Kornit Digital Ltd.

Greetings and welcome to Cornute Digital's first quarter 2022 earnings call. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Andrew Beckman, Global Head of Investor Relations for Cornute Digital. Mr. Beckman, you may begin.

Thank you, Operator. Good day, everyone, and welcome to Cornute Digital's first quarter 2022 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 Securities Litigation Reform Act of 1995 and other U.S. security 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 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 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 Securities and Exchange Commission, including the company's annual report on Form 20F, filed on March 30, 2022, 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 release, which was published today, and is also posted on our website in the investor relations section. At this time, I would like to now turn the call over to Ronan. Ronan?

Thank you, Andy, and good day, everyone. Thank you for joining us on today's call. I'm pleased to share that we delivered a good start to the year with revenues coming just about the high end of our guidance and operating margins in line with our expectations. For the first quarter, total revenues grew by 26% year-over-year to $83.3 million, net of $8 million in warrants related to our global strategic account. System revenue growth was very strong and overall system contribution to the revenue mix was very high. We saw diversification across the business within our top 10 customers with very strong performance of our global strategic account that continues to execute on its aggressive expansion initiatives throughout 2022 and 2023. We saw a record quarter in Asia-Pacific and a strong quarter in both EMEA and the Americas. We continue to make progress with major brands, including one of the largest retailers in the world, who acquired several Atlas Max systems this quarter. This major retailer is focused on the ability to scale and automate massive quantities of production, in addition to leveraging the incredible benefits of CronitX and our global fulfillment network. On the product side, we see a strong pipeline and adoption of the Atlas Max with existing and new customers. We are moving along through the initial stages of the Atlas to Atlas Max upgrades, which will continue to gain pace throughout the year and into 2023. We also receive tremendous customer feedback on the automation upgrades which will be selectively available in the second part of this year with commercial availability in 2023. We had an exceptional quarter for the Presto, especially in Europe and Asia Pacific, and see a lot of excitement and momentum around the Presto Max, which now represents the majority of the DTF pipeline. We also see an increasing backlog for Presto Max upgrades, as customers tell us that enhancing the decorative capabilities for dark colors fabrics is a massive benefit. On Kornit X, we continue to engage in several very interesting initiatives with some of the largest digital platforms, marketplaces, and brands in the world. We are particularly enthusiastic about the upcoming launch of our strategic partnership with Wix, one of the leading SaaS and e-commerce platforms in the world with over 220 million users globally. Wix is a leading platform for creators and enterprises of all sizes that are looking to build a digital presence. With CronitX, the Wix platform will enable its massive community to seamlessly add on-demand fulfillment services, opening to them exciting commerce and merchandising opportunities. We expect to go live later this quarter and are excited about our joint roadmap head. In addition to this massive opportunity in our pipeline of new partners, some of our existing CornetX customers and partners continue to scale volumes and the total GMV running on the platform, and we are very satisfied with our progress. As mentioned on our last call, 2022 will be an exciting year of groundbreaking new product introductions. In early April, we hosted the extremely successful Kornit Fashion Week Tel Aviv, where we officially unveiled the Atlas Max poly and demonstrated our revolutionary game-changer Kornit Apollo. The Apollo is the most comprehensive digital single-step system targeting screen-print mass production markets and the perfect solution for near-show mid-range mass production with best-in-class max quality with the lowest TCE and the highest output per operator. Apollo uses smart curing from our recently completed Tesoma acquisition. We expect early customer engagement for Apollo in the second half of this year and commercial availability mid of 2023. We see strong movement and growth in the market from brands and retailers shifting traditionally mass-produced offshore jobs to near-shore and onshore short-run production, supporting their lean inventory, fast replenishment, and in-season reactivity needs. Our strong portfolio of mass-production max solutions and soon-to-come Cornita Polo all powered by our unique CornitX platform, place Cornit in a remarkable position to cater to these evolving market opportunities and trends. While we see these tremendous and growing tailwinds fueling our business, our customers and us are not fully immune to the overall macro headwinds and certain post-pandemic dynamics. We started this year with a strong backlog and robust pipeline. But as we move deeper into the first quarter, we begin to see the macroeconomic volatility weight on the pace of consumer purchases and on capital allocation decision of certain customers. As such, some of these purchases and expansion plans are now shifting out into later quarters. We remain excited with our growth plan for the full year and continue to expect the second half of this year to be much stronger than the first half in terms of both revenue and profitability. Considering the near-term volatility of the top line and the continued investment in major marketing events and the sales activity this quarter, We expect operating profitability in the second quarter to be lower than the first quarter, as a loan will discuss it shortly. We are extremely energized heading into Cornete Fashion Week London, which will take place next week. We expect over 600 brands. designers, retailers, influencers, investors, and press to attend where we will demonstrate how virtual and physical fashion worlds intersect. This coming event, as well as the FESPA event in Berlin at the end of May, will be a catalyst to develop our funnel and pipeline for the coming quarters. In summary, we remain focused on our mission to build the operating system for on-demand fashion and the massive opportunities ahead. And as I mentioned, while we are not fully immune to overall macroeconomics headwinds and near-term volatility, we continue to expect to deliver ahead of plan The 125 million run rate business we originally targeted for the fourth quarter of 2023 and remain confident in our journey to become a billion dollar business in 2026. We are working extremely hard to mitigate the external macro factors and remain extremely confident in our team and the value we deliver to our customers. Thank you again, and we hope to see you next week in London. With that, let me turn the call over to Alon for a closer look at the numbers and the guidance. Alon.