Kornit Digital reports Q1 2023 net loss of $18.9M on revenues of US$47.8M

Sample article from our Printing & Publishing

ROSH-HA`AYIN, Israel , May 11, 2023 (press release) –

  • First quarter revenues of $47.8 million, in line with prior guidance
  • First quarter GAAP net loss of $18.9 million; non-GAAP net loss of $13.4 million
  • MAX upgrades drive strong quarter for Services
  • Double-digit year-over-year impressions growth from several strategic customers
  • New Atlas MAX Poly and Direct-to-Fabric customers added in key textile regions
  • Set to showcase new break-through solutions at June ITMA tradeshow in Milan, Italy

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 first quarter ended March 31, 2023.

“Promising indicators emerged during the first quarter in certain parts of our business, despite the persistent macroeconomic pressures,” said Ronen Samuel, Kornit’s Chief Executive Officer. “These indicators included the double-digit year-over-year impressions growth from several of our larger direct-to-garment (DTG) strategic accounts in the customized design market, and the continued adoption of our MAX technology. While capacity utilization is still not optimal, we see immense opportunities unfolding with major demand generating platforms and expect this market to resume growth as overall macro conditions improve.”

Mr. Samuel continued, “With our MAX technology as the cornerstone, we’ve been steadily gaining momentum on our strategy in targeting brands, retailers, and their global fulfillers, all of whom will greatly benefit from Kornit’s sustainable on-demand digital solutions, instead of existing analog production. We had a strong quarter for Atlas MAX Poly, and continued to strengthen our market-leading position in direct-to-fabric (DTF) with Presto MAX. The progress made in the first quarter offers additional proof points that our MAX technology is becoming the industry standard and an excellent solution that offers top retail quality output, increased productivity, better cost efficiencies, and new product capabilities and offerings.”

Mr. Samuel concluded, “We are excited to attend the upcoming ITMA tradeshow in Milan, where we will demonstrate how digital production goes mainstream with sustainable on-demand manufacturing at scale. We will showcase a diverse range of new cutting-edge DTF and DTG solutions, including unveiling our highly anticipated Apollo, which will revolutionize markets traditionally served by analog. These new systems and solutions significantly extend the breadth of print applications and offer levels of automation never before seen in any of the markets we serve.”

First Quarter 2023 Results of Operations

  • Total revenue for the first quarter of 2023 was $47.8 million compared with $83.3 million in the prior year period, primarily due to expected lower systems revenues.
     
  • GAAP gross profit margin for the first quarter of 2023 was 27.4% compared with 40.1% in the prior year period. On a non-GAAP basis, gross profit margin was 30.2% compared with 41.5% in the prior year period.
     
  • GAAP operating expenses for the first quarter of 2023 decreased by 7.7% to $37.2 million compared with the prior year period. On a non-GAAP basis, operating expenses also decreased by 8.0% to $32.4 million compared with the prior year period.
     
  • GAAP net loss for the first quarter of 2023 was $18.9 million, or ($0.38) per basic share, compared with net loss of $5.2 million, or ($0.10) per basic share, for the first quarter of 2022.
     
  • Non-GAAP net loss for the first quarter of 2023 was $13.4 million, or ($0.27) per basic share, compared with non-GAAP net income of $0.2 million, or $0.00 per diluted share, for the first quarter of 2022.
     
  • Adjusted EBITDA loss for the first quarter of 2023 was $14.7 million compared with adjusted EBITDA of $1.5 million for the first quarter of 2022. Adjusted EBITDA margin for the first quarter of 2023 was -30.8% compared with 1.8% for the first quarter of 2022.

Second Quarter 2023 Guidance

For the second quarter of 2023, the Company expects revenues to be in the range of $54 million to $59 million and adjusted EBITDA margin between -19% to -27% 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.

First 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 1-888-886-7786 or 1-416-764-8658. The toll-free Israeli number is 1 809 468 221. The conference confirmation code is 79530398.

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 79530398. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on Wednesday, May 24, 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 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 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 G. Backman
Global Head of Investor Relations
andrew.backman@kornit.com 

 

KORNIT DIGITAL LTD.  
AND ITS SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(U.S. dollars in thousands)  
           
    March 31,   December 31,  
    2023   2022  
    (Unaudited)   (Audited)  
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents   $ 352,950   $ 104,597  
Short-term bank deposit     101     275,033  
Marketable securities     25,948     20,380  
Trade receivables, net     72,968     67,360  
Inventory     92,727     89,415  
Other accounts receivable and prepaid expenses     21,138     22,054  
Total current assets     565,832     578,839  
           
LONG-TERM ASSETS:          
Marketable securities     244,946     245,970  
Deposits and other long-term assets     6,954     5,927  
Severance pay fund     301     274  
Property, plant and equipment, net     58,717     60,463  
Operating lease right-of-use assets     31,910     27,139  
Intangible assets, net     9,233     9,890  
Goodwill     29,164     29,164  
Total long-term assets     381,225     378,827  
           
Total assets     947,057     957,666  
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
CURRENT LIABILITIES:          
Trade payables     11,837     14,833  
Employees and payroll accruals     14,857     14,255  
Deferred revenues and advances from customers     4,663     5,701  
Operating lease liabilities     4,975     4,989  
Other payables and accrued expenses     30,127     25,592  
Total current liabilities     66,459     65,370  
           
LONG-TERM LIABILITIES:          
Accrued severance pay     1,349     1,223  
Operating lease liabilities     25,363     21,035  
Other long-term liabilities     856     1,216  
Total long-term liabilities     27,568     23,474  
           
SHAREHOLDERS' EQUITY     853,030     868,822  
           
Total liabilities and shareholders' equity   $ 947,057   $ 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
  March 31,
    2023       2022  
  (Unaudited)
       
Revenues      
     Products $ 31,903     $ 72,514  
     Services   15,875       10,779  
Total revenues   47,778       83,293  
       
Cost of revenues      
      Products   20,379       39,237  
      Services   14,327       10,654  
Total cost of revenues   34,706       49,891  
       
Gross profit   13,072       33,402  
       
Operating expenses:      
Research and development, net   13,082       14,010  
Sales and marketing   15,183       16,531  
General and administrative   8,948       9,766  
Total operating expenses   37,213       40,307  
       
Operating loss   (24,141 )     (6,905 )
       
Financial income, net   5,404       1,799  
Loss before taxes on income   (18,737 )     (5,106 )
       
Taxes on income   194       91  
Net loss $ (18,931 )   $ (5,197 )
       
Basic loss per share $ (0.38 )   $ (0.10 )
       
       
Weighted average number of shares      
used in computing basic net loss per share   49,887,982       49,658,028  
       
       
Diluted net loss per share $ (0.38 )   $ (0.10 )
       
       
Weighted average number of shares      
used in computing diluted net loss per share   49,887,982       49,658,028  
       

 

  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
      March 31,
        2023       2022  
      (Unaudited)
           
  Revenues $ 47,778     $ 83,293  
           
           
  GAAP cost of revenues $ 34,706     $ 49,891  
  Cost of product recorded for share-based compensation (1)   (507 )     (449 )
  Cost of service recorded for share-based compensation (1)   (351 )     (385 )
  Intangible assets amortization on cost of product (3)   (263 )     (173 )
  Intangible assets amortization on cost of service (3)   (160 )     (160 )
  Restructuring expenses (4)   (89 )     -  
  Non-GAAP cost of revenues $ 33,336     $ 48,724  
           
           
  GAAP gross profit $ 13,072     $ 33,402  
  Gross profit adjustments   1,370       1,167  
  Non-GAAP gross profit $ 14,442     $ 34,569  
           
           
  GAAP operating expenses $ 37,213     $ 40,307  
  Share-based compensation (1)   (4,387 )     (4,464 )
  Acquisition related expenses (2)   -       (512 )
  Intangible assets amortization (3)   (188 )     (86 )
  Restructuring expenses (4)     (206 )     -  
  Non-GAAP operating expenses $ 32,432     $ 35,245  
           
           
  GAAP Financial income, net $ 5,404     $ 1,799  
  Foreign exchange differences associated with ASC 842   (376 )     (649 )
  Non-GAAP Financial income , net $ 5,028     $ 1,150  
           
           
  GAAP Taxes on income $ 194     $ 91  
  Non-cash deferred tax income   221       217  
  Non-GAAP Taxes on income $ 415     $ 308  
           
           
  GAAP net loss $ (18,931 )   $ (5,197 )
  Share-based compensation (1)   5,245       5,298  
  Acquisition related expenses (2)   -       512  
  Intangible assets amortization (3)   611       419  
  Restructuring expenses (4)   295       -  
  Foreign exchange differences associated with ASC 842   (376 )     (649 )
  Non-cash deferred tax income   (221 )     (217 )
  Non-GAAP net income (Loss) $ (13,377 )   $ 166  
           
  GAAP diluted loss per share $ (0.38 )   $ (0.10 )
           
  Non-GAAP diluted earnings (loss) per share $ (0.27 )   $ 0.00  
           
  Weighted average number of shares      
           
  Shares used in computing GAAP diluted net loss per share   49,887,982       49,658,028  
           
  Shares used in computing Non-GAAP diluted net earnings (loss) per share   49,887,982       50,955,776  
           
           
  (1) Share-based compensation      
   Cost of product revenues $ 507     $ 449  
   Cost of service revenues   351       385  
   Research and development   1,351       1,189  
   Sales and marketing   1,363       1,809  
   General and administrative   1,673       1,466  
      $ 5,245     $ 5,298  
  (2) Acquisition related expenses      
   General and administrative $ -     $ 512  
      $ -     $ 512  
  (3) Intangible assets amortization      
   Cost of product revenues $ 263     $ 173  
   Cost of service revenues   160       160  
   Sales and marketing   188       86  
      $ 611     $ 419  
           
  (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
    March 31,
      2023       2022  
    (Unaudited)
  Cash flows from operating activities:      
         
  Net loss $ (18,931 )   $ (5,197 )
  Adjustments to reconcile net loss to net cash used in operating activities:      
  Depreciation and amortization   3,873       2,580  
  Fair value of warrants deducted from revenues   2,344       8,005  
  Share-based compensation   5,245       5,298  
  Amortization of premium and accretion of discount on marketable securities, net   323       528  
  Realized loss on sale and redemption of marketable securities   40       3  
  Change in operating assets and liabilities:      
  Trade receivables, net   (5,608 )     (31,193 )
  Other accounts receivables and prepaid expenses   916       (2,464 )
  Inventory   (3,023 )     (9,036 )
  Operating leases right-of-use assets and liabilities, net   (457 )     (408 )
  Deferred taxes   -       (305 )
  Deposits and other long term assets   (1,027 )     6  
  Trade payables   (1,477 )     (7,444 )
  Employees and payroll accruals   737       (6,470 )
  Deferred revenues and advances from customers   (1,038 )     (1,471 )
  Other payables and accrued expenses   4,340       359  
  Accrued severance pay, net   99       (189 )
  Other long-term liabilities   (360 )     316  
  Net cash used in operating activities $ (14,004 )   $ (47,082 )
         
  Cash flows from investing activities:      
         
  Purchase of property, plant and equipment $ (3,278 )   $ (7,462 )
  Proceeds from (investment in) short-term bank deposits, net   274,932       (410,985 )
  Proceeds from sales and redemption of marketable securities   4,000       445  
  Proceeds from maturities of marketable securities   3,572       11,922  
  Investment in marketable securities   (10,024 )     (80,894 )
  Net cash provided by (used in) investing activities $ 269,202     $ (486,974 )
         
         
  Cash flows from financing activities:      
         
  Exercise of employee stock options $ 42     $ 299  
  Payments related to shares withheld for taxes   (135 )     (510 )
  Repurchase of ordinary shares   (6,752 )     -  
  Net cash used in financing activities $ (6,845 )   $ (211 )
         
         
         
  Increase (decrease) in cash and cash equivalents $ 248,353     $ (534,267 )
  Cash and cash equivalents at the beginning of the period   104,597       611,551  
  Cash and cash equivalents at the end of the period $ 352,950     $ 77,284  
         
         
         
  Non-cash investing and financing activities:      
         
  Purchase of property and equipment on credit   173       1,292  
  Inventory transferred to be used as property and equipment   365       697  
  Property, plant and equipment transferred to be used as inventory   653       4  
  Receipt on account of shares   -       63  
  Lease liabilities arising from obtaining right-of-use assets   6,037       5,746  
         

 

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
    March 31,
      2023       2022  
    (Unaudited)
         
GAAP Revenues   $ 47,778     $ 83,293  
         
GAAP Net Loss     (18,931 )     (5,197 )
     Taxes on income     194       91  
     Financial income     (5,404 )     (1,799 )
     Share-based compensation     5,245       5,298  
     Intangible assets amortization     611       419  
     Acquisition related expenses     -       512  
     Restructuring expenses     295       -  
Non-GAAP Operating Loss     (17,990 )     (676 )
     Depreciation     3,262       2,161  
Adjusted EBITDA   $ (14,728 )   $ 1,485  
         

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

More from our Printing & Publishing Coverage
See our dashboard in action - schedule an demo
Jason Irving
Jason Irving
- SVP Enterprise Solutions -

We offer built-to-order printing & publishing coverage for our clients. Contact us for a free consultation.

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025

+1 (310) 553 0008

About Cookies On This Site

This website stores cookies on your computer. These cookies are used to improve your website experience and provide more personalized services to you, both on this website and through other media. To find out more about the cookies we use, see our Privacy Policy. We won't track your information when you visit our site. But in order to comply with your preferences, we'll have to use just one tiny cookie so that you're not asked to make this choice again.