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 2022
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): ☐
CONTENTS
Results of Operations and Financial Condition- Third Quarter of 2022
On November 9, 2022, Kornit Digital Ltd. (“Kornit”) issued a press release entitled “Kornit Digital Reports Second Quarter 2022 Results,” in which Kornit reported its results of operations for the quarter and nine months ended September 30, 2022. A copy of that press release is furnished as Exhibit 99.1 hereto.
Kornit is holding a conference call on November 9, 2022 to discuss its quarterly results for the quarter ended September30, 2022 and will make available to its investors a slide presentation to provide additional information regarding its business and its financial results. That slide presentation is attached as Exhibit 99.2 to this Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) and is incorporated herein by reference.
Incorporation by Reference
The U.S. GAAP financial information contained in the (i) consolidated balance sheets, (ii) consolidated statements of operations and (iii) consolidated statements of cash flows included in the press release attached as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K is hereby incorporated by reference into Kornit’s Registration Statements on Form F-3 (File No. 333-248784) and Form S-8 (File No.’s 333-203970, 333-214015, 333-217039, 333-223794, 333-230567, 333-237346, 333-254749, and 333-263975).
1
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 9, 2022 | By: | /s/ Alon Rozner |
| Name: | Alon Rozner | |
| Title: | Chief Financial Officer | |
2
Exhibit Index
3
Exhibit 99.1
Investor Contact:
Andrew G. Backman
Global Head of Investor Relations
andrew.backman@kornit.com
Kornit Digital Reports Third Quarter 2022 Results
| ● | 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 – November 9, 2022 – 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 Margin | 35.5 | % | 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.
2
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.
3
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 | ||||
4
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 | ||||||||||||
5
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 earnings (loss) per share | $ | (0.38 | ) | $ | 0.08 | $ | (0.88 | ) | $ | 0.30 | ||||||
| Non-GAAP diluted earnings (loss) per share | $ | (0.21 | ) | $ | 0.24 | $ | (0.52 | ) | $ | 0.62 | ||||||
| Weighted average number of shares | ||||||||||||||||
| Shares used in computing GAAP diluted net earnings (loss) per share | 49,834,417 | 48,116,716 | 49,750,458 | 47,846,077 | ||||||||||||
| Shares used in computing Non-GAAP diluted net earnings (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 | $ | - | |||||||||
6
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 | ||||||||||||
7
Exhibit 99.2
© 2022 Kornit Digital. All rights reserved. KORNIT DIGITAL (NASDAQ : KRNT) 1 Third Quarter 2022 Earnings Conference Call Supporting Slides November 9, 2022
© 2022 Kornit Digital. All rights reserved. ON T O D A Y ’S CALL Ronen Samuel CEO Lauri Hanover Incoming CFO Amir Shaked Mandel EVP Corp Dev Andrew Backman Global Head of IR
SAFE HARBOR © 2022 Kornit Digital. All rights reserved. 3 © 2022 Kornit Digital. All rights reserved. This presentation contains forward - looking statements within the meaning of U . S . securities laws . All statements other than statements of historical fact contained in this presentation are forward - looking statements . In some cases, you can identify forward - looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology . These statements reflect our current views with respect to future events and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward - looking statements . Although we believe that the expectations reflected in the forward - looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance or events or circumstances described in the presentation will occur or be achieved . You should read the Company’s most recent annual report on Form 20 - F, filed with the U . S . Securities and Exchange Commission, or SEC, on March 30 , 2022 , including the Risk Factors set forth therein . Except as required by law, we undertake no obligation to update or revise any of the forward - looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation . In addition to U . S . GAAP financials, this presentation includes certain non - GAAP financial measures . These non - GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U . S . GAAP . Please see the reconciliation table that appears among the financial tables in our earnings release being issued today, which earnings release is attached as Exhibit 99 . 1 to our report of foreign private issuer on Form 6 - K being furnished to the SEC today, which reconciliation table is incorporated by reference in this presentation . This presentation contains statistical data that we obtained from industry publications and reports generated by third parties . Although we believe that the publications and reports are reliable, we have not independently verified this statistical data . Kornit, Kornit Digital, the K logo, and NeoPigment are trademarks of Kornit Digital Ltd . All other trademarks are the property of their respective owners and are used for reference purposes only . Such use should not be construed as an endorsement of our products or services .
BUSINESS HIGHLIGHTS RONEN SAMUEL Chief Executive Officer © 2022 Kornit Digital. All rights reserved. 4 © 2022 Kornit Digital. All rights reserved.
© 2022 Kornit Digital. All rights reserved. 5 Third Quarter Results • Total revenues $66.8 million, net of $5.6 million of non - cash warrants impact • Exceeded revenue guidance range provided in August, which assumed zero impact from the fair value of issued warrants • Consumables revenues grew nicely from the second quarter and year - over - year; Solid demand from larger strategic accounts as they gear up for peak season • Services revenues increased from the second quarter and year - over - year due to the execution of a major fleet upgrade to Atlas MAX with a large strategic customer • Continue to receive excellent feedback for our MAX family of products from prospective customers and strategic accounts
Current Operating Environment © 2022 Kornit Digital. All rights reserved. 6 © 2022 Kornit Digital. All rights reserved. • Macro - related headwinds (inflation, general consumer sentiment, rising interest rates) continue to impact customers and prospects; • Impacting their projected pace of growth in coming quarters • Longer sale cycle • Increased demand for robust financing options • Overall slowdown in new systems’ orders • APAC: • Facing impacts of strong U.S. dollar, especially in Japan and Korea • Headwinds in China due to zero - COVID policy
Long - term Opportunities Remain Firmly Intact • Continue to engage with large fashion brands, retailers, major manufacturers, e - commerce and digital platforms • Focused on improving their operations, lowering inventory levels, and transforming supply chains • Continue to hear need for shorter runs • Shifting production volumes from mass off - shore production to nearshore, on - demand sustainable production • Industry gradually transforming from analog to digital • Receiving good interest in our Apollo • Most comprehensive, digital single step solution with MAX quality • Lowest Total Cost of Ownership • Targeting screen print mass production markets • Perfect solution for near shore, mid - run production © 2022 Kornit Digital. All rights reserved. 7 © 2022 Kornit Digital. All rights reserved.
Long - term Opportunities Remain Firmly Intact • Continue to see interest in recent new product introductions • Pipeline of potential business with existing and new accounts globally • However: • Expect systems revenues to remain challenging in next several quarters • Balanced by healthy and growing consumables and service revenues • Consumables revenues seasonally lower on first half of each year and traditionally build heading into customers’ peak seasons • Continue to work closely with our global strategic account on their future global expansion plans • Shipped delayed systems during the third quarter • Anticipate systems revenues in 2023 to build up more linearly than 2022 • Starting likely in the second quarter of 2023 and heading into their peak season © 2022 Kornit Digital. All rights reserved. 8 © 2022 Kornit Digital. All rights reserved.
Adjusting to Current Market Environment © 2022 Kornit Digital. All rights reserved. 9 © 2022 Kornit Digital. All rights reserved. • Over past several years, built business and cost structure to be profitable at materially higher revenue run rate • In July, took decisive actions in operations, including a reduction in workforce • Taking additional steps to reduce company’s cost structure • Re - allocating resources to emphasize areas with a higher ROI • Further adjusting go - to - market initiatives • Focus on returning to sustainable, profitable growth We are a resilient company, with a proven business model, pristine balance sheet and remain committed to our long - term vision and strategy
© 2022 Kornit Digital. All rights reserved. © 2022 Kornit Digital. All rights reserved.
FINANCIAL HIGHLIGHTS LAURI HANOVER Incoming Chief Financial Officer © 2022 Kornit Digital. All rights reserved. 11 © 2022 Kornit Digital. All rights reserved.
Third Quarter Revenues • $66.8 million, net of $5.6 million of non - cash warrant impact related to a global strategic account • Consumables: Solid demand from key strategic accounts as they head into the peak season • Services: Grew sequentially and year - over - year due in part to a large north - American customer who is completing upgrading entire fleet of Atlas to Atlas MAX • Systems: Rose sequentially and included delayed shipment of systems to our global strategic account • Top 10 largest accounts represented approximately 60% of total revenues © 2022 Kornit Digital. All rights reserved. 12 © 2022 Kornit Digital. All rights reserved.
Third Quarter Gross Margins © 2022 Kornit Digital. All rights reserved. 13 © 2022 Kornit Digital. All rights reserved. • Non - GAAP Gross Margins, net of a 5 - point warrants impact, was 35.5% (compared to 47.8% in Q3’21) • Gross margins were negatively impacted year - over - year due to: • Significantly lower systems revenues on a fixed cost infrastructure • Inventory write - offs for older generation systems • Stronger U.S. dollar in the EMEA region • Anticipate gross margins in Q4’22 to sequentially increase • Driven by higher proportion of consumables in the sales mix
Third Quarter Operating Expenses © 2022 Kornit Digital. All rights reserved. 14 © 2022 Kornit Digital. All rights reserved. • Non - GAAP operating expenses were $36.7 million, down ~10% from $40.7 million in Q2’22 • Sequential decline driven by reduced marketing activities and some benefit from cost reduction and other initiatives • Expect Q4’22 operating expenses to be lower as we further realize improvements to the cost structure, offset by expenses associated with Printing United Non - GAAP Operating Expenses (% of Revenues) Q3 2022 Q2 2022 Q3 2021 Research & Development 19.6% 22.0% 12.4% Sales & Marketing 22.2% 33.2% 16.6% General & Administrative 13.2% 14.8% 8.9% Total Operating Expenses 55.0% 70.0% 37.9%
Q3 2022 Q3 2021 Non - GAAP Operating Income (Loss) ($13.0) $8.6 Non - GAAP Net Income (Loss) ($10.7) $11.5 Non - GAAP Diluted EPS ($0.21) $0.24 GAAP Net Income (Loss) ($19.0) $3.9 GAAP Diluted (Basic) EPS ($0.38) $0.08 © 2022 Kornit Digital. All rights reserved. 15 © 2022 Kornit Digital. All rights reserved. $ in millions, except per share amounts Quarterly P&L KPI
Balance Sheet and Cash Flow © 2022 Kornit Digital. All rights reserved. 16 © 2022 Kornit Digital. All rights reserved. • Q3 cash used in operating activities were approximately $5.1 million • Receivables increased approximately $3.2 million from the second quarter • Inventories increased approximately $2.7 million from the second quarter • Trade payables decreased approximately $6.0 million from the second quarter • Cash balance, including bank deposits and marketable securities, at quarter end was approximately $689.8 million Q3 2022 Q2 2022 Q3 2021 Cash, Deposits & Marketable Securities $689.8 $704.6 $457.5 Accounts Receivable $63.7 $60.5 $49.9 Inventory $92.2 $89.6 $55.3 Trade Payable $24.0 $30.8 $30.6 Net Working Capital $536.7 $566.6 $388.9 $ in millions
$75 Million Share Repurchase Authorization © 2022 Kornit Digital. All rights reserved. 17 © 2022 Kornit Digital. All rights reserved. • In August, the Board of Directors approved the repurchase of up to $75 million of the Company’s ordinary shares • Share repurchase program is subject to certain requirements under the Israeli Companies Law and the receipt of Israeli court approval • We have submitted our application to the court • Court approval process could take several months • Continue to believe using a portion of the cash on our extremely strong balance sheet to repurchase shares is in the best interests of the Company and our shareholders • Will not impact our ability to execute on our growth initiatives
Q4 2022 Guidance Consistent with past practice, guidance excludes the impact from the fair value of issued warrants in the quarter with our global strategic account Revenues • Expect fourth quarter revenues to be in the range of $66 million to $70 million • Consistent with outlook previously provided on third quarter earnings call in August • Expect higher proportion of consumables in the sales mix for the fourth quarter Operating Margins • Expect fourth quarter Non - GAAP operating margins in the range of - 6% to - 10% of revenue © 2022 Kornit Digital. All rights reserved. 18 © 2022 Kornit Digital. All rights reserved.
Q3 2022 Warrants Impact Summary © 2022 Kornit Digital. All rights reserved. 19 © 2022 Kornit Digital. All rights reserved.
THANK YOU © 2022 Kornit Digital. All rights reserved. 20 © 2022 Kornit Digital. All rights reserved.