Kornit Digital(KRNT) - 2023 Q2 - Quarterly Report

Report Highlights and Management Commentary Management discusses Q1 results amid macroeconomic pressures, highlighting strategic account growth and new technology showcases Q1 2023 Key Metrics | Metric | Value | | :--- | :--- | | Revenues | $47.8 million | | GAAP Net Loss | $18.9 million | | Non-GAAP Net Loss | $13.4 million | - Several larger direct-to-garment (DTG) strategic accounts in the customized design market showed double-digit year-over-year impressions growth[3][4] - The company is gaining momentum with its MAX technology, which is becoming an industry standard, and had a strong quarter for Atlas MAX Poly and Presto MAX[3] - Kornit plans to showcase new cutting-edge solutions, including the Apollo system, at the ITMA tradeshow in Milan, aiming to revolutionize markets traditionally served by analog production[3][4] Financial Performance Q1 financials show a significant revenue decline and wider net loss, with modest revenue guidance for Q2 First Quarter 2023 Results of Operations Q1 2023 revenue fell to $47.8 million from $83.3 million YoY, driving a GAAP net loss of $18.9 million and lower gross margins Q1 2023 vs Q1 2022 Financial Comparison (in millions, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total Revenue | $47.8 | $83.3 | | GAAP Gross Profit Margin | 27.4% | 40.1% | | Non-GAAP Gross Profit Margin | 30.2% | 41.5% | | GAAP Net Loss | $(18.9) | $(5.2) | | GAAP Loss per Share | $(0.38) | $(0.10) | | Non-GAAP Net (Loss)/Income | $(13.4) | $0.2 | | Non-GAAP (Loss)/Earnings per Share | $(0.27) | $0.00 | | Adjusted EBITDA | $(14.7) | $1.5 | Second Quarter 2023 Guidance The company projects Q2 2023 revenues of $54-$59 million with a negative adjusted EBITDA margin Q2 2023 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues | $54 million - $59 million | | Adjusted EBITDA Margin | -19% to -27% | Financial Statements The statements detail the company's financial position, operating results, and cash flow activities for Q1 2023 Consolidated Balance Sheets Total assets slightly decreased to $947.1 million, with a major shift from bank deposits to cash and equivalents Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $352,950 | $104,597 | | Short-term bank deposit | $101 | $275,033 | | Total Assets | $947,057 | $957,666 | | Total Liabilities | $94,027 | $88,844 | | Total Shareholders' Equity | $853,030 | $868,822 | Consolidated Statements of Operations Q1 revenues fell to $47.8 million due to lower Product sales, resulting in an operating loss of $24.1 million Q1 Statement of Operations (in thousands, except per share data) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Product Revenues | $31,903 | $72,514 | | Services Revenues | $15,875 | $10,779 | | Total Revenues | $47,778 | $83,293 | | Gross Profit | $13,072 | $33,402 | | Operating Loss | $(24,141) | $(6,905) | | Net Loss | $(18,931) | $(5,197) | | Basic Loss Per Share | $(0.38) | $(0.10) | Consolidated Statements of Cash Flows Net cash used in operations was $14.0 million, while investing activities provided $269.2 million in cash Q1 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,004) | $(47,082) | | Net cash provided by (used in) investing activities | $269,202 | $(486,974) | | Net cash used in financing activities | $(6,845) | $(211) | | Increase (decrease) in cash and cash equivalents | $248,353 | $(534,267) | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP results, adjusting for items like share-based compensation and amortization Reconciliation of GAAP to Non-GAAP Statements of Operations Adjustments for non-cash items resulted in a non-GAAP net loss of $13.4 million versus a GAAP loss of $18.9 million Q1 2023 GAAP to Non-GAAP Net Loss Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP Net Loss | $(18,931) | | Share-based compensation | $5,245 | | Intangible assets amortization | $611 | | Restructuring expenses | $295 | | Foreign exchange differences associated with ASC 842 | $(376) | | Non-cash deferred tax income | $(221) | | Non-GAAP Net Loss | $(13,377) | Reconciliation of GAAP Net Income to Adjusted EBITDA Adjusted EBITDA was a loss of $14.7 million in Q1 2023, down from a positive $1.5 million in the prior year Q1 GAAP Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Description | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | GAAP Net Loss | $(18,931) | $(5,197) | | Taxes on income | $194 | $91 | | Financial income | $(5,404) | $(1,799) | | Share-based compensation | $5,245 | $5,298 | | Intangible assets amortization | $611 | $419 | | Depreciation | $3,262 | $2,161 | | Other adjustments | $295 | $512 | | Adjusted EBITDA | $(14,728) | $1,485 | Other Information This section includes forward-looking statements, non-GAAP disclosures, and conference call details Forward-Looking Statements The company outlines potential risks including macroeconomic conditions, product adoption, and competition - Identified risks include the duration of macroeconomic headwinds, success in selling new products like Poly Pro and Presto, and competition[11] Non-GAAP Discussion Disclosure The company explains its use of non-GAAP measures to provide a view of core operating performance - Non-GAAP measures are used by management for planning, forecasting, and evaluating the business's ongoing performance[14] - Adjustments to GAAP measures include share-based compensation, amortization of intangible assets, acquisition-related expenses, restructuring expenses, and certain foreign exchange differences[12] Conference Call Information The company hosted a conference call on May 10, 2023, to discuss Q1 results, with a replay available - The earnings conference call was held on May 10, 2023, with a replay available until May 24, 2023[7][8]