KORNIT DIGITAL
(NASDAQ: KRNT)
Q4 and Full Year 2019 Earnings Call: Supporting Slides
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 26, 2019, 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. 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.
2 | © All rights reserved Kornit Digital 2020
SPEAKERS ON TODAY'S CALL
Ronen Samuel | Guy Avidan |
CEO | CFO |
3 | © All rights reserved Kornit Digital 2020
OUR VISION
CREATE A BETTER WORLD
WHERE EVERYBODY CAN BOND, DESIGN AND
EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME
Q4 2019
BUSINESS HIGHLIGHTS
RONEN SAMUEL
CEO
STRONG FINISH TO A SUPERB YEAR
- Phenomenal performance in Q4
- Completion of first year of five-year journey to $500M sales run rate business
- Industry in need for on-demand textile manufacturing in a sustainable way
- Kornit's leadership position continues to widen
- Time to continue investing and accelerate efforts to capture huge opportunity
6 | © All rights reserved Kornit Digital 2020
2019 KEY EXECUTION ACHIEVEMENTS
- Delivered strong financial performance
- Successfully launched innovative Atlas, Poly Pro, Presto - all experiencing great momentum and opening new markets
- Significant progress with leading brands
- Growth in strategic accounts and creation of many new accounts
- Accelerated our DTF business
- Scaled and professionalized our GTM across regions
- Phenomenal execution on our go-direct sales model in North America
7 | © All rights reserved Kornit Digital 2020
Q4 BUSINESS HIGHLIGHTS
- Delivered revenues of $48.7 million, net of $1.1 million of warrants impact
- Business volume grew by 27.1%
- Outstanding systems sales
- Growing momentum in DTF business
- Robust peak season for strategic and regional accounts
- Continued strong adoption of HD, Atlas, Presto and Poly Pro
- Pleased with Presto momentum, opens large market opportunity
- Footprint expansion in strategic accounts and continued engagement with brands
8 | © All rights reserved Kornit Digital 2020
Q4 REGIONAL HIGHLIGHTS
- Strong finish across regions
- Record systems sales quarter for Americas, and momentum continuing into 2020
- Chuck Mayo joining Kornit as President of Americas
- Monitoring China situation, sending message of hope and strength to all impacted
- Do not anticipate material negative impact to top line
- No manufacturing in China
- Some supply chain dependency on raw materials, could be reasonably mitigated
9 | © All rights reserved Kornit Digital 2020
STRONG START TO 2020
- ISS Long Beach showcased the newly launched Vulcan Plus and Storm Light
- Starting year with a very strong pipeline
- Expecting Q1 business volume to be in the range of Q4, a material and exciting deviation from typical Q4 to Q1 seasonality
- Very good visibility into the rest of the year
- Currently engaged in big expansion projects with some strategic accounts
- Investing in business to realize these expansions
- Anticipating modest operating margins in H1 2020, offset by operating margin improvements in H2 2020, resulting in overall operating margin expansion for full year 2020
Well positioned to meet 5 year / $500 million sales run rate goal, and with right investments can even accelerate growth on path to goal
10| © All rights reserved Kornit Digital 2020
Tel Aviv Innovation Event
Hosted by Kornit Digital
21-24 April 2020
Meet the world's most influential fashion and textile brands and learn about their opportunities and challenges
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Discover cutting-edge technology innovation in garment & fashion production to future-proof your business
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Establish your network with
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CUSTOMERS
CHANNEL & PROSPECTS PARTNERS
WORLD'S
INVESTORS LEADING
BRANDS
SUPPLIERS
INFLUENCERS
JOURNALISTS
Q4 2019
FINANCIAL OVERVIEW
GUY AVIDAN
CFO
Q4 2019 FINANCIAL RESULTS
Total Revenue
Gross Profit
Operating Income
Net Income
Diluted EPS
Diluted Shares (M)
$ In millions except per share and share amounts
GAAP
Q4 2019 | Q4 2018 | YoY |
Change | ||
$48.7 | $37.8 | $10.9 |
$24.0 | $18.1 | $5.9 |
$3.3 | $0.8 | $2.5 |
$4.8 | $7.0 | ($2.2) |
$0.11 | $0.19 | ($0.08) |
42.2 | 36.0 | 6.2 |
Non-GAAP
Q4 2019 | Q4 2018 | YoY |
Change | ||
$48.7 | $37.8 | $10.9 |
$24.4 | $18.4 | $6.0 |
$5.8 | $2.9 | $2.9 |
$7.1 | $3.0 | $4.1 |
$0.17 | $0.08 | $0.09 |
42.7 | 36.2 | 6.5 |
13| © All rights reserved Kornit Digital 2020
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 |
14| © All rights reserved Kornit Digital 2020
QUARTERLY REVENUES
- Revenues of $48.7 million vs. $37.8 million in prior year, increase of 28.8% YoY and 2.9% QoQ
- A global customer accounted for 9.1% of revenues compared to 14.0% in previous year
- 10 largest accounts represented 41.6% of revenues compared to 57.4% in the previous year
Geographic Revenue Split
Q4 2019Q4 2018
11% | 13% |
25%
29%
58%
64%
Americas | EMEA | Asia Pacific | Americas | EMEA | Asia Pacific |
15| © All rights reserved Kornit Digital 2020
ANNUAL REVENUES
- Revenues of $179.9 million vs. $142.4 million in prior year, increase of 26.3%
- A global customer accounted for 12.3% of revenues compared to 17.0% in previous year
- 10 largest accounts represented 40.4% of revenues compared to 53.8% in the previous year
Geographic Revenue Split
20192018
12% | 11% |
27%
32%
57%
61%
Americas | EMEA | Asia Pacific | Americas | EMEA | Asia Pacific |
16| © All rights reserved Kornit Digital 2020
PRODUCT AND SERVICES ANNUAL TRENDS
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
System / Ink / Services
10% | 11% | 13% |
45% | 42% | 37% |
45% | 47% | 50% |
2017 | 2018 | 2019 |
System Ink Services
Trends (in $M)
91.4
90.0 | |||||||||||||||||||
80.0 | |||||||||||||||||||
70.0 | 65.8 | 65.2 | |||||||||||||||||
60.0 | 59.9 | ||||||||||||||||||
51.5 | 50.5 | ||||||||||||||||||
50.0 | |||||||||||||||||||
40.0 | |||||||||||||||||||
30.0 | |||||||||||||||||||
23.3 | |||||||||||||||||||
20.0 | 12.1 | 16.7 | |||||||||||||||||
10.0 | |||||||||||||||||||
- | |||||||||||||||||||
2017 | 2018 | 2019 | |||||||||||||||||
Services | Ink | System | |||||||||||||||||
Expon. (Services) | Expon. (Ink) | Expon. (System) |
17| © All rights reserved Kornit Digital 2020
QUARTERLY GROSS MARGIN AND OPEX
- Non-GAAPgross margin of 50.2% increased from 48.8% in Q4 2018 attributed to decrease in warrants impact
- Non-GAAPOperating expenses of $18.6 million increased 20.0% year-over-year
Non GAAP Operating Expenses (% of Revenue) | ||
Q4 2019 | Q4 2018 | |
Research & Development | 11.6% | 15.6% |
Sales & Marketing | 17.4% | 16.5% |
General & Administrative | 9.2% | 8.9% |
Total Operating Expenses | 38.2% | 41.0% |
18| © All rights reserved Kornit Digital 2020
ANNUAL GROSS MARGIN AND OPEX
- Non-GAAPgross margin of 47.9% decreased from 49.8% in 2018 due to less favorable product mix.
- Non-GAAPOperating expenses of $68.0 million increased 16.9% year-over-year
Non GAAP Operating Expenses (% of Revenue) | ||
2019 | 2018 | |
Research & Development | 11.7% | 14.7% |
Sales & Marketing | 17.3% | 16.4% |
General & Administrative | 8.8% | 9.7% |
Total Operating Expenses | 37.8% | 40.8% |
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QUARTERLY P&L KPI
Non-GAAP Operating Income
Non-GAAP Net Income
Non-GAAP diluted EPS
GAAP Net Income
GAAP Diluted EPS
Adjusted EBITA
$ In millions except per share amounts
Q4 2019 | Q4 2018 |
$5.8$2.9
$7.1$3.0
$0.17$0.08
$4.8$7.0
$0.11$0.19
$8.2$5.2
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HEADCOUNT TRENDS
- Headcount as at December 31st headcount was 547 employees compared to 444 at the end of December 2018
21| © All rights reserved Kornit Digital 2020
QUARTERLY WARRANTS IMPACT
Net of | |
Warrants | |
Impact | |
Revenues | |
$48,650 | |
Gross Profit | $24,418 |
Gross Margin | 50.2% |
Operating Profit | $5,822 |
Operating Margin | 12.0% |
Net Profit | $7,071 |
Net Margin | 14.5% |
Diluted EPS | $0.17 |
$ In thousands except per share amounts
Q4 2019 | ||
Warrants | Net of | |
Warrants | ||
Impact | ||
Impact | ||
$1,131 | $49,781 | |
$47,293 | ||
$25,549 | $22,570 | |
113 BPS | 51.3% | 47.7% |
$6,953 | $6,162 | |
200 BPS | 14.0% | 13.0% |
$8,202 | $6,591 | |
194 BPS | 16.5% | 13.9% |
$0.02 | $0.19 | $0.16 |
Q3 2019 | ||
Warrants | Net of | |
Warrants | ||
Impact | ||
Impact | ||
$2,429 | $49,722 | |
$37,786 | ||
$24,999 | $18,436 | |
255 BPS | 50.3% | 48.8% |
$8,591 | $2,943 | |
425 BPS | 17.3% | 7.8% |
$9,020 | $2,953 | |
421 BPS | 18.1% | 7.8% |
$0.05 | $0.21 | $0.08 |
Q4 2018 | |
Warrants | |
Impact | |
$1,385 | $39,171 |
$19,821 | |
181 BPS | 50.6% |
$4,328 | |
326 BPS | 11.0% |
$4,338 | |
326 BPS | 11.1% |
$0.04 | $0.12 |
22| © All rights reserved Kornit Digital 2020
ANNUAL WARRANTS IMPACT
Net of | |
Warrants | |
Impact | |
Revenues | $179,865 |
Gross Profit | $86,145 |
Gross Margin | 47.9% |
Operating Profit | $18,177 |
Operating Margin | 10.1% |
Net Profit | $19,587 |
Net Margin | 10.9% |
Diluted EPS | $0.49 |
2019 | ||
Warrants | Net of | |
Warrants | ||
Impact | ||
Impact | ||
$5,095 | $184,960 | $142,373 |
- | $91,240 | $70,861 |
144 BPS | 49.3% | 49.8% |
- | $23,272 | $12,710 |
248 BPS | 12.6% | 8.9% |
- | $24,682 | $13,122 |
245 BPS | 13.3% | 9.2% |
$0.13 | $0.62 | $0.37 |
2018 | |
Warrants | |
Impact | |
$4,575 | $146,948 |
$75,436 | |
156 BPS | 51.3% |
$17,285 | |
284 BPS | 11.8% |
$17,697 | |
283 BPS | 12.0% |
$0.13 | $0.50 |
$ In thousands except per share amounts
23| © All rights reserved Kornit Digital 2020
WARRANTS IMPACT AND VESTING
Warrants Impact1
13.46 | 14.60 | ||||||||||||
9.50 | 10.06 | 11.04 | |||||||||||
8.12 | |||||||||||||
6.46 | |||||||||||||
4.93 | 4.97 | ||||||||||||
2.03 | 2.97 | 4.38 | 4.53 | ||||||||||
2.43 | |||||||||||||
2.03 | 1.41 | 1.49 | 1.66 | 1.39 | 1.13 | ||||||||
0.94 | 0.39 | 0.56 | 0.97 | ||||||||||
0.15 | 0.04 | ||||||||||||
Q4-2016 | Q1-2017 | Q2-2017 | Q3-2017 | Q4-2017 | Q1-2018 | Q2-2018 | Q3-2018 | Q4-2018 | Q1-2019 | Q2-2019 | Q3-2019 | Q4-2019 | |
Warrants $M | Accumulative $M |
Warrants Vesting2
1.61 | |||||||||||||
1.20 | 1.28 | ||||||||||||
1.11 | |||||||||||||
1.03 | |||||||||||||
0.86 | |||||||||||||
0.51 | 0.60 | 0.60 | |||||||||||
0.34 | 0.34 | 0.34 | 0.26 | 0.33 | |||||||||
0.17 | 0.17 | 0.17 | 0.17 | 0.17 | |||||||||
0.09 | 0.09 | 0.09 | 0.09 | ||||||||||
- | - | - | |||||||||||
Q4-2016 | Q1-2017 | Q2-2017 | Q3-2017 | Q4-2017 | Q1-2018 | Q2-2018 | Q3-2018 | Q4-2018 | Q1-2019 | Q2-2019 | Q3-2019 | Q4-2019 | |
Full T #M | Full T Accumulative #M |
- Revenue recognition base impact
- Collection base impact
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QUARTERLY BALANCE SHEET AND CASH FLOW
Balance Sheet
Q4 2019 | Q3 2019 | Q4 2018 | |
Cash & Cash Equivalents | $263.7 | $250.4 | $127.7 |
Accounts Recievable | $40.5 | $44.9 | $22.0 |
Inventory | $37.5 | $34.4 | $30.0 |
Trade Payable | $23.4 | $17.3 | $16.6 |
Net Working Capital | $205.8 | $259.8 | $179.1 |
$ In millions
Cash From Operating Activities
15.7
11.0
(0.0)
Q4 2018 | Q3 2019 | Q4 2019 |
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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 December 31, 2019, 1,612,683 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 $1.1 million during the fourth quarter and $5.1 during the year ended December 31, 2019
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Q1 2020 GUIDANCE*
- Revenue is expected to be between $47 million to $51 million
- Non-GAAPoperating income is expected to be between 2.0% to 6.0% of revenue
*we assume zero impact on revenue and operating margin for the purposes of guidance
27| © All rights reserved Kornit Digital 2020
OUR VISION
CREATE A BETTER WORLD
WHERE EVERYBODY CAN BOND, DESIGN AND
EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME
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Kornit Digital Ltd. published this content on 11 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 February 2020 22:22:06 UTC