Q2 2024 Markforged Holding Corp Earnings Call

Shai Terem, Assaf Zipori, Austin Bohlig, Austin Bohlig, Austin Bohlig, Austin

Gregory Palm: Hello, I'm Gregory Palm, and I'll be back in a few minutes.

Operator: Greetings, and welcome to the March 4, 2nd quarter, 2024, earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Greetings and welcome to the Mark Ford second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Austin Bohlig, Director of Investor Relations. Thank you, Austin. You may begin.

Greetings and welcome to the Mark Ford Second Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: A brief question and answer session will follow the formal presentation.

Operator: If anyone should require offer assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Austin Bohlig: It is now my pleasure to introduce your host, Austin Bohlig, Director of Investor Relations.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Austin Bohlig, Director of Investor Relations. Thank you, Austin, may begin.

Operator: Thank you, Austin. You may begin.

Austin Bohlig: Good afternoon, I'm Austin Bohlig, Director of Investor Relations for Mark Ford Tolling Corporation. Welcome to our second quarter of 2024 results conference call. We will be discussing the results announced in our earnings press release issued after market close today. On the call with me is our President and CEO, Shai Terem, and CFO, Assaf Zipori.

Austin Bohlig: Good afternoon.

Austin Bohlig: I'm Austin Bohlig, Director of Investor Relations of Mark Ford Tolling Corporation. Welcome to our 2nd quarter of 2024 results conference call. We will be discussing the results announced in our earnings press release issued after market closed today.

Austin Bohlig: Good afternoon. I'm Austin Bohlig, Director of Investor Relations of Mark Ford Tolling Corporation. Welcome to our second quarter of 2024 results conference call.

Speaker Change: We will be discussing the results announced in our earnings press release issued after market closed today With me on the call is our president and CEO Shai Terem and CFO Assaf Zipori

Austin Bohlig: With me on the call is our President and CEO, Shai Terem, and CFO, Assaf Zipori. Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates and other Ford-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. These statements represent management views as of today, August 8, 2024, and are subject to material risks and uncertainties that could cause actual results to differ materially.

Austin Bohlig: Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates and other forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Therefore, any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. These statements represent management's views as of today, August 8, 2024, and are subject to material risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates and other forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Any statements contained in this column that are not statements of historical facts should be deemed to be forward-looking statements.

Speaker Change: These statements represent management's views as of today, August 8th, 2024, and are subject to material risks and uncertainties that could cause actual results to differ materially.

Austin Bohlig: A description of these risks and uncertainties and other factors that could affect our financial results and performance are included in our SEC filings, including in our most recent annual report on Form 10-K for the fiscal year ended December 31, 2023, and subsequent quarter reports on our Form 10-Q, which may be obtained on the SEC's website and on our Investor Relations website. Mark Ford's disclaims any intention or obligation, except as required by law, to update or revise Ford-looking statements.

Austin Bohlig: A description of these risks and uncertainties and other factors that could affect our financial results and performance is included in our SEC filings, including in our most recent annual report on Form 10-K for the fiscal year ended December 31st, 2023, and subsequent quarterly reports on Form 10-Q, which may be obtained on the SEC's website and on our investor relations website. Mark Forge disclaims any intention or obligation, except as required by law, to update or revise forward-looking statements.

Speaker Change: A description of these risks and uncertainties and other factors that could affect our financial results and performance.

Austin Bohlig: [inaudible] I'll now turn the call over to Shai Terem, President and CEO of Mark Forged. Thank you Austin and thank you everyone for joining us on our Q2 2024 earnings call. We demonstrated strong execution in Q2 while effectively navigating industry sector challenges. We remain encouraged by the market response to our new products. The positive feedback and growing pipeline underscore the strength of our newest innovation and our ability to meet the needs of our manufacturing customers. As we look ahead to the second half of the year, we see a restoration of growth driven by the continued rollout of our newest platform innovation, the FX10, FX20, PX100 and new materials.

Speaker Change: are included in our SEC findings, including in our most recent annual report on Form 10K for the fiscal year ended December 31, 2023 and subsequent quarter reports on our Form 10K, which may be obtained on the SEC's website and on our Investor Relations website.

Austin Bohlig: Also, during the course of today's call, we refer to certain non-GAAP financial measures. These non-GAAP measures should be considered as a supplement to and not a substitute for our GAAP financial measures. There's a reconciliation schedule showing the gap versus non-gap results currently available in our press release issued after market close today, which can also be found on our investor relations website at investors.markforge.com. I'll now turn the call over to Shai Terem, President and CEO of Mark Ford.

Mark forge: Mark forge disclaims any intention or obligation except as required by law to update or revise forward-looking statements.

Austin Bohlig: Also, during the course of today's call, we refer to certain non-GAAP financial measures. These non-GAAP measures should be considered as a supplement to and not a substitute for our GAAP financial measures. There's a reconciliation schedule showing the gap versus non-GAAP results currently available in our press release issued after market closed today, which can also be found on our Investor Relations website at investors.markforge.com.

Speaker Change: Also, during the course of today's call, we refer to certain non-GAAP financial measures.

Speaker Change: These non-gap measures should be considered as a supplement to and not a substitute for a gap financial measures.

Speaker Change: There's a reconciliation schedule showing the gap versus non-gap results currently available in our press release issued after market closed today, which can also be found on our investor relations website at investors.markforge.com.

Shai Terem: I'll now turn the call over to Shai Terem, President and CEO of Mark Forged. Thank you, Austin, and thank you, everyone, for joining us on our Q2 2024 earnings call. We demonstrated strong execution in Q2 while effectively navigating industry sector challenges. We remain encouraged by the market response to our new products. The positive feedback and growing pipeline underscore the strength of our newest innovation and our ability to meet the needs of our manufacturing customers. As we look ahead to the second half of the year, we see a restoration of growth driven by the continued rollout of our newest platform innovation, the FX10, FX20, PX100, and new materials.

Speaker Change: I'll now turn the call over to Shai Terem, President and CEO of Mark Forged.

Shai Terem: Thank you, Austin. And thank you everyone for joining us on our Q2 2024 earnings call, where we demonstrated strong execution in Q2 while effectively navigating industry sector challenges. We remain encouraged by the market response to our new products; the positive feedback and growing pipeline underscore the strength of our new innovation and our ability to meet the needs of our manufacturing customers. As we look ahead to the second half of the year, we see a restoration of growth driven by the continued rollout of our newest platform innovation, the FX-10, FX-20, VX-100, and new materials, to maximize our cash resources and best enable us to achieve sustainable growth Discourse Reduction X has been initiated, and we expect it to be completed by the end of the year.

Shai Terem: Thank you, Austin, and thank you, everyone, for joining us on our Q2 2024 earnings call.

Shai Terem: With demonstrated strong execution in Q2 while effectively navigating industry sector challenges.

Shai Terem: We remain encouraged by the market response to our new products.

Shai Terem: The positive feedback and growing pipeline underscore the strength of our newest innovation and our ability to meet the needs of our manufacturing customers.

Shai Terem: As we look ahead to the second half of the year, we see a restoration of growth driven by the continued rollout of our newest platform innovations.

Shai Terem: The FX10, FX20, PX100 and new materials.

Shai Terem: To maximize our cash resources and best enable us to achieve sustainable growth, we are implementing a 25 million cost reduction initiative that we expect will reduce our annual operating expenses run rate to approximately 70 million in 2025. These cost reduction actions have been initiated, and we expect to be completed by the end of the year. We have a strong product line, and these cost reductions are not expected to compromise our ability to grow and keep us on a sustainable growth trajectory. In Q2, we also accelerated shipments of the FX10, underscoring the product's innovative features and superior capabilities of printing mission-critical parts for the factory floor.

Shai Terem: to maximize our cash resources and best enable us to achieve sustainable growth.

Shai Terem: We're implementing a $25 million cost reduction initiative that we expect will reduce our annual operating expenses run rate to approximately $70 million in 2025.

Shai Terem: These cost reduction actions have been initiated and we expect to be completed by the end of the year.

Shai Terem: We have a strong product line. These cost reductions are not expected to compromise our ability to grow and keep us on sustainable growth projects. In Q2, we also accelerated shipments of the FX10, underscoring the product's innovative features and superior capabilities of printing mission-critical parts for the factory floor. We entered you free with a robust pipeline and intent to release additional capabilities, which increases our confidence that this momentum will continue to drive growth in the second half of the year. We also launched two new materials, Onyx FR, a flame retardant, and Vega, with High-Temperature, Continuous Fibre.

Shai Terem: We have a strong product line, and these cost reductions are not expected to compromise our ability to grow and keep us on a sustainable growth trajectory.

Shai Terem: In Q2, we also accelerated shipments of the FX10, underscoring the product innovative features and superior capabilities of printing mission critical parts for the factory floor.

Shai Terem: We enter Q3 with a robust pipeline and intent to release additional capabilities, which increases our confidence that this momentum will continue to drive growth in the second half of the year. We also launched two new materials: ONIX-FR, DLM retardant, and Vega with high-temperature continuous fiber. These new materials further expand the capabilities of the digital forge and especially the FX20, which will help our manufacturing customers to solve even more applications on the factory floor. We believe these innovations amplify the capabilities of our newest platforms and will support the increased adoption and growth.

Shai Terem: We enter Q3 with a robust pipeline and intend to release additional capabilities which increases our confidence that this momentum will continue to drive growth in the second half of the year.

Shai Terem: We also launched two new materials, Onyx FR, flame retardant, and Vega, with high temperature continuous fiber.

Shai Terem: These new materials further expand the capabilities of the digital forge and especially the FX20, which will help our manufacturing customers to solve even more applications on the factory floor. We believe these innovations amplify the capabilities of our newest platforms and will support increased adoption and growth. I'm also excited to announce that we successfully shipped the first PX100 in Q2, marking a significant milestone in our company's journey. This milestone is the culmination of extensive development and rigorous steps to ensure we deliver high quality, innovative solutions to our customers.

Shai Terem: His new materials further expand the capabilities of the Dichar forge and especially the FX20.

Shai Terem: Which will help our manufacturing customers to solve even more applications on the factory floor

Shai Terem: We believe these innovations amplify the capabilities of our newest platforms and will support the increased adoption and growth.

Shai Terem: I am also excited to announce that we have successfully shipped the first PX100 in Q2, marking a significant milestone in our company's journey. This milestone is the culmination of extensive development and rigorous testing to ensure we deliver high-quality innovative solutions to our customers. Our customers believe in the PX100's potential to set new standards in highly regulated markets such as automotive, medical, aerospace, and luxury goods. thereby supporting Mark 4G's future growth. We remain on plan to ship additional units in the second half of this year.

Shai Terem: I'm also excited to announce that we have successfully shipped the first PX100 in Q2.

Shai Terem: Marking a significant milestone in our company's journey.

Shai Terem: This milestone is the culmination of extensive development and rigorous testing to ensure we deliver high quality innovative solutions to our customers.

Shai Terem: Our customers believe in the PX100's potential to set new standards in highly regulated markets, such as automotive, medical, aerospace, and luxury, thereby supporting Mark Ford's future growth and remain on plan to ship additional units in the second half of this year. Our customers across the world increasingly recognize the digital forge as a powerful platform to reduce cost and improve manufacturing operations. Parson Corporation, which designs and delivers custom automation and robotic systems to manufacturers, provides a good example. A prominent American snack food company engaged Farsan to automate the Collection and Transport of Small Food Product Plies.

Shai Terem: Our customers believe in the PX100's potential to set new standards in highly regulated markets such as automotive, medical, aerospace, and luxury goods.

Shai Terem: thereby supporting Markforged's future growth.

Shai Terem: of us. Our customers across the world increasingly recognize the digital forge as a powerful platform to reduce cost and improvement in manufacturing operations. Farson Corporation, which designed and delivered custom automation and robotic systems to manufacturers, provides a good example. A prominent American's next-foot company engaged Farson to automate the collection and transport of small-foot product lines. When conventional manufacturing approached, proved incapable of meeting their customers' needs, Farson's team turned to the digital forge to boost design flexibility and production opportunities. Farson produced over 80 small package containers that were production-ready for the packaging line, while meeting a lean manufacturing budget for the customer.

Shai Terem: We remain on plan to ship additional units in the second half of this year.

Shai Terem: Our customers across the world

Shai Terem: increasingly recognized the digital forge as a powerful platform to reduce cost and improve manufacturing operations.

Shai Terem: To maximize our cash resources and best enable us to achieve sustainable growth where implementing a 25 million cost reduction initiative that we expect will reduce our annual operating expenses run rate to approximately 70 million in 2025. These cost reduction actions have been initiated and we expect to be completed by the end of the year. We have a strong product line and these cost reduction are not expected to compromise our ability to grow and keep us on a sustainable growth trajectory.

Speaker Change: Parson Corporation, which designs and delivers custom automation and robotic systems to manufacturers, provides a good example.

Speaker Change: prominent American snack food company engaged Farsan to automate the collection and transport of small food product lines.

Shai Terem: When the Convention of an Manufacturing Approach proved incapable of meeting their customers' needs, Parsons' team turned to the digital forge to boost design flexibility and production opportunities. Parson produced over 80 small package containers that were production ready for the packaging line while meeting a lean manufacturing budget for the customers. This is just one of many examples of how Firestone is solving its customer packaging challenges with the digital force. Another example is Century Product Limits, a leading global company specializing in the production of a premium non-alcoholic beverage, which also solves manufacturing challenges using the digital forward.

Speaker Change: When conventional and manufacturing approached, proved incapable of meeting their customers' needs.

Shai Terem: Parsną's team turned to the digital forge to boost the scientific ability and production opportunities.

Shai Terem: In Q2, we also accelerated shipments of the FX10, underscoring the products innovative features and superior capabilities of printing mission critical parts for the factory floor. We enter Q3 with a robust pipeline and intent to release additional capabilities which increases our confidence that this momentum will continue to drive growth in the second half of the year. We also launched two new materials, Onyx-FR, Blame retardant and Vega with high-temperature continuous fiber. These new materials further expand the capabilities of the digital forge and especially the FX20 which will help our manufacturing customers to solve even more applications on the factory floor. We believe these innovations amplify the capabilities of our newest platforms and will support the increased adoption and growth.

Shai Terem: Parson produced over 80 small packaged containers that were production ready for the packaging line.

Shai Terem: This is just one of many examples of how Farson is solving its customer packaging challenges with the Digital Forge.

Shai Terem: meeting, a lean manufacturing budget for the customer.

Firestone: This is just one of many examples of how Firestone is solving its customer packaging challenges with the digital forge.

Shai Terem: Another example is with Centuri Product Limited, a leading global company specializing in the production of premium, non-alcoholic beverages, which also solved manufacturing challenges using the digital forge. They have logged over 12,000 hours with the digital forge, producing over 1,000 parts such as jigs for tuber placement for a fraction of the cost of traditional sourcing. Access at the Haruna plant led to expansion across Centuri Product and the entire Centuri Group, enhancing productivity and innovation at multiple sites. Driven by innovative new products, as well as robust utilization rates across our growing installments, we are on plan to return to growth in the second half of the year.

Speaker Change: Another example is with Century Products Ltd.

Speaker Change: A leading global company specializing in the production of premium non-alcoholic beverages.

Speaker Change: which also solves manufacturing challenges using the digital boards.

Shai Terem: Evlogged over 12,000 hours with a digital port, producing over 1,000 parts, such as jigs for tube replacement, for a fraction of the cost of traditional sources. Success at the Haruna plant led to expansion across Suntory products and the entire Suntory group, enhancing productivity and innovation at multiple sites. Driven by Barnovative New Products, as well as robust utilisation rates across our growing installed base, where we ourselves plan to return to growth in the second half of the year.

Speaker Change: They have logged over 12,000 hours with the digital forge, producing over 1,000 parts, such as jigs for tube replacement, for a fraction of the cost of traditional sourcing.

Speaker Change: Success at the Haruna plant led to expansion across Suntory products and the entire Suntory group, enhancing productivity and innovation at multiple sites.

Shai Terem: I am also excited to announce that we have successfully shipped the first PX100 in Q2, marking a significant milestone in our company's journey. This milestone is the culmination of extensive development and rigorous testing to ensure we deliver high quality innovative solutions to our customers. Our customers believe in the PX100 potential to set new standards in highly regulated markets, such as automotive, medical, aerospace and luxury goods. Thereby, supporting Mark 4G's future growth. We remain on plan to ship additional units in the second half of this year. Our customers across the world increasingly recognize the digital forge as a powerful platform to reduce cost and improvement in manufacturing operations.

Shai Terem: driven by innovative new products.

Speaker Change: As well as robust utilization rates across our growing install base, we are on plan to return to growth in the second half of the year.

Shai Terem: There is a massive opportunity to help manufacturers bring industrial production to the point of need, and we remain confident that Mark Forge offers the best solution.

Shai Terem: There is a massive opportunity to help manufacturers bring industrial production to the point of need, and we remain confident that Mark Forge offers the best solution. With effective cost controls, brutal cash management, and our new product line, we remain excited about the future of the company and our ability to continue to drive the adoption of additive manufacturing on the factory floor. With that, I now turn the call over to Assaf Zipori, our CFO, who will offer more details on our financial performance and guidance for the remainder of the year.

Speaker Change: There is a massive opportunity to help manufacturers bring industrial production to the point of need and we remain confident that Mark Forge offers the best solution.

Shai Terem: With effective cost controls, rodent cash management, and our new product line, we remain excited about the future of the company and our ability to continue to drive the adoption of additive manufacturing on the factory floor.

Assaf Zipori: With effective cost controls, brutal cash management, and our new product mine, were remain excited about the future of the company and our ability to continue to drive that adoption of additive manufacturing on the factory floor.

Assaf Zipori: With that, I now turn the call over to a staff report of CFO who will offer more details on our financial performance and guidance for the reminder of the year. Thank you, Shai, and good evening, everyone. I will now be covering our financial results for the second quarter of 2024 in the outlook for the full year. Please note that my comments reflect our non-GAAP results and outlook. For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website includes our GAAP to non-GAAP reconciliation to assist with my commentary. Revenue for Q2 was 21.7 million compared to 25.4 million in the second quarter of 2023.

Shai Terem: With that, I now turn the call over to Assaf Zipori, our CFO , who will offer more details on our financial performance and guidance for the remainder of the year.

Assaf Zipori: Thank you, Shai, and good evening, everyone. I will now be covering our financial results for the second quarter of 2024 and the outlook for the full year. Please note that my comments reflect our non-GAAP results and outlook. For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website includes our gap to non-gap reconciliation to assist with my commentary. Revenue for Q2 was $21.7 million, compared to $25.4 million in the second quarter of 2023.

Assaf Zipori: Our revenue performance was largely driven by lower system revenue, which continues to be impacted by tough market conditions with high interest rates. World's margins for the quarter were 51.9%, up 3.6% from the second quarter of 2023. This margin expansion was driven by operational efficiencies and product innovation.

Assaf Zipori: Thank you, Shai, and good evening, everyone.

Shai Terem: Farson Corporation, which designed and delivered custom automation and robotic systems to manufacturers, provides a good example. A prominent American's next-foot company engaged Farson to automate the collection and transport of small-foot product lines. When conventional manufacturing approached, proved incapable of meeting their customers needs, Farson's team turned to the digital forge to boost design flexibility and production opportunities. Farson produced over 80 small-packaged containers that were production-ready for the packaging line, while meeting a lean manufacturing budget for the customer. This is just one of many examples of how Farson is solving its customer packaging challenges with the digital forge.

Assaf Zipori: I will now be covering our financial results for the second quarter of 2024 in the outlook for the full year.

Assaf Zipori: Please note that my comments reflect our non-GAP results and outlook.

Assaf Zipori: For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website includes our gap to non-gap reconciliation to assist with my commentary.

Assaf Zipori: Revenue for Tier 2 was 21.7 million, compared to 25.4 million in the second quarter of 2023.

Assaf Zipori: A revenue performance was largely driven by lower system revenue, which continues to be impacted by tax market conditions with high interest rates. Growth margins for the quarter was 51.9%, up 3.6% from the second quarter of 2023. This margin expansion was driven by operational efficiencies and product mix. Operating expenses were 23.3 million in the second quarter of 2024, down from 26.6 million in the second quarter of 2023. This improvement is a result of our own growing efforts to reduce operating expenses and optimize our cash utilization. As we previously highlighted, we initiated an approximately 25 million annualized cost reduction initiatives that is expected to reduce our annual up extra on rate to approximately $70 million in 2025.

Assaf Zipori: Our revenue performance was largely driven by lower system revenue, which continues to be impacted by tough market conditions with high interest rates.

Assaf Zipori: Growth margins for the quarter was 51.9% up 3.6% from the second quarter of 2023. This margin expansion was driven by operational efficiencies and product mix.

Shai Terem: Another example is with Centuri Product Limited, a leading global company specializing in the production of premium non-alcoholic beverages, which also solved manufacturing challenges using the digital forge. They have logged over 12,000 hours with the digital forge, producing over 1,000 parts such as jigs for tuber placement, for a fraction of the cost of traditional sourcing. Access at the Haruna plant led to expansion across Centuri Product and the entire Centuri Group, enhancing productivity and innovation at multiple sites.

Assaf Zipori: Operating expenses were $23.3 million in the second quarter of 2024, down from $26.6 million in the second quarter of 2023. This improvement is a result of our ongoing efforts to reduce operating expenses and optimize our cash utilization. As we previously highlighted, we initiated an approximately $25 million annualized cost reduction initiative that is expected to reduce our annual OPEX run rate to approximately $70 million in 2025. We expect savings to begin to be realized in fiscal year 2024, with the cost reduction program almost entirely completed by the end of the year 2024.

Assaf Zipori: Operating expenses were 23.3 million in the second quarter of 2024, down from 26.6 million in the second quarter of 2023.

Assaf Zipori: This improvement is a result of our own going efforts to reduce operating expenses and optimize our cash utilization.

Assaf Zipori: As we previously highlighted, we initiated an approximately $25 million annualized cost reduction initiative that is expected to reduce our annual OPEX run rate to approximately $70 million in 2025.

Shai Terem: Driven by innovative new products, as well as robust utilization rates across our growing installbays, we are on plan to return to growth in the second half of the year. There is a massive opportunity to help manufacturers bring industrial production to the point of need, and we remain confident that Mark Forge offers the best solution.

Assaf Zipori: We expect savings to begin to be realized in Q3 2024, with the cost reduction program almost entirely completed by the end of the year 2024. I also want to note that in Q3 we reached an agreement to terminate the lease agreement covering our previous headquarters locations in Watertown, Massachusetts. As consideration for the lease termination, we made a one-time payment of $2.75 million to the landlord, avoiding approximately $600,000 of rent in 2024, and we expect to save a cumulative additional amount of approximately $6.2 million in 2025 and beyond. Our operating loss for the quarter was 12 million and improvement from 14.3 million in the second quarter of 2023.

Assaf Zipori: We expect savings to begin to be realized in Q3 2024 with the cost reduction program almost entirely completed by the end of the year 2024.

Assaf Zipori: I also want to note that in Q3, we reached an agreement to terminate the lease agreement covering our previous headquarters location in Watertown, Massachusetts. As consideration for the lease termination, we made a one-time payment of $2.75 million to the landlord, avoiding approximately $600,000 of rent in 2024, and we expect to save a cumulative additional amount of approximately $6.2 million in 2025 and beyond. Our operating loss for the quarter was $12 million, an improvement from $14.3 million in the second quarter of 2023. The net loss in the second quarter of 2024 was $10.8 million, and an improvement from a loss of $12.5 million in Q2 2023. The second quarter loss per share was $0.05 based on our weighted average, shares outstanding for the quarter of 201.3 million.

Shai Terem: With effective cost controls, rodent cash management, and our new product line, we remain excited about the future of the company and our ability to continue to drive the adoption of additive manufacturing on the factory floor.

Assaf Zipori: I also want to note that in Q3, we reached an agreement to terminate the lease agreement covering our previous headquarters location in Watertown, Massachusetts.

Assaf Zipori: As consideration for the list termination, we made a one-time payment of $2.75 million to the landlord, avoiding approximately $600,000 of rent in 2024.

Assaf Zipori: With that, I now turn the call over to a staff report of CFO who will offer more details on our financial performance and guidance for the reminder of the year. Thank you, Shai, and good evening, everyone. I will now be covering our financial results for the second quarter of 2024 in the outlook for the full year.

Assaf Zipori: And we expect to save a cumulative additional amount of approximately $6.2 million in 2025 and beyond.

Assaf Zipori: Please note that my comments reflect our non-gap results and outlook. For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website include our gap to non-gap reconciliation to assist with my commentary. Revenue for Q2 was 21.7 million compared to 25.4 million in the second quarter of 2023. A revenue performance was largely driven by lower system revenue which continues to be impacted by tax market conditions with high interest rates.

Assaf Zipori: Our operating loss for the quarter was $12 million, an improvement from $14.3 million in the second quarter of 2023.

Assaf Zipori: Net loss in the second quarter of 2024 was 10.8 million and improvement from a loss of 12.5 million in Q2 2023. Second quarter lost fair share with five cents based on our weighted average shared outstanding for the quarter of 201.3 million. Our net cash used in operating activities in the first six months of 2024 was 21.9 million, which is an improvement of approximately 29% from the first six months of 2023. We expect our cash utilizing operations to improve throughout 2025 as a result of higher revenues, growth margin expansion, cost saving initiatives, and working capital efficiencies.

Assaf Zipori: Net loss in the second quarter of 2024 was $10.8 million, an improvement from a loss of $12.5 million in Q2 2023.

Assaf Zipori: Second quarter loss per share was $0.05 based on our weighted average, shares outstanding for the quarter of $201.3 million.

Assaf Zipori: Our net cash used in operating activities in the first six months of 2024 was $21.9 million, which is an improvement of approximately 29% from the first six months of 2023. We expect our cash U.T. lies in operations to improve throughout 2025 as a result of higher reviews of margin expansion, cost saving initiatives, and working capital efficiency. Our cash and cash equivalents, including restricted cash, were 93.9 million at the end of Q2, down from 109.4 million at the end of Q1.

Assaf Zipori: Our net cash used in operating activities in the first six months of 2024 was $21.9 million, which is an improvement of approximately 29% from the first six months of 2023.

Assaf Zipori: Growth margins for the quarter was 51.9%, up 3.6% from the second quarter of 2023. This margin expansion was driven by operational efficiencies and product mix. Operating expenses were 23.3 million in the second quarter of 2024, down from 26.6 million in the second quarter of 2023. This improvement is a result of our own growing efforts to reduce operating expenses and optimize our cash utilization. As we previously highlighted, we initiated an approximately 25 million annualized cost reduction initiatives that is expected to reduce our annual off-extron rates to approximately $70 million in 2025.

Assaf Zipori: We expect our cash-utilizing operations to improve throughout 2025 as a result of higher revenues, gross margin expansion, cost-saving initiatives, and working capital efficiencies.

Assaf Zipori: Our cash and cash equivalent, including restricted cash, were 93.9 million at the end of Q2, down from 109.4 million from the end of Q1. A restricted cash includes 19.1 million to cover certain liabilities associated with the continuous composite lawsuits and the judgment of 17.3 million in monetary damages plus 1.8 million of interest for the pre-judgment period and the expected duration of the appeal process. We expect these funds we remain in restricted cash as we continue to explore and pursue all available options with respect to the continuous composite smell, including seeking to overturn the verdict through the appeal process.

Assaf Zipori: Our cash and cash equivalents, including restricted cash,

Assaf Zipori: We're 93.9 million at the end of Q2, down from 109.4 million from the end of Q1.

Assaf Zipori: The restricted cash includes $19.1 million to cover certain liabilities associated with the continuous composite lawsuit and the judgment of $17.3 million in monetary damages plus $1.8 million of interest for the pre-judgment period and the expected duration of the appeal process. We expect these funds will remain in restricted cash as we continue to explore and pursue all available options with respect to the continuous composites matter, including seeking to overturn the verdict through the appeal process.

Assaf Zipori: A restricted cash includes $19.1 million to cover certain liabilities associated with the Continuous Composites Lawsuit and the judgment of $17.3 million in monetary damages.

Assaf Zipori: 1.8 million of interest for the pre-judgment period and the expected duration of the appeal process.

Assaf Zipori: We expect savings to begin to be realized in Q3 2024 with the cost reduction program almost entirely completed by the end of the year 2024. I also want to note that in Q3 we reached an agreement to terminate the lease agreement covering our previous headquarters locations in Watertown, Massachusetts. As consideration for the lease termination, we made a one-time payment of $2.75 million to the landlord avoiding approximately $600,000 of rent in 2024 and we expect to save a cumulative additional amount of approximately $6.2 million in 2025 and beyond.

Assaf Zipori: We expect these funds will remain in restricted cash as we continue to explore and pursue all available options with respect to the Continuous Composites Matter, including seeking to overturn the verdict

Assaf Zipori: Following the verdict, Continuous Composite also asserted through post-trial motion claims for royalty payments for sales of certain products, manufactured and/or sold in the United States after December 31, 2023. We anticipate the ruling on the post-trial royalty claim to occur during the second half of 2024. As we note in our 10-Q filing for the period ended June 30, 2024, filed today with the SEC and available on our investor relations website. We estimated the last contingency related to continuous composite royalty payment claims to be in the range of zero to 2.7 million for the six months ended June 30, 2024.

Assaf Zipori: Following the verdict, Continuous Composites also asserted a proposed trial motion requesting royalty payment for sales of certain products manufactured and or sold in the United States after December 31, 2023. We anticipate a ruling on the post-trial royalty claim to occur during the second half of 2024. As we note in our 10-Q filing for the period ended June 30, 2024, filed today with the SEC and available on our Investor Relations website, we estimated the last contingency related to continuous composite soil repayment claims to be in the range of zero to 2.7 million for the six months and then June 30, 2024; in accordance with applicable accounting standards and guidance, we recorded a charge for Q2 because the lower end of this range was estimated to be zero, and we These estimates were based on the information available to us at the time of assessment.

Assaf Zipori: through the appeal process.

Assaf Zipori: Following the verdict, continuous composite, also assertive, to post-try motion, claims for oil deployment, for sales of certain products, manufactured, and or sold in the United States after December 31, 2023.

Assaf Zipori: We anticipate a ruling on the bowstrile royalty claims to occur during the second half of 2024.

Assaf Zipori: Our operating loss for the quarter was 12 million and improvement from 14.3 million in the second quarter of 2023. Net loss in the second quarter of 2024 was 10.8 million and improvement from a loss of 12.5 million in Q2 2023. Second quarter lost fair share with five cents based on our weighted average shared outstanding for the quarter of 201.3 million. Our net cash used in operating activities in the first six months of 2024 was 21.9 million which is an improvement of approximately 29% from the first six months of 2023.

Assaf Zipori: As we note in our thank you filing for the period ended June 30, 2024, fly today with the SEC in available on our Investor Relations website.

Assaf Zipori: We estimated the last contingency related to continuous composite soil repayment claims to be in the range of 0 to 2.7 million for the 6 months ended June 30, 2024.

Assaf Zipori: In accordance with applicable accounting standards and guidance, we recorded no accrual for Q2 because the low end of this range was estimated to be zero, and we believe that no amount within this range was a better estimate than any other amount. These estimates were based on information available to us at the time of assessment. As additional information becomes available or there are future developments in the case, we may reassess the potential liability related to this matter and may revise our estimates. In the event is awarded, we expect the court's remedy to be a fixed fee assessment of royalty payment for each machine sold and/or manufactured in the United States after December 31, 2023.

Assaf Zipori: In accordance with applicable accounting standards and guidance, we recorded no accrual for Q2 because the low end of this range was estimated to be zero.

Assaf Zipori: and we believe that no amount within this range was a better estimate than any other amount.

Assaf Zipori: These estimates were based on the information available to us at the time of assessment.

Assaf Zipori: We expect our cash utilizing operations to improve throughout 2025 as a result of higher revenue, growth margin expansion, cost saving initiatives and working capital efficiencies. Our cash and cash equivalent including restricted cash were 93.9 million at the end of Q2 down from 109.4 million from the end of Q1. A restricted cash includes 19.1 million to cover certain liabilities associated with the continuous composite lawsuits and the judgment of 17.3 million in monetary damages, plus 1.8 million of interest for the pre-judgment period and the expected duration of the appeal process.

Assaf Zipori: As additional information becomes available, or there are future developments in the case, we may reassess the potential liability related to this matter and may revise our estimation. In the event continuous composites post-trial royalty payment claims are successful and royalties are awarded, we expect the court's remedy to be a fixed fee assessment of royalty payments for each machine sold and or manufactured in the United States after December 31, 2023, which includes our carbon fiber reinforcement technology.

Assaf Zipori: As additional information becomes available, or there are future developments in the case, we may reassess the potential liability related to this matter and may revise our estimates.

Assaf Zipori: In the event continuous composites post-trial royalty payment claims

Assaf Zipori: are successful and royalties are awarded.

Assaf Zipori: We expect the court's remedy to be a fixed-fee assessment of royalty payments for each machine sold and or manufactured in the United States after December 31, 2023.

Assaf Zipori: That includes our carbon fiber reinforcement technology. In the near term, we would expect royalty payments, if awarded, to result in a five to seven percentage point reduction in our growth margins. There may be additional impact as well, which are discussed in our Form 10-Q filing for the period and the June 30, 2024, a copy of which is available on our investor relations website. As discussed previously, we continue to strongly disagree with the verdict in the continuous composite case and the associated post-trial royalty claim. We have engaged a leading law firm to support us through the appeal process and defend against the post-trial royalty claims and continue to explore all other available options.

Assaf Zipori: That includes our carbon fiber reinforcement technology.

Assaf Zipori: In the near term, we would expect royalty payments, if awarded, to result in a 5 to 7 percentage point reduction in gross margin. There may be additional impacts as well, which are discussed in our Form 10-Q filing for the period ended June 30, 2024, a copy of which is available on our Investor Relations web site at the Scott As previously discussed, we continue to strongly disagree with the verdicts in the continuous composite case and the associated post-stry royalty claims.

Assaf Zipori: In the near term, we would expect royalty payments, if awarded, to result in a 5-7 percentage point reduction in gross margins.

Assaf Zipori: We expect these funds will remain in restricted cash as we continue to explore and pursue all available options with respect to the continuous composite smell, including seeking to overturn the verdict through the appeal process. Following the verdict, continuous composite also asserted to post-try motion claims for royalty payment for sales of certain products, manufactured and or sold in the United States after December 31, 2023. We anticipate a ruling on the post-trial royalty claims to occur during the second half of 2024.

Assaf Zipori: There may be additional impacts as well, which are discussed in our Form 10-Q filing for the period ended June 30, 2024, a copy of which is available on our Investor Relations website.

Assaf Zipori: As discussed previously, we continue to strongly disagree with the verdict in the continuous composite case and the associated post-trial royalty claims.

Assaf Zipori: We have engaged a leading law firm to support us through the appeal process and defend against the post-trial royalty claim, and continue to explore all other available options. We are also exploring measures to help mitigate the impact of an ongoing royalty payment obligation if awarded by the court, such as 15 more of our manufacturing operations to site outside of the United States. Now, we're moving on to our guide. At this time, our guidance does not reflect any additional relief continuous composite may exist as a result of its post-trial claims.

Assaf Zipori: We have engaged a leading law firm to support us through the appeal process and defend against the post-trial royalty claims and continue to explore all other available options.

Assaf Zipori: We are also exploring measures to help mitigate the impact of an ongoing royalty payment obligation, if awarded by the court, such as 15 more of our manufacturing operations to sites outside of the United States.

Assaf Zipori: We are also exploring measures to help mitigate the impact of an ongoing royalty payment obligation, if awarded by the court, such as 15 more of a manufacturing operation to sites outside of the United States.

Assaf Zipori: As we note in our 10Q filing for the period ended June 30, 2024, tried today with the SEC and available on our investor relations website. We estimated the last contingency related to continuous composite royalty payment claims to be in the range of 0 to 2.7 million for the six months ended June 30, 2024. In accordance with applicable accounting standards and guidance, we recorded now a rule for Q2 because the low end of this range was estimated to be 0, and we believe that no amount within this range was a better estimate than any other amount.

Assaf Zipori: Now moving on to our guidance. At this time, our guidance does not reflect any additional relief Continuous Composite may receive as a result of its post-trial claims. Our guidance does not include adjustment in future quarters to account for development in the ongoing Continuous Composite litigation. We anticipate fiscal year 2024 revenues to be between 90 and 95 million, which acknowledges more persistent macroeconomic headwinds than previously anticipated. However, we expect revenues to grow low single digits quarter over quarter in Q3 and continue to see double digits year-over-year growth returns in the second half driven by sale of new products, particularly the effect.

Assaf Zipori: Now moving on to our guidance.

Assaf Zipori: At this time, our guidance does not reflect any additional relief continuous composite may receive as a result of its post-trial claims.

Assaf Zipori: Our guidance does not include any adjustment in future quarters to account for developments in the ongoing continuous composite litigation. We anticipate fiscal year 2024 revenues to be between 90 and 95 million, which acknowledges more economic headwinds than previously anticipated. However, we expect revenues to grow low single digits quarter over quarter in Q3 and continue to see double digit year over year growth return in the second half driven by sales of new products, particularly the FX10. Given strong execution over the first half, we now expect non-gap growth margins to be in the upper range of our previous 48 to 50% guidance.

Assaf Zipori: Our guidance does not include adjustments in future quarters to account for developments in the ongoing continuous composite litigation.

Assaf Zipori: We anticipate fiscal year 2024 revenues to be between 90 and 95 million, which acknowledges more persistent macroeconomic headwinds than previously anticipated.

Assaf Zipori: These estimates were based on information available to us at the time of assessment. As additional information becomes available, or there are future developments in the case, we may reassess the potential liability related to this matter and may revise our estimates. In the event continuous composite post-trial royalty payment claims are successful and royalties are awarded, we expect the court's remedy to be a fixed fee assessment of royalty payment for each machine sold and all manufactured in the United States after December 31, 2023.

Assaf Zipori: However, we expect revenues to grow low single digits quarter over quarter in Q3 and continue to see double digit year over year growth return in the second half driven by sales of new products, particularly the FX10.

Assaf Zipori: Given strong execution over the first half, we now expect non-GAAP growth margins to be in the upper range of our previous 48 to 50 percent guidance.

Assaf Zipori: Given strong execution over the first half, we now expect non-gap growth margins to lean the upper range of our previous 48 to 50% guidance.

Assaf Zipori: Non-GAAP operating loss is expected to be in the range of 42.5 to 47 million for the year, resulting in a non-GAAP loss per share in the range of 19 to 22 cents per share.

Assaf Zipori: Non-GAP operating loss is expected to be in the range of 42.5 to 47 million for the year.

Assaf Zipori: resulting in a non-gap loss per share in the range of 19 to 22 cents per share.

Assaf Zipori: That includes our carbon fiber reinforcement technology. In the near term, we would expect royalty payments if awarded to result in a 5 to 7 percentage point reduction in our growth margins. There may be additional impacts as well, which are discussed in our form 10Q filing for the period and the June 30, 2024, a copy of which is available on our investor relations website. As discussed previously, we continue to strongly disagree with the verdict in the continuous composite case and the associated post-trial royalty claim.

Operator: That concludes our prepared remarks today.

Assaf Zipori: Non-GAP operating loss is expected to be in the range of 42.5 to 47 million for the year, resulting in a non-gap lost bear share in the range of 19 to 22 cents per share. That concludes our prepared remarks today. Please open the call for questions.

Operator: Please open the column for questions. Thank you. We'll now be conducting a question and answer session. If you'd 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before processing the star keys. One moment please, while we pull for questions. Thank you.

Assaf Zipori: That concludes our three-thirds remarks today. Please open the call for questions.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd 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'd like to remove your question from the queue. For participants using speaker equipment, and may be necessary to pick up your hands, which will focus on the start. moment, please, while we poll for questions. Thank you. Our first question is from Brian Drab, with William Blair. Please proceed with your question.

Operator: Thank you, we'll now be conducting a question and answer session. If you'd 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'd like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Brian Drat: Our first question is from Brian Drat with William Blair. Please proceed with your question.

Speaker Change: Episode 2

Operator: [inaudible]

Assaf Zipori: We have engaged a leading law firm to support us through the appeal process and defend against the post-rial royalty claims and continue to explore all other available options. We are also exploring measures to help mitigate the impact of an ongoing royalty payment obligation if awarded by the court, such as 15 more of our manufacturing operations to sites outside of the United States.

Operator: Thank you, our first question is from Brian Drap with William Blair. Please participate in your question.

Brian Drab: Hi, thanks for taking my questions, just as we were closing talking about the legal issues, I'm wondering, maybe I missed, but can you talk about how much the legal issues have cost you at this point, in terms of legal fees, cumulatively, and you know where we're seeing that in the P&L.

Brian Drat: Hi, thanks for taking my questions. We were closing and talking about the legal issues.

Brian Drab: Alright, thanks for taking my questions.

Brian Drat: I'm wondering, maybe I missed, but can you talk about how much the legal issues have cost you at this point in terms of legal fees cumulatively and where we're seeing that in the PNL?

Brian Drab: Just as we were closing talking with the legal issues, I'm wondering, and maybe I missed, but can you talk about how much...

Brian Drab: Lichuz have cost you at this point in terms of legal fees, cumulatively, and where we're seeing that in the piano.

Assaf Zipori: So Brian, this is Assaf. The legal fees are available in the gap to an end gap. The conciliation, it's excluded from the non-gap PNL, you can see that number over here.

Assaf Zipori: Brian, this is a staff. The legal fees are available in the gap to non-GAAP reconciliation. It's excluded from the non-gap PNL. You can see that number over there.

Assaf Zipori: So, Brian, this is Assaf, the legal fees are available in the gap to an end gap. The conciliation, it's excluded from the non-gap P&L.

Assaf Zipori: Now moving on to our guidance.

Assaf Zipori: At this time, our guidance does not reflect any additional relief continuous composites may receive as a result of its post-rial claims. Our guidance does not include adjustment in future quarters to account for development in the ongoing continuous composites litigation. We anticipate fiscal year 2024 revenues to be between 90 and 95 million, which acknowledges more persistent macroeconomic headwinds than previously anticipated. However, we expect revenues to grow low single digits, quarter over quarter in Q3, and continue to see double digits year-over-year growth returns in the second half driven by sales of new products, particularly the FX10.

Assaf Zipori: You can see that number over there.

Brian Drat: Okay. Do you have a top of mind? I guess I'll look for it. No problem. I'll just look for it, Assaf. No problem. I'll look for it in the file.

Brian Drab: Okay. Do you have a top of mind? I guess I'll look for it.

Speaker Change: Okay. Do you have a top of mind? I guess I'll look for it. No problem.

Assaf Zipori: Yes, I can. Okay, I'll just look for it. No problem. No problem. I'll look for it in the file. I just haven't had time to look through all the numbers yet. And can you can you elaborate a little bit on the cost reduction initiative and what what areas are you focused on, what you know, functions or a little bit more? I think you think you touched on some of the areas, but can you can you just put a little bit more on that?

Brian Drat: I just haven't had time to look through all the numbers yet.

Assaf Zipori: I'll just look forward to Saf, no problem, no problem, all look forward in the final. I just haven't had time to look through all the numbers yet.

Assaf Zipori: Can you elaborate a little bit on the cost reduction initiative and what areas are you focused on, what functions are a little bit more? I think you think you touched on some of the areas, but can you just put a little more detail around where you're cutting? Sure.

Assaf Zipori: Can you elaborate a little bit on the cost reduction initiative and what areas are you focused on?

Assaf Zipori: functions or a little bit more I think you think you touched on some of the areas but can you can you just put a little more detail around where you're where you're cutting

Shai Terem: Sure. So thank you for the question, Brian. We announced a $25 million cost-saving initiative. Bjorn, really committed to getting to what we see as sustainable growth for our company. The majority of the savings are now coming from the R&D side, and now as we have released three new platforms, ready to start growing with them, that's the right path to sustainable growth.

Assaf Zipori: So thank you for the question, Brian. As you announce the 25 million cost saving initiative, you are really committed to get to what we see as sustainable growth for our company. The majority of the savings are now coming from the R&D side, and now as we released three new platforms, we're ready to start growing with them. It's the right prudent to do get to sustainable growth. Okay.

Shai Terem: Sure. So thank you for the question, Brian . As you can see...

Assaf Zipori: Given strong execution over the first half, we now expect non-gap growth margins to be in the upper range of our previous 48 to 50 percent guidance. Non-gap operating loss is expected to be in the range of 42.5 to 47 million for the year, resulting in a non-gap loss per share in the range of 19 to 22 cents per share.

Shai Terem: We announced a $25 million cost-saving initiative.

Shai Terem: We are really committed to get to what we see as sustainable growth for our company. The majority of the savings are now coming from the R&D side and now as we released three new platforms.

Shai Terem: We're ready to start growing with them. That's the right prudent thing to do.

Brian Drab: Okay, thanks. And this last one is it, you have, you know, I know the guidance has come down a little bit and it's a really tough macro environment, but Can you, can you just talk a little bit about why we're going to see an increase in revenue from a little over 40 million in the first half to, in our 50s, time in the second half. Thanks.

Speaker Change: to get to sustainable growth.

Brian Drat: Thanks. And this last one is that you have, you know, I know the guidance has come down a little bit and it's really tough macro environment, but, you know, can you can you just talk a little bit about, you know, why we're going to see an increase in revenue from. You know, a little over 40 million in the first half to, you know, 50, 50 times in a second.

Assaf Zipori: That concludes our prepared remarks today.

Speaker Change: Alright, alright.

Brian Drab: Okay, thanks. And this last one is...

Unknown Executive: Please open the column for questions. Thank you.

Brian Drab: You have, you know, I know the guidance has come down a little bit and it's really tough macro environment.

Unknown Executive: We'll now be conducting a question and answer session. If you'd 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before passing the star keys. One moment please while we pull for questions.

Unknown Executive: Thank you.

Brian Drab: Can you just talk a little bit about why we're going to see an increase in revenue from a little over 40 million in the first half to...

Shai Terem: Thanks. So see there's a slight growth between Q2 and Q1. And we see our pipelines growing, and that's our leading indicator. So assuming the conversions are the same, we believe that we will see the growth. And it's highly based on the new innovation with the pipeline growing significantly with the FX 10. As you see, we shift the first PX 100, and there's more to come. So I think it consists of kind of still challenging an interest environment for capital equipment, but that's the new innovation definitely supports the growth in the second half. Yeah. Okay. All right.

Brian Drab: [inaudible]

Shai Terem: So, you can see there's slight growth between Q2 and Q1. And we see our pipelines growing, and that's our leading indicator. Assuming that the conversions are the same, we believe that we will see growth, and it's highly based on the new innovation. We see the pipeline growing significantly with the FX10. As you see, we shipped the first PX100, and there's more to come. So I think it's, consists of, kind of, still challenging an interesting environment for capital equipment, but the new innovation definitely supports the growth in the second.

Speaker Change: ish, 50 tithes in the second half, thanks.

Shai Terem: So, see there's a slight growth between Q2 and Q1.

Brian Drab: Our first question is from Brian Drat with William Blair. Please proceed with your question. Thanks for taking my questions.

Shai Terem: and we see our pipelines growing and that's our leading indicator so

Speaker Change: Assaf Zipori, Austin Bohlig

Assaf Zipori: As we were closing talking about the legal issues, I'm wondering if maybe I missed, but can you talk about how much the legal issues have cost you at this point, just in terms of legal fees cumulatively and where we're seeing that in the P&L? Brian, this is a staff. The legal fees are available in the gap to a non-gap reconciliation. It's excluded from the non-gap P&L. You can see that number over there.

Speaker Change: Consist of Scarb.

Shai Terem: Still challenging interest environment for capital equipment but the new innovation definitely supports the growth in the second half.

Brian Drab: Yeah, okay. All right. Thanks very much. Thank you, Brian.

Brian Drat: Thanks very much.

Operator: Thank you, Brian.

Brian Drab: Yeah, okay, all right, thanks very much.

Operator: As a reminder, if you want to ask a question, please press star one on your telephone keypad. Thank you.

Operator: Reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Shai Terem for any closing comments.

Shai Terem: Thank you Brian.

Operator: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: Episode 2

Operator: There are no further questions at this time.

Assaf Zipori: Okay. Do you have a top of mind? I guess I'll look for it. No problem, of all. Okay, I'll just look for it, Assaf. No problem. I'll look for it in the file. I just haven't had time to look through all the numbers yet.

Shai Terem: I'd like to hand the floor back over the shy to round for any closing comments. Thank you, everyone, for joining us for our second quarter results. We're talking again in Q3.

Operator: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Shai Terem for any closing comments.

Shai Terem: Thank you everyone for joining us for our second quarter results; we'll talk again in two free minutes.

Shai Terem: Thank you everyone for joining us for our second quarter results. We're talking again in Q3.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Assaf Zipori: Can you elaborate a little bit on the cost reduction initiative and what areas are you focused on? What functions are a little bit more? I think you think you touched on some of the areas, but can you just put a little more detail around where you're cutting? Sure, so thank you for the question, Brian. As you announce the 25 million cost saving initiative, you are really committed to get to what we see as sustainable growth for our company.

Operator: This concludes today's conference. You may disconnect your lives at this time. Thank you for your participation.

Operator: [inaudible]

Assaf Zipori: The majority of the savings are now coming from the R&D side and now as we release the three new platforms, we're ready to start growing with them. That's the right prudent thing to do to get to sustainable growth. Okay, thanks.

Assaf Zipori: And this last one is you have, you know, I know the guidance has come down a little bit and it's really tough macro environment, but can you just talk a little bit about, you know, why we're going to see an increase in revenue from, you know, a little over 40 million in the first half to, you know, 50, 50 times in the second half. Thanks. Sure, so see there's a slight growth between Q2 and Q1 and we see our pipelines growing and that's our leading indicator.

Assaf Zipori: So, assuming that the conversions are the same, we believe that we will see the growth and it's highly based on the new innovation with the pipeline growing significantly with FX10. As you see, we shift the first PX100 and there's more to come. So I think it's consistent of kind of still challenging an interesting environment for capital equipment, but the new innovation definitely supports the growth in the second half. Yeah, okay. All right. Thanks very much. Thank you, Brian. As a reminder, if you want to ask a question, please press star one on your telephone keypad. Thank you.

Unknown Executive: There are no further questions at this time.

Shai Terem: I'd like to hand the floor back over the shite around for any closing comments. Thank you, everyone, for joining us for our second quarter results. We're talking again in Q3.

Unknown Executive: This concludes today's conference. You may disconnect your lives at this time. Thank you for your participation.