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Kornit Digital Reports Second Quarter 2023 Results

August 9, 2023
  • Second quarter revenues of $56.2 million, in line with previous guidance
  • Second quarter GAAP net loss of $14.3 million; non-GAAP net loss of $7.4 million
  • Double-digit year-over-year impressions and consumables growth across all regions
  • Successful ITMA tradeshow in Milan, Italy, securing high-quality leads and providing a healthy pipeline for 2024 and beyond
  • Company issues third-annual Impact Report highlighting progress on its long-term impact strategy and reaffirming commitment to a more sustainable fashion and textiles industry

ROSH-HA`AYIN, Israel, Aug. 09, 2023 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (“Kornit” or “the Company”) (Nasdaq: KRNT), a worldwide market leader in sustainable, on-demand, digital fashionX and textile production technologies, reported today its results for the second quarter ended June 30, 2023.

“During the quarter, impressions grew at a double-digit pace year-over-year for the second consecutive quarter, driving a steady improvement in capacity utilization and strong double-digit consumables revenue growth across our customer segments and throughout all our operating regions,” said Ronen Samuel, Kornit’s Chief Executive Officer. “Services revenues again demonstrated exceptional growth, as it has during the past year, with customers upgrading to our new MAX technology. While system sales volumes are expected to remain modest in the near-term due to continued softness in capital equipment spending and lengthening sales cycles, we have taken actions through various initiatives to diversify our customer base, increase operating efficiencies, and build a healthy pipeline for 2024 and beyond.”

Mr. Samuel concluded, “We were pleased with our successful participation in the recent ITMA trade show in Milan, where exceptional customer interest in our innovative solutions generated numerous high-quality leads and sales orders. We remain confident that our strategy, product roadmap, and solid balance sheet position us well to generate meaningful, long-term, profitable growth and continue to expect to approach break-even on an adjusted EBITDA basis for the fourth quarter of this year, and aim to deliver profitable growth for the full year 2024.”

Second Quarter 2023 Results of Operations

  • Total revenue for the second quarter of 2023 was $56.2 million compared with $58.1 million in the prior year period, due primarily to lower systems revenues.
  • GAAP gross profit margin for the second quarter of 2023 was 33.3% compared with 35.3% in the prior year period. On a non-GAAP basis, gross profit margin was 36.1% compared with 38.6% in the prior year period.
  • GAAP operating expenses for the second quarter of 2023 decreased by 12.8% to $39.6 million compared with the prior year period. On a non-GAAP basis, operating expenses decreased by 16.3% to $34.1 million compared with the prior year period.
  • GAAP net loss for the second quarter of 2023 was $14.3 million, or ($0.29) per basic share, compared with net loss of $19.5 million, or ($0.39) per basic share, for the second quarter of 2022.
  • Non-GAAP net loss for the second quarter of 2023 was $7.4 million, or ($0.15) per basic share, compared with non-GAAP net loss of $15.6 million, or ($0.31) per basic share, for the second quarter of 2022.
  • Adjusted EBITDA loss for the second quarter of 2023 was $10.7 million compared with adjusted EBITDA loss of $15.7 million for the second quarter of 2022. Adjusted EBITDA margin for the second quarter of 2023 was -19.1% compared with -27.1% for the second quarter of 2022.

Third Quarter 2023 Guidance

For the third quarter of 2023, the Company expects revenues to be in the range of $58 million to $62 million and adjusted EBITDA margin between -6% to -13% of revenue. The guidance for revenue and adjusted EBITDA margin includes the impact of the non-cash expense associated with the fair value of the Company’s warrants.

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 investor 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 conference confirmation code is 13739895.

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 13739895. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on August 23, 2023. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

About Kornit Digital

Kornit Digital Ltd. (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashionx 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 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 duration and severity of current adverse macro-economic headwinds being caused by inflationary pressures, rising interest rates, and supply-chain delays, which have been impacting, and may continue to impact, in an adverse manner, the Company’s operations, financial position and cash flows, in part due to the adverse impact on the Company’s customers and suppliers; 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 its systems; the extent of the Company’s ability to increase sales of its systems, ink and consumables; the extent of the Company’s ability to leverage its 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; 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, 2022, filed with the SEC on March 30, 2023. 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 Company presents certain non-GAAP financial measures, in this press release and in the accompanying conference call to discuss the Company’s quarterly results. These non-GAAP financial measures reflect adjustments to corresponding GAAP financial measures in order to exclude the impact of the following: share-based compensation expenses; amortization of intangible assets; acquisition related expenses; restructuring expenses; foreign exchange differences associated with ASC 842; and non-cash deferred tax income.

The Company defines “Adjusted EBITDA” as non-GAAP operating income (loss), which reflects the adjustments described in the preceding paragraph, as further adjusted to exclude depreciation expense.

The purpose of the foregoing non-GAAP financial measures is to convey 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. 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.

The reconciliation tables included below present a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures.

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,
  2023 2022
  (Unaudited) (Audited)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $101,322  $104,597 
Short-term bank deposit  220,098   275,033 
Marketable securities  42,463   20,380 
Trade receivables, net  84,216   67,360 
Inventory  88,209   89,415 
Other accounts receivable and prepaid expenses  22,820   22,054 
Total current assets  559,128   578,839 
     
LONG-TERM ASSETS:    
Marketable securities  227,798   245,970 
Deposits and other long-term assets  7,805   5,927 
Severance pay fund  279   274 
Property, plant and equipment, net  56,981   60,463 
Operating lease right-of-use assets  29,921   27,139 
Intangible assets, net  8,707   9,890 
Goodwill  29,164   29,164 
Total long-term assets  360,655   378,827 
     
Total assets  919,783   957,666 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Trade payables  11,550   14,833 
Employees and payroll accruals  16,307   14,255 
Deferred revenues and advances from customers  2,464   5,701 
Operating lease liabilities  4,753   4,989 
Other payables and accrued expenses  26,570   25,592 
Total current liabilities  61,644   65,370 
     
LONG-TERM LIABILITIES:    
Accrued severance pay  1,166   1,223 
Operating lease liabilities  23,041   21,035 
Other long-term liabilities  526   1,216 
Total long-term liabilities  24,733   23,474 
     
SHAREHOLDERS' EQUITY  833,406   868,822 
     
Total liabilities and shareholders' equity $919,783  $957,666 
     


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,
  2023   2022   2023   2022 
 (Unaudited) (Unaudited)
        
Revenues       
Products$40,083  $47,566  $71,986  $120,080 
Services 16,116   10,570   31,991   21,349 
Total revenues 56,199   58,136   103,977   141,429 
        
Cost of revenues       
Products 22,620   25,667   42,999   64,904 
Services 14,886   11,937   29,213   22,591 
Total cost of revenues 37,506   37,604   72,212   87,495 
        
Gross profit 18,693   20,532   31,765   53,934 
        
Operating expenses:       
Research and development, net 12,907   14,081   25,989   28,091 
Sales and marketing 18,158   21,100   33,341   37,631 
General and administrative 8,541   10,250   17,489   20,016 
Total operating expenses 39,606   45,431   76,819   85,738 
        
Operating loss (20,913)  (24,899)  (45,054)  (31,804)
        
Financial income, net 7,018   4,324   12,422   6,123 
Loss before taxes on income (13,895)  (20,575)  (32,632)  (25,681)
        
Taxes on income (tax benefit) 430   (1,099)  624   (1,008)
Net loss$(14,325) $(19,476) $(33,256) $(24,673)
        
Basic loss per share$(0.29) $(0.39) $(0.67) $(0.50)
        
        
Weighted average number of shares used in computing basic net loss per share 49,554,383   49,756,990   49,720,453   49,707,782 
        
        
Diluted net loss per share$(0.29) $(0.39) $(0.67) $(0.50)
        
        
Weighted average number of shares used in computing diluted net loss per share 49,554,383   49,756,990   49,720,453   49,707,782 
        


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)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
   2023   2022   2023   2022 
  (Unaudited) (Unaudited)
         
Revenues$56,199  $58,136  $103,977  $141,429 
         
         
GAAP cost of revenues$37,506  $37,604  $72,212  $87,495 
Cost of product recorded for share-based compensation (1) (672)  (606)  (1,179)  (1,055)
Cost of service recorded for share-based compensation (1) (493)  (461)  (844)  (846)
Intangible assets amortization on cost of product (3) (263)  (666)  (526)  (839)
Intangible assets amortization on cost of service (3) (160)  (160)  (320)  (320)
Restructuring expenses (4) -   -   (89)  - 
Non-GAAP cost of revenues$35,918  $35,711  $69,254  $84,435 
         
         
GAAP gross profit$18,693  $20,532  $31,765  $53,934 
Gross profit adjustments 1,588   1,893   2,958   3,060 
Non-GAAP gross profit$20,281  $22,425  $34,723  $56,994 
         
         
GAAP operating expenses$39,606  $45,431  $76,819  $85,738 
Share-based compensation (1) (5,385)  (4,414)  (9,772)  (8,878)
Acquisition related expenses (2) -   -   -   (512)
Intangible assets amortization (3) (152)  (333)  (340)  (419)
Restructuring expenses (4) -   -   (206)  - 
Non-GAAP operating expenses$34,069  $40,684  $66,501  $75,929 
         
         
GAAP Financial income, net$7,018  $4,324  $12,422  $6,123 
Foreign exchange losses associated with ASC 842 (121)  (2,480)  (497)  (3,129)
Non-GAAP Financial income , net$6,897  $1,844  $11,925  $2,994 
         
         
GAAP Taxes on income (tax benefit)$430  $(1,099) $624  $(1,008)
Non-cash deferred tax income$102  $250  $323  $467 
Non-GAAP Taxes on income (tax benefit)$532  $(849) $947  $(541)
         
         
GAAP net loss$(14,325) $(19,476) $(33,256) $(24,673)
Share-based compensation (1) 6,550   5,481   11,795   10,779 
Acquisition related expenses (2) -   -   -   512 
Intangible assets amortization (3) 575   1,159   1,186   1,578 
Restructuring expenses (4) -   -   295   - 
Foreign exchange losses associated with ASC 842 (121)  (2,480)  (497)  (3,129)
Non-cash deferred tax income (102)  (250)  (323)  (467)
Non-GAAP net loss$(7,423) $(15,566) $(20,800) $(15,400)
         
GAAP diluted loss per share$(0.29) $(0.39) $(0.67) $(0.50)
         
Non-GAAP diluted loss per share$(0.15) $(0.31) $(0.42) $(0.31)
         
Weighted average number of shares       
         
Shares used in computing GAAP diluted net loss per share 49,554,383   49,756,990   49,720,453   49,707,782 
         
Shares used in computing Non-GAAP diluted net loss per share 49,554,383   49,756,990   49,720,453   49,707,782 
         
         
(1) Share-based compensation       
 Cost of product revenues$672  $606  $1,179  $1,055 
 Cost of service revenues$493   461   844   846 
 Research and development$1,601   1,268   2,952   2,457 
 Sales and marketing$1,944   1,491   3,307   3,300 
 General and administrative$1,840   1,655   3,513   3,121 
  $6,550  $5,481  $11,795  $10,779 
(2) Acquisition related expenses       
 General and administrative$-  $-  $-  $512 
  $-  $-  $-  $512 
(3) Intangible assets amortization       
 Cost of product revenues$263  $666  $526  $839 
 Cost of service revenues$160   160   320   320 
 Sales and marketing$152   333   340   419 
  $575  $1,159  $1,186  $1,578 
         
(4) Restructuring expenses       
 Cost of product revenues$-  $-  $89  $- 
 Research and development$-   -   20   - 
 Sales and marketing$-   -   186   - 
  $-  $-  $295  $- 
         


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,
  2023   2022   2023   2022 
 (Unaudited) (Unaudited)
Cash flows from operating activities:       
        
Net loss$(14,325) $(19,476) $(33,256) $(24,673)
Adjustments to reconcile net loss to net cash used in operating activities:       
Depreciation and amortization 3,654   3,322   7,527   5,902 
Fair value of warrants deducted from revenues 3,332   4,516   5,676   12,521 
Share-based compensation 6,550   5,481   11,795   10,779 
Amortization of premium and accretion of discount on marketable securities, net 202   484   525   1,012 
Realized gain (loss) on sale and redemption of marketable securities (43)  7   (3)  10 
Change in operating assets and liabilities:       
Trade receivables, net (11,248)  22,189   (16,856)  (9,004)
Other accounts receivables and prepaid expenses (1,682)  673   (766)  (1,791)
Inventory 4,963   (14,816)  1,940   (23,852)
Operating leases right-of-use assets and liabilities, net (555)  (2,449)  (1,012)  (2,857)
Deferred taxes -   (2,111)  -   (2,416)
Deposits and other long term assets (851)  (1,327)  (1,878)  (1,321)
Trade payables (225)  (4,476)  (1,702)  (11,920)
Employees and payroll accruals 1,752   (364)  2,489   (6,834)
Deferred revenues and advances from customers (2,199)  (2,643)  (3,237)  (4,114)
Other payables and accrued expenses (4,378)  3,081   (38)  3,440 
Accrued severance pay, net (161)  (103)  (62)  (292)
Other long - term liabilities (330)  413   (690)  729 
Loss from sale and disposal of property, plant and equipment -   41   -   41 
Net cash used in operating activities$(15,544) $(7,558) $(29,548) $(54,640)
        
Cash flows from investing activities:       
        
Purchase of property, plant and equipment$(1,791) $(1,985) $(5,069) $(9,447)
Investment in equity securities -   (354)  -   (354)
Acquisition of intangible assets -   (133)  -   (133)
Proceeds from sale of property, plant and equipment -   55   -   55 
Cash paid in connection with acquisition, net of cash acquired -   (14,654)  -   (14,654)
Proceeds from (investment in) short-term bank deposits, net (219,997)  160,090   54,935   (250,895)
Proceeds from sales and redemption of marketable securities 1,250   1,500   5,250   1,945 
Proceeds from maturities of marketable securities 7,680   5,500   11,252   17,422 
Investment in marketable securities (8,911)  (23,003)  (18,935)  (103,897)
Net cash provided by (used in) investing activities$(221,769) $127,016  $47,433  $(359,958)
        
        
Cash flows from financing activities:       
        
Exercise of employee stock options$53  $41  $95  $340 
Payments related to shares withheld for taxes (302)  (172)  (437)  (682)
Repurchase of ordinary shares (14,066)  -   (20,818)  - 
Net cash used in financing activities$(14,315) $(131) $(21,160) $(342)
        
        
        
Increase (decrease) in cash and cash equivalents$(251,628) $119,327  $(3,275) $(414,940)
Cash and cash equivalents at the beginning of the period 352,950   77,284   104,597   611,551 
Cash and cash equivalents at the end of the period$101,322  $196,611  $101,322  $196,611 
        
        
        
Non-cash investing and financing activities:       
        
Purchase of property and equipment on credit 46   1,823   219   1,823 
Inventory transferred to be used as property and equipment -   592   -   1,289 
Property, plant and equipment transferred to be used as inventory -   5   734   9 
Lease liabilities arising from obtaining right-of-use assets (550)  641   5,487   6,387 
        


KORNIT DIGITAL LTD.
AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(U.S. dollars in thousands, except share and per share data)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
   2023   2022   2023   2022 
  (Unaudited) (Unaudited)
         
GAAP Revenues $56,199  $58,136  $103,977  $141,429 
         
GAAP Net Loss  (14,325)  (19,476)  (33,256)  (24,673)
Taxes on income  430   (1,099)  624   (1,008)
Financial income  (7,018)  (4,324)  (12,422)  (6,123)
Share-based compensation  6,550   5,481   11,795   10,779 
Intangible assets amortization  575   790   1,186   1,209 
Acquisition related expenses  -   -   -   512 
Excess cost of product on acquired inventory -   369   -   369 
Restructuring expenses  -   -   295   - 
Non-GAAP Operating Loss  (13,788)  (18,259)  (31,778)  (18,935)
Depreciation  3,079   2,532   6,341   4,693 
Adjusted EBITDA $(10,709) $(15,727) $(25,437) $(14,242)
         

Contact Investor Relations

Jared Maymon

Global Head of Investor Relations

E-mail: Jared.Maymon@kornit.com