After the profit warning come the layoffs at Kornit Digital (Nasdaq: KRNT). Sources inform "Globes" that the company, which produces digital printing systems for printing on textiles, is laying off 30 people. At the end of 2021, Kornit Digital had 882 employees, of whom 500 were in Israel. The layoffs thus represent 3.5% of the workforce. The company declined to comment.
Kornit Digital is headed by Ronen Samuel, and has a $1.3 billion market cap, after an 85% fall in its share price from the peak that it reached last November. Two weeks ago, the company published a profit warning for the second quarter of this year. It cut its revenue forecast from $85-95 million to $56.4-59.4 million, and whereas it had expected to break even operationally, it now projects an operating loss on a non-GAAP basis of $18 million. EBITDA will be a negative $15.6 million; it had been projected at 0-4% of revenue.
Kornit Digital’s customers are fashion companies that use its technology to produce items in accordance with demand and close to their consumers. "The overall re-calibration of e-commerce growth, combined with macro headwinds which meaningfully accelerated in the last few weeks of the quarter, as well as delays in the completion of customer production facilities, resulted in a significantly slower pace of direct-to-garment (DTG) systems orders in the second quarter as compared to our prior expectations. We have entered a period where some of our customers are working through excess capacity built throughout the two-year pandemic period, which we expect to continue for the near-term," Samuel said by way of explanation of the preliminary second quarter results.
On the positive side, Samuel continued: "At the same time, based on our focused investments in R&D over the past several years, we are working with our customers and prospects on several meaningful growth initiatives, including new product introductions, upgrades, and novel applications that we believe will open up new addressable markets and help drive incremental demand in their businesses. We see meaningful post-pandemic opportunities with major brands and retailers shifting production from mass-analog off-shore production to short-run, near-shore production, and believe Kornit is well positioned to take advantage of these trends."
Kornit Digital raised $300 million in an equity offering when its share price was close to the peak. The offering was at a price of $151 per share, which compares with a current market price of $27. At the end of the first quarter, the company had $735 million cash.
Published by Globes, Israel business news - en.globes.co.il - on July 20, 2022.
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