Kornit Digital Ltd. Q1 FY2026 Earnings Call

Greetings, and welcome to Kornit Digital's First Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Mr. Andrew 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 First Quarter 2026 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 first quarter, followed by Assaf, who will review our first quarter 2026 results and provide our guidance for the second quarter 2026 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 forward-looking statements include, but are not limited to, statements relating to the company's plans, strategies, projected results of operations and 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 26, 2026, 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 measures 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 turn the call over to Ronen. Ronen?

Thank you, Andy, and good day, everyone. Q1 was a strong start to the year and a clear proof point that our strategy is translating into execution and measurable results. We delivered revenues of approximately $48.5 million at the high end of our guidance with adjusted EBITDA loss of $2.8 million and continue to generate positive operating cash flow for the 10th consecutive quarter. We are seeing continued strong impression growth with trailing 12 months year-over-year growth of approximately 12%, driven by higher utilization across our installed base and the ongoing shift from screen to digital. Momentum is being driven by both new and existing customers. Approximately 40% of our system sales in the first quarter came from new customers, while approximately 65% were to traditional screen printing customers, primarily targeting long-run production environments. At the same time, relatively new customers are already expanding their fleets after seeing the operational and economic benefits of digital production. Together, these trends reinforce the shift from analog to digital manufacturing. As an example, Promos Inc., who became a Kornit customer just last year, expanded its Apollo and ATLAS MAX fleet with multiple ATLAS MAX Plus systems through Kornit AIC platform. The company is also beta testing our newly unveiled ATLAS MATRIX platform. Another example is Printers, a high-volume Canadian screen printer focused on sports and athleisure, which expanded its ATLAS MAX Poly fleet with multiple ATLAS MAX Plus systems during the first quarter. The company has also committed to upgrade all its systems to ATLAS MATRIX platform, including its planned expansions into the U.S. market. Our pipeline and backlog continued to strengthen, improving visibility into Q2 and the second half of the year and reinforcing our confidence in the business momentum. In the first quarter, we added ARR of approximately $2.1 million, ending Q1 with about $27 million in ARR. Based on our signed backlog, advanced pipeline and customers already committed to AIC, we expect a meaningful step-up in ARR in Q2 with continued acceleration throughout the second half of the year. A few weeks ago, we hosted Connection 2026, which was a defining moment for Kornit and for the industry. We had close to 600 participants, including hundreds of existing customers and a strong mix of new prospects, brands, retailers, fulfillers and solution partners. The energy and feedback around our vision, strategy and solutions was extremely strong. Connections is becoming much more than an event. It is evolving into a platform where the industry comes together to shape the future of on-demand production and demonstrates Kornit's leadership in that transformation. What became very clear during the event was that the industry is accelerating towards agile demand-driven manufacturing models and customers are actively looking for technologies and integrated platforms that can reduce inventory risk, improve speed to market and drive more sustainable production. At Connections, we demonstrated ATLAS MATRIX for the first time, and the response exceeded our expectations. Customers immediately recognized the breakthrough value of a single platform capable of producing across cotton, polyesters and blends with industrial scale quality, durability, consistency and efficiency. Powered by our unique Carbon Shield technology, MATRIX addresses one of the industry's biggest challenges, enabling high-quality digital production on polyester fabrics while preventing dye migration, a critical limitation that has constrained digital apparel printing for years. This breakthrough significantly expands our addressable market into polyester, sportswear, performance apparel and other high-growth segments, opening new applications and production opportunities for our customers. Customers and partner feedback has been extremely positive, and we are already building a meaningful backlog of new and upgrade orders, reinforcing ATLAS MATRIX's potential to accelerate the transition from analog to digital production across a much broader portion of the market. We also showcased Apollo in live production environments, demonstrating the level of automation, throughput and consistency required to address bulk and mid-run production at scale. For the first time, we demonstrated production on cut pieces using Apollo, opening new market opportunities in applications and workflows that historically were difficult to automate digitally at scale. The response from customers looking to replace analog screen printing was very strong, reinforcing the significant market opportunities ahead of us. In parallel, we announced the acquisition of Print Factory, a strategic transaction that significantly strengthens our software workflow and production automation capabilities. What we are seeing more clearly now is that digital production is no longer limited to short-run customization. It is increasingly moving into scaled manufacturing environments. Print Factory is already deployed across thousands of production sites globally, bringing advanced color management, workflow automation and production control capabilities that are becoming increasingly critical in scaled digital manufacturing environments. More importantly, Print Factory accelerates our long-term strategy to build the connected digital infrastructure for the textile and apparel industry, connecting demand generation, workflow, production and fulfillment into one scalable ecosystem. Customers increasingly recognize that the future of production lies in intelligent connected platforms, not just hardware. Very few companies in the industry can bring together production systems, workflow, automation, consumable and fulfillment connectivity into a single integrated offering the way Kornit can. Following Connection, we continue to build momentum at Texprocess in Frankfurt, where we introduced and demonstrated Presto Max Plus for the first time. Interest levels were extremely high, particularly in the footwear, technical apparel, camouflage, performance wear, home decor and other high-performance applications. And we are already seeing a growing pipeline of opportunities and orders for the new platform. Presto Max Plus represents another important expansion of our addressable market, bringing Kornit's digital production capabilities into entirely new categories and applications. Powered by our new DuaTech architecture, the system delivers exceptional durability and print performance on demanding fabrics and applications that historically were impossible to address with digital production. Combined with our advanced vision system and intelligent production capabilities, Presto Max Plus brings a new level of automation, consistency and production control to roll-to-roll digital textile manufacturing. Customer feedback around print durability, fabric flexibility, sustainability and the ability to eliminate traditional pre- and post-processing steps was extremely positive. Taken together, these developments reinforce the strength of our innovation pipeline, the breadth of our platform and the momentum we are building across products, customers and markets, positioning Kornit well to capture the growing shift towards on-demand production. Looking ahead, the momentum we built in Q1 continues to strengthen into Q2. Our Q2 guidance reflects the continued progress and execution we are seeing across the business. In addition, our growing pipeline, backlog and customer activity are providing us with better visibility and confidence as we look towards the second half of the year. We also remain disciplined on cost. While the strengthening of the shekel creates some pressure, we are taking the right actions to manage our cost structure and protect profitability as we scale. Stepping back, over the past two years, we focused on stabilizing the business, strengthening our foundation and redefining our strategy. Today, we are seeing the results through a stronger product portfolio, expansion into new markets and applications, a growing recurring revenue model through AIC and a clear position as the technology and platform leader, enabling the shift towards on-demand manufacturing at scale. Most importantly, we are executing consistently and building the foundation to scale and grow from here. With that, I will turn the call over to Assaf. Assaf?

Thank you, Ronen, and good day, everyone. Total revenues for the first quarter were $48.5 million at the top end of our guidance range. Revenue performance in the quarter reflected year-over-year product and services growth of 4% and 7%, respectively, supported by growing customer activity and expansion across our installed base. AIC revenue continued to grow strongly year-over-year, increasing approximately 103% compared to the first quarter last year. We ended the quarter with approximately $27 million in ARR and entered Q2 with a strong backlog, pipeline and customer activity level, supporting our confidence in continued sequential growth in both AIC revenue and ARR throughout the year. As Ronen discussed, impressions, a strong leading indicator of system utilization and consumables demand, grew by approximately 12% year-over-year on a trailing 12-month basis, supported by continued utilization across our installed base and the ongoing shift from screen to digital production. Moving to margins. First quarter non-GAAP gross margin was 41% compared to 45.2% in Q1 2025, mainly reflecting a higher mix of systems and services relative to consumables, driven primarily by normal seasonality patterns in the business. As a reminder, our business typically sees strong consumables demand and utilization levels in the second half of the year following normal season patterns. Compared to Q1 2025, gross margin was also affected by FX movement related to the shekel strengthening as well as certain tariff-related costs during the quarter, which together reduced gross margins by approximately 190 basis points year-over-year. As we move through Q2, we are seeing continued strengthening in our pipeline, order flow and backlog, providing us with improved visibility into the second half of the year. As utilization and recurring revenues continue to scale, we expect gross margin improvements in Q2 with more meaningful setup during the second half of the year, driven by higher utilization, recurring revenues and improved operating leverage. Turning to operating expenses. First quarter non-GAAP operating expenses were $25.5 million, down 7% year-over-year despite an unfavorable FX impact of approximately $2 million related to shekel strengthening. Our OpEx performance reflects continued discipline around cost management while maintaining investment in our key growth initiatives, innovation roadmap and go-to-market activities. Non-GAAP operating expenses exclude approximately $2 million in legal costs related to a prior class action lawsuit. We recently reached an agreement in principle to resolve the matter pending final documentation and court approval. The settlement is largely covered by insurance, and we are pleased to put this matter behind us. Adjusted EBITDA loss for the first quarter was $2.8 million compared to an adjusted EBITDA loss of $3.9 million in the same period last year. Adjusted EBITDA margin for the quarter was negative 5.8%, representing an improvement of approximately 260 basis points year-over-year and better than the midpoint of our guidance range. Turning to cash and balance sheet. Our cash balance, including bank deposits and marketable securities at quarter end, was approximately $462.2 million. Operating cash flow for the first quarter was $6.3 million, representing our 10th consecutive quarter of positive operating cash flow and reflecting our continued focus on working capital efficiency and disciplined financial management. During the first quarter, we repurchased just over $30 million under our share repurchase program. Since the launch of our initial repurchase program in 2023 and through the end of the first quarter of 2026, we have repurchased approximately 9.1 million shares for a total gross amount of approximately $200 million. Our balance sheet remains very strong and provides us with significant flexibility to support organic growth initiatives, including AIC deployments, new product innovation and strategic investments that support our long-term strategy. Print Factory is a strong example of that strategy. Announced after the quarter end, the acquisition strengthened our software workflow and production automation capabilities by supporting our long-term vision to build connected digital infrastructure for the textile and apparel industry. We expect the transaction to close during the second quarter. Turning to guidance. For the second quarter of 2026, we expect revenue between $51 million and $55 million with adjusted EBITDA margin between negative 5% and breakeven. Our guidance reflects the continued momentum we're seeing across customer activity, backlog growth and execution across the business. As expected, second quarter profitability includes continued investments in strategic initiatives, including Connections 2026 as well as some ongoing FX pressure from shekel strengthening. Looking ahead, we continue to improve visibility into the second half of the year, supported by strengthening backlog, growing recurring revenues and continued momentum across the business. We expect continued revenue growth, improving profitability and ongoing positive operating cash flow generation as we continue scaling the business through 2026. With that, I will now turn the call back to Ronen to open the line for Q&A. Ronen?

Thank you, Assaf. And operator, we are ready for the Q&A session.

Operator Instructions. The first question comes from the line of Brian Drab with William Blair.

First, I just wanted to—I think Assaf mentioned it, so the second quarter is off to a good start, and it's obviously evident in the guidance as well. But Ronen, can you just talk a little bit more about what you're seeing here early in the second quarter momentum coming out of Connections and just talk a little bit more about what the setup is for the quarter and the rest of the year?

Yes. Thanks, Brian, for the question. I'll give some kind of an overview and where we stand today and how we see Q2. I'll start with the market. We see the industry moving to on-demand production. We felt it at Connection, and I will talk a bit more about Connection later on, but it was a strong sentiment from brands, retailers and, of course, fulfillers looking to on-demand just-in-time production to meet the demand of the consumer. So this is a clear sentiment in the overall market. Over the last two years, we worked very hard to shift our strategy to go after the mainstream of the market, the high production in the screen market and getting into new segments like footwear. Q1 results represent the success of this strategy. Overall, in Q1, you saw that we grew our revenue both in products and services and services include upgrades. Some of the upgrades for the ATLAS MAX, and we are looking forward into Q2 where we're already getting a very, very strong pipeline for upgrades for the MATRIX. Impressions, which is a leading indicator, grew by 12% on trailing 12 months. We continue to see impressions growing across the board, both from the customized design installed base and also new customers that just joined us and are adding more capacity, specifically in the screen replacement from analog to digital conversion. We see growth from customers; it's really interesting to see that when we look at the system mix, 40% of the systems that we delivered in Q1, some of them on the all-inclusive AIC, some on CapEx, came from net new customers. And 65% of the deals came from the screen market, the market that we are targeting, which we see a massive potential in. Overall, when we look at the new business model of the AIC, it is really growing very nicely, both AIC revenues and ARR, both of them around 100% growth year-over-year, and we expect it to continue to grow significantly in Q2 and the rest of the year. In parallel, we're working very hard to manage our OpEx while the shekel is strengthening and it's a headwind for us. But actually, we managed to reduce OpEx year-over-year by 7% despite the shekel. On top of that, of course, we continue to generate cash—this is our 10th consecutive quarter—and we believe that we'll continue to generate cash for the full year. We worked very hard in Q1 to deliver the Connection event at the beginning of Q2 that generated a lot of momentum. Not forgetting that we announced the acquisition of Print Factory, which is a very strategic acquisition that we plan to close during Q2. But I'm most proud that it's not just about the number. It's really about being able to bring the innovation that the market was looking for. MATRIX is a game changer for the industry. The feedback we got from customers at Connection was really unbelievable, above our expectation. The Carbon Shield technology is unique—nobody has it on the digital side—and now customers can have one system that can print agnostically on any type of fabric from cotton to polyester to blends. This provides a lot of potential. If we try to quantify this market, we mentioned in the past that we see our SAM at $6 billion. Those are run lengths below 1,000. About 30% of those run lengths are made today on polyester, specifically for sports and athleisure and some blends, which was very difficult to approach before with digital. Now we can definitely go after them and the feedback from customers was very exciting. We're already getting a very strong pipeline for upgrades of the installed base of ATLAS MAX and ATLAS MAX Plus to the MATRIX, and customers are also adding additional systems. We also demonstrated the Apollo further—we are now able to print on cut pieces, opening up markets in Portugal, in Latin America, and in some Eastern countries. Printing on cut pieces to really automate printing on cut pieces is very complex, and we've demonstrated it and we're already having a good pipeline and even an order specifically in India for this application. Presto Max, where we presented Presto Max Plus, is a product we've worked on for a long time to penetrate markets that digital was never in before. We are the only ones that can go after technical, camouflage, footwear, performance wear and home decor. The feedback on durability, the vision systems and the overall solution was impressive. We had a good Q1 for Presto Max, and we believe moving forward we will see a growing pipeline and orders for Presto Max specifically in those markets. Overall, looking forward, we see a growing backlog into Q2 and H2, providing us confidence for the full year to continue to bring growth. Bottom line, we see a stronger product portfolio, expansion into new markets and applications, growing recurring revenue and a very clear position of Kornit as the technology and platform leader.

That was a very extensive answer. I appreciate it. And I kind of feel like I should just pass it on. But just quickly, I'll tack on one more question related to the MATRIX and the Presto Max Plus. Can you talk at all about the amount of revenue that you expect to come from either upgrades or new system sales from those machines in 2026 and 2027?

Yes. So I can give you some directional color, not specific numbers, but where we see growth on these platforms. Specifically on MATRIX, first of all, many of our customers that choose ATLAS MAX today and were trying to print on polyester or blends faced issues. These are incremental impressions that each customer will now be able to print digitally, leveraging Kornit and leveraging ATLAS MATRIX. From one hand, we will see revenue coming from upgrades of the installed base; we have hundreds of ATLAS systems in the field, and we expect many of them, in large quantities, to upgrade to MATRIX. The second phenomenon is impression growth on each system as the market opens. Also because printing on polyester requires different chemistry, we expect revenue per impression to go up when printing on polyester. What we see today is that customers who were on the fence saw MATRIX, understood that the flexibility is much broader, and are jumping in. We already have a nice backlog of new customers and existing customers that are adding more systems already in Q2 and into H2. We feel very strong about the feedback and the results from demonstrating MATRIX. Next week, we will announce the release of MATRIX at FESPA Barcelona. We will demonstrate it and have many meetings with customers, mainly from Europe, and customers are flying from around the world to see MATRIX. We expect orders both for upgrades and new systems there. As for Presto Max Plus, it opens totally new markets for us. We demonstrated it recently at Texprocess in Frankfurt, which focuses on technical markets, and we saw how unique we are in going after footwear. We see growth in footwear, both from the installed base adding systems and from new customers adopting our technology and a very strong pipeline. We found our technology has a great fit for other applications like camouflage for the military—this is a massive market—and we believe we have a strong value proposition. You will hear more about that later. Other technical and functional applications we are targeting will generate additional revenue from installed base upgrades to the Plus and from new system sales and impressions.

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

As you guys know, I was at Connections myself, so I sensed everybody's excitement at the event. I'm just curious in terms of the actual event, what did you see from an order booking standpoint? Can you give us a little bit of actual feedback that you got from customers that were there as well?

Yes. Thanks, Greg, and thanks for being at the event as well. Strategically, the aim of the event was to build a center for this industry movement toward on-demand manufacturing. We can't do it ourselves; we need the ecosystem. The event was about that ecosystem, and you saw it: close to 600 participants in Miami, more than 300 customers and prospective customers, many brands, retailers, solution providers and partners, all focused on accelerating the move to on-demand manufacturing—not only for customized design, but for long-run production for brands and retailers. Most of the speakers were from the industry, not Kornit, talking about the need to move to on-demand manufacturing. We had a solution showcase with many other solution providers. We introduced MATRIX for the first time and showcased many applications. Apollo was there as well. There was real excitement—people were standing around the machines, checking them. We had tens of live demos where people brought their files and media, tested the machines, and we received orders onsite. Some orders were surprising and came from a variety of countries. We came out of the event with two things: one, positioning the Connections event as an industry movement with Kornit at the center; and two, a very strong pipeline coming out of the event, with some orders already for Q2 and a large part of the pipeline expected to convert in H2 and into next year. The nice thing is that much of the pipeline is from net new customers; for some, this was their second or third meeting with Kornit and the event accelerated the decision to move to digital.

Okay. Perfect. And then just a follow-up on MATRIX. In terms of actual revenue recognition, do you expect later this year to see a meaningful uptick in revenue, or is it more of a 2027 event? And to be clear, is the bigger opportunity the upgrades of the installed base or new system sales?

We already started taking orders at Connection. Once we showed the system, we took orders there. The product will be released next week and we have a few beta sites with extremely good feedback in the U.S. and Europe. All of them will convert to revenue in Q2. In Q2, we will have revenues from new shipments of MATRIX to the market and some upgrades. We expect most upgrades to occur in Q3 and into Q4 and, of course, into next year. But the pipeline is strong, and the question is timing of delivery; revenue will start in Q2 this quarter.

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

This is Maya on for Eric. I kind of just want to touch on the AIC model for a second. What percentage of new customers would you say are entering through AIC versus the traditional CapEx method? And where do you ultimately see that mix stabilizing? Are you also seeing existing customers shift their preference to AIC?

Yes, it's a very good question, Maya. It's different across the market segments we serve. In the screen market—the customers we're targeting there—we see very high adoption of the AIC model. Most new customers in that market choose AIC; when I say most, it's over 90% will be on AIC. In customized design, the mix is different between existing and new customers. Existing customers are more familiar with CapEx economics and some prefer CapEx depending on the comparison to AIC pricing, so we see a mix there. Newcomers in customized design also tend to prefer AIC. As the company grows and the move to AIC matures, we are pushing more into the AIC model because it provides better predictability of recurring revenue and better long-term gross margin. AIC customers, on average, print more impressions than CapEx customers because of the commitment structure and incentives to print above commitment. So looking ahead, you will see more deals moving into AIC versus CapEx. Q1 was relatively strong in CapEx deals, but the overall trend is toward AIC.

Got it. And then just one more for me. You had a pretty healthy quarter of buybacks this quarter. Is that the right quarterly run rate to think about for the rest of the year? Or just any kind of outlook you can help with there?

Maya, this is Assaf. We continuously evaluate our capital allocation against the company's strategic priorities. We have a plan to buy up to $100 million, but that doesn't imply a consistent quarterly run rate. It changes based on priorities: supporting organic growth and AIC deployments, nonorganic opportunities such as M&A—we just announced a strategic software acquisition—and buybacks. Our commitment is to provide the optimal value to our shareholders using these three components.

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

So you're clearly making progress with system sales to new customers. I'm curious, what is the average selling cycle like now in terms of timelines for bringing on some of these newer customers?

Thanks, Jim. A few things are happening. The market is maturing. In the past we had to convince customers to move to digital; today more customers are predisposed to move to digital, which shortens the sales cycle. The AIC model, by definition, shortens the sales cycle; we see some deals closing in one to two months from demonstration. For CapEx, it depends if the buyer is an existing customer or a new one. Existing customers often add additional systems or upgrades and those sales cycles are shorter. Overall, the sales cycle is becoming shorter versus what it used to be.

And Ronen, as you think about newer customers, what is your line of sight or how would you characterize the opportunity to drive multiple machines at these customer locations?

This is the really positive part. We see customers adopting quickly. I mentioned two examples in my prepared remarks of customers that joined Kornit about a year ago, and within a year they expanded their deployment significantly. In the screen market, the initial sale is often the most complex because customers are not used to digital workflows. They often start with one or two systems and, if successful, scale quickly. We see many customers starting with one or two systems and within six months adding capacity, moving to Apollo or adding additional ATLAS MAX systems.

Got it. And just quickly, I was curious about activity with your large global strategic customer. I may have missed any reference to it in the call so far.

Yes. As you know, we have confidentiality agreements with them, so we can't disclose everything. At the end of Q4, we received an order from them to continue upgrading their fleet to the MAX platform, which we are executing. They are very involved in reviewing our technologies, including the Plus, MATRIX and Apollo. We have a close relationship with them, good discussions, and we are pleased to support their growth moving forward.

The next question comes from the line of Kieran McCabe with Cantor Fitzgerald.

This is Kieran on for Troy Jensen. Part of my question was already answered regarding the sales cycle, but especially with the Presto Max, can you give a little color on the new markets, the size of the opportunity in some of those new markets and the growth potential or adoption in markets like home decor or camouflage?

Yes. We are still at an initial stage quantifying the exact TAM in these new markets, but they are massive. The camouflage market for military applications includes billions of impressions. For footwear, we cited about 2 billion impressions as a sum we can target and we are actively going after it. We are seeing nice scale-up within our customer base and interest from the biggest brands. In camouflage specifically, we introduced DuaTech on Presto Max Plus at Texprocess, and the reception has been very strong—tens of meetings with military personnel showing high interest in our capabilities. Home decor is a massive market as well and you will see more development from Kornit there later this year. Another market is performance apparel, including compression; we have a specific project on compression with one of the largest brands and will share more when appropriate. Overall, these new markets represent additional growth engines for Kornit.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the floor over to Mr. Samuel for closing comments.

First of all, thank you all for joining the call. Before we close, I want to sincerely thank the entire Kornit team, our customers and our partners for the passion, commitment and support behind the strong progress we are making together. Q1 was an important quarter for Kornit. The industry continued to accelerate toward digital on-demand production and Kornit is increasingly becoming a key platform enabling that transformation. We are seeing growing customer momentum, strong engagement across markets and very positive feedback on our newest innovations and solutions. We are entering the rest of 2026 with strong momentum, improving visibility and growing confidence in our strategy, execution and long-term opportunity. Thanks again for joining today's call. Andrew?

Great. Thanks, Ronen, and thanks, Assaf, and thank you all for joining us today and for your continued interest in Kornit. As always, please feel free to reach out to me directly should you have any follow-up questions. Renju, could you please close the call?

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