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    KRNT
    Earnings call· Jun 2026(Q2 FY26)

    Kornit Digital Q2 FY26 earnings call KRNT

    Aug 12, 2026 Source

    Executive summary

    Kornit Digital Q2 FY26 — Strong Recurring Revenue Growth and Digital Transformation Momentum

    Kornit Digital delivered a strong Q2 FY26, exceeding revenue and adjusted EBITDA guidance, driven by significant growth in its All-Inclusive Click (AIC) model and annual recurring revenue (ARR). The company is successfully executing its strategy to transition from analog to digital production, particularly within the traditional screen printing market, and is evolving into a resilient manufacturing platform with a highly recurring revenue base. Management expressed confidence in continued profitable growth and cash generation for the second half of the year.

    Highlights

    5

    • Revenue of $55.3 million, above the high end of guidance.

    • Generated positive adjusted EBITDA of $0.3 million, also above the high end of guidance.

    • Annual recurring revenue (ARR) increased by $7 million, reaching $33.8 million, representing 79% YoY growth.

    • All-Inclusive Click (AIC) revenue increased by 112% compared with the prior year period.

    • Operating cash flow was approximately $8.5 million, marking the 11th consecutive quarter of positive operating cash flow.

    Concerns

    2

    • Foreign exchange headwinds impacted operating expenses by approximately $1.9 million.

    • Overall apparel market is not doing great, with long-tail customers declining.

    Guidance & targets

    6
    CategoryTargetConfidence
    Revenue
    $55 million and $60 million
    high materiality
    High
    Adjusted EBITDA Margin
    between breakeven and 3%
    medium materiality
    High
    Revenue Growth
    approximately 15% higher than the first half of the year
    high materiality
    High
    Revenue Growth
    high single-digit revenue growth
    high materiality
    High
    Profitability
    continuing to improve profitability
    medium materiality
    High
    Operating Cash Flow
    generate positive operating cash flow
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Services
    Benefiting from higher customer activity and continued expansion in the utilization of installed systems.
    		—34.7%——
    Product
    Benefiting from higher customer activity and continued expansion in the utilization of installed systems.
    		—4.3%——

    Operational metrics

    16
    Annual recurring revenue (ARR)
    $33.8 million79% year-over-year growth
    Q2 FY26

    ARR represents only the next 12 months of minimum commitments under our AIC agreements.

    All-Inclusive Click (AIC) revenue
    $6.5 million112% year-over-year
    Q2 FY26

    The model continues to drive higher system utilization while closely aligning our economics with our customers' success.

    Total Contract Value (TCV) for AIC agreements
    $142 million
    Q2 FY26

    Providing strong visibility into future revenues.

    Trailing 12-month impressions growth
    15%
    TTM Q2 FY26

    Reflecting higher production volume across our installed base.

    System sales from new customers
    Approximately 40%
    Q2 FY26

    Demonstrating our continued ability to expand the market while growing alongside existing customers.

    System sales to traditional screen printers
    Approximately 60%
    Q2 FY26

    Providing clear evidence of the momentum we are seeing in the transition from analog to digital production.

    Revenue recurring or highly recurring
    Approximately 80%
    Q2 FY26

    This fundamentally changes our business model, making it more resilient and giving us greater visibility into the future revenues.

    Non-GAAP gross margin
    47.4%improvement of 110 basis points compared with the prior year period
    Q2 FY26

    Reflecting higher customer activity, increased platform utilization and the continued evolution of our revenue mix.

    Non-GAAP operating expenses
    $28.8 millionincrease of $2.1 million year-over-year
    Q2 FY26
    Adjusted EBITDA
    $0.3 millioncompared with a loss of $1.2 million in the second quarter of 2025
    Q2 FY26

    Exceeding the upper end of our guidance range.

    Adjusted EBITDA margin
    0.6%improved 290 basis points year-over-year
    Q2 FY26

    Exceeding the upper end of our guidance range.

    Cash, bank deposits and marketable securities
    $451 million
    Q2 FY26

    Our balance sheet remains a significant strategic asset.

    Share repurchase amount
    $5.4 million
    Q2 FY26

    Under our share repurchase program.

    Shares repurchased since program began
    9.5 million shares
    Since 2023

    Since the program began in 2023.

    Remaining share repurchase authorization
    $60 million
    Q2 FY26

    Under the current authorization.

    System sales split (CapEx vs AIC)
    50% CapEx / 50% AIC
    Q2 FY26

    It changed between one quarter to another.

    Industry KPIs

    3
    MetricValueDetails
    Tariff cost impact$830,000USD
    Parts aftermarket business34.7%%
    Order backlog order intake by segment—

    Product announcements

    2
    ProductTypeDetails
    Presto MAX PLUSlaunch
    Additional roll-to-roll technologyroadmap

    Deals & partnerships

    5
    Print FactoryStrengthens platform strategy with software capabilities.

    Acquisition closed in Q2 FY26.

    Jerry LeighInvestment in 2 Apollo systems and 2 Atlas MAX platforms.

    One of the leading screen printers in the U.S. and a new Kornit customer.

    PrintfulAdded 2 Apollo systems to their existing large fleet of Atlas MAX systems.

    One of Kornit's largest and most strategic global customers.

    Shirt MonkeyExpanded from Atlas MAX to both Apollo and Atlas MATRIX through the All-Inclusive Click model.

    One of the U.K.'s leading print-on-demand providers.

    SNQSExpanded from Atlas MAX to Apollo within 1 year to support higher volume screen replacement.

    A leading screen printer in India.

    Risks & headwinds

    4
    Foreign exchange headwindsQ2 FY26

    $1.9 million impact on operating expenses

    Mitigation: Not explicitly stated, but managed within financial discipline.

    Labor shortagesCurrent

    very difficult today to retain and to find, but it's also expensive

    Mitigation: Automation offered by Kornit's technology.

    Inventory riskCurrent

    continue to pressure traditional manufacturing models

    Mitigation: Digital manufacturing offers reduced inventory risk.

    Overall apparel market softnessCurrent

    not doing great, long-tail customers declining

    Mitigation: Kornit's focus on digital transformation and gaining market share within the shifting market.

    What to watch in Q3 FY26

    5

    H2 FY26 Revenue Growth

    H2 FY26
    CurrentH1 FY26 revenue
    Targetapproximately 15% higher than the first half of the year

    Why it matters

    This is a key guidance metric for the second half of the fiscal year, indicating the company's growth trajectory.

    Based on what we see today, we expect revenue in the second half of 2026 to be approximately 15% higher than the first half of the year, positioning us to deliver a high single-digit revenue growth for the full year while continuing to improve profitability and generate positive operating cash flow.

    Q&A highlights

    6

    What has driven the recent acceleration in performance, and what is fundamentally different about Kornit today compared to a few years ago?

    Ronen highlighted the success of strategies implemented 2-2.5 years ago, leading to revenue growth and significant ARR expansion. He emphasized the shift to a recurring business model (80% of revenue), new technology (Apollo, MATRIX, PrintFactory, AI), financial discipline (11 consecutive quarters of positive operating cash flow), and expansion into the screen printing market (60% of system sales to this market).

    “Overall, we are totally different company as of today and we are very happy with the changes that we have done.”

    asked by Greg Palm · answered by Ronen Samuel

    2 min read7 chapters

    Detailed Narrative

    01

    Transformation and Strategic Progress

    Kornit Digital is undergoing a significant transformation, with its strategy implemented 2-2.5 years ago now delivering results. The company is shifting towards a more resilient, recurring business model, with 80% of revenue now recurring or highly recurring. This provides stronger visibility and predictability, supported by 11 consecutive quarters of positive operating cash flow.

    02

    Shift to Digital Manufacturing

    The industry is experiencing a structural shift from analog to digital production, driven by demand for greater flexibility, shorter production runs, faster response times, and nearshore manufacturing. Traditional screen printers are increasingly adopting digital solutions, with approximately 60% of system sales in Q2 and H1 FY26 going to this market, indicating a significant market penetration.

    03

    All-Inclusive Click (AIC) Model Success

    The AIC model is a key driver of growth, increasing long-term customer commitments, typically 5-year agreements. It lowers upfront investment for customers and aligns Kornit's economics with customer success, leading to higher system utilization and deeper platform adoption. The model has contributed to a total contract value of approximately $142 million, providing strong future revenue visibility.

    04

    Technology and Platform Evolution

    Kornit has invested in industrial production systems like Apollo, Atlas MATRIX, and Presto MAX PLUS, expanding into software, AI, and automation, including the recent PrintFactory acquisition. The company now positions itself as a manufacturing platform, offering integrated solutions rather than just printing systems, enabling customers to build smarter, more profitable businesses.

    05

    Global Screen Printer Adoption

    The adoption of Kornit's digital technology by traditional screen printers is a global phenomenon, observed in the U.S., Europe, India (e.g., SNQS), Sri Lanka, and Japan. This widespread adoption is driven by market pressures🌐 such as labor shortages, the need for automation, and the competitive total cost of ownership offered by digital solutions for longer runs.

    06

    Roll-to-Roll Business Momentum

    After a slow 2025, the roll-to-roll business is gaining momentum with a focus on unique applications like footwear, home decor, and technical markets. The recent release of Presto MAX PLUS and upcoming additional technology announcements are expected to drive contributions to total revenue in H2 FY26 and build a strong pipeline for 2027.

    07

    Capital Allocation and Financial Discipline

    Kornit maintains a disciplined capital allocation strategy, balancing investments in the AIC program, inventory, product innovation, and targeted acquisitions with returning capital to shareholders. The company repurchased $5.4 million in shares during Q2, with $60 million remaining under the current authorization, while maintaining a strong cash balance of $451 million.

    AI-generated summary of the company’s earnings call. Not investment advice.