Kornit Digital Ltd.

Greetings and welcome to Cornet Digital second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kelsey Turcotte. of the Blue Shirt Group. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Cornet Digital's second quarter 2020 earnings conference call. Before we begin, I would like to remind you that forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws will be made on this call. These forward-looking statements include, but are not limited to, Thank you for joining us. and are based potentially on inaccurate assumptions that could cause results to differ materially from those expected or implied by the forward-looking statements. The company's actual results could differ materially from those anticipated for many reasons, and I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's quarterly report on Form 6-K, filed May 19, 2020. which identifies specific risk factors that may cause actual results or events to differ materially. Any forward-looking statements are made of this call, herefore, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, the company will be making reference to certain non-GAAP financial measures on this call. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's earnings release published today, which is posted on the company's investor relations site. Before I turn the call over to Ronen Samuel, Cornete's Chief Executive Officer, and Guy Avedon, Cornete's Chief Financial Officer, I would like to invite you to a virtual fireside chat next Tuesday, August 18th, Thank you, Kelsey. Good evening and thank you for joining us on this afternoon earning call.

I hope you and your families are all safe and healthy. Before Guy and I share with you in more details the results of the quarter, I'd like to highlight the exciting announcement we made earlier today with the acquisition of Custom Gateway, a leading global provider of cloud software workflow solution enabling on-demand fulfillment. This strategic acquisition accelerates our organic development and strengthens our value proposition for brands, retailers and fulfillers in this fascinating area of digital transformation. Our industry is an inflection point. The online channel is booming across B2C and B2B environments. and Traditional Retail Channel are transforming how they operate in order to remain relevant to consumers, while at the same time solving their massive inventory inefficiencies. Destructive moments like this, driven by changing consumer habits, create a perfect storm for the accelerated adoption of agile, digital and sustainable on-demand textile production. The combination of custom gateway software workflow portfolio with Cornit existing and future technologies will bring to the market a unique end-to-end solution for on-demand production. Together, we will revolutionize how global brands and fulfillers transforming the supply chain into sustainable on-demand production to meet consumer needs. We have partnered with Custom Gateway for several years now and have seen the synergy between the two organizations firsthand in shared strategic accounts like Printful, DTG2Go, and Fanatics. Custom Gateway has over 300 customers globally, including leading brands and retailers like UK's largest fashion retailer, Next. This is an extremely important next step for us in transforming the textile industry and we are pleased to welcome the Custom Gateway team to Kornit. Turning to our second quarter results, I'm very proud of how well the team executed. We deliver total revenue of 37.4 million, net of 842,000 in warrants related to Global Strategic Account, which represents sequential growth of approximately 44% in Q2 compared to Q1 2020. These strong results reflect the positive momentum we started seeing in late April as production sites reopened and our customers started responding to the surging demand coming mostly from online channels. We believe that Kornit is in the midst of a sharp V-shaped recovery. Our visibility into the second half of the year is as strong as ever, and we remain very confident in the business outlook not only for the second half of 2020 but into 2021 as well. For the second half of 2020, we now expect to deliver year-over-year revenue growth in the low teens and a positive operating profit for the full year. This is an increase to the high single-digit year-over-year revenue growth we focused on our first quarter call and reflects the significant and building momentum we have in the business. Despite the continued impact of COVID on regular daily routines in certain territories, our global operations are fully operating in line with the safety guidelines of the relevant local authorities. Travel restrictions have been eased in many places, allowing our sales and service personnel to support customers on-site when needed. And all our manufacturing and R&D sites in Israel are fully staffed. Originally, we had exceptionally strong performance in North America across both new and existing customers. We are also seeing continued growth in Central and Latin America and believe this region will become increasingly strategic in the coming years as brands and retailers look to nearshoring and onshoreing as a necessary evolution in their existing supply chains. While there continues to be a lingering impact from COVID in Europe and Asia, the mega-trends propelling our industry are similar to those serving as a tailwind in the US, and we expect increased demand from these regions as we move through the year. To that end, we are accelerating investment in both regions as we build a larger direct touch presence in the UK, Germany and Japan in conjunction with local partnership. This infrastructure will allow us to accelerate growth and support of our global strategic account as they expand to new territories. From a system perspective, it was another excellence quarter for the Atlas. which is proving to be a huge success across both new and existing customers. Our customers are making significant investments in the Atlas to create new capacity for on-demand fulfillment, in many cases deploying multiple systems. At the same time, demand for our Vulkan Plus is strong, with new customers engaging in active conversation with us and following orders placed in the quarter. These follow-on orders are particularly impressive given the Vulcan Plus was just introduced to the market in the first quarter of 2020. And finally, the PolyPo. As we shared earlier this year, we expect to release significant technological enhancements to the PolyPo during the first half of next year, and we are very encouraged by the building pipeline of customers excited about its unique capabilities. On the direct-to-fabric side, the Presto continues to perform beyond our expectations with new and existing customers, and we believe we have the best technology in the market to capture a huge opportunity for sustainable on-demand manufacturing in the fashion and home decor market. On the operational and service side, our teams globally are focused on customer excellence, delivering on the numerous large-scale implementation we have in place with customers like TSC, Printful, Spoonflower, DTG2Go, Spreadshirt, and many others, which will not only generate revenue for the second half, but will also drive growth in ink and supplies in 2021 and beyond. Some of those projects we identified with regional and strategic account in our first quarter call have proven to be significantly larger than we had anticipated, as our customers are experiencing a steep growth in orders for on-demand proximity short-run production. Our partnership with our global strategic account continues to be very strong, and we are successfully working with them on their ambitious growth plan while expanding globally. We are also seeing good progress with leading global brands on their way to transforming the supply chain into on-demand production for both B2C and B2B business models. These are exciting times for Kornit and for the entire textile industry. Thank you very much. at 10.30 a.m. Eastern Time to discuss the vision beyond the acquisition of Custom Greatway in more detail, as well as more details on our execution plan. Now, I will turn the call over to Guy for a closer look to the numbers. Guy.