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Kornit Digital Reports Third Quarter 2023 Results

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Kornit Digital Ltd. (KRNT) reports Q3 revenues of $59.2 million, in line with guidance. GAAP net loss of $8.2 million; non-GAAP net loss of $3.4 million. System sales increased quarter-over-quarter. Company operations in Israel remain stable. Q4 revenue expected to be $55-60 million. Adjusted EBITDA margin between -6% to 0%.
Positive
  • Q3 revenues in line with guidance
  • System sales increased quarter-over-quarter
  • Stable company operations in Israel
  • Q4 revenue guidance of $55-60 million
Negative
  • Total revenue for Q3 decreased compared to the prior year period
  • Adjusted EBITDA margin expected to be negative
  • Third quarter revenues of $59.2 million, in line with previous guidance
  • Third quarter GAAP net loss of $8.2 million; non-GAAP net loss of $3.4 million
  • Impressions and consumables revenues both continued to grow year-over-year
  • System sales increased quarter-over-quarter on continued conversion of ITMA orders
  • Company operations have not been materially impacted by the security situation in Israel

ROSH-HA'AYIN, Israel, Nov. 08, 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 third quarter ended September 30, 2023.

“We delivered third quarter revenues within our guidance range, despite a challenging macroeconomic environment. Our consumables sales grew year-over-year, while system sales improved sequentially as we continued to convert orders from ITMA,” said Ronen Samuel, Kornit’s Chief Executive Officer. “We also saw further growth in our direct-to-fabric solutions, resulting in one of the strongest quarters for Presto system sales. Interest in our Atlas MAX Poly system has also been robust, especially in the sports and athleisure market."

"During the quarter, we successfully installed our initial Apollo beta systems, which have received highly encouraging feedback and demonstrated solid uptime, yield, and unit economics. We continue to target general availability for Apollo in the first quarter of 2024 and are building a strong pipeline of both existing and new customers,” Mr. Samuel concluded, “Looking ahead, we are taking proactive measures to further diversify our customer base, expand into key textile-producing regions, and resume overall sales growth, while also focusing on enhancing operating efficiencies across the entire company. Our plan includes approaching breakeven on an adjusted EBITDA basis during the fourth quarter and achieving profitable growth for the full year in 2024.”

Third Quarter 2023 Results of Operations

  • Total revenue for the third quarter of 2023 was $59.2 million compared with $66.8 million in the prior year period, due primarily to lower systems revenues.

  • GAAP gross profit margin for the third quarter of 2023 was 34.8% compared with 32.1% in the prior year period. On a non-GAAP basis, gross profit margin was 37.4% compared with 35.5% in the prior year period.

  • GAAP operating expenses for the third quarter of 2023 decreased by 17.6% to $35.3 million compared with the prior year period. On a non-GAAP basis, operating expenses decreased by 15.3% to $31.1 million compared with the prior year period.

  • GAAP net loss for the third quarter of 2023 was $8.2 million, or ($0.17) per basic share, compared with net loss of $19.0 million, or ($0.38) per basic share, for the third quarter of 2022.

  • Non-GAAP net loss for the third quarter of 2023 was $3.4 million, or ($0.07) per basic share, compared with non-GAAP net loss of $10.7 million, or ($0.21) per basic share, for the third quarter of 2022.

  • Adjusted EBITDA loss for the third quarter of 2023 was $5.6 million compared with adjusted EBITDA loss of $10.5 million for the third quarter of 2022. Adjusted EBITDA margin for the third quarter of 2023 was -9.5% compared with -15.7% for the third quarter of 2022.

Fourth Quarter 2023 Guidance

For the fourth quarter of 2023, the Company expects revenues to be in the range of $55 million to $60 million and adjusted EBITDA margin between -6% to 0% 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.

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 1-877-407-0792 or 1-201-689-8263. The toll-free Israeli number is 1 809 406 247. The conference confirmation code is 13741274.

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 13741274. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on November 22, 2023. 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 100 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 and higher 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 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:
Jared Maymon
Global Head of Investor Relations
jared.maymon@kornit.com   

 

KORNIT DIGITAL LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
     
   September 30,   December 31, 
   2023   2022 
   (Unaudited)   (Audited) 
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents $76,288  $104,597 
Short-term bank deposit  220,095   275,033 
Marketable securities  49,974   20,380 
Trade receivables, net  93,137   67,360 
Inventory  83,111   89,415 
Other accounts receivable and prepaid expenses  23,506   22,054 
Total current assets  546,111   578,839 
         
LONG-TERM ASSETS:        
Marketable securities  222,285   245,970 
Deposits and other long-term assets  8,106   5,927 
Severance pay fund  262   274 
Property, plant and equipment, net  55,026   60,463 
Operating lease right-of-use assets  28,988   27,139 
Intangible assets, net  8,165   9,890 
Goodwill  29,164   29,164 
Total long-term assets  351,996   378,827 
         
Total assets  898,107   957,666 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Trade payables  9,626   14,833 
Employees and payroll accruals  15,023   14,255 
Deferred revenues and advances from customers  2,050   5,701 
Operating lease liabilities  4,543   4,989 
Other payables and accrued expenses  23,216   25,592 
Total current liabilities  54,458   65,370 
         
LONG-TERM LIABILITIES:        
Accrued severance pay  1,073   1,223 
Operating lease liabilities  21,607   21,035 
Other long-term liabilities  272   1,216 
Total long-term liabilities  22,952   23,474 
         
SHAREHOLDERS' EQUITY  820,697   868,822 
         
Total liabilities and shareholders' equity $898,107  $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 Nine Months Ended
  September 30, September 30,
  2023 2022 2023 2022
  (Unaudited) (Unaudited)
         
Revenues                
Products $45,486  $52,627  $117,472  $172,707 
Services  13,738   14,164   45,729   35,513 
Total revenues  59,224   66,791   163,201   208,220 
                 
Cost of revenues                
Products  25,392   31,789   68,391   96,909 
Services  13,212   13,569   42,425   36,160 
Total cost of revenues  38,604   45,358   110,816   133,069 
                 
Gross profit  20,620   21,433   52,385   75,151 
                 
Operating expenses:                
Research and development, net  12,038   14,684   38,027   42,775 
Sales and marketing  15,586   17,502   48,927   54,917 
General and administrative  7,654   10,616   25,143   30,632 
Total operating expenses  35,278   42,802   112,097   128,324 
                 
Operating loss  (14,658)  (21,369)  (59,712)  (53,173)
                 
Financial income, net  6,304   2,207   18,726   8,330 
Loss before taxes on income  (8,354)  (19,162)  (40,986)  (44,843)
                 
Taxes on income (tax benefit)  (193)  (130)  431   (1,138)
Net loss $(8,161) $(19,032) $(41,417) $(43,705)
                 
Basic loss per share $(0.17) $(0.38) $(0.84) $(0.88)
                 
                 
Weighted average number of shares used in computing basic net loss per share  48,968,244   49,834,417   49,469,717   49,750,458 
                 
                 
Diluted net loss per share $(0.17) $(0.38) $(0.84) $(0.88)
                 
                 
Weighted average number of shares used in computing diluted net loss per share  48,968,244   49,834,417   49,469,717   49,750,458 

 

       
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,
  2023 2022 2023 2022
  (Unaudited) (Unaudited)
         
Revenues $59,224  $66,791  $163,201  $208,220 
                 
                 
GAAP cost of revenues $38,604  $45,358  $110,816  $133,069 
Cost of product recorded for share-based compensation (1)  (632)  (587)  (1,811)  (1,642)
Cost of service recorded for share-based compensation (1)  (467)  (422)  (1,311)  (1,268)
Intangible assets amortization on cost of product (3)  (267)  (744)  (793)  (1,799)
Intangible assets amortization on cost of service (3)  (160)  (160)  (480)  (480)
Restructuring expenses (4)  -   (396)  (89)  (396)
Non-GAAP cost of revenues $37,078  $43,049  $106,332  $127,484 
                 
                 
GAAP gross profit $20,620  $21,433  $52,385  $75,151 
Gross profit adjustments  1,526   2,309   4,484   5,585 
Non-GAAP gross profit $22,146  $23,742  $56,869  $80,736 
                 
                 
GAAP operating expenses $35,278  $42,802  $112,097  $128,324 
Share-based compensation (1)  (4,050)  (5,646)  (13,822)  (14,524)
Acquisition related expenses (2)  -   -   -   (512)
Intangible assets amortization (3)  (117)  (160)  (457)  (363)
Restructuring expenses (4)  -   (281)  (206)  (281)
Non-GAAP operating expenses $31,111  $36,715  $97,612  $112,644 
                 
                 
GAAP Financial income, net $6,304  $2,207  $18,726  $8,330 
Foreign exchange losses associated with ASC 842  (704)  (279)  (1,201)  (3,408)
Non-GAAP Financial income , net $5,600  $1,928  $17,525  $4,922 
                 
                 
GAAP Taxes on income (tax benefit) $(193) $(130) $431  $(1,138)
Non-cash deferred tax income $255  $(247) $578  $220 
Non-GAAP Taxes on income (tax benefit) $62  $(377) $1,009  $(918)
                 
                 
GAAP net loss $(8,161) $(19,032) $(41,417) $(43,705)
Share-based compensation (1)  5,149   6,655   16,944   17,434 
Acquisition related expenses (2)  -   -   -   512 
Intangible assets amortization (3)  544   1,064   1,730   2,642 
Restructuring expenses (4)  -   677   295   677 
Foreign exchange losses associated with ASC 842  (704)  (279)  (1,201)  (3,408)
Non-cash deferred tax income  (255)  247   (578)  (220)
Non-GAAP net loss $(3,427) $(10,668) $(24,227) $(26,068)
                 
GAAP diluted loss per share $(0.17) $(0.38) $(0.84) $(0.88)
                 
Non-GAAP diluted loss per share $(0.07) $(0.21) $(0.49) $(0.52)
                 
Weighted average number of shares                
                 
Shares used in computing GAAP diluted net loss per share  48,968,244   49,834,417   49,469,717   49,750,458 
                 
Shares used in computing Non-GAAP diluted net loss per share  48,968,244   49,834,417   49,469,717   49,750,458 
                 
                 
(1) Share-based compensation                
Cost of product revenues $632  $587  $1,811  $1,642 
Cost of service revenues $467   422   1,311   1,268 
Research and development $1,478   1,515   4,430   3,972 
Sales and marketing $1,747   2,368   5,054   5,668 
General and administrative $825   1,763   4,338   4,884 
  $5,149  $6,655  $16,944  $17,434 
(2) Acquisition related expenses                
General and administrative $-  $-  $-  $512 
  $-  $-  $-  $512 
(3) Intangible assets amortization                
Cost of product revenues $267  $744  $793  $1,799 
Cost of service revenues $160   160   480   480 
Sales and marketing $117   160   457   363 
  $544  $1,064  $1,730  $2,642 
                 
(4) Restructuring expenses                
Cost of product revenues $-  $384  $89  $384 
Cost of service revenues $-  $12  $-  $12 
Research and development $-   64   20   64 
Sales and marketing $-   188   186   188 
General and administrative $-   29   -   29 
  $-  $677  $295  $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,
  2023 2022 2023 2022
  (Unaudited) (Unaudited)
Cash flows from operating activities:                
                 
Net loss $(8,161) $(19,032) $(41,417) $(43,705)
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization  3,886   3,264   11,413   9,166 
Fair value of warrants deducted from revenues  3,325   5,640   9,001   18,161 
Share-based compensation  5,149   6,655   16,944   17,434 
Amortization of premium and accretion of discount on marketable securities, net  148   435   673   1,447 
Realized gain on sale and redemption of marketable securities  44   -   41   10 
Change in operating assets and liabilities:                
Trade receivables, net  (8,921)  (3,214)  (25,777)  (12,218)
Other accounts receivables and prepaid expenses  (686)  (4,343)  (1,452)  (6,134)
Inventory  4,567   (2,715)  6,507   (26,567)
Operating leases right-of-use assets and liabilities, net  (711)  (290)  (1,723)  (3,147)
Deferred taxes  -   (577)  -   (2,993)
Deposits and other long term assets  (301)  (1,071)  (2,179)  (2,392)
Trade payables  (1,887)  (5,960)  (3,589)  (17,880)
Employees and payroll accruals  (1,284)  1,382   1,205   (5,452)
Deferred revenues and advances from customers  (414)  2,581   (3,651)  (1,533)
Other payables and accrued expenses  (2,152)  12,623   (2,190)  16,063 
Accrued severance pay, net  (76)  12   (138)  (280)
Other long - term liabilities  (254)  (1,046)  (944)  (317)
Loss from sale and disposal of property, plant and equipment  -   526   -   567 
Net cash used in operating activities $(7,728) $(5,130) $(37,276) $(59,770)
                 
Cash flows from investing activities:                
                 
Purchase of property, plant and equipment $(1,003) $(2,819) $(6,072) $(12,266)
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  -   -   -   (14,654)
Proceeds from (investment in) short-term bank deposits, net  3   (100,059)  54,938   (350,954)
Proceeds from sales and redemption of marketable securities  1,990   -   7,240   1,945 
Proceeds from maturities of marketable securities  2,970   3,976   14,222   21,398 
Investment in marketable securities  (5,516)  (25,468)  (24,451)  (129,365)
Net cash provided by (used in) investing activities $(1,556) $(124,729) $45,877  $(484,687)
                 
                 
Cash flows from financing activities:                
                 
Exercise of employee stock options $198  $120  $293  $460 
Payments related to shares withheld for taxes  -   (179)  (437)  (861)
Repurchase of ordinary shares  (15,948)  -   (36,766)  - 
Net cash used in financing activities $(15,750) $(59) $(36,910) $(401)
                 
                 
                 
Decrease in cash and cash equivalents $(25,034) $(129,918) $(28,309) $(544,858)
Cash and cash equivalents at the beginning of the period  101,322   196,611   104,597   611,551 
Cash and cash equivalents at the end of the period $76,288  $66,693  $76,288  $66,693 
                 
                 
                 
Non-cash investing and financing activities:                
                 
Purchase of property and equipment on credit  74   1,033   74   1,033 
Inventory transferred to be used as property and equipment  531   255   531   1,544 
Property, plant and equipment transferred to be used as inventory  -   183   734   192 
Lease liabilities arising from obtaining right-of-use assets  322   790   5,809   7,177 


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 Nine Months Ended
  September 30, September 30,
  2023 2022 2023 2022
  (Unaudited) (Unaudited)
         
GAAP Revenues $59,224  $66,791  $163,201  $208,220 
                 
GAAP Net Loss  (8,161)  (19,032)  (41,417)  (43,705)
Taxes on income  (193)  (130)  431   (1,138)
Financial income  (6,304)  (2,207)  (18,726)  (8,330)
Share-based compensation  5,149   6,655   16,944   17,434 
Intangible assets amortization  544   770   1,730   1,979 
Acquisition related expenses  -   -   -   512 
Excess cost of product on acquired inventory  -   294   -   663 
Restructuring expenses  -   677   295   677 
Non-GAAP Operating Loss  (8,965)  (12,973)  (40,743)  (31,908)
Depreciation  3,342   2,494   9,683   7,187 
Adjusted EBITDA $(5,623) $(10,479) $(31,060) $(24,721)

Kornit Digital Ltd. reported Q3 revenues of $59.2 million, in line with previous guidance.

For Q4 2023, the company expects revenues to be in the range of $55 million to $60 million.

The company expects the adjusted EBITDA margin to be between -6% to 0% of revenue for Q4 2023.
Kornit Digital Ltd

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Printing Machinery and Equipment Manufacturing
Manufacturing
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Producer Manufacturing, Industrial Machinery, Manufacturing, Printing Machinery and Equipment Manufacturing
Israel
12 Ha Amal St Afek Park

About KRNT

kornit digital develops, manufactures and markets industrial and commercial solutions for the garment, apparel and fabric industry. leading the digital textile industry with its integrated pretreatment solution and its neopigment ™ inks, it directly caters to the needs of both designers and manufacturers. with its immense experience in the direct to garment industry, it is revolutionizing the roll fabric industry by enabling printing with one ink set on all kinds of fabrics. founded in 2003, kornit digital is a global company with offices in the united states, asia pacific, europe and india and serves customers in more than 100 countries worldwide. join the kornit-digital group and stay up to date with recent news and developments. for more information on any of our direct to garment solutions, visit our website at http://www.kornit.com