Kornit Digital Ltd. ((KRNT)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Kornit Digital Ltd. Navigates Transition with Mixed Earnings Call Sentiment
The recent earnings call for Kornit Digital Ltd. paints a picture of a company in transition. While there is modest revenue growth and significant expansions in customer base and strategic partnerships, challenges such as declining service and consumable revenues, negative EBITDA margins, and slower-than-expected adoption of new models present areas of concern. The company remains committed to long-term growth and market penetration, but short-term challenges are impacting performance.
Year-Over-Year Revenue Growth
Kornit Digital reported a modest year-over-year revenue growth of 2% for Q2 2025, with a total first-half growth of approximately 5%. This growth, while positive, highlights the slow pace of revenue increase in the current market environment.
Increase in Annual Recurring Revenue
The company achieved an increase in annual recurring revenues by $4 million, reaching approximately $19 million. This reflects progress in building a more predictable and resilient business model, which is crucial for long-term stability.
Expansion in Customer Base
Kornit Digital saw significant expansions in its customer base, with notable additions such as Cimpress adding multiple systems and new customers like Flashship Print joining with multiple system installations. This expansion is a positive indicator of the company’s growing market presence.
Strategic Partnerships and Market Penetration
The company signed a strategic development agreement with a top sports brand and made strides in penetrating the screen printing market, with notable installations in the U.S., U.K., and Quebec. These partnerships are expected to enhance Kornit’s market position.
Operational Discipline and Cash Flow Management
Kornit Digital maintained tight operational discipline, aiming for full-year adjusted EBITDA profitability and positive cash flow from operations. This focus on financial discipline is essential for navigating current challenges.
Revenue Below Midpoint of Guidance
The second-quarter revenues were approximately $49.8 million, within the guidance range but below the midpoint. This shortfall indicates challenges in meeting revenue expectations.
Decline in Service and Consumable Revenues
Service revenues declined year-over-year due to fewer Atlas MAX upgrades, and consumable revenues decreased due to inventory adjustments by key customers. These declines are areas of concern for the company’s revenue streams.
Negative Adjusted EBITDA Margin
The adjusted EBITDA margin was negative 2.3%, highlighting the challenge of achieving profitability in the quarter. This negative margin underscores the financial hurdles Kornit is facing.
Challenges with Apollo System Shipments
Apollo system shipments tracked below expectations due to longer sales cycles, particularly in the screen printing market. This delay in shipments affects the company’s growth projections.
ARR Tracking Below Expectations
Annual recurring revenue was below expectations due to slower adoption of the AIC model, impacting future growth projections. This slower adoption rate is a concern for future revenue growth.
Forward-Looking Guidance
Kornit Digital’s forward-looking guidance anticipates modest top-line growth of low single digits in the second half of the year while expanding their annual recurring revenue (ARR) base. The company is setting the stage for significant growth in 2026, despite current challenges.
In summary, Kornit Digital Ltd.’s earnings call reflects a company in transition, grappling with short-term challenges but committed to long-term growth. While there are positive developments in customer base expansion and strategic partnerships, financial hurdles such as declining service revenues and negative EBITDA margins remain. The company’s focus on operational discipline and cash flow management is crucial as it navigates these challenges and prepares for future growth.