Kornit beat its guidance and its GAAP loss grew by half. Sixty per cent of the systems it sold went to screen printers

What was reported

Kornit makes direct-to-garment and direct-to-fabric systems and the inks and software that run them. It is Israeli, headquartered at Rosh-Ha’ayin, and trades on Nasdaq as KRNT, which is why its numbers are public in this much detail while most of the equipment suppliers an Australian printer deals with are private and disclose nothing.

Revenue grew about 11 per cent. Annual recurring revenue grew 79 per cent, which the company reports alongside a 112 per cent rise in what it calls All-Inclusive Click revenue, a consumption-based model where the printer pays per impression. Chief executive Ronen Samuel said approximately 80% of our revenues being recurring or highly recurring in nature gives the business greater visibility. Operating cash flow was positive for an eleventh consecutive quarter.

None of that is spin. A supplier moving from selling boxes to selling consumption is a genuinely different and generally sturdier business, and the recurring revenue line is the evidence for it.

Two sets of numbers, and what the second one leaves out

The gap between a GAAP net loss of $11.2 million and non-GAAP net income of $1.7 million is $12.9 million in a single quarter, so it is worth knowing what sits in it. The company states it plainly. The non-GAAP measures exclude share-based compensation expenses; amortization of intangible assets; restructuring expenses; foreign exchange differences associated with ASC 842; and M&A and class action-related legal fees, and adjusted EBITDA further excludes depreciation.

This is ordinary, legal and disclosed, and most US-listed technology companies do it. The stated purpose is to show performance exclusive of non-cash charges and other items that are considered by management to be outside of the Company’s core operating results, and for share-based compensation and amortisation that argument holds up: they are real costs but they are not cash going out the door this quarter.

The items worth pausing on are the ones that are neither non-cash nor obviously one-off. Restructuring expenses have been excluded while the company describes itself as mid-transformation, and legal fees relating to M&A and a class action are excluded too. The release does not break the $12.9 million down into those components, so we cannot tell you how much of it is which, and we are not going to guess. What can be said is that the adjustments are disclosed, the direction of the adjustment is always favourable, and a reader who takes only the headline lines away has been told the more flattering of two true stories.

One more line deserves attention because it is explicitly temporary. Both gross margins were supported by a net tariff-related benefit of approximately $830,000, driven by a $2 million tariff refund during the quarter. A refund is not trading performance, and on $55.3 million of revenue an $830,000 benefit is about 1.5 percentage points of margin.

The guidance has no GAAP version, and the company says why

For the third quarter Kornit expects revenue of $55 million to $60 million and an adjusted EBITDA margin between breakeven and 3%. There is no corresponding GAAP forecast, and the release is upfront about it: the company has not provided guidance for expected GAAP net loss margin or a reconciliation, because that information is not available to us without unreasonable effort or with reasonable certainty.

That is a permitted and common position. It also means the forward-looking number the market is handed is the adjusted one only, and the measure that has been getting worse is the one not forecast.

The number that matters most in Australia

Buried in the same release is the figure with the clearest read-across to a workshop here. Kornit says approximately 60 per cent of systems sold in both the second quarter and the first half of 2026 went to traditional screen printers, which it describes as evidence of the growing momentum behind the screen market’s transition from analog to digital production. Trailing twelve-month impressions were up 15 per cent.

Treat the framing as the company's and the proportion as its own disclosure, because both are. But the proportion is the kind of number a vendor has little reason to invent and some reason to find uncomfortable: it says most of its growth is conversion of existing analog shops rather than new entrants or expansion by existing digital customers. For an Australian screen printer weighing whether the switch is a trend or a sales pitch, that is the most useful sentence in the document, and it is one the company reports about its own customers rather than about the market at large.

Our view, and what we would check before signing

Our reading is that this is a business genuinely improving on the measures that describe durability, and not yet profitable on the measure that describes profit. Recurring revenue at 79 per cent growth, eleven straight quarters of positive operating cash flow and rising gross margin are real and matter more to a buyer than a quarterly loss does, because the question a buyer is actually asking is whether the supplier will still be there to service the machine and supply the ink in five years. Cash generation answers that better than net income.

What we would not do is read the headline bullets as the whole picture. The GAAP loss widened by nearly half year on year while revenue grew about a tenth, operating expenses grew faster than revenue, part of the margin improvement was a tariff refund that will not repeat, and the only forward guidance offered is on the adjusted measure. Those facts are all in the same release as the good news, which is to the company's credit, and they are further down it, which is why this piece exists.

If you are quoting a system: ask what happens to All-Inclusive Click pricing at renewal, since a consumption model shifts cost from a one-off capital decision to an ongoing one that scales with how well your shop does. That is the trade the recurring-revenue line describes, viewed from the other side of the invoice.

Sources

1. Kornit Digital Ltd, Kornit Digital Reports Second Quarter 2026 Results, published 12 August 2026 (read in full 29 August 2026): every figure in the table above and in the text, including total revenues, GAAP and non-GAAP gross margins and operating expenses, GAAP net loss and per-share figures, non-GAAP net income, adjusted EBITDA and margin, annual recurring revenue, the 112 per cent AIC growth and 15 per cent trailing twelve-month impressions; the quoted chief executive statement on recurring revenue; the quoted screen-market transition language and the approximately 60 per cent of systems sold figure; the quoted tariff-related benefit and $2 million refund; the third quarter revenue and adjusted EBITDA margin guidance and the quoted explanation for providing no GAAP reconciliation; and the quoted list of items excluded from the non-GAAP measures and the quoted statement of their purpose.
2. Kornit Digital Ltd, investor relations press release index (read 29 August 2026): the 12 August 2026 publication date of the results, and the sequence of 2026 announcements including the first quarter results of 13 May 2026 and the acquisition of PrintFactory announced 12 April 2026.

How we read this. The results release was read in full from the company's own investor relations site, not from coverage of it, and every figure here is the company's own. Where Kornit characterises its market or its performance we have attributed that to Kornit rather than adopting it. Percentage changes we describe in words (revenue up about 11 per cent, loss up nearly half, the $830,000 benefit being about 1.5 percentage points of margin on $55.3 million of revenue) are our arithmetic on the company's published figures. We have not spoken to Kornit, we hold no position in the company, and it is not a client of ours or an advertiser on this masthead.