Kornit Digital Ltd. · NASDAQ:KRNT
Kornit Digital — Investor Presentation (January 2018)
30 slides from Kornit Digital's investor presentation, Jan 17, 2018
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 January 2018
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
© All rights reserved Kornit Digital 2016 3 INVESTMENT HIGHLIGHTS Large, High Growth Addressable Market Leader in DTG Digital Printing Enabling Textile Market Transition to an Online Business Model Disruptive Proprietary Solutions: Technology, Ink, Services and Software Significant Opportunities for
Slide 4: Polluting Labor intensive Energy and water consuming Antiquated technology Long lead times Inefficient supply
© All rights reserved Kornit Digital 2016 4 Polluting Labor intensive Energy and water consuming Antiquated technology Long lead times Inefficient supply chain
Slide 5: Key Consumer Trends Driving Industry Change
© All rights reserved Kornit Digital 2016 5 KEY CONSUMER TRENDS DRIVING INDUSTRY CHANGE Immediate Gratification Personal Expression Influence Through Social Media Consumer Preference Apparel retailers increasingly leveraging the online channel U.S. Amazon Prime customers willing to pay more to recei
Slide 6: Moving to Digital Is the Only Way to Go
© All rights reserved Kornit Digital 2016 6 MOVING TO DIGITAL IS THE ONLY WAY TO GO Run Length # of units % of Market at Each Run Length 10 24 72 100 500 10,000 100,000 SAM Source: Kornit analysis and estimates. SAM TAM Future Market Prior Market • Complex setup • Costly setup • Limited design flexi
Slide 7: Digital Printing Is Enabling the Online Revolution
7 © All rights reserved Kornit Digital 2016 7 DIGITAL PRINTING IS ENABLING THE ONLINE REVOLUTION Faster Time to Market Reduces Fixed Cost Element Infinite Design Flexibility Reduces Inventory Self - Fulfillment Hybrid Printers Third Party Fulfillment Centers Global Fulfillment Network
Slide 8: 2017: The Year of Retail Bankruptcies
© All rights reserved Kornit Digital 2016 8 2017 : THE YEAR OF RETAIL BANKRUPTCIES Source: Credit Suisse, S&P Global Market Intelligence, THE WALL STREET JOURNAL 0 1 2 3 4 5 6 7 8 General Electronics Specialty Apparel Closing Time Retail bankruptcies in 2017 , by category 0 % 2 % 4 % 6 % 8 % 10 % 12
Slide 9: Huge Market in Early Transformation
9 © All rights reserved Kornit Digital 2016 9 HUGE MARKET IN EARLY TRANSFORMATION $ 1.1 T+ Textile ( 1 ) $ 165 B+ Printed Textile ( 1 ) 15 % based on printed fabrics 5 % digital penetration $ 8 - 10 B Digitally Printed ( 2 ) $ 1.2 B Digital Textile Printing ( 3 ) ( 1 ) Source: InfoTrends. ( 2 ) Esti
Slide 10: A New Supply Chain Is Developing
10 © All rights reserved Kornit Digital 2016 10 A NEW SUPPLY CHAIN IS DEVELOPING DEMAND AND SUPPLY SUPPLY AND DEMAND
Slide 11: But… printing on textile is challenging
11 © 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 12: Our Proprietary Process
12 © 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 13: Our Proprietary R2R Printing Process
13 © 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 14: Our Comprehensive End-to-End Solutions
© All rights reserved Kornit Digital 2016 14 OUR COMPREHENSIVE END - TO - END SOLUTIONS ENTRY LEVEL ONLINE DTG FAST RETAIL ON DEMAND TEXTILE INKS AND CONSUMABLES SOFTWARE VALUE - ADDED SERVICES • QuickP Production 6.0 • QuickP Designer 2.0 • QuickP Plus 2.0 Customer Support Warranty, maintenance and
Slide 15: Growth Strategy
15 © All rights reserved Kornit Digital 2016 15 GROWTH STRATEGY Increase Sales to Existing Customers Acquire New High Volume Customers Capitalize on Growth in Our Targeted Markets Extend Our SAM by Continuing to Enhance Our Solutions Extend Our Leadership Position Through Ongoing Investment in R&D,
Slide 16: Focus on High Volume Customers Is Paying Off
16 © All rights reserved Kornit Digital 2016 16 FOCUS ON HIGH VOLUME CUSTOMERS IS PAYING OFF • Kornit selected to support Amazon’s Merch program • Monetization tool for developers that enables the sale of personalized graphic merchandise • Agreement to purchase systems, ink and services • Multiple s
Slide 17: Allegro Enabling On-Demand Textile Printing
17 © All rights reserved Kornit Digital 2016 17 ALLEGRO ENABLING ON - DEMAND TEXTILE PRINTING Web to Print • 4 Allegro systems • 3 shifts, 7 days/week Wholesale Home Furniture Manufacturer • Shipping to customers that order through retailers Baby Bedding Manufacturer • Customized baby beddings produ
Slide 18: Fast Fashion Is Moving Online
18 © 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 19: Expanding Our Addressable Market by Lowering CPP
© All rights reserved Kornit Digital 2016 19 EXPANDING OUR ADDRESSABLE MARKET BY LOWERING CPP Source: Kornit Analysis and estimates. Demand for Smaller Batches + Digital Solutions that Lower CPP at Longer Runs = SAM Expansion for Kornit Cost Per Print (CPP) $ Kornit Storm Kornit Avalanche Kornit Vul
Slide 20: Kornit Digital HD Technology
PROFITABILITY breakthrough for Digital & Screen printers KORNIT DIGITAL HD TECHNOLOGY
Slide 21: Costing: Screen vs. HD
21 All rights reserved Kornit Digital 2016 © COSTING: SCREEN VS. HD $/UNIT $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 24 72 120 168 216 264 312 360 408 456 504 552 600 Two color print Four color print Six color print Eight color print Kornit HD Technology ( 45 cent Cost of Ink) Cost of unit inc
Slide 22: Screen vs. Digital: 3 Color Job Order
22 All rights reserved Kornit Digital 2016 © SCREEN VS. DIGITAL: 3 COLOR JOB ORDER Screen printing Kornit HD Technology 1 - N copies $ 1 per Unit ( 25 c - 45 c cost of ink per print) 200 copies $ 1.5 per unit 72 copies $ 2.5 per unit 24 copies $ 4.5 per unit
Slide 23: • Attractive business model contributes to significant revenue growth with substantial recurring revenues •
© All rights reserved Kornit Digital 2016 23 • 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 flexibility driven by debt
Slide 24: Historical Revenues Analysis
24 © All rights reserved Kornit Digital 2016 HISTORICAL REVENUES ANALYSIS Annual Revenues ($ millions) Quarterly Revenues ($ millions) Components of business model $ 49.4 $ 66.4 $ 86.6 $ 110.7 2013 2014 2015 2016 57 % 61 % 62 % 61 % 43 % 39 % 38 % 39 % 0% 50% 100% 2013 2014 2015 2016 %Systems & Serv
Slide 25: Gross Margin Performance
25 © All rights reserved Kornit Digital 2016 43.6 % 44.3 % 47.8 % 49.3 % 2013 2014 2015 2016 Non - GAAP Gross Margin ~ 570 Bps Improvement Looking Forward: 5 key drivers for Gross Margin Expansion Continued transition to high throughput systems Higher ink consumption Turning value - added services i
Slide 26: Gross Margin KPIs
26 © All rights reserved Kornit Digital 2016 GROSS MARGIN KPI’S ASP (Average Selling Price) Service Contract coverage vs. installed base Revenue from Recurring Customers Scale of Installed Base Driving Higher per System Ink Consumption (Avalanche 1000 ) ICPS ( 2 ) 0 - Low / 5 - High Represents a Kor
Slide 27: September Quarter Financial Results
27 © All rights reserved Kornit Digital 2016 SEPTEMBER QUARTER FINANCIAL RESULTS • Quarterly non GAAP revenues of $ 28.6 million VS. $ 30.9 in prior year, - 4.7 % YoY decrease. • Quarterly non - GAAP gross margins of 52.3 %, Increase from 49.1 % from the previous quarter and increase from 49.2 % in
Slide 28: Q4 2017 Guidance
28 © All rights reserved Kornit Digital 2016 Q 4 ’ 2017 GUIDANCE • Expected revenues between $ 29 million to $ 32 million • Non GAAP Operating income expected to be between 5 % to 9 % of revenues • End of quarter share count expected to be approximately 35.2 million
Slide 29: Investment Highlights
29 © All rights reserved Kornit Digital 2016 INVESTMENT HIGHLIGHTS Large, High Growth Addressable Market Leader in DTG Digital Printing Enabling Textile Market Transition to an Online Business Model Disruptive Proprietary Solutions: Technology, Ink, Services and Software Significant Opportunities fo
Slide 30: Thank You
30 © All rights reserved Kornit Digital 2016 THANK YOU
Kornit Digital — Investor Presentation (January 2018) on 6ix