Third quarter GAAP sales which are net of the fair value of the warrants associated with revenues recognised from Amazon during the period was $28.5 million, down from the prior year level of $30.9 million. Lower revenues were driven by a previously disclosed large customer who was unable to take scheduled delivery of a large number of systems due to unforeseen protracted delays in the receipt of regulatory permits. On a non-GAAP basis, Kornit reported sales of $28.6 million, down from the prior year level of $30.9 million.
The company's GAAP total operating expenses in the third quarter were $14.8 million, or 52 per cent of sales, compared to $13.0 million, or 41.9 per cent of sales, in the prior year period. The increase in operating expenses as a percentage of sales was consistent with the Kornit's previously communicated plans to continue to invest in its global infrastructure buildout. Non-GAAP operating expenses in the third quarter increased to $13.2 million, or 46.2 per cent of sales, compared to $11.4 million, or 36.7 per cent of sales in the prior year.
"As mentioned during our pre-announcement call at the end of September, our financial results during the quarter were strongly impacted by a customer delay. While our near term business is impacted by this postponed customer order and slower than expected ramp up in Vulcan revenues, we see the concept of proximity decoration gaining momentum, and driving demand in the apparel industry for direct-to-garment systems which should lead to significant growth in 2018," said Gabi Seligsohn, Kornit Digital’s chief executive officer said.
During the third quarter, Kornit attended several events, including SGIA in New Orleans where the company showcased its latest technology and introduced neon ink printing on its Allegro roll-to-roll printer, which enables new and creative applications for customers and was well received by event participants. "During this important event, we noted a strong uptick in interest from screen printers, which is a direct response to their customers demanding smaller batch manufacturing requiring digital capabilities. This is encouraging to the long-term adoption rate of our highest throughput systems, such as the Vulcan and Avalanche." Seligsohn added. (RR)
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