Financial Data and Key Metrics Changes - The company reported revenues of $53.1 million for Q3 2025, reflecting a 5% year-over-year growth [4] - EBITDA margin was approximately 2%, indicating progress towards full-year profitability [4] - Annual recurring revenue (ARR) from the all-inclusive click (AIC) model reached $21.5 million, up $2.6 million sequentially [8][18] - Non-GAAP gross margin for Q3 was 45.8%, down from 50.3% year-over-year, primarily due to inventory-related adjustments and U.S. tariff costs [16] Business Line Data and Key Metrics Changes - Product revenues grew year-over-year, driven by increased consumable sales and growth from the AIC model [15] - Service revenue also increased year-over-year, mainly due to greater upgrade activity [15] - Approximately 80% of Apollo systems now operate under the AIC model, enhancing recurring revenue streams [8] Market Data and Key Metrics Changes - The global screen printing market for blank apparel represents around 14 billion annual impressions, with Kornit targeting to capture approximately 5% of this market by 2030 [5] - In Asia, Kornit customers produced approximately 232 million impressions over the past 12 months, reflecting a 5% growth [9] - The company showcased its digital footwear solution at ITMA Asia, marking a significant step in expanding into adjacent markets [11] Company Strategy and Development Direction - Kornit is transitioning from one-time equipment sales to a recurring usage-based model through the AIC, which is expected to strengthen long-term profitability and customer lifetime value [13][14] - The company aims to expand its addressable market by focusing on footwear and other adjacent categories, with a total addressable market of approximately 1 billion pairs annually in footwear [12] - The strategy includes a deliberate shift towards building a more predictable and sustainable business model, with a focus on recurring revenue [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sequential growth in revenue, gross margin, and EBITDA in Q4 2025 [14] - For 2026, the company anticipates modest top-line growth in the low single digits, with significant expansion in EBITDA driven by higher utilization and scaling recurring revenues [14][26] - The management highlighted a strong pipeline for both AIC and CapEx deals, indicating better visibility for future growth [44] Other Important Information - The company is focused on managing operating expenses closely, with total non-GAAP operating expenses decreasing by 3.7% year-over-year [16][42] - Kornit is experiencing strong customer adoption of its Apollo systems, with over 40% of impressions produced for Barker Peril [6] - The company is expanding its operations in Asia, having recently introduced the AIC model in the region [9][30] Q&A Session Summary Question: Broader demand environment and inventory levels - Management noted that product and service revenues grew year-over-year, with a focus on expanding the AIC model for future growth [21][22] Question: Gross margin impacts - Management acknowledged headwinds from inventory adjustments and tariffs, with plans for price increases to offset these impacts [23] Question: 2026 growth outlook - Management indicated a conservative view on CapEx but expects low single-digit growth with stronger expansion in EBITDA [24][26] Question: Geographic revenue mix - North America is expected to remain the largest region, but Asia is anticipated to contribute more significantly moving forward [30] Question: Overall business environment in 2026 - Management expressed optimism about the pipeline and visibility for growth, expecting modest top-line growth and significant EBITDA expansion [44]

Financial Data and Key Metrics Changes - First quarter revenues were $46.5 million, within the guidance range of $45.5 million to $49.5 million, showing year-over-year growth in product revenues primarily due to the expansion of the AIC program [22][24] - Non-GAAP gross margin for Q1 reached 45.2%, up from 37.5% in the same period last year, attributed to operating efficiencies and a one-time benefit from a materials recovery effort [23][24] - Adjusted EBITDA for Q1 was negative $3.9 million, an improvement from negative $7.8 million in the same period last year, with an adjusted EBITDA margin of negative 8.4% [24] Business Line Data and Key Metrics Changes - The AIC program's annual recurring revenue (ARR) reached $14.5 million, representing a stable and growing base of recurring revenue [14][24] - Impressions reported on a trailing twelve-month basis reached a record 222 million, up 10% compared to the previous period, driven by stronger system utilization [15][26] Market Data and Key Metrics Changes - The apparel industry is experiencing significant disruption, with brands and retailers rethinking supply chains due to new trade policies and consumer demands for faster delivery and sustainability [6][7] - The mass production space for print runs under 1,000 units represents an estimated $4.5 billion globally, indicating a substantial market opportunity for Kornit [21] Company Strategy and Development Direction - Kornit is focusing on the successful adoption and scaling of the Apollo system to penetrate the mass production market, which has traditionally been dominated by analog methods [11][20] - The company is also accelerating the adoption of its all-inclusive AIC model, which is designed to lower barriers to entry for customers and align success with theirs [14][20] Management's Comments on Operating Environment and Future Outlook - Management noted that while macro conditions delayed some planned system purchases in Q1, there is growing conviction among brands and fulfillers to transition to on-demand mass production [10][20] - The company expects full-year revenue growth, adjusted EBITDA profitability, and positive operating cash flow, with stronger growth anticipated in the second half of 2025 [20][27] Other Important Information - Kornit completed a $75 million accelerated share repurchase program, repurchasing approximately 2.5 million shares at an average price of $30.4 per share [25] - The company is actively pursuing partnerships with major supply chain partners to enhance its market position and support high-volume, time-sensitive production [18][19] Q&A Session Summary Question: Discussion on the transition to screen and recent changes in tariffs - Management highlighted that the fashion and textile market is undergoing significant disruption, with brands seeking to connect to local manufacturing to reduce inventory and markdowns [30][34] Question: Apollo placement numbers and impact of macro conditions - Management confirmed the expectation to deliver approximately 30 Apollo systems this year, despite some delays, with a strong pipeline of new customers [40][41] Question: Clarification on ARR and growth expectations - Management indicated that the ARR reflects minimum commitments, with expectations for continued growth in AIC revenue throughout the year [48][50] Question: Opportunities for profitability and efficiency - Management emphasized ongoing efforts to find efficiencies and highlighted the importance of impression growth as a key driver of profitability [86][88] Question: Future capital allocation priorities - Management discussed the remaining share repurchase program and the balance between organic investments and strategic acquisitions [94][95]