KRNT - Kornit Digital Reports First Quarter 2021 Results
Revenue Increased 1 52 % Year-Over-Year
Record Shipment s of Mass Production System s
- First quarter revenue grew 152% year-over-year to $66.1 million, net of non-cash warrants impact of $3.1 million
- First quarter GAAP operating profit of $3.1 million; non-GAAP operating profit of $6.5 million, in each case net of $3.1 million attributed to the non-cash impact of warrants
- Revenue growth and profitability significantly exceeded expectations
- Executing on major global expansion projects with strategic customers
- Introduction of breakthrough MAX technology and ATLAS MAX establishes new standard for sustainable on-demand textile production
ROSH-HA`AYIN, Israel, May 11, 2021 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ: KRNT), a worldwide market leader in digital textile printing technology, today reported results for the first quarter ended March 31, 2021.
“We are excited to share a strong start to the year and outstanding first quarter results. We significantly exceeded our expectations for revenue and profitability, and our outlook for the year is very strong,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “As the world moves into the post-pandemic era, the textile industry is in desperate need to accelerate its mass adoption of digital, sustainable, on-demand production. The business opportunity ahead of us is enormous and we are laser focused on introducing continued innovation and scaling our business on all fronts.”
Mr. Samuel continued, “during the second half of last year we discussed engagements on major global expansion projects with multiple strategic accounts, which we are now rolling out and we continue to build Kornit’s brand recognition in the heart of the fashion and home décor industries. The launch of our Max technology establishes a new standard for on-demand fashion and apparel production and significantly expands our addressable market into lucrative new segments. Our first product release, the ATLAS MAX, is just the beginning of revolutionary future new products coming from the MAX line, which will unlock additional huge market segments. Kornit is in a remarkable position and I am more confident than ever in our value proposition, our leadership position, and our dedicated people, as we take another step on our path to become a $500 million revenue run rate business ahead of plan.”
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 first quarters of 2021 and 2020, respectively:
First Quarter Warrants Impact
| |
| Three Months Ended |
| March 31, |
| 20 2 1 |
| 20 20 |
| Net of Warrants Impact |
| Warrants Impact |
| Net of Warrants Impact |
| Warrants Impact |
| Revenue |
| $66.1M |
| $3.1M |
| $26.2M |
| $0.6M |
| Non-GAAP Gross Margin |
| 47.1% |
| 240bps |
| 33.0% |
| 141bps |
| Non-GAAP Operating Margin |
| 9.8% |
| 409bps |
| (40.1%) |
| 295bps |
| Non-GAAP Net Margin |
| 11.7% |
| 400bps |
| (34.0%) |
| 282bps |
| Non-GAAP Diluted Earnings Per Share |
| $0.16 |
| $0.07 |
| ($0.22) |
| $0.02 |
“We are very pleased with our strong first quarter results, which were driven by a record quarter for mass production system shipments,” said Alon Rozner, Kornit Digital’s Chief Financial Officer. “Our engagements on major global expansion projects with strategic accounts and our growing business with net new accounts continues to drive our backlog to record levels, positioning us very well to execute on our short term and long-term goals.”
First Quarter 2021 Results of Operations
- Total revenue for the first quarter of 2021 was $66.1 million, net of $3.1 million attributed to the non-cash impact of warrants, compared to $26.2 million, net of $0.6 million attributed to the non-cash impact of warrants in the prior year period.
- GAAP net income for the first quarter of 2021 was $5.1 million, or $0.11 per diluted share, compared to net loss of $10.1 million, or $0.25 per basic share, for the first quarter of 2020.
- Non-GAAP net income for the first quarter of 2021 was $7.7 million, or $0.16 per diluted share, net of $0.07 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net loss of $8.9 million, or $0.22 per basic share, net of $0.02 per diluted share attributed to the non-cash impact of warrants, for the first quarter of 2020.
Second Quarter 20 2 1 Guidance
The Company will discuss the details of its guidance live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com , as referenced below.
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 for 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 13719064.
To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 13719064. The telephonic replay will be available beginning at 11:30 a.m. ET on Tuesday, May 11, 2021, until 11:59 p.m. ET on Tuesday, May 25, 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.
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 Ltd. (NASDAQ: KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries. Kornit delivers complete solutions, including digital printing systems, inks, consumables, software and after-sales support. Leading the digital direct-to-garment printing market with its exclusive eco-friendly NeoPigment printing process, Kornit caters directly to the changing needs of the textile printing value chain. Kornit’s technology enables innovative business models based on web-to-print, on-demand and mass customization concepts. With its immense experience in the direct-to-garment market, Kornit also offers a revolutionary approach to the roll-to-roll textile printing industry: digitally printing with a single ink set onto multiple types of fabric with no additional finishing processes. Founded in 2002, Kornit Digital is a global company, headquartered in Israel with offices in the USA, Europe and Asia Pacific, and serves customers in more than 100 countries and states worldwide.
| KORNIT DIGITAL LTD. |
| AND ITS SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (U.S. dollars in thousands) |
| March 31, |
| December 31, |
| 2021 |
| 2020 |
| (Unaudited) |
| ASSETS |
| CURRENT ASSETS: |
| Cash and cash equivalents |
| $ |
| 94,171 |
| $ |
| 125,777 |
| Short-term bank deposit |
| 243,659 |
| 224,804 |
| Marketable securities |
| 25,836 |
| 13,718 |
| Trade receivables, net |
| 53,054 |
| 51,566 |
| Inventories |
| 52,750 |
| 52,487 |
| Other accounts receivable and prepaid expenses |
| 7,500 |
| 9,178 |
| Total current assets |
| 476,970 |
| 477,530 |
| LONG-TERM ASSETS: |
| Marketable securities |
| 74,986 |
| 71,636 |
| Deposits and other long-term assets |
| 405 |
| 395 |
| Severance pay fund |
| 324 |
| 337 |
| Deferred taxes |
| 5,473 |
| 5,096 |
| Property,plant and equipment, net |
| 31,708 |
| 29,255 |
| Operating lease right-of-use assets |
| 20,319 |
| 21,053 |
| Intangible assets, net |
| 6,809 |
| 7,221 |
| Goodwill |
| 16,466 |
| 16,466 |
| Total long-term assets |
| 156,490 |
| 151,459 |
| Total assets |
| $ |
| 633,460 |
| $ |
| 628,989 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |
| CURRENT LIABILITIES: |
| Trade payables |
| $ |
| 26,517 |
| $ |
| 32,016 |
| Employees and payroll accruals |
| 16,569 |
| 15,022 |
| Deferred revenues and advances from customers |
| 23,647 |
| 27,019 |
| Operating lease liabilities |
| 3,721 |
| 3,957 |
| Other payables and accrued expenses |
| 13,467 |
| 11,613 |
| Total current liabilities |
| 83,921 |
| 89,627 |
| LONG-TERM LIABILITIES: |
| Accrued severance pay |
| 1,171 |
| 1,214 |
| Operating lease liabilities |
| 17,334 |
| 18,688 |
| Other long-term liabilities |
| 742 |
| 443 |
| Total long-term liabilities |
| 19,247 |
| 20,345 |
| SHAREHOLDERS' EQUITY |
| 530,292 |
| 519,017 |
| Total liabilities and shareholders' equity |
| $ |
| 633,460 |
| $ |
| 628,989 |
| 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, |
| 2021 |
| 2020 |
| (Unaudited) |
| Revenues |
| Products |
| $ |
| 57,946 |
| $ |
| 22,387 |
| Services |
| 8,177 |
| 3,825 |
| Total revenues |
| 66,123 |
| 26,212 |
| Cost of revenues |
| Products |
| 28,175 |
| 12,156 |
| Services |
| 7,538 |
| 6,028 |
| Total cost of revenues |
| 35,713 |
| 18,184 |
| Gross profit |
| 30,410 |
| 8,028 |
| Operating expenses: |
| Research and development, net |
| 9,444 |
| 6,483 |
| Sales and marketing |
| 11,049 |
| 8,497 |
| General and administrative |
| 6,808 |
| 6,070 |
| Total operating expenses |
| 27,301 |
| 21,050 |
| Operating income (loss) |
| 3,109 |
| (13,022 |
| ) |
| Financial income, net |
| 2,065 |
| 2,205 |
| Income (loss) before taxes on income (tax benefit) |
| 5,174 |
| (10,817 |
| ) |
| Taxes on income (Tax benefit) |
| 75 |
| (763 |
| ) |
| Net income (loss) |
| 5,099 |
| (10,054 |
| ) |
| Basic earnings (losses) per share |
| $ |
| 0.11 |
| $ |
| (0.25 |
| ) |
| Weighted average number of shares |
| used in computing basic earnings (losses) |
| per share |
| 46,041,253 |
| 40,762,688 |
| Diluted earnings (losses) per share |
| $ |
| 0.11 |
| $ |
| (0.25 |
| ) |
| Weighted average number of shares |
| used in computing diluted earnings (losses) |
| per share |
| 47,568,215 |
| 40,762,688 |
| 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) |
| Three Months Ended |
| March 31, |
| 2021 |
| 2020 |
| (Unaudited) |
| GAAP cost of revenues |
| $ |
| 35,713 |
| $ |
| 18,184 |
| Cost of product recorded for share-based compensation (1) |
| (299 |
| ) |
| (214 |
| ) |
| Cost of service recorded for share-based compensation (1) |
| (233 |
| ) |
| (150 |
| ) |
| Intangible assets amortization on cost of product (2) |
| (25 |
| ) |
| (25 |
| ) |
| Intangible assets amortization on cost of service (2) |
| (160 |
| ) |
| - |
| COVID-19 one time impact (3) |
| - |
| (244 |
| ) |
| Non-GAAP cost of revenues |
| $ |
| 34,996 |
| $ |
| 17,551 |
| GAAP gross profit |
| $ |
| 30,410 |
| $ |
| 8,028 |
| Gross profit adjustments |
| 717 |
| 633 |
| Non-GAAP gross profit |
| $ |
| 31,127 |
| $ |
| 8,661 |
| GAAP operating expenses |
| $ |
| 27,301 |
| $ |
| 21,050 |
| Share-based compensation (1) |
| (2,540 |
| ) |
| (1,744 |
| ) |
| Intangible assets amortization (2) |
| (119 |
| ) |
| (135 |
| ) |
| COVID-19 one time impact (3) |
| - |
| (11 |
| ) |
| Non-GAAP operating expenses |
| $ |
| 24,642 |
| $ |
| 19,160 |
| GAAP Financial income, net |
| $ |
| 2,065 |
| $ |
| 2,205 |
| Foreign exchange gain associated with ASC 842 |
| (802 |
| ) |
| (610 |
| ) |
| Non-GAAP Financial income, net |
| $ |
| 1,263 |
| $ |
| 1,595 |
| GAAP Taxes on income (Tax benefit) |
| $ |
| 75 |
| $ |
| (763 |
| ) |
| Tax effect on to the above non-GAAP adjustments |
| 191 |
| (82 |
| ) |
| Taxes on income (Tax benefit) (a) |
| (248 |
| ) |
| 846 |
| Non-GAAP Taxes on income |
| $ |
| 18 |
| $ |
| 1 |
| GAAP net income (loss) |
| $ |
| 5,099 |
| $ |
| (10,054 |
| ) |
| Share-based compensation (1) |
| 3,072 |
| 2,108 |
| Intangible assets amortization (2) |
| 304 |
| 160 |
| COVID-19 one time impact (3) |
| - |
| 255 |
| Foreign exchange gain associated with ASC 842 |
| (802 |
| ) |
| (610 |
| ) |
| Tax effect on to the above non-GAAP adjustments |
| (191 |
| ) |
| 82 |
| Deferred taxes on income (Tax benefit) (a) |
| 248 |
| (846 |
| ) |
| Non-GAAP net income (loss) |
| $ |
| 7,730 |
| $ |
| (8,905 |
| ) |
| GAAP diluted earnings (losses) per share |
| $ |
| 0.11 |
| $ |
| (0.25 |
| ) |
| Non-GAAP diluted earnings (losses) per share |
| $ |
| 0.16 |
| $ |
| (0.22 |
| ) |
| Weighted average number of shares |
| Shares used in computing GAAP diluted net earnings (losses) per share |
| 47,568,215 |
| 40,762,688 |
| Shares used in computing Non-GAAP diluted net earnings (losses) per share |
| 47,692,101 |
| 40,762,688 |
| (1) Share-based compensation |
| Cost of product revenues |
| 299 |
| 214 |
| Cost of service revenues |
| 233 |
| 150 |
| Research and development |
| 502 |
| 344 |
| Selling and marketing |
| 1,072 |
| 641 |
| General and administrative |
| 966 |
| 759 |
| 3,072 |
| 2,108 |
| (2) Intangible assets amortization |
| Cost of product revenues |
| 25 |
| 25 |
| Cost of service revenues |
| 160 |
| - |
| Research and development |
| - |
| - |
| Selling and marketing |
| 119 |
| 135 |
| 304 |
| 160 |
| (3) COVID-19 one time impact |
| Cost of product revenues |
| - |
| 244 |
| Cost of service revenues |
| - |
| - |
| Research and development |
| - |
| - |
| Selling and marketing |
| - |
| 11 |
| General and administrative |
| - |
| - |
| - |
| 255 |
| (a) |
| Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel. |
| KORNIT DIGITAL LTD. |
| AND ITS SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (U.S. dollars in thousands) |
| Three Months Ended |
| March 31, |
| 2021 |
| 2020 |
| (Unaudited) |
| Cash flows from operating activities: |
| Net income (loss) |
| $ |
| 5,099 |
| $ |
| (10,054 |
| ) |
| Adjustments to reconcile net income to net cash provided by operating activities: |
| Depreciation and amortization |
| 1,492 |
| 1,101 |
| Fair value of warrants deducted from revenues |
| 3,139 |
| 565 |
| Share-based compensation |
| 3,072 |
| 2,108 |
| Amortization of discount on marketable securities |
| (817 |
| ) |
| 89 |
| Realized gain on sale of marketable securities |
| - |
| (102 |
| ) |
| Change in operating assets and liabilities: |
| Trade receivables, net |
| (1,488 |
| ) |
| 7,385 |
| Other accounts receivables and prepaid expenses |
| 1,550 |
| (979 |
| ) |
| Inventories |
| (672 |
| ) |
| (9,503 |
| ) |
| Operating leases right-of-use assets |
| (56 |
| ) |
| 63 |
| Deferred taxes |
| (320 |
| ) |
| (1,106 |
| ) |
| Deposits and long-term assets |
| (10 |
| ) |
| 5 |
| Trade payables |
| (6,056 |
| ) |
| (1,504 |
| ) |
| Operating lease liabilities |
| (800 |
| ) |
| (609 |
| ) |
| Employees and payroll accruals |
| 2,235 |
| (353 |
| ) |
| Deferred revenues and advances from customers |
| (3,372 |
| ) |
| (95 |
| ) |
| Other payables and accrued expenses |
| 1,854 |
| (360 |
| ) |
| Accrued severance pay, net |
| (30 |
| ) |
| (29 |
| ) |
| Other long-term liabilities |
| 299 |
| (130 |
| ) |
| Loss from sale and disposal of property and Equipment |
| - |
| 75 |
| Foreign currency translation income (loss) on inter company balances with foreign subsidiaries |
| - |
| 310 |
| Net cash provided by (used in) operating activities |
| 5,119 |
| (13,123 |
| ) |
| Cash flows from investing activities: |
| Purchase of property, plant and equipment |
| (2,567 |
| ) |
| (3,575 |
| ) |
| Acquisition of intangible assets and capitalization of software development costs |
| - |
| (81 |
| ) |
| Proceeds from sale of property, plant and equipment |
| - |
| 4 |
| Investment in short-term bank deposits |
| (18,855 |
| ) |
| 13,850 |
| Proceeds from sale of marketable securities |
| - |
| 20,802 |
| Proceeds from maturity of marketable securities |
| - |
| 12,102 |
| Investment in marketable securities |
| (15,290 |
| ) |
| (8,741 |
| ) |
| Net cash provided by (used in) investing activities |
| (36,712 |
| ) |
| 34,361 |
| Cash flows from financing activities: |
| Exercise of employee stock options |
| 675 |
| 1,568 |
| Payments related to shares withheld for taxes |
| (688 |
| ) |
| (53 |
| ) |
| Net cash provided by (used in) financing activities |
| (13 |
| ) |
| 1,515 |
| Foreign currency translation adjustments on cash and cash equivalents |
| - |
| (19 |
| ) |
| Increase (decrease) in cash and cash equivalents |
| (31,606 |
| ) |
| 22,734 |
| Cash and cash equivalents at the beginning of the period |
| 125,777 |
| 40,743 |
| Cash and cash equivalents at the end of the period |
| 94,171 |
| 63,477 |
| Non-cash investing and financing activities: |
| Purchase of property and equipment on credit |
| 1,477 |
| 1,909 |
| Inventory transferred to be used as property and equipment |
| 412 |
| 298 |
| Property and equipment transferred to be used as inventory |
| 3 |
| - |
| Lease liabilities arising from obtaining right-of-use assets |
| 263 |
| 1,653 |
| Capitalization of software development costs |
| - |
| 40 |
Investor C ontact:
Monica Gould
The Blueshirt Group
(212) 871-3927
Monica@blueshirtgroup.com