Kornit Digital (KRNT) 10 Nov 202020 Q3 Earnings call transcript

Greetings, and welcome to Kornit Digital's Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host, Kelsey Turcotte of The Blueshirt Group. you. Thank

proceed. may You

Good XXXX and earnings operator. Digital's to third quarter conference afternoon, you, welcome everyone Kornit Thank call.

Securities meaning Before financial to intends, plans, objectives, we Securities of to statements limited and These preliminary or the the laws that company's the this made other results are activities, not forward-looking remind will that like Act Private of call. you that will our to, believes XXXX begin, future. relating projected or operations or in forward-looking anticipates address statements U.S. of strategies, condition I and may Litigation statements expects, all Reform would developments the statements occur or or on but events the projects, of be within statements include company

call forward-looking statements, by otherwise a company no or law. update specific filed as XX, at undertakes revise materially to for and obligation whether Exchange this or on Commission, results report X-K, actual Forward-looking company's that assumptions form that XXXX, from risk review with and results the the and which may cause risks events and known Securities statements. any potentially based differ encourage statements on of publicly for and required the those unknown quarterly here are August by the company's those are materially future materially. are to differ inaccurate and many new of to from statements made subject identifies to could expected results to including could factors The result or actual you as except events I information, cause reasons, Any forward-looking filings company's implied uncertainties differ anticipated forward-looking or the

comparable today, is this the The directly the of company posted release to published company's found Investor company's reconciliation numbers call. on non-GAAP reference measures which Relations the will non-GAAP most measures in certain the GAAP can earnings site. measures Additionally, these to financial be making be on

Executive fireside Officer Officer, like discuss August chat I over Before related market Time virtual the Eastern This further Avidan of Financial Kornit's call to A.M. the turn Guy event. would to Custom acquisition and Samuel, Kornit's Gateway XX:XX is invite a to you next Tuesday, opportunity. Kornit's Chief at XX RSVP Chief to and an Ronen only I

turn Officer to further information now this website. of Chief turn At section Ronen. Ronen to over call Avidan Officer. now Kornit's to go Investor over Executive call the I'll Ronen? For and please Financial the the Samuel, Kornit's Kornit's Guy I'll time Chief

Kelsey. in we grew consumable X.X for I'm this sequential driven growth Thank to related were exceeded warrants strong delivered for and second EMEA, quarter evening systems line Top regions. and North for demand account you ecommerce XX% we with global you, a across Good thank joining significantly and in strategic to we you share and demand revenue year. America million results the XX% of half a extraordinary the sharp growth all production. call. to Total our the for million that year-over-year third the quarter, expectation on afternoon are XX.X improving our of us outlook pleased earning and services an by in on of industrial for reflecting and exceptional net

plan, customer on sustainable done ahead of bring of to while the have focus maintaining excellence. profitability, On work teams quarter I'm important services proud a side, our to this the business

XXXX. over the profit we achieve delivered important and reached for services our line, objectives we milestone, to we improve Now operating strong for the we to expect Bottom operating scale that business. continue margin margin have we quarter, expect a this as to

to Globally, we deliver and the incremental industry demand our Our customers industry into on leading sustainable partnering at point, are transformation the of we is production. inflection with on focused are Stakes, ink demand in with for and large holiday customers as and expansion scale are like we the TSC projects enter key engaged we services In systems, Printful, season. Americas, others. the

demand like to collaboration reengaged replenishment apparel EMEA, in Delta of both the In a are solutions. what digitally and enables out retailer, and late Topics, Americas in consumer One for iconic of Apparel on reduced these a Kornit partnership mid the a projects interesting end the fueled to unique allows level of demand by Hot integrated partners This fulfillment we April. is costs stock experience immediate consumer. on are shipping store It fully and fulfillment. demand also on customers revolutionary and experiencing of resurgence, seamless with printed happened

Our out investment we to pipeline eluding in industry to buildup. continue and see encouraging significant deliver support local we required and and of expansion results customers. immediate scaling signs the APAC, is recent direct infrastructure strategic recovery, operation global scale sales projects UK with on In

continued quarter Ilan the Elad perspective, R&D our of Tokyo of our to it confidence give scale and Asia shipment that focus on platform this we this application From seasoned based effort next executive, region. part a accelerate operation lead As to a support. record was generation a huge go-to-market region, are a us Atlas and will success, unprecedented welcome system. in this product Pacific important This to for planning excited for

come. growth for to be the continued years the Atlas expect to We in foundation

investing midsized in Plus of continues volumes to also produce fleets considerable with ones. large to Vulcan customer Our traction have

looking data multiple on conversations driven major globally demand with pleased us solution the the industry The fueled large this industry growth pigment-based quarter, offer benefits a to ability Software offer the important that deal In the are ongoing production. business Customers this for. Executing strategic the at closed both huge orders. disrupt already On already have our strategy. over our with new including XX own in are sustainable have teams market our steps of is supply side, to in Workflow announcement, and remains of expectations DTF manufacturing. fashion quality teams the Gateway, Important unique account that to in are are brands the our an markets DTF the Italian the supplies. handles projects confident digital Since Exciting the the third transform transition have are with and demand clock by this at we our partner Gateway our entire seeing like is Cloud decor model acquisition perfectly to with with Expansion and world, end-to-end retail on of around sustainable textile and single technology demand adopt us largest a unique The global now of lethal the wins received opportunities with generated the streamline model. exceeding we leading deliver partner the to Custom with Creazioni heart to Digitali, that our various efficient of all Creazioni home of in we and fulfillers witnessing are and we Cloud of process. and the the on this very of Custom Kornit realize fashion place. makes we in the momentum fashion the quality are Workflow our to accelerated brands proposition and production chain strong, impact of support working solutions to phenomenal market of telling Kornit brands and our some And platform integration. step to sustainability. fashion and we alongside our of progress process looking heart to massive fulfillment we the the enable on Presto, and Versace. match the our best looking

that to decision big double-digit second half to revenue very to growth pleased continue XX% Our business growth. increase paying invest the during position from pandemic year-over-year to the are of year-over-year year we the for outlook we is in And the provided I'm dividends. low the

strong Looking we XXXX forward, backlog. are with strong entering very momentum into we very see and

our Before like Guy, I teams. exciting we industry. shareholders execute for the thank over would the extremely times for Kornit our the them on opportunity And welcome of trust are to us. textile confident massive I ahead in are and and new to These turn entire the call for to

Guy a number over guidance. turn closer call to the will look Now, to I and for our

Thanks, evening good Ronen and everyone.

are XXXX. the quarter results We strong our final and our pleased of quarter very third with outlook for

the overview, would measures Before well discussion pro beginning as forma as non-GAAP I the you will following financial results. GAAP like include that remind to financial

this acquisition do the COVID the in XXX,XXX, of Gateway Custom COVID-XX Gateway, not Custom based quarter amount non-GAAP $XXX,XXX. to $XX,XXX. related third Our XXX,XXX expenses, expenses additional which expenses non-cash quarter Adjustments in intangible for expenses. deferred related Stock assets $X.X of the compensation forma the totaled related million, acquisition pro total amortization items. in amount following related $XXX,XXX, results acquisition cost were to tax and reflect adjustment of of related including of expenses amount We the expect the pandemic to to

currency, lease gain and true liabilities. losses we and liability the foreign These incur these from significant the financial has of company foreign vary reflect company. As the do losses of operating exchange performance period period may to or the not revaluation in gains from

ASC a on This release to full reconciliation results $XXX,XXX. our today section our press were the earlier gains with issued of GAAP our available investor associated is XXX A exchange quarter and basis foreign on of non-GAAP in website. earnings

to the and included period services Custom Gateway margin in XX% from and market of the warrants Gateway quarter third XXX,XXX Beginning revenue XXX.X% X.X services. of From warrants to XXXX product X.X year digit services the Third goods the of attributed of X.X% cost increase compared of to year million serving high or XXX,XXX strategic revenues customers third our for X.X% prior million in a very to and The and quarter quarter the an non-cash amount in increase in for net outside online the total period, XX.X revenues, compared million US. third prior XX.X% revenues for healthy an global Custom quarter customer impact revenue revenue X.X% perspective, and to of continue impact of to and or loss and sequentially. significant warrants are year XX.X% compared prior of quarter million excluding was the net were sequentially. single a or in cash increase sequentially. demand revenues the X.X impact of Services XX.X% of Net our see of generated from X.X the US an our was of XX.X% million, year-over-year increase accounting period. this we of compared warrants revenues impact, of net the of

region, more in each Americas, than revenues with three As quarter, from XX% that strong customers that the it Pacific In Africa Europe, coming from total X% Asia XX% Middle region. Ronen had a of revenue. mentioned, we contributed the total and was XX% and from the quarter of the third East

XX.X% accounted the revenue period. to our of customers for XX year total compared in prior top Our XX.X%

impact warrants XX.X% XX.X% in of Moving the compared sequentially. period, to was margin non-GAAP XX.X% profitability, net year gross in quarter and the prior to

previewed On XX.X% quarter impact As period our in excluding we're pre-COVID call, in the gross sequentially. of gross of during prior XX% and the second GAAP a was earnings the compared warrants. quarter XX.X% to margin margin level to basis XX% year our back

I'll represents accelerated non-GAAP is charges Not items by tailwind Kornit. these in Moving accelerated and and predicted significantly by our customers on have to This also industry our consumable and only in from market consumption. items, and today's mentioned transition to that evolution for has digital. but some analogue release. to further discuss ink further our reconciliation our a evolution highlighted a sales, has in COVID exclude time created previously included need which textile non-operating experiencing this opportunity non-GAAP system an boosted we OpEx for has basis, printing been press The significant GAAP been to

and Each items growth the continue mentioned, growth. As We ahead employees of to the in business Gateway. of investment due with necessary employees a the increase line XX build reflect to we employees, increase new the year-over-year us. of joining invest ended us support XX the quarter predominantly to infrastructure following to Ronen of sequential XXX Custom to headcount opportunities XXX from accelerate a

X.X predominantly merge market quarter, research technology the Adjusted or fourth in XXXX, we're the workflow headcount sales and our quarter leading net facing to and in of functions compared of to approximately increase period. beginning million the XX.X% XX by employees forward sales, organically or customer development planning our year X.X per position and was and strengthen solution. prior to the million XX.X% to of Looking

mainly per of growth share quarter Non-GAAP quarter headcount XXXX. basis net compared $X.XX profit with X.X or GAAP expenses XX.X% and and Additional Sales marketing year or shows sales of was per were million increase marketing cost diluted the in million to X.X% warranty income fully year to compared or and X.X net is quarter addition XX.X% and in mainly X.X in to $X.XX G&A expenses million third in third a diluted $X.XX and R&D period. The expenses. to net share sales D&O X.X% or of and of million, basis the administrative to in insurance this impact. headcount quarter the million period. profit General materials. million trade sales, attributed expenses was fully for the prior in is third additional Net attributed income cost the per share reduced The million for cost. X.X prior on or were in X cost or relative attributed a X.X decline $X.XX the use of compared on of is the or travel absence X.X of quarter

a this Our income of non-GAAP on interest cash result as financial accrued million our investments. X.X was quarter

X.X this was GAAP income million. Our financial quarter

Turning in to in customers, XXXX EBITDA, increase X.X million X.X increase net previous the year quarter, million and million even profit X.X inventory year prior the for million revenues a in third operating was a million payable XX.X net Net trade and used the and due offset from mainly in million deferred X.X operating break X.X the period receivables in million to compared X.X advance cash to quarter of increase XX.X million in activities increase and quarter. by for period. million in prior provided of this was by activities EBITDA to EBITDA adjusted adjusted adjusted XX.X compared cash

as We deferred the to compared securities balance in XXX of from XX, quarter XXXX. Custom including in Cash bank cash balances expect primarily coming by and was June last Gateway. discussed, September used deposit million offering quarters. of this in This balances activities in and by convert operating net were million as mainly year, at the to of in over revenues increase driven acquisition offset previously XXX our million three marketable revenues end cash million generated XXX proceed XX.X the

sold million million. proceeds In warrants X.X Amazon from net on million shares X.X of addition to the converted XX offering, primary basis cashless a for

Turning in and of XX% fourth XX revenues. income to XX% million range revenues view to to expect quarter, the of in be range operating of of we the million to non-GAAP our to the on be XX revenues

the the issued these the of been no our transfer impact XXXX. in to numbers third I'll practice past of quarter has As call back now assume value the Ronen. of fair warrants in

are audience. you, Guy. Thank take With to that we ready any the question from

session. Thank time, we conducting a this you. question-and-answer At will be

first Rosner Barclays. Our line Tavi comes question. question from shoot with your Please of

Hi, Thanks this question. for Tavi. for is my Peter taking on

that's ask little all? about the to drivers and at strong traction up, a that and the expansion on account entering related then services have DTF the on You on of I to of you XXXX. comment if whether on to the trends could the if some the renewed give wanted color you follow of side mentioned a that Could risk just emerging COVID-XX could more backlog

for and I'll maybe Guy of to top start Yeah, want add on. if the me questions. you on later so thanks

it's booming of May is And growing while and already the is inflection of see demand and it We demand for COVID April. will focus our the into purchased fueling our is of growing discussed ecommerce manufacturing a the tailwind So XX% be we ecommerce the industry. saw the industry definitely fueling for What ecommerce that is XXXX our own There's is to can in The to the really We see booming. we through point. end a customers. customer. it. the within ecommerce. move and parallel clear from dramatically the the growth The

and the peak now peak season of in peak the ordering are entering and to they're systems. customers Our

big we both projects accounts, We are marketplaces. with the across have both brands, involved that with world, with strategic

days, Some be those implemented of XXXX. implemented them these projects are will of being some early

the are a So we're strong into we entering why this is reason saying XXXX. with backlog

and we any for visibility of first the - the very a about very Guy, positive XXXX. strong have half We entirety are

quarter in we talking initiatives will services The industrial now services in the achieved breakeven few in with goal the for than discussing so expected. example, go were are contract machine guess this question, quarters earlier we're service XXXX. the dividend. all I last about yielding the We a fourth

Thank the on Congrats you both quarter. the for color.

Peter. Thanks

question line Suva question. next comes Citi. with Please from Our Jim your of shoot

and you results time. congratulations great on much, on your very Thank a such and prepared challenging question is comments. during My

de slash just engineering headwind? talk Can mentioned little minimis believe at you get deliveries still times and as still or to going something I and said receive we're lot to is aren't if You electricity simply Thanks. for you those behind point. down like a down about or talk these customers a play COVID a the about installing are equipment were bit this causing logistics slowing COVID us some overall, logistics of devices cost. this architectural, those us about your install if big permits plug you can

we actually, We any due the and possible the to and opposite. get the the as huge see COVID, and in services to soon actually pressure peak don't to for ready terms No, a be as equipment logistics the supplies of headwinds see season. to demand the installers

don't logistic, installation. a before shipments COVID mentioned in tailwind. very of production, limitation and I As strong We have is terms any the

the about only have the is demands ready and implement they're Luckily, customers own our needed. both our ramp Asia Europe, course, up install limitation, and So to US in travelling. the in that we of all and team, can

headwinds midsized now you businesses. midsized normalcy? with business, at orders associated you're of could where to challenges the those Coronavirus be point little Create Is a or a funding small place bit those the are and giving they're may with more then small back to they if for a funding returning more or challenge past or they a

the normal. like specific extend quarter, looks themselves. going most for on customers we second back our almost finance cases In credit first, the like credit have case, to market to credit Yeah, based it crunch. the But business back. ability be In some more the extended thought to it there's we terms, is but of looks

components logistics us question, supplies was just any and last of or the my is shipping well and less Are logistical Okay also anything having world? there's behind since or around challenges getting you also? airplanes going that ships or

No, have that. limitation any don't on clearly, no, we

the Thank you thank and And you and congratulations you team. to your details. for

much. very you Thank

Jim. Thanks

Drab from Brian comes your question with Blair. shoot of line next question. Our the Please William

taking for questions. thanks Hey, my

just any clear at new The you further? idea us of be and this can some year might for next what might thinking give those what point first addressable about how the market expand the products one, you're and

we get into So cannot detail. much too

to portfolio printed going the year, - will applications be the in both focus we categories. our DTG new going we customer be - two is in an before. never on opening to year Next both never The extend the DTF exciting and are that both applications,

into the So enabling improving but use. applications, solution, as our ease of productivities new the adjacent also as of the getting well markets automation,

we there course, of into So that and we're them it a are aspects deliver Workflow many planning of, top win is are to quality. on looking on that many, emphasize. big

forward, next on Moving new coming side workflow see year. you products will the

mix? it, in how And you. was it significant in of the revenue is got DTF DTF, How thank Okay, terms quarter? third the mentioned significant you

still QX into that a DTF business, this portion. When a a foresee our segment. is small fast-growing strong business. of segment be we will a is growth within our small still is into we're our looking So outlook It but part within

of are DTF not what providing overall business. out the size We of indication, is the the

really in consumable. supplies strong to on Within the very the base growth of interesting of see it's install the the the terms strong DTF and of growth use

the the to can then you get over there? longer over do do can gross think the to think Thanks. what like, get term? range so, ask and quickly, approximately XX% I you it margin takes if service And Got period just still it

profitable Again, of one it's what though, - move give We quarter ahead service sustainable. we didn't said time, indication to we're aiming. ready not we we a to are

we improve will about We profitability, to any the going what aiming are for. to going not see we but guidance we are continue profitability, are to give currently

I sorry. Ronen. I've but think point, the company been before I at that and had covering heard too Okay, time one Thanks. those long

Thank Okay. you. Bye.

question? next of line Our Company. comes & from Please Ricchiuti shoot question James Needham your with

me. Hi, hopefully can hear you

three is Did more of Okay. have The were question that I hear that I customers that say you heard revenues I you had or - quarter? I correctly? XX% in yeah, thought the

Yeah, correct.

correctly, serves had there recall you is I time this being me That don't customers, three is a time first where XX% the happened? memory percent that's

time we exceed have customers first It's that direct the three XX%.

that can one other mean, any on or there had past, of is two us in type the give? I think color is the color can you've surface, there customer I but on two provide And customers? you you any the

the we two cannot them Again, America, quarter we quarters on but we of alluded the ago, name that. get our are into of projects two them on. or are North the of cannot customers of are we customer. top a big ago working add across across actually one more color in Those world into that Those them world, top that the

think about you obviously - this sounds helping drive a growth half before, faster the and stronger half. to traction the minutes but we couple of that fairly what you're of outlook the larger first in and a I'm year. customers with second your traction in And you're guidance for these raising the that of second expectations you're wondering call I the maybe And into late, half. generally some Ronen, some market, the to joined next of alluded if making the the strong is anticipating like you're

we other with that strategic the big is recently, with before. Yeah, global accounts definitely but for midsized additional account, see existing that that accounts with part very material are becoming on strategic strategic Kornit But accounts, goals our only we what new accounts not our strategic of had projects. we see

each them, far installation. see are project with a we them very, entering growing the and very to almost multiple new interesting. are brands customers, mostly one Presto on marketplaces net And very is entering are very that some of We that segment us we but interesting new then for

that couple I some been geographic you a if revenues Pacific, guys smaller success a your time. last of Asia think you be additions terms opportunity. I if had we should look wondering yet to management guys? at big may, we great should announced your question a And thinking that? about for be the that And it's in that have team in of at APAC regions. of how region What Okay, about would would just for You've think I'm some And there. part you

we that need only big is and going would with than previous Actually, be we with say a see as to coming around growth big understand brands, calls very you a some now Asia interesting play within with a or to one Australia. very Japan, in to revenue pillar and And closed. believe within one move business Japan, Australia, to bit to starting - very I mentioned fulfillers So from Asia and that mainly focus, Pacific Asia Korea. the starting strategic Pacific, country marketplaces, travel and Kornit's We reopen. cannot last, We from in future our see totally nice Australia business. also is in there less Pacific year currently, China China, they're and we're country both constant is year,

Thanks it. very Got congratulations. much,

very you Thank much.

question Please Patrick Ho question. line with shoot next Our of on comes your Stifel.

and quarter congrats bit on very outlook. apologize, late. a joined I much, nice the Ronen, I you and little Thank

at the say how on the as more qualitatively, And as I add do strong but a you have for visibility, whole, into And looking backlog months. and quarter for December build quantitative, may orders December in the you wondering, we of outlook this. XXXX? the quarter, we three you first as last I'm second has not your look quarter, as a into improved just of how and not, terms 'XX. guess, So I the probably to visibility, a addressed XXXX to see or get ability if continue over quarter with go But was

that would visibility never in entire clear to that today have say very the situation of a I HX. that has very, we we've been

look will like. HX how know we So

about confident very HX. are We

We are projects the engaged across in big world.

are of implementations. of the them in Some middle the

about is we starting HX. building full So sight of have about are well. as The to which HX, team we confidence line engaged have already the

XXXX. So we confident about feel about comfortable -

you broad see the the the on you base well the as and that your Great and of the of and of across are both fulfillers traction presentation, Plus there. of products Can Vulcan you as the for the brands types I customer Atlas in - detail about talk customers the Atlas, like terms several the seeing adoption particularly Atlas?

Atlas see with Yeah, the some are consumers, and that them so directly their some the both businesses, directly BXC. with in them fulfillers playing demand of ecommerce, BXB we in market to own of adoption

We are entering on into choosing printers. they're traditional that and and buying do screen to move demand They to understand they Kornit. have digital

base. many they're adopting volume the fulfilling the technology fully to and to in that terms producing using two across vertical, brands, to types print, for and the demand general the go the by Atlas's, of and base see are embellishment into of raise them, digital In our brands brands, there we and to brands which are really getting vertical, meaning themselves installed boost but planning installed also connecting world they're for

Great today. there OpEx final of benefiting Obviously, of terms maybe me, that of for Guy shows some and because nature. today that's out OpEx, given management for environment and really strong of - things in you're fewer question trade the

return? you how at see do guess as XXXX more environment, at and shows begin look there and somewhat, we to may potential ramp OpEx hopefully we the that as trade normalizes look the I As

down can the yet, to started we're technology. the to you call, when guys in first, and and again, going and quarter and for but going throughout XXXX second we're trend. R&D, it and just continue to on R&D to see guiding So COVID QX, the on we other that third remind expect not said we're investment increase double we And actually you

invest continue in to OpEx R&D. we So will wise,

that year, trade will to might show X, fast. travel in well. see as Assuming marketing assumption we normality return that that normal will it we But see sales is in next and will some our January obviously increase to return not return expenses, will

marketing investment. increase shifting marketing events, et even probably And cetera, we are digital tradeshows, maintain We from and will budget this to physical today.

thank you Great, again.

you. Thank

you. Thank

Our Moore Please next question Securities. Chris question. shoot from comes your with CJS

Hey, good Gateway. maybe on questions afternoon. couple just Custom Yeah, a

- that is So about those is little to time do the the just integration to fully leverage to really complete just fully point a there? and there still much you've already more wanted And at maybe talk this in capabilities? impact seen bit

It's The the in that market to of from of Yeah, due the customers. strategy it. business, integrated. Yeah, great now. the are the closely not solutions - that working is is fully we And bringing course with new value feedback Kornit. have getting are super workflow together. in integration, We propositions the we engage synergy very getting But we team the our of is middle The important. to is are we at immense. heart

I more and on both the the selling both now, course, have those systems the XX Kornit solution opportunities are Gateway and call software, As And with mentioned than solutions opportunities - right we the of brands new Custom fulfillers. to for opportunities.

want platform platform the brands the in to Gateway do vision us about really Kornit enable Kornit they opened for the fulfillment huge a So base. of wherever on the Kornit really Custom market. connect of brands the manufacturing - into demand the The fulfillers, and workflow the connecting and really to installed the opportunity network it's of it's through

what's on this that spending very terms forward. on at Very of going much time Last for Got here, with thanks. helpful, me, busy stage? moving thoughts on activity you're just something one M&A it. Obviously, that in is

M&A a activities opportunities. dedicated that team have we at and Yes, the looking

identified looking We markets. more one two getting a workflow opportunities is again, and to other if about And them. technology systems that looking the One a are on interesting technology, is extending software solution. it's very are main market areas. adjacent solutions, We we into in few new

So we're very have as exploring interesting Yeah, well. front that we us. some opportunity of in

Appreciate Thank guys. it, you.

Thank you.

final comes of Hallum. question. Our Palm shoot with question your Craig online Greg Please

a view meaningful mean upgrade driver you by as and expansionary customers, opportunities view how you on curious for the upgrades? more Yeah. curious not versus Thanks for maybe in taking necessarily? the outlets? current year as I new next strength you how And demand or the replacement questions of customers driven I'm do much well. or shift quarter efforts to that the I'm as congrats is

Excellent question, this upgrade them we still the completed. completed. almost didn't hopefully soon, intend to upgrades almost the one that in customers upgrade upgrades, we terms very and to, few the so We but of have to HD we

We - year the those some see expect we next to will portfolio year. be once This upgrade new updates be opportunities new next and the announce solution. for HX new available on will

second So on we opportunity in half expect year. upgrade of massive the growth a the

between would I so it's between and XX-XX the In say In DPF customers. the new this really net around to DTG, existing, the mentioned, I very DTF from in to terms question new segment-to-segment. of massive we and mostly, region-to-region was America, North And from net different new. as the growth the market. net quarter, In interesting see it existing coming

Asia in opportunities. similar many Europe in market So opportunities and going while we new market is many, existing new It's customer fast, have getting very and mostly segments. many we the is have new we're net too

might And Are it on trends you've on wondering systems consumptions, interesting. going any or specifically sorts in I more season commentary similar expecting you're in similar of consumables so I'm about activity what different Okay, based based curious part first be in seeing? what end the October, just seen consumable this this of than on? holiday how past system's mix of November, years? the of QX or a on all demand kind skew versus you will towards guess

yeah. peak season, it's strong to all of going First a very be

they're fully and getting Our customers are more already engaged systems.

that will So hearing season talking this December, customers to by able that be busy. they're peak of demand end they huge not very, time on peak season because about to believe the February they end deliver because of and from all will extend we're One will thing be very that not they that of to going that they January, have. backlog the the orders

a this situation So unique didn't before. see is that we of kind

that? won't much be In QX good previous you the to very question. different relate do from terms of to I for very it's supplies I Guy, the say it between mix a year. to would want system,

heavy I be this in year. terms year. think in consumables QX it's it's is to be like is think the QX last more to No, same normally of going and got - we Obviously, mix

I QX seeing of more operating exclude because above XX.X% the better impact through well implying you warrant terms non-GAAP operating aren't guess, if flow that margin you with for guess I a did you're Okay, for and QX, it revenue consumables. I in mix of expected levels for appears Why guide QX higher the income?

profit. So is term, operating action higher and we're we're meaning again, expect lot of on obviously longer the But net in technology. we higher and we investing opportunities long gross we're seeing ahead that run a facing the margin and much. operating also said margin and customer this And we increasing it taking why said not OpEx, us before, obviously and we're that of

investments. a more of of so function continued just Okay,

Right.

leave it luck Thanks. Okay, And of there. I'll best good. going All forward. right,

Thanks Greg.

Thank any additional questions. you,

this questions at time. No

everyone Okay, joining so I for would to like afternoon thank call. this

industry sustainable our very XXXX and our The execute been point revenues to never growth. better results opportunity. this digital have to teen an to pleased inflection year-over-year against third with second demand transition in We ability is quarter in increase we on half low to textile our are position its manufacturing. XX% And clearly at

Looking the for of you end work ahead, I strong like great passion XXXX. to would employees for pipeline our team, carry Thank customers. thanking strong to hard deal and expect much. a we commitment our into and world XXXX very their across a by and momentum close our

This concludes today's teleconference.

for and your your day. disconnect participation you Thank wonderful lines time. this You may a at have now