Andersen Group Inc. ($ANDG)

Greetings, and welcome to the Q4 2025 Andersen Group Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greg Vistica, Managing Director of Investor Relations. Thank you. You may begin.

Before we begin, please note that certain statements made on this call are forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks and uncertainties are described in our earnings release and SEC filings, including our prospectus dated December 16, 2025, and our Form 10-K for the year ended December 31, 2025, that will be filed with the SEC. Except as required by law, we undertake no obligation to update any forward-looking statements. We will also reference certain non-GAAP financial measures today. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and will be available on our website. Our 2 speakers today are Mark Vorsatz, Andersen's CEO and Global Chairman; and Neal Livingstone, Andersen's CFO. I turn it over to Mark Vorsatz now.

Thanks, Greg. Greg, with that introduction, I think you can work with Bill Deckelman and our legal department. So I have a couple of introductory comments, and I'm going to cover 4 points, and then I'm going to turn it over to Neal to talk a little bit more about the detail on our financial results. People often say to me, what's different about your business? And I would say the #1 difference about our business is culture. I often comment that we operate like a family business. Steve Foley, who writes for the Financial Times I've gotten to know over the last few years, asked me about our business when we did the launch of the IPO. And I said, we're like a family business. I often comment to my partners, my wife rang the bell to open the New York Stock Exchange because she's my best partner. I talk to my daughter today. We're very lucky we have 2 wonderful children, my son, Blair, my daughter, Tori, and she said that her 2.5-year-old, we have 2 grandchildren, 2.5 years old and 6 months old, both girls. She said, Maya, our 2.5-year-old would be listening in on this call. So I want to give a shout out to Maya. I also want to express my appreciation to the investors who have demonstrated confidence in our business model. I think when you hear the results of our conversation today, I hope that we begin to earn your trust in that confidence. I also want to who have been terrific advisers, mentors to me, all the good, the bad and the ugly. I've been blessed to have people who have been willing to share their perspectives, counsel me, give me some advice. And I think it's been very, very helpful to me personally. I'm going to cover 4 points today. I'm going to do a macro overview on our financial results for the fourth quarter. Neal will fill in a lot of the detail on that, but I want to communicate what I think is an important message here. The second is I want to talk about areas that I think are focused with respect to our 2026 strategy. Thirdly, I'm going to talk a little bit about acquisitions. I'm going to not get into a lot of information about projections, but I will give you an update on where we are in the process and where we think we're going to go conceptually and what the strategy is around that. It's probably different than any other professional service firm that you've encountered because we've built out a network of different firms. Many of these groups, we have a close working relationship with, and we know them very well. I know their spouses, I know their children. I know their partners, I know their business. And then the last thing I'm going to talk about is technology. I'm not going to call it AI. Everybody wants to talk about AI. I think that's a little bit of a misnomer. I think it's a broader concept around technology as a competitive advantage. We see it as a massive opportunity for our firm, and I'll talk about some of those considerations. With respect to our fourth quarter financial operations, in 2024, our revenue was $142 million. We have provided the analysts with a projection 7% for the fourth quarter, which would have been $157 million. We actually came in a little bit better than I anticipated. We came in at $170 million of revenue. That was a 19.6% increase in revenue, a little better than I would have expected. Multitude of factors in that. All 4 of our segments of the business, that would be Private Client Services, Commercial, Alternative Investment Funds and Valuation had double-digit growth for last year. At the bottom line, we really exceeded -- we beat what we provided the investors by the analysts by about $33 million. So I think by any measure, a quarter, I'm never happy with anything, but I think that's reasonable progress. For 2025, we came in at 14.6% growth in revenue at about $839 million. When people said to me before we went public, what do you anticipate? And my reaction was, well, we didn't just have a good year. We had a really good year last year, but we had 24 good years. Our average revenue growth for 24 years has been 15%. Our average net income growth for the last 8 we've been private has been over 25%. I tend to focus more on the historical numbers because a lot of the GAAP numbers because we unvested 59% of our equity, create a little bit of confusion if you're trying to figure out the story as to whether we had income or we had a loss. We unvested 59% of our equity. That was -- that has no dilution effect. It has no cash flow effect. That was done because of culture, which is our biggest strength. I joke with some of the investment banking firms if I had a meeting with your managing directors and said, we're all going to vote on unvesting 59% of your equity. How many people do you think would have voted in favor of that? We had unanimity. 100% of our partners voted in favor of that because it underscores our point about culture. I tend to look more at price earnings because that's what we used historically. For 2024, our net income was $134 million. Our plan for 2025 was $175 million, and we came in at $199 million, even a little better than I expected. That was about a 48% growth in net income. What I find I'm very proud of is a group of partners and our investors, we Mobility and Andersen Consulting, and we lost $22 million because those are start-ups. We needed to build an infrastructure. On a pro forma basis for 2025, our net income was really up 64%. So I think by any measure, a pretty solid year. Areas of focus for this year, what's exciting to me is we have a lot of room for improvement. I will also tell you how lucky I am. There's an expression, it's hard to fly like an eagle when you're surrounded by a bunch of turkeys. It's hard to fly like a turkey when you're surrounded by a bunch of eagles. I'm surrounded by a bunch of eagles who leave their eagle at the door and not titles, but how they can contribute to the success of our business. And there are areas that we're going to focus on in 2026. One is productivity. Dan DePaoli, who many of the investors and analysts have met. Dan is a partner in our New York office and is serving as an operating partner for the U.S. the last few years. Dan is going to focus on productivity. We have improvement. As I've communicated to our partners, if we can improve our productivity an hour a week in terms of client service across the board for this year, that would add $42 million to our net income. That certainly is an incremental approach that I think has a lot of value. The second is area of profitability. That includes not only how we manage our client base, but also cost control. Peter Kasha, who's also a partner in our New York office, is taking on that responsibility. Last year, we grew our GS&A by about 3% or more. We were averaging in the high 14s. We grew it to about 18. I'm confident with economies of scale, we'll move that number down about 1% a year over the next couple of years. Peter is going to be working with me on the functional areas of our business on how we can operate those more effectively. Also, Peter, the last few years, has been working on client retention issues and profitability. We are not the right firm for everybody. Our focus is on client selection and value solutions, and I'll talk about the latter in a little bit. The third area of opportunity for us is integration. James Frost, who has worked with me, James is based in the U.K. James has worked with me for the last 12 years on our expansion. James knows just about all of our partners because of that role. James will be working on integration. I'll be involved in that. When we first started expanding internationally, I used to say to my partners in the U.S., 1 plus 1 equals 7. What does that mean? Well, if Dan has 2 clients and I have 2 clients and we introduce each other, now I have 4. If Peter has 4, now I have 8. If James has 8, now I have 16. Our ability to drive solutions through our client base and help our clients be successful is a huge competitive advantage because of our platform. What I used to say when I was a partner at Arthur Andersen, I used to say to my partners, it's harder to get fired in 10 countries than it is to get fired in 1. And then the last area is acquisitions. As I think most of people on this call realize, we have built out a terrific network over the last 12 or 13 years. The opportunity for us is to selectively roll that network up into the business. It's a process. It's an ongoing process. We have a lot of conversations in place. In the -- we've signed a handful of deals, and I'll explain to you the rationale in that. In the projections for 2026 that we provided to the analysts for the second half of this year, $10 million of revenue in tax and legal and $23 million in revenue in consulting. In the last week or so, we've signed 4 deals. I'll give you a little context on those. We signed our practice in Canada for a variety of strategic reasons. It's in West Canada. It's based in Vancouver. Steve Flynn and Christa Rabadu are the 2 lead partners in that practice. The original group had been Ernst & Young. We've had a working relationship with them. They've been part of our network for over 7 years. We know them very well. They're a terrific group. They focus mostly on PCS, a lot of synergy with our business in the United States. The second is our tax practice in Nigeria. It's run by Leah. Leah was a director at Arthur Andersen. They joined us almost -- when they joined us, they had 13 people. Today, they have 128 with the growth of most of the groups that we've added internationally. The third and fourth groups are based in Uruguay. And by the way, Leah is a -- is the co-managing partner in charge of Africa, which will be a theme as I talk about how we're going to add groups. We're going to essentially prioritize our global management. So having Leah at the front end of the story was really important because there's no one who has a better perspective of our business in Africa than Leah. And as we move groups in, we're first going to prioritize our global management group that exists currently for our Swiss one. And then the third and fourth groups are our legal practice and our tax practice in Uruguay. They have been with us for over 8 years. Cecilia Riciardi runs the Tax and Accounting practice in Uruguay. Juan Federico Fischer runs our legal practice. Juan Federico is also on our global Board of our Swiss Vine. Those 4 groups and our strategy will be around adding groups where we have a platform and expanding those groups and building them out. That is a much more cost-effective way than to buy big practices with groups you're not familiar with. These people are like family to us. We know them very well. It's a total of 270 people in headcount. It is about $21 million in revenue. What we put in the plan that we provided to the analysts was that we would do $10 million in that space in the second half of this year. So we're already off to a beat. We will be updating -- Neal is going to go over later the projections that we gave to the analysts. We'll be updating those in the second quarter. And when we announce our first quarter financial results, we'll also announce our projections for the balance of the year. We have quite a few conversations in process. We had a new partner meeting in Las Vegas last week, along with a meeting for our consulting firm, our consulting colleagues. I have the honor and privilege to do the opening on both of those meetings. While I was in Las Vegas over a 4-day period, we met with 17 consulting firms that we're advancing conversations with. As I indicated that we had put in our plan a $23 million in revenue in the second half of this year. I will tell you that we will substantially outperform that plan. The last topic I'm going to touch on before I turn it over to Neal is technology. We have had a joint venture with the University of San Francisco that we do a lot of activity with. We did a pilot program in November and December in technology, Anthropic is providing the licensing. We also did one in January. We are being measured, thoughtful, deliberative about this. What I have observed with other firms is they're a little precipitous in acting on technology. Two firms outside the United States had regulatory problems because of the way they've introduced artificial intelligence into their solutions. We are going to manage this in a thoughtful process. We are going to have 2 more pilots with senior people in May and June. We have a potential candidate to run what we'll call artificial intelligence or technology, some other candidates to add to that. This is a process that's going to take some time. We're going to be thoughtful about it. We're going to be measured about it. We're going to be deliberate, but we're also going to be decisive and nimble. My take on this, we're already implementing it and getting economies of scale in the tax compliance areas. I think there's going to be a number of -- in our business model in the next 3 to 4 years. Today, we run in the U.S. 2.5:1. I think that's going to change to about 3 to 3.5:1. I think the level of productivity of senior people is going to be much higher. I think this will be the first year when we probably hire more lateral people than we hire new associates. We had a call today with the office managing partners, and Dan underscored a point that I have emphasized for the last 10 or 12 years is that probably in the future, virtually 100% of our associates [indiscernible] us either in the spring or in the summer. It's an incubation of how we build our relationships. The 2 things I will suggest that are continue to what I would call [indiscernible] I'm not going to suggest we're better than other firms. I'm just going to talk about how we're different. The first is client selection and the second is the area of in how we deliver our services. I'm going to use -- give you a quick few examples on that. Sandra Vanderwal, who works at our national tax group at the request of Mary Duffy, who runs that group and myself, spearheaded an initiative as part of the 2025 legislation to work on getting cost segregation projects out of our existing client base. In the fourth quarter alone, we secured 64 projects. I'll give you an example of one of my clients. I reviewed the valuation last week, along with the tax return on that client. We saved that client because of soft cost segregation where we could expense anything that a useful life of less than 20 years, we saved that client $19 million in front-end costs. That client will not pay any income taxes in 2025 for federal purposes. The second is a strategy that we launched on October 16. I have made an introduction to several of our clients in the area of cybersecurity for family offices. Peter Kasha, who is working with some of our colleagues in private client services, we had a call October 16 with 65 partners in what we call PCS. Over a period of about 2 months, we were able to secure about 230 qualified introductions for cybersecurity for our family offices. The third initiative that we've launched is what we call tax transformation. It's about 15% or 20% tax, and the balance -- we've added a terrific group that's led by Mark Tucker, who used to be a partner in Ernst & Young. We're ramping up that business. A fourth area that we're working on has to do with the tariff refunds. Many companies were not equipped to pay the tariffs. They're less equipped to secure refund. I've suggested to our national tax group is that would be a business that would lend it agency fee, where we would provide services to both existing clients and nonclients. The last 2 I'll comment on. One is what's emerging in the United States is a wealth tax. And there were a couple of questions from the analysts. I'm happy to expand the discussion on this later. California has a potential proposition to impose a wealth tax of 5% on anybody with a net worth in addition -- in excess of $1 billion. Senator Sanders just introduced a bill in the Congress that would tax unrealized appreciation on anybody with a net worth of over $1 billion. The new mayor of New York is introducing a variety of legislation, one that would reduce the inheritance tax by 90% or increase the inheritance tax by 90% by reducing the [indiscernible] The state of Washington has introduced potential legislation to create an income tax and only tax those worth over $1 million. For the type of client base, there is a huge opportunity because of our technical capabilities in this space and also our resources across the entire country. The last comment I'll make is just a bread and butter, and I got an e-mail on Sunday from somebody who runs a family office for a client of mine. And what they needed indicated that because of a variety of considerations, they needed services in New Zealand, in Singapore and in Norway. The strength of our global platform enables me to identify resources immediately. They said, why don't we start with New Zealand? I made an introduction today. We've already got a call in process. This is the strength of having a global platform. We are continuing conversations on the tax, legal and valuation side and expanding that in consulting to build this out and merge these groups into our public company. So with that, I'm going to stop, and I'm going to turn it over to Neal.

Mark, thanks very much. Good afternoon, everyone, and thanks for joining us today. Obviously, this is our first earnings call as a public company. And as Mark noted, we really appreciate the strong interest from the analysts and the wider investment community. So I'm going to cover our performance for the fourth quarter as well as the full year 2025. I'm going to discuss our results on both a GAAP and a non-GAAP basis and then share our financial outlook for Q1 '26 and the full year '26. As Greg noted, we will be sharing today non-GAAP financial measures. We think these provide meaningful insight into the underlying performance of the company. And there are reconciliations of everything we're discussing today in the earnings release and also on the investor slides that have been posted to the firm's Investor Relations website. So with that, let me quickly turn to Q4 quarterly performance. So to recap what Mark has noted, revenue for the fourth quarter, $170.3 million. That's a $27.9 million increase or 19.6% year-over-year. That exceeded our internal expectations and was driven by both client fees being higher than expected and volume, notably in the month of December as compared to the prior year. Again, growth was balanced across all service lines, and there were no large onetime or project-related items for the quarter. On a GAAP basis, we incurred a net loss of $195.9 million for the quarter. That compares to a net loss of $9.7 million for 4Q 2024. That GAAP net loss was primarily due to the one-off equity restructuring costs that you can see in our P&L of $193.2 million and other IPO-related expenses. The net result of that is a net loss per share on a diluted basis of $0.22 per share. That's on a GAAP basis. On a non-GAAP basis for the fourth quarter, I'll give you both our adjusted net income and adjusted EBITDA numbers. Adjusted net income was $7.5 million. That compares to a net loss of $8.4 million for the fourth quarter of 2024. And our adjusted EBITDA was $9.4 million as compared to a loss of $7.9 million for the fourth quarter of 2024. Our margins expanded across both of those metrics by more than 100 basis points in each case. So strong underlying performance. On a full year basis, again, following the same pattern, just to recap, full year revenue, $838.7 million. That was a $107 million increase or 14.6% on a year-over-year basis. That compares with 14.5% revenue growth for 2024. So reinforcing the enduring nature of the firm's business model and obviously, ongoing demand for our core services. As with the fourth quarter, revenue growth was well diversified, all regions and service lines showing positive revenue growth year-over-year and no large onetime or project-related items in those numbers. PCS, Private Client Services, continues to be our largest service line. And for the year, that represented 51.5% of total revenue, although there was no substantive change in the mix of revenue by service line for the year. I'll mention some of the drivers of this performance. On the client side, we expanded the number of clients -- we expanded our client relationships. For 2025, we had 687 client groups that generated over $250,000 in revenue. That was up from 629 groups in 2024. So a healthy growth in the number of clients that we're achieving that $250,000 threshold. We also increased the number of active client groups by 650 or 5.6% on a net basis. So that's excluding previously active clients that became inactive during 2025. And the number of client engagements with those client groups expanded by 10.6% over the same period. Again, just to emphasize the point we've made previously of revenue diversification. So we've got -- our revenue is dispersed across a broad range of clients. There's no single client group accounted for more than 1% of revenue in either '25 or '24. And our top 10 client groups accounted for approximately 5% of revenue across those 2 financial years. In terms of pricing, our average rate per hour increased approximately 11% year-over-year. That's confirming the firm's ongoing ability to increase pricing. Our total headcount increased 5% in 2025, and our voluntary attrition rate of our staff teams was 14%, again, exactly in line with 2024. I'll mention briefly some of the expansion initiatives that we executed in 2025, where we established new offices in Atlanta, Georgia and Charlotte, North Carolina. Those offices contributed approximately $1 million in incremental revenue. And as Mark noted, we continue to make investments in Andersen Consulting and Global Mobility, which delivered combined revenue growth of approximately 38% in 2025. That's on a non-GAAP -- that's in terms of summary of our revenue. On a GAAP basis, we incurred a net loss for the year of $130.2 million. Again, that's primarily due to the $193 million one-off equity restructuring charge and the stock-based compensation expense that we incurred leading up to the IPO. As a result, for the year, our earnings per share was negative, and our effective tax rate was also negative 2.4% to be precise. That's on a GAAP basis. Turning now to non-GAAP results. Our adjusted net income for 2025 was $217 million, and our adjusted net income margin was 25.9%. That's a 72 basis point expansion year-over-year. Adjusted EBITDA was $226.3 million. That's a 59% increase year-over-year, and the adjusted EBITDA margin was [ 27.7%. ] That is a 75 basis point expansion year-over-year. So we will get the question, I'll anticipate, the margin expansion reflected in those non-GAAP metrics highlights the operating leverage in our business model where, as revenue scales, together with disciplined cost management that Mark noted, there's a strong flow-through from revenue growth to bottom line profitability. I'll turn now briefly to balance sheet and cash flow. As of December 31, 2025, we had cash and equivalents on the balance sheet of $258.5 million, and we had no third-party debt. Hence, our balance sheet remains liquid and provides significant flexibility to support growth whilst maintaining prudent financial leverage going forward. In terms of cash flow, net cash flow from operations for the year was $184.6 million. That was an increase of 21% over 2024, reflecting the strong underlying earnings and working capital discipline that has been maintained. CapEx for the year was pretty modest at $10.6 million, primarily related to nonstrategic technology investments, but aligned to our long-term growth strategy. Mark mentioned a number of expansion initiatives. As we've discussed previously, our overall strategy is to build the platform, add content and integrate it. And central to that is geographic and service line expansion with the aim, as Mark noted, of building a differentiated multidimensional professional services firm. So we will continue to prioritize investments in expansion, in people and infrastructure that are culturally and economically aligned to those underlying core principles. We think those investments -- we believe those investments position us well for sustained growth and margin expansion over the medium term, all the while, as I've noted, maintaining strong liquidity with a conservative financial leverage. Last point I'm going to cover is our outlook and forward guidance. Overall, we are pleased with the underlying performance of the business. Looking ahead, we are providing guidance for 2026 as follows: revenue is expected to be in the range of $955 million to $970 million. That equates to an anticipated growth rate of 14% to 15% and includes approximately $33 million of inorganic revenue. We are projecting adjusted EBITDA to be in the range of $213 million to $220 million, with adjusted EBITDA margin in the range of 22% to 23%. Growth drivers there are ongoing revenue growth in our core tax practice with a step-up in growth in Consulting and Global Mobility plus the inorganic revenue that Mark has noted. We currently expect a net loss in 2026. This is primarily due to the noncash equity-based compensation expense associated with the vesting of the Class X aggregator units that were issued prior to and in anticipation of the IPO. As a reminder, these are noncash accounting-driven charges, which have no impact on the operations of the company. But with a net loss, as in 2025, we anticipate EPS also being negative for the year. Finally, turning to the first quarter of 2026. Firstly, allow me to remind everyone that our business has a seasonal pattern, which is driven by the tax filing deadlines where client activity peaks in Q1 and again in Q3. This leads to seasonal variability in revenue and net income as our resourcing and related costs remain largely fixed during those periods of fluctuating client activity. Historically, our core tax business has generated approximately 25% of revenue in Q1, 21% in Q2, 34% in Q3 and 20% in Q4. Consequently, as you can see, Q3 for us is a bellwether quarter where we have historically generated significantly more than 50%, sometimes up to 2/3 of our annual net income with Q4 often reported as a loss period. Given the seasonal pattern, there's a level of conservatism which is necessarily applied to projections for the preceding quarters, the quarters prior to Q3. I wanted to give that context because we are providing guidance for Q1 with that as a backdrop. And the guidance is as follows: we anticipate revenue for Q1 to be in the range of $230 million to $235 million. We anticipate adjusted EBITDA to be in the range of $55 million to $60 million and adjusted EBITDA margins to be in the range of 25% to 26%. I'm obliged just to note some of the key assumptions underlying those -- that forward guidance, which is obviously reflecting our best judgment. So there's a number of variables here to note. One is return on investment in consulting and mobility. Another is the successful implementation of our 2026 pricing strategy, including successful rollout of the 3% technology surcharge, which we've discussed previously. There's a dependency on net customer acquisition. There's a dependency on the productivity initiative and staffing levels, which Mark mentioned that Dan DePaoli is leading. There's a dependency on integration of acquired firms, investment in technology, automation and AI and last but not least, ongoing discipline and management of compensation and other operating expenses. So all of those assumptions are, of course, dynamic. And as Mark noted, we will update our forward guidance in conjunction with our Q1 results. So in closing, I'd say we are extremely proud of these first set of results as a public company. We've delivered strong top line growth, expanding margins and solid cash generation while laying the foundation for the value creation over the medium term. And unsurprisingly, as financial people, our executive team is very focused, laser-focused on both growth and profitability. So thank you for your time and ongoing interest in Andersen. We appreciate -- really appreciate the opportunity to engage with the investor community. And with that, we'll be happy to take analyst questions.

[Operator Instructions] Our first question comes from the line of Mark Marcon with Baird.

Mark, are you on? We can't hear Mark.

Can you hear me now?

Yes.

Sorry about that. Congratulations on the very strong quarter. The fourth quarter, you had acceleration to 19.6% year-over-year growth. I'm wondering to what extent should we think about that momentum carrying forward through the balance of this year? And Mark, you mentioned a number of initiatives, increasing the billable hours by 1 hour across the associates. You also mentioned all of the different tax initiatives, which I would imagine are driving all sorts of conversations with some of your clients. So I'm wondering like to what extent is the Q1 and fiscal '26 guidance relatively conservative given some of those initiatives that you have coming across the 4?

Yes. So first of all, Mark, I will say I want to thank you the guidance and direction that you've given to me. Yes, as you know from our prior conversations, we run this business in a very conservative fashion. Once we paid off our MBO debt about 10 years ago, we've had no bank debt. I would say probably the most telling thing for what I would expect in 2026 is the recurring revenue that we had in August and September and October. So those are months -- our busiest month of the year is September. Our second busiest month historically has been August. Our third busiest month is March. It's usually an indicator of what our business will be like in the next year. And we had -- in September, my recollection is we had 18% revenue growth. In October, we had 17% revenue growth. So the numbers that we have provided to the analysts, I would say, when we have this conversation in a couple of months on first quarter, we will elevate those numbers. I'm not going to get into specifics. I'm just going to generally say that we are further ahead of where I had anticipated that we would be. I will also say that on the side, it's literally as fast as we can manage. We are not lacking groups that want to join us. As I commented on many discussions with both the analysts and investors, the inorganic revenue through different affiliations is almost $5 billion. I don't anticipate that all those groups are going to become part of the public company. A number of reasons why. Some is the practices are too small. We need the geographic coverage, but the practices are too small in those countries and/or their countries that have different kinds of risks, both from a business standpoint as well as a corruption standpoint. But I would say, based on our conversations to date, we would expect that an ordinary course of business that we will have groups continue to join us in a systematic fashion. As I indicated, I'm focused on those that bring immediate benefits. And that would be -- we added a group in Canada, Mexico is on our list. The U.K. is on our list, Spain, Italy, mature economies where we already have a lot of interaction. So without getting into specifics, I would say [indiscernible] end up with $33 million of revenue this year in acquisitions that I would probably resign from my role. On the organic side, we continue to see clients with a lot of needs where we can help them be successful. I'm continuing to push for us to not focus on those types of services that tend to be commodity that are driven by price. We had a call with our office managing partners and our internal U.S. Board this morning and a few other folks. We had 25 people on the call. And yes, those spaces where services tend to be more commodity is -- our primary competition is pushing price down. And my view is, let's not do that work. Let's focus. I had a situation with a client where we just implemented it last week, where the client wanted to transfer a piece of property, and we came up with a structure on that client. And we just concluded all the documents last week, and I pointed out to the client that on a present value basis, we were going to save him $12 million, okay? That's the space we want to play in. We want to play where we can drive great cost benefits, help our clients solve their most significant issues and get the most value, okay? So we're going to be -- we're going to continue to move in a disciplined fashion. I would say that did we have a good year last year? We had a pretty good year. 45% growth in net income or 48% and on a pro forma basis, 64%, 65%. Anybody you would want to compare us to would be happy to have our financial results for last year. That's all organic, okay? Having said that, I'm very disappointed because I see tremendous areas of opportunity, tremendous areas of improvement. And I may be -- my partners will call me a lot of things, but I will tell you, one is I am somebody who is just going to continue to push our organization to achieve its potential. So I hope that addresses your question. We're not going to get into specifics at this point. I will tell you that when we have this call in a couple of months and cover our first quarter financials, I would anticipate because we've already gone through a few drafts, we're having conversations with outside directors on, we will elevate both the revenue objectives as well as the adjusted EBITDA objectives.

Great. And then 2 quick questions, hopefully. With regards to your annual price increase or your semiannual price increase, did that one go through in January as you typically would have it go through? And are you hearing any sort of pushback from any clients with regards to being able to work more efficiently because of AI and therefore, reducing price increases. That's the second follow-up question. And then the third is basically along the lines of -- in terms of the groups that you are bringing in, are they coming in under the economic framework that was previously discussed with regards to how you price acquisitions?

So on the latter question, the answer is yes. As you probably have observed, our trading activity has been pretty limited. And while everyone has advised me that you shouldn't use stock at all, we are going to use stock. Part of it will pick up our float a little bit. The other part is these are our partners, and we want -- we're imposing the same restrictions on the equity component that we're imposing on our U.S. partners because we don't want to buy shell corporations [indiscernible] interested in serving as an exit strategy for somebody. We're interested in people that want to build a great company. Are we getting a little pushback on pricing? Yes, we are. And I would say it's in those scenarios where the service model is much more competitive, where clients tend to get multi proposals from multi-organizations. And it's, in part, the clients, it's, in part, our competition. There's a race to the bottom in some of these spaces. My view is we don't want to be in those spaces, okay? We don't want to be in the space where the only decision the client is making is based on pricing. We want to be paid fair for what we do, and we want to deliver value. So more and more, we will migrate to a less leveraged model where the spreads on our value proposition is much greater [indiscernible] start moving probably in the second half of this year. There were some regulatory issues with our auditor to move a little more to fixed pricing. That will be a continual process. We're not unreasonable people. We want our clients to benefit from some of the technology advantages. We also want to benefit from implementing those technology solutions. There's plenty of pricing benefit to spread. So we want to help our clients be successful. We also want to be fair to ourselves. But the basic model of the acquisitions, Mark, is not different than what we had previously communicated. And quite frankly, we have so much interest not only within our organization. As I indicated, we've got 436 affiliates with over 50,000 people. But I'm getting solicited by groups outside of our organization that are much larger that get the strategy we're pursuing, which Neal underscored what I've been doing from the beginning, which is build a platform, add content and integrate it. We are not -- we're about 50% through the content. We're about 3% through the integration model. We have so much room for improvement. I'm so excited about the upside in our business. All we have to do is execute. This is just an execution strategy. What I've explained to you on the acquisition side, I'm working 24/7. I had 24 meetings and 4 days in Las Vegas with different groups that are excited about being part of our organization. These things take time, and we're going to be measured, and we're going to be disciplined. We're not going to do things. We had a group that wanted to advance a conversation back in early January and wanted to negotiate the price with me, and I canceled the call with them, and they actually flew to Las Vegas to meet with me to request that we revisit those conversations, and they will agree with the business model that we had articulated. We have a responsibility to the groups that join us. We have a responsibility to our public shareholders. We have responsibility to our people. I am very sensitive to all of those responsibilities.

Mark, if I can add one comment there. You asked about pushback on pricing. Just to give you one data point on the tech surcharge, which we discussed previously, around the time of the road show, our expectation was we would get traction on about 50% of that. We are actually tracking 2/3 of our clients, and we're not happy with that, by the way, because on some clients, we said we'll give them a year before we implement that surcharge. So that is going quite well, but more to do.

Our next question comes from the line of Toni Kaplan with Morgan Stanley.

I'll just hop on asking about pricing as well. So you talked about, in the past year, the pricing was up about 11%. Maybe just help us frame the pricing contribution for 2026 that you've embedded in the guidance.

Neal, do you want to take that, and I'll add it?

Yes. Toni, we haven't changed our outlook on pricing from what was shared pre-IPO with the analyst group. So it is not at the double-digit level, but it is high single digits is where we're forecasting. But you can see our run rate is pleasingly exceeding that. And as we implement this tax surcharge, which will be a nice one-off gain, that should give us a good tailwind. So yes, we're being conservative, but we're optimistic that we can sustain that level of pricing going forward, Mark?

And Toni, I'll just -- if you read my CEO founder's letter in the S-1, I commented that we had grown our pricing over 4 years at 33%. So if you add in last year, that's 44% over 5 years. So call it, roughly 9% a year. This isn't like we had one good year last year. Okay, it was a little bit better than we had in the past? Yes. Are we a little more attentive to it? Yes. Are we focused more on value services? Will we change our business model over time in a systematic way to capture some of the upside in pricing based on the value proposition with our clients? Yes. And as indicated, I don't mind leaving a few bucks on the table with our clients. These are relationships. We want our clients to be happy. We also want to be fair to our firm, and we want to be fair to our shareholders. So do I anticipate any significant change in pricing this year? I do not. And that is built into our model. And when you see an update on that model come whenever we schedule next call, probably some [indiscernible] you'll probably see 2 major changes. One is a major change on what we would expect to execute on acquisitions because I do think in the next [ 16 ] [indiscernible] we will be in a much better position to project the balance of the year in that area. And I also think on the financials, we'll be in a much better position to project the subsequent quarters.

Great. And just on the acquisitions point, you mentioned the $33 million of inorganic revenue in the guide. How much of that revenue is from acquisitions that have already -- that are already within the Andersen Group versus yet to acquire?

So the 4 deals that we just implemented are about $21 million. Those deals will be effective April 1. So call it, $15 million of the $33 million is already in the bank. I would say we may -- depending upon the activity, we may consider having either a call or a press release sometime in the next 60 days. And just to kind of give you some context here, these are not people that we don't know. I mean these are people -- every one of these deals, all 436 of them I've done. And every one of them, I know their family, I know their kids. These are people we have relationships with. They are excited about building a great global company and being part of this journey. So does it take time? Absolutely. It's probably 6 months to get a deal done from start to finish. It was -- we have a terrific outside Board. I needed to spend some time with them because most of those people have extensive acquisition experience. And what I had to help them understand is we've got groups that have been with us for 12 years. We have close personal relationships as well as business relationships. So I would say, Toni, bottom line is we'll give you some [indiscernible] the end of May or so, I would say, do I think we will outperform the $33 million? I think we will substantially outperform that number, but I'm not going to give you any specifics at this point.

Got it. And lastly for me, you've talked about the sort of part of the business that is commodity -- that you don't tend to focus on business that's commodity, excuse me, very high-end service, et cetera, and that's definitely been clear throughout the whole process. Are there parts of your business that you are starting to see some competition in from AI players or anything like that? Or have you not really seen that at all because you are focused on much more high-end value-added services?

I would say there are areas in the large corporate area where you're going to see prices be much more competitive. On the value side of the business, we don't -- we have not seen solutions in that area in artificial intelligence being implemented in a very extensive way. Are we using it? Absolutely. I typically have quarterly calls with my clients. I had a call with one of my clients about 6 weeks ago. While I was on the call, an issue came up that I used -- my preferred solution is Gemini. I use Gemini and on that, within 3 or 4 minutes, I was able to do a financial analysis that 5 years ago, I would have given to a manager and it would take me a week to get back an answer. That actually led to a bigger project, okay? Now will we see more of that, which is why I suggest our leverage model is going to change. Groups that are talking about extensive growth in headcount, I think we have a different view on this. We think the clients are going to want more experienced people who can use technology more effectively to drive value in a much faster time period. We had some folks within our organization that about 6 or 8 months ago that had said to me, we got to get out in front on this, we should license with a particular group. What we've learned in the last 6 months is that particular group does not have the best solution from our perspective. We're evaluating multiple solutions. I get a lot of articles all over the world. There are 2 major international firms that have used artificial intelligence and solutions that turned out to be disadvantaged and created -- they got fined by regulators because [indiscernible] that was wrong. We're not going to be the first, but we'll move very quickly once we have concluded on the strategy, and we definitely think it's going to change our business. We actually think it's a massive opportunity for us. I think it's going to drive greater value through our client relationships because we'll be much more nimble today than we were a year ago. And I think because of that, we will have a much more profitable business than a lot of the groups that we traditionally compete with. You know what, Toni? Toni is going to have to increase her projections. What do you think, Toni?

[indiscernible], I think we've got a couple of minutes left perhaps for one question.

Our last question comes from the line of Faiza Alwy with Deutsche Bank.

I wanted to ask if -- just given the somewhat uncertain macro environment that we're in post the geopolitical events, I'm curious if just over the last couple of weeks, if there's any specific part of the business where you're seeing any impact or if we should be anticipating any impact from macro uncertainty?

We haven't seen it ripple through yet into our core business. I would say, and I think Dan has commented in some of our prior calls and meetings that where we see a downturn in the value of financial assets that actually creates a big planning opportunity for us with our clients. I do [indiscernible] Federal Reserve Chair, Kevin Warsh, who I know a little bit. I have nothing but maximum respect for him. I do think in an early process, interest rates will come down. That may be because of some [indiscernible] may be because of the Federal Reserve's policy. What we see is volatility creates opportunity for us. Whether it's a lot of upside or a lot of downside, it creates opportunity for us because we plan with our clients. So where we have those relationships, our clients need us in downturns. It also represents huge opportunities for state planning. What I described earlier is there are 4 major jurisdictions that are considering wealth taxes, and that's a huge stimulus for us. There isn't a client -- there isn't a wealthy client we have that isn't interested in how we can help them mitigate those issues. So I would say, will the general core business in professional services get a little softer, particularly if there's a downturn in M&A and IPOs and so forth? Yes, probably. I will say this, as I commented at the beginning of this call, we had a -- we had a pretty good year last year. I'm never happy, but we think we should do better this year. We had a call this morning to talk about that. Having said that, we were the only tax firm in the United States of any of the major tax firms that had positive revenue in 2008 and 2009. We've never had a down year in revenue. We've never had a down year in net income. Now several of you have suggested to me, yes, but you got to prove it once you're public. Well, I think we're off to a very good start in the first quarter. I even think Mark Marcon would say 19.6% revenue growth for a quarter that historically for us is soft is pretty good progress. And what I'm excited is that we have so much opportunity to improve. We are -- one thing I am, Faiza, is I'm relentless, okay? I'm a 24/7 relentless person who will never be happy and never be satisfied. Okay, we did a pretty good job last year, but we can do so much better. And we have so many talented people and so many talented partners. As I commented earlier, I'm lucky to be surrounded by such talent. And all we have to do is organize it, harness it and unleash it. And if we do that, and we have the level of intensity that I know we are capable of, everyone who invests with us, I am thrilled with today's -- announcing today's results for anybody that's short in our stock. I hope you [indiscernible] tomorrow.

Tal, could we extend to see if there are any more questions in the queue from analysts?

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

Congratulations on the results. I guess -- and Mark, the results speak for themselves. So just how are you approaching the AI efficiencies internally and across the clients? I mean, clearly, it's not manifesting itself in pricing. It seems like that ratio is going to get tighter. But is it -- you continue to expand the service offerings, so any efficiencies? I guess my question is, how are you expressing the efficiencies in the business to your clients?

So first of all, let me [indiscernible] back when Greg Vistica sent me questions or topics you guys want to talk about, I had to look up what an agentic world was. So [indiscernible] my vocabulary. I'm going to let Neal talk a little bit about the operational side, and I'll come back and talk a little bit about the client service side.

Kevin, I'm going to repeat something that we've discussed previously, and I think there's actually a more important point to make currently given the kind of market nervousness around different sectors and who are the winners and losers. I think we've previously communicated that we are not and we don't have an aspiration to morph into a software business. That's not our core competence. That's not how we add value to clients. So I think making that distinction first up is super important. Yes, we are imposing a pricing technology surcharge. That's not a SaaS equivalent. That's not because we've got software that we are recharging to clients. That's simply recroupment of core investment in technology and automation and so forth. Operationally, we have deployed enterprise AI capability. But the real sort of nirvana point for us will come when we can deploy this on the more complex client engagements. At this point, we're not seeing ready deployable solutions in that space. We are continuing to monitor to watch. And as we mentioned previously, it's on the investor presentation, if you'd like to take a look, we are partnering very deeply with a number of experts and specialists in this area, the Palantirs of the world and so forth. I also just mentioned briefly on the consulting side of the business, which is obviously still in early growth stage. But that is a business that is being built as AI-enabled from the get-go. We do not have legacy infrastructure that we have to reshape, reconfigure, restructure in order to live in, as you noted, the new world of AI. So operationally, this is an ongoing journey. There's a huge amount to do without question. But just to emphasize the point, this is about partnering very deeply and getting access to proprietary technology that our competitors may not be able to access as rapidly as we are.

I would [indiscernible] Kevin, on the client service -- on the client service side, Kevin, I would say we are doing it incrementally. I'll give you an example of an engagement I work with another younger partner on where we probably have improved the efficiency of our delivery of recurring work by somewhere around 15% to 20% this year. We are capturing that differential at the bottom line. Is it going to happen all at once? It's not going to happen all at once. We're going to go through a process where, first of all, we improve some of those -- some of the compliance areas, which we're already doing. And then the second area is the service from a planning perspective, how do we leverage value propositions. We've got some ideas that we're going to probably unveil second half of this year about how we leverage our intellectual capital. How do we leverage our intellectual capital and deliver to clients more effectively? I was talking to Dan over the weekend about an idea I have on a client that I'm actually drafting some agreements on to work with their counsel to how to implement it. It's a high-value solution. It's something we could clearly leverage throughout a large segment of our client base. So some of this is really leveraging our distribution channels, leveraging our delivery of service, leveraging our intellectual capital, leveraging our technology and combining those. In our prior life, we were probably known as the firm that had the most training. We were the first firm internationally to ever buy a training facility. In 1969, we bought what had been a college outside of Chicago. We generally require our people training. We think investing in our people is really critical. That's kind of -- it's all -- it's a number of factors, Kevin, but that clearly is going to change over time. And we think we're going to be -- we think it's an opportunity for us. I think some of the organizations that have leveraged their business by loading up people on a bus and sending them out to the client to have the client train them, I think they're going to have challenges that are much different than we have. So -- and I also see, as I indicated, our leverage model is going to shrink. We're going to have higher pricing. We're probably going to look a little more like a law firm than an accounting firm or somewhere in between. And that's something we're already working on, and Dan and Peter Kasha and I have been having conversations about it, and we're already implementing it this year. This is the first year, we'll probably hire more lateral hires than we hire at entry level.

That's super helpful. Then just one quick numbers. You dimensionalized the inorganic $33 million. How much EBITDA is there against that $33 million?

I would defer to Neal on that. And if we can't address it right now, maybe he can send you a note or he can send a note to the analysts or whomever.

That's fine. We can take it offline.

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

I appreciate you fitting me in here. I'll just ask one. It sounds like really good growth, albeit off a small base for Global Mobility and Consulting organically in 2025. Can you speak to kind of what's embedded in your guidance for acceleration or I guess, I should say, growth in those 2 businesses in '26? And at what point can those 2 businesses maybe, combined or separate, however you want to answer it, become profitable or at least be in a position where they're not a headwind to margin?

So I would say in Global Mobility, sales for this year that exceed our plan in revenue. Consulting is going to grow what we made a strategic decision. We've got 136 consulting firms who we recruited all with the understanding that if we like them and they like us in a 2-year period or so that we would want to merge them into the public company. Are we going to merge all 136? We're not. But we started that process, and we made a strategic decision that we're not going to hire up a lot of people when we have groups that we can merge in, in 2026, who can provide the resources to do the work on opportunities that we can introduce. I would say, as I commented, we lost about $22 million in those businesses last year. On the organic side, we will lose money this year. My recollection is we probably have a plan to lose about $7 million or so less. We'll update that, as I indicated, in the next quarter projections. But I would anticipate in the next 2 years, we'll lose money in both of those businesses because we're still investing in the infrastructure. When we started our office in Chicago in February of 2006, we hired 4 people. And Joe Karchesski, who was the partner that we hired to run that, over an 8-year period, we lost money at an increasing pace, and that was my decision because in our prior life, Chicago was our home court, and we had 65% market share. We were not just bigger than the big 4, we were bigger than the big 4 put together. Chicago in tax went to Deloitte. Deloitte had 140 people in tax. We had over 1,000, okay? So we made a decision strategically, at least I did, to lose money because I thought we would, long term, grow it much faster. I would say the last 5 years, Chicago has been our fastest market for growth and is #3 in profitability. And we now have almost 300 people in that office, and there's no reason why we can't compete with anybody in Chicago. I would say similar strategic issues for Global Mobility and Consulting. We will balance the strategy around investment with net income, which I think we did last year, driving 48% increase in net income and losing $22 million in 2 new businesses was a reasonable thing to do. And I would say, as an investor, I think that was a measured approach. We anticipate doing that in other areas. I'm particularly focused on consulting. We have 2 excellent around PwC's practice, John, [indiscernible] and Sameer Mammadov. But Dan DePaoli now has recently taken on oversight of that business. We see huge opportunities. I would anticipate in the near to intermediate term, we'll create separate subsidiaries for both of those businesses because I think that will house them more effectively. And we see other areas. I'm not going to get into it today, but there's another new business that we have a tremendous expansion opportunity, and I have interviewed a candidate to run that business. The timing of that, to some degree, will be driven by how fast we can progress consulting and global mobility and get them into the black. So we will continue to balance new investment with profitability. I think we did a pretty good job of that last year. I think we'll do a pretty good job of it this year.

do we have others in the queue?

There are no other questions.

Okay. Mark, if I could have you clarify one thing. On the USF program, is it Anthropic or Accordance?

It's Anthropic.

Thank you.

I want to just thank everybody for the time, and I want to reiterate my appreciation for those groups that have invested in us and particularly some of those groups that not only invested with us pre-IPO, but have continued to buy shares in the company. I'm grateful for that. I know I'm going to have a handful of calls coming up in the next week with some of the investors. I also want to thank the analysts for all the great feedback that we've gotten. I'm the kind of person that appreciates criticism. I can learn and I can improve even at this stage of my life. I think there's still opportunities that I can improve on. And so I want to thank you all for the comments. I will say this group of analysts has been incredibly helpful to us and that has helped us in shaping our vision for what we're trying to accomplish. So thank you all very much, and I appreciate it, and wish you have a good week.

Thank you. And this does conclude...

Thank very much.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for...