Q3 2025 Kornit Digital Ltd Earnings Call

Greetings and welcome to the corny. Digital third quarter 2025 earnings conference call.

As a reminder, this call is being recorded.

I will now like to turn the conference over to our hosts, Mr. Jared mayman. That's relations for corny digital, Mr. Raymond, you may begin.

Thank you, operator.

Good day, everyone and welcome to Courtney digital's. Third quarter, 2025 earnings conference call.

Joining me today are chief executive officer. Ronan, Samuel, and Lori Hanover Courtney's, Chief Financial Officer.

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

Lori will then review the third quarter results and provide our fourth 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 conditions.

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 different material 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 non-gaap 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 ronit Ronin.

Good morning, everyone. And thank you for joining our third quarter, 2025 earning call.

this quarter with delivered results above the midpoint of our guidance range with revenues of 53.1, million representing 5% growth year-over-year,

in our all-inclusive, click AIC model, which are recognized over time,

Underlining business activity was even stronger, this quarter.

I'm particularly pleased that we have achieved this goals while continuing to generate positive cash flow from operations for the 8 consecutive quarter.

This performance reflects not only strong operational execution, but also continued progress in transforming kit into a business driven by recurring revenues expanding the addressable Market. While driving sustainable, portability beyond the financials, I would like to provide an update on our key Focus areas.

Screen Market, penetration, Apollo adoptions and the expansion of our all-inclusive click model.

The global screen printing market for balke. Peril represent around 14 billion annual Impressions and more than 40% of those production runs are under 1,000 units representing. An addressable Market of roughly 6, billion impressions, as production continues shifting towards shorter runs and faster delivery. Cornet is uniquely positioned to lead the transition from screen printing to Agile, high volume digital production, powered by our advanced technology portfolio and the AIC model that lowers barriers to entry, our goal remains to capture approximately 5% of this addressable Market by 20,

30 in, just 18 months since the first Apollo installation, adoption continues to accelerate. As customer expander fleets, increased utilization and push production to new levels across our early Apollo users production scale rapidly with systems. Now averaging more than 1 million impression annually and now over 40% of those impression produced for bulk apparel about 25% of this. Bulk jobs are above 500 copies proving that digital is moving beyond short runs and increasingly replacing traditional screen printing in high volume production with a growing number of customers. Installing multiple Apollo systems. The shift towards digital as the preferred production method is clearly gaining momentum. Importantly epochs

73, 40% of all Apollo and Atlas Max systems, sold this year, where to new customers, reflecting the growing confidence in coordinates technology, and the expanding opportunity ahead. Another area of progress is the continued expansion of our all-inclusive click model today, about 80% of Apollo systems. Operate under the AIC model which removes barriers

For customers and drives a growing stream of recurring Revenue.

AIC is strengthening who needs leadership in digital production.

Serving as a clear differentiator that attracts new customers and generate strong momentum across the industry. At the end of the third quarter annual recurring revenue from AIC reach 21.5 million up to 2.6 million sequentially. Several deals that shifted into early Q4, have since closed bringing ARR to 23.1 million today and we expect further expansion by year end as the program continued to scale.

This Milestone is a specialty meaningful given that the AIC is still in its early stages of global rollout and was only recently, introducing Asia. Where we deliver our first Atlas Max Plus systems and early. In Q4 close, our first Apollo deal under the program.

Can also be seen clearly in the success of our customers who are expanding capacity scaling production and increasing utilization across their operations.

In the third quarter Med engine Global 1 of the world's largest manufacturers of license and brand and apparel added another Apollo. Under the AIC model on top of 2 existing Apollo's and a large fleets of Atlas, Max Plus systems. This expansion allows them to replace screen, jobs short and production time and reduce waste and energy. Use hybrid digital a fast growing wholesaler added a second. Apollo under AIC to better support peak season, pod demand, move more of its bark, apparel production into digital and meet faster, delivery requirements, basic thinking, a European manufacturer install. A second Apollo within 6 months to meet growing demand from leading fashion brands and

For instance, its position as a digital first producer hft 71 part of the TBI group, integrated Apollo with its existing, Atlas Max Plus Fleet to meet surging bug, demand and set a new production standard in Central Europe.

And in Asia, webbing in South Korea, become the first customer to adopt AIC operating 2 Atlas Max Plus systems. As part of a full digital transformation. That replaced Legacy screen capacity. While improving time to Market and production efficiency.

This example show that cool. Needs technology and business model are delivering tangible results and accelerating the industry transition from screen to digital.

I also want to touch on our expansion beyond our traditional apparel market segments.

Last week at MMA, Asia in Singapore, we showcased our portfolio and announced the commercial launch of konitz digital footwork solution for the sports. And at leisure markets. After 2 years, of pilot programs with leading Global Brands, the solution is now commercially available and has already crossed the Milestone of

More than 1 million pairs of shoes produce using corny technology and the well-known International brands.

This achievement marks an important step forward in applying our digital platform to adjacent categories, and demonstrate that our focused Innovation engine continues to create new growth opportunities. We view Footwear as a significant pillar of our long-term growth plan, the total addressable Market is approximately 1. Billion pairs annually equal to about 2 billion, print Impressions and corn. It is well positioned to capture a meaningful share of this opportunity.

Our solution directly addresses, the Footwear industry, biggest challenges.

Such as slow development Cycles, design limitations, and over production by replacing complex, analog decoration with a single step digital process that delivers unlimited design, Freedom, durability, and efficiency customers are excited because the design to production cycle, which once took months can now be done in days enabling faster response to Trends, lower waist and local on demand product.

Ction at scale following successful, deployments of our new solution in China.

We are expanding into Vietnam and Germany establishing a new global standard for digital Footwear production. This efforts are further supported by additional orders from existing customers secure doing its Singapore

Sustainable digital production continues to grow, and could it Remains the most advanced and trusted partner to enable that transformation before I close? I want to take step back and reflect on the broader transition. We are executing kit is transitioning from 1 time, equipment cells to a recurring usage, based model through AIC and our

when this naturally shifts, the timing of Revenue recognition, it is a deliberate move.

It, strengthens long-term profitability predictability and customer lifetime value.

We are already seeing the benefits through stronger, customer retention higher engagement and increasing system utilization. Our plan for 2025 was to deliver profitability, generate cash from operations and drive growth, both in the revenue. And even more importantly in recurring revenue. From the AIC model, we are on track to deliver on this plan. Looking ahead to the fourth quarter. We expect sequential growth in Revenue, gross margin and ibitta while continuing to expand our recurring Revenue base through the AIC program as we look ahead into 2026.

We expect more the stop line goals in the Lord's single digit as we continue to deliberately transition more customer to AIC while driving strong growth in annual recurring Revenue. At the same time, we expect continued ibida, expansion driven by higher utilization scaling, recurring revenues and discipline cost management. This Evolution position kit for sustainable, profitable growth, and long-term value Creation in summary. We are executing with discipline. Capturing a multi-billion dollar market opportunity. As we transform, how apparel is produced. Our recurring business model is scaling. Our technology is driving real impact, and we continue to look ahead with Innovation into new segments, like, Footwear and other adjacencies, the progress so far is just the

Beginning and there is much more to come.

I will now send the call over to Lori to further discuss our third quarter results and our guidance for the fourth quarter Lori,

Thank you, Ronan. And good day to everyone, third quarter revenues, were 53.1 million within our guidance range of 49 million to 55 million provided in August,

Year-over-year. We saw growth in product revenues primarily attributable to an increase in consumable sales and continued growth of revenue from the AIC model.

Service revenue also increased year-over-year, primarily due to greater upgrade activity.

Moving to margins.

Third quarter, non-gaap gross margin was 45.8% compared with 50.3% in the same period last year.

The year-over-year decline was primarily the result of inventory related adjustments, us tariff costs and lower service gross margin as expected.

We have communicated targeted, price increases that are expected to offset part of the Tariff impact in the coming quarters.

Looking at operating expenses total third quarter, non-gaap operating expenses with 25.8 million, a decrease of 1 million or about 3.7% from 26.8 million in the same period last year.

A large portion of our operating expenses are in Israeli shekels. The shekel appreciated more than 9% in the third quarter year-over-year.

Rate remained at the prior year level operating expenses would have been 25 million or 7% below Q3 2024.

Managing our operating expenses closely as within our control even in an uncertain environment. And we are expecting to realize more meaningful operating. Leverage over time as we continue to align our expenses, with our base of Revenue and near-term needs

For the third quarter.

Adjusted ebido was 1.1 million, compared with 1.5 million in the same period last year.

Had exchange rates in Q3 255 remained at the level of the Year earlier period, adjusted ibida would have reached 1.8 million.

Adjusted Ebie de margin for the third quarter of 2025 was 2% above the midpoint of the guidance range we provided in August.

We still anticipate delivering adjusted EB to profitability on a full year basis in 2025.

As we move into 2026, we plan to continue shifting, a greater share of system volume from the traditional capex model to AIC.

as Ronan said earlier ARR from system, shipped under the AIC model reached 21.5 million at the end of Q3

As a reminder, this figure does not represent recognized Revenue but rather the annualised recurring Revenue, we expect to generate based on systems shipped to date.

We are focused on moving a greater portion of our system shipments to the AIC model, with the goal of expanding this base of recurring Revenue,

This effort will strengthen our ability to project, the coming quarters and year and is expected to drive an improvement in our gross margin over time.

Moving to our balance sheet, our balance sheet remains robust with our quarter and cash balance, including Bank, deposits and marketable, securities standing at 490 million

Operating cash flow was 4.3 million compared with 13.6 million in the same period last year.

Cash flow less Capital expenditures including investment and equipment on lease for AIC in Q3 was 800,000 compared with 3.1 million in the same period last year.

Ending with our fourth quarter guidance, we currently expect fourth quarter revenues, to be between 56 and 60 million and adjusted ibida margin to be in the 7 to 10% range.

I'll now turn it back over to Ronan to open the call for Q&A.

Thank you Lori. Uh, operator we are ready for the session of the Q&A.

Thank you.

And at this time, we will be conducting a Q&A session. If you would like to ask a question, please press star 1 on your telephone keypad, the confirmation total indicate that your line is in the question to you. You may press star 2 to remove yourself from the queue.

1 moment while we pull up for questions.

And our first question comes from the line of Greg Palm with Craig Helen. Please proceed with your question.

Thanks. This is uh Danny Edgar johnford Greg today. Um, maybe just 1 kind of on on the broader demand environment and maybe, you know, if you could break out systems and consumables and, you know how, how what played out this quarter was maybe different or, or, or better, or worse than you were expecting from from what you saw, a few months ago, you know, where are we at in? Kind of, you know, inventory levels on the consumable side and and, and how our customers, kind of, um, activity changed around, you know, Capital sales and and, and AIC for Apollo

Yeah, thank you Danny. Um, so regarding this quarter, uh, the way we look at it product, as you can see, grew, uh, Eve of the year, uh, the same uh, way the service, uh service will uh mainly due to upgrades that we delivered this quarter, uh, within the 4 dock. We see expansion both on the Inc, side. Uh, but also of course, on the AIC is starting to contribute to our Revenue over the role. Uh, we are shipping more and more systems. Uh, you don't see the systems. Of course, that we are shipping on the, on the AIC model, but they will going to contribute, uh, moving forward into Q4 and 2026. Um, this is the major Focus for us, uh, for growth

Hopefully, I answer your question.

Yeah, I know that's that's helpful. Um, maybe just 1 on on gross margin. Um, maybe a little step down uh and um little below expectations. I know you kind of mentioned that inventory related adjustment and some tariff stuff is there any way to kind of break out um into a little more depth, some of those impacts that you saw and how we should think about maybe the the price increase, offsetting those tariff impacts going forward?

Yeah, we live in beginning, okay? So as you mentioned

This quarter.

And as we said, we have communicated targeted price increases that we expect to offset a part of the Tariff impacts in the coming quarters.

Yeah, what I can add as well that you should expect to see expansion in gross. Margin of course in Q4 Q4 is traditionally uh Stronger on is the most is the strongest quarter in terms of gross margin. Uh and we are planning, of course to continue see expansion here over is into 202, C in gross margin

Okay, great. Maybe just 1 last 1 for me. Um, appreciate you kind of giving that early 2026 Outlook, I guess, what kind of visibility do you have at this point? Um, I'm assuming a little bit more visibility, you know, transitioning into more recurring revenue and what kind of gives you that confidence confidence in in your ability to grow, uh, next year.

Yeah. So uh we're starting to have more and more visibility uh because of our recovering revenue and react cooling revenue. Of course, we have the ink, um, Revenue, which is the rear cooling. We have the service Revenue that is react Cooling, and we are building more and more. The are, uh, from the AC models, that is the recurring revenue and while taking relative, uh, conservative view, uh, on the systems that we will deliver. Next year on capex, we still believe

Uh, that we can deliver, uh, growth next year, as I mentioned, uh, low single digit, uh, growth, but you will see, uh, much stronger expansion on the ibida. And, of course, uh uh, accelerated growth on the are doing the U.

All right, appreciate the color. I'll leave it there.

Thank you.

And our next question comes from the line of Brian Drab with William Blair. Please proceed with your question.

Hi, thanks for taking my questions. Um, would like to talk first just about the low single digit outlook for the

for for 2026, um, Ronin, can you just talk about the

Thinking that goes into that the components of of that growth. And um, you know, I I guess I I would have thought that, uh, with

The ARR that you're entering 2026 with that, um, you would have expected to grow a little bit faster than low single digits.

Yeah. Thank you, Brian. Um, and, uh, you're right, uh, for 1 hand, uh, we entering with, uh, uh, n into 2026. We also having, uh, better visibility on our pipeline. We have, uh, Stronger pipeline that we had before, uh, but when we are looking at our growth rate, uh, uh, it reflect a deliberate and strategic position towards building a more predictable, sustainable profitable business, uh, we are not only expanding our addressable Market. Uh, we are really getting into the Bala Footwear and additional categories but also transforming. And this is the main impact. Our model from 1 time equipment, sells to recurring usage, based Revenue under the all-inclusive click model uh, this shift naturally, moves part of the revenue recognition,

That we are planning for next year, uh, from the short term into future periods, but it creates a much stronger Foundation of long-term growth of stability, and visibility.

What we expect 2026 to deliver low single, uh, uh, Revenue goals. We see meaningful expansion in ibida as we maintain a discipline cost structure and continue to scaling and recurring Revenue base.

The ability to grow a significantly while expanding profitability is a major milestone for us and a strong indicator of the durable growth and we are building, um, over the years ahead.

So I hope I answer your question, Brian.

Yeah, Ron and that's that's helpful. Um, my follow-up to that is just

Customers to AIC rather than equipment.

That's a yes, we see that the model is

Saying that saying, yes, because we see the AIC model, is the right the preferred model for our customers, uh, reducing barriers of investing in, uh, capital in advance, uh, aligning cost structure, um, to revenues, um, and uh, providing public ability to our customers. Uh, we see also that customers on this program are using the systems. The utilization is higher, uh, the number of impression is higher on systems that are on AIC model for us, it creates much better visibility, uh, uh, with a much stronger, recurring Revenue, uh, and better profitability, and, uh, uh, customer value, uh, that we are generating out of each of those, uh, system. So, we deliberate decided to move more and more into the recurring business, the AIC, and then,

Therefore, we anticipate a reduction next year, on the capex bill, but increasing the number of systems overall and we see the number of system. Even this year is growing quite significantly versus last year. Um, and we expect even more next year, but many of them or most of them will be on the AIC and we will not see the revenue recognition at the same quarter. We will see it over time, we will create much stronger uh business uh moving forward uh for the years to come

Okay, so just to put, put a final note on this, I guess it seems like uh capex sales be much lower, a AIC Revenue will probably increase.

Significantly, um, next year and and and maybe even more than double. Um but really your position in the company kind of for 2027 and and Beyond is my impression right now.

in terms of the revenue, and

Yeah, as we mentioned AIC revenue is becoming uh significant and most likely by the end of q1. We will start reporting separately on the AIC Revenue as it becomes even more significant. So next year, you will see more Revenue, significantly, more Revenue coming,

From the AIC, some of that is offsetting the reduction of the capex revenue overall, we still expect a growth for the full year.

Okay. Thanks I'll follow up more later. Thank you.

Thank you.

Okay, thank you. And our next question comes from the line of Chris Moore with CJs Securities. Please proceed with your question.

Hi. This is Will. And for Chris, do you think that Geographic mix of your Revenue will look much different 2 to 3 years from now? And if so what are the drivers?

Geographically. Thanks Chris. Um, so for us, North America today, represent something like 65%. Uh, in 3 years from now, we will continue to be the largest region. Um, and uh, we definitely would like to see, uh, in Maya catching up and, and, and the massive opportunity in Asia. Uh, we see specifically in ages of opportunity around the Footwear. Uh, we've been there last week at itmann, we got fantastic feedback. And we have, uh, many new prospects, uh, for this segment, but we see food with this. We see the penetration also into the screen Market in Asia. And as I mentioned, in my prepared remarks, uh we closed the uh 2 deals. Uh, the first deals in Asia.

But also in the AIC we only now introduced the AIC model in Asia. So we expect Asia to contribute more moving forward. Uh, but as we see today, North America is the largest opportunity both on the screen Market uh from the fashion perspective, uh from the install base, we have very large install base. Um and uh we expect not to make up to to continue to contribute and grow.

Thank you and can you remind us sir to add some color to what your thoughts are on a free cash flow in 2026 and 2027?

Uh, hi as we presented earlier. As we drive, our penetration with the AIC approach, we would expect our free cash flow to be negative, whereas our objective is to keep operating cash flow positive.

Okay.

Thank you.

Thank you.

And our next question comes from the line of Eric Woodring with Morgan Stanley. Please proceed with your question.

Hi, this is Maya on for Eric um, you know, last quarter, you told us that second half Revenue would grow kind of in the low, single digit range here every year your guidance for 4 q implies, you know, flat to slight declines, you know, over the past um 3 months, what has really changed and what supporting evidence can you provide to give us the confidence that you'll achieve at least the midpoint of work key results. Thank you.

Yeah, so uh, first of all, you know, a few 3, we go 5%, uh, over here. Um, few full, we expect sequentially goals. This is a q, uh, Q3 however, you will believe you, right? It's a, uh, it's a decline, uh, based on the guidance, um, and the main, uh, driver, um, is the move.

From capex bills to all inclusive. So we do expect to see meaningful growth on the, uh, Insight. Um, um, service probably will be flat or a bit lower than last year. Um, but uh, the main, uh, Impact versus last year will be the move from capex build that we delivered last year, uh, to, uh, all-inclusive, uh, deals, uh, that become are.

Got it. Thank you. And then you kind of touched on this for 4 Keogh but it was good to see Services returned to year-over-year growth. This quarter I understand maybe in 4k, we're thinking flat to slightly down. I guess. How sustainable is upgrade activity? As we look to 2026

Um, so in 2020 uh, uh, 4. Uh, we have quite a, quite significant amount of upgrades, which contributed to the service Revenue. So if we attacking their from the service Revenue, the upgrades at all service Revenue continue to grow. Um, e over here, once we are putting the, uh, inside the upgrade. It depends on the upgrades or the deals that we are closing, the availability of the upgrades that we have, but we are offering most of the upgrades that we've done in 2024 where, uh, around

The Applause to Atlas Max upgrade that we completed most of it. Some of it we continue to do this year uh and we saw it in in Q3 um we do expect uh in 2024 uh at least from the midpoint of 2024 to have some new upgrades, uh, which will contribute for more capability to assistance. I cannot get into detail right now. We are we didn't disclose it yet but we do uh uh plan on additional updates that will come in 2026 on top of uh our biggest customers of potentially can continue and upgrade their Fleet into uh a Max technology.

Thank you.

And our next question comes from the line of Chris Rhymer with Parkways. Let's see with your question.

Oh, hi. Thanks for taking my questions. Uh, 2 quick ones on demand in the Footwear and in textile, I mean, the Footwear, I know you've been talking about this for a while. What's changed? And how do you see customer adoption as as a growth, um, driver over the next 2 years?

And then on the textile you mentioned some of the new customers um in the the Branded uh printing. But how do you see traction with uh textile companies uh customers

In China, and then it go to additional customer and over time, they, uh, took more systems. Uh, we worked very closely with those customers and with Major Brands, uh, and we have reached a point that we felt that we have the right solution as of today. Uh, those customers deliver more than 1 million pairs of Footwear upper into the market. Um, we land a lot about this Market. We didn't know anything about this Market 2 years ago, um, and we met many customers, new potential customers. Um, when we learned about the market, the market is, is, is a big Market where we're looking at the decorated Footwear Market. Uh, we are talking about about 1 billion, uh, pairs of shoes that are being decorated and printed on the annual level. If you translate, it is about 2 billion impression.

And this is our addressable Market that we are going after it, we only in the beginning. Uh, and uh, the what we are doing here is actually a replacement move of changing, the current technology and moving a very complex, uh, way of production that takes uh months, um uh into much more agile. Uh and in in 1, step process, um, meeting the doability standard that this

Uh, industry require um, and uh, right now, um, the stones of innovations that we are bringing to the market around this technology, we are very proud because we are unique. We are the only digital solution out there in the market. There was tons of excitement at itma from foot Footwear manufacturers that came and saw this look at it as a, as a magic. Um, and uh, what we are delivering their, um, is really solving the, the main pain of this industry, which is a slow development, is taking months to develop a, a, a, a footwear. Uh, and you can move it now to days, um, design Freedom, non limitation anymore on design and produce exactly what you need without waste. Um, and without all the production, uh, we have early success in China, uh, with 2

Major manufacturers that working with most of the leading brands of the world. Um, 1 of them at itma, uh, order another 2 systems on top of the system that is they already have. Um, and we now entering, uh, into Vietnam and Germany with additional orders that we got already. Um, they, as I mentioned, lots of interest, um, and, uh, we need to understand, it's just the beginning. Uh,

So why we see a big opportunity there? Um, it will take time to capture it, uh, but it's going to be become, uh, um, significant contributor to our growth in the next 3 years. This is on the Footwear, um, on, on the fashion, um, on the fashion Market. Um, we are looking more the technical aspects of the fashion. Uh, I mentioned on the previous call that we signed a very strategic agreement with 1 of the leading, uh, brands of the world sports brand of the world. The project is running, um, in a few months where we, we are reaching a point of decision, um, and this can open for us. Another very, very lucrative and interesting Market uh, with a big, uh, order that will follow up. Um, once the pilot will uh, will finalize and there is uh, uh, in a lot of in

Interest in the technical area, uh, in in, in Germany, um, Central Europe, uh, in Asia, uh, specifically around the, the sports Market. But we continue to deliver assistance. Also, to the fashion Market 1 of our biggest customer actually in the customized design Market, uh, is adopted, um, a presto a few months back and now is

Uh, using the pesto for all over 3 to print on hoodies and or create hoodies and create uh, t-shirts and delivering to the market with On Demand with customization, very Innovative, uh, direction that we see it, the opportunity for them to grow rapidly with the additional systems, uh, and for other to follow up as well.

Great great. Uh, thanks for the color that was very helpful.

Thank you. And our next question comes from the line of Kieran McKay with Cantor Fitzgerald. Please proceed with your question.

Uh yes thank you for taking my question. I was wondering. Maybe if you could uh maybe touch on the Improvement in Opex uh year-over-year kind of quarter over quarter, kind of lower the drivers and you know, how they kind of met your plan and really kind of uh, what do you see as uh, opportunities, uh, going forward to, you know, continue to optimize Opex with their uh, your Revenue line.

Thank you.

Hi. Um, so we have been focused on allocating resources to drive our growth so resources that were not part of driving growth were reduced. If that is an addition to constant efficiencies that we are looking to to achieve, as I mentioned, um, this quarter, you can see even with the unfavorable Exchange impact that we were successful in reducing our operating expenses, we will continue to look to drive our operating expenses to, uh, match our level of Revenue growth, so that we achieve our profitability targets, uh, and we'll do our best to manage that through what we expect will be, uh, a more significant impact, uh, next year because

Exchange rates.

Is that helpful?

Yes, it does. And I guess maybe I had a kind of a, for a demand for 2026 uh, you know, kind of the AIC model, but generally what's your kind of impression of the overall demand or business environment uh in 2026? You a sense of more optimism more. Uh,

Uh, you know.

More of an uptick or is it more of a sense overall that kind of pretty much the same as this year, just kind of your general sense of the outside of company specific change from a capex model to the AIC but just a general business environment expected in 2026.

Um so it was very difficult to to understand the line was breaking. Can you repeat the question please?

Uh, yes, it was just uh wondering uh what your sense of the business environment uh, or kind of visibility in 2026 is, um, versus this year. Um, you see kind of an overall more up this the view of the year or uh, kind of more of the same given geopolitical tariffs and and the like

Um, in terms of the pipeline, uh, we feel that we are in a better State uh Place, uh we have better visibility on our pipeline both for the deals that our AIC model but also on capex this specifically uh, we have a, a very strong Pipeline on screen replacement Market. Um, as I mentioned we have uh a nice pipeline uh of for for the the Footwear Market as well. So we have a visibility. There we are very good visibility, of course, on the ink and the services and what are the upgrades that we are planning to to do next year. Um, so overall, uh, we we feel that we have a good plan and we feel confident about what we uh discussed as the year of uh goals uh of uh modest growth on on Topline of uh low single digit and more um significant growth on the

on the bottom line.

Great, thank you so much.

Thank you.

And with that, there are no further questions at this time. I'd like to turn the floor back to Mr. Samuel, who will provide some closing remarks.

Yeah. So first of all, thank you everyone for joining us.

On this call.

Deliver to many of our customers. Um, our pipeline is getting stronger. We have better, visibility both to Q4 and for 2026. Um, and, uh, we believe that, uh, we are executing, uh, with passion and Clarity to our strategy, to our strategy. So, I would like to thank you again and hope to meet you soon, um, in different events. Thank you very much.

Thank you. And with that, this does conclude today's teleconference, we thank you for your participation and you may disconnect your lines at this time and have a wonderful day.