EX-99.1 2 ea150248ex99-1_kornitdigital.htm PRESS RELEASE, DATED NOVEMBER 10, 2021, TITLED "KORNIT DIGITAL REPORTS THIRD QUARTER 2021 RESULTS"

Exhibit 99.1

 

Investor Contact:

 

Andrew G. Backman

Global Head of Investor Relations

andrew.backman@kornit.com

 

 

Kornit Digital Reports Record Third Quarter 2021 Results

 

●Revenue up 51% year-over-year to $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants; Record revenues across all regions, strong profitability, and operating cash flows

 

●Third quarter GAAP operating profit of $3.9 million; Non-GAAP operating profit of $8.6 million, net of $7.9 million attributed to the non-cash impact of warrants

 

●New industry transforming innovative platforms; Atlas MAX and Presto MAX extremely well received by market; Robust new product introductions planned for early 2022

 

●Company’s inspirational global fashion tech platform in Los Angeles, New York, Italy, and Japan drives creativity, sustainability, and inclusiveness to the forefront of the fashion world, utilizing Kornit’s on-demand technologies

 

●Enters 2022 with extremely strong business fundamentals, momentum, and pipeline

 

Rosh-Ha’Ayin, Israel – November 10, 2021 – Kornit Digital Ltd. (NASDAQ: KRNT), a worldwide market leader in sustainable, on-demand, digital textile production technologies, reported today results for the third quarter ended September 30, 2021.

 

“I am extremely proud of our phenomenal third quarter performance, with record revenues across all regions, strong profitability and operating cash flows,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “We are witnessing the change in the fashion industry with an acceleration to sustainable, on-demand production -- a revolutionary moment in how we all think and act about fashion, from the need for self-expression, to responsible production. Kornit is leading the digital transformation the fashion industry must make with innovative solutions that break the barriers between imagination and physical applications.”

 

Mr. Samuel concluded, “We enter 2022 with very strong business fundamentals supported by broad-based demand for our industry leading solutions. This growing demand and market acceptance puts us firmly on the path of becoming a $1 billion revenue company in 2026.”

 

The following table compares the adverse, non-cash impact that the Company’s outstanding warrants had on the Company’s results of operations during the third quarters of 2021 and 2020, respectively:

 

 

 

 

Third Quarter Warrants Impact

 

   Three Months Ended 
   September 30, 
   2021   2020 
   Net of
Warrants
Impact		   Warrants
Impact		   Net of
Warrants
Impact		   Warrants
Impact		 
                 
Revenue  $86.7M  $7.9M  $57.4M  $2.2M
Non-GAAP Gross Margin   47.8%   4.3%   48.1%   1.9%
Non-GAAP Operating Margin   9.9%   7.5%   11.3%   3.2%
Non-GAAP Net Margin   13.3%   7.2%   13.5%   3.1%
Non-GAAP Diluted Earnings Per Share  $0.24   $0.16   $0.18   $0.05 

 

“We are very pleased with our strong third quarter performance, which continued our momentum from the first half of the year,” said Alon Rozner, Kornit Digital’s Chief Financial Officer. “We are focused on ending the year strong and supporting our customers to ensure they are ready for their peak season. We enter 2022 in a phenomenal position with outstanding business fundamentals, a robust backlog and strong pipeline.”

 

Third Quarter 2021 Results of Operations

 

●Total revenue for the third quarter of 2021 was $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants, compared to $57.4 million, net of $2.2 million attributed to the non-cash impact of warrants in the prior year period.

 

●GAAP net income for the third quarter of 2021 was $3.9 million, or $0.08 per diluted share, compared to $3.9 million, or $0.09 per share, for the third quarter of 2020.

 

●Non-GAAP net income for the third quarter of 2021 was $11.5 million, or $0.24 per diluted share, net of $0.16 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net profit of $7.7 million, or $0.18 per diluted share, net of $0.05 per diluted share attributed to the non-cash impact of warrants, for the third quarter of 2020.

 

Fourth Quarter 2021 Guidance

 

For the fourth quarter of 2021, and assuming zero impact from the fair value of issued warrants in the quarter, the Company expects revenue to be in the range of $89 million to $93 million and non-GAAP operating income to be in the range of 13.0% to 15.0% of revenue.

 

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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 investment 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 confirmation code is 13724287.

 

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 13724287. The telephonic replay will be available beginning at 11:30 a.m. ET on Wednesday, November 10, 2021, until 11:59 p.m. ET on Wednesday, November 24, 2021. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

 

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 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 Kornit’s systems; the extent of the Company’s ability to continue to increase sales of Kornit’s systems, ink and consumables; the extent of the Company’s ability to leverage Kornit’s 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; the duration and severity of, and the degree of recovery from, the global COVID-19 pandemic, which could potentially impact once again, in a material adverse manner, the Company’s operations, financial position and cash flows, and those of the Company’s customers and suppliers; 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, 2020, filed with the U.S. Securities and Exchange Commission, or SEC, on March 25, 2021. 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.

 

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The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Kornit urges investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measures to evaluate its business. A reconciliation for non-GAAP operating income guidance set forth above is not provided because, as forward-looking statements, such reconciliation is not available without unreasonable effort due to the high variability, complexity, and difficulty of estimating certain items such as charges to share-based compensation expense and currency fluctuations which could have an impact on its consolidated results. Kornit believes the information provided is useful to investors because it can be considered in the context of Kornit’s historical disclosures of this measure.

 

Non-GAAP Discussion Disclosure

 

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, acquisition related expenses, excess cost of acquired inventory, foreign exchange differences associated with ASC 842, amortization of acquired intangible assets, deferred tax impact and the one-time impact of COVID-19, and the tax effect of the foregoing. The purpose of such adjustments is to provide an indication of 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. However, 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.

 

About Kornit

 

Kornit Digital (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashion 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.

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 

   September 30,   December 31, 
   2021   2020 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents  $96,668   $125,777 
Short-term bank deposit   241,103    224,804 
Marketable securities   25,920    13,718 
Trade receivables, net   49,866    51,566 
Inventory   55,344    52,487 
Other accounts receivable and prepaid expenses   11,148    9,178 
Total current assets   480,049    477,530 
           
LONG-TERM ASSETS:          
Marketable securities   93,816    71,636 
Deposits and prepaid expenses   471    395 
Severance pay fund   342    337 
Deferred taxes   7,054    5,096 
Property,plant and equipment, net   38,401    29,255 
Operating lease right-of-use assets   22,122    21,053 
Intangible assets, net   10,479    7,221 
Goodwill   25,447    16,466 
Total long-term assets   198,132    151,459 
           
Total assets  $678,181   $628,989 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Trade payables  $30,630   $32,016 
Employees and payroll accruals   22,238    15,022 
Deferred revenues and advances from customers   11,719    27,019 
Operating lease liabilities   4,461    3,957 
Other payables and accrued expenses   22,116    11,613 
Total current liabilities   91,164    89,627 
           
LONG-TERM LIABILITIES:          
Accrued severance pay   1,327    1,214 
Operating lease liabilities   18,856    18,688 
Other long-term liabilities   1,699    443 
Total long-term liabilities   21,882    20,345 
           
SHAREHOLDERS’ EQUITY   565,135    519,017 
           
Total liabilities and shareholders’ equity  $678,181   $628,989 

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

 

   Nine Months Ended   Three Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
   (Unaudited)   (Unaudited) 
Revenues                
Products  $206,682   $103,536   $76,560   $49,290 
Services   27,776    17,504    10,109    8,102 
Total revenues   234,458    121,040    86,669    57,392 
                     
Cost of revenues                    
Products   98,457    50,117    36,028    23,031 
Services   26,477    20,066    10,109    7,330 
Total cost of revenues   124,934    70,183    46,137    30,361 
                     
Gross profit   109,524    50,857    40,532    27,031 
                     
Operating expenses:                    
Research and development, net   30,736    22,213    11,493    8,689 
Sales and marketing   40,716    25,375    15,837    8,587 
General and administrative   24,972    18,957    9,283    7,093 
Total operating   96,424    66,545    36,613    24,369 
Operating income (loss)   13,100    (15,688)   3,919    2,662 
Financial income, net   2,635    4,427    219    1,630 
Income (loss) before taxes on income   15,735    (11,261)   4,138    4,292 
                     
Taxes on income (benefit)   1,162    (577)   266    350 
Net income (loss)   14,573    (10,684)   3,872    3,942 
                     
Basic net income (loss) per share  $0.32   $(0.26)  $0.08   $0.09 
                     
Weighted average number of shares used in computing basic net income (loss) per share   46,200,884    41,059,090    46,361,164    41,536,835 
                     
Diluted net income (loss) per share  $0.30   $(0.26)  $0.08   $0.09 
                     
Weighted average number of shares used in computing diluted net income (loss) per share   47,846,077    41,059,090    48,116,716    42,692,989 

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

 

   Nine Months Ended   Three Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
   (Unaudited)   (Unaudited) 
Revenues  $234,458   $121,040   $86,669   $57,392 
                     
GAAP cost of revenues  $124,934   $70,183    46,137    30,361 
Cost of product recorded for share-based compensation (1)   (1,000)   (772)   (381)   (281)
Cost of service recorded for share-based compensation (1)   (750)   (568)   (251)   (208)
Intangible assets amortization on cost of product (3)   (161)   (75)   (111)   (25)
Intangible assets amortization on cost of service (3)   (480)   -    (160)   - 
Coronavirus one time impact (4)   -    (520)   -    (74)
Non-GAAP cost of revenues  $122,543   $68,248   $45,234   $29,773 
                     
GAAP gross profit  $109,524   $50,857    40,532    27,031 
Gross profit adjustments   2,391    1,935    903    588 
Non-GAAP gross profit  $111,915   $52,792   $41,435   $27,619 
                     
GAAP operating expenses  $96,424   $66,545   $36,613   $24,369 
Share-based compensation (1)   (9,219)   (5,970)   (3,438)   (2,191)
Acquisition related expenses (2)   (194)   (648)   (194)   (648)
Intangible assets amortization (3)   (336)   (622)   (98)   (371)
Coronavirus one time impact (4)   -    69    -    - 
Non-GAAP operating expenses  $86,675   $59,374   $32,883   $21,159 
                     
GAAP Financial income (expenses), net  $2,635   $4,427   $219   $1,630 
Foreign exchange losses associated with ASC 842   (302)   28    113    110 
Non-GAAP Financial income (expenses), net  $2,333   $4,455   $332   $1,740 
                     
GAAP Taxes on income (benefit)  $1,162   $(577)  $266   $350 
Tax effect on to the above non-GAAP adjustments   (1,954)   346    (2,119)   526 
Deferred tax benefit based on an Israeli statutory tax rate (a)   (1,360)   610    (774)   (405)
Non-GAAP Taxes on income (benefit)  $(2,152)  $379   $(2,627)  $471 
                     
GAAP net income (loss)  $14,573   $(10,684)  $3,872   $3,942 
Share-based compensation (1)   10,969    7,310    4,070    2,680 
Acquisition related expenses (2)   194    648    194    648 
Intangible assets amortization (3)   977    697    369    396 
Coronavirus one time impact (4)   -    451    -    74 
Foreign exchange losses associated with ASC 842   (302)   28    113    110 
Tax effect on to the above non-GAAP adjustments   1,954    (346)   2,119    (526)
Deferred tax benefit based on an Israeli statutory tax rate (a)   1,360    (610)   774    405 
Non-GAAP net income (loss)  $29,725   $(2,506)  $11,511   $7,729 
                     
GAAP diluted earning (loss) per share  $0.30   $(0.26)  $0.08   $0.09 
                     
Non-GAAP diluted earning (loss) per share  $0.62   $(0.06)  $0.24   $0.18 
                     
Weighted average number of shares                    
                     
Shares used in computing GAAP diluted net earning (loss) per share   47,846,077    41,059,090    48,116,716    42,692,989 
                     
Shares used in computing Non-GAAP diluted net earning (loss) per share   48,082,118    41,059,090    48,361,472    42,972,182 
                     
(1) Share-based compensation                    
Cost of product revenues   1,000    772    381    281 
Cost of service revenues   750    568    251    208 
Research and development   1,810    1,243    739    463 
Selling and marketing   3,651    2,150    1,318    769 
General and administrative   3,758    2,577    1,381    959 
    10,969    7,310    4,070    2,680 
                     
(2) Acquisition related expenses                    
General and administrative   194    648    194    648 
    194    648    194    648 
                     
(3) Intangible assets amortization                    
Cost of product revenues   161    75    111    25 
Cost of service revenues   480    -    160    - 
Research and development   -    315    -    315 
Selling and marketing   336    307    98    56 
    977    697    369    396 
                     
(4) Coronavirus one time impact                    
Cost of product revenues   -    527    -    74 
Cost of service revenues   -    -7    -    - 
Research and development   -    -57    -    - 
Selling and marketing   -    -1    -    - 
General and administrative   -    -11    -    - 
    -    451    -    74 

 

(a)Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel.

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

   Nine Months Ended   Three Months Ended 
   September 30,   September 30, 
   2021   2020   2021   2020 
   (Unaudited)   (Unaudited) 
Cash flows from operating activities:                
                 
Net income (loss)  $14,573   $(10,684)  $3,872   $3,942 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Depreciation and amortization   4,945    3,411    1,910    1,215 
Fair value of warrants deducted from revenues   17,568    3,564    7,857    2,158 
Share-based compensation   10,969    7,310    4,070    2,680 
Amortization of premium and accretion of discount on marketable securities, net   (1,652)   248    (354)   83 
Realized loss (gain) on sale of marketable securities   -    (503)   -    (401)
Change in operating assets and liabilities:                    
Trade receivables   1,713    (7,933)   12,798    (8,549)
Other receivables and prepaid expenses   (1,853)   (1,615)   (340)   (771)
Inventory   (3,765)   (9,529)   (3,239)   (4,324)
Operating lease right-of-use assets and liabilities, net   (397)   -    122    49 
Deferred taxes, net   (1,866)   (823)   (2,111)   561 
Other long term assets   (76)   38    55    120 
Trade payables   (2,400)   571    17    10,462 
Employees and payroll accruals   8,878    4,318    6,774    3,983 
Deferred revenues and advances from customers   (15,350)   7,663    (3,949)   7,770 
Payables and accrued expenses   10,479    2,120    4,803    1,688 
Severance pay, net   108    81    59    18 
Other long term liabilities   1,256    48    456    191 
Sale of property and Equipment   -    75    -    - 
Foreign currency translation income (loss) on inter company balances with foreign subsidiaries   -    (294)   -    (477)
                     
Net cash provided by (used in) operating activities   43,130    (1,934)   32,800    20,398 
                     
Cash flows from investing activities:                    
                     
Purchase of property and equipment   (9,422)   (10,758)   (3,867)   (2,247)
Capitalization of software development costs   -    (121)   -    - 
Proceeds from sale of property and equipment   -    4    -    - 
Cash paid in connection with acquisition, net of cash acquired   (14,991)   (15,059)   (14,991)   (15,059)
Investment in (proceeds from) bank deposits   (16,299)   43,192    (6,167)   27,996 
Proceeds from sale of marketable securities   -    58,532    -    37,730 
Proceeds from maturity of marketable securities   10,304    20,006    8,254    2,561 
Investment in marketable securities   (44,310)   (18,542)   (13,800)   - 
                     
Net cash provided by (used in) investing activities   (74,718)   77,254    (30,571)   50,981 
                     
Cash flows from financing activities:                    
                     
Exercise of employee stock options   4,141    4,942    2,387    2,138 
Payments related to shares withheld for taxes   (1,662)   (82)   (516)   (18)
Proceeds from public offering, net of issuance costs   -    162,720    -    162,720 
                     
Net cash provided by financing activities   2,479    167,580    1,871    164,840 
                     
Foreign currency translation adjustments on cash and cash equivalents   -    37    -    13 
Increase (decrease) in cash and cash equivalents   (29,109)   242,937    4,100    236,232 
Cash and cash equivalents at the beginning of the period   125,777    40,743    92,568    47,448 
Cash and cash equivalents at the end of the period   96,668    283,680    96,668    283,680 
                     
Non-cash investing and financing activities:                    
                     
Purchase of property and equipment on credit    1,907    382    1,907    382 
Inventory transferred to be used as property and equipment   931    823    51    312 
Issuance expenses on credit    -    739    -    739 
Lease liabilities arising from obtaining right-of-use assets    1,517    2,769    1,033    849 

 

 

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