GlobeNewswire Inc | May 11, 2021 07:00AM EDT

May 11, 2021

Revenue Increased 152% Year-Over-Year

Record Shipments of Mass Production Systems

-- 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 Digitals 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 Kornits brand recognition in the heart of the fashion and home dcor 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 Companys outstanding warrants had on the Companys results of operations during the first quarters of 2021 and 2020, respectively:

First Quarter Warrants Impact

Three Months Ended

March 31, 2021 2020 Net of Warrants Net of Warrants Warrants Impact Warrants Impact Impact Impact Revenue $66.1M $3.1M $26.2M $0.6MNon-GAAP Gross Margin 47.1% 240bps 33.0% 141bpsNon-GAAP Operating 9.8% 409bps (40.1%) 295bpsMarginNon-GAAP Net Margin 11.7% 400bps (34.0%) 282bpsNon-GAAP Diluted $0.16 $0.07 ($0.22) $0.02Earnings Per Share

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 Digitals 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 2021 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 Kornits 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 Companys degree of success in developing, introducing and selling new or improved products and product enhancements including specifically the Companys Poly Pro and Presto products; the extent of the Companys ability to consummate sales to large accounts with multi-system delivery plans; the degree of the Companys ability to fill orders for Kornits systems; the extent of the Companys ability to continue to increase sales of Kornits systems, ink and consumables; the extent of the Companys ability to leverage Kornits global infrastructure build-out; the development of the market for digital textile printing; the availability of alternative ink; competition; sales concentration; changes to the Companys relationships with suppliers; the extent of the Companys 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 Companys operations, financial position and cash flows, and those of the Companys 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 Companys performance exclusive of non-cash charges and other items that are considered by management to be outside of the Companys 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 Companys 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 Companys business. However, the Companys 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 Companys 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. Kornits 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 7,500 9,178 expensesTotal 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 5,174 (10,817 ) benefit) 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 (299 ) (214 ) share-based compensation (1)Cost of service recorded for (233 ) (150 ) share-based compensation (1)Intangible assets amortization on (25 ) (25 ) cost of product (2)Intangible assets amortization on (160 ) - cost of service (2)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 (802 ) (610 ) with ASC 842Non-GAAP Financial income, net $ 1,263 $ 1,595 GAAP Taxes on income (Tax benefit) $ 75 $ (763 ) Tax effect on to the above 191 (82 ) non-GAAP adjustmentsTaxes 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 (802 ) (610 ) with ASC 842Tax effect on to the above (191 ) 82 non-GAAP adjustmentsDeferred taxes on income (Tax 248 (846 ) benefit) (a)Non-GAAP net income (loss) $ 7,730 $ (8,905 ) GAAP diluted earnings (losses) per $ 0.11 $ (0.25 ) share Non-GAAP diluted earnings (losses) $ 0.16 $ (0.22 ) per share Weighted average number of shares Shares used in computing GAAPdiluted net earnings (losses) per 47,568,215 40,762,688 share Shares used in computing Non-GAAPdiluted net earnings (losses) per 47,692,101 40,762,688 share (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 Non cash impact related to the recognition of(a) 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 3,139 565 revenues Share-based compensation 3,072 2,108 Amortization of discount on marketable (817 ) 89 securities Realized gain on sale of marketable - (102 ) securities Change in operating assets and liabilities: Trade receivables, net (1,488 ) 7,385 Other accounts receivables and prepaid 1,550 (979 ) expenses 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 (3,372 ) (95 ) customers 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 - 75 and Equipment Foreign currency translation income (loss) on inter company balances with foreign - 310 subsidiaries Net cash provided by (used in) operating 5,119 (13,123 ) activities Cash flows from investing activities: Purchase of property, plant and equipment (2,567 ) (3,575 ) Acquisition of intangible assets and capitalization of software development - (81 ) costs Proceeds from sale of property, plant and - 4 equipment Investment in short-term bank deposits (18,855 ) 13,850 Proceeds from sale of marketable - 20,802 securities Proceeds from maturity of marketable - 12,102 securities Investment in marketable securities (15,290 ) (8,741 ) Net cash provided by (used in) investing (36,712 ) 34,361 activities Cash flows from financing activities: Exercise of employee stock options 675 1,568 Payments related to shares withheld for (688 ) (53 ) taxes Net cash provided by (used in) financing (13 ) 1,515 activities Foreign currency translation adjustments - (19 ) on cash and cash equivalents Increase (decrease) in cash and cash (31,606 ) 22,734 equivalents Cash and cash equivalents at the beginning 125,777 40,743 of the period Cash and cash equivalents at the end of 94,171 63,477 the period Non-cashinvesting and financing activities: Purchase of property and equipment on 1,477 1,909 credit Inventory transferred to be used as 412 298 property and equipment Property and equipment transferred to be 3 - used as inventory Lease liabilities arising from obtaining 263 1,653 right-of-use assets Capitalization of software development - 40 costs



Investor Contact:Monica GouldThe Blueshirt Group(212) 871-3927Monica@blueshirtgroup.com