Kornit Digital Ltd.

Fourth 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. Please note this conference is being recorded. I would now turn the conference over to your host, Elise Ferlani, with the Blue Shirt Group. Thank you. You may begin.

Thank you, Operator. Good afternoon and welcome to Corning Digital's fourth quarter and full year 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, statements relating to the company's objectives, plans, strategies, statements of preliminary or projected results of operations or our financial condition, and all statements that address activities, events, or developments that the company intends, expects, projects, believes, or anticipates will or may occur in the future. Forward-looking statements are subject to known and unknown risks and uncertainties 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 6K filed November 10th, 2020, which identifies specific risk factors that may cause actual results or events to differ materially. Any forward-looking statements are made as of this call hereof, 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 website. I will now turn the call over to Ronan Samuel, Cornete's chief executive officer, and Alon Rosner, Cornete's chief financial officer. At this time, I would now like to turn the call over to Ronan. Ronan.

Thank you, Alice. Thank you all for joining us this evening on our earning call. I'm pleased to report an outstanding fourth quarter, significantly exceeding guidance for top-line growth and profitability, capping off a record second half 2020 for Cornete. This proved to be a transformative year in Cornete's history. While 2020 will be remembered for the global pandemic, It is also the year in which the textile industry hit an inflection point. The massive leap in e-commerce and the exposed inefficiency of the traditional textile supply chain create strong trailwinds to the digital transformation that Cornit is leading. In 2018, we laid out our management goal to become a 500 million revenue run rate business at the end of 2023. Upon completion of the second year in this journey, we are more confident than ever in our ability to achieve this goal ahead of plan. Turning to our Q4 results, we finished 2020 on a very strong note, with total revenue going 49% year over year to $72.3 million, net of $1.8 million in warrants related to global strategic account. We delivered record gross margins and we significantly exceeded our operating profitability goal for the full year while generating a record of 34.3 million net cash from operating activities. While traditional retail is recovering from the effect of the pandemic, Ecom and online marketplaces continue to boom across verticals, including core fashion brands, at leisure, merch, sport licensing, customers apparel, and home decor. As a result, key and regional accounts are adding multiple atlases, vulcans, and AVHDs to their existing fleets. And we see multiple customers that started with entry-level systems from Kornit only 12 to 18 months ago moving rapidly to purchase high-throughput systems. We also see a very healthy mix in our order book of net new versus existing accounts across our geographies. The press store is an absolutely game changer for the fashion industry and the level of engagement with manufacturers for top fashion brands continue to grow. The recurring consumable business from DTF is gaining volume and we experience tremendous year-over-year growth in the fourth quarter. On a regional basis, Americas continue to set new record highs EMEA deliver a good quarter, particularly in UK and Germany, with continued movement to the adoption of higher throughput system. While Asia-Pacific continues to struggle with pandemic challenges, our new leadership is making strategic alignments required to capitalize on the massive opportunity and we expect to see a strong recovery in 2021. We enable our customers to have an incredibly successful peak season reflected in the staggering year-over-year growth of our recurring consumable business. Services continue to outperform our expectation on growth and profitability, and I am very proud with the execution of our customer success teams. In Q4, we announced our new business line, leveraging the strategic foundation of Custom Gateway. Our cloud-based software workflow platform is unique, and we are experiencing huge interest from brands and fulfillers looking to adopt on-demand business models at a global scale, as well as automate and optimize the production flows. We received multiple orders from customers across regions and the pipeline continued to grow. We believe there is a huge opportunity for Kornit to build an incremental recurring business model and we have an exciting roadmap of new software applications and value-added services. 2020 was a phenomenal execution year for Kony throughout an unprecedented pandemic environment, demonstrating the accelerating demand for our products and the continued execution of our team. Turning to 2021, our outlook for the year is very strong, supported by the highest level of visibility and confidence in our history. We started the year stronger than ever with accelerating industry tailwinds, an impressive backlog of global expansion projects with strategic accounts that we are in the process of fulfilling, and an extremely robust pipeline. 2021 will be an exciting year filled with significant strategic initiatives. We will launch powerful new products which will drive further penetration into the heart of the fashion, apparel, and home decor industry. We are going to launch a breakthrough propriety automation technology that substantially increases throughput, usability, and consistency of operation. We will be introducing a groundbreaking proprietary 3D textile application that will bring to the market unique embroidery, high-density printing, and vinyl heat transfer effects. This first-of-a-kind application will enable entirely new products creation, disrupt the traditional embroidery market, and significantly expand Kornit's addressable market. We will scale our new software workflow business line. We will execute on massive global expansion with our strategic accounts. And we will expand our footprint in key segments, grow our activities with mega brands, as well as penetrate new market vertical while continuing to drive customer success. I will also note that ESG has been a strategic focus area for Kornit since beginning, especially as it comes to driving sustainability in the textile industry. 2021 will mark the year in which we are taking our long-term ESG program to the next level. Our dedicated ESG team is working with the best professionals in the industry to prioritize the execution of our many initiatives and our first impact report will be published in the second half of the year. Last week we announced Kornit Fashion Week Tel Aviv. An excitement around this event is building rapidly. The widely recognized international event will showcase how innovation and technology meet the fashion world to create a future that is more expressive and sustainable, solving the industry's most pressing problem. More than 40 leading fashion designers will be participating in this international showcase of sustainable fashion and it will give observers insight into the many ways technology empowers even the most demanding designers to deliver fashion that is sustainable without compromising the world famous quality. We couldn't be prouder to be part of this, and it demonstrates our commitment to expand our footprint in the fashion industry. Last year, we were hoping to host all of you in Israel for our business unusual event planned with hundreds of customer partners and investors at this first-of-a-kind event. While global travel restrictions remain challenging to predict currently, we remain optimistic and aim to hold this extraordinary industry event during the second half of 2021. So stay tuned. In a moment, I will turn the call over to Alon Rosner for his first earning call as the CFO of Cornit. Alon brings more than 20 years of financial management experience to the world, and his exceptional leadership capabilities will be essential as we continue to execute on our profitable growth strategy. Cornit is stronger than ever been, and we enter 2021 more confident than ever in our ability to execute on the massive opportunities ahead of us. Moreover, we believe Cornit's initiatives will further disrupt the industry, enabling our customer to achieve even greater success while fueling Kornit's growth and profitability well beyond 2021. Now I will pass over the call to Alon.