GlobeNewswire Inc | Nov 10, 2021 07:05AM EST

November 10, 2021

-- Revenue up 51% year-over-year to $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants; Record revenues across all regions, strong profitability, and operating cash flows

-- Third quarter GAAP operating profit of $3.9 million; Non-GAAP operating profit of $8.6 million, net of $7.9 million attributed to the non-cash impact of warrants

-- New industry transforming innovative platforms; Atlas MAX and Presto MAX extremely well received by market; Robust new product introductions planned for early 2022

-- Companys inspirational global fashion tech platform in Los Angeles, New York, Italy, and Japan drives creativity, sustainability, and inclusiveness to the forefront of the fashion world, utilizing Kornits on-demand technologies

-- Enters 2022 with extremely strong business fundamentals, momentum, and pipeline

ROSH-HA'AYIN, Israel, Nov. 10, 2021 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ: KRNT), a worldwide market leader in sustainable, on-demand, digital textile production technologies, reported today results for the third quarter ended September 30, 2021.

I am extremely proud of our phenomenal third quarter performance, with record revenues across all regions, strong profitability and operating cash flows, said Ronen Samuel, Kornit Digitals Chief Executive Officer. We are witnessing the change in the fashion industry with an acceleration to sustainable, on-demand production -- a revolutionary moment in how we all think and act about fashion, from the need for self-expression, to responsible production. Kornit is leading the digital transformation the fashion industry must make with innovative solutions that break the barriers between imagination and physical applications.

Mr. Samuel concluded, We enter 2022 with very strong business fundamentals supported by broad-based demand for our industry leading solutions. This growing demand and market acceptance puts us firmly on the path of becoming 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 third quarters of 2021 and 2020, respectively:

Third Quarter Warrants Impact

Three Months Ended September 30, 2021 2020 Net of Warrants Net of Warrants Warrants Impact Warrants Impact Impact Impact Revenue $86.7M $7.9M $57.4M $2.2MNon-GAAP Gross Margin 47.8% 4.3% 48.1% 1.9%Non-GAAP Operating Margin 9.9% 7.5% 11.3% 3.2%Non-GAAP Net Margin 13.3% 7.2% 13.5% 3.1%Non-GAAP Diluted Earnings Per $0.24 $0.16 $0.18 $0.05Share

We are very pleased with our strong third quarter performance, which continued our momentum from the first half of the year, said Alon Rozner, Kornit Digitals Chief Financial Officer. We are focused on ending the year strong and supporting our customers to ensure they are ready for their peak season. We enter 2022 in a phenomenal position with outstanding business fundamentals, a robust backlog and strong pipeline.

Third Quarter 2021 Results of Operations

-- Total revenue for the third quarter of 2021 was $86.7 million, net of $7.9 million attributed to the non-cash impact of warrants, compared to $57.4 million, net of $2.2 million attributed to the non-cash impact of warrants in the prior year period.

-- GAAP net income for the third quarter of 2021 was $3.9 million, or $0.08 per diluted share, compared to $3.9 million, or $0.09 per share, for the third quarter of 2020.

-- Non-GAAP net income for the third quarter of 2021 was $11.5 million, or $0.24 per diluted share, net of $0.16 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net profit of $7.7 million, or $0.18 per diluted share, net of $0.05 per diluted share attributed to the non-cash impact of warrants, for the third quarter of 2020.

FourthQuarter 2021 Guidance

For the fourth quarter of 2021, and assuming zero impact from the fair value of issued warrants in the quarter, the Company expects revenue to be in the range of $89 million to $93 million and non-GAAP operating income to be in the range of 13.0% to 15.0% of revenue.

ThirdQuarter 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 13724287.

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 13724287. The telephonic replay will be available beginning at 11:30 a.m. ET on Wednesday, November 10, 2021, until 11:59 p.m. ET on Wednesday, November 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.

The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Kornit urges investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measures to evaluate its business. A reconciliation for non-GAAP operating income guidance set forth above is not provided because, as forward-looking statements, such reconciliation is not available without unreasonable effort due to the high variability, complexity, and difficulty of estimating certain items such as charges to share-based compensation expense and currency fluctuations which could have an impact on its consolidated results. Kornit believes the information provided is useful to investors because it can be considered in the context of Kornits historical disclosures of this measure.

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 (NASDAQ: KRNT) is a worldwide market leader in sustainable, on-demand, digital fashion 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.

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(U.S. dollars in thousands) September 30, December 31, 2021 2020 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 96,668 $ 125,777Short-term bank deposit 241,103 224,804Marketable securities 25,920 13,718Trade receivables, net 49,866 51,566Inventory 55,344 52,487Other accounts receivable and prepaid expenses 11,148 9,178Total current assets 480,049 477,530 LONG-TERM ASSETS: Marketable securities 93,816 71,636Deposits and prepaid expenses 471 395Severance pay fund 342 337Deferred taxes 7,054 5,096Property,plant and equipment, net 38,401 29,255Operating lease right-of-use assets 22,122 21,053Intangible assets, net 10,479 7,221Goodwill 25,447 16,466Total long-term assets 198,132 151,459 Total assets $ 678,181 $ 628,989 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 30,630 $ 32,016Employees and payroll accruals 22,238 15,022Deferred revenues and advances from customers 11,719 27,019Operating lease liabilities 4,461 3,957Other payables and accrued expenses 22,116 11,613Total current liabilities 91,164 89,627 LONG-TERM LIABILITIES: Accrued severance pay 1,327 1,214Operating lease liabilities 18,856 18,688Other long-term liabilities 1,699 443Total long-term liabilities 21,882 20,345 SHAREHOLDERS' EQUITY 565,135 519,017 Total liabilities and shareholders' equity $ 678,181 $ 628,989

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except share and per share data)

Nine Months Ended Three Months Ended September 30, September 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues Products $ 206,682 $ 103,536 $ 76,560 $ 49,290 Services 27,776 17,504 10,109 8,102 Total revenues 234,458 121,040 86,669 57,392 Cost of revenuesProducts 98,457 50,117 36,028 23,031 Services 26,477 20,066 10,109 7,330 Total cost of 124,934 70,183 46,137 30,361 revenues Gross profit 109,524 50,857 40,532 27,031 Operating expenses:Research anddevelopment, 30,736 22,213 11,493 8,689 netSales and 40,716 25,375 15,837 8,587 marketingGeneral and 24,972 18,957 9,283 7,093 administrativeTotal 96,424 66,545 36,613 24,369 operatingOperating 13,100 (15,688 ) 3,919 2,662 income (loss)Financial 2,635 4,427 219 1,630 income, netIncome (loss)before taxes 15,735 (11,261 ) 4,138 4,292 on income Taxes onincome 1,162 (577 ) 266 350 (benefit)Net income 14,573 (10,684 ) 3,872 3,942 (loss) Basic netincome (loss) $ 0.32 $ (0.26 ) $ 0.08 $ 0.09 per share Weightedaverage number of sharesused incomputing basic netincome (loss) 46,200,884 41,059,090 46,361,164 41,536,835 per share Diluted netincome (loss) $ 0.30 $ (0.26 ) $ 0.08 $ 0.09 per share Weightedaverage number of sharesused incomputing dilutednet income(loss) per 47,846,077 41,059,090 48,116,716 42,692,989 share

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(U.S. dollars in thousands)

Nine Months Ended Three Months Ended September 30, September 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) Cash flows fromoperating activities: Net income (loss) $ 14,573 $ (10,684 ) $ 3,872 $ 3,942 Adjustments to reconcile netincome (loss) to net cash provided by (used in) operatingactivities:Depreciation and 4,945 3,411 1,910 1,215 amortizationFair value ofwarrants deducted 17,568 3,564 7,857 2,158 from revenuesShare-based 10,969 7,310 4,070 2,680 compensationAmortization ofpremium andaccretion of (1,652 ) 248 (354 ) 83 discount onmarketablesecurities, netRealized loss(gain) on sale of - (503 ) - (401 )marketablesecuritiesChange in operatingassets and liabilities:Trade receivables 1,713 (7,933 ) 12,798 (8,549 )Other receivablesand prepaid (1,853 ) (1,615 ) (340 ) (771 )expensesInventory (3,765 ) (9,529 ) (3,239 ) (4,324 )Operating leaseright-of-use assets (397 ) - 122 49 and liabilities,netDeferred taxes, net (1,866 ) (823 ) (2,111 ) 561 Other long term (76 ) 38 55 120 assetsTrade payables (2,400 ) 571 17 10,462 Employees and 8,878 4,318 6,774 3,983 payroll accrualsDeferred revenuesand advances from (15,350 ) 7,663 (3,949 ) 7,770 customersPayables and 10,479 2,120 4,803 1,688 accrued expensesSeverance pay, net 108 81 59 18 Other long term 1,256 48 456 191 liabilitiesSale of property - 75 - - and EquipmentForeign currencytranslation income(loss) on inter - (294 ) - (477 )company balanceswith foreignsubsidiaries Net cash providedby (used in) 43,130 (1,934 ) 32,800 20,398 operatingactivities Cash flows frominvesting activities: Purchase ofproperty and (9,422 ) (10,758 ) (3,867 ) (2,247 )equipmentCapitalization ofsoftware - (121 ) - - development costsProceeds from saleof property and - 4 - - equipmentCash paid inconnection with (14,991 ) (15,059 ) (14,991 ) (15,059 )acquisition, net ofcash acquiredInvestment in(proceeds from) (16,299 ) 43,192 (6,167 ) 27,996 bank depositsProceeds from saleof marketable - 58,532 - 37,730 securitiesProceeds frommaturity of 10,304 20,006 8,254 2,561 marketablesecuritiesInvestment inmarketable (44,310 ) (18,542 ) (13,800 ) - securities Net cash providedby (used in) (74,718 ) 77,254 (30,571 ) 50,981 investingactivities Cash flows fromfinancing activities: Exercise ofemployee stock 4,141 4,942 2,387 2,138 optionsPayments related toshares withheld for (1,662 ) (82 ) (516 ) (18 )taxesProceeds frompublic offering, - 162,720 - 162,720 net of issuancecosts Net cash providedby financing 2,479 167,580 1,871 164,840 activities Foreign currencytranslationadjustments on cash - 37 - 13 and cashequivalentsIncrease (decrease)in cash and cash (29,109 ) 242,937 4,100 236,232 equivalentsCash and cashequivalents at the 125,777 40,743 92,568 47,448 beginning of theperiodCash and cashequivalents at the 96,668 283,680 96,668 283,680 end of the period Non-cashinvestingand financing activities: Purchase ofproperty and 1,907 382 1,907 382 equipment on creditInventorytransferred to be 931 823 51 312 used as propertyand equipmentIssuance expenses - 739 - 739 on creditLease liabilitiesarising from 1,517 2,769 1,033 849 obtainingright-of-use assets

KORNIT DIGITAL LTD.AND ITS SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except share and per share data) Nine Months Ended Three Months Ended September 30, September 30, 2021 2020 2021 2020 (Unaudited) (Unaudited)Revenues $ 234,458 $ 121,040 $ 86,669 $ 57,392 GAAP cost of $ 124,934 $ 70,183 46,137 30,361 revenuesCost of productrecorded for (1,000 ) (772 ) (381 ) (281 )share-basedcompensation (1)Cost of servicerecorded for (750 ) (568 ) (251 ) (208 )share-basedcompensation (1)Intangible assetsamortization on (161 ) (75 ) (111 ) (25 )cost of product(3)Intangible assetsamortization on (480 ) - (160 ) - cost of service(3)Coronavirus one - (520 ) - (74 )time impact (4)Non-GAAP cost of $ 122,543 $ 68,248 $ 45,234 $ 29,773 revenues GAAP gross profit $ 109,524 $ 50,857 40,532 27,031 Gross profit 2,391 1,935 903 588 adjustmentsNon-GAAP gross $ 111,915 $ 52,792 $ 41,435 $ 27,619 profit GAAP operating $ 96,424 $ 66,545 $ 36,613 $ 24,369 expensesShare-based (9,219 ) (5,970 ) (3,438 ) (2,191 )compensation (1)Acquisitionrelated expenses (194 ) (648 ) (194 ) (648 )(2)Intangible assets (336 ) (622 ) (98 ) (371 )amortization (3)Coronavirus one - 69 - - time impact (4)Non-GAAP operating $ 86,675 $ 59,374 $ 32,883 $ 21,159 expenses GAAP Financialincome (expenses), $ 2,635 $ 4,427 $ 219 $ 1,630 netForeign exchangelosses associated (302 ) 28 113 110 with ASC 842Non-GAAP Financialincome (expenses), $ 2,333 $ 4,455 $ 332 $ 1,740 net GAAP Taxes on $ 1,162 $ (577 ) $ 266 $ 350 income (benefit)Tax effect on tothe above non-GAAP (1,954 ) 346 (2,119 ) 526 adjustmentsDeferred taxbenefit based onan Israeli (1,360 ) 610 (774 ) (405 )statutory tax rate(a)Non-GAAP Taxes on $ (2,152 ) $ 379 $ (2,627 ) $ 471 income (benefit) GAAP net income $ 14,573 $ (10,684 ) $ 3,872 $ 3,942 (loss)Share-based 10,969 7,310 4,070 2,680 compensation (1)Acquisitionrelated expenses 194 648 194 648 (2)Intangible assets 977 697 369 396 amortization (3)Coronavirus one - 451 - 74 time impact (4)Foreign exchangelosses associated (302 ) 28 113 110 with ASC 842Tax effect on tothe above non-GAAP 1,954 (346 ) 2,119 (526 )adjustmentsDeferred taxbenefit based onan Israeli 1,360 (610 ) 774 405 statutory tax rate(a)Non-GAAP net $ 29,725 $ (2,506 ) $ 11,511 $ 7,729 income (loss) GAAP dilutedearning (loss) per $ 0.30 $ (0.26 ) $ 0.08 $ 0.09 share Non-GAAP dilutedearning (loss) per $ 0.62 $ (0.06 ) $ 0.24 $ 0.18 share Weighted average number of shares Shares used incomputing GAAPdiluted net 47,846,077 41,059,090 48,116,716 42,692,989 earning (loss) pershare Shares used incomputing Non-GAAPdiluted net 48,082,118 41,059,090 48,361,472 42,972,182 earning (loss) pershare (1) Share-based compensation Cost of product 1,000 772 381 281 revenues Cost of service 750 568 251 208 revenues Research and 1,810 1,243 739 463 development Selling and 3,651 2,150 1,318 769 marketing General and 3,758 2,577 1,381 959 administrative 10,969 7,310 4,070 2,680 (2) Acquisition related expenses General and 194 648 194 648 administrative 194 648 194 648 (3) Intangibleassets amortization Cost of product 161 75 111 25 revenues Cost of service 480 - 160 - revenues Research and - 315 - 315 development Selling and 336 307 98 56 marketing 977 697 369 396 (4) Coronavirus one time impact Cost of product - 527 - 74 revenues Cost of service - -7 - - revenues Research and - -57 - - development Selling and - -1 - - marketing General and - -11 - - administrative - 451 - 74 (a) Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel.

InvestorContact:Andrew G. BackmanGlobal Head of Investor Relationsandrew.backman@kornit.com