EX-99.1 2 ea193760ex99-1_kornit.htm PRESS RELEASE, DATED FEBRUARY 14, 2024, TITLED "KORNIT DIGITAL REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS"

Exhibit 99.1

 

Investor Contact:

 

Jared Maymon

Global Head of Investor Relations

Jared.Maymon@Kornit.com

 

 

 

Kornit Digital Reports Fourth Quarter and Full Year 2023 Results

 

●Fourth quarter revenues of $56.6 million, in line with previous guidance

 

●Fourth quarter GAAP net loss of $22.9 million; non-GAAP net income of $3.8 million

 

●Achieved breakeven adjusted EBITDA and generated positive operating cash flow for the fourth quarter

 

●Successfully launched the Apollo platform for general commercial use in early 2024

 

●Expecting modest revenue growth, adjusted EBITDA profitability, and positive operating cash flow for the full year 2024

 

Rosh-Ha’Ayin, Israel – February 14, 2024 – Kornit Digital Ltd. (“Kornit” or the “Company”) (Nasdaq: KRNT), a worldwide market leader in sustainable, on-demand, digital fashionX and textile production technologies, reported today its results for the fourth quarter and full year ended December 31, 2023.

 

“We experienced a healthy peak season, with year-over-year growth in impressions and double-digit growth in high-margin consumable sales.” said Ronen Samuel, Kornit’s Chief Executive Officer. Mr. Samuel continued, “This growth, combined with improvements to our operating efficiency and working capital position, drove us to positive adjusted EBITDA and cash from operations in the fourth quarter.”

 

Mr. Samuel concluded, “Despite a challenging operating environment in 2023, we made progress in further diversifying our customer base, established our MAX technology as the new industry standard, and completed a successful beta program for the Apollo. As we enter 2024, while we continue to anticipate macroeconomics headwinds to weigh on our sales cycle, we are focused on leveraging our key drivers to achieve modest revenue growth for the full year. In the first quarter we have taken further actions to restructure and realign our operating expenses with the current market environment. This puts us on solid footing to generate adjusted EBITDA profitability and positive operating cash flow for the full year.”

 

Fourth Quarter 2023 Results of Operations

 

●Total revenue for the fourth quarter of 2023 was $56.6 million compared with $63.3 million in the prior year period, due primarily to lower systems revenues.

 

●GAAP gross profit margin for the fourth quarter of 2023 was 25.8% compared with 33.7% in the prior year period. On a non-GAAP basis, gross profit margin was 48.6% compared with 36.4% in the prior year period.

 

 

 

●GAAP operating expenses for the fourth quarter of 2023 were $42.4 million compared with $38.1 million in the prior year period. On a non-GAAP basis, operating expenses decreased by 8.7% to $30.1 million compared with the prior year period.

 

●GAAP net loss for the fourth quarter of 2023 was $22.9 million, or ($0.48) per basic share, compared with net loss of $35.4 million, or ($0.71) per basic share, for the fourth quarter of 2022.

 

●Non-GAAP net income for the fourth quarter of 2023 was $3.8 million, or $0.08 per diluted share, compared with non-GAAP net loss of $6.6 million, or ($0.13) per basic share, for the fourth quarter of 2022.

 

●Adjusted EBITDA for the fourth quarter of 2023 was $0.2 million compared with adjusted EBITDA loss of $6.1 million for the fourth quarter of 2022. Adjusted EBITDA margin for the fourth quarter of 2023 was 0.3% compared with -9.6% for the fourth quarter of 2022.

 

Full Year 2023 Results of Operations

 

●Total revenue for the full year 2023 was $219.8 million compared with $271.5 million in the prior year, due primarily to lower systems revenues.

 

●GAAP gross profit margin for the full year 2023 was 30.5% compared with 35.5% in the prior year. On a non-GAAP basis, gross profit margin was 38.4% compared with 38.2% in the prior year.

 

●GAAP operating expenses for the full year 2023 were $154.5 million compared with $166.4 million in the prior year. On a non-GAAP basis, operating expenses decreased by 12.3% to $127.7 million compared with the prior year.

 

●GAAP net loss for the full year 2023 was $64.4 million, or ($1.31) per basic share, compared with net loss of $79.1 million, or ($1.59) per basic share, for the full year 2022.

 

●Non-GAAP net loss for the full year 2023 was $20.4 million, or ($0.42) per basic share, compared with non-GAAP net loss of $32.6 million, or ($0.66) per basic share, for the full year 2022.

 

●Adjusted EBITDA loss for the full year 2023 was $30.9 million compared with adjusted EBITDA loss of $30.8 million for the full year 2022. Adjusted EBITDA margin for the full year 2023 was -14.0% compared with -11.3% for the full year 2022.

 

First Quarter 2024 Guidance

 

For the first quarter of 2024, the Company expects revenues to be in the range of $43 million to $48 million and adjusted EBITDA margin between –16% to –26% of revenue. The guidance for revenue and adjusted EBITDA margin includes the impact of the non-cash expense associated with the fair value of the Company’s warrants.

 

Fourth Quarter and Full Year 2023 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.

 

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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 conference confirmation code is 13744080.

 

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 13744080. The telephonic replay will be available approximately three hours after the completion of the live call until 11:59 pm ET on February 28, 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 fashionx 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.

 

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; 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, 2022, filed with the SEC on March 30, 2023. 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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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; acquisition related expenses; 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.

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 

   December 31,   December 31, 
   2023   2022 
   (Unaudited)   (Audited) 
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents  $39,605   $104,597 
Short-term bank deposit   235,600    275,033 
Marketable securities   57,292    20,380 
Trade receivables, net   93,632    67,360 
Inventory   67,712    89,415 
Other accounts receivable and prepaid expenses   28,546    22,054 
Total current assets   522,387    578,839 
           
LONG-TERM ASSETS:          
Marketable securities   223,203    245,970 
Deposits and other long-term assets   8,209    5,927 
Severance pay fund   283    274 
Property,plant and equipment, net   50,905    60,463 
Operating lease right-of-use assets   23,782    27,139 
Intangible assets, net   7,647    9,890 
Goodwill   29,164    29,164 
Total long-term assets   343,193    378,827 
           
Total assets   865,580    957,666 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Trade payables   6,936    14,833 
Employees and payroll accruals   12,121    14,255 
Deferred revenues and advances from customers   2,158    5,701 
Operating lease liabilities   4,345    4,989 
Other payables and accrued expenses   23,814    25,592 
Total current liabilities   49,374    65,370 
           
LONG-TERM LIABILITIES:          
Accrued severance pay   1,080    1,223 
Operating lease liabilities   19,261    21,035 
Other long-term liabilities   198    1,216 
Total long-term liabilities   20,539    23,474 
           
SHAREHOLDERS’ EQUITY   795,667    868,822 
           
Total liabilities and shareholders’ equity  $865,580   $957,666 

 

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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)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
   (Unaudited)   (Unaudited)   Audited 
                 
Revenues                
Products  $43,573   $49,795   $161,045   $222,502 
Services   13,012    13,503    58,741    49,016 
Total revenues   56,585    63,298    219,786    271,518 
                     
Cost of revenues                    
Products   23,125    29,026    91,516    125,935 
Services   18,888    12,923    61,313    49,083 
Total cost of revenues   42,013    41,949    152,829    175,018 
                     
Gross profit   14,572    21,349    66,957    96,500 
                     
Operating expenses:                    
Research and development, net   12,033    13,251    50,060    56,026 
Sales and marketing   17,909    16,150    66,836    71,067 
General and administrative   12,449    8,657    37,592    39,289 
Total operating expenses   42,391    38,058    154,488    166,382 
                     
Operating loss   (27,819)   (16,709)   (87,531)   (69,882)
                     
Financial income, net   5,424    5,052    24,150    13,382 
Loss before taxes on income   (22,395)   (11,657)   (63,381)   (56,500)
                     
Taxes on income   539    23,703    970    22,565 
Net loss  $(22,934)  $(35,360)  $(64,351)  $(79,065)
                     
Basic loss per share  $(0.48)  $(0.71)  $(1.31)  $(1.59)
                     
Weighted average number of shares used in computing basic net loss per share   48,231,916    49,913,898    49,160,266    49,791,659 
                     
Diluted net loss per share  $(0.48)  $(0.71)  $(1.31)  $(1.59)
                     
Weighted average number of shares used in computing diluted net loss per share   48,231,916    49,913,898    49,160,266    49,791,659 

 

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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   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
   (Unaudited)   (Unaudited) 
                 
Revenues  $56,585   $63,298   $219,786   $271,518 
                     
GAAP cost of revenues  $42,013   $41,949   $152,829   $175,018 
Cost of product recorded for share-based compensation (1)   (545)   (543)   (2,356)   (2,185)
Cost of service recorded for share-based compensation (1)   (447)   (408)   (1,758)   (1,676)
Intangible assets amortization on cost of product (3)   (260)   (266)   (1,053)   (1,402)
Intangible assets amortization on cost of service (3)   (160)   (160)   (640)   (640)
Excess cost of product on acquired inventory (2)   -    -    -    (663)
Restructuring expenses (4)   (11,501)   (305)   (11,590)   (701)
 Non-GAAP cost of revenues  $29,100   $40,267   $135,432   $167,751 
                     
GAAP gross profit  $14,572   $21,349   $66,957   $96,500 
Gross profit adjustments   12,913    1,682    17,397    7,267 
Non-GAAP gross profit  $27,485   $23,031   $84,354   $103,767 
                     
GAAP operating expenses  $42,391   $38,058   $154,488   $166,382 
Share-based compensation (1)   (4,653)   (4,264)   (18,475)   (18,788)
Acquisition related expenses (2)   -    -    -    (512)
Intangible assets amortization (3)   (93)   (138)   (550)   (501)
Restructuring expenses (4)   (7,579)   (711)   (7,785)   (992)
Non-GAAP operating expenses  $30,066   $32,945   $127,678   $145,589 
                     
GAAP Financial income, net  $5,424   $5,052   $24,150   $13,382 
Foreign exchange losses associated with ASC 842   1,579    285    378    (3,123)
Non-GAAP Financial income , net  $7,003   $5,337   $24,528   $10,259 
                     
GAAP Taxes on income  $539   $23,703   $970   $22,565 
Non-cash deferred tax income (expenses)  $88   $(10,234)  $666   $(10,014)
Non-recurring tax payment (a)  $-   $(11,485)  $-   $(11,485)
Non-GAAP Taxes on income  $627   $1,984   $1,636   $1,066 
                     
GAAP net loss  $(22,934)  $(35,360)  $(64,351)  $(79,065)
Share-based compensation (1)   5,645    5,215    22,589    22,649 
Acquisition related expenses (2)   -    -    -    512 
Intangible assets amortization (3)   513    564    2,243    2,543 
Restructuring expenses (4)   19,080    1,016    19,375    1,693 
Excess cost of product on acquired inventory (2)   -    -    -    663 
Foreign exchange losses associated with ASC 842   1,579    285    378    (3,123)
Non-cash deferred tax expenses (income)   (88)   10,234    (666)   10,014 
Non-recurring tax payment (a)   -    11,485    -    11,485 
Non-GAAP net income (loss)  $3,795   $(6,561)  $(20,432)  $(32,629)
                     
GAAP diluted loss per share  $(0.48)  $(0.71)  $(1.31)  $(1.59)
                     
Non-GAAP diluted income (loss) per share  $0.08   $(0.13)  $(0.42)  $(0.66)
                     
Weighted average number of shares                    
                     
Shares used in computing GAAP diluted net loss per share   48,231,916    49,913,898    49,160,266    49,791,659 
                     
Shares used in computing Non-GAAP diluted net income (loss) per share   50,094,714    49,913,898    49,160,266    49,791,659 
                     
(1) Share-based compensation                    
Cost of product revenues  $545   $543   $2,356   $2,185 
Cost of service revenues  $447    408    1,758    1,676 
Research and development  $1,329    1,340    5,759    5,312 
Sales and marketing  $1,635    1,693    6,689    7,361 
General and administrative  $1,689    1,231    6,027    6,115 
   $5,645   $5,215   $22,589   $22,649 
(2) Acquisition related expenses                    
Cost of product revenues   -    -    -    663 
General and administrative  $-   $-   $-   $512 
   $-   $-   $-   $1,175 
(3) Intangible assets amortization                    
Cost of product revenues  $260   $266   $1,053   $1,402 
Cost of service revenues  $160    160    640    640 
Sales and marketing  $93    138    550    501 
   $513   $564   $2,243   $2,543 
                     
(4) Restructuring expenses                    
Cost of product revenues  $5,569   $305   $5,658   $689 
Cost of service revenues  $5,932    -    5,932    12 
Research and development  $860    137    880    201 
Sales and marketing  $2,744    487    2,930    675 
General and administrative  $3,975    87    3,975    116 
   $19,080   $1,016   $19,375   $1,693 
                     
(a) Attributed to tax settlement with the Israeli Tax Authority                    

 

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KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
   (Unaudited)   (Unaudited)   Audited 
Cash flows from operating activities:                
                 
Net loss  $(22,934)  $(35,360)  $(64,351)  $(79,065)
Adjustments to reconcile net loss to net cash used in operating activities:                    
Depreciation and amortization   3,287    4,399    14,700    13,565 
Restructuring and other charges   19,080    -    19,080    - 
Fair value of warrants deducted from revenues   4,841    4,339    13,842    22,500 
Share-based compensation   5,645    5,215    22,589    22,649 
Amortization of premium and accretion of discount on marketable securities, net   83    373    756    1,820 
Realized gain on sale and redemption of marketable securities   93    -    134    10 
Change in operating assets and liabilities:                    
Trade receivables, net   6,557    (3,673)   (19,220)   (15,891)
Other accounts receivables and prepaid expenses   (5,040)   (2,501)   (6,492)   (8,635)
Inventory   4,521    (2,437)   11,028    (29,004)
Operating leases right-of-use assets and liabilities, net   1,544    229    (179)   (2,918)
Deferred taxes   -    11,523    -    8,530 
Deposits and other long term assets   (103)   (1,859)   (2,282)   (4,251)
Trade payables   (2,902)   (9,068)   (6,491)   (26,948)
Employees and payroll accruals   (2,294)   (2,222)   (1,089)   (7,674)
Deferred revenues and advances from customers   (1,339)   107    (4,990)   (1,426)
Other payables and accrued expenses   (8,357)   (8,873)   (10,547)   7,190 
Accrued severance pay, net   (14)   43    (152)   (237)
Other long - term liabilities   (74)   330    (1,018)   13 
Loss (gain) from sale and disposal of property, plant and equipment   -    (142)   -    425 
Net cash provided by (used in) operating activities  $2,594   $(39,577)  $(34,682)  $(99,347)
                     
Cash flows from investing activities:                    
                     
Purchase of property, plant and equipment  $(934)  $(5,776)  $(7,006)  $(18,042)
Investment in equity securities   -    (193)   -    (820)
Acquisition of intangible assets   -    (73)   -    (308)
Proceeds from sale of property, plant and equipment   -    -    -    71 
Cash paid in connection with acquisition, net of cash acquired   -    -    -    (14,654)
Proceeds from (investment in) short-term bank deposits, net   (15,505)   85,089    39,433    (265,865)
Proceeds from sales and redemption of marketable securities   -    -    7,240    1,945 
Proceeds from maturities of marketable securities   6,300    6,500    20,522    27,898 
Investment in marketable securities   (9,526)   (8,135)   (33,977)   (137,500)
Net cash provided by (used in) investing activities  $(19,665)  $77,412   $26,212   $(407,275)
                     
Cash flows from financing activities:                    
                     
Exercise of employee stock options  $-   $159   $293   $619 
Payments related to shares withheld for taxes   (608)   (90)   (1,045)   (951)
Repurchase of ordinary shares   (19,004)   -    (55,770)   - 
Net cash used in financing activities  $(19,612)  $69   $(56,522)  $(332)
                     
Increase (decrease) in cash and cash equivalents  $(36,683)  $37,904   $(64,992)  $(506,954)
Cash and cash equivalents at the beginning of the period   76,288    66,693    104,597    611,551 
Cash and cash equivalents at the end of the period  $39,605   $104,597   $39,605   $104,597 
                     
Non-cash investing and financing activities:                    
                     
Purchase of property and equipment on credit   314    1,692    314    1,692 
Inventory transferred to be used as property and equipment   -    5,248    531    6,792 
Property, plant and equipment transferred to be used as inventory   131    -    865    - 
Lease liabilities arising from obtaining right-of-use assets   (3,250)   408    2,559    7,585 

 

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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   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
   (Unaudited)   (Unaudited) 
                 
GAAP Revenues  $56,585   $63,298   $219,786   $271,518 
                     
GAAP Net Loss   (22,934)   (35,360)   (64,351)   (79,065)
Taxes on income   539    23,703    970    22,565 
Financial income   (5,424)   (5,052)   (24,150)   (13,382)
Share-based compensation   5,645    5,215    22,589    22,649 
Intangible assets amortization   513    564    2,243    2,543 
Acquisition related expenses   -    -    -    512 
Excess cost of product on acquired inventory   -    -    -    663 
Restructuring expenses   19,080    1,016    19,375    1,693 
Non-GAAP Operating Loss   (2,581)   (9,914)   (43,324)   (41,822)
Depreciation   2,774    3,835    12,457    11,022 
Adjusted EBITDA  $193   $(6,079)  $(30,867)  $(30,800)

 

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