Kornit Digital Ltd.

Greetings and welcome to Corneet Digital's first quarter 2025 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Mr. Jared Maiman, Investor Relations for Corneet Digital. Mr. Maiman, you may begin.

Thank you, Operator. Good day, everyone, and welcome to Corneet Digital's first quarter 2025 earnings conference call. Joining me today are Chief Executive Officer Ronen Samuel, and Lori Hanover, Coronet's Chief Financial Officer. For today's call, Ronen will provide comments on the first quarter of 2025 and provide an update on our market. Lori will then review the first quarter results 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 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 plans, strategies, projected results of operations or financial condition, and all statements that address 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 20F, filed with the SEC on March 28th of 2025, 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 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 published today, which is also posted on the company's investor relations website. At this time, I would now like to turn the call over to Ronen. Ronen?

Good morning, and thank you for joining us. I'm pleased to report that Kornit met expectations in Q1 and delivered on our commitments and even as we operated in uncertain macro environment with new threat policy risk and soft consumer sentiment. Revenue came at 46.5 million and adjusted EBITDA margin at minus 8.4%, both within our guidance. We also generated positive cash flow from operations demonstrating the strengths of our model and discipline execution. But the real story this quarter lies beyond the numbers. The apparel industry is undergoing one of its most significant disruptions ever. And there has never been a better moment for Cornit as pioneering digital transformation to lead. Global supply chains have been optimized for low cost, offshore, bulk production, which no longer meet the demands of today's consumer. We expect instant gratifications, endless variety, fast delivery and sustainability. Brands and retailers are recognizing that producing closer to the consumer in smaller runs and only what actually sells is essential. This transformational shift is no longer optional, is becoming urgent, and Cornit's digital platform delivers the agility that customers need to win in today's marketplace, minimizing waste, freeing up working capital, and improving margins. Recent trade policy developments, including proposed U.S. tariff on imports from Mexico, China, and other low-cost regions, further emphasizes this need to change. Our customers, especially brands and retailers, are rethinking their supply chains and turning to Cornit and our fulfillment partners to localize production. We are also well positioned to work through this set of circumstances because most of our manufacturing is based in Israel, rather than China or other heavily targeted regions, and we are not significantly reliant on tariff-exposed imports. We have already taken proactive steps to mitigate potential impacts, and based on what we know today, we anticipate only a modest cost effect if new tariffs are enacted. In fact, today's environment only reinforces our strategic positioning. That said, we remain vigilant, and the ultimate impact will depend on how trade policies evolve. A recent regulatory change is already reinforcing this shift. The U.S. closure of the de minimis loophole on May 2nd, which had previously allowed sub-800 packages from overseas to enter tariff-free, is already disrupting the direct-to-consumer flow of low-cost garments from China. Brands are seeking alternative supply chains closer to the market, supported by early feedback from our customer base, which points to increased activities in the US as a result. While macro conditions delay a few planned system purchases in Q1, we are seeing a much more powerful force at work, growing conviction among both brands and fulfillers that now is the time to move to on-demand mass production. This is no longer theoretical. Our technology is proven, the ecosystem is in place, and our customers are acting. Executives are telling us their organizations must adapt or risk falling behind, and they are choosing Cornit as a partner to lead that transition. Let's now dive into the three key execution priorities that are driving Cornit's transformation and long-term growth. First is the successful adoption and scale-up of the Apollo system, which is key to our breakthrough into mass production. Since its launch, Apollo has delivered remarkable growth in impressions, especially on longer production runs. which have traditionally been an analog stronghold. Apollo unlocking a high volume segment that had long resisted digital. And we are now engaging with screen printers that previously wouldn't have considered this transition. What stands out is that we are now seeing these traditional screen printers running jobs of thousands of units on the Apollo, something previously unthinkable in digital. This demonstrates the strong economics and scalability of the platform. Additionally, customers are telling us that Apollo is replacing the need for at least three carousel screen presses and enabling them to reduce their headcounts by 15 to 20 employees, delivering both operational simplicity and significant cost savings. Apollo's successful live debut last week at FESPA Berlin was an important milestone. FESPA is one of the industry-leading silkscreen focus events, and our participation allows industry leaders to experience Apollo in action. The conclusion from attendees was clear and compelling. Apollo removes the compromises that have held digital back. It delivers what sales screeners need in emerging marketplace. Labor saving, automation, high speed throughput and sales screen level retail quality. All without waste, set up time or inefficiencies of analog. Our pipeline continues to expand with many new customers and early adopters have already added additional systems or are planning to follow on orders. Clear validation of the Apollo performance and ROI. The momentum Apollo is experiencing is a key part of our broader strategic shift to scale beyond the customized design segment and into mass production, leveraging our complete Max portfolio, including Apollo, Atlas Max, Atlas Max Poly, and Presto Max, to deliver the speed, quality, and agility the market demands. Interest is growing quickly from large fulfillers, global brands and retailers, seeking to replace legacy models and bring manufacturing closer to the consumer. Second is accelerating the adoption of our all-inclusive click AIC model. This printing-as-a-service approach is disruptive in a hardware-centric industry and is gaining meaningful traction. AIC is designed to lower the barrier of entry to digital for our customers, changing how they buy, operate, and grow with us, and aligning our success with theirs. At the end of Q1, we reached a significant milestone. Our annual recurring revenue, ARR, from AIC contracts reached 14.5 million. These are multi-year contracts, so that 14.5 represents a stable and growing base of recurring revenue contractually locked in for multiple years to come. This significant milestone validates our strategy of emphasizing recurring revenue streams, and it's only the beginning. Combined with our reoccurring consumable and service revenue, today over 80% of Cornit's total revenue is recurring or highly predictable, driven by AIC, consumable, and service contracts. Our pipeline for this model continues to expand, as more customers see the benefits, and we expect AIC to grow meaningfully through our 2025, driving a larger portion of our revenue and fostering more win-win partnership with our customers. Third is our impression growth, both from our existing install base and increasing demand from new channels. This quarter, we began reporting impressions on a trailing 12-month basis and reached a record 222 million impressions, up 10% compared to the prior 12-month period, driven by a stronger system utilization and continued digital adoption. Each impression translates into recurring or reoccurring revenue and validate the growing value of our platform. To support this growth, we are focused on connecting demand with available production capacity, bridging between brands, retailers, and demand generators with our on-demand global fulfillment network. That connection of demand generation with fulfillment was the core theme at Connections, our flagship event held last month in Miami. What started as a small gathering has become a sold-out industry summit, bringing together hundreds of leaders from fashion, retail tech, and manufacturing. The takeaway was clear. the shift to near-shore, on-shore, on-demand production in mass quantities is happening, and Cornete is at the center of it. A major highlight from Connections is our newly announced strategic partnership with MAS ACME, a U.S. subsidiary of MAS Holdings, one of the world's leading supply chain partners to top global fashion and retail brands, including Victoria's Secret, PVH, Nike, Lululemon, Gap Brands, and Mac & Spencer. MAS Acme is now using corny technology for short-run replenishment in the U.S., enabling faster response time, helping brands reduce markdowns and avoiding costly stockouts. This partnership is a major validation of our platform's ability to support high-volume, time-sensitive production at scale and a key step towards reshaping global apparel supply chains. We also announced our partnership with Guten, a leading print-on-demand platform now connected to our global fulfillment network via CornitX. Guten is leveraging our infrastructure to route consistent, high-quality orders into our install base, helping demand generators scale reliable on-demand production across geographies and categories. In parallel, Adoption is growing across digital native platforms like Castoming, Redbubbles, Tpublic, Zoomies, Blue Tomato, Life is Good, and Zazzle, all leveraging Cognit Max technology to fulfill faster, locally, and with consistent quality. So, as we look ahead, yes, macro uncertainty remains. But the transformation of the apparel industry is undeniable. The need for speed, agility, and relevance is the new standard. Cornit is leading this change with the right technology, a proven business model, and the operational scale to support our customers' evolving needs. Based on what we see today, we continue to expect a full year for revenue growth, adjusted EBITDA profitability, and positive operating cash flow. While sell cycles may remain longer in H1, the momentum we are building across Apollo, AIC, Impressions, and Demand Generation position us well for stronger growth in the second half of 2025. Historically, Kornitis primarily served the custom design segment of the apparel industry, focused largely on one-off impressions. This niche has driven most of the impressions produced on our system to date, but the market ahead is exponentially larger. The mass production space for print runs under 1,000 units represent an estimated 4.5 billion impressions globally. With Apollo, our max technology portfolio, and the proven economics of the AIC model, we now have the print quality, cost efficiency, and business readiness to go after this massive opportunity. And we are not just aiming for it. We are starting to capture it. Customers are shifting. Use cases are expanding. And volume is moving. The opportunity ahead is enormous. And Cronit is advancing with clarity, conviction, and purpose. We are not being reactive. We are playing offense. and leading the transformation of how fashion is created, consumed, and delivered. And that future is on demand, digital, and much more sustainable. Thank you. I will now turn the call over to Lori. Lori.