Kornit Digital has blamed volatile world markets for a “significantly slower pace” of orders for direct-to-garment (DTG) machines and lower-than-expected revenues.
It has warned that revenues for its second quarter – the three months to June 30 – will be in the range of $56.4 million to $59.4 million (£47.2 million to £49.7 million) – well below analysts’ expectations of around $88.5 million (£74 million).
This is even lower than the $85 million to $95 million (£70 million to £78 million) that the company warned of in May. The news knocked nearly a third off the value of the company’s shares on Wall Street.
However, Kornit Digital CEO Ronen Samuel said the outlook looked positive, with major brands and retailers continuing to shift from off-shore printing of garments to short-run, near-shore production.
He blamed “the overall re-calibration of e-commerce growth” after online clothing retailing and print on demand soared during the first two years of the Covid pandemic.
He said this was 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”.
This “resulted in a significantly slower pace of direct-to-garment (DTG) systems orders in the second quarter as compared to our prior expectations”.
Looking further ahead, he added: “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.
“At the same time, based on our focused investments in R&D over the past several years, we are working with our customers and prospects on several meaningful growth initiatives, including new product introductions, upgrades and novel applications that we believe will open up new addressable markets and help drive incremental demand in their businesses.
“We see meaningful post-pandemic opportunities with major brands and retailers shifting production from mass-analogue off-shore production to short-run, near-shore production, and believe Kornit is well positioned to take advantage of these trends.
“Kornit is an extremely strong company with a profitable business model, robust balance sheet, intimate customer relationships and a dedicated global team of professionals.
“We believe the industry will continue its long-term secular growth and are confident in our ability to successfully navigate this near-term volatility.
“We remain committed to profitable growth and will continue to lead the digital transformation of the industry.”
Kornit Digital will provide additional updates about its second-quarter results and operations in August.
Based in Israel and distributed in the UK by Amaya Sales UK, Kornit Digital is a leading manufacturer in the development of sustainable, on-demand, digital printing technology for garments and textiles.