Kornit Digital Ltd. · NASDAQ:KRNT
Kornit Digital — Investor Presentation (November 2016)
31 slides from Kornit Digital's investor presentation, Nov 9, 2016
Slide 1: Enabling the supply chain revolution of the printed textiles market
1 © All rights reserved Kornit Digital 2016 Enabling the supply chain revolution of the printed textiles market 11 / 9 / 2016 1 © All rights reserved Kornit Digital 2016 Enabling the supply chain revolution of the printed textiles market 11 / 10 / 2016
Slide 2: Disclaimer
2 © All rights reserved Kornit Digital 2016 DISCLAIMER • 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
Slide 3: Investment Highlights
3 © All rights reserved Kornit Digital 2016 INVESTMENT HIGHLIGHTS Kornit is leading a secular shift to digital textile printing with an addressable end market of ~ $ 165 B • Leading solution provider for macro consumer trend of online shopping and personalization of apparel • Proprietary fully integ
Slide 4: Huge Market in Early Transformation
4 © All rights reserved Kornit Digital 2016 HUGE MARKET IN EARLY TRANSFORMATION 1.1 T$ Textile 165 B$ Printed Textile 15 % based on printed fabrics 5 % digital penetration 8 - 10 B$ * Digitally Printed 1.7 B$** Digital Equipment & Ink > 20 % CAGR *Estimated based on digital production penetration. A
Slide 5: Key Consumer Trends Driving Growth
5 © All rights reserved Kornit Digital 2016 The need for personal expression Influence through social media Consumer awareness Immediate gratification 4 KEY CONSUMER TRENDS DRIVING GROWTH
Slide 6: Immediate Gratification
6 © All rights reserved Kornit Digital 2016 number of US Amazon customers willing to >Doubled pay more to receive faster from 25 , 000 , 000 in 2013 To 55 , 000 , 000 in 2015 Source: CIRP – Consumer Intelligence Research Partners, LLC IMMEDIATE GRATIFICATION
Slide 7: The Need for Personal Expression
7 © All rights reserved Kornit Digital 2016 Style says “only me” Fashion says “me too” (Geraldine Stutz) Photo credit: pic by me THE NEED FOR PERSONAL EXPRESSION
Slide 8: Influence Through Social Media
8 © All rights reserved Kornit Digital 2016 INFLUENCE THROUGH SOCIAL MEDIA > 74 % Of consumers rely on social media to influence purchasing decisions Source: Sprout social, Germin 8 – social intelligence.
Slide 9: Online Apparel Market Is Booming
9 © All rights reserved Kornit Digital 2016 KORNIT TOP 10 ACCOUNTS Aggregated capacity 5 M GARMENTS a month Largest site can print over 40 , 000 garments a day Kornit installed base produces 70 - 80 M GARMENTS A YEAR ONLINE APPAREL MARKET IS BOOMING Segments CAGR 2015 Retail apparel Ecommerce total
Slide 10: Customer Example for Online Trend
10 © All rights reserved Kornit Digital 2016 CUSTOMER EXAMPLE FOR ONLINE TREND 65 % of sales are from unique designs that were sold 50 times or less* Customers* 1.25 M Turnover FY 2016 E USD 105 m 68 % Apparel sales Driven by individuality and de - branding which are fueled by social media Source: R
Slide 11: Supply Chain Must React to Become Versatile, Agile, Productive, Sustainable
11 © All rights reserved Kornit Digital 2016 SUPPLY CHAIN MUST REACT TO BECOME: VERSATILE AGILE PRODUCTIVE SUSTAINABLE
Slide 12: Moving to Digital Is the Only Way to Go
12 © All rights reserved Kornit Digital 2016 • Complexity • Costly setup • Limited design flexibility • Large batch manufacturing MOVING TO DIGITAL IS THE ONLY WAY TO GO Analogue Textile Printing Digital Textile Printing • Simplicity • No setup cost • Infinite design flexibility • No minimum: MOQ =
Slide 13: Digital Printing Enables New Business Models
13 © All rights reserved Kornit Digital 2016 DIGITAL PRINTING ENABLES NEW BUSINESS MODELS Faster Time to Market Global fulfillment network Reduces fixed cost element Infinite design flexibility Reducing inventory & inventory at risk
Slide 14: Printing on Textile Is Challenging
14 © All rights reserved Kornit Digital 2016 But… printing on textile is challenging Fabric Variety Dark & Light Dyes Wear (Fastness) Stretchable Media Uneven Surfaces Costly Absorptive Media Feel (Hand)
Slide 15: Our Proprietary Process
15 © All rights reserved Kornit Digital 2016 OUR PROPRIETARY PROCESS Source: Company analysis and estimates. Process Steps for Competitive Digital DTG Solutions – 5 Steps Process Steps for Kornit
Slide 16: Our Proprietary Printing Process
16 © All rights reserved Kornit Digital 2016 OUR PROPRIETARY R 2 R PRINTING PROCESS Source: Company analysis and estimates. Conventional digital textile printing process: 5 steps Kornit Digital printing process – single step, multiple fabric types
Slide 17: Our Product Strategy
17 © All rights reserved Kornit Digital 2016 OUR PRODUCT STRATEGY Enabling set up of global fulfillment networks for optimal order turnaround Moving medium and long runs from screen. Serving retail transition to frequent store level replenishment Enable custom decoration for home Décor, beachwear, f
Slide 18: On Demand Textile Customer Examples
18 © All rights reserved Kornit Digital 2016 ON DEMAND TEXTILE CUSTOMER EXAMPLES Web to Print 4 Allegros 21 / 7 operation wholesale Home furniture manufacturer Shipping to customers that order through retailers (Costco, Wayfair, Walmart…) Baby Bedding Manufacturer Customized baby beddings produced o
Slide 19: A New Supply Chain Is Developing
19 © All rights reserved Kornit Digital 2016 A NEW SUPPLY CHAIN IS DEVELOPING DEMAND AND SUPPLY SUPPLY AND DEMAND
Slide 20: New DTC Strategies Require New Operating Models
20 © All rights reserved Kornit Digital 2016 NEW DTC (DIRECT TO CONSUMER) STRATEGIES REQUIRE NEW OPERATING MODELS DTC expected to drive 50 % of Nike’s growth by 2020 GAP online shop represents 30 % of revenues • From “street shopping” to on line shopping & “click and collect” • Less stores: closing
Slide 21: Fast Fashion Is Moving Online
21 © All rights reserved Kornit Digital 2016 FAST FASHION IS MOVING ONLINE This business is all about reducing response time. In fashion, stock is like food. It goes bad quickly José María Castellano, former CEO and Deputy Chairman of the Inditex Group “Fast Fashion: Quantifying The Benefits”. Warre
Slide 22: SAM Continuously Expanding
22 © All rights reserved Kornit Digital 2016 SAM CONTINUOUSLY EXPANDING SAM CPP $ Run Length # of units Market Share % 10 24 72 100 500 10 , 000 100 , 000 Kornit Storm Kornit Avalanche Kornit Vulcan TAM Analogue Digital Source: Kornit Analysis
Slide 23: Market Is Trending Towards Smaller Batches
23 © All rights reserved Kornit Digital 2016 MARKET IS TRENDING TOWARDS SMALLER BATCHES CPP $ Run Length # of units Market Share % 10 24 72 100 500 10 , 000 100 , 000 Kornit Storm Kornit Avalanche Kornit Vulcan SAM Analogue Digital Source: Kornit Analysis SAM TAM
Slide 24: Financial Highlights
24 © All rights reserved Kornit Digital 2016 FINANCIAL HIGHLIGHTS • Attractive business model contributes to significant revenue growth with substantial recurring revenues • Investment in research & development and sales & marketing to support growth • Attractive long - term model • Financial flexib
Slide 25: Historical Revenues Analysis
25 © All rights reserved Kornit Digital 2016 HISTORICAL REVENUES ANALYSIS Annual Revenues ($ millions) Quarterly Revenues ($ millions) Components of business model ($ millions) $ 49.4 $ 66.4 $ 86.4 32 % CAGR 57 % 61 % 62 % 43 % 39 % 38 % $ 49.4 $ 66.4 $ 86.4 Printing Sy
Slide 26: Gross Margin Performance
26 © All rights reserved Kornit Digital 2016 43.6 % 44.3 % 47.8 % Non - GAAP Gross Margin ~ 420 Bps Improvement Looking Forward: 5 key drivers for Gross Margin Expansion Continued transition to high throughput systems Higher ink consumption Turning value - added services into a profit
Slide 27: Gross Margin KPIs
27 © All rights reserved Kornit Digital 2016 GROSS MARGIN KPI’S ASP (Average Selling Price) Throughput Service Contract coverage vs. installed base 66.2 % 65.6 % 71 % 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 2016-H1 Revenue from Recurring Customers 0 % 3 % 12 % 0% 5% 10% 15% 1
Slide 28: Financial Results for Q3 2016
28 © All rights reserved Kornit Digital 2016 • Quarterly revenues of $ 30.9 million vs. $ 22.0 in prior year period, 40.3 % YoY increase • Quarterly non - GAAP gross margins of 49.2 %, increase from 48.6 % in 3 rd quarter of 2015 . • NON - GAAP net income of $ 3.6 M for the quarter, or $ 0.11 per di
Slide 29: Q4 2016 Guidance
29 © All rights reserved Kornit Digital 2016 Q 4 ’ 2016 GUIDANCE • Expected revenues between $ 31 million to $ 34 million • Operating income expected to be in the range of 12 % of revenues to 16 % of revenues • End of quarter share count expected to be approximately 32.5 million
Slide 30: Investment Highlights
30 © All rights reserved Kornit Digital 2016 INVESTMENT HIGHLIGHTS Kornit is leading a secular shift to digital textile printing with an addressable end market of ~ $ 165 B • Leading solution provider for macro consumer trend of online shopping and personalization of apparel • Proprietary fully inte
Slide 31: Thank You
31 © All rights reserved Kornit Digital 2016 THANK YOU
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