Kornit Digital(KRNT) - 2024 Q1 - Quarterly Report

Kornit Digital Q4 and Full Year 2023 Earnings Release Management Commentary and Business Outlook Management reported a strong Q4 peak season, key 2023 achievements, and a 2024 outlook for modest growth and profitability amid macroeconomic headwinds - Experienced a healthy peak season with year-over-year growth in impressions and double-digit growth in consumable sales[3] - Achieved positive adjusted EBITDA and cash from operations in the fourth quarter[3] - Diversified customer base and established MAX technology as the new industry standard[3] - Successfully completed the beta program for the Apollo platform[3] - The outlook for 2024 anticipates continued macroeconomic headwinds, modest full-year revenue growth, and a focus on achieving adjusted EBITDA profitability and positive operating cash flow[3] First Quarter 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues | $43 million to $48 million | | Adjusted EBITDA Margin | -16% to -26% of revenue | Financial Performance Highlights The company reported a year-over-year revenue decline for Q4 and the full year, though Q4 profitability improved significantly from the prior-year period Fourth Quarter 2023 Performance Q4 revenue declined, but improved gross margins and lower expenses drove a shift from a non-GAAP net loss in the prior year to positive non-GAAP net income Q4 2023 vs Q4 2022 Financial Results (in millions, except per share data) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $56.6 | $63.3 | -10.6% | | GAAP Gross Margin | 25.8% | 33.7% | -7.9 p.p. | | Non-GAAP Gross Margin | 48.6% | 36.4% | +12.2 p.p. | | GAAP Net Loss | $(22.9) | $(35.4) | +35.3% | | Non-GAAP Net Income (Loss) | $3.8 | $(6.6) | N/A | | Adjusted EBITDA | $0.2 | $(6.1) | N/A | | GAAP EPS | $(0.48) | $(0.71) | +32.4% | | Non-GAAP EPS | $0.08 | $(0.13) | N/A | Full Year 2023 Performance Full-year revenue decreased due to lower systems sales, though both GAAP and non-GAAP net losses narrowed compared to 2022 Full Year 2023 vs Full Year 2022 Financial Results (in millions, except per share data) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $219.8 | $271.5 | -19.0% | | GAAP Gross Margin | 30.5% | 35.5% | -5.0 p.p. | | Non-GAAP Gross Margin | 38.4% | 38.2% | +0.2 p.p. | | GAAP Net Loss | $(64.4) | $(79.1) | +18.6% | | Non-GAAP Net Loss | $(20.4) | $(32.6) | +37.4% | | Adjusted EBITDA Loss | $(30.9) | $(30.8) | -0.3% | | GAAP EPS | $(1.31) | $(1.59) | +17.6% | | Non-GAAP EPS | $(0.42) | $(0.66) | +36.4% | Consolidated Financial Statements The statements show a decline in total assets and shareholders' equity, a persistent but improved net loss, and a significant net decrease in cash for the year Consolidated Balance Sheets Total assets and shareholders' equity decreased year-over-year, primarily driven by a reduction in cash and inventory balances Key Balance Sheet Items (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $39,605 | $104,597 | | Inventory | $67,712 | $89,415 | | Total Current Assets | $522,387 | $578,839 | | Total Assets | $865,580 | $957,666 | | Total Liabilities | $69,913 | $88,844 | | Total Shareholders' Equity | $795,667 | $868,822 | Consolidated Statements of Operations Full-year revenue and gross profit declined, and despite lower operating expenses, the operating loss widened while the net loss improved from the prior year Key Statement of Operations Items - Full Year (in thousands) | Account | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Total Revenues | $219,786 | $271,518 | | Gross Profit | $66,957 | $96,500 | | Total Operating Expenses | $154,488 | $166,382 | | Operating Loss | $(87,531) | $(69,882) | | Net Loss | $(64,351) | $(79,065) | | Basic Loss Per Share | $(1.31) | $(1.59) | Consolidated Statements of Cash Flows The company significantly reduced cash used in operations and generated cash from investing, but share repurchases led to a net decrease in cash for the year Key Cash Flow Items - Full Year (in thousands) | Account | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,682) | $(99,347) | | Net cash provided by (used in) investing activities | $26,212 | $(407,275) | | Net cash used in financing activities | $(56,522) | $(332) | | Net decrease in cash and cash equivalents | $(64,992) | $(506,954) | | Cash and cash equivalents at end of period | $39,605 | $104,597 | Reconciliation of GAAP to Non-GAAP Measures The reconciliation details adjustments for items like restructuring costs and share-based compensation, which turned a Q4 GAAP loss into non-GAAP income Reconciliation of Statements of Operations Restructuring expenses and share-based compensation were the primary adjustments that narrowed the non-GAAP loss relative to the GAAP loss for the full year Key GAAP to Non-GAAP Reconciliation Items (in thousands) | Adjustment | Q4 2023 | FY 2023 | | :--- | :--- | :--- | | GAAP Net Loss | $(22,934) | $(64,351) | | Share-based compensation | $5,645 | $22,589 | | Intangible assets amortization | $513 | $2,243 | | Restructuring expenses | $19,080 | $19,375 | | Other adjustments | $1,479 | $(2,274) | | Non-GAAP Net Income (Loss) | $3,795 | $(20,432) | Reconciliation to Adjusted EBITDA Adjustments for non-cash and non-recurring items, notably restructuring costs, converted a significant Q4 GAAP net loss to positive adjusted EBITDA GAAP Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q4 2023 | FY 2023 | | :--- | :--- | :--- | | GAAP Net Loss | $(22,934) | $(64,351) | | Taxes on income | $539 | $970 | | Financial income, net | $(5,424) | $(24,150) | | Share-based compensation | $5,645 | $22,589 | | Intangible assets amortization | $513 | $2,243 | | Restructuring expenses | $19,080 | $19,375 | | Depreciation | $2,774 | $12,457 | | Adjusted EBITDA | $193 | $(30,867) |