Q2 2025 Kornit Digital Ltd Earnings Call

Greetings, and welcome to cornet. Digital's second quarter 2025 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Mr. Jared mamemon, investor relations, for kornit, digital Mr. Mayman. You may begin

Thank you, operator.

Good day everyone and welcome to corny digital second quarter 2025 earnings conference call.

Joining me today are chief executive officer, Ronin, Samuel and Lori Hanover Court needs Chief Financial Officer.

For today's call Ronin will provide comments on the second quarter of 2025 and provide an update on our Market.

Lori will then review the second quarter results and provide our third quarter outlook before we open it up for Q&A?

Before we begin, I would like to remind you that forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995, and other us Securities laws will be made on this call.

These forward-looking statements include, but are not limited to statements relating to the company's plans, strategies projected results of operations, or financial condition, and all statements, that address developments that the company expects will occur in the future.

Forward-looking statements are subject to known and unknown risks and uncertainties that could cause results to differ materially from those implied by the forward-looking statements.

I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's annual report on form 20f filed with the SEC on March, 28th of 2025, which identifies specific risk factors that could cause actual results to differ materially,

Any forward-looking statements are made currently and the company undertakes. No. Obligation to publicly update any forward-looking statements except as required by law.

Additionally, the company will be making reference to certain non-gaap Financial measures on this call. The reconciliation of these 9 Gap measures to the most directly comparable. Gaap measures can be found in the company's earnings release published today, which is also posted on the company's investor relations website.

At this time, I would now like to turn the call over to Ronan. Ronan.

Good morning and thank you for joining us.

We deliver second quarter revenues of approximately 49.8 million within our guidance range, but below the midpoint,

Gross margin was 46.3% and adjusted ibida, margin came in at negative 2.3%, while service and consumable revenues were softer than expected system cells. And our all-inclusive, click business model, continue to drive growth.

Q2 marked modest earlier Revenue growth of 2% bringing total, first half growth to approximately 5%.

During the quarter, we increase our annual recurring revenues by 4 million reaching approximately 19 million, which is a clear reflection of our progress in building. A more predictable and resilient recurring Business Service, revenues declined year-over-year, primarily due to a few Atlas Max upgrades, which had contributed meaningfully to service Revenue in the comparable period of 2024. While overall consumer sentiments, remain relative soft which continues to affect our customer appetite. For new capital investment. We are seeing consistent and encouraging growth in production across our install base impression groups 5% to

222.7 million on a trailing 12 month, basis with strong double-digit goals, among our top customers in both the DTG and roll-to-roll segments.

Despite this increase in impression, Q2 consumable revenues declined year-over-year. Largely due to the lingering impact of October 7 War which led several key customers to significantly. Increase Inc, inventory in late 2023 and early 2024 in the first half of this year, those customers adjusted. Their inventory approached and began drawing down existing stock temporarily reducing replenishment activity. We expect this to normalize in the second half of the year.

Close to digital and capturing net. New impression in bulk apparel.

The opportunity ahead is significant and we are executing with discipline and intent.

In the customized design segment, momentum is continuing with these customers, many of whom have partnered with us for years. They continued to increase utilization of their systems, translating into higher throughput and stronger productivity. This quarter, we saw clear examples of capacity expansion across our install base. Same press, a global leader in mass customization, ordered the second Apollo system along with 3 additional Atlas Max Plus units to their large fleet of coordinated systems, reinforcing both the confidence in our technology and their intent to scale globally.

T-shirt and suns in the UK, part of PF concept group added the second Apollo as well to the Poland site, and the AIC building on the growing Atlas Max Fleet, snagger in the UK added multiple address, Max Plus systems to the growing Fleet of Atlas marks as a response to strong demand and consistently high performance. Another exciting addition is, Flagship print and net new Digital customer that. Join our install base with 1 Apollo and

2, Atlas Max Plus systems under the AIC model on top of that, a global strategic customer placed a follow-on orders to expand. Their Max technology deployment across several sites, fed a validating the value. They see in our platform while many long-standing customers continue operating under our traditional capex, model new customers are increasingly adopting AIC as a way to align cost with production and scale more efficiently. We expect this model to remain a key driver of growth as both utilization and footprint expand in parallel. We are making strong progress in the screen printing Market, which is a critical pillar of our long-term growth plan. This segment long dominated by analog is starting to embrace digital Solutions, driven by the need for shorter lead times, labor efficiency,

And the ability to profitably handle me to show short run jobs, our Atlas Max Plus and a polo systems, especially under the AIC model are now opening doors to customer who just year ago would not have considered digital a viable alternative.

A standard example is pomos, 1 of the largest screen printed in the US serving Major Brands and National retailers. They installed the first Atlas, Max Plus just 6 months ago, expanded to 3 and added an Apollo under AIC in Q2 with more Apollo units. Now, in discussion, we are also seeing strong adoption from new screen. Customers globally in the UK basic thinking, in installing Apollo under AIC in Quebec print is adopted 2. Atlas Max policy systems focus on performance sportswear

And T-Shirt Factory in the UK added two Atlas Max Plus units under AIC to replace screens. These are just a few examples of how traditional screen printers are turning to co to modernize their offering and stimulate growth.

This rapid expansion and growing Confidence from analog, players is a powerful validation of our technology, business model and strategic direction. Looking at production across this accounts. We are seeing a clear increase in net New Impressions for bark apparel many jobs. Now fall within the 250 to 500 unit range and we are seeing more runs produce. Well above 1,000 units which were volumes unreachable for digital.

Digital before the Apollo and the atlas Max Plus.

The screen Market pipeline continues to build with most deals aligned to the AIC model midsize. Players are adopting Atlas, Max Plus and Atlas Max poly while larger customers are deploying a polo or combining both platforms to address broader range of application and run lens. Our value proposition is clear better total cost of ownership, Superior print quality and unmatched agility.

I am already seeing measurable improvements in productivity, flexibility, and economics to accelerate this momentum. We are investing in application development, automation, print quality, and AIC offerings designed for longer run production and large-scale operators. While the transformation is underway, adoption in the screen market is progressing at a measured pace. Bulk apparel remains a highly established analog-driven segment, and shifting production models takes time. That said, it is far the largest opportunity in front of us with a massive install base ready for disruption. Kornit is uniquely positioned to lead the shift. We are in the midst of a paradigm shift; the strength of our customary relationships, expanding pipelines, and differentiated technology position Kornit at the forefront.

The analog to digital transformation in the screen Market Apollo Atlas Max Plus, Atlas Max poly, and our AIC model together. Create a powerful foundation for long-term disruption and Market leadership. We also made meaningful progress this quarter in expanding into new, verticals with additional systems being installed at Key footwork customer across China, Vietnam and Europe.

Each of these customers is adopting kit technology to meet a specific demands of mass Market. Sports footwear production, which demonstrate the scalability and adaptability of our technology across region and use cases.

In parallel, we are advancing breakthrough, Innovations for functional applications and plan to unveil new capabilities. Later this year that will open and entirely new high value markets. Where kit has not previously participated. We also signed a strategic development agreement with 1 of the world's top sports brands to co-develop, a property application, leveraging, our unique functional technology, while details, remain confidential for. Now, this partnership highlights, the increasing relevance of our technology for Global Brands, looking to innovate design and deliver with speed sustainability and Agility at the core.

Looking ahead to the second half of the year. We expect modest Topline growth of low single digit, while further, expanding our ARR base and setting the stage for a meaningful growth in 2026.

We are executing against a defined plan.

Scaling Apollo accelerating AIC adoption, strengthening our screen Market funnel and maximizing utilization across Global install base. At the same time we are maintaining tight operational discipline, continuing to Target fully adjusted, ebit up, profitability and positive cash flow from operations. In addition, we actively managing potential impact for the Recently. Announced 15% tariff on products originating from Israel. While we do not expect the material effect on our financials, we have developed mitigation strategies and cost-saving initiatives to minimize any impact.

In closing, we remain confident in our strategy and our ability to deliver on our long-term goals.

We are in the midst of a profound transformation.

On demand sustainable digital production is no longer a Future Vision, it is happening. Now, our value proposition is clear, our strategy is aligned with long-term industry Trends and we have intense focus on execution. While this change takes time, we are building a healthier more resilient and more scalable business with the right technology. The right model and the right team in place.

Thank you for your continued support.

Now, we'll turn the call over to Lori Lori.

Thank you, Ronan, and good day to everyone. Second quarter revenues were 49.8 million at the low end of the guidance range of 49 million to 55 million. We provided in May,

Year-over-year, we saw growth in product, revenues largely attributable to an increase in system sales and the continued expansion of our AIC program.

Largely reflective of customers returning to more normal levels of inventory. After last year's buildup in the wake of tensions in the Middle East.

Service Revenue declined year-over-year due. Mainly to fewer Atlas, Max upgrades as expected,

Moving to margins second quarter, non-gaap gross, margin was 46.3% compared with 48.6% in the same period last year.

The year-over-year decline in gross margin was primarily the result of the lower sales of consumables and Atlas Max upgrades

Looking at operating expenses.

Total second quarter. Non-gaap operating, expenses were 26.7 million, a decrease of 1.2 million or about 4.4% from 28 million in the same period last year.

We continue to manage operating expenses closely and plan to deliver positive adjusted. Evida on a full year basis in 2025.

For the second quarter. Adjusted evida was - 1.2 million. This was an improvement. Versus the negative - 1.6 million. We reported in the same period last year.

adjusted ebida margin for the second quarter of 2025 was -2.3 within the guidance range we provided in May

Our balance sheet remains robust, with our quarter and cash balance, including bank deposits and marketable securities, standing at $489 million.

Operating cash flow was 3.7 million compared with 4.5 million in the same period last year.

Cash flow less Capital expenditures and investment in equipment on lease for AIC in Q2 was -2.1 Million which was in line with our plan.

This compared to positive 3 million in the same period last year, moving to our Sherry purchase activity. During the second quarter, we completed our 100 million accelerated Sherry purchase program which ran subsequent to our initial 75 million plan announced in 2023.

Through a mix of an accelerated share repurchase and a traditional open market repurchase. We purchased approximately 3.6 million shares at an average price paid of 28.1 per share.

Repurchases, during Q2 specifically or 758,000 shares at an average price paid of 22.67 per share.

This brings our total repurchases since 2023 to 6.7 million shares for a total consideration of 164.8 million reflecting an average price paid of 24.54 per share.

Ending with our third quarter guidance. We currently expect third quarter revenues, to be between 49 million, and 555 million, and adjusted ibida margin to be in the negative, 3% to positive 3% range. I'll now turn it back over to Ronan to open the call for Q&A.

Thank you Lori. Uh operator, please open the call for Q&A.

Certainly. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the Queue at any time by pressing star 2.

Once again, that is star and 1 to ask a question and we will pause for a moment to allow questions to queue.

And we will take our first question from Greg Palm with Craig halem. Please go ahead.

Yeah, thanks. Uh, I I guess I'd like to just start with maybe some kind of broader commentary relative to. You know, what we talked about back back in May I don't know if it's easier to sort of break down the sort of the new implied. Second half Outlook by by segment. But just kind of curious kind of what's changed, you know, how much of the maybe more subdued Outlook is is you know, inventory these stock and how much is you know system sales or you know, at least placement shifting to 2026, you know, less upgrade orders. I don't know, maybe just a little bit more color on all that.

Yeah, thanks. Uh, Greg for the question. Um, I will stop by saying, uh, you know, we are in the, in the middle of, uh, transforming our company, uh, both in terms of technology, in terms of the market that we are serving in terms of the customer base, I'll go to market and miss this model.

Some areas. Uh, but we also see a very positive signs in other area, which I will touch. Probably later on on this call. I would actually would like to start with areas that we saw some, some softness in the in Q2 and to explain them.

first of all, um, in Q2

in the primary driven form, uh, lower than expected, ink ink and service Revenue. Um, uh, this despite a very strong growth that we saw in system cells actually system Cell Double versus last last year and a strong goals in the AIC Revenue.

So we saw a soft and actually a decline.

Revenue in ink and services, let's let me explain from. Where is it? Coming in the ink Revenue decline, this is due to the inventory, build up that was done by few customers in late 2023. Few key customers, uh, much of uh, which was consumed doing, um, the first half of 2025 and they didn't order much of ink. And therefore we saw a decline on this Revenue. This is more of a technical correction versus any fundamental issues on the ink because we see an increase of impression. A

Of course, I'll install base.

in terms of the service Revenue decline,

Is the client came mainly due to fewer Atlas mass or Max upgrades compared to the same period last year, which was very strong in terms of upgrades to the max platform.

We expect when looking ahead uh for ink and services to normalize uh in the second half of

Uh, of the year, the second half of this year.

Additionally, uh, we need to remember that a portion of the ink and service revenue is now embedded within the growing area or the AIC Revenue, that now is embedded within our product category. Um, so we differentiate between the growth that we see on the ink line to, uh, the AIC.

So, this is the main impact in terms of the softness of Q2 few more points that I would like to mention, uh, which relevant to what we've seen in Q2 1 is about Apollo system shipment, which currently are tracking below. What we were intending to shape this year.

This is mainly due to the longer sales cycle and particularly with net new customers from uh, the traditional screen Market, as you know this year, we are focusing very much to take the Apollo to net new customers. Each 1 of those Apollo, most of the installation of the Apollo are going to net new customers and this takes longer in terms of implementation, but also longer sales cycle,

We are actively building Lighthouse accounts when I mentioned few Lighthouse accounts in my Preparatory notes. Um, and some of them will, of course, influence those light account will demonstrate a polo performance and reduce the Fear Factor of switching to digital form other screen printers. Um, and we believe that this will accelerate, uh, the growth of the Apollo moving forward. We have a very strong, uh, pipeline for the screen market and specifically for the Apollo and we believe that this will be a major growth Engine moving forward.

The third point that I would like to mention is regarding the ARR and it's currently the error that we reported close to 19 million dollar, but it's tracking below our expectation.

Uh, and it's primarily due to the slower than anticipated rollout and adoption of the AIC model, and it's coming from different areas.

Basically shifting towards AIC first engagement.

Um, and this model is, Will gain traction uh, with new deal that will sign and many more, uh, that we have right now in the pipeline, but particularly within the screen, uh, segments, we expect that our error executing in 2025 will be meaningful, uh, for the beginning of 2026 to deliver, uh, a, a momentum and meaningful growth in 2026.

So I was trying Greg to cover um those areas that were relative software from what we internally expected to deliver. There are many areas of

Strength and growth, and I'm sure that I will touch on them in later later on in other questions.

Nope, it's uh, very helpful, appreciate the color. And I mean, just

on on the the ink I'm I'm kind of surprised that it's taken this long to see, you know, an impact. So I I'm curious like how many months of inventory, what a customer typically have on hand and and, and

Again, just kind of thinking back to when you, when you saw the initial kind of stockpiling. Why is it taking sort of this long like what's changed more recently where all of a sudden

they're they're destocking now versus you know. Why don't they do it 6 or 9 months ago?

yeah, first of all, we need to understand that

Uh, in specifically few key large customers, okay? Um, and usually those key customer large customers are keeping inventory between 2 2 to 3 months. What we have seen uh in late 2023 and H1 2024. The bank have increased the safety inventory into about 6 months of inventory. Um, and we were assuming that they will consuming, uh, a long 20, uh, 24. Uh, but they've decided to change their inventory, inventory level only in beginning of 2025, and gradually. Now, reducing their inventory and starting to replenish it into again, back into, uh, 2 months, or 3 months of inventory, this takes time and we saw the impacts, uh, specifically in Q2, we assume that most of the

Impact is behind us. They will be continued. Some impact in H2.

Okay, understood. All right, thanks for the caller.

Thank you. Our next question comes from Chris Moore with CJ's Securities. Please go ahead.

Hi, this is Will on for Chris.

Um, you're targeting 30 Apollos in 2025. You know, how many do you already have orders for and how concentrated is the customer base on that? 30. Thank you.

Yeah. So, uh, as I mentioned before, uh, we are very, very encouraged by the feedbacks. That we are receiving from the Apollo, uh, and bringing the Apollo and installing it in net, new customers. Uh, or however, we are tracking below. The 30 system targets that we put in front of self, uh, and I'm not going to provide more detail on that uh, in terms of numbers. But what I'm going to say is that, uh, um, what we see right now that we see more and more customers, uh, adopting the second systems, of course, we have a customers that are having already 7 systems and planning to place more system very soon. Uh, but more and more customers are placing their second system. Uh when we are monitoring those systems. We really see that many of them running long runs. Um, many jobs above

Fully will change a market that we never been there. The screen market for the first time and this is happening. Only this year, we are penetrating, we never been there before this Market, the addressable Market is 5 billion impression below. The 1,000 runlands, just to remind everyone our customers today are doing something like 220 million. This is a m, massive growth potential, we have the right technology, we have the right business model with the all-inclusive click. Now we have the right go to market with the right team to really go and change transform this Market into digital.

Thank you. And could you add any color to what you roughly expect? The mix to be for fy2 between systems, consumables and services and will be much different and uh that's why 26.

Um, so I don't have it exactly. In the 4th of May, I can try to go back to your later on to all of you. But uh, what what? I can say like this. First of all, what we see, we see a massive and this is part of the good news, a massive change in system shipment and revenue from system. Actually, when you look at system, we double the revenue on

System and we double the number of systems that we have shipped to the market, some of it, because of the capex, some of it. Because of the AIC model, this is a very important indicator for the future growth of impression and the growth of corny. So, uh, you should assume that the portion of the system is starting to get a a a bigger. Uh although uh still the ink is a a is is massive. Of course, the AIC is a trending, very, very strongly up. And um we are we believe that the air that we will end 2025 will be very meaningful for the growth into 2026.

um, other things that we we, we see, uh,

Can help you as well. Uh, we see a significant, uh, penetration into the screen Market. You will see there by penetrating, your screen Market is both in terms of new system because most of them, or all of them are new customers. Uh, but you will see a massive growth of on the ink and on the AIC. Uh, in each 1 of those installation, a lot of it is related to Apollo. We also see a recovery, uh, in the customized design, uh, which in, you will see the

Application on the ink revenue and moving forward. We see impression goals in the customized design in many of our customers strong double digit. Um, and many of them are adding additional systems, I mentioned simp, presses and example, uh, synthes Global strategic customer, um, added another Apollo and 3 Atlas Maxes to a very large Fleet of addresses that they already have. Uh, in just 1, example of the customized designs that going, uh, very rapidly right now. Uh, we see, uh, the pipeline both for the for the screen and the customized design are growing. Uh, and the most, uh, encouraging that we have, is that the model that we just launched about the year ago, the AIC model is gaining, massive traction. This is a game changer for the industry. We are the only 1 that

Providing it and we see that it's open. Almost every door and customer, adopting it. And this is will be the 1 of the main vehicle of growth and penetration into the screen Market moving forward.

Thank you.

Thank you. And our next question comes from Jim Ruchi yudi with Anita and Company, please go ahead.

Thank you. Um, hey, well, I'm I'm trying to reconcile your comments. That ARR is

tracking below expectations but that you expect to exit the year with um,

That.

So first of all, you know, everything is against expectation. Uh, so in 1 year from the moment, we've launched uh, the AIC program, we announced today that we have already 19 million dollar of error.

And we are starting to have a more meaningful revenue for May. I see every quarter and of course, H2 is in front of us and we have a pipeline to increase the arrow further. Uh, so you should see a, a, a meaningful increase during 2025 and we will start the next year, uh, with our that actually everything is the revenue already for for the beginning of the year.

And what we see why we believe that this course continue. Um, first of all, we have a pipeline, we see the final is getting stronger and it took us a while as the company to really change the DNA to understand deeply. What does it mean the AIC uh, and to balance between the capex deal to the AIC? Remember that, we still need to deliver the revenue, uh, on a quarterly basis on system while the ARR is more longer term, but as I mentioned, we are driving the company into more of a ARR business. And uh, we see that the adoption of the AIC model uh, is now

Not only within the net, new customer in the screen Market but also some of uh key customer in the customized design existing customer when they want to expand uh adopting. This model which is a fantastic to see the

in between us.

Okay. Um,

Maybe just shifting to the, uh, the atlas Max upgrade business. Uh, I'm wondering how we should be thinking about that. Upgrade business in the second half, just given the order you noted from your low, your Global strategic account. You are you anticipating that more skewed toward Q3 and preparation for, you know, higher utilization and Q4.

Yeah. So first of all, um most of our install base already been upgraded to Atlas Max. Now we are very busy to upgrade most of our install base to address Max plus. It's true that our Global strategic customers started to upgrade their install base last year in Q4, and we were anticipating to, uh, to know when they will continue. And now I'm coming and and mentioning that we go to the Poo for continuation of the upgrade, uh, for their, uh, some of their

Install base, which is a very good sign of believing in our technology and our platform, uh, moving forward. Uh, those updates will be part of Q3 and Q4, uh, revenues and implementation doing the second half of the year. Um, it's already embedded in the comments that I said, that we expect H2, uh, to go, uh, by, uh, load single digit, uh, in H2. Of course, it will contribute to the revenue from the service, uh, or from the, for the survey business.

Okay, if I could just slip that 1, quick, 1 in how many customers um do you feel that have adjusted their inventory levels going back to what you referenced earlier?

Um, it's only a few um, which we believe that we have an impact, uh, is.

Ah less than a handful uh of customer but uh some of them are very meaningful.

Without getting into more.

Fair enough. Thank you.

Thank you. And our next question comes from Brian job with William Blair, please go ahead.

Hi, good morning or good evening I guess in your case. Um, thanks for taking questions. I'm just wondering first of all, uh, you know, some of these larger deals that have been, um, you know, that were in the works earlier in 2025

You know, I think some of that got pushed out, you said, you know, the sales cycle is, is longer. Um, do you have visibility Ronin to some of those deals maybe happening in 2026? Or you know, these customers are just delayed decisions. And and, uh,

Probably going to come back to the table and and um close some of these deals. Once they figure out where they want to put machines, Etc, can you talk about that a little bit?

Yeah, but uh, be before that, I just want to emphasize once again. Um, if you look at the systems line by itself, both in terms of Revenue and in terms of number of systems that we are shipping, we actually doubled the number of systems that we are shipping and the revenue versus last year, okay? So we see a very good momentum uh, while we would like to see more and some of it related to the AIC. Um,

What we found out that what we need to do is really show that the time between, you know, uh the the final development to closing the deal and to to the implementation uh on the screen Market, specifically, what we identify as a barrier, really to to get acceleration, is to have more Lighthouse across the world. And we are very much focusing on building those Lighthouse, like promos. They're just 8 months back or 6 months back in store, 1, Atlas Max. Now, they have 3 plus Apollo and very soon. Hopefully more Apollo, this will be a lighthouse in North America and the same thing will be a lighthouse Inn in UK with basic thinking, uh,

And more and more. And by that we'll spread uh the confidence in the screen Market that uh not only we have the right quality, the right productivity, the right automation, but the TCO and those and those customers are successful. So it's taking time to do this transformation of an industry. Um, this industry, many of those accounts that we are knocking on the door, never heard about Kit. The perception about Kit is that kit is digital, uh, and not relevant for longer run. And only when we sit with them and showing them the technology, the ROI, um, the total cost of ownership when they realizing that they have a massive opportunity to change and improve their business. This takes time, but it's going now to accelerate, because we are gaining momentum that we're gaining experience. And the rumors are starting to spread in the market.

Okay, thanks. And, um, I guess I'll ask just a little more directly. There's one customer that had, at one point, you're talking, you know, a couple of quarters in a row, but, you know, they have seven Apollos—more Apollos than anyone.

Um and then can you talk about? You know that? I think you're you said they could take on 10 more Apollos. Like we're we're where are we with those 10 Apollos?

Yeah, so this uh customer he mentioned that they are were planning to take 10 more polos and we hopefully that they will uh will do it. I cannot get to specific their business. There was some changes uh, uh, moving to 1 new sites. I cannot get into more details than that. Uh, but what I can say that those 7 Apollo performance are incredible.

Incredible performance, uh, running around the clock 24 by 7. They are super pleased with the performance. They are great partners and they will go. We are going to go together moving forward.

Okay. Okay. Um and and then can you comment at all on whether you're seeing uh or or your customers commenting on whether they're increasingly possibly motivated by the

The big Bill that was passed here on the accelerated depreciation associated with that and and can that result in any activity before year end.

Yeah, definitely. Um, it's very relevant to our North America business. I don't know if you make a teams is engaged with many customers that see it as an opportunity. Uh, and uh, of course, this will move some of the deal from AIC into capex, but it's, it's, it's great for the customer. It's great for us, it's great for the economy. So it's definitely going to influence also.

4 H2. Uh, we still don't have, uh, Clarity on how many additional deals, we are going to bend for me to how how, how many deals going to accelerate. But it's a positive indication to the Capital Market.

Okay, I'll follow up more later. Thank you very much.

Thank you.

Thank you. And as a reminder, if you would like to ask a question, please press the star and 1 on your telephone keypad now, and we will take our next question from Eric Woodring with Morgan Stanley. Please go ahead.

Thank you. This is Maya on for Eric, um, you know, you've talked a lot about the success you're seeing with screen printing customers. Can you maybe quantify that for us a little bit more? You know, how much revenue comes from these customers? I understand, it's largely Apollo based, but what they're buying and what kind of Revenue, um, or impression growth, did you see from them? And as we look into the second half, you know, how does this change at all?

Yeah. Um, I'll try to give you some colors on. On this Market, this Market is new to us. We are learning a lot every day. Um, the different types of customers. They are the giant 1, uh, like the promos and, uh, smaller ones, uh, that we are penetrating. Usually the small ones, um, the way we so the way we are dealing with those customers is to try to understand the business. What is the volume that they have? That they can move to digital how much of the volume below 1,000 copies? Uh, um, they have on an annual basis uh, and therefore we are trying to feed the right solution to the volume, so many of the small customers, they don't have enough volume to justify to have an Apollo. And therefore we see a very nice adoption of for the small and midsize.

Screen printers for the atlas Max and the atlas, Max polling, the big 1. Usually, they have enough volume to justify more than 1 Apollo.

And some of them will start actually with Atlas Max to learn about the technology, and later on, we'll add Apollo. And then we'll continue to go with the Apollo, the automation is very, very important. Uh, and uh, the intend is to go with the Apollo, but some of them as their risk, averse will start with, uh, the atas max. What we also learning is that we need to adapt our AIC model to the different type of customers. For example, there are many screen printers,

Which are running the business differently from the customized design. Customer customers design. Customer as the mes is on demand. Usually working, almost 24 hours close at least 2 shifts.

Many of the screen printers are working, only 1 shift, and even if they are big customer in 1 shift, the commitment that they need to give for their Apollo AIC, it's putting them on the on, in a high risk. They sit in the right risk if they can reach to that.

So we are now working on adjusting our AIC model to fit. Also, those customers are running only 1 shift and not running 2 shifts. We also adjusting our IC model to motivate customer to run longer runs. So they will see cost per impression on longer runs lower than if they're running shorter runs. Um, so there's a massive opportunity here. Uh, I can tell you that every door that we are knocking is opening up, uh and seriously discussion. The, the only thing, the main thing that we need to

Clear is the Fear Factor because many of them are analog traditional analog and this is the first time that they are touching digital. Um, and there is a few factor and to overcome it, we need first of all, to spread the word, the, the woman in the market about, uh, the, the success that we have about the qualities that we have, what the productivity we need to create those lighthouses. So the team is very much focused on that and I've been in previous life in in those transformation of industry in the print Market it's happening and Screen Market will move to digital. It's not an exception it will move to digital it's a matter of time and now we accelerating it with our AIC which is a very

A unique proposition to this Market, which will make it much easier and reduce the risk for those customer to move to digital.

Great, thank you. And then 1 last 1 for me, you know,

Trailing 12-month Impressions were up about 5% year-over-year. That's deceleration from what we saw in 1 Q. Obviously, we don't have a lot of history. Um, but you know, why are Impressions slowing? And, you know, how does this trend differ by customer segments? Are you seeing stronger growth in 1 area of the market versus another?

I I mentioned in my script already that we see many of our install base are going strong, double digit, and our top, customer the 20 top customer. Most of them are really going very, very strong. So then you ask yourself, how come it's only 5% on trailing 12 months so let me explain, it's a bit complex, but listen carefully. Um, as Laurie mentioned, last quarter in a prepared remarks

Letting the impressions in 2 ways.

Uh, for customers that connected to the, to our connect system, we track the actual impression printed in real time.

So, this is accurate.

However, we have customer for that, those that are not connected to connect and the way we are calculating it. Um, and within those customer, there are few big customers. We are estimating impression by translating the ink shipments into an average consumption rate. Okay, so we are translating how much shipments of ink that took this quarter and translating it to impression.

Specifically in Q2, this method of, uh,

Was impacted uh by law in shipment because of the issues of October 7th that I mentioned before. This is a temporarily, uh, this temporary reduce the estimated impression, even though that actually production remained. Very stately and and and and the growth is much more than the 5%, uh, that we've mentioned

Great, thank you so much.

Okay, thank you.

And it appears that there are no further questions at this time. I will now turn the program back to Mr. Samuel.

Okay. So thank you very much for being on the call. Uh my my last comment is why we are still in a transition phase. We are confidently. Uh, building a stronger. More resilient more profitable growth business for Mid and long term. Our technology customers win Pipeline and business model are laying the foundation for leadership in both customized design and the large scale digital transformation of the screen Market.

We have confidence in our positioning to drive meaning, meaningful growth in 2026, not only in the customized design, but also in the massive opportunity of digitizing the screen printing Market. Thank you very much and hope to see you soon.

Thank you.

This does conclude today's presentation, thank you for your participation. You may disconnect at any time.