IPO Report: Kornit Digital Ltd. (KRNT)

Francis Gaskins  |

Kornit Digital Ltd. (KRNT) focuses on the rapidly growing high throughput direct-to-garment, or DTG, segment of the printed textile industry.

KRNT is one of two companies scheduled to IPO this week. The full IPO calendar is available at IPOpremium.

KRNT planneda $99 million IPO on Nasdaq. The market capitalization of $402 million at a price range midpoint of $14. The IPO is scheduled for Thursday, April 2, 2015. The company is based in Rosh Ha’Ayin, Israel,

The manager and joint-managers are Barclays and Citigroup. The co-managers are Blair/ Stifel, Canaccord Genuity, and Needham. SEC fililngs

Kornit Digital IPO Conclusion


Neutral minus

P/E 134 seems high, as is price-to-sales of 6.1

Rev +26% for '13; +34% for  '14

Gross profit 44% up from 43%, low  for a tech company

Price-to-book 3.9

Kornit Digital IPO Valuation


Valuation Ratios

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% offered in IPO

Kornit Digital Ltd. (KRNT)








Kornit Digital Business

KRNT focuses on the rapidly growing high throughput direct-to-garment, or DTG, segment of the printed textile industry.

Solutions include proprietary digital printing systems, ink and other consumables, associated software and value added services that allow for large scale printing of short runs of complex images and designs directly on finished garments

Kornit Digital Industry

The global printed textile industry can be categorized into clothing, household, technical and displays.

KRNT estimates that the vast majority of the approximately 33 billion square meters of projected annual output of the global printed textile industry in 2015 will be produced using analog print methods, specifically screen printing, carousels for printing on garments and rotary screen printers for printing on rolls of fabric.

KRNT's assessment is based on data provided in a 2014 report by Smithers Pira, a provider of market intelligence on the printed textile industry.

The Pira report provides digital printing output estimates for 2014 and projects the analog printing output for 2015 as well as the annual digital textile printing growth rate through 2019, which KRNT used to calculate a projected digital output of approximately 780 million square meters for 2015, representing approximately 2% of total projected annual global printed textile output in 2015.

According to the Pira report, digital textile printing output is forecasted to grow at approximately 20% per year globally for the foreseeable future.

Within digital textile printing, clothing applications represent the greatest amount of digital printed textile output and are projected to grow at a faster rate than household, technical and display applications.

Kornit Digital Distribution

KRNT sells the majority of its solutions through a global network of approximately 50 independent distributors and value added resellers, referred to as channel partners.

Channel partners, in turn, sell the solutions they purchase from KRNT to customers directly or, in some cases, act as facilitators of KRNT's direct sales process.

Independent distributors are generally responsible for identifying potential leads, working with KRNT's  sales force to convert leads into buying customers and maintaining relationships with customers.

Maintenance and support is performed either by KRNT's own service organization or by service engineers employed by distributors.

Kornit Digital Growth Plan

Most of the sales in recent years have been to high throughput manufacturers, which KRNT believes will continue to grow in the next several years.

At the same time, KRNT is seeking to expand its presence into the mass production market with the commercial launch of the Vulcan system, targeted to occur within the next 24 months.

Furthermore, KRNT believes that its advanced technology and years of experience in digital textile printing will enable the company to penetrate the R2R market after the commercial launch of the  Allegro system, which is targeted within the next 18 months.

Kornit Digital Intellectual Property

As of December 31, 2014, KRNT owned seven issued patents in the United States and five provisional or pending U.S. patent applications.

KRNT also had 10 patents issued in non-U.S. jurisdictions, and two pending Patent Cooperation Treaty patent applications, which are counterparts of the U.S. patent applications.

The non-U.S. jurisdictions in which KRNT has issued patents are China, the European Union, Hong Kong and Japan. The principal granted patents relate to our wet-on-wet printing methodology, ink formulations, printing processes and related methods and systems, with expiration dates ranging from 2020 to 2035.

Kornit Digital Competition

Textile printing is most commonly conducted using automated carousel screen printing. In recent years, manufacturers of digital printers have increased their penetration of this market.

As such, KRNT competes with companies that manufacture automated carousel screen printers as well as those that manufacture digital printers.

KRNT's principal competitor in the high throughput digital DTG (direct-to-garmet) market is Aeoon Technologies GmbH.

KRNT also faces competition from Brother International Corporation, Seiko Epson Corporation and a number of smaller competitors with respect to the entry level systems.
KRNT technologies allow the company to offer a wide spectrum of digital textile printing systems of varying features, capacities and price points.

Kornit Digital 5% shareholders pre-IPO

Fortissimo Capital Fund II (Israel), L.P. 70%

Gavriel Weinshtock 6.2%

Yossef Nuriel 5.9%

Yahel (Nur Group) Holdings Ltd. 5.1%

Kornit Digital Dividends

No dividends planned

Kornit Digital IPO Use of proceeds

KRNT expects to net $90 million from its IPO.

The principal purposes of the IPO  are to obtain additional capital, to increase financial flexibility and visibility in the marketplace, to create a public market for ordinary shares and to facilitate future access to the public equity markets.

Disclaimer: This JCAP IPO report is based on a reading and analysis of MXPT’s S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
KRNT Kornit Digital Ltd. 23.22 0.22 0.93 105,970 Trade



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