Kornit Digital Reports First Quarter 2024 Results

Published
  • First quarter revenues of $43.8 million, in line with previous guidance
  • First quarter GAAP net loss of $13.2 million; non-GAAP net loss of $5.3 million
  • Generated positive cash flow from operations for the first quarter of 2024
  • Successfully concluded Apollo beta with all three customers and built a healthy pipeline
  • Significant interest from new and existing customers on the all-inclusive click (“AIC”) model

ROSH-HA`AYIN, Israel, May 08, 2024 (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 first quarter ended March 31, 2024.

“Despite enduring macroeconomic challenges, we saw success with the strategic initiatives we implemented in Q4 and early this quarter.” said Ronen Samuel, Kornit’s Chief Executive Officer. Mr. Samuel continued, “Our pipeline for the Apollo has already been filled for 2024 by customers addressing both existing and target markets, and we are now building our pipeline for 2025. Additionally, in the first quarter of the AIC pilot on Apollo, the model generated highly positive feedback and drove multiple orders.”

Mr. Samuel concluded, “As we look ahead, we are dedicating our attention and resources to ensuring that we have put all the necessary pieces in place to deliver on our vision of transitioning long-run production to sustainable, on-demand digital production, globally.”

First Quarter 2024 Results of Operations

  • Total revenue for the first quarter of 2024 was $43.8 million compared with $47.8 million in the prior year period, due primarily to lower systems revenues.
  • GAAP gross profit margin for the first quarter of 2024 was 32.3% compared with 27.4% in the prior year period. On a non-GAAP basis, gross profit margin was 37.5% compared with 30.2% in the prior year period.
  • GAAP operating expenses for the first quarter of 2024 were $32.4 million compared with $37.2 million in the prior year period. On a non-GAAP basis, operating expenses decreased by 16.6% to $27.1 million compared with the prior year period.
  • GAAP net loss for the first quarter of 2024 was $13.2 million, or ($0.28) per basic share, compared with net loss of $18.9 million, or ($0.38) per basic share, for the first quarter of 2023.
  • Non-GAAP net loss for the first quarter of 2024 was $5.3 million, or ($0.11) per basic share, compared with non-GAAP net loss of $13.4 million, or ($0.27) per basic share, for the first quarter of 2023.
  • Adjusted EBITDA loss for the first quarter of 2024 was $7.8 million compared with adjusted EBITDA loss of $14.7 million for the first quarter of 2023. Adjusted EBITDA margin for the first quarter of 2024 was -17.9% compared with -30.8% for the first quarter of 2023.

Second Quarter 2024 Guidance

For the second quarter of 2024, the Company expects revenues to be in the range of $47 million to $52 million and adjusted EBITDA margin between –10% to 0%.

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 1-800-717-1738 or 1-646-307-1865. The toll-free Israeli number is 972 3 384 8161. The conference confirmation code is 61743.

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 1161743. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on May 22, 2024. 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 adverse macro-economic headwinds that were caused by inflationary pressures and higher interest rates, which have impacted, 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, and the Company’s Apollo direct-to-garment platform; 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 and consumables; 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, 2023, filed with the SEC on March 28, 2024. 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; 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 MaymonGlobal Head of Investor Relations & Strategic FinanceJared.Maymon@Kornit.com 

 
KORNIT DIGITAL LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
     
  March 31, December 31,
   2024   2023 
  (Unaudited) (Audited)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $6,501  $39,605 
Short-term bank deposit  259,997   235,600 
Marketable securities  107,401   57,292 
Trade receivables, net  80,727   93,632 
Inventory  67,016   67,712 
Other accounts receivable and prepaid expenses  28,032   28,546 
Total current assets  549,674   522,387 
     
LONG-TERM ASSETS:    
Marketable securities  177,518   223,203 
Deposits and other long-term assets  8,917   8,209 
Severance pay fund  289   283 
Property, plant and equipment, net  49,948   50,905 
Operating lease right-of-use assets  20,348   23,782 
Intangible assets, net  7,134   7,647 
Goodwill  29,164   29,164 
Total long-term assets  293,318   343,193 
     
Total assets  842,992   865,580 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Trade payables  2,949   6,936 
Employees and payroll accruals  10,375   12,121 
Deferred revenues and advances from customers  1,850   2,158 
Operating lease liabilities  3,682   5,073 
Other payables and accrued expenses  21,997   23,814 
Total current liabilities  40,853   50,102 
     
LONG-TERM LIABILITIES:    
Accrued severance pay  1,054   1,080 
Operating lease liabilities  16,403   18,533 
Other long-term liabilities  112   198 
Total long-term liabilities  17,569   19,811 
     
SHAREHOLDERS' EQUITY  784,570   795,667 
     
Total liabilities and shareholders' equity $842,992  $865,580 
     

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,
  2024   2023 
 (Unaudited)
    
Revenues   
Products$29,013  $31,903 
Services 14,763   15,875 
Total revenues 43,776   47,778 
    
Cost of revenues   
Products 15,691   20,379 
Services 13,946   14,327 
Total cost of revenues 29,637   34,706 
    
Gross profit 14,139   13,072 
    
Operating expenses:   
Research and development, net 11,352   13,082 
Sales and marketing 13,796   15,183 
General and administrative 7,277   8,948 
Total operating expenses 32,425   37,213 
    
Operating loss (18,286)  (24,141)
    
Financial income, net 5,346   5,404 
Loss before taxes on income (12,940)  (18,737)
    
Taxes on income 259   194 
Net loss$(13,199) $(18,931)
    
Basic loss per share$(0.28) $(0.38)
    
    
Weighted average number of shares   
used in computing basic net loss per share 47,611,456   49,887,982 
    
    
Diluted net loss per share$(0.28) $(0.38)
    
    
Weighted average number of shares   
used in computing diluted net loss per share 47,611,456   49,887,982 
    

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,
   2024   2023 
  (Unaudited)
     
Revenues$43,776  $47,778 
     
     
GAAP cost of revenues$29,637  $34,706 
Cost of product recorded for share-based compensation (1) (502)  (507)
Cost of service recorded for share-based compensation (1) (419)  (351)
Intangible assets amortization on cost of product (2) (265)  (263)
Intangible assets amortization on cost of service (2) (160)  (160)
Restructuring expenses (3) (914)  (89)
Non-GAAP cost of revenues$27,377  $33,336 
     
     
GAAP gross profit$14,139  $13,072 
Gross profit adjustments 2,260   1,370 
Non-GAAP gross profit$16,399  $14,442 
     
     
GAAP operating expenses$32,425  $37,213 
Share-based compensation (1) (4,527)  (4,387)
Intangible assets amortization (2) (88)  (188)
Restructuring expenses (3) (757)  (206)
Non-GAAP operating expenses$27,053  $32,432 
     
     
GAAP Financial income, net$5,346  $5,404 
Foreign exchange losses associated with ASC 842 385   (376)
Non-GAAP Financial income , net$5,731  $5,028 
     
     
GAAP Taxes on income$259  $194 
Non-cash deferred tax income$87  $221 
Non-GAAP Taxes on income$346  $415 
     
     
GAAP net loss$(13,199) $(18,931)
Share-based compensation (1) 5,448   5,245 
Intangible assets amortization (2) 513   611 
Restructuring expenses (3) 1,671   295 
Foreign exchange losses associated with ASC 842 385   (376)
Non-cash deferred tax income (87)  (221)
Non-GAAP net loss$(5,269) $(13,377)
     
GAAP diluted loss per share$(0.28) $(0.38)
     
Non-GAAP diluted loss per share$(0.11) $(0.27)
     
Weighted average number of shares   
     
Shares used in computing GAAP diluted net loss per share 47,611,456   49,887,982 
     
Shares used in computing Non-GAAP diluted net loss per share 47,611,456   49,887,982 
     
     
(1) Share-based compensation   
 Cost of product revenues$502  $507 
 Cost of service revenues$419   351 
 Research and development$1,295   1,351 
 Sales and marketing$1,582   1,363 
 General and administrative$1,650   1,673 
  $5,448  $5,245 
(2) Intangible assets amortization   
 Cost of product revenues$265  $263 
 Cost of service revenues$160   160 
 Sales and marketing$88   188 
  $513  $611 
     
(3) Restructuring expenses   
 Cost of product revenues$865  $89 
 Cost of service revenues$49   - 
 Research and development$235   20 
 Sales and marketing$190   186 
 General and administrative$332   - 
  $1,671  $295 
     

KORNIT DIGITAL LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
 
 Three Months Ended
 March 31,
  2024   2023 
 (Unaudited)
Cash flows from operating activities:   
    
Net loss$(13,199) $(18,931)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization 3,324   3,873 
Fair value of warrants deducted from revenues 3,586   2,344 
Share-based compensation 5,448   5,245 
Amortization of premium and accretion of discount on marketable securities, net (7)  323 
Realized loss on sale and redemption of marketable securities -   40 
Change in operating assets and liabilities:   
Trade receivables, net 12,905   (5,608)
Other accounts receivables and prepaid expenses 514   916 
Inventory (96)  (3,023)
Operating leases right-of-use assets and liabilities, net (87)  (457)
Deposits and other long term assets (708)  (1,027)
Trade payables (3,765)  (1,477)
Employees and payroll accruals (1,152)  737 
Deferred revenues and advances from customers (308)  (1,038)
Other payables and accrued expenses (2,313)  4,340 
Accrued severance pay, net (32)  99 
Other long - term liabilities (86)  (360)
Net cash provided by (used in) operating activities$4,024  $(14,004)
    
Cash flows from investing activities:   
    
Purchase of property, plant and equipment$(1,284) $(3,278)
Proceeds from (investment in) short-term bank deposits, net (24,397)  274,932 
Proceeds from sales and redemption of marketable securities 3,494   4,000 
Proceeds from maturities of marketable securities 11,298   3,572 
Investment in marketable securities (18,017)  (10,024)
Net cash provided by (used in) investing activities$(28,906) $269,202 
    
    
Cash flows from financing activities:   
    
Exercise of employee stock options$-  $42 
Payments related to shares withheld for taxes (594)  (135)
Repurchase of ordinary shares (7,628)  (6,752)
Net cash used in financing activities$(8,222) $(6,845)
    
    
    
Increase (decrease) in cash and cash equivalents$(33,104) $248,353 
Cash and cash equivalents at the beginning of the period 39,605   104,597 
Cash and cash equivalents at the end of the period$6,501  $352,950 
    
    
    
Non-cash investing and financing activities:   
    
Purchase of property and equipment on credit 92   173 
Inventory transferred to be used as property and equipment 946   365 
Property, plant and equipment transferred to be used as inventory 154   653 
Lease liabilities arising from obtaining right-of-use assets (1,746)  6,037 
    

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,
   2024   2023 
  (Unaudited)
     
GAAP Revenues $43,776  $47,778 
     
GAAP Net Loss  (13,199)  (18,931)
Taxes on income  259   194 
Financial income  (5,346)  (5,404)
Share-based compensation  5,448   5,245 
Intangible assets amortization  513   611 
Restructuring expenses  1,671   295 
Non-GAAP Operating Loss  (10,654)  (17,990)
Depreciation  2,811   3,262 
Adjusted EBITDA $(7,843) $(14,728)

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Source: Kornit Digital Ltd

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