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    Kornit Digital Reports Record Third Quarter 2021 Results

    November 10, 2021
    • Revenue up 51% year-over-year to $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants; Record revenues across all regions, strong profitability, and operating cash flows
    • Third quarter GAAP operating profit of $3.9 million; Non-GAAP operating profit of $8.6 million, net of $7.9 million attributed to the non-cash impact of warrants
    • New industry transforming innovative platforms; Atlas MAX and Presto MAX extremely well received by market; Robust new product introductions planned for early 2022
    • Company’s inspirational global fashion tech platform in Los Angeles, New York, Italy, and Japan drives creativity, sustainability, and inclusiveness to the forefront of the fashion world, utilizing Kornit’s on-demand technologies
    • Enters 2022 with extremely strong business fundamentals, momentum, and pipeline

    ROSH-HA`AYIN, Israel, Nov. 10, 2021 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ: KRNT), a worldwide market leader in sustainable, on-demand, digital textile production technologies, reported today results for the third quarter ended September 30, 2021.

    “I am extremely proud of our phenomenal third quarter performance, with record revenues across all regions, strong profitability and operating cash flows,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “We are witnessing the change in the fashion industry with an acceleration to sustainable, on-demand production -- a revolutionary moment in how we all think and act about fashion, from the need for self-expression, to responsible production. Kornit is leading the digital transformation the fashion industry must make with innovative solutions that break the barriers between imagination and physical applications.”

    Mr. Samuel concluded, “We enter 2022 with very strong business fundamentals supported by broad-based demand for our industry leading solutions. This growing demand and market acceptance puts us firmly on the path of becoming a $1 billion revenue company in 2026.”

    The following table compares the adverse, non-cash impact that the Company’s outstanding warrants had on the Company’s results of operations during the third quarters of 2021 and 2020, respectively:

     Third Quarter Warrants Impact

     Three Months Ended
     September 30,
     2021 2020
     Net of
    Warrants
    Impact
     Warrants
    Impact
     Net of
    Warrants
    Impact
     Warrants
    Impact
            
    Revenue$86.7M $7.9M $57.4M $2.2M
    Non-GAAP Gross Margin47.8% 4.3% 48.1% 1.9%
    Non-GAAP Operating Margin9.9% 7.5% 11.3% 3.2%
    Non-GAAP Net Margin13.3% 7.2% 13.5% 3.1%
    Non-GAAP Diluted Earnings Per Share$0.24 $0.16 $0.18 $0.05

    “We are very pleased with our strong third quarter performance, which continued our momentum from the first half of the year,” said Alon Rozner, Kornit Digital’s Chief Financial Officer. “We are focused on ending the year strong and supporting our customers to ensure they are ready for their peak season. We enter 2022 in a phenomenal position with outstanding business fundamentals, a robust backlog and strong pipeline.”

    Third Quarter 2021 Results of Operations

    • Total revenue for the third quarter of 2021 was $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants, compared to $57.4 million, net of $2.2 million attributed to the non-cash impact of warrants in the prior year period.
    • GAAP net income for the third quarter of 2021 was $3.9 million, or $0.08 per diluted share, compared to $3.9 million, or $0.09 per share, for the third quarter of 2020.
    • Non-GAAP net income for the third quarter of 2021 was $11.5 million, or $0.24 per diluted share, net of $0.16 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net profit of $7.7 million, or $0.18 per diluted share, net of $0.05 per diluted share attributed to the non-cash impact of warrants, for the third quarter of 2020.

    Fourth Quarter 2021 Guidance

    For the fourth quarter of 2021, and assuming zero impact from the fair value of issued warrants in the quarter, the Company expects revenue to be in the range of $89 million to $93 million and non-GAAP operating income to be in the range of 13.0% to 15.0% of revenue.

    Third Quarter Earnings Conference Call Information

    The Company will host a conference call today at 8:30 a.m. ET, or 3:30 p.m. Israel time, to discuss the results, followed by a question-and-answer session with the investment community.

    A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-877-407-0792 or +1-201-689-8263. The toll-free Israeli number is 1-809-406-247. The confirmation code is 13724287.

    To listen to a replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 13724287. The telephonic replay will be available beginning at 11:30 a.m. ET on Wednesday, November 10, 2021, until 11:59 p.m. ET on Wednesday, November 24, 2021. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

    Forward Looking Statements

    Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continue," "believes," "should," "intended," "guidance," "preliminary," "future," "planned," or other words. These forward-looking statements include, but are not limited to, statements relating to the Company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the Company’s degree of success in developing, introducing and selling new or improved products and product enhancements including specifically the Company’s Poly Pro and Presto products; the extent of the Company’s ability to consummate sales to large accounts with multi-system delivery plans; the degree of the Company’s ability to fill orders for Kornit’s systems; the extent of the Company’s ability to continue to increase sales of Kornit’s systems, ink and consumables; the extent of the Company’s ability to leverage Kornit’s global infrastructure build-out; the development of the market for digital textile printing; the availability of alternative ink; competition; sales concentration; changes to the Company’s relationships with suppliers; the extent of the Company’s success in marketing; the duration and severity of, and the degree of recovery from, the global COVID-19 pandemic, which could potentially impact once again, in a material adverse manner, the Company’s operations, financial position and cash flows, and those of the Company’s customers and suppliers; and those additional factors referred to under "Risk Factors" in Item 3.D of the Company's Annual Report on Form 20-F for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission, or SEC, on March 25, 2021. Any forward-looking statements in this press release are made as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

    The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Kornit urges investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measures to evaluate its business. A reconciliation for non-GAAP operating income guidance set forth above is not provided because, as forward-looking statements, such reconciliation is not available without unreasonable effort due to the high variability, complexity, and difficulty of estimating certain items such as charges to share-based compensation expense and currency fluctuations which could have an impact on its consolidated results. Kornit believes the information provided is useful to investors because it can be considered in the context of Kornit’s historical disclosures of this measure.

    Non-GAAP Discussion Disclosure

    Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, acquisition related expenses, excess cost of acquired inventory, foreign exchange differences associated with ASC 842, amortization of acquired intangible assets, deferred tax impact and the one-time impact of COVID-19, and the tax effect of the foregoing. The purpose of such adjustments is to provide an indication of the Company’s performance exclusive of non-cash charges and other items that are considered by management to be outside of the Company’s core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate the Company’s business and make operating decisions, and the Company believes that they are useful to investors as a consistent and comparable measure of the ongoing performance of the Company’s business. However, the Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

    About Kornit

    Kornit Digital (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashion and textile production technologies. The company is writing the operating system for fashion with end-to-end solutions including digital printing systems, inks, consumables, and an entire global ecosystem that manages workflows and fulfillment. Headquartered in Israel with offices in the USA, Europe, and Asia Pacific, Kornit Digital serves customers in more than 100 countries and states worldwide. To learn more about how Kornit Digital is boldly transforming the world of fashion and textiles, visit www.kornit.com.


    KORNIT DIGITAL LTD.
    AND ITS SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (U.S. dollars in thousands)
         
      September 30, December 31,
      2021 2020
      (Unaudited)  
    ASSETS    
    CURRENT ASSETS:    
    Cash and cash equivalents $96,668 $125,777
    Short-term bank deposit  241,103  224,804
    Marketable securities  25,920  13,718
    Trade receivables, net  49,866  51,566
    Inventory  55,344  52,487
    Other accounts receivable and prepaid expenses  11,148  9,178
    Total current assets  480,049  477,530
         
    LONG-TERM ASSETS:    
    Marketable securities  93,816  71,636
    Deposits and prepaid expenses  471  395
    Severance pay fund  342  337
    Deferred taxes  7,054  5,096
    Property,plant and equipment, net  38,401  29,255
    Operating lease right-of-use assets  22,122  21,053
    Intangible assets, net  10,479  7,221
    Goodwill  25,447  16,466
    Total long-term assets  198,132  151,459
         
    Total assets $678,181 $628,989
         
    LIABILITIES AND SHAREHOLDERS' EQUITY   
    CURRENT LIABILITIES:    
    Trade payables $30,630 $32,016
    Employees and payroll accruals  22,238  15,022
    Deferred revenues and advances from customers  11,719  27,019
    Operating lease liabilities  4,461  3,957
    Other payables and accrued expenses  22,116  11,613
    Total current liabilities  91,164  89,627
         
    LONG-TERM LIABILITIES:    
    Accrued severance pay  1,327  1,214
    Operating lease liabilities  18,856  18,688
    Other long-term liabilities  1,699  443
    Total long-term liabilities  21,882  20,345
         
    SHAREHOLDERS' EQUITY  565,135  519,017
         
    Total liabilities and shareholders' equity $678,181 $628,989
         


    KORNIT DIGITAL LTD.
    AND ITS SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (U.S. dollars in thousands, except share and per share data)
     
     Nine Months Ended Three Months Ended
     September 30, September 30,
      2021   2020   2021   2020 
     (Unaudited) (Unaudited)
            
    Revenues       
    Products$206,682  $103,536  $76,560  $49,290 
    Services 27,776   17,504   10,109   8,102 
    Total revenues 234,458   121,040   86,669   57,392 
            
    Cost of revenues       
    Products 98,457   50,117   36,028   23,031 
    Services 26,477   20,066   10,109   7,330 
    Total cost of revenues 124,934   70,183   46,137   30,361 
            
    Gross profit 109,524   50,857   40,532   27,031 
            
    Operating expenses:       
    Research and development, net 30,736   22,213   11,493   8,689 
    Sales and marketing 40,716   25,375   15,837   8,587 
    General and administrative 24,972   18,957   9,283   7,093 
    Total operating 96,424   66,545   36,613   24,369 
    Operating income (loss) 13,100   (15,688)  3,919   2,662 
    Financial income, net 2,635   4,427   219   1,630 
    Income (loss) before taxes on income 15,735   (11,261)  4,138   4,292 
            
    Taxes on income (benefit) 1,162   (577)  266   350 
    Net income (loss) 14,573   (10,684)  3,872   3,942 
            
    Basic net income (loss) per share$0.32  $(0.26) $0.08  $0.09 
            
    Weighted average number of shares       
    used in computing basic net       
    income (loss) per share 46,200,884   41,059,090   46,361,164   41,536,835 
            
            
    Diluted net income (loss) per share$0.30  $(0.26) $0.08  $0.09 
            
    Weighted average number of shares       
    used in computing diluted       
    net income (loss) per share 47,846,077   41,059,090   48,116,716   42,692,989 
            


    KORNIT DIGITAL LTD.
    AND ITS SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (U.S. dollars in thousands)
     
     Nine Months Ended Three Months Ended
     September 30, September 30,
      2021   2020   2021   2020 
     (Unaudited) (Unaudited)
            
    Cash flows from operating activities:       
            
    Net income (loss)$14,573  $(10,684) $3,872  $3,942 
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
    Depreciation and amortization 4,945   3,411   1,910   1,215 
    Fair value of warrants deducted from revenues 17,568   3,564   7,857   2,158 
    Share-based compensation 10,969   7,310   4,070   2,680 
    Amortization of premium and accretion of discount on marketable securities, net (1,652)  248   (354)  83 
    Realized loss (gain) on sale of marketable securities -   (503)  -   (401)
    Change in operating assets and liabilities:       
    Trade receivables 1,713   (7,933)  12,798   (8,549)
    Other receivables and prepaid expenses (1,853)  (1,615)  (340)  (771)
    Inventory (3,765)  (9,529)  (3,239)  (4,324)
    Operating lease right-of-use assets and liabilities, net (397)  -   122   49 
    Deferred taxes, net (1,866)  (823)  (2,111)  561 
    Other long term assets (76)  38   55   120 
    Trade payables (2,400)  571   17   10,462 
    Employees and payroll accruals 8,878   4,318   6,774   3,983 
    Deferred revenues and advances from customers (15,350)  7,663   (3,949)  7,770 
    Payables and accrued expenses 10,479   2,120   4,803   1,688 
    Severance pay, net 108   81   59   18 
    Other long term liabilities 1,256   48   456   191 
    Sale of property and Equipment -   75   -   - 
    Foreign currency translation income (loss) on inter company balances with foreign subsidiaries -   (294)  -   (477)
            
    Net cash provided by (used in) operating activities 43,130   (1,934)  32,800   20,398 
            
    Cash flows from investing activities:       
            
    Purchase of property and equipment (9,422)  (10,758)  (3,867)  (2,247)
    Capitalization of software development costs -   (121)  -   - 
    Proceeds from sale of property and equipment -   4   -   - 
    Cash paid in connection with acquisition, net of cash acquired (14,991)  (15,059)  (14,991)  (15,059)
    Investment in (proceeds from) bank deposits (16,299)  43,192   (6,167)  27,996 
    Proceeds from sale of marketable securities -   58,532   -   37,730 
    Proceeds from maturity of marketable securities 10,304   20,006   8,254   2,561 
    Investment in marketable securities (44,310)  (18,542)  (13,800)  - 
            
    Net cash provided by (used in) investing activities (74,718)  77,254   (30,571)  50,981 
            
            
    Cash flows from financing activities:       
            
    Exercise of employee stock options 4,141   4,942   2,387   2,138 
    Payments related to shares withheld for taxes (1,662)  (82)  (516)  (18)
    Proceeds from public offering, net of issuance costs -   162,720   -   162,720 
            
    Net cash provided by financing activities 2,479   167,580   1,871   164,840 
            
            
            
    Foreign currency translation adjustments on cash and cash equivalents -   37   -   13 
    Increase (decrease) in cash and cash equivalents (29,109)  242,937   4,100   236,232 
    Cash and cash equivalents at the beginning of the period 125,777   40,743   92,568   47,448 
    Cash and cash equivalents at the end of the period 96,668   283,680   96,668   283,680 
            
            
            
    Non-cash investing and financing activities:       
            
    Purchase of property and equipment on credit 1,907   382   1,907   382 
    Inventory transferred to be used as property and equipment 931   823   51   312 
    Issuance expenses on credit -   739   -   739 
    Lease liabilities arising from obtaining right-of-use assets 1,517   2,769   1,033   849 
            


    KORNIT DIGITAL LTD.
    AND ITS SUBSIDIARIES
    RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
    (U.S. dollars in thousands, except share and per share data)
             
      Nine Months Ended Three Months Ended
      September 30, September 30,
       2021   2020   2021   2020 
      (Unaudited) (Unaudited)
    Revenues$234,458  $121,040  $86,669  $57,392 
             
             
    GAAP cost of revenues$124,934  $70,183   46,137   30,361 
    Cost of product recorded for share-based compensation (1) (1,000)  (772)  (381)  (281)
    Cost of service recorded for share-based compensation (1) (750)  (568)  (251)  (208)
    Intangible assets amortization on cost of product (3) (161)  (75)  (111)  (25)
    Intangible assets amortization on cost of service (3) (480)  -   (160)  - 
    Coronavirus one time impact (4) -   (520)  -   (74)
    Non-GAAP cost of revenues$122,543  $68,248  $45,234  $29,773 
             
             
    GAAP gross profit$109,524  $50,857   40,532   27,031 
    Gross profit adjustments 2,391   1,935   903   588 
    Non-GAAP gross profit$111,915  $52,792  $41,435  $27,619 
             
             
    GAAP operating expenses$96,424  $66,545  $36,613  $24,369 
    Share-based compensation (1) (9,219)  (5,970)  (3,438)  (2,191)
    Acquisition related expenses (2) (194)  (648)  (194)  (648)
    Intangible assets amortization (3) (336)  (622)  (98)  (371)
    Coronavirus one time impact (4) -   69   -   - 
    Non-GAAP operating expenses$86,675  $59,374  $32,883  $21,159 
             
             
    GAAP Financial income (expenses), net$2,635  $4,427  $219  $1,630 
    Foreign exchange losses associated with ASC 842 (302)  28   113   110 
    Non-GAAP Financial income (expenses), net$2,333  $4,455  $332  $1,740 
             
             
    GAAP Taxes on income (benefit)$1,162  $(577) $266  $350 
    Tax effect on to the above non-GAAP adjustments (1,954)  346   (2,119)  526 
    Deferred tax benefit based on an Israeli statutory tax rate (a) (1,360)  610   (774)  (405)
    Non-GAAP Taxes on income (benefit)$(2,152) $379  $(2,627) $471 
             
             
    GAAP net income (loss)$14,573  $(10,684) $3,872  $3,942 
    Share-based compensation (1) 10,969   7,310   4,070   2,680 
    Acquisition related expenses (2) 194   648   194   648 
    Intangible assets amortization (3) 977   697   369   396 
    Coronavirus one time impact (4) -   451   -   74 
    Foreign exchange losses associated with ASC 842 (302)  28   113   110 
    Tax effect on to the above non-GAAP adjustments 1,954   (346)  2,119   (526)
    Deferred tax benefit based on an Israeli statutory tax rate (a) 1,360   (610)  774   405 
    Non-GAAP net income (loss)$29,725  $(2,506) $11,511  $7,729 
             
    GAAP diluted earning (loss) per share$0.30  $(0.26) $0.08  $0.09 
             
    Non-GAAP diluted earning (loss) per share$0.62  $(0.06) $0.24  $0.18 
             
    Weighted average number of shares       
             
    Shares used in computing GAAP diluted net earning (loss) per share 47,846,077   41,059,090   48,116,716   42,692,989 
             
    Shares used in computing Non-GAAP diluted net earning (loss) per share 48,082,118   41,059,090   48,361,472   42,972,182 
             
             
    (1) Share-based compensation       
     Cost of product revenues 1,000   772   381   281 
     Cost of service revenues 750   568   251   208 
     Research and development 1,810   1,243   739   463 
     Selling and marketing 3,651   2,150   1,318   769 
     General and administrative 3,758   2,577   1,381   959 
       10,969   7,310   4,070   2,680 
    (2) Acquisition related expenses       
     General and administrative 194   648   194   648 
       194   648   194   648 
    (3) Intangible assets amortization       
     Cost of product revenues 161   75   111   25 
     Cost of service revenues 480   -   160   - 
     Research and development -   315   -   315 
     Selling and marketing 336   307   98   56 
       977   697   369   396 
             
    (4) Coronavirus one time impact       
     Cost of product revenues -   527   -   74 
     Cost of service revenues -   -7   -   - 
     Research and development -   -57   -   - 
     Selling and marketing -   -1   -   - 
     General and administrative -   -11   -   - 
       -   451   -   74 
             
    (a)Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel.
             

    Investor Contact:
    Andrew G. Backman
    Global Head of Investor Relations
    andrew.backman@kornit.com


    Contact Investor Relations

     

    Andrew G. Backman
    Global Head of Investor Relations
    Phone: 201-608-5882 [ext: 3882]
    E-mail: Andrew.Backman@kornit.com