Kornit Digital Ltd. · NASDAQ:KRNT
Kornit Digital — Investor Presentation (August 2015)
24 slides from Kornit Digital's investor presentation, August 2015
Slide 1: Leading the Digital Textile Printing Revolution
Leading the Digital Textile Printing Revolution August 2015 1 Copyright Kornit Digital 2015. All Rights Reserved.
Slide 2: Disclaimer
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 identify forward-looking statements by terminolog
Slide 3: Kornit Is Leading the Digital Textile Printing Revolution
Kornit Is Leading the Digital Textile Printing Revolution Serves addressable market of $165B annual output of printed textiles Offers a disruptive and highly differentiated solution to an industry looking for significant changes to supply chain Leading provider of Direct To Garment solutions to supp
Slide 4: A Huge Market with Limited Innovation… Until Now
A Huge Market with Limited Innovation… Until Now Analog Processes Direct–to-Garment (DTG) Roll–to-Roll (R2R) Total Textile Leading the Shift from Analog to Digital Printing Processes Market >$1 trillion ~15% Printed Applications Source: 2012 Infotrends report: “Transforming Textile Printing”. 4 Copy
Slide 5: Industry Trends Driving the Need for a Disruptive Solution
Industry Trends Driving the Need for a Disruptive Solution Demand Supply Environment Cost Inventory • Consumers want creative • Increasing focus by consumers designs, more quickly than ever and brands on environment Retail/brand buyer • Seek customization, • Increasing regulatory scrutiny personaliz
Slide 6: Industry Business Models are Rapidly Evolving
Industry Business Models are Rapidly Evolving Markdowns and write-offs are a significant challenge for the textile industry Fast Fashion Shortens Time to Market… (1) … And Addresses Inventory Risk (2) • Inditex / Zara CEO: “This business is all about Distribution reducing response time. In fashion,
Slide 7: Digital Printing is a Disruptive and Enabling Technology
Digital Printing is a Disruptive and Enabling Technology Business Owners’ Goals How Digital Printing Delivers React to Social Media Multiple Visits per Season Faster Time to Market Real Time Response and Online Trends Solves Complexity – Reduces Set-up – Optimize Inventory Increase Profitability Cus
Slide 8: Attractive Market Opportunity
Attractive Market Opportunity ~2% Digital ~98% Analog 5 – 10bn garments Over 300,000 prospective ~2% digital penetration From ~$1.4bn in 2014 to digitally produced per users / garment of textile printing ~$3.1bn digital textile annum manufacturers (growing to ~4% by 2019) printing equipment and ink
Slide 9: Our Proprietary Integrated Digital Printing Process
Our Proprietary Integrated Digital Printing Process Process Steps for Competitive Digital DTG Solutions Inhibits Adoption for Industrial Applications Pretreatment Heat Press Dry Print Heat Press or Dryer Cure 1-2 mins 1 min 3-5 mins Implications of additional separated pre-treatment: Kornit’s Wet-on
Slide 10: Kornit's Comprehensive End-to-End Solution
Kornit’s Comprehensive End-to-End Solution Printing Systems System Throughput, Size, Capabilities Entry Level Under Development High Throughput Direct-to-Garment Direct-to-Garment Roll-to-Roll Direct-to-Garment Breeze Storm II Paradigm II Avalanche Family Vulcan Allegro Inks and Consumables Software
Slide 11: Kornit Offers the Only Truly Industrial Solution
Kornit Offers the Only Truly Industrial Solution Competitive effective throughput comparison (1) • Kornit numbers INCLUDE integrated inline pretreatment Dark garments/hour, A4 size, high quality print • Non Kornit numbers refer to printing AFTER pretreatment was 120 applied off line: 109 • 50-80% mo
Slide 12: Our Customer Categories
Our Customer Categories Custom Decorators Online Businesses • Custom (or garment) decorators utilize various Growing Distributor • “Web-to-print” business model technologies to embellish and print small Network • Customization and personalization quantities of a large variety of designs 300,000 Pote
Slide 13: Growth Strategy
Growth Strategy Continuous Focus on Enhancing our Customer Intimacy to Provide Value-Added Solutions 1 Grow Digital DTG Market 2 Penetrate R2R Market 3 Expand DTG Offering • Focus on web-to-print customers • Commercialization of Allegro • Launch Vulcan, next-gen DTG • Drive adoption of Paradigm II •
Slide 14: Allegro Enables Access to the Attractive R2R Market
Allegro Enables Access to the Attractive R2R Market Kornit Allegro brings the only fully digital solution to the market Conventional Digital Textile Printing Process: 6 steps Fixing with Image Fabric Pre- Washing and Digital Printing Drying Steam or Hot Preparation treatment Drying Air Process Advan
Slide 15: Customer Intimacy Drives Further Adoption of New and Existing Solutions
Customer Intimacy Drives Further Adoption of New and Existing Solutions Systems and Ink Software and Value-added Services QuickP Set-up Customer Support Training Maintenance Connectivity Ink Consumption per System Grows with Development of Diverse Applications and Use of New Substrates Diverse Range
Slide 16: Financial Highlights
Financial Highlights Attractive business model contributes to significant revenue growth with substantial 1 recurring revenues 2 High, expanding gross margins 3 Investment in research & development and sales & marketing to support growth Financial flexibility driven by debt-free balance sheet, minim
Slide 17: Historical Revenues Analysis
Historical Revenues Analysis Annual Revenues ($ millions) $66.4 $49.4 Quarterly Revenues ($ millions) $39.2 25 $21.3 20 $18.5 $18.9 $17.6 $15.7 $15.2 2012 2013 2014 15 $13.3 $13.9 $11.8 10 $8.5 Semi Annual Revenues ($ millions) 5 $38.9 $29.0 0 1Q 2Q 3Q 4Q $20.3 2013 2014 2015 H1-2013 H1-2014 H1-2015
Slide 18: Components of Our Business Model
Components of Our Business Model Annual Revenues by Type ($ millions) Drivers of Systems and Services Revenues: $66.4 • Higher throughput systems • Growing services business $49.4 38.8% $39.2 Drivers of Ink and Consumables Revenues: 43.5% • System size / throughput 38.7% • Installed base system mix
Slide 19: Significant Mix Shift towards High Throughput Systems
Significant Mix Shift towards High Throughput Systems Our high throughput systems sell for higher ASPs and consume more ink than our entry level systems 7% 35% 43% 93% 96% 57% 65% 4% 2012 2013 2014 2015E HighThroughput Entry Level 19 Copyright Kornit Digital 2015. All Rights Reserved.
Slide 20: Gross Margin Performance
Gross Margin Performance Non-GAAP Gross Margin Drivers of Gross Margin Expansion • Sale of larger quantities of ink and other consumables 46.7% • Continued transition to high throughput systems 43.8% • Turing value-added services into a profitable business and expanding 42.5% software offerings H1-2
Slide 21: Taxes and Foreign Exchange Impact
Taxes and Foreign Exchange Impact Taxes Foreign Exchange Parent Company enjoys tax holiday until • U.S. Dollar is our functional and reporting 2019 (under “the Investment Law”), currency then low tax rate of 16% or 9% based on geographical location In 2014, 85% of revenues effectively in U.S. Do
Slide 22: Second Quarter 2015 Financial Results
Second Quarter 2015 Financial Results Quarterly revenues of $21.3 million, 35.1% YoY increase Quarterly non-GAAP gross margins of 47.6%, increase from 43.8% in Q2 2014 NON-GAAP net income of $2.4M, or $0.07 per diluted share $1.8 million YoY increase in Non GAAP net profit GAAP net income
Slide 23: Q3' 2015 Guidance
Q3’ 2015 Guidance Expected revenues between $22 million to $25 million Operating income expected to be between 10.5% to 14.5% of revenues End of quarter share count expected to be approximately 32-33 million 23 Copyright Kornit Digital 2015. All Rights Reserved.
Slide 24: Investment Highlights
Investment Highlights Serves addressable market of $165B annual output of printed textiles Offers a disruptive and highly differentiated solution to an industry looking for significant changes to supply chain Leading provider of Direct To Garment solutions to support mass customization, personalizat