Press
Release Details

• Second quarter revenues of $58.1 million, net of non-cash warrants impact of $4.5 million, in line with preliminary results issued on July 5, 2022
• Second quarter GAAP operating loss of $24.9 million; Non-GAAP operating loss of $18.3 million, net of $4.5 million attributed to the non-cash impact of warrants
  
• Board of Directors approves $75 million share repurchase program
• Announces CFO transition; Industry veteran Lauri Hanover to join Kornit executive management team as Chief Financial Officer
  

ROSH-HA`AYIN, Israel, Aug. 10, 2022 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (“Kornit” or “the Company”) (Nasdaq: KRNT), a worldwide market leader in sustainable, on-demand, digital fashion^X and textile production technologies, reported today results for the second quarter ended June 30, 2022.

“While the overall operating environment remains challenging, we believe the industry will continue its long-term secular growth, fueled by the mega-trends we’ve discussed in the past,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “We are navigating the current market dynamics by working closely with global brands, retailers and fulfillers to shift production volumes to on-demand, executing on new product introductions and adoption of these innovative technologies, and focusing on returning to profitability.”

Mr. Samuel continued, “Our vision remains unchanged and we remain extremely confident in the fundamentals of the business. With our solid financial foundation and dedicated global team of professionals, we continue to be laser focused on leading the industry’s transformation from analog manufacturing to sustainable on-demand digital production.”

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 second quarters of 2022 and 2021, respectively:

Second Quarter Warrants Impact

	Three Months Ended
	June 30,
		2022								2021
	Net of Warrants Impact				Warrants Impact				Net of Warrants Impact				Warrants Impact
Revenue	$	58.1	M		$	4.5	M		$	81.7	M		$		6.6	M
Non-GAAP Gross Margin		38.6	%			4.4	%			48.2	%			3.9		%
Non-GAAP Operating Margin		(31.4	%)			9.5	%			12.5	%			6.5		%
Non-GAAP Net Margin		(26.8	%)			9.1	%			12.8	%			6.5		%
Non-GAAP Diluted Earnings Per Share	($	0.31	)		$	0.09			$	0.22			$	0.13

“We continue to strategically look at all aspects of our business and are adjusting our cost structure as needed, including a recent focused reduction-in-force, while reallocating resources to key growth initiatives and investments in long-term programs that support our customers’ needs,” said Alon Rozner, Kornit Digital’s Chief Financial Officer. “Our extremely strong balance sheet provides us with a great foundation to navigate the current market conditions and volatility, while focusing on longer-term opportunities to drive profitable growth.”

Second Quarter 2022 Results of Operations

• Total revenue for the second quarter of 2022 was $58.1 million, net of $4.5 million attributed to the non-cash impact of warrants, compared to $81.7 million, net of $6.6 million attributed to the non-cash impact of warrants in the prior year period.
  
  
• GAAP net loss for the second quarter of 2022 was $19.5 million, or ($0.39) per basic share, compared to net income of $5.6 million, or $0.12 per diluted share, for the second quarter of 2021.
  
  
• Non-GAAP net loss for the second quarter of 2022 was $15.6 million, or ($0.31) per basic share, net of $0.09 per basic share attributed to the non-cash impact of warrants, compared to non-GAAP net income of $10.5 million, or $0.22 per diluted share, net of $0.13 per diluted share attributed to the non-cash impact of warrants, for the second quarter of 2021.
  

Third Quarter 2022 Guidance

For the third quarter of 2022, the Company expects revenue to be in the range of $66 million to $70 million; non-GAAP operating margins to be in the range of -15% to -11% of revenue; EBITDA Margins to be in the range of -12% to -8%. Consistent with past practice, this guidance excludes the impact of the fair value of issued warrants in the quarter.

$75 million Share Repurchase Authorization

The Company announced today that its Board of Directors has authorized the repurchase of up to $75 million of the Company’s ordinary shares, subject to the completion of required Israeli regulatory procedures.

“A share repurchase program is a flexible way to return capital to our shareholders when we see significant value in our stock,” said Mr. Rozner. “In evaluating our capital allocation plans and the current trading levels of our stock, the Board and management believe that using a portion of the cash on our extremely strong balance sheet – which included approximately $705 million in cash, cash equivalents, and marketable securities at the end of the second quarter – for repurchases of our ordinary shares is in the best interests of the Company and its shareholders, and will not adversely impact our ability to execute on our growth plans.”

The program is subject to Kornit’s Board of Directors’ final confirmation that the Company meets certain liquidity-related requirements under the Israeli Companies Law, as well as Kornit’s receipt of Israeli court approval, which would cover an initial period of six months, after which period renewed court approval would be needed to continue the program. The court approval process is expected to take several months. If and when the Company receives court approval, repurchases may be made from time to time through open market repurchases or through privately negotiated transactions, subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases will be effected in accordance with the requirements of Rule 10b-18 under the Exchange Act. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. The repurchase program does not obligate the Company to acquire any particular amount of its ordinary shares, and it may be modified, suspended, or terminated, at any time at the Company’s discretion. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

Announces CFO Transition

The Company also announced that Alon Rozner, Chief Financial Officer, will leave the Company for personal reasons. Kornit is pleased to appoint Lauri Hanover as the Company’s new CFO. To ensure an orderly transition, Mr. Rozner will continue as CFO until his expected departure in November.

Since March 2015, Ms. Hanover has served as a member of the Company’s Board of Directors. Ms. Hanover has over 25 years of CFO experience and financial expertise in the software, hardware, consumer goods, and industrials sectors. Ms. Hanover holds a B.A. from the University of Pennsylvania, a B.S. in Economics from The Wharton School of the University of Pennsylvania, as well as an M.B.A. from New York University.

Ms. Hanover will continue as a member of the Company’s Board of Directors (“Board”), but will step down as the Company’s Audit Committee Chair and as member of the Compensation Committee effective immediately. Current Board members Mr. Dov Ofer will assume the role of Audit Chairperson and Mr. Gabi Seligsohn will join the Audit Committee, while Mr. Stephen Nigro will join the Compensation Committee. Each of the foregoing individuals heading or joining those committees of the Board is an independent director and possesses the requisite credentials for the relevant role under the Nasdaq Listing Rules.

“Alon has been an integral member of our executive management team and an immensely valued colleague to everyone here at Kornit,” said Ronen Samuel. “His exceptional leadership and vital contributions further strengthened and expanded the financial foundation of the firm, especially through the global pandemic. We wish him only the best in the future.”

“It has been a pleasure to serve as Kornit’s CFO and to work with such an amazing team across the world,” said Alon Rozner. “I have the utmost confidence in the Company, its strategy, and its leadership team, and have no doubt the Company will successfully transform the fashion and textile industry. I look forward to working with Lauri on a successful transition and wish everyone at Kornit tremendous success.”

Commenting on her appointment, Ms. Hanover added, “I am truly honored to undertake this role with Kornit in a new capacity as CFO and look forward to working with Alon on the transition, and with the entire management team to execute on our long-term strategy and drive value creation.”

Second 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 1-877-300-8521 or +1-412-317-6026. The toll-free Israeli number is 1-809-213-284. The conference confirmation code is 10169717.

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 10169717. The telephonic replay will be available approximately two hours after the completion of the live call until 11:59 pm ET on Wednesday, August 24, 2022. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

About Kornit Digital

Kornit Digital (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashion^x 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 one hundred countries and states worldwide. To learn more about how Kornit Digital is boldly transforming the world of fashion and textiles, visit www.kornit.com.

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 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 the adverse macro-economic trends triggered by the global COVID-19 pandemic, such as supply-chain delays inflationary pressures, and rising interest rates, which could potentially impact, in a material adverse manner, the Company’s operations, financial position and cash flows, and those of the Company’s customers and suppliers; receipt of court approval to effect the Company’s proposed share repurchase program; 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, 2021, filed with the SEC on March 30, 2022. 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.

Non-GAAP Discussion Disclosure

The non-GAAP financial measures presented consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, amortization of acquired intangible assets, acquisition related expenses, foreign exchange differences associated with ASC 842 and the related 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.

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

	KORNIT DIGITAL LTD.
	AND ITS SUBSIDIARIES
	CONSOLIDATED  BALANCE  SHEETS
	(U.S. dollars in thousands)
			June 30,			December 31,
				2022			2021
			(Unaudited)
	ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	196,611		$	611,551
	Short-term bank deposit			260,063			9,168
	Marketable securities			21,726			28,116
	Trade receivables, net			60,473			49,797
	Inventory			89,580			63,017
	Other accounts receivable and prepaid expenses			13,465			13,694
	Total current assets			641,918			775,343
	LONG-TERM ASSETS:
	Marketable securities		$	226,173		$	149,269
	Deposits and other long-term assets			2,531			856
	Severance pay fund			323			357
	Deferred taxes			14,153			9,339
	Property,plant and equipment, net			53,189			45,046
	Operating lease right-of-use assets			28,658			25,155
	Intangible assets, net			11,271			10,063
	Goodwill			29,164			25,447
	Total long-term assets			365,462			265,532
	Total assets		$	1,007,380		$	1,040,875
	LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
	Trade payables		$	30,788		$	46,448
	Employees and payroll accruals			15,364			22,482
	Deferred revenues and advances from customers			3,013			5,401
	Operating lease liabilities			5,071			5,058
	Other payables and accrued expenses			21,046			17,287
	Total current liabilities			75,282			96,676
	LONG-TERM LIABILITIES:
	Accrued severance pay		$	1,217		$	1,543
	Operating lease liabilities			22,533			21,900
	Other long-term liabilities			1,932			1,203
	Total long-term liabilities			25,682			24,646
	SHAREHOLDERS' EQUITY			906,416			919,553
	Total liabilities and shareholders' equity		$	1,007,380		$	1,040,875

 

	KORNIT DIGITAL LTD.
	AND ITS SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF OPERATIONS
	(U.S. dollars in thousands, except share and per share data)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2022				2021			2022				2021
		(Unaudited)							(Unaudited)
	Revenues
	Products	$	47,566			$	72,176		$	120,080			$	130,122
	Services		10,570				9,490			21,349				17,667
	Total revenues		58,136				81,666			141,429				147,789
	Cost of revenues
	Products		25,667				34,254			64,904				62,429
	Services		11,937				8,830			22,591				16,368
	Total cost of revenues		37,604				43,084			87,495				78,797
	Gross profit		20,532				38,582			53,934				68,992
	Operating expenses:
	Research and development, net		14,081				9,799			28,091				19,243
	Sales and marketing		21,100				13,830			37,631				24,879
	General and administrative		10,250				8,881			20,016				15,689
	Total operating expenses		45,431				32,510			85,738				59,811
	Operating income (loss)		(24,899	)			6,072			(31,804	)			9,181
	Financial income, net		4,324				351			6,123				2,416
	Income (loss) before taxes on income (tax benefits)		(20,575	)			6,423			(25,681	)			11,597
	Taxes on income (tax benefits)		(1,099	)			821			(1,008	)			896
	Net income (loss)		(19,476	)			5,602			(24,673	)			10,701
	Basic net income (loss) per share	$	(0.39	)		$	0.12		$	(0.50	)		$	0.23
	Weighted average number of shares
	used in computing basic net
	income (loss) per share		49,756,990				46,196,720			49,707,782				46,119,416
	Diluted net income (loss) per share	$	(0.39	)		$	0.12		$	(0.50	)		$	0.22
	Weighted average number of shares
	used in computing diluted
	net income (loss) per share		49,756,990				47,849,783			49,707,782				47,709,429

 

	KORNIT DIGITAL LTD.
	AND ITS SUBSIDIARIES
	RECONCILATION OF GAAP TO NON-GAAP  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
	(U.S. dollars in thousands, except share and per share data)
			Three Months Ended										Six Months Ended
			June 30,										June 30,
				2022				2021						2022				2021
			(Unaudited)										(Unaudited)
	Revenues		$	58,136			$	81,666					$	141,429			$	147,789
	GAAP cost of revenues		$	37,604			$	43,084					$	87,495			$	78,797
	Cost of product recorded for share-based compensation (1)			(606	)			(320	)					(1,055	)			(619	)
	Cost of service recorded for share-based compensation (1)			(461	)			(266	)					(846	)			(499	)
	Intangible assets amortization on cost of product (3)			(666	)			(25	)					(839	)			(50	)
	Intangible assets amortization on cost of service (3)			(160	)			(160	)					(320	)			(320	)
	Non-GAAP cost of revenues		$	35,711			$	42,313					$	84,435			$	77,309
	GAAP gross profit		$	20,532			$	38,582					$	53,934			$	68,992
	Gross profit adjustments			1,893				771						3,060				1,488
	Non-GAAP gross profit		$	22,425			$	39,353					$	56,994			$	70,480
	GAAP operating expenses		$	45,431			$	32,510					$	85,738			$	59,811
	Share-based compensation (1)			(4,414	)			(3,241	)					(8,878	)			(5,781	)
	Acquisition related expenses (2)			-				-						(512	)			-
	Intangible assets amortization (3)			(333	)			(119	)					(419	)			(238	)
	Non-GAAP operating expenses		$	40,684			$	29,150					$	75,929			$	53,792
	GAAP Financial income, net		$	4,324			$	351					$	6,123			$	2,416
	Foreign exchange losses associated with ASC 842			(2,480	)			387						(3,129	)			(415	)
	Non-GAAP Financial income , net		$	1,844			$	738					$	2,994			$	2,001
	GAAP Taxes on income (tax benefit)		$	(1,099	)		$	821					$	(1,008	)		$	896
	Tax effect on to the above non-GAAP adjustments			(187	)			(26	)					140				165
	Deferred tax benefit based on an Israeli statutory tax rate			437				(338	)					327				(586	)
	Non-GAAP Taxes on income (tax benefit)		$	(849	)		$	457					$	(541	)		$	475
	GAAP net income (loss)		$	(19,476	)		$	5,602					$	(24,673	)		$	10,701
	Share-based compensation (1)			5,481				3,827						10,779				6,899
	Acquisition related expenses (2)			-				-						512				-
	Intangible assets amortization (3)			1,159				304						1,578				608
	Foreign exchange losses associated with ASC 842			(2,480	)			387						(3,129	)			(415	)
	Tax effect of  the above non-GAAP adjustments			187				26						(140	)			(165	)
	Deferred tax benefit at the Israeli statutory tax rate			(437	)			338						(327	)			586
	Non-GAAP net income (Loss)		$	(15,566	)		$	10,484					$	(15,400	)		$	18,214
	GAAP diluted earning (loss) per share		$	(0.39	)		$	0.12					$	(0.50	)		$	0.22
	Non-GAAP diluted earning (loss) per share		$	(0.31	)		$	0.22					$	(0.31	)		$	0.38
	Weighted average number of shares
	Shares used in computing GAAP diluted net earning (loss) per share			49,756,990				47,849,783						49,707,782				47,709,429
	Shares used in computing Non-GAAP diluted net earning (loss) per share			49,756,990				48,189,266						49,707,782				47,941,113
	(1) Share-based compensation
		Cost of product revenues	$	606			$	320					$	1,055			$	619
		Cost of service revenues		461				266						846				499
		Research and development		1,268				569						2,457				1,071
		Sales and marketing		1,491				1,261						3,300				2,333
		General and administrative		1,655				1,411						3,121				2,377
			$	5,481			$	3,827					$	10,779			$	6,899
	(2) Acquisition related expenses
		General and administrative	$	-			$	-					$	512			$	-
			$	-			$	-					$	512			$	-
	(3) Intangible assets amortization
		Cost of product revenues	$	666			$	25					$	839			$	50
		Cost of service revenues		160				160						320				320
		Sales and marketing		333				119						419				238
			$	1,159			$	304					$	1,578			$	608

 

	KORNIT DIGITAL LTD.
	AND ITS SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF CASH FLOWS
	(U.S. dollars in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
			2022				2021				2022				2021
		(Unaudited)								(Unaudited)
	Cash flows from operating activities:
	Net income (loss)	$	(19,476	)		$	5,602			$	(24,673	)		$	10,701
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
	Depreciation and amortization		3,322				1,543				5,902				3,035
	Fair value of warrants deducted from revenues		4,516				6,572				12,521				9,711
	Share-based compensation		5,481				3,827				10,779				6,899
	Amortization of premium and accretion of discount on marketable securities, net		484				(481	)			1,012				(1,298	)
	Realized gain on sale and redemption of marketable securities		7				-				10				-
	Change in operating assets and liabilities:
	Trade receivables, net		22,189				(9,597	)			(9,004	)			(11,085	)
	Other accounts receivables and prepaid expenses		673				(3,063	)			(1,791	)			(1,513	)
	Inventory		(14,816	)			146				(23,852	)			(526	)
	Operating leases right-of-use assets and liabilities, net		(2,449	)			337				(2,857	)			(519	)
	Deferred taxes		(2,111	)			565				(2,416	)			245
	Deposits and other long term assets		(1,327	)			(121	)			(1,321	)			(131	)
	Trade payables		(4,476	)			3,639				(11,920	)			(2,417	)
	Employees and payroll accruals		(364	)			(131	)			(6,834	)			2,104
	Deferred revenues and advances from customers		(2,643	)			(8,029	)			(4,114	)			(11,401	)
	Other payables and accrued expenses		3,081				3,822				3,440				5,676
	Accrued severance pay, net		(103	)			79				(292	)			49
	Other long - term liabilities		413				501				729				800
	Loss from sale and disposal of property, plant and Equipment		41				-				41				-
	Net cash provided by (used in) operating activities		(7,558	)			5,211				(54,640	)			10,330
	Cash flows from investing activities:
	Purchase of property, plant and equipment		(1,985	)			(2,988	)			(9,447	)			(5,555	)
	Investment in equity securities		(354	)			-				(354	)			-
	Acquisition of intangible assets		(133	)			-				(133	)			-
	Proceeds from sale of property, plant  and equipment		55				-				55				-
	Cash paid in connection with acquisition, net of cash acquired		(14,654	)			-				(14,654	)			-
	Proceeds from (Investment in) bank deposits		160,090				8,723				(250,895	)			(10,132	)
	Proceeds from sales and redemption of marketable securities		1,500				2,050				1,945				2,050
	Proceeds from maturity of marketable securities		5,500				-				17,422				-
	Investment in marketable securities		(23,003	)			(15,220	)			(103,897	)			(30,510	)
	Net cash provided by (used in) investing activities		127,016				(7,435	)			(359,958	)			(44,147	)
	Cash flows from financing activities:
	Exercise of employee stock options		41				1,079				340				1,754
	Payments related to shares withheld for taxes		(172	)			(458	)			(682	)			(1,146	)
	Net cash provided by (used in) financing activities		(131	)			621				(342	)			608
	Increase (decrease) in cash and cash equivalents		119,327				(1,603	)			(414,940	)			(33,209	)
	Cash and cash equivalents at the beginning of the period		77,284				94,171				611,551				125,777
	Cash and cash equivalents at the end of the period	$	196,611			$	92,568			$	196,611			$	92,568
	Non-cash investing and financing activities:
	Purchase of property and equipment on credit		1,823				2,678				1,823				2,678
	Inventory transferred to be used as property and equipment		592				51				1,289				463
	Property, plant and equipment transferred to be used as inventory		5				-				9				3
	Receipt on account of shares		27				32				27				32
	Lease liabilities arising from obtaining right-of-use assets		641				1,033				6,387				1,296