Kornit Digital Reports Second Quarter 2023 Results
Kornit Digital Ltd. (Nasdaq: KRNT) reported second quarter revenues of $56.2 million, in line with previous guidance. The company issued third-annual Impact Report highlighting progress on its long-term impact strategy and reaffirming commitment to a more sustainable fashion and textiles industry. The successful ITMA tradeshow in Milan secured high-quality leads and provided a healthy pipeline for 2024 and beyond. Despite lower systems revenues, Kornit's double-digit year-over-year impressions and consumables growth across all regions are driving steady improvement in capacity utilization and strong revenue growth. The company expects revenues for the third quarter of 2023 to be in the range of $58 million to $62 million, with an adjusted EBITDA margin between -6% to -13% of revenue.
08/09/2023 - 06:59 AM
Second quarter revenues of $56.2 million , in line with previous guidance Second quarter GAAP net loss of $14.3 million ; non-GAAP net loss of $7.4 million Double-digit year-over-year impressions and consumables growth across all regions Successful ITMA tradeshow in Milan, Italy, securing high-quality leads and providing a healthy pipeline for 2024 and beyond Company issues third-annual Impact Report highlighting progress on its long-term impact strategy and reaffirming commitment to a more sustainable fashion and textiles industry ROSH-HA`AYIN, Israel, Aug. 09, 2023 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (“Kornit” or “the Company”) (Nasdaq: KRNT), a worldwide market leader in sustainable, on-demand, digital fashionX and textile production technologies, reported today its results for the second quarter ended June 30, 2023.
“During the quarter, impressions grew at a double-digit pace year-over-year for the second consecutive quarter, driving a steady improvement in capacity utilization and strong double-digit consumables revenue growth across our customer segments and throughout all our operating regions,” said Ronen Samuel, Kornit’s Chief Executive Officer. “Services revenues again demonstrated exceptional growth, as it has during the past year, with customers upgrading to our new MAX technology. While system sales volumes are expected to remain modest in the near-term due to continued softness in capital equipment spending and lengthening sales cycles, we have taken actions through various initiatives to diversify our customer base, increase operating efficiencies, and build a healthy pipeline for 2024 and beyond.”
Mr. Samuel concluded, “We were pleased with our successful participation in the recent ITMA trade show in Milan, where exceptional customer interest in our innovative solutions generated numerous high-quality leads and sales orders. We remain confident that our strategy, product roadmap, and solid balance sheet position us well to generate meaningful, long-term, profitable growth and continue to expect to approach break-even on an adjusted EBITDA basis for the fourth quarter of this year, and aim to deliver profitable growth for the full year 2024.”
Second Quarter 2023 Results of Operations
Total revenue for the second quarter of 2023 was $56.2 million compared with $58.1 million in the prior year period, due primarily to lower systems revenues. GAAP gross profit margin for the second quarter of 2023 was 33.3% compared with 35.3% in the prior year period. On a non-GAAP basis, gross profit margin was 36.1% compared with 38.6% in the prior year period. GAAP operating expenses for the second quarter of 2023 decreased by 12.8% to $39.6 million compared with the prior year period. On a non-GAAP basis, operating expenses decreased by 16.3% to $34.1 million compared with the prior year period. GAAP net loss for the second quarter of 2023 was $14.3 million , or ($0.29) per basic share, compared with net loss of $19.5 million , or ($0.39) per basic share, for the second quarter of 2022. Non-GAAP net loss for the second quarter of 2023 was $7.4 million , or ($0.15) per basic share, compared with non-GAAP net loss of $15.6 million , or ($0.31) per basic share, for the second quarter of 2022. Adjusted EBITDA loss for the second quarter of 2023 was $10.7 million compared with adjusted EBITDA loss of $15.7 million for the second quarter of 2022. Adjusted EBITDA margin for the second quarter of 2023 was -19.1% compared with -27.1% for the second quarter of 2022. Third Quarter 2023 Guidance
For the third quarter of 2023, the Company expects revenues to be in the range of $58 million to $62 million and adjusted EBITDA margin between -6% to -13% of revenue. The guidance for revenue and adjusted EBITDA margin includes the impact of the non-cash expense associated with the fair value of the Company’s warrants.
Second Quarter Earnings Conference Call Information
The Company will host a conference call today at 8:30 a.m. ET, or 3:30 p.m. Israel time, to discuss the results, followed by a question-and-answer session with the investor community.
A live webcast of the call can be accessed at ir.kornit.com . To access the call, participants may dial toll-free at 1-877-407-0792 or 1-201-689-8263. The toll-free Israeli number is 1 809 406 247. The conference confirmation code is 13739895.
To listen to a replay of the conference call, dial toll-free 1-844-512-2921 or 1-412-317-6671 (international) and enter confirmation code 13739895. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on August 23, 2023. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.
About Kornit Digital
Kornit Digital Ltd. (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashionx and textile production technologies. The Company is writing the operating system for fashion with end-to-end solutions including digital printing systems, inks, consumables, and an entire global ecosystem that manages workflows and fulfillment. Headquartered in Israel with offices in the USA, Europe, and Asia Pacific, Kornit serves customers in more than one hundred countries and states worldwide. To learn more about how Kornit Digital is boldly transforming the world of fashion and textiles, visit www.kornit.com .
Forward Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as “will,” “expects,” “anticipates,” “continue,” “believes,” “should,” “intended,” “guidance,” “preliminary,” “future,” “planned,” or other words. These forward-looking statements include, but are not limited to, statements relating to the Company’s objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events, or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the duration and severity of current adverse macro-economic headwinds being caused by inflationary pressures, rising interest rates, and supply-chain delays, which have been impacting, and may continue to impact, in an adverse manner, the Company’s operations, financial position and cash flows, in part due to the adverse impact on the Company’s customers and suppliers; the Company’s degree of success in developing, introducing and selling new or improved products and product enhancements including specifically the Company’s Poly Pro and Presto products; the extent of the Company’s ability to consummate sales to large accounts with multi-system delivery plans; the degree of the Company’s ability to fill orders for its systems; the extent of the Company’s ability to increase sales of its systems, ink and consumables; the extent of the Company’s ability to leverage its global infrastructure build-out; the development of the market for digital textile printing; the availability of alternative ink; competition; sales concentration; changes to the Company’s relationships with suppliers; the extent of the Company’s success in marketing; and those additional factors referred to under “Risk Factors” in Item 3.D of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 30, 2023. Any forward-looking statements in this press release are made as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Discussion Disclosure
The Company presents certain non-GAAP financial measures, in this press release and in the accompanying conference call to discuss the Company’s quarterly results. These non-GAAP financial measures reflect adjustments to corresponding GAAP financial measures in order to exclude the impact of the following: share-based compensation expenses; amortization of intangible assets; acquisition related expenses; restructuring expenses; foreign exchange differences associated with ASC 842; and non-cash deferred tax income.
The Company defines “Adjusted EBITDA” as non-GAAP operating income (loss), which reflects the adjustments described in the preceding paragraph, as further adjusted to exclude depreciation expense.
The purpose of the foregoing non-GAAP financial measures is to convey the Company’s performance exclusive of non-cash charges and other items that are considered by management to be outside of the Company’s core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage, and evaluate the Company’s business and make operating decisions, and the Company believes that they are useful to investors as a consistent and comparable measure of the ongoing performance of the Company’s business. The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.
The reconciliation tables included below present a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures.
Investor Contact: andrew.backman@kornit.com
KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) June 30, December 31, 2023 2022 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 101,322 $ 104,597 Short-term bank deposit 220,098 275,033 Marketable securities 42,463 20,380 Trade receivables, net 84,216 67,360 Inventory 88,209 89,415 Other accounts receivable and prepaid expenses 22,820 22,054 Total current assets 559,128 578,839 LONG-TERM ASSETS: Marketable securities 227,798 245,970 Deposits and other long-term assets 7,805 5,927 Severance pay fund 279 274 Property, plant and equipment, net 56,981 60,463 Operating lease right-of-use assets 29,921 27,139 Intangible assets, net 8,707 9,890 Goodwill 29,164 29,164 Total long-term assets 360,655 378,827 Total assets 919,783 957,666 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables 11,550 14,833 Employees and payroll accruals 16,307 14,255 Deferred revenues and advances from customers 2,464 5,701 Operating lease liabilities 4,753 4,989 Other payables and accrued expenses 26,570 25,592 Total current liabilities 61,644 65,370 LONG-TERM LIABILITIES: Accrued severance pay 1,166 1,223 Operating lease liabilities 23,041 21,035 Other long-term liabilities 526 1,216 Total long-term liabilities 24,733 23,474 SHAREHOLDERS' EQUITY 833,406 868,822 Total liabilities and shareholders' equity $ 919,783 $ 957,666
KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) Revenues Products $ 40,083 $ 47,566 $ 71,986 $ 120,080 Services 16,116 10,570 31,991 21,349 Total revenues 56,199 58,136 103,977 141,429 Cost of revenues Products 22,620 25,667 42,999 64,904 Services 14,886 11,937 29,213 22,591 Total cost of revenues 37,506 37,604 72,212 87,495 Gross profit 18,693 20,532 31,765 53,934 Operating expenses: Research and development, net 12,907 14,081 25,989 28,091 Sales and marketing 18,158 21,100 33,341 37,631 General and administrative 8,541 10,250 17,489 20,016 Total operating expenses 39,606 45,431 76,819 85,738 Operating loss (20,913 ) (24,899 ) (45,054 ) (31,804 ) Financial income, net 7,018 4,324 12,422 6,123 Loss before taxes on income (13,895 ) (20,575 ) (32,632 ) (25,681 ) Taxes on income (tax benefit) 430 (1,099 ) 624 (1,008 ) Net loss $ (14,325 ) $ (19,476 ) $ (33,256 ) $ (24,673 ) Basic loss per share $ (0.29 ) $ (0.39 ) $ (0.67 ) $ (0.50 ) Weighted average number of shares used in computing basic net loss per share 49,554,383 49,756,990 49,720,453 49,707,782 Diluted net loss per share $ (0.29 ) $ (0.39 ) $ (0.67 ) $ (0.50 ) Weighted average number of shares used in computing diluted net loss per share 49,554,383 49,756,990 49,720,453 49,707,782
KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) Revenues $ 56,199 $ 58,136 $ 103,977 $ 141,429 GAAP cost of revenues $ 37,506 $ 37,604 $ 72,212 $ 87,495 Cost of product recorded for share-based compensation (1) (672 ) (606 ) (1,179 ) (1,055 ) Cost of service recorded for share-based compensation (1) (493 ) (461 ) (844 ) (846 ) Intangible assets amortization on cost of product (3) (263 ) (666 ) (526 ) (839 ) Intangible assets amortization on cost of service (3) (160 ) (160 ) (320 ) (320 ) Restructuring expenses (4) - - (89 ) - Non-GAAP cost of revenues $ 35,918 $ 35,711 $ 69,254 $ 84,435 GAAP gross profit $ 18,693 $ 20,532 $ 31,765 $ 53,934 Gross profit adjustments 1,588 1,893 2,958 3,060 Non-GAAP gross profit $ 20,281 $ 22,425 $ 34,723 $ 56,994 GAAP operating expenses $ 39,606 $ 45,431 $ 76,819 $ 85,738 Share-based compensation (1) (5,385 ) (4,414 ) (9,772 ) (8,878 ) Acquisition related expenses (2) - - - (512 ) Intangible assets amortization (3) (152 ) (333 ) (340 ) (419 ) Restructuring expenses (4) - - (206 ) - Non-GAAP operating expenses $ 34,069 $ 40,684 $ 66,501 $ 75,929 GAAP Financial income, net $ 7,018 $ 4,324 $ 12,422 $ 6,123 Foreign exchange losses associated with ASC 842 (121 ) (2,480 ) (497 ) (3,129 ) Non-GAAP Financial income , net $ 6,897 $ 1,844 $ 11,925 $ 2,994 GAAP Taxes on income (tax benefit) $ 430 $ (1,099 ) $ 624 $ (1,008 ) Non-cash deferred tax income $ 102 $ 250 $ 323 $ 467 Non-GAAP Taxes on income (tax benefit) $ 532 $ (849 ) $ 947 $ (541 ) GAAP net loss $ (14,325 ) $ (19,476 ) $ (33,256 ) $ (24,673 ) Share-based compensation (1) 6,550 5,481 11,795 10,779 Acquisition related expenses (2) - - - 512 Intangible assets amortization (3) 575 1,159 1,186 1,578 Restructuring expenses (4) - - 295 - Foreign exchange losses associated with ASC 842 (121 ) (2,480 ) (497 ) (3,129 ) Non-cash deferred tax income (102 ) (250 ) (323 ) (467 ) Non-GAAP net loss $ (7,423 ) $ (15,566 ) $ (20,800 ) $ (15,400 ) GAAP diluted loss per share $ (0.29 ) $ (0.39 ) $ (0.67 ) $ (0.50 ) Non-GAAP diluted loss per share $ (0.15 ) $ (0.31 ) $ (0.42 ) $ (0.31 ) Weighted average number of shares Shares used in computing GAAP diluted net loss per share 49,554,383 49,756,990 49,720,453 49,707,782 Shares used in computing Non-GAAP diluted net loss per share 49,554,383 49,756,990 49,720,453 49,707,782 (1) Share-based compensation Cost of product revenues $ 672 $ 606 $ 1,179 $ 1,055 Cost of service revenues $ 493 461 844 846 Research and development $ 1,601 1,268 2,952 2,457 Sales and marketing $ 1,944 1,491 3,307 3,300 General and administrative $ 1,840 1,655 3,513 3,121 $ 6,550 $ 5,481 $ 11,795 $ 10,779 (2) Acquisition related expenses General and administrative $ - $ - $ - $ 512 $ - $ - $ - $ 512 (3) Intangible assets amortization Cost of product revenues $ 263 $ 666 $ 526 $ 839 Cost of service revenues $ 160 160 320 320 Sales and marketing $ 152 333 340 419 $ 575 $ 1,159 $ 1,186 $ 1,578 (4) Restructuring expenses Cost of product revenues $ - $ - $ 89 $ - Research and development $ - - 20 - Sales and marketing $ - - 186 - $ - $ - $ 295 $ -
KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) Cash flows from operating activities: Net loss $ (14,325 ) $ (19,476 ) $ (33,256 ) $ (24,673 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,654 3,322 7,527 5,902 Fair value of warrants deducted from revenues 3,332 4,516 5,676 12,521 Share-based compensation 6,550 5,481 11,795 10,779 Amortization of premium and accretion of discount on marketable securities, net 202 484 525 1,012 Realized gain (loss) on sale and redemption of marketable securities (43 ) 7 (3 ) 10 Change in operating assets and liabilities: Trade receivables, net (11,248 ) 22,189 (16,856 ) (9,004 ) Other accounts receivables and prepaid expenses (1,682 ) 673 (766 ) (1,791 ) Inventory 4,963 (14,816 ) 1,940 (23,852 ) Operating leases right-of-use assets and liabilities, net (555 ) (2,449 ) (1,012 ) (2,857 ) Deferred taxes - (2,111 ) - (2,416 ) Deposits and other long term assets (851 ) (1,327 ) (1,878 ) (1,321 ) Trade payables (225 ) (4,476 ) (1,702 ) (11,920 ) Employees and payroll accruals 1,752 (364 ) 2,489 (6,834 ) Deferred revenues and advances from customers (2,199 ) (2,643 ) (3,237 ) (4,114 ) Other payables and accrued expenses (4,378 ) 3,081 (38 ) 3,440 Accrued severance pay, net (161 ) (103 ) (62 ) (292 ) Other long - term liabilities (330 ) 413 (690 ) 729 Loss from sale and disposal of property, plant and equipment - 41 - 41 Net cash used in operating activities $ (15,544 ) $ (7,558 ) $ (29,548 ) $ (54,640 ) Cash flows from investing activities: Purchase of property, plant and equipment $ (1,791 ) $ (1,985 ) $ (5,069 ) $ (9,447 ) Investment in equity securities - (354 ) - (354 ) Acquisition of intangible assets - (133 ) - (133 ) Proceeds from sale of property, plant and equipment - 55 - 55 Cash paid in connection with acquisition, net of cash acquired - (14,654 ) - (14,654 ) Proceeds from (investment in) short-term bank deposits, net (219,997 ) 160,090 54,935 (250,895 ) Proceeds from sales and redemption of marketable securities 1,250 1,500 5,250 1,945 Proceeds from maturities of marketable securities 7,680 5,500 11,252 17,422 Investment in marketable securities (8,911 ) (23,003 ) (18,935 ) (103,897 ) Net cash provided by (used in) investing activities $ (221,769 ) $ 127,016 $ 47,433 $ (359,958 ) Cash flows from financing activities: Exercise of employee stock options $ 53 $ 41 $ 95 $ 340 Payments related to shares withheld for taxes (302 ) (172 ) (437 ) (682 ) Repurchase of ordinary shares (14,066 ) - (20,818 ) - Net cash used in financing activities $ (14,315 ) $ (131 ) $ (21,160 ) $ (342 ) Increase (decrease) in cash and cash equivalents $ (251,628 ) $ 119,327 $ (3,275 ) $ (414,940 ) Cash and cash equivalents at the beginning of the period 352,950 77,284 104,597 611,551 Cash and cash equivalents at the end of the period $ 101,322 $ 196,611 $ 101,322 $ 196,611 Non-cash investing and financing activities: Purchase of property and equipment on credit 46 1,823 219 1,823 Inventory transferred to be used as property and equipment - 592 - 1,289 Property, plant and equipment transferred to be used as inventory - 5 734 9 Lease liabilities arising from obtaining right-of-use assets (550 ) 641 5,487 6,387
KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA (U.S. dollars in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) GAAP Revenues $ 56,199 $ 58,136 $ 103,977 $ 141,429 GAAP Net Loss (14,325 ) (19,476 ) (33,256 ) (24,673 ) Taxes on income 430 (1,099 ) 624 (1,008 ) Financial income (7,018 ) (4,324 ) (12,422 ) (6,123 ) Share-based compensation 6,550 5,481 11,795 10,779 Intangible assets amortization 575 790 1,186 1,209 Acquisition related expenses - - - 512 Excess cost of product on acquired inventory - 369 - 369 Restructuring expenses - - 295 - Non-GAAP Operating Loss (13,788 ) (18,259 ) (31,778 ) (18,935 ) Depreciation 3,079 2,532 6,341 4,693 Adjusted EBITDA $ (10,709 ) $ (15,727 ) $ (25,437 ) $ (14,242 )
What were Kornit Digital Ltd.'s second quarter revenues?
Kornit Digital Ltd. reported second quarter revenues of $56.2 million, in line with previous guidance.
What did the third-annual Impact Report highlight?
The third-annual Impact Report highlighted progress on Kornit Digital Ltd.'s long-term impact strategy and reaffirmed the company's commitment to a more sustainable fashion and textiles industry.
What is the revenue expectation for the third quarter of 2023?
For the third quarter of 2023, Kornit Digital Ltd. expects revenues to be in the range of $58 million to $62 million, with an adjusted EBITDA margin between -6% to -13% of revenue.
