UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2020

 

Commission File Number 001-36903

 

KORNIT DIGITAL LTD.

(Translation of Registrant’s name into English)

 

12 Ha’Amal Street

Park Afek

Rosh Ha’Ayin 4824096 Israel

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒     Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

 

 

 

CONTENTS

 

On May 19, 2020 Kornit Digital Ltd. (“Kornit”) issued a press release entitled “Kornit Digital Reports First Quarter 2020 Results,” in which Kornit reported its financial results for the quarter ended March 31, 2020. A copy of that press release is furnished as Exhibit 99.1 hereto.

 

In conjunction with the conference call being held on May 19, 2020 to discuss Kornit’s quarterly results for the quarter ended March 31, 2020, Kornit also made available to its investors a slide presentation to provide additional information regarding its business and its financial results. That slide presentation is attached as Exhibit 99.2 to this Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) and is incorporated herein by reference.

 

The U.S. GAAP financial information contained in the (i) consolidated balance sheets, (ii) consolidated statements of operations and (iii) consolidated statements of cash flows included in the press release attached as Exhibit 99.1 to this Form 6-K is hereby incorporated by reference into Kornit’s Registration Statements on Form F-3 (File No. 333-232070) and Form S-8 (File No.’s 333-203970, 333-214015, 333-217039, 333-223794, 333-230567 and 333-237346).

 

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

  KORNIT DIGITAL LTD.
     
Date: May 19, 2020 By: /s/ Guy Avidan
  Name: Guy Avidan
  Title: Chief Financial Officer

 

2

 

 

Exhibit Index

 

Exhibit

No.

  Description
99.1   Press release dated May 19, 2020 “Kornit Digital Reports First Quarter 2020 Results”
99.2   Slide presentation for conference call of Kornit held on May 19, 2020 discussing quarterly financial results for the first quarter of 2020

 

 

3

 

Exhibit 99.1

 

Investor Contact:

Kelsey Turcotte

The Blueshirt Group

(917) 842-0334

Kelsey@blueshirtgroup.com

 

 

Kornit Digital Reports First Quarter 2020 Results

 

Textile Industry at Inflection Point

 

·First quarter revenue of $26.2 million, net of non-cash warrants impact of $0.6 million
·First quarter 2020 GAAP operating loss of $13.0 million; Non-GAAP operating loss of $10.5 million, including $0.6 million attributed to the non-cash impact of warrants
·First quarter 2020 performance reflects immediate short-term impact of COVID-19
·High confidence in delivering year-over-year growth for the second half of 2020

 

Rosh-Ha’Ayin, Israel – May 19, 2020 – Kornit Digital Ltd. (NASDAQ: KRNT), a leading provider of digital printing solutions for the global textile industry, today reported results for the first quarter ended March 31, 2020.

 

“While our first quarter 2020 results were significantly impacted by efforts to contain COVID-19, we are very encouraged by the global reopening of the economy and see a clear path to reaccelerating top line growth,” said Ronen Samuel, Kornit Digital’s Chief Executive Officer. “The broader market disruption of the last few months has created an inflection point in the textile industry, further accelerating the shift to e-commerce and exposing the inherent supply chain challenges faced by traditional retail. There is a need across all segments for flexible inventory management, all of which is driving an increased need for on-demand digital production and decoration of textiles in a sustainable way.”

 

Samuel continued, “We believe this short-term dislocation moves the market more quickly in our direction and is reflected in our strengthening pipeline. Looking at the balance of fiscal 2020, we expect that customers will accelerate their investments in Kornit as they prepare for peak activity. I am more confident than ever in our value proposition and our leadership position. Kornit is very well positioned to seize the market opportunity ahead of us, and we expect to deliver year-over-year growth for the second half of 2020.”

 

2019 GAAP and Non-GAAP figures in today’s press release are presented using a different valuation basis for the warrants impact compared to previous years as a result of the recently issued accounting standards update (ASU 2019-08).

 

 

 

 

The following table compares the adverse, non-cash impact that our outstanding warrants had on our results of operations during the first quarter of 2020 and 2019, respectively:

 

First Quarter Warrants Impact

 

   Three Months Ended 
   March 31, 
   2020   2019 
   Net of Warrants Impact   Warrants Impact   Net of Warrants Impact   Warrants Impact 
                 
Revenue  $26.2M  $0.6M  $38.6M  $0.6M
Non-GAAP Gross Margin   33.0%   141bps   45.5%   78bps
Non-GAAP Operating Margin   (40.1%)   295bps   5.3%   135bps
Non-GAAP Net Margin   (34.0%)   282bps   4.2%   137bps
Non-GAAP Diluted Earnings (Loss) Per Share  ($0.22)  $0.02   $0.04   $0.02 

 

“Early on we made the decision to maintain investment in the infrastructure to support the significant growth we expect in the near future and are as ready as ever to support our customers and partners as they reopen their businesses,” said Guy Avidan, Kornit Digital’s Chief Financial Officer. “The market is moving quickly in our direction and this focus on efficient execution has allowed us to continue investing in innovation and long-term opportunities that will further enhance our market leadership. We believe this was the right approach and are very optimistic as we look at the remainder of the year and beyond.”

 

First Quarter 2020 Results of Operations

 

·Total revenue for the first quarter of 2020 decreased to $26.2 million, net of $0.6 million attributed to the non-cash impact of warrants, compared to $ 38.6 million, net of $0.6 million attributed to the non-cash impact of warrants in the prior year period.
·GAAP net loss for the first quarter of 2020 was $10.1 million, or $0.25 per diluted share, compared to net loss of $1.2 million, or $0.03 per diluted share, for the first quarter of 2019.
·Non-GAAP net loss for the first quarter 2020 was $8.9 million, or $0.22 per diluted share, including $0.02 per diluted share attributed to the non-cash impact of warrants, compared to non-GAAP net income of $1.6 million, or $0.04 per diluted share, net of $0.02 per diluted share attributed to the non-cash impact of warrants, for the first quarter of 2019.

 

Second Quarter 2020 Guidance

 

The Company will discuss its expectations for the second quarter and the balance of 2020 live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com, as referenced below.


2

 

 

Conference Call Information

 

The Company will host a conference call today at 5:00 p.m. ET, or 12:00 a.m. Israel time, to discuss the results, followed by a question and answer session for the investment community. A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-877-407-0792 or +1-201-689-8263 The toll-free Israeli number is 1 809 406 247. The confirmation code is 13702439.

 

To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 13702439. The telephonic replay will be available beginning at 8:00 p.m. ET on Tuesday, May 19, 2020, until 11:59 p.m. ET on Tuesday, June 2, 2020. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

 

Forward Looking Statements

 

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as “will,” “expects,” “anticipates,” “continue,” “believes,” “should,” “intended,” “guidance,” “preliminary,” “future,” “planned,” or other words. These forward-looking statements include, but are not limited to, statements relating to the Company’s objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the duration of the global COVID-19 pandemic, which, if extensive, may continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers; the degree of our success in developing, introducing and selling new or improved products and product enhancements including specifically our Poly Pro and Presto products the extent of our ability to consummate sales to large accounts with multi-system delivery plans, the degree of our ability to fill orders for our systems, the extent of our ability to continue to increase sales of our systems, ink and consumables, the extent of our ability to leverage our global infrastructure build-out, the development of the market for digital textile printing, the availability of alternative ink, competition, sales concentration, changes to our relationships with suppliers, the extent of our success in marketing, and those additional factors referred to under “Risk Factors” in Item 3.D of the Company’s Annual Report on Form 20-F for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission on March 23, 2020. Any forward-looking statements in this press release are made as of the date hereof, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

3

 

 

Non-GAAP Discussion Disclosure

 

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, acquisition related expenses, excess cost of acquired inventory, foreign exchange differences associated with ASC 842, amortization of acquired intangible assets, deferred tax impact and the one-time impact of COVID-19, and the tax effect of the foregoing. The purpose of such adjustments is to provide an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These Non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the Non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Additionally, these Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies.

 

About Kornit

 

Kornit Digital (NASDAQ: KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries. Kornit delivers complete solutions, including digital printing systems, inks, consumables, software and after-sales support. Leading the digital direct-to-garment printing market with its exclusive eco-friendly NeoPigment printing process, Kornit caters directly to the changing needs of the textile printing value chain. Kornit’s technology enables innovative business models based on web-to-print, on-demand and mass customization concepts. With its immense experience in the direct-to-garment market, Kornit also offers a revolutionary approach to the roll-to-roll textile printing industry: digitally printing with a single ink set onto multiple types of fabric with no additional finishing processes. Founded in 2002, Kornit Digital is a global company, headquartered in Israel with offices in the USA, Europe and Asia Pacific, and serves customers in more than 100 countries worldwide.

 

4

 

 

KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 

   March 31,   December 31, 
   2020   2019 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents  $63,477   $40,743 
Short-term bank deposit   81,150    95,000 
Marketable securities   21,088    32,567 
Trade receivables, net   32,846    40,510 
Inventory   46,599    37,477 
Other accounts receivable and prepaid expenses   7,872    6,985 
Total current assets   253,032    253,282 
           
LONG-TERM ASSETS:          
Marketable securities   81,828    95,393 
Deposits and prepaid expenses   349    356 
Severance pay fund   280    301 
Deferred taxes   8,946    7,781 
Property,plant and equipment, net   21,449    17,489 
Operating lease right-of-use assets   23,512    22,806 
Intangible assets, net   2,380    2,494 
Goodwill   5,564    5,564 
Total long-term assets   144,308    152,184 
           
Total assets  $397,340   $405,466 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Trade payables  $22,969   $23,449 
Employees and payroll accruals   8,747    9,165 
Deferred revenues and advances from customers   2,576    2,688 
Operating lease liabilities   3,728    3,902 
Other payables and accrued expenses   5,985    6,373 
Total current liabilities   44,005    45,577 
           
LONG-TERM LIABILITIES:          
Accrued severance pay   985    1,035 
Operating lease liabilities   19,565    19,231 
Other long-term liabilities   1,190    1,320 
Total long-term liabilities   21,740    21,586 
           
SHAREHOLDERS’ EQUITY   331,595    338,303 
           
Total liabilities and shareholders’ equity  $397,340   $405,466 

 

5

 

 

KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

 

   Three Months Ended 
   March 31, 
   2020   2019 
   (Unaudited) 
         
Revenues        
Products  $22,387   $32,244 
Services   3,825    6,346 
Total revenues   26,212    38,590 
           
Cost of revenues          
Products   12,156    16,422 
Services   6,028    6,441 
Total cost of revenues   18,184    22,863 
           
Gross profit   8,028    15,727 
           
Operating expenses:          
Research and development   6,483    5,467 
Selling and marketing   8,497    7,268 
General and administrative   6,070    4,043 
Total operating   21,050    16,778 
Operating income   (13,022)   (1,051)
Financial income, net   2,205    (4)
Income before taxes on income   (10,817)   (1,055)
           
Taxes on income (benefit)   (763)   105 
Net income   (10,054)   (1,160)
           
Basic net income per share  $(0.25)  $(0.03)
          
Weighted average number of shares used in computing basic net income per share   40,762,688    35,127,377 
           
Diluted net income per share  $(0.25)  $(0.03)
           
Weighted average number of shares used in computing diluted net income per share   40,762,688    35,127,377 

 

6

 

 

KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

 

   Three Months Ended 
   March 31, 
  2020   2019 
   (Unaudited) 
         
GAAP cost of revenues  $18,184   $22,863 
Cost of product recorded for share-based compensation (1)   (214)   (108)
Cost of service recorded for share-based compensation (1)   (150)   (114)
Intangible assets amortization on cost of product (3)   (25)   (25)
Excess cost of product on acquired inventory (a)   -    (1,554)
Acquisition related expenses (2)   -    (28)
COVID-19 one time impact (4)   (244)   - 
Non-GAAP cost of revenues  $17,551   $21,034 
           
GAAP gross profit  $8,028   $15,727 
Gross profit adjustments   633    1,829 
Non-GAAP gross profit  $8,661   $17,556 
           
GAAP operating expenses  $21,050   $16,778 
Share-based compensation (1)   (1,744)   (1,078)
Acquisition related expenses (2)   -    (57)
Intangible assets amortization (3)   (135)   (129)
COVID-19 one time impact (4)   (11)   - 
Non-GAAP operating expenses  $19,160   $15,514 
           
GAAP Financial income  $2,205   $(4)
Foreign exchange losses associated with ASC 842   (610)   335 
Non-GAAP Financial income  $1,595   $331 
           
GAAP Taxes on income (benefit)  $(763)  $105 
Tax effect on to the above non-GAAP adjustments   (82)   489 
Tax benefit (b)   846    165 
Non-GAAP Taxes on income  $1   $759 
           
GAAP net income  $(10,054)  $(1,160)
Share-based compensation    2,108    1,300 
Acquisition related expenses (2)   -    85 
Intangible assets amortization (3)   160    154 
COVID-19 one time impact (4)   255    - 
Excess cost of product on acquired inventory (a)   -    1,554 
Foreign exchange losses associated with ASC 842   (610)   335 
Tax effect on to the above non-GAAP adjustments   82    (489)
Deferred taxes on income (benefit) (b)   (846)   (165)
Non-GAAP net income  $(8,905)  $1,614 
           
GAAP diluted earning per share  $(0.25)  $(0.03)
           
Non-GAAP diluted earning per share  $(0.22)  $0.04 
           
Weighted average number of shares          
           
Shares used in computing GAAP diluted net earning per share   40,762,688    35,127,377 
           
Shares used in computing Non-GAAP diluted net earning per share   40,762,688    36,431,015 
           
(1) Share-based compensation          
Cost of product revenues   214    108 
Cost of service revenues   150    114 
Research and development   344    255 
Selling and marketing   641    315 
General and administrative   759    508 
    2,108    1,300 
(2) Acquisition related expenses          
Cost of product revenues   -    28 
Selling and marketing   -    14 
General and administrative   -    43 
    -    85 
(3) Intangible assets amortization          
Cost of product revenues   25    25 
Selling and marketing   135    129 
    160    154 
(4) COVID-19 one time impact          
Cost of product revenues   244    - 
Selling and marketing   11    - 
    255    - 

 

(a)Consists of charges to cost of revenues for the difference between the higher carrying cost of the acquired inventory from a distributor purchased on February 8, 2019 which was recorded at fair value and the standard cost of the Company’s inventory, which adversely impacts the Company’s gross profit.

(b)Non cash impact related to the recognition of deferred taxes with respect to carryforward losses in Israel.

 

7

 

 

KORNIT DIGITAL LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

   Three Months Ended 
   March 31, 
   2020   2019 
   (Unaudited) 
         
Cash flows from operating activities:        
         
Net loss  $(10,054)  $(1,160)
Adjustments to reconcile net income to net cash  provided by operating activities:          
Depreciation and amortization   1,101    1,081 
Fair value of warrants deducted from revenues   565    560 
Share-based compensation   2,108    1,300 
Amortization of premium (discount) on marketable securities   89    (34)
Realized gain on sale of marketable securities   (102)   - 
Decrease (increase) in trade receivables   7,385    (4,141)
Decrease (increase) in other receivables and prepaid expenses   (979)   1,282 
Increase in inventory   (9,503)   (1,603)
Decrease in operating leases right-of-use assets   63    24 
Increase in deferred taxes, net   (1,106)   (186)
Decrease in other long term assets   5    210 
Increase (decrease) in trade payables   (1,504)   2,668 
Increase (decrease) in operating lease liabilities   (609)   335 
Increase (decrease) in employees and payroll accruals   (353)   1,126 
Decrease in deferred revenues and advances from customers   (95)   (1,321)
Increase (decrease) in other payables and accrued expenses   (360)   347 
Increase (decrease) in accrued severance pay, net   (29)   (37)
Decrease in other long term liabilities   (130)   (198)
Loss from sale and disposal of property and Equipment   75    - 
Foreign currency translation income on inter company balances with foreign subsidiaries   310    193 
           
Net cash  provided by (used in) operating activities   (13,123)   446 
           
Cash flows from investing activities:          
           
Purchase of property and equipment   (3,575)   (654)
Acquisition of intangible assets and capitalization of software development costs   (81)   - 
Proceeds from sale of property and equipment   4    - 
Cash paid in connection with acquisition   -    (4,715)
Decrease (increase) in bank deposits   13,850    (9,000)
Proceeds from sale of marketable securities   20,802    638 
Proceeds from maturity of marketable securities   12,102    500 
Purchase of marketable securities   (8,741)   (44,599)
           
Net cash provided by (used in) investing activities   34,361    (57,830)
           
Cash flows from financing activities:          
           
Exercise of employee stock options   1,568    1,144 
Payments related to shares withheld for taxes   (53)   - 
Payment of contingent consideration   -    (303)
           
Net cash provided by financing activities   1,515    841 
           
Foreign currency translation adjustments on cash and cash equivalents   (19)   (30)
Increase (decrease) in cash and cash equivalents   22,734    (56,573)
Cash and cash equivalents at the beginning of the period   40,743    74,132 
Cash and cash equivalents at the end of the period   63,477    17,559 
           
Non-cash investing and financing activities:          
           
Purchase of property and equipment on credit    1,909    277 
Inventory transferred to be used as property and equipment    298    - 
Lease liabilities arising from obtaining right-of-use assets   1,653    - 
Capitalization of software development costs   40    - 

 

 

8

 

Exhibit 99.2

 

| © All rights reserved Kornit Digital 2018 1 KORNIT DIGITAL (NASDAQ: KRNT) Q 1 2020 Earnings Call – Supporting Slides

 

©   Kornit Digital. All rights reserved. SAFE HARBOR  This presentation contains forward - looking statements within the meaning of U . S . securities laws . All statements other than statements of historical fact contained in this presentation are forward - looking statements . In some cases, you can identify forward - looking statements by terminology such as “ may, ” “ will, ” “ should, ” “ expects, ” “ plans, ” “ anticipates, ” “ believes, ” “ estimates, ” “ predicts, ” “ potential ” or “ continue ” or the negative of these terms or other comparable terminology . These statements reflect our current views with respect to future events and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry ’ s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward - looking statements . Although we believe that the expectations reflected in the forward - looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance or events or circumstances described in the presentation will occur or be achieved . You should read the Company ’ s most recent annual report on Form 20 - F, filed with the U . S . Securities and Exchange Commission on March 23 , 2020 , including the Risk Factors set forth therein, completely and with the understanding that our actual future results may be materially different from what we expect . Specifically, we face the risk that the duration of the global COVID - 19 pandemic may be extensive, which could continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers . Except as required by law, we undertake no obligation to update or revise any of the forward - looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation . In addition to U . S . GAAP financials, this presentation includes certain non - GAAP financial measures . These non - GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U . S . GAAP . This presentation contains statistical data that we obtained from industry publications and reports generated by third parties . Although we believe that the publications and reports are reliable, we have not independently verified this statistical data . Kornit, Kornit Digital, the K logo, and NeoPigment are trademarks of Kornit Digital Ltd . All other trademarks are the property of their respective owners and are used for reference purposes only . Such use should not be construed as an endorsement of our products or services .

 

©   Kornit Digital. All rights reserved. SPEAKERS ON TODAY ’ S CALL  Ronen Samuel CEO Guy Avidan CFO

 

CREATE A BETTER WORLD WHERE EVERYBODY CAN BOND, DESIGN AND EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME OUR VISION

 

| © All rights reserved Kornit Digital 2018 5 BUSINESS HIGHLIGHTS RONEN SAMUEL CEO

 

©   Kornit Digital. All rights reserved.  Q 1 2020 & CURRENT UPDATE • Enthusiastic to see global progress on lockdown exit strategies and pick - up in business activity • Acted decisively to ensure safety of our staff, while maintaining business continuity » Manufacturing and R& D operated throughout the period (staggered shifts) » Service continued working closely with our customers » Sales and marketing remained highly engaged with customers, prospects and industry leaders • Partnered with manufacturers and large brands for PPE, with our inks and systems • At this point, all manufacturing and R&D sites fully staffed again, experience centers open; operating in - line with safety guidelines of local authorities • Q 1 2020 results reflect immediate short - term impact of COVID - 19 • Already witnessing a very strong recovery path back to growth

 

©   Kornit Digital. All rights reserved.  INDUSTRY IN AN INFLECTION POINT • Crisis fundamentally changing behaviors in textile industry, both on demand and supply side • We believe this is an inflection point in the continued adoption of digital production of textile • E - commerce has gone from a growing channel to the only channel of operation » We expect this to have a long - lasting effect on consumers » Existing supply chains are not adequate to support successful e - commerce business models at scale. » The industry needs to adopt agile, digital, sustainable on - demand manufacturing models to succeed on that channel • Traditional retail will return, but crisis exposed massive inefficiencies associated with the classic supply and demand offshore operating model in place » Resulting in massive inventory write - offs and a continued environmental disaster. Mega trends that have been fueling our growth are only going to accelerate once the short - term impacts subside

 

©   Kornit Digital. All rights reserved.  ACTIVITY & BUSINESS MOMENTUM • Customer sites are reopening and strategic accounts with big projects have reengaged • Some major orders expected in Q 1 2020 have already been received in Q 2 2020 • Partners in the online customized design segment, as well as brands/retailers with solid ecommerce on - demand models remain very active » Expect summer activity and gear up for holiday season » A great example is Printful, experiencing very strong demand through the pandemic; investing in 6 additional Atlas systems as part of a larger planned investment • Recent developments highlight importance for brands and retailers of embracing flexible digitally enabled on - demand production models » One of our accounts in North and Central America working with retailers for flexible inventory management makes strategic investment in 6 new Atlas systems » Strong testament to success of go - direct model

 

©   Kornit Digital. All rights reserved.  ACTIVITY & BUSINESS MOMENTUM • Pleased with early reception of Vulcan Plus, largest system addressing high volumes of short to mid - run production orders » Regional account addressing proximity production needs adding second system, as part of a larger investment • Interest in Presto continues to be strong » Robusto Softener released in March is a game - changer as it allows Kornit Presto users to manufacture on demand for top retail and fashion brands, with no compromise on hand - feel » Spoonflower, long - time visionary partner, placed an order for 4 additional Presto systems to respond to the increased demand they are experiencing for their innovative on - demand offerings • Partnership with global strategic account as strong as ever » Investing in preparation, resources planning and operations readiness required to deliver on ambitious growth plans in North America, Europe and Asia

 

©   Kornit Digital. All rights reserved.  WELL POSITIONED • Pipeline is getting stronger • Leadership position has only strengthened • Irresponsible to provide guidance for second quarter, considering high macro volatility levels: » At this point, we expect to do significantly better than consensus revenues estimates, with at least 30 % sequential growth in Q 2 2020 compared to Q 1 2020 » We expect to deliver high single - digit year - over - year revenues growth in the second half of 2020 , with Gross Margin in a similar range to the second half of 2019 and a positive operating profit for the entire year • We believe the market is now moving more decidedly in our direction and we are ready to execute

 

| © All rights reserved Kornit Digital 2018 11 Q 1 2020 FINANCIAL OVERVIEW GUY AVIDAN CFO

 

 

 

 

©   Kornit Digital. All rights reserved. QUARTERLY WARRANTS IMPACT $ In thousands except per share amounts  Net of Warrants Impact Warrants Impact K$/BPS/EPS Net of Warrants Impact Warrants Impact K$/BPS/EPS Net of Warrants Impact Warrants Impact K$/BPS/EPS Revenues $26,212 $564 $26,776 $48,650 $1,131 $49,781 $38,590 $560 $39,150 Gross Profit $8,661 $9,225 $24,418 $25,549 $17,556 $18,116 Gross Margin 33.0% 141 BPS 34.5% 50.2% 113 BPS 51.3% 45.5% 78 BPS 46.3% Operating Profit -$10,499 -$9,935 $5,822 $6,953 $2,042 $2,602 Operating Margin -40.1% 295 BPS -37.1% 12.0% 200 BPS 14.0% 5.3% 135 BPS 6.6% Net Profit -$8,905 -$8,341 $7,071 $8,202 $1,614 $2,174 Net Margin -34.0% 282 BPS -31.2% 14.5% 194 BPS 16.5% 4.2% 137 BPS 5.6% Diluted EPS -$0.22 $0.02 -$0.20 $0.17 $0.02 $0.19 $0.04 $0.02 $0.06 Q1 20 Q4 19 Q1 19

 

©   Kornit Digital. All rights reserved. Q 1 2020 FINANCIAL RESULTS GAAP Non - GAAP Q1 2020 Q1 2019 YoY Change Q1 2020 Q1 2019 YoY Change Total Revenue $26.2 $38.6 ($12.4) $ 26.2 $38.6 ($12.4) Gross Profit $8.0 $15.7 ($7.7) $ 8.7 $17.6 ($8.9) Operating Income (Loss) ($13.0) ($1.1) ($11.9) ($ 10.5 ) $2.0 ($12.5) Net Income (Loss) ($10.1) ($1.2) ($8.9) ($ 8.9 ) $1.6 ($10.5) Diluted EPS ($0.25) ($0.03) ($0.22) ($ 0.22 ) $0.04 ($0.26) Diluted Shares (M) 40.8 35.1 5.7 40.8 36.4 4.4 $ In millions except per share and share amounts 

 

©   Kornit Digital. All rights reserved. QUARTERLY REVENUES Geographic Revenue Split • Revenues of $ 26 . 2 million vs . $ 38 . 6 million in prior year, decrease of 32 . 1 % YoY and 46 . 1 % QoQ • A global customer accounted for 8 . 5 % of revenues compared to 7 . 7 % in prior year • 10 largest accounts represented 49 . 0 % of revenues compared to 52 . 9 % in prior year 

 

©   Kornit Digital. All rights reserved. QUARTERLY GROSS MARGIN AND OPEX Q1 2020 Q1 2019 Research & Development 23.4% 13.5% Sales & Marketing 29.4% 17.6% General & Administrative 20.3% 9.0% Total Operating Expenses 73.1% 40.1% • Non - GAAP gross margin of 33 . 0 % decreased from 45 . 5 % in Q 1 2019 attributed to decline in top line and less favorable product mix • Non - GAAP operating expenses of $ 19 . 2 million increased 23 . 5 % year over year 

 

©   Kornit Digital. All rights reserved. QUARTERLY P&L KPI Q1 2020 Q1 2019 Non - GAAP Operating Income (Loss) ($10.5) $2.0 Non - GAAP Net Income (Loss) ($8.9) $1.6 Non - GAAP Diluted EPS ($0.22) $0.04 GAAP Net Income (Loss) ($10.1) ($1.2) GAAP Diluted EPS ($0.25) ($0.03) Adjusted EBITDA ($9.2) $3.5 $ In millions except per share amounts 

 

©   Kornit Digital. All rights reserved. QUARTERLY BALANCE SHEET AND CASH FLOW Cash From Operating Activities Balance Sheet $ In millions Q1 2020 Q4 2019 Q1 2019 Cash, Bank Deposits and MK Securities $247.5 $263.7 $124.3 Trade Recievables $32.8 $40.5 $26.0 Inventory $46.6 $37.5 $34.9 Trade Payables $23.0 $23.4 $19.3 Net Working Capital $209.0 $207.7 $75.4 0.4 ( 3.7 ) (13.1) Q 1 2019 Q 4 2019 Q1 2020  $ In millions

 

©   Kornit Digital. All rights reserved. WARRANTS IMPACT AND VESTING * Revenue recognition base impact ** Collection base impact 2.03 0.94 1.41 0.15 0.39 0.04 1.49 1.66 1.39 0.56 0.97 2.43 1.13 0.56 2.03 2.97 4.38 4.53 4.93 4.97 6.46 8.12 9.50 10.06 11.04 13.46 14.60 15.16 - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 Warrants Impact * Warrants $M Accumulative $M 0.17 0.17 - - 0.17 0.09 - 0.26 0.17 0.09 0.09 0.09 0.33 0.11 0.17 0.34 0.34 0.34 0.51 0.60 0.60 0.86 1.03 1.11 1.20 1.28 1.61 1.72 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Warrants Vesting ** Full T #M Full T Accumulative #M 

 

©   Kornit Digital. All rights reserved. AMAZON WARRANTS AGREEMENT • 2 , 932 , 176 warrants to purchase ordinary shares of the Company at an exercise price of $ 13 . 04 were issued to Amazon as a customer incentive . The warrants are subject to vesting as a function of payments for purchased products and services of up to $ 150 million beginning on May 1 , 2016 , with the shares vesting incrementally each time Amazon makes a payment totaling $ 5 million to the Company . As of March 31 , 2020 , 1 , 722 , 639 warrants are exercisable • The Company utilized the Monte Carlo simulation approach to estimate the fair value of the warrants . We early adopted the new guidance as of January 1 , 2019 and will use the fair value of the unvested warrants on the adoption date rather than upon the later vesting dates in order to determine the reduction of the transaction price • The Company recognized a reduction to revenues of $ 0 . 6 million both during the first quarter of 2020 and the first quarter of 2019 ( $ 5 . 1 million during the year ended December 31 , 2019 ) 

 

| © All rights reserved Kornit Digital 2018 20 CREATE A BETTER WORLD WHERE EVERYBODY CAN BOND, DESIGN AND EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME OUR VISION

 

©   Kornit Digital. All rights reserved. WARRANTS IMPACT CHANGE IN ASU 2019 - 08 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 GAAP prior to adoptation of ASU 2019-08 38,161 43,890 44,581 48,649 175,281 Warrants impact prior to adoptation of ASU 2019-08 989 2,416 5,143 1,130 9,678 Warrants impact % 2.5% 5.2% 10.3% 2.3% 5.2% Warrants impact after adoptation of ASU 2019-08 560 974 2,429 1,130 5,093 Warrants impact % 1.4% 2.2% 5.2% 2.3% 2.8% GAAP after adoptation of ASU 2019-08 38,590 45,332 47,295 48,649 179,866