Kornit Digital Ltd. (“Kornit” or the “Company”) (Nasdaq: KRNT), a global leader in sustainable, on-demand, digital fashion and textile production technologies, today reported results for the third quarter ended September 30, 2024.

“I am very pleased with the operational progress we achieved this quarter. We delivered gross margin expansion, returned to adjusted EBITDA profitability, and maintained positive cash generation as planned,” said Ronen Samuel, Kornit’s Chief Executive Officer.

He continued, “Our unsurpassed Apollo and MAX-powered products combined with our revamped go-to-market and our All-Inclusive-Click model are already expanding our serviceable market. This quarter we announced new customers such as Print Palace and Custom Ink that have chosen Kornit to shift their production from screen to digital-direct-to-garment. We are simultaneously seeing signs of a return to a growth-focused mindset from our core market with customers such as Monster Digital, Mad Engine Global and DO Apparel, all of whom have announced expansion of their on-demand digital production fleets with Kornit.”

“We are entering 2025 with the right products and the right model, and we are laser-focused on executing the plan we laid out at our Investor Event in September,” Mr. Samuel concluded.

Third Quarter 2024 Results of Operations

  • Total revenue for the third quarter of 2024 was $50.7 million compared with $59.2 million in the prior year period, due primarily to lower systems revenues.
  • GAAP gross profit margin for the third quarter of 2024 was 47.7% compared with 34.8% in the prior year period. On a non-GAAP basis, gross profit margin was 50.3% compared with 37.4% in the prior year period.
  • GAAP operating expenses for the third quarter of 2024 were $31.3 million compared with $35.3 million in the prior year period. On a non-GAAP basis, operating expenses decreased by 14% to $26.8 million compared with the prior year period.
  • GAAP net loss for the third quarter of 2024 was $0.9 million, or ($0.02) per basic share, compared with net loss of $8.2 million, or ($0.17) per basic share, for the third quarter of 2023.
  • Non-GAAP net income for the third quarter of 2024 was $5.5 million, or $0.11 per diluted share, compared with non-GAAP net loss of $3.4 million, or ($0.07) per basic share, for the third quarter of 2023.
  • Adjusted EBITDA for the third quarter of 2024 was $1.5 million compared with adjusted EBITDA loss of $5.6 million for the third quarter of 2023. Adjusted EBITDA margin for the third quarter of 2024 was 2.9% compared with -9.5% for the third quarter of 2023.

Fourth Quarter 2024 Guidance

For the fourth quarter of 2024, the Company expects revenues to be in the range of $58 million to $63 million and adjusted EBITDA margin between 12% to 16%.

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 international number is 1 809 406 247.

To listen to a replay of the conference call, dial toll-free 1-844-512-2921 or 1-412-317-6671 and enter access ID 13746039. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on November 20, 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 fashion, and textile production technologies. The company offers end-to-end solutions including digital printing systems, inks, consumables, software, and fulfillment services through its global fulfillment network. 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)
         
    September 30,   December 31,
     2024    2023
    (Unaudited)   (Audited)
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents   $ 113,861   $ 39,605
Short-term bank deposit     169,401     235,600
Marketable securities     217,949     57,292
Trade receivables, net     74,132     93,632
Inventory     66,326     67,712
Other accounts receivable and prepaid expenses     27,509     28,546
Total current assets     669,178     522,387
         
LONG-TERM ASSETS:        
Marketable securities     59,910     223,203
Deposits and other long-term assets     20,704     8,209
Severance pay fund     298     283
Property, plant and equipment, net     46,144     50,905
Operating lease right-of-use assets     19,248     23,782
Intangible assets, net     6,145     7,647
Goodwill     29,164     29,164
Total long-term assets     181,613     343,193
         
Total assets     850,791     865,580
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Trade payables     5,061     6,936
Employees and payroll accruals     12,483     12,121
Deferred revenues and advances from customers     1,541     2,158
Operating lease liabilities     3,251     5,073
Other payables and accrued expenses     18,210     23,814
Total current liabilities     40,546     50,102
         
LONG-TERM LIABILITIES:        
Accrued severance pay     1,037     1,080
Operating lease liabilities     15,585     18,533
Other long-term liabilities     118     198
Total long-term liabilities     16,740     19,811
         
SHAREHOLDERS' EQUITY     793,505     795,667
         
Total liabilities and shareholders' equity   $ 850,791   $ 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   Nine Months Ended
  September 30,   September 30,
    2024       2023       2024       2023  
  (Unaudited)   (Unaudited)
               
Revenues              
Products $ 36,996     $ 45,486     $ 100,375     $ 117,472  
Services   13,736       13,738       42,754       45,729  
Total revenues   50,732       59,224       143,129       163,201  
               
Cost of revenues              
Products   14,647       25,392       43,609       68,391  
Services   11,875       13,212       38,887       42,425  
Total cost of revenues   26,522       38,604       82,496       110,816  
               
Gross profit   24,210       20,620       60,633       52,385  
               
Operating expenses:              
Research and development, net   9,973       12,038       31,797       38,027  
Sales and marketing   14,441       15,586       43,213       48,927  
General and administrative   6,919       7,654       21,728       25,143  
Total operating expenses   31,333       35,278       96,738       112,097  
               
Operating loss   (7,123 )     (14,658 )     (36,105 )     (59,712 )
               
Financial income, net   6,720       6,304       18,501       18,726  
Loss before taxes on income   (403 )     (8,354 )     (17,604 )     (40,986 )
               
Taxes on income (tax benefit)   505       (193 )     1,412       431  
Net loss $ (908 )   $ (8,161 )   $ (19,016 )   $ (41,417 )
               
Basic loss per share $ (0.02 )   $ (0.17 )   $ (0.40 )   $ (0.84 )
               
               
Weighted average number of shares              
used in computing basic net loss per share   47,604,224       48,968,244       47,583,631       49,469,717  
               
               
Diluted loss per share $ (0.02 )   $ (0.17 )   $ (0.40 )   $ (0.84 )
               
               
Weighted average number of shares              
used in computing diluted net loss per share   47,604,224       48,968,244       47,583,631       49,469,717  
               
       
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,
      2024       2023       2024       2023  
    (Unaudited)   (Unaudited)
                 
Revenues $ 50,732     $ 59,224     $ 143,129     $ 163,201  
                 
                 
GAAP cost of revenues $ 26,522     $ 38,604     $ 82,496     $ 110,816  
Cost of product recorded for share-based compensation (1)   (502 )     (632 )     (1,494 )     (1,811 )
Cost of service recorded for share-based compensation (1)   (422 )     (467 )     (1,294 )     (1,311 )
Intangible assets amortization on cost of product (2)   (231 )     (267 )     (760 )     (793 )
Intangible assets amortization on cost of service (2)   (160 )     (160 )     (480 )     (480 )
Restructuring expenses (3)   -       -       (914 )     (89 )
Non-GAAP cost of revenues $ 25,207     $ 37,078     $ 77,554     $ 106,332  
                 
                 
GAAP gross profit $ 24,210     $ 20,620     $ 60,633     $ 52,385  
Gross profit adjustments   1,315       1,526       4,942       4,484  
Non-GAAP gross profit $ 25,525     $ 22,146     $ 65,575     $ 56,869  
                 
                 
GAAP operating expenses $ 31,333     $ 35,278     $ 96,738     $ 112,097  
Share-based compensation (1)   (4,431 )     (4,050 )     (13,884 )     (13,822 )
Intangible assets amortization (2)   (87 )     (117 )     (262 )     (457 )
Restructuring expenses (3)   -       -       (757 )     (206 )
Non-GAAP operating expenses $ 26,815     $ 31,111     $ 81,835     $ 97,612  
                 
                 
GAAP Financial income, net $ 6,720     $ 6,304     $ 18,501     $ 18,726  
Foreign exchange losses associated with ASC 842   441       (704 )     557       (1,201 )
Non-GAAP Financial income , net $ 7,161     $ 5,600     $ 19,058     $ 17,525  
                 
                 
GAAP Taxes on income $ 505     $ (193 )   $ 1,412     $ 431  
Non-cash deferred tax income   (173 )     255       -       578  
Non-GAAP Taxes on income $ 332     $ 62     $ 1,412     $ 1,009  
                 
                 
GAAP net loss $ (908 )   $ (8,161 )   $ (19,016 )   $ (41,417 )
Share-based compensation (1)   5,355       5,149       16,672       16,944  
Intangible assets amortization (2)   478       544       1,502       1,730  
Restructuring expenses (3)   -       -       1,671       295  
Foreign exchange losses associated with ASC 842   441       (704 )     557       (1,201 )
Non-cash deferred tax income   173       (255 )     -       (578 )
Non-GAAP net income (loss) $ 5,539     $ (3,427 )   $ 1,386     $ (24,227 )
                 
GAAP diluted loss per share $ (0.02 )   $ (0.17 )   $ (0.40 )   $ (0.84 )
                 
Non-GAAP diluted income (loss) per share $ 0.11     $ (0.07 )   $ 0.03     $ (0.49 )
                 
Weighted average number of shares              
                 
Shares used in computing GAAP diluted net loss per share   47,604,224       48,968,244       47,583,631       49,469,717  
                 
Shares used in computing Non-GAAP diluted net loss per share   49,988,803       48,968,244       49,166,345       49,469,717  
                 
                 
(1) Share-based compensation              
  Cost of product revenues $ 502     $ 632     $ 1,494     $ 1,811  
  Cost of service revenues   422       467       1,294       1,311  
  Research and development   1,384       1,478       4,055       4,430  
  Sales and marketing   1,650       1,747       5,016       5,054  
  General and administrative   1,397       825       4,813       4,338  
    $ 5,355     $ 5,149     $ 16,672     $ 16,944  
(2) Intangible assets amortization              
  Cost of product revenues $ 231     $ 267     $ 760     $ 793  
  Cost of service revenues   160       160       480       480  
  Sales and marketing   87       117       262       457  
    $ 478     $ 544     $ 1,502     $ 1,730  
                 
(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   Nine Months Ended
  September 30,   September 30,
    2024       2023       2024       2023  
  (Unaudited)   (Unaudited)
Cash flows from operating activities:              
               
Net loss $ (908 )   $ (8,161 )   $ (19,016 )   $ (41,417 )
Adjustments to reconcile net loss to net cash used in operating activities:              
Depreciation and amortization   3,219       3,886       9,734       11,413  
Fair value of warrants deducted from revenues   -       3,325       3,273       9,001  
Share-based compensation   5,355       5,149       16,672       16,944  
Amortization of premium and accretion of discount on marketable securities, net   (287 )     148       (278 )     673  
Realized loss on sale and redemption of marketable securities   -       44       -       41  
Change in operating assets and liabilities:              
Trade receivables, net   5,329       (8,921 )     19,500       (25,777 )
Other accounts receivables and prepaid expenses   (447 )     (686 )     1,037       (1,452 )
Inventory   4,094       4,567       130       6,507  
Operating leases right-of-use assets and liabilities, net   339       (711 )     (236 )     (1,723 )
Deposits and other long term assets   (440 )     (301 )     (1,659 )     (2,179 )
Trade payables   227       (1,887 )     (1,706 )     (3,589 )
Employees and payroll accruals   914       (1,284 )     1,436       1,205  
Deferred revenues and advances from customers   55       (414 )     (617 )     (3,651 )
Other payables and accrued expenses   (3,880 )     (2,152 )     (6,070 )     (2,190 )
Accrued severance pay, net   4       (76 )     (58 )     (138 )
Other long - term liabilities   (20 )     (254 )     (80 )     (944 )
Net cash provided by (used in) operating activities   13,554       (7,728 )     22,062       (37,276 )
               
Cash flows from investing activities:              
               
Purchase of property, plant and equipment   (774 )     (1,003 )     (3,497 )     (6,072 )
Investing in long term assets   (9,723 )     -       (9,723 )     -  
Proceeds from short-term bank deposits, net   73,995       3       66,199       54,938  
Proceeds from sales and redemption of marketable securities   7,000       1,990       10,494       7,240  
Proceeds from maturities of marketable securities   8,750       2,970       44,629       14,222  
Investment in marketable securities   (1,282 )     (5,516 )     (45,901 )     (24,451 )
Net cash provided by (used in) investing activities   77,966       (1,556 )     62,201       45,877  
               
               
Cash flows from financing activities:              
               
Exercise of employee stock options   115       198       122       293  
Payments related to shares withheld for taxes   (296 )     -       (1,074 )     (437 )
Repurchase of ordinary shares   -       (15,948 )     (9,055 )     (36,766 )
Net cash used in financing activities   (181 )     (15,750 )     (10,007 )     (36,910 )
               
               
               
Increase (decrease) in cash and cash equivalents   91,339       (25,034 )     74,256       (28,309 )
Cash and cash equivalents at the beginning of the period   22,522       101,322       39,605       104,597  
Cash and cash equivalents at the end of the period $ 113,861     $ 76,288     $ 113,861     $ 76,288  
               
               
               
Non-cash investing and financing activities:              
               
Purchase of property and equipment on credit   145       74       145       74  
Inventory transferred to be used as property and equipment and long term assets   175       531       1,576       531  
Property, plant and equipment transferred to be used as inventory   -       -       320       734  
Lease liabilities arising from obtaining right-of-use assets   337       322       (1,071 )     5,809  
               
       
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,
      2024       2023       2024       2023  
    (Unaudited)   (Unaudited)
                 
GAAP Revenues   $ 50,732     $ 59,224     $ 143,129     $ 163,201  
                 
GAAP Net Loss     (908 )     (8,161 )     (19,016 )     (41,417 )
Taxes on income     505       (193 )     1,412       431  
Financial income     (6,720 )     (6,304 )     (18,501 )     (18,726 )
Share-based compensation     5,355       5,149       16,672       16,944  
Intangible assets amortization     478       544       1,502       1,730  
Restructuring expenses     -       -       1,671       295  
Non-GAAP Operating Loss     (1,290 )     (8,965 )     (16,260 )     (40,743 )
Depreciation     2,741       3,342       8,232       9,683  
Adjusted EBITDA   $ 1,451     $ (5,623 )   $ (8,028 )   $ (31,060 )
                 
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