Kornit Digital(KRNT) - 2023 Q1 - Quarterly Report

Kornit Digital Reports Fourth Quarter and Full-Year 2022 Results This section details Kornit Digital's Q4 and full-year 2022 financial performance, including key highlights and warrant impacts Key Highlights and Management Commentary Kornit Digital reported Q4 2022 consumables and services growth, outlining 2023 strategic priorities for profitability and Apollo launch - Consumables and services revenues grew in Q4 due to a solid peak season[3][4] - Management recognized 2022 as a challenging year, implementing decisive actions to adapt operations to market conditions[3] - Key strategic priorities for 2023 include returning to profitability, successful Apollo system launch, and scaling the business[3][4] Warrants Impact Analysis The company detailed the significant adverse, non-cash impact of outstanding warrants on its financial results for both the fourth quarter and the full year of 2022 Fourth Quarter Warrants Impact Comparison (2022 vs 2021) | Metric | Q4 2022 Warrants Impact ($) | Q4 2021 Warrants Impact ($) | | :--- | :--- | :--- | | Revenue | $4.3M | $7.9M | | Non-GAAP Gross Margin (%) | 4.1% | 4.1% | | Non-GAAP Operating Margin (%) | 7.4% | 7.8% | | Non-GAAP Net Margin (%) | 7.1% | 7.6% | | Non-GAAP Diluted EPS ($) | $0.09 | $0.16 | Full-Year Warrants Impact Comparison (2022 vs 2021) | Metric | FY 2022 Warrants Impact ($) | FY 2021 Warrants Impact ($) | | :--- | :--- | :--- | | Revenue | $22.5M | $25.4M | | Non-GAAP Gross Margin (%) | 4.7% | 3.8% | | Non-GAAP Operating Margin (%) | 8.8% | 6.6% | | Non-GAAP Net Margin (%) | 8.6% | 6.5% | | Non-GAAP Diluted EPS ($) | $0.45 | $0.52 | Fourth Quarter 2022 Results of Operations Q4 2022 total revenue decreased to $63.3 million, resulting in a GAAP net loss of $35.4 million Q4 2022 vs Q4 2021 Performance | Metric | Q4 2022 ($) | Q4 2021 ($) | | :--- | :--- | :--- | | Total Revenue | $63.3M | $87.5M | | GAAP Net Income (Loss) | ($35.4M) | $1.0M | | GAAP EPS (basic) | ($0.71) | $0.02 | | Non-GAAP Net Income (Loss) | ($6.6M) | $6.4M | | Non-GAAP EPS (basic) | ($0.13) | $0.13 | Full-Year 2022 Results of Operations Full-year 2022 total revenue decreased to $271.5 million, resulting in a GAAP net loss of $79.1 million Full-Year 2022 vs 2021 Performance | Metric | Full-Year 2022 ($) | Full-Year 2021 ($) | | :--- | :--- | :--- | | Total Revenue | $271.5M | $322.0M | | GAAP Net Income (Loss) | ($79.1M) | $15.5M | | GAAP EPS (basic) | ($1.58) | $0.32 | | Non-GAAP Net Income (Loss) | ($32.6M) | $36.1M | | Non-GAAP EPS (basic) | ($0.65) | $0.74 | Financial Outlook This section outlines the company's Q1 2023 financial guidance, including revenue and adjusted EBITDA margin forecasts First Quarter 2023 Guidance Q1 2023 revenues are anticipated between $47 million and $52 million, with adjusted EBITDA margin of -27% to -35% of revenue, including warrant impact Q1 2023 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues ($) | $47M - $52M | | Adjusted EBITDA Margin (%) | -27% to -35% of revenue | - Guidance now incorporates the non-cash expense impact from warrants for better alignment with reported metrics[12] Financial Statements This section presents Kornit Digital's consolidated balance sheets, statements of operations, and cash flow statements Consolidated Balance Sheets As of December 31, 2022, total assets decreased to $957.7 million from $1,040.9 million, primarily due to reduced cash and cash equivalents Key Balance Sheet Items (in thousands) | Account | Dec 31, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $104,597 | $611,551 | | Inventory | $89,415 | $63,017 | | Total current assets | $578,839 | $775,343 | | Total assets | $957,666 | $1,040,875 | | Total liabilities | $88,844 | $121,322 | | Total shareholders' equity | $868,822 | $919,553 | Consolidated Statements of Operations For 2022, total revenues were $271.5 million, resulting in an operating loss of $69.9 million and a net loss of $79.1 million Year-End Statement of Operations (in thousands) | Account | Year Ended Dec 31, 2022 ($) | Year Ended Dec 31, 2021 ($) | | :--- | :--- | :--- | | Total revenues | $271,518 | $322,006 | | Gross profit | $96,500 | $151,911 | | Total operating expenses | $166,382 | $139,118 | | Operating income (loss) | ($69,882) | $12,793 | | Net income (loss) | ($79,065) | $15,527 | | Diluted net income (loss) per share | ($1.58) | $0.32 | Consolidated Statements of Cash Flows For 2022, net cash used in operating activities was $99.3 million, leading to a $507.0 million decrease in cash and cash equivalents, ending at $104.6 million Year-End Cash Flow Summary (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2022 ($) | Year Ended Dec 31, 2021 ($) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($99,347) | $53,644 | | Net cash provided by (used in) investing activities | ($407,275) | $89,755 | | Net cash provided by (used in) financing activities | ($332) | $342,375 | | Increase (decrease) in cash and cash equivalents | ($506,954) | $485,774 | | Cash and cash equivalents at end of period | $104,597 | $611,551 | Non-GAAP Financial Measures and Reconciliations This section provides reconciliations of GAAP financial measures to non-GAAP counterparts, including net income and Adjusted EBITDA Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations The company provides a reconciliation from GAAP to non-GAAP results, showing a non-GAAP net loss of $32.6 million for 2022 after various adjustments Full-Year GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | FY 2022 ($) | FY 2021 ($) | | :--- | :--- | :--- | | GAAP net income (loss) | ($79,065) | $15,527 | | Share-based compensation | $22,649 | $15,133 | | Intangible assets amortization | $2,543 | $1,410 | | Restructuring expenses | $1,693 | - | | Non-cash deferred tax expenses (income) | $10,014 | $2,733 | | Non-recurring tax payment | $11,485 | - | | Other adjustments | ($1,948) | $1,296 | | Non-GAAP net income (Loss) | ($32,629) | $36,099 | Reconciliation of GAAP Net Income to Adjusted EBITDA This reconciliation shows Adjusted EBITDA for 2022 was negative $30.8 million, or negative $8.3 million when excluding the $22.5 million impact from warrants Full-Year Adjusted EBITDA Reconciliation (in thousands) | Description | FY 2022 ($) | FY 2021 ($) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | ($79,065) | $15,527 | | Adjustments (Taxes, Interest, SBC, etc.) | $37,243 | $14,769 | | Non-GAAP Operating Income (Loss) | ($41,822) | $30,296 | | Depreciation | $11,022 | $5,686 | | Adjusted EBITDA | ($30,800) | $35,982 | | Warrants Impact | $22,500 | $25,423 | | Adjusted EBITDA, ex. Warrants Impact | ($8,300) | $61,405 |