Kornit Digital Ltd. — Call Transcript 2025

Greetings and welcome to the Kornit Digital's third 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 Maymon, Investor Relations for Kornit Digital. Mr. Maymon, you may begin. Thank you, Operator. Good day, everyone, and welcome to Kornit Digital's third quarter 2025 earnings conference call. Joining me today are Chief Executive Officer Ronen Samuel, and Laurie Hanover, Kornit's Chief Financial Officer. For today's call, Ronen will provide comments on the third quarter of 2025 and provide an update on our progress. Laurie will then review the third quarter results and provide our fourth 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 28, 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, everyone, and thank you for joining our third quarter 2025 earnings call. This quarter, we delivered results above the midpoint of our guidance range, with revenues of $53.1 million, representing 5% growth year over year. When including deals under our all-inclusive click AIC model, which are recognized over time, underlying business activity was even stronger this quarter. Under this model, revenue is recognized as customer print and consumer impressions rather than upfront, which builds recurring revenue over time, even though it shifts parts of the recognition to a later period. Our EBITDA margin came in at approximately 2%, reflecting continued progress towards full year profitability as we maintain disciplined cost control. I'm particularly pleased that we have achieved this growth while continuing to generate positive cash flow from operations for the eighth consecutive quarter. This performance reflects not only strong operational execution but also continued progress in transforming Kornit into a business driven by recurring revenues, expanding the addressable market while driving sustainable profitability. Beyond the financials, I would like to provide an update on our key focus areas: screen market penetration, Apollo adoptions, and the expansion of our all-inclusive click model. The global screen printing market for blank apparel represents around 14 billion annual impressions, and more than 40% of those production runs are under 1,000 units, representing an addressable market of roughly 6 billion impressions. As production continues shifting towards shorter runs and faster delivery, Kornit is uniquely positioned to lead the transition from screen printing to agile, high-volume digital production powered by our advanced technology portfolio and the AIC model that lowers barriers to entry. Our goal remains to capture approximately 5% of this addressable market by 2030. In just 18 months since the first Apollo installation, adoption continues to accelerate as customers expand their fleets, increase utilization, and push production to new levels. Across our early Apollo users, production has scaled rapidly, with systems now averaging more than 1 million impressions annually and now over 40% of those impressions produced for Barker Peril. About 25% of these Bark jobs are above 500 copies, proving that digital is moving beyond short runs and increasingly replacing traditional screen printing in high-volume production. With a growing number of customers installing multiple Apollo systems, the shift towards digital as the preferred production method is clearly gaining momentum. Importantly, approximately 40% of all Apollo and Atlas Max systems sold this year were to new customers, reflecting the growing confidence in Kornit’s technology and the expanding opportunity ahead. Another area of progress is the continued expansion of our all-inclusive click model. Today, about 80% of Apollo systems operate under the AIC model, which removes barriers for customers and drives a growing stream of recurring revenue. AIC is strengthening Kornit's leadership in digital production, serving as a clear differentiator that attracts new customers and generates strong momentum across the industry. At the end of the third quarter, annual recurring revenue from AIC reached $21.5 million, up $2.6 million sequentially. Several deals that shifted into early Q4 have since closed, bringing ARR to $23.1 million today, and we expect further expansion by year-end as the program continues to scale. This milestone is especially meaningful given that the AIC is still in its early stages of global rollout and was only recently introduced in Asia, where we deliver our first Atlas MAX Plus systems and early in Q4 closed our first Apollo deal under the program. Asia is the largest textile-producing region in the world. An early success there is another encouraging validation of our technology and business model. Over the past 12 months, Kornit customers produced approximately 232 million impressions, reflecting 5% growth on a trailing 12-month basis. We expect a solid increase in the growth rate of impressions on a trailing 12-month basis as we move through the fourth quarter, driven by the continued ramp-up of Apollo systems and higher utilization across our install base. Our progress can also be seen clearly in the success of our customers, who are expanding capacity, scaling production, and increasing utilization across their operations. In the third quarter, MedEngine Global, one of the world's largest manufacturers of licensed and branded apparel, added another Apollo under the AIC model on top of two existing Apollos and a large fleet of Atlas Max Plus systems. This expansion allows them to replace screen jobs, shorten production time, and reduce waste and energy use. Hybrid Digital, a fast-growing wholesaler, added a second Apollo under AIC to better support peak season POD demand, move more of its Barker Peril production into digital, and meet faster delivery requirements. Basic Thinking, a European manufacturer, installed a second Apollo within six months to meet growing demand from leading fashion brands and strengthen its position as a digital-first producer. HFT71, part of the TBI Group, integrated Apollo with its existing Atlas MAX Plus fleet to meet surging Bark demand and set a new production standard in Central Europe. In Asia, WebLink in South Korea became the first customer to adopt AIC, operating two Atlas MAX Plus systems as part of a full digital transformation that replaced legacy screen capacity while improving time-to-market and production efficiency. This example shows that Kornit's technology and business model are delivering tangible results and accelerating the industry transition from screen to digital. I also want to touch on our expansion beyond our traditional apparel market segments. Last week at ITMA Asia in Singapore, we showcased our portfolio and announced the commercial launch of Kornit's digital footwear solution for the sports and athleisure markets. After two years of pilot programs with leading global brands, the solution is now commercially available and has already crossed the milestone of more than 1 million pairs of shoes produced using Kornit technology under well-known international brands. This achievement marks an important step forward in applying our digital platform to adjacent categories and demonstrates that our focused innovation engine continues to create new growth opportunities. We view footwear as a significant pillar of our long-term growth plan. The total addressable market is approximately 1 billion pairs annually, equal to about 2 billion print impressions, and Kornit is well-positioned to capture a meaningful share of this opportunity. Our solution directly addresses the footwear industry's biggest challenges, such as slow development cycles, design limitations, and overproduction, by replacing complex analog decoration with a single-step digital process that delivers unlimited design freedom, durability, and efficiency. Customers are excited because the design-to-production cycle, which once took months, can now be done in days, enabling faster response to trends, lower waste, and local on-demand production at scale. Following successful deployments of our new solution in China, we are expanding into Vietnam and Germany, establishing a new global standard for digital footwear production. These efforts are further supported by additional orders from existing customers secured during ITMA Singapore. Ten days ago, we also participated in Printing United in Orlando, where we engaged with many new potential customers and partners. The feedback was consistent. The industry's needs for agile, high-quality, and sustainable digital production continue to grow, and Kornit remains the most advanced and trusted partner to enable that transformation. Before I close, I want to take a step back and reflect on the broader transition we are executing. Kornit is transitioning from one-time equipment sales to a recurring usage-based model through AIC and ARR. While this naturally shifts the timing of revenue recognition, it is a deliberate move. It strengthens long-term profitability, predictability, and customer lifetime value. We are already seeing the benefits through stronger customer retention, higher engagement, and increasing system utilization. Our plan for 2025 was to deliver profitability, generate cash from operations, and drive growth both in revenue and, even more importantly, in recurring revenue from the AIC model. We are on track to deliver on this plan. Looking ahead to the fourth quarter, we expect sequential growth in revenue, gross margin, and EBITDA while continuing to expand our recurring revenue base through the AIC program. As we look ahead into 2026, we expect modest top-line growth in the lowest single digit as we continue to deliberately transition more customers to AIC while driving strong growth in annual recurring revenue. At the same time, we expect continued EBITDA expansion driven by higher utilization, scaling recurring revenues, and disciplined cost management. This evolution positions Kornit for sustainable, profitable growth, and long-term value creation. In summary, we are executing with discipline, capturing a multi-billion-dollar market opportunity as we transform how apparel is produced. Our recurring business model is scaling, our technology is driving real impact, and we continue to look ahead with innovation into new segments like footwear and other adjacencies. The progress so far is just the beginning, and there is much more to come. I will now turn the call over to Lauri to further discuss our third-quarter results and our guidance for the fourth quarter. Lauri. Thank you, Ronen, and good day to everyone. Third-quarter revenues were $53.1 million within our guidance range of $49 million-$55 million provided in August. Year-over-year, we saw growth in product revenues, primarily attributable to an increase in consumable sales and continued growth of revenue from the AIC model. Service revenue also increased year-over-year due primarily to greater upgrade activity. Moving to margins, third-quarter non-GAAP gross margin was 45.8% compared with 50.3% in the same period last year. The year-over-year decline was primarily the result of inventory-related adjustments, U.S. tariff costs, and lower service gross margin, as expected. We have communicated targeted price increases that are expected to offset part of the tariff impact in the coming quarters. Looking at operating expenses, total third-quarter non-GAAP operating expenses were $25.8 million, a decrease of $1 million, or about 3.7% from $26.8 million in the same period last year. A large portion of our operating expenses are Israeli Shekel denominated. The Shekel appreciated more than 9% in the third quarter year-over-year. Had the U.S. dollar Shekel exchange rate remained at the prior year level, operating expenses would have been $25 million, or 7% below Q3 2024. Managing our operating expenses closely is within our control, even in an uncertain environment, and we are expecting to realize more meaningful operating leverage over time as we continue to align our expenses with our base of revenue and near-term needs. For the third quarter, adjusted EBITDA was $1.1 million compared with $1.5 million in the same period last year. Had exchange rates in Q3 2025 remained at the level of the year earlier period, adjusted EBITDA would have reached $1.8 million. Adjusted EBITDA margin for the third quarter of 2025 was 2%, above the midpoint of the guidance range we provided in August. We still anticipate delivering adjusted EBITDA profitability on a full-year basis in 2025. As we move into 2026, we plan to continue shifting a greater share of system volume from the traditional CapEx model to AIC. As Ronen said earlier, ARR from systems shipped under the AIC model reached $21.5 million at the end of Q3. As a reminder, this figure does not represent recognized revenue, but rather the annualized recurring revenue we expect to generate based on systems shipped to date. We are focused on moving a greater portion of our system shipments to the AIC model with the goal of expanding this base of recurring revenue. This effort will strengthen our ability to project the coming quarters and year and is expected to drive an improvement in our gross margin over time. Moving to our balance sheet, our balance sheet remains robust with our quarter-end cash balance, including bank deposits and marketable securities, standing at $490 million. Operating cash flow was $4.3 million compared with $13.6 million in the same period last year. Cash flow less capital expenditures, including investment in equipment on lease for AIC in Q3, was $800,000 compared with $3.1 million in the same period last year. Ending with our fourth-quarter guidance, we currently expect fourth-quarter revenues to be between $56 million and $60 million and adjusted EBITDA margin to be in the 7%-10% range. I'll now turn it back over to Ronen to open the call for Q&A. Thank you, Laurie. Operator, we are ready for the session of the Q&A. Thank you. At this time, we will be conducting a Q&A session. If you would like to ask a question, please press Star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the question queue. You may press Star 2 to remove yourself from the queue. One moment while we pull for questions. Our first question comes from the line of Greg Palm with Craig Hallum. Please proceed with your question. Thanks. This is Danny Eggert, on for Greg today. Maybe just one kind of on the broader demand environment and maybe if you could break out systems and consumables and how what played out this quarter was maybe different or better or worse than you were expecting from what you saw a few months ago. Where are we at in kind of inventory levels on the consumable side and how have customers' kind of activity changed around capital sales and AIC for Apollo? Yes. Thank you, Danny. Regarding this quarter, the way we look at it, product, as you can see, grew year-over-year the same way the service. Service grew mainly due to upgrades that we delivered this quarter. Within the product, we see expansion both on the ink side. But also, of course, on the AIC that's starting to contribute to our revenue. Overall, we are shipping more and more systems. You do not see the systems, of course, that we are shipping on the AIC model, but they will going to contribute moving forward into Q4 and 2026. This is the major focus for us for growth. Hopefully, I answered your question. Yeah. No, that's helpful. Maybe just one on gross margin, maybe a little step down and a little below expectations. I know you kind of mentioned that inventory-related adjustment and some tariff stuff. Is there any way to kind of break out into a little more depth some of those impacts that you saw and how we should think about maybe the price increase offsetting those tariff impacts going forward? Yeah. We'll leave this question to Laurie for beginning. Okay. As you mentioned, we faced some headwinds resulting from inventory adjustments in addition to a greater impact from the effects of U.S. tariffs, which, of course, we did not have last year. Both of these affected the product gross margin as well as the service gross margin this quarter. As we said, we have communicated targeted price increases that we expect to offset a part of the tariff impact in the coming quarters. Yeah. What I can add as well is that you should expect to see expansion in gross margin, of course, in Q4. Q4 is traditionally stronger, is the strongest quarter in terms of gross margin. We are planning, of course, to continue to see expansion year-over-year into 2023 on gross margin. Okay. Great. Maybe just one last one for me. Appreciate you kind of giving that early 2026 outlook. I guess, what kind of visibility do you have at this point? I'm assuming a little bit more visibility transitioning to more recurring revenue. What kind of gives you that confidence in your ability to grow next year? Yeah. We are starting to have more and more visibility because of our recurring revenue and reoccurring revenue. Of course, we have the ink revenue, which is the reoccurring. We have the service revenue that is reoccurring, and we are building more and more the ARR from the AIC model that is the recurring revenue. While taking a relatively conservative view on the systems that we will deliver next year on CapEx, we still believe that we can deliver growth next year. As I mentioned, low single-digit growth, but you will see much stronger expansion on the EBITDA and, of course, accelerated growth on the ARR during the year. All right. Appreciate the call, Roli. Leave it there. Thank you. Our next question comes from the line of Ryan Drab with William Blair. Please proceed with your question. Hi. Thanks for taking my questions. I would like to talk first just about the low single-digit outlook for 2026. Ronen, can you just talk about the thinking that goes into that, the components of that growth? I guess I would have thought that with the ARR that you're entering 2026 with, that you would have expected to grow a little bit faster than low single digits? Yeah. Thank you, Ryan. And you're right. For one hand, we're entering with nice ARR into 2026. We're also having better visibility on our pipeline. We have a stronger pipeline than we had before. When we are looking at our growth rates. It reflects a deliberate and strategic transition towards building a more predictable, sustainable, profitable business. We are not only expanding our addressable market. We are really getting into the bulk apparel, footwear, and additional categories, but also transforming, and this is the main impact, our model from one-time equipment sales to recurring usage-based revenue under the All-Inclusive Click model. This shift naturally moves part of the revenue recognition that we are planning for next year from the short term into future periods, but it creates a much stronger foundation of long-term growth, profitability, and visibility. While we expect 2026 to deliver low single-digit revenue growth, we see meaningful expansion in EBITDA as we maintain a disciplined cost structure and continue to scale our recurring revenue base. The ability to grow ARR significantly while expanding profitability is a major milestone for us and a strong indicator of the durable growth engine we are building over the years ahead. I hope I answered your question, Brian. Yeah. Ronen, that's helpful. My follow-up to that is just, are you leaning more away from outright equipment sales in 2026? Has your strategy changed a little bit in the last few months regarding trying to just move customers to AIC rather than equipment? The answer is yes. We see the AIC model as, saying that the answer is yes because we see the AIC model is the right, preferred model for our customers, reducing barriers of investing in capital in advance, aligning cost structure to revenues, and providing predictability to our customers. We see also that customers on this program are using the systems, the utilization is higher. The number of impressions is higher on systems that are on AIC model. For us, it creates much better visibility, much stronger recurring revenue, and better profitability and customer value that we are generating out of each of those systems. We deliberately decided to move more and more into the recurring business, the AIC, and therefore we anticipate a reduction next year on the CapEx deal, but increasing the number of systems overall. We see the number of systems even this year is growing quite significantly versus last year. We expect even more next year, but many of them or most of them will be on the AIC, and we will not see the revenue recognition at the same quarter. We will see it over time, and it will create much stronger business moving forward for the years to come. Okay. So just to. Put a final note on this, I guess it seems like CapEx sales will be much lower, AIC revenue will probably increase significantly next year, and maybe even more than double. But really, you're positioning the company kind of for 2027 and beyond, is my impression right now. In terms of revenue growth. Yeah. As we mentioned, AIC revenue is becoming significant, and most likely by the end of Q1, we will start reporting separately on the AIC revenue as it becomes even more significant. So next year, you will see more revenue, significantly more revenue coming from the AIC. Some of it is offsetting the reduction of the CapEx revenue. Overall, we still expect a growth for the full year. Okay. Thanks. I'll follow up more later. Thank you. Thank you. Thank you. And our next question comes from the line of Chris Moore with CJS Securities. Please proceed with your question. Hi. This is Willen for Chris. Do you think the geographic mix of your revenue will look much different two to three years from now? If so, what are the drivers? Geographically, thanks, Chris. For us, North America today represents something like 65%. In three years from now, it will continue to be the largest region. We definitely would like to see EMEA catching up and a massive opportunity in Asia. We see specifically in Asia the opportunity around the footwear. We have been there last week at ITMA. We got fantastic feedback, and we have many new prospects for this segment. We see the penetration also into the skin market in Asia. As I mentioned in my prepared remarks, we closed two deals, the first deals in Asia, both in the skin market but also in the AIC. We only now introduced the AIC model in Asia. We expect Asia to contribute more moving forward. As we see today, North America is the largest opportunity both from the skin market, from the fashion perspective, from the install base. We have a very large install base. We expect North America to continue to contribute and grow. Thank you. Can you remind us or add some color to what your thoughts are on free cash flow in 2026 and 2027? Hi. As we presented earlier, as we drive our penetration with the AIC approach, we would expect our free cash flow to be negative, whereas our objective is to keep operating cash flow positive. Okay? Thank you. Does that answer the question? Yes. Thank you. Our next question comes from the line of Eric Woodring with Morgan Stanley. Please proceed with your question. Hi. This is Maya on for Eric. Last quarter, you told us that second-half revenue would grow kind of in the low single-digit range year over year. Your guidance for Q4 implies flat to slight declines. Over the past three months, what has really changed? And what supporting evidence can you provide to give us the confidence that you'll achieve at least the midpoint of Q4 results? Thank you. Yeah. So first of all, Q3, we grew 5% year over year. Q4, we expect sequentially growth versus Q3. However, year over year, you're right, it's a decline based on our guidance. And the main driver is the move from CapEx deals to all-inclusive. So we do expect to see meaningful growth on the ink side. And service probably will be flat or a bit lower than last year. But the main. Impact versus last year will be the move from CapEx deals that we delivered last year to all-inclusive deals that become ARR. Got it. Thank you. You kind of touched on this for 4Q, but it was good to see services return to year-over-year growth this quarter. I understand maybe in 4Q we're thinking flat to slightly down. I guess how sustainable is upgrade activity as we look to 2026? In 2024, we have quite a significant amount of upgrades, which contributed to the service revenue. If we are taking from the service revenue the upgrades at all, service revenue continued to grow year over year. Once we are putting inside the upgrades, it depends on the upgrades or the deals that we are closing, the availability of the upgrades that we have, that we are offering. Most of the upgrades that we've done in 2024 were around the Atlas to Atlas Max upgrades that we completed, most of it. Some of it we continue to do this year, and we saw it in Q3. We do expect in 2024, at least from the midpoint of 2024, to have some new upgrades, which will contribute for more capability to our systems. I cannot get into detail right now. We didn't disclose it yet, but we do plan on additional upgrades that will come in 2026 on top of our biggest customers that potentially can continue and upgrade their fleet into Max technology. Great. Thank you. Thank you. Our next question comes from the line of Chris Reimer with Barclays. Please proceed with your question. Oh, hi. Thanks for taking my questions. Two quick ones on demand. In the footwear and in textile. I mean, the footwear, I know you've been talking about this for a while. What's changed, and how do you see customer adoption as a growth driver over the next two years? On the textile, you mentioned some of the new customers in the branded printing, but how do you see traction with textile customers? Yeah. Let's start with the footwear. You all remember that we started it about two years ago, and we mentioned that we are looking into this segment with initial customers in China, and then it grew to additional customers, and over time, they took more systems. We worked very closely with those customers and with major brands, and we have reached a point that we felt that we had the right solution. As of today, those customers deliver more than one million pairs of footwear upper into the market. We learned a lot about this market. We did not know anything about this market two years ago. We met many customers, new potential customers. When we learned about the market, the market is a big market. When we are looking at the decorated footwear market, we are talking about 1 billion pairs of shoes that are being decorated and printed on an annual level. If you translate it, it is about 2 billion impressions, and this is our addressable market that we are going after. We are only in the beginning. What we are doing here is actually a replacement move of changing the current technology and moving a very complex way of production that takes months into a much more agile and in one-step process, meeting the durability standard that this industry requires. Right now. There are tons of innovations that we are bringing to the market around this technology. We are very proud because we are unique. We are the only digital solution out there in the market. There was tons of excitement at ITMA from footwear manufacturers that came and saw this and looked at it as the magic. What we are delivering there is really solving the main pain of this industry, which is a slow development. It's taking months to develop a footwear. You can move it now to days. Design freedom, no limitation anymore on design, and produce exactly what you need without waste and without overproduction. We have early success in China with two major manufacturers that are working with most of the leading brands of the world. One of them at ITMA ordered another two systems on top of the systems that they already have. We're now entering into Vietnam and Germany with additional orders that we got already. There is, as I mentioned, lots of interest. We need to understand it's just the beginning. While we see a big opportunity there, it will take time to capture it. It's going to become a significant contributor to our growth in the next three years. This is on the footwear. On the fashion market, we are looking more on the technical aspect of the fashion. I mentioned on the previous call that we signed a very strategic agreement with one of the leading brands of the world, sports brands of the world. The project is running. In a few months, we are reaching a point of decision. This can open for us another very, very lucrative and interesting market with a big order that will follow up. Once the pilot will finalize. There is a lot of interest in the technical area in Germany, Central Europe, in Asia, specifically around the sports market. We continue to deliver systems also to the fashion market. One of our biggest customers, actually in the customized design market, has adopted a Presto a few months back and now is using the Presto for all over print to print on hoodies and create hoodies and create T-shirts and delivering to the market with on-demand, with customization. Very innovative direction. We see it as an opportunity for them to grow rapidly with additional systems and for others to follow up as well. Great. Thanks for the color. That was very helpful. Thank you. Our next question comes from the line of Kieran McCabe with Cantor Fitzgerald. Please proceed with your question. Yes. Thank you for taking my question. I was wondering maybe if you could maybe touch on the improvement in OpEx year over year, kind of quarter over quarter, kind of who are the drivers and how they kind of met your plan, and really kind of what do you see as opportunities going forward to continue to optimize OpEx with your revenue line? Thank you. Sure. Hi. So we have been focused on allocating resources to drive our growth. So resources that were not part of driving growth were reduced. That is in addition to constant efficiencies that we are looking to achieve. As I mentioned, this quarter, you can see even with the unfavorable exchange impact that we were successful in reducing our operating expenses, we will continue to look to drive our operating expenses to match our level of revenue growth so that we achieve our profitability targets. We'll do our best to manage that through what we expect will be a more significant impact next year because of exchange rates. Is that helpful? Yes, it does. I guess maybe I had a kind of a demand for 2026, kind of the AIC model. But generally, what's your kind of impression of the overall demand or business environment in 2026? Do you have a sense of more optimism, more of an uptick, or is it more of a sense overall that it's kind of pretty much the same as this year? Just kind of your general sense of the outside of company spending change from the CapEx model to the AIC, but just a general overall business environment expected in 2026. It was very difficult to understand, the language breaking. Can you repeat the question, please? Yeah. I was just wondering what your sense of the business environment or kind of visibility in 2026 is versus this year. Do you see kind of an overall more optimistic view of the year or kind of more of the same given geopolitical tariffs and the like? In terms of the pipeline, we feel that we are in a better place. We have better visibility on our pipeline, both for the deals that are on AIC model, but also on CapEx deals. Specifically, we have a very strong pipeline on screen replacement markets. As I mentioned, we have a nice pipeline for the footwear market as well. We have visibility there. We have very good visibility, of course, on the ink and the services and what are the upgrades that we are planning to do next year. Overall. We feel that we have a good plan, and we feel confident about what we described as the year of growth, of modest growth on top line, of low single digit and more significant growth on the EBITDA on the bottom line. Great. Thank you so much. Thank you. With that, there are no further questions at this time. I'd like to turn the floor back to Mr. Samuel, who will provide some closing remarks. Yeah. First of all, thank you, everyone, for joining us on this call. As you can see, Kornit is going through a major transformation, both in terms of the market, the addressable market that we are going after, if it's the screen market, which is totally new to us, which is a massive opportunity and the main opportunity we are going after on top of the customized design market. Now also footwear and some other adjacencies that we are going after. On top of that, we are changing our business model into the recurring AIC model, which is only now starting to gain momentum and penetrating new regions like Asia-Pacific. We see acceleration and adoption of our Apollo with multiple systems being delivered to many of our customers. Our pipeline is getting stronger. We have better visibility both to Q4 and for 2026. We believe that we are executing with passion and clarity to our strategy. I would like to thank you again and hope to meet you soon in different events. Thank you very much. Thank you. With that, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time and have a wonderful day.

Speaker 2: Greetings and welcome to the Kornit Digital's third 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 Maymon, Investor Relations for Kornit Digital. Mr. Maymon, you may begin. Greetings and welcome to the Kornit Digital's third quarter 2025 earnings conference call. greetings and welcome to the kornit digital's third quarter 2025 earnings conference call As a reminder, this call is being recorded. as a reminder this call is being recorded I would now like to turn the conference over to our host, Mr. Jared Maymon, Investor Relations for Kornit Digital. i would now like to turn the conference over to our host mr jared maymon investor relations for kornit digital Mr. Maymon, you may begin. mr maymon you may begin

Speaker 3: Thank you, Operator. Good day, everyone, and welcome to Kornit Digital's third quarter 2025 earnings conference call. Joining me today are Chief Executive Officer Ronen Samuel, and Laurie Hanover, Kornit's Chief Financial Officer. For today's call, Ronen will provide comments on the third quarter of 2025 and provide an update on our progress. Laurie will then review the third quarter results and provide our fourth 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. Thank you, Operator. thank you operator Good day, everyone, and welcome to Kornit Digital's third quarter 2025 earnings conference call. good day everyone and welcome to kornit digital's third quarter 2025 earnings conference call Joining me today are Chief Executive Officer Ronen Samuel, and Laurie Hanover, Kornit's Chief Financial Officer. joining me today are chief executive officer ronen samuel and laurie hanover kornit's chief financial officer For today's call, Ronen will provide comments on the third quarter of 2025 and provide an update on our progress. for today's call ronen will provide comments on the third quarter of 2025 and provide an update on our progress Laurie will then review the third quarter results and provide our fourth quarter outlook before we open it up for Q&A. laurie will then review the third quarter results and provide our fourth 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. 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. 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 28, 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. 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. 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 28, 2025, which identifies specific risk factors that could cause actual results to differ materially. 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 28 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. 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. 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. 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? At this time, I would now like to turn the call over to Ronen. at this time i would now like to turn the call over to ronen Ronen? ronen

Speaker 1: Good morning, everyone, and thank you for joining our third quarter 2025 earnings call. This quarter, we delivered results above the midpoint of our guidance range, with revenues of $53.1 million, representing 5% growth year over year. When including deals under our all-inclusive click AIC model, which are recognized over time, underlying business activity was even stronger this quarter. Under this model, revenue is recognized as customer print and consumer impressions rather than upfront, which builds recurring revenue over time, even though it shifts parts of the recognition to a later period. Our EBITDA margin came in at approximately 2%, reflecting continued progress towards full year profitability as we maintain disciplined cost control. I'm particularly pleased that we have achieved this growth while continuing to generate positive cash flow from operations for the eighth consecutive quarter. Good morning, everyone, and thank you for joining our third quarter 2025 earnings call. good morning everyone and thank you for joining our third quarter 2025 earnings call This quarter, we delivered results above the midpoint of our guidance range, with revenues of $53.1 million, representing 5% growth year over year. this quarter we delivered results above the midpoint of our guidance range with revenues of $53.1 million representing 5% growth year over year When including deals under our all-inclusive click AIC model, which are recognized over time, underlying business activity was even stronger this quarter. when including deals under our all-inclusive click aic model which are recognized over time underlying business activity was even stronger this quarter Under this model, revenue is recognized as customer print and consumer impressions rather than upfront, which builds recurring revenue over time, even though it shifts parts of the recognition to a later period. under this model revenue is recognized as customer print and consumer impressions rather than upfront which builds recurring revenue over time even though it shifts parts of the recognition to a later period Our EBITDA margin came in at approximately 2%, reflecting continued progress towards full year profitability as we maintain disciplined cost control. our ebitda margin came in at approximately 2% reflecting continued progress towards full year profitability as we maintain disciplined cost control I'm particularly pleased that we have achieved this growth while continuing to generate positive cash flow from operations for the eighth consecutive quarter. i'm particularly pleased that we have achieved this growth while continuing to generate positive cash flow from operations for the eighth consecutive quarter This performance reflects not only strong operational execution but also continued progress in transforming Kornit into a business driven by recurring revenues, expanding the addressable market while driving sustainable profitability. Beyond the financials, I would like to provide an update on our key focus areas: screen market penetration, Apollo adoptions, and the expansion of our all-inclusive click model. The global screen printing market for blank apparel represents around 14 billion annual impressions, and more than 40% of those production runs are under 1,000 units, representing an addressable market of roughly 6 billion impressions. As production continues shifting towards shorter runs and faster delivery, Kornit is uniquely positioned to lead the transition from screen printing to agile, high-volume digital production powered by our advanced technology portfolio and the AIC model that lowers barriers to entry. Our goal remains to capture approximately 5% of this addressable market by 2030. This performance reflects not only strong operational execution but also continued progress in transforming Kornit into a business driven by recurring revenues, expanding the addressable market while driving sustainable profitability. this performance reflects not only strong operational execution but also continued progress in transforming kornit into a business driven by recurring revenues expanding the addressable market while driving sustainable profitability Beyond the financials, I would like to provide an update on our key focus areas: screen market penetration, Apollo adoptions, and the expansion of our all-inclusive click model. beyond the financials i would like to provide an update on our key focus areas screen market penetration apollo adoptions and the expansion of our all-inclusive click model The global screen printing market for blank apparel represents around 14 billion annual impressions, and more than 40% of those production runs are under 1,000 units, representing an addressable market of roughly 6 billion impressions. the global screen printing market for blank apparel represents around 14 billion annual impressions and more than 40% of those production runs are under 1,000 units representing an addressable market of roughly 6 billion impressions As production continues shifting towards shorter runs and faster delivery, Kornit is uniquely positioned to lead the transition from screen printing to agile, high-volume digital production powered by our advanced technology portfolio and the AIC model that lowers barriers to entry. as production continues shifting towards shorter runs and faster delivery kornit is uniquely positioned to lead the transition from screen printing to agile high-volume digital production powered by our advanced technology portfolio and the aic model that lowers barriers to entry Our goal remains to capture approximately 5% of this addressable market by 2030. our goal remains to capture approximately 5% of this addressable market by 2030 In just 18 months since the first Apollo installation, adoption continues to accelerate as customers expand their fleets, increase utilization, and push production to new levels. Across our early Apollo users, production has scaled rapidly, with systems now averaging more than 1 million impressions annually and now over 40% of those impressions produced for Barker Peril. About 25% of these Bark jobs are above 500 copies, proving that digital is moving beyond short runs and increasingly replacing traditional screen printing in high-volume production. With a growing number of customers installing multiple Apollo systems, the shift towards digital as the preferred production method is clearly gaining momentum. Importantly, approximately 40% of all Apollo and Atlas Max systems sold this year were to new customers, reflecting the growing confidence in Kornit’s technology and the expanding opportunity ahead. Another area of progress is the continued expansion of our all-inclusive click model. In just 18 months since the first Apollo installation, adoption continues to accelerate as customers expand their fleets, increase utilization, and push production to new levels. in just 18 months since the first apollo installation adoption continues to accelerate as customers expand their fleets increase utilization and push production to new levels Across our early Apollo users, production has scaled rapidly, with systems now averaging more than 1 million impressions annually and now over 40% of those impressions produced for Barker Peril. across our early apollo users production has scaled rapidly with systems now averaging more than 1 million impressions annually and now over 40% of those impressions produced for barker peril About 25% of these Bark jobs are above 500 copies, proving that digital is moving beyond short runs and increasingly replacing traditional screen printing in high-volume production. about 25% of these bark jobs are above 500 copies proving that digital is moving beyond short runs and increasingly replacing traditional screen printing in high-volume production With a growing number of customers installing multiple Apollo systems, the shift towards digital as the preferred production method is clearly gaining momentum. with a growing number of customers installing multiple apollo systems the shift towards digital as the preferred production method is clearly gaining momentum Importantly, approximately 40% of all Apollo and Atlas Max systems sold this year were to new customers, reflecting the growing confidence in Kornit’s technology and the expanding opportunity ahead. importantly approximately 40% of all apollo and atlas max systems sold this year were to new customers reflecting the growing confidence in kornit’s technology and the expanding opportunity ahead Another area of progress is the continued expansion of our all-inclusive click model. another area of progress is the continued expansion of our all-inclusive click model Today, about 80% of Apollo systems operate under the AIC model, which removes barriers for customers and drives a growing stream of recurring revenue. AIC is strengthening Kornit's leadership in digital production, serving as a clear differentiator that attracts new customers and generates strong momentum across the industry. At the end of the third quarter, annual recurring revenue from AIC reached $21.5 million, up $2.6 million sequentially. Several deals that shifted into early Q4 have since closed, bringing ARR to $23.1 million today, and we expect further expansion by year-end as the program continues to scale. This milestone is especially meaningful given that the AIC is still in its early stages of global rollout and was only recently introduced in Asia, where we deliver our first Atlas MAX Plus systems and early in Q4 closed our first Apollo deal under the program. Today, about 80% of Apollo systems operate under the AIC model, which removes barriers for customers and drives a growing stream of recurring revenue. today about 80% of apollo systems operate under the aic model which removes barriers for customers and drives a growing stream of recurring revenue AIC is strengthening Kornit's leadership in digital production, serving as a clear differentiator that attracts new customers and generates strong momentum across the industry. aic is strengthening kornit's leadership in digital production serving as a clear differentiator that attracts new customers and generates strong momentum across the industry At the end of the third quarter, annual recurring revenue from AIC reached $21.5 million, up $2.6 million sequentially. at the end of the third quarter annual recurring revenue from aic reached $21.5 million up $2.6 million sequentially Several deals that shifted into early Q4 have since closed, bringing ARR to $23.1 million today, and we expect further expansion by year-end as the program continues to scale. several deals that shifted into early q4 have since closed bringing arr to $23.1 million today and we expect further expansion by year-end as the program continues to scale This milestone is especially meaningful given that the AIC is still in its early stages of global rollout and was only recently introduced in Asia, where we deliver our first Atlas MAX Plus systems and early in Q4 closed our first Apollo deal under the program. this milestone is especially meaningful given that the aic is still in its early stages of global rollout and was only recently introduced in asia where we deliver our first atlas max plus systems and early in q4 closed our first apollo deal under the program Asia is the largest textile-producing region in the world. An early success there is another encouraging validation of our technology and business model. Over the past 12 months, Kornit customers produced approximately 232 million impressions, reflecting 5% growth on a trailing 12-month basis. We expect a solid increase in the growth rate of impressions on a trailing 12-month basis as we move through the fourth quarter, driven by the continued ramp-up of Apollo systems and higher utilization across our install base. Our progress can also be seen clearly in the success of our customers, who are expanding capacity, scaling production, and increasing utilization across their operations. In the third quarter, MedEngine Global, one of the world's largest manufacturers of licensed and branded apparel, added another Apollo under the AIC model on top of two existing Apollos and a large fleet of Atlas Max Plus systems. Asia is the largest textile-producing region in the world. asia is the largest textile-producing region in the world An early success there is another encouraging validation of our technology and business model. an early success there is another encouraging validation of our technology and business model Over the past 12 months, Kornit customers produced approximately 232 million impressions, reflecting 5% growth on a trailing 12-month basis. over the past 12 months kornit customers produced approximately 232 million impressions reflecting 5% growth on a trailing 12-month basis We expect a solid increase in the growth rate of impressions on a trailing 12-month basis as we move through the fourth quarter, driven by the continued ramp-up of Apollo systems and higher utilization across our install base. we expect a solid increase in the growth rate of impressions on a trailing 12-month basis as we move through the fourth quarter driven by the continued ramp-up of apollo systems and higher utilization across our install base Our progress can also be seen clearly in the success of our customers, who are expanding capacity, scaling production, and increasing utilization across their operations. our progress can also be seen clearly in the success of our customers who are expanding capacity scaling production and increasing utilization across their operations In the third quarter, MedEngine Global, one of the world's largest manufacturers of licensed and branded apparel, added another Apollo under the AIC model on top of two existing Apollos and a large fleet of Atlas Max Plus systems. in the third quarter medengine global one of the world's largest manufacturers of licensed and branded apparel added another apollo under the aic model on top of two existing apollos and a large fleet of atlas max plus systems This expansion allows them to replace screen jobs, shorten production time, and reduce waste and energy use. Hybrid Digital, a fast-growing wholesaler, added a second Apollo under AIC to better support peak season POD demand, move more of its Barker Peril production into digital, and meet faster delivery requirements. Basic Thinking, a European manufacturer, installed a second Apollo within six months to meet growing demand from leading fashion brands and strengthen its position as a digital-first producer. HFT71, part of the TBI Group, integrated Apollo with its existing Atlas MAX Plus fleet to meet surging Bark demand and set a new production standard in Central Europe. In Asia, WebLink in South Korea became the first customer to adopt AIC, operating two Atlas MAX Plus systems as part of a full digital transformation that replaced legacy screen capacity while improving time-to-market and production efficiency. This expansion allows them to replace screen jobs, shorten production time, and reduce waste and energy use. this expansion allows them to replace screen jobs shorten production time and reduce waste and energy use Hybrid Digital, a fast-growing wholesaler, added a second Apollo under AIC to better support peak season POD demand, move more of its Barker Peril production into digital, and meet faster delivery requirements. hybrid digital a fast-growing wholesaler added a second apollo under aic to better support peak season pod demand move more of its barker peril production into digital and meet faster delivery requirements Basic Thinking, a European manufacturer, installed a second Apollo within six months to meet growing demand from leading fashion brands and strengthen its position as a digital-first producer. basic thinking a european manufacturer installed a second apollo within six months to meet growing demand from leading fashion brands and strengthen its position as a digital-first producer HFT71, part of the TBI Group, integrated Apollo with its existing Atlas MAX Plus fleet to meet surging Bark demand and set a new production standard in Central Europe. hft71 part of the tbi group integrated apollo with its existing atlas max plus fleet to meet surging bark demand and set a new production standard in central europe In Asia, WebLink in South Korea became the first customer to adopt AIC, operating two Atlas MAX Plus systems as part of a full digital transformation that replaced legacy screen capacity while improving time-to-market and production efficiency. in asia weblink in south korea became the first customer to adopt aic operating two atlas max plus systems as part of a full digital transformation that replaced legacy screen capacity while improving time-to-market and production efficiency This example shows that Kornit's technology and business model are delivering tangible results and accelerating the industry transition from screen to digital. I also want to touch on our expansion beyond our traditional apparel market segments. Last week at ITMA Asia in Singapore, we showcased our portfolio and announced the commercial launch of Kornit's digital footwear solution for the sports and athleisure markets. After two years of pilot programs with leading global brands, the solution is now commercially available and has already crossed the milestone of more than 1 million pairs of shoes produced using Kornit technology under well-known international brands. This achievement marks an important step forward in applying our digital platform to adjacent categories and demonstrates that our focused innovation engine continues to create new growth opportunities. We view footwear as a significant pillar of our long-term growth plan. This example shows that Kornit's technology and business model are delivering tangible results and accelerating the industry transition from screen to digital. this example shows that kornit's technology and business model are delivering tangible results and accelerating the industry transition from screen to digital I also want to touch on our expansion beyond our traditional apparel market segments. i also want to touch on our expansion beyond our traditional apparel market segments Last week at ITMA Asia in Singapore, we showcased our portfolio and announced the commercial launch of Kornit's digital footwear solution for the sports and athleisure markets. last week at itma asia in singapore we showcased our portfolio and announced the commercial launch of kornit's digital footwear solution for the sports and athleisure markets After two years of pilot programs with leading global brands, the solution is now commercially available and has already crossed the milestone of more than 1 million pairs of shoes produced using Kornit technology under well-known international brands. after two years of pilot programs with leading global brands the solution is now commercially available and has already crossed the milestone of more than 1 million pairs of shoes produced using kornit technology under well-known international brands This achievement marks an important step forward in applying our digital platform to adjacent categories and demonstrates that our focused innovation engine continues to create new growth opportunities. this achievement marks an important step forward in applying our digital platform to adjacent categories and demonstrates that our focused innovation engine continues to create new growth opportunities We view footwear as a significant pillar of our long-term growth plan. we view footwear as a significant pillar of our long-term growth plan The total addressable market is approximately 1 billion pairs annually, equal to about 2 billion print impressions, and Kornit is well-positioned to capture a meaningful share of this opportunity. Our solution directly addresses the footwear industry's biggest challenges, such as slow development cycles, design limitations, and overproduction, by replacing complex analog decoration with a single-step digital process that delivers unlimited design freedom, durability, and efficiency. Customers are excited because the design-to-production cycle, which once took months, can now be done in days, enabling faster response to trends, lower waste, and local on-demand production at scale. Following successful deployments of our new solution in China, we are expanding into Vietnam and Germany, establishing a new global standard for digital footwear production. These efforts are further supported by additional orders from existing customers secured during ITMA Singapore. The total addressable market is approximately 1 billion pairs annually, equal to about 2 billion print impressions, and Kornit is well-positioned to capture a meaningful share of this opportunity. the total addressable market is approximately 1 billion pairs annually equal to about 2 billion print impressions and kornit is well-positioned to capture a meaningful share of this opportunity Our solution directly addresses the footwear industry's biggest challenges, such as slow development cycles, design limitations, and overproduction, by replacing complex analog decoration with a single-step digital process that delivers unlimited design freedom, durability, and efficiency. our solution directly addresses the footwear industry's biggest challenges such as slow development cycles design limitations and overproduction by replacing complex analog decoration with a single-step digital process that delivers unlimited design freedom durability and efficiency Customers are excited because the design-to-production cycle, which once took months, can now be done in days, enabling faster response to trends, lower waste, and local on-demand production at scale. customers are excited because the design-to-production cycle which once took months can now be done in days enabling faster response to trends lower waste and local on-demand production at scale Following successful deployments of our new solution in China, we are expanding into Vietnam and Germany, establishing a new global standard for digital footwear production. following successful deployments of our new solution in china we are expanding into vietnam and germany establishing a new global standard for digital footwear production These efforts are further supported by additional orders from existing customers secured during ITMA Singapore. these efforts are further supported by additional orders from existing customers secured during itma singapore Ten days ago, we also participated in Printing United in Orlando, where we engaged with many new potential customers and partners. The feedback was consistent. The industry's needs for agile, high-quality, and sustainable digital production continue to grow, and Kornit remains the most advanced and trusted partner to enable that transformation. Before I close, I want to take a step back and reflect on the broader transition we are executing. Kornit is transitioning from one-time equipment sales to a recurring usage-based model through AIC and ARR. While this naturally shifts the timing of revenue recognition, it is a deliberate move. It strengthens long-term profitability, predictability, and customer lifetime value. We are already seeing the benefits through stronger customer retention, higher engagement, and increasing system utilization. Ten days ago, we also participated in Printing United in Orlando, where we engaged with many new potential customers and partners. ten days ago we also participated in printing united in orlando where we engaged with many new potential customers and partners The feedback was consistent. the feedback was consistent The industry's needs for agile, high-quality, and sustainable digital production continue to grow, and Kornit remains the most advanced and trusted partner to enable that transformation. the industry's needs for agile high-quality and sustainable digital production continue to grow and kornit remains the most advanced and trusted partner to enable that transformation Before I close, I want to take a step back and reflect on the broader transition we are executing. before i close i want to take a step back and reflect on the broader transition we are executing Kornit is transitioning from one-time equipment sales to a recurring usage-based model through AIC and ARR. kornit is transitioning from one-time equipment sales to a recurring usage-based model through aic and arr While this naturally shifts the timing of revenue recognition, it is a deliberate move. while this naturally shifts the timing of revenue recognition it is a deliberate move It strengthens long-term profitability, predictability, and customer lifetime value. it strengthens long-term profitability predictability and customer lifetime value We are already seeing the benefits through stronger customer retention, higher engagement, and increasing system utilization. we are already seeing the benefits through stronger customer retention higher engagement and increasing system utilization Our plan for 2025 was to deliver profitability, generate cash from operations, and drive growth both in revenue and, even more importantly, in recurring revenue from the AIC model. We are on track to deliver on this plan. Looking ahead to the fourth quarter, we expect sequential growth in revenue, gross margin, and EBITDA while continuing to expand our recurring revenue base through the AIC program. As we look ahead into 2026, we expect modest top-line growth in the lowest single digit as we continue to deliberately transition more customers to AIC while driving strong growth in annual recurring revenue. At the same time, we expect continued EBITDA expansion driven by higher utilization, scaling recurring revenues, and disciplined cost management. This evolution positions Kornit for sustainable, profitable growth, and long-term value creation. Our plan for 2025 was to deliver profitability, generate cash from operations, and drive growth both in revenue and, even more importantly, in recurring revenue from the AIC model. our plan for 2025 was to deliver profitability generate cash from operations and drive growth both in revenue and even more importantly in recurring revenue from the aic model We are on track to deliver on this plan. we are on track to deliver on this plan Looking ahead to the fourth quarter, we expect sequential growth in revenue, gross margin, and EBITDA while continuing to expand our recurring revenue base through the AIC program. looking ahead to the fourth quarter we expect sequential growth in revenue gross margin and ebitda while continuing to expand our recurring revenue base through the aic program As we look ahead into 2026, we expect modest top-line growth in the lowest single digit as we continue to deliberately transition more customers to AIC while driving strong growth in annual recurring revenue. as we look ahead into 2026 we expect modest top-line growth in the lowest single digit as we continue to deliberately transition more customers to aic while driving strong growth in annual recurring revenue At the same time, we expect continued EBITDA expansion driven by higher utilization, scaling recurring revenues, and disciplined cost management. at the same time we expect continued ebitda expansion driven by higher utilization scaling recurring revenues and disciplined cost management This evolution positions Kornit for sustainable, profitable growth, and long-term value creation. this evolution positions kornit for sustainable profitable growth and long-term value creation In summary, we are executing with discipline, capturing a multi-billion-dollar market opportunity as we transform how apparel is produced. Our recurring business model is scaling, our technology is driving real impact, and we continue to look ahead with innovation into new segments like footwear and other adjacencies. The progress so far is just the beginning, and there is much more to come. I will now turn the call over to Lauri to further discuss our third-quarter results and our guidance for the fourth quarter. Lauri. Thank you, Ronen, and good day to everyone. Third-quarter revenues were $53.1 million within our guidance range of $49 million-$55 million provided in August. Year-over-year, we saw growth in product revenues, primarily attributable to an increase in consumable sales and continued growth of revenue from the AIC model. Service revenue also increased year-over-year due primarily to greater upgrade activity. In summary, we are executing with discipline, capturing a multi-billion-dollar market opportunity as we transform how apparel is produced. in summary we are executing with discipline capturing a multi-billion-dollar market opportunity as we transform how apparel is produced Our recurring business model is scaling, our technology is driving real impact, and we continue to look ahead with innovation into new segments like footwear and other adjacencies. our recurring business model is scaling our technology is driving real impact and we continue to look ahead with innovation into new segments like footwear and other adjacencies The progress so far is just the beginning, and there is much more to come. the progress so far is just the beginning and there is much more to come I will now turn the call over to Lauri to further discuss our third-quarter results and our guidance for the fourth quarter. i will now turn the call over to lauri to further discuss our third-quarter results and our guidance for the fourth quarter Lauri. lauri Thank you, Ronen, and good day to everyone. thank you ronen and good day to everyone Third-quarter revenues were $53.1 million within our guidance range of $49 million-$55 million provided in August. third-quarter revenues were $53.1 million within our guidance range of $49 million-$55 million provided in august Year-over-year, we saw growth in product revenues, primarily attributable to an increase in consumable sales and continued growth of revenue from the AIC model. year-over-year we saw growth in product revenues primarily attributable to an increase in consumable sales and continued growth of revenue from the aic model Service revenue also increased year-over-year due primarily to greater upgrade activity. service revenue also increased year-over-year due primarily to greater upgrade activity Moving to margins, third-quarter non-GAAP gross margin was 45.8% compared with 50.3% in the same period last year. The year-over-year decline was primarily the result of inventory-related adjustments, U.S. tariff costs, and lower service gross margin, as expected. We have communicated targeted price increases that are expected to offset part of the tariff impact in the coming quarters. Looking at operating expenses, total third-quarter non-GAAP operating expenses were $25.8 million, a decrease of $1 million, or about 3.7% from $26.8 million in the same period last year. A large portion of our operating expenses are Israeli Shekel denominated. The Shekel appreciated more than 9% in the third quarter year-over-year. Had the U.S. dollar Shekel exchange rate remained at the prior year level, operating expenses would have been $25 million, or 7% below Q3 2024. Moving to margins, third-quarter non-GAAP gross margin was 45.8% compared with 50.3% in the same period last year. moving to margins third-quarter non-gaap gross margin was 45.8% compared with 50.3% in the same period last year The year-over-year decline was primarily the result of inventory-related adjustments, U.S. tariff costs, and lower service gross margin, as expected. the year-over-year decline was primarily the result of inventory-related adjustments u.s tariff costs and lower service gross margin as expected We have communicated targeted price increases that are expected to offset part of the tariff impact in the coming quarters. we have communicated targeted price increases that are expected to offset part of the tariff impact in the coming quarters Looking at operating expenses, total third-quarter non-GAAP operating expenses were $25.8 million, a decrease of $1 million, or about 3.7% from $26.8 million in the same period last year. looking at operating expenses total third-quarter non-gaap operating expenses were $25.8 million a decrease of $1 million or about 3.7% from $26.8 million in the same period last year A large portion of our operating expenses are Israeli Shekel denominated. a large portion of our operating expenses are israeli shekel denominated The Shekel appreciated more than 9% in the third quarter year-over-year. the shekel appreciated more than 9% in the third quarter year-over-year Had the U.S. dollar Shekel exchange rate remained at the prior year level, operating expenses would have been $25 million, or 7% below Q3 2024. had the u.s dollar shekel exchange rate remained at the prior year level operating expenses would have been $25 million or 7% below q3 2024 Managing our operating expenses closely is within our control, even in an uncertain environment, and we are expecting to realize more meaningful operating leverage over time as we continue to align our expenses with our base of revenue and near-term needs. For the third quarter, adjusted EBITDA was $1.1 million compared with $1.5 million in the same period last year. Had exchange rates in Q3 2025 remained at the level of the year earlier period, adjusted EBITDA would have reached $1.8 million. Adjusted EBITDA margin for the third quarter of 2025 was 2%, above the midpoint of the guidance range we provided in August. We still anticipate delivering adjusted EBITDA profitability on a full-year basis in 2025. As we move into 2026, we plan to continue shifting a greater share of system volume from the traditional CapEx model to AIC. Managing our operating expenses closely is within our control, even in an uncertain environment, and we are expecting to realize more meaningful operating leverage over time as we continue to align our expenses with our base of revenue and near-term needs. managing our operating expenses closely is within our control even in an uncertain environment and we are expecting to realize more meaningful operating leverage over time as we continue to align our expenses with our base of revenue and near-term needs For the third quarter, adjusted EBITDA was $1.1 million compared with $1.5 million in the same period last year. for the third quarter adjusted ebitda was $1.1 million compared with $1.5 million in the same period last year Had exchange rates in Q3 2025 remained at the level of the year earlier period, adjusted EBITDA would have reached $1.8 million. had exchange rates in q3 2025 remained at the level of the year earlier period adjusted ebitda would have reached $1.8 million Adjusted EBITDA margin for the third quarter of 2025 was 2%, above the midpoint of the guidance range we provided in August. adjusted ebitda margin for the third quarter of 2025 was 2% above the midpoint of the guidance range we provided in august We still anticipate delivering adjusted EBITDA profitability on a full-year basis in 2025. we still anticipate delivering adjusted ebitda profitability on a full-year basis in 2025 As we move into 2026, we plan to continue shifting a greater share of system volume from the traditional CapEx model to AIC. as we move into 2026 we plan to continue shifting a greater share of system volume from the traditional capex model to aic As Ronen said earlier, ARR from systems shipped under the AIC model reached $21.5 million at the end of Q3. As a reminder, this figure does not represent recognized revenue, but rather the annualized recurring revenue we expect to generate based on systems shipped to date. We are focused on moving a greater portion of our system shipments to the AIC model with the goal of expanding this base of recurring revenue. This effort will strengthen our ability to project the coming quarters and year and is expected to drive an improvement in our gross margin over time. Moving to our balance sheet, our balance sheet remains robust with our quarter-end cash balance, including bank deposits and marketable securities, standing at $490 million. Operating cash flow was $4.3 million compared with $13.6 million in the same period last year. As Ronen said earlier, ARR from systems shipped under the AIC model reached $21.5 million at the end of Q3. as ronen said earlier arr from systems shipped under the aic model reached $21.5 million at the end of q3 As a reminder, this figure does not represent recognized revenue, but rather the annualized recurring revenue we expect to generate based on systems shipped to date. as a reminder this figure does not represent recognized revenue but rather the annualized recurring revenue we expect to generate based on systems shipped to date We are focused on moving a greater portion of our system shipments to the AIC model with the goal of expanding this base of recurring revenue. we are focused on moving a greater portion of our system shipments to the aic model with the goal of expanding this base of recurring revenue This effort will strengthen our ability to project the coming quarters and year and is expected to drive an improvement in our gross margin over time. this effort will strengthen our ability to project the coming quarters and year and is expected to drive an improvement in our gross margin over time Moving to our balance sheet, our balance sheet remains robust with our quarter-end cash balance, including bank deposits and marketable securities, standing at $490 million. moving to our balance sheet our balance sheet remains robust with our quarter-end cash balance including bank deposits and marketable securities standing at $490 million Operating cash flow was $4.3 million compared with $13.6 million in the same period last year. operating cash flow was $4.3 million compared with $13.6 million in the same period last year Cash flow less capital expenditures, including investment in equipment on lease for AIC in Q3, was $800,000 compared with $3.1 million in the same period last year. Ending with our fourth-quarter guidance, we currently expect fourth-quarter revenues to be between $56 million and $60 million and adjusted EBITDA margin to be in the 7%-10% range. I'll now turn it back over to Ronen to open the call for Q&A. Thank you, Laurie. Operator, we are ready for the session of the Q&A. Thank you. At this time, we will be conducting a Q&A session. If you would like to ask a question, please press Star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the question queue. You may press Star 2 to remove yourself from the queue. One moment while we pull for questions. Cash flow less capital expenditures, including investment in equipment on lease for AIC in Q3, was $800,000 compared with $3.1 million in the same period last year. cash flow less capital expenditures including investment in equipment on lease for aic in q3 was $800,000 compared with $3.1 million in the same period last year Ending with our fourth-quarter guidance, we currently expect fourth-quarter revenues to be between $56 million and $60 million and adjusted EBITDA margin to be in the 7%-10% range. ending with our fourth-quarter guidance we currently expect fourth-quarter revenues to be between $56 million and $60 million and adjusted ebitda margin to be in the 7%-10% range I'll now turn it back over to Ronen to open the call for Q&A. i'll now turn it back over to ronen to open the call for q&a Thank you, Laurie. thank you laurie Operator, we are ready for the session of the Q&A. operator we are ready for the session of the q&a Thank you. thank you At this time, we will be conducting a Q&A session. at this time we will be conducting a q&a session If you would like to ask a question, please press Star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the question queue. if you would like to ask a question please press star 1 on your telephone keypad and a confirmation tone will indicate that your line is in the question queue You may press Star 2 to remove yourself from the queue. you may press star 2 to remove yourself from the queue One moment while we pull for questions. one moment while we pull for questions Our first question comes from the line of Greg Palm with Craig Hallum. Please proceed with your question. Thanks. This is Danny Eggert, on for Greg today. Maybe just one kind of on the broader demand environment and maybe if you could break out systems and consumables and how what played out this quarter was maybe different or better or worse than you were expecting from what you saw a few months ago. Where are we at in kind of inventory levels on the consumable side and how have customers' kind of activity changed around capital sales and AIC for Apollo? Yes. Thank you, Danny. Regarding this quarter, the way we look at it, product, as you can see, grew year-over-year the same way the service. Service grew mainly due to upgrades that we delivered this quarter. Within the product, we see expansion both on the ink side. Our first question comes from the line of Greg Palm with Craig Hallum. our first question comes from the line of greg palm with craig hallum Please proceed with your question. please proceed with your question Thanks. thanks This is Danny Eggert, on for Greg today. this is danny eggert on for greg today Maybe just one kind of on the broader demand environment and maybe if you could break out systems and consumables and how what played out this quarter was maybe different or better or worse than you were expecting from what you saw a few months ago. maybe just one kind of on the broader demand environment and maybe if you could break out systems and consumables and how what played out this quarter was maybe different or better or worse than you were expecting from what you saw a few months ago Where are we at in kind of inventory levels on the consumable side and how have customers' kind of activity changed around capital sales and AIC for Apollo? where are we at in kind of inventory levels on the consumable side and how have customers' kind of activity changed around capital sales and aic for apollo Yes. yes Thank you, Danny. thank you danny Regarding this quarter, the way we look at it, product, as you can see, grew year-over-year the same way the service. regarding this quarter the way we look at it product as you can see grew year-over-year the same way the service Service grew mainly due to upgrades that we delivered this quarter. service grew mainly due to upgrades that we delivered this quarter Within the product, we see expansion both on the ink side. within the product we see expansion both on the ink side But also, of course, on the AIC that's starting to contribute to our revenue. Overall, we are shipping more and more systems. You do not see the systems, of course, that we are shipping on the AIC model, but they will going to contribute moving forward into Q4 and 2026. This is the major focus for us for growth. Hopefully, I answered your question. Yeah. No, that's helpful. Maybe just one on gross margin, maybe a little step down and a little below expectations. I know you kind of mentioned that inventory-related adjustment and some tariff stuff. Is there any way to kind of break out into a little more depth some of those impacts that you saw and how we should think about maybe the price increase offsetting those tariff impacts going forward? Yeah. We'll leave this question to Laurie for beginning. Okay. But also, of course, on the AIC that's starting to contribute to our revenue. but also of course on the aic that's starting to contribute to our revenue Overall, we are shipping more and more systems. overall we are shipping more and more systems You do not see the systems, of course, that we are shipping on the AIC model, but they will going to contribute moving forward into Q4 and 2026. you do not see the systems of course that we are shipping on the aic model but they will going to contribute moving forward into q4 and 2026 This is the major focus for us for growth. this is the major focus for us for growth Hopefully, I answered your question. hopefully i answered your question Yeah. yeah No, that's helpful. no that's helpful Maybe just one on gross margin, maybe a little step down and a little below expectations. maybe just one on gross margin maybe a little step down and a little below expectations I know you kind of mentioned that inventory-related adjustment and some tariff stuff. i know you kind of mentioned that inventory-related adjustment and some tariff stuff Is there any way to kind of break out into a little more depth some of those impacts that you saw and how we should think about maybe the price increase offsetting those tariff impacts going forward? is there any way to kind of break out into a little more depth some of those impacts that you saw and how we should think about maybe the price increase offsetting those tariff impacts going forward Yeah. yeah We'll leave this question to Laurie for beginning. we'll leave this question to laurie for beginning Okay. okay As you mentioned, we faced some headwinds resulting from inventory adjustments in addition to a greater impact from the effects of U.S. tariffs, which, of course, we did not have last year. Both of these affected the product gross margin as well as the service gross margin this quarter. As we said, we have communicated targeted price increases that we expect to offset a part of the tariff impact in the coming quarters. Yeah. What I can add as well is that you should expect to see expansion in gross margin, of course, in Q4. Q4 is traditionally stronger, is the strongest quarter in terms of gross margin. We are planning, of course, to continue to see expansion year-over-year into 2023 on gross margin. Okay. Great. Maybe just one last one for me. Appreciate you kind of giving that early 2026 outlook. As you mentioned, we faced some headwinds resulting from inventory adjustments in addition to a greater impact from the effects of U.S. tariffs, which, of course, we did not have last year. as you mentioned we faced some headwinds resulting from inventory adjustments in addition to a greater impact from the effects of u.s tariffs which of course we did not have last year Both of these affected the product gross margin as well as the service gross margin this quarter. both of these affected the product gross margin as well as the service gross margin this quarter As we said, we have communicated targeted price increases that we expect to offset a part of the tariff impact in the coming quarters. as we said we have communicated targeted price increases that we expect to offset a part of the tariff impact in the coming quarters Yeah. yeah What I can add as well is that you should expect to see expansion in gross margin, of course, in Q4. what i can add as well is that you should expect to see expansion in gross margin of course in q4 Q4 is traditionally stronger, is the strongest quarter in terms of gross margin. q4 is traditionally stronger is the strongest quarter in terms of gross margin We are planning, of course, to continue to see expansion year-over-year into 2023 on gross margin. we are planning of course to continue to see expansion year-over-year into 2023 on gross margin Okay. okay Great. great Maybe just one last one for me. maybe just one last one for me Appreciate you kind of giving that early 2026 outlook. appreciate you kind of giving that early 2026 outlook I guess, what kind of visibility do you have at this point? I'm assuming a little bit more visibility transitioning to more recurring revenue. What kind of gives you that confidence in your ability to grow next year? Yeah. We are starting to have more and more visibility because of our recurring revenue and reoccurring revenue. Of course, we have the ink revenue, which is the reoccurring. We have the service revenue that is reoccurring, and we are building more and more the ARR from the AIC model that is the recurring revenue. While taking a relatively conservative view on the systems that we will deliver next year on CapEx, we still believe that we can deliver growth next year. As I mentioned, low single-digit growth, but you will see much stronger expansion on the EBITDA and, of course, accelerated growth on the ARR during the year. I guess, what kind of visibility do you have at this point? i guess what kind of visibility do you have at this point I'm assuming a little bit more visibility transitioning to more recurring revenue. i'm assuming a little bit more visibility transitioning to more recurring revenue What kind of gives you that confidence in your ability to grow next year? what kind of gives you that confidence in your ability to grow next year Yeah. yeah We are starting to have more and more visibility because of our recurring revenue and reoccurring revenue. we are starting to have more and more visibility because of our recurring revenue and reoccurring revenue Of course, we have the ink revenue, which is the reoccurring. of course we have the ink revenue which is the reoccurring We have the service revenue that is reoccurring, and we are building more and more the ARR from the AIC model that is the recurring revenue. we have the service revenue that is reoccurring and we are building more and more the arr from the aic model that is the recurring revenue While taking a relatively conservative view on the systems that we will deliver next year on CapEx, we still believe that we can deliver growth next year. while taking a relatively conservative view on the systems that we will deliver next year on capex we still believe that we can deliver growth next year As I mentioned, low single-digit growth, but you will see much stronger expansion on the EBITDA and, of course, accelerated growth on the ARR during the year. as i mentioned low single-digit growth but you will see much stronger expansion on the ebitda and of course accelerated growth on the arr during the year All right. Appreciate the call, Roli. Leave it there. Thank you. Our next question comes from the line of Ryan Drab with William Blair. Please proceed with your question. Hi. Thanks for taking my questions. I would like to talk first just about the low single-digit outlook for 2026. Ronen, can you just talk about the thinking that goes into that, the components of that growth? I guess I would have thought that with the ARR that you're entering 2026 with, that you would have expected to grow a little bit faster than low single digits? Yeah. Thank you, Ryan. And you're right. For one hand, we're entering with nice ARR into 2026. We're also having better visibility on our pipeline. We have a stronger pipeline than we had before. When we are looking at our growth rates. All right. all right Appreciate the call, Roli. appreciate the call roli Leave it there. leave it there Thank you. thank you Our next question comes from the line of Ryan Drab with William Blair. our next question comes from the line of ryan drab with william blair Please proceed with your question. please proceed with your question Hi. hi Thanks for taking my questions. thanks for taking my questions I would like to talk first just about the low single-digit outlook for 2026. i would like to talk first just about the low single-digit outlook for 2026 Ronen, can you just talk about the thinking that goes into that, the components of that growth? ronen can you just talk about the thinking that goes into that the components of that growth I guess I would have thought that with the ARR that you're entering 2026 with, that you would have expected to grow a little bit faster than low single digits? i guess i would have thought that with the arr that you're entering 2026 with that you would have expected to grow a little bit faster than low single digits Yeah. yeah Thank you, Ryan. thank you ryan And you're right. and you're right For one hand, we're entering with nice ARR into 2026. for one hand we're entering with nice arr into 2026 We're also having better visibility on our pipeline. we're also having better visibility on our pipeline We have a stronger pipeline than we had before. we have a stronger pipeline than we had before When we are looking at our growth rates. when we are looking at our growth rates It reflects a deliberate and strategic transition towards building a more predictable, sustainable, profitable business. We are not only expanding our addressable market. We are really getting into the bulk apparel, footwear, and additional categories, but also transforming, and this is the main impact, our model from one-time equipment sales to recurring usage-based revenue under the All-Inclusive Click model. This shift naturally moves part of the revenue recognition that we are planning for next year from the short term into future periods, but it creates a much stronger foundation of long-term growth, profitability, and visibility. While we expect 2026 to deliver low single-digit revenue growth, we see meaningful expansion in EBITDA as we maintain a disciplined cost structure and continue to scale our recurring revenue base. It reflects a deliberate and strategic transition towards building a more predictable, sustainable, profitable business. it reflects a deliberate and strategic transition towards building a more predictable sustainable profitable business We are not only expanding our addressable market. we are not only expanding our addressable market We are really getting into the bulk apparel, footwear, and additional categories, but also transforming, and this is the main impact, our model from one-time equipment sales to recurring usage-based revenue under the All-Inclusive Click model. we are really getting into the bulk apparel footwear and additional categories but also transforming and this is the main impact our model from one-time equipment sales to recurring usage-based revenue under the all-inclusive click model This shift naturally moves part of the revenue recognition that we are planning for next year from the short term into future periods, but it creates a much stronger foundation of long-term growth, profitability, and visibility. this shift naturally moves part of the revenue recognition that we are planning for next year from the short term into future periods but it creates a much stronger foundation of long-term growth profitability and visibility While we expect 2026 to deliver low single-digit revenue growth, we see meaningful expansion in EBITDA as we maintain a disciplined cost structure and continue to scale our recurring revenue base. while we expect 2026 to deliver low single-digit revenue growth we see meaningful expansion in ebitda as we maintain a disciplined cost structure and continue to scale our recurring revenue base The ability to grow ARR significantly while expanding profitability is a major milestone for us and a strong indicator of the durable growth engine we are building over the years ahead. I hope I answered your question, Brian. Yeah. Ronen, that's helpful. My follow-up to that is just, are you leaning more away from outright equipment sales in 2026? Has your strategy changed a little bit in the last few months regarding trying to just move customers to AIC rather than equipment? The answer is yes. We see the AIC model as, saying that the answer is yes because we see the AIC model is the right, preferred model for our customers, reducing barriers of investing in capital in advance, aligning cost structure to revenues, and providing predictability to our customers. We see also that customers on this program are using the systems, the utilization is higher. The ability to grow ARR significantly while expanding profitability is a major milestone for us and a strong indicator of the durable growth engine we are building over the years ahead. the ability to grow arr significantly while expanding profitability is a major milestone for us and a strong indicator of the durable growth engine we are building over the years ahead I hope I answered your question, Brian. i hope i answered your question brian Yeah. yeah Ronen, that's helpful. ronen that's helpful My follow-up to that is just, are you leaning more away from outright equipment sales in 2026? my follow-up to that is just are you leaning more away from outright equipment sales in 2026 Has your strategy changed a little bit in the last few months regarding trying to just move customers to AIC rather than equipment? has your strategy changed a little bit in the last few months regarding trying to just move customers to aic rather than equipment The answer is yes. the answer is yes We see the AIC model as, saying that the answer is yes because we see the AIC model is the right, preferred model for our customers, reducing barriers of investing in capital in advance, aligning cost structure to revenues, and providing predictability to our customers. we see the aic model as saying that the answer is yes because we see the aic model is the right preferred model for our customers reducing barriers of investing in capital in advance aligning cost structure to revenues and providing predictability to our customers We see also that customers on this program are using the systems, the utilization is higher. we see also that customers on this program are using the systems the utilization is higher The number of impressions is higher on systems that are on AIC model. For us, it creates much better visibility, much stronger recurring revenue, and better profitability and customer value that we are generating out of each of those systems. We deliberately decided to move more and more into the recurring business, the AIC, and therefore we anticipate a reduction next year on the CapEx deal, but increasing the number of systems overall. We see the number of systems even this year is growing quite significantly versus last year. We expect even more next year, but many of them or most of them will be on the AIC, and we will not see the revenue recognition at the same quarter. We will see it over time, and it will create much stronger business moving forward for the years to come. Okay. So just to. The number of impressions is higher on systems that are on AIC model. the number of impressions is higher on systems that are on aic model For us, it creates much better visibility, much stronger recurring revenue, and better profitability and customer value that we are generating out of each of those systems. for us it creates much better visibility much stronger recurring revenue and better profitability and customer value that we are generating out of each of those systems We deliberately decided to move more and more into the recurring business, the AIC, and therefore we anticipate a reduction next year on the CapEx deal, but increasing the number of systems overall. we deliberately decided to move more and more into the recurring business the aic and therefore we anticipate a reduction next year on the capex deal but increasing the number of systems overall We see the number of systems even this year is growing quite significantly versus last year. we see the number of systems even this year is growing quite significantly versus last year We expect even more next year, but many of them or most of them will be on the AIC, and we will not see the revenue recognition at the same quarter. we expect even more next year but many of them or most of them will be on the aic and we will not see the revenue recognition at the same quarter We will see it over time, and it will create much stronger business moving forward for the years to come. we will see it over time and it will create much stronger business moving forward for the years to come Okay. okay So just to. so just to Put a final note on this, I guess it seems like CapEx sales will be much lower, AIC revenue will probably increase significantly next year, and maybe even more than double. But really, you're positioning the company kind of for 2027 and beyond, is my impression right now. In terms of revenue growth. Yeah. As we mentioned, AIC revenue is becoming significant, and most likely by the end of Q1, we will start reporting separately on the AIC revenue as it becomes even more significant. So next year, you will see more revenue, significantly more revenue coming from the AIC. Some of it is offsetting the reduction of the CapEx revenue. Overall, we still expect a growth for the full year. Okay. Thanks. I'll follow up more later. Thank you. Thank you. Thank you. And our next question comes from the line of Chris Moore with CJS Securities. Put a final note on this, I guess it seems like CapEx sales will be much lower, AIC revenue will probably increase significantly next year, and maybe even more than double. put a final note on this i guess it seems like capex sales will be much lower aic revenue will probably increase significantly next year and maybe even more than double But really, you're positioning the company kind of for 2027 and beyond, is my impression right now. but really you're positioning the company kind of for 2027 and beyond is my impression right now In terms of revenue growth. in terms of revenue growth Yeah. yeah As we mentioned, AIC revenue is becoming significant, and most likely by the end of Q1, we will start reporting separately on the AIC revenue as it becomes even more significant. as we mentioned aic revenue is becoming significant and most likely by the end of q1 we will start reporting separately on the aic revenue as it becomes even more significant So next year, you will see more revenue, significantly more revenue coming from the AIC. so next year you will see more revenue significantly more revenue coming from the aic Some of it is offsetting the reduction of the CapEx revenue. some of it is offsetting the reduction of the capex revenue Overall, we still expect a growth for the full year. overall we still expect a growth for the full year Okay. okay Thanks. thanks I'll follow up more later. i'll follow up more later Thank you. thank you Thank you. thank you Thank you. thank you And our next question comes from the line of Chris Moore with CJS Securities. and our next question comes from the line of chris moore with cjs securities Please proceed with your question. Hi. This is Willen for Chris. Do you think the geographic mix of your revenue will look much different two to three years from now? If so, what are the drivers? Geographically, thanks, Chris. For us, North America today represents something like 65%. In three years from now, it will continue to be the largest region. We definitely would like to see EMEA catching up and a massive opportunity in Asia. We see specifically in Asia the opportunity around the footwear. We have been there last week at ITMA. We got fantastic feedback, and we have many new prospects for this segment. We see the penetration also into the skin market in Asia. As I mentioned in my prepared remarks, we closed two deals, the first deals in Asia, both in the skin market but also in the AIC. Please proceed with your question. please proceed with your question Hi. hi This is Willen for Chris. this is willen for chris Do you think the geographic mix of your revenue will look much different two to three years from now? do you think the geographic mix of your revenue will look much different two to three years from now If so, what are the drivers? if so what are the drivers Geographically, thanks, Chris. geographically thanks chris For us, North America today represents something like 65%. for us north america today represents something like 65% In three years from now, it will continue to be the largest region. in three years from now, it will continue to be the largest region We definitely would like to see EMEA catching up and a massive opportunity in Asia. we definitely would like to see emea catching up and a massive opportunity in asia We see specifically in Asia the opportunity around the footwear. We have been there last week at ITMA. we see specifically in asia the opportunity around the footwear. we have been there last week at itma We got fantastic feedback, and we have many new prospects for this segment. we got fantastic feedback and we have many new prospects for this segment We see the penetration also into the skin market in Asia. we see the penetration also into the skin market in asia As I mentioned in my prepared remarks, we closed two deals, the first deals in Asia, both in the skin market but also in the AIC. as i mentioned in my prepared remarks we closed two deals the first deals in asia both in the skin market but also in the aic We only now introduced the AIC model in Asia. We expect Asia to contribute more moving forward. As we see today, North America is the largest opportunity both from the skin market, from the fashion perspective, from the install base. We have a very large install base. We expect North America to continue to contribute and grow. Thank you. Can you remind us or add some color to what your thoughts are on free cash flow in 2026 and 2027? Hi. As we presented earlier, as we drive our penetration with the AIC approach, we would expect our free cash flow to be negative, whereas our objective is to keep operating cash flow positive. Okay? Thank you. Does that answer the question? Yes. Thank you. Our next question comes from the line of Eric Woodring with Morgan Stanley. Please proceed with your question. Hi. We only now introduced the AIC model in Asia. we only now introduced the aic model in asia We expect Asia to contribute more moving forward. we expect asia to contribute more moving forward As we see today, North America is the largest opportunity both from the skin market, from the fashion perspective, from the install base. as we see today north america is the largest opportunity both from the skin market from the fashion perspective from the install base We have a very large install base. we have a very large install base We expect North America to continue to contribute and grow. we expect north america to continue to contribute and grow Thank you. thank you Can you remind us or add some color to what your thoughts are on free cash flow in 2026 and 2027? can you remind us or add some color to what your thoughts are on free cash flow in 2026 and 2027 Hi. hi As we presented earlier, as we drive our penetration with the AIC approach, we would expect our free cash flow to be negative, whereas our objective is to keep operating cash flow positive. as we presented earlier as we drive our penetration with the aic approach we would expect our free cash flow to be negative whereas our objective is to keep operating cash flow positive Okay? okay Thank you. thank you Does that answer the question? does that answer the question Yes. yes Thank you. thank you Our next question comes from the line of Eric Woodring with Morgan Stanley. our next question comes from the line of eric woodring with morgan stanley Please proceed with your question. please proceed with your question Hi. hi This is Maya on for Eric. Last quarter, you told us that second-half revenue would grow kind of in the low single-digit range year over year. Your guidance for Q4 implies flat to slight declines. Over the past three months, what has really changed? And what supporting evidence can you provide to give us the confidence that you'll achieve at least the midpoint of Q4 results? Thank you. Yeah. So first of all, Q3, we grew 5% year over year. Q4, we expect sequentially growth versus Q3. However, year over year, you're right, it's a decline based on our guidance. And the main driver is the move from CapEx deals to all-inclusive. So we do expect to see meaningful growth on the ink side. And service probably will be flat or a bit lower than last year. But the main. This is Maya on for Eric. this is maya on for eric Last quarter, you told us that second-half revenue would grow kind of in the low single-digit range year over year. last quarter you told us that second-half revenue would grow kind of in the low single-digit range year over year Your guidance for Q4 implies flat to slight declines. your guidance for q4 implies flat to slight declines Over the past three months, what has really changed? over the past three months what has really changed And what supporting evidence can you provide to give us the confidence that you'll achieve at least the midpoint of Q4 results? and what supporting evidence can you provide to give us the confidence that you'll achieve at least the midpoint of q4 results Thank you. thank you Yeah. yeah So first of all, Q3, we grew 5% year over year. so first of all q3 we grew 5% year over year Q4, we expect sequentially growth versus Q3. q4 we expect sequentially growth versus q3 However, year over year, you're right, it's a decline based on our guidance. however year over year you're right it's a decline based on our guidance And the main driver is the move from CapEx deals to all-inclusive. and the main driver is the move from capex deals to all-inclusive So we do expect to see meaningful growth on the ink side. so we do expect to see meaningful growth on the ink side And service probably will be flat or a bit lower than last year. and service probably will be flat or a bit lower than last year But the main. but the main Impact versus last year will be the move from CapEx deals that we delivered last year to all-inclusive deals that become ARR. Got it. Thank you. You kind of touched on this for 4Q, but it was good to see services return to year-over-year growth this quarter. I understand maybe in 4Q we're thinking flat to slightly down. I guess how sustainable is upgrade activity as we look to 2026? In 2024, we have quite a significant amount of upgrades, which contributed to the service revenue. If we are taking from the service revenue the upgrades at all, service revenue continued to grow year over year. Once we are putting inside the upgrades, it depends on the upgrades or the deals that we are closing, the availability of the upgrades that we have, that we are offering. Impact versus last year will be the move from CapEx deals that we delivered last year to all-inclusive deals that become ARR. impact versus last year will be the move from capex deals that we delivered last year to all-inclusive deals that become arr Got it. got it Thank you. thank you You kind of touched on this for 4Q, but it was good to see services return to year-over-year growth this quarter. you kind of touched on this for 4q but it was good to see services return to year-over-year growth this quarter I understand maybe in 4Q we're thinking flat to slightly down. i understand maybe in 4q we're thinking flat to slightly down I guess how sustainable is upgrade activity as we look to 2026? i guess how sustainable is upgrade activity as we look to 2026 In 2024, we have quite a significant amount of upgrades, which contributed to the service revenue. in 2024 we have quite a significant amount of upgrades which contributed to the service revenue If we are taking from the service revenue the upgrades at all, service revenue continued to grow year over year. if we are taking from the service revenue the upgrades at all service revenue continued to grow year over year Once we are putting inside the upgrades, it depends on the upgrades or the deals that we are closing, the availability of the upgrades that we have, that we are offering. once we are putting inside the upgrades it depends on the upgrades or the deals that we are closing the availability of the upgrades that we have that we are offering Most of the upgrades that we've done in 2024 were around the Atlas to Atlas Max upgrades that we completed, most of it. Some of it we continue to do this year, and we saw it in Q3. We do expect in 2024, at least from the midpoint of 2024, to have some new upgrades, which will contribute for more capability to our systems. I cannot get into detail right now. We didn't disclose it yet, but we do plan on additional upgrades that will come in 2026 on top of our biggest customers that potentially can continue and upgrade their fleet into Max technology. Great. Thank you. Thank you. Our next question comes from the line of Chris Reimer with Barclays. Please proceed with your question. Oh, hi. Thanks for taking my questions. Two quick ones on demand. In the footwear and in textile. Most of the upgrades that we've done in 2024 were around the Atlas to Atlas Max upgrades that we completed, most of it. most of the upgrades that we've done in 2024 were around the atlas to atlas max upgrades that we completed most of it Some of it we continue to do this year, and we saw it in Q3. some of it we continue to do this year and we saw it in q3 We do expect in 2024, at least from the midpoint of 2024, to have some new upgrades, which will contribute for more capability to our systems. we do expect in 2024 at least from the midpoint of 2024 to have some new upgrades which will contribute for more capability to our systems I cannot get into detail right now. i cannot get into detail right now We didn't disclose it yet, but we do plan on additional upgrades that will come in 2026 on top of our biggest customers that potentially can continue and upgrade their fleet into Max technology. we didn't disclose it yet but we do plan on additional upgrades that will come in 2026 on top of our biggest customers that potentially can continue and upgrade their fleet into max technology Great. great Thank you. thank you Thank you. thank you Our next question comes from the line of Chris Reimer with Barclays. our next question comes from the line of chris reimer with barclays Please proceed with your question. please proceed with your question Oh, hi. oh hi Thanks for taking my questions. thanks for taking my questions Two quick ones on demand. two quick ones on demand In the footwear and in textile. in the footwear and in textile I mean, the footwear, I know you've been talking about this for a while. What's changed, and how do you see customer adoption as a growth driver over the next two years? On the textile, you mentioned some of the new customers in the branded printing, but how do you see traction with textile customers? Yeah. Let's start with the footwear. You all remember that we started it about two years ago, and we mentioned that we are looking into this segment with initial customers in China, and then it grew to additional customers, and over time, they took more systems. We worked very closely with those customers and with major brands, and we have reached a point that we felt that we had the right solution. As of today, those customers deliver more than one million pairs of footwear upper into the market. I mean, the footwear, I know you've been talking about this for a while. i mean the footwear i know you've been talking about this for a while What's changed, and how do you see customer adoption as a growth driver over the next two years? what's changed and how do you see customer adoption as a growth driver over the next two years On the textile, you mentioned some of the new customers in the branded printing, but how do you see traction with textile customers? on the textile you mentioned some of the new customers in the branded printing but how do you see traction with textile customers Yeah. yeah Let's start with the footwear. let's start with the footwear You all remember that we started it about two years ago, and we mentioned that we are looking into this segment with initial customers in China, and then it grew to additional customers, and over time, they took more systems. you all remember that we started it about two years ago and we mentioned that we are looking into this segment with initial customers in china and then it grew to additional customers and over time they took more systems We worked very closely with those customers and with major brands, and we have reached a point that we felt that we had the right solution. we worked very closely with those customers and with major brands and we have reached a point that we felt that we had the right solution As of today, those customers deliver more than one million pairs of footwear upper into the market. as of today those customers deliver more than one million pairs of footwear upper into the market We learned a lot about this market. We did not know anything about this market two years ago. We met many customers, new potential customers. When we learned about the market, the market is a big market. When we are looking at the decorated footwear market, we are talking about 1 billion pairs of shoes that are being decorated and printed on an annual level. If you translate it, it is about 2 billion impressions, and this is our addressable market that we are going after. We are only in the beginning. What we are doing here is actually a replacement move of changing the current technology and moving a very complex way of production that takes months into a much more agile and in one-step process, meeting the durability standard that this industry requires. Right now. We learned a lot about this market. we learned a lot about this market We did not know anything about this market two years ago. we did not know anything about this market two years ago We met many customers, new potential customers. we met many customers new potential customers When we learned about the market, the market is a big market. when we learned about the market the market is a big market When we are looking at the decorated footwear market, we are talking about 1 billion pairs of shoes that are being decorated and printed on an annual level. when we are looking at the decorated footwear market we are talking about 1 billion pairs of shoes that are being decorated and printed on an annual level If you translate it, it is about 2 billion impressions, and this is our addressable market that we are going after. if you translate it, it is about 2 billion impressions and this is our addressable market that we are going after We are only in the beginning. we are only in the beginning What we are doing here is actually a replacement move of changing the current technology and moving a very complex way of production that takes months into a much more agile and in one-step process, meeting the durability standard that this industry requires. what we are doing here is actually a replacement move of changing the current technology and moving a very complex way of production that takes months into a much more agile and in one-step process meeting the durability standard that this industry requires Right now. right now There are tons of innovations that we are bringing to the market around this technology. We are very proud because we are unique. We are the only digital solution out there in the market. There was tons of excitement at ITMA from footwear manufacturers that came and saw this and looked at it as the magic. What we are delivering there is really solving the main pain of this industry, which is a slow development. It's taking months to develop a footwear. You can move it now to days. Design freedom, no limitation anymore on design, and produce exactly what you need without waste and without overproduction. We have early success in China with two major manufacturers that are working with most of the leading brands of the world. One of them at ITMA ordered another two systems on top of the systems that they already have. There are tons of innovations that we are bringing to the market around this technology. there are tons of innovations that we are bringing to the market around this technology We are very proud because we are unique. we are very proud because we are unique We are the only digital solution out there in the market. we are the only digital solution out there in the market There was tons of excitement at ITMA from footwear manufacturers that came and saw this and looked at it as the magic. there was tons of excitement at itma from footwear manufacturers that came and saw this and looked at it as the magic What we are delivering there is really solving the main pain of this industry, which is a slow development. what we are delivering there is really solving the main pain of this industry which is a slow development It's taking months to develop a footwear. it's taking months to develop a footwear You can move it now to days. you can move it now to days Design freedom, no limitation anymore on design, and produce exactly what you need without waste and without overproduction. design freedom no limitation anymore on design and produce exactly what you need without waste and without overproduction We have early success in China with two major manufacturers that are working with most of the leading brands of the world. we have early success in china with two major manufacturers that are working with most of the leading brands of the world One of them at ITMA ordered another two systems on top of the systems that they already have. one of them at itma ordered another two systems on top of the systems that they already have We're now entering into Vietnam and Germany with additional orders that we got already. There is, as I mentioned, lots of interest. We need to understand it's just the beginning. While we see a big opportunity there, it will take time to capture it. It's going to become a significant contributor to our growth in the next three years. This is on the footwear. On the fashion market, we are looking more on the technical aspect of the fashion. I mentioned on the previous call that we signed a very strategic agreement with one of the leading brands of the world, sports brands of the world. The project is running. In a few months, we are reaching a point of decision. This can open for us another very, very lucrative and interesting market with a big order that will follow up. We're now entering into Vietnam and Germany with additional orders that we got already. we're now entering into vietnam and germany with additional orders that we got already There is, as I mentioned, lots of interest. there is as i mentioned lots of interest We need to understand it's just the beginning. we need to understand it's just the beginning While we see a big opportunity there, it will take time to capture it. while we see a big opportunity there it will take time to capture it It's going to become a significant contributor to our growth in the next three years. it's going to become a significant contributor to our growth in the next three years This is on the footwear. this is on the footwear On the fashion market, we are looking more on the technical aspect of the fashion. on the fashion market we are looking more on the technical aspect of the fashion I mentioned on the previous call that we signed a very strategic agreement with one of the leading brands of the world, sports brands of the world. i mentioned on the previous call that we signed a very strategic agreement with one of the leading brands of the world sports brands of the world The project is running. the project is running In a few months, we are reaching a point of decision. in a few months we are reaching a point of decision This can open for us another very, very lucrative and interesting market with a big order that will follow up. this can open for us another very very lucrative and interesting market with a big order that will follow up Once the pilot will finalize. There is a lot of interest in the technical area in Germany, Central Europe, in Asia, specifically around the sports market. We continue to deliver systems also to the fashion market. One of our biggest customers, actually in the customized design market, has adopted a Presto a few months back and now is using the Presto for all over print to print on hoodies and create hoodies and create T-shirts and delivering to the market with on-demand, with customization. Very innovative direction. We see it as an opportunity for them to grow rapidly with additional systems and for others to follow up as well. Great. Thanks for the color. That was very helpful. Thank you. Our next question comes from the line of Kieran McCabe with Cantor Fitzgerald. Please proceed with your question. Yes. Thank you for taking my question. Once the pilot will finalize. There is a lot of interest in the technical area in Germany, Central Europe, in Asia, specifically around the sports market. once the pilot will finalize. there is a lot of interest in the technical area in germany central europe in asia specifically around the sports market We continue to deliver systems also to the fashion market. we continue to deliver systems also to the fashion market One of our biggest customers, actually in the customized design market, has adopted a Presto a few months back and now is using the Presto for all over print to print on hoodies and create hoodies and create T-shirts and delivering to the market with on-demand, with customization. one of our biggest customers actually in the customized design market has adopted a presto a few months back and now is using the presto for all over print to print on hoodies and create hoodies and create t-shirts and delivering to the market with on-demand with customization Very innovative direction. very innovative direction We see it as an opportunity for them to grow rapidly with additional systems and for others to follow up as well. we see it as an opportunity for them to grow rapidly with additional systems and for others to follow up as well Great. great Thanks for the color. thanks for the color That was very helpful. that was very helpful Thank you. thank you Our next question comes from the line of Kieran McCabe with Cantor Fitzgerald. our next question comes from the line of kieran mccabe with cantor fitzgerald Please proceed with your question. please proceed with your question Yes. yes Thank you for taking my question. thank you for taking my question I was wondering maybe if you could maybe touch on the improvement in OpEx year over year, kind of quarter over quarter, kind of who are the drivers and how they kind of met your plan, and really kind of what do you see as opportunities going forward to continue to optimize OpEx with your revenue line? Thank you. Sure. Hi. So we have been focused on allocating resources to drive our growth. So resources that were not part of driving growth were reduced. That is in addition to constant efficiencies that we are looking to achieve. As I mentioned, this quarter, you can see even with the unfavorable exchange impact that we were successful in reducing our operating expenses, we will continue to look to drive our operating expenses to match our level of revenue growth so that we achieve our profitability targets. I was wondering maybe if you could maybe touch on the improvement in OpEx year over year, kind of quarter over quarter, kind of who are the drivers and how they kind of met your plan, and really kind of what do you see as opportunities going forward to continue to optimize OpEx with your revenue line? i was wondering maybe if you could maybe touch on the improvement in opex year over year kind of quarter over quarter kind of who are the drivers and how they kind of met your plan and really kind of what do you see as opportunities going forward to continue to optimize opex with your revenue line Thank you. thank you Sure. sure Hi. hi So we have been focused on allocating resources to drive our growth. so we have been focused on allocating resources to drive our growth So resources that were not part of driving growth were reduced. so resources that were not part of driving growth were reduced That is in addition to constant efficiencies that we are looking to achieve. that is in addition to constant efficiencies that we are looking to achieve As I mentioned, this quarter, you can see even with the unfavorable exchange impact that we were successful in reducing our operating expenses, we will continue to look to drive our operating expenses to match our level of revenue growth so that we achieve our profitability targets. as i mentioned this quarter you can see even with the unfavorable exchange impact that we were successful in reducing our operating expenses we will continue to look to drive our operating expenses to match our level of revenue growth so that we achieve our profitability targets We'll do our best to manage that through what we expect will be a more significant impact next year because of exchange rates. Is that helpful? Yes, it does. I guess maybe I had a kind of a demand for 2026, kind of the AIC model. But generally, what's your kind of impression of the overall demand or business environment in 2026? Do you have a sense of more optimism, more of an uptick, or is it more of a sense overall that it's kind of pretty much the same as this year? Just kind of your general sense of the outside of company spending change from the CapEx model to the AIC, but just a general overall business environment expected in 2026. It was very difficult to understand, the language breaking. Can you repeat the question, please? Yeah. We'll do our best to manage that through what we expect will be a more significant impact next year because of exchange rates. we'll do our best to manage that through what we expect will be a more significant impact next year because of exchange rates Is that helpful? is that helpful Yes, it does. yes it does I guess maybe I had a kind of a demand for 2026, kind of the AIC model. i guess maybe i had a kind of a demand for 2026 kind of the aic model But generally, what's your kind of impression of the overall demand or business environment in 2026? but generally what's your kind of impression of the overall demand or business environment in 2026 Do you have a sense of more optimism, more of an uptick, or is it more of a sense overall that it's kind of pretty much the same as this year? do you have a sense of more optimism more of an uptick or is it more of a sense overall that it's kind of pretty much the same as this year Just kind of your general sense of the outside of company spending change from the CapEx model to the AIC, but just a general overall business environment expected in 2026. just kind of your general sense of the outside of company spending change from the capex model to the aic but just a general overall business environment expected in 2026 It was very difficult to understand, the language breaking. it was very difficult to understand the language breaking Can you repeat the question, please? can you repeat the question please Yeah. yeah I was just wondering what your sense of the business environment or kind of visibility in 2026 is versus this year. Do you see kind of an overall more optimistic view of the year or kind of more of the same given geopolitical tariffs and the like? In terms of the pipeline, we feel that we are in a better place. We have better visibility on our pipeline, both for the deals that are on AIC model, but also on CapEx deals. Specifically, we have a very strong pipeline on screen replacement markets. As I mentioned, we have a nice pipeline for the footwear market as well. We have visibility there. We have very good visibility, of course, on the ink and the services and what are the upgrades that we are planning to do next year. Overall. I was just wondering what your sense of the business environment or kind of visibility in 2026 is versus this year. i was just wondering what your sense of the business environment or kind of visibility in 2026 is versus this year Do you see kind of an overall more optimistic view of the year or kind of more of the same given geopolitical tariffs and the like? do you see kind of an overall more optimistic view of the year or kind of more of the same given geopolitical tariffs and the like In terms of the pipeline, we feel that we are in a better place. in terms of the pipeline we feel that we are in a better place We have better visibility on our pipeline, both for the deals that are on AIC model, but also on CapEx deals. we have better visibility on our pipeline both for the deals that are on aic model but also on capex deals Specifically, we have a very strong pipeline on screen replacement markets. specifically we have a very strong pipeline on screen replacement markets As I mentioned, we have a nice pipeline for the footwear market as well. as i mentioned we have a nice pipeline for the footwear market as well We have visibility there. we have visibility there We have very good visibility, of course, on the ink and the services and what are the upgrades that we are planning to do next year. we have very good visibility of course on the ink and the services and what are the upgrades that we are planning to do next year Overall. overall We feel that we have a good plan, and we feel confident about what we described as the year of growth, of modest growth on top line, of low single digit and more significant growth on the EBITDA on the bottom line. Great. Thank you so much. Thank you. With that, there are no further questions at this time. I'd like to turn the floor back to Mr. Samuel, who will provide some closing remarks. Yeah. First of all, thank you, everyone, for joining us on this call. As you can see, Kornit is going through a major transformation, both in terms of the market, the addressable market that we are going after, if it's the screen market, which is totally new to us, which is a massive opportunity and the main opportunity we are going after on top of the customized design market. We feel that we have a good plan, and we feel confident about what we described as the year of growth, of modest growth on top line, of low single digit and more significant growth on the EBITDA on the bottom line. we feel that we have a good plan and we feel confident about what we described as the year of growth of modest growth on top line of low single digit and more significant growth on the ebitda on the bottom line Great. great Thank you so much. thank you so much Thank you. thank you With that, there are no further questions at this time. with that there are no further questions at this time I'd like to turn the floor back to Mr. Samuel, who will provide some closing remarks. i'd like to turn the floor back to mr samuel who will provide some closing remarks Yeah. yeah First of all, thank you, everyone, for joining us on this call. first of all thank you everyone for joining us on this call As you can see, Kornit is going through a major transformation, both in terms of the market, the addressable market that we are going after, if it's the screen market, which is totally new to us, which is a massive opportunity and the main opportunity we are going after on top of the customized design market. as you can see kornit is going through a major transformation both in terms of the market the addressable market that we are going after if it's the screen market which is totally new to us which is a massive opportunity and the main opportunity we are going after on top of the customized design market Now also footwear and some other adjacencies that we are going after. On top of that, we are changing our business model into the recurring AIC model, which is only now starting to gain momentum and penetrating new regions like Asia-Pacific. We see acceleration and adoption of our Apollo with multiple systems being delivered to many of our customers. Our pipeline is getting stronger. We have better visibility both to Q4 and for 2026. We believe that we are executing with passion and clarity to our strategy. I would like to thank you again and hope to meet you soon in different events. Thank you very much. Thank you. With that, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time and have a wonderful day. Now also footwear and some other adjacencies that we are going after. now also footwear and some other adjacencies that we are going after On top of that, we are changing our business model into the recurring AIC model, which is only now starting to gain momentum and penetrating new regions like Asia-Pacific. on top of that we are changing our business model into the recurring aic model which is only now starting to gain momentum and penetrating new regions like asia-pacific We see acceleration and adoption of our Apollo with multiple systems being delivered to many of our customers. we see acceleration and adoption of our apollo with multiple systems being delivered to many of our customers Our pipeline is getting stronger. our pipeline is getting stronger We have better visibility both to Q4 and for 2026. we have better visibility both to q4 and for 2026 We believe that we are executing with passion and clarity to our strategy. we believe that we are executing with passion and clarity to our strategy I would like to thank you again and hope to meet you soon in different events. i would like to thank you again and hope to meet you soon in different events Thank you very much. thank you very much Thank you. thank you With that, this does conclude today's teleconference. with that this does conclude today's teleconference We thank you for your participation, and you may disconnect your lines at this time and have a wonderful day. we thank you for your participation and you may disconnect your lines at this time and have a wonderful day