Kornit Digital(US:KRNT)2022-05-11 18:10Financial Data and Key Metrics Changes - Total revenues for Q1 2022 grew by 26% year-over-year to $83.3 million, net of $8 million in warrants related to a global strategic account [5][11] - Non-GAAP gross margin was 41.5%, down from 47.1% in the same period last year, attributed to a higher mix of system sales and lower consumables revenues [13][18] - Non-GAAP net income for Q1 was $0.2 million or $0.00 per share, compared to $7.7 million or $0.16 per share in Q1 2021 [18] Business Line Data and Key Metrics Changes - System revenues were strong, particularly from Atlas and Presto systems, with services revenues increasing by 32% year-over-year to $10.8 million [11][12] - The Presto MAX system saw significant demand, especially in Europe and Asia Pacific, contributing to a strong DTF pipeline [7][12] - The Atlas MAX system adoption is increasing, with strong customer feedback and a growing backlog for upgrades [7][12] Market Data and Key Metrics Changes - Asia Pacific recorded a record quarter, with strong sales of both Atlas MAX and Presto systems [11][12] - EMEA had one of its best quarters ever, driven by upgrades from Atlas MAX and strong interest in KornitX [12] - In the Americas, new customers included a major swim and sports apparel company, indicating strong market penetration [12] Company Strategy and Development Direction - The company aims to build the operating system for on-demand fashion, focusing on sustainability and local production to mitigate supply chain issues [10][37] - KornitX is expected to drive significant growth, with partnerships like Wix enhancing demand generation [7][39] - The introduction of new products, including the Atlas Poly and Apollo, is anticipated to strengthen market position and revenue in H2 2022 [10][31] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic volatility affecting consumer purchases and capital allocation decisions, leading to some delays in system purchases [9][30] - Despite near-term challenges, the company remains confident in achieving a $1 billion business by 2026, supported by strong fundamentals and a robust pipeline [10][31] - The second half of 2022 is expected to be stronger than the first half, driven by major orders and product introductions [20][31] Other Important Information - Total operating expenses for Q1 were $35.2 million, a 43% increase year-over-year, reflecting continued investment in R&D and marketing [15][16] - The company ended Q1 with a cash balance of $734 million, a decrease of approximately $64 million from the previous quarter [18][19] Q&A Session Summary Question: Is the slowdown primarily related to the global strategic customer or other accounts? - The slowdown is mixed, primarily from the e-commerce segment, while the global strategic account continues to show tremendous growth [24][25] Question: What gives confidence for improvement in the second half of the year? - Confidence stems from a strong backlog, major product introductions, and historical trends showing stronger performance in H2 [29][31] Question: How is the interest in print technology compared to last quarter? - There is accelerated engagement and growth, particularly in EMEA, with major brands adopting Kornit technology [36][37] Question: What is the outlook for KornitX and its ramp-up? - KornitX is expected to see meaningful revenue growth in H2 2022, with partnerships enhancing demand generation [39][40] Question: Are there concerns about competition from screen-printing equipment manufacturers? - There is confidence in Kornit's technology and market position, with a strong moat around its products [41][42] Question: Can you provide updates on relationships with Fanatics and Delta Apparel? - Both relationships remain strong, with Fanatics shifting to an outsourced production model and Delta Apparel testing competitor systems [72][73]