Kornit Digital Reports Third Quarter 2015 Results
Highlights
- Third quarter 2015 sales of
$22.2 million , an increase of 20.0% over the prior year - Non-GAAP operating margin of 13.5%, or
$3 million ; GAAP operating margin of 10%, or$2.2 million - Third quarter non-GAAP net income of
$2.9 million , or$0.09 per diluted share; GAAP net income of$2.1 million or$0.07 per diluted share. - Key customer places fourth order for Allegro R2R system
Sales for the third quarter of 2015 increased 20.0% year-over-year to
Non-GAAP net income in the third quarter of 2015 was
Seligsohn continued, "We are pleased with the growth in our business through the first nine-months of 29% vs. the same period last year, although third quarter growth came in at the lower end of our guided range due to the timing of system volume. As we have seen in the past, quarter-to-quarter growth is not linear at this stage in our evolution. Looking to the balance of the year, we anticipate revenue from our recently introduced high throughput systems and volume from several new customers to provide a tailwind as we close out 2015."
Results of Operations
In the third quarter of 2015, Kornit reported sales of
Non-GAAP gross margin as a percentage of sales in the third quarter of 2015 was 48.3%, compared with 50.6% in the prior-year period. Lower gross margin compared to the prior year resulted from two large customer orders of multiple high-end systems in the third quarter of 2014, which provided a favorable margin rate during the period. Excluding the impact of these orders, our gross margin run rate continued to expand as a result of the ongoing mix shift to higher throughput systems, incremental ink sales, and a stronger contribution from services. On a GAAP basis, gross margin was
Non-GAAP operating expenses in the third quarter increased to
Non-GAAP research and development expenses were
Non-GAAP operating profit in the third quarter declined to
Non-GAAP net income for the third quarter of 2015 were
On a GAAP basis, the Company reported net earnings of
2015 Third Quarter Guidance
The Company will discuss the details of its guidance live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com.
Conference Call Information
Kornit will host a conference call today at
To listen to a telephonic replay of the conference call, dial toll-free 1-877-870-5176 or +1-858-384-5517 (international) and enter confirmation code 8335584. The telephonic replay will be available beginning at
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: development of the market for digital textile printing, availability of alternative ink, competition, sales concentration, changes to our relationships with suppliers, our success in developing, introducing and selling new or improved products, our success in marketing, our success in effectively increasing our field presence and those factors referred to under "Risk Factors" in the company's final prospectus filed with the
Non-GAAP Discussion Disclosure
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude acquisition related expenses, share-based compensation expenses, amortization of acquired intangible assets and compensation related to the IPO. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our 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 our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our 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 our 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 develops, designs and markets innovative digital printing solutions for the global printed textile industry. Kornit's solution includes its proprietary digital printing systems, ink and other consumables, associated software and value added services. Kornit's vision is to revolutionize the textile industry by facilitating the transition from analog processes that have not evolved for decades to digital methods of production that address contemporary supply, demand and environmental dynamics. Kornit is a global company headquartered in Rosh-Ha`Ayin,
| KORNIT DIGITAL LTD. | ||||
| AND ITS SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (U.S. dollars in thousands, except share and per share data) | ||||
| Nine Months Ended | Three Months Ended | |||
| September 30, | September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| (Unaudited) | (Unaudited) | |||
| Revenues | $ 61,077 | $ 47,495 | $ 22,201 | $ 18,494 |
| Cost of revenues | 32,547 | 26,855 | 11,624 | 9,196 |
| Gross profit | 28,530 | 20,640 | 10,577 | 9,298 |
| Operating expenses: | ||||
| Research and development | 8,573 | 6,851 | 3,067 | 2,263 |
| Selling and marketing | 9,175 | 7,569 | 3,264 | 2,195 |
| General and administrative | 7,213 | 3,716 | 2,028 | 1,393 |
| Total operating expenses | 24,961 | 18,136 | 8,359 | 5,851 |
| Operating income | 3,569 | 2,504 | 2,218 | 3,447 |
| Financial income (expenses), net | (170) | (199) | 279 | (105) |
| Income before taxes on income | 3,399 | 2,305 | 2,497 | 3,342 |
| Taxes on income | 739 | 476 | 354 | 173 |
| Net income | 2,660 | 1,829 | 2,143 | 3,169 |
| Basic net income per share | $ 0.12 | $ 0.20 | $ 0.07 | $ 0.35 |
| Weighted average number of shares used in computing basic net income per share | 22,814,312 | 8,968,343 | 29,779,017 | 8,968,343 |
| Diluted net income per share | $ 0.11 | $ 0.18 | $ 0.07 | $ 0.30 |
| Weighted average number of shares used in computing diluted net income per share | 24,734,519 | 10,139,704 | 31,743,307 | 10,663,649 |
| KORNIT DIGITAL LTD. | ||||
| AND ITS SUBSIDIARIES | ||||
| RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF INCOME | ||||
| (U.S. dollars in thousands, except per share data) | ||||
| Nine Months Ended | Three Months Ended | |||
| September 30, | September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| (Unaudited) | (Unaudited) | |||
| GAAP net income as reported | $ 2,660 | $ 1,829 | $ 2,143 | $ 3,169 |
| Non-GAAP adjustments | ||||
| Expenses recorded for share-based compensation | ||||
| Cost of revenues | 197 | 59 | 85 | 20 |
| Research and development | 209 | 43 | 85 | 29 |
| Selling and marketing | 338 | 122 | 174 | 41 |
| General and administrative | 882 | 289 | 307 | 159 |
| Acquisition related expenses | ||||
| Research and development | 188 | -- | 62 | -- |
| General and administrative | 550 | -- | -- | -- |
| Intangible assets amortization | ||||
| Cost of revenues | 169 | 94 | 56 | 32 |
| Compensation in relation to the IPO | ||||
| Separation payment to shareholder | 750 | -- | -- | -- |
| IPO bonuses to employees | 270 | -- | -- | -- |
| Total adjustments | 3,553 | 607 | 769 | 281 |
| Non-GAAP net income | $ 6,213 | $ 2,436 | $ 2,912 | $ 3,450 |
| Non- GAAP diluted net income per share | $ 0.25 | $ 0.23 | $ 0.09 | $ 0.31 |
| Weighted average number of shares used in computing diluted net income per share | 25,111,776 | 10,431,433 | 32,096,739 | 11,125,629 |
| KORNIT DIGITAL LTD. | ||||
| AND ITS SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (U.S. dollars in thousands) | ||||
| September 30, | December 31, | |||
| 2015 | 2014 | |||
| (Unaudited) | ||||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ 37,377 | $ 4,993 | ||
| Short term bank deposits | 11,000 | -- | ||
| Available for sale marketable securities | 3,543 | -- | ||
| Trade receivables, net | 17,319 | 9,770 | ||
| Other accounts receivables and prepaid expenses | 3,473 | 1,775 | ||
| Inventory | 14,729 | 11,986 | ||
| Total current assets | 87,441 | 28,524 | ||
| LONG-TERM ASSETS: | ||||
| Available for sale long-term marketable securities | 22,305 | -- | ||
| Severance pay fund | 1,121 | 1,187 | ||
| Property and equipment, net | 4,097 | 3,660 | ||
| Intangible assets, net | 1,079 | 245 | ||
| Deferred issuance costs | -- | 849 | ||
| Other assets | 292 | 249 | ||
| Total long-term assets | 28,894 | 6,190 | ||
| Total assets | $ 116,335 | $ 34,714 | ||
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Trade payables | $ 9,028 | $ 5,901 | ||
| Employees and payroll accruals | 4,442 | 2,968 | ||
| Deferred revenues and advances from customers | 552 | 1,863 | ||
| Other payables and accrued expenses | 3,116 | 2,606 | ||
| Total current liabilities | 17,138 | 13,338 | ||
| LONG-TERM LIABILITIES: | ||||
| Accrued severance pay | 1,829 | 1,903 | ||
| Deferred taxes | 153 | 122 | ||
| Total long-term liabilities | 1,982 | 2,025 | ||
| SHAREHOLDERS' EQUITY | 97,215 | 19,351 | ||
| Total liabilities and shareholders' equity | $ 116,335 | $ 34,714 | ||
| 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, | |||
| 2015 | 2014 | 2015 | 2014 | |
| (Unaudited) | (Unaudited) | |||
| Cash flows from operating activities: | ||||
| Net income | $ 2,660 | $ 1,829 | $ 2,143 | $ 3,169 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
| Depreciation and amortization | 1,279 | 1,004 | 613 | 360 |
| Share-based compensation | 1,626 | 513 | 651 | 249 |
| Increase in accrued interest and amortization of premium on marketable securities | (43) | -- | (43) | -- |
| Increase (decrease) in accrued severance pay, net | (8) | 289 | (50) | 68 |
| Decrease (increase) in trade receivables | (7,726) | (1,541) | (6,235) | 57 |
| Decrease (increase) in other receivables and prepaid expenses | (1,556) | 55 | (304) | 645 |
| Increase in inventories | (3,361) | (1,961) | (1,802) | (426) |
| Changes in deferred taxes, net | (76) | -- | (18) | -- |
| Increase (decrease) in other long term assets | (49) | 4 | 51 | 11 |
| Increase (decrease) in trade payables | 3,101 | (2,029) | (23) | (1,606) |
| Increase in employees and payroll accruals | 1,486 | 302 | 799 | 26 |
| Increase (decrease) in deferred revenues | (1,281) | 374 | (1,006) | (2,796) |
| Increase (decrease) in other payables and accrued expenses | 729 | (720) | 391 | 266 |
| Interest on short-term bank deposit | (30) | (1) | (30) | (1) |
| Gain from sale of property and equipments | -- | (5) | -- | -- |
| Foreign currency translation loss on inter company balances with foreign subsidiaries | 409 | 174 | 6 | 124 |
| Net cash (used in) provided by operating activities | (2,840) | (1,713) | (4,857) | 146 |
| Cash flows from investing activities: | ||||
| Purchase of property and equipment | (1,052) | (1,407) | (279) | (515) |
| Cash paid in connection with acquisition | (1,000) | -- | -- | -- |
| Proceeds from (investment in) bank deposits, net | (11,000) | 2,094 | (11,000) | 1,076 |
| Proceeds from redemption or sale of marketable securities | 1,500 | -- | 1,500 | -- |
| Proceeds from sale of property and equipment | 8 | 6 | 8 | -- |
| Purchase of marketable securities | (27,428) | -- | (27,428) | -- |
| Net cash provided by (used in) investing activities | (38,972) | 693 | (37,199) | 561 |
| Cash flows from financing activities: | ||||
| Payment of issuance costs | -- | -- | -- | -- |
| Proceeds from initial public offering, net (Payment of issuance costs) | 74,180 | (6) | (1,052) | (6) |
| Exercise of employee stock options | 60 | 6 | 60 | -- |
| Net cash provided by (used in) financing activities | 74,240 | -- | (992) | (6) |
| Foreign currency translation adjustments on cash and cash equivalents | (44) | (36) | 1 | (31) |
| Increase (decrease) in cash and cash equivalents | 32,428 | (1,020) | (43,048) | 701 |
| Cash and cash equivalents at the beginning of the period | 4,993 | 5,329 | 80,424 | 3,603 |
| Cash and cash equivalents at the end of the period | 37,377 | 4,273 | 37,377 | 4,273 |
| (a) Non-cash investing activities: |
||||
| Non-cash investing activities: | ||||
| Purchase of property and equipment on credit | 145 | 52 | 145 | 52 |
| Non-cash issuance expenses | -- | 56 | -- | 56 |
| Inventory transferred to be used as property and equipment | 592 | 69 | 306 | 69 |
| Property and equipment transferred to be used as inventory | 106 | -- | -- | -- |
CONTACT: Investor Contact:
Michael Callahan , ICR
(203) 682-8311
Michael.Callahan@icrinc.com