Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kornit Digital Ltd (KRNT, Financial) reported positive cash flow from operations for the third consecutive quarter, indicating improved financial health.
- The company saw growth in impressions and consumables, suggesting strong utilization of existing capacity by customers.
- The Apollo system continues to be well-received, with several new orders, indicating strong market demand.
- The AIC model is gaining traction, providing predictable unit economics for customers and a clearer revenue view for Kornit.
- Kornit Digital Ltd (KRNT) expects a stronger second half of 2024, with sales projected to increase by 20% to 25%.
Negative Points
- The company reported an adjusted EBITDA margin of negative 3%, indicating ongoing profitability challenges.
- Sales of systems and services declined year-over-year, reflecting potential weaknesses in these segments.
- The macroeconomic environment remains unstable, delaying investments in capital equipment.
- An allowance for doubtful debts of approximately $1.5 million was recorded due to a North American customer's bankruptcy filing.
- The share repurchase program was limited due to a blackout period, and the existing authorization expired in July.
Q & A Highlights
Q: Can you provide an update on the progress of the AIC model with Apollo, and why you are expanding it to Atlas?
A: Ronen Samuel, CEO: The AIC model is transformative for the industry, removing barriers to entry by eliminating large initial capital investments. We have signed multiple Apollo systems, with 10 out of 15 expected to be on the AIC model this year. The feedback is positive, leading us to expand the model to Atlas MAX, which targets customers with lower volume needs than Apollo.
Q: Can you clarify the impact of the warrant agreement with your global strategic account?
A: Ronen Samuel, CEO: The first tranche of the warrant agreement, covering $250 million in existing products, is complete. The second tranche, up to $150 million, applies to new products. Our relationship with the strategic account remains strong, with continued growth in impressions and consumables.
Q: How do you see the Direct-to-Fabric market evolving, and how does it compare to Direct-to-Garment?
A: Ronen Samuel, CEO: The Direct-to-Fabric market is distinct, with significant growth potential in regions like India and China. We are focusing on new applications, such as footwear, which is a large, manual, and analog market. We aim to disrupt this with our digital solutions.
Q: What are your expectations for revenue growth in the second half of the year, and what will drive it?
A: Ronen Samuel, CEO: We expect a 20% to 25% revenue increase in the second half, driven primarily by consumables. We anticipate a stronger Q4, with improvements in gross margin and system deliveries, including those on the AIC model.
Q: How are you addressing the screen printing market with Apollo and AIC models?
A: Ronen Samuel, CEO: We are successfully engaging screen printers, many of whom are new to digital. Apollo offers superior quality and productivity, requiring only one operator. The AIC model further reduces entry barriers, and we plan to double Apollo deliveries next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
