Kornit Digital Ltd. Price & Performance (KRNT)

Good day, everyone, and welcome to Korny Digital's Fourth Quarter and Full Year twenty twenty four earnings conference call. Joining me today are Chief Executive Officer, Renan Samuel and Lori Hanover, Corny's Chief Financial Officer. For today's call, Renan will recap the full year 2024, provide comments on the fourth quarter and then discuss our view on 2025. Lori will then review the fourth quarter and full year numbers and provide our first quarter outlook before we open it up for Q and 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 the forward looking statements. I encourage you to review the company's filings with the Securities and Exchange Commission including the company's annual report on Form 20 F filed with the SEC on 03/28/2024, which identify specific risk factors that could cause actual results to differ materially.

Any forward looking statements are made currently and the company undertakes no obligation to publicly update any forward looking statements except as acquired by law Additionally, the company will be making reference to certain non GAAP financial measures on The reconciliation of these non GAAP measures to the most directly comparable GAAP measures can be found in the company's earnings release published today which is also posted on the company's Investor Relations website. At this time, I'd now like to turn the call over to Ronan. [indiscernible] Good morning, everyone, and welcome to Kornit's Fourth Quarter and Full Year twenty twenty four Before we dive into our results, I want to take a moment to reflect the significant transformation Kornit experienced in 2024. This year, was a turning point one in which we successfully executed our return to profitability and position the company for sustained profitable growth, At the beginning of 2024, we set clear objectives return to positive EBITDA, generate meaningful cash flow and establish a scalable disciplined model that fuel long term expansion. Thanks to the dedicated effort of our teams, I'm pleased to report but also introduced game changing innovation strengthened our market position and expanded into new strategic adjacencies.

Today, we are pleased to report Q4 twenty twenty four revenues of $60,700,000 and an adjusted EBITDA margin of 13.8% both within our guidance ranges demonstrating the successful implementation of our strategy and an ongoing business momentum. We also reported $26,700,000 of operating cash flow in the quarter. These results mark two significant milestones. Achieving positive EBITDA for the full year and generating substantial operating cash flow. Our Q4 performance was fueled by a successful peak season and growing impressions across our key customers. One of the most exciting highlights of Q4 was the Apollo platform performance during the peak season. Having delivered 15 Apollo systems throughout the year, with most becoming fully operational during the critical period, Customer feedback has been excellent reinforcing Apollo's role as a key enabler of mass scale digital production. 2024 was not just about financial milestones. It was about laying the foundation for Kornit's long term success. We introduced industry defining solutions including Apollo, Atlas Max Plus and Vivido Inc. For wall to wall, setting new benchmarks for quality, cost efficiency and sustainability. Apollo has redefined mass scale digital production delivering unmatched productivity automation and consistency. The strong market response is evident in our growing pipeline which is already filling up for twenty twenty five deliveries.

Additionally, we have successfully upgraded a significant portion of our installed base transitioning customers from Atlas to Atlas Max and are now beginning to upgrade them to Atlas Max Plus. This upgrade path was reinforced by principal recent announcement highlighting the growing adoption of our latest technology and its ability to drive efficiency and quality at scale. Our all inclusive click model is revolutionizing how customers embrace digital technology. Driving strong adoption, accelerating penetration in the screen printing market and already generating meaningful ARR which we will start reporting as promised on our Q1 earnings call. We have expanded our horizon to new markets, including bulk apparel, footwear and home decor, while deepening our presence in key regions. In Bancaparole, we have delivered Apollo and Atlas MAX systems to major screen printers adopting digital technology for the first time marking a significant step in the transformation of high volume apparel manufacturing from analog to digital. In footwear, we delivered our solution to three different customers in Asia with one already in full production for major global brands. This customer has seen strong initial adoption and is now scaling up with additional systems planned for deployment in the first half of twenty twenty five.

Reinforcing the growing demand for digital production in the footwear sector. We fundamentally shifted our go to market approach emphasizing customer success account management and recurring revenue growth. We also strengthened our team with top tier talent across all functions. Ensuring we have the right leadership in place to drive sustained execution. In conclusion, we have built a business that is resilience, profitable and pose for long term success. Beyond our innovation, we continue to deliver shareholder value. We have executed $75,000,000 of our previously announced $100,000,000 share repurchase program which we expect to complete by mid-twenty twenty five. As we enter 2025, Kornit is in the strongest position it has ever been. The market is showing signs of improvement driven by a clear shift among brands, retailers and creators towards on demand manufacturing. This transition is becoming increasingly critical for businesses aiming to respond swiftly to evolving consumer demand, while minimizing excess inventory and waste. Additionally, there is significant shift toward nearshore and onshore production as company seeks enhanced supply chain resilience and faster turnaround times. While these trends are positive, certain macroeconomic uncertainties persist. Recent political developments in The U. S. And potential tariffs on Mexico have raised concerns among some of our customers regarding nearshore manufacturing.

Furthermore, potential inflationary pressures stemming from these policies could impact consumer purchasing power. We continue to monitor this dynamic closely while supporting our customers in navigating these shifts, [indiscernible] As we stated in our last call, 2025 is about execution translating the strong foundation built in 2024 into scalable profitable growth strengthening our market leadership and driving the industry forward with our innovative solutions and business models. With our continued focus on innovation, customer success and disciplined financial management we are confident in our ability to drive significant value for our customers employees and shareholders. With that, will now turn the call over to Laurie for a closure look at our financials. [indiscernible] Thank you, Ronen, and good day to everyone.

Fourth quarter revenues were 60,700,000.0 within the guidance range we provided in November. This quarter, year over year growth of 7% resulted mainly from growth in system sales and revenue recognized under our AIC model. For the full year 2024, revenues were $203,800,000 compared with $219,800,000 in 2023. The decline resulted from lower systems and services sales, and was partly offset by growth in consumables. Moving to margins. Fourth quarter non GAAP gross margin was 55.1% up from 48.6% in the same period last year. This year over year improvement was primarily driven by higher product revenues from Sysco the absence of a warrant impact this quarter and cost base reductions resulting from the initiatives announced at beginning of twenty twenty four. For the full year 2024, non GAAP gross margin rose to 48.6% compared with 38.4% in 2023. The increase was largely attributable to a more favorable sales mix driven by consumable sales, reduced warrant impact and the cost base reductions. Looking at expenses, [indiscernible] Total fourth quarter non GAAP operating expenses were $28,000,000 a decrease of about 7% from 30 For the full year 2024, non GAAP operating expenses decreased about 14% to $109,800,000 This reduction in expenses reflects the impact of the restructuring initiatives implemented at the end of twenty twenty three and beginning of twenty twenty four.

Moving to EBITDA. Our adjusted EBITDA in the fourth quarter was $8,400,000 marking a meaningful improvement over the adjusted EBITDA of $200,000 in the same period last year. And the adjusted EBITDA of 1,500,000.0 Last quarter, Adjusted EBITDA margin for the fourth quarter of twenty twenty four was 13.8%, compared with 0.3% in the same period last year. For the full year 2024, adjusted EBITDA was $300,000 which was up significantly versus negative $30,900,000 in 2023. Improving profitability was a key objective for us as we entered 2024. And we are pleased with this improvement of $31,200,000 year over year, which resulted in positive adjusted Adjusted EBITDA margin for the full year was 0.2% compared with negative 14% in 2023. With the improvement being driven by reduced OpEx improvement to sales mix and the reduced warrant impact. Our cash balance including bank deposits and marketable securities at quarter end was approximately $512,000,000 For the fourth quarter, operating cash flow increased to $26,700,000 versus $2,600,000 in the same period last year. And on a full year basis, 2024 operating cash flow was a robust $48,700,000 compared with negative $34,700,000 in 2023. This positive cash flow was primarily driven by strong collections and improved profitability.

Our primary use of cash during 2024 was our share repurchase program. We used $84,100,000 of cash on repurchases during 2024 bringing the total gross amount used on repurchases to $121,600,000 at an average execution price of $24.4 During the fourth quarter, we entered an accelerated share repurchase under which we plan to repurchase approximately $75,000,000 of our ordinary shares. Under the terms of the ASR agreement, we received an initial delivery of approximately 1,800,000.0 shares in exchange for a prepayment of $75,000,000 The final number of shares repurchased will be dependent on our average daily VWAP through the end of the contract. We expect this program to close at the June. This $75,000,000 represents a majority of the $100,000,000 program we announced at our investor event in September and we expect to complete the remaining $25,000,000 through opportunistic repurchasing. As Ronen mentioned, 2025 will be a year of execution for us. Meaning it will be a year where we aim to turn our vision innovative solutions and the business model we laid out at our Investor into measurable results. These measurable results include the annual recurring revenue generated by our AIC model. We will begin to disclose this metric during our first quarter of twenty twenty five earnings.

In the meantime, the investments made in our AIC model can be seen on our balance sheet under equipment on lease net. Turning to first quarter guidance. We currently expect revenues for the first quarter of twenty twenty five to be between $45,500,000 dollars dollars and adjusted EBITDA margin to be in the negative 4% to negative 9% range. That concludes our prepared remarks. With that, I will now turn it back over to Ronen to open up the call for Q and A. [indiscernible] Thank you, Laurie.

Operator, we are ready to receive questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session. For participants using speaker equipment, it may be necessary to The first question comes from the line of Greg Palm from Greg Hallum Capital Group. Please go ahead. [indiscernible] congrats on the progress Here Ronan, you talked about kind of 2024 a little bit and 2025 is sort of another year of ex Maybe tell us what you sort of perceive as kind of your goals for the year and how that relates to top line growth potential? Yes. Thanks, Greg.

First of all, would like to touch on a bit about 2024 because it was a turning point for Kornit Kornit. A year that we set very clear targets in front of us to move to positive EBITDA and generating substantial cash from operation and we have delivered on that. And this was a transformative year for us. On top of that, you can see that in Q4, we moved back to growth And on top of that, of course, we introduced many new products like the Apollo, the Atlas Max Plus, the Vivido for the [indiscernible] RSS and many, much more. One of the things we are very proud of and will contribute to your question about 2025 is the a new model, the AIC and the ARR that is generating and we're coming out of 2024 with meaningful ARR that going to contribute for the 2025. We set a really clear targets to penetrate the bulk apparel, the screen market, which we did major steps into it and some of the major screen players now using Apollo's and other solution from Komet. We entered to new adjacencies like the footwear which we see acceleration and the home decor and all of those will contribute for 2025.

Major change and revamp of our go to market focus customer success, on account management, recovering revenue, recurring revenue, sorry, and really bringing new talents across our team and specifically for the go to market. In conclusion, when you see looking at 2024, we deliver on what we promised. We build a resilience business, [indiscernible] for expansion and a profitable growth. Now as I mentioned in my prepared remarks, 2025 will be a year that we will see a profitable growth in every quarter and we will generate continue to generate positive cash from operation. To do that, we need to continue focusing on execution. Our team is fully focused on execution and I'm going to touch on few fundamentals that we are going to focus in 2024 to make it happen. So on top of what we've delivered 2024, 2025, on the Apollo specifically, we set a clear target to deliver 30 systems This is on top of the 15 systems that we have delivered in the 2024 and we are coming to 2025 with a strong pipeline and a good visibility on those service systems. Which will contribute significantly to our top line and also our bottom line.

Building continue building ARR super, super important. The new AIC model really opening for us new markets, new customers, and generating very healthy revenues and ARR, which we are going to start reporting from from the next seven call of Q1. And we are going to put we are putting a lot of focus on that and we have internal targets how do we would like to end the year in terms of ARR versus where we start the there is a significant growth that we are building on. Another area of the focus is continue penetrating the screen market. What we see in this market is a clear move from analog to digital. We see a massive opportunity there. We already penetrated some big accounts there and we have a very healthy pipeline to convert to digital. Another very important and very fundamental KPIs for the year is really about impression growth. First of all, we are going to measure it every every quarter. We're actually looking at it on a daily basis. We have a clear target how do we want to end the year in terms of the impression. And those impression coming from existing customers, we start to see a nice [indiscernible] on the existing customers and also on the capacity utilization of the systems.

But also from net new customers, specifically in March that we never been there like the screen market, the footwear, the home decor and others. Another focus area 2025 will be the role to all. While 2024 was relatively soft on the world to all market We see much healthier funnel for the roll to roll business in 2025 specifically in the area of fashion footwear and on the go. Overall bottom line, we believe that 2025 will be a year of profitable growth and a massive execution by the team. We feel very good entering to 2025.

I mean, when you and that was helpful color, so appreciate that. When you put that all together, does does that give you an ability or a potential to to get back to double digit growth? Or would you rather not commit to a certain number at this point?

Yes. So as you know, we are guiding only quarter by quarter. So I wouldn't I don't want to guide for the year. We have better visibility for 2025 Some of this visibility is coming, first of all, from the Apollo, major part of the revenue in 2025 will come from that portal and we have a very good line of sight on where we are going to install Kornit. Another area that improving our visibility is the AIC. We are coming to 2025 with a nice meaningful revenue on AIC and it's going to grow along the year substantially. Of course, we have the inks and services, which is almost recurring revenue for us, so we have clear visibility on that. We also came to Q1 with some CapEx order in hand already. So we have a good visibility for Q1. And for the rest of the year. As for the cost structure, we did significant cost improvement during 2024. And we feel that we are under control for the cost. Therefore, we have also good visibility to our EBITDA Understood. All right. I will pass it off. Thanks and best of luck. Thank you.

Thank you. The next question comes from the line of Brian Krab from William Blair.

Hi.

Thanks for taking my questions. The First one is just could you give us a little more color Ronan on the roll to roll opportunity in 2025 and you had a lot of momentum at the and LOIs at that show in Italy and then then high interest rates, wait on that business. But why was it soft in 2024 and what has changed that makes you more optimistic about '25?

Thank you, Waijan. So, world to all, when we're looking at this, a few things that have changed. One of them is that we just about to release the new products, which include the Vivido. Which right now is ending the beta testing and getting excellent feedback from our customers. This brings the quality of the role to all to a very similar quality of the reactive ink in terms of the darkness of the black improvement on the hand field And we also see that the market is really looking for much more sustainable on demand way of manufacturing and Kornit is by far leading this revolution with our pigment unique pigment capabilities. On top of that, look, we are coming out of two point five years of very soft market in the fashion market.

Many of our customers really in the last two years two point five years, We're working partially. Some sites were closed, some sites were working only one shift and we see the change. They're getting more demand from their retailers and brands and they're getting to much more production. We see it across the board. Still there is room to improvement, but we see the change in the market. On top of that, we see the [indiscernible] So our existing customer, we are monitoring every day the number of impressions that they're printing on our roll to roll and we see a very nice growth and we expect some of them to acquire additional system this year. As I mentioned on my prepared remarks, on the footwear specifically, we managed to penetrate already three major player in Asia One of them is already in a minute to scale the business and now is producing for large brands and already placed an order for additional systems that we are going to deliver in H1 which we have a full commitment and visibility for that. On top of that, we penetrated the home Deco in 2024, specifically in H2, 2024, we put a lot of effort to go after the home decor Beginning of this year, we had an important event in frank food called Heimtek Steel and we got a really nice feedback from some of the biggest retailers and brands and manufacturers And our solution has a perfect fit for home decor because of the pigment, the resistance and durability of the pigment.

Now that Home Decor is going much more into unique and short runs and on demand we find it as a big opportunity for us. Also in the fashion, we managed to penetrate few big player who is moving from analog to digital or from reactive to pigment, and some of them are scaling up. So and will need more capacity. Overall, our funnel entering to 2025 is much stronger on the roll to roll and the team is optimistic that we will be able to deliver much better results 2025 versus 2024 on the wall to wall. Okay.

Thank you for that comprehensive answer. Answer. I'll just ask one more for now, I think. But the Apollo is obviously so critical to the story going forward and it sounds like it's performing very well in the field from talking to you and from talking to customers. Elaborate on what you saw in terms of its performance during the holiday season, what customers were able to produce maybe per hour or what the feedback was from customers and using the Apollo and the quality throughout the holiday season?

Yes. So Apollo, as I mentioned, previous call, is a game changer. It's a game changer for our existing customer, but it's a game changer for us and for new markets that we are entering specifically the screen and the move from analog to digital. When we are looking at our customers that using today [indiscernible] is a mix of type of customer. There is the existing customers that are using the Apollo, some of them for very short run than one of but also using the Apollo to convert volume that today they are printing on analog, on screen and moving it to digital. On top of that, we have new type of customer, totally new to digital [indiscernible] and really moving only mid run and long run jobs from analog to digital, some of them are retailers, but some of them are fulfillers. So this is very encouraging to see the mix and really opening new markets and incremental impression. This year, as I mentioned, we managed to deliver 15 systems. Many of those systems were installed just before the peak season, but all of them performed during the peak season. Happy to share with all of you that the the performance of the system exceeded our expectation.

This, of course, very complex new product introduction and new platform and like any new platform, there are issues. But this was the best introduction of a new platform that CONNECT has delivered ever to a very complex solution in terms of the automation and the capability and the productivity. The satisfaction level of our customers out of it is very high. And how do you measure satisfaction? I can tell you without any exception that each one of those customers that will already deliver the system or already have the second system or more or about to order the second system or more this year. So we are very, very pleased with how is it going till now. In terms of the utilization and capacity we have reached our goal and customer have reached their goal while we are planning to improve the capacity and the availability of the systems along the 2025. We're entering 2025 with a very healthy pipeline and good visibility to deliver on the service system during 2025.

Okay. And before Ronan, you said 15 orders were in hand. Is that still around that same level?

I mentioned that we have 15 commitment from our customers. Today, we have even more commitment in terms of order. I didn't mention how many orders we have in hand. We have a very good visibility and line of sight to deliver service system during 2025.

Okay.

Thanks for clarifying that.

That's all for me. Thank you.

Thank you. The next question comes from the line of James from Needham and Company. Hi, thank you. I was wondering, Ronan, if you can give any update on equipment purchases or or upgrades from your large global strategic account. I don't recall you talking about that in call or I may have missed it. So thanks, James.

First of all, I would relate first of all to one of of our key strategic customer, which we had the announced of major upgrade, which is the Printful, they have announced it. During 2024, they upgraded their entire fleet of Atlases 86 to be accurate of Atlases into Atlas Max and now we are in a process to upgrade all the fleets also to Atlas Max Plus. And they were sharing the satisfaction about the quality, the productivity, and the additional capability in terms of application that they can run. So we are very, very satisfied about that. As for our global strategic customer, our relationship are very, very close. We are working very closely together. Like many of our key customer, they had a very strong peak season and overall very healthy year. For them like many of other customers, key customers [indiscernible] And as I mentioned in the past, we hope that this year they will continue with the plan to upgrade some of their fleets into Atlas Max We reported that in Q4, there were some upgrades and we hope that we will see this year additional upgrades coming from this customer.

Got it. Laurie, can you help us at all in terms of how we should be thinking about gross margins in Q3 just given seasonality and the ongoing development of the AIC model?

Hi. Thanks for the question. In Q1, as you rightly pointed out, it's the seasonally low quarter, which has an impact on gross margins As you know, we have adjusted our cost base and we are looking always to improve efficiency. So depending upon the mix that we'll see in that quarter, we would expect the gross margins to be similar to what we've seen in the past, that being the lowest gross margin that we have during the year. And if I could, one quick one.

Ronan, you mentioned the issue around the geopolitical situation and tariffs and I think you talked about Mexico. Are you seeing actually seeing any or hearing any changes in terms of uncertainty as it relates to customer behavior [indiscernible] I'm just curious what has changed, if anything, in terms of customer behavior around the issue of tariffs? [indiscernible] talking a lot about the nearshore and we see the move to nearshore and some of our key customers move to the near show. So we took the opportunity of course to touch base with each one of them and ask them what are they going to do when there will be tariff if it will happen. The answer is mainly what we hear from them is wait and see. None of them really has a clear understanding if it will happen, when it will happen and what will be the actions that they are going to take. Some of them looking potentially to move some of the operation into also into The U. S. Which can have positive implication [indiscernible] But there is a lot of uncertainty. So we don't know. We working very closely with our customer and they don't know.

They are looking into what will be the verdict verdict in the end And once we will know more, we will be able to report to you.

Thank you and congratulations on the progress Thank you very much.

Thank you. The next question comes from the line of Troy Jensen from Cantor Fitzgerald.

Hey, thank you. Congrats on the nice results here.

Maybe just a couple of questions for Laurie and kind of following up on Jim's question.

On gross margins. I think you said it could be as low as the lowest quarter in the last year. So implying gross margins could be as low as 37.5% per No, no, no, no. Hi, Troy.

No, let me clarify. What I said is that the first quarter is typically the lowest gross margin quarter of the year. Which is something that we've seen in the past as well. I was not comparing to the prior year.

Okay.

So we should well above because last year was kind of a big downtick for you guys in Q1.

So I'm not sure you weren't implying that. But then also just on guidance, I mean, I know you only give EBITDA, but we've got a model of EPS we need a financial income number.

And that's kind of changed a lot for you guys in the past quarter over quarter here. So you give us any color on what you think financial income is Q1 and maybe for us '25 Troy, we provide guidance in terms of revenue and adjusted EBITDA. We don't provide guidance on other elements of the P and L. All right.

I'll take it offline, but I guess it's probably just interest income come down and rates have come down, so I drove it down and sequentially get in. Happy to follow-up. So, all right, well, congrats and good luck going forward. [indiscernible] to have you on the call and we are looking forward to work with you in the future. Thanks Ronin.

Thank you. The next question comes from the line of Maya Woodring from Morgan Stanley. Please go ahead.

Hi. This is Maya on the line for Eric.

Great end to the year guys. Thank you for having us.

I think maybe just to kind of double hit on gross margins. It looks like total company gross margins hit what looks like an all time record high in the quarter and product gross margins were quite strong.

You maybe speak to some of the puts and takes driving that margin outperformance? How would you how much would you say is a result of the AIC model? And were there any one time dynamics to call out And kind of how sustainable is kind of this step up in margins? Obviously, [indiscernible] how sustainable would you say are these higher level of margins looking forward?

Hi, Maya. Thanks for the question. So first of all, as you rightly pointed out, our gross margin is very much affected by the seasonality and the mix within revenues. That being said, some of the key drivers are of course the volume, the volume of systems, the proportion of consumables in the mix, But we've also taken made great strides in terms of our cost base reduction which gives us additional leverage. In terms of our gross margin. And then we have the on the onboarding of the AIC model, which over time as it becomes a more meaningful element of revenue, will also help support improved gross margins.

The only point that I will mention back in the investor event what we have said that in 2025 you should see a moderate improvement in gross margin. Okay, versus this year. So we are planning to expect expand it along the year.

Got it. Very helpful. Then maybe just one last one from me. You talk about good line of sight into the 30 Apollos this year. Is that still the cap in terms of capacity or could you potentially demand far exceeds that 30? For this year?

We have defined the 30 in because of capacity and definitely not because of the demand, the market is much bigger than those 30 system. We are doing it only because we would like to make sure that every installation of the Apollis successful We're still learning a lot. We are working with our customer on each one of the installation some of it was totally new type of customer. So we are taking it step by step, doubling the number of from twenty twenty twenty twenty six will be the year that we will scale the Apollo to the next level.

Got it. Thank you. And that's it for me.

Thanks, Lana. Thank you.

The next question comes from the line of Chris Moore from CJS Securities.

Hey, good day. Thanks for taking a couple. Yes, maybe just one more on the 30 Apollos for 2025. Just trying to get a sense, obviously, it's still a work in process, but how many customers you think are going to comprise that? Is it twenty twenty customers? Is it 10 or there are a few that are taking quite a few? Just kind of any thoughts there?

I prefer not to throw a specific number right now, although we have a very clear line of sight on that. However, what I would say is that the two main audience that will receive those Apollo in 2025. One audience is existing customers that are already using the Apollo. As I mentioned, each one of them are planning to add at least additional one system in 2025. There are few of them that will add more than one system. And the other audience is more net new customers. That usually are buying one system and we expect them to have only one system in twenty twenty. Twenty twenty five. Those are type of customers that are coming from the screen from the analog wall and stepping into digital for the first time and they will expand into 2026. So it's kind of a mix And I would say it's about in terms of number of customers about fifty-fifty between existing customer to new customers that coming from the analog world.

Got it. That's helpful. Obviously, AISC game changer for Apollo. How important is AIC for Atlas MAX or MAX plus at this stage?

Well, it's we see encouraging feedback and use of the ASCs specifically on the Atlas Max and the Atlas Max Poly, we implemented meaningful amount of them during 2024. We have a healthy funnel in Q1 and for the rest of the year also for the Atlas family in terms of the AIC. What we see, some of them is going also to net new screen printers that they doesn't have the volume to justify Apollo. So as you know, there are really thousands of thousands of screen printers, some of them small, mid size, They cannot commit to the minimum volumes that Apollo can deliver. But they definitely can commit to the minimum volume on Atlas MAXs.

Many of them are taking multiple Atlas MAXs. Some are going taking two or three Atlas MAXs, We already implemented, as I mentioned, in 2024 and we have a good funnel for 2025.

Got it. That's what I was after. I was trying to figure out if there were some if you're getting new customers as well because of the AISC model there. So awesome. I will leave it there.

Thank you.

Thank you. The next question comes from the line of Tevey Rosemar from Barclays. Please go ahead.

Hi, Ron and Lori. Thanks for taking my questions. [indiscernible] quick ones for me. Most of them have been addressed. Looking at the demand side, so you spoke about the AI AIC and the pipeline. When you look ahead like 2025, any prospect of selling new systems not under the AIC, like is there still such a thing given the current macro environment? Or most of the demand now is through the AIC?

So as we shared on the the Investor Day, it's very consistent with what we see today in the market both in 2024 but moving forward to 2025. First of all, AHC model is only on the DTG side of the business. All the roll to roll business is on CapEx. There's no AIC at this stage for the roll to roll business. As for the DTG, when we look at the mix between CapEx to AIC is about 25% of the deals going on are on CapEx. 75% of the deals are on AIC. For example, in 2024, while we deliver 15 Apolos, 10 of them were on AIC and five of them were on CapEx. Is that if we'll need to ask ourselves who is choosing AEC and who is choosing CapEx, Many of the new to digital [indiscernible] that were in the analog world and moving to digital prefer to move to AAC to have a predictable cost and because they're operating the first time digital, for them to know exactly how much it will cost them is very, very important. And we see a clear growth in this area. It's also many of them they have a good business, they have But in terms of cash or CapEx, capital, there were more difficulties.

So therefore, they're choosing the AAC. On the other hand, existing customers that using our systems already and know exactly the cost they can compare the running cost that they have today on CapEx versus the running costs on the AIC And many of them are choosing the CapEx because the seed is more favorable in terms of the cost versus the AIC.

Great. Thanks, Ronen. That's helpful. It's all for me. Thank you. Thank you. Ladies and gentlemen, as there are no further questions, I would now hand the conference over to Roland Samuel, for his closing comments.

Yes. So thanks everyone for joining us on today's call. We are excited about what lies ahead for 2025 for Kornit Kornit. And we're looking forward to updating you on our progress on our next earnings call. Thank you very much. Thank you.

The conference of Coronet Digital has now concluded. [indiscernible]