Operator: Good morning, ladies and gentlemen, and welcome to the Siemens 2026 Fourth Quarter Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Tobias Atzler: Good morning, ladies and gentlemen, and welcome to our fiscal Q4 '26 conference call. All documents were released this morning and can be found also on our IR website. I'm here today with our CEO, Roland Busch; and our CFO, Veronika Bienert. Both will review our outstanding preliminary fiscal '26 and Q4 results as well as fiscal '27 guidance and midterm targets. We shortened the presentation to have more time for Q&A, while all the details are in the appendix of the presentation deck. With that, over to you, Roland.

Roland Busch: Good morning, everyone, and thank you for joining us. Fiscal '26 was another highly successful year for Siemens. We delivered outstanding order growth supported by structural demand across key markets. Revenue growth accelerated further and reached 8%. Our bottom line increased even faster. EPS pre-PPA was up 14%. This growth reflects strong operational performance and leverage. Free cash flow is the ultimate measure for performance was up 12% to EUR 12.1 billion. And once again, we delivered on our guidance. Fiscal year '26 was also a year of significant progress in strategic KPIs. Our digital business continued to show strong momentum. Revenue was up 16%, reaching EUR 10.9 billion. It already accounts for close to 20% of Siemens revenue ex Siemens Healthineers. We are fully on track with our ambition to double our digital business revenue by fiscal 2030. A key catalyst for this rapid growth is the continued strength in DI software. Revenue now exceeds EUR 7 billion and annual recurring revenue is up 12% year-on-year. Importantly, AI is increasingly driving growth in our software business at DI and beyond. In fiscal '26, AI revenue was already trending to around 5% of DI software. But the AI opportunity goes well beyond software. For us, industrial AI is the defining growth opportunity, and Siemens is built to win in this space. But why us? We have a head start. For years, our strategy has been to combine the real and the digital worlds. Industrial AI makes this combination more valuable than ever. Industrial AI requires more and powerful models. It requires real-world industrial data. It requires a deep understanding of how engineering physics and complex industrial systems actually work, and that is where Siemens is uniquely positioned. We have a strong and unmatched portfolio in industrial AI with our software, our customers can build the most comprehensive physics-based digital twin of their products or manufacturing sites or even molecules. And we do know the world of the atoms too. We know how to build things in the real world. We give AI the context it needs to act in the industrial world. We do this in mission-critical environments. Customers trust Siemens. Our agents are already transforming engineering workflows from design to the shop floor, and we have an unmatched global footprint, combined with coverage of industrial infrastructure and mobility markets. As a first of its kind, our Eigen engineering agent demonstrates how fast we can be. Since its launch in April, we have continuously expanded across it across the engineering value chain and we have broadened its reach across industries, including semiconductors as well as consumer packaged goods. Most recently, we expanded it into automotive manufacturing. Customer adoption remains very strong. What matters in industrial AI is not what technology can do. It is the value our customers can create with it. So let's take a look at one of our customers in machine building, Andritz, a global supplier across several key industries. The entire group has around 30,000 employees at more than 250 locations in over 80 countries. They are already using a wide range of our automation and software portfolio. At their size, engineering is performed at the scale of several million hours every year, followed by several million additional hours for installation and commissioning. Improvements enabled by generative AI, therefore, have the potential to drive massive gains in productivity, cost efficiency and overall competitiveness. That's why they are using the Eigen engineering agent in their Andritz Metals unit. There, they have real potential to fundamentally change how engineering is done. Instead of engineers spending time searching for information, the information comes to the engineers, grounded in the company's own real-world industrial data standards and engineering knowledge. Instead of manual writing or adopting PLC code, engineers can generate and refine it interactively. Every result is checked against the specification and reviewed by people so that the engineers can act with trust. Instead of navigating complex documentation, engineers can ask questions and receive immediate answers. All based on the deep industrial understanding of specifications, drawings and proven reference plans from decades of engineering. At this customer's scale, that shift is significant. At Andritz Metals, they now deliver the same engineering scope twice as fast with our Siemens Eigen engineering agent. As the customers' engineering rules are captured once and reused in every new project, engineering capacity growth without adding head count. That is scaling at its best. And as machine builders are key multipliers across growth verticals like semiconductors, aerospace and defense and robotic, this creates an opportunity for Siemens to scale by using digital twins, data, connected automation and industrial AI. We can further increase the value we deliver to machine builders and grow with them. In short, we scale industrial AI by combining the real and the digital world. This customer example shows the strength of our ONE Tech company program. We are accelerating profitable growth through 5 strategic growth levers each supported by our highly synergistic portfolio of hardware, software and services and stringent investment. We turn our digital and industrial AI strengths into growth across attractive verticals and regions and our strategic growth levers reinforce each other. Lever 1, grow AI. Industrial AI in operations has already moved from isolated pilots to scaling at our customers. The semiconductor manufacturing industry sees a rapid capacity expansion. This creates customer pull for digitally enabled manufacturing and AI-driven productivity in facilities and operations. Our partnership with GlobalFoundries on their new AI-enabled control center in Singapore proves why Siemens is trusted for mission-critical operations. We combine GlobalFoundries semiconductor manufacturing expertise with Siemens industrial digitalization capabilities. The AI-enabled control center will, upon full global deployment, integrate more than 1 million critical data points to support capabilities such as AI-driven predictive maintenance, helping teams detect potential issues earlier and reduce unplanned downtime and respond faster. Lever 2, grow digital. This week, we signed an agreement to acquire Lauterbach, a leading provider of debug and trace solutions for embedded software and complex system-on-chips architectures. By adding industry-leading debugging technologies to our hardware-assisted verification solutions, we are further extending our competitive edge. The planned combination -- combined solution will enable customers to develop and verify embedded software even earlier and well before the physical chip is available. The planned acquisition represents another important step for our digital growth lever. Further proof points are the acquisitions of Altair and Dotmatics, which have accelerated our digital business growth and our transformation into an AI-powered technology company. Both companies have developed very successfully. Integration is fully on track. For Altair, we have met our ambitions, fiscal year '26 revenue targets and see first revenue synergies coming through. The combined organization is delivering as one team. And with physical AI, we are leading the way to AI-powered simulation. With Dotmatics, we also see strong commercial momentum and robust synergy pipeline. Revenue continues to be on track and profitability is even exceeding expectations. Lever 3, grow verticals. The prime example of how much impact a unified Siemens approach can bring has been our data center team. In fiscal year '26, orders grew triple digits to more than EUR 8.5 billion, while revenue was up around 60% to around EUR 4.6 billion. Growth in this space is super fast, and we are innovating at the same pace through R&D and through partnerships. Just last quarter, we announced new partnerships to advance solid-stage transformers and super capacitors. Why did NVIDIA choose Siemens to design the blueprint for next-generation AI factories? Because of our capabilities in next-generation DC switching, in industrial automation and because we are the only company that can create a full digital thread for AI factories. Lever 4, grow regions. Our customers operate globally. So do we -- each market is different, but the winning formula is the same everywhere. Technology wins, speed wins and resilience wins. The U.S. remains a key growth market for our automation business. We make a difference through software-defined automation, industrial edge, integrated hardware software offerings and strength in large-scale greenfield projects. Our automation business grew 12% last year, and we expect even faster growth in fiscal year '27. I said, speed wins. This aspect is of utmost importance in China. Our Chinese customers are fully embracing Siemens accelerator and Industrial AI. Our local for local automation portfolio is proving the power of speed, fast innovation and development, lower cost and strong customer adoption. Revenue with our local for local portfolio in China grew more than 25% in fiscal year '26. And we keep launching new products. Now we take the opportunity to go global with selected products to grow faster. All this is ONE Tech company at work. Lever #5, grow people. Our people will remain our most powerful growth lever, enabling them to drive growth is about building the skills, leadership and organization to turn industrial AI into real impact. So let me bring this together. Our ONE Tech company program is now in full swing. Industrial AI is at the heart of our strategy. We scale industrial AI by combining the reel and the digital worlds for our customers, for Siemens, for our shareholders. The foundation remains unchanged, stronger customer focus, faster innovations and ultimately higher profitable growth. We enter this next chapter from a position of strength. And with the planned spin-off of Siemens Healthineers fully on track, we are taking another important step to sharpen our profile as the leading industrial AI company. We see significant opportunities ahead, driven by powerful secular growth trends and the strength of our core markets, we are raising our midterm targets. For comparable revenue growth, we now expect 7% to 11%, up from 6% to 9%, and we raised our growth targets for EPS to double digit. We have started the fiscal year '27 with strong momentum and a clear plan to build on it. Based on our record backlog, structural demand for industrial AI and digital infrastructure, public investment programs and further pickup in our industrial markets. We expect in fiscal year '27 comparable revenue growth of 9% to 11%. And we see EPS pre-PPA in the range of EUR 10.20 to EUR 10.80, up 13% at the midpoint, and this excludes Siemens Healthineers. With that, let me hand over to Veronika.

Veronika Bienert: Thank you, Roland, and good morning, everyone. Let me take you through our fourth quarter performance and our outlook for fiscal 2027. We closed fiscal '26 is an outstanding quarter, setting records across multiple key metrics. Orders reached an all-time high of EUR 34.8 billion driven by outstanding momentum in both Smart Infrastructure and Mobility. Digital Industries finished the year on a strong note as well. Revenue growth accelerated to 10% with healthy growth across all businesses, led by SI. Strong top line performance translated into a record industrial business profit of EUR 3.9 billion, reaching a margin of 16.8%. Free cash flow was another highlight in the quarter. coming in at EUR 5.6 billion. This result once again demonstrates the strong cash generation power of our businesses. Let's now walk through the key drivers behind these results. In the appendix, you will find the full set of financial details in the well-known format. The strong year-end bookings in both automation and software order growth at Digital Industries accelerated to 15% and exceeded our expectations. Automation orders were up 16% with a book-to-bill of 1.02. Growth in our discrete automation businesses continued supported by Aerospace and Defense and Electronics, increasing investments in AI infrastructure and in semiconductors. We are also driving industrial demand in machinery. Regionally, the U.S. showed particularly strong momentum with automation orders up 61%, driven by project business. Also, Germany benefited from larger orders, for example, in Life Sciences and from improving sentiment and export-driven industries, which contribute to overall order growth of 19%. In China, order intake grew by 8%. Following strong momentum in July and August, automation order intake growth softened in September. This slowdown partly reflected order shifts into October. In addition, in October, we saw strong customer activity ahead of announced price increases. Roland already highlighted the continued strength in our DI software business. Q4 marked an exceptional finish to a strong year, and orders reached a quarterly record of EUR 2.9 billion. This performance was driven by several larger orders booked in both PLM and EDA. We successfully converted our sales pipeline, including early renewals with significant upselling. Major wins included high-profile customers across semiconductors, electronics and industrial end markets such as Aerospace and Defense. Both automation and software successfully converted strong demand into revenue exceeding our expectations. Automation grew 8%, led by the short-cycle businesses in China and the U.S. Both software revenue and ARR increased by 12%. DI's margin improved 540 basis points year-over-year, including severance, its margin increased 200 basis points. This improvement was driven by higher volumes in automation and by a better-than-expected business mix. A clearly net positive economic equation also supported DI's margin alongside some currency tailwinds. In software, Digital Industries continued to benefit from the smooth integration of Altair and Dotmatics, integration-related costs weighted on the DI margin by 60 basis points, in line with our expectations. Digital Industries enters fiscal year 2027 on a strong foundation with confidence in its trajectory to seize opportunities in a solid market environment. Therefore, DI expect comparable revenue growth in the range of 8% to 12%. Double-digit growth in software will lead this increase and automation will show accelerated growth. We are building on our leading portfolio enhanced by AI and by our optimized sales setup. At the same time, pricing actions across automation market participants may lead to some volatility in customer and order phasing. For Digital Industries, we expect a profit margin for fiscal '27 in the range of 20% to 22%. In automation, we will see benefit from volume while we diligently offset cost headwinds with productivity and adequate pricing. In software, the SaaS transition was now being completed -- has now been completed. Furthermore, we expected increasing contributions from Altair and Dotmatics also supported by fading integration-related costs. DI software continues to execute fully in line with our business plan and will strongly contribute to fiscal '27 margin improvement. One important point on phasing, fiscal '27 is a strong renewal year for our EDA business, with the sales funnel again concentrated in Q4. For Q1, we expect DI revenue growth in line with our full year guidance, primarily driven by automation while we expect software to grow moderately. We expect DI's Q1 margin to be around 20%. Now let's turn to Smart Infrastructure, which once again delivered an outstanding performance with growth of 39%, SI reached record orders of EUR 8.7 billion. This increase was driven by sharp growth of 62% in electrification and 45% in electrical products. Both businesses benefited from data center orders, again up triple digit, driven by the U.S. and Europe. Orders for the Buildings business also grew double digit. In the fourth quarter, revenue growth accelerated to 15%, reflecting the successful ramp-up of operations and supply chain. Both electrification businesses executed flawlessly, growing by around 20%. All 3 businesses contributed to further operational margin expansion. Electrification and electrical products benefited from scale effects and continue to operate at benchmark levels. The Buildings business again increased its margin, supported by strength in cost management and a strong product business. Let me point out that Smart Infrastructure's margin of 20.3% included 50 basis points from U.S. tariff refunds. Looking ahead, end markets remain healthy. These data centers and power utilities continuing to be growth -- key growth levers. Data centers are now Smart Infrastructure's second largest vertical accounting for around 20% of revenue. Our order backlog of more than EUR 25 billion provides excellent visibility. For fiscal year '27, we expect comparable revenue growth of 11% to 13%. Please be aware that we expect the Buildings business, which accounts for roughly 35% of SI's revenue to grow in the mid-single-digit range with a continued focus on selectivity and margin expansion. Meanwhile, we expect our electrical products and electrification businesses to grow in the mid and high teens respectively, as they further expand capacity globally and execute backlog, especially for data centers. For fiscal '27, Smart Infrastructure sees a further increase in profitability with a margin in the range of 19.5% to 20.5%. Key drivers will be economies of scale and a net positive economic equation while we continue to invest in additional capacity across our low- and medium-voltage businesses. For the first quarter, SI expect revenue growth around the upper end for its fiscal year range, supported by easy comps in electrical products. We expect SI's Q1 profit margin to be in the lower half of the fiscal year guidance range in line with seasonal patterns. Let us now take a look at Mobility's Q4 performance. Mobility achieved record orders exceeding EUR 10 billion, securing several major contracts across our rolling stock platforms. Attractive long-term service agreements accounted for more than EUR 4 billion. In the fourth quarter, revenue grew 9%, supported by strong backlog execution and rolling stock and customer services. A favorable mix in those businesses drove the profit margin to 9.5%. As expected, Mobility delivered a material catch-up in free cash flow reaching EUR 1.4 billion in Q4. This resulted in excellent cash conversion of 1.03 for the full year. In early November, Mobility closed the acquisition of the key businesses of the MERMEC Group. This move further strengthens Mobility's rail portfolio, particularly in diagnostics and measurement technologies. We expect MERMEC to contribute around 3 percentage points to nominal revenue growth in fiscal '27. Looking ahead, you see attractive market opportunities driven by decarbonization, digitalization and modernization efforts on the part of rail operators. Mobility's pipeline remains healthy, and we expect our book-to-bill well above 1 again. Mobility's order backlog stands at more than EUR 65 billion, which further improved gross margin. Due to the long-term nature of many projects, revenue conversion will occur progressively over an extended execution period. Many of the recently booked projects will only start converting beyond fiscal year '28, and service will start even later. For fiscal '27, we expect comparable revenue growth in the range of 6% to 8% for Mobility. Furthermore, we expect Mobility's profit margin to be between 8% and 10%. While we assume operational progress, profitability in fiscal '27 will be held back by integration-related costs for MERMEC and higher transformation costs as we streamline the business and invest in increasing efficiency. For the first quarter, we expect Mobility's revenue to increase mid-single-digit. We anticipate profitability in line with its full year guidance. As Roland mentioned, a key highlight in fiscal '26 was our record high group free cash flow. We achieved a free cash flow margin of 14.5% demonstrating the consistent cash-generating strength of our businesses. We have now delivered double-digit cash returns for 7 consecutive years. Regarding our current share buyback program, since it started in July, we have already bought back EUR 1.7 billion worth of shares. Our rock solid balance sheet enables us to return substantial cash to our shareholders. In line with our progressive dividend policy, we propose a dividend of EUR 5.50 per share for fiscal '26, up to EUR 0.15 year-over-year. We will remain firmly committed to our progressive dividend policy even after the Siemens Healthineers spin-off based on their current dividend proposal. Let me give you a brief update on the planned Siemens Healthineers spin-off. We plan to transfer 34.1% stake in Siemens Healthineers to Siemens AG shareholders at a ratio of 1 Siemens Healthineers share for every 2 Siemens shares. On December 10, we will publish the comprehensive joint spin-off report together with the invitation to our Annual Shareholders Meeting. Comparable key figures for Siemens AG, reflecting the classification of Siemens Healthineers as discounted operations will follow soon thereafter. This allows you to adjust your models accordingly ahead of Q1. We expect that after the approval of the shareholders' meetings of both Siemens and Siemens Healthineers in February, the spin-off will take effect in late spring, subject to the necessary filing and registration process. We plan to report Siemens Healthineers as discontinued operations, starting with the results for the first quarter of fiscal '27. Once the spin-off has taken effect and deconsolidation has taken place, our remaining stake will be accounted for at equity. In the medium term, we intend to reduce our shareholding in this company for a financial asset. Roland already outlined our ambitious group outlook for fiscal '27. You will find our detailed assumptions in the appendix. In short, investments in R&D and CapEx will enable us to scale industrial AI and execute our growth plans. At the same time, we will stay focused on continued productivity efforts across our businesses and functions. Siemens is well positioned for the next phase of accelerated profitable growth while maintaining strong cash generation. With that, I hand it back to Tobias for Q&A.

Tobias Atzler: We are now ready for Q&A. Please limit yourself to one question per person. We want to give as many of you as possible the opportunity to raise your questions. Operator, please open the Q&A now.

Operator: [Operator Instructions] And the first question goes to Ben Uglow from Oxcap Analytics.

Benedict Uglow: I guess it's around the growth guidance for Digital Industries. The 8% to 12% number, which is obviously pretty big and pretty impressive. I wanted to understand the kind of thinking, the qualitative thinking behind that. And so 2 questions wrapped into one. On that double-digit or potential double-digit at the midpoint growth outlook. How much of this is coming from hardware versus what you know is -- can come through on the software side? But then within hardware, could you talk a little bit about the U.S. acceleration versus what we know already about China. I think you mentioned that there are some kind of restock effects there. So basically, how much of this is software versus hardware? And if there is hardware, how much is really relating to China? And why do we feel confident, I guess.

Roland Busch: So I mean both -- we are firing on both cylinders. You see a growth in automation and software, slightly higher on software. I mean software -- the software market is growing by 10%. Our growth sits on I mean, Digital Business 16%, software 12%. So that's something where we have -- we see a strong momentum there. But still automation will also contribute and this comes from -- let me start the United States. I mean just -- I mean the growth rate will be super accretive to this target. However, on a low basis, you know that our revenue share from automation in United States small, but you saw our growth rates in the current fiscal year and that will continue and be even stronger. In China, which is the second market which is in focus, obviously, we will continue to grow in a similar path like we did this 25% plus with our local portfolio, which covers something like 15% of our portfolio there. We keep that momentum, and we are firing with new products there. So this is a growth comes from. But also from -- we see this as very interesting. We're not only seeing China growth from our local for local products, our value-for-money products, but also on our higher performance of global portfolio. So that adds on top. And the other piece where we see growth is our machine builders are picking up momentum are also delivering to United States into Aerospace, Defense, data center, semiconductors and the like and they come very often with Siemens automation under the hood, as you can imagine, is our high market share. So this is in a nutshell where we see growth, which is encouraging. That is what we're waiting for. And on software, I mean, I just said to before, we see our synergies coming through Altair and Dotmatics that works perfectly. We see -- we laid out the 5 percentage AI enabled software, either enabled or native and that keeps growing, which is another support of our growth in our software business.

Benedict Uglow: Understand, Roland, just to be very specific. So whatever destock, restock we may have seen in September, October in China, your view is that, that doesn't threaten the underlying growth that could happen in next year. That's fair, right?

Roland Busch: Thank you for that question. And let me put it that way. We see a really good start in October. I mean to a point where we even throttle a little bit because we don't want to have this -- we want our distributors to buy what they also sell. So therefore, that's something that was really strong. It's too early to say how that plays out in Q1, but I'll tell you. And this is also due to the -- I mean, everybody looks at the storage price, which is increasing and they are believing that there will be a price increase, so they may be buy faster. So we are leveling that out a little bit, which is good. But again, the overall momentum is very strong.

Operator: And the next question comes from Phil Buller from JPMorgan.

Philip Buller: Congrats on the results. In terms of the medium-term guide, I think this is what many of us were hoping for a year ago at the CMD. I'm wondering what's happened in the past year to lead you to upgrade things today. I get it for 2027, your answer to Ben is very clear. But there's a lot of uncertainties out there at a macro level. So -- what are you seeing on the ground? Is there growing evidence for this physical AI addressable markets or you've higher conviction in your market share? I guess I'm wondering what specifically you've seen to announce this medium-term change today?

Roland Busch: Yes. Thank you for that question. And it's really -- it's not a single product portfolio where we base our growth adoption on it. So this -- let me start with the 7% to 11%, the lower end, the 7%. Obviously, in the midterm, you never know whether there is a downturn. So to be on the safe side. It's quite obvious also seen from our guidance in fiscal '27, 9% to 11% that we are targeting with our ambition more of the upper half than the lower one, obviously. I mean, that's clear. But again, if you lay our midterm target in such a volatile environment, you want to have kind of a lower level to put a ceiling there. There's a reason why also the gap increased from 3%, so the delta from lower to 4%. Now why are now increasing I mean -- #1 is, let me start with our electrification data center business. Number 1 is we don't see in the next couple of years a slowdown. And this is super strong triple-digit order intake, visibility over the next 18 months, strong conversion. We invested in our capacity, and we are rolling in now more and more portfolio into these data centers. Remember, their control -- the data centers are controlled with building automation, AI factories have to be controlled. It's factory automation much faster. So we are kicking in new portfolio elements in there. So therefore, this is one driver. The other one is automation. I do believe that we made our homework in the local for local market in China. Yes, Inovance is growing fast but we are not losing market share. They're not losing market share, and we keep on going in bringing new products, expanding our portfolio with higher growth rates. At the same time, the machine building market is coming back for certain verticals. And again, with such a high market share in machine building, in particular in Europe, but also in China, we see more stronger demand in automation. Brings me then into the software piece. This is really super growth. I think the world understands better and better how powerful digital twins can be if you really go for the whole threat from a design to manufacturing. I mean this -- you outperform competitors in your cycle time in changes when you have component changes. And then on top comps, I think about 5% of that already comes, which is -- if you multiply 5 by EUR 7 billion, then you end up with EUR 350 million. This is already industrial AI, either native or enabled. For example, we are taking our Simsolid, which is simulating designs. We do that, we combine it now with physical AI so we can accelerate simulation X time. You can come up with new design proposals. So this is super powerful. We embed, by the way, industrial AI into our workflows. So it's not a copilot sitting on the site, in some cases, maybe, but it's embedded. So this is another growth driver, which we see. And then still mobility, solid growth momentum. Also, we have a huge order backlog. By the way, the backlog margin is improving as we go forward. So still strong there. So put it all together, we are quite confident that we can. To lift now our medium-term guidance for growth and subsequently, of course, also for the EPS if we want to show conversion.

Veronika Bienert: And Phil, maybe to briefly add. So we did our homework in fiscal year '26. You can see at the numbers, not only in Q4, but over the fiscal year that we prepared for changing our fabric. So the automation business, for instance, started first of October with the new setup. So as well, structurally, if you look at our sales setup and the PLM and the CRM interlock. So this is really unleashing further potential. And it's really a proof point of the way how we are adapting our organization to this ONE Tech approach and how do we really enable this faster and profitable growth. And this is not only really based on one organizational setup of DI, but it's really on a horizontal basis. So therefore, it's nicely supporting the growth momentum and it's supporting the ambition which we set and based on the financials and what the visibility which we have, not only into fiscal year '27. But overall, the comfort we are getting that really drove us to adjust the midterm target in this way. And besides that productivity as well keeps to be super important for us in order to increase the headroom for our activities. And we did not only change -- make changes in the structures in the sales area or when we look in our manufacturing footprint, but it's concerning as well for instance, our functional setup. And our expectation is going forward, that this helps us in order to increase the momentum in the way how we are driving our businesses and in our potential to adapt in a faster manner going forward.

Operator: The next question comes from Sean McLoughlin from HSBC.

Sean McLoughlin: I wanted to touch on capital allocation. It's been another very strong year of free cash flow generation. Obviously, gives you a lot of optionality. Just to understand, maybe, first of all, what's your appetite now for large M&A now that you're over the integration with Altair? And also with that in mind, how are you thinking about potential upgrades to your buyback program once the Healthineers spin is complete?

Veronika Bienert: So thanks for the question. And of course, capital allocation is on top of our mind. But there are different levers and ways how to allocate capital. Of course, we have an active deal book, which we are monitoring for all businesses. And so therefore, if we are investing in certain areas, it really needs to be accretive for our strategic targets, but as well supporting profitable growth. So therefore, we stay to be selective. But if from a strategic perspective, the relevant M&A target comes up and is meeting our expectations in our -- for our M&A road map according to the KPIs in our financial framework, then of course, we have the relevant position in order to execute, but it's not only about large transactions. So you can see the evidence on a regular basis, we are announcing as well kind of smaller acquisitions, and it's all about the strategic fit for the relevant businesses. And there is, of course, the focus on software, but the focus which we are having, in addition is really the combination of software and hardware and the relevant data, which are connected with that because that's the area where we exactly see growth potential going forward. So this is really about M&A. But besides M&A, there are other levers in order or other instruments to drive our capital allocation. So another area is, of course, R&D. And here, in contrast to external growth. So we really look at organic growth as well. So how can we further develop our R&D activities and embed AI in our R&D activities that we increased. For instance, R&D efficiency and speed in the go-to-market and the offering which we provide with our R&D activities decides that I explained about our share buyback program. So after the Siemens Healthineers spin, we will continue with rapid speed in our share buyback program. So there are different areas which we are focusing on and the composition of the different elements. They are of relevance to execute them in the prudent way and with the right timing, which is of essence.

Operator: The next question comes from Max Yates from Morgan Stanley.

Max Yates: Just my question would be on the Smart Infrastructure guidance. And you gave a helpful breakdown of some of the moving parts on organic growth. I guess I wanted to ask about it in a slightly different way. Your data center business is now 20% of revenues in the Smart Infrastructure business. It grew 60% last year. You've got a huge amount of backlog coverage. If it grows 60% again, that's now 12 points of growth. It's basically the midpoint of your existing guidance. So if you were to the extent that you're able to maybe thinking about what would you expect from your data center revenues? How much of that backlog can you convert? And then maybe a sort of just one other element of the data center business, I'd love to explore. The order intake is obviously at an extremely high level. When you speak to your customers in the data center piece of the business, do you worry at all that there's -- we've sort of created an air pocket and some of the regulatory changes that we've seen may lead to a sort of temporary slowdown in order intake, which wouldn't necessarily matter your revenues, but just so we can sort of think through maybe order trajectory into next year as well.

Veronika Bienert: Yes. Thanks for the question. So with regards to revenue growth in the data center business. So in fiscal year '26, so we have seen this impressive growth above 60% and with regards to our backlog execution, so we have -- for data center, we have a backlog above EUR 7 billion. And the kind of the 12-month conversion thinking or kind of considering that. So around 70% of this DC backlog will be kind of converted into revenue in fiscal year '27 and the other 30% in the year after. So we expect another strong revenue growth. And this might exceed if we execute with everything as planned, the 40% mark. And the other topic, which you addressed was really the topic around risks around power access and permits. And how does that look like for fiscal year '27. So we always said in the -- in Q3, so that we might see some volatility on a quarterly basis with regards to order intake. Because we really need to look as well the quality of large orders. But in terms of pipeline visibility, the pipeline looks really very robust. And it's as well a very important topic in the way how can we really execute the pipeline. That is extremely important to us, so we have really a prudent approach here. And you have read in the news that we are ramping up capacities for SI, not only in Germany, but as well capacities in the U.S. and in other areas of the world. And this really needs to go hand in hand. So in terms of execution in Q4, you could see that we very nicely executed due to the fact that we could manage capacity increases and that we, in addition, that we could as well with regards to supply chain management that we had really a flawless execution here. So therefore, the permitting will be something which we will kind of monitor and we might see some hesitation in order intake in the upcoming months. but overall, the overall pipeline and what we see really stays healthy and robust.

Operator: The next question comes from Mark Fielding from RBC.

Mark Fielding: Actually, if you don't mind, I'll actually just clarify around a couple of other points that you made in terms of thinking about the midterm targets. And specifically, obviously, positive higher growth you've outlined the sort of drivers. I mean you do previously have divisional guidance in terms of the growth outlook and the DI one particularly looks below the new target range. So should we expect an update to the divisional guidance? Or are we going to see more of a group level guidance only going forward? And I just want to clarify, could you just comment as well as we think about the evolving targets, whether there's anything we should think about in terms of cash conversion impacts post the Healthineers spin?

Veronika Bienert: So with regards to the midterm targets and you addressed the business targets. So today, we announced the upgraded midterm targets for the group, and it's really about really all the progress we have made and the increased ambition level for higher profitable growth. So our focus is really to act as one, as an organization and to deliver to the customer in a very focused manner, the overall solution, and this is really something we execute on group level. So therefore, this is of utmost importance for us. Of course, internally, the way how we manage the businesses as well with the diversification of the business is we keep measuring and continuously improving our businesses compared always to the best-in-class benchmarks. That's absolutely clear as well as we talk about our M&A activities. And externally, we focus on our group targets. So we will continue to provide an annual guidance for each industrial business. And you see that our guidance for fiscal year '27 that we demonstrate a very strong growth momentum across our businesses.

Mark Fielding: Sorry, just was there any comment in terms of anything we should think about for cash flows as well with the changes?

Veronika Bienert: Sorry, cash flow. Of course, in the context of the Siemens Healthineers spin, we have the intragroup loans. So therefore, this effectiveness of the spin and those loans can be terminated. So in this context, of course, we will see additional cash from this perspective. And with regards to driving our businesses, we remain with our strong targets for free cash flow generation for all the businesses and with the very high ambition we are having here. So no change with our ambition on the free cash flow. And with regard, of course, Siemens Healthineers what I mentioned is, of course, not part of the free cash flow, but I thought this might be of interest for you as well.

Operator: The next question comes from James Moore from Rothschild & Co Redburn.

James Moore: Might be a more question for Veronika. But could I ask about Page 34 in the presentation and your assumptions for 2027 specifically on OpEx and CapEx. And you mentioned the SG&A ratio clearly below 26%. I wondered if you could tie that to an update on ONE Tech. And you've talked to as a company in the past about a couple of years of extra investment on ERP, CRM and AI. And I wondered if coming off that hump is somehow tied to this or it's driven by something else. And on the CapEx side, where you talk about a materially high ratio, and you mentioned the capacity in the U.S. and elsewhere for SI. But would it be possible to talk about pace of SI capacity expansion growth in the last 3 years and what you plan in the next 3 years and where utilization is. I'm basically trying to get my head around an industry that's growing extremely fast, and we can all see that. We can see the backlogs and the great data center growth. But what's the maximum speed Siemens SI outside of buildings, electrification, electrical products could grow given the capacity expansion speed?

Veronika Bienert: So I think first, I will touch on the CapEx topic with regards to SI. So I mentioned that we are adapting and increasing the capacity for SI for the extremely strong demand which we are having with regards to the CapEx fiscal year '26 compared to fiscal year '27. So we are -- definitely we are increasing our capacities. However that needs to be in a very well thought true and staggered approach in order really to execute as well on the order backlog, which we are having. And the level we are kind of focusing on for fiscal year '27 is targeting to meet the demand and to enable further growth, but in kind of in a balanced approach. But definitely, we will see in fiscal year '27 and CapEx increase in Smart Infrastructure to meet the relevant demand. And okay, so Roland?

Roland Busch: One more point. So you will see a substantial increase. And again, we invested before as well, number one. Number two, we are driving also with our technology productivity out of the CapEx, which we have. I mean if you would walk a site there, you will see that. And the last one is we are also going for engaging suppliers so that we don't have to use our own CapEx in all cases and try to engage also a supply base, which has another win in case of maybe a slowdown, you then are more flexible. So that's another element, which we do that. So therefore, this is a combination of substantial increase also continuous investing in CapEx and in capacity. Speeding up again in '27, productivity and engaging suppliers.

James Moore: That's very helpful. And could you say anything about the ONE Tech side? And is that tied to the SG&A guidance?

Veronika Bienert: Absolutely. So you mentioned or you addressed the assumptions with regards to OpEx. So I already mentioned that we will invest further in R&D, but it's really a moderate growth, which we are planning here. And with regards to SG&A. So that is something where we are using -- I mentioned the sales set up, for instance, which we are kind of harmonizing across the different businesses. So therefore, that is something where we are investing in growth areas like, for instance, in the U.S. because the U.S. is a key market for us, so therefore, in the sales area, that is something which we are strengthening. And in the G&A part, here, I mentioned our productivity focus, and that is something where, from our perspective, and that is as well kind of incorporated in this outlook and in the midterm targets. Here, we want to increase efficiency in our organization. And that is more or less -- that leads to a balanced approach between selling and G&A and to balance that out for the needs of our ONE Tech company going forward. Does that help you?

James Moore: Yes, that's really helpful.

Operator: The next question comes from Daniela Costa from Goldman Sachs.

Daniela Costa: I wanted to ask a question related to kind of your new strategy, I guess, to use China for export markets. And then just what exactly kind of like has prompted that? Is it more prompted by the competitiveness of Chinese peers outside of China increasing? And in that case, how that ties with sort of pricing outlook continued to improve, which I think is sort of hinted at? Or is it more prompted by your internal ambitions for where your margin can be from thinking about your cost positioning just kind of like wonder regarding what's behind it?

Roland Busch: Daniela, both. Good question. Number 1 is, I mean, if you look at Inovance, their share from global revenue is still low, but obviously, there pushing to send their products outside, number one. Number 2 is whenever they bring, let's say, whenever they equip a machine, which was built in China with their automation, you will see that presence also in the outside world. So therefore, we have to be ready to see a pressure on the price points for, let's say, entry-level automation also globally. And we rather don't wait for seeing that and go slowly selectively, but go also with these products, which have a demand and we see maybe different price points aggressively there, number one. Number 2 is, obviously, it helps also on the margins because then you have a completely different cost structure. And thirdly, I mean once we launch these products, we see there's -- our regional sales guys from Asia, from other regions, they say, "Oh, I would love to sell these products in my market, too." So we see also really pulled on our salespeople. So we don't go all in and say, let's say, push every product to the global markets. It's also sometimes from the requirements, you have some different ones. But we start going global. And this is a proactive approach, which has benefit on top and bottom line for us and of course, of serving our customers better.

Operator: The next question comes from Gael de-Bray from Deutsche Bank.

Gael de-Bray: Can I ask a sort of a technical question, I guess, but when do you think the Siemens Energy licensing fee goes away? It's probably going to be roughly EUR 500 million in 2027. So that's a fairly big number, maybe around 4%, 5% of EPS now. So how shall we think about that in the context of the midterm double-digit EPS target is it the case that, for example, the innovation spend that you're doing at the group level is going to be lowered when the licensing fees vanish away? Or I mean, how should we think about that?

Roland Busch: So #1, it's a problem which comes a little bit later. Our license agreements, they keep on going for Healthineers as well as for Siemens Energy. So this is one message. The other one is, I mean, there's one dimension is that one the other dimension is driving productivity in our G&A. We do that. We have now a global view on all functions. They're looking now how they can leverage technology, AI technology, of course, and go for further cost savings and the cost savings should be have a conversion. That means if we grow, we want to grow, obviously, with our cost spending less. And the last point is -- and if we believe that there is innovations which are cutting across the company, which are supporting our platform we would still do that and if it makes sense, but it has to be a business case behind. So -- and then I can show that either on a company level or in the businesses, we tend to -- if we do that, and you know that we tend to calculate it back to the businesses so that it can be carried with the revenue. But we will keep a certain level of innovation on a central level because this is something which you cannot do bottom up, some things you want to drive top down. And then I'll give you one example. We luckily had investments in a very strong technology robotics team, which is working on really core robotics elements, and that pays off sooner or later. So we are mindful about that. And it's a combination of selective spending of savings and then fees fading out in a couple of years.

Gael de-Bray: Okay. So do you expect the governance and innovation spend altogether to remain sort of steady in the next few years?

Roland Busch: I mean, remember, we have also, for example, by design, we took SHERPA X, which is an SAP project, which cuts across different business types. We took that also on that line. This goes away. I mean, as we roll out, we are evolving. So therefore, I mean, that's not only this piece.

Veronika Bienert: So maybe just to add from my side to clarify, I think one part is the governance element and here, we stay committed to the really net 0 approach for governance. That's very clear. And then we have the innovation part. And in the innovation part with our ONE Tech company approach, here are really elements in like what Roland mentioned was, for instance, SHERPA X, the platform for the ERP platform, where we said that applies for all businesses. So therefore, this is part for the innovation. Then there are other topics within the innovation part, which will be the key ingredients to accelerate certain topics across all the businesses. So if you think about we announced 1 year ago, our AI investment, yes. So and this investment, so this runs over several years. And here, different businesses are benefiting. For instance, if you think about the Eigen engineering agent, so the AI team is really supporting that. And that is something which we have in the partially in the innovation part, yes. And I think you have the relevant documents. So for governance, for instance, it's really the 0 in fiscal year '26 as I said. And in 2027, you have it in the slide deck anyhow, yes. But does that help you in the explanation?

Gael de-Bray: Yes. Thank you very much.

Operator: This question comes from Benjamin Heelan from Bank of America.

Benjamin Heelan: I wanted to touch on software. And obviously, we've seen a large deal at one of your competitors in the last couple of months. So can you talk a little bit about how you see the competitive environment in PLM at the moment and how you see that potentially being impacted by this deal? And then a follow-on from that, you talked a lot about the Eigen engineering agent over the last 12 months and the success that you are starting to see -- can you talk how are you monetizing that? And more broadly, when you think about the growth that you're seeing in software from an AI perspective, how are you planning on building that going forward and monetizing that and offsetting any potential headwinds that you may see from our seat-based pricing dynamic?

Roland Busch: Yes. Well, I mean, I can split it out. The acquisition of PTC by Schneider confirms, first and foremost, confirms our strategy clearly. And -- but we did that years ahead and if you talk about the PLM space, I mean PTC is weak or almost 0 on simulation. So there's nothing what really helps. And on the design element, I mean, it's a competitor. And the expectations or the proposed synergies are extremely aggressive, put it that way. If you just make a cross reading what we did what we said for Altair and have in mind that Altair sits really at the core of what our people selling customers, cross-selling. I mean, so therefore, this is really very aggressive. We take that serious. I mean we always have to take a move of a competitor and in particular, spending more than EUR 22 billion on our software assets have to be very serious. But on the other side, if you think what we did with our PLM software, I mean, SaaS transformation go through all that that's behind us. And you see the growth trajectory which we have there. Also conversion, we see as planned a conversion also in driving profit. So therefore, that's something where we are coming from an extremely strong position, and we want to expand it. So again, we'll watch that closely and we -- but we see ourselves just confirmed and encouraged to double our speed and effort into what we do in our strategy and make it more and more authentic. Short version of Eigen engineering agent, it's license fee based because it's an engineering tool in this engineering space but by licensees, but that must not remain forever, and I'll give it over to Veronika.

Veronika Bienert: Yes. So with regards to monetization, so here is really very important that we have a clear AI monetization strategy. So we have the existing user-based named user subscription foundation, and that is something which we continue and we discussed that already in the last months. So that we have the super strong foundation on this user-based named user subscription foundation. And this we will continue in fiscal year '27 and it's really set for growth in fiscal year '27 and beyond. And then on top of that, for the human-led AI such as copilots. So this will be monetized really through additional AI subscription fees, really kind of on top of the subscription foundation. And of course, as we move forward, so towards additional usage, so we plan, and we will introduce an agentic surcharge on really this underlying software subscription. And in the future, of course, other credit base, user-based monetization will follow. But this will evolve according to the needs of our customers. And with that, we feel very comfortable to serve our customers as they need it.

Tobias Atzler: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We are looking forward to meeting many of you at the sell-side meeting in London later today and during our upcoming roadshows. Have a great day, and goodbye.

Operator: Ladies and gentlemen, that will conclude today's conference call. You may now disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.