Kornit Digital : Q4 2019 Investor Presentation

Kornit Digital : Q4 2019 Investor Presentation

Kornit Digital Ltd.

Equities

KRNT

IL0011216723

Industrial Machinery & Equipment

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Latest news about Kornit Digital Ltd.

Chart Kornit Digital Ltd.

Income Statement Evolution

Ratings for Kornit Digital Ltd.

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Quarterly earnings - Rate of surprise

Sector Industrial Machinery

February 19, 2020 at 09:55 am EST

KORNIT DIGITAL

(NASDAQ: KRNT)

Q4 2019 Investor Presentation

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 terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements reflect our current views with respect to future events and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance or events or circumstances described in the presentation will occur or be achieved. You should read the Company's most recent annual report on Form 20- F, filed with the U.S. Securities and Exchange Commission, or SEC, on March 26, 2019, as well as the Company's registration statement on Form F-3 and final prospectus supplement, each filed with the SEC on June 10, 2019 and June 14, 2019, respectively, including the "Risk Factors" contained in each such document, completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we undertake no obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation.

In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

This presentation contains statistical data that we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified this statistical data.

Kornit, Kornit Digital, the K logo, and NeoPigment are trademarks of Kornit Digital Ltd. All other trademarks are the property of their respective owners and are used for reference purposes only. Such use should not be construed as an endorsement of our products or services.

OUR VISION

CREATE A BETTER WORLD WHERE EVERYBODY CAN

BOND, DESIGN AND EXPRESS THEIR IDENTITIES,

ONE IMPRESSION AT A TIME

KORNIT AT A GLANCE

TRANSFORMING THE FASHION, APPAREL AND HOME DECOR INDUSTRIES

DIGITAL TEXTILE GLOBAL LEADER

Transforming the fashion, apparel and home décor industries, fueling

transition to on-demand retail and flexible online business models

FACTS & FIGURES

	Founded		Employees *
2002		547


	Significant		Highly

customer base of		experienced
	over 1,200		leadership team

* As of Dec 31 2019

OPPORTUNITY

Huge Addressable Market with significant growth opportunities

$1.4T 1		15B 2
Textile		Yearly DTG
market		Impressions

38B 3

Sqm per Year R2R

Source: Marketline report, December 2018. Represents the value of the global apparel retail market; (2) Company estimates; annualized run rate 2017 (3) Source: WTiN

CUTTING EDGE TECHNOLOGY

WITH IP PROTECTION

Systems Ink and

Consumables

Value Added	Software
Services

STRENGTH IN NUMBERS

Operating profitability *10.1%

FY2018; Non-GAAP, net of warrants impact of 248 BPS

Strong balance	$263.7m
Sheet *

As of Dec 31, 2019, reflects short and long-term cash maturities

WHAT WE DO

LEAD THE DIGITAL TEXTILE PRINTING REVOLUTION

LEADING DIRECT-TO-GARMENT (DTG) SOLUTIONS	UNIQUE ON-DEMANDDIRECT-TO-FABRIC (DTF) SOLUTIONS
1st	TO OFFER INDUSTRIAL DTG PRINTING	1st	TO DEVELOP SINGLE-STEP DTF PRINTING
Decorating textiles and finished apparel with digital printing	Printing images and designs onto rolled fabrics that are
		converted into finished garments and décor

PROPRIETARY AND FULLY INTEGRATED TECHNOLOGIES THAT INCLUDE DIGITAL PRINTING SYSTEMS,

SPECIALTY INK, SOFTWARE AND VALUE-ADDED SERVICES

MEGA TRENDS CHANGING THE INDUSTRY

PERSONAL	SOCIAL MEDIA	E-COMMERCE	SUSTAINABILITY
EXPRESSION	INFLUENCE	BOOM
Easy, Fast and Personal	Ultra Fast Fashion	Shorter Product Lifecycle	Rise of Green Consumerism
	On-Demand & Supply	Traditional Retail Meltdown	Tipping Point
	Immediate Gratification	Reinventailers

MARKET GAP

THE MARKET GAP

Consumers in the self-expression era want Easy Fast Personal Sustainable

Brands and designers want to connect to the consumer and deliver fast

Production methods haven't changed for decades, are based on mass production and have become inefficient

Supply chains are not set up to capitalize on shift in consumer dynamics

TRADITIONAL METHODS INADEQUATE

Long set-ups-- Polluting, energy and water consuming -- Labor intensive -- Design limitations

THE MARKETS ARE MOVING TO

ON-DEMAND RETAIL

TRADITIONAL METHODS WASTE & POLLUTION

TRADITIONAL METHODS THE WORLD RESPONDS

THE NEED	KORNIT
	PRODUCTION METHODS

SHORT RUNS
CUSTOMIZATION
ON DEMAND

SUSTAINABLE PRODUCTION

HUGE AND UNTAPPED MARKET SEGMENTS

Decorated /	(1)	Direct-to-Fabric
DTG Apparel

25B	42B(3)
(2023)	(2023)
15B	38B(2)
IMPRESSIONS	SQM per year

DIGITAL

IMPRESSIONS

Source: Company estimates for apparel impressions (including for example impressions on t-shirts, hoodies, pants, bags, etc.) 15B represents estimated annualized run rate of impressions as of 2017. 25B represents projected annualized run rate of impressions for year-end 2023.
Source: 2017 Digital Textile Industry Review. 38B represents estimated total volume in SQM of printed fabric output as of 2017.
Source: Company estimates. 42B represents projected total volume in SQM of printed fabric output.

ON DEMAND

THE MARKETS ARE MOVING TO

ON-DEMAND RETAIL

KORNIT'S PROPRIETARY AND

CUTTING EDGE TECHNOLOGIES

DTG: TRADITIONAL DIGITAL => 5-STEP SOLUTION	DTG:	2-STEP SOLUTION

Image	Pre-treatment	Dry	Print	Dry
Preparation

PrintingDry

	DTF:	1-STEP SOLUTION
DTF: TRADITIONAL DIGITAL=> 5-STEP SOLUTION

					Kornit
Image Prep /	Digital	Dry and Steam	Washing	Drying	Presto
Fabric Pre-treatment	Printing				Printing & Drying

KORNIT'S INNOVATIVE SOLUTIONS

	DTG SYSTEMS		DTF SYSTEMS
MASS	INDUSTRIAL	SPECIALTY	ON DEMAND DTF

INKS AND CONSUMABLES		SOFTWARE		VALUE-ADDED SERVICES

					Customer	Warranty,
					maintenance
•	Patented integrated				Support	and upgrades
	pretreatment process
•	DTG ink system				Application
•	DTF ink system				Training
			Development
•	Discharge digital ink

•	Fluorescent set

GOAL

A $500M RUN RATE BUSINESS

Expanding gross margin and profitability

CATALYSTS DRIVING OUR EXPANSION


1	2	3	4
Removing		Entering Key		Maximizing		Expanding Our
Market and
	Adjacent		System		GTM and
Technology
	Markets		Utilization		Services
Barriers

1REMOVING MARKET AND TECHNOLOGY BARRIERS TO DRIVE CONTINUED ORGANIC GROWTH

Eco Rapid Inks

DTG

Tackling the "Basics"

Providing our Customers with More

Retail Quality	Design Creativity
Superior Hand Feel	Substrate and Application Variety
Optimized Cost per Print	Accuracy and Color Management
Productivity Improvements	Workflow Enablement and Data Analytics	COLOR

DTF

1REMOVING MARKET AND TECHNOLOGY BARRIERS TO DRIVE CONTINUED ORGANIC GROWTH

EXPANDING OUR ADDRESSABLE MARKET BY LOWERING TOTAL COST OF OWNERSHIP

CPP $

Avalanche

Avalanche HD

Atlas

Number of Print Jobs

Digital

Analogue

Market Shifting to Smaller

Batch Sizes

TAM

SAM

Source: Kornit Analysis.

100

500

10,000

100,000

Run Length # of units

1CHANGING THE POLYESTER GAME

HIGH QUALITY PRINTING ON DYED POLYESTER

✓ Sportswear	Tailored, Proprietary Solution
✓	Athleisure	for a $34 Billion Market (1)
	New Untapped Market
✓ Functional Apparel	Kornit is the First Digital
		Industrial Solution

(1) Source: Credence Research, Global T-Shirts Market 2017. Represents projected 2019 polyester t-shirt market value.

2 ENTERING KEY ADJACENT MARKETS

DTG MARKETS SHIFTING TO ON DEMAND RETAIL

BRANDS &			PROMOTIONAL
PRIVATE LABELS	1B*	2.5B*
11.5B	*
	CUSTOMIZED DESIGN

Uniforms

Recreational

Sports

Entertainment,

Music, Sport

Figures represent estimated number of impressions based on market size as of 2017. Source: Company estimates. Note: Logos represent both current and prospective customers.

2 ENTERING KEY ADJACENT MARKETS

MARKET MOVING INTO ON-DEMAND HOME DECOR AND FASHION

Costumes &		BRANDS	Babies

Hobbies		DESIGNERS
		Home
			Accessories
Designers	FASHION	DIY	HOME DECOR


Accessories		Baby	Furniture
		Apparel
	Technical		Textile
		KitchenwareCurtains

Note: Logos represent both current and prospective customers.

MAXIMIZING SYSTEM UTILIZATION OF EXISTING
3CUSTOMERS	No. of Customers with at least 2 Systems

			282
		155
Customer	Application	2014	2019
empowerment	consulting

Illustrative Atlas System 5 Year LTV(1)

System		Ink and Services

Consumables	Value added services	Ink and Services
management and		up to 2x System Cost

creative business models
	Year 1	Year 5

EXPANDING OUR GTM AND SERVICES
4BUSINESS		Evolution of Regional Headcount(1) Americas

					✓ Move to direct in US						EMEA

									208	APAC



					✓ Expand growth in Asia Pacific					44
					85		68
Market reach	Sales coverage and	✓ Expand coverage, sales and
23
	productivity	support across regions	25	96
	37


						2014		2019
					Revenue from Services		Service Contract Take Rate(2)
					($m)

Strategic accounts		23.3		38%
Customer success
	25%
management	Service contracts

	4.2
	2014	2019	2016	2019

Excludes Israel based employees.
Ratio of service contract order entry / total industrial printing systems.

INORGANIC GROWTH STRATEGIES

HELPING BRANDS WITH THEIR FOCUS ON DIRECT-TO-CONSUMER (DTC)

BRANDS

CONSUMERS

STRENGTHENING EXISTING LEADERSHIP POSITION

Software / Data Driven	Scale GTM	Portfolio Expansion	Complementary Add-Ons
Workflow

Disciplined Framework for Evaluating Opportunities

Impact on Financial Profile
Defensible IP and technological barriers
Compatibility with Kornit's technology and culture
Appropriate scale and integration potential

FINANCIAL HIGHLIGHTS

✓

Top line growth driven by expanding systems installed base

Shift to higher systems ASP

High ink consumption and services driving recurring revenue model

Improving customer diversification

Expanding gross margin and profitability

Positive cash from operations and no debt

ATTRACTIVE REVENUE GROWTH

Annual Revenues ($ millions)*

Quarterly Revenues ($ millions)

							179.9			45.3	47.3	48.7

						142.4	38.6	35.9		37.6	37.8
							27.1 31.1		30.928.4	32.030.0
				108.7	114.1		28.6
		66.4	86.6			21.8	24.0
	49.4
39.1


2012	2013	2014	2015	2016	2017	2018	2019	Q1	Q2		Q3	Q4

2016	2017	2018	2019

* Net of the warrants impact in 2016, 2017, 2018 & 2019 of $2M, $2.9M, $4.6M, $5.1m respectively

GROSS MARGIN PERFORMANCE

Non-GAAP Gross Margin (2014-2019)*	Looking Forward
	5 Key Drivers for Gross Margin Expansion

	47.9%
	Continued transition to high throughput systems
	Higher ink consumption
44.3%	Turning value-added services into a profitable business
Significant additions of software features & functionality

	Continuous reduction of COGS
2014	2019

*Net of warrant impact on revenues of 144 BPS in 2019.

EXECUTING TO PLAN

	Top 10/20/50 Customer Revenue Share			Systems ASP
88%															282%

		84%			82%

75%							76%
		68%												212%
				67%
65%
												184%	184%

						56%	58%
		55%								148%

								45%				113%

										100%

2016	2017			2018	2019		2013	2014	2015	2016	2017	2018	2019
			Top 50		Top 20		Top 10

Q4 2019 FINANCIAL RESULTS

Revenues

Forth quarter 2019 revenues increased 28.8% to $48.7 million, net of $1.1 million attributed to the non-cash impact of warrants, compared to $37.8 million net of $1.4 million attributed to the non- cash impact of warrants in the prior year period.

Operating Income

Forth quarter 2019 GAAP operating income of $3.3 million, or 6.8% Of revenues; non-GAAP operating income of $5.8 million, or 12.0% of revenue.

Net Income

Forth quarter 2019 GAAP net Income of $4.8 million, or $0.11 per diluted share; non-GAAP net income of $7.1 million, or $0.17 per diluted share.

Warrants Impact

Forth quarter warrants impact on Non-GAAP Gross margin was 113 BSP, Operating margin 200 BPS and 194 BPS on the Net margin.

Q1 2020 GUIDANCE

Revenues	Operating Income
Expected revenues between $47	Non-GAAP operating income
million to $51 million	expected to be between 2.0% to
	6.0% of revenues

Warrants Impact

Since we currently can not predict the non-cash impact of the warrants, we assume zero impact on revenue and operating margin

INVESTMENT HIGHLIGHTS

Large Total	Supportive Mega	Established	Proprietary	High Growth	Significant
Addressable	Trends	Market	Technology	Recurring	Growth
Market		Leadership		Revenue Model	Opportunities
				with Expanding
				Gross Margin

RIGHT MARKET TRENDS, RIGHT TECHNOLOGY, RIGHT COMPANY

THANK YOU

CREATE A BETTER WORLD WHERE EVERYBODY CAN

BOND, DESIGN AND EXPRESS THEIR IDENTITIES,

ONE IMPRESSION AT A TIME

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Kornit Digital Ltd. published this content on 19 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 February 2020 14:54:01 UTC

Delayed Nasdaq Other stock markets 03:59:35 2024-04-23 pm EDT			5-day change	1st Jan Change
15.86 ^USD	+1.08%		0.00%	-17.28%

Feb. 14	Transcript : Kornit Digital Ltd., Q4 2023 Earnings Call, Feb 14, 2024
Feb. 14	Earnings Flash (KRNT) KORNIT DIGITAL Posts Q4 Revenue $56.6M, vs. Street Est of $57.5M	MT

Transcript : Kornit Digital Ltd., Q4 2023 Earnings Call, Feb 14, 2024	Feb. 14
Earnings Flash (KRNT) KORNIT DIGITAL Posts Q4 Revenue $56.6M, vs. Street Est of $57.5M	Feb. 14	MT
Earnings Flash (KRNT) KORNIT DIGITAL Reports Q4 EPS $0.08, vs. Street Est of $-0.01	Feb. 14	MT
Earnings Flash (KRNT) KORNIT DIGITAL Reports Q4 EPS $0.08, vs. Street Est of $-0.01	Feb. 14	MT
Kornit Digital Ltd. Reports Earnings Results for the Full Year Ended December 31, 2023	Feb. 14	CI
Kornit Digital Ltd. Provides Earnings Guidance for First Quarter of 2024	Feb. 14	CI
Kornit Digital Ltd. Reports Earnings Results for the Fourth Quarter Ended December 31, 2023	Feb. 14	CI
Kornit Digital Ltd. Announces General Availability of Its Field Proven Kornit Apollo	Jan. 29	CI
Kornit Digital Ltd.'s Equity Buyback Plan Extended for additional six months.	Dec. 12	CI
Morgan Stanley Adjusts Price Target on Kornit Digital to $24 From $29, Maintains Overweight Rating	Nov. 09	MT
Craig-Hallum Upgrades Kornit Digital to Buy From Hold, Price Target is $23	Nov. 09	MT
Tranche Update on Kornit Digital Ltd.'s Equity Buyback Plan announced on August 10, 2022.	Nov. 08	CI
Transcript : Kornit Digital Ltd., Q3 2023 Earnings Call, Nov 08, 2023	Nov. 08
Earnings Flash (KRNT) KORNIT DIGITAL Posts Q3 Revenue $59.2M, vs. Street Est of $59.9M	Nov. 08	MT
Kornit Digital Ltd. Provides Revenue Guidance for the Fourth Quarter of 2023	Nov. 08	CI
Kornit Digital Ltd. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	Nov. 08	CI
Needham Adjusts Price Target on Kornit Digital to $31 From $33, Keeps Buy Rating	23-08-10	MT
Morgan Stanley Upgrades Kornit Digital to Overweight From Equalweight, Calls Stock Drop 'Overreaction,' Keeps Price Target at $29	23-08-10	MT
Tranche Update on Kornit Digital Ltd.'s Equity Buyback Plan announced on August 10, 2022.	23-08-09	CI
Kornit Digital's Q2 Non-GAAP Net Loss Narrows, Revenue Falls	23-08-09	MT
Transcript : Kornit Digital Ltd., Q2 2023 Earnings Call, Aug 09, 2023	23-08-09
Earnings Flash (KRNT) KORNIT DIGITAL Posts Q2 Revenue $56.2M, vs. Street Est of $56.8M	23-08-09	MT
Kornit Digital Ltd. Reports Earnings Results for the Second Quarter and Six Months Ended June 30, 2023	23-08-09	CI
Kornit Digital Ltd. Provides Earnings Guidance for the Third Quarter of 2023	23-08-09	CI
Kornit Digital Ltd.'s Equity Buyback Plan Extended for additional six months.	23-08-08	CI

	1st Jan change	Capi.
KORNIT DIGITAL LTD.	-17.28%	749M
NORDSON CORPORATION	-0.80%	14.9B
HAITIAN INTERNATIONAL HOLDINGS LIMITED	+30.69%	5.11B
WUXI LEAD INTELLIGENT EQUIPMENT CO.,LTD.	-12.30%	4.91B
VALMET OYJ	-4.60%	4.82B
SUZHOU MAXWELL TECHNOLOGIES CO., LTD.	-16.98%	4.33B
KRONES AG	+10.91%	4.14B
TOMRA SYSTEMS ASA	+20.86%	3.89B
IHI CORPORATION	+39.22%	3.75B
KADANT INC.	+3.27%	3.31B

Attractive profitable recurring revenue

Gross margin *

business model

* FY2019; Non-GAAP, net of warrants impact of 144 BPS