GlobeNewswire Inc | Aug 10, 2021 07:05AM EDT

August 10, 2021

-- Second quarter revenue increased 118% year-over-year to $81.7 million, net of $6.6 million attributed to the non-cash impact of warrants -- Second quarter GAAP operating profit of $6.1 million; Non-GAAP operating profit of $10.2 million, net of $6.6 million attributed to the non-cash impact of warrants -- All geographic regions posted significant year-over-year and sequential growth; Americas and EMEA regions revenue more than doubled year-over-year -- Successfully completed beta testing and began shipments of Atlas Max; Very strong order backlog and positive customer feedback on increased productivity, unique XDi capabilities, and unparalleled print quality and durability -- Visibility, pipeline and confidence for the remainder of year and into next year have never been stronger -- Announced acquisition of Voxel8 accelerates execution of Kornits 4.0 strategy to digitize on-demand textile production; Significantly expands Companys reach into existing and new lucrative markets

ROSH-HA'AYIN, Israel, Aug. 10, 2021 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ: KRNT), a worldwide market leader in digital textile production technologies, reported results for the second quarter ended June 30, 2021.

Our second quarter results capped off what was a remarkable first half of the year for Kornit, said Ronen Samuel, Kornit Digitals Chief Executive Officer. The Company executed across the board, delivering on massive global expansion projects with top strategic customers and driving growth from new customers, both in the DTG and DTF product lines. We began shipping our Atlas Max mass production systems after very successful beta testing, and are seeing great momentum for KornitX, as evidenced by our recently announced partnership with Canva, the largest on-line design software and content provider in the world.

Mr. Samuel continued, We are also pleased to announce our acquisition of Voxel8, which will help us accelerate the execution of our 4.0 strategy to digitize on-demand sustainable textile production. Through Voxel8s advanced and proven 3D technology, which has been tested by some of the worlds leading fashion and footwear brands including Hush Puppies, which is part of Wolverine Worldwide, we will disrupt the business of fashion, empowering completely new creative decorative concepts and never-before-seen functional textile applications, while exploring new lucrative opportunities in the functional apparel and footwear markets.

Mr. Samuel concluded, Our pipeline and visibility have never been stronger as the industry accelerates its digital transformation with Kornit leading the way. We are more confident than ever in our outlook for the remainder of this year and into next year, and believe we are well on our way to becoming the operating system for on demand sustainable fashion and a $1 billion revenue company in 2026.

The following table compares the adverse, non-cash impact that the Companys outstanding warrants had on the Companys results of operations during the second quarter of 2021 and 2020, respectively:

Second Quarter Warrants Impact Three Months Ended June 30, 2021 2020 Net of Warrants Net of Warrants Warrants Impact Warrants Impact Impact Impact Revenue $81.7M $6.6M $37.4M $0.8MNon-GAAP Gross Margin 48.2% 386bps 44.1% 123bpsNon-GAAP Operating Margin 12.5% 652bps (6.8%) 235bpsNon-GAAP Net Margin 12.8% 649bps (3.6%) 228bpsNon-GAAP Diluted Earnings Per $0.22 $0.13 ($0.03) $0.02Share



"We are very pleased with our exceptionally strong second quarter results, said Alon Rozner, Kornit Digitals Chief Financial Officer. All revenue components including mass production systems, consumables and services increased, due in part to continued momentum with our global strategic accounts, whileallregions posted year-over-year and sequential growth. Ourgross margin expansion was again driven by a favorable product mix shift, as well as continued profitability from our services business, while overall profitability benefited from our scale and operating leverage. We are very proud of our strong second quarter performance as it further validates our strategy and is a result of all the hard work and dedication of the entire Kornit team.

Second Quarter 2021 Results of Operations

-- Total revenue for the second quarter of 2021 was $81.7 million, net of $6.6 million attributed to the non-cash impact of warrants, compared to $37.4 million, net of $0.8 million attributed to the non-cash impact of warrants in the prior year period. -- GAAP net income for the second quarter of 2021 was $5.6 million, or $0.12 per diluted share, compared to net loss of $4.6 million, or $0.11 per basic share, for the second quarter of 2020. -- Non-GAAP net income for the second quarter of 2021 was $10.5 million, or $0.22 per diluted share, net of $0.13 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net loss of $1.3 million, or $0.03 per basic share, net of $0.02 per diluted share attributed to the non-cash impact of warrants, for the second quarter of 2020.

ThirdQuarter 2021 Guidance

The Company expects revenue for the third quarter to be in the range of $88 million to $92 million and non-GAAP operating income to be in the range of 12 % to 14 % of revenue. Consistent with past practice, this guidance excludes the impact of the fair value of issued warrants in the quarter.

SecondQuarter 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 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 13721628.

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 13721628. The telephonic replay will be available beginning at 11:30 a.m. ET on Tuesday, August 10, 2021, until 11:59 p.m. ET on Tuesday, August 24, 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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(U.S. dollars in thousands) June 30, December 31, 2021 2020 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 92,568 $ 125,777 Short-term bank deposit 234,936 224,804 Marketable securities 29,280 13,718 Trade receivables, net 62,651 51,566 Inventory 52,553 52,487 Other accounts receivable and prepaid 10,714 9,178 expensesTotal current assets 482,702 477,530 LONG-TERM ASSETS: Marketable securities 85,039 71,636 Deposits and prepaid expenses 526 395 Severance pay fund 335 337 Deferred taxes 4,909 5,096 Property, plant and equipment, net 34,818 29,255 Operating lease right-of-use assets 20,383 21,053 Intangible assets, net 6,399 7,221 Goodwill 16,463 16,466 Total long-term assets 168,872 151,459 Total assets $ 651,574 $ 628,989 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 31,357 $ 32,016 Employees and payroll accruals 15,980 15,022 Deferred revenues and advances from customers 15,618 27,019 Operating lease liabilities 3,853 3,957 Other payables and accrued expenses 17,289 11,613 Total current liabilities 84,097 89,627 LONG-TERM LIABILITIES: Accrued severance pay 1,261 1,214 Operating lease liabilities 17,603 18,688 Other long-term liabilities 1,243 443 Total long-term liabilities 20,107 20,345 SHAREHOLDERS' EQUITY 547,370 519,017 Total liabilities and shareholders' equity $ 651,574 $ 628,989

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except share and per share data) Six Months Ended Three Months Ended June 30, June 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues Products $ 130,122 $ 54,246 $ 72,176 $ 31,859 Services 17,667 9,402 9,490 5,577 Total revenues 147,789 63,648 81,666 37,436 Cost of revenuesProducts 62,429 27,086 34,254 14,930 Services 16,368 12,736 8,830 6,708 Total cost of 78,797 39,822 43,084 21,638 revenues Gross profit 68,992 23,826 38,582 15,798 Operating expenses:Research anddevelopment, 19,243 13,524 9,799 7,041 netSales and 24,879 16,788 13,830 8,291 marketingGeneral and 15,689 11,864 8,881 5,794 administrativeTotaloperating 59,811 42,176 32,510 21,126 expensesOperating 9,181 (18,350 ) 6,072 (5,328 )income (loss)Financial 2,416 2,797 351 592 income, netIncome (loss)before taxes 11,597 (15,553 ) 6,423 (4,736 )on income (taxbenefit) Taxes onincome (Tax 896 (927 ) 821 (164 )benefit)Net income 10,701 (14,626 ) 5,602 (4,572 )(loss) Basic earnings(losses) per $ 0.23 $ (0.36 ) $ 0.12 $ (0.11 )share Weightedaverage numberof shares usedin computing 46,119,416 40,817,593 46,196,720 40,872,497 basic earnings(losses) pershare Dilutedearnings $ 0.22 $ (0.36 ) $ 0.12 $ (0.11 )(losses) pershare Weightedaverage numberof shares usedin computing 47,709,429 40,817,593 47,849,783 40,872,497 dilutedearnings(losses) pershare

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESRECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except share and per share data) Six Months Ended Three Months Ended June 30, June 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) GAAP cost of $ 78,797 $ 39,822 $ 43,084 $ 21,638 revenuesCost of productrecorded for (619 ) (491 ) (320 ) (277 )share-basedcompensation (1)Cost of servicerecorded for (499 ) (360 ) (266 ) (210 )share-basedcompensation (1)Intangible assetsamortization on (50 ) (50 ) (25 ) (25 )cost of product(2)Intangible assetsamortization on (320 ) - (160 ) - cost of service(2)COVID-19 one time - (446 ) - (202 )impact (3)Non-GAAP cost of $ 77,309 $ 38,475 $ 42,313 $ 20,924 revenues GAAP gross profit $ 68,992 $ 23,826 $ 38,582 $ 15,798 Gross profit 1,488 1,347 771 714 adjustmentsNon-GAAP gross $ 70,480 $ 25,173 $ 39,353 $ 16,512 profit GAAP operating $ 59,811 $ 42,176 $ 32,510 $ 21,126 expensesShare-based (5,781 ) (3,779 ) (3,241 ) (2,035 )compensation (1)Intangible assets (238 ) (251 ) (119 ) (116 )amortization (2)COVID-19 one time - 69 - 80 impact (3)Non-GAAP operating $ 53,792 $ 38,215 $ 29,150 $ 19,055 expenses GAAP Financial $ 2,416 $ 2,797 $ 351 $ 592 income, netForeign exchangegain associated (415 ) (82 ) 387 528 with ASC 842Non-GAAP Financial $ 2,001 $ 2,715 $ 738 $ 1,120 income, net GAAP Taxes onincome (Tax $ 896 $ (927 ) $ 821 $ (164 )benefit)Tax effect on tothe above non-GAAP 165 (180 ) (26 ) (98 )adjustmentsTaxes on income (586 ) 1,015 (338 ) 169 (Tax benefit) (a)Non-GAAP Taxes on $ 475 $ (92 ) $ 457 $ (93 )income GAAP net income $ 10,701 $ (14,626 ) $ 5,602 $ (4,572 )(loss)Share-based 6,899 4,630 3,827 2,522 compensation (1)Intangible assets 608 301 304 141 amortization (2)COVID-19 one time - 377 - 122 impact (3)Foreign exchangegain associated (415 ) (82 ) 387 528 with ASC 842Tax effect on tothe above non-GAAP (165 ) 180 26 98 adjustmentsDeferred taxes onincome (Tax 586 (1,015 ) 338 (169 )benefit) (a)Non-GAAP net $ 18,214 $ (10,235 ) $ 10,484 $ (1,330 )income (loss) GAAP dilutedearnings (losses) $ 0.22 $ (0.36 ) $ 0.12 $ (0.11 )per share Non-GAAP dilutedearnings (losses) $ 0.38 $ (0.25 ) $ 0.22 $ (0.03 )per share Weighted average number of shares Shares used incomputing GAAPdiluted net 47,709,429 40,817,593 47,849,783 40,872,497 earnings (losses)per share Shares used incomputing Non-GAAPdiluted net 47,941,113 40,817,593 48,189,266 40,872,497 earnings (losses)per share (1) Share-based compensation Cost of product 619 491 320 277 revenues Cost of service 499 360 266 210 revenues Research and 1,071 780 569 436 development Selling and 2,333 1,381 1,261 740 marketing General and 2,377 1,618 1,411 859 administrative 6,899 4,630 3,827 2,522 (2) Intangibleassets amortization Cost of product 50 50 25 25 revenues Cost of service 320 - 160 - revenues Selling and 238 251 119 116 marketing 608 301 304 141 (3) COVID-19 one time impact Cost of product - 453 - 209 revenues Cost of service - (7 ) - (7 ) revenues Research and - (57 ) - (57 ) development Selling and - (1 ) - (12 ) marketing General and - (11 ) - (11 ) administrative - 377 - 122 (a) Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel.

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(U.S. dollars in thousands) Six Months Ended Three Months Ended June 30, June 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Cash flows fromoperating activities: Net income (loss) $ 10,701 $ (14,626 ) $ 5,602 $ (4,572 )Adjustments toreconcile netincome to net cash provided byoperatingactivities:Depreciation and 3,035 2,196 1,543 1,095 amortizationFair value ofwarrants deducted 9,711 1,406 6,572 841 from revenuesShare-based 6,899 4,630 3,827 2,522 compensationAmortization ofpremium andaccretion of (1,298 ) 165 (481 ) 76 discount onmarketablesecurities, netRealized gain onsale of marketable - (102 ) - - securitiesChange in operatingassets and liabilities:Trade receivables, (11,085 ) 616 (9,597 ) (6,769 )netOther accountsreceivables and (1,513 ) (844 ) (3,063 ) 135 prepaid expensesInventories (526 ) (5,205 ) 146 4,298 Operating leases (104 ) 33 (48 ) (30 )right-of-use assetsDeferred taxes 245 (1,384 ) 565 (278 )Deposits and (131 ) (82 ) (121 ) (87 )long-term assetsTrade payables (2,417 ) (9,891 ) 3,639 (8,387 )Operating lease (415 ) (82 ) 385 527 liabilitiesEmployees and 2,104 335 (131 ) 688 payroll accrualsDeferred revenuesand advances from (11,401 ) (107 ) (8,029 ) (12 )customersOther payables and 5,676 432 3,822 792 accrued expensesAccrued severance 49 63 79 92 pay, netOther long-term 800 (143 ) 501 (13 )liabilitiesLoss from sale anddisposal of - 75 - - property andEquipmentForeign currencytranslation income(loss) on inter - 183 - (127 )company balanceswith foreignsubsidiaries Net cash providedby (used in) 10,330 (22,332 ) 5,211 (9,209 )operatingactivities Cash flows frominvesting activities: Purchase ofproperty, plant and (5,555 ) (8,511 ) (2,988 ) (4,936 )equipmentAcquisition ofintangible assetsand capitalization - (121 ) - (40 )of softwaredevelopment costsProceeds from saleof property, plant - 4 - - and equipmentInvestment inshort-term bank (10,132 ) 15,196 8,723 1,346 depositsProceeds from saleof marketable 2,050 20,802 2,050 - securitiesProceeds frommaturity of - 17,445 - 5,343 marketablesecuritiesInvestment inmarketable (30,510 ) (18,542 ) (15,220 ) (9,801 )securities Net cash providedby (used in) (44,147 ) 26,273 (7,435 ) (8,088 )investingactivities Cash flows fromfinancing activities: Exercise ofemployee stock 1,754 2,804 1,079 1,236 optionsPayments related toshares withheld for (1,146 ) (64 ) (458 ) (11 )taxes Net cash providedby (used in) 608 2,740 621 1,225 financingactivities Foreign currencytranslationadjustments on cash - 24 - 43 and cashequivalentsIncrease (decrease)in cash and cash (33,209 ) 6,705 (1,603 ) (16,029 )equivalentsCash and cashequivalents at the 125,777 40,743 94,171 63,477 beginning of theperiodCash and cashequivalents at the 92,568 47,448 92,568 47,448 end of the period Non-cashinvestingand financing activities: Purchase ofproperty and 2,678 384 2,678 384 equipment on creditInventorytransferred to be 463 511 51 214 used as propertyand equipmentProperty andequipment 3 51 - - transferred to beused as inventoryReceipt on account 32 13 32 13 of sharesLease liabilitiesarising from 1,296 2,187 1,033 267 obtainingright-of-use assets

Investor Contact:Andrew G. BackmanGlobal Head of Investor Relations(201) 608-5882andrew.backman@kornit.com