Kornit Digital(US:KRNT)2023-08-09 18:28Financial Data and Key Metrics Changes - The company reported second quarter revenues of $56.2 million, aligning with the guidance provided in May, despite lower system sales volumes leading to a decline in gross margin to 36.1% from 38.6% year-over-year [4][8][63] - Adjusted EBITDA loss for Q2 2023 was $10.7 million, an improvement from a loss of $15.7 million in the same period last year, with an adjusted EBITDA margin of negative 19% [64] - The company expects revenues for Q3 2023 to be between $58 million and $62 million, with adjusted EBITDA margins projected to be in the negative 6% to negative 13% range [65] Business Line Data and Key Metrics Changes - Consumable revenue grew at a strong double-digit rate across customer segments, contributing to overall revenue growth despite lower system sales [4][63] - The services business demonstrated exceptional revenue growth during Q2, driven by customer upgrades to MAX technology [44][63] Market Data and Key Metrics Changes - In the Americas, year-over-year growth was attributed to a double-digit increase in consumables across strategic accounts, while EMEA faced a decline in system sales due to financing challenges [63] - The APAC region experienced healthy growth in consumables and services compared to the same period last year, particularly in key textile producing countries like India and China [47] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and entering new markets, with a strong emphasis on launching the Apollo platform and capitalizing on growth opportunities in direct-to-fabric business [5][6] - Kornit aims to achieve breakeven on an adjusted EBITDA basis in Q4 2023 and deliver profitable growth for the full year 2024 [5][64] Management's Comments on Operating Environment and Future Outlook - Management noted that while system sales volumes remain soft due to capital equipment spending challenges, there is a positive trend in consumables and services revenue growth [44][63] - The company anticipates a strong Q3 and Q4 driven by increased engagement with brands and retailers, particularly in the sports and athleisure markets [22][27] Other Important Information - Kornit successfully introduced new technologies at the ITMA trade show, receiving positive feedback and securing a significant number of leads and sales orders [6][61] - The company has repurchased approximately 938,000 shares for an aggregate amount of $21.8 million, reflecting confidence in its financial position [48] Q&A Session Summary Question: Can you discuss the upgrade timing for larger customers going into 2024? - Management indicated that upgrades are expected to continue in Q3, with a strong focus on completing upgrades before Q4, as customers are busy during that period [54][72] Question: How is the relationship with Amaze progressing? - The company is optimistic about the growth potential with Amaze, noting that they are testing the Apollo system and exploring additional opportunities [56][74] Question: What is the outlook for revenue recognition for new products? - Management stated that many deals signed at ITMA will be implemented in early 2024, with a strong pipeline for direct-to-fabric systems [84][86] Question: Can you provide insight into financing alternatives for customers? - The company is exploring third-party financing options to support qualified buyers, which could drive conversions moving forward [63][76]