Q4 2020 Kornit Digital Ltd Earnings Call
Greetings and welcome to clean the digital fourth quarter, 'twenty and 'twenty earnings Conference call. At this time, all participants are in a listen only mode.
And the answer session will follow the form of presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I would now turn the conference over here a host of at least Falani with the Blue shirt group. Thank you you may begin.
Thank you operator, good afternoon, and welcome to corny digital fourth quarter and full year 'twenty and 'twenty earnings Conference call before we begin I would like to remind you of 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.
Carl.
These forward looking statements include but are not limited to statements relating to the company's objectives plans strategies statements of preliminary or projected results of operations or our financial condition and all statements that address activities events or developments that the company intends.
Specs projects believes or anticipates will or may occur in the future.
Forward looking statements are subject to known and unknown risks and uncertainties and our base potentially on inaccurate assumptions that could cause results to differ materially from those expected or implied by the forward looking statements.
The company's actual results could differ materially from those anticipated for many reasons and I encourage you to review the company's filings with the Securities and Exchange Commission, including the including the company's quarterly report on form 6K filed November 10th 'twenty, and 'twenty, which identify of spin.
The big risk factors that may cause actual results or events to differ materially.
Any forward looking statements are made as of this call heroes.
And the company undertakes no obligation to publicly update or revise any forward looking statements.
Whether as a result of new information future events or otherwise, 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 and the company's earnings release published today, which is which is posted on the company's investor relation.
On the website I will now turn the call over to run and Samuel <unk>, Chief Executive Officer, and Alon Rosner Carney Chief Financial Officer at this time I would now like to turn the call over to Ron and Brendan.
Thank you Ali.
Thank you all for joining us this evening or no and in coal.
I'm pleased to report and outstanding fourth quarter and significantly exceeding guidance for top line goals and book stability capping off a record second half 'twenty 'twenty four code meet the supposed to be transformative and KOL neat east three.
While the 'twenty 'twenty will be the member for the global pandemic. It is also the ease in which the textile industry Eaton inflection point, the massive leap in E commerce and the expose inefficiency of the traditional Texas supply chain.
The strong trade winds to the digital transformation the coordinate these leading.
In 2018, we laid out our management goal to become a 500 million revenue run rate business and the <unk>.
The end of 'twenty and 'twenty three.
Upon completion of the second year in this journey, we are more confident than ever.
The ability to achieve this goal ahead of plan.
Turning to our Q4 results. We finished 2020 on the very strong note with total revenue growing 49% year over the U 272, 3 million net of $1 8 million and warrants related to global strategic accounts.
We delivered record gross margins and we significantly exceeded our operating profitability goal for the full year, while generating a record of $34 3 million net cash from operating activities, while traditional retail is recovering from the effects.
Net of the pandemic E com and online marketplaces continue to boom of course verticals, including core fashion brands.
Asia Merch sport licensing customers, the apparel and home decor.
And as a result, he and regional accounts are adding multiple atlases, worldcom's and a V H d's to their existing fleets.
And we see multiple customers the started with entry level system phone call need only 12 to 18 months ago, moving the rapidly to purchase high throughput systems.
We also see very healthy mix in the order book of net new versus existing accounts of course, our gogo fees.
The Presto is an absolutely game changer for the fashion industry and the level of engagement with many fixtures for top fashion brands continued to grow.
And the recurring consumable business from Dth is gaining volume and we experienced tremendous year over year of growth in the fourth quarter.
On the regional bases and <unk>.
<unk> continued to set new record highs EMEA delivered a good quarter, particularly in UK and Germany with continued movement to the adoption of higher throughput system.
While the Asia Pacific continues to struggle with pandemic challenges.
Our new leadership is making strategic alignments required to capitalize on the massive opportunity and we expect to see a strong recovery in 2021.
When able of customers to have an incredibly successful peak season and reflected in the staggering evil the growth of our recurring consumable business day.
Services continued to outperform our expectation on growth and profitability and the.
And I'm very proud with the execution of our customer success team.
In Q4, we announced our new business line and leveraging the strategic foundation of custom Gateway.
Our cloud based software workflow platform is unique and we are experiencing huge interest from brands and fulfill is looking to adopt on demand business models at the global scale as well as automate and optimize the production flows.
We received multiple orders from customers across the regions and the pipeline continue to grow.
We believe there is the huge opportunity for co neat to build and incremental recurring business model and we are and exciting roadmap of new software application and value added services.
'twenty and 'twenty was the phenomenal execution year for kony throughout and unprecedented pandemic environment, demonstrating the accelerating demand for our products and the continued execution of our team.
Turning to <unk> 'twenty 'twenty, one our outlook for the ear is very strong supported by the highest level of visibility and confidence in OE story.
We started the year stronger than ever with accelerating industry tailwind.
And impressive backlog of global expansion project with strategic accounts that we are in the process of fulfilling.
And the extremely robust pipeline.
'twenty 'twenty, one will be and exciting year filled with significant strategic initiatives, we will launch and powerful new products, which will drive further penetration into the heart of the fashion apparel and home the co industry, we are going to launch a break.
The food propriety automation technology.
Substantially increases throughput use the ability and consistency of operation.
We will be introducing a ground breaking propriety the deep textile application that will bring to the market unique embroidery and high density printing and vinyl heat transfer of effects.
This first of the kind of application will enable entirely new product creation disrupt the traditional and bordry market and significantly expand core needs of addressable market.
We will scale of our new software work flow business line, we will execute on massive global expansion with our strategic accounts.
And we will expand our footprint in key segments guar activities with Mega brands as well as penetrate new market vertical while continuing to drive customer success.
I will also note the ESG has been a strategic focus area for corn needs since the beginning, especially as it comes to driving sustainability in the textile industry.
'twenty 'twenty, one will match the year in which we are taking our long term ESG program to the next level.
Our dedicated E. G team is working with the best professional in the industry to prioritize the execution of our many initiatives and our first impact report will be published in the second half of the year.
Last week, we announced co neat fashion week Tel Aviv.
And the excitement around this event is building the rapidly.
The widely recognized international event will showcase how innovation and technology meet the fashion world to create the future that is more expressive and sustainable solving the industry most pressing problem.
More than 40, leading fashion designers will be participating in this international showcase of sustainable fashion and it will give observers insight into the many ways technology empowers, even the most demanding designers to deliver the fashion that the.
Tenable without compromising the wall famous quality, we couldnt be prouder to be part of this and it demonstrates our commitment to expand our footprint in the fashion industry.
Last year, we were hoping to host all of you in Israel for our business unusual event planned with hundreds of customers partners and investors at the first of a kind event.
While global travel restrictions remain challenging to predict currently we remain optimistic and.
The aim to all of these extraordinary industry event during the second half of 2021, so stay tuned.
In a moment I will turn the call over to our loan was nil for the first earning call as the CFO of coordinate and.
Non brings more than 20 ease of financial management experience to the wall and his exceptional leadership capabilities will be essential as we continue to execute on our profitable growth strategy.
Core net is stronger than ever been.
And we enter 2021 more confident than ever in our ability to execute on the massive opportunities ahead of us.
Moreover, we believe conatus initiatives will further disrupt the industry and enabling our customer to achieve even greater success, while fueling core net growth and profitability well beyond 'twenty 'twenty one.
Now I will pass over the call to alone.
Alone.
Yes.
Thank you ronen and good evening everyone.
Since joining coordinate and December I've had the opportunity to immerse myself in the business and operations as well as get closely familiar with my colleagues and professional teams across go on it.
And I'm excited with the journey ahead of US as we continue to transform the textile industry and scale profitability before beginning of the financial overview I would like to remind you. The the following discussion will include GAAP financial measures as well as non-GAAP pro forma results.
A full reconciliation of our results on a GAAP to non-GAAP basis is available in the earnings press release issued earlier today and on the investors section of our website now let's dive into the financials. We are very pleased with our strong fourth quarter results, which significantly exceeded the.
Our expectations on top and bottom lines.
And fourth quarter results were record high for coordinate across key financial parameters, including revenue profitability and cash flow from operations.
Fourth quarter revenue increased 49% year over year to $72 3 million net of 1.8 million noncash warrants impact and an increase of 26% compared to the previous quarter.
Our fourth quarter results were driven by strong demand for our industrial and mass production systems, mostly in North America, and Europe, and very high growth in consumables during the peak season.
Services revenue for the fourth quarter was $10 9 million net of $280000 non cash warrants impact accounting for 15% of total revenue and increase of 70% year over year, and an increase of 35 per cent compared to the previous quarter.
As a reminder, custom gateway revenue and cost of goods and mostly included in services.
We continue to improve our service contract the attach rate, which is growing our recurring revenue stream.
And as ronen.
You mentioned it was a strong quarter in the Americas with 75 per cent of total revenue coming from that region 20 per cent from EMEA and five per cent from Asia Pacific region in.
In the fourth quarter, we had only one customer that contributed more than 10 per cent of total revenue our top 10 customers accounted for 62.1% of total revenue.
Moving to profitability.
Non-GAAP gross margin in the quarter net of warrants impact reached 51, 8% and improvement of 160 basis point year over year, and 370 basis points from previous quarter.
Our GAAP basis gross margin in the quarter was 51.1 per cent and improvement of 170 basis points year over year, and and improvement of 400 basis points from the previous quarter.
Our strong gross margin is the result of the demand of our for our high end systems high demand for ink profitable service revenue and continuous operational efficiency.
Moving to our Opex items I will discuss these items on a non-GAAP basis, we continued to invest in the business to support the accelerated growth opportunities ahead of us.
During the fourth quarter, we didn't have any adjustments or expenses related to COVID-19, and we do not expect any costs going forward.
Adjusted Research and development expenses were $8 7 million or 12.1 per cent of revenue compared to $5 7 million or 11, 6% of revenue in the fourth quarter of 2019.
The increase in R&D is the result of the accelerated investment in R&D for new product and innovative applications and attribute it to head count additions and use of materials.
Sales and marketing expenses in the quarter were $10 2 million or 14, 2% of revenue compared to $8 5 million or 17 point and 4% of revenue in the fourth quarter of 2019.
We continue to invest in expanding our go to market capabilities and in customer facing activities. However, travel and event expenses were lower this quarter due to continued travel limitations in some areas.
General and administrative expenses in the fourth quarter were $6 7 million or nine 2% of revenue compared to $4 5 million or nine 2% of revenue in the fourth quarter of 2019.
The increase in G&A cost is mainly related to additional headcount professional services and increase in D&O insurance costs.
We ended the quarter with 672 employees a year over increase of 125 employees and an increase of 15 employees compared to the previous quarter.
The year over year increase was in line with our growth plans, both organically and Inorganically with 53, and new employees, joining us from custom gateway.
Looking forward to 2021, we will continue to invest and growing the organization to support all of business, mainly in R&D and sales and marketing.
Non-GAAP net profit for the fourth quarter was $11 5 million or <unk> 24 cents per share on a fully diluted basis up from $7 1 million or 17 cents per share in the fourth quarter of 2019.
Fourth quarter GAAP net profit was $5 9 million or 12 cents per share on a fully diluted basis up from net income of $4 8 million or 11 cents per share for the fourth quarter of 2019, adjusted EBITDA for the fourth quarter of 'twenty and 'twenty was $14 8 million.
Compared to adjusted EBITDA of $7 8 million for the fourth quarter of 2019 net cash provided by operating activities was 34.3 media and this quarter compared to $14 9 million in the fourth quarter of 2019, the increase was mainly due to the increased leg.
Well of activity and advanced payments from customers.
And we enter 'twenty 'twenty, one with a strong backlog, including 27 million of deferred revenue and customer advances.
We expect the deferred revenue balance to convert to revenue in 'twenty and 'twenty, one largely in the second and third quarter.
Cash balance, including bank deposits and marketable securities at quarter end were $436 million compared to 264 million as of December 31st 2019 the.
And the increasing cash.
It was mostly driven by the successful offering of 163 million in September and our operating profit.
I will now briefly recap our full year 'twenty and 'twenty results. Our full year results were impacted by Covid uncertainty in the first quarter than we experienced strong growth and the business in the second half of 'twenty and 'twenty, which resulted in a record close to the year full year revenue.
The net of 5.4 million noncash warrants impact was $193 3 million and increase of seven 5% year over year.
Full year GAAP net loss was $4 8 million or 11 cents per share on a fully diluted basis compared to net income of $10 2 million or <unk> 26 cents per share in 2019 free.
Full year, adjusted EBITDA was $14 million compared to adjusted EBITDA of $26 9 million in 'twenty and 19.
Turning to our view on the first quarter of 2021.
We enter 2021 with strong industry tailwind a backlog of large expansion project and great momentum in the business.
For the first quarter of 'twenty 'twenty, one we expect revenue to be and the range of 61 million to 65 million and non-GAAP operating income to be in the range of 8% of revenue to 10% of revenue.
As has been our practice in the past these numbers as you know impact of fair value of issued warrants in the quarter. In summary, we are very proud of our Q4 results as we continue to execute on our strategy and capitalize on the long term opportunity ahead of us coordinate easing of very strong.
Action and we are more confident than ever in our ability to achieve our 500 million run rate goal ahead of plan, while expanding gross margin and profitability.
I will now turn the call back to Ronan.
Yeah.
Thank you alone with that with that we're ready to open the call for questions.
Thank you and he would like to ask a question. Please press star one on your telephone keypad.
From Asia tell will indicate your line instead of the question queue. You May press star two if he would like to remove your question from the queue and fair of participants using speaker equipment may be necessary to pick up of your handset before pressing the star of fees.
Our first question is from Jim and silver with Citigroup investment Research. Please proceed.
Thank you very much and good evening and thank you for on the details and thus far and congratulations on good results and outlook on the.
Outlook can you talk to us a little bit about the supply chains and sugar.
The components of it seems like there is a.
A lot of shortages around the world less airplanes flying around.
Kind of your building and looking forward you know you haven't and the components for like one quarter of three quarters or how should we think about potential constraints to the supply chain.
Thank you Jim Good question, we don't see any constraints on the supply chain as you know we produce our system and in the.
Israel.
Walking very closely with our contract manufacturer of both submitted and the flextronics.
And we just.
About the move to a new implant the test capacity well above the what we would need and the next 10 years.
And so we don't see any constraints on supply chain and the only <unk>.
The negative set aside on supply chain as you know the cost of shipping is growing up everywhere and we see it as well on our business.
<unk> is going up.
And then my last question is on your meetings with customers now typically shaking and in person meetings and trials are those getting better and now there are some parts of the World book is Israel and are opening up and come back from a little bit sooner and then say North America or is it still.
And so kind of putting challenge because your results are really strong I'm, just wondering and you're starting to even getting a little bit more visibility from where you sit on demand.
And so again great questions bottom line when we're looking at Q4 actually the mix that we have between net new customers to existing customers is very healthy. So we see many net new customers joining our business.
And we are gaining this momentum actually meeting with them in many cases for zoom meetings.
I'm going to visit.
And other customers for wafer and sites.
We are doing live demonstration from al.
Experience center, all around the wall, the and including and Israel are alive with our customers and it's very very efficient debt lending as the material in advance of we're doing all the testing we are sending them back the material. After it was produced and printed.
So it's working quite well.
Actually the in terms of productivity I can tell you even for my and I find myself, sometimes having free fall zone.
Zoom calls with the on it on there.
On one day with our key customers and it's very very.
Fisher and and beneficial.
Thank you so much from the details and congratulations.
Thank you. Thank you.
Okay.
Our next question is from the TV.
The aerie with Barclays. Please proceed.
Hello. This is here and that's the answer to Xavi, congratulations on the quarter and welcome to you alone.
I was wondering if you could give us some color.
I was wondering if you'd give us some color on the consumables mix for the year of the quarter.
What I'm wondering is typically in the fourth quarter, you would have mix skewed a bit towards more toward consumables, and then build them and the rest of the year I'm wondering if that's changed at all given the sort of accelerated pace of system sales you've been seeing.
And then also I'm sorry, if I missed it but did you mention any greater the type of share customers and the quarter.
So.
Hi, this is alone.
Yes, I mean the.
Typically typically Q4, we have and Q4, we have the higher demand for our for consumables and the this quarter. It was the same and even stronger we had a very strong demand for our consumables, which supported our business very well.
I can't add debt in this quarter Q4, we broke the record in terms of the supplies growth.
A really really strong supply growth. We are we are not sharing the numbers, but is well above what we expected and we see the momentum moving into 2021 in terms of your second question about the customers that is more than 10%. We have only one customer that had this quarter more than the.
The 10%.
And it wasn't our global strategic accounts it was not a global strategic accounts.
So that's that's going to play a part and so much.
Okay.
Our next question is from Brian Drab with William Blair. Please proceed.
Hi, congratulations and thanks for taking my questions and.
I'm wondering if you could talk a little bit more about.
The automation solution and you know what.
When might we hear more about that how much does it speed up the process is it applicable of the machines across your portfolio is there is there anything else you can share today on that.
Yeah, Brian. Thank you very much for the question so of the automation and it's the breakthrough solution on this.
Nothing like this in the in the market.
One of the car and it's a way of a strong IP on on the on the solution and we are planning to release it and the mid of the year.
The solution.
<unk> is an option on top of the portfolio of that we have.
We'll serve the.
The Atlas portfolio, including the new system.
Systems.
The new portfolio of that we're going to release in the second half of the year.
In terms of and debt.
Patients see and the productivity.
So it really depends on the operators the running the systems.
So today for example, the atlases can run at the.
Above the 100 impression per hour.
But the limitation of running constantly 100 and impression of what about per hour on the atlas's is actually dope operator of that sometimes the operator.
Taking breaks and the tired.
Maybe they can do it and one over the second how they will go down to 80.
Automation and enable the operator.
To do his job in the in the constant the way much more.
Easy.
And and in constant quality, India and so.
It will improve the.
Quality it will improve the ease of use.
And the productivity, we expect the the productivity will be increased by around 20% on average.
That's really helpful. Thanks, and so its the solution just to be clear that doesn't completely remove the need for an operator, but it makes and.
And the operator and much more efficient.
Correct.
It doesn't remove the op.
Whether it's a hell of a bulk of our total load and unload.
From the systems and consistent way.
In some cases, we can see one operator of running two systems with the system.
With the open the got it.
Okay. Thanks, and then can you.
The helped me of envision this the three D embroidery.
Embroidery application.
A little bit better and and also talk about how much that expands your addressable market as you alluded to and the press release.
Yeah.
So we.
We are not ready to share too much information is the stage.
We are going to share much more information and area and of course, we are going to show it to the market in June it will be part of the new portfolio of that we are releasing to the market again, it's a break for a solution. There's no added digital solutions that can enable those applications that some of those application will never.
There exist before.
So what the system, the new system and able to do will enable to do is to print actually on government on any type of government could be fully asked it would be quarter blended it.
Read the images, so actually we can build images.
So really images, which is where it can go up to 700 micron.
The above the the surface.
And the two emulate all kinds of application one of the application is and Badri.
And we are getting excellent results and extra and feel of embroidery.
And that application is I density vinyl.
All of which is very very important for example for the sport and athleisure market and.
And the also the heat transfer, which is also relevant and.
Very much for the sports market. So we believe at this point that in terms of the addressable market. It will increase coordinate the addressable market by about 25% to 30% from what we have today. So it's a huge increase of four.
For the Tam and.
And we believe that on top of that it will create new application that will never.
Being been able to produce before.
That's that's great and just one clarification is it.
The system that embroiderers or it stimulates the embroidery and as part of the solution.
Similarly in baud rates, you're right out of this.
The printing.
But it feels and looks like embroidery.
And many many additional advantages okay what the.
And we'll keep it.
A bit later and Apple, we're going to share a bit more information on debt.
Alright, Thank you very much.
Our next question is from Patrick Ho with Stifel. Please proceed with your question.
Thank you very much and congrats on the nice quarter and into the year Rona and first stop and posted some very strong services numbers and in your prepared remarks, you talked about the increasing attach rates and can you give the color. If some of those attach rates are now from multiyear type of service agreements or are they still kind of.
Of course singular year contracts, which you have to get quote renewals with these customers.
So are we already are about a year and that's the goal we move to a full contract every machine of that we're selling we're selling into with the contract Theres no other way to buy from Watson machine and it's.
It's not for one of you it's for multiple year contracts and we see a very nice recurring revenue coming from.
From the services business.
Great that's helpful and maybe as a follow up for a lot of in terms of the the operating model you guys posted very strong gross margins, obviously product mix had a contributor to that.
And you look at 2021, you talked about Opex, increasing to help grow with the business. One can you talk about some of the focus items in R&D are they for the embroidery product that's going to be released or are they for others that are yet to be seen until say 'twenty and 'twenty, two and beyond and and.
And how much do you need to add more in terms of the sales and marketing.
To support these new initiatives.
Okay. So.
And as we said we continue to invest in our in the organization is as you mentioned the focus is the is R&D and sales and marketing.
The go to market.
In regards to R&D.
We invest the actually across the board I mean, now we are enhancing our capabilities in the core.
Patients and in R&D.
And software and new projects are in workflow. So there is the massive investment in R&D. We did it and are in Q4, and we will continue in 2021 and the same goes with the.
With sales and marketing, we increased our recovering with the professional salespeople.
Across all regions and.
And yes, I mean, we will continue to invest in 'twenty one.
At the same.
Let me add one more point as you as we mentioned on our mission for the 500 million.
Run rate growth.
No.
We said and we are committing to expand our gross margin.
And to bring leverage also on the bottom line on the operating profit. So you will see it during 2021 leverage on operating profit we.
We will bring some more leverage on the operating profit, we don't want to maximize it because we see a massive opportunity in the marketplace and we would like to invest as much as we can while maintaining our commitment.
And to the market.
But we would like to invest as much as we get and we can and more feet on street and more R&D and.
And other parts of the businesses.
Because this.
And this is the time to invest and to grow up the market.
And not the two mills of the co.
The maximum.
Thank you very much.
Yeah.
Okay.
Our next question is from current.
Jim Ricchiuti with Needham and company. Please proceed.
Thank you good evening.
Question about.
Clearly it sounds like you had a very strong quarter for supplies and you did call out the strength and Presto and I Wonder if you could talk a little bit more road and about what youre seeing there. It sounds like utilization is kind of pretty high level.
Is that fair and say where is it just certain customers have really begun to deploy this.
Yes, so we have a tremendous success on the Presto now, let's ask yourself from where is it coming it's actually these inflection points of going on and the in the textile market. As we have discussed we can see the move to onshore production on the textile if it's on the <unk>.
And market on the home the core market, we can see it of course Europe U S and also in Asia really moving to onshore or nearshore production.
We have of system, which is the presto, which is the one of the kind and we are the only one that the enabling onshore production in the full sustainable way without any pre treatment without any post treatment I can tell you. This week, we have many many designers prepare.
Being here and in the <unk>.
Facility in Israel for the core net Tel Aviv fashion show.
They are amazed with what they can see from coming out from the Bristol the actually designing on the floor their ideas and they can see it immediately going out of the press ready to just cut and so this is the handheld though and we are gaining huge momentum.
The durability of the quality and the Haynesville is nothing like a you can see and other places in the market and we believe that the entire market the entire.
And the textile well the fashion market and their home.
The market is moving into on the men production on onshore and we have the right solutions to address this market.
Thank you.
It appears that you're pleased with the progress.
Custom gateway and I guess, you've only had the the.
The business for less and a half year can you share.
Robin and looking out at the second half.
Of 'twenty and 'twenty.
And how many of your.
Existing coordinate customers have you been able to bring into the custom gateway solution portfolio.
So Jim we are not ready to share the numbers at this stage of says we format, but the mid of the year, we will be able to share a bit more numbers on on the business line and the also a target for the future of that we expect from this business and what I can tell you the huge excess.
Pipeline, both from the marketplaces from a form of grants from the retails.
From online players and also from our customers.
Joining to the custom gateway solution really and enable our customers to the more efficient on the production flow.
And we had enable customers to connect to.
And two major brands, we can see huge increase coming on and tickets of volume of impressions of coming from Brent and marketplaces directly into our customers and we see very very nice increase of impression.
All of that coming from from the system. So we see it.
The potential of.
Revenue and margin growth coming from our from this business are moving forward and we're very optimistic about this book.
Thank you and last question if I may just with respect of the the new products the ones that you're most excited by it.
So the most of our the contribution that Youre anticipating for these products.
This year or.
Are the is skewed more to the second half will we see of contribution in Q3.
Yes, absolutely and Q3, you will see contribution.
From a from the new products and also from the formation.
And also from the application and so we will see it already and a H.
Sure.
Thank you.
Our next question is from Rod Hall with Goldman Sachs. Please proceed.
Yeah. Thanks for the question I wanted to start off with the the revenue that you printed in the guidance.
Lot of long ways ahead of your guidance for the Q4, and then really strong guidance and Q1 could you maybe highlight the one or two things that surprised you there.
And push that way above the high end of your guidance range for Q4, and then I have a follow up.
So few few things first of all we've discussed already on the growth on the supplies and so it was the very very strong.
And our supplies quarter of the Q4 Oh. It was also very strong quarter for the service school.
While our systems of course also very strong so it's a combination for all of those three.
And the businesses are and the what we see and on the on the system is things that we've never seen before.
We see relative new customers of just showing coordinate and about a year ago.
Increasing capacity volume very dramatically and the.
Purchasing multiple systems when at the same multiple system with a few cases of more than 10 more than 20, and even 50 systems of orders without getting too names of customers and even more than debt. So surprising.
Really what surprised me is the magnitude to seeing so many customers are ordering multiple of <unk>.
Many multiple of the of systems.
And is that I think one of the wanted just a critical math thing do you think like do you feel like you kind of point of recognition that these things are out there and what could be done with them, that's driven the acceleration all of the sudden or.
Okay.
On the acceleration is coming from this from the inflection point that we were talking about a two quarter ago.
And is really above the the move to the E. Commerce. The online marketplaces are booming the moving to onshore we can see the growth and the strategic accounts and existing accounts. Our systems you know the growth and the Atlas is the walk on the E Z H D debt.
Presto, which is relative new segments for net new order of Conatus business is growing fantastically.
And we can see the mix between the new customer to existing customers the Ric.
Current revenue is very very strong.
And and it was a very very strong peak season, and so it's the combination of all of those together.
I think that if okay and then.
It was not sure of what Walmart yes.
It was not only you know our of customers preparing.
Their infrastructure for the peak season, but are they kept investing and we got a strong demand also during the peak season until the very last day of of our of the quarter. So we see you know a again as Ron had mentioned I mean this is the absolutely you know related to the inflection point and.
Just you know are the short term at the.
Peak season.
Okay and then my thanks for that and my last question was just on polypropylene you may be give us a little update on.
And how things are going there.
Yeah. So on political are we're getting a very nice demand are we're starting to see very good traction of the current polypore solution.
Part of the new <unk>, the new product introductions that we are bringing in the middle of the year.
Is oh.
Additionally, solution and expanding the portfolio of the polypore and taking it to the next level in terms of productivity.
In terms of the quality and terms of the.
The efficiency.
You will see and amazing.
Quality durability coming out of all of these new products that we're bringing to the market.
It will really go into open for us the and the at leisure and the sports market and we are very optimistic about the growth of it will see and 82 of the from the poly market.
Okay and Thats the same thing as the as the three D printing thing or it's they're totally different I thought they were different but are you is it the same.
The thing that you are talking about midyear.
Okay. Okay. Thank you.
Yeah.
Yes.
And our next question is from Greg Palm with Craig Hallum Capital Group. Please proceed.
Yeah, Thanks for taking the questions and congrats on the results here I know you don't usually give full year guidance, but looking back at history Q1 tends to always be the low point of the year and usually you see are.
Kind of a step up.
And and revenue in the second half versus the first half. So I'm. Just curious is there anything unusual that we should expect this year or would you expect those sort of same seasonality trends and to hold this year as well.
Greg you're absolutely right you should expect the same seasonality.
Okay, Great and I mean, if we think about that specifically maybe help us bucket out what the largest drivers of that is I mean, you've kind of alluded to this this new customers and I'm curious if that's outside your core business or is that sort of incremental customers and sort of that core area is it you know.
Capacity expansions from from New York from existing customers and then maybe you know what the contribution expectations are from new products as well.
Yeah. So what we can say that the oh existing customers and even new customers, they're adding capacity because they expect 2021 to be.
To see it as a growth in four of them are they see the demand and.
And the C. The volume coming the actually on constant peak season.
Already from from.
April may timeframe, the constant the peak season.
And during December it was the peak of the peak and the seats continue into the Q1 and and adding more capacity. So for example of strategic accounts and the key accounts on adding more capacity and many of them opening additional sites.
And if it's of course the U S. If it's of course continent, moving to the Europe and even into Asia. So we see expansion of.
Additional site and expansion within the site of additional capacity of more systems.
And also they are moving to higher capacity systems. So many of them of moving from the avalanches.
Into the Atlas's, we see also growth into the Balkans.
So this is one the area we see the growth coming also from from totally net new customers.
Digital customers and.
The entering the see the opportunity in.
And in this market and the starting and debt gaining momentum very very fast and as I mentioned and the Presto is relative new the DTF is relative new business for us which is another.
A big big growth engines.
And on top of that you know that the all of the poly and one and ask the years ago was not the exist at all and again, we are now gaining momentum as well on the poly side.
Okay, and if I could just sneak in one clarification and I take your answer to a previous question about how about Q4, and what drove sort of the upside.
You mentioned that the the growth rate or at least the answer almost implied like the growth rate and the consumables business surpassed the growth of system was was that right or did I Miss here something.
No I think that Uh huh.
The growth was the in all fronts I mean, we had a nice growth and in systems, and consumables and and and service.
And <unk>, we had a very high growth in consumables as we highlighted the but the growth was there and in all the different.
Different types of business we have.
Okay, great. Thanks for all of the color best of luck going forward.
Thank you.
And that does conclude our question and answer session I would like to turn the conference back over to management for closing remarks.
Great. So I want to thank everyone for joining us on this afternoon's call I would like to take this opportunity and to thank our employees for their dedication and the passion to our customers I would like also to things our investor community for the trust and partnership two.
2021 will be and exciting year for coordinate and we are more confident than ever and our ability to execute on the massive opportunity ahead of us.
We would like to wish all of you a good health and hope to see you soon face to face north to zoom in 2021, we wish all of you. Good night from Tel Aviv. Thank you very much.
Thank you that does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.