Kornit Digital Ltd.

Greetings, and welcome to Cornete Digital's fourth quarter and full year 2021 earnings call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Andrew Bachman, Global Head of Investor Relations for Cornete Digital. Mr. Bachman, you may begin at this time.

Thank you, Operator, and good day, everyone, and welcome to Cornete Digital's fourth quarter and full year 2021 earnings conference call. With me today are Ronan Samuel, Corneet Digital's Chief Executive Officer, Alon Rosner, Corneet's Chief Financial Officer, and Amir Shakad Mandel, Executive Vice President of Corporate Development. Before we begin, I would like to remind you that forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995 and other U.S. security laws will be made in this call. These forward-looking statements include but are not limited to statements related to the company's objectives, plans, strategies, statements of preliminary or projected results of operations, or a financial condition, and all statements that address activities, events, or developments that the company intends, expects, projects, believes, or anticipates will 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. I encourage you to review the company's filings with the Security Exchange Commission, including the company's annual report on the 420F filed on March 25, 2021, which identifies specific risk factors that could 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 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 press release published today, which is posted on the company's investor relations website. At this time, I would like to now turn the call over to Ronan.

Ronan? Thank you, Andy, and thank you all for joining us to summarize an excellent year and review our strong business momentum as we enter what will be one of the busiest and most exciting years in the history of Kornit. 2021 will be remembered as a pivotal year in Kornit's path to become a $1 billion company in 2026 or before. Our annual performance reflects outstanding execution on the huge market opportunity we are after and the strengths of our unique business model as we continue to exceed our growth and profitability goals across the board. We delivered remarkable year-over-year total revenue growth of over 65%, and shipped a large number of mass production systems that will continue to fuel the growth of our recurring revenue streams for years to come. System sales grew over 100% this year, and our recurring consumable and services revenues grew over 30%, reflecting record growth of our customers. we also delivered an extraordinary operating margin while continuing investing in the business. In 2021, we unveiled our 4.0 strategy and laid the foundation for the future growth of CorneetX. We strengthened our team with talents in key leadership positions, scaled R&D and go-to-market functions across regions, scale operations and infrastructure, launch groundbreaking technologies, unveil state-of-the-art customer experience centers, and initiated innovating lead generation marketing platforms. We also leverage our strong balance sheet to enhance our organic efforts to digitize the production flow with smart inorganic technological innovation such as Voxel 8. For the fourth quarter, we again exceeded the high end of our top-line guidance and delivered record total revenue of 87.5 million, net of 7.9 million in warrants related to a global strategic account. Our record recurring consumables and services revenues were driven by an exceptional peak season, gross margin expanded versus last year, and our operating margin was in line with our guidance. We ended the quarter with a very strong backlog of orders and an extremely robust pipeline across all regions, giving us tremendous tailwind into 2022. Our business in EMEA is growing strongly with remarkable strategic projects with major tier one brands and service providers engaging in capacity builds up that we have seen mainly in the Americas to date, including an order for a double digit number of Atlas Max systems and multiple integrated projects leveraging our Kornit X platform. we see encouraging signs of recovery in Asia markets and had our strongest quarter ever in the region with promising activities in China, Korea, Australia, and Japan that fuels our expectation for a record year in 2022. In the Americas, We had one of our best quarters for net new accounts, purchasing mass production systems. And we expect many of these to rapidly grow the fleets in the quarter to come. Growth activities with our global strategic account, particularly this quarter in Americas, continue to be tremendous. And we expect these impressive volumes of activities to continue in 2022 and beyond. as our relationship continues to be stronger than ever. We started 2022 with outstanding momentum. The megatrends that have been fueling our business are intensifying in magnitude, and transformation to digital on-demand sustainable production continues to accelerate. The digital fashion and apparel segment continues to outpace growth of the overall e-commerce sector. Brands of all sizes, licensors, merchandisers, designers, and individual creators are all seeking to monetize the enormous traffic their creative offerings are capturing on the digital platform and are in desperate need for sustainable on-demand production. Traditional textile supply chains are completely broken and unreliable at this point. And alternative digital manufacturing supply chains based on proximity production and fast turnaround are becoming the new norm. Additionally, the fashion industry is unfortunately responsible for severe ecological damage. As a result of excessive production, approximately 30% of manufactured garments are considered overproduction. Furthermore, the fashion industry produces nearly 20% of the global water waste. Kornit is the only company that offers high-quality, on-demand, mass production digital solutions that can deliver to this massive need and is also the only company that seamlessly connects the virtual and physical worlds of the textile industry. Moreover, Kornit is driving a massive positive ecological impact in the fashion and textile industry. 2022 will be exciting as we gear up for very strong growth and a remarkable amount of groundbreaking new products introductions starting already in the first quarter. Backlog of orders for the remarkable Max technology from our customer and prospects is very strong. Starting Q1, we expect approximately 75% of our installed Atlas fleets to upgrade to the MAX and approximately 50% of the fleets to the active load automation throughout 2022 and into 2023. Atlas Poly will be a game-changer to the multi-billion-dollar sports market. We expect this solution, especially when integrated with CornetX, to unleash the massive untapped demand in this market for short-run production, personalization, and disruptive direct-to-funds and direct-to-recreational players' business models. Our Quest software-based solution is highly anticipated by customers scaling globally and seeking consistent quality. And we will also launch exciting upgrades to our cloud-based production analytics connects platform. Earlier this year, we shared that during H2 2022, we will unveil a groundbreaking high productivity next generation DTG platform. We believe this will be a revolution in how textiles are produced and will change forever the economical and sustainability balance of short-run mass production, shifting volumes to cornite that have been traditionally untapped for digital production. We expect better testing in the end of this year with initial shipments in mid-23. On the DTF side of the production floor offering, the Presto Max will be made available during Q2 2022 with never-before-seen applications and quality standards that meet the needs of the broader fashion industry. The pipeline for these products has been building strongly since we unveiled it. And we are very excited with our continued traction into the DTF market. We expect H122 NPIs to meaningfully contribute to our goals in the second half of 2022 and well into 2023 and beyond. The year started with another exciting announcement on our execution path to digitize the production flow with the announced acquisition of Tesoma. This acquisition will further empower Kornit's customers to operate end-to-end production process with greater automation and quality. We plan to take Kornit X to an entirely new level in 2022. We see massive, massive opportunities for the end-to-end on-demand workflow that CronitX enables. In both B2C, B2B environments across booming verticals, including sports, music, entertainment, influencers, gaming, and broader creator communities. We are laser focused on four execution areas of this extremely strategic pillar. scaling our global fulfillment network, which is progressing extremely well, investing in tech layers of the platform, such as automation, AI, and data-driven decisioning, enriching our front-end offering, such as content management, visualization, and smart connectivity, and expanding striking additional strategic alliances with mega platforms and marketplaces. Stay tuned for exciting developments with Kornit X in the quarters ahead. In 2021, Kornit delivered a strong message into the core of the fashion industry with the launch of the Kornit Fashion Week platform. This powerful platform is about unleashing creativity, driving on-demand sustainable production and promoting diversity. We will continue to expand these successful activities and are gearing up for Kornit Fashion Week Tel Aviv in April and London during May. At these amazing events, we will host tens of designers, brands, influencers and producers. At these events, we will plan to unveil our new production solutions, showcase Kornit X, and demonstrate our vision for connecting the virtual and physical worlds in the fast approaching areas of Web 3.0 and the metaverse. In summary, our fundamentals are excellent. The market opportunity we are after is endless and our competitive position is unmatched. Kornit has never been in a stronger position and we are extremely confident in our ability to meet our 1 billion revenue goals by 2026, if not before. I am proud of our amazing team. Thank you for your commitment and I'm looking forward to the exciting times ahead of us. With that, Let me turn the call over to Alon for a closer look at the numbers and the guidance. Alon.