Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to Kornit Digital's First Quarter 2023 Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to turn the conference over to our host Mr. Andrew G. Backman, Global Head of Investor Relations for Kornit Digital. Mr. begin. may you Backman

Andrew G. Backman

Hanover, Good quarter everyone With XXXX Samuel, Corporate Officer; are operator. Amir Officer; Kornit EVP Shaked-Mandel, me welcome Digital's Ronen of Lauri Executive Chief first earnings Kornit's, Chief day you, Financial and and to Development to today Kornit's, Thank conference call.

quarter comments up For the and numbers first provide first outlook, we XXXX. it on second open before call, Q&A. today's will Lauri quarter for quarter provide the Ronen will review our then

remind XXXX to call. or meaning will like that US would forward-looking Securities developments the I begin, the on These future. statements we expects limited the laws statements within you of Litigation include, statements in plans, Before this securities made to that be will Reform and are Private forward-looking all occur the relating Act to, not of other statements that condition the financial and of company address strategies, but operations company's projected results

as XX, XXXX, Forward-looking obligation to that publicly results on risks XX-F statements filed forward-looking the encourage are subject the report differ that you by the undertakes no Commission, implied the identifies and statements including to annual and differ company's required statements. Exchange from to could company company's except the SEC by law. on cause I are specific Securities update review unknown those risk uncertainties forward-looking and with materially filings with forward-looking factors actual Any Form which to March could materially. to known and results made statements, currently cause any

measures on measures of reference also posted financial directly making be reconciliation non-GAAP is company's found Relations to is the which company non-GAAP our today, can in pres be the Investor The call. GAAP earnings release, most published measurements Additionally, on the comparable these website. this certain which will to

turn would At like this to to Ronen? the over I call time, Ronen.

Ronen Samuel

call. for and Thanks, joining for thanks us everyone today's Andy

were the impact revenues the certain business, indicators with first in our earlier macro issued as the Promising overall of about we guidance provided historically value business reported which sales, customized our quarter despite supporting design $XX.X first XX% February, from the line the the fair million pressures during of which included customers, remained As our quarter today, emerged warrants. in System in reminder environment. of quarter. represented in persistent during operating challenging our a the parts

However, accounts. larger online the bringing is some additional growth our utilization who growth our current handle promising this we account, expected see of strategic emerge, impression to systems capacity This including and strategic year-over-year indicator several double-digit included from global year. volume

site were Remember, experienced installation year due to these systems but shipped completions. delays last

XXXX. second impression a far, in being drove upgrading MAX of several growth with technology more at So Customers overall the customers momentum start regarding of for our bit to strong a optimistic quarter quarter revenues. continued the our service

and During system clear Customers received we a quarter, its approximately durability are technology enhanced color, quality, strategic to Atlas from orders choosing several for upgrade our productivity. the making of Atlas MAX. upgrades MAX endorsement first to from vibrancy, to customers XX

large We new in MAX their standard customers the believe, expect throughout continue and upgrade and XXXX. of to other systems XXXX industry remaining is the to

and we and in artists, have we within making power from still customized production optimal, of market content massive utilization large seeking immense surface the not the unfolding on-demand of capacity design social, opportunities online easily while Overall, of monetize friends. scratched is to believe, by the their just creators, it within entertainment the merchants digital global users the and platform embrace to communities accessible platforms digital,

do expect resume design conditions overall during pandemic. the category We elevated same in the experienced the stabilize. as at As such, we are to macro customized growth not levels

brands targeting been to market, making have strategy paid sustainable inventory to looking of the their products fulfillment enforcement to new several restructure textile and of margin global we Over excess order chains and quarters, address supply progress production. our in and expansion, past retailers steady partners, liability on regulatory

innovative strategy, cost efficiencies in are with the our Our capabilities. quality, MAX better retail this of cornerstones top product products and technology new

For Atlas global fanwear. entertainment for massive quality MAX and to fashion customers apparel at example, leisure our up sportswear markets Poly and opens Kornit retail them enabling new offer

Pacific. a customers, mostly Poly In Atlas our in strong and strategic North in fact, MAX we for America, largest some of Asia had first with EMEA quarter

I'm starting we contribute also direct-to-fabric, made in have pleased, the more to which is to business. progress to now meaningfully see our

key are in textile building good regions a We Asia very America, and Pacific. are Latin and new of funnel Europe penetrating markets

During one international for producer brands. the including some textiles an in including printing of first and with the prominent the in a quarter, we world's customers functional industry, of for of end Germany, variety added houses high-tech of several highest Italy new

Presto We upgrades. closed MAX also successfully Presto several to

solution, single-step innovative Kornit is in our With leader direct-to-fabric. the market

innovation new fashion ink, We revolutionary we into the ITMA continue our new in position, penetration to at Presto industry. showcase will will including MAX tradeshow Milan, with that strengthen mainstream we the believe and upcoming the a with accelerate leading

time as we scale. production how demonstrate manufacturing up mainstream an on-demand digital Kornit, gear to at goes we exciting showcase at and intend It's where for sustainable ITMA,

production. and textile on-demand We solution complete a transformation which showcase industry-leading the Kornit technology industry, will offers portfolio, digital to apparel

to a into breakthrough what At been be solution platform run cycles production suitable will will brings mainstream, This Kornit unveil real the than our differentiator. officially for digital and ITMA, we date. addressing has Apollo, longer production

of that total our will initial ever ownership. customers, consistency game on productivity, are in a Apollo than we be Based more confident from changer and of feedback quality terms the cost automation,

Apollo, In a we to of level addition which MAX the new Atlas PLUS, the productivity. will will MAX take Atlas new showcase our to

and curing RSS experience hope textile the will drive MAX industry. based transformation, digital us of fashion pallets at Tesoma our you ITMA, as Atlas as We on join MAX smart Kornit's new to Our well our needed new will and solution technology, on-demand portfolio solutions. our Presto KornitX massive in Poly, ecosystem

launching Kornit laser-focused, on last remain thereafter; as with making expected call KornitX To mentioned executing a good generators. and year successfully on for key demand three year, we the second begin in profitable an during this transition some are approach trial breakeven summarize, then several I scale Apollo, on we our progress, areas: soon; while with and adjusted of growth is half better EBITDA XXXX, to

take immense pride, in effort I the our tireless dedication to entire move team's company. and

during I stated remain drivers our Kornit's intact. As last long-term growth call, earnings firmly

market road to We solid are profitable us our with product sheet balance well and that strategy, overall deliver position in meaningful improvement growth. confident long-term combined condition, map

me Lauri? look turn the let and first closer quarter Lauri, a the for that, at With the number over call quarter guidance. to second

Lauri Hanover

everyone. day to Thank you, good Ronen and

first million, line February. in guidance the $XX.X range revenues we provided As quarter with were in Ronen mentioned,

As expected, to customized system revenues, meaningfully the primarily year-over-year decline in revenues the market. was in design attributable lower

impressions orders global double-digit growth essentially line from from revenues with some large customers, see the in While timing consumables prior a year the of to were part we did strategic in some period in due customer.

posted to described growth sales spare our as printers technology, earlier, services due MAX year-over-year well parts. Ronen revenue As as very higher customers growth, higher upgrading revenues strong systems contract primarily to of and

while cycles. very which system In in solid the Americas, continues to remained we macro sales due region had longer to the environment, quarter overall sales of services drive the challenging a growth,

trends the of at customer of throughout some pipeline cadence in we as Looking stabilization services the emerging. drive a the signs in see revenues which consumables healthy will year, as upgrades region, as we expect positive well

same with by as primarily and year growth higher In volumes EMEA, exceptional consumables compared year-over-year last was ASPs. the period driven

system seeking revenues constrained, increasingly capital expected, for remain customers As with expenditures. alternatives financing

added quarter. high-quality Our continues as customers during DTF EMEA the we portfolio in several to gain traction

Atlas as MAX growth South services addition robust delivered same last compared region systems APAC Poly period in in year The sales with strong Korea. of the to

continue in region, focus strategic Australia meaningful We and particularly accounts China. developing the India, opportunities in Japan, and to on with partnerships

help this transactions believe ITMA the year will Milan a a we new XXXX and number of close opportunities funnel the for to upcoming to, of tradeshow but catalyst build a of balance sales the across in healthy regions. not only be also For

margins. volumes margin in driven last The XX.X% with XX.X% margin year-over-year systems to year. by compared Non-GAAP gross the lower Moving and decline period mix. gross primarily was was same in as

heading throughout run volumes improvement a of on that year structure. operating our rate We of longer leverage cost balance reduced term the consumables progressively to percent given and higher this a the season sales continue the gross as sales generates into being cadence historical to expect recover of as margin peak

R&D board. from Turning first quarter cost engagement Total activities we million year-over-year The and sales to and in across from X% implemented operating enable year. structure same workforce last expenses. initiatives previously and of our prioritizing long-term $XX.X customer marketing and the non-GAAP period the approximately our reductions and growth expenses reallocating non-customer-facing of the impact $XX.X acceleration additional engines. million, completed reflects down developments were functions decline includes to This that resources improvements the

EBITDA compared Adjusted margin the same loss EBITDA adjusted $XX.X above, in the range in February. of line $X.X quarter of the million of XXXX we provided XXXX EBITDA as the the result midpoint in of adjusted was year. million last of the XX% with a As was quarter negative for first first guidance with for period

suppliers by changes marketable million. the accounts inventories the and collections balance, the approximately and due to of system rose were operations Cash receipt primarily loss end in for higher $XXX terms and while sales bank during $XX used and including level regard, Our operating to customers driven receivable approximately deposits cash quarter additional new raw this capital. payment higher systems at securities to In materials Apollo. million, extended of timing a reflect working from of in the select first was was including quarter modestly

$X.X an of average repurchase repurchased Further, program during XXX,XXX we share under quarter, the aggregate per representing of shares price million, our an $XX.XX. for paid amount approximately share

$XX As for have share program to repurchase an authorized a million. we reminder, up

our our ability that shares sheet, can growth initiatives. strong opportunistically repurchase believe on we execute balance without we Given to the company's impacting

quarter of $XX to and be in and adjusted the million be guidance. expect the XX% currently margins negative million second XX% second range. to We between quarter revenues XXXX to negative for $XX EBITDA Turning to

revenue As the global with warrants adjusted a largest and the for value guidance EBITDA of fair the the margin to impact of expense associated account. reminder, our the company's strategic non-cash includes

generate we mid-XX% last adjusted to on I mentioned on basis rate obviously, a EBITDA earnings range, As approximately expect the of million run mix range. depending quarterly gross OpEx in our results million as on an margins in reach operating and the mid-$XX with breakeven revenues $XX call,

of half later corner and We second again this EBITDA margin the move the year continue during to to on breakeven approach adjusted on and an to expect profitability, turn basis.

me back Ronen. let to that, with it And turn

Ronen Samuel

Lauri. time Q&A. call Operator open the it's to you, Thank for now,

Operator

gentlemen, from session. Please Your Tavy and from question-and-answer Barclays. Ladies will Rosner the comes you. now go first Thank question begin we [Operator ahead. Instructions]

Tavy Rosner

for Hi. for questions. system thanks Good to sales I a about minute. afternoon, talk my taking wanted and

operational or You you mentioned customers. end, be getting issues kind proposition guys Are made potential of pushback you there issues And to I'm that pointing or their into the the perhaps challenging what more on new the wondering geographies. feel do offer? needs from education environment across value to that they you're most is especially financing that

Ronen Samuel

Yeah.

you, Tavy I'll it. for So the take question. Thank

First of rate. interest customers the pressure all, we in due capital for see it's general, our the tough to customers raise and to new which macroeconomic

is we one deal this that So element to need with.

with some capital investment. assist Sometimes right and longer connecting we're the in payment third-party leasing order program to them to supporting terms them with dealing sometimes that's

of the script, In we on improvement. we in in we improvement see customers new of my cycle systems design in segment that growth of they some key general, overcapacity in into having mainly strategic an the see although are systems, going customized to go the as terms still we see customers also believe mentioned systems. an investment and We are and a in utilization of

We in said So it always We believe that will we ahead what systems. be believe that also much HX be HX this looking than stronger general, in will are stronger stronger. we be HX. is stronger will

from the So in QX. always general, season QX HX peak an much and stronger end of perspective ink into by

in to also on service from very had strong service HX and quarter our going we're upgrade. a some of that a side upgrades be QX due customer. the side, we the On growth this We to is already strong the major expecting well from expect the QX as quarter.

catalyst major the in for systems, the systems. growth will on ITMA driving As a the be

point customers to come as the will with there We of will prospective decision. are expecting we're that customers dealing meetings them with be that take new we that many customers some ITMA hundreds ITMA of will

many will HX We ITMA focused are during year. very get this we that much to expect which and influence on orders

Tavy Rosner

one me. Thanks last for a for And that. just

You mentioned Can where granularity the KornitX going on. you of any stands? give of that scale-up

Ronen Samuel

scale. low a in still is KornitX Yeah.

sales of the see directly of see dollars systems from we them Although, indicator coming KornitX, some is a millions driving new of actually generators demand that GFN. that good that some from progress few we going with have into good few are we directly the

of network Global them we connection in new had Network nice buying the systems a the of progress. QX, demand in into due the we some And So to more of generator. ink see very the course GFN, Fulfillment

digital at HX. development working media platform platform, are business social and on of them We entertainment gaming some with be onboard expect platform, we platforms some major to on

Of in onboard and other Kantra this drive course, growth HX. you're but familiar of board with there impressions. and like will that to already we major Wix platforms on to all system bring would And are

it's buying So going to additional due base also at through Kornit, ink the fulfillment going look that dollar that of demand more that that's direct in important on GFN indirect customer not only they're the into it's are systems but is the and our to transaction, more receiving. contribution

Tavy Rosner

you, Thank that. Great. Thank for you Ronen.

Andrew G. Backman

Tavy. Thanks,

please? question Next

Operator

you. Thank

Please go next from Blair. Brian ahead. Your comes William from Drab question

Unidentified Analyst

morning. for Good This on Brian. Blake guys. Hi is

Ronen Samuel

Blake. Hi,

Unidentified Analyst

guys quarter we that we your if them upgrades the to granularity the wondering through go experienced for talked about upgrades already I the cadence as give through was XXXX, and can You expect just as -- year? on and that the the you have any expectation first you there more you but in progress

Ronen Samuel

about XXXX. we this the can Atlas I in got strategic second momentum to This last QX momentum customers, in few for of of after and orders into Atlas to is What you half and we key continued in mentioned in expecting upgrades year. that MAXs. from QX continue We're HX customers tell XX

MAX major, to technology into it XXXX. major now both considering that move We are influence will the have and few and XXXX our of customers

is to industry, there. move and is MAX important the have standard they becoming customers mention What now that of technology the the that understand to

upgrades we productivity is go the helping Storms Avalanches MAX, base So from the to using technology into standard and Atlas we in new are the to now now Atlas the expecting them and and looking Atlas MAX in deeply in or our and to are only that see that's not best-in-class installed industry. trade quality the and to MAX into technology durability and

Unidentified Analyst

you. show guys macro you the it. Got also of waiting customers, when activity frozen talk seen have muted then customer by only the And not guys up seen product to the new you environment ITMA ahead with Thank buying but intros? you have see

Ronen Samuel

We're Yes, customers from expecting we absolutely. Asia talking many big the are delegation coming with potential I very America mentioned before Latin across many, and from Pacific. world customers.

Europe North a and from America. it's big, Europe course, Of big show for even

that are telling have we ITMA us, We final prospective waiting decision. customers for customers take are and to

ITMA. probably We would like to to deals meet with the senior management. We do know that at going you're good

So some them Apollo. we And, course, are see waiting there. like of to would of the

bringing only time with services are We for first to customers markets, Apollo, strategic breakthrough screen to the operator based hour quality Tesoma productivity automation in-line about MAX per print with highest connected run full that year solution I that technology, a are entire the the best of of an on t-shirts hour technology are providing And customers many time some are totally new that customers, many, to for the XXX and not are some unveil the is acquired the and the technologies one which with and the for we apparel is retailers. we who ago mentioned we Apollo productivity. as for and which waiting going first entering the dryers, a but which brands is can the it, with market new

is be going ITMA to a milestone. So

we brings the DTF the and very are we line for impact more believe bringing ITMA with Looking for of And, new MAX demonstration We with MAX on to last gaining that last XXXX bringing this our Kornit in much the ink with we productivity Plus, that smart believe back which that that ITMA technology level for the with RSS had Atlas that Tesoma Tesoma with with future. the years new full be are MAX Poly, Kornit a with the a Atlas of to course, momentum was and Apollo now of will -- ITMA is the what and are at the the four on meaningful we KornitX. where the major dry technology ITMA Kornit. Barcelona, time

Unidentified Analyst

it Got you. it. I’ll Thank pass along.

Andrew G. Backman

question Thanks. Sergio, right. next please? All

Operator

Thank you.

from question ahead. Woodring from next comes Morgan Your Erik go Please Stanley.

Erik Woodring

that does for my growth with select historically how how on today should Is customers, of to spare that and ordering a question and you, morning think the system if through guys. a Maybe I Meaning Kornit just leading ask flow of is bit the usually lag good that about the taking unique and indicator have actually I'd And think you start And Ronen that Thank same the parts. between a and we ink then question. impression a Thanks. follow-up. that? impression printheads should seeing Good I or side if correlation or both monetize we consumable about sales? growth from then we're one-off? more sales the about, like maybe

Ronen Samuel

I'll to customers. down? indicator pressure business is year we're actually Look, health in global about is impression health in It's see a a customers we talk going many customer the in or in briefly. strong it very that the good do impression. we saw trend starting double-digit started we How the very, customers up. we impressions the indicator, customers best on Definitely trend growth. -- to starting going the of And growth HX customer strong the that global in including to a growth some to a and of QX, down. going move is they Is printing? call our strategic And our are our the And question. for up it impression? is What last what of saw our try many leading new

growing capacity which needs if the system utilization major this are customer more things indicator is they will and per changing. means is and the the a are go Because that impressions And growing, a of them but into MAX to only some more and the not technology. systems more upgrading productive old finally their and now cycle will buying more systems ink into of get systems

moving it's So, healthy a very forward. indicator definitely

Erik Woodring

That's it in and guys you over I I'd XX% authorization second $XX at call Okay. Lauri helpful. super buyers just of you of imagine, for market the that direct then, value I the is today look buyback have that, you'd cap question to call And I'll your million. cash. realize when stock. think intrinsic stock today effectively your your maybe yourselves is

aggressive get balance maybe more just not cash And stock the on have returns given why it for of you so the thoughts that's balance where love sheet today? or that. just just a on strength the little Would is bit And so buybacks the much. capital me. Thanks your

Lauri Hanover

Okay.

you know, we stock about as common of in our purchased quarter. $X first the million So

the we discounts agree Given just believe the you profitability. enterprise generate levels. point you current be made in company's value and with low growth long-term active to again, our And current that, given expect trading quarter severely -- more we that, prospects these do the second we

Erik Woodring

you. enough. Fair Thank

Andrew G. Backman

question, Next Sergio?

Operator

you. Thank

question next Chris from go Moore Please Securities. Your comes ahead. from CJS

Chris Moore

Hey, of competitive current guys. questions. hoping was that, little I with Apollo. couple – talk you're to a you the about environment seeing Yeah. could that a Thanks bit for taking specifically respect

Ronen Samuel

Yeah.

I Apollo screen time of penetrate market. of Kornit And market. impressions the for main see going most there. market to -- screen we the of competition for would all. running is the first is the say the course of So are The There analog first Chris, impression XX.X% you the the thank that is

today e-commerce. coming everyone, customized for enablement customers the is to running them most Just business the more from very running of remind design. run of our from of as our of Most off are one than short XX%

first a entering with much, For bigger bigger to market much sum Apollo. we the the time, are

it from reasons. do couldn't we several Now, before

the the brands quality, digital reasons our but One the quality good print for for a the print for the was replacement in always retail as of enough screen. and that best wasn't is

quality images definitely Today not and and with good in only screen as the is other MAX better cases technology, in in photographic as aspects. our durability many much

thing. one is this So

the milestone productivity. was Another

running Atlas we machine. MAX, screen a or can speed Atlas of MAX machine part very the of Apollo X.X now is like the but the to the brought in the screen bring a So large which times productivity productivity

the you screen change the look system screens clean need screen is you if to much, at However, replace much of better and because because shift productivity half and machine -- time is the either inks.

time there digital, between jobs. no With is idle

And with definitely screen in aiming to on the is much a on that below position productive. top So ownership job machine cost of are the in length. of front be every we competitive more XXX total run of

we of So billions if after. this looking about we're of XXX going that impressions below at and are market talking run are we lengths

to player till that opportunity in So for big a to the we and really the total market here today is disturb Kornit didn't incremental address. become markets

Chris Moore

are Got June. follow-up. Helpful. my very Obviously, you And it. about the Michele guys excited [ph] just Thank you.

is orders? Just of out Just reasonable to a that trying coming to X of of X your Is number committed there? get a of for kind kind sense number it as it betas Is to? are of what expectation there? Apollo thoughts

Ronen Samuel

Yeah.

ITMA So and on of sales and signed is for a shipped ITMA. machine customers -- event. one is actually beta already us for already a our already shipped the for we we the machine beta,

very We selling of solutions that and only not the selling course Atlas have Apollo are much MAX the MAXs, the floor. we more on the many the Presto very, Poly focused

for we would this of in to also clear event. get aim And backlog the per many Apollo building a the for order to of XXXX a have XXXX, like on we with but region are in orders how start We XXXX. much focusing already target we out Apollo very

it's very event. So meaningful a

I to results. be to immediately and hope and focused, the much very is team after you Our update ITMA able

Chris Moore

That's helpful. Thank you. it. Got there. it I'll leave

Andrew G. Backman

Thanks, next question? Chris. Sergio,

Operator

you. Thank

Please next Maymon Berenberg Capital ahead. go comes Markets. Jared Your question from from

Jared Maymon

to about past Thanks of pool model transactional model. morning sales for customers of the a growth the a good guys. talked team bit questions. you so from in and a going taking little customer guess the kind to pushing first I Hey the one same

us join insights going half the then has I'm you you start the indicated how on at ITMA? based they're give first of been kind into that can QX? curious in So, of to effort interesting this of that any who's and guys just And year

Ronen Samuel

Yes.

QX, of So, if we all, the at look of deals of deals new. -- actually XX% net first the are many

models. of into would looking change some working like KornitX to buying some brands model. We GFN. And through net to in successes those midsized after to vertically more of more the and more business and we're go see and more those And of their of them this new going starting them systems retailers see business some and retailers success

top we're On talking that, market with I athleisure it the market on replacement segments. actually the was but us looking which the a Atlas and of the at replacement quarter Apollo, to Atlas was see screen mainly also starting market, with but replacement before MAX very the enter for strong MAXs the is into for the the going Poly,

which more And Another be is meaningful. DTF. now we on meaningful replacement area enablement starting focused but continued more is mainly and is versus becoming it's success to

they We to volume much players system much that sales larger market the in are entering using. into those larger with players see and are to we expect multiple

fill, far pigment and of move of move vibrance industry from acids reactives to in of able best very now, do into pigment the moving a onshore pigment into being of we of the ink industry entire see and in of in which short durability, terms in terms our consume this pressure lot But a ink. to to is moving manufacturing into The pressure hand in daily Kornit looking regulatory the technology different on-demand industry with major by has a terms ink, factor of lot polluted the basis. on changes being market of water and runs, ink, our designs

to to this ink do. ink, that And this mainstream are ITMA, the tell which it you more industry. surprise at going industry going we what But of type ink with to fashion I the drive will to is of new going you ITMA to leave I'm Kornit tell to the

Jared Maymon

ink. I'm That's one very forward about good more me. hearing much. just to new hear. the for I guess to looking Thanks

of is a by almost now. So, point was at only it and this the month flying kind halfway XXXX through year away about

of and more year. to about bit a little first starting just kind in think the Apollo the there potential So, the

that just that been. outlined So, I kind specs us tell beta are know already it. But your how for what you've the has talked kind about curious If you can of I'm are kind the how about guys on you expectations on you delivers of of thinking that anything interest year? first system

purchase customers of customers? you you XX kind new come number expecting or customers more these are and growth or top non-top from XX expecting of a to Are in systems,

in And past lastly, ASPs this have of kind me cycles. where some resulted dynamic if rising a wrong, think I margin cases the then just to I'm in we've had in system between correct gross but boost also

the to curious continue So, if just you're expecting that with Apollo?

Ronen Samuel

Well, many I questions. hope of I captured all them.

customer, So, after. are first new screen from interest, a existing from of of lot that market of but customer going all first all, we coming lot we have an in interest a terms of -- the from segments incremental incremental

have a a running customers they leading you systems, week, full are it running that two today example, replacement. an are week screen last with our we give I'll as but Actually mainly

lot they But I week. about -- were They coming is to saw Israel the were the for a videos They And were away. here. Apollo They things. course They blown away. those running all the before can you full for in run system learned here tell it of live blown unbelievable. and

The an being one done low, is operator too systems And run but at work are by the shirts of up automation. system. bit full quality hour speed a The in of most the system phenomenon. XXX the helping the to only

the to industry. this change going machine is So, really

of so ink. are way really about at we you In gross terms margin, in terms the is it looking the asking of

of the of of the gross clock. And those but are lot that As you margin buying generate to a know on around going on because ink use we least productivity, at are it system, and have ink. the those much shifts nice gross to going better margin two systems uses because it the

but those that meaningfully the will margin moving believe to definitely forward. into revenue the gross we So both contribute

Jared Maymon

and Loud clear. and looking Thanks, Ronen forward to…

Ronen Samuel

Any other to I wanted hear point missed? you that that

Jared Maymon

hit I think it. on it all. No Appreciate you

Ronen Samuel

you, Chris. Thank

Andrew G. Backman

question? next Sergio, Thanks.

Operator

comes at our from Palm Of ahead. go Please course question Craig-Hallum. last Greg

Danny Eggerichs

today. Greg Yes. This on for is Danny Eggerichs

Ronen Samuel

Danny. Hi,

Danny Eggerichs

to quick hoping path on on the touch was to your I profitability. thoughts

verbiage is that approach mean where breakeven second the in given that? profitability? pushed think on in right just get out What the actually I guess achieving are I is Does your breakeven thoughts we EBITDA the now, I at half. to at all? are macro

Ronen Samuel

and top that. can on I'll maybe Lauri of start add

So aiming confident market the achieving half breakeven to we and of the as during second to year we are it. feel promised the we report in

the need does of we need base? in of mentioned XX gross clearly on depends on to in Now the revenue. run systems And revenue. mid margin terms the $XX volume on million impact be very OpEx OpEx and we have the for the in all gross the We of it on what mid on the to is that major of it of because XXs revenue a margin We on breakeven now in be side. rate somewhere

three the sight we of services so business. and So revenue break when line we into feel that very inks which to very good parts, confident service we is have systems, the

We much impact have the into sight business in will how and ink HX. of very good confidence to it line

deliver come into system now ITMA during ITMA funnel at and and are building help counting to breakeven of to this ITMA promise you expecting out second year. feel tell When what the ramp half I on us volume we at can the we HX. to confident we working we're And up that looking what to we're the of approaching we're

Danny Eggerichs

some -- global since talked they're expecting we -- there been systems. of like time to I still sense. in they've XXXX? your contribution sounds customer strategic system contribution again the those Got delayed guess any update last I it. restart installing guess Makes starting

Ronen Kornit

Yes.

customers. of with terms the have strategic a our relationship relationship in So great we global

closely. They with on be to They with the management very indicate strong another had very grow working meeting beginning peak we are plans on and basis. good on the start ink, again them see orders daily our basis strong a in with senior we season. to weekly are us They and with three-year continued sharing which of are QX and basis in double-digit them of to quarter. a We quarterly QX a nice very, a

that now we there or wanted systems installing in top delay to And they on year sites and open. of this purchased is were that last those delivering the

sites Now almost ready. the are

they We before are ready run installing to the systems the season. peak will now be and

and to are of expect looking with see growing forward into continue ink So to QX. accelerated HX our usage strategic we mainly and global during And growth we impression customers.

course qualified into upgrading We now get different area of are MAX through to deep in the One POs waiting the of the course. a will is XXXX. fleet qualification. technology. happen value We only probably of it we are MAX course and There went the of the parts understand

opening are There new parts sites. of other

early very course, later in to on XXXX forward well course open based Of they Apollo on Apollo. and the start to testing involved of the sites and the Apollo to are deeply looking as

We our with are side. looking on expanding business fashion on the them

age of of new So are technology but upgrade also Avalanches, MAX are forward there's we many, there trade them, areas. the the many with them in Atlas with fleets course Apollo to looking future. And or

Danny Eggerichs

All right. Got there. it. Thanks. leave it I will

Ronen Kornit

Andrew. Next,

Operator

Thank you. further are there questions Mr. at time. no Backman, this

may You proceed.

Andrew G. Backman

all Great. Thank joining you, for and thank us today. Sergio you

to hesitate questions will follow-up any please please directly. contact me you have you the not close if call? do always As Sergio,

Operator

and disconnect call Ladies today. ask Thank your you your for concludes participating you. you that this please gentlemen, and We conference lines. for thank

Kornit Digital (KRNT) 10 May 232023 Q1 Earnings call transcript