Kornit Digital Ltd.

Greetings and welcome to Cornet 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 Cornet Digital. Mr. Backman, you may begin.

Thank you, Operator. Good day to everyone and welcome to Cornet Digital's first quarter 2023 earnings conference call. With me today are Ronan Samuel, Corneet's Chief Executive Officer, Laurie Hanover, Corneet's Chief Financial Officer, and Amir Shakad Mandel, EVP of Corporate Development. For today's call, Ronan will provide comments on the first quarter of 2023. Laurie will then review the first quarter numbers and provide our second quarter outlook before we open it up for Q&A. 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. securities laws will be made on this call. These forward-looking statements include, but are not limited to, the statements relating to the company's plans, strategies, projected results of operations or financial conditions, and all statements that address the developments that the company expects will occur in the future. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause results to differ materially from those 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 20-F filed with the SEC on March 30, 2023, which identifies specific risk factors that could cause actual results to differ materially. Any forward-looking statements are made currently, and the company undertakes no obligation to publicly update any forward-looking statement 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 our earnings press release, which was published today, which is also posted on the company's investor relations website. At this time, I would like to turn the call over to Ronan. Ronan?

Thanks, Andy, and thanks, everyone, for joining us for today's call. As we reported earlier today, our first quarter revenues were $47.8 million in line with with the guidance provided in February, which, as a reminder, included the impact from the fair value of issued warrants. Promising indicators emerged during the first quarter in certain parts of our business, despite the persistent macro pressures in the overall operating environment. System sales supporting our customized design customers, which historically represented about 90% of our business, remained challenging during the quarter. However, we see some promising capacity utilization indicators emerge, including double-digit year-over-year impression growth from several of our larger strategic accounts. This included our global strategic account, who is bringing additional systems online to handle the current and expected volume growth this year. Remember, these systems were shipped last year but experienced installation delays due to site completions. So far, impression momentum continued in the second quarter, with several of our customers being a bit more optimistic regarding overall growth at the start of 2023. Customers upgrading to our Max technology drove a strong quarter for service revenues. During the first quarter, we received orders from several strategic customers for approximately 60 system upgrades from Atlas to Atlas Max. Customers choosing to upgrade to our Max technology are making a clear endorsement of its quality, color vibrancy, durability, and enhanced productivity. we continue to believe MAX is the new industry standard and expect other large customers to upgrade their systems throughout the remaining of 2023 and in 2024. Overall, while capacity utilization in the customized design market is still not optimal, we believe we have just scratched the surface of the immense opportunities unfolding within large social, digital entertainment, and content online platforms seeking to embrace and monetize the power of on-demand digital production by making it easily accessible from within their platforms to the massive global communities of users, creators, artists, merchants, and fans. As such, while not at the same elevated levels experienced during the pandemic, we do expect growth to resume in the customized design category as overall macro conditions stabilize. Over the past several quarters, we have been making steady progress on our strategy of targeting brands and retailers and their global fulfillment partners looking to restructure supply chains in order to address new products paid to market, margin expansion, excess inventory liability, and regulatory enforcement of sustainable textile production. Our MAX technology and our innovative products are the cornerstones of this strategy. We stop retail quality, better cost efficiencies, and new products capabilities. For example, our Atlas Max Poly opens up massive new global fashion, at leisure, and entertainment apparel markets for Kornit customers, enabling them to offer retail quality sportswear and funwear. In fact, we had a strong first quarter for Atlas Max Poly, mostly with some of our largest strategic customers in North America, EMEA, and in Asia Pacific. I'm also pleased to see the progress we have made in direct to fabric, which is now starting to contribute more meaningfully to our business. We are penetrating new markets and are building a very good funnel in key textile regions of Latin America, Europe, and Asia Pacific. During the first quarter, we added several new customers, including one of the prominent printing houses in Italy, and in Germany with an international producer of high-tech functional textiles for a variety of industry, including for some of the world's highest-end brands. We also successfully closed several Presto to Presto Max upgrades. With our innovative single-step solution, Cornit is the market leader in direct-to-fabric. We continue to strengthen our leading position With Presto Max and with new innovation, including a revolutionary new ink, we will showcase at the upcoming ITMA Trecho in Milan that we believe will accelerate the penetration into the mainstream fashion industry. It's an exciting time at Cornit as we gear up for ITMA. where we intend to demonstrate how digital production goes mainstream and showcase sustainable on-demand manufacturing at scale. We will showcase Cornit industry-leading technology portfolio, which offers the apparel and textile industry a complete digital transformation solution to on-demand production. At ITMA, we will officially unveil Apollo, our breakthrough platform suitable for longer-run production cycles than what Kornit's solution has been addressing to date. This brings digital production into the mainstream and will be a real differentiator. Based on initial feedback from our customers, we are more confident than ever that the Apollo will be a game-changer in terms of productivity, automation, quality consistency, and total cost of ownership. In addition to the Apollo, we will showcase our new Atlas Max Plus, which will take the Atlas Max to a new level of productivity. Our new portfolio of smart curing solutions based on TESOMA technology, our new RSS palettes, as well as our Atlas Max Poly, Presto Max, and Cornit X solutions. We hope you will join us at ITMA to experience how Cornit's digital on-demand ecosystem will drive massive needed transformation in the textile and fashion industry. To summarize, as I mentioned on our last call, 2023 is a transition year for Cornit, and we remain laser-focused on executing in three key areas. Approach break event during the second half of this year on an adjusted EBITDA and then possible growth thereafter. Successfully launching Apollo with better trial expected to begin soon. Scale CornetX where we are making some good progress with several demand generators. I take immense pride in our entire team's tireless effort and dedication to move the company. As I stated during our last earning call, Kornit's long-term growth drivers remain firmly intact. We are confident that our strategy, product roadmap, and solid balance sheet combined with improvement in overall market condition position us well to deliver meaningful long-term profitable growth. With that, let me turn the call over to Lori for a closer look at the first quarter number and the second quarter guidance. Lori.