Greetings, and welcome to Kornit Digital's Q4 and full year 2022 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Andrew Backman, Global Head of Investor Relations for Kornit Digital. Mr. Backman, you may begin. Thank you, operator. Good day, everyone, and welcome to Kornit Digital's Q4 and full year 2022 earnings conference call. Joining me today are Chief Executive Officer, Ronen Samuel, Lauri Hanover, Kornit's Chief Financial Officer, and Amir Shaked-Mandel, EVP of Corporate Development. For today's call, Ronen will provide comments on our Q4, recap the full year 2022 highlights, and discuss key focus areas for 2023. Lauri will then review Q4 and full year numbers and provide our Q1 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 U.S. securities laws will be made on this call. These forward-looking statements include, but are not limited to, statements relating to the company's plans, strategies, projected results of operations or financial condition, and all statements that address developments that the company expects will occur in the future. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause results to differ materially from those implied by 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 foreign 20-F filed in March 2022, 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 statement, except as required by law. Additionally, the company will be making reference to certain non-GAAP financial measurements 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 press release published today, which is also posted on the company's investor relations website. At this time, I would like to turn the call over to Ronen. Ronen? Thank you, Andy. Good day, everyone. Thank you for joining us. Before we begin, I wanted to extend from all of us here at Kornit our thoughts and prayers to those who have been impacted by the recent devastation caused by the earthquakes. Turning to our results, as reported this morning, Q4 revenues were $63.3 million, net of approximately $4.3 million of non-cash warrants impact related to a global strategic accounts and in line with the revenue guidance range provided in November, which as a reminder, assumes zero impact from the fair value of the issues warrant. For the Q4, consumable and services revenues were again up sequentially year-over-year and on a full year basis as compared to 2021. We saw a mixed peak season across regions and customers with some of our largest strategic accounts, mainly in Americas, experiencing a very good peak season. Others, especially in Europe, were generally flat to slightly up or down in terms of impressions and consumables. As expected, systems revenues were down meaningfully in the quarter, given the ongoing macroeconomic backdrop. Some customers and prospects continue to take a wait and see approach on making meaningful investments, including adding production capacity to their existing fleets. As such, we continue to expect system sales to remain challenging in 2023 and expect to see growth for consumables and services. Like the broader global technology environment, 2022 was a tough year for all of us. We started 2022 with a strong momentum and growth, fueled by the introduction of groundbreaking new products that set the stage for sustainable long-term top-line growth. We closed the acquisition of Tesoma, opened our new ink plant, and cemented the position of our MAX technology as the new industry standard for quality with several strategic customers looking to upgrade to Atlas MAX given its retail quality and superior TCO. Despite the macro backdrop, we experienced good demand and encouraging results for our DTF solutions, especially in Latin America and in important European fashion production countries such as Italy, Portugal, and Turkey. Results in Japan are trending well, and new meaningful opportunities are beginning to develop in India as well as in China, where the economy is slowly reopening. Our long-term partnership with our largest global strategic customer remains very strong. Relative to the market, they continue to grow nicely, contributing to the increase in our consumables and services revenues this quarter. Looking at 2023, we expect this customer to have new sites operational with added capacity driven by the systems we sold in 2022. While global uncertainties in what I call the big waves of the overall market environment are outside of our control, we are focused on what we can control. We view 2023 as an important year for Kornit, a year of transition and execution, and a year we will focus on three key areas vital to our long-term profitable growth. First, returning to profitability. Over the past several quarters, we implemented decisive actions to reduce operating expenses, improve margins, and adjust our operations to the current market conditions. These actions, combined with improvements in system utilization in some of our install base, plus the rebuilding and scaling our system sales, should help us turn the corner during the second half of this year and approach break-even and later on move to profitability. Second, we are laser-focused on successfully launching Apollo, for which we expect to gain meaningful traction with retail brands and fulfillers and to help transform the retail industry supply chain. Beta trials for the Apollo are set to begin over the next several months, with a formal unveiling in June at ITMA Global Trade Show in Milan, Italy. In addition to showcasing Apollo at ITMA, we will demonstrate how Kornit is leading the retail transformation with our strong portfolio of DTG, DTF, and KornitX solutions. We will show global brands and retailers how they can fundamentally change their business models with the highest quality, flexible, on-demand, sustainable digital production capabilities, all while unleashing unmatched creativity and being aligned with the new rules of supplies and demand. We hope many of you will join us for what will be an amazing conference. Stay tuned for more details. Third, we are focused on scaling KornitX by pursuing demand generators and further building our Global Fulfillment Network of on-demand digital fulfillers. We have added several key customers and partners, most recently with a number of global brands and marketplaces. Over the past two years, we have learned a great deal and reprioritized efforts to improve the customer experience for demand generators and further develop and scale the GFN. We continue to believe KornitX will be a meaningful contributor to Kornit in the years to come. Okay, a couple of final comments before I turn it over to Lauri. First, our long-term growth drivers remain firmly intact. The penetration of digital production remains low, and we fully expect demand for DTG systems to resume growth as capacity utilization and market conditions improve. We also see meaningful new market opportunities with Apollo, Atlas MAX Poly, DTF, and scaling KornitX. We see meaningful system upgrades and replacement opportunities across our customer base. Further, we expect a higher mix of revenues from consumables to drive additional operating leverage on our adjusted cost structure over time. While current market dynamics have impacted the timing of reaching our 2026 financial objectives, we firmly believe we can achieve our long-term financial goals in the years to come as we continue to lead the retail and supply chain transformation in the industry. It is clear to me that our vision to transform the fashion industry is happening. While we expect customized design, which represent the vast majority of our current business to resume growth and continue to be a meaningful part of our business, we see very meaningful growth opportunities in several new markets that we expect to really drive and accelerate long-term growth. For example, we see mid-size retailers all over the world shifting their business models and transforming their supply chains with vertical on-demand digital production or by using KornitX as they test and change product SKUs daily in order to chase trends. In addition, we see massive opportunities within surging creator economies, influencers and their communities, large digital, social, and content-generating platforms, all of whom can benefit from productizing and monetizing their individual brands and platforms using Kornit's on-demand digital solutions to support their production needs. Finally, as we have seen over the last several years, supply chains in the broader apparel industry, including for the large traditional brands, are broken and are reliant on antiquated production cycles. We believe Kornit is best positioned to lead the retail transformation to a more efficient, profitable, and sustainable business model for years to come. As I've said before, we are a resilient company with a strong balance sheet, and we remain fully committed to long-term profitable growth. With that, let me turn the call over to Lauri for a closer look at the Q4 and full year 2022 numbers and guidance. Lauri? Thank you, Ronen, good day to everyone. Q4 revenues were $63.3 million, net of $4.3 million non-cash warrant impact related to a global strategic account. For the full year 2022, revenues were $271.5 million, net of $22.5 million attributed to the non-cash warrant impact, compared with $322 million, net of $25.4 million attributed to the non-cash warrant impact in 2021. As Ronen described earlier, consumables and services revenues were each up year-over-year and on a full year basis as compared with 2021. While systems revenues were down meaningfully in the quarter as we expected and for the full year 2022. In the Americas, we had a solid quarter of consumables and of services revenue growth, with some customers experience a strong peak season, while others continued to work through excess capacity. Although overall system sales remain challenging, we continue to gain traction for our DTF solutions in Latin America with yet another encouraging quarter of growth. In EMEA, consumables and services revenues were generally flat compared with the same period last year, while system sales continued to be impacted by capacity utilization and higher financing costs. We are seeing encouraging results in important European countries like Italy, Portugal, Iberia, and Turkey, with additional opportunities opening up in the UAE and Northwest Africa. The APAC region delivered stable performance despite the tough macro backdrop driven by China's zero COVID policy. Both consumables and services revenues were flat to slightly up, and system sales were lower year-over-year. We do see encouraging penetration of the MAX Technology in APAC, with installations in Japan and Australia, and as Ronen said, meaningful opportunities developing in India and in China. Moving to margins. non-GAAP gross margin, net of a 4.1 margin point warrants impact, was 36.4% compared with 49.6% in the same period last year. The lower year-over-year gross margin was driven primarily by reduced sales volumes compared with the same period last year, as well as approximately $6 million of inventory write-offs associated with older generation systems and spare parts as customers continue to move to our newer generation systems. We continue to examine our bill of materials, selectively raise prices, and seek opportunities to generate efficiencies within our services offerings. We therefore expect gross margin to improve over time, particularly as system sales volumes rebuild and recover to a run rate that generates operating leverage on our reduced cost structure. Turning to expenses. Total Q4 non-GAAP operating expenses were $32.9 million, down approximately 14% from $38.4 million in the same period last year. The change was due to cost structure improvements across the board, including prioritizing R&D and sales and marketing initiatives, and reallocating resources from non-customer facing activities to development and to customer engagement functions, thus enabling acceleration of our long-term growth engines. We also completed workforce reductions over the past two quarters, which will reduce overall headcount by approximately 10%. We ended the Q4 with 934 employees. Non-GAAP operating loss was $9.9 million, net of $4.3 million non-cash warrants impact, which was in line with our guidance for the quarter. For the full year 2022, non-GAAP operating loss was $41.8 million, net of $22.5 million attributed to the non-cash impact of warrants, compared with non-GAAP operating profit of $30.3 million, net of $25.4 million attributed to the non-cash impact of warrants for the full year 2021. Q4 adjusted EBITDA loss was $6.1 million, compared with adjusted EBITDA of $6.8 million in the prior year period. For the full year 2022, adjusted EBITDA loss was $30.8 million, compared with adjusted EBITDA of $36 million for the full year 2021. Please refer to our updated adjusted EBITDA disclosure in the earnings press release, as well as the details provided in the GAAP to non-GAAP reconciliation table for details. I would like to address two special tax items impacting the reported Q4 and full year 2022 results. Approximately $11.5 million or $0.23 per basic share was paid to the Israeli Tax Authority. The company took advantage of a window of opportunity to pay taxes for trapped profits from prior years at a steeply discounted rate, which provided us with material tax savings compared with the higher rates we would have paid in the future, including tax associated with our previously announced share buyback program. Second, we took a valuation allowance against our deferred tax asset, given cumulative losses incurred over the past three years, of which approximately $10 million impacted the P&L or $0.20 per basic share. From a P&L perspective, the Israeli Tax Authority payment was a one-time cash expense, while the deferred tax revaluation was non-cash. Please refer to the GAAP to non-GAAP reconciliations in our press release for further details. Our cash balance, including bank deposits and marketable securities at quarter end, was approximately $646 million. Cash used in operations during the Q4 was approximately $39.6 million, driven primarily by the operating loss, the Israeli Tax Authority payment I just discussed, and changes in working capital. As expected, inventories remained high and our less than typical payables balance reflects lower material purchases and payments in advance of cutting over to the new ERP system, which we successfully transitioned to in January 2023. As described in our recent 6-K filed in December, we are pleased to report that the Israeli court has approved our request to authorize a share repurchase program of up to $75 million. We continue to believe opportunistically purchasing shares is in the best interest of the company and our shareholders, and that the share repurchase program will not impact our ability to execute on our growth initiatives given our strong balance sheet. Before discussing Q1 guidance, I'd like to highlight key changes to the guidance that we will provide to the investment community going forward. As has been our historical practice, the guidance provided assumed no impact of the fair value of issued warrants related to our global strategic account. We received valuable feedback from the investment community to make our financial reporting easier to understand. To be better aligned with our reported financials, we have therefore decided to provide guidance net of the warrants impact on revenues and profitability going forward, starting with the Q1 of 2023. We are also providing a guidance range for adjusted EBITDA margin expectations going forward instead of a range for non-GAAP operating margin. In this regard, depreciation expense has materially increased after the completion of our new ink manufacturing plant. We believe adjusted EBITDA margin is a more useful financial metric instead of non-GAAP operating margin to measure the performance of our business. We have included a reconciliation table of our GAAP net income to adjusted EBITDA in our earnings press release for the last three years. Turning to Q1 guidance. We currently expect revenues for the Q1 2023 to be between $47 million and $52 million, and adjusted EBITDA margins to be in the -27% to -35% range. Again, the guidance for revenue and adjusted EBITDA margin includes the impact of the non-cash expense associated with the fair value of the company's warrants to our largest global strategic account. I'd like to remind everyone that the Q1 guidance reflects the typical seasonality we see in our business, with the Q1 typically being the lowest quarter for higher margin consumable sales, and also factors in a difficult year-over-year comparison for system sales volumes. As a result, generating operating leverage on the revenue range provided in our Q1 guidance is difficult, as our operations were built to be profitable at a higher revenue run rate. I will note, given the decisive actions we have taken over the past several quarters to adjust our operations, we see break even on an adjusted EBITDA and operating margin basis at a quarterly revenue run rate of approximately $70 million, with gross margins in the mid 40% range, obviously depending upon mix, and OpEx in the mid 30s%. As Ronen mentioned, we expect to turn the corner during the second half of this year and approach break even, and later on move to profitability again on both an adjusted EBITDA and operating margin basis. Looking out, we continue to believe substantial long-term growth drivers remain fully intact and that we can achieve our long-term financial objectives as overall markets improve, capacity utilization increases, and as we penetrate several new markets. With that, let me turn it back to Ronen. Thank you, Lauri. We are ready now, to open the call for the Q&A session. Ronen, could you open up the Q&A, please? Can you hear us, Rena? Rena, can you hear us? Ladies and gentlemen, we apologize for the technical difficulties. We will begin our Q&A session. Again, if you'd like to ask a question, please press star one at this time. We do have a question coming from the line of Jim Suva with Citigroup. Please proceed. Thank you so much. Just a quick housekeeping item before I proceed with a more interesting question. The change in guidance to include the warrants, am I correct that's more just of a housekeeping and getting sell-side analyst and consensus numbers all on the same definitional term, and there's actually been no relationship change or contractual change between you and your larger strategic customer? Hi. You're absolutely correct. We have been engaged in very frequent dialogue with our current investors as well as the research analysts, and we received very valuable feedback, that we need to make our financial reporting easier to understand and less confusing, as well as aligned with our reported financials. That's the reason that we've taken this. Great. That was my understanding also. Thank you. I think everybody will appreciate that. My more meaningful question. We all know interest rates have materially increased, you know, during the past year or so. With that, with Kornit selling their large printers, for the purchase decisions, are they now starting to come back to a more normalized level in discussions, or are your customers kind of still pausing and struggling for financial arrangements? If they're struggling for financial arrangements, does Kornit kind of change the way that it helps its customers with getting across the finish line for that? How should we think about the impact from the closing phase of selling products and Kornit able to get it across the finish line for a sales contract? Thank you. Thank you for the question. We still see impact of the macroeconomics on decision taking by our customers. Many of them are still sitting on the fence and waiting to see the direction of the market. The good size in Q4, what we have seen, we saw growth on the supplies, on the impressions versus last year. To remind you, Q4 2021 was very strong peak season to show a growth this year. The supply is very, very healthy. We see the utilization of the overall systems getting better. We still see some overcapacity, but our customers are closing it, and there is better utilization. Some of the decision of buying new equipment are being delayed. We are still selling. We have segments that we're actually accelerating. DTF, for example, direct to fabric, is a growing segment. We had a very strong Q4, and we have a very strong Q1 for the DTF. We are starting to penetrate with the DTG to new markets, like the retail markets, the brands. We're starting to see very nice success, and Q4 was a nice peak season for some of the retailers. We can see interesting stories with retailers that buying handful of system, Atlas MAXes, and utilizing them to the MAX. Different from the previous business that it was mainly custom design business of one-off, they are leveraging this equipment for mid-run length, some of them printing up to 3,000 linear copies or impressions per job, which is a great testimonial of going after the retail market and the brands. As for financial solution, Lauri and her team are working very, very close with partners to find financial solution to support our key customers moving forward. We are selective as of today with supporting our customers. The customers that we believe in them longer term, we're already supporting them on in payment terms. As I mentioned, soon we will come with financial solution around it. Maybe Lauri can add a bit more on that point. Yes. Just to remind you, as I stated, last time, one of my key initiatives for this year is to evaluate various programs and to ultimately formalize an alternative financing solution with third parties with whom we have relationships and who understand our business and how Kornit solutions help our customers. I really believe this kind of a program could provide the company with a significant competitive advantage in the marketplace. Thank you, and congratulations to your team for getting through and navigating a challenging 2022, and we're all looking forward to 2023. Thank you. Thank you very much. Thanks, Jim. Appreciate it. Ronen, next question, please. Thank you. Our next question comes from Tavy Rosner with Barclays. Hi, good afternoon. Thanks for taking my questions. I wanted to ask a little bit about the outlook. I was wondering if you can comment on the demand you were seeing through the different end markets. I'm thinking the global strategy customers, the e-commerce channel, the brands. Are you seeing kind of the same wait and see reaction from everyone or is it just particular segment? I guess as a follow-up to that, is there any indication you can give with regards to potential, you know, top line growth in 2023 or is it too soon to talk about growth this year? Thank you, Tavy. 2023, as you can see, we are starting in Q1 always from a seasonality perspective on the low side. We expect Q2 to be stronger than Q1 and H2 to be stronger than H1. As I mentioned, we are aiming to move back to break even during H2 and to profitability. The main driver for that, first of all, will come from systems sales. In the middle of the year in June, we have a big event, ITMA, where we are going to introduce and reveal the Apollo and start selling it, we are going to also introduce many other new technology, both on the DTG and the DTF and on KornitX. The ITMA show is a long show, is more than a week, it's a sell-through show. We know many customers that we're speaking with them today are waiting for this show to take a final decision on purchasing of new equipment. We expect ITMA to contribute already for Q2, but definitely for H2 and beyond that. On the systems side, we see a mix. We see customers that really sitting on the fence and some of them from the custom design segment, but we see some that are seeing the opportunity. We need to understand that the market, the textile market, the fashion market is going through a major transformation right now. Supply chain is fully broken. Inventory is the biggest issues of brands and retailers. quire many SKUs on a daily basis to attract Gen Z. For that, they have to move into on-demand production in a sustainable way, onshore or nearshore. The only solution that can help them to do that is leveraging Kornit Digital solution, both on the systems side and Kornit side. We believe that long term, when we are looking at 2023 and beyond that, we are in an inflection point that the market will accelerate and move to on-demand production. As for the supplies, Q1 is the slowest supplies quarter. We will see an increase in Q2 and definitely a strong increase in H2 and in Q4. Services, we expect a nice growth across the year We see some major key customer adopting the MAX Technology and going into upgrading the fleet of Atlases to Atlas MAX, and we see across the year like we saw it also in Q4. Those is on the service. Interesting part on the segment side, I mentioned it also before, 90% of our business as of today is coming from custom designs. Customers like, you know, the Amazon and the Printful of the world, they will continue to grow, and we expect these segments to continue to grow. In overall impression, this is relatively a small segment. A much bigger segment, which is more than 10-fold this segment, is the screen markets and the screen replacement, and mainly going working with the retailers and the brands. With the MAX Technology, which is the new standard, and it's much better than the screen quality. With all the market trends that I spoke about for years and now is really happening and brands are moving into many SKUs and retail needs to move to on-demand production onshore, now is the time for Kornit really to go big time onto the replacement market. We will start to see it in 2023, mainly in the H2, but definitely into 2024 and beyond that. Thank you, Ronen. Great. Tavy, thanks. Next, question, Ronen, please. Our next question comes from Brian Drab with William Blair. Hi. Thanks for taking my questions. First one, I just wanna clarify something. I think on the last call, you had said that you expected your large strategic customer to begin purchasing equipment again in the Q2 of 2023. I don't know, Ronen, if I misinterpreted, but it sounded like you made a comment along the lines of they've added the capacity in 2022 that they would need for 2023. I don't know if I misinterpreted that. No, no, you're absolutely right. I mentioned on the previous call that we expect our strategic customers, our global strategic customer to add more capacity in 2023. Let me clarify. 2022 was a very strong year for our strategic global customer from our perspective. We saw an increased volume in terms of number of systems, opening new sites, and definitely in terms of impression. There's a very nice peak season, and they are getting very strong into 2023. We expect in 2023 that they will open new sites, whether they are going to leverage systems that we sold them in 2022 to deliver them into those sites in 2023. They will open new sites. We'll add more capacity. We expect to see increased volume in 2023. We are not expecting at this stage to sell additional systems to this strategic customer in 2023. We see massive opportunity of growth with these global strategic customers, not only by selling new system in 2024, the relative new system that we are going to release in 2023, like the Apollo. We see a major opportunity of upgrades the existing Atlas portfolio into the Atlas MAX, trade-ins of the old technology with the Atlas MAX technology and potentially with the Apollo in the future, getting to new businesses with this account as well. There's a lot. It's very close. We as I mentioned in the calls before, we have transparent relationship and working on three years plans. We expect to see major growth coming in the years to come. Okay, thanks. Thanks for clarifying that. Then I'll just ask one more for now. Do you still see the potential for this business to generate greater than 50% gross margin or something changed structurally and what needs to happen maybe besides volume leverage to get to 50% plus? Longer term, we still believe, firmly believe in the model. We have a very strong business model with the supplies we need to uplift the volume on the systems. We definitely believe that we can be at the 50% and even crossing it. We believe longer term that we will be in operating profit of more than 20%. And as Lauri mentioned, for us to be in the break even, we adjusted our cost structure, and right now we can be at a break even at around $70 million of revenue and at around the mid-40s gross margin with the current topics that we have to be at the break even. We are aiming to be at the breakeven in the second half of the year and hopefully move to profitability later this year and beyond that. Longer term, yes, we firmly believe that Kornit can be multi-billion dollar companies with strong growth margin of above 50% and operating margin of above 20%. Okay, then one last quick one. To be clear, when you say break even, you're talking about an EBITDA basis? On both EBITDA and operating margin. EBITA and EBITDA. Okay, thank you very much. Thanks, Brian. Next question, please, Renam. Thank you. Our next question comes from Erik Woodring with Morgan Stanley. Hey, good morning, guys. Excited to be on the call. Thank you for taking my questions. Maybe, Ronen, first one from you, or for you, I should say. You know, I very much hear you on the opportunities that you highlighted for the future in terms of better penetrating kind of mid-sized retailers, the creator economy, social platforms, transforming supply chains. That all makes sense to me. I guess my question is, you know, are you having conversations with these kind of customers today, and they're expressing kind of interest in your types of digital systems or software enablement? Or are you kind of more so saying, "These are markets that make sense, and we will approach them"? I just kind of wanna understand if those conversations are already happening and you're hearing about demand, or if you're just saying these are ripe for opportunity and we're gonna go after them in the future. I have a follow-up. Thanks. Thank you for the question. It's not only discussion happening. Actually, major part of the new system that we are selling today is into those retailers, brands, and digital platforms. We see an increased volume of supplies of ink coming from those brands and retailers. This is a massive opportunity. Most of our team engage with those discussion and selling. Today, we are selling many system to those type of customers that we were talking two years ago, and it was a dream that we were aiming, and it's happening now. It's happening now for two reasons. One is from the macro of the textile industry, of supply chain, what we have discussed, of inventory, of being able to be creative and to invent yourself every day, without having inventory and making it sustainable. This is one thing which is happening now. The other thing, digital finally, and Kornit finally has the quality and the productivity and the total cost of ownership that can address this market and really transform it once and for all to more sustainable on-demand production. Great. That is very helpful. Thank you, Ronen. Then maybe Laurie, one for you is, you know, seasonality does at least look a bit different than normal right now. It looked a little different in four Q, it looks a little bit different in one Q, just in terms of, you know, forecasting kind of your second-largest seasonal decline after the March 2020 quarter, which we know is impacted by COVID. I guess my question is, you know, is there any visibility into when you believe revenue growth can return to more seasonal trends or even above seasonal trends? If so, why would that be the case? Thank you. In terms of the seasonality, currently in 2023, we are not expecting change in seasonality. Q1 will be the lower one, and Q4 will be the strongest one in terms of supplies. Q3 will be the strongest one in terms of the systems, and you will take Q2 higher than Q1. We don't expect. Longer term, getting into the retails market more and more into the brand, we'll start to see a big different seasonality across the year. Most of our business today, as I mentioned before, is for the custom design. For those customers are selling mainly in the peak in the holiday season, one-off, working with the retailers and the brands, they've the need to sell across the year, and the same to the shops and to the retailers. We expect the seasonality in terms of supplies will moderate in the coming years. Super. Thanks so much. Thanks, Eric. Next question on please. Our next question comes from Jim Ricchiuti with Needham and Co. Hi. Thank you. Question I have relates to the systems business in 2023. You provided a framework in terms of how you get back to break even, whether that's, you know, later in the year. What my question relates to is, if we think about the systems business this year, do you expect more meaningful inroads with new customers or a possible recovery later in the year from existing or some combination? To what extent does Apollo play into this, maybe in broad strokes, the launch is midyear, but what are your expectations as it relates to Apollo for 2023? Yeah. It's mixed, and it's mixed between regions and between different segments. As you know, I'll give you an example, on the DTF side, direct-to-fabric, as it's relative new segment for us, most of the deals that we are doing in the DTF are net new customers. If it's in Brazil, Argentina, Poland, Japan, et cetera. Turkey. We see good business there. Iberia, excellent business as well on the DTF side. This is all net new customers. When we are talking about the retails, and the screen replacement, there is mainly net new customer as well. Finally, we are getting to those retailers, many of them buying systems, many of them working with KornitX. This is a new type of customers. On the custom design side, this is the mix. We expect in 2023 some of our bigger customers to start getting into the cycle of buying additional systems. We see it in the utilization of the currently that they have. We see it that they need to trade in some of the old legacy system to new system, and we definitely see it in the upgrade from Atlas to Atlas MAXes. This is regarding the type of customer, the type of segment. Again, between region in Asia Pacific, most of the customers that we are selling are relatively new. And in the Latin America as well, in North America and Europe is kind of a mix. As for the Apollo is the biggest launch that we've done for the last four years. It's bringing tons of innovation. This is what the market was looking for. 400 garments per hours, the highest quality of the MAX Technology quality with one operator, full of automation, quality control, and many, many more elements into it, smart queuing and much more. We are going to reveal it in ITMA and start installation of beta sites before ITMA. In the next few months, we're starting the installation of the beta. As I mentioned, I think on the pre-previous call, we aim for 2023 to install less than 10 units. It's mainly around the beta sites and around our demo centers in the U.S. and in Europe. We're expecting to get the second order from beta sites already this year. The real acceleration of growth will come in 2024 from the revenue perspective. I can tell you, we already have a list of customers that's waiting for the Apollo. We expect ITMA to be a very strong demand generator for the Apollo. We believe that after ITMA, we will be able to close already 24 in terms of the capacity for the Apollo. Got it. A question for you, Lauri. Some of this is gonna be disclosed in the 20-F, but I'm wondering if you can provide us, if you could share with us any color around the breakdown of systems, ink and consumables and service. Is that any of that detail available or do we need to wait for the 20-F? yes, I can certainly help you out here. let's, you're looking for about, on the year? It would be great if we had it for the quarter as well, but I'll leave that to you. Hey, Jim, you'll see it in the, as we said, in the, in the 20-F. As you know, we have it in products and services throughout the quarters, but we don't break it out yet. You will wait to see that segregation between systems and services and consumables, okay? Jim, you can see today between the system, which include a machine and ink to the services. You can see a major growth on the services side, which include the upgrades of upgrade kits for the MAX. You don't see the breakdown on a quarterly basis right now. On the 20-F, you will see the breakdown between the ink to the system. What I can say that we see larger portion of ink versus system versus previous years. We see a growth on the ink side versus 2021. Remind you that 2021 was a very strong year on the ink, but we see major decline on the system side. Overall, the mix is totally different from 2021. Got it. We'll look for that. Thank you. Thanks, Jim. Next question, please. Our next question comes from Chris Moore with CJS Securities. Hey, good day, guys. Yeah, maybe talk a little bit about KornitX. I know it has changed, evolved quite a bit over the past two years, and I guess there's two questions there is, one, kind of, you know, what do you know now that you didn't know then? Two, just from a marketing standpoint, you know, you talked about mid-size retailers, et cetera, as being kind of a prime market. How will the marketing approach differ from, you know, what you're doing right now, you know, on the, you know, on the system side? Yeah. We have learned a lot in the last two years from the acquisition of Custom Gateway, we adjusted our business model, we developed our solution. We have much more clarity and better traction than before. We have very high confidence about KornitX as material contributor, both in terms of revenue and in terms of driving impression and volume to our systems and to the GFN, the Global Fulfillment Network. What happened in the market, that many digital platform, as of today, would like to monetize and productize their platforms. Creative community is happening. Creative economy is happening. Many of them are working through those platform. Those platform are looking for a black box that they can send all the jobs and be fulfilled locally, closer to the consumer in a sustainable way, without dealing with production. This is Kornit X. In a nutshell, if you think about the Uber model, Kornit X is the platform, is the app that connects between volume of impressions that coming from brands, from marketplaces, from digital platform into a network of fulfillers that using Kornit machine and driving volume to those machines. Driving volume to those machine will drive more ink and more machines. As I mentioned, we see a very nice traction with some of very nice platform and some brands. 2023 is a transition year also for KornitX, and we hope that by the end of 2023, we'll be able to start reporting more meaningful information and data, financial data on KornitX. Just kind of a best guess in terms of when KornitX does get to that meaningful revenue level that's likely at fiscal 2025 versus fiscal 2024 from where you sit today. The, it's depends how you look at it. From a revenue perspective, it's already generated few millions of dollars, okay? We expect to see growth in 2023 versus 2022. Even more important, what we are measuring is how many impressions are being routed through KornitX to our customers that using Kornit, and because of that, they're buying more systems and more ink. This is very, very material, and we start to see the volume picking up, and we are very, very focusing on those retailers and brands, that some of them do not want to go vertical and to buy system, but they're looking for solution to produce for them all over the world, leveraging KornitX. Got it. helpful. I will leave it there. Thanks, Ronen. Thank you. Mr. Backman, our last question comes from the line of Greg Palm from Craig-Hallum. Please go ahead. Yeah. Hey, everyone. Thanks for taking the questions here. I just, you know, wanted to follow up on the commentary on your global strategic. I just wanna make sure I understood that correctly. They will not be purchasing any new systems in 2023 is what I heard, but they're still opening up new sites. Are they using systems from other existing sites to fill the new sites? Is that potentially what's going on? First of all, the first sentence is correct. We are not expecting them to buy additional systems in 2023. This is the current assumption that we are taking into our model and how do we see 2023. We're still working with them on many other opportunities, as I mentioned before. As for the new site, as you remember, last year we discussed about delayed sites. They bought system last year for those sites, and some of those sites will be just opened this year. We will see the machines that they bought last year being utilized on those new sites only this year. Okay? From their perspective, they will see a major increase in potential volume. Some of the printers that you sold them in 2022 were for these new sites that they're opening this year? Correct. Understood. I'm just following up on the Apollo. Last quarter, I think you said in selling and installing dozens of systems, I think you said less than 10. I don't know if I misunderstood you last quarter, but can you just confirm that? Then just in terms of revenue recognition, are you expecting to recognize any of those systems this year for the beta sites, or will rev rec be in 2024? Let me confirm. In 2023, our aim is to make the Apollo the most successful product. By that, we are very much focused, and we are going to deliver less than 10 units. Mainly for better sites and for the demo centers, and we're expecting second order already from those better sites in 2023. We are going to be very focused in making successful. As for recognize those system at this stage, we are not adding it to the plan. We're taking the conservative approach that we will recognize some of those units only beginning of 2024. This is a conservative approach. On top of that, beginning of 2024 is a full acceleration plans of selling many more Apollos beginning of the year. Okay, perfect. I guess just last one, if I can just maybe one more clarification. Your commentary implies, you know, approaching break even in the second half. I think that sort of implies revenue in the $70 million range, if that makes sense. I just wanted to be clear, that is, including the impact of the non-cash expense, associated with the warrant accounting. Is that correct? Yes. Correct. Now we are talking only net, and the $70 million is net. Yeah, we expect, as I mentioned, to reach the breakeven in H2. Based on what we gave, around the $70 million and, around the mid-40%, 40% gross margin, of course, is different from Q3 to Q4. Q4 is a very strong quarter from a supply perspective, so hopefully we will move into profitability. Perfect. Okay. Thank you so much for the call. Yeah, thanks, Greg. Thank you. Mr. Backman, we have no more questions at this time. I would like to turn the floor back over to Mr. Backman for closing comments. Great. Thank you, Ronen. Thank you to everyone for joining us today. As always, if you should have any additional follow-up questions, please feel free to reach out to me directly. Have a great day. Thank you so much. Renan, please close the call. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.