Kornit Digital (KRNT) 6 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, good morning, and welcome to the Kornit Digital Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jared Maymon, Investor Relations for Kornit Digital. Please go ahead, sir.

Thank you, operator. Good day, everyone, and welcome to Kornit Digital's third quarter 2024 earnings conference call.

Chief Financial Ronen Officer. are Hanover, and today Chief Kornit's me Executive Samuel; Officer, Lauri Joining

review numbers For on outlook of then the call, before third third today's Ronen up quarter XXXX. will we open Lauri for fourth provide our and provide it comments the quarter quarter Q&A. will

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

filed to could report company's and uncertainties the filings from known and Securities encourage forward-looking materially differ company's materially. Exchange update subject XX-F could as cause the to to implied to obligation company publicly on results no which statements, XXXX, forward-looking are actual Commission, cause risks that factors annual XX, by those the differ specific with undertakes on March risk and required forward-looking you Form currently statements. I unknown statements identify by and that statements to made Forward-looking the the the results review are except law. any Any with including SEC

I'd on reference to Investor non-GAAP be non-GAAP is measures website. At company's financial can turn to the posted making certain release the call on The to GAAP will like time, the Ronen? to over Relations today, measures these Ronen. earnings the be most reconciliation in company's which this call. Additionally, of the directly also now company found published measures this comparable

cost guidance of focus underscores welcome to control, and operational this the million EBITDA earnings third us in X.X%, $XX.X infrastructure we generating to set Good working operations positioning and revenues report conference call. morning, disciplined growth. optimization, both August. cash XXXX improvements and our EBITDA within adjusted Today, profitable ranges of I'm from pleased margin everyone, all on quarter quarter and Achieving positive sustainable capital for our

also climbing improvement, This more gains the as and products gross to higher and Our we over business shift substantial showcasing services, we margin reflects mix sales are model. operational margin XX%. our profitable transform realizing a saw

event production significant As these Outdated unlocking analog new we and needs conversions. our are are fashion to our demands meet discussed precisely, creativity speed, to chains demand brands struggling is today during solutions. Kornit's are September, go-to-market production offerings investor accelerating market screen revamped digital sustainability opportunities. strategy pace and seeking and agile supply we with for urgently for keep in seeing

and All-Inclusive system, shift Apollo the this peak remainder deployment year AIC Apollo's or before XX already Our the XX shipped driving coupled this of model to with scheduled season. out Click with new is

We and pipeline with pure-play Print interested to leaders of grow. continue are MAX and collaborating industry analog our like Palace technology in and businesses T-Formation Apollo screen

to Our while agility by to brands of entry addressing digital high-volume manufacturers structure retailers. the while manufacturers analog leverage production. need the is eliminating meeting lowering key AIC capital the quality transition impression a provides barriers investment, enabling of cost multi-billion opportunity seeking global screen model demand digital predictable for for a AIC driver, the replacement and

the for model our combination This AIC industry have and expanding model technologies promising This and market our multiple business to production. digital powerful of MAX transition on on quarter, and also shipped XXXX. AIC is accelerating MAX reach on-demand we innovative systems into ATLAS this added opportunities new

to growing a model. ahead approximately targets, on XXXX, Apollo revenues We base be AIC which Looking on confirmed with we have with and track financial already enhanced half growth more and with expected to our are systems visibility as deliver XX firm systems double-digit to long-term than XX of on orders. aligns from profitability. some recurring well these This AIC revenue of includes

during the MAX. account and upgraded strategic Apollo some of ATLAS our with progress quarter, Beyond the we AIC, of the Atlas to fleets global

also business, significant seeing strategic particularly Roll-to-Roll with already with using This momentum advancing with footwear new market. are customers. for now we and brands early additional existing large this our MAX In up potential the systems in has China, orders systems. the technology and progress received are both and in from in year. expansion presents making customer production Presto market next ramping A growth is major our We

footwear also positions to competitive secured us into have of This supplies continued Roll-to-Roll market, in brands. XXXX. order progress global We new whom a underscore success prominent for China's major both in our and player another from our edge

shareholders our season, at quarter validated profitability. which these to retailers the least signs positioned recovery agility, enter solutions our AIC Brands anticipated transformation peak lead of for is visibility in are and QX, we improvements support are digital driving signs of of fourth demands need than systems of the industry. meet market and revenue Kornit QX the we seeing continued growth and delivery. and textile the well is XXXX, we for and recurring our closing, gradual expectation confident and delivering by recovery, This with for industry Kornit's path to order AIC our speed, showing HX are be employees for strong and higher quality the As XX% growth stabilization year-over-year our consistent and consumable growing towards sustainability. of revenue guidance technology, leadership customers, paired and the value alike. Supported momentum from HX. In in good by in improvement, with

our closer the quarter. to for over turn Now fourth Lauri let guidance a me at the and for QX results look call

and day to you, everyone. Ronen, Thank good

August. the to million $XX.X $XX were we million, in range within revenues provided million of quarter $XX guidance Third

primarily system As sales sales sales versus by impressions second and expected, higher approximately flat quarter. grew. year-over-year sales driven service the declined, was consumable were Sequential growth and system

Moving to margins.

a high to proportion is of favorable margin Third warrant impact the gross overall Sequential no same a attributable with lower gains. and was volume year-over-year improvement sales, shift year. represented period reached driven principally largely as XX.X% quarter The non-GAAP compared sales inventory adjustments. in consumable XX.X% by higher mix last improvement margin

$XX.X third of $XX.X Total non-GAAP this year. The continued operating primarily driven decrease quarter initiatives the in expenses. or expenses operating $X.X at million implemented reducing cost year-over-year million, from reduction progress savings of year. toward our million last expenses operating expenses goal in were is period and Looking the $XX reflects the same XX% a by restructuring million earlier and by

Moving to profitability.

This quarter $X.X improvement year quarter million margin within the was period positive same million. X%, return EBITDA $X.X and adjusted range was in third the reported for significant is we positive last negative adjusted we the positive last of of reported million versus the Third XXXX August. Adjusted negative to quarter. to a EBITDA in $X.X X% guidance X% EBITDA the we provided

in of Our capital cash was quarter million. investment $X.X negative earlier to balance same expenditures This flow restructuring cash year. year free outlays and in last with with million flow bank including $X.X assets including balance, addition strong securities, improvement our in in remains collections. robust implemented the and cash Operating end this deposits year-over-year QX million less and and million, sheet to $XXX increasing compared long-term restructuring is marketable in period $X.X cost to initiatives the savings attributable

were generating capital cash in under cash in expenditures and AIC QX assets cash approximately growth cash presented long-term investing are in flow of event, flow $X.X at statements reported our investor long-term shared respectively. QX, year program activities our in reflected in growth investments $XX and investments operating the activities. are treated operating from Thus, positive investments we from under and $XX.X assets were In investments on activities. for consolidated million, We and $X.X AIC flows full of the XXXX. As program focused was investing million as from the flow million cash remain in million

to period, blackout subject a program. Law, Moving According to share ahead period our earnings. QX we our Israeli which on of waiting concluded repurchase XX-day to were during

blackout following period under we earnings, will concludes be begin our our million plan. repurchasing able $XXX to repurchase new As

on and MAX AIC the going with this XXXX. As the a of systems XX by This end systems growing of solid number ATLAS recurring ship track Apollo to we are model. provide expected of revenue Ronen a using those base of to is year XX into mentioned,

XX to along more a with we be significant ATLAS the model, MAX expand our plan our it Apollo ship expect revenue, XX This AIC in part more revenue. XXXX, Looking on which overall of will systems. base making systems recurring we to of ahead, of

the target adjusted first the fourth fourth half to year. growth our versus positive Turning that, quarter of the XX% concludes I to Accordingly, guidance, to over Ronen? million currently and $XX million currently our we to of expect for the to call to meet revenue and remarks. at XX% the year adjusted now of this And Q&A. for quarter prepared XXXX, second to full for EBITDA with be half we least in open $XX it revenues be turn EBITDA up range. That Ronen XX% the back expect between will margin in and

you, open line Operator, Q&A. for Lauri. Thank the please

from The comes [Operator first Instructions] Chris Moore Securities. with question CJS

what overall the Apollo. Any Obviously, could you're on kind seeing market, of of we you're start Maybe the lots just momentum in with there. seeing overall market? momentum

the We woods. more say recovery are can needs. retailers to this Yes, movement Chris, brands they to say that off that digital. both to the that on brands, growing. market, see They and runs, thank the orders, creativity brands, to about the in you through market customers. screen When from We bringing into operational out and to the and short they talking on-demand our sustainability brands, see and talking Overall, stabilization. quarter with see for important. Overall, get becoming jobs can about When for what this the are and from new to market run, flexibility quarter. I'm fit manufacturers perfect we're large early need we back screen. the are on-demand agility we more products retailers, of see talking getting retailers market talking clearly we been about I pleased all entire the our production. they're has progress demand, the production. Overall, is which has It's We shifting question. you're talking is those large they meet very the seen technology much bring SKUs with the adopting our for to long fast coming having more the they're overall impressions clearly agility and too with But need it can see mid-runs, the

We a a few targets like XX% would versus business looking clearly very We that have HX clearly by growing set see very we we to said back, adjusted our into QX, system. to for and the clear sequential saw XXXX. We months said the on on we year. EBITDA be we growth are margin the the in positive very, set tracking very to for like well. QX full would tone year, HX. Overall,

our for improvement major the of brought positive We the MAX on Apollo pleased the a very Atlas million very we see in start and growth the cash the Atlas I'm Plus positive by OpEx by exception brought and show on and notes, OpEx, in the upgrades into from with of as about the base I'm margin. to moving execution met overall we that very that is team saw the upgrades the an pleased on expenses. MAX. reduction in very, we to momentum system with and profitable the year setting that as Roll-to-Roll Finally, the we the see business we we structure great on promised. brought new -- of and the the we growth. Lauri $XX We execution market. Overall, fleets year, This first a versus a concluding product last year, and with the also flow the see introduction. our the continued QX Apollos, the this the EBITDA ATLAS terms the on mentioned, excellent as introduction specifically We and of with execution, this promised, we across happy are installed cost Plus. expectation forward. I'm prepared

us opening opening the into AIC for reception. see XXXX. We for going totally and the -- following generate during of new MAXs and really they for for and the customers, It's also the new we time really the first but introduced see AIC and predictable revenue many Apollo, shipped recurring during the course great markets, massive that's us some this market technology Apollos being -- for nice it's cost, QX, Atlases, the we'll see both opportunities. of open quarter, a of QX, the opportunity, we aligning new into the for us benefit systems on it, definitely having opening to already ATLAS revenue us a for and Those

bulk see existing new in growth see additional fleet. Overall, to getting working home and growing the print SAM systems for customers customized with expansion the additional also, opening see into ability the X design. revamp about and some XDI, billion that some new the recovering and capacity entering a the apparel customized finally We Presto fashion, the but we decor, China when with production, of to in our with into and us see white like into And time their into and go-to-market. customer there. for first by are footwear. getting the are big see we we with requiring and MAX them design us is impression footwear talking the like getting time, is we there ink very of of specific opening on direct-to-fabric We for advancement segment segment are -- we customers markets in for We what hard massive

out in our the at momentum super And our remarks I for looks selling to and upgrades systems. that we boxes their that, our successful. implement mentioned stage, forcing to will MAX. strong customers to AIC selling moving in great top as team, today, this which very to shipped started we of is of to both it in see drive to QX, Kornit. On our XX to our In the that, Atlas already strategic and from are we customers from account prepared of us some solutions hand-in-hand helping Apollos. QX, We that top On with ATLAS talents customer, impression. benefit bringing model The our of grow XX to global work

I us the the next new year, to for units half together we and than XX planning Apollo with are as We is them with before really of we XX MAX season, ship the together opportunities AIC all a for already and the in hard the for which already. And peak for prepared more the have are mentioned, the commitment opening market.

a AIC market it a is of that This market. Kornit we that I'm there improving our revenue with And of achievement model with in the up, be turning is to the build is we of I'm have, a course, coming that lot the hard right evolving into business of and All team, the of front of have and the point scaling set model and a solid us. with technologies will the years. model. but the new accelerated acceleration need pleased, us will in we with with of the year showed the in of Apollo great XXXX XXXX in the now. and recurring very work confident will XXXX transformative into the understand and growth we'll current current business that CapEx execution XXXX, for continued

Got it. Very helpful.

Just the one on quick follow-up Apollo.

under to next So it year going be and AIC this like sounds X/X model. year are both the shipped

Apollo day, model? or that? Is to just upfront Or x garments of becomes the buy per number to trying per the the you where how year? effective about it versus crossover Just customers it think when understand is more AIC

Yes.

AIC risk they it that are So of much the cost model, know the an predictable are customers, have exactly every they buying this for digital, parallel the next they business from screen into they front for commitment are volume know Also, differentiate as buying our some on I What And them. impression is mentioned, them on new looking see market mainly a and that today they screen in general AIC first from AIC. the to running a lot CapEx, them on provides can the analog time and of some is They which them years model to of have cost, reduce before. of in in we CapEx. the them the We predictability. will on that didn't which that experience getting how new X taking from their are digital, move between that model. customers for they

fit bit the risk cost is time for that model customers first great digital. those on a getting this for the a into So averse and

are digital that us, have already they services ink and on they might efficiently, the hand, that know buying the from other the they it do using calculation Kornit might and the if take and they sometimes to how volume, than model. operationalize find customers AIC CapEx systems the and a they On the find it separately cheaper the and bit

a this We and on So on this it's great some adoption DTG the that a will CapEx. ] forecasting at mainly ATLAS our great we customers. fit of for AIC mainly on and of CapEx. stage, have and -- we would forward net business, now, limitation XX% from new MAXs different [ see customers AIC. like XX% therefore, Apollo versus And on And will believe that be further momentum continue those to the to right are expand from type moving

from comes question Greg the next The of from Craig-Hallum line Group. Capital Palm

Helpful the When how of maybe all Apollo, feel 'XX, together, little got bit of recovery kind of what kind one-offs put of you order that a kind or CAGR. A ramp-up that about just answer couple make business, color. Ronen. of does a given light I'm first of of on answer, lot other year? in in you've curious are of you your stabilization overall base of sort the your activity, of next of thoughts sort longer-term,mid-teens in just a terms

Thanks, Yes. Greg.

ago. gave for not and XXXX. guidance first directional give XXXX, into So, event longer-term kind prefer didn't specific months doing for all, our guidance We investor we of of I X.X specifically about get to

more how color next on XXXX. in we do You December, hear will call probably our

We be But year we growth. take in And that growth. one, we caution will we is because, to believe what will with the caution. still all in need that market the believe year is profitability. However, it volatile. a I before, explained see see We this

Second, terms the the into the and changing investing year. improvement We in transition of will in And growth business business of see we would believe more salespeople, you you while and along are and of education will acceleration see some during model. company. our I changing model year, is XXXX beyond. And in profitability lot come new say that the are we a will XXXX in DNA a that

know a of puts going lot business Yes. Understood. with of this more you I and through AIC. got takes

then know even global you good little Can don't too of on early it's talk orders. I if that your in bit thought And for give of talked can So us what upgrades was of went? question. just initial kind first give about you you feedback, bit us and sense future? capacity sort upgrade just a some are terms a point a that of -- potentially more -- for color on I plans additions at in little how well. as strategic, Maybe the but more in terms more that

Yes.

definitely, will plans. bit the to more So, disclose try I a cannot I color, give but

working We share initial some positive. plans say business is to definitely, Those been already are their are And upgrade closely that they're our installed growing can and our base. and overall account cannot this implementations with we very it I the this quarter, longer an What feedback I sharing call. global with The on have done. strategic us implemented very nicely. of

of there not The the fleet, although upgrade an will for they going the massive. optimistic the we that receive on if know upgrades. successful, have year, are and don't will peak will be are additional next we into all. be Of is additional At whole order hopefully for at We we momentum We XXXX. successful, they it it any stage, to will we or this the are some at fleet be stage decide peak season commitment believe if hopeful, season. next run course, will through upgrades to this year potential don't

initial more Or might this this announced kind guess, what it upgrade better to guess, I out visibility? you, Just be that would order? curious, is in point you at at the or I I like season something when next point September talked year or shortly after of mean, have success? figure it peak

basis. are in with them constant weekly engagement on We a

We our QBRs with have them.

them, the then to have we year they face-to-face need next We their and year. and year our for indication with and only get financials probably close will

really get I them. don't to time the into leave line. want So to it I

this we'll we have year be end got or report or indications year great We got some Hopefully, that to next we partnership and able by that strategic with customer. commitment on to early a them. come from the global of

from Morgan The the next line Stanley. Woodring question from comes of Erik

part really are the changing, shift? just What think you the is really I'm the trying mind? but conviction? like your so, AIC? analog I hear has driving your thesis have And voice, have is, driving as if Is Ronen, momentum it's stronger. kind shift want large about business in my conviction comments then your your to if it I what what that a follow-up. digital. feel if go-to-market? your been What well. wondering has acceleration I it of right. the that. But the broader And to for interpretation that in change I does just X of of in is it from confirm shift if understand it is this Is drivers just gotten And is know underlying to changing? And in is a that I'm what of I higher

X They Yes. cannot confident When it One but is see change Thanks, to to to to moving Speed course, market. they needs market different will portion this super is talk a that you need day, wait on-demand, be for angle, moving retailers, from super, Yes, tell take product It any for of crucial. we they that today I'm time. any Erik. in months. It's to market angles. tomorrow. convinced a I'm market brand, anymore it. from you not a the see is the more is digital. it We in to than large will and --

order for economical as they do move Being crucial. keep way By brand. and from production. mid-runs to are from retailers are moving runs, and [ moving full pigment close ordering agility today that, They sustainable to So production terms into don't run brands of the is want orders of retail much shorter a to digital a brands with inventory. make ] in provide in is lot consumer waste sense into it shorter placing retailers without of and able and the to to and tomorrow. Flexibility brands

see a market to perspective, from we the it's and on-shore see clear, So we move near-shore. and

As U.S. today textile more as in China. from I today the mentioned, are market near-shore ordering Mexico versus

it's So a shift. massive

of The the area technology. retailers. our technology wasn't meet past, the to In right and other the is, and the course, fit of to brands mid-runs capture standards quality

and MAX the we of With standard above and are technology, expectation the brands meeting even retailers. the

out With we and the large really screen digital. we into mid-runs, Apollo, shift are from can getting into quantities

on to very recurring -- to our and start a we the of moving will move the the way best we is which digital be second many the And the creating or the it growth digital are and for them when third ourselves move believe into XXXX. signed million ask that in recurring on-demand digital. this And forward, we business the hopefully, talking in printers, pillar, investment ARR to systems how accelerate of we $X So a into with pillar. And strong accelerate healthy screen model million the QX, sheet, with a capital, that business while and ARR on Click averse. they sheet, the All-inclusive innovating are will balance Changing risk has are mentioned, on field. this the in leveraging reporting is already we healthy our customers Apollo, massive. our and and our the it's the we from Not everyone $X.X that balance as

buying manage that with the that that hand-to-hand, specifically stick digital see going all from we the are revamp is that the components. actually Print right of of to of tens the Ink with from level with C is We those see our volume course, on putting to result top boxes, bringing are T-Formation, Custom is but but know is of coming not them to millions example now, we and moving screen the So selling impressions Kornit. bringing market, -- of transition of This really accounts, about experts of the Palace, people millions focus digital. working And analog to how into big and that of system, go-to-market result. not of and are

see are those transition opportunities, and So massive the we happening.

meaning, really much just helpful. environment and tank, obviously, this that And with done more exhibit XX discipline Maybe your is do your responded to positive. again, as demand you But kind have Again, guidance model? from taking kind you is a of you might that in I to cost you're months, And guiding. that it of comments would are just that's directionally think you drive so, long-term That discipline that how terms renewed and cost I'm discipline, what question more exhibiting there cost and bit wondering, second profitability in leverage more you model? an this uneven to how you year kind could you of year, me. leverage next standpoint the in Great. And on have your focused say I'm guys know look is gas the exhibit my operating much year not can your on of cost. but a just for wondering focus in what next maybe

start, maybe add of and So Lauri top on I'll to will something me. add

that So On in are believe into to we the in see into see -- again, we it as of you the you EBITDA margin XX%. XX% We some mentioned, going XXXX. are not as gross EBITDA model, expanding our we XXXX. the margin long-term margin, EBITDA improvement in the for and an adjusted guiding mentioned,

the want it don't gross to see year improvement margin XXXX. I in profitability in we believe now for how color will And the full in You see in that XXXX. much. overall you expansion will But right

and directional We add? provide will for call, kind come we Lauri, will the the year. on anything to some next of

one I'll Maybe just thing. add

to in driving beyond. let's much our focus September can one XXXX those served for to bucket resources we First of we looking But on all say, purpose, business say our resources from in were efficiencies have did of grow and to parts XXXX all, reallocate our business. clear a that as we as in that we drive

The comes Ricchiuti Jim of from Company. line & Needham next from the question

Apollo you systems that tell multi-unit install And you're year, expecting maybe next Just entirely can how of customers? systems, on the many new us being customers? those to you would XX anticipate would many represent the how

good It's Jim. a you, Thank question.

for we of deliver the systems, of next we the XX All-Inclusive. XX this XX into As on them we out field also, systems will year, the of year. to on that are of planning top about mentioned And XX be mentioned,

new net We have funnel very a customers also of healthy but existing customers.

the we and volume. with are we AIC incremental understand also targeting Now to with the Apollo that need

We fleet we from installed on really AIC targeting some the it volume to are screen Apollo own they have shift MAXs to that or of not targeting on doing are base opportunity digital, they it's printers, ATLAS if to now on specifically a and and carousels have screen and that screen, the AIC. our are

the focus moving systems year this for delivering last moving next digital. actually for We're into to how of screen Apollo. is have really have this next asking customer and As during very we them in we year, year. systems. It's system This about were main X you be nicely will on of closing additional customer quarter, that of that many one mentioned the What and PR the their early now is is the we we that The say. and the -- net growing too released year, new? already XX from committed already installing screen our job are facility

focus progressing very cycle the customers, were one Hybrid, to and for with And already to the will them, we field, net XXXX. the the we nicely. I to have believe, We mentioned there. is would sales that grow build list Apollo of are for. accelerate a and putting additional Mad Digital you Apollo. -- grow answer is that Apollos, very, to the we to On it have continue and each during Engine building you TSS, we new are and with gave number shifting names a with that, we strong are The and like funnel like that need few others shipping the of Hopefully, looking of lot other XXXX is also customers of aim that like we that Zumiez year et XXXX. cetera, continue a we will of top us we

the follow-up. the field? Ronen. quick one to out installed helps, MAX of Atlas been what Have It said percentage base And has upgraded in you just

of say. No, from most Atlas ATLAS say MAX. to that We base upgraded our already we installed didn't

process Now very well, even very, ATLAS installed we base Plus. of in upgrade are the ATLAS the MAX which MAX to upgrading progressing Plus our is to

MAX fleet of from -- customers. that upgrade of global largest is Atlas strategic a we to One yet the ATLAS our didn't

hopefully, And to As good we for upgrades year. do I be will mentioned, some during indication QX. a next it started

Chris next question Reimer is from the of The Barclays. from line

I wanted color. to ask if you could give any

model response I You that? wondering did AIC number And in the with associated What's a on traction mention constraints? Part your there Or you you with if relative machine? is with you demand? more comfortable can yet revenue under are the the ability to did model. your already any the the minimum the was been? do provide to a All-Inclusive C, And for deliver just Atlas -- MAX capacity comments you comment little have

you. Thank Yes.

who can fits basis. on on can they MAX that customer that Apollo on AIC an system versus commit annual is of Atlas volume, based all, understand let's mainly on AIC. the use The volume the on So first differentiation

to medium-sized So million to see they can the business many, for need every for is on and but $X to they Kornit, flexibility have of is the move cannot demand would on for that agility of into of revenue the the that's many Apollo. that getting Kornit. of the a and smaller necessary moving or that Apollo. impression volume are has to Apollo, MAX a that the There digital. and the the digital have Not on example, the afford such magnitude And ATLAS that, printers customer we This like impression, customer screen without to a fit. small to quality great commit and is the

will those $XXX,XXX. MAX, be receive On the ATLAS from investor customers using that annual we event the in during impression XXX,XXX of that ATLAS we gave range or our the MAX will indication revenue the

a this we nice of and the the number Actually, Apollo. We is in of see quarter, indication is systems, get X/X shipped customers, we about some from So the new them totally a will revenues this great -- the momentum. of volume into the year. existing forward our contribute -- to will healthy customers them significantly that to next is year. will of that QX expand and and of very to some moving like into next it would And funnel screen mostly replacement into into it revenue course, recurring

good some really That's Great. color.

Just me gross one margin. around for more

long-term change to going over All-Inclusive pressure when at just to due that or level year mix? forward new that just wondering do considering fully the favorable this you in model gross where a some is commented next is And might quarter I'm ramped, XX% maybe You the Or coming XX% the see the so your contributed margin. that? this the mix

on our from into there in businesses expansion, This the event, of transition So, will we that of investor next margin. said impressions. believe overall, the the gross few the is for as expansion potential years some come it to we more XX%

ink services capturing also more or is AIC on with gross generating margin. are of with great systems selling this will So the We through on impressions improvement after ink time focus increasing impressions the improve margin you volume our systems And gross the strong of believe into margin with is over going margin. see that gross higher more if the margin. into capacity those big and it's and, impression course, a lot and and selling impression, is ink gross a and will moving players through contribute will

CapEx improve systems of So well the as margin. increasing number sell will volume that will we of gross on

The next Brian from Blair. question comes from line Drab the of William

service just flat, third seeing in and can the looks quarter? revenue regarding will have revenue, answered. wondering, questions the flat revenue we upgrade fourth Are Ronen, just you services revenue my any in it we like I'm in that year-over-year. Or revenue? of that the number say it's material Most see been upgrade service quarter

Brian. you, Thank

year that MAX So in you flat from the included reason it is year, significant ATLAS to why mainly Atlas year, more last you upgrades. to less upgrades, compared last that have the we see this see service, and

in our see contract an but can And flat, -- is going last we Some less you versus service strategic like it's margin up. of gross services. those why on is significantly the you this about it's the the which discussed parts already while other customer, on quarter numbers, them And see margin improvement but global of this -- year. included

any And the next of can year? in Okay. on them and you regarding then all are XX that Apollo the you around have make just you And partners' comment capability if making you're ability these manufacturing where the how to obviously machines for at that's conflict manufacturing and you? concerns there's unfortunate it's all confident ongoing

you. Thank Yes.

the of increase already So we have we in be those QX number and contract ramping a steep see year. the working manufacturers I contract our and perspective. QX able our up to Apollos XX production both We systems, for our perspective next confidence we into deliver very have in producing team of strong full and from with are will that systems and manufacturer a

nice We impact As in inventory X our months customers. steps Israel, on make the taking the ink of that than for regions. a the sure are no of build in more to all ink, situation is there we

need here the U.S. we ability produce in that to and in the facility have the consumable case in Israel. will We our close to inks

and redundancy ship they other there. can have being our they Israel, shift And plans plans production contract Sanmina like are from parts with can that their their mainly the outside systems, we are world. and manufacturers spare all global around Our and working world that the produced we over them Flex

anticipating Of will not that course, happen. are we

are continue produce We will and and cautions our to deliver all what the to customers. we needed taking

question-and-answer the to for Ladies this Samuel session. his comments. concludes now Ronen hand closing gentlemen, Ronen? our over I conference and would

Yes.

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