Q2 2023 Kornit Digital Ltd Earnings Call
Greetings and welcome to coordinate Digital's second quarter 2023 earnings conference call.
As a reminder, this conference being recorded I would now.
I'd like to turn the conference over to your host today, Mr. Andrew G Backman Global head of Investor Relations for Clinique digital Mr. Backman, you may begin.
Thank you operator, and good day, everyone and welcome to Corny Digital's second quarter 2023 earnings Conference call. Joining me today are Chief Executive Officer Ronen Samuel.
Laurie Hangover Carnitas, Chief Financial Officer, and I'm here, So cat mindell EVP of corporate development.
For today's call, Brian will provide comments on our second quarter of 2023.
Laurie will then review the second quarter numbers and provide our third quarter outlook before we open it up for Q&A before.
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.
I encourage you to read the company's filings with the Securities and Exchange Commission, including the company's annual report on form 20-F, which was filed with the Securities Exchange Commission on March 30th 'twenty, 'twenty, three which identifies specific risk factors that could cause actual results to differ materially.
Any forward looking statements are made concurrently 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 measurements on this call. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's earnings press release published today, which is also posted on the company's Investor Relations website. At this time I would like to now turn the call over to Ronan.
Running.
Thanks Sandeep.
And thanks to everyone for joining us on today's call.
Earlier today, we reported second quarter revenues of $56 2 million.
In line with the guidance, we provided in May which as a reminder included the impact from the fair value of issued warrants.
Doing the court there impression grew at a double digit pace year over year for the second consecutive quarter driving a steady improvement in capacity utilization.
Consumable revenue grew at a strong double digit rate across all customer segments, including key strategic accounts and through up all our operating regions. So far in the third quarter impression growth is a gain on pace to increase at double digit rates even.
Ear, which gave us confidence in solid consumable growth for the second half of the year. Our services business also continues to demonstrate exceptional revenue growth during the second quarter and so far doing the status quote there is no customer actively upgrade and transition to our.
Max Technology, we are very pleased with the customer feedback we have received all know Max technology and anticipate additional upgrades orders during the second half of this year and throughout 2024.
Along this year services has improved considerably both in terms of revenue generation and increased operating efficiencies.
Stem cells volumes remained soft during the quarter, mainly due to continued challenges in capital equipment spending and Theres a customized design custom is continue to work through excess capacity.
Why do we anticipate the prevailing softness in system sales volumes to continue in the short term.
We have implemented strategic measures to attract new customers, including brands retailers and digital platforms. Additionally, we are targeting new growth regions within key textile production hubs to diversify our customer base and establish a healthy.
Pipeline for 'twenty, 'twenty four and beyond.
In addition to diversifying our customer base and entering new markets. We have taken various actions to increase efficiencies throughout our operation based on our progress to date. We currently expect to approach breakeven on an adjusted EBITDA basis for the fourth quarter of this year.
Even at a quarterly revenue run rate in the mid 60 million range due to a favorable sales mix of higher margin consumables and quarterly opex in the low to mid 30 million range yeah.
We are also aiming to deliver profitable growth for the full year 'twenty 'twenty four is.
As a result, so far focused R&D marketing and other airports. We are usually successful eat my tradeshows in Milan, we had a very high customer engagements with new customers from Keith textile regions, such as India, China, Turkey, My local and from Latam country.
Fees, such as Argentina, Brazil, and Mexico.
We also secured high number of quality leads and sales orders for both direct to fabric and direct to garment systems. For example, it each month, we signed a deal with one of the top textile manufacturers in India, which we are planning to deliver in the third quarter.
These new relationships opens up a new market for us in India, a market. We believe has the potential to meaningfully grow over the next several years approximately 60% deal signed were from net new customers.
Turning to the door for additional systems consumables and services sales, providing us with healthy pipeline for 'twenty 'twenty four and beyond the.
The level of energy and innovation co need bought to eat my was incredible with hundreds of customers and prospects providing favorable feedback for our portfolio.
We also unveiled our new App Paulo, I swoop put platform and secured several new orders.
We expect to recognize as revenues fall down below in the first quarter of 'twenty 'twenty four and are currently focused on building a substantial order backlog for the full year during the second quarter, we installed our first beta system in the U S, which is now up and running.
And we are in the process of installing the second better in this region.
As we have stated previously that Paulo platform has the potential to provide us with annual consumable and services revenue of approximately 1 million per system once installed and running at high utilization rates.
In summary, we have been solid foundation for future growth and core needs long term goals that I visit remain firmly intact.
You reinforced by our recent experience at each month, we have made substantial progress throughout the first half of this year as evidenced by our successful introduction of new technologies and solutions.
Our Max platform has been well received by the market, becoming the new standard in the market.
Our quality of Prince X D I capabilities and.
Our ability to sustainably print white on that fabrics, and open up new markets and driving increased customer interest and engagement.
As a result, we continue to diversify our business and blow stare out pipeline. We have also materially adjusted our course stocks shutting in operation and reallocating resources to further enable growth engines, such as launching their Paulo platform and capitalizing on.
Gross opportunities in new markets to our direct to fabric business.
We remain confident.
Now our strategy product roadmap and solid balance sheet position us well to generate meaningful long term growth.
On a final note. This morning, we issue our said impact report, which highlights our activities and the progress we made on corn needs long term impact strategy, demonstrating our commitment to a more sustainable fashion and textile industry.
With that let me turn the call over to Laurie for a closer look to our second quarter financial and third quarter guidance. Louis.
Thank you Ron and good day to everyone. As Ronen mentioned second quarter revenues were $56 2 million in line with the guidance range. We provided in May we experienced strong double digit year over year revenue growth from both consumables and services yet as expected.
Meaningfully lower year over year system sales drove the low single digit decline in total revenues as compared with the same period last year in the Americas year over year growth was attributable to a double digit increase in consumables across strategic accounts and again, a strong quarter of serve.
<unk> gross contribution due mainly to Max upgrades.
In EMEA, while consumables growth was robust due to our larger installed base and increased usage the year over year decline was driven by lower system sales as customers continued to encounter financing challenges.
We continue to explore ways to support qualified buyers to secure financing and now have a number of third party financing partners lined up we continue to seek additional partners, who understand our business and how the company solutions help our customers.
The APAC region also experienced healthy consumables and services growth as compared with the same period last year as Gordon said, we continue to develop a meaningful pipeline of long term growth opportunities in this region, especially in key textile producing countries, such as India and China.
Moving to margins non-GAAP gross margin was 36, 1% compared with 38, 6% in the same period last year.
Lower system sales volumes drove the year over year decline in gross margin, even as higher margin consumables grew nicely and as the profitability of services meaningfully improved.
We continue to expect gross margin improvement throughout the balance of this year given the historical cadence of consumables as a percentage of sales being progressively higher in the third and fourth quarters.
Turning to expenses total second quarter non-GAAP operating expenses were $34 1 million down approximately 16% from $40 7 million in the same period last year.
The year over year decline, primarily reflects the impact of our previously completed workforce reductions and lower marketing spend.
As a result, adjusted EBITDA loss for the second quarter of 2023 was $10 7 million an improvement as compared with adjusted EBITDA loss of $15 7 million in the same period last year.
Adjusted EBITDA margin for the second quarter of 2023 was negative 19% again in line with the guidance range. We provided in May.
Our cash balance, including bank deposits and marketable securities at quarter end was approximately 592 million.
Cash used in operations during the second quarter was $15 5 million driven primarily by the operating loss and changes in working capital.
Accounts receivable increased due to the timing of collections as well as a higher balance associated with extended payment terms to select customers while inventories declined sequentially.
We continue to remain focused on improving working capital to drive cash conversion.
Since the beginning of the year, we have repurchased approximately 938000 shares under our share repurchase program for an aggregate amount of 21.8 million, resulting in an average price paid per share of $23.20.
The initial six months court approved period for the company's share repurchase program of up to $75 million expired on June 15th we have applied for and received a new approval from the Israeli court covering the unused balance of our previously authorized share repurchase program.
For an additional six month period.
Given our strong balance sheet, we continue to believe that we can opportunistically repurchase shares without impacting our ability to execute the company's growth initiatives.
Turning to third quarter guidance we.
We currently expect revenues for the third quarter of 2023 to be between 58 million and 62 million and adjusted EBITDA margins to be in the negative 6% to negative 13% range. As a reminder, the guidance for revenue and adjusted EBITDA margin includes the impact of the <unk>.
Noncash expense associated with the fair value of the company's warrants to our largest global strategic account as Ronen mentioned, we currently expect to approach breakeven on an adjusted EBITDA basis for the fourth quarter.
And before I hand, it back to Ronan I wanted to announce that Andy Backman, a global head of Investor Relations will be leaving coordinate at the end of this month to pursue a new opportunity.
Since joining coordinate Andy has played a pivotal role in leading and transforming our investor Relations program, establishing it as a world class program and operation He will be greatly missed and we thank him for all his many accomplishments and contributions to the company and wish him only the best in his new endeavor.
We are also excited to announce that Jared made men, who is here with us today in Israel will be assuming the role of head of Investor Relations.
Jared comes to us from their Amber capital markets, where he covered coordinate as a sell side analyst for the past two years.
Jared welcome aboard and we all look forward to working with you and Sarkis.
With that I would like to turn it back over to <unk> to open the call up for Q&A Ronan.
Thank you Lori operator, we are ready for the Q&A session.
Thank you we will now conduct a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the Q4.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing just darkies.
Once again, that's star one to ask a question at this time, one moment, while we poll for our first question.
Our first question comes from Erik Woodring with Morgan Stanley . Please proceed.
Super. Thank you guys for taking my question and good morning, you know so so good to see the uptake in impressions and an improvement in utilization both in <unk> and now some of this early data that you're pointing to in <unk>.
Just based on your Investor conversations and I need you know kind of telemetry data that you have.
The way that you can kind of gauge where you think average utilization might be today and you know how long that that does that mean your customers can continue to sweat their assets before they really start to expand capacity would love. If you could just double click on that and then I have a follow up thank you so much.
Thank you Eric and good morning to you as well. This is excellent question. It's it's really depends on the type of segments, we're looking into okay.
So when we're talking about.
Utilization and underutilized mainly refer to all.
Customers in the in the customized design, where they saw a huge big doing a 2020, the second half of 'twenty 2021 and then they invested a lot in.
Many new systems and they sold their downside at the 2022.
What we see in the in Q2, and we saw it already in Q1, we saw them increasing volumes some of them actually going into double digit growth.
A core salary installed base, we see double digit growth not only in the strategic gone but of course all of them installed base and.
We see it also in the supplies revenues overall, we see good improvement on the utilization Oh, we have that we will need to wait for the peak season and to see that theyre getting into high utilization in order for them to reach to a point that they need to invest in addition.
Okay capacity, we assume that those key customers on the customized design will get into this cycle only next year. After the peak season. After the better visibility currently that the trends of supplies continue to be very positive a close bill.
The type of customers.
The other hand, we see customers that are in different market segments. If it's in the DPF direct to fabric or if it's in the replacement of the scatter market than we see massive goals and specific customers of course U S EMEA and the Asia Pacific We.
We see them adopting the Max technology, if it said that the snacks and in the future.
You will see it also in their Paulo, we.
We see them growing very rapidly and actually we can start to see them buying additional systems and growing so as I mentioned depends on different end market, but overall, we see a very positive trends.
No. That's super helpful. Thank you ronen for up for that color and kind of a bifurcation between D. T S and a and D. T. G. M. You know that.
The second question I just wanted to pick your brain on was you know in your in your prepared remarks and in the press release or presentation. You mentioned, a strong pipeline for 2024 and beyond post. It. My can you can you maybe just double click on that comment and talk about some of the devices that saw some of the strongest interest at an edit them.
Any new trends that emerge that you think are important for all of us to think about and then any kind of advice or guidance that you could provide us in terms of how to think about.
The timing of revenue recognition for for any of those new products that are now in your pipeline and that's it for me. Thanks, so much.
Yeah.
So thank you Eric.
That's really it for a system for the international lead my was incredible.
Incredible successful event.
<expletive> on it.
We so first of all from the market trends, we saw all the market trends as we were talking four is really happening customers and visitors that came to our booth were talking about how do they move into on demand manufacturing onshore moving to production onshore and nearshore sustainability, becoming.
A big issue for the for the brands and retailers and they are all looking for pigment solution and thus far we have the best pigment solution, we met with hundreds of visitors if its brands retail there's capital near four specs are different partners and they excite.
Many of the solutions that we have shown on each month was remarkable people are amazed by the Max technology and the Max Technology is now the new standard the new benchmark in the industry everybody is talking about it and he is taking a deeply into the screen market into the replacement.
<unk>, which is a totally new market that we never played before the Atlas Max plus with the additional capability of additional productivity.
Wally said the X D I really opening for us not only a additional capacity within it within a customer, but a new market entries.
For <unk>, but it was very successful eventful all Atlas Max fully matched Paul is gaining momentum within retail as sports retailers and sports brands.
<unk> both in the professional sport, but also in the athleisure market, we closed quite a few orders or for the.
The Max are poorly and we had a very strong pipeline moving forward into age two and 2024. Therefore was unbelievable success was running around the clock people, where it made it for the first time they can see our systems are running at 400.
Our governments and our and full productivity with one operate though this is a breakthrough for this industry based on Max technology, We got multiple orders for their Paulo.
Mentioned, we already running the bedtime installing and the second one the feedbacks are great. This will position us deeply into the screen market and we expect a substantial go off on their polo next is the recognition of the units that we are going to set the install and were going to install this year will happen.
Only in Q1.
Presto months with the new ink, which focus on that.
On the on the black on that black ability to print on that fabric was white ink.
And for US for the first time really the fashion market, but also the home decor, but more than that for the first time, we are talking and we had a very strong funnel.
Soon it is within different hubs of textile market in the world. If is the India. If it's in Turkey, if it's in Brazil, and Mexico, we have a very strong pipeline going there a lot of excitement a it was the one of the heat of this event.
Of course, we show that there's so much dry August says they coordinate X all they're all great feedback on our solution.
And this show really show us that are from focusing on customized design now puneet switch gear on focusing on the replacement market. Both in the direct to fabric going after the replacement, which is a massive market, but also in the direct to garment, a which is a very big opportunity.
For us we collected more than 1000 lives. During the show also then we already identified hundreds of opportunities real opportunity. We qualified the follow up with those kinds of customers hundreds of opportunities.
We also built a very nice orders and annualize out of those orders and L. O is close to 50% of them already converted to P. O all in big in.
In the place to be converted very very soon to be old so 50%, we'd never seen such a a hyphen conversion.
From all the deals that we go out doing and the LOI, 60% are from new customers and when we look at the opportunities that we have is more than 90%.
Net new customer, which opened for us massive market opportunity moving forward.
Overall, when we look at the show we show there that one was his leadership coordinate sure. We are the leader of this industry and all the eyes are looking at Corning now in terms of conversion some of the deals we converted already in Q2, a few of them.
You will see also in Q3 and Q4, but the majority will be only in 2024 throughout the 'twenty 'twenty. Four now we ended the process of really going one by one as I mentioned many of those leads become an opportunity as many of them are.
A very very hot we still facing macroeconomics challenges are with the interest rate and people are waiting some of them waiting for the peak season. Some of them just are.
Waiting to see what will happen in the interesting there in the market, but they're all excited about our solution, they're all serious about it and we believe that we will be able to convert many of them into 2020 full we believe 'twenty 'twenty four will be the ear not only by scanning their polo and the new Atlas Max.
And then the new address smack surplus and the Presto Max who is the new E.
But if they are that we will show again equals and we will show a profitable growth in 2024.
That was a that was amazing thank you Ron and good luck to you guys.
Okay. Next question, please Brian drab with William Blair. Please proceed.
Hi, Thank you I'm on two simultaneous calls so I'm going to try and just asked my questions and I'll get back in the queue.
Can you talk about the upgrade timing, particularly at some of the bigger customers are going into 'twenty 'twenty four upgrade to Max technology.
And also suppressed demand, which I know is you know there's a ton of interested in the presto at the at Michelle.
You know how many of those did yourself.
And or signed letters of intent for and when do you.
What's the timing like of the delivery of some of those orders and revenue generation and sorry, I'm just going to jump back into the queue, though thank you.
Yeah. Thank you, Brian so as regarding to the upgrades. We each one was very strong in terms of implementing upgrades from Atlas to watch a smacks some of it with our key customers.
Some of it with the smaller customers, we expect Q3 and another strong quarter.
Upgrades across our and the different regions, we do not expect Q4 to be a strong quarter for our best customers are very busy in Q4, we do not expect to do and upgrades. During Q4. So we are very very busy right now completing all the athletes are possible we are with that.
Customers are in Q3, we are already aware of customers are expecting to continue the upgrades in Q1 and Q2 next year some of their most strategic customer Hum as for a global strategic customer with past all the testing regarding the Ed.
The quality and the productivity and.
And we just expect a waiting to get a green light when to.
To start their upgrades on their installed base.
So those are the regarding the upgrades you will see it again in <unk>.
Q3, and a S. A first half of next year regarding the first store as I mentioned, our Presto, what we have shown with the quality of the new ink set up.
We presented the ability to print on dark fabric with Whiting are the ex the eyes opened for us for the first time the replacement market and then let me explain what is the replacement market until now we were selling the presto mainly for customers that were looking for really short runs.
<unk> printing all kinds of would be a fashion governments, so problem and even on the call. So sorry for the first time, we have right now dealing with massive textile manufactures in major hubs around the world that's looking to transform their business.
To a more sustainable on demand, but not for short runs really for mainstream production and doing the calculation of the total cost of ownership and the ability to print on almost any fabric without any pre treatment and post treatment and in Wuxi.
Any waste of water fully sustainable makes a little sense too many of them to move now to Oh Presto solution. Our Presto Mac solution, we will see a strong Q3 are on the on the on the Crystal are we.
The storm Guan, we expect also a strong Q4.
But many of the deals on many of the opportunities that we got it at MA and the deals that we signed that it will be implemented only beginning of 'twenty 'twenty four.
But we see a massive opportunity and a growth engine for coordinate for the first time.
<unk> direct to fabric is a real growth engine for our business.
Next question please.
Our next question comes from Tavy Rosner with Barclays. Please proceed.
Hi, Thanks for taking my question I wanted to ask about I'm alone.
Broadly speaking our origination should going in.
Last quarter you mentioned.
There's some systems that they ordered it hasn't.
Yes. So I was wondering you D E. Cheap then were installed and if theres any update.
A muslim potentially upgrading their portfolio.
Two systems like portal.
Yeah.
Yeah. So thanks for the question Avi aim so with our global strategic customer we have a very very close relationship.
And as I mentioned before we always working with them on long term plans three of plants.
And are there business is doing very good I'm the head of a great H one we could continue to see the momentum.
Growing our so when I'm, saying momentum is meaning in terms of impressions a number of impressions that is growing without getting into numbers, but that's a storm double digit impressions that is growing.
As you all recall last year, they were supposed to open a new a new sites Oh, we sold the many systems those side were delayed finally those sites are ready we actually in those days, we are installing on both sides. Those many many sister.
So they will be ready for the peak season for Q4, two or to run. So we expect a massive growth in terms of impression from a four mile global strategic customer into Q4 and definitely in 'twenty 'twenty four.
For additional capital investment, it's still within their internal their discussion are there multiple opportunity of capital investment and different timetable from them. One of them. We were talking about upgrading their fleet of atlas's to watch a smacks as they are.
Mentioned, they already did all the testing.
Now that you've been looking at to the Atlas Max class.
And potentially are they did all the testing we pass them and they just need to give us the game like to move ahead. So this is internal decision of this global strategic customers and we are waiting for you to another opportunity is really to trade in that also.
Late of avalanches.
And trading them into the Max technology, if its the Atlas marks plus oil and.
They have Paulo, and I can tell you that they're very excited about that Paulo, they're looking at the future growth coming from this platform as we mentioned on previous calls they will be testing that Paulo very very soon.
They will be able to get up into 2025 with their polo.
And so this is another major opportunity of course with this this strategic customer Globus to these customers that are the opportunity. If it was their fashion and department or a business and looking into both the direct to fabric and we've seen it.
Also on the Soma dryers and other areas.
So it's a massive opportunities we are supporting them very closely we are proud to be to partner with them and we are proud to see the growth moving forward.
Thanks Lindon.
Thanks, Terry the tiny next question please.
Our next question comes from Jim Ricchiuti with Needham <unk> Company. Please proceed.
Hi, Good morning, this is actually Chris on for Jim.
Thank you for taking the questions late in June you, you announced the knees deal.
And I was just wondering if you can elaborate on that on that deal.
Whether it entails incremental units or is largely leveraging the existing can fill their network.
And what you see in terms of additional enterprise scale prospects for our core need X. Thank you very much.
Yeah.
Yeah. Thank you for the question. So it's an interesting deal, but it's another proof point for the direction that the industry is taking a we see a massive opportunities with digital platform a platform like Kansas kind of like weeks.
And we announced the amaze what amaze.
It was important that they chose not only coordinate takes as the platform, but they chose <unk> Atlas MX is the only platform that will bring the declaration and the government. So this is a very very important the message as for the business. He just stopping we already connected.
With a few of the.
Global fulfillment network I can tell you that one of them already ordered a few systems because of this connection.
In the in the in North America, which is another testament to the value of connecting digital platform and demand generation to our customers are buying system from us. So.
So we expect and we believe that the M. Amazed will go there's a big potential not only in the U S, but in Europe , and Asia Pacific and we support them like we support other digital platform supporting our.
Brands and retailers and the nice thing that we are connecting to all customers through all our installed base by more systems and more ink from us.
Great.
Thanks.
Thanks, Chris.
Our next question comes from Derek <unk> with Craig Hallum. Please proceed.
Yeah. Thanks.
Everyone. Thanks for taking the question I guess, just starting off it seems like the implied second half outlook in terms of revenue is a little bit lower relative to where we were three months ago. So I'm just kind of curious what what's changed you know how much of maybe some activity that you thought went away.
This year it got pushed into 2024, and then just as you sort of look at other ways to convert customers. I'm curious if you can give us a little bit more color on sort of financing alternatives. It sounds like you'd maybe opened up that that option and I'm. Just curious if you think that could be a big driver.
Conversions going forward.
Yeah. So thank you for the question. If you remember we were talking about the visibility that we have for H door and we always said that we have the kind of 70% visibility, which coming from the supplies the ink and from the services and are actually.
As of today. The this the ink and consumable is actually trending better than what we expected and it's growing faster, which is a great man and message because it shows the health of the of our customers and show that they are they will.
It's more a system in the future. We also trending better there on the services and services revenues growing at faster and also the gross margin looks very very nice there as well and trending in a very.
Positive way are the place that we are below what we expected in terms of total revenue is systems.
Now on systems side, let's look at it from two angles. One in terms of finally, we have really line of sight line of sight for pipeline as before each month, we actually were almost like how H do we look like.
Today, we have a very clear line of sight for H, two and beyond we have the pipeline for 2024.
We are we know who we are dealing and we had a very very clear.
All the pipeline for <unk>.
And for the second half of this year.
Some of the pipelines that you wanted to convert after each miles we understand now that it will take longer and it will take us to 2024, mainly due to the macroeconomics customers looking for financing some of them prefer to wait.
On the on the fence before jumping in some of them prefer to wait for the peak season, and taking decision only after the peak season.
So oh. This is the reason why we are saying H two in terms of system.
We will be still a bit lower than what we wanted it to be a waiver the good news.
Is that we used to measure and measures are in advanced not only the supplies gross margin and the gross revenue and gross margin both on supplies and and services looks good.
But we took measurements on down on the Opex and we are going to reach a breakeven on an adjusted EBITDA basis.
And we're going to approach breakeven on adjusted EBITDA basis in Q4, we feel very comfortable about it as for 2024 as I mentioned before we are aiming for a pasta bowl and a year that we will grow versus 2023.
And just to be yeah. Thanks for that that was very helpful detail answer and just to be clear on Q4, specifically I think you had mentioned approaching breakeven on a revenue run rate. That's now towards the mid sixteens versus 70 previously so are you effectively.
<unk> revenue in that sort of mid sixties range for Q4, I just want to confirm that.
But we are guiding only for Q3, we are not guiding for Q4, we're saying that we can be often reaching approaching breakeven in the mid sixties.
With our Opex in the low to mid therapies are this.
This is what our what we believe that we can do we are not guiding for that but this is kind of a indication where do we see it right now with the business.
Understood Alright. Thanks.
Thanks, Craig next question please.
Our last question comes from the line of Mr. Chris Moore from CJS Securities.
Hey, guys. Thanks for taking the question or two so it sounds like the it my good morning, my conversion rate.
Hello, I to purchasers as was quite high getting better is there any way you can size the purchase orders to date.
Kim.
We are not providing those numbers, specifically, but I can tell you that coordinate today after it more with the technologies that we have we bought both to the BTG and the D. E F direct to fabric is a different company.
Is much more diverse much stronger than ever before.
If you look at coordinating the past we were a company that 90% of our revenue came from the BTG a lot of it for a few key customers strategic customers are a lot of it from North America. Today, we are a different company a company that deep direct to fabric becoming.
It's very very important market and growth market within the BTG is not only the customized design, we are getting to the replacement market, which is much much bigger and in many of those deals now are growing there mainly with of course with their Colo and that's a smack says.
We are entering two new geographies is India, China is growing Mexico, Turkey, Morocco, and many many other hubs that we never been able to get there because customized design was not relevant in replacement market is very relevant for them and each one of them is huge.
We're getting into many many new key customers strategic customers. The data that I mentioned in India, and India is one of the largest men and textile manufactures ah and potential to buy many many system only with these customers and definitely many others will follow in China.
Are we just installed in Q2 and Dts in totally new application I don't want to get right now to the application.
Wed like to keep it confidential, but this is totally new applications very exciting one with potential to tens of units.
Only discuss the amazing massive massive customers totally new opportunity in new markets and new applications that we never been there before.
Other than that we can see the growth coming from retailers a few retailers that we are walking with them are growing on a quarterly basis, both an impression in Boston buying more systems, we can see the engagement with the brands totally different level of engagement brand needs to move to.
On demand production onshore production sustainability, becoming critical for those brands.
And we have a high level of engagement with different tiers within the blend the brands. Another market that we were talking about it for a few years, but finally is growing as the sports sports market with now is the Atlas poorly and we see it all.
Also with depressed Vermox get into this market is a big opportunity and we're starting to get orders and.
Pipeline looks say, great and now the market is the home Deco within Dts. That's really now is picking up so puneet today is in a different space and the future starts now for call. It a way for them as to the markets that we are going.
To be approaching breakeven 2023 was the eve of transition for Konate moving from H, one to H to deliver all the products that are we delivering to it's my.
Bringing the business back into breakeven on adjusted EBITDA basis into Q4, and 2025 will be the is it call it would be back to profitable growth.
Okay.
Alright, thank you for that Rhona metrics eventful.
Okay.
For 'twenty 'twenty four will be there to take on it would be back to profitable growth as I mentioned 2025 is a mistake.
Got it thank you.
Thanks, Chris.
Mr. Backman, we have no further questions at this time.
Great. Thank you so much and thank you all for joining us today as always if there's a.
Any follow up questions. Please feel free to reach out directly Tony will you. Please close the call. Thank you so much.
This does concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.