Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Performance exceeded guidance driven by a structural shift in manufacturing where brands and retailers prioritize agility, shorter production runs, and nearshore production over traditional analog models.
The transition from analog to digital is accelerating, evidenced by 60% of system sales in the first half of 2026 going to traditional screen printers replacing legacy production. Management characterizes the current environment as one of the most significant manufacturing transitions in decades, with customers shifting from questioning digital's role to focusing on implementation speed. The business model has fundamentally shifted to a manufacturing platform approach, with approximately 80% of revenue now recurring or highly recurring through ARR, ink, services, and software.
The All-Inclusive Click (AIC) model is driving deeper customer engagement by lowering upfront capital barriers while aligning Kornit's economics directly with customer production volumes. Strategic acquisitions, such as PrintFactory, are being integrated to move beyond hardware sales into providing comprehensive software, AI, and automation solutions. Management expects second-half 2026 revenue to be approximately 15% higher than the first half, supported by seasonal peaks and strong backlog visibility.
Full-year revenue growth expectations have been upgraded to high single-digits, an improvement from the low single-digit growth anticipated at the start of the year. The AIC model provides significant forward visibility, with current agreements representing approximately $142 million in total contract value typically spanning five-year terms. Profitability is expected to expand in the second half of 2026, driven by a higher mix of consumable (ink) revenue and increased platform utilization across the installed base.
Future growth initiatives include a new technology announcement for the roll-to-roll market expected by year-end to address footwear, home decor, and technical textile applications. Gross margins benefited from a one-time $2 million tariff refund, resulting in a net tariff-related benefit of approximately $830,000 for the quarter. Operating expenses were impacted by $1.9 million in foreign exchange headwinds and costs associated with the Konnections customer conference.
The company maintained its 11th consecutive quarter of positive operating cash flow, ending the period with $451 million in cash and liquid assets. Capital allocation remains focused on the share repurchase program, with $5.4 million deployed in Q2 and approximately $60 million remaining under current authorization. Nvidia-level potential. 30M+ investors trust Moby to find it first.
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