Exhibit 99.2

KORNIT DIGITAL LTD.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

For the Six Months Ended June 30, 2022 

Comparison of Period to Period Results of Operations

Geographic Breakdown of Revenues

The following table sets forth the geographic breakdown of revenues from sales to customers located in the regions indicated below for the periods indicated:

Comparison of the Six Months Ended June 30, 2022 and 2021

Revenues

Revenues of Kornit Digital Ltd. (“Kornit” “we,” “us” or “our”) decreased by $6.4 million, or 4.3%, to $141.4 million in the six months ended June 30, 2022, from $147.8 million in the six months ended June 30, 2021, which is net of $12.5 million and $9.7 million, in the fair value of warrants associated with revenues recognized from Amazon, respectively. Systems revenues decreased 12.4% to $78.2 million in the six months ended June 30, 2022 from $89.3 million in the six months ended June 30, 2021, as offset in part by a 20.3% increase in service revenues to $21.3 million in the six months ended June 30, 2022, from $17.7 million in the six months ended June 30, 2021, and an increase of 2.7% in ink revenues to $41.9 million from $40.8 million in six months ended June 30, 2022. The decrease in systems revenues for the six months ended June 30, 2022 reflected the impact of lower DTG systems revenues, mainly in the Americas region, due in part to an overall recalibration of e-commerce growth, macroeconomic headwinds, and delays in completion of customer production facilities.

Cost of Revenues and Gross Profit

Cost of revenues increased by $8.7 million, or 11.0%, to $87.5 million in the six months ended June 30, 2022, from $78.8 million in the six months ended June 30, 2021. Gross profit decreased by $15.1 million, or 21.8%, to $53.9 million in the six months ended June 30, 2022, from $69.0 million in the six months ended June 30, 2021. Gross margin decreased to 38.1% in the six months ended June 30, 2022, compared to 46.7% in the six months ended June 30, 2021, The year-over-year decrease in gross margin was driven by materially lower systems revenues, mainly in the Americas region. Inventory write-offs amounted to $2.5 million in the six months ended June 30, 2022, compared to $2.2 million in the six months ended June 30, 2021.

Operating Expenses 

Research and Development, net. Research and development net expenses increased by 46.0% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase was mainly attributable to $5.9 million in salaries and related personnel expenses and share-based compensation due to an increase in the number of employees. In addition, depreciation expenses increased by $1.2 million due to an increase in the number of our systems utilized for research and development activities, while expenses related to facilities increased by $1.5, which corresponded with the increase in the number of employees during the six month period ended June 30, 2022 relative to the corresponding period of 2021. As a percentage of total revenues, our research and development expenses increased from 13.0% in the six months ended June 30, 2021 to 19.9% in the six months ended June 30, 2022.

Sales and Marketing. Sales and marketing expenses increased by 51.4% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021. This increase was primarily due to $5.4 million in salaries and related personnel expenses and share-based compensation expenses due to a higher number of employees and an increase in variable compensation payout during the six months ended June 30, 2022 compared to the six months ended June 30, 2021. In addition, the increase reflected $5.2 million in marketing activities and $1.2 million in travel expenses (as COVID-19 travel restrictions were gradually lifted in the first half of 2022 relative to the first half of 2021). As a percentage of total revenues, our sales and marketing expenses increased during this period, from 16.9% in the six months ended June 30, 2021 to 26.6% in the six months ended June 30, 2022.

General and Administrative. General and administrative expenses increased by 27.6% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021. This primarily resulted from: (i) an increase of $2.7 million in salaries, related personnel expenses and share-based compensation expenses, mainly due to our employment of additional personnel during the first six months of 2022, as well (ii) an increase of $0.8 million in expenses related to consulting services, and (iii) an increase of $0.4 million in travel expenses (as COVID-19 travel restrictions were gradually lifted in the first half of 2022 relative to the first half of 2021). As a percentage of total revenues, our general and administrative expenses increased from 10.6% in the six months ended June 30, 2021 to 14.1% in the six months ended June 30, 2022.

Financial income, net

Finance income, net totaled $6.1 million in the six months ended June 30, 2022, compared to $2.4 million in the six months ended June 30, 2021. The $3.7 million increase in finance income in the first half of 2022 relative to the corresponding period in 2021, mainly resulted from $2.5 million related to interest on marketable securities and bank deposits and $1.0 million in currency exchange gains.

Taxes on Income

Our tax benefits amounted to $1.0 million, in the six months ended June 30, 2022, compared to tax expenses of $0.9 million in the six months ended June 30, 2021. The change from tax expenses to tax benefits was mainly derived from the increase of deferred tax assets related to carry-forward losses.

Liquidity and Capital Resources

As of June 30, 2022, we had approximately $196.6 million in cash and cash equivalents, $260.1 million in short term deposits and $247.9 million in short-term and long-term marketable securities, which, in the aggregate, totaled $704.6 million. We fund our operations mostly with cash raised via our equity financings, including our January 2017, June 2019, and September 2021 follow-on offerings, as well as income from operations (for periods when we realize operating income).

As of June 30, 2022, we had a line of credit with an Israeli bank for total borrowings of up to 6.0 million New Israeli Shekels. This line of credit is unsecured and available provided that (i) we maintain a 30% ratio of total tangible shareholders' equity to total tangible assets and (ii) the total credit use is less than 70% of our receivables. Interest rates on this credit line varied from (a) 0.3% to (b) Prime (Israel Interbank Offered Rate) plus 0.7% (2.95% as of June 30, 2022).

Based on our current business plans, we believe that our cash flows from operating activities (when our operations are cash-flow positive) and our existing cash resources will be sufficient to fund our projected cash requirements for at least the next 12 months without drawing on our lines of credit or using cash on hand. Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts, the expansion of our sales and marketing activities, and the timing of introductions of new solutions and the continuing market acceptance of our solutions as well as other business development efforts.

The following table presents the major components of net cash flows for the periods presented:

Net Cash Provided by (used in) Operating Activities

Six Months Ended June 30, 2022

Net cash used in operating activities in the six months ended June 30, 2022 was $54.6 million.

Net cash used in operating activities consisted of a net loss of $24.7 million, as adjusted in an amount of $30.2 million for non-cash line items, including stock-based compensation expenses, depreciation, amortization of intangible assets, fair value of warrants deducted from revenues, amortization of premium on marketable securities, offset in part, by other adjustments not included hereunder in an amount of $4.4 million.

During the six months ended June 30, 2022, our accounts receivable increased by $9.0 million, which reduced cash provided by operating activities. Number of days receivables for each of the six-month periods ended June 30, 2022 and 2021 was 77 days.

During the six months ended June 30, 2022, trade payable and deferred revenues and advances from customers decreased by $16.0 million, reducing cash provided by operating activities, inventory increased by $23.9 million, reflecting the decrease in business volume, and employee and payroll accruals decreased by $6.8 million decreasing cash provided by operating activities.

Six Months Ended June 30, 2021

Net cash provided by operating activities in the six months ended June 30, 2021 was $10.3 million.

Net cash provided by operating activities consisted of net income of $10.7 million, as adjusted in an amount of $18.3 million for non-cash line items, including stock-based compensation expenses, depreciation, amortization of intangible assets, fair value of warrants deducted from revenues, amortization of premium on marketable securities, offset, in part by other adjustments not included hereunder in an amount of $1.9 million.

During the six months ended June 30, 2021, our accounts receivable increased by $11.1 million, reflecting the increase in our revenues, which reduced cash provided by operating activities. Number of days receivables were outstanding for the for the six months ended June 30, 2021 decreased to 77 days, compared to 113 days for the six months ended June 30, 2020.

During the six months ended June 30, 2021, deferred revenues and advances from customers decreased by $11.4 million, reducing cash provided by operating activities, while other payables and accrued expenses increased by $5.7 million, reflecting the increase in business volume, increasing cash provided by operating activities.

Net Cash Used in Investing Activities

 Six Months Ended June 30, 2022

Net cash used in investing activities was $360.0 million for the six months ended June 30, 2022, which was primarily attributable to an increase in bank deposits in an amount of $250.9 million, a net purchase of marketable securities in an amount of $84.5 million, cash paid in connection with acquisitions, net of cash acquired, in an amount of $14.6 million and an investment of $9.4 million in property and equipment.

Six Months Ended June 30, 2021

Net cash used in investing activities was $44.1 million for the six months ended June 30, 2021, which was primarily attributable to the net purchase of marketable securities and an increase in bank deposits in an amount of $38.5 million and an investment of $5.6 million in property and equipment.

Net Cash Provided by (Used in) Financing Activities

Six Months Ended June 30, 2022

Net cash used in financing activities was $0.3 million for the six months ended June 30, 2022, which was attributable to $682 thousand of payments related to shares withheld for taxes in connection with option exercises, offset in part by $340 thousand of proceeds from option exercises.

Six Months Ended June 30, 2021

Net cash provided by financing activities was $0.6 million for the six months ended June 30, 2021, which was attributable to approximately $1.8 million of proceeds from option exercises, offset in part by approximately $1.1 million of payments related to shares withheld for taxes in connection with option exercises.

Cautionary Statement Regarding Forward-Looking Statements

Certain information herein may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “may,” “will,” “could,” “should,” “expect,” “anticipate,” “intend,” “estimate,” “believe,” “project,” “plan,” “assume” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words.

These forward-looking statements may include, but are not limited to, statements regarding our future strategy, future operations, projected financial position, proposed products, estimated future revenues, projected costs, future prospects, the future of our industry and results that might be obtained by pursuing management’s current plans and objectives.

These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition and all statements (other than statements of historical facts) that address activities, events or developments that we expect, project, believe, anticipate, intend or project will or may occur in the future. The statements that we make regarding the following matters are forward-looking by their nature:

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions, and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks described in our Annual Report on Form 20-F for the year ended December 31, 2021, which is on file with the Securities and Exchange Commission (the ”SEC”), and the other risk factors discussed from time to time by us in reports filed or furnished to the SEC.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.

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