Welcome to Kornit Digital's second quarter 2026 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to Andy Backman, Chief Capital Markets Officer to Kornit Digital. Mr. Backman, please go ahead. Thank you, operator. Good day, everyone, and welcome to Kornit Digital's second quarter 2026 earnings conference call. With me today are Ronen Samuel, Kornit's Chief Executive Officer, and Assaf Zipori, our Chief Financial Officer. For today's call, Ronen will share his overall commentary on the second quarter, followed by Assaf, who will review our results and provide guidance for our third quarter before we open up the call for Q&A. Before we begin, I would like to remind you that forward-looking statements within the meaning of the U.S. securities laws will be made on this call. These statements involve known and unknown risks and uncertainties. I encourage you to review the company's filings with the SEC, including our annual report on Form 20-F, which identifies specific risk factors that could cause actual results to differ materially. Additionally, we will reference certain non-GAAP financial measures. Reconciliations of the most comparable GAAP measures can be found in the earnings release published today and posted at ir.kornit.com. At this time, I would like to turn the call over to Ronen. Ronen? Thanks, Andy, and good day, everyone. Thank you for joining us today. The second quarter marked another important step in Kornit's transformation. We delivered revenue of $55.3 million above the high end of our guidance, generated positive adjusted EBITDA, also above the high end of our guidance range, and positive operating cash flow for the 11th consecutive quarter. We also increased annual recurring revenue by $7 million, bringing total ARR to $33.8 million, representing 79% year-over-year growth, while revenue from all-inclusive click model increased by 112% compared with the prior year period. In addition, trailing 12 months impression grew 15%, reflecting higher production volume across our install base. We continue to see healthy growth in system deliveries, expanding our production footprint and customer base. Approximately 40% of our system sales during the quarter came from new customers, demonstrating our continued ability to expand the market while growing alongside existing customers. Importantly, approximately 60% of system sales in both Q2 and the first half of 2026 were to traditional screen printers, providing clear evidence of the momentum we are seeing in the transition from analog to digital production. These results reinforce the progress we are making against our strategy. We are delivering revenue growth while significantly expanding annual recurring revenue, improving the quality of our growth, and giving us greater visibility into the future. A key driver of this progress is our all-inclusive click model, which is increasing the share of the business built around long-term customer commitments. Every new all-inclusive click agreement creates a long-term partnership, typically built around a five-year commitment. For our customers, AIC lower upfront investment and provides the flexibility to scale production as their business grows. As a result, we are seeing higher system utilization, stronger customer engagement, and deeper adoption of the Kornit platform. For Kornit, AIC strengthen customer relationship and aligns our economics directly with our customer success. As our customer grow, we grow with them. What give us confidence today is not simply the financial performance we delivered this quarter. It is what we are hearing from customer around the world. One thing is becoming increasingly clear, the economics of manufacturing are changing. Brands, retailers, and traditional screen printers are looking for greater flexibility, shorter production runs, faster response time, and manufacturing closer to the point of demand. While inventory risk and labor shortages continue to pressure traditional manufacturing models. We are seeing this transition particularly clearly among traditional screen printers, where digital is increasingly replacing screen production across a growing range of applications. These are not short-term trends. They represent a structural shift in how our industry will manufacture over the coming decade. Having spent more than three decades in this industry, I believe we are witnessing one of the most significant manufacturing transition of my career. Customers are no longer asking whether digital production has a role. They are asking how quickly they can shift from analog to digital. That exactly what we have been preparing for. For years, we have invested in industrial production systems like Apollo, Atlas MAX, and Presto MAX PLUS while expanding into software, AI, and automation. As the industry moves towards digital manufacturing, Kornit is positioned as a manufacturing platform, bringing together industrial production systems, software, AI, and automation into one integrated solution. We are no longer simply helping customers buy better printing systems. We are helping them build smarter, more profitable manufacturer businesses. Our ambition isn't simply to replace analog printing. It's to make on-demand digital manufacturing the new standard for apparel production. Our customers are the clearest proof that this transition is already underway. Let me share a few examples. Jerry Lee, one of the leading screen printers in the U.S. and a new customer to Kornit, recently invested in two Apollo systems and two Atlas MAX platforms, illustrating how traditional screen printers are transitioning production from analog to digital. Another great example is Printful, one of our largest and most strategic global customers. Already operating a large fleet of Atlas MAX systems, they recently added two Apollo systems, reflecting the value they are realizing from the Kornit platform and their continued confidence in Kornit. Shirt Monkey, one of the U.K.'s leading print-on-demand providers, expanded from Atlas MAX to both Apollo and Atlas MAX through our all-inclusive click model, demonstrating how AIC can accelerate digital adoption with lower upfront investment. Finally, SNQS, a leading screen printer in India, expanded from Atlas MAX to Apollo within just one year to support higher-volume screen replacement, demonstrating how mainstream screen printers are increasingly scaling digital production as they transition more of their core production from analog to digital. While these customers operate in different markets and applications, they all point to the same conclusion. Manufacturers are increasingly choosing digital production because it delivers a smarter, more flexible, and more profitable manufacturing model. As we look ahead, we enter the second half of the year with stronger backlog visibility, a healthy pipeline, and continued momentum across both new customer acquisition and expansion within our install base. Based on what we see today, we expect revenue in the second half of 2026 to be approximately 15% higher than the first half of the year, positioning us to deliver high single-digit revenue growth for the full year while continuing to improve profitability and generate positive operating cash flow. Before I conclude, I'd like to leave you with one final perspective. Many people still think of Kornit primarily as a capital equipment company. The reality today is quite different. Approximately 80% of our revenue is recurring or highly recurring in nature, generated through annual recurring revenue, ink, services, and software. This fundamentally changes our business model, making it more resilient and giving us greater visibility into future revenues. At the same time, the industry's accelerating shift from analog to digital manufacturing represents a significant structural growth opportunity for Kornit. Combined with a highly recurring business model and market-leading technology, this gives us confidence in our ability to create sustainable, long-term value for our customers and shareholders. I'd like to thank our customers for their continued trust, our partners for their collaboration, our employees for their relentless commitment and execution, and our shareholders for their continued support. With that, let me turn the call over to Assaf. Assaf? Thank you, Ronen, and good day, everyone. Let me walk you through our second quarter financial results and the continued progress we're making across the business. Second quarter revenue was $55.3 million, growing 11.2% year-over-year and exceeding the upper end of our guidance range. Services revenue increased 34.7%, while product revenue grew 4.3%, both benefiting from higher customer activity and continued expansion in the utilization of our installed systems. Annual recurring revenue reached $33.8 million, representing 79% growth year-over-year and 26% sequentially, reflecting continued momentum in the adoption of our all-inclusive click model. Importantly, ARR represents only the next 12 months of minimum commitments under our AIC agreements. With these agreements typically spanning five years, they represent approximately $142 million in total contract value, providing strong visibility into future revenues. AIC delivered another strong quarter, with revenue increasing 112% year-over-year and 32.7% sequentially. The model continues to drive higher system utilization while closely aligning our economics with our customers' success. As Ronen mentioned, approximately 80% of our revenue today is recurring or highly recurring in nature, generated through ARR, ink, services, and software. This provides greater resilience and divisibility while supporting sustainable, profitable growth. Turning to margins. Second quarter non-GAAP gross margins was 47.4%, an improvement of 110 basis points compared with the prior year period. The quarter included a net tariffs related benefit of approximately $830,000, driven by a $2 million tariff refund during the quarter. Underlying gross margins performance continued to improve sequentially, reflecting higher customer activity, increased platform utilization, and the continued evolution of our revenue mix. Turning to operating expenses. Second quarter non-GAAP operating expenses were $28.8 million, an increase of $2.1 million year-over-year. The increase primarily reflects expenses associated with our highly successful Konnections conference, which supported customer engagement and commercial momentum, together with approximately $1.9 million of foreign exchange headwinds. Adjusted EBITDA was $0.3 million, compared with a loss of $1.2 million in the second quarter of 2025. Adjusted EBITDA margins improved 290 basis points year-over-year to 0.6%, exceeding the upper end of our guidance range. Turning to cash and our balance sheet. We ended the quarter with approximately $451 million in cash, bank deposits, and marketable securities. Operating cash flow was approximately $8.5 million, marking our 11th consecutive quarter of positive operating cash flow and reflecting continued work in capital discipline. Our balance sheet remains a significant strategic asset. It provides the flexibility to support continued investment in our AIC program, fund inventory to meet anticipated customer demand, invest in product innovation across our portfolio, and pursue targeted acquisitions that strengthen our platform strategy with PrintFactory, which closed in the second quarter, serving as the most recent example. During the quarter, we also invested $5.4 million under our share repurchase program. Since the program began in 2023, we have repurchased approximately 9.5 million shares for about $205 million, with approximately $60 million remaining under the current authorization. We remain committed to disciplined capital allocation strategy, balancing investment in long-term growth with returning capital to shareholders while maintaining strong financial flexibility. Turning to guidance. For the third quarter of 2026, we expect revenue between $55 million and $60 million, with adjusted EBITDA margin between breakeven and 3%. Looking beyond the quarter, we expect second half 2026 revenue to be approximately 15% higher than the first half, supporting high single-digit revenue growth for the full year, an improvement from the low single-digit growth we anticipated entering the year. Our outlook reflects continued confidence in customer demand and the strength of our commercial pipeline. As we continue to scale the business, our financial priorities remain clear, driving profitable revenue growth, improving margins, generating positive operating cash flow, and investing with discipline to create sustainable long-term value to our shareholders. With that, let me turn the call back to Ronen. Ronen? Thank you, Assaf. Operator, by that, we are ready to get questions from the audience. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question comes from the line of Greg Palm with Craig-Hallum. Please proceed with your question. Yeah, thanks for taking the questions and congrats on the results. It definitely seems like things are stepping up here. Ronen, I just maybe talk to us a little bit about kind of what your view is and what's happened the last, you know, few months, year to date, this sort of acceleration, and just kind of thinking about the company, where it stands today versus a few years ago. What's fundamentally different? Yeah, thank you, Greg. There's a lot of changes, and what we clearly see is that the strategies that we implemented actually starting two, 2. 5 years ago, are starting to deliver. We're delivering growth in revenue, in top line, but significantly expanding our ARR, which providing us a much stronger visibility into the future. Moving into recurring business model, as I mentioned, providing more predictability but also resilience. We can see that as of today, we reached to a $33.8 million of ARR, and this represents 79% year-over-year growth. We ended this quarter, Q2, with additional $7 million in the AIC revenue, or in ARR, with AIC revenue growing by $6.5 million, which is a growth of 112%. When we are looking at it, we need to understand that this ARR is multiple years, typically five years model, which bring us to a total contractual value of $142 million. We are changing totally the business model of the company. When we look at it today, we actually about 80% of our revenue is recurring or reoccurring revenues, which again, providing visibility and predictability and resilience to the company. From a business model, from the recurring, it is changing a lot the way we are looking at the future. Even more fundamentally, let us look at the technology, what we have brought to the market in the last two years, starting with the Apollo that is scaling up and really focusing on entering to the screen market, and bringing huge volume to our customers and to Kornit. The MATRIX, we just introduced it in the beginning of Q2, and we see a massive adoption of the MATRIX getting into new markets, new application like, the POLY. We are starting to do upgrades for the install base. We are bringing automation, AI software with, PrintFactory. Our wall-to-wall business is gaining momentum. From a technology perspective, we are totally different company as of today, and we are looking at ourself as manufacturing platform rather than just selling boxes. Look at the financial discipline. This is the 11th quarter in terms of bringing a positive operating cash flow. So there is a lot of discipline in the way we are executing and bringing back the company to profitability, and to grow. I think the most important thing is the addressable market. If you think about it, at Kornit, three years ago, Kornit was mainly focused on the customized design market, which is a very lucrative market, but it is a niche at the overall apparel market. It is continued to grow, and Kornit continue to lead this market, but moving and entering to the screen market, the bulk apparel market, this is the biggest move that Kornit has done. As we see today, 60% of the systems that we deliver in Q2 and also overall in H1 are going to screen market, screen replacement, and we see those customer running not short run, really longer run jobs. We see them scaling very fast, many of them leveraging the AIC model. Overall, we are totally different company as of today, and we are very happy with the changes that we have done. Yeah. No, appreciate that color. I know a lot of us have been waiting for some time for this acceleration from analog to digital, and it seems like it is finally starting to happen. If you could help us understand, is that being driven more by kind of that traditional screen printing industry? Or how much is actually driven by your traditional customer base that is actually helping accelerate that shift itself? Yeah. It's being driven mainly from new customers that we are penetrating in the screen market, although we see also growth within our install base. Some of our customers that were dealing in customized design see the opportunity now leveraging our technology to penetrate also the bulk apparel. We see also some screen printers that leveraging digital technology, to go after customized design. It's a mixed bag, but we need to understand that a few things are happening in the screen market. First of all, is the market changing? Even without talking about the business model and the technology from Kornit perspective, is the market is changing. I'm traveling a lot, meeting many brands, screen printers. They're all talking about the same thing. They need agility. They need flexibility. They need faster turnaround. The products in terms of run length becoming much, much shorter. They needed on-shore or near-shore production. This is a massive change. Another big change in this market is labor. First of all, labor is very difficult today to retain and to find, but it's also expensive. Automation is very, very important. This is a major driver for screen printer and anyone that is dealing with bulk apparels that looking for a new technology. Kornit, for many years, was working for developing technology that will meet the needs of the screen market. For the first time, when we introduced the MAX technology and the Apollo, we finally got to the level that we can meet the quality, the flexibility, the total cost of ownership, and the automation that bring with the Apollo. Think about it now that we are bringing the workflow together with PrintFactory, some AI capability as well into the production, that's really helping those customers to switch much faster into digital. Another thing that is very, very important and really accelerating the penetration of Kornit into the screen market is really the new model, the AIC model, which reduced the capital investment up from capital investment from those screen printers that are not used to invest millions of dollar in equipment. But now they have predictability, and they know exactly how much they need to pay per impression, per copy. Digital now is very, very competitive and going after longer run in terms of the total cost of ownership of per impressions. Other things, in the end, what we need to look at in the screen market is about our customer. I gave a few example, but the example of Jerry Lee as SNQS in India, we see really mainstream screen printers in places that you wouldn't expect, like India, like Sri Lanka, like other places moving to digital and leveraging Kornit technology. I gave a few examples. The results to see 60% of our system sales going to this market speaks by itself. We are very, very pleased. Another benefit that we see with our customers and many of them really, when we are monitoring what they are printing, we see that they're starting to use our technology for much longer runs. They are scaling some of the new customers like SNQS, like Jerry Lee, scaling very, very fast, leveraging the all-inclusive click model. Okay. Thanks for all the thoughts. I appreciate that new TCV disclosure. I think that will be really helpful. Thank you. Great. Thanks, Greg. Next question, please. Thank you. Our next question comes from the line of Erik Woodring with Morgan Stanley. Please proceed with your questioning. Great. Good morning, guys. Thanks so much for taking my questions, and congrats on the results. Ronen, maybe starting just with two related questions. First, as we think about the 15% half-on-half growth into the second half, can you help us just better understand where exactly that growth will primarily come from? Whether that is upgrade system sales, consumables, and how that might be different from the first half, and then just a quick follow-up, please. Thank you. Yeah. First of all, as you know very well, Kornit has a seasonality in our business, and always H2 is stronger than H1. Many of our customers have peak season during the end of Q3 and Q4. So traditionally, H2 is stronger than H1. Now, in terms of visibility, we are entering H2 with much better visibility. As I mentioned, 80% of our revenue is recurring, reoccurring, so we have a very good visibility to more than 80% of our revenue already. We are entering with a very strong pipeline and some orders already in hand into Q3 and even in Q4. All of it is coming from system. Some of the systems are CapEx systems, some of the systems are into the AIC model. We have a very good line of sight on the AIC. If you deliver in Q2 $6.5 million for Q2, you will see expansion of revenue quite significantly in H2 into the AIC revenue that we are collecting in Q2 and Q3. So AIC revenue is a major growth engine in H2 versus H1. Also, in terms of the system sales that we are seeing, and of course, the main growth in H2 is the consumable, is the ink. So overall, not only we expect H2 to grow by 15% versus H1, but we expect a significant expansion in our gross margin and specifically in our profitability because of the consumable. Okay, awesome. I am just writing all that down. Awesome. Thank you, Ronen. Then maybe just a follow-up. You have seen four quarters of accelerating trailing 12-month impressions growth. Can you maybe just provide a bit more detail to us about what you are hearing from your customers in terms of their end demand? What could be causing this acceleration? Is it an industry dynamic? Is it maybe somewhat unique to Kornit? Maybe just elaborate a bit on why we are seeing accelerations in impressions growth. Thanks so much, guys. Thank you. Overall apparel market, and you can read the reports like anyone else, is not doing great. There is ups and downs, overall apparel market. But what we see within the apparel market is that a lot of the jobs are getting shorter. There's many more SKUs. Time to market is very important. This is why we start to see the shift from the growth of the overall market that is kind of a small growth to the growth of digital. Digital growing much, much faster because a lot of the move is moving to short runs, on demand, and on shore production. We hear it, there is the differences between the different region. We see very strong growth in our Americas or North America region. This is the leading region in terms of the growth. We see also differences between type of customers, between the screen printers to the customized design, between strategic customers to the long-tail customers. We see strong growth in most of our strategic customers. They are growing very, very nicely. On the long tail, we see customers that are declining. It's all over the place. But overall, the main message that a lot of the apparel market is moving into short runs, on-demand, and by that overall digital and growing for me, and specifically Kornit, we believe we are gaining share. Awesome. Thank you so much, Ron. Best of luck to you guys. Thank you. Thanks, Erik. Next question, please. Thank you. Our next question comes from the line of Brian Drab with William Blair. Please proceed with your question. Hi. Thanks for taking my questions. Congratulations. First question is just on the 80% that's recurring now. What's in that 20%? Does that mean 20% is outright system sales? And how have outright system sales influenced the first half and second quarter results? Yeah. So in the 20%, there are two main components. One is system sale, CapEx system sales, and another thing is spare parts, services, upgrades, sorry, not spare parts, upgrades on services that are not recurring. So part of the revenues that you see in services is not part of the recurring revenue, okay? What is in part of the recurring revenue within the services is our contract and spare parts that we know the tendency of selling them. Yeah. Is it clear? Yeah, it's clear. It's helpful. In my model, based on the guidance and all these factors, I was kind of assuming there would not be significant outright CapEx system sales. I'm just wondering if those CapEx system sales are a little bit, the unit sold is a little bit higher than you expected, or is it on track? Units sold right now what we see is higher than what we expected in the beginning of the year. You see there's a split between unit sales that we are selling on CapEx to unit sales that we are selling on AIC. As you can see that AIC is growing strongly, and the ARR for example, in Q2 grew by $7 million, which means it's new systems that we sold to the market on the AIC model. In parallel, of course, part of the product that you see, the product revenue, which in the product revenue you have consumable, you have AIC, and you have system, there is a CapEx portion there. Actually, we had a very good quarter in Q2 for the CapEx, and we believe that it will continue also in H2, as we have a strong pipeline. Overall, in terms of system delivery, I would say it's something at this range that 50% of the systems are on CapEx delivery and 50% of the systems are on AIC. It change between one quarter to another. Yeah. Okay. Thank you. I do not mean to focus too much on that point. It is just, I think a lot of people have been thinking about the model. It is easier to forecast given you have such a high level of recurring revenue. We are focusing on AIC, and it is growing so well, but just been thinking if there is really any systems sales in the CapEx category, then that is upside to the results, and I felt like that might be happening. Thank you. Then can you just, Ron, touch on, when you talk about the success you are having with screen printer customers, the traditional screen printers, is that in the U.S. mainly? Is that also being driven in part by just the need to change their supply chain dynamics? Or is that really global, where you are seeing screen printer demand? I just want to understand that dynamic better. Thanks. Yeah. The answer is very clear, absolutely global. We see a very strong adoption of screen in Europe. I mentioned, for example, India with SNQS which is a manufacturing country, even entered into Sri Lanka. But we see it in Japan, and as I mentioned, in Europe. U.S., yes, absolutely. U.S. is growing. U.S., we see a very nice penetration into traditional screen printers. I mentioned a few in previous call, and this call as well. It is all over the globe. The same pressure that customers seeing in the U.S., we see it also in Europe and in Asia. Okay. Thanks very much. Thank you. Great. Thanks, Brian. Next question, please. Thank you. It looks like we need our final question. It comes from the line of Jim Ricchiuti with Needham & Company. Please proceed with your question. Hi. Thanks. Good afternoon. Congrats. Couple of questions. I may have missed this information if you gave it, but did you say what percentage of your new customer adds are screen printers. Does this now represent the majority of the new customer adds that you alluded to for Q2? Yeah. So what we mentioned in Q2 and overall in H1, that 60% of the systems that we have delivered, some of them on CapEx and some of them on AIC, went to screen printer. Many of them are net new customers. Okay. Many of them. Ronen, you also highlighted the roll-to-roll business gaining momentum. I was hoping to get a little bit more color on the progress in this area and what's driving the improvement in that directive fabric part of the business. Yeah, as you know, we spoke about it in the previous call as well. 2025 was a slow year for roll-to-roll, and we are putting a lot of focus to gain, again, momentum because we believe that we have a unique technology and the market is moving more and more into digital, into sustainability, on-demand pigment becoming a necessity in many different applications. We just released a new product which is called Presto MAX PLUS, with new capability to be able to print on unique applications that digital has an advantage in specific market, like the footwear, like home decor, like technical market, and performance market. So those are the areas that we are focusing our pipeline and our funnel becoming stronger. I can hint that by the end of the year, we are going to announce about additional technology that we are bringing to the market. Very exciting technology. I cannot share more than that, but there will be additional technology in this market. So overall, we are excited about the opportunity. Now is the time to deliver. I believe that H2 will be the time that the roll-to-roll will contribute to our total revenue, and we are building a strong pipeline into 2027. Got it. Helpful. Last question from me. How would you characterize the demand that you're seeing from your global strategic customer, including upgrades? And how should we think about the contribution from that customer also as it relates to your second half guidance? Yeah. I cannot relate to demand and growth of our global strategic customer. This is their business, and if they would like, they will share. I cannot share specific information. I can share what I shared in the past, that we started this year an upgrade for their systems. They have large amounts of systems that going through upgrades, started in Q1, continue in H2, and we believe that it will continue also in next year. There are multiple projects that we are working together with this strategic customer, global strategic customers. We have excellent relationship, but I cannot share more information specifically on this account. Fair enough. Thank you. Thank you. Thank you. Mr. Sammy, we have no further questions. I will turn it back over to you for final remarks. All right. Thank you everyone for joining us today. We are really pleased with the progress we deliver in Q2, and more importantly, encouraged by what we see ahead. Our strategy is translating into results. Our recurring revenue base continue to grow, and we are seeing increasing momentum, as traditional screen production moves from analog to digital. We know there is still a lot of work ahead of us. Our focus remain on execution, customer success, and continue to build strong and more profitable Kornit. We would like to thank you, thanks to our customers, our employees, our shareholders for your continued trust and support. We look forward to updating you again on the next quarter. Thank you and have a great day. Great. Thank you, Ronen, and thank you, Assaf, and thank you all for joining us today. As always, please feel free to reach out to me directly should you have any follow-up questions. [Shamali], if you could please give the replay instructions, I would appreciate it. Thank you. As far as the replay instructions, you may contact or visit [vyvid.com for the replay information. With that, we do thank you for your participation. This concludes today's conference, and you may disconnect your lines at this time. Thank you.