Kornit Digital Reports Second Quarter 2019 Results

Kornit Digital Ltd. (NASDAQ: KRNT), a leading provider of digital printing solutions for the global printed textile industry, today reported results for the second quarter, ended June 30, 2019.

Second quarter 2019 revenue increased by 22.3% to $43.9 million, net of $2.4 million attributed to the non-cash impact of warrants, compared to $35.9 million, net of $1.5 million attributed to the non-cash impact of warrants, in the prior year period. Increased revenue in the quarter was attributable to widespread growth of systems, services and consumables sales across geographies, particularly in the North American and Asia Pacific regions.

On a GAAP basis, second quarter operating loss was $(0.2) million, compared to the prior-year period operating income of $1.6 million. Non-GAAP operating income in the second quarter was $2.7 million net of $2.4 million attributed to the non-cash impact of warrants, constituting 6.2% of revenue, net of 490 basis points attributed to the non-cash impact of warrants, compared to $3.2 million, or 8.8% of revenue, in the prior year period. The decrease in operating income was the result of the more significant impact of warrants during the period, increased sales and marketing expenses driven by marketing events in the quarter, and a less favorable product mix.

Ronen Samuel, Kornit Digital’s Chief Executive Officer commented “Our second quarter performance demonstrates our laser-focused commitment to execution. The momentum we continue building through the introduction of innovative new solutions and the continued investment in scaling our go-to-market allowed us to deliver another quarter of record quarterly sales.”

Samuel added: “We are excited and encouraged by the continued demand for our HD platforms and the outstanding new product introduction of the Atlas, Poly Pro, and Presto. We are entering the second half of the year with good momentum. I am encouraged with the number of ongoing engagements we have with some of the world’s leading brands and our relationship with our strategic customers is as strong as ever. We remain focused on executing on our strategic initiatives and continue to progress toward our long-term goal of becoming a $500 million run-rate sales business by the end of 2023.”

Second Quarter 2019 Results of Operations

Kornit reported second quarter revenue, net of the non-cash impact of warrants, of $43.9 million, compared with the prior-year period level of $35.9 million. The total non-cash impact of the warrants deducted from revenue was $2.4 million in the second quarter of 2019 and $1.5 million in the second quarter of 2018.

On a GAAP basis, second quarter gross profit was $18.7 million, compared to $17.4 million in the prior-year period. Non-GAAP gross profit in the second quarter was $20.2 million, or 45.9% of revenue, compared with $17.6 million, or 49.2% of revenue in the second quarter of 2018. The decrease in gross margin was primarily driven by impact of warrants, product mix and new product introduction.

On a GAAP basis, total operating expenses in the second quarter were $18.8 million, compared to $15.8 million in the prior-year period. Non-GAAP operating expenses in the second quarter increased to $17.5 million, or 39.8% of revenue, compared to $14.5 million, or 40.3% of revenue, in the prior-year period.

Second quarter GAAP research and development expenses were $5.3 million, unchanged from the prior-year period. Second quarter Non-GAAP research and development expenses were $5.0 million, or 11.3% of revenue, compared to $5.1 million, or 14.2% of revenue in the prior-year period.

Second quarter GAAP selling and marketing expenses were $9.2 million, compared to $6.4 million in the prior-year period. Second quarter Non-GAAP selling and marketing expenses were $8.7 million, or 19.8% of revenue, compared to $5.9 million, or 16.3% of revenue, in the equivalent prior-year period.

Second quarter GAAP general and administrative expenses were $4.3 million, compared to $4.0 million in the prior-year period. Second quarter non-GAAP general and administrative expenses were $3.8 million, or 8.6% of revenue, compared to $3.5 million, or 9.8% of revenue, in the prior-year period.

On a GAAP basis, second-quarter operating loss was $(0.2) million, compared to operating income of $1.6 million during the prior-year period. Non-GAAP operating income in the second quarter was $2.7 million, compared to $3.2 million in the prior-year period. As a percentage of revenue, Non-GAAP operating margin for the second quarter was 6.2% of revenue, compared with 8.8% of revenue in the second quarter of 2018.

On a GAAP basis, the Company reported net income of $0.5 million, or $0.01 per diluted share, compared to net income of $1.8 million in the second quarter of 2018. Non-GAAP net income for the second quarter of 2019 was $2.9 million, or $0.08 per diluted share, net of $0.06 per diluted share attributed to the non-cash impact of warrants, compared to net income of $3.2 million, or $0.09 per diluted share, net of $0.04 per diluted share attributed to the non-cash impact of warrants in the prior year period.

Balance Sheet and Cash Flow

As of June 30, 2019, the Company had cash, deposits and marketable securities of $250.1 million, which reflects growth of $130.4 million due to net proceeds from the Company’s follow-on offering completed in June 2019, and no long-term debt. Cash used in operations was $(4.4) million during the second quarter of 2019, reflecting an increase in DSO.

Source: Kornit Digital

The preceding press release was provided by a company unaffiliated with Wide-Format Impressions. The views expressed within do not directly reflect the thoughts or opinions of Wide-Format Impressions.