In This Article:
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Kornit Digital Ltd (NASDAQ:KRNT) met its Q1 2025 revenue expectations with $46.5 million and an adjusted EBITDA margin of 8.4%, demonstrating strong financial performance.
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The company generated positive cash flow from operations, highlighting the strength of its business model and disciplined execution.
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Kornit Digital Ltd (NASDAQ:KRNT) is well-positioned to benefit from the apparel industry's shift towards on-demand, local production, driven by changing consumer demands and trade policy developments.
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The Apollo system has been successfully adopted, showing strong growth in impressions and replacing traditional screen printing methods, which indicates a significant market opportunity.
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The company's AIC model has reached $14.5 million in annual recurring revenue, validating its strategy of emphasizing recurring revenue streams.
Negative Points
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Macro conditions have delayed some planned system purchases in Q1, indicating potential challenges in the sales cycle.
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The company faces uncertainties due to evolving trade policies, which could impact costs and operations.
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Service revenue declined year over year due to fewer upgrades of the Atlas Max, partially offset by upgrades to Max Plus with lower average selling prices.
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The company anticipates a negative adjusted EBITDA margin in the range of -4% to 4% for Q2 2025, reflecting ongoing challenges.
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A major Apollo customer delayed their purchase, which could impact the company's ability to meet its target of delivering 30 Apollo systems this year.
Q & A Highlights
Q: What are you seeing from customers given recent changes in tariffs and trade supply chains? A: Ronan Samuel, CEO: The fashion textile market is undergoing significant disruption, with consumers demanding instant gratification, variety, and fast delivery. Traditional mass production models in low-cost countries are becoming obsolete, leading to waste and inventory issues. Recent tariffs and trade changes are accelerating the shift towards local manufacturing. Brands and retailers are actively seeking to connect with local manufacturers to remain relevant and reduce inventory. Kornit is playing a key role in this transition, with technology like Apollo enabling mass production and attracting new customers, particularly screen printers entering digital for the first time.
Q: Can you discuss the Apollo placement number for the year versus previous expectations for 30 systems? A: Ronan Samuel, CEO: Feedback on Apollo has been overwhelmingly positive, with customers seeing it as a game-changer in terms of quality, automation, and cost. The pipeline is strong, primarily with new customers from the screen printing market. We still expect to deliver approximately 30 Apollo systems this year, despite some delays from customers planning multiple system purchases. The pipeline is filled with new and existing customers, and we remain optimistic about Apollo's future.