Kornit Digital Ltd. · NASDAQ:KRNT
Kornit Digital — Investor Presentation (January 2016)
30 slides from Kornit Digital's investor presentation, Jan 11, 2016
Slide 1: Kornit Digital Investor Presentation January 2016
printed textiles through digital printing bonding January 2016 matters SS = &@ Kornit | Enabling the supply chain revolution of Digital Pp & CE Komnit Digital oprih Kom Dita 2015 A ight Rereved DS soncing mates
Slide 2: Forward-looking statements disclaimer
This presentation contains forward-looking statements within the meaning of US. Securities las. All statements other than statement of historical fact contained in this presentation ae forward-looking statements In some cases, you can identify forward-dooking statements by terminology suchas “may,”
Slide 3: Kornit Is Leading the Digital Textile Printing Revolution
SKornit Is Leading the Digital Textile Printing Revolution Offers a disruptive and highly differentiated solution to an industry looking for sant changes to supply chain Serves al adi je market + $165B annual output of printed tex Leading provider of Direct To Garment solutions to support mass custo
Slide 4: A Huge Market with Limited Innovation... Until Now
A Huge Market with Limited Innovation... Until Now over 1,000, 000,000,000 (1 trillion) total textile market >15% pried eBeoraZera= PTT Source: 2012 lftrens report "rarforming Teste Printing” Ceprrign tori Digital 2015, Al igh Raered
Slide 5: Industry Trends Driving the Need for a Disruptive Solution
Industry Trends Driving the Need for a Disruptive Solution HCL CRY aaa sane Demand Supply Environment ‘Online shopping and personalization in ‘Web to print and DTC models Water quotas, strict standards and all market segments: Fashion, Apparel, require new sourcing strategy high consumer awareness (
Slide 6: Mega Trends in Textile Markets
Mega Trends in Textile Markets Online Personalization - offs and small batches Very fast growth - Speed and freedom of Design - Reducing floor - Frequent Chas - Omni Channel, Ceprign korit Digi! 2015. Al ight Re Kornit Digital Bencng mates
Slide 7: Online personalization is taking on many shapes
— On line personalization is taking on many shapes Po moe
Slide 8: New DTC strategies require new operating models
— New DTC (Direct to Consumer) strategies require new operating models an Leading brands are focusing on DTC strategies, which requires new operating models including supply chain initiatives and key partnerships. Lead times and material waste will be reduced as a result. DTC takes DTC expected DTC
Slide 9: Retail is going through dramatic transformation
— Retail is going through dramatic transformation Key trends identified from brands publications: ZARA zananome Bershka oysho Puterc Geer Mewino Dac ‘eas MANGO From “street shopping” to on line shopping & “click and collect” No more stores: closing “brick and mortars” and opening e-commerce platform
Slide 10: Digital Printing enables new on-line and DTC business models
—Dieital Printing enables new on-line and DTC business models significantly reduces fixed reducing nventory at risk cost element Faster Time aoe fulfillment to Market network Ceprign korit Digi! 2015. Al ight Re Kornit Digital & Keritbigtal
Slide 11: Industry Business Models are Rapidly Evolving
Industry Business Models are Rapidly Evolvin — ry pialy g Markdowns and write-offs are a significant challenge for the textile industry Fast Fashion Shortens Time to Marke’ And Addresses Inventory Risk!) Inditex / Zara CEO: “This business is all about reducing response time. In fashion, stock is lik
Slide 12: Attractive Market Opportunity
— Attractive Market Opportunity —— 5-10 bn 300,000 ~2% era aaa P?? ~S1.4BN , ~$3.1BN and Ink sles by 2019 (-17% CAGR)® Aes 4 woe
Slide 13: Digital Textile Printing is Complicated
DS ut..vigital Textile Printing is Complicated Textiles are Extremely Complicated Substrates to Embellish with Print me key challenges associated with digital textile printing Kornit Digital
Slide 14: Our Proprietary Integrated Digital Printing Process
Sour Proprietary Integrated Digital Printing Process Process Steps for Competitive Digital DTG Solutions Inhibits Adoption for Industrial Applications 7 = Pretreatment 12 min ‘min 35min 5-8 min per shirt Implications of additional separated pre-treatment: 1.80.50 extra consumables cost 2, 25.40% add
Slide 15: Value-Added Services
Value-Added Services Inks & Consumables Patented “Wet-on-wet” Pre-treatment Gea ® Me I Je} a
Slide 16: Kornit Offers the Only Truly Industrial Solution
SKornit Offers the Only Truly Industrial Solution Competitive effective throughput comparison") Numbers represent throughput of: QFacigni (Earcre 1000 109 on Qt Ste MGB FPSON nate other patel” a * E E E Bee oe High Throughput Entry Level 4G esses, Ceprign korit Digi! 2015. Al ight Re
Slide 17: Our Customer Categories
——Our Customer Categories ——— Brand Owners QUIKSAVER| » toes on brand vars pot Invontion and operation efincy bY 4 “Diary GIVENCHY ZIALLABONG Contract Printers > those ptingsenis tobe a BG cesta ceour Relying on Growing Distributor Network and Internal Sales Force 300, 10 Potential oe & CE Komnit Di
Slide 18: Conventional Digital Textile Printing Process: steps
‘Conventional Digital Textile Printing Process: 6 steps SC ES £3 Image reparation Fabric Pretreatment Digital Printing Drying Fixing with Steam ‘or Het Ai fami col; Qornit Process Advantages vs. other digital techniques 7 On single step solution » only solution able to print on multiple types of fab
Slide 19: Kornit Vulcan and Kornit Allegro
Focusing on enhancing Kornit Vulcan, mass producing One Kornit Allegro productivity, efficiency, print direct-to-garment printing system, printing factory quality and consistency and design for medium to long runs (72-400) flexibility, through HW and SW capabilities complete ~ oo Enabling set up of
Slide 20: Customer Intimacy Drives Further Adoption of Solutions
semmeustomer Intimacy Drives Further Adoption of New and Existing Solutions an Systems and Ink + Software & Services = Diverse Range of Applications and Substrates ‘onsumption per System Grows with Developme and Use of New Substrates Ceprrign tori Digital 2015, Al igh Raered
Slide 21: Fashion By Kornit
babe Fashion By Korn
Slide 22: Financial Highlights
Ssinancial Highlights j Attractive High, long-term expanding Financial model gross margins flexibility Attractive business Bycebnee model contributes to ince sheet, significant Investment in moraine pital & research & capex anda long-term favorable tax position revenue growth with substantial develo
Slide 23: Historical Revenues Analysis
= istorical Revenues Analysis Annual Revenues ($ millions) CAGR 30% i oz «208208 9 Months Revenues ($ millions) CAGR 34% ‘Months —9Months 9Months Zos 201” Dons Quarterly Revenues ($ millions) 0) 2013 2014 fH 2015 Midpoint of Guidance $1.6 $23 $255 $133 $85 a S187 sue a $22.2 ma $189 5152 sing 3 a Ce
Slide 24: Components of Our Business Model
==eomponents of Our Business Model a 1m Printing Systems and Services = Ink and Consumables $49.4 $39.2 2012 2013 $66.4 2014 Drivers of Systems and Services Revenues: » Higher throughput systems » Growing services business Drivers of Ink and Consumables Revenues: » System size / throughput > Install
Slide 25: Significant Mix Shift towards High Throughput Systems
SEs eniticant Mix Shift towards High Throughput Systems Our high throughput systems sell for higher ASPs and consume an order of magnitude more ink than our entry level systems mEntry Level, ms HighThroughput System revenue share Kornit Digital 14 onto
Slide 26: Gross Margin Performance
SSG'05s Margin Performance Non-GAAP Gross Margin ~460 Bps Improvement Looking Forward: 5 key drivers for Gross Margin Expansion > Continued transition to high throughput systems > Higher ASP + Higher GM > Higher ink consumption > Ink carries high GM > Turning value-added services into a profitable b
Slide 27: Tax and Foreign Exchange Impact
— "EA and Foreign Exchange Impact Taxes » Parent Company enjoys tax holiday until 2019 (under “the Investment Law”) » Israeli subsidiary has existing net operating loss carry forwards > Non-Israeli subsidiaries operating as Low Risk Distributor enjoy tax rate of 1.0%-1.5% of revenues Foreign Exchang
Slide 28: Financial Results for the First Nine Months of 2015
ssebinancial Results for the First Nine Months of 2015 » Nine months revenues of $61.1 million, 29% YoY increase » Nine months non-GAAP gross margins of 46.7%, increase from 43.8% in first nine months 2014. » NON-GAAP net income of $6.2M, or $0.25 per diluted share. Increase of 3.8 million over 2014
Slide 29: Q4 2015 Guidance
— Ny 2015 Guidance » Expected revenues between $24 million to $27 million » Operating income expected to be between 11.2% to 14.8% of revenues » End of quarter share count expected to be approximately 32-34 million Kornit Digital
Slide 30: Kornit Is Leading the Digital Textile Printing Revolution
SKornit Is Leading the Digital Textile Printing Revolution Offers a disruptive and highly differentiated solution to an industry looking for sant changes to supply chain Serves al adi je market + $165B annual output of printed tex Leading provider of Direct To Garment solutions to support mass custo
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