Slide 1: Kornit Digital Q2 2020 Earnings Call – Supporting Slides
KORNIT DIGITAL (NASDAQ: KRNT) Q2 2020 Earnings Call – Supporting Slides 1 | © All rights reserved Kornit Digital 2018
Slide 2: Safe Harbor
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 terminolo
Slide 3: Speakers on Today's Call
SPEAKERS ON TODAY’S CALL Ronen Samuel Guy Avidan Amir Shaked Mandel CEO CFO EVP Corp Dev 3 © 2020 Kornit Digital. All rights reserved.
Slide 4: Our Vision
OUR VISION CREATE A BETTER WORLD WHERE EVERYBODY CAN BOND, DESIGN AND EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME
Slide 5: Business Highlights
BUSINESS HIGHLIGHTS RONEN SAMUEL CEO 5 | © All rights reserved Kornit Digital 2018
Slide 6: Kornit Digital Acquires Custom Gateway
KORNIT DIGITAL ACQUIRES CUSTOM GATEWAY © 2020 Kornit Digital. All rights reserved.
Slide 7: Industry at an Inflection Point
INDUSTRY ON-LINE SALES ARE EXCESS AT AN BOOMING B2C B2B MANUFACTURING & OVER PRODUCTION INFLECTION POINT WHILE EXCESS INVENTORY TRADITIONAL RETAIL A MAJOR PAIN POINT DOWN FOR BRANDS AND RETAILRS © 2020 Kornit Digital. All rights reserved. Figures represent current estimated number of impressions bas
Slide 8: Kornit Digital Acquires Custom Gateway
KORNIT DIGITAL ACQUIRES CUSTOM GATEWAY EXPANDING CLOUD SOFTWARE WORKFLOW PORTFOLIO FOR END-TO-END MANAGEMENT OF ON-DEMAND APPAREL AND HOME DÉCOR PRODUCTION © 2020 Kornit Digital. All rights reserved.
Slide 9: Together We Will Enable
TOGETHER WE WILL ENABLE ON-DEMAND EFFICIENT SCALE MANUFACTURING UP OF ON-DEMAND FOR BRANDS AND PRODUCTION RETAILERS FLOORS • Bring a unique, end-to-end solution for on-demand production to the market • Revolutionize how global brands and fulfillers transforming their supply chain in to sustainable o
Slide 10: Strong Q2 2020 & Business Outlook
STRONG Q2 2020 & BUSINESS OUTLOOK • Total revenue of $37.4 million, net of $842 thousand in warrants related to a global strategic account • Sequential growth of approximately 44% in Q2 compared to Q1 2020 • Strong results reflect positive momentum starting in late April • Production sites re-opened
Slide 11: Activity & Business Momentum
ACTIVITY & BUSINESS MOMENTUM • Global operations are fully operating in-line with safety guidelines • Sales and service personnel supporting customers onsite when needed • All our manufacturing and R&D sites in Israel are fully staffed. • Exceptionally strong performance in North America across both
Slide 12: Activity & Business Momentum
ACTIVITY & BUSINESS MOMENTUM • Another excellent quarter for the Atlas, a huge success across both new and existing customers • Customers making significant investments • Projects identified on first quarter call proving to be larger than anticipated • Demand for Vulcan Plus introduced in Q1 2020 is
Slide 13: Well Positioned for Growth
WELL POSITIONED FOR GROWTH • Our teams globally are focused on customer excellence delivering on the numerous large-scale implementations we have in place • Expected to drive revenue for the second half • Creating demand for ink and supplies in 2021 and beyond. • Our partnership with our global stra
Slide 14: © 2020 Kornit Digital. All rights reserved.
© 2020 Kornit Digital. All rights reserved.
Slide 15: Q2 2020 Financial Overview
Q2 2020 FINANCIAL OVERVIEW GUY AVIDAN CFO © 2020 Kornit Digital. All rights reserved.
Slide 16: Quarterly Warrants Impact
QUARTERLY WARRANTS IMPACT Q2 20 Q1 20 Q2 19 Net of Warrants Net of Warrants Net of Warrants Warrants Impact Warrants Impact Warrants Impact Impact K$/BPS/EPS Impact K$/BPS/EPS Impact K$/BPS/EPS Revenues $37,436 $842 $38,278 $26,212 $564 $26,776 $45,333 $974 $46,307 Gross Profit $16,512 $17,354 $8,66
Slide 17: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS GAAP Non-GAAP YoY YoY Q2 2020 Q2 2019 Q2 2020 Q2 2019 Change Change Total Revenue $37.4 $45.3 ($7.9) $37.4 $45.3 ($7.9) Gross Profit $15.8 $20.1 ($4.3) $16.5 $21.6 ($5.1) Operating Income (Loss) ($5.3) $1.3 ($6.6) ($2.5) $4.2 ($6.7) Net Income (Loss) ($4.6) $1.9 ($6.6) ($1.
Slide 18: Quarterly Revenues
QUARTERLY REVENUES • Revenues of $37.4 million vs. $45.3 million in prior year, a decrease of 17.4% YoY and an increase 42.8% QoQ • A global customer accounted for 8.8% of revenues compared to 11.4% in prior year • 10 largest accounts represented 59.3% of revenues compared to 44.5% in prior year Geo
Slide 19: Quarterly Gross Margin and Opex
QUARTERLY GROSS MARGIN AND OPEX • Non-GAAP gross margin of 44.1% decreased from 47.7% in Q2 2019 attributed mainly to decline in top line • Non-GAAP operating expenses of $19.1 million increased 9.2% year over year Q2 2020 Q2 2019 Research & Development 17.8% 11.0% Sales & Marketing 19.9% 19.2% Gene
Slide 20: Quarterly P&L KPI
QUARTERLY P&L KPI Q2 2020 Q2 2019 Non-GAAP Operating Income (Loss) ($2.5) $4.2 Non-GAAP Net Income (Loss) ($1.3) $4.3 Non-GAAP Diluted EPS ($0.03) $0.11 GAAP Net Income (Loss) ($4.6) $1.9 GAAP Diluted EPS ($0.11) $0.05 Adjusted EBITDA ($0.9) $6.5 $ in millions except per share amounts 20 © 2020 Korn
Slide 21: Quarterly Balance Sheet and Cash Flow
QUARTERLY BALANCE SHEET AND CASH FLOW Balance Sheet Cash from Operating Activities Q2 2020 Q1 2020 Q2 2019 Cash, Bank Deposits and MK Securities 237.4 247.5 250.1 Accounts Receivables 39.8 32.8 34.1 Inventory 42.1 46.6 34.9 Trade Payable 13.0 23.0 20.9 Net Working Capital 217.7 209.0 246.0 $ in mill
Slide 22: Warrants Impact and Vesting
WARRANTS IMPACT AND VESTING * Revenue recognition base impact ** Collection base impact 22 © 2020 Kornit Digital. All rights reserved.
Slide 23: Amazon Warrants Agreement
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
Slide 24: Q3 2020 Guidance
Q3 2020 GUIDANCE* • Revenue is expected to be between $53.5 million to $57.5 million • Non-GAAP operating income is expected to be between 8% to 11% of revenue *we assume zero impact on revenue and operating margin for the purposes of guidance 24 © 2020 Kornit Digital. All rights reserved.
Slide 25: Thank You
THANK YOU OUR VISION CREATE A BETTER WORLD WHERE EVERYBODY CAN BOND, DESIGN AND EXPRESS THEIR IDENTITIES, ONE IMPRESSION AT A TIME © 2020 Kornit Digital. All rights reserved.
Slide 26: Warrants Impact Change in ASU 2019-08
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 adop