Highlights

• Third quarter 2018 revenues increased by 32.1% to $37.6 million, net of $1.7 million attributed to the non-cash impact of warrants, compared to $28.4 million, net of $0.1 million attributed to the non-cash impact of warrants in the prior year period.
• Third quarter 2018 GAAP operating income of $3.1 million, or 8.2% of revenue; non-GAAP operating income of $4.9 million, or 13.0% of revenue, net of 367 basis points attributed to the non-cash impact of warrants.
• Third quarter 2018 GAAP net income of $3.1 million, or $0.09 per diluted share; non-GAAP net income of $4.8 million, or $0.13 per diluted share.
• Third quarter warrants impact on Non-GAAP Gross margin was 206 basis points, operating margin 367 basis points and Non-GAAP net margin 368 basis points.
• Company continues to benefit from the market success of the HD with orders of more than 200 systems and upgrades to date.

ROSH-HA`AYIN, Israel, Nov. 12, 2018 (GLOBE NEWSWIRE) Kornit Digital Ltd. (NASDAQ: KRNT), a leading provider of digital printing solutions for the global printed textile industry, today reported results for the third quarter ended September 30, 2018.

Beginning as of the fourth-quarter of 2017, non-GAAP figures are presented using a different methodology compared to previous periods as a result of comments received from the U.S. Securities and Exchange Commission. These changes also impact the Company's guidance methodology, the details of which can be found at the end of today's press release.

Kornit reported that third quarter 2018 revenue increased by 32.1% to $37.6 million, net of $1.7 million attributed to the non-cash impact of warrants, compared to the prior year period of $28.4 million, net of $0.1 million attributed to the non-cash impact of warrants. Higher revenue in the quarter was attributable to widespread growth across geographies and customers, and the delivery of systems on a large customer program.

GAAP operating income increased to $3.1 million, compared to the prior-year period operating loss of $0.2 million. Non-GAAP operating income increased by 208.4% to $4.9 million, or 13.0% of revenue, compared to the prior year period of $1.6 million, or 5.6% of revenue. Increased operating income was the result of increased revenue and higher operating leverage, partially offset by an unfavorable product mix, as more systems were sold during the period.

Ronen Samuel, Kornit Digital’s Chief Executive Officer, commented, “We are pleased to report strong third quarter results, with sales increasing by more than 30% compared to last year quarter as the market success of our leading industrial DTG systems continues to modernize the retail supply chain. Our sales are accelerating as our customers respond to dynamic challenges to reduce printed apparel run length and lead times while minimizing inventory risk. We firmly believe that Kornit is uniquely positioned to address these evolving priorities with the right technology that delivers superior print quality and hand-feel to end consumers.

“Our latest-generation HD products are receiving unprecedented market success, with more than 200 orders of systems and upgrades to date. The success of the HD leads another wave of Kornit innovation, as we are progressing well with customer beta testing of a new mass production system slated for broader availability in 2019, and the launch of our dark poly solution that was announced during our recent investor day. These technological enhancements add to our recent momentum and present a clear path to achieving our long-term goals.”

Third Quarter Results of Operations

Kornit reported third quarter revenues, net of the non-cash impact of warrants, of $37.6 million, compared with the prior-year period level of $28.4 million. The total non-cash impact of the warrants deducted from revenues was $1.7 million in the third quarter of 2018 and $0.1 million in the third quarter of 2017.

On a GAAP basis, third quarter gross profit was $18.9 million, compared with $14.6 million, in the prior-year period. Non-GAAP gross profit in the third quarter was $19.2 million, or 51.1% of revenue, compared with $14.8 million, or 52% of revenue in the third quarter of 2017. The lower gross margin was primarily due to the effect of warrants in the period.

On a GAAP basis, total operating expenses in the third quarter were $15.9 million, compared to $14.8 million in the corresponding prior-year period. Non-GAAP operating expenses in the third quarter increased to $14.3 million, or 38.1% of revenue, compared to $13.2 million, or 46.5% of revenues, in the corresponding prior-year period.

Third quarter GAAP research and development expenses were $5.1 million, compared to $5.8 million in the corresponding prior-year period of. Third quarter non-GAAP research and development expenses were $4.8 million, or 12.8% of revenues, compared to $5.6 million, or 19.6% of revenues in the prior-year period.

Third quarter GAAP selling and marketing expenses were $6.5 million, compared to $5.3 million in the corresponding prior-year period. Third quarter non-GAAP selling and marketing expenses were $5.9 million, or 15.7% of revenues, compared to $4.8 million, or 16.8% of revenues, in the equivalent prior-year period.

Third quarter GAAP general and administrative expenses were $4.2 million, compared to $3.4 million in the corresponding prior-year period. Third quarter non-GAAP general and administrative expenses were $3.6 million, or 9.6% of revenues, compared to $2.9 million, or 10.1% of revenues, in the corresponding prior-year period.

On a GAAP basis, third-quarter operating income was $3.1 million, compared to operating loss of $0.2 million during the corresponding prior-year period. Non-GAAP operating income in the third quarter increased to $4.9 million, compared to $1.6 million in the equivalent prior-year period. As a percent of revenues, non-GAAP operating margin for the third quarter was 13.0% of revenues, compared with 5.6% of revenues in the third quarter of 2017.

On a GAAP basis, the Company reported net income of $3.1 million, or $0.09 per diluted share, compared to net loss of $0.1 million in the third quarter of 2017. Non-GAAP net income for the third quarter of 2018 was $4.8 million, or $0.13 per diluted share, compared to net income of $1.5 million, or $0.04 per diluted share, in the corresponding prior year period.

Q3 Warrants impact:

Balance Sheet and Cash Flow
At September 30, 2018, the Company had cash, deposits and marketable securities of $110.9 million, and no long-term debt. Cash flow provided by operations was $11 million during the third quarter of 2018, attributable mainly to higher net profit.

Fourth Quarter 2018 Guidance
The Company will discuss the details of its guidance live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com.

Conference Call Information
The Company will host a conference call on Monday, November 12 at 5:00 p.m. ET, or 0:00 a.m. Israel time, to discuss the results, followed by a question and answer session for the investment community. A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-800-239-9838 or +1-323-794-2551. The toll-free Israeli number is 1 80 921 2883. The confirmation code is 8753465.

To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 8753465. The telephonic replay will be available beginning at 8:00 p.m. ET on Monday, November 12, 2018, and will last through 11:59 p.m. ET on Monday, November 26, 2018. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

Forward Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continue," "believes," "should," "intended," "guidance," "preliminary," "future," "planned," or other words. These forward-looking statements include, but are not limited to, statements relating to the Company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the degree of our success in developing, introducing and selling new or improved products and product enhancements, the extent of our ability to consummate sales to large accounts with multi-system delivery plans, the degree of our ability to fill orders for our systems, the extent of our ability to continue to increase sales of our systems and ink and consumables, the extent of our ability to leverage our global infrastructure build-out, the development of the market for digital textile printing, availability of alternative ink, competition, sales concentration, changes to our relationships with suppliers, the extent of our success in marketing, and those additional factors referred to under "Risk Factors" in the company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 30, 2018. Any forward-looking statements in this press release are made as of the date hereof, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Discussion Disclosure
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, amortization of acquired intangible assets and restructuring expenses and their tax effect. The purpose of such adjustments is to provide an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

About Kornit                                                                                              
Kornit Digital (NASDAQ:KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries. Kornit delivers complete solutions, including digital printing systems, inks, consumables, software and after-sales support. Leading the digital direct-to-garment printing market with its exclusive eco-friendly NeoPigment printing process, Kornit caters directly to the changing needs of the textile printing value chain. Kornit’s technology enables innovative business models based on web-to-print, on-demand and mass customization concepts. With its immense experience in the direct-to-garment market, Kornit also offers a revolutionary approach to the roll-to-roll textile printing industry: digitally printing with a single ink set onto multiple types of fabric with no additional finishing processes. Founded in 2003, Kornit Digital is a global company, headquartered in Israel with offices in the USA, Europe and Asia Pacific, and serves customers in more than 100 countries worldwide.