early days for these two products, early days tailwinds?

Yes, early days. It's -- the products work and they're being purchased. And so there's a lot of upside as we move forward.

And you're convinced that the integration is being accepted by clients, the combination of consortium data and panel data together.

Yes. Yes. And it's not -- for sure, the panel on demand is a little different where we integrate the market read with who's actually buying. And so I'll try and make an example that is real. We can -- let's say, you own Rouse spaghetti sauce. We can tell you, here's the Rouse spaghetti sauce that's sold in Brooklyn, you're losing share to a new competitor who's also got a branded restaurant brand. And by the way, you're losing it to 50-year-old males who are now buying this new brand, and we can even say, by the way, they're introducing Alfredo sauce, which is clearly something you should be doing because they're actually buying both products at once.

You can only do that with knowing that there is actually a 50-year-old males buying stuff and that you get the market lead data. So we're able to put those two things together. That's like a holy grail for some. I was with a big -- very big client before we bought the company, and he said, "Jim, if you could do one thing, do that." And so we did that, and it's not just in the U.S., it's all around the world.

Right, it's not a secret that when you look at the consumer packaged goods side of your client base, it's been a tough year for them. Does that make your execution any more challenging selling into them, serving them?

No. Our -- again, back to this Bloomberg terminal. They use our information whether things are going good or bad. They need to know what's going on. They're not going to cut back on the use. So in good times, they may be flush with cash and say, look, we -- what we want to do is invest in innovation. And so we have something called BASES and BASES AI, which allows them to understand how quickly they -- how quickly a customer segment might buy their new product and then get into it, so there's a lot of spending there.

They still might be doing pricing optimization. When times are bad, they will probably use our information to understand where they can stop investing in advertising. We're a minor part of their spending relative to advertising. So basically, they're leveraging what they spend with us to save more money, where they're spending a lot more money. They're not -- it doesn't really pay for them to say, "You know I'm just not going to do that this year."And so even in our Activate business, we're not seeing some demand fall off.

That's what I wanted to jump in. So most of your business is subscription, but where there is more transactional is your Activation business. You grew it in the third quarter, a little bit more than the first half of the year. I definitely remember the comments from your team on the conference, good fourth quarter on the Activation side. My question is, is this just you executing? Or do you actually see demand starting to rebound from the customer standpoint, let's say, on their own?

Yes. I don't know if we ever saw it not there. So there's a few dynamics you probably understand. So we're selling ad hoc reports, while you're working with a client, they might change their mind halfway through the process and give you new requirements. Of course, you could charge more, but it may move the revenue recognition into another quarter. So some of these fluctuations are just the way our clients move. The demand is always there.

And so we're not seeing any real decline in demand. Part of it is execution. I think we still have a ways to go to manage our sales pipeline, like I would like to see it, to manage our fulfillment pipeline, like I would like to see it, but that's inevitable. We're just going to do that. I thought I'd just make a comment about Activate. There's this I think theory that with AI, it's going to somehow with all these entrants into the market and we're going to take away our analytics business. And someone asked me, are you getting new competitors?

And the answer is for the wrong reason you may not think about. We're getting new competitors because AI is letting us get into new areas where we couldn't really afford to be before. And so AI is making our engineers 40% more productive. It frees up CapEx. It allows us to do more innovation. And so we're starting to say, "Hey, you know what, you don't need to spend $2 million running that with this big consulting company, you can maybe spend $500,000 with us running this new -- we can do the analytics."

I think that we're actually expanding our ability. And I'll just say this, we -- it's our data. We can innovate all day long in that data. We don't have to pay an extra nickel and the more capacity that AI frees up our engineers to do more stuff, we're just going to keep expanding our capabilities. So AI is enabling that part of our business.

So I definitely understand that your Activation business, which is 20% of revenues, is it a tech-enabled analytics business and you could take business away from consulting firms, but would you still agree that there's more AI risk in your Activation business than your intelligence business, which is really kind of a business?

I just can't agree with you there.

Okay, fair enough. Keep going.

I think if we do a bad job, absolutely, we can get our lunch eaten. But if we stay with it, number one, and we've used that freed up capacity, I mean, this is not a joke number leg or whatever. It's -- our engineers are 40% more productive using Claude and so are just like any other company. So that's freeing up CapEx. That's allowing us to say where do we want to apply that. And we know what's going on inside our clients because they have to tell us how they're using our data and other analytics.

So we're allowed to do what we want to do and look towards new avenues for growth. So if we do a bad job, yes. If we do a good job, we can actually use it to expand our footprint.

And maybe, Alex, I'd just add one comment there is that when we look at that Activation business, of that's 20% of our revenue. Of that 20%, 80% of it is highly reoccurring as I'll define it, highly recurring being the same clients, buying similar products 3 years in a row in terms of thinking about it. So they're teed up. They're in terms of what those projects are going to look like. So it's not all ad hoc and not...

But Mike, you still think I should keep my eye on the Activation business. Well, it's reoccurring, the way you just defined it, it's not subscription.

Correct.

We keep our eye on it. you should keep your eye it, agreed, 100%.

Since Mike, jumped in about Activation. So something -- again, I'm going to go back to that comment on the call. And I know your COO has stated on the call that we expect a good fourth quarter in Activation. Does that mean the same as the third quarter growth, like was the third quarter good growth in Activation? Or does that mean better than the third quarter? Like I don't know how to define the word good.

Well, good -- it's in the eye of the beholder in terms of the definition, I guess, but in terms of...

What's the third quarter, good growth like?

I mean, was it improved from where we were in the second quarter, right? And so we would look to see -- with that improvement, we look to see a similar type of growth pattern looking at the fourth quarter.

Right. That's what I thought you got. And Jim, I'm not sure you shared with the group here. So when investors ask you, have you seen new start-ups in your Activation space. And I heard you say, of course, we're going into their space, we're seeing the consulting firms. But have you seen -- what I'm really asking is AI-enabled new startups as competitors?

There's always folks that are -- that know this industry that maybe specialize in the [Beatle] analytic thing here or whatever. We're not -- we -- in our contracts, you can't take our data and use it without us knowing what's going on. So we know what's going on and guess what, we get a piece of the action. Because we just put that in our contracts. So we know what's going on, and we know there are players that take certain bites of the apple. But we haven't seen them really impinge upon our activation pipeline.

But no impressive AI startup in this space stands out to you is like, "oh, we have to keep our eye on that one."

Not that I would mention.

You're probably about to acquire it too. I understand that. Here's kind of an amusing question. When you look at your client base, those that really embrace your AI capabilities, is that cohort of your kind of AI forward customers using more of NIQ's data than just call it a control group, that's just your traditional customer?

For sure, more of our data. And an example is, I was in London with a client a couple of weeks ago, very forward thinking on AI. They're using some of our -- I won't say which one is because I don't to want to give anything away, but they're using some of our AI products sooner than anyone else, and they're pressuring us to do more, faster because it's helping them accelerate their pace of innovation well beyond where they've done in the past. But they're also big users and forward thinkers in their own right, and very curious and doing what I believe are the right things to take advantage of it.

Right. And do you think you could share in that upside? Because when I think about the beauty of NIQ, and I'm really talking about it in your intelligence business 80%, it's a lot of fixed subscription. And so like if they're using your data more, are you going to share in that upside that they're getting more, how about NIQ?

Yes. So a couple of ways, let's -- our Activation business or let's call, C&I.

Agreed.

So we built something called BASES AI. And BASES is a product that we put a little electronic cap on a person and we can see how their neurons are snapping when they see advertising or they see a new product or they hear certain words and it helps our clients understand how they're going to -- is this product going to be any good. We've taken the whole history of that and put it in a large language model. Now companies, I think Unilever is letting us talk about this. Companies, they're taking like 50 ideas and running it through that in a week or even less than a week as they iterate and boiling that down then to their top 3 ideas.

So they're paying us for that service. But then when they really want to make the final, final decision, they do need real live humans because we don't have all the recency bias built in our database. So TikTok influencers, all that stuff hasn't really been built in. So then we kind of get early -- more revenue early and then they're still running the big reports. I don't know if I answered your whole question.

I think you did. It's like, are you going to share in the upside?

I did. On the intelligence side, we -- about 2.5 years ago, we kind of anticipated this, and we made sure our contracts are very clear that you can't use our data to build large language models. You can't build our data to build IP that you can't keep without buying our data, and you really can't use our data to replace what we're already doing in analytics.

And you think you're very good at tracking that, right?

We're -- I think we're good enough, but people are intentionally going to try and not follow a contract. That's pretty serious stuff, but we do watermark our data. We know where it's at all the time. And we communicate all the time what the rules are. I think any information company, they're not doing that should be doing that.

Right. So Mike, one of the things at the time of the IPO that I was a little -- let's just say, watching was it was kind of early in the free cash flow conversion journey. Obviously, I feel a little bit better after third quarter. But should we expect a big uplift, a meaningful uplift in what you guys define as GAAP free cash flow in '26 and '27, like after the third quarter, like are you more encouraged about the uplift ahead?

I am. When I think about it, Alex, when we just -- and we announced the third quarter results, we increased our free cash flow. We had stated we would be $245 million to $275 million of free cash flow in the second half of the year. We delivered $224 million of free cash flow just in the third quarter alone. And therefore, we took our guidance up to $280 million for the full year, which gets us to breakeven. And then as you asked about '26 and '27, if you're breakeven, it's moving in a very positive direction. Just...

Just saying free cash flow moves with momentum once...

It does. And with margin improvements, so we're a 300 basis point improvement in our EBITDA margins between Q3 '25 versus the prior year, which about 200 basis points of that's coming from our GfK integration and 100 basis points coming from our continued fixed cost base at 80%. And with that 5% to 6% revenue growth, you're seeing that drop to the bottom line. So EBITDA growth and then we're turning it into cash and we're at a breakeven point and then an inflection point as we move forward into '26 and '27.

Okay. Great. So you just mentioned GfK, so let's pivot to Tech and Durables. I know the party line is for GfK, it's Tech and Durables versus consumer aggregate, you're going to run the same playbook as you did in Core NIQ. So my question is, what inning are we in with Tech and Durables in terms of driving synergies, the revenue opportunity? And the thing that I'm really waiting for is when will your Tech and Durables growth, start to support enterprise growth, Tech and Durables growing as fast as your overall organic revenue growth?

Yes. So we're -- what inning are we in, maybe the sixth inning, maybe a little further as far as the internal integration. So right now, when you see what we call our onetime integration costs, they're really severance-related and dual running costs. So we're having to run our back office systems until we retire, we're cutting over. So that will extend a little bit into next year. So you're going to start seeing the real synergies rolling in as far as the cost synergies.

The business, as you know, when it came out of the gate a little soft. It was -- we spent a whole year arguing with the European Commission about whether we could buy it or not and which speaks to the power of the combined asset. It is now contributing to growth.

What do you mean by that? It's growing in line with overall?

Getting in line with the overall, closer, very close, very close.

Do you call it mid-single digit?

Yes, I would.

Oh, I didn't know that. So first half, you called low single digits, so...

Well, yes I think your definition of mid single.

4% to 6%.

That's it.

Yes. Well, I think that's notable. Okay. Just to keep going. So how would you define success for Tech and Durables, what should we watch?

So success is to continue that sustained growth following the same revenue growth equation that we've done for the rest of the business. So believe it or not, Activation was something we maybe underestimated the potential. So GfK didn't have the tools that we had at NIQ to bring analytics into that customer base. So there's quite -- we think there's quite a bit of upside there as we teach our people how to cross-sell, upsell. We've really integrated the whole sales motion into the over -- like we don't separate -- there's one person running France. There's one person running Western Europe, not CPG and Tech and Durables.

Right, right. So maybe, Mike, I'm going to ask you the same question. How do you feel about GfK? Like I surely remember when you came to NIQ, let's call it not GfK. You really had to get your finance organization to kind of like tell you the truth, like sometimes it's not always pretty. Like do you feel like the finance professionals at GfK are telling you, "Hey, this is practically where we're at and not overpromising"?

Yes, I do. We have integrated the business 100%. So the GfK individuals that were historical businesses is our treasure, [indiscernible] has really been integrated in the NIQ business. So I feel very comfortable in terms of understanding what's going on and what's happening. We have combined the general ledgers. We have one general ledger in terms of how we operate the business since it's overseen by one group today. So I feel very good about it, Alex.

Okay. Okay. That sounds good. How about a quick point, Mike, on capital allocation? I know obviously, the priority is deleveraging. And I know you're going to say it's your first priority, but I would just want to ask, is there room in capital allocation as we head into next year for other things besides for deleveraging?

Yes. I mean we're continuing to look at accretive M&A. We've done a couple of deals this year, which we announced our Gastrograft deal, which is an ingredients business that we're able to bring into our distribution network and continue to leverage. And we also have bought a business in Brazil that equally is in the logistics area, and we're able to look at that and drive that across the board where it's highly accretive. We don't see any gaps that we've had in the business or geographic pieces that we're worried about.

So yes, we will look at deals, but we are focused on our debt pay down and make sure we deleverage ourselves. We had targeted being less than 3.5x by the end of this year and less than 3 by the end of '26. And -- but we think we can still look at those types of shareholder activities and make sure we still meet our debt commitments.

Way to be. Thank you very much, Mike and Jim.

All right. Thanks.

Thank you.

Thank you.

Good morning, and welcome to NIQ's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to NIQ's Third Quarter 2025 Earnings Call. Joining me today are CEO, Jim Peck; COO, Tracey Massey; and CFO, Michael Burwell. Following Jim and Mike's prepared remarks, Jim, Tracey and Mike will take your Q&A.

As a reminder, our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release. Any forward-looking statements that we make on this call are based on our assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Also, during this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release which is available on our IR website, investors.nielseniq.com. A replay of this call will also be available on our IR site. And lastly, just a quick housekeeping item. Posted alongside our 10-Q and earnings release, you'll find a supplemental file that reflects recasted financials related to our post-IPO legal reorganization. This includes a noncash mark-to-market adjustment on the Nielsen media warrant for all historical periods prior to Q3 2025, where the instrument has converted to equity treatment.

And with that, I'll now hand the call to Jim.

Thanks, Will. Good morning, everyone, and thank you for joining us. I'm very pleased to report that our Q3 results beat expectations across the board. 5.8% organic constant currency revenue growth, 21% margins, up 300 basis points and $224 million of levered free cash flow, achieving most of our second half cash flow guidance in Q3 alone. We've raised our 2025 outlook, and we're heading into 2026 with momentum. Q3 is further proof that we are reaping the financial benefits of our multiyear transformation. In terms of revenue, EMEA and Americas grew 8.8% and 4.1%, respectively, on an organic constant currency basis and APAC growth improved. Intelligence revenue grew 6.6% in organic constant currency. Intelligence subscription revenue, our version of ARR, also grew 6.6%.

This was our sixth straight quarter of 5-plus percent organic constant currency growth and 6-plus percent Intelligence subscription growth. Activation revenue improved in the quarter, and our pipeline remains robust. On profitability, net loss and adjusted net loss improved while adjusted EBITDA of $223.7 million accelerated to 25% growth. We expanded adjusted EBITDA margins and we're tracking to a significant expansion in 2026. And with our strong Q3 performance, we now expect to be free cash flow breakeven on a levered basis for the full year 2025. The first step of what we expect will be a multiyear free cash flow inflection. As an important reminder, levered free cash flow in the first half of the year did not reflect the $100 million of annual interest savings we achieved as part of the IPO.

Looking at high-level business performance. Aligned to our revenue growth algorithm, Q3 was driven by strong pricing as well as innovation cross-sell and upsell. In intelligence, we're seeing continued strong adoption of our omni-channel measurement products such as e-commerce, consumer panel and full view measurement, which contributed nicely to our growth. We're also successfully executing our proven integration playbook at GfK. Tech & Durables revenue has grown year-to-date, and we're aiming to accelerate further in 2026.

In activation, our AI-first basis, analytics and media products are growing rapidly, supporting 2025 revenue and bolstering momentum heading into 2026. Lastly, integrations of our Gastrograph AI and M-Trix acquisitions are going well, and we're penetrating new markets and converting new business. In short, it was a strong quarter. We're growing profitably and improving margin and free cash flow ahead of schedule.

For the balance of my prepared remarks, I will address how AI is widening the moat around the NIQ ecosystem and improving our financial profile. We are not simply participating in the AI revolution in consumer data intelligence for leading it. Let me start by highlighting 3 key takeaways: first, AI widens the NIQ data mode. Today and into the future, AI models need the right data in scope, accuracy and depth. Our data assets are vast and hard to replicate are enriched, are proprietary and spent decades of consumer spend and behavior and are updated constantly.

Second, we are rapidly embedding AI across our solutions portfolio. We're also evolving the NIQ user experience to enable client speed to insights and further enhance our revenue growth. And third, we believe we are in the first innings of capturing significant AI-driven operating efficiencies and margin expansion. On my first point, today's consumer brands and retailers face a daunting and expensive reality. Consumer behavior is changing rapidly, and shopping data is exploding in volume and complexity. Identifying, collecting and analyzing this data across a rapidly growing number of channels and touch points is more challenging and costly than ever.

As generative and Agentic AI reshaped this competitive landscape, CPGs and retailers seek real-time granular insights so they can act faster and compete smarter. General purpose AI models alone are insufficient to extract meaningful signals from messy unstructured data and not built to support high stake decision-making. Try asking a general purpose LLM who sold the most chocolate during October 2025, and the result is incomplete, outdated and inaccurate. This is because the accurate data simply isn't available in the public domain, but we have this granular data at NIQ to discover clients can click into sales data by day, week, location or specific candy bar at what price point sold through which retailer, why the consumer bought, what else the consumer bought, everything and more about that transaction.

In our ecosystem, we harness advanced technologies and draw on decades of industry leadership to amass the global super set of consumer shopping behavior data, which is continuously updated with first-party data. Our data covers every dimension that matters to clients, including geography, channel and category. We also believe our data is the most granular available anywhere down to the specific product SKU. This data moat is intentionally designed. Our data scale is vast, global and proprietary. Our harmonized data assets are extremely difficult and highly impractical to replicate. We ingest retail point-of-sale data from thousands of retail chains in over 90 markets and our robust industry reputation for data stewardship facilitates these exchanges.

In traditional trade retail, our extensive network of field auditors and digitize collection methods enable us to cover consumer purchases with less technology for retailers in key developing markets, a feat unmatched by others. We also believe we have the most comprehensive digital commerce assets, offering the most detailed view of the digital marketplaces as well as the largest global e-receipt consumer panel. In fact, panels are a key area of focus and differentiation for us. We have collected decades of consumer shopping data from our panels, and we're investing to expand our panel footprint.

By pairing the what the consumer bought from our leading measurement data with the why from our robots panel data, we are uniquely able to deliver clients a full view of consumer shopping behavior globally. In addition to the massive amounts of data we ingest, it's the rich data that we create that further enhances our moat. We generate a substantial layer of rich reference data and metadata, which includes tens of millions of product attributes, taxonomies, hierarchies and harmonized product information across the 220 million items in our database.

This includes brand category, size, ingredients, packaging type and more. Our rich layer of descriptive data enables NIQ to organize, analyze and pair products at a granular level making it possible for clients to uncover trends benchmark performance and make smarter decisions faster, which brings me to my second point. How our solutions drive clients speed to insights and unlock new growth.

NIQ data and insights power mission-critical client decisions across their enterprise, and our clients are leaning in. By Q3, users on our Discover platform grew 9%. Total data points consumed grew 29%, and the average monthly data consumed grew 39% versus last year. Clients increasingly rely on our data and insights. We're leveraging AI to deliver deep value. For example, NexIQ is our proprietary AI engine, which we purpose trained on our 160 petabytes of global consumer and retail data. Unlike generic large language models, the NexIQ understands the nuances of consumer shopping. This enables 10 to 12x faster data processing than general-purpose LLM and with near-perfect categorization accuracy.

NexIQ isn't just automation. It's NIQ Intelligence at scale, delivering real-time insights with unmatched precision and speed, developed with partners like Microsoft, Snowflake, Google and Intel. NexIQ is also the backbone of our AI-powered product suite, driving innovation across intelligence and activation products. We're building tools to transform how our clients make decisions from predicting winning product concepts in minutes to generating automated KPI narratives. MAX IQ's integration into our ecosystem ensures that every insight is grounded in the most granular harmonized data available, giving NIQ a defensible edge in the market. And from this strong foundation, we're rapidly evolving our AI solutions.

For example, version 1 of our Gen AI copilot Arthur has accelerated speed to insights by 40% across our omnichannel measurement and consumer panel data. In 2026, we plan to launch Arthur version 2 an intelligence research hub with predictive signals and analytics storytelling that can chat, anticipate, act and summarize. Eventually, Arthur will be able to suggest NIQ products, data sets and analysis based on client needs enhancing our Discover software into an AI-powered cross-sell and upsell engine.

We're also driving AI innovation throughout our activation suite. For example, Revenue Optimizer is our AI-driven analytics solution, helping clients optimize pricing and manage trade spend for maximum profit. Precision area uses AI data harmonization to segment countries into local markets by demographics and by retail data. This enables clients to find a needle in the haystack in terms of growth opportunities and investment optimization down to the granular neighborhood level. This year, -- we also launched 2 AI-first solutions, BASES AI Screener and product developer. These solutions seamlessly combine our leading global data assets with our advanced analytics offerings.

With BASES AI, clients can now rapidly test, develop and commercialize products that consumers want to buy. We're driving expansion and seeing strong early client adoption. BASES AI Screener is now live in 11 markets across 129 product categories. Client feedback has been overwhelmingly positive, and we've added 18 large clients since launch. With BASES AI product developer, 31 clients, including our largest CPG clients to SMB tested 500 product concepts in Q3 alone.

Unilever reported a 65% reduction in product development time, stronger innovation success rates and accelerated speed to market, launching products up to 6 months sooner compared to traditional testing methods. And as showcased in our IPO roadshow, Brown-Forman used BASES AI to identify a winning Jack and Coke formulation adapted for new markets and plan future line extensions. They reported a 350% sales increase, 2.5x sales velocity increase and repeat consumer purchases that nearly doubled.

So AI is embedded broadly across our entire product suite supporting revenue growth and innovation. We believe we're well positioned to capitalize further in 2026 and beyond. Lastly, on my third point. artificial intelligence is a key driver of operating efficiency and margin improvement in NIQ. It helped us deliver better-than-expected margin expansion in Q3 and year-to-date and in laying the groundwork for continued expansion in the years to come. For example, we're harnessing agentic AI to automate our entire data operations workflow from acquisitions to coding to delivery. We're finding that the combination of advanced AI and operational expertise boost efficiency, elevates data quality and accelerates our innovation.

Clients benefit from our ability to bring products to market faster and to expand into new markets. On the customer support front, our globally launched NIQ service suite now delivers dynamic personalized and contextual support powered by Gen AI. AI-driven support ticket routing and automated intelligence unlocks faster resolutions and more seamless client experiences. Since launch, user engagement with Gen AI support tools and increased efficiency by over 40%. And our agentic customer success ecosystem is setting new standards for end-to-end client satisfaction.

Across our corporate support functions, including HR, legal and finance, we're deploying advanced AI and automation to streamline operations, enhance compliance and unlock new efficiencies. In finance, AI-powered process automation has enabled us to standardize reporting, reduce transactional workloads and deliver real-time insights for executive decision-making. In HR, intelligent analytics are helping us optimize talent acquisition and workforce planning, while legal teams leverage AI for faster contract review and improve regulatory compliance.

In summary, we believe AI is a strength for NIQ on all fronts. It's a differentiator and a profitable growth enabler. We use it to turn global omnichannel consumer complexity into competitive advantage. We turn client questions and needs into client value. As we close out 2025, we are excited about what's ahead in 2026, will continue to lead shaping and building the AI-powered future of Consumer Intelligence.

With that, I'll turn it over to Mike to cover our financials.

Thanks, Jim, and good morning, everyone. Q3 was another strong quarter. We exceeded expectations across the board and demonstrated a powerful free cash flow inflection, delivering most of our back half levered free cash flow guidance in Q3 alone. AI-powered automation is reducing manual effort and increasing efficiency across NIQ. This contributed to margin expansion in Q3 2025 and we expect it will be a margin driver in 2026 and beyond. We are raising our 2025 guidance. We believe this further demonstrates the mission-critical value we bring for clients. and the embedded operating leverage in our business.

Turning to our Q3 results. In Q3, organic constant currency revenue grew 5.8% to $1.1 billion surpassing the top end of our August guidance. We saw a particular strength in our EMEA segment with Intelligence Solutions driving renewals, value-based pricing, cross-sell, upsell, and expansion into new verticals. On an organic constant currency basis, EMEA grew 8.8%. From a product perspective, total Intelligence revenue grew 6.6% and annualized Intelligence subscription revenue also grew 6.6%, our sixth straight quarter of 6%-plus growth. Annualized Intelligence subscription net dollar retention and gross dollar retention remained strong at 105% and 98%, respectively, reinforcement of strength in our revenue growth algorithm.

As Jim mentioned, Q3 activation revenue improved to year-over-year growth in our client pipeline remains robust. On expenses, total operating expenses increased $89.3 million or 8.9% on a year-over-year basis driven primarily by a $50 million onetime stock-based compensation charge triggered by the IPO, which we previewed to analysts as part of our IPO process. This is a life-to-date catch-up related to pre-IPO equity awards.

Other factors driving expenses included higher amortization driven by our Gastrograph AI and M-Trix acquisitions as well as fluctuations in foreign currency exchange rates. It's important to note that outside of these aforementioned factors, OpEx growth remains modest and well below revenue growth. Net loss, adjusted net loss improved $16.1 million and $47.6 million on a year-over-year basis, respectively. We accelerated adjusted EBITDA growth to 25% and delivering $223.7 million for the quarter. We expanded adjusted EBITDA margin by 300 basis points to 21.3%.

Profitable organic revenue growth as well as ongoing GfK integration and AI-driven synergies remain key drivers this year. Importantly, we remain firmly on track towards our midterm margin target of mid-20% that we shared during our IPO road show. We expect 2026 will be another year of significant margin expansion as revenue growth flows through and we drive AI-powered efficiency across the business.

Turning to free cash flow. We delivered $224.4 million of leverage free cash flow, achieving most of our back half 2025 guidance in Q3 alone. This is driven by higher adjusted EBITDA, lower interest expense a significantly improved net working capital as we improved DSOs by 7 days compared to Q2, well ahead of schedule versus our August guidance. I'll also note that Q3 working capital benefited from a vendor payment that we accelerated in Q2 in exchange for more favorable contract terms moving forward.

For better-than-expected Q3, a -- we're raising full year 2025 leverage free cash flow guidance to breakeven. This is an exciting inflection point for our business as we continue to improve and progress towards our steady-state profile in the coming years. up $20 million from our previous guidance midpoint, full year breakeven implies a $225 million improvement versus 2024. It also implies $280 million of leverage free cash flow in the second half of 2025. And which is above the high end of our prior $245 million to $275 million range.

As an important reminder, leverage free cash flow in the first half of the year was burdened by our pre-IPO capital structure and did not reflect the $100 million of annual interest savings we achieved by deleveraging the balance sheet and repricing our debt. In fact, our strong Q3 performance triggered another interest rate spread step down generating an additional $9 million of annual interest savings moving forward.

Turning to our balance sheet. At the end of Q3, we had cash and cash equivalents of $446 million and $750 million of available capacity under our revolver for a total of $1.2 billion of available liquidity. On capital allocation, as I mentioned before, as free cash flow ramps, debt repayment remains our top priority. At the same time, we continue to pursue accretive tuck-in acquisitions that complement our growth strategy. We are confident that our inflecting free cash flow and strong liquidity position enables us to simultaneously achieve our financial priorities.

Now turning to our increased guidance. Based on our strong Q3 performance, and favorable business dynamics, we're setting Q4 guidance ahead of what was implied at our August call. We now expect reported revenue growth of approximately 7% to 7.3%. The organic constant currency revenue growth of approximately 5% to 5.3%, and adjusted EBITDA growth of approximately 25% to 26%. This implies adjusted EBITDA margin nearing 25% and or 360 basis points of expansion on a year-over-year basis.

On free cash flow, we now expect to deliver positive $55 million to $60 million for the quarter. This implies that for the full year of 2025, we expect reported revenue growth of approximately 5.1% to 5.2%. Organic constant currency revenue growth of approximately 5.5% to 5.6% and -- adjusted EBITDA growth of approximately 22% to 23%. This implies adjusted EBITDA margin nearing 22% or 300 basis points of expansion on a year-over-year basis. And our expectation for breakeven leveraged free cash flow is a $20 million improvement versus the midpoint of our previously stated range. I'll note that margin expansion has exceeded our expectations in recent quarters.

We attribute this outperformance to AI-driven operating efficiencies, including as part of our ongoing GfK integration. Heading into 2026, we're actively identifying additional AI-driven operational efficiencies across the business. In summary, it was a strong Q3, and we're excited about what's ahead. We're focused on closing out a strong 2025. We're in the midst of finalizing our plans for 2026 and which we expect to be another year of mid-single-digit growth, strong margin expansion and significantly increased free cash flow generation. We intend to provide more details on our Q4 and year-end earnings call tentatively scheduled for late February.

Operator, we're ready to open the call for Q&A.

[Operator Instructions]

We'll take our first question from Alexander Hess at JPMorgan.

NIQ exceeded its guidance at -- NIQ exceeded its guidance at a time when many of your CPG clients have been paring back their expectations for their calendar years or fiscal years, at least we follow. Can you walk us through the general trajectory of your clients wallet or trade R&D, marketing, sort of that wallet that you're able to capture a share of -- and then what you guys are doing that specifically increasing your share of wallet, which feels like sort of where your you're at and what the trajectory is right now?

Yes, great question. It lets us explore a lot of questions and a lot of other folks might have. And I'll start off by saying, as you know, whether things are going really well or things aren't going so well for our clients, they really need our mission-critical services. So in good times, they need us more for innovation, maybe in bad times, they need more to help them understand where they want to spend their money and where they're going to get the most bang for the buck, and that's holding true right now. And of course, we have a lot of new innovations that are part of our growth strategy that are increasing our share of our clients' wallets as they're on their own journey for growth -- and so as you know, Tracey worked at one of the biggest manufacturers in the world, and I'm going to turn it over to her to give her perspective from kind of a client's perspective.

Yes. Our clients are in different places. Some of them are really driving innovative solutions. So if you look at the market performance of our clients, the ones that are winning that have the best innovation are the ones that are partnering with us, with our BASES AI Screener or our BASES product developer. We're helping them get much quicker to market with their innovation with some of our new AI products, but also then we're able to help them with the renovation if it's working then where to double down, increase your advertising, increase your trade. If it's not working were to pay back and where to move your money around.

So whether you're growing or you're struggling, we're absolutely critical to them across all their decisions. if I look at our top customers, 8 of our top 14 customers are growing mid- to high single digits, some of them in double digit. Some of them are struggling a little bit more where they've had -- and we've talked about this before, where they've got internal changes like they changed their CEO or they've got restructurings or they've got divestitures, they tend to double down internally for a few months. and then they pick their heads back up. So we're seeing really good momentum with our clients as they get coming out of some of these internal changes and we expect to see even better performance from some of them that are picking their heads up now and looking at where they can drive innovation and growth.

But what you have to remember with the CPG clients, the ones that are growing are the ones that are winning. So they're all looking for our help to maximize their growth performance. That's where they get the ROI from their spend with us.

We'll move next to [ Manav Patni ] at Barclays.

Jim, I appreciate all the detail on the AI debate. I think that was really important and helpful. I just had a follow-up in terms of -- can you talk about the data acquisition that you get? And I guess the debate is how much of that data do you buy that somebody else can buy and how much you collect yourself. I know you alluded to adding your context around it, but I was just hoping you could address that where the data comes from question.

Yes. So as you know, we get data from literally thousands and thousands and thousands and thousands of sources. And some of it, I'm not going to give you a percentage of anything actually. And part of the moat around our business, which I think is what you're really asking me is that to collect that amount of data is really quite improbable, I think, for someone to try and do that the way we do it. But that's a chunk we get from retailers. And then we get another massive amount of data from going into and then a huge network of people going into stores and the traditional trade and actually having to, by the way, using AI and power technology going in and understanding what's selling in India, what's selling in different parts of Latin America, we're selling in different parts of Asia Pac.

And then on top of that, of course, we get -- we had some of the biggest consumer panels in the world, delivering it all their e-receipts. -- telling us who they are demographically and we collect that massive amount of information every day, every second, every day and add it to our database. That data is often very messy. And so not only do we have to do the normal cleaning, we also have to put it in context with which each of our clients view their world. And that's part of what we call coding. So there's a ton of metadata that goes into making our database function properly and function properly with AI, by the way. for our clients. And so that is really the moat. And I think you're trying to get at -- well, someone can just go buy data and they'll slap on ChatGPT and they're going to create something. That's not going to happen.

And I tried to give you an example in my remarks. I was at Halloween and I was like, okay, let's see what's out there. who is selling the most chocolate bars right now in the United States. And I won't say which clients came back on top. I could easily tell right away. So this is what's happening real-time with chocolate sales -- this is what's happening this day, this week up to the month of Halloween or up to the day of Halloween. Here's what's happening in this region. Here's what's happening in the city. Here's what's happening in the store. -- here's why they're winning, somebody is discounting pricing, so they're selling more units, but their prices aren't as high as they normally are.

And you can't get any of that kind of thing from anywhere, where like is somehow going to come through somebody throwing an AI tool on top of some public data, but you can go ahead and look it up yourself. Right now, you may be able if there's an annual report out there, you may able to leave someone's annual toward at a very high level. But you're just not going to get to the level of granularity even close that our clients need to run their business, and it's not going to be right. And I'm going to go off on this 1 for a little bit.

Our clients make huge decisions based on what we do. And if we give them the wrong information they can make decisions that will cost them millions and millions and millions of dollars. And so we also have the responsibility to make sure this stuff works, right? And so we do a significant amount of testing to make sure that our AI tools sitting on top of this information and other analytic tools are providing the right answers. And while I've got this subject, if you think about it, we're sitting on all this data and what has been a constraint for any company like ours on providing more and more innovation. It's just enough access to capital or how much capital do we have to invest in all these new tools that we know we can build and that maybe others are building with AI now, we have kind of a way to develop things much more cheaply and efficiently and we know what our clients want. And so we can spend all day long innovating.

So I think what you're going to find is that we are the ones who have access to this information to actually build things and test them and get them in our clients' hands. And so it's just going to make our innovation engine run that much faster. And then I'll just conclude with that to do what we do, we have to have a lot -- our data stewardship is very, very important. So making sure that we're doing the right things with the data that we're allowed to do. We have -- it's not just a contract. It also has to be done technically. There are a lot of things we have to do to make sure that certain clients' data don't get in the hands of others. -- that they don't want them. And so that's a big part of our ecosystem as well and then just another moat around the business.

Got it. That's super helpful. And then just a follow-up, Mike, you talked a little bit about, I think you were planning for '26. I missed that part a bit. But just early thoughts into this momentum continuing into next year and how we should think about the kind of prior numbers we had.

Yes. So I think the numbers that you had are still make sense, Manav. But when we announced at the end of February, we'll give you guidance in terms of looking what '26 is. But we're excited about the momentum that we're seeing, right, I mean, in terms of what's happening from a revenue standpoint and then the launch of both of our AI activities in terms of what it's doing to drive revenue as well as what it's doing for us in terms of coding and margin improvement as well. So I'm excited to be able to give you more of that review. I guess I just think we'll continue to move in that direction and momentum. And I guess I look forward to giving you that update when we get through Q4 and update at year-end in terms of what we look like for '26. But nothing further at this point other than I like where we're trending.

We'll move next to Ashish Sabadra at RBC Capital Markets.

Just wanted to focus on EMEA in particular, where we've seen some really material acceleration in growth. I was just wondering if you could drill down further and talk about what's really driving that robust growth in Europe in particular.

Sure. When we look at Europe, we have been continued, and I'm sure Tracey will comment on it. Our panel on demand service offering is doing very, very well. It's being widely accepted and that people can look at Discover. And in Discover, they can get the overall market REIT, but they also then can look at consumer panel information so they get both what was sold and why it was sold, and it's really powerful to be able to bring that together, particularly as you look across the markets that represent EMEA, it's been very, very well received. But Tracey, maybe I don't know, you want to comment on that?

Yes, sure. There's 2 big impacts in our EMEA region. Firstly, it's where our GfK acquisition was the biggest. The tech and durables part of our business. If you remember, we acquired that in 2023. It was a bit of a drag on our growth in 2024. And we've been able to turn that around this year. So that's a big part of their growth as that business, that large business turns around. But also, like Mike said, the consumer panel business growing over 20% in EMEA, and that's really a result of this panel on demand. If you remember, when we divested -- when we took -- we bought -- we acquired the GfK business, we had to divest our panels in Europe, and we weren't allowed to compete against YouGov until Q4 of last year.

So we've seen a massive acceleration once we've been able to compete in consumer panel. We've built our own panels and significantly increased the size as we've seen many, many takeaways in that part of the world and as we've done that. And the main reason, like Mike said is because we've got panel on demand -- you can see measurement, which is our RMS solution, which tells you what happens. And you can see why it happened, which is our panel solution. You can see it in 1 place. If you don't -- we're the only people that can do it in 1 place. So I'll give you an example.

One of our clients had some out stops on 1 of their chocolate products and they saw their sales go down. They were able to see that in our measurement business. And then when they looked at why that happened, not only did they find that their sales went down because they were out of stock -- but when they came back in stock, customers have switched. -- they've switched to other brands, and they've had an impact on penetration and loyalty. They can see all of that 1 platform. You can't get that if you wish anybody else because you've got measurement in 1 platform, panel in another, and you've got to go in and out of systems, and you've got to try and look at what's going on.

We're winning a ton of business in EMEA in particular because we can put both in 1 place -- and in particular, that panel business is really picking up a lot of our RMS clients getting more efficient, too, because if you can buy from 1 supplier, that's a cost saving. So not only are they getting better information and being more efficient internally, they're more efficient on their spend because they're moving the second part of that business, the panel business to us and having both together.

That's great color. And then maybe just on the activation side. Again, you've seen some improvement there in the third quarter, but fourth quarter tends to be the seasonally stronger quarter for activation. I was just wondering the kind of visibility that you have for activation revenue in the fourth quarter? Obviously, your fourth quarter guidance was really strong, but any incremental color on the activation tech side?

Yes, we see strong momentum for our activation business quite often in Q4. Clients are trying to spend their budget. I know that sounds crazy. But they have got budget, they will spend it in the fourth quarter. They've been -- they know where their business is going. They know what they can and can't spend. So we have very good visibility into our pipeline feeling good about that activation business. It picked up in growth in Q3 up against some very tough comps last year. We had a very strong activation comps in Q2 and Q3 of last year, and we expect to see a good Q4 on the activation side.

We'll take our next question from Andrew Nicholas at William Blair.

This is [ Tom Rush ] on for Andrew Nicholas. I was wondering if you could provide color on your pipeline in the fourth quarter and aging the year across Intelligence and activation and just kind of the visibility you have into both as well?

Yes. This is Jim. So we obviously ton of visibility into our pipeline. And I want to make sure I'm covering your question because we just talked about activation, but both in intelligence and activation, we actively manage our pipeline every every day, of course. And so it's very -- it's highly predictable to begin with, as you know. And so the variable part, which is I think what you're talking about, which would include new wins or new projects is very, very, very visible to us. I want to let you have a follow-up question, though, because I don't know if there's something behind your question that you're trying to get at.

Yes. I was maybe focus on like new wins you're seeing those come in in the fourth quarter like thus far? And kind of what are you projecting as you go into to 2026?

So it's really more of the same where we are focusing on multiple things right now. So let's make sure we get all our various forms of price increases all set and ready to go in '26. Let's continue to make the big push on say AI or what we call activation as the year is ending and our clients are just by their nature, spending they're different parts of their budget, and so we need to get that closed and fulfilled, and we feel really good about that. And then, of course, just continuously as contracts come up with our clients looking for new wind and looking to penetrate with our different innovation products or different new product capabilities. And so we feel like we have good -- the momentum is there already, right? It's been building since last year, really to '24, '25, and we just see the same as we run into 2026.

And then my follow-up, I'll then if we could double-click on the SMB market and just kind of what the health of the end market is, especially given all the tariff noise? And then also, if you have any color on the growth you saw in the quarter there?

Yes. I think we'll let Tracey talk to that. She manages that every second of every day.

Yes. So on the SMB market for the smaller clients, we grew 20% in '24, we're growing 20% year-to-date in '25, very strong market for us as big market out there that we've got opportunity to activate against we're winning against our competition, taking business in that space and also creating lots of new clients. It's a high-churn business, they go in and out of business. And many of them go from small to them become bigger clients as they grow their business, but we're very, very happy with that part of the business, like I said, double-digit growth.

Next, we'll move to Jeff Meuler at Baird.

Can you comment on the sustainability or runway for growth in panel on demand, just as you anniversary the relaunch in EMEA -- and if you can comment on how adoption is going forward in other geographies or if they require more of a displacement sale?

Yes. So we're -- go ahead. Go ahead, Tracey. No, go ahead.

It's a very -- we've got a lot of runway there. In terms of panel, we're not -- in terms of RMS, retail measurement, we're the largest player in terms of panel we're not -- so we have a long, long runway there and a lot of runway in many parts of the world. EMEA was very strong growth rate because we were restricted from actually having that competition for a while. Now that restriction is expected to come down a little bit, but not a lot, there's a massive market out there. And like I say, nobody else can do both. So a long, long runway. and across the world.

Okay. And then on the AI-driven margin improvement narrative, I just want to see if we could better tie that to what we're seeing in margins on a geographic basis because if it was more AI-driven, I wouldn't expect the margin expansion to be so concentrated in EMEA and I'd expect more in the Americas, if you can comment on that. But I think you were making a point that AI tools were helping with GfK synergies or something to that effect, if you could provide more perspective on that. Yes.

Let me just talk broadly about AI and then maybe Mike or if you want to sweep in and talk about EMEA. So -- you don't have to look hard at our company to know that AI applies that we're a data company. So everything from collecting the information with for the people out and traditional trade is helping them know where to go when they get in a store, helping them know what to look for, doing recognition, and it's just going to keep getting better and better and better at doing that. And so that's not only enabling efficiencies, but that's enabling better collection, right? And so that -- you're going to find that helps us in areas that are emerging markets. but AI also applies in how we code the data and how we prepare it to go online, and that's some of our biggest cost.

And just like any other company, we are using AI to get more efficient in HR to get more efficient and finance to get more efficient in legal and all our support groups. And of course, we're using AI to get much more efficiency in our, let's call it, coding, so actually writing code, software code. So you're seeing the beginning of that in our margin expansion. And as we run into next year, I think you're going to see even more if I could foreshadow that, you're going to see even more expansion. As we've I think even in the last 6 months, had further epiphanies on how we can use AI to get more efficient in everything we do.

So we're feeling very much on our front foot with understanding how to make it work and where every 1 of the people who report into me is becoming very, very -- or has become very, very AI proficient in how to lead it. and then how to generate results from it. And so it's something we're focusing on quite a bit, and I think you're going to see it in our results, and you're already seeing it in our results.

And maybe, Jim, just to add to your comments. When you think about the GfK business, and we've been focused on that integration, the largest piece of that historical business is an EMEA and a big part of margin improvement has been the integration that's been going on. So that's the driver of why you're seeing that margin being driven. And equally, just to repeat back what the pylon what Jim said. And when you look at our operations, and we're doing coding more efficiently and what's that mean for us in terms of margin and using AI to assist us in terms of coding as well as customer success. -- as we continue to become more and more AI-driven and our customer success support, all of those are becoming operating efficiencies that are flowing through in terms of margin.

We'll move to our next question from Wahid Amin at Bank of America.

In your prepared remarks, I think you mentioned strong pricing and up or cross-sell within the quarter. Is there anything in particular that contributed more in this quarter or region specific? I think last quarter was called out a bit, but any commentary there would be helpful.

Yes. So I'm going to repeat our revenue algorithm. And so the pricing just is consistent, right? And that roughly equates to about 2.5% of our growth. And then the new capabilities, what we call innovation contributes roughly 2.5%, and that's where you get your cross-sell, upsell balanced across those initiatives. I think you -- we would note that e-com and our consumer panels with panel on demand are especially strong and continue to contribute, but that -- those also have a long runway for growth. And then our SMB is, again, a link a machine. It's a steady drumbeat of establishing new clients, more like with telephonic sales, if you know what I mean.

And so we have more of a machine there. We know who all the new entrants into the market are. And so we were able to identify them, tell them how we can create value. And we already know how we're creating value. And so that's just a steady drumbeat. And so that algorithm continues to march on and we'll continue to march on every month and every quarter.

Got it. And then on the region specific, Americas has sort of come down a bit on organic growth. I know it faces difficult comps, but is there anything you're seeing on a client perspective are a bit more confident on the go-forward basis of that region?

Yes. So the biggest reason is the comp. So in Q3 last year, we grew 9% in the Americas. So the biggest reason for the slight deceleration is of that comp year-on-year. It's a much it's an easier comp in Q4. We're not seeing anything specific with related to clients. And that part of the business is also very strong. And I would say some of the launches happened a little bit later. So -- we recently launched our panel on demand in the U.S. later than we launched in Europe. So that big omnishopper panel, we moved to 500,000 consumers. -- that was only recently launched in the U.S. So I expect to see an acceleration as we go into Q4 and into next year as that product really takes hold. And people see the benefit of that much larger panel because it's a massive difference you can get much more granular in your understanding of the consumer, where they live, what they're doing, the bigger your panel is.

So expect to see that continue, but nothing out of the ordinary, seem good good pickup of our new solutions on -- measurement, whether that be e-com or our Costco and Amazon Reads. We start to see some really nice momentum there, and in particular, momentum on the activation side of the business with BASES Innovation AI Screener.

We'll go next to [indiscernible] [ Rosenbaum ] at Stifel.

I just want to start out a little bit, just getting a little bit more granular, if you could, on the status of the GfK integration. It looks like the top line growth is really moving in the right direction, which is frankly usually the hardest part. Could you talk a little bit about what's going on in terms of the operational side and margins. How much of the margin expansion is because you're outperforming the top line versus the efficiencies you're trying to get? And where are you operationally, there was just also like a comment about the integration driving a higher ARDS over there. Maybe you can kind of talk about that as well. And then I'll have a follow-up.

Sure, [ Sam. ] Maybe I'll start off here. When you think about it from a revenue standpoint, you may remember when we talked about it at the IPO time frame, we said that the strategy was going to be rents repeat similar to what we had done with NIQ. And we knew the playbook, and we were going to continue to execute it and Tracey alluded to it in her her comments and that's the playbook we've been running. We've gotten discipline around our service offering, discipline around our contracting process. and making sure we're exceeding clients' expectations overall and making sure pricing is flowing through the same algorithm that Jim commented on when you think about it in terms of price what we're doing in terms of end markets and what we're doing at cross-sell and up-sell activities.

That algorithm is in place and operating and driving top line for the legacy GfK business. And look, I look at it roughly a couple of hundred basis points in terms of being driven through that. When you look at it from the back office side, I really feel good as the back office is is getting principally done. -- ops is going to be complete through next year, and we're continuing to drive margin through that. So I think about half of that margin improvement that you're seeing from us is coming through the GfK integration.

So the top line is obviously helping that, but we'd anticipated that, and we're delivering it through the bottom line overall. So look, we're very pleased with where we are, what's going on and how that business is performing. And as I say, it was the same playbook we pulled out and executed and have been driving.

Okay. And before -- the next question I had is just to go through the sequential margin trends in Americas and APAC, they were down a little bit. And seasonal impact and mix issue or anything else about that? And also, if you could just to put a bow on the last answer, just to comment a little bit about that AR DSO comment that was in the press release about GfK, what that was about.

Sure. So when I look at the what's been happening on the GfK side want to -- we're continuing to see that margin improvement flowing through -- when we look at the DSO comment, we did see -- when we put the 2 systems together at the end of Q2, we had a little bit of a timing issue in terms of of getting that cash collected, build, collected, et cetera, just as we integrated those systems, we were all over it, and you saw that improvement happen in Q3, and you really saw that improvement being driven through that DSO drive a reduction of 7 days that I commented on overall.

The GfK is we're continuing to drop that bottom line. So maybe go back to make sure I covered your questions.

Just on that GFK, it was just some kind of comment about DSO going up a little bit on JFK. That was the only thing I was wondering if there's something ...

Yes, that was a Q2 and really not at all. When only seen working capital as you're seeing it in the numbers really flow through in a very, very positive fashion.

Okay. Okay. So then we're fine on that. And then if you could just finish up on the sequential margin trends in the Americas and APAC is seasonal mix or something else?

So when you look at the APAC margins, we'll continue to invest and improve coverage. And that's really what's driving that side of the equation. I think we touched on EMEA. And when you think about North America, as Tracey said, you had a little bit tougher comps in terms of where that revenue was flowing -- and then, therefore, with our fixed cost base, you saw a little bit of impact on that as it relates to margins. But we look at an aggregate and feel very good about where our margins are and continue to drive that 300 basis points improvement over the past versus the prior year and over 60 basis points improvement from Q2 to Q3, and we're going to continue to drive margin improvements going forward. Kind of going back to Manav's comment -- question.

We'll take our next question from Jeff Silber at BMO Capital Markets.

I know it's late. I'll just ask one. I hate to nitpick here, but when looking at gross margins, you didn't have a lot of gross margin expansion on a year-over-year basis, and we've seen that play out in prior quarters. Was there anything specifically going on this past quarter in terms of mix or anything else?

No, nothing specific. I mean, we tend to manage the business really looking at EBITDA margins in terms of thinking about it in total, but there's nothing that I would call out or that was unusual just to make sure to call out to you. Thanks for the question.

And we'll move back to Jason Haas at Wells Fargo.

The fourth quarter guidance does imply a decel on an organic basis from 3Q to 4Q despite the compares getting easier. -- your commentary sounds pretty positive on how the business is trending. So I was just curious if there's any factors to think about that could be driving that decel in 4Q.

Yes. So we're -- as you know, from the last quarter's guidance, right, we're -- and in my opening remarks, we are very confident in our growth algorithm, and we're really going to stick to that as we're kind of training the company and training ourselves to hit the targets that -- or beat the targets that we're giving out. There's nothing systemic or something like that, that you're looking for that we can -- that you would associate with a slowdown -- and as you know, we're fairly conservative here. And I think as a new company doing -- becoming public, that's the track record we just want to establish. And we're managing a whole portfolio geography, the whole portfolio of new initiatives, a whole portfolio of renewal and takeaway.

And so we feel like very comfortable in the range that we're in, and you can expect us to continue that pattern going forward.

Okay. That's great. That's very helpful. And then as a follow-up, in the prepared -- in the prepared remarks you did -- yes, sorry Yes, just for the follow-up, I just wanted to ask about in the prepared remarks, there was a comment about you're expecting significant margin expansion next year. And I know you're not giving guidance for next year, but -- what was the thought behind putting that comment out there? Are you trying to say that there's not any sort of like onetime benefits in the margins this year, and therefore, this is the right run rate? Or like what was the genesis behind that comment? And if you can't like talk to next year, maybe you could just unpack like this year's margin, so we know what's onetime, what isn't?

All right. I'll let Mike unpack the year's margins. But of course, our comments are very deliberate when we say something like that. Between continued synergies that we're going to get from the GfK integration, which will manifest next year and continued just good operating efficiencies. We are going to see AI starting to contribute now. that is continue to accelerate. And we're very confident in the things that we're doing. They're going to allow that to happen. And we'll be able to talk more about that, of course, next year when we're on the same call.

Mike, do you want to talk about?

Yes, Jim, I would just add to your comments. We have been talking about getting to mid-20s margins in the midterm is where we had talked talked about. And -- but we're continuing to see AI, as Jim said, really kick in. We know that GfK synergies are driving 2/3 of that margin improvement and organic revenue growth as we've talked about previously, 50 to 100 basis points improvement. So we are continuing to drive margin improvements, and we'll see that going forward.

And that concludes our Q&A session. I will now turn the conference back over to Jim Peck for closing remarks.

Yes. So thanks, everyone, for joining us. We look forward to continuing our journey with you and with our clients with all the people who work for NIQ to do such an amazing job. -- and of course, with our investors, and we'll see you in February.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.