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DATE

Feb. 23, 2026

CALL PARTICIPANTS

  • Executive Chairman and Chief Executive Officer — Marcus Lemonis
  • Chief Financial Officer — Adrianne Lee

TAKEAWAYS

  • Revenue -- Down 10% year over year in the quarter, or 6% excluding Canadian operations.
  • Average order value (AOV) -- Increased 7% compared to the prior year; rise driven by improved online assortment and larger mix into Overstock.
  • Orders delivered -- Rose 13% quarter over quarter versus the previous quarter.
  • Gross margin -- Reached 24.6% in the quarter, a 160 basis point improvement year over year; full-year gross margin rose 390 basis points to 24.7%.
  • Sales and marketing expense -- Decreased by $15 million, with efficiency improving 350 basis points as a percent of revenue.
  • General and administrative and technology expense -- Fell to $33 million, a $15 million year-over-year reduction, attributed to cost controls and organizational rightsizing.
  • Adjusted EBITDA -- Reported loss of $4 million, improving by $23 million or 84% from last year; full-year adjusted EBITDA loss $31 million, $113 million better year over year.
  • Diluted EPS -- Quarterly loss of $0.30 per share, a $1.36 or 82% improvement; full-year diluted EPS loss of $1.39, a 75% or $4.15 improvement compared to prior year.
  • Cash and inventory -- Ended quarter with $207 million in cash, cash equivalents, restricted cash, and inventory combined.
  • Omnichannel revenue base -- Including Kirkland’s, omnichannel pillar targets approximately $1.5 billion in annualized revenue; an additional unnamed acquisition is expected to add about $500 million in top line revenue.
  • 2026 revenue growth outlook -- Management targets low to mid single digit revenue growth for the year in the e-commerce segment, with Kirkland’s expected to track similarly, and quarterly sequential improvements expected.
  • 2026 EBITDA and margin targets -- First quarter revenue and EBITDA targeted to improve at least 30% year over year; consolidation of acquisitions may allow profitability by third or fourth quarter if integration milestones are met.
  • Pillar integration timeline -- Second quarter will reflect partial Kirkland's ownership and integration costs; meaningful financial benefit expected after ninety to one hundred twenty days of integration activities, with full synergy gains targeted by third and fourth quarter.
  • Margin potential by pillar -- Home services businesses (pillar three) are expected to provide gross margins in excess of 40%, and protection and financial solutions (pillar two) could realize gross margins north of 50%, supporting long-term consolidated margin expansion above 30% if acquisitions complete as planned.
  • Technology and efficiency initiatives -- Accelerated implementation of modern technology, including AI tools, is underway to enhance conversion rates, inventory productivity, pricing, and cost management.
  • Customer metrics -- Management claims that "the trough is behind us," with growth anticipated in revenue, EBITDA performance, and active customer count going forward.
  • Loyalty and home operating system development -- Proprietary loyalty wrap and digital home operating system (including LifeChain blockchain) are being built to unify and connect all service pillars and customer data.
  • Balance sheet and cost efficiency -- Cash usage in operating activities improved $118 million, or 67%, year over year, and $150 million in annualized run rate savings aims were exceeded.

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RISKS

  • Management expects pressure on gross margins in the second quarter as omnichannel mix shifts toward lower-margin categories, with anticipated margin compression to 24.1%-24.2% during patio season.
  • "There will be transaction costs and transition costs associated with the merger and integration. Second quarter should be viewed as an integration quarter, not a fully synergized quarter."
  • Achieving improved profitability and synergy realization is contingent on successful and timely closing and integration of acquisitions, with the company noting that full benefits require ninety to one hundred twenty days post-closing and, for some activities, eight to twelve months for results to stabilize.
  • Management states "We are nowhere near where we need to be in the next twelve to twenty-four months," regarding technology infrastructure and integration, with reliance on third-party evaluations to identify and drive further efficiency improvements.

SUMMARY

Bed Bath & Beyond (BBBY 4.46%) reported sequential and year-over-year improvement across nearly all major earnings metrics, highlighted by a significant narrowing of losses and marked efficiency gains in both operational and marketing expenses. Management outlined the company's multi-pillar strategy, emphasizing the imminent completion of the Kirkland’s acquisition and a pipeline of pending deals in both home services and financial solutions that, if closed, could expand annualized revenue to $3 billion. The organization detailed a deliberate integration roadmap, with full synergy capture from new acquisitions projected to emerge over the next three to twelve months, and strong gross margin potential in both the home services and protection and advocacy segments. Modernization of technology, continued variable cost reductions, and the roll-out of a digital "home operating system" are core priorities, while both the customer base and conversion metrics are expected to trend upward as the ecosystem expands. The company maintains that these objectives are not predicated on a housing market recovery, but could benefit substantially if macro housing conditions improve.

  • Management said, "Including Kirkland's, this pillar approximates $1,500,000,000 in annualized revenue, with an additional omnichannel transaction agreed to in principle with the sellers expected to add an additional $500,000,000 in top line," signaling mergers and acquisitions are foundational to current growth targets.
  • CEO Lemonis stated that potential home services businesses yield gross margins "in excess of 40%" and protection, advocacy, and financial solutions "north of 50%" gross margins, setting the basis for consolidated group margin expansion above 30% once the planned acquisitions complete and scale is realized.
  • For the first and second quarters, the company forecasts 3%-5% revenue growth and 30% EBITDA improvement year over year, with larger profitability goals for the back half of the year if integrations proceed on plan.
  • Technology enhancement projects, including AI adoption and external reviews of infrastructure, were described as ongoing priorities intended to unlock further conversion gains and cost efficiencies.
  • Loyalty and data infrastructure partnerships, including with BILT and LifeChain blockchain, are positioned as connective tissue of the ecosystem, supporting expanded services and engagement across retail and service verticals.
  • The strategy avoids balance sheet risk in pillar two by solely originating and distributing financial products, rather than taking on underwriting or reserve liabilities, mitigating capital demands and regulatory exposure.

INDUSTRY GLOSSARY

  • Omnichannel: Integration of retail and e-commerce operations offering customers a consistent experience across physical and digital platforms.
  • Pillars: The company's three strategic business segments—omnichannel retail, protection, financial and brokerage services, and home services installation and maintenance.
  • BILT: Third-party loyalty and identity technology partner forming the company's key customer experience layer.
  • LifeChain: Proprietary blockchain-based home and homeowner record storage system supporting digital identity and service verification across the ecosystem.
  • Kirkland’s: U.S.-based specialty home décor retailer whose acquisition by Bed Bath & Beyond is referenced as pending or in integration.

Full Conference Call Transcript

Operator: Original range higher. That progression is going to take time. We will not compromise top line growth or customer value simply to form for short term margin expansion. We believe the true base of the business has now been established in 2025. We are seeing low to mid single digit year over year increases in revenue growth early in the year and are targeting low to mid single digit revenue growth for the full year 2026 based on current trends.

While we are not providing formal guidance, it is important because the company is in an active building phase growing its base business while layering in complementary acquisitions across each of the three pillars, we believe it is important to provide directional clarity so investors understand how performance should progress quarter by quarter and across the full year. This is a build. It is sequenced. And it is deliberate. Much like the last eight quarters, we expect continued year over year improvement, but that improvement will not be linear. It will follow integration timing, and execution milestones.

In the first quarter, we expect year over year revenue growth and EBITDA improvement of at least 30% compared to Q1 of last year. This reflects stabilization of the base business and continued cost discipline. In quarter two, we expect to close on the Kirkland's transaction on or around April 1. Q2 will reflect partial ownership and will include transition and integration activity. It will not reflect the full benefit of merger synergies. We expect approximately 90 to 120 days following the closing to execute meaningful integration initiatives, including consolidation of overlapping corporate costs, vendor contract alignment and purchasing leverage, shared services optimization, supply chain integration, technology integration, and merchandising alignment.

There will be transaction costs and transition costs associated with the merger and integration. Q2 should be viewed as an integration quarter, not a fully synergized quarter. But the base business will have increased revenue and will have improvement on the bottom line as it relates to EBITDA. Quarter three integration work should be executed, and Q2 should begin to flow through the financials in a more meaningful way. We expect positive top line growth and improved operating leverage with a stretch objective to approach breakeven. By Q4, assuming integration milestones are achieved, we expect positive top line growth again and improved margin leverage with an opportunity in Q4 for profitability.

This framework reflects disciplined execution, not reliance on a housing recovery. Everything we are building fits into one of three defined pillars. I outlined them in my January 5 letter and again today in my February 23 shareholder letter. Nothing sits outside the framework that I have provided. The architecture is the filter through which we evaluate every deal, every acquisition, and every decision. We are aggregators, not consolidators. A consolidator requires similar businesses to reduce cost and drive margin through scale. An aggregator, which we are, builds a connected system of complementary capabilities that strengthen one another.

Later on, you will be able to check our investor site to see the graphic that we have posted, a one-sheet graphic that will show you what that ecosystem looks like. We are building integration, not accumulation. Pillar one is pretty simple. It is our omnichannel business. It includes brands like Bed Bath & Beyond Inc., Overstock, Buy Baby, and Kirkland's upon closing. Including Kirkland's, this pillar approximates $1,500,000,000 in annualized revenue, with an additional omnichannel transaction agreed to in principle with the sellers expected to add an additional $500,000,000 in top line. Look. Retail drives engagement, purchasing leverage, and customer acquisition. Pillar two is our protection, advocacy, brokerage, and financial solutions pillar.

It includes property and casualty insurance, renters insurance, home warranties, product warranties, title services, renovations and renovation financing, mortgages and HELOCs, a credit union partnership, and a scaled residential brokerage network. The brokerage platform is critical. We are pursuing the acquisition or development of a scaled residential brokerage network as we speak, of thousands and ultimately tens of thousands of agents. Protection and advocacy come first. When trust is established, customers give us permission to extend those services. Financial services is an extension of trust, not the starting point. Pillar three is our home services installation and maintenance infrastructure. It includes flooring, cabinetry, closets and storage systems, carpeting, renovation services, professional installation, repair, and maintenance networks.

The differentiator is the installation labor model. Most homeowners cannot self-install flooring, cabinetry, or renovation materials. Installation is required. By building a professional labor network, we create higher transaction values, stronger attachment rates, greater customer stickiness, and ongoing maintenance engagement. This infrastructure converts retail demand into completed projects and allows brokerage origination to flow into renovation activity. For all of this to work, you have to make sure that everything has a unifying layer. Surrounding all three pillars is our proprietary loyalty and identity wrapper executed in partnership with BILT. We are also building a broader home operating system.

The home operating system connects the homeowner and the home through durable digital records around protection, financing, renovation history, installation records, warranties, public records, surveys, titles, deeds, and maintenance events. LifeChain supports this infrastructure by creating durable records around both the homeowner and the home itself on blockchain. Without this layer, these are separate businesses. With it, they become an integrated ecosystem. A key priority in 2026 is accelerated implementation of modern technology across the enterprise. Yes, that includes AI. We are deploying tools that increase conversions, improve inventory productivity, optimize price, enhance marketing efficiency, and reduce operating costs. Technology is a performance lever designed to drive revenue up and cost down simultaneously.

At this point, I will turn the call over to Adrianne Lee to walk through our fourth quarter and full year financial results in greater detail. Adrianne?

Adrianne Lee: Thank you, Marcus, for your insight into the significant financial progress we made in 2025 and our strategic path forward as you mentioned outlined in your shareholder letters. I will now turn to our fourth quarter financial results, which highlight the achievement of consistent earnings and improvement throughout 2025, and the material progress towards our committed targets to restore our retail operating discipline. Revenue declined 10% year over year in the fourth quarter, and 6% if you exclude the impact of discontinuing our operations in Canada. AOV improved 7%, driven by our continued focus on improving assortment on the Bed Bath site and an increased sales mix into Overstock.

This was partially offset by fewer orders delivered in the quarter versus 2024. However, I am pleased orders delivered increased 13% in the fourth quarter versus 2025. Gross margin landed at 24.6% for the quarter, a 160 basis point improvement compared to the same period last year. For the full year, we improved gross margin by 390 basis points to 24.7%, driven by structural changes in freight contracts and returns economics, as well as continued pricing and discounting rigor. We expected quarterly gross margin to be in the 24% to 26% range, impacted by seasonality, emerging categories, and competitive landscape, and delivered just that.

Sales and marketing decreased by $15,000,000, or improved efficiency by 350 basis points as a percent of revenue versus last year. It is important to note our full year spend efficiency improved by close to 350 basis points, another meaningful improvement to earnings power. We continue to navigate the balance of driving revenue and maintaining our ROAS guardrails while improving the site experience and sharpening pricing. We maintained our internal guardrails, launched retention tools, improved owned channel, and now need to optimize these tools and learnings for growth. G&A and tech expense of $33,000,000 decreased by $15,000,000 year over year as a result of our commitment to reduce fixed costs through rightsizing the organization, prioritizing efforts, and mandating productivity.

I am pleased that we exceeded our commitment to achieve a $150,000,000 annual run rate. All in, adjusted EBITDA came in at a loss of $4,000,000, an 84% or $23,000,000 improvement versus 2024. Full year adjusted EBITDA was a loss of $31,000,000, a $113,000,000 improvement versus 2024. Reported diluted EPS was a loss of $0.30 per share, an 82% or $1.36 improvement year over year. Notably, full year net loss improved by $174,000,000 and reported diluted EPS improved by 75% or $4.15. We ended the quarter with cash, cash equivalents, restricted cash, and inventory balance of $207,000,000.

Full year cash used in operating activities improved year over year by more than $118,000,000, or 67%, illustrating significant progress against the transformation initiative and stabilization of the retail operation. 2025’s performance reflects significant, measurable, and importantly swift progress in retaining our core retail operating discipline and materially reducing the expense to run the business. This is evidenced by the $113,000,000, or 79%, improvement in adjusted EBITDA year over year. As always, we will remain focused on continuous improvement, finding efficient ways to create a more variable cost structure, with an intense focus on driving top line growth. With that, I would like to turn the call back to Marcus.

Marcus Lemonis: Let me close with one broader perspective. Thanks, Adrianne. Our current plan does not assume a housing recovery. However, as mortgage rates moderate and transaction volumes return towards historical mid-cycle levels, the ecosystem we are assembling is positioned to benefit from that normalization. When incremental demand is layered on top of a fully integrated platform, with merger synergies realized and structural costs aligned, we believe the company has potential over time to generate substantial mid single digit to high single digit EBITDA margins. That expectation reflects disciplined execution and a normal housing environment, not aggressive assumptions. 2025 stabilized the base. 2026 is about expanding the base with a disciplined, architectural framework. We are aggregating complementary capabilities, integrating talent and expertise.

We are building execution and infrastructure. We are connecting the homeowner and the home. We are very deliberate, and we are very confident in our sequencing. I would like to now turn the call over for questions.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up question. If you would like to ask a question, please press star-1 on your telephone keypad. To withdraw your question, press star-1 again. Please pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Please mute immediately after. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steven Forbes at Guggenheim Securities LLC. Steven, your line is now live.

Steven Forbes: Thank you, and good afternoon, Marcus. Yes. Hey, Adrianne. Marcus, you mentioned a few 2026 growth drivers within the release and prepared remarks, right, AOV being one of them, conversion being another. But as we look at some of the core KPIs that you report, I was curious you maybe just walk us through how you are thinking about the active customer base. Like, are we reaching a troughing point? Is there visibility within the cohorts to rescale that in 2026? And then also, orders per active customer, second quarter in a row of stability, is that indicative of sort of that KPI also bottoming?

Marcus Lemonis: Thanks for that question. We do not believe that; we believe—excuse me. We believe that the trough is behind us and that everything you see going forward will have growth: growth in revenue, growth in EBITDA performance, growth in the number of active customers. What I want to be careful of is to land on AOV, because as Bed Bath & Beyond Inc. starts to open up stores again, we believe that there is going to be a disproportionate amount of volume based on the last twelve to twenty-four months that will lean into some of the historic Bed Bath & Beyond Inc. categories.

And while we do not expect furniture, patio, and rugs to do anything but grow, when you start mixing in higher count items in your basket versus dollars in your basket, it could throw that off a little bit. And as we start stocking a lot of inventory in our potential Jackson, Tennessee warehouse through the Kirkland's acquisition, we are going to see more towels, more small appliances, more gadgets, more top of bed, more housewares go through our ecosystem online, ultimately driving that AOV down, driving the average customer base up. We will come up with a clean way to delineate historical categories and their performance and legacy Bed Bath & Beyond Inc. categories and their performance.

Because as a reminder, a lot of our online business today is a function of what Overstock did for years. So, yes, growth in all cases. I want to be tempered on the AOV just because of the change in mix that could happen through the year.

Steven Forbes: Thank you for that. And then a follow-up. Yeah. As we think through the opportunity you expressed via pillar two and pillar three, I was curious if you could maybe explore your ability—if you have measured, I guess, interest among your active customer base or intent of utilization of such services, if the demographic profile sort of caters to those services. I guess, what gives you conviction and what should give us conviction that the opportunity is addressable to Bed Bath & Beyond Inc.?

Marcus Lemonis: Well, I think you have to start to think about Bed Bath & Beyond Inc. differently and stop thinking about Bed Bath & Beyond Inc. as the old Overstock e-commerce business and start to think about the overall housing market. And when I look at the size of the TAM, in the trillions, not billions, in the overall housing market, we believe that an ecosystem that taps into all the parts and pieces of that is quintessential to our business. The omnichannel business is really the first place we meet the customer.

And when you look at Bed Bath & Beyond Inc., Overstock, Buy Baby, Kirkland's, and the pending acquisition that has yet to be announced, we will have rounded out all of the important, what I would call, categories of soft and hard goods inside the home. When I go to the other side of the paper, which is pillar three, the home services, we know that for decades, these things have existed independently. And whether that is flooring, closets, cabinetry, carpentry, installation service, renovation services. We know those things are going to exist regardless of what is happening in the general economy. And we believe that the connection between those two is that they are both originators of new customers.

What I like about pillar three is its ability to spark larger transactions that call for things like financing or warranties. If I am putting all new cabinetry in my kitchen, that could be a $7,500 to $8,000 order that is going to largely come with financing and maybe some other services along the way. It also gives us the ability to get into the home with a homeowner and build a relationship. Putting in new flooring, putting in new carpeting, putting in new closet systems, do not just apply to a first-time home buyer. They apply to renovations. They apply to expanding families. They apply to life-changing events.

And what we are doing is we are taking the proprietary knowledge we have of why customers shopped at Bed Bath and, more importantly, when they shopped at Bed Bath, and we want to exploit all of those life events by selling them more than towels. The middle section is probably the easiest to understand because we know it is a competitive landscape as it relates to mortgages and HELOCs and insurance and warranties. As a reminder, insurance and warranties are regulated. So it is not easy for people to discount those services. That comes from trust.

When it comes to banking and things like banking, whether it is savings, checking, mortgages, or HELOCs, we are going to take two avenues. The first avenue is we are launching a partnership to launch what we believe to be the first ever homeowners credit union in America. It is a unique proposition, and it will offer three products: market-leading savings rates, market-leading checking rates, and what we believe is market-leading mortgages and HELOCs. That is a more traditional buyer. When they see credit union, they know there is value there because the layer of making money between the cost of funds and the retail rate that the banks have to make a profit, credit unions do not have.

We want to show our customers that value is squarely there. We signed a new deal with Brown & Brown to launch both a property and casualty insurance agency, a choice model that puts multiple carriers in front of people, as well as a full relationship on home warranties and product warranties. Product warranties and shipping insurance are through Extend. The only reason why I am 100% confident that this ecosystem works is that I did it in my former life. By understanding where origination starts and where all the other tentacles for lifetime value expansion exist. Candidly, what is missing in that middle stack and maybe lost on people is brokerage services.

As I mentioned in my prepared remarks and in my letter, we are pursuing three large transformative pillar acquisitions, one in pillar one, which I disclosed, is a deal in principle that is agreed to for pillar one. Pillar three is a deal in principle that has been agreed to on the home services side. And in the middle pillar is a deal that is in process, pretty close to being agreed to, that I think will give that business the teeth of origination that it ultimately needs.

If those three acquisitions pan out the way we expect them to, it would be north of $1,500,000,000 of additional revenue on top of the existing base that I described that also includes Kirkland's. So you take the approximately $1,500,000,000 base of our original e-commerce business, you add the omnichannel business of Kirkland's to it, and then you add these three transactions, and you could end up with an annualized run rate of about $3,000,000,000. But one in each of those pillars really providing the foundation for how those businesses will be built. Thank you.

Operator: Your next question comes from the line of Jonathan Matuszewski from Jefferies. Thanks for the time.

Jonathan Matuszewski: Marcus, I had a follow-up question first on just pillars two and three. Just trying to get a better hold of maybe the trajectory for how you see those two mixing into the overall kind of revenue base. And would it be correct to assume that the margin of those pillars two and three is going to be kind of the overall driving factor of EBITDA margin expansion over the medium term? Is that kind of the next leg in terms of margin expansion? That would be my first question. Thanks.

Marcus Lemonis: Yeah. You know, we have talked for a while now about the margin range of 24 to 26, and that has been on the historical e-commerce business. And we know the retail business is slightly better than that, two or three points better than that in a normal environment. What we know for certain is that the home services, the cabinets, the flooring, the installation, the renovation, they all come with far greater margins than that, in excess of 40%. And part of our strategy in growing our overall profitability is expanding our overall company consolidated margin through, A, the acquisition of those types of businesses in pillar three and being able to absorb those.

We will have work to do to take out some of the merger synergies and lower their CAC so that their EBITDA coincides with our expectations. But from a gross margin standpoint, materially higher than selling towels and couches online. The middle section is probably the one that I am most excited about, and it takes several years for it to come to fruition. But the acquisition that we have on the table will build the solid, call it, $400,000,000 foundational base of which we will build stuff on top of.

In that particular instance, whether it is the credit unions, the insurance, the warranties, keep in mind that the cost of goods associated with all of those is de minimis. There is no real asset, in many cases, because we are never on the liability. We are not acting as a bank. We are not acting as an insurance company. We are not acting as a warranty insurer. We are a marketing and sales organization making commissions and fees off of those; the margins are explosive, north of 50%.

And so over time, as we start to see those mature, we would expect a consolidated margin in the next 36 months, pending these acquisitions coming together, to expand above and beyond 30% for the overall ecosystem. The key is making sure that we take the cost out of these businesses. And one important distinction that I am sure many of you are thinking and I want to address upfront is we are going to operate these pillars individually, with their own leaders, and their own, call it, CEOs—sort of presidents of those businesses. These are people that are foundationally subject matter experts in those disciplines, not taking those businesses and trying to have e-commerce people run them.

We believe in having independence for entrepreneurs to be able to operate as subject matter experts. And where we will exist is twofold: one, from a financial and treasury standpoint, wanting to make sure that we are taking out any redundant back office costs, and from a data consolidation standpoint, meaning that each of these businesses are obligated to remit their financials, sign up for our code of conduct and the way we want to do business, and contribute data in a form and a manner to the overall ecosystem that matters. We feed that data into a data fabric, which is being operated by a third party.

And we partner with a master wrapper loyalty program functioned and partnered with BILT—B-I-L-T. You can do your research and find out what they do today. We, as you could tell as a company, believe in partnering and buying as opposed to building everything because technology moves so fast. So the operators are really in their own little cocoon, and we are acting as aggregators. But the most important aggregation of where we think we are going to get the real cost synergy is lowering the CAC for each of them, finding administrative costs that can be eliminated, and sharing in treasury management efficiency.

And that is ultimately why we are so confident that this business, in short order, three years, can be in a normal mid-cycle environment, can be mid single digit to high single digit EBITDA contribution because of those factors.

Unknown Analyst: Would love to just hear how you are thinking about measuring the success of your ads pilot with instant checkout and maybe the types of customer activation or the volume of activation that you would maybe need to see to divert more advertising dollars to that experimental channel? Thanks, Marcus.

Marcus Lemonis: You are talking about chat. Yes. Yeah. It is too early. I mean, it has been a couple of weeks, and we were one of the pilot programs with them and getting launched. But it is really early in the innings. There is a lot of learning that has to happen. But one thing that we have noticed in the last several months is that layering in different learning machines and different technologies is allowing us to get better. But let me be really clear.

We are nowhere near where we need to be in the next twelve to twenty-four months, and we have started to engage with outside third parties to help us assess our tech infrastructure, look at our overhead, look at the connectivity between everything, and look at integrations. We recently engaged with Alvarez, and they will be doing a full study for us, particularly in light of all of these acquisitions, to make sure that we are squeezing out every last dollar and capturing every last bit of information. Thank you.

Operator: Your next question comes from Bernard McTernan at Needham. Bernie, your line is now open.

Unknown Analyst: Great. Thanks for taking the question. Just had a follow-up on pillar two. I wanted to make sure I understood the right thing. So you said a large acquisition happening in pillar two for origination. So should we assume then that all those, you know, whether it is insurance, home warranties, HELOCs, all that will be after the acquisition, you will be able to offer all of that on a 1P basis, and then partnering with, you know, a big residential brokerage to basically sell those services.

Marcus Lemonis: So the way I would like you to think about it is there is kind of, like, a two-funnel approach. Funnel number one is using all of the customer engagement from pillar one and pillar three to offer all of those services in pillar two. And that is a little bit harder hill to climb quickly. You can get there over time after you build trust, after you improve your customer service experience, after people understand the connectivity. The acquisition in pillar two around the brokerage services provides instant, I would call it, integration.

And I would expect on day two of that acquisition that the products and services that we have lined up, whether it be with the credit union, whether it be with the insurance company, whether it be with the warranty companies, whether it be with the titling companies, would immediately be embedded. The piece we like most about this potential acquisition in pillar two is that it has already started some of those services and has seen early success but does not necessarily, in our opinion, have the technology or the capital to invest in technology that can supercharge that.

When you think about that real estate brokerage network, what you are really talking about is thousands, if not tens of thousands, of sales agents who are commission-based. That is how they sell things. We believe that there is an interesting and proper way to motivate those agents to receive commissions not only from the things they are permitted to inside of their real estate license, but also to be able to sell other products and services in the ecosystem for commissions that are compliant with whatever the state regulation is. When you can pick up a 10,000-person army of salespeople who are commission-based, are hungry to provide value to customers only on things they need, you get instant activation.

I would expect that within twelve months of making that acquisition, we would be running at relatively full steam, looking for attachment in a more traditional manner.

Jonathan Matuszewski: Okay. Understood. That is really helpful. Thanks, Marcus.

Unknown Analyst: And then just a quick follow-up. The—I know we are not calling it guidance, but directional commentary on 2026 for low to mid single digit revenue growth.

Jonathan Matuszewski: Is that inclusive or exclusive of Kirkland's?

Marcus Lemonis: So let me take my time here and go very clear. In the mid single revenue growth numbers that we are talking about, that is e-commerce only. Low to mid single digit is e-commerce only. Kirkland's will have similar growth at the same time. And so when we close on that acquisition for Q2, we are going to provide you a forecast. But what you can expect out of our base business for 2026 is low to mid single, hopefully closer to mid single digit growth for the full year. Margin expectation for that base business—we were 24.7 in 2025. We want to get to 25%, which is the midpoint.

And that is a push, particularly with all the noise around tariffs. And the more recent noise, as in, like, Saturday, we want to get ourselves to 25. On the sales and marketing expense, we are probably going to look maybe flat to similar in 2026 versus 2025. I am hedging myself a little bit there because I think we have some unlocks that have not fully been realized. And we expect nice improvement in EBITDA every single quarter over its previous year with the outside shot, stretch, stretch, stretch call in Q3 of profitability, a little less of a stretch in Q4 for profitability of 2026. That does not include any of the larger acquisitions we are talking about.

But I promise you this. The shareholder letter and the amount of disclosures that we have provided—they will continue to be as robust as we are providing them now so that when we do make an acquisition, you will understand how one plus one equals two. There will be no hiding the weenie. You will understand it full throttle. What we have to tell you, though, in order to make the numbers work long term, it takes from the moment we get the keys—because we cannot influence change before we close—but from the moment we get the keys, in some cases, 90 to 120 days.

In other cases, when you are getting out of leases or getting out of distribution centers or consolidating contracts, it could take anywhere from eight to twelve months. We will show you that when we lay it out. We will show you what it looks like. We will show you what we think the pro forma could look like. And we will show you maybe, like, a two, three-year cadence of what that could look like as well. I will tell you, I am really excited by what we are seeing in the early forecast. And, again, none of this contemplates a housing recovery. The housing recovery happens, then we are going to be in much better shape.

Jonathan Matuszewski: Great. Thanks for walking through all that again. Thanks.

Unknown Analyst: Yep.

Operator: Your next question comes from Thomas Forte with Maxim Group. Thomas, your line is now open.

Thomas Forte: Great. So, Marcus and Adrianne, congrats on the improvement in the quarter and the year. Regarding the Everything Home ecosystem and pillars, the first question, I will wait for the answer and then one follow-up. So, Marcus, when I look at each pillar, how do you determine when to work with a strategic partner versus when to own and operate an asset? On the surface, it seems like pillar one is all owned, and pillars two and three are more partnerships or combinations of owned and partnerships.

Marcus Lemonis: Pillar one is largely owned, but we are working on some larger licensing transactions with both the existing brands we have and some of the brands that we are acquiring. Secondly, we already have the relationship in Canada where we licensed and sold the intellectual property in Canada. We expect them to start opening stores, and they will be contributory. But for the most part, Tom, you are right. The bulk of it is owned. In pillar two, the delineation between when we should be in it and when we should not be in it is when there is a lot of regulatory complexity to it and a lot of what I would call balance sheet risk.

We are not in a position and probably will not be in the near future to take on any balance sheet risk around claims, or around reserves, or around insurance, or around financing, or any of those things. We just do not believe that we are subject matter experts in that result. We are an origination machine. And we expect to make money through all of these different transactions, including the brokerage services, in all of those. I would never expect us in the short term to be anything more than an insurance agency, a seller of warranties, a provider of financing. What we like about that is that there is no inventory requirement. There is no capital requirement.

There is no reserve requirement. And the money flows pretty nicely. But there also is not a big staff required to execute those. And so while some have said to me, oh, you are giving up margin by not being the bank or not being the insurance company, there is truth in that, but what they forget is all of the costs associated with doing that and the regulatory complexity with doing that. That is not where we want to spend our time nor our money. In pillar three, we want to own as much of that as we can, including providing the home services, installation services, all the products that go with it.

We believe that is a gateway to meeting the homeowner where they need us most. The margins are explosive, and the opportunity to surprise and delight and upsell is easier if we are controlling the journey than a third party is controlling the journey.

Thomas Forte: Great. And then for my follow-up, can you walk us through—recognize it is still early—your vision for the home operating system and the home OS? I know you have talked about it a couple times.

Marcus Lemonis: I liken the home operating system similar to how I liken loyalty. It is a wrapper around the entire ecosystem. And many people know home operating systems because they have an Alexa or they have a Ring doorbell. But at the end of the day, society and homeowners and renters are moving towards a connected home. And while it is nice to connect your lights and your AC and your TV and your radio, all those things, that is not what we believe is the most important part of the operating system.

The most important feature of the operating system, in our opinion, is a real estate ledger, a blockchain ledger, that captures all of the important documents for two different sets of items. One, the homeowner themselves and all the things that make up everything that they do, and the home asset itself, including title, deed, survey, insurance, maintenance records, because we know that the homeowner is portable. They are going to move in and out. And that home stays relatively constant. We like it on block because we think it, over time, provides integrity for insurance providers, lenders, homebuyers, maintenance providers, warranty providers, to see the true health report and the true lineage of that asset, giving people an opportunity.

No different than if you drive a car and you do not have an accident over time. You get better rates. People have to know what the health is. We think blockchain is a great way to do that. If you look at that particular product being existent, back when the Palisades fire happened, and all those folks had no records of anything that happened, we want to solve problems like that, both because people are transient, both because people buy and sell houses every seven years, and because there are these catastrophic events that cause that to be necessary. You would access that information both through an app and through a touch screen in your home.

As a feature, as a benefit, as a nice to have in addition to the important center of the universe with LifeChain? Of course, you will be able to handle your lights and handle your alarm and handle your doorbell and your AC and all those other things that we are all used to. But that should be features and benefits, not the core deliverable. We expect to be developing a good chunk of that over the next twelve months and hope to launch something like that in partnership in 2027.

Unknown Analyst: Thanks, Marcus.

Operator: Your final question comes from Seth Sigman, Barclays. Seth, your line is now—oh, please stand by while we bring up Seth.

Seth Sigman: Hey, guys. How are you? Thanks for taking the question. Nice progress. I wanted to go back to your comment about low to mid single digit revenue growth early this year. Is that meant to say what you are running right now? And if so, can you just bridge us versus—I think it was down 6% in the fourth quarter year over year. What is driving the top line improvement maybe across categories? Perhaps consumer cohorts? What are you seeing? Because, obviously, that would be a pretty meaningful improvement. Thanks so much.

Marcus Lemonis: Yeah. So a couple things. We have seen positive year over year growth starting in January through today. It is low to mid single digit. It is our goal over the course of the year to push ourselves towards mid single digit and hopefully even bust through that. Here is what is ultimately changed. We have really done a nice job of cleaning up the assortment online. We have done a nice job—plenty of work to do left—on improving the pricing. We have got better at marketing and getting people in our ecosystem to come back for the second and third purchase.

We are being very diligent about the kind of marketing dollars that we are spending, spending a little bit more on new technology, including a new pilot with chat, new techniques around SMS, and we believe that the omnichannel launch will help just create general awareness. We are not pleased—and I know this is going to sound funny—we are not pleased with low to mid single digit growth. We want to be conservative, and we want to outperform that in the market. But we also want to build our cash flow and our projections around something we know we can hit.

And if you go back and you look at the last four or five quarters, we have been pretty good at saying we are going to do something and delivering it. And I think that is the key to this business. We know we need to earn that trust and earn that confidence. And the only way to do that is set realistic expectations, meet them, or exceed them.

But so much of it, Seth, came from cleansing things, getting rid of vendors with bad margins, getting rid of SKUs with bad margins, getting rid of products on the website that have no relevance to our site, cleaning up how we are presenting brands, figuring out how we are ultimately going to get the customer back for their second purchase that may have come through on a PLA ad. We cannot keep just buying the customer. We have to earn, win, and maintain that customer. And that is what is starting to see happen. When we look at Q1, just to give clarity around it, we are expecting—and we are stretching—for about a 30% improvement in EBITDA.

Call it 3% to 5% in revenue improvement in Q1. Margin year over year from Q1 of last year, we are expecting margins to be where they are trending now, is where we think they are going to end. They are around 24.5% to 24.7%. That starts to get a little bit of pressure as we start indexing into patio. When we get into Q2, we would expect to see that same 3% to 5% growth. We think there will be a little bit of pressure on margins because more into patio, probably pushing closer to, like, 24.1%, 24.2%. But we expect EBITDA improvement again in Q2.

And then when we get into Q3 and Q4 is when we think we are going to start to see a little bit more wind in our sails, where we expect that revenue to maybe be 5%, 5.5%, hopefully forcing it to 6%, getting the margins to stabilize around 25% in Q3 and Q4, and having taken more costs out, which is what is giving us confidence to have a stretch, stretch, stretch goal to make some money in Q3. We know we will be better in Q3. We do not know if we can get all the way to zero. And then in Q4, as we just reported, I think, a $4,400,000 EBITDA loss, getting to zero or above.

And we know we have time, and we know we have work to do, but that is something that is really exciting in our company—that we are doing it the right way. We are building. We are growing. We are adding customers. We are generating revenue. We are making acquisitions. We are no longer in “holy crap, the place is burning down, and we need to cut stuff.” We are now in the kind of mode that caused me to leave my old company for this. Full time.

Seth Sigman: Yep. Alright. Very helpful. Thanks so much. I will leave it there.

Adrianne Lee: There are no more questions.

Marcus Lemonis: Do we have any more questions?

Operator: There are no further questions at this time. I would love to turn the call back to Marcus Lemonis, Executive Chairman and Chief Executive Officer, for closing remarks.

Marcus Lemonis: Thank you so much. We look forward to seeing you on our next quarter call. Take care. Bye-bye.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.