Highlights

-- Second quarter 2018 revenues increased 25.5% to $35.9 million, net of $1.5 million attributed to the non-cash impact of warrants, compared to $28.6 million, net of $1.4 million attributed to the non-cash impact of warrants in the prior year period. -- Second quarter 2018 GAAP operating income of $1.6 million, or 4.5% of revenues; non-GAAP operating income of $3.2 million, or 8.8% of revenue. -- Second quarter 2018 GAAP net income of $1.8 million, or $0.05 per diluted share; non-GAAP net income of $3.2 million, or $0.09 per diluted share. -- Second quarter warrants impact on Gross margin was 203 BPS, Operating margin 364 BPS and 363 BPS on the Net margin. -- Previously announced management transition completed as Ronen Samuel assumes role of Chief Executive Officer.

ROSH-HA`AYIN, Israel, Aug. 06, 2018 (GLOBE NEWSWIRE) -- Kornit Digital Ltd. (NASDAQ: KRNT), a leading provider of digital printing solutions for the global printed textile industry, today reported results for the second quarter ended June 30, 2018.

Non-GAAP figures in today’s press release are presented using a different methodology compared to previous periods as a result of comments from the US Securities and Exchange Commission. These changes also impact the Company's guidance methodology. Details of which can be found at the end of today's press release.

Kornit reported second quarter 2018 revenue increased 25.5% to $35.9 million, net of $1.5 million attributed to the non-cash impact of warrants, compared to the prior year period of $28.6 million, net of $1.4 million attributed to the non-cash impact of warrants. Higher revenue in the quarter was attributable to widespread growth across geographies and customers, and the delivery of systems on a large customer program.

GAAP operating income increased to $1.6 million, compared to the prior year period operating loss of $62 thousand. Non-GAAP operating income increased 138.3% to $3.2 million, or 8.8% of revenues, compared to the prior year period of $1.3 million or 4.7% of sales. Increased operating income was the result of increased sales, gross margin expansion, and higher operating leverage as a result of higher sales.

Ronen Samuel, Kornit Digital’s Chief Executive Officer, commented, “I am very pleased with our results for the quarter which included a robust top line growth rate of 25.5% with revenues and operating margins coming in at above the high end of our guidance. These achievements were driven by strong demand for our market leading technology. The recent introduction of the Avalanche HD 6 System with its significant reduction in cost per print, improved hand-feel and improved print quality combined with the continued shift towards print on demand have created excellent business momentum. The retail shift towards shorter run production and the benefits offered by the HD6 are driving migration of more screen printers to our digital solution. To that end, we are well positioned to capture increased growth opportunities as our addressable market expands. Having spent the last 7 weeks on the road meeting customers and employees in all our regions, I was pleased to see the strong business momentum enjoyed by existing and new customers as well as the level of trust and depth of relations our employees have built over the years.”

Second Quarter Results of Operations Kornit reported second quarter revenues, net of the non-cash impact of warrants, of $35.9 million, compared with the prior-year period level of $28.6 million. The total non-cash impact of the warrants deducted from revenues was $1.5 million in the second quarter of 2018 and $1.4 million in the second quarter of 2017.

On a GAAP basis, second quarter gross profit was $17.4 million, compared with $13.2 million, in the prior-year period. Non-GAAP gross profit in the second quarter was $17.6 million, or 49.2% gross margin compared with $13.3 million, or 46.6% gross margin in the second quarter of 2017. Higher gross margins primarily reflected a favorable product mix compared to the prior year period.

On a GAAP basis, total operating expenses in the second quarter were $15.8 million, compared to $13.2 million in the prior year period. Non-GAAP operating expenses in the second quarter increased to $14.5 million, or 40.3% of revenues, compared to $12.0 million, or 42% of revenues in the prior year period.

Second quarter GAAP research and development expenses were $5.3 million, compared to the prior-year period of $4.6 million. Second quarter non-GAAP research and development expenses were $5.1 million, or 14.2% of revenues, compared to $4.4 million, or 15.3% of revenues in the prior-year period.

Second quarter GAAP selling and marketing expenses were $6.4 million, compared to the prior-year period of $5.3 million. Second quarter non-GAAP selling and marketing expenses were $5.9 million, or 16.3% of revenues, compared to $4.8 million, or 16.8% of revenues in the prior-year period.

Second quarter GAAP general and administrative expenses were $4.0 million, compared to the prior-year period of $3.3 million. Second quarter non-GAAP general and administrative expenses were $3.5 million, or 9.8% of revenues, compared to $2.8 million, or 9.9% of revenues in the prior-year period.

On a GAAP basis, second quarter operating income was $1.6 million, compared to the prior year period operating loss of $62 thousand. Non-GAAP operating income in the second quarter increased to $3.2 million, compared to $1.3 million in the prior year period. As a percent of revenues, Non-GAAP operating margin for the second quarter was 8.8% of revenues, compared with 4.7% of revenues in the second quarter of 2017.

On a GAAP basis, the Company reported net income of $1.8 million, or $0.05 per diluted share, compared to a net income of $0.2 million, in the second quarter of 2017. Non-GAAP net income for the second quarter of 2018 was $3.2 million, or $0.09 per diluted share, compared to net income of $1.5 million, or $0.04 per diluted share in the prior year period.

Balance Sheet and Cash FlowAt June 30, 2018, the Company had cash and marketable securities of $102.7 million, and no long-term debt. Cash flow used in operations for the second quarter of 2018 was $4.9 million, attributable to operation and reduction of inventory.

Third Quarter 2018 Guidance The Company will discuss the details of its guidance live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com.

Conference Call InformationThe Company will host a conference call on the today at 5:00 p.m. ET, or 0:00 a.m. Israel time, to discuss the results, followed by a question and answer session for the investment community. A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-866-548-4713 or +1-323-794-2093. The toll-free Israeli number is 1 80 921 2883. The confirmation code is 8206507.

To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 8206507. The telephonic replay will be available beginning at 8:00 p.m. ET on Monday, August 6, 2018, and will last through 11:59 p.m. ET on Monday, August 20, 2018. The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

Forward Looking StatementsCertain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continue," "believes," "should," "intended," "guidance," "preliminary," "future," "planned," or other words. These forward-looking statements include, but are not limited to, statements relating to the company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: our success in developing, introducing and selling new or improved products and product enhancements, our ability to consummate sales to large accounts with multi-system delivery plans, our ability to fill orders for our systems, our ability to continue to increase sales of our systems and ink and consumables, our ability to leverage our global infrastructure build-out, the development of the market for digital textile printing, availability of alternative ink, competition, sales concentration, changes to our relationships with suppliers, our success in marketing, and those factors referred to under "Risk Factors" in the company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 30, 2018. Any forward-looking statements in this press release are made as of the date hereof, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Discussion DisclosureNon-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, amortization of acquired intangible assets and restructuring expenses and their tax effect. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

About KornitKornit Digital (NASDAQ:KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries. Kornit delivers complete solutions, including digital printing systems, inks, consumables, software and after-sales support. Leading the digital direct-to-garment printing market with its exclusive eco-friendly NeoPigment printing process, Kornit caters directly to the changing needs of the textile printing value chain. Kornit’s technology enables innovative business models based on web-to-print, on-demand and mass customization concepts. With its immense experience in the direct-to-garment market, Kornit also offers a revolutionary approach to the roll-to-roll textile printing industry: digitally printing with a single ink set onto multiple types of fabric with no additional finishing processes. Founded in 2003, Kornit Digital is a global company, headquartered in Israel with offices in the USA, Europe and Asia Pacific, and serves customers in more than 100 countries worldwide.

KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) Six Months Ended Three Months Ended June 30, June 30, ---------------------------- -------------------- 2018 2017 2018 2017 ------------ -------------- -------- ---------- (Unaudited) (Unaudited) ---------------------------- -------------------- Revenues Products $ 58,850 $ 50,406 $ 32,092 $ 25,776 Services 8,146 5,285 3,784 2,813 Total revenues 66,996 55,691 35,876 28,589 Cost of revenues Products 25,232 24,075 14,193 11,992 Services 8,947 6,556 4,255 3,432 - ---------- - ---------- - - ------ - ------ - Total cost of revenues 34,179 30,631 18,448 15,424 Gross profit 32,817 25,060 17,428 13,165 - ---------- - ---------- - - ------ - ------ - Operating expenses: Research and development 10,589 9,342 5,317 4,562 Selling and marketing 12,201 10,829 6,352 5,271 General and administrative 8,054 6,138 4,026 3,301 Restructuring expenses 266 93 118 93 - ---------- - ---------- - - ------ - ------ - Total operating expenses 31,110 26,402 15,813 13,227 Operating income (loss) 1,707 (1,342 ) 1,615 (62 ) Financial income, net 828 93 295 389 - ---------- - ---------- - - ------ - ------ - Income (loss) before taxes on income 2,535 (1,249 ) 1,910 327 Taxes on income 196 273 136 112 - ---------- - ---------- - - ------ - ------ - Net income (loss) 2,339 (1,522 ) 1,774 215 - ---------- - ---------- - - ------ - ------ - Basic net income (loss) per share $ 0.07 $ (0.05 ) $ 0.05 $ 0.01 - ---------- - ---------- - - ------ - ------ - Weighted average number of shares used in computing basic net income (loss) per share 34,295,752 33,151,633 34,321,99 33,658,867 5 - ---------- - ---------- - -------- ---------- Diluted net income (loss) per share $ 0.07 $ (0.05 ) $ 0.05 $ 0.01 - ---------- - ---------- - - ------ - ------ - Weighted average number of shares used in computing diluted net income (loss) per share 34,885,393 33,151,633 35,047,81 34,719,784 7 - ---------- - ---------- - -------- ----------

KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAPCONSOLIDATEDSTATEMENTSOFOPERATIONS (U.S. dollars in thousands, except share and per share data) Six Months Ended Three Months Ended June 30, June 30, ------------------------------ ------------------------------ ` 2018 2017 2018 2017 -------------- -------------- -------------- -------------- (Unaudited) (Unaudited) ------------------------------ ------------------------------ GAAP cost of revenues $ 34,179 $ 30,631 $ 18,448 $ 15,424 Share-based compensation (1) (341 ) (287 ) (193 ) (143 ) Intangible assets amortization (50 ) (50 ) (25 ) (25 ) (2) Non-GAAP cost of revenues $ 33,788 $ 30,294 $ 18,230 $ 15,256 - ---------- - - ---------- - - ---------- - - ---------- - GAAP gross profit $ 32,817 $ 25,060 $ 17,428 $ 13,165 Gross profit adjustments 391 337 218 168 Non-GAAP gross profit $ 33,208 $ 25,397 $ 17,646 $ 13,333 - ---------- - - ---------- - - ---------- - - ---------- - GAAP operating expenses $ 31,110 $ 26,402 $ 15,813 $ 13,227 Share-based compensation (1) (2,039 ) (1,661 ) (982 ) (867 ) Intangible assets amortization (482 ) (677 ) (241 ) (266 ) (2) Restructuring expenses (266 ) (93 ) (118 ) (93 ) Non-GAAP operating expenses $ 28,323 $ 23,971 $ 14,472 $ 12,001 - ---------- - - ---------- - - ---------- - - ---------- - GAAP Taxes on income $ 196 $ 273 $ 136 $ 112 Tax effect on to the above 181 306 93 122 non-GAAP adjustments Non-GAAP Taxes on income $ 377 $ 579 $ 229 $ 234 - ---------- - - ---------- - - ---------- - - ---------- - GAAP net income (loss) $ 2,339 $ (1,522 ) $ 1,774 $ 215 Share-based compensation (1) 2,380 1,948 1,175 1,010 Intangible assets amortization 532 727 266 291 (2) Restructuring expenses 266 93 118 93 Tax effect on to the above (181 ) (306 ) (93 ) (122 ) non-GAAP adjustments Non-GAAP net income (*) $ 5,336 $ 940 $ 3,240 $ 1,487 - ---------- - - ---------- - - ---------- - - ---------- - GAAP diluted earning (loss) $ 0.07 $ (0.05 ) $ 0.05 $ 0.01 per share - ---------- - - ---------- - - ---------- - - ---------- - Non-GAAP diluted earning per $ 0.15 $ 0.03 $ 0.09 $ 0.04 share - ---------- - - ---------- - - ---------- - - ---------- - Weighted average number of shares Weighted average number of shares used in computing diluted GAAP net earning (loss) per 34,885,393 33,151,633 35,047,817 34,719,784 share - ---------- - - ---------- - - ---------- - - ---------- - Weighted average number of shares used in computing diluted non GAAP net earning per share 35,176,284 34,702,588 35,346,599 35,235,330 - ---------- - - ---------- - - ---------- - - ---------- - (1) Share-based compensation Cost of product 189 204 104 101 Cost of service 152 83 89 42 Research and development 402 297 228 180 Selling and marketing 476 430 248 210 General and administrative 1,161 934 506 477 2,380 1,948 1,175 1,010 - ---------- - - ---------- - - ---------- - - ---------- - (2) Intangible assets amortization Cost of product 50 50 25 25 Selling and marketing 482 677 241 266 532 727 266 291 - ---------- - - ---------- - - ---------- - - ---------- - Non-GAAP net income has been updated from prior reports (a) to remove the adjustment for (*) the non-cash impact of the warrants deducted from revenues, and (b) to reflect the tax effect of the non-GAAP adjustments.

KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATEDBALANCESHEETS (U.S. dollars in thousands) June 30, December 31, 2018 2017 --------- --------- (Unaudited ) --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 17,223 $ 18,629 Short-term bank deposit 7,500 4,500 Marketable securities 10,657 5,537 Trade receivables, net 33,162 23,245 Inventory 25,123 34,855 Other accounts receivable and prepaid expenses 3,153 2,661 Total current assets 96,818 89,427 - ------- - ------- LONG-TERM ASSETS: Marketable securities 67,341 68,835 Deposits and other long-term assets 722 627 Severance pay fund 537 523 Deferred tax asset 805 564 Property and equipment, net 10,994 11,230 Intangible assets, net 1,543 2,076 Goodwill 5,092 5,092 - ------- - ------- Total long-term assets 87,034 88,947 - ------- - ------- Total assets $ 183,852 $ 178,374 - ------- - ------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 10,014 $ 12,439 Employees and payroll accruals 7,081 6,338 Deferred revenues and advances from customers 2,096 1,697 Other payables and accrued expenses 4,740 5,046 Total current liabilities 23,931 25,520 - ------- - ------- LONG-TERM LIABILITIES: Accrued severance pay 1,355 1,232 Payment obligation related to acquisition - 334 Other long-term liabilities 764 589 Total long-term liabilities 2,119 2,155 - ------- - ------- SHAREHOLDERS' EQUITY 157,802 150,699 - ------- - ------- Total liabilities and shareholders' equity $ 183,852 $ 178,374 - ------- - -------

KORNIT DIGITAL LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) Six Months Ended Three Months Ended June 30, June 30, ------------------------ ----------------------- 2018 2017 2018 2017 ----------- ----------- ---------- ----------- (Unaudited) (Unaudited) ------------------------ ----------------------- Cash flows from operating activities: Net Income (loss) $ 2,339 $ (1,522 ) $ 1,774 $ 215 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,367 2,427 1,200 1,154 Fair value of warrants deducted from revenues 1,533 2,353 1,491 1,415 Share-based compensation 2,380 1,948 1,175 1,010 Amortization of premium on marketable securities 241 277 124 145 Realized gain on sale of marketable securities - (29 ) - (29 ) Decrease (increase) in trade receivables (10,141 ) 2,894 (7,871 ) (4,332 ) Decrease (increase) in other receivables and prepaid (522 ) 747 (939 ) 1,016 expenses Decrease (increase) in inventory 9,044 (8,652 ) 4,129 (2,716 ) Decrease (increase) in deferred taxes, net (219 ) (183 ) 90 (19 ) Decrease (increase) in other long term assets (97 ) 194 (52 ) 45 Increase (decrease) in trade payables (2,192 ) (2,060 ) 2,954 (1,851 ) Increase (decrease) in employees and payroll accruals 759 (833 ) 417 (1,087 ) Increase (decrease) in deferred revenues and advances from 412 (692 ) 108 390 customers Increase (decrease) in other payables and accrued expenses 203 122 (684 ) (755 ) Increase (decrease) in accrued severance pay, net 109 28 189 (4 ) Increase in other long term liabilities 175 369 141 133 Loss from sale of property and Equipment - 29 - 29 Foreign currency translation loss on inter company balances 293 (595 ) 632 (482 ) with foreign subsidiaries Net cash provided by (used in) operating activities 6,684 (3,178 ) 4,878 (5,723 ) - ------- - - ------- - - ------ - - ------- - Cash flows from investing activities: Purchase of property and equipment (1,244 ) (3,431 ) (762 ) (2,536 ) Investment in bank deposits (3,000 ) - - - Proceeds from sale of marketable securities - 38,312 - 38,312 Proceeds from maturity of marketable securities 2,150 6,740 1,650 2,000 Purchase of marketable securities (6,130 ) (70,648 ) (3,781 ) (22,520 ) Net cash provided by (used in) investing activities (8,224 ) (29,027 ) (2,893 ) 15,256 - ------- - - ------- - - ------ - - ------- - Cash flows from financing activities: Proceeds from follow on offering - 36,058 - 428 Exercise of employee stock options 1,067 1,347 536 872 Payment of deferred issuance cost - (981 ) - (981 ) Payment of contingent consideration (900 ) (1,400 ) - - Net cash provided by financing activities 167 35,024 536 319 - ------- - - ------- - - ------ - - ------- - Foreign currency translation adjustments on cash and cash (33 ) 99 (80 ) 85 equivalents Increase (decrease) in cash and cash equivalents (1,373 ) 2,819 2,521 9,852 Cash and cash equivalents at the beginning of the period 18,629 22,789 14,782 15,770 Cash and cash equivalents at the end of the period 17,223 25,707 17,223 25,707 - ------- - - ------- - - ------ - - ------- - Non-cash investing and financing activities: Purchase of property and equipment on credit 200 863 200 863 - ------- - - ------- - - ------ - - ------- - Inventory transferred to be used as property and equipment 591 167 - 167 - ------- - - ------- - - ------ - - ------- - Receipt on account of shares 20 - 20 - - ------- - - ------- - - ------ - - ------- -

Investor Contact:Michael Callahan, ICR(203) 682-8311Michael.Callahan@icrinc.com