Just to get it out of the way, I have to tell you that you can find a full list of research disclosures on our website, williamblair.com. Today, we're happy to have with us Ronen Samuel, the CEO of Kornit. We also have Jared Maymon, Head of Investor Relations. Jared, there's plenty of seats if you want to stand the whole time. I will be really brief with my comments because Ronen's joking, half-joking, that his presentation is going to take 40 minutes. I think many of you know that Kornit is a leader, really the world leader in direct-to-garment digital printing on textiles. The company has some revolutionary technology that they brought into the market over the last couple of years in the Apollo machine. I'm just going to stop here because he's going to tell you all about this stuff way better than I will.
Ronen, thank you very much for being here today.
Yeah, great. Thank you very much. Good afternoon, almost. We'll start with a quick video clip, just taking us through the industry, the changes, the on-demand, and then we'll jump into the presentation.
Advancements in technology are redefining consumer expectations and pushing the fashion industry to evolve. Remember when shopping for that new outfit required a trip to the mall? When consumers accepted limited choice, buying whatever the industry set out on the racks. Fashion supply chain relied on offshore mass production and 18-month forecasts, stifling creativity and flooding the market with piles of identical items. Unsold inventory became waste that ended in landfills. Designer wear and customization were expensive and a privilege of the few. That was yesterday. Today, everything has changed. Consumers live online and discover the latest trend from their algorithm, not fashion magazines, and they want to express their unique take on whatever their tribe is loving. They crave endless choices and demand overnight delivery for the thrill of instant gratification. They embrace the influencer economy, following and buying whatever their favorite creators are selling directly online.
Established brands and retailers are struggling to compete. They need speed, flexibility, and creativity. What they need most is more agility and to be more sustainable, producing less waste with less water nearer to shore. The fashion industry is choosing on-demand to be relevant with unlimited creativity, closer to demand so they can satisfy the consumer of today. Welcome to the future of digital on-demand fashion, where self-expression meets immediate gratification, sustainably for everyone.
Good. Fashion is choosing on-demand, and the fashion industry is going through the biggest disruption. This is the second disruption in the past five years. The first one was COVID. The second one is now. I'm going to talk about this disruption. This disruption is not only because of the tariff. It's because of everything that's going around this massive industry. This industry is one of the biggest industries in the world, is the $3 trillion industry. While many industries went through the transition to digital, this industry is still behaving like it was 100 years ago. We will talk about the market. We will talk about the technology. We will talk about the new business models that we have today. Let's start with the market. As I mentioned, this market is going through a big disruption.
This market is lacking agility, and the agility is going to drive the innovation in this market and going to make this market more relevant. We saw and we see lots of changes around us. Technology is changing every industry right now. As I mentioned, fashion is stuck in the same way that it produced many, many years ago. The fashion is looking for agility to win. As you can see, I have disruptions also here on my shirt. There is a disruption going on in this industry. Before we go deeply into the disruption of the industry, just to remind us all around us, every industry around us is going through disruption.
It's the transformation industry with Uber that's not having even one taxi, with Airbnb transitioning or transforming the hospitality with no one hotel, and Netflix and Amazon that now two days delivery looks slow, and Spotify, though now is about fashion. Fashion requires a big change. AI is just one thing that will accelerate the move into on-demand manufacturing. What you can see here that I'm wearing right now was actually designed by AI. This is why it looks very unique. I actually uploaded my presentation to Midjourney and asked the presentation Midjourney to create a jacket for me. It gave me a few options that you can see here on the slide. I chose one option, gave it to my team. They printed it for me. A few days ahead, this jacket, unique jacket that described disruption.
This is what it looks like, disruption, including my T-shirt. This is the way that it was printed on our machine. Later on, it was cut and sewed. This is part of the disruption that this industry is going through, leveraging also AI, which is one of the drivers of the disruption. It's actually taking fashion into mass customization, mass personalization, democratizing fashion, democratizing design, and bringing it into the fashion industry. Now, let's talk about this industry. One of the biggest disruptions that's happening today is by the consumer. The consumer today is different than the consumer that we all grew with. They are looking for immediate delivery of products. They're living online. Six, seven hours of the day, they are online looking into Instagram and TikToking and Zooming. They're being influenced by those social media.
TikTok is really influencing what people are going to wear. If in the past, brands were defining what consumer is going to wear, today, TikTok and Instagram are the driver for what people would like to wear. Immediate gratification, it's a must. People are willing to pay a bit more to get the products today. Latest tomorrow, they will switch a website and e-commerce to another site if the product cannot be delivered within 24 hours. It's happening. We can see that the number of SKUs of the products in the market is growing dramatically. A good example is Shein, which I'm going to touch in a minute, bringing about 8,000 new SKUs every day to the market. We can see Zara that are bringing also many, many SKUs to the market and changing the products on a daily basis. Product lifecycle becoming shorter.
The consumer today would like to choose their own tribe. They would like to belong to tribes. Everybody's choosing their own fashion, which means that there are many more products. All those products, the lifecycle is shorter and shorter runs production. We are going through a revolution. This revolution really requires agility, agility to bring new products to the market as fast as possible, to react fast to market trends, to reduce inventory, which is a massive, massive issue, and to be more sustainable. What is holding this industry is the way that this industry was working for many, many years. This industry worked in a way that looked at the lowest cost production area, actually producing large quantities in China, Bangladesh, Sri Lanka, and other places, and producing large quantities, trying to focus on what the consumer would like to wear.
Today, it's impossible even to focus what the consumer would like to wear tomorrow. Everything is changing. Brands and retailers were stuck with massive inventory and massive write-down and markdown, which I'm going to touch in a minute, which created also a lot of waste and its unsustainable business model. We can look at the P&L and the balance sheets of those brands, how they're suffering from those write-downs on every quarter. This industry is lacking agility. What we can see today is that this industry is starting to change. Shein, which I touched before, everybody familiar. Your kids are familiar with Shein, for sure. They're ordering online. This is the biggest retailer in the US selling for the fashion for our kids, bringing about 8,000 new SKUs every day.
Many, many brands and retailers are looking at them and trying to ask themselves, how do we do it as well? How do we make supply chain more efficient? We also see our customers, retailers like Life is Good, Zumiez, Tilly's, 47 Brand adopting digital technology into the warehouses, into the distribution centers, and producing for the shelf. Each one of them has 200-600 shops around the US, and they're producing directly to the shelf, doing replenishment, bringing new products to the market. We start to see it as a trend with the retailers and definitely with any demand generator. Also, we can see those big giant retailers like Macy's, Nordstrom, that they have massive, massive, massive size in real estate. In this industry, if you are too big and too slow, you are not relevant.
They are slow, and slow is the opposite of being relevant today. You need to be very fast and very agile. Actually, what we see from McKinsey, McKinsey is doing a survey every year with the CEO of the brands, of the leading brands of the world and retailers, and they are asking them what are the greatest trends. 39% of them, this is a survey actually from 2023, that is saying 39% need to move to onshore manufacturing and to on-demand. 65% are saying nearshore production and 61% forming strategic relationship in order to produce to on-demand. Those are massive changes in the market. This is even before the disruption that we see today with the tariff. Tariff is accelerating everything.
Today, brands have to take action, have to move out from production in China and Bangladesh and moving production onshore once because the consumer demanded and the consumer would like changes. Second, their P&L and their balance sheet cannot absorb any more write-downs and markdowns. Third, tariff making them not relevant anymore if they produce in China. All of this, I think this is a very important slide because it's coming from, first of all, from BCG and explained the massive disconnect in this market. This market is one of the biggest markets, $3 trillion market. One trillion of this market is markdown and write-off. Think about it. Companies like Ralph Lauren are trying to focus on what we are going to buy next year, producing large quantities, and then they are stuck with the inventory.
Every year, they need to write it off and mark it down. That does not make any sense. While other companies like Zara and like Shein, think about their working capital. It is a negative working capital. They are actually producing what they need to sell next week or in the next two weeks and paying their suppliers in the next three months. This is the model that investors are looking for. This is also the model that consumers are looking for because then you are relevant, bringing new products to the market. It is so crucial to understand this slide. One thing that is driving their business is on this slide. It is also super, super important. Think about the products that are being sold at $140 in the market. The margin of these products is $12, about 8% margin. What are they focused on?
The brands and retailers focus on cost. How do we reduce cost? How do we produce large quantities in China and reduce the cost? The cost part is the yellow, is actually representing only 15% of the total price of the products. What represents close to 70% is actually all the markdown that they're taking into account and their write-off. They have to work on the markdown and the write-off. Until today, they were focusing just working on the cost of the production. Changing it is only by moving to on-demand manufacturing and producing what consumers would like to have versus producing what the consumer might want or trying to focus, which is impossible to focus. This is the major focus now in the market of really reducing the markdown and the write-off and moving to on-demand manufacturing.
Another thing that we can see very, very clearly, companies that are becoming more agile, every 5% of agility of those brands and retailers, not only increasing the revenue, it's reducing the markdown, decreasing the inventory, and really increasing the profitability of those companies. Now, on top of that, of course, we have the tariff. We can see the move. We are already seeing the move outside of China. By the way, in China, in the last three months, there was no production. All the facilities of the production facility were closed. There was demonstration. It was done. That's it. A company was telling those manufacturers, even if you got the order and you produce it, throw it away. You cannot bring it to the US.
We can see that the move into onshore, if it's in Europe, if it's in the US, is happening as well, moving to Latin America. Latin America is becoming really, really strong because the tariff is relatively low and the cost of employment is relatively low as well. What do we need to make in order to make the fashion better? It's really we need supply chain flexibility. This is when you're talking today to brands and retailers, in every boardroom, in every meeting, this is what they're dealing with right now. How do we change our supply chain? How do we move production from low-cost countries like China to move it to the US or to Mexico in order to be relevant, in order to react fast to the market trends, in order to reduce the inventory and to be much more agile in their production?
To do that, we call it postponement or in the name that you're familiar with, on-demand, moving really to on-demand production closer to the consumer and leveraging digital technology. Digital technology really can enable you to print and produce what you need rather than the focus. You can get an order today and delivering. Our customers were doing it for many, many years in the customized design market, customers like Amazon and Printful and many, many others that are using our technology and printing what needs and producing what needs and delivering within even the same day or two hours to houses. This is the model that now we are shifting into the bulk apparel, which is a much bigger market, which I'm going to touch in a minute by doing onshore. It is important to understand that there's a big change in the technology.
The technology today that Kornit is bringing for the first time is enabling us to penetrate a much bigger market. If till now we were only in the one-off market, the 222 million impressions that we just announced that our customers are doing, which is a 10% increase, is coming mainly from the one-off. The market that we are going now after, a bulk apparel of the screen market, is 20 times bigger than what our customers are printing today. It is about 4.5 billion impressions that we are going after. This is being, we can do that only because we released the MAX technology. MAX technology actually is bringing the quality of digital to the level of screen or even better screen. I can tell you it is better than screen in terms of quality, in terms of end feel. And for jobs that are below 1,000 copies, even cheaper.
We see customers that are using our technology even for 10,000 copies because they need to deliver the products fast to the market, or there are many colors or photographic images, which does not make sense to do it on conventional. We can see that with our technology, we can enter to many different applications and many different markets. I am going to touch on the Apollo. Apollo was released about one and a half years ago. Really, now it is ramping up very quickly. We can see customers using the Apollo and replacing screen machine. We hear about customers. Yesterday, I visited a customer, Grand Style, actually not far away here in Chicago. Grand Style is producing for military. They have their own brands. And actually, they replaced 18 screen machines with Apollo and Atlas Max.
We see customers that are replacing three automated big screen machines with one Apollo, reducing the number of headcounts for each Apollo, reducing 15 headcounts. It is really saving money. More importantly, you can really help your customer be agile, bringing new products to the market much, much faster with the highest quality. The Apollo is a game changer. It is a game changer for this industry. It is a factory by itself, running by one person. It is really helping us to penetrate a totally new market, as I mentioned, much, much bigger than before. What you can see here is really the break-even point. You can see that Apollo can capture jobs of 1,000 and below and be more economical. As I mentioned, we see customers that are running much, much longer than 1,000.
As you're all familiar, Kornit Digital now, most of the impressions that we were doing are from one-off. Our customers were printing one-offs. This is the first time that we're going for the long-run market. You can see customers using the Apollo, but also the Atlas Maxes for much, much longer run lengths and replacing screens. The market that we are penetrating now is much, much bigger. If we are looking at the amount of T-shirts that are being printed with some T-shirts with print on top of it, the market is $24 billion, which is going to $31 billion. Below 1,000 copies, the market is 4.8, going to 7 billion impressions, which is a massive opportunity that we can be in every impression, be cheaper and better quality and much more agile than the alternative.
What we start to see is that screen printer, traditional screen printer that they used to have only analog, starting to adopt digital. The new business model of the all-inclusive really accelerated it and reduced the barrier of entry to digital. The same thing, we see it also on the roll-to-roll. The roll-to-roll, the MAX technology enables us to enter into a new market and getting into much better in terms of productivity and quality. We are getting into the fashion market, like what I'm wearing right now. Also, home decor is a new market that we are penetrating. Footwear, we see a growth within China with few customers starting to use our technology to replace analog and to print for the footwear market and, of course, technical market as well. This is another growth engine for Kornit moving forward.
It's a massive market to go after. In terms of the overall capabilities, I want to touch on another thing. Of course, Kornit is delivering systems, software, services, a lot about data. Kornit X is starting to gain momentum. We just announced a few companies that are starting to use Kornit X. Gooten is one of them. Custom Ink is another demand generator that's starting to use Kornit X. Kornit X is a cloud-based platform that's routing jobs into our customers and enables them to move the demand generator to on-demand manufacturing anywhere around the world in consistent quality. It's starting to help the market to move to on-demand. We see more and more demand generators starting to use it. If we are looking to the future, Kornit is continuing to innovate. We're investing a lot in R&D.
We are bringing more application, more automation, and more data and AI. We're becoming more proactive in terms of maintaining our machine, our customers, and looking very much on broadening our solution in terms of new market and new application. As for the go-to-market, massive change in the go-to-market. You heard about the new technology. You heard about the new markets that we're entering, mainly the screen replacement market. We've done a big change in terms of our sales team because we're moving much more into a SaaS model, leveraging the new business model of the AIC. On top of that, we are going after the demand generator. We have a team that's going after demand generators and building really connecting demand generators to our customers. I want to touch on the AIC. The AIC model is a breakthrough model.
We are the only ones that brought it to this market. We are enabling new customers, screen printers, reducing the barrier of entry. For the screen printers, it's a very easy model. They understand exactly how much it will cost them. Let's assume for Apollo, they need to commit for 700,000 impressions per year. Let's assume that they are paying for each impression $1. So they know how much they need to pay for a year. They know that each impression, impression is a shirt, will cost them $1 no matter how much ink they need to put on the shirt. They can do every shirt in the highest quality that they want. They compare it to how much it costs them on screen. If it's cheaper than screen, they can move and from the first day be saving money.
They have enough jobs to move into digital. They can choose if they are doing it on the Apollo or doing it on the Atlas Max or Atlas Max Poly. This business is starting to gain a lot of momentum with many new customers and also existing customers. For Kornit, it is providing us predictability. It is five years' predictability. For the first time, we announced about $14.5 million ARR that we generated in Q1 for the last 12 months. This is going to grow very fast. In Q1 next year, we are going to report the AIC, the revenue, because the AIC is starting to be meaningful. In H2, it is going to contribute quite a lot to our revenue. In Q1 2026, you will start comparing the AIC revenue to the ARR.
Hopefully, the AIC, you will see that it's running faster because customers are printing more than the commitment. The ARR, what we are reporting, is on systems that we ship to the field. And the minimum commitment that the customer committed multiplied by the cost per impression. As well, for us, it's very good to move to the SaaS model. First of all, we control the second-hand market. The machine belongs to us. So after five years, seven years, we can take the machine and install it back even at a lower price into the market, penetrate further. It's providing predictability. Kornit will move over time more and more into a SaaS model. Today, 80% of our revenue is more recurring or reoccurring. You will see it growing. You will see very soon that it will be 90%.
Over time, our interest is to move to a more SaaS and SaaS model, of course. Also, from the investor perspective, we'll get a different multiple in the market. Just a bit about where we stand today. We reported the Q1 results. I just want to touch based on the 222 million impressions. This has come mainly from the install base that are doing one-off impressions. The nice thing to see is that they are growing, growing 10% year over year, meaning that they are starting to get into the maximum utilization level of the system. Soon, we will start seeing customers also in the one-off buying from us and not only the new customers that we are penetrating. We announced about MAS relationship. This is very, very important.
MAS is the largest manufacturer to the biggest brands like Nike, like Lululemon, like Victoria's Secret, Gap, and many, many others. When I'm saying manufacturers, they are actually producing the blanks. Nike is buying from them the blanks, and they are doing also the embellishment on the blanks. They took the decision that they understand that moving from production in Bangladesh, in Sri Lanka, they have to move onshore. They opened a facility in the US, leveraging our technology and starting to provide to the brands on-demand manufacturing out of the US. This is a proof point that really the market is moving to on-demand manufacturing with the biggest brands and the biggest fulfillers of the world. Now is the time. We have the market is going through disruption. Everyone needs to move to on-demand. We have the right technology. We have the business model to make it happen.
AIC and Apollo is gaining momentum in the market. We're expanding into a much bigger market with many, many opportunities to go to some new adjacent markets like the footwear, home decor, and more. Thank you very much. You're welcome to come to the breakout session and ask any questions.