UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2015

 

Commission File Number 001-36903

 

KORNIT DIGITAL LTD.

(Translation of Registrant’s name into English)

 

12 Ha’Amal Street

Park Afek

Rosh Ha’Ayin 4824096 Israel

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒        Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

 

 

 

EXPLANATORY NOTE

 

On November 3, 2015, Kornit Digital Ltd. issued a press release entitled “Kornit Digital Reports Third Quarter 2015 Results.” A copy of this press release is furnished as Exhibit 99.1 hereto.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

KORNIT DIGITAL LTD.

     
Date: November 4, 2015 By: /s/ Guy Avidan
  Name: Guy Avidan
  Title: Chief Financial Officer

  

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Exhibit Index

 

Exhibit No.   Description
     
99.1   Press release dated November 3, 2015 entitled “Kornit Digital Reports Third Quarter 2015 Results”

  

 

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Exhibit 99.1

 

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

 

ROSH-HA'AYIN, Israel, Nov. 3, 2015 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ:KRNT), a leading provider of digital printing solutions for the global printed textile industry, today reported results for the third quarter ended September 30, 2015.

 

Sales for the third quarter of 2015 increased 20.0% year-over-year to $22.2 million, as a result of incremental revenue associated with the new Allegro roll-to-roll system, combined with continued growth in direct-to-garment (DTG) systems and ink.

 

Non-GAAP net income in the third quarter of 2015 was $2.9 million, or $0.09 per diluted share, compared to prior-year net income of $3.5 million. On a GAAP basis, the Company reported a net income of $2.1 million, or $0.07 per diluted share, compared to a net income of $3.2 million, in the third quarter of 2014.

 

Gabi Seligsohn, Kornit Digital's Chief Executive Officer commented, "During the third quarter, we continued to deepen our customer relationships and generate strong interest for our disruptive solutions, particularly of our recently introduced high throughput systems. To that point, throughout the quarter we hosted multiple demonstrations for our newly introduced Allegro and pre-beta Vulcan systems, which generated strong customer interest. For the Allegro, several customer interactions have led to system orders which will be installed during the fourth quarter. For Vulcan, we successfully executed on multiple pre-beta customer demos, all of which have led to firm demand for systems by those customers."

 

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 $22.2 million, an increase of 20.0% compared with the prior-year level of $18.5 million. Higher sales were the result of contributions from all product categories including systems, ink and consumables, and services.

 

 

 

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 $10.6 million, or 47.6% of sales.

 

Non-GAAP operating expenses in the third quarter increased to $7.7 million, compared to $5.6 million in the prior year. The increase in total operating expenses is consistent with the previously stated growth strategy, as the Company continues to execute to its global infrastructure build out. As a percent of sales, non-GAAP operating expenses for the third quarter were 34.8% of sales, an increase from 30.4% of sales in the prior year. On a GAAP basis, operating expenses were $8.4 million, or 37.7% during the quarter.

 

Non-GAAP research and development expenses were $2.9 million, compared to $2.2 million in the prior-year. On a GAAP basis, research and development expenses were $3.1 million, or 13.8% of sales during the quarter.

 

Non-GAAP operating profit in the third quarter declined to $3.0 million, compared to $3.7 million in the prior year. As a percent of sales, non-GAAP operating profit for the third quarter was 13.5% of sales, a decrease from 20.2% of sales in the prior year.

 

Non-GAAP net income for the third quarter of 2015 were $2.9 million, or $0.09 per diluted share, compared with Non-GAAP net income of $3.5 million, or $0.31 in the prior year period.

 

On a GAAP basis, the Company reported net earnings of $2.1 million, or $0.07 per diluted share, compared to a net income of $3.2 million, or $0.3 per diluted share in the third quarter of 2014.

 

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 5:00 p.m. ET, or 12:00 a.m. Israel time, to discuss the results, followed by a question and answer session for 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 1-888-427-9411 or +1-719-325-2458. The toll-free Israeli number is 1-809-24 5906. The confirmation code is 8335584.

 

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 8:00 p.m. ET on Tuesday, November 3, 2015, and will last through 11:59 p.m. ET November 17, 2015. The call will also be available for replay via the webcast link on Kornit's Investor Relations website.

 

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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 U.S. Securities and Exchange Commission. Any forward-looking statements in this press release are made as of the date hereof, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

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.

 

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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, Israel, with U.S. offices in Mequon, Wisconsin and additional sales, support and marketing offices in Germany and Hong Kong.

 

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 

 

 

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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 

 

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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 

 

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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

 

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