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    Kornit Digital Reports Third Quarter 2022 Results

    November 9, 2022
    • Third quarter revenues of $66.8 million, net of non-cash warrants impact of $5.6 million
    • Third quarter GAAP operating loss of $21.4 million; non-GAAP operating loss of $13.0 million, net of $5.6 million attributed to the non-cash impact of warrants
    • Consumables and Services revenues up on solid demand from key accounts, as well as robust contribution from Atlas MAX upgrades
    • Macro-related and other pressures continue; Long-term opportunities remain firmly intact
    • Continue to take appropriate steps to return to sustainable, profitable growth

    ROSH-HA`AYIN, Israel, Nov. 09, 2022 (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 results for the third quarter ended September 30, 2022.

    “Consumables and Services revenues grew nicely from the second quarter, and year-over-year, due to solid demand from our key strategic accounts as they gear up for their peak season, as well as the execution of a major fleet upgrade to Atlas MAX with a large strategic customer,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “And while we continue to see good receptivity and interest for our Atlas MAX family of products, macro-related headwinds and other pressures continue to impact customers’ systems purchasing decisions and their projected pace of growth.”

    Mr. Samuel concluded, “We are a resilient company, with the right strategy, product and service offerings, a pristine balance sheet, and a global team that is energized, dedicated, and focused to move the Company forward. We have and will continue to take the necessary steps to return
    to sustainable, profitable growth.”

    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 2022 and 2021, respectively:

     Third Quarter Warrants Impact
      
     Three Months Ended
     September 30,
      2022  2021
     Net of
    Warrants
    Impact
     Warrants
    Impact
     Net of
    Warrants
    Impact
     Warrants
    Impact
            
    Revenue$66.8M $5.6M $86.7M $7.9M
    Non-GAAP Gross Margin35.5% 5.0% 47.8% 4.3%
    Non-GAAP Operating Margin(19.4%) 9.3% 9.9% 7.5%
    Non-GAAP Net Margin(16.0%) 9.0% 13.3% 7.2%
    Non-GAAP Diluted Earnings (Loss) Per Share($0.21) $0.11 $0.24 $0.16
            

    “Our infrastructure was built to be profitable at a materially higher revenue run rate,” said Alon Rozner, Kornit Digital’s Chief Financial Officer. “As macro-related and other pressures continue to impact our business in the near-term, we are building upon the decisive expense reductions and other initiatives performed earlier this year to adjust the business to the near-term market environment.”

    Third Quarter 2022 Results of Operations

    • Total revenue for the third quarter of 2022 was $66.8 million, net of $5.6 million attributed to the non-cash impact of warrants, compared to $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants in the prior year period.
    • GAAP net loss for the third quarter of 2022 was $19.0 million, or ($0.38) per basic share, compared to net income of $3.9 million, or $0.08 per diluted share, for the third quarter of 2021.
    • Non-GAAP net loss for the third quarter of 2022 was $10.7 million, or ($0.21) per basic share, net of $0.11 per basic share attributed to the non-cash impact of warrants, compared to non-GAAP net income of $11.5 million, or $0.24 per diluted share, net of $0.16 per diluted share attributed to the non-cash impact of warrants, for the third quarter of 2021.

    Fourth Quarter 2022 Guidance

    For the fourth 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 -6% to -10% of revenue. Consistent with past practice, this guidance excludes the impact of the fair value of issued warrants in the quarter.

    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 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 1-877-300-8521 or 1-412-317-6026. The toll-free Israeli number is 1-80-9213284. The conference confirmation code is 10171559.

    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 10171559. The telephonic replay will be available approximately five hours after the completion of the live call until 11:59 pm ET on Wednesday, November 23, 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 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 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 duration and severity of current adverse macro-economic conditions, such as supply-chain delays, inflationary pressures, and rising interest rates, 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 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; whether court approval is received 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 by the Company in this press release and in the accompanying conference call to discuss the Company’s quarterly results 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. Please see the reconciliation table included below in order to compare our non-GAAP financial measures with the most directly comparable financial measures presented in accordance with GAAP.

    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)
      September 30,
     December 31,
       2022   2021 
      (Unaudited)  
    ASSETS    
    CURRENT ASSETS:    
    Cash and cash equivalents $66,693  $611,551 
    Short-term bank deposit $360,122   9,168 
    Marketable securities $20,608   28,116 
    Trade receivables, net $63,687   49,797 
    Inventory $92,223   63,017 
    Other accounts receivable and prepaid expenses$18,197   13,694 
    Total current assets  621,530   775,343 
         
    LONG-TERM ASSETS:    
    Marketable securities $242,348  $149,269 
    Deposits and other long-term assets  3,875   856 
    Severance pay fund  271   357 
    Deferred taxes  16,081   9,339 
    Property,plant and equipment, net  52,364   45,046 
    Operating lease right-of-use assets  28,057   25,155 
    Intangible assets, net  10,494   10,063 
    Goodwill  29,163   25,447 
    Total long-term assets  382,653   265,532 
         
    Total assets $1,004,183  $1,040,875 
         
    LIABILITIES AND SHAREHOLDERS' EQUITY   
    CURRENT LIABILITIES:    
    Trade payables $24,038  $46,448 
    Employees and payroll accruals  16,567   22,482 
    Deferred revenues and advances from customers 5,594   5,401 
    Operating lease liabilities  4,958   5,058 
    Other payables and accrued expenses  33,669   17,287 
    Total current liabilities  84,826   96,676 
         
    LONG-TERM LIABILITIES:    
    Accrued severance pay $1,177  $1,543 
    Operating lease liabilities  21,755   21,900 
    Other long-term liabilities  886   1,203 
    Total long-term liabilities  23,818   24,646 
         
    SHAREHOLDERS' EQUITY  895,539   919,553 
         
    Total liabilities and shareholders' equity $1,004,183  $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 Nine Months Ended
     September 30, September 30,
      2022   2021   2022   2021 
     (Unaudited) (Unaudited)
            
    Revenues       
    Products$52,627  $76,560  $172,707  $206,682 
    Services 14,164   10,109   35,513   27,776 
    Total revenues 66,791   86,669   208,220   234,458 
            
    Cost of revenues       
    Products 31,789   36,028   96,909   98,457 
    Services 13,569   10,109   36,160   26,477 
    Total cost of revenues 45,358   46,137   133,069   124,934 
            
    Gross profit 21,433   40,532   75,151   109,524 
            
    Operating expenses:       
    Research and development, net 14,684   11,493   42,775   30,736 
    Sales and marketing 17,502   15,837   54,917   40,716 
    General and administrative 10,616   9,283   30,632   24,972 
    Total operating expenses 42,802   36,613   128,324   96,424 
            
    Operating income (loss) (21,369)  3,919   (53,173)  13,100 
            
    Financial income, net 2,207   219   8,330   2,635 
    Income (loss) before taxes on income (tax benefits) (19,162)  4,138   (44,843)  15,735 
            
    Taxes on income (tax benefits) (130)  266   (1,138)  1,162 
    Net income (loss) (19,032)  3,872   (43,705)  14,573 
            
    Basic net income (loss) per share$(0.38) $0.08  $(0.88) $0.32 
            
    Weighted average number of shares       
    used in computing basic net       
    income (loss) per share 49,834,417   46,361,164   49,750,458   46,200,884 
            
            
    Diluted net income (loss) per share$(0.38) $0.08  $(0.88) $0.30 
            
    Weighted average number of shares       
    used in computing diluted       
    net income (loss) per share 49,834,417   48,116,716   49,750,458   47,846,077 
            


    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 Nine Months Ended
      September 30, September 30,
       2022   2021   2022   2021 
      (Unaudited) (Unaudited)
             
    Revenues$66,791  $86,669  $208,220  $234,458 
             
             
    GAAP cost of revenues$45,358  $46,137  $133,069  $124,934 
    Cost of product recorded for share-based compensation (1) (587)  (381)  (1,642)  (1,000)
    Cost of service recorded for share-based compensation (1) (422)  (251)  (1,268)  (750)
    Intangible assets amortization on cost of product (3) (744)  (111)  (1,799)  (161)
    Intangible assets amortization on cost of service (3) (160)  (160)  (480)  (480)
    Restructuring expenses (4) (396)  -   (396)  - 
    Non-GAAP cost of revenues$43,049  $45,234  $127,484  $122,543 
             
             
    GAAP gross profit$21,433  $40,532  $75,151  $109,524 
    Gross profit adjustments 2,309   903   5,585   2,391 
    Non-GAAP gross profit$23,742  $41,435  $80,736  $111,915 
             
             
    GAAP operating expenses$42,802  $36,613  $128,324  $96,424 
    Share-based compensation (1) (5,646)  (3,438)  (14,524)  (9,219)
    Acquisition related expenses (2) -   (194)  (512)  (194)
    Intangible assets amortization (3) (160)  (98)  (363)  (336)
    Restructuring expenses (4)  (281)  -   (281)  
    Non-GAAP operating expenses$36,715  $32,883  $112,644  $86,675 
             
             
    GAAP Financial income, net$2,207  $219  $8,330  $2,635 
    Foreign exchange losses associated with ASC 842 (279)  113   (3,408)  (302)
    Non-GAAP Financial income , net$1,928  $332  $4,922  $2,333 
             
             
    GAAP Taxes on income (tax benefit)$(130) $266  $(1,138) $1,162 
    Tax effect on to the above non-GAAP adjustments (45)  (2,119)  95   (1,954)
    Deferred tax benefit based on an Israeli statutory tax rate (202)  (774)  125   (1,360)
    Non-GAAP Taxes on income (tax benefit)$(377) $(2,627) $(918) $(2,152)
             
             
    GAAP net income (loss)$(19,032) $3,872  $(43,705) $14,573 
    Share-based compensation (1) 6,655   4,070   17,434   10,969 
    Acquisition related expenses (2) -   194   512   194 
    Intangible assets amortization (3) 1,064   369   2,642   977 
    Restructuring expenses (4) 677   -   677   - 
    Foreign exchange losses associated with ASC 842 (279)  113   (3,408)  (302)
    Tax effect of the above non-GAAP adjustments 45   2,119   (95)  1,954 
    Deferred tax benefit at the Israeli statutory tax rate 202   774   (125)  1,360 
    Non-GAAP net income (Loss)$(10,668) $11,511  $(26,068) $29,725 
             
    GAAP diluted earning (loss) per share$(0.38) $0.08  $(0.88) $0.30 
             
    Non-GAAP diluted earning (loss) per share$(0.21) $0.24  $(0.52) $0.62 
             
    Weighted average number of shares       
             
    Shares used in computing GAAP diluted net earning (loss) per share 49,834,417   48,116,716   49,750,458   47,846,077 
             
    Shares used in computing Non-GAAP diluted net earning (loss) per share 49,834,417   48,361,472   49,750,458   48,082,118 
             
             
    (1) Share-based compensation       
     Cost of product revenues$587  $381  $1,642  $1,000 
     Cost of service revenues 422   251   1,268   750 
     Research and development 1,515   739   3,972   1,810 
     Sales and marketing 2,368   1,318   5,668   3,651 
     General and administrative 1,763   1,381   4,884   3,758 
      $6,655  $4,070  $17,434  $10,969 
    (2) Acquisition related expenses       
     General and administrative$-  $194  $512  $194 
      $-  $194  $512  $194 
    (3) Intangible assets amortization       
     Cost of product revenues$744  $111  $1,799  $161 
     Cost of service revenues 160   160   480   480 
     Sales and marketing 160   98   363   336 
      $1,064  $369  $2,642  $977 
             
    (4) Restructuring expenses       
     Cost of product revenues$384  $-  $384  $- 
     Cost of service revenues 12   -   12   - 
     Research and development 64   -   64   - 
     Selling and marketing 188   -   188   - 
     General and administrative 29   -   29   - 
      $677  $-  $677  $- 
             


    KORNIT DIGITAL LTD.
    AND ITS SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (U.S. dollars in thousands)
     
     Three Months Ended Nine Months Ended
     September 30, September 30,
      2022   2021   2022   2021 
     (Unaudited) (Unaudited)
    Cash flows from operating activities:       
            
    Net income (loss)$(19,032) $3,872  $(43,705) $14,573 
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:         
    Depreciation and amortization 3,264   1,910   9,166   4,945 
    Fair value of warrants deducted from revenues 5,640   7,857   18,161   17,568 
    Share-based compensation 6,655   4,070   17,434   10,969 
    Amortization of premium and accretion of discount on marketable securities, net 435   (322)  1,447   (1,620)
    Realized gain on sale and redemption of marketable securities -   (32)  10   (32)
    Change in operating assets and liabilities:       
    Trade receivables, net (3,214)  12,798   (12,218)  1,713 
    Other accounts receivables and prepaid expenses (4,343)  (340)  (6,134)  (1,853)
    Inventory (2,715)  (3,239)  (26,567)  (3,765)
    Operating leases right-of-use assets and liabilities, net (290)  122   (3,147)  (397)
    Deferred taxes (577)  (2,111)  (2,993)  (1,866)
    Deposits and other long term assets (1,071)  55   (2,392)  (76)
    Trade payables (5,960)  17   (17,880)  (2,400)
    Operating lease liabilities       
    Employees and payroll accruals 1,382   6,774   (5,452)  8,878 
    Deferred revenues and advances from customers 2,581   (3,949)  (1,533)  (15,350)
    Other payables and accrued expenses 12,623   4,803   16,063   10,479 
    Accrued severance pay, net 12   59   (280)  108 
    Other long - term liabilities (1,046)  456   (317)  1,256 
    Loss from sale and disposal of property, plant and Equipment 526   -   567   - 
    Net cash provided by (used in) operating activities (5,130)  32,800   (59,770)  43,130 
            
    Cash flows from investing activities:       
            
    Purchase of property, plant and equipment (2,819)  (3,867)  (12,266)  (9,422)
    Investment in equity securities (273)  -   (627)  - 
    Acquisition of intangible assets (102)  -   (235)  - 
    Proceeds from sale of property, plant and equipment 16   -   71   - 
    Cash paid in connection with acquisition, net of cash acquired -   (14,991)  (14,654)  (14,991)
    Investment in bank deposits (100,059)  (6,167)  (350,954)  (16,299)
    Proceeds from sales and redemption of marketable securities -   1,000   1,945   1,000 
    Proceeds from maturity of marketable securities 3,976   7,254   21,398   9,304 
    Investment in marketable securities (25,468)  (13,800)  (129,365)  (44,310)
    Net cash provided by (used in) investing activities (124,729)  (30,571)  (484,687)  (74,718)
            
            
    Cash flows from financing activities:       
            
    Exercise of employee stock options 120   2,387   460   4,141 
    Payments related to shares withheld for taxes (179)  (516)  (861)  (1,662)
    Net cash provided by (used in) financing activities (59)  1,871   (401)  2,479 
            
            
            
    Increase (decrease) in cash and cash equivalents (129,918)  4,100   (544,858)  (29,109)
    Cash and cash equivalents at the beginning of the period 196,611   92,568   611,551   125,777 
    Cash and cash equivalents at the end of the period$66,693  $96,668  $66,693  $96,668 
            
            
            
    Non-cash investing and financing activities:       
            
    Purchase of property and equipment on credit 1,033   1,907   1,033   1,907 
    Inventory transferred to be used as property and equipment 255   51   1,544   931 
    Property, plant and equipment transferred to be used as inventory 183   -   192   - 
    Lease liabilities arising from obtaining right-of-use assets 790   1,033   7,177   1,517 

    Contact Investor Relations

     

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