Kornit Digital stock tumbles postmarket on lower-than-expected prelim Q2 revenue

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Kornit Digital (NASDAQ:KRNT) stock tumbled 24% postmarket on Tuesday after the company reported prelim. Q2 revenue well below Street estimates, citing macro headwinds.

KRNT projects Q2 revenue of $56.4M-$59.4M, net of non-cash warrant impact of ~$4.6M, vs. prior guidance of $85M-$95M. Consensus revenue estimate is $88.53M.

"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 completion of customer production facilities, resulted in a significantly slower pace of direct-to-garment systems orders in Q2 vs. prior expectations," said KRNT CEO Ronen Samuel.

"We entered a period where some customers are working through excess capacity built throughout the pandemic, which we expect to continue for the near-term," he added.

Q2 adj. operating margin is expected to be between -34% and -28%, while adj. EBITDA margin is estimated to be between -30% and -24%, both net of non-cash warrant impact of ~10%.

KRNT expects Q3 revenue to be at or above Q2 revenue.

The firm has not completed its Q2 financial close yet and plans to release its Q2 results on Aug. 10 before market open.

KRNT stock has declined ~79% YTD.

Comments

[Moksha83]

I am surprised by the revenue miss and the negative growth, this stock was a favorite of hedge funds during FY21 and was a regular occurrence in 13F filings of a number of hedge funds. Only good thing is the cash on balance sheet. May be a good bet if trades for cash balance where you get the business for free. As Warren Buffet said 'Textile is a terrible business' to be in seems to be very true.

[Peter Balint]

@Moksha83 they are facing headwinds from the current macro environment. They will be fine again. Its just a good opportunity to buy a good asset cheaper.

[Moksha83]

@Peter Balint I agree, just that it is not predictable and I generally don't like non-recurring business such as this with limited recurring revenues. But I might buy it if it trades close to cash balance at which points it becomes a value play.

[Tambo210]

Wow!I remember seeing this stock in Early 2019 at 21bucks. Then watched it zoom up to 150bucks and I kicked myself for not buying!
If AH plays out......This market has no mercy!

[Peter Balint]

@Tambo210 this one is deserved. They will have a negative growth this year.