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July 6, 2022, 7:39 a.m. EDT

In a worrisome sign for e-commerce, Kornit Digital slashes forecast and stock plunges 20%

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By Jeremy C. Owens

In a sign of continuing worries about e-commerce activity, Kornit Digital Ltd. slashed its forecast for the second quarter Tuesday and suggested the third quarter isn’t expected to be much better, sending shares into a spiral in after-hours trading.

Kornit Digital /zigman2/quotes/201434077/composite KRNT +0.11% executives announced that they now expect revenue of $56.4 million to $59.4 million in the second quarter, after previously projecting $85 million to $95 million in sales for the period. The Israeli company — which markets itself as “the operating system for fashion” and is most well-known for selling digital printers that can make clothing on-demand — produced $81.7 million in sales in the same quarter a year ago, suggesting a revenue decline of more than 27%.

“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,” Chief Executive Ronen Samuel said in a statement.

Executives provided an early third-quarter forecast that called for sales “to be at or above second-quarter revenues.” Analysts on average expected third-quarter revenue to top $100 million, according to FactSet, which would have been a first for the company.

Online shopping, which spiked during the COVID-19 pandemic, has slowed down as shops have opened back up, which has crimped previously high-flying companies that service the sector, such as Shopify Inc. /zigman2/quotes/209033712/composite SHOP -0.47% . Kornit has deep ties with Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.44% , which is cutting costs after running into a growth slowdown of its own — Amazon accounted for 27% of Kornit’s revenue in 2021, according to Kornit’s annual report to the Securities and Exchange Commission.

“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 in the announcement.

Kornit shares dove 20% in after-hours trading following the announcement. The stock has already shed nearly 80% of its value this year, falling 79.3% and chopping the company’s market valuation from a peak of more than $8 billion in late 2021 to less than $1.6 billion as of Tuesday’s close.

/zigman2/quotes/201434077/composite
US : U.S.: Nasdaq
$ 35.51
+0.04 +0.11%
Volume: 1.19M
Aug. 11, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.77 billion
Rev. per Employee
$336,288
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/zigman2/quotes/209033712/composite
US : U.S.: NYSE
$ 40.42
-0.19 -0.47%
Volume: 55.57M
Aug. 11, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$51.51 billion
Rev. per Employee
N/A
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 140.64
-2.05 -1.44%
Volume: 44.87M
Aug. 11, 2022 4:00p
P/E Ratio
125.86
Dividend Yield
N/A
Market Cap
$1453.66 billion
Rev. per Employee
$302,178
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