Greetings, and welcome to Kornit Digital's Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Mr. Andy Backman, Chief Capital Markets Officer for Kornit Digital. Mr. Backman, you may begin.

Thank you, operator. Good day, everyone, and welcome to Kornit Digital's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining 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 fourth quarter and the full year, followed by Assaf, who will review our fourth quarter and full year 2025 results and provide guidance for the first quarter of 2026, before we open the call up 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 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 similar statements regarding the company's expectations for the future. The fulfillment of forward-looking statements is subject to known and unknown risks and uncertainties. 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 March 28, 2025, 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 them, 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 release published today, which is also posted on the company's Investor Relations website. At this time, I would like to now turn the call over to Ronen. Ronen?

Thank you, Andy. Good morning, everyone, and thank you for joining our Q4 and full year 2025 earnings call. Before I begin, I want to briefly welcome Assaf, who recently joined as the CFO, and Andy, who returned to Kornit to lead our capital markets activities. Let me turn directly to our business performance. When we entered 2025, we set clear and measurable targets for the year. We set out to move the company back to revenue growth while, at the same time, transitioning the business towards a more recurring ARR model, a shift that naturally changes near-term revenue timing as we build stronger long-term revenue foundations. We also committed to delivering positive EBITDA and generating positive cash flow from operations, all while capturing a meaningful share of bulk apparel production and driving impression growth across our installed base. I'm very pleased to share that we achieved all of these objectives. Q4 marked a solid finish to the year. Our customers had a successful peak season, reflected in a strong double-digit impression growth in Q4 year-over-year and 11% growth for the full year, reaching 243 million impressions. This growth was driven by higher utilization across our installed base and increased adoption of digital production for the longer runs. We delivered Q4 revenues of $58.9 million and adjusted EBITDA of $5.5 million, both at the upper end of our guidance. We also generated approximately $11 million in operating cash flow in Q4, making our ninth consecutive quarter of positive operating cash generation. For the full year 2025, we moved back to growth, achieved positive adjusted EBITDA, and generated strong operating cash flow of approximately $24 million. At the same time, we continued executing the transition towards a more recurring business model. We exited the year with approximately $25 million in ARR from the AIC program. This ARR is typically supported by multiyear customer commitments usually around 5 years, providing strong revenue visibility and durability. In 2025, AIC contributed $15.2 million in revenues and continue to scale as adoption expands. Together, these results reflect disciplined execution and meaningful progress in building a more recurring, predictable business model. One of the most important drivers of this progress is the accelerating shift from screen production to digital. We clearly see a shift of impressions into longer runs and incremental bulk apparel production moving to digital. Over 40% of our system deals in 2025, including Q4, came from net new customers, many of them traditional screen printers adopting digital production for the first time. For example, in Europe, top few in Poland, one of the leading screen printers in the region recently ordered an Apollo system for bulk apparel production under our AIC model. This represents a strategic move as they began transitioning part of their high-volume screen production to digital to improve flexibility, reduce labor dependency, and respond faster to customer demand. In the U.S., midsized screen printers are adopting our Atlas MAX platform to replace screen production for the first time. Customers like Cedarstream, a U.S. apparel decoration company focused on high-volume production, and Real Thread, a U.S.-based custom apparel and merchandise producer serving brands, creators, and e-commerce customers are moving bulk apparel impressions to digital to gain speed, consistency, and efficiency. At the same time, we are seeing clear expansion of bulk apparel impressions from existing Kornit customers, reinforcing the strength of our value proposition and the business outcomes we deliver. For example, Zumiez, a specialty retailer of action sports-related apparel, added its second Apollo system in Q4 on top of its existing fleet of Atlas MAX PLUS systems to support higher volumes, faster replenishment, and improve speed to market. 500 Level, a U.S. leader in licensed sports fan apparel and merchandise production, added an Apollo system on top of its Atlas MAX PLUS fleet under the AIC model to support licensed sport apparel production, improve automation, and scale bulk and replenishment programs more efficiently. Basic Thinking, a leader U.K. screen apparel producer added a second Apollo system under the AIC program as its business continued to scale following its initial transition to digital. Together, these examples show a consistent pattern. Over 40% of our existing Apollo customers added a second system or more in 2025, reflecting strong ROI, meaningful improvements in availability, uptime, and utilization across our Apollo installed base and growing confidence in digital for bulk and mid-run production. In parallel, our Atlas MAX family continues to gain traction among small and midsized screen printers taking the first step into digital production. We are also seeing encouraging momentum in our customized design segment with growth momentum returning across several of our key accounts. This momentum is driven by higher utilization of existing systems as well as customers adding capacity through upgrading to Atlas MAX PLUS and by deploying additional systems to support growing demand. A good example is MARUI in Japan, which expanded its production by adding a fleet of Atlas MAX PLUS systems to meet increasing demand for speed, quality, and operational agility in one of the most advanced print-on-demand markets globally. We are also pleased to share that our global strategic customer recently placed an order to continue upgrading its fleet to the Atlas MAX platform, reinforcing the long-term confidence in our technology and partnership. This also reinforces the broader trend we are seeing across our customer base with continued investment in capacity as utilization and demand grow. Beyond apparel, we continue to see growth in impressions and pipeline development in the sports and footwear market. We expect 2026 to be a stronger year for our roll-to-roll business, both in the footwear and technical and functional apparel segments, supported by new technologies and capabilities we plan to introduce later in the year that will further expand applications and drive future growth. We are entering 2026 with a growing pipeline of opportunities and much better visibility for the year. Today, more than 83% of our revenues are recurring or highly predictable. We expect low single-digit revenue growth in 2026, reflecting our deliberate decision to accelerate the transition towards the AIC model. Alongside this, we expect stronger profitability expansion and continued positive cash flow from operations while ARR continues to grow through additional AIC system deployments. As more customers move to AIC, our recurring revenue base grows, enhancing visibility and strengthening the long-term scalability of our business. Our priorities remain clear. We will continue driving incremental impressions from the screen market, expanding the AIC program, and delivering on our innovation road map to support growth beyond 2026. Before we close, I would like to personally invite you to join us at our connection event in Miami on April 12 to 14. This will be an opportunity to experience firsthand the progress we are making across screen, AIC, DTG, and roll-to-roll. You will meet hundreds of customers from around the world and see live demonstrations of the latest technology shaping the future of our industry. During the event, we will unveil breakthrough innovations designed to expand our addressable market, accelerate digital adoption, and enable our customers to capture new growth opportunities. Connection is where strategy meets execution and where the shift towards digital on-demand production becomes tangible. We look forward to seeing many of you there. I will now turn the call over to Assaf to further discuss our fourth quarter and full year results and our guidance for the first quarter. Assaf?

Thank you, Ronen, and good day, everyone. I am excited to be joining Kornit at such an important moment in the company's journey. Over the past few months, I've had the opportunity to engage closely with customers, investors, and the leadership team, gathering direct feedback on our strategy and execution, which reinforces my conviction in the company's direction and opportunity ahead. Turning to our results. Total revenue for the fourth quarter was $58.9 million, well within our guidance. Our revenue mix reflects the strategic shift in our business. AIC revenue grew 104% year-over-year. We ended the quarter with $24.8 million in ARR. Impressions, a strong leading indicator of system utilization and consumption, grew at a strong double-digit rate for the quarter. For the full year 2025, total revenue was $208.2 million, up 2% year-over-year, driven by the continued expansion of our AIC program. AIC revenue increased to $15.2 million from $3.3 million last year, strengthening the quality of our revenue through predictability, higher system utilization, and deeper customer engagement. Moving to margins. Fourth quarter non-GAAP gross margin was 50.7% compared with 55.1% in Q4 '24, reflecting in part changes in product mix and the impact of tariffs. Similarly, for the full year '25, non-GAAP gross margin was 47.2% compared with 48.6% last year. Long term, we expect annual gross margins to expand as AIC continues to scale. Turning to operating expenses. Fourth quarter non-GAAP operating expenses were $27.1 million, down 3.1% year-over-year and included an unfavorable $1.1 million impact from foreign exchange. For the full year '25, non-GAAP operating expenses were $107.1 million, down 2.5% year-over-year, again, including an unfavorable $2.6 million impact from foreign exchange. Our OpEx improvement is a reflection of our commitment to remain disciplined with costs while continuing to invest in the company's growth initiatives. Adjusted EBITDA for the fourth quarter was $5.5 million, compared with $8.4 million in the same period last year. Adjusted EBITDA margin for the fourth quarter was 9.3% compared to 13.8% in 2024. For the full year 2025, adjusted EBITDA was $1.5 million compared with $0.3 million last year. On a constant currency basis, adjusted EBITDA margin was 11.5% and 1.9% for the fourth quarter and full year 2025, respectively. Turning to cash and the balance sheet. Our cash balance, including bank deposits and marketable securities at quarter-end was approximately $491.2 million. Operating cash flow for the fourth quarter was $10.6 million and $24.4 million for the full year 2025, reflecting a continued focus on improving working capital. During 2025, we repurchased $27 million under our share purchase program, including $2 million under the new $100 million program we announced in November '25. Since our first program was announced in 2023 and through the fourth quarter of 2025, we have repurchased a total of 6.9 million shares for a total gross amount of approximately $167 million. We enter 2026 with a solid balance sheet that has sufficient capacity to fund organic growth, including AIC deployments and new product innovations. We will also continue to evaluate inorganic opportunities that align with our strategy. Turning to guidance. For the first quarter of 2026, we expect revenue of $45 million to $49 million and an adjusted EBITDA margin between negative 10% and negative 4%. As a reminder, our business is seasonal with adjusted EBITDA margins typically negative in the first half of the year. As the year progresses, we anticipate improvements in both revenue and margins, supported by increased utilization in the later part of the year and continued operational efficiency gains. 2026 will be a year of focused execution as we translate our strategy, innovation, and business model into tangible financial and operational results. We expect low single-digit revenue growth, improved profitability, and positive operating cash flow.

With that, I will now turn the call back to Ronen to open it up for Q&A.

The first question is from Greg Palm from Craig-Hallum.

I wanted to start by asking for some insights on the peak season performance. You mentioned double-digit growth, but could you provide further details on how it went, especially regarding Apollo's performance?

Thank you, Greg. Firstly, the peak season was indeed strong for our customers, and the key indicator of this strength is impression growth. For Q4, we experienced strong double-digit impression growth, closing the year with an overall 11% growth in impressions. This growth is primarily attributed to three main areas. First, we saw significant growth from customers utilizing the AIC program, which has high utilization rates compared to machines reliant on CapEx. Second, we noted substantial growth in the screen market, with a noticeable shift towards Kornit systems for long runs of bulk apparel. Lastly, in relation to Apollo, our systems have exhibited high volume capabilities, leading to a successful peak season for customers using Apollo. We achieved over 90% uptime across the board in Q4, indicating very high utilization and stability. Customer satisfaction with Apollo is exceptionally high; in 2025, 40% of existing Apollo customers have ordered additional machines. We are also seeing new, larger screen printers adopting Kornit systems for the first time, particularly Apollo. Customers are using Apollo for both small runs and, increasingly, longer runs of up to 5,000 copies. I also encourage everyone to attend Connection, where we will showcase Apollo along with groundbreaking applications and capabilities that will be unveiled for the first time. Apollo is truly a game changer for the industry.

Okay. Look forward to that event. As you look back on 2025, what do you view as the most major accomplishments? I know it's a pretty busy year on a lot of fronts, but talk to us about that? And how does that guide some of your priorities this year and beyond?

Well, so 2025 was very busy, as you mentioned. It was a transition year, but it's a year that when we're looking back, it's a year that we flipped the page. We are a different company right now. When we started 2025, we set clear targets, very measurable targets, and we delivered on them. I will start by saying a few of those targets and what we have achieved. First of all, we moved back to growth. So finally, we are growing. And this growth is coming in parallel to the transition of the business model into a more recurring model through the ARR and AIC, which is really gaining traction, which, as you know, moving to this model has some short-term impact but has a major positive long-term or midterm long-term impact on the business. We ended the year with significant ARR of approximately $25 million. For the full year, we recognized $15 million of AIC. This is a growth versus 2024 from $3 million to $15 million, more than 300% growth. And those ARR and AIC or ARR contracts, you need to remember that they are multiyear contracts with our customers. So traditionally most of those contracts are 5 years long, providing predictability, consistency, and stability to our business. Also, we delivered positive EBITDA, which is super important. We generated very healthy cash from operations for the full year and also for Q4. The main focus, which I also discussed on my prepared remarks, is penetrating the screen market. I would say that we ended the year having really penetrated some key customers in the screen market. We start to see a real shift of major screen printers into digital, leveraging our technology. Today, we are in a position that we have lighthouses almost all around the world, and we are starting to capture the biggest opportunity in front of Kornit, which is really in the screen market, and we feel that now we can start to scale on top of that. And the screen is really where the long run and the impressions are being driven. I talked about the impression for the full year; we grew 11%, but we saw it from better utilization of our installed base's systems, which is very important. We can see some of our key customers that now need more capacity or they are upgrading to Atlas MAX PLUS or adding additional systems, which is a very, very strong signal. In Apollo, as I mentioned before, this is a major milestone that we have achieved to see the stability and to see that customers are buying the second, third, and even more systems. This is really encouraging. 40% of the customers that we acquired in 2025 were net new customers, and each one of them has the potential to add additional capacity. So those are the main achievements, I would say, that we are entering 2026 with much better visibility, predictability; almost 83% of our revenue for 2026 is recurring or reoccurring revenue. So we feel very confident getting into 2026.

Okay. That's great. Before I hand it off, how should we view the system placements this year compared to last year considering the ongoing accelerated shift towards AIC? I assume unit volumes will likely increase quite a bit. I'm not looking for specific numbers, but I would appreciate some insight on how we should understand that dynamic.

Yes. This is a very good question because what you see is the product, and you compare products on CapEx, and you don't see the products that we are shipping on AIC. Overall, the number of systems that we've delivered in 2025 was higher than 2024. So we are delivering more systems to the field. But even more importantly, we are delivering more capacity because we are selling more high-end products to the market, which is systems that can generate more volume. So those are very strong indications for the future: more systems, more capacity, which will generate more revenue coming from services and AIC.

The next question is from Brian Drab from William Blair.

Congratulations on a great quarter. It's nice to connect with you again, Andy and Assaf. Ronen, could you discuss the low single-digit forecast? In the past, you've provided a detailed breakdown of the business components like consumables, services, and upgrades. Can you help us understand the transition from the 2025 revenue to the 2026 forecast, particularly regarding the Amazon upgrade order you mentioned?

Yes. So first of all, we are very pleased with the decision of our global strategic customers to continue to grow with us. It shows the confidence in the technology in our partnerships moving forward. It's something that we anticipated, hope to get, and we received, which definitely will have some impact on the 2026 in terms of growth of revenue. But we need to remember, we are at the beginning of the year. We would like to be very prudent about what we are saying to the market at this stage. While we have much better visibility and predictability for 2026, we are really continuing to push more into the AIC ARR revenue. So whenever we can move customers and deals into this model, this is where we are motivating our team to go and the customer, to show the customers the value in the ARR, which means that there is some impact in the short term in order to build the long-term quality of the revenue and predictability. We are focusing a lot in 2026 on improving profitability. So you will see expansion in profitability. We will continue to focus on penetrating the screen market and growing the ARR drastically. This is the focus of 2026. You will see a lot of innovation as well coming in 2026 that will start contributing in the second half of 2026. So I understand the question of guiding the market into low single digits. Remember, we would like to be prudent. We would like to be in a position where we are in good size and not missing our numbers.

Okay. Can you talk at all about the significance of an order from your strategic customer for the upgrades? I mean how many machines roughly we're talking about? Is that substantial? And how will that progress throughout 2026? Is it all in 1 quarter? Is it throughout the year?

Yes. So I would start by saying we have a very close relationship, very strategic relationship, and we are very proud of this partnership between us working very, very close together. As you can imagine, I cannot disclose any sensitive information of this strategic customer or any customer without getting that permission, and I don't have the permission to share this information. What I can say is that after last year, we started the initial upgrade in part of the portfolio. It was very successful. They saw the benefit, and they placed an order to continue upgrading it during 2026. These updates will take time. It's not one quarter; it's a few quarters because we're talking about a fleet of upgrades. Again, it shows the confidence in the solution. It shows that they need to grow; the main benefit of the MAX is really providing more capacity, and they need more capacity to grow, which is a very good sign. And of course, we continue to evaluate together new technology into the future.

The next question is from Erik Woodring from Morgan Stanley.

Congratulations on the strong execution to conclude the year. Ronen, could you help us understand the current status of the Apollo initiative? It has experienced several developments in 2025. At the beginning of the year, we found out about the longer sales cycles with new customers. As we discuss this now, what have you discovered regarding the onboarding and ramp-up time for these new customers to ensure sustained momentum for this product into 2026? Are the new customers utilizing Apollo differently compared to existing ones? If you have any insights regarding different customer cohorts, I would appreciate understanding that better. And I have a quick follow-up for Assaf as well.

Okay. Excellent question. Look, remember that we started actually deploying the Apollo in 2024. 2024 was after the beta. In the beginning, we actually deployed the Apollo mainly into existing customers, those who used to run digital; they have the ATLAS MAX and they have the digital workflow. The deployment was quite easy. Of course, we had to continue to improve the stability and the productivity, but we grew quite quickly in 2024 with those customers. But the aim of the Apollo was to go after an incremental market, not only in the one-off customer design, but really going after the screen and replace the screen analog technologies. This was the focus in 2025. What we have achieved in 2025, while 2024 was focused on a few customers with large fleets of Apollo, 2025 was focused on net new customers from the screen printers or penetrating for the first time with digital and taking the Apollo. What we found out is that the sales cycle is different. It's much easier to penetrate digital players because they have the workflow; they have the understanding, they already have the need. With the screen market, you need to show them the need. You need to show them that the quality is at least as good as the screen market. You need to work with them on the workflow; you need to train them. It's a different mindset. Many of them are traditional. So we worked very hard in 2025 to start building lighthouses. Within 2025, we already saw a few of them going with the second Apollo or taking a fleet of Apollo and ATLAS MAX together, and we started to see successes. And what we see right now in all kinds of open houses that we have in those customers that they are becoming a lighthouse, and they are telling the story to other screen printers, how it changed their business and what benefit it provides them, and it wasn't too complex. So we've learned a lot. We've learned the type of quality that they expect, the type of productivity that they expect, the different garments that they would like to run. We're focusing a lot on the workflow; how do we automate their workflow versus digital players that are coming already with workflows designed for digital. You will see some innovations on the workflow side at Connection, specifically addressing the screen market in order to make it easier for them and to shorten the sales cycle of penetrating and growing the screen market.

Okay. Awesome. And then Assaf, nice to, I guess, reach over the phone here. But I'd love to get your insights just at a high level of how we see better profitability in 2026? Obviously, you gave us what you think about revenue growth, but how should we be thinking about gross margins given AIC mix improves, that's higher profitability, ink and consumables growth should seemingly follow impressions at least somewhat. And then what's the approach to expenses this year? I'd just love to understand the moving pieces there.

Yes. Erik, thanks for the question. So I would say that our biggest growth driver is AIC. AIC has accretive gross margin to the overall company. As it scales further, you should expect to see expansion continue. With that, we have a very disciplined approach towards expenses and adjusting the expenses in line with our growth rates as we look into 2026. In '26, I would not expect to see significant deviation for our gross margins as AIC continues to scale. So you should expect reasonable levels as you're seeing now. In terms of OpEx, we are also not expecting any significant changes in OpEx for as long as we continue to grow as we expect. We remain very disciplined in our approach and in the way that we evaluate the impact of tariffs, the impact of foreign exchange, and so on.

Next question is from Troy Jensen from Lake Street Capital Markets.

It's actually Cantor Fitzgerald now, but gentlemen, congrats on the great quarter and Assaf and Andy, nice working with you guys again. Quick, maybe just, Ronen, for you. Just looking back to '25, can you just talk about the overall market? Do you think the industry is stagnant, you guys maintained share? Or was there growth and you guys lost share because of the AIC conversion? Or kind of any thoughts there would be great.

Thanks for the question. Look, the market is shifting. The market is really changing. We are talking with many brands, retailers, demand generators. They're all talking about in any boardroom how they can stay relevant. Product life cycles are getting shorter and shorter, changing by the minute. The way that they were focusing and producing in the past is not relevant. We see it in life. We see brands and retailers and demand generators moving production, nearshore and onshore, talking about how they can produce closer to the consumer without excess inventory, how they become more sustainable, how they can become more relevant by bringing new products to the market. And it's a clear change that we see. We see some leading brands. I mentioned Zumiez, and the way that they changed — they fully moved to vertical production. We see more retailers and brands starting to move to on-demand production. This has become a necessity. This is not any more a discussion, like what it was in the past. And of course, tariffs and the minimums really pushed even further the move to onshore production. We see it also within our customers; they are gaining volume, which is reflected in the impression volume. Overall, the trend is very, very clear. It's being now accelerated. It's obvious that the fashion industry, the apparel industry is going to change. It's going to change dramatically. How fast is very difficult to forecast. But now with necessity, this world is moving to digital, like many other industries that we know that moved to digital. Textile and fashion is not exceptional.

All right, understood. Assaf, just for you, just to follow up on the cost question too. Non-GAAP OpEx was $27 million. Would you assume that it's that number or higher going forward on a sequential basis?

I would say that you should not expect any significant changes as we move forward. Obviously, we have a certain exposure to forex. We also hedged, so the exposure is somewhat contained. We are also well positioned. In our plans, we've assumed that forex would remain at reasonably similar levels to what it is today. So I would not expect any material changes.

Okay. If you look at just in the model too, on that forex, was that all kind of in the R&D? It looks like that had a big sequential growth.

It's mostly on the operational side. We have a significant team in Israel that is being paid in the local currency, not necessarily just R&D.

All right. Understood. If I could get one last question. You guys kind of mentioned cash use funds and inorganic opportunities. What types of applications or technology, Ronen, do you think you guys would be interested in absorbing?

Yes. So in general, we need to wait to see at Connection. I expect to see you at Connection because we are going to have a lot of unwieldy new technologies. I'm going to say that it will be across the board. It will be on the direct-to-garment. It will be on the roll-to-roll. It will be on workflow. It will be on new applications. Think about it. Kornit was always in the decoration area. We will continue to bring innovation on decoration, but we are taking it to the technical area as well with new capability, with new chemistry, with new processes. We are taking it to the functional area after the technical, and you will see some tractional revolution that we are bringing with our technology and even to the smart area, smart apparel, but you will see some innovation at Connection. Overall, it will be a breakthrough capability that we are bringing. It will be unique. We are the only ones presenting in terms of technology and innovation. We will be unique in the market. We will approach new market segments. It will be a major differentiator versus other things that you can see in the market. Specifically, I'm going to say that there will be a lot of focus also on the sports market and sports innovation at the event. So other than that, again, I welcome all of you to join us. It will give you the opportunity not only to see the technology but to interact with many of our customers, prospects, brands, and retailers that will be there and major brands that will be there, and they will tell the stories. So you're all welcome to join us.

Next question is from Jim Ricchiuti from Needham & Co.

I was wondering if I can get an update on the direct-to-fabric market. I'm assuming that was probably a more challenging area of the business. In 2025, it sounds like you're looking to introduce some new products into that market. How do we think about that and the timing? Is that second half '26? Or can you give us some color on that?

Yes. So indeed, 2025 wasn't a great year for the roll-to-roll business. We had higher expectations. What I can say is that we are starting the year with a much stronger pipeline, first of all, with a tangible pipeline that we can convert, and we feel much more confident. Now this confidence is not only about the pipeline. It's also about the new market that we invested in 2025, specifically in the footwear market with new players that are entering this market. Part of this innovation you will see in Connection, again, about the footwear is revolutionary to what we brought to this market, and this will continue to expand. On the technical market, we are getting to new market segments in the technical, and you will see some innovative applications there and the functional in the sports market, which there's some big news that hopefully will come later this year, working with some of the biggest brands of the world on functional apparel that it all relates also to the roll-to-roll business. We are going to unveil some new technology, both in terms of the systems but also in terms of the process chemistry, but also some features that will enable our customers to enter into new applications, very innovative applications that till today, traditionally, were done by analog, and digital can do it much faster, much better, unleashing the flexibility and better economics. We are much more confident that 2026 will be a year that we will start to see very nice growth in the roll-to-roll business. Definitely, late second half of the year and getting into 2027, this is where we would expect to see acceleration in this market.

Can you talk about the — there were some targeted price increases, I think, that the company called out in the last earnings call. Were those fully realized in Q4? Or will there be some benefit from that in the early part of 2026?

So this is a gradual process that the company is evaluating and executing. I think that we remain committed to the guidance that we've given, and everything is reflected within that guidance. So yes, that's...

Yes, I would just say, as we mentioned in the last call, we implemented a small price increase to our installed base due to tariffs. We already implemented it, and we are running it at the beginning of the year. Overall, the market received it with full acceptance, and we are running, and it's baked into the model.

Okay. And one last question, just a quick one. In '26, would you expect more activity with new customers or just greater multiunit deployments with existing, given some of the traction you saw with new customers last year?

It is a mix. As I mentioned, in 2025, 40% of dealers were with new customers. Almost every one of them we expect to grow in 2026. So it will be repeated on top of some of our key customers that continue to grow if it's for upgrade, or for additional systems. But our focus is, of course, on penetrating the screen market and penetrating in the roll-to-roll into new markets. By definition, penetrating into the screen market and the roll-to-roll mostly will come from net new customers. So we expect many net new customers adding into 2026. And of course, later on, each one of them can purchase multiple systems.

Next question is from Christopher Moore from CJS Securities.

So obviously, the shift to AIC slows the revenue growth near term, talking about low single digits today. Given where you sit and the pace of progression on ARR, likely 2 to 3 years before that annual revenue growth starts to pick up? Or just kind of any thoughts on how you're looking at that?

Yes. The ARR is $25 million at the end of this year, which is a significant milestone. It's also becoming meaningful in terms of quarterly revenue, with $50 million in revenue for the year. This revenue is beneficial for our gross margin, and we anticipate further improvements in that margin as our program expands. Both revenue and gross margin will be majorly impacted, and the predictability of our deals is crucial. Each contract typically spans five years, giving us a five-year outlook. The ARR we report reflects the minimum contractual commitment, though customers may print more impressions and deliver additional revenue. This is an important milestone. We expect to see an acceleration in top-line revenue growth once the ARR hits around $50 million. Currently, at $25 million, reaching that $50 million ARR will lead to significant AIC revenue, resulting in growth in top-line revenue compared to what we see today.

Got it. That's helpful. What about — from a geographic standpoint, geographic mix, do you expect your revenue to be much different 2 to 3 years from now?

No. We still see the fastest growth in the Americas, specifically North America. While it's the largest territory and work in revenue, it's also the fastest-growing territory for us. We see that EMEA is catching up. And now with the new technologies that we are bringing both on the DTG and the roll-to-roll, we expect to see some acceleration in Asia, specifically around the footwear, specifically around the sports market and technical market. But in the next 2 to 3 years, the Americas will continue to lead and probably will continue to be the fastest-growing region for us.

Got it. Helpful. Last one for me is just are you hearing anything in terms of competitors looking to create a similar AIC model?

We have some rumors. We have competitors saying that they can provide it as well. Tangibly, we don't see it. We think that it will be very difficult for them from a cash flow perspective to go forward with it. This AIC is not just a financial model. It's a change of DNA. There's a ton of tools around it. There's a lot of AI to support it. There's a change in the entire mindset of the service organization and support and customer success. We are much stronger today as a team and as an organization in terms of ways that we are supporting our customers. We're getting great feedback on the TCE reports for our customers about the way we're supporting them, that we are much more proactive. This model forces us to be in partnership with our customers; only when a customer is successful are we successful. When they are printing more, we are earning more. So it's holding hands together. We don't see this capability from any other company in the market, and we don't see it as of today. We might see it in the future.

The next question is from Tavy Rosner from Barclays.

I wanted to welcome Assaf and welcome back, Andy. It's great to have you back with the company. Two very quick ones. Most of them have been asked. I wanted to ask about footwear. How do you see the market as an opportunity? And what are the solutions that Kornit had to address the opportunity?

Tavy, great to hear from you again. The footwear is a new market for Kornit. Kornit is the only company that's innovating in the footwear in the digital space. I can tell you that we had major meetings with some of the leading sports brands around the world, and they are super impressed with the capabilities that we are bringing to the market. We're actually enabling the footwear, specifically the sports footwear, to unleash creativity to produce any type of footwear in terms of design without the limitation of quantities. You will see it in Connection. You will see the type of design that we are creating and the things that are being sold today. There are more than 1 million pairs of shoes that are already being sold today in the market. In terms of market opportunity, we believe the opportunity in front of us is something like 2 billion impressions in this footwear that we can capture. We see consistent growth within my customers, both in terms of utilization of the system, the production, and adding more capacities, and our funnel and pipeline is getting stronger and stronger.

There are no further questions at this time. I would like to turn the floor back over to Mr. Ronen Samuel, CEO, for closing comments.

Okay. So thank you. And before we close the call, I really want to thank, first of all, the entire Kornit team, also, our customers, the partnership that we have with customers, and all the partners that help us to make 2025 a year of many achievements. While there is certainly more work ahead, we are very much focused on the work ahead. I'm truly excited about what we have accomplished as a team together in 2025, and I'm really looking forward to 2026, into those areas that I mentioned in the call. I would like to thank you for all your support and being on this call, and I would like to remind all of you that we are looking forward to seeing you at Connection in April. It will be a milestone event, and there will be Kornit before and after. So looking forward to seeing all of you. Thank you very much.

Great. Thank you, Ronen. Thank you, Assaf. And thank you all for joining us today. As always, please reach out to me directly should you have any follow-up questions. And as Ronen said, we are looking forward to seeing everybody at Connections in April. Sati, can you close the call, please? Thank you.

Certainly. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.