Kornit Digital(US:KRNT)2022-08-10 20:17Financial Data and Key Metrics Changes - The company reported second quarter revenues of $58.1 million, which was impacted by approximately $4.5 million of noncash warrants related to a global strategic account, aligning with preliminary revenue expectations [6][15] - Non-GAAP gross margin for the second quarter was 38.6%, down from 48.2% in the same period last year, primarily due to lower systems revenues in the Americas [15][16] - Non-GAAP net loss for the second quarter was $15.6 million, or a loss of $0.31 per basic share, compared to a net income of $10.5 million, or $0.22 per diluted share, in the same period last year [19] Business Line Data and Key Metrics Changes - DTG systems revenues fell short of expectations, particularly in the Americas, while consumables revenues met expectations [6][15] - The company anticipates consumables to grow sequentially throughout the remainder of 2022, driven by customer preparations for peak season [8][21] Market Data and Key Metrics Changes - EMEA and Asia Pacific regions showed good growth in the first half of the year, with EMEA's pipeline improving and Asia Pacific opening up post-lockdowns [8][9] - In the Americas, particularly Latin America, demand is increasing, especially for the press to MAX [9][10] Company Strategy and Development Direction - The company is focusing on three key areas: helping brands understand the benefits of on-demand production, ensuring successful rollout of new products, and returning to profitability [11][12] - A share repurchase program of up to $75 million was authorized to return value to shareholders while maintaining growth plans [13][20] Management's Comments on Operating Environment and Future Outlook - Management noted that while the operating environment remains uncertain, opportunities for growth are intact, particularly with new product launches and customer expansions [10][12] - The company expects revenues for Q3 to be between $66 million to $70 million, with a similar outlook for Q4, driven by consumables and services [22][21] Other Important Information - The company announced a leadership transition with Lauri Hanover set to become the new CFO in November [14][25] - The acquisition of Tesoma was completed during the quarter, contributing to an increase in employee count [19][20] Q&A Session Summary Question: Update on hardware units sold and potential Q4 shortfall - Management confirmed that systems delayed from Q2 are expected to be shipped and recognized in H2, with good visibility on site readiness [31][32] Question: Growth expectations for consumables in Q3 and Q4 - Management expects sequential growth in consumables for both quarters, although at a lower pace compared to previous years [33] Question: Visibility into order pipeline for 2023 - Management indicated it is too early to provide guidance for 2023, but there is strong visibility for global strategic accounts [36][38] Question: Operating expenses and margin improvement - Management expects operating margins to improve in Q3 and Q4 due to a higher mix of consumables and operational efficiencies [40][41] Question: Long-term revenue target confidence - Management expressed confidence in the fundamentals of the company and the potential for significant growth, aiming for $1 billion in revenue by 2026 [45][46] Question: Customer interest in Apollo machine - Management highlighted strong demand for the Apollo, particularly for short to mid-run production, emphasizing its efficiency and cost-effectiveness [49][51] Question: Impact of market conditions on customer plans for upgrades - Management noted that while some upgrades were delayed, there is a normalization in customer demand, with expectations for strong upgrade activity in Q3 and 2023 [55][56] Question: KornitX business impact from market slowdown - Management stated that KornitX remains a core strategy, with ongoing improvements and customer engagement [58] Question: Product introductions and revenue drivers - Management indicated that Atlas MAX is gaining traction, while DTF technology is becoming increasingly significant for revenue [62][63]