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What changed in Kornit Digital Ltd.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kornit Digital Ltd.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+451 added−450 removedSource: 20-F (2025-03-27) vs 20-F (2024-03-28)

Top changes in Kornit Digital Ltd.'s 2024 20-F

451 paragraphs added · 450 removed · 335 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

109 edited+46 added−22 removed224 unchanged
Biggest changeThat could similarly cause us to underutilize our new ink manufacturing facility. ● Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. ● The scrutiny that may be applied to sustainability practices of companies such as ours. ● Our expanding international operations are accompanied by costs, operational risks and required regulatory compliance in many jurisdictions. ● We may not be able to successfully acquire and integrate other companies and technologies, necessary for our growth, and to finance such acquisitions. ● We may be subject to significant tax liabilities as a result of audits of our tax returns.
Biggest changeThat could similarly cause us to underutilize our new ink manufacturing facility. ● Our expected reliance, for a significant portion of our future long-term revenues, on our All-Inclusive Click (AIC™) model, under which we retain ownership of our systems, while our customers operate the systems and are charged a fixed fee per impression, has certain accompanying risks. ● Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. ● New and reciprocal import tariffs imposed by the United States and other countries could increase the prices we pay for raw materials and adversely impact demand for our products in countries in which our affected customers operate. ● The scrutiny that may be applied to sustainability practices of companies such as ours. ● Our expanding international operations are accompanied by costs, operational risks and required regulatory compliance in many jurisdictions. ● We may not be able to successfully acquire and integrate other companies and technologies, necessary for our growth, and to finance such acquisitions. ● We may be subject to significant tax liabilities as a result of audits of our tax returns.
We may not be able to find new or alternative components of a requisite quality or find that we are unable to reconfigure our systems and manufacturing processes in a timely manner if the necessary components become unavailable.
We may not be able to find new or alternative components of a requisite quality or we may find that we are unable to reconfigure our systems and manufacturing processes in a timely manner if the necessary components become unavailable.
To protect against an increase the dollar-denominated value of expenses paid in NIS during the year, we have instituted a foreign currency cash flow hedging program, which seeks to hedge a portion of the economic exposure associated with our anticipated NIS-denominated expenses using derivative instruments.
To protect against an increase in the dollar-denominated value of expenses paid in NIS during the year, we have instituted a foreign currency cash flow hedging program, which seeks to hedge a portion of the economic exposure associated with our anticipated NIS-denominated expenses using derivative instruments.
In order to implement changes to our internal control over financial reporting triggered by a failure of those controls, we could experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. 20 Our U.S. shareholders may suffer adverse tax consequences if we are classified as a passive foreign investment company.
In order to implement changes to our internal control over financial reporting triggered by a failure of those controls, we could experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. Our U.S. shareholders may suffer adverse tax consequences if we are classified as a passive foreign investment company.
Product liability claims, injuries, defects, or other problems experienced by other companies in the digital printing industry could lead to unfavorable market conditions for the industry as a whole. We have acquired businesses and may acquire other businesses and/or companies, which could require significant management attention, disrupt our business, dilute shareholder value, and adversely affect our results of operations.
Product liability claims, injuries, defects, or other problems experienced by other companies in the digital printing industry could lead to unfavorable market conditions for the industry as a whole. 16 We have acquired businesses and may acquire other businesses and/or companies, which could require significant management attention, disrupt our business, dilute shareholder value, and adversely affect our results of operations.
If the Lease Agreement is terminated, we would be unable to use the new Kiryat Gat facility constructed on that property, which would have a material adverse effect on our results of operations. 8 Disruption of operations at our manufacturing site or those of third-party manufacturers could prevent us from filling customer orders on a timely basis.
If the Lease Agreement is terminated, we would be unable to use the new Kiryat Gat facility constructed on that property, which would have a material adverse effect on our results of operations. Disruption of operations at our manufacturing site or those of third-party manufacturers could prevent us from filling customer orders on a timely basis.
To the extent that we experience additional frequent changes in our leadership team (or the leadership teams of our subsidiaries) going forward, that could adversely affect our performance in a material manner. 11 Our growth and success also depend on our ability to attract and retain additional highly qualified scientific, technical, sales, managerial, operational, HR, marketing and finance personnel.
To the extent that we experience additional frequent changes in our leadership team (or the leadership teams of our subsidiaries) going forward, that could adversely affect our performance in a material manner. Our growth and success also depend on our ability to attract and retain additional highly qualified scientific, technical, sales, managerial, operational, HR, marketing and finance personnel.
These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor. We would lose our foreign private issuer status if a majority of our directors or executive officers are U.S. citizens or residents, and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status.
These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor. 22 We would lose our foreign private issuer status if a majority of our directors or executive officers are U.S. citizens or residents, and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status.
Market acceptance of our new system depends, among other things, on the system demonstrating a real advantage over existing systems, the success of our sales and marketing teams in creating awareness of the system, the sales price and the return on investment of the system relative to alternative systems, customer recognition of the value of our technology, the effectiveness of our marketing campaigns, and the general willingness of potential customers to try new technologies.
Market acceptance of our new systems depends, among other things, on the systems demonstrating a real advantage over existing solutions, the success of our sales and marketing teams in creating awareness of the system, the sales price and the return on investment of the system relative to alternative systems, customer recognition of the value of our technology, the effectiveness of our marketing campaigns, and the general willingness of potential customers to try new technologies.
See Note 2, “Significant Accounting Policies”, to the consolidated financial statements included in Item 18 of this annual report for more details. Our business could suffer if we are unable to attract and retain key employees. Our success depends upon the continued service and performance of our senior management and other key personnel.
See Note 2, “Significant Accounting Policies”, to the consolidated financial statements included in Item 18 of this annual report for more details. 13 Our business could suffer if we are unable to attract and retain key employees. Our success depends upon the continued service and performance of our senior management and other key personnel.
Operating and Financial Review and Prospects- Taxation and Israeli Government Programs Applicable to our Company - Law for the Encouragement of Capital Investments, 5719-1959.” We have received and may receive further Israeli government grants for certain research and development activities. The terms of those grants restrict our ability to transfer manufacturing operations or technology outside of Israel.
Operating and Financial Review and Prospects- Taxation and Israeli Government Programs Applicable to our Company - Law for the Encouragement of Capital Investments, 5719-1959.” 26 We have received and may receive further Israeli government grants for certain research and development activities. The terms of those grants restrict our ability to transfer manufacturing operations or technology outside of Israel.
Additionally, we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance. Any such developments could have a material adverse effect on our business, financial condition and results of operations. Environmental, health and safety laws and regulations may also change from time to time.
Additionally, we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance. 12 Any such developments could have a material adverse effect on our business, financial condition and results of operations. Environmental, health and safety laws and regulations may also change from time to time.
Federal Income Taxation - Passive Foreign Investment Company Considerations.” Certain U.S. holders of our ordinary shares may suffer adverse tax consequences if we or any of our non-U.S. subsidiaries are characterized as a “controlled foreign corporation”, or a CFC, under Section 957(a) of the Internal Revenue Code of 1986, as amended, or the Code.
Federal Income Taxation - Passive Foreign Investment Company Considerations.” 24 Certain U.S. holders of our ordinary shares may suffer adverse tax consequences if we or any of our non-U.S. subsidiaries are characterized as a “controlled foreign corporation”, or a CFC, under Section 957(a) of the Internal Revenue Code of 1986, as amended, or the Code.
The shipping and delivery of our systems and ink and other consumables from our manufacturing facilities and those of our third-party manufacturers in Israel could be delayed or interrupted by political, economic, military, and other events outside of our reasonable control, including labor strikes at ports in Israel or at ports of destination, military attacks on transportation facilities or vessels, and severe weather events.
The shipping and delivery of our systems and ink and other consumables from our manufacturing facilities and those of our third-party manufacturers in Israel could also be delayed or interrupted by political, economic, military, and other events outside of our reasonable control, including labor strikes at ports in Israel or at ports of destination, military attacks on transportation facilities or vessels, and severe weather events.
The warrants are reported as a reduction of revenue in the Company’s income statement when related revenues are recognized. 5 ● We have agreed to provide a rebate to Amazon based on the number of systems and amount of ink and other consumables Amazon orders in a given 12-month period.
The warrants are reported as a reduction of revenue in the Company’s income statement when related revenues are recognized. ● We have agreed to provide a rebate to Amazon based on the number of systems and amount of ink and other consumables Amazon orders in a given 12-month period.
Any reduction in our ability to market and sell our ink and other consumables and spare parts for use in our systems may adversely impact our future revenues and our overall profitability. We face increased competition and if we do not compete successfully, our revenues and demand for our solutions could decline.
Any reduction in our ability to market and sell our ink and other consumables and spare parts for use in our systems may adversely impact our future revenues and our overall profitability. 3 We face increased competition and if we do not compete successfully, our revenues and demand for our solutions could decline.
In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell our solutions.
In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell and service our solutions.
As such, there is risk that any expectations for our business and guidance we provide to the market may be incorrect. 4 Our quarterly results of operations have fluctuated in the past and may fluctuate in the future due to variability in our revenues.
As such, there is risk that any expectations for our business and guidance we provide to the market may be incorrect. Our quarterly results of operations have fluctuated in the past and may fluctuate in the future due to variability in our revenues.
As a result, we may not be able to obtain adequate protection or to effectively enforce our issued patents or other intellectual property rights. In addition to patents, we rely on trade secret rights, copyrights, trademarks, and other rights to protect our proprietary intellectual property and technology.
As a result, we may not be able to obtain adequate protection or to effectively enforce our issued patents or other intellectual property rights. 18 In addition to patents, we rely on trade secret rights, copyrights, trademarks, and other rights to protect our proprietary intellectual property and technology.
As a result, we are exposed to the risk that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag inflation in Israel.
As a result, we are exposed to the risk that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel.
It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in this prospectus supplement in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts. 24 Your rights and responsibilities as a shareholder are governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.
It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in this prospectus supplement in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts. 28 Your rights and responsibilities as a shareholder are governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.
We do not expect the Kornit X offering to have a material impact on our overall results of operations in the very near term; however, we believe that it nonetheless exposes us to a number of potential risks, including the following: ● software bugs and defects that adversely impact our customer’s production processes; ● unauthorized access, data breaches and/or loss of customer data, including data regarding payment methods; ● use of unauthorized open source software or other infringements of third-party intellectual property; ● challenges providing support to software users; and ● challenges related to our required delivery of the service level agreements under the virtual supplier model that we utilize for our Kornit X offering.
We do not expect the Kornit X offering to have a material impact on our overall results of operations in the very near term; however, we believe that it nonetheless exposes us to several potential risks, including the following: ● software bugs and defects that adversely impact our customer’s production processes; ● unauthorized access, data breaches and/or loss of customer data, including data regarding payment methods; ● use of unauthorized open-source software or other infringements of third-party intellectual property; 17 ● challenges providing support to software users; and ● challenges related to our required delivery of the service level agreements under the virtual supplier model that we utilize for our Kornit X offering.
Based on the 2022 report on intellectual property rights protection and enforcement published by the Office of the United States Trade Representative, such countries included Argentina, Chile, China, India, Indonesia, Russia, and Venezuela (designated as priority watch list countries). If we are unable to protect our trademarks from infringement, our business prospects may be harmed.
Based on the 2024 report on intellectual property rights protection and enforcement published by the Office of the United States Trade Representative, such countries included Argentina, Chile, China, India, Indonesia, Russia, and Venezuela (designated as priority watch list countries). If we are unable to protect our trademarks from infringement, our business prospects may be harmed.
Any losses or damages incurred by us could have a material adverse effect on our business. While we have commenced implementation of a business continuity plan which provides for alternative sites outside of Israel, there can be no assurance that such plan will be successful. Any armed conflict involving Israel could adversely affect our operations and results of operations.
Any losses or damage incurred by us could have a material adverse effect on our business. While we have commenced implementation of a business continuity plan which provides for alternative sites outside of Israel, there can be no assurance that such plan will be successful. Any armed conflict involving Israel could adversely affect our operations and results of operations.
Although our employees have agreed to assign to us service invention rights and have specifically waived their right to receive any special remuneration for such service inventions beyond their regular salary and benefits, we may face claims demanding remuneration in consideration for assigned inventions. 17 Risks Related to Our Ordinary Shares Our share price may be volatile.
Although our employees have agreed to assign to us service invention rights and have specifically waived their right to receive any special remuneration for such service inventions beyond their regular salary and benefits, we may face claims demanding remuneration in consideration for assigned inventions. 20 Risks Related to Our Ordinary Shares Our share price may be volatile.
We are currently in the process of entering into a long-term supply agreement with Heubach Group. 6 ● Certain parts of the control system of our systems are supplied by sole suppliers, Yaskawa Europe Technology Ltd., an affiliate of Yaskawa Electric Corporation, or Yaskawa, and Beckhoff Automation Limited.
We are currently in the process of entering into a long-term supply agreement with Heubach Group. 7 ● Certain parts of the control system of our systems are supplied by sole suppliers, Yaskawa Europe Technology Ltd., an affiliate of Yaskawa Electric Corporation, or Yaskawa, and Beckhoff Automation Limited.
If the market does not accept our new system, our business, results of operations and financial condition would be adversely affected. If our customers use alternative ink and consumables and/or alternative spare parts in our systems, our gross margin could decline significantly, and our business could be harmed.
If the market does not accept our new system, our business, results of operations and financial condition will be adversely affected. If our customers use alternative ink and consumables and/or alternative spare parts in our systems, our gross margin could decline significantly, and our business could be harmed.
We own trademarks that identify “Kornit”, “NeoPigment”, the “K” logo and “Konnect” logo, and we have an additional trademark registration for the “Custom Gateway” logo, among others, and have registered these trademarks in certain key markets. We further own trademark registrations and applications for VOXEL8, VOXEL8 logo, ACTIVEIMAGE, ACTIVELAB and ACTIVEMIX in certain key markets.
We own trademarks that identify “Kornit”, “Kornit Digital”, “NeoPigment”, the “K” logo and “Konnect” logo, and we have an additional trademark registration for the “Custom Gateway” logo, among others, and have registered these trademarks in certain key markets. We further own trademark registrations and applications for VOXEL8, VOXEL8 logo, ACTIVEIMAGE, ACTIVELAB and ACTIVEMIX in certain key markets.
Based on historic and certain estimates of our gross income, gross assets and market capitalization (which may fluctuate from time to time) and the nature of our business, we believe we were not a PFIC for the taxable year ended December 31, 2023.
Based on historic and certain estimates of our gross income, gross assets and market capitalization (which may fluctuate from time to time) and the nature of our business, we believe we were not a PFIC for the taxable year ended December 31, 2024.
Because PFIC status is based on our income, assets and activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for our 2024 taxable year until after the close of the year.
Because PFIC status is based on our income, assets and activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for our 2025 taxable year until after the close of the year.
Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants, shareholders, and customers have focused increasingly on the environmental, social, and governance (ESG) or “sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants, shareholders, and customers have focused increasingly on the environmental, social, and governance (ESG) or “sustainability” practices of companies. These parties have ascribed increased importance to the implications of the social cost of their investments.
The non-U.S. jurisdictions in which we have issued patents or pending applications are China, the European Union or European countries of the European Union including 3 Unitary Patents, Mexico, Israel, Canada, Australia, Republic of Korea, South Africa, Brazil, Japan and India. We may file additional patent applications in the future.
The non-U.S. jurisdictions in which we have issued patents or pending applications are China, the European Union or European countries of the European Union including 3 Unitary Patents, Mexico, Israel, Canada, Australia, South Africa, Japan and India. We may file additional patent applications in the future.
Corporate Governance.” Furthermore, we may in the future elect to follow Israeli home country practices in lieu of the Nasdaq requirements on other matters, such as the requirement to hold separate executive sessions of independent directors or to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company).
Corporate Governance.” Furthermore, we may in the future elect to follow Israeli home country practices in lieu of the Nasdaq requirements on other matters, such as the requirement to hold separate executive sessions of independent directors or to obtain shareholder approval for certain dilutive events (such as for issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company).
Under the agreement, as last amended on June 20, 2022, the initial term of the agreement will expire on December 31, 2025, and the agreement will automatically renew for an additional two-year period, unless either party notifies the other party at least 90 days prior to expiration of the initial term that it does not want such a renewal.
Under the agreement, as last amended on January 1, 2025, the initial term of the agreement will expire on December 31, 2025, and the agreement will automatically renew for an additional two-year period, unless either party notifies the other party at least 90 days prior to expiration of the initial term that it does not want such a renewal.
We have designated a special committee to assess our cybersecurity and data protection risks and develop and implement a data security policy. We also created an annual program to ensure our data safety. This program includes self-evaluations, auditing, tests, and third-party evaluation.
We have designated a special committee of executives to assess, among others, our cybersecurity and data protection risks and develop and implement a data security policy. We also created an annual program to ensure our data safety. This program includes self-evaluations, auditing, tests, and third-party evaluation.
Risks Related to Our Business and Our Industry If the market for digital textile printing does not develop as we anticipate, our sales may not grow as expected and our share price could decline. The global printed textile industry remains dominated by analog printing processes, the most common of which are screen printing and carousel printing.
Risks Related to Our Business and Our Industry If the market’s rate of adoption of digital textile printing does not develop as we anticipate, our sales may not grow as expected and our share price could decline. The global printed textile industry remains dominated by analog printing processes, the most common of which are screen printing and carousel printing.
We currently purchase these chemicals on a purchase order basis. ● Dispersing agents used in some of our inks are supplied by BASF SE, which to our knowledge is the only source of supply of those agents. We purchase these dispersing agents from BASF on a purchase order basis.
We purchase this material on a purchase order basis. ● Dispersing agents used in some of our inks are supplied by BASF SE, which to our knowledge is the only source of supply of those agents. We purchase these dispersing agents from BASF on a purchase order basis.
Pursuant to the master purchase agreement, we have issued to an affiliate of Amazon warrants to acquire up to 3,401,028 of our ordinary shares at a purchase price of $59.26 per share, of which 1,787,953 were vested and exercisable as of December 31, 2023.
Pursuant to the master purchase agreement, we have issued to an affiliate of Amazon warrants to acquire up to 3,401,028 of our ordinary shares at a purchase price of $59.26 per share, of which 1,943,445 were vested and exercisable as of December 31, 2024.
In 2021, 2022 and 2023, we received new commitments from the Innovation Authority for non-royalty bearing grants to reimburse us for up to 55% of our research and development expenses in connection with our projects, in amounts of NIS 2.02 million, NIS 3.2 million, and NIS 2.4 million, respectively (approximately $0.7 million, $0.9 million, and $0.7 million), in the aggregate.
In 2021, 2022, 2023, and 2024, we received new commitments from the Innovation Authority for non-royalty bearing grants to reimburse us for up to 55% of our research and development expenses in connection with certain projects, in amounts of NIS 2 million, NIS 3.6 million, NIS 2.6 million, and NIS 1.2 million, respectively (approximately $0.7 million, $1 million, $0.7 million, and $0.3 million), in the aggregate.
In addition to exerting the foregoing impact, macro-economic headwinds may amplify a number of risks for us, including, but not limited to, the following: ● our ability to increase sales of new, enhanced systems to existing customers may be hindered due to more cautious purchasing and investment strategies by corporate customers, in addition to systems overcapacity at some customers; ● reduced economic activity, which could lead to a recession, could negatively impact consumer discretionary spending on garments and apparel, which in turn could severely impact our business operations, financial condition, and liquidity; ● our customer success efforts, our ability to enter into new markets and to acquire new customers may be impeded, in part due to potentially lower conversion rates and delays and lengthening of our sales cycles; and ● there may be an increase in our credit losses reserves as customers face economic hardship and collectability becomes more uncertain, including due to a higher risk of bankruptcies.
We have experienced declines in systems revenues and a slower growth rate in services revenues (although consumables revenues have grown), which has led to recent overall declines in our revenues. 4 In addition to exerting the foregoing impact, macro-economic headwinds may amplify a number of risks for us, including, but not limited to, the following: ● our ability to increase sales of new, enhanced systems to existing customers may be hindered due to more cautious purchasing and investment strategies by corporate customers, in addition to systems overcapacity at some customers; ● reduced economic activity, which could lead to a recession, could negatively impact consumer discretionary spending on garments and apparel, which in turn could severely impact our business operations, financial condition, and liquidity; ● our customer success efforts, our ability to enter into new markets and to acquire new customers may be impeded, in part due to potentially lower conversion rates and delays and lengthening of our sales cycles; and ● there may be an increase in our credit losses reserves as customers face economic hardship and collectability becomes more uncertain, including due to a higher risk of bankruptcies.
Summary of Risks Related to Our Business and Our Industry ● Our success is dependent on adoption of digital textile printing in place of existing methods of printing. ● We are dependent on our ability to timely introduce new products that are accepted by the market and increase our market share. ● We face increased competition from a wide variety of market participants. ● Our significant reliance on a small number of significant customers, including Amazon. ● The adverse impact of unfavorable macro-economic conditions, including inflation and relatively high interest rates on our revenues, profitability and cash flows. ● Our significant reliance on suppliers, including single-source suppliers, and our reliance on third-party manufacturers. 1 ● Overcapacity in the global printed fashion and textile industries has caused and may continue to cause our customers to underutilize existing printing systems that they have purchased from us and to reduce their orders for new systems.
Summary of Risks Related to Our Business and Our Industry ● Our success is dependent on adoption of digital textile printing in place of existing methods of printing. ● We are dependent on our ability to timely introduce new products that are accepted by the market and increase our market share. ● We face increased competition from a wide variety of market participants. 1 ● Our significant reliance on a small number of significant customers, including Amazon. ● The adverse impact of unfavorable macro-economic conditions, such as relatively high interest rates and any lingering inflationary conditions, on the budgets for capital expenditures of our customers and potential customers, which may continue to have material adverse consequences for our revenues, financial position, and cash flows. ● Our significant reliance on suppliers, including single-source suppliers, and our reliance on third-party manufacturers. ● Overcapacity in the global printed fashion and textile industries has caused and may continue to cause our customers to underutilize existing printing systems that they have purchased from us and to reduce their orders for new systems.
However, a prolonged war could result in further military reserve duty call-ups as well as irregularities to our supply chain and our ability to ship products from Israel, which could disrupt our operations.
However, an even further prolonged or intensified war could result in further military reserve duty call-ups as well as irregularities to our supply chain and our ability to ship products from Israel, which could disrupt our operations.
We manufacture our ink and other consumables at our new, modern facility in Kiryat Gat, Israel, and our curing systems are manufactured in Tesoma’s facilities. We also rely on contract manufacturing services provided by Flex, and Sanmina-SCI Israel Medical Systems Ltd. which are also in Israel, to assemble our systems.
We manufacture our ink and other consumables at our facility in Kiryat Gat, Israel. We rely on contract manufacturing services provided by Flex, and Sanmina-SCI Israel Medical Systems Ltd. which are also in Israel, to assemble our printing and curing systems.
In addition, 2,107,696 ordinary shares are issuable under currently vested and exercisable share options and unvested restricted share units, or RSUs, in the aggregate, granted to employees and office holders as of December 31, 2023.
In addition, 2,580,694 ordinary shares are issuable under currently vested and exercisable share options and unvested restricted share units, or RSUs, in the aggregate, granted to employees and office holders as of December 31, 2024.
The development of the digital textile printing market has been slower than we anticipated. If the global printed textile market does not more broadly accept digital printing as an alternative to analog printing, our revenues may not continue to grow, or may decline, and our share price could suffer.
The development of the digital textile printing market has been slower than we anticipated. If the global printed textile market does not more broadly accept digital printing as an alternative to analog printing, our revenues may be adversely affected and our share price could suffer.
We maintain safety stock of these raw materials and pigments in an amount which will allow us to continue our manufacturing for several fiscal quarters in case of discontinuation.
We currently purchase these raw materials and pigments on a purchase order basis. We maintain safety stock of these raw materials and pigments in an amount which will allow us to continue our manufacturing for several fiscal quarters in case of discontinuation.
To date, we have received from the Innovation Authority NIS 6.2 million (approximately $1.8 million) of this new committed amount.
To date, we have received from the Innovation Authority NIS 4 million (approximately $1.1 million) of this new committed amount.
As we continue to expand our international sales and operations, we are subject to a number of risks, including the following: ● greater difficulty in enforcing contracts and accounts receivable collection, as well as longer collection periods; ● increased expenses incurred in establishing and maintaining office space and equipment for our international operations; ● fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; 12 ● greater difficulty in recruiting local experienced personnel, and the costs and expenses associated with such activities; ● general economic and political conditions in these foreign markets; ● management communication and integration problems resulting from cultural and geographic dispersion; ● the impact of Russia’s invasion of Ukraine in February 2022 and trade and monetary sanctions in response to such developments on the markets in which we operate; ● risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our solutions required in foreign countries, such as high import taxes in Brazil and other Latin American markets where we sell our products; ● greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties; ● the uncertainty of protection for intellectual property rights in some countries; ● greater risk of a failure of employees to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
As we continue to expand our international sales and operations, we are subject to a number of risks, including the following: ● greater difficulty in enforcing contracts and accounts receivable collection, as well as longer collection periods; ● increased expenses incurred in establishing and maintaining office space and equipment for our international operations; ● fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; ● greater difficulty in recruiting local experienced personnel, and the costs and expenses associated with such activities; ● general economic and political conditions in these foreign markets; ● management communication and integration problems resulting from cultural and geographic dispersion; ● the impact of Russia’s ongoing war against Ukraine and trade and monetary sanctions in response to such developments on the markets in which we operate; ● exposure to material disruptions to the global supply chain and to international shipping routes caused by Houthi attacks on marine vessels traversing the Red Sea; ● risks associated with trade restrictions and foreign legal requirements, including the importation, certification, and localization of our solutions required in foreign countries, such as high import taxes in Brazil and other Latin American markets where we sell our products; ● greater risk of unexpected changes in regulatory practices, tariffs (including, without limitation, U.S.-China reciprocal tariffs), and tax laws and treaties; ● the uncertainty of protection for intellectual property rights in some countries; 15 ● greater risk of a failure of employees to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
Achieving our published goals with respect to the environmental impact of our operations and products could result in us incurring additional costs, and our failure to achieve these goals could adversely impact our reputation, employee retention, and willingness of customers to do business with us.
Achieving satisfactory compliance levels with respect to the environmental impact of our operations and products could result in our incurring additional costs, and our failure to achieve such levels could adversely impact our reputation, employee retention, and willingness of customers to do business with us.
We have filed registration statements on Form S-8 under the Securities Act registering our potential issuance of those ordinary shares under our share incentive plans, of which, as of December 31, 2023, there were options, RSUs and warrants to purchase 4,094,530 shares outstanding.
We have filed registration statements on Form S-8 under the Securities Act registering our potential issuance of those ordinary shares under our share incentive plans, of which, as of December 31, 2024, there were options and RSUs to purchase an aggregate of 4,696,089 shares outstanding.
Underutilization of our manufacturing facilities can adversely affect our gross margin and other operating results. If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which would increase our expenses.
If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which would increase our expenses.
A recipient of a grant or a benefit under the Innovation Law is required to notify the Innovation Authority of events enumerated in the Innovation Law. 23 These restrictions and requirements for payment may impair our ability to sell our technology assets outside of Israel or to outsource or transfer manufacturing activities with respect to any product or technology outside of Israel; however, they do not restrict the export of our products that incorporate know-how funded by the Innovation Authority.
These restrictions and requirements for payment may impair our ability to sell our technology assets outside of Israel or to outsource or transfer manufacturing activities with respect to any product or technology outside of Israel; however, they do not restrict the export of our products that incorporate know-how funded by the Innovation Authority.
During the years ended December 31, 2023 and 2022, our ten largest customers accounted for approximately 49% and 51% of our revenues, respectively. During those same years, out of the foregoing group of largest customers, Amazon Corporate LLC, a subsidiary of Amazon.com, Inc., which we collectively refer to as Amazon, accounted for approximately 20% and 27% of our revenues, respectively.
During those same years, out of the foregoing group of largest customers, Amazon Corporate LLC, a subsidiary of Amazon.com, Inc., which we collectively refer to as Amazon, accounted for approximately 30% and 20% of our revenues, respectively.
Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. A significant invasion, interruption, destruction or breakdown of our information technology, or IT, systems and/or infrastructure by persons with authorized or unauthorized access could negatively impact our business and operations.
A significant breach, interruption, destruction or breakdown of our information technology, or IT, systems and/or infrastructure by persons with authorized or unauthorized access could negatively impact our business and operations.
It may continue to fluctuate substantially as a result of many factors, including: ● actual or anticipated variations in our and/or our competitors’ results of operations and financial condition; ● variance in our financial performance from the expectations of market analysts; ● announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions, strategic relationships or expansion plans; ● changes in the prices of our solutions; ● our involvement in litigation; ● our sale of ordinary shares or other securities in the future; ● market conditions in our industry; ● changes in key personnel; ● the trading volume of our ordinary shares; ● changes in the estimation of the future size and growth rate of our markets; and ● general economic and market conditions; In addition, recently, the stock markets have experienced extreme price and volume fluctuations.
It may continue to fluctuate substantially as a result of many factors, including: ● actual or anticipated variations in our and/or our competitors’ results of operations and financial condition; ● variance in our financial performance from the expectations of market analysts; ● announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions, strategic relationships or expansion plans; ● changes in the prices of our solutions; ● our future repurchases, if any, of our ordinary shares pursuant to our current share repurchase programs and/or any other share repurchase program which may be approved in the future; ● our sale of ordinary shares or other securities in the future; ● market conditions in our industry; ● changes in key personnel; ● the trading volume of our ordinary shares; ● changes in the estimation of the future size and growth rate of our markets; and ● general economic and market conditions.
In addition to considerations related to corporate finance, Israeli law limits our ability to declare and pay dividends and may subject our dividends to Israeli withholding taxes. 18 As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we may follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we may follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
If we do not succeed, our trademarks will be exposed to infringement in a particular jurisdiction, which could have various adverse effects on our operations in that jurisdiction. 16 We may become subject to claims of intellectual property infringement by third parties or claims by third parties that our intellectual party rights are invalid and may be required to indemnify our distributors or other third parties against such claims, which, regardless of their merit, could result in litigation, distract our management and materially adversely affect our business, results of operations and financial condition.
We may become subject to claims of intellectual property infringement by third parties or claims by third parties that our intellectual party rights are invalid and may be required to indemnify our distributors or other third parties against such claims, which, regardless of their merit, could result in litigation, distract our management and materially adversely affect our business, results of operations and financial condition.
The agreement further provides that FDMX may, at its option, discontinue products supplied under the agreement, provided that we are given one-year notice of the planned discontinuance and are provided with an end-of-sale purchase program. ● A chemical used in some of our inks is supplied by B.G.
The agreement further provides that FDMX may, at its option, discontinue products supplied under the agreement, provided that we are given one-year notice of the planned discontinuance and are provided with an end-of-sale purchase program.
Risks Related to Our Operations in Israel Our headquarters, manufacturing and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel.
Risks Related to Our Operations in Israel Our headquarters, manufacturing and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel. Our headquarters, research and development and manufacturing facility, and the primary manufacturing facilities of our third-party manufacturers, are located in Israel.
The impact of the provisions listed above cannot be fully predicted in advance and could, in certain circumstances, adversely impact our business or results of operations, or the manner in which investors or analysts assess and perceive our performance. If our relationships with suppliers, especially with single source suppliers of components, were to terminate, our business could be harmed.
The impact of the provisions listed above cannot be fully predicted in advance and could, in certain circumstances, adversely impact our business or results of operations, or the manner in which investors or analysts assess and perceive our performance.
To the extent that a cyber-attack is successful, we could incur significant expense, depending on the severity of the attack, We have invested in advanced protective systems to reduce our cybersecurity and data protection risks, some of which have been installed and others that are still in the process of installation. In addition, we back up our data regularly.
We have invested in advanced protective systems to reduce our cybersecurity and data protection risks, some of which have been installed and others that are still in the process of installation. In addition, we back up our data regularly.
We also face some competition in this market from OvalJet, M&R, ROQ, Brother International Corporation, Seiko Epson Corporation, Ricoh Company Ltd. and a number of smaller competitors that offer industrial level production capacity through multiple entry level systems.
We also face some competition in this market from Aeoon, Seiko Epson Corporation, Ricoh Company Ltd, Oveljet and several smaller competitors that offer industrial level production capacity through multiple entry level systems.
We cannot provide any assurances that our hedging activities will be successful in protecting us in full from adverse impacts from currency exchange rate fluctuations since we only plan to hedge a portion of our foreign currency exposure, and we cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against the dollar For example, based on annual average exchange rates, the NIS appreciated by 6.2% against the dollar in 2021, before depreciating against the dollar by 4.0% in 2022 and 9.7% in 2023.
We cannot provide any assurances that our hedging activities will be successful in protecting us in full from adverse impacts from currency exchange rate fluctuations since we only plan to hedge a portion of our foreign currency exposure, and we cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against the dollar.
It is difficult to predict future demand for printing in the global printed fashion and textile industries in which we operate, which makes it challenging for our customers to estimate future requirements for production capacity and avoid periods of overcapacity.
Such a trend could reduce our operating margins and have a material adverse effect on our financial performance. It is difficult to predict future demand for printing in the global printed fashion and textile industries in which we operate, which makes it challenging for our customers to estimate future requirements for production capacity and avoid periods of overcapacity.
If any of these proposed new U.S. federal restrictions becomes effective, or if any state in which we have operations continues to expand restrictions or bans the use of non-compete restrictions, that could adversely impact our ability to protect our investment in our key employees in our U.S. locations, and harm our competitive position.
If any of these proposed new U.S. federal restrictions become and/or remain effective, or if any state in which we have operations continues to expand restrictions or bans the use of non-compete restrictions, that could adversely impact our ability to protect our investment in our key employees in our U.S. locations, and harm our competitive position. 14 We have a significant presence in international markets and plan to continue to expand our international operations, which exposes us to a number of risks that could affect our future growth.
We have recently experienced changes in senior personnel, notably, our chief commercial officer in September 2023, our EVP operations in December 2023, our CMO and our EVP corporate development in June 2024, and certain changes in our regional presidents’ roles.
We have recently experienced changes in senior personnel, notably, our EVP operations in December 2023 (replaced in July 2024), our Chief Marketing Officer (replaced in March 2024), our EVP corporate development in June 2024, our EVP R&D in December 2024 (replaced in January 2025) and certain changes in our regional presidents’ roles.
We maintain safety stock of these chemicals in an amount which will allow us to continue our manufacturing for several fiscal quarters in case of discontinuation. ● Several raw materials and pigments used in some of our inks are supplied by Heubach Group. We currently purchase these raw materials and pigments on a purchase order basis.
We maintain safety stock of these chemicals in an amount which will allow us to continue our manufacturing in case of discontinuation. ● Several raw materials and pigments used in some of our inks are supplied by Heubach Group, which was acquired by Sudarshan Chemical Industries in 2024.
We continually evaluate that strategy in the geographies we serve in an effort to best serve our direct or indirect customers. When we shift towards a direct sales model in relevant territories, we may experience an initial disruption to our sales efforts in those jurisdictions as we transition from our previous sales structure.
When we shift towards a direct sales model in relevant territories, we may experience an initial disruption to our sales efforts in those jurisdictions as we transition from our previous sales structure.
These factors have also delayed or lengthened our sales cycles, and have inhibited our international expansion, and may also lead to longer collection cycles for payments due from our customers, as well as potentially result in an increase in customer bad debt.
These factors have also delayed or lengthened our sales cycles, have inhibited our international expansion, have led to longer collection cycles for payments due from our customers, and may potentially result in an increase in customer bad debt. As a result of these conditions, customers have found it harder to obtain financing to fund their purchase of our systems.
If operations in any of these facilities were to be disrupted due to a major equipment failure or power failure lasting beyond the capabilities of backup generators or other events outside of our reasonable control, our manufacturing capacity could be shut down for an extended period, we could experience a loss of raw materials or finished goods inventory and our ability to operate our business would be harmed.
Our ability to generate revenues could be impaired, market acceptance of our solutions could be adversely affected, and customers may instead purchase or use alternative products. 10 If operations in any of these facilities were to be disrupted due to a major equipment failure or power failure lasting beyond the capabilities of backup generators or other events outside of our reasonable control (including due to a military attack against Israel during its ongoing military conflicts), our manufacturing capacity could be shut down for an extended period, we could experience a loss of raw materials or finished goods inventory and our ability to operate our business would be harmed.
During these periods, there was inflation of 2.8%, 5.3% and 3.0% in Israel in 2021, 2022 and 2023, respectively. If the dollar cost of our operations continues to increase, our dollar-measured results of operations will be adversely affected. See “ITEM 11.
The annual rate of inflation in Israel amounted to 5.3%, 3.0%, and 3.2% in 2022, 2023, and 2024, respectively. If the dollar cost of our operations increases, our dollar-measured results of operations will be adversely affected. See “ITEM 11.
We expect that these errors or defects will be found from time to time in new or enhanced systems after commencement of commercial distribution or upon software upgrades. 13 To the extent that any error, deficiency, or hazardous component (which presents a safety concern) exists in any of our products and is not discovered and corrected before a product is introduced to the market, such product could be unsafe and/or could cause damage, including property damage, personal injury, or death.
To the extent that any error, deficiency, or hazardous component (which presents a safety concern) exists in any of our products and is not discovered and corrected before a product is introduced to the market, such product could be unsafe and/or could cause damage, including property damage, personal injury, or death.
We currently follow Israeli home country practices with regard to the (i) quorum requirement for shareholder meetings (25%, which is less than the one-third minimum required under the Nasdaq rules) and (ii) independent director oversight requirement for director nominations (the board as a whole, rather than an entirely independent nominating committee or only the independent directors, handles this under Israeli law).
We currently follow Israeli home country practices with regard to (i) the quorum requirement for shareholder meetings (25%, which is less than the one-third minimum required under the Nasdaq rules), (ii) the independent director oversight requirement for director nominations (the board as a whole, rather than an entirely independent nominating committee or only the independent directors, handles this under Israeli law), and (iii) shareholder approval for the issuance of ordinary shares or other securities to officers, directors, employees or consultants under an equity compensation plan or arrangement, or for the adoption of, or a material amendment to, such a plan or arrangement (Israeli law only requires shareholder approval generally for a grant under a plan or arrangement for directors or the chief executive officer).
Exchange rate fluctuations between the U.S. dollar and the Israeli shekel, the Euro and other non-U.S. currencies may negatively affect our earnings. The U.S. dollar is our functional and reporting currency. However, a significant portion of our operating expenses are incurred in Israeli shekels, or NIS.
The U.S. dollar is our functional and reporting currency. However, a significant portion of our operating expenses are incurred in Israeli shekels, or NIS.
The Federal Trade Commission proposed a new rule to ban employers nationwide from using non-compete agreements with their employees and independent contractors, and the General Counsel of the National Labor Relations Board issued a memo in March 2023 opining that many types of non-compete and non-solicitation restrictions unlawfully interfere with employees’ protected rights under Section 7 of the National Labor Relations Act.
In addition, the General Counsel of the National Labor Relations Board issued a memo in March 2023 opining that many types of non-compete and non-solicitation restrictions unlawfully interfere with employees’ protected rights under Section 7 of the National Labor Relations Act.
The principal competition for our direct to garment (DTG) systems comes from manufacturers of analog screen-printing systems, textile printers and ink, such as M&R Printing Equipment, Inc., Machines Highest Mechatronic GmbH and ROQ. Our principal competitor in the industrial digital DTG market is Aeoon Technologies GmbH.
The principal competition for our direct-to-garment (DTG) systems comes from manufacturers of industrial DTG printers, analog screen-printing systems, and digital hybrid systems such as M&R Printing Equipment, ROQ and Brother.
In addition, if these competitors develop products with similar or superior functionality to our solutions at prices comparable to or lower than ours, we may be forced to decrease the prices of our solutions in order to remain competitive, which could reduce our gross margins. 3 A significant portion of our sales is concentrated among a small number of customers, and our business would be adversely affected by a decline in sales to, or the loss of, those customers.
In addition, if these competitors develop products with similar or superior functionality to our solutions at prices comparable to or lower than ours, we may be forced to decrease the prices of our solutions in order to remain competitive, which could reduce our gross margins.
If delivery and installation of our products is delayed or prevented by any such events, our revenues could be materially and adversely impacted. 22 The tax benefits that are available to us under Israeli law require us to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.
The tax benefits that are available to us under Israeli law require us to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.
Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company.
If the potential tax liabilities in respect of which we have taken these reserves exceed the amount of those reserves, that may have a material adverse effect on our results of operations.
If the potential tax liabilities in respect of which we have taken these reserves exceed the amount of those reserves, that may have a material adverse effect on our results of operations. For more information on our tax positions please refer to Note 14 to our financial statements that appear in Item 18 of this annual report.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeWe have recently begun piloting with our Apollo system, a new model, based on a price per impression produced on our system, which includes use of the system, consumables and service. Our go-to-market strategy consists of a hybrid model of indirect and direct sales, with a trend towards adopting a direct sales model in certain key markets.
Biggest changeOur go-to-market strategy consists of a hybrid model of indirect and direct sales, with a trend towards adopting a direct sales model in certain key markets. We have historically generated a significant portion of our sales through a global network of independent agents, distributors and value-added resellers that we refer to as our channel partners.
Our solutions are designed to enable our customers to remain relevant, reduce waste, and adapt to shifting supply chain dynamics. We focus on the rapidly growing high throughput DTG (direct to garment) and DTF (direct to fabric) segments of the printed textile industry. Our solutions include our proprietary digital printing systems, ink, and other consumables, associated software and value-added services.
Our solutions are designed to enable our customers to remain relevant, reduce waste, and adapt to shifting supply chain dynamics. We focus on the rapidly growing high throughput DTG (direct to garment) and Direct to Fabric segments of the printed textile industry. Our solutions include our proprietary digital printing systems, ink, and other consumables, associated software and value-added services.
Through these value-added services, we can increase system availability and utilization, end-user product quality, and increase impressions, thereby requiring more ink and other consumables purchases as well as potential investment in new systems as our customers require additional capacity. 34 Extend our leadership position through acquisitions and strategic partnerships We seek to continue to differentiate ourselves and extend our leadership position.
Through these value-added services, we can increase system availability and utilization, end-user product quality, and increase impressions, thereby requiring more ink and other consumables purchases as well as potential investment in new systems as our customers require additional capacity. Extend our leadership position through acquisitions and strategic partnerships We seek to continue to differentiate ourselves and extend our leadership position.
Our primary systems within our DTG business include the Atlas, Atlas MAX, Atlas MAX Poly and Apollo. In April 2021, we supplemented our original DTG printing solutions with our Kornit MAX technology, which enables exemplary retail print quality and durability standards, together with enhanced production speed.
Our primary systems within our DTG business include the Atlas MAX Plus, Atlas MAX Poly and Apollo. In April 2021, we supplemented our original DTG printing solutions with our Kornit MAX technology, which enables exemplary retail print quality and durability standards, together with enhanced production speed.
The move to digital printing significantly reduces the need for manpower and allows for a more flexible cost structure. Sustainability. Digital textile printing significantly reduces industrial water consumption and discharge of toxic chemicals by eliminating the need to wash screens for color changes and repeated use.
The move to digital printing significantly reduces the need for manpower and allows for a more flexible cost structure. 35 Sustainability. Digital textile printing significantly reduces industrial water consumption and discharge of toxic chemicals by eliminating the need to wash screens for color changes and repeated use.
The following chart summarizes the key steps involved in the DTG printing process: Direct-to-Fabric (DTF) In DTF printing, rolls of fabric pass in-line through wide-format inkjet printers that are utilized to directly print images and designs onto rolling fabric.
The following chart summarizes the key steps involved in the DTG printing process: Direct-to-Fabric In Direct-to-Fabric printing, rolls of fabric pass in-line through wide-format inkjet printers that are utilized to directly print images and designs onto rolling fabric.
Digital textile printing is better suited for the transition of the production floor environment to full digitization, including connectivity to cloud networking elements and productivity analytics software solutions. 31 Reduced time between design and production.
Digital textile printing is better suited for the transition of the production floor environment to full digitization, including connectivity to cloud networking elements and productivity analytics software solutions. Reduced time between design and production.
For example, our acquisition of Polymeric Imaging in 2015 expanded our ink technology capabilities, our acquisitions of the digital DTG printing assets of SPSI in 2016 enabled us to strengthen our direct sales channel and gain access to a large screen-printing customer base, the acquisition of business assets from Hirsch in 2019 helped us transition to a full direct sales model in North America, and our acquisition of Tesoma in 2022 allowed us the ability to integrate the curing step of DTG printing process directly into our solutions via the Apollo.
For example, our acquisition of Polymeric Imaging in 2015 expanded our ink technology capabilities, our acquisitions of the digital DTG printing assets of SPSI in 2016 enabled us to strengthen our direct sales channel and gain access to a large screen-printing customer base, the acquisition of business assets from Hirsch in 2019 helped us transition to a full direct sales model in North America, and our acquisition of Tesoma in 2022 provided us the ability to integrate the curing step of the DTG printing process directly into our solutions via the Apollo.
Factors including rising income per capita, favorable demographics and shifting consumer trends are expected to drive long-term demand in the apparel market. 27 The global printed textile industry involves printing on fabric rolls, finished garments and unsewn pieces of cut fabric at various stages along the value chain in the production of goods for fashion, apparel, and home decoration.
Factors including rising income per capita, favorable demographics and shifting consumer trends are expected to drive long-term demand in the apparel market. 31 The global printed textile industry involves printing on fabric rolls, finished garments and unsewn pieces of cut fabric at various stages along the value chain in the production of goods for fashion, apparel, and home decoration.
Digital textile printing generally uses either dye-based or pigment-based ink. 30 The digital textile printing market principally includes two types of printing processes: Direct-to-Garment (DTG) In DTG printing, an inkjet printer prints directly on the textile. DTG printing allows for printing images and designs onto finished textiles, such as t-shirts that have already been sewn and dyed.
Digital textile printing generally uses either dye-based or pigment-based ink. 34 The digital textile printing market principally includes two types of printing processes: Direct-to-Garment (DTG) In DTG printing, an inkjet printer prints directly on the textile. DTG printing allows for printing images and designs onto finished textiles, such as t-shirts that have already been sewn and dyed.
From a practical point of view, companies are focusing their sustainability strategies to include technological improvements that enable cleaner production, pollution prevention, and other sustainable manufacturing practices. 28 Overview of Textile Printing Processes The graphic and accompanying description below present various textile printing processes: Screen printing is the most commonly used printing process for textiles.
From a practical point of view, companies are focusing their sustainability strategies to include technological improvements that enable cleaner production, pollution prevention, and other sustainable manufacturing practices. 32 Overview of Textile Printing Processes The graphic and accompanying description below present various textile printing processes: Screen printing is the most commonly used printing process for textiles.
Operating and Financial Review and Prospects- Taxation and Israeli Government Programs Applicable to Our Company” below; and o CE regulations for the European market. Israeli Environmental, Health and Safety Regulations .
Operating and Financial Review and Prospects- Taxation and Israeli Government Programs Applicable to Our Company” below; and ○ CE regulations for the European market. Israeli Environmental, Health and Safety Regulations .
The Atlas MAX Poly harnesses an innovative low temperature curing ink set alongside a new process and consumables to deliver highest quality digital printing on dyed polyester as well, as delivering improved productivity rates. These new capabilities expand our opportunity within the sports and athleisure spaces.
The Atlas MAX Poly harnesses an innovative low temperature curing ink set alongside a new process and consumables to deliver highest quality digital printing on dyed polyester as well as delivering improved productivity rates. These new capabilities expanded our opportunity within the sports and athleisure spaces.
The maximum size of an image or design is limited based on the circumference of the cylinders, which is typically no more than 60 centimeters. 29 The following diagram depicts the analog rotary screen printing process: Automated Carousel Screen Printing. Automated carousel screen printing is commonly used to print on finished garments and cut pieces.
The maximum size of an image or design is limited based on the circumference of the cylinders, which is typically no more than 60 centimeters. 33 The following diagram depicts the analog rotary screen printing process: Automated Carousel Screen Printing. Automated carousel screen printing is commonly used to print on finished garments and cut pieces.
Additionally, we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance. C.
Additionally, we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance. 40 C.
In July 2022, we introduced the Atlas MAX Poly, which extends our technological capabilities in high quality printing on polyester even further by leveraging the Kornit MAX technology and incorporating it as part of our proprietary polyester printing process, which is based on the NeoPigment™ Olympia ink set.
In July 2022, we introduced the Atlas MAX Poly, which extended our technological capabilities in high quality printing on polyester even further by leveraging the Kornit MAX technology and incorporating it as part of our proprietary polyester printing process, which is based on the NeoPigment® Olympia ink set.
Kornit Konnect, our cloud-based, software analytics connectivity platform enables businesses to maximize productivity of their digital printing solutions. In its first phase, Kornit Konnect enables businesses to monitor production, analyze data, be insights-driven and manage their fleet, in order to eliminate blind spots.
Kornit Konnect, our cloud-based, software analytics connectivity platform enables businesses to maximize productivity of their digital printing solutions. In its first phase, Kornit Konnect enables businesses to monitor production, analyze data, become insights-driven and manage their fleet, in order to eliminate blind spots.
Maximize Impressions We are focused on increasing sales to existing customers by introducing new digital printing applications, developing new features and functionality of our systems, offering new system upgrade products to make it easier for customers to renew their fleets and update their installed base to the latest technology available, increasing sales of software, offering customers empowerment program inclusive of basic and advanced training, with a goal of enabling our customers to increase utilization of their systems.
Maximize Impressions We are focused on increasing sales to existing customers by introducing new digital printing applications, developing new features and functionality of our systems, offering new system upgrade products to make it easier for customers to renew their fleets and update their installed base to the latest technology available, offering customers empowerment programs inclusive of basic and advanced training, with a goal of enabling our customers to increase utilization of their systems.
The aggregate amount for 2021 and 2022 included approximately $2.5 million paid for the land for our new 6,700 square meter ink manufacturing and storage facility in Kiryat Gat, Israel, which we opened on January 26, 2022.
The aggregate amount for 2021 and 2022 included approximately $2.5 million paid for the land for our new 6,637 square meter ink manufacturing and storage facility in Kiryat Gat, Israel, which we opened on January 26, 2022.
We have entered into a lease for these headquarters, which includes approximately 15,845 square feet of offices and warehouse. The lease for this location expires in February 2028. We maintain additional sales, support and marketing offices in Dusseldorf, Hong Kong, United Kingdom, Massachusetts, Slovakia, and Japan.
We have entered into a lease for these headquarters, which includes approximately 15,845 square feet of offices and a warehouse. The lease for this location expires in February 2028. We maintain additional sales, support and marketing offices in: Dusseldorf, Germany; Hong Kong; the United Kingdom and Japan.
Industry trends E-Commerce The global e-commerce market has undergone significant growth in the past two decades, expanding in the U.S. from only ~2% of total retail sales in 2003 to ~16% in 2023 according to the U.S. census bureau.
Industry trends E-Commerce The global e-commerce market has undergone significant growth in the past two decades, expanding in the U.S. from only ~2% of total retail sales in 2003 to 16.2% in late 2024 according to the U.S. census bureau.
The following chart summarizes the key steps involved in the DTF printing process: Recent technological developments in digital printing have supported the adoption of digital printing by the global printed textile industry, including by custom decorators, online businesses, brand owners and contract printers.
The following chart summarizes the key steps involved in the Direct-to-Fabric printing process: Recent technological developments in digital printing have supported the adoption of digital printing by the global printed textile industry, including by custom decorators, online businesses, brand owners and contract printers.
These include: o Israeli environmental, health and safety regulations, including conditions set by the Israeli Ministry of Environmental Protection for the operation of our manufacturing and development facilities which use chemicals and produce waste materials, as further detailed below; o the U.S.
These include: ○ Israeli environmental, health and safety regulations, including conditions set by the Israeli Ministry of Environmental Protection for the operation of our manufacturing and development facilities which use chemicals and produce waste materials, as further detailed below; ○ the U.S. Foreign Corrupt Practices Act and the U.S.
We own the property and the building at this facility (subject to a 49-year lease agreement with the ILA, which will renew for an additional 49 years). Our capital expenditures for 2021, 2022 and 2023 included approximately $2.5 million paid for the land for our new 6,700 square meter ink manufacturing and storage facility in Kiryat Gat, Israel.
We own the property and the building at this facility (subject to a 49-year lease agreement with the ILA, which will renew for an additional 49 years). Our capital expenditures for 2021 and 2022 included approximately $2.5 million paid for the land for our new 71,440 square foot ink manufacturing and storage facility in Kiryat Gat, Israel.
Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer an industrial digital printing solution, the Presto, which targets the on-demand DTF market.
Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer an industrial digital printing solution, the Presto MAX, which targets the on-demand Direct-to-Fabric market.
The software manages the system operation and prepares image files for print. QuickP Production is a simple to use solution that allows users to control key operating parameters, such as print resolution, perform maintenance and calibration procedures and import image files and prepare them for print.
QuickP Production is a simple to use solution that allows users to control key operating parameters, such as print resolution, perform maintenance and calibration procedures and import image files and prepare them for print.
Kornit (Shanghai) Digital Co., Ltd., which was incorporated on December 8, 2021, is wholly owned by Kornit Digital Asia Pacific Limited. D. Property, Plant and Equipment Our corporate headquarters are located in Rosh Ha’Ayin, Israel in an office and research and development facility consisting of approximately 172,492 square feet.
Custom Gateway Limited has several subsidiaries. Kornit (Shanghai) Digital Co., Ltd., which was incorporated on December 8, 2021, is wholly owned by Kornit Digital Asia Pacific Limited. D. Property, Plant and Equipment Our corporate headquarters are located in Rosh Ha’Ayin, Israel in an office and research and development facility consisting of approximately 125,658 square feet.
ITEM 4. Information on the Company . A. History and Development of the Company Our History Our legal name is Kornit Digital Ltd., and we were incorporated under the laws of the State of Israel on January 16, 2002. We shipped our first system in 2005.
ITEM 4. Information on the Company . A. History and Development of the Company Our History Our legal name is Kornit Digital Ltd., and we were incorporated under the laws of the State of Israel on January 16, 2002. We shipped our first system in 2005. In April 2015, we completed our initial public offering, or IPO.
Principal Capital Expenditures Capital expenditures in the years ended December 31, 2021, 2022, and 2023 were approximately $14.5 million, $18.0 million and $7.0 million, respectively, and were principally used for the purchase of property, plant and equipment.
Principal Capital Expenditures Capital expenditures in the years ended December 31, 2022, 2023 and 2024 were approximately $18.0 million, $7.0 million, and $15.1 million, respectively, and were principally used for the purchase of property, plant and equipment and, in 2024, for the production of equipment for lease.
While the DTG market generally involves printing on finished garments, the DTF market is focused on printing on fabrics that are subsequently converted into finished garments, home or office décor, and other items. The Presto and Presto MAX, like our predecessor DTF product, the Allegro, utilize our proprietary wet-on-wet printing methodology and house an integrated drying and curing system.
While the DTG market generally involves printing on finished garments, the Direct-to-Fabric market is focused on printing on fabrics that are subsequently converted into finished garments, home décor and other items. The Presto MAX, like our predecessor Direct-to-Fabric products, the Presto and Allegro, utilizes our proprietary wet-on-wet printing methodology and houses an integrated drying and curing system.
At the same time, we are pursuing new high-volume customers, including new customers in the screen replacement market, which should help drive an increase in the sale of ink and other consumables.
Besides reaching new customers, we also seek to increase our sales to existing customers, particularly sales of our ink and other consumables. At the same time, we are pursuing new high-volume customers, including new customers in the screen replacement market, which should help drive an increase in the sale of ink and other consumables.
Social Media Social media platforms, merging media and network categories, have significantly impacted the retail landscape, influencing communication, consumer trends, and brand perception. As of January 2023, 4.76 billion users (59% of the global population) were active on social media, with over 302 million users in the U.S. alone, according to DataReportal and Statista.
Social Media Social media platforms, merging media and network categories, have significantly impacted the retail landscape, influencing communication, consumer trends, and brand perception. As of October 2024, 5.22 billion users (63.8% of the global population) were active on social media, with over 304 million users in the U.S. alone, according to DataReportal and Statista.
Foreign Corrupt Practices Act; Anti-Money Laundering Act of 2020 o laws pertaining to the hiring, treatment, safety and discharge of employees; o import/ export control regulations related to chemicals and hazardous substances, as described below; o Israeli tax regulations, as described under “ITEM 5.
Anti-Money Laundering Act, as well as similar laws in Israel, UK and the European Union; ○ laws pertaining to the hiring, treatment, safety and discharge of employees; ○ import/ export control regulations related to chemicals and hazardous substances, as described below; ○ Israeli tax regulations, as described under “ITEM 5.
These three ink sets are available in seven colors (W+CMYKRG) and a complementary binding agent. NeoPigment™ Olympia is designed for our polyester printing system, the Avalanche Poly Pro and the Atlas MAX Poly, and is available in five colors (W+CMYK), with an enhancer for the Avalanche Poly Pro and 7 colors (W+CMYKNyNp) on the Atlas MAX Poly.
NeoPigment® Olympia is designed for our polyester printing system, the Avalanche Poly Pro and the Atlas MAX Poly, and is available in five colors (W+CMYK), with an enhancer for the Avalanche Poly Pro and 7 colors (W+CMYKNyNp) on the Atlas MAX Poly.
This new platform is also equipped with Neon applications and a proprietary consumable called ProGuard, which acts as a barrier between the fabric and print and promotes the inhibition of dye migration. In addition, this solution improves print quality on polyester cotton blends. 32 Apollo, the newest addition to our Max portfolio, was successfully beta tested during 2023.
This platform is also equipped with Neon applications and a proprietary consumable called ProGuard, which acts as a barrier between the fabric and print and promotes the inhibition of dye migration. In addition, this solution improves print quality on polyester cotton blends. Apollo was launched in January 2024.
The total cost for land, construction of the facility, design and installation of the production line, was approximately NIS 69 million (approximately $22 million). We used cash on hand to finance the construction of that facility.
The total cost for land, construction of the facility, design and installation of the production line, was approximately NIS 69 million (approximately $22 million). We used cash on hand to finance the construction of that facility. 29 On April 5, 2022, we completed the acquisition of Lichtenau, Germany-based Tesoma GmbH, or Tesoma.
Our customers can renew maintenance and support contracts for additional periods by purchasing a maintenance and support package that covers remote support, software upgrades and onsite yearly maintenance or they can choose to rely on our support on a non-contractual time and material basis.
Our customers can renew maintenance and support contracts for additional periods by purchasing a maintenance and support package that covers remote support, software upgrades and onsite yearly maintenance or they can choose to rely on our support on a non-contractual time and material basis The General Textile Industry Textile is a flexible material formed using various processes, including weaving, knitting, crocheting, or felting.
RSS is a single adjustable pallet for multiple applications and product sizes The RSS increases the speed and productivity of on-demand direct-to-garment production with a single pallet platform that addresses a wide range of applications, from T-shirts with or without neck tags and hoodies to children’s apparel.
The RSS increases the speed and productivity of on-demand direct-to-garment production with a single pallet platform that addresses a wide range of applications, from T-shirts with or without neck tags and hoodies, to children’s apparel. This solution also reduces the downtime associated with pallet changes and streamlined production for accelerated time-to-market.
Government Regulation We are subject to various local, state, federal and international laws, regulations, and agencies that affect businesses generally, and our business in particular.
Third Party Fulfillment Centers . Companies serving as third party fulfillment for printed textile retailers. 39 Government Regulation We are subject to various local, state, federal and international laws, regulations, and agencies that affect businesses generally, and our business in particular.
In addition, the term for the remaining space under the lease would be amended to expire in December 2028, with an option for us to extend the lease for an additional two-year period. In January 2022, we announced the official opening of a new, modern, ink manufacturing facility in Kiryat Gat.
The lease for this office expires in December 2028, with an option for us to extend the lease for an additional two years. In January 2022, we announced the official opening of a new, modern, ink manufacturing facility in Kiryat Gat, Israel.
Tesoma GmbH is wholly owned by Kornit Digital Technologies Ltd. Custom Gateway, which currently operates under the name KornitX, was incorporated on May 5, 2010 under the laws of England and Wales, and is wholly owned by Kornit Digital UK Ltd. Custom Gateway Limited has several subsidiaries.
Tesoma GmbH (a German company, whose production activities were recently transferred to our third-party manufacturer) is wholly owned by Kornit Digital Technologies Ltd. Custom Gateway, which currently operates under the name Kornit Digital/KornitX, was incorporated on May 5, 2010 under the laws of England and Wales, and is wholly owned by Kornit Digital UK Ltd.
With the rise of social media, consumers also increasingly expect that both their online and in-store shopping experiences will reflect the latest apparel trends, which are evolving more rapidly than ever before. To meet these consumer demands, many fulfillers and demand generators have faced rising inventories, higher variable costs, more unsold finished goods, and lower pricing.
With the rise of social media, consumers also increasingly expect that both their online and in-store shopping experiences will reflect the latest apparel trends, which are evolving more rapidly than ever before.
Some environmental, health and safety laws and regulations allow for strict, joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a potentially responsible party under such laws.
Some environmental, health and safety laws and regulations allow for strict, joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a potentially responsible party under such laws. In addition, our customers may need to obtain regulatory permits to operate our systems in their facilities. Import/Export Control Regulation of Chemicals and Hazardous Substances .
Our Presto Max platform brings unique capabilities to the market allowing our customers to digitally print on dyed fabrics, utilizing our white NeoPigment™ ink, both as a spot color and as a base. Presto Max also allows printing using Neon colors to achieve expanded color gamut and a wide variety of applications.
Our system within our Direct-to-Fabric business include the Presto MAX. Our Presto MAX platform brings unique capabilities to the market allowing our customers to digitally print on dyed fabrics, utilizing our white NeoPigment® ink, both as a spot color and as a base.
When compared with analog methods of production, our solutions significantly reduce production lead times and enable our customers to produce smaller quantities of individually printed designs more effectively, sustainably, and cost-efficiently.
To meet these consumer demands, many fulfillers and demand generators have faced rising inventories, higher variable costs, more unsold finished goods, and lower pricing. 30 When compared with analog methods of production, our solutions significantly reduce production lead times and enable our customers to produce smaller quantities of individually printed designs more effectively, sustainably, and cost-efficiently.
According to a report published by Statista in February 2024, the value of the global apparel retail market was approximately $1.39 trillion in 2020 and was forecasted to grow from an estimated $1.57 trillion in 2022 to $1.94 trillion in 2027, reflecting a compound annual growth rate (CAGR) of approximately 4.5% from 2022 to 2027.
According to a report published by Statista in October 2024, the value of the global apparel retail market was approximately $1.73 trillion in 2023 and is forecasted to grow to $2.04 trillion in 2029, reflecting a compound annual growth rate (CAGR) of 2.6% between 2025 and 2029.
We have historically generated a significant portion of our sales through a global network of independent agents, distributors and value-added resellers that we refer to as our channel partners. Our channel partners, in turn, sell the solutions they purchase from us to customers for whom we provide installation services, or sell and install our solutions on their own.
Our channel partners, in turn, sell the solutions they purchase from us to customers for whom we provide installation services, or sell and install our solutions on their own.
In addition, our customers may need to obtain regulatory permits to operate our systems in their facilities. 35 Import/Export Control Regulation of Chemicals and Hazardous Substances . The export of our products internationally subjects us to environmental laws and regulations concerning the import and export of chemicals and hazardous substances.
The export of our products internationally subjects us to environmental laws and regulations concerning the import and export of chemicals and hazardous substances.
The SEC maintains an Internet site (http:// www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
As a company whose ordinary shares are registered under the Exchange Act, we report publicly to the SEC. The SEC maintains an Internet site (http:// www.sec.gov) that contains reports and other information regarding issuers that file electronically with the SEC.
Additionally, Kornit is anticipated to launch the Qualiset system, which facilitates automatic machine calibrations ensuring quality and consistency. Our series of ink sets for DTG systems, includes NeoPigment™, NeoPigment™ Rapid, NeoPigment™ Eco-Rapid and NeoPigment™ Olympia. The first two ink sets are designed for Kornit legacy products, while the Eco-Rapid is the most advanced ink set designed for retail quality.
Our series of ink sets for DTG systems, includes NeoPigment®, NeoPigment® Rapid, NeoPigment® Eco-Rapid and NeoPigment® Olympia. The first two ink sets are designed for Kornit legacy products, while the Eco-Rapid is the most advanced ink set designed for retail quality. These three ink sets are available in seven colors (W+CMYKRG) and a complementary binding agent.
For our roll-to-roll Direct-to Fabric systems, we offer the NeoPigment™ Robusto ink set, which consists of up to nine colors (W+CMYKRGNyNp) in several different configurations. We also offer customers maintenance and support services, as well as value-added services and application consulting, aimed at optimizing the number of impressions printed by our systems.
For our roll-to-roll systems, we offer the NeoPigment® Robusto ink set, which consists of up to nine colors (W+CMYKRGNyNp) in several different configurations.
We began selling the Presto commercially in the second quarter of 2019, four years after having introduced our initial DTF digital textile printing solution, the Kornit Allegro in the second quarter of 2015. 26 Consumers today have grown accustomed to shopping online with a vast selection of products advertising rapid shipping times; however, fulfillers and demand generators have historically relied on antiquated, pollutive, and labor-intensive production methods.
It offers a single-step, eco-friendly, stand-alone industrial Direct-to-Fabric digital textile printing solution. Consumers today have grown accustomed to shopping online with a vast selection of products advertising rapid shipping times; however, fulfillers and demand generators have historically relied on antiquated, pollutive, and labor-intensive production methods.
The General Textile Industry Textile is a flexible material formed using various processes, including weaving, knitting, crocheting, or felting. Textile is conventionally used in a broad range of applications including fashion, apparel, and home decor.
Textile is conventionally used in a broad range of applications including fashion, apparel, footwear and home decor.
Kornit’s new energy-efficient Smart Curing solutions include Orion for mid-level production, and Titan for higher-capacity volumes – both optimized for compatibility with Kornit Atlas MAX systems and based on field-proven solutions developed by Tesoma. These highly efficient curing systems sync production and finishing for an end-to-end process that reduces both energy consumption and total cost of ownership (TCO).
We intend to continue developing and adding additional features to Apollo to further enhance flexibility, quality, and productivity. 36 Kornit’s new energy-efficient Smart Curing solutions includes Orion for mid-level production, and Titan for higher-capacity volumes - both optimized for compatibility with Kornit Atlas MAX systems and based on field-proven solutions developed by Tesoma.
Our DTF products are designed to deliver printing on rolls of fabric that are subsequently converted into finished goods. Our DTF capabilities cater to different market segments such as fashion and home or office décor. Like our DTG products, our DTF solutions are designed to print on a wide range of fabrics.
Our Direct-to-Fabric capabilities cater to different market segments such as fashion and home décor. Like our DTG products, our Direct-to-Fabric solutions are designed to print on a wide range of fabrics. Our digital Direct-to-Fabric printing products also use our wet-on-wet patent and are a leading single-step, eco-friendly, stand-alone industrial Direct-to-Fabric digital textile printing products available on the market.
Concurrently, the creator economy is expanding, with social media and e-commerce platforms enabling creators to monetize their digital content. In 2021, e-commerce apparel sales reached $159 billion, a 16% increase from 2020, highlighting the impact of the COVID-19 pandemic on accelerating online shopping trends.
Concurrently, the creator economy is expanding, with social media and e-commerce platforms enabling creators to monetize their digital content. In 2024, e-commerce apparel sales are projected to reach $457 billion, accounting for 26% of the overall apparel market, and reflecting a 12% increase from 2023.
Our agent for service of process in the United States is Kornit Digital North America Inc., located at 480 South Dean Street Englewood, NJ 07631, and its telephone number is (262) 518-0200. As a company whose ordinary shares are registered under the Exchange Act, we report publicly to the SEC.
Our website address is www.kornit.com (the information contained therein or linked thereto shall not be considered incorporated by reference in this annual report). Our agent for service of process in the United States is Kornit Digital North America Inc., located at 480 South Dean Street Englewood, NJ 07631, and its telephone number is (262) 518-0200.
This solution also reduces the downtime associated with pallet changes and streamlined production for accelerated time-to-market. Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer an industrial digital printing solutions which target the on-demand DTF market.
Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer industrial digital printing solutions which target the on-demand Direct-to-Fabric market. Our Direct-to-Fabric products are designed to deliver printing on rolls of fabric that are subsequently converted into finished goods.
We intend to capitalize on the continued growth of the DTG market by expanding our diverse global customer base, focusing particularly on fast-growing web-to-print businesses. We also seek to increase our sales to existing customers, particularly sales of our ink and other consumables.
We intend to capitalize on the continued growth of the DTG market by expanding our diverse global customer base, focusing particularly on fast-growing web-to-print businesses. We similarly strive to capture a greater share of the growing market for Direct-to-Fabric, which has emerged as a transformative technology within the apparel industry.
The total cash consideration for this acquisition was $15.0 million. On April 5, 2022, we completed the acquisition of Lichtenau, Germany-based Tesoma GmbH, or Tesoma. Tesoma is globally recognized for the high-quality engineering and performance of its cutting-edge textile curing solutions. The total cash consideration for this acquisition was 15.4 million Euros. B.
Tesoma is globally recognized for the high-quality engineering and performance of its cutting-edge textile curing solutions. The total cash consideration for this acquisition was 15.4 million Euros. In February 2025, after having integrated Tesoma’s customer service, and research and development, teams into our overall business operations, we commenced the transition of Tesoma’s production activities to our third-party manufacturer.
We also maintain a disaster recovery site in Milwaukee, Wisconsin, where we manufacture the fixation agent for some of our printers. 36 In November 2022, we entered into an agreement for the lease of an additional 18,256 square feet in our office in Dusseldorf, Germany, which we primarily intend to use as an experience center.
We also maintain a disaster recovery site in Milwaukee, Wisconsin, where we are able to manufacture the fixation agent for some of our printers and ink.
We are subject to the provisions of the Israeli Companies Law, 5759-1999. Our principal executive offices are located at 12 Ha’Amal Street, Rosh Ha’Ayin 4809246, Israel, and our telephone number is +972-3-908-5800. Our website address is www.kornit.com (the information contained therein or linked thereto shall not be considered incorporated by reference in this annual report).
Our ordinary shares began trading on the Nasdaq Global Select Market, under the symbol “KRNT,” on April 2, 2015. We are subject to the Israeli Companies Law, 5759-1999. Our principal executive offices are located at 12 Ha’Amal Street, Rosh Ha’Ayin 4809246, Israel, and our telephone number is +972-3-908-5800.
Companies that produce printed textiles and sell their own designs. Hybrid Printers . Companies that produce printed textiles both in-house and outsource to third party fulfillment providers. Third Party Fulfillment Centers . Companies serving as third party fulfillment for printed textile retailers.
Our Customers Our diverse global customer base consisted of approximately 865 active customers as of December 31, 2024. Our installed base serves a variety of customers, operating through different business models. Self-Fulfillment . Companies that produce printed textiles and sell their own designs. Hybrid Printers . Companies that produce printed textiles both in-house and outsource to third party fulfillment providers.
Presto Max also includes Kornit’s innovative XDi technology allowing 3D-effects and enabling our customers penetrate into higher margin premium markets. We expect to release our new “Vivido” ink set in the upcoming year. The Vivido is expected to enable the printing of deep and neutral blacks while reducing ink consumption.
Presto MAX also allows printing using Neon colors to achieve expanded color gamut and a wide variety of applications. Presto MAX also includes Kornit’s innovative XDi technology allowing 3D-effects and enabling our customers to penetrate higher margin premium markets. During the last quarter of 2024, we commenced the final test stage of our “Vivido” ink set.
As of December 31, 2023, we had service contracts in place with approximately 43% of our industrial and mass production installed base.
As of December 31, 2024, we had service contracts in place with approximately 34% of our industrial and mass production installed base. AIC™ – All-Inclusive Click business model In early 2024, the Company formally introduced the All-Inclusive Click (AIC™) model, which is designed to provide customers with a predictable, scalable, and cost-effective approach to digital printing.
Smart curing systems allow integration between our different Max platforms to the curing system, increasing print quality, energy efficiency and flexibility. During 2023 we launched our Rapid Size Shifter (RSS) Pallet for our Atlas Max platform.
The Lunar smart curing platform brings the same capabilities to Kornit’s Apollo solution. These highly efficient curing systems sync production and finish for an end-to-end process that reduces both energy consumption and total cost of ownership (TCO). Smart curing systems allow integration between our different Max platforms to the curing system, increasing print quality, energy efficiency and flexibility.
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In April 2015, we completed our initial public offering, or IPO, pursuant to which we sold 8.165 million ordinary shares for aggregate gross proceeds of $81.65 million, before underwriting discounts, commissions and expenses. Our ordinary shares began trading on the Nasdaq Global Select Market, under the symbol “KRNT,” on April 2, 2015.
Added
Consequently, production activities at Tesoma’s German facility were discontinued as of March 15, 2025. We did not make any capital expenditures for the acquisition of interests in other companies in 2023 or 2024, nor have we done so thus far in 2025. B.
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Our capital expenditures for the acquisition of interests in other companies within the last three years and through the current time are described below. 25 On August 10, 2021, we completed the acquisition of certain assets of Voxel8, primarily related to its advanced additive manufacturing technology for textiles, which allows for the digital fabrication of functional features with zonal control of material properties, and for utilizing high-performance elastomers adhering to inkjet technology.
Added
According to Future Market Insights (FMI), the global digital textile printing market is set to experience substantial growth over the forecast period, with a projected compound annual growth rate (CAGR) of 12.1% from 2024 to 2034.
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It offers the sole single-step, eco-friendly, stand-alone industrial DTF digital textile printing solution available on the market, following its predecessor the Allegro.
Added
This remarkable growth is expected to drive the market from USD 2,989.6 million in 2024 to a forecasted USD 8,897.3 million by 2034, indicating strong demand for advanced printing technologies in the textile industry.
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We primarily sell the Presto to innovative web-based businesses operating on-demand models that require a high degree of variety and limited quantity orders, as well as to fabric converters, which source large quantities of fabric and convert the untreated fabrics into finished materials to be sold to garment and home décor manufacturers.
Added
Kornit’s RIP (Raster Image Processor) solution – K-RIP, is integrated into the Apollo, enabling it to print spot colors and specific Pantones with ease.
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We believe that with the Presto Max we are well positioned to take advantage of the growing trend towards customized fashion, home décor and on-demand fabric printing, where there is an increased focus on sustainable production.
Added
During 2023 we launched our Rapid Size Shifter (RSS) Pallet for our Atlas Max platform. RSS is a single adjustable pallet for multiple applications and product sizes.
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According to The Future of Digital Textile Printing report published by Pira in December 2023, it is estimated that approximately 93% of the global output of printed textile in 2022 was carried out via analog methods of printing.
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In June 2024, we launched the new Atlas MAX Plus system which uses Kornit’s proven Atlas MAX platform to bring increased productivity of up to150 garments per hour. With integrated Smart Curing, Rapid Size Shifter pallets, and qualiset, the offering takes smart production capabilities a step forward introducing production flexibility, autonomous calibration, consistency.
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According to the same Pira report, the global value of digital printed textile output was estimated to be approximately $4.7 billion in 2023 and expected to grow to approximately $7.54 billion by 2028, reflecting a CAGR of 9.7% in value, in the five-year period from 2023 to 2028, mainly driven by changes in consumer demand, sustainability and brand needs to mitigate excess inventory.
Added
The Vivido is expected to enable the printing of deep and natural blacks while reducing ink consumption and improving hand feel. Additionally, Kornit is anticipated to launch the Qualiset system also as part of the Presto MAX platform, which facilitates automatic machine calibrations ensuring quality and consistency.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

74 edited+13 added−40 removed103 unchanged
Biggest changeYear Ended December 31, 2022 Net cash used in investing activities was $407.3 million for the year ended December 31, 2022, which was primarily attributable to investments in marketable securities and bank deposits of $403.4 million, purchase of property, plant and equipment of $18.0 million, and $14.7 million of cash paid in connection with acquisitions, offset, in part, by $29.8 million of proceeds from the sale and maturity of marketable securities. 49 Net Cash Provided by (Used in) Financing Activities Year Ended December 31, 2023 Net cash used in financing activities was $56.5 million for the year ended December 31, 2023, which was primarily attributable to the repurchase of ordinary shares of $55.8 million and payments related to shares withheld for taxes of $1 million.
Biggest changeNet cash provided by investing activities for the year ended December 31, 2024, was primarily attributable to proceeds from short-term bank deposits and marketable securities of $109.3 million, only partly offset, by $62.7 million investments in marketable securities and purchase of property, plant and equipment, including equipment under lease, of $15.9 million.
These adjustments were offset by the elimination of certain non-cash changes to our operating assets and liabilities, which, when eliminated, had a net impact of increasing the cash used in our operating activities, including an increase of accounts receivables of $19.2 million, a decrease in accrued expenses and other liabilities of $10.5 million and a decrease in trade payables of $6.5 million, partially offset by an increase in inventory of $11.0 million.
These adjustments were offset by the elimination of certain non-cash changes to our operating assets and liabilities, which, when eliminated, had a net impact of increasing the cash used in our operating activities, including an increase of accounts receivables of $19.2 million, a decrease in accrued expenses and other liabilities of $10.5 million and a decrease in trade payables of $6.5 million, partially offset by an increase in inventory, net of $11.0 million.
Therefore, we identify a contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to each performance obligation in the contract, and recognize revenues when, or as, we satisfy a performance obligation.
Therefore, we identify a contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to each performance obligation in the contract, and recognize revenues when, or as, we satisfy a performance obligation.
We primarily sell the Presto to innovative web-based businesses operating on-demand models that require a high degree of variety and limited quantity orders, as well as to fabric converters, which source large quantities of fabric and convert the untreated fabrics into finished materials to be sold to garment and home décor manufacturers.
We primarily sell the Presto MAX to innovative web-based businesses operating on-demand models that require a high degree of variety and limited quantity orders, as well as to fabric converters, which source large quantities of fabric and convert the untreated fabrics into finished materials to be sold to garment and home décor manufacturers.
We are improving our software solutions to simplify workflows in the printing process, by offering a complete solution from web order intake through graphic job preparation and execution. 40 Sales and Marketing Expenses. The largest component of our sales and marketing expenses is salaries and related personnel expenses for our marketing, sales and other sales-support employees.
We are improving our software solutions to simplify workflows in the printing process, by offering a complete solution from web order intake through graphic job preparation and execution. Sales and Marketing Expenses. The largest component of our sales and marketing expenses is salaries and related personnel expenses for our marketing, sales and other sales-support employees.
Eligibility for benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any governmental authority. 44 There can be no assurance that we will continue to qualify as an Industrial Company or that the benefits described above will be available in the future.
Eligibility for benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any governmental authority. There can be no assurance that we will continue to qualify as an Industrial Company or that the benefits described above will be available in the future.
E. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). These accounting principles are more fully described in Note 2 to our consolidated financial statements included elsewhere in this annual report and require us to make certain estimates, judgments and assumptions.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). These accounting principles are more fully described in Note 2 to our consolidated financial statements included elsewhere in this annual report and require us to make certain estimates, judgments and assumptions.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts, the expansion of our sales and marketing activities, the timing of introductions of new solutions and the continuing market acceptance of our solutions, as well as other business development efforts.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts, the expansion of our sales and marketing activities, the timing of introductions of new solutions and the continuing market acceptance of our solutions, as well as other business development efforts including acquisitions.
We believe that with the Presto we are well positioned to take advantage of the growing trend towards customized fashion, home décor and on-demand fabric printing, where there is an increased focus on sustainable production.
We believe that with the Presto MAX we are well positioned to take advantage of the growing trend towards customized fashion, home décor and on-demand fabric printing, where there is an increased focus on sustainable production.
We believe that the following significant accounting policies are the basis for the most significant judgments and estimates used in the preparation of our consolidated financial statements. 50 Revenue Recognition We generate revenues from sales of systems, consumables and services.
We believe that the following significant accounting policies are the basis for the most significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition We generate revenues from sales of systems, consumables and services.
Operating expenses also include allocated overhead costs for facilities, including rent payments under our facility leases. Research and Development Expenses, net. The largest component of our research and development expenses, net of government grants, is salaries and related personnel expenses for our research and development employees.
Operating expenses also include allocated overhead costs for facilities, including rent payments under our facility leases. 45 Research and Development Expenses, net. The largest component of our research and development expenses, net of government grants, is salaries and related personnel expenses for our research and development employees.
The benefits period is limited to 12 years from the year the company first chose to have the tax benefits apply. 45 A company qualifying for tax benefits under the 2005 Amendment which pays a dividend out of income derived by its Benefited Enterprise during the tax exemption period will be subject to deferred corporate tax in respect of the gross amount of the dividend distributed (grossed-up to reflect the pre-tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which would have otherwise been applicable.
The benefits period is limited to 12 years from the year the company first chose to have the tax benefits apply. 50 A company qualifying for tax benefits under the 2005 Amendment which pays a dividend out of income derived by its Benefited Enterprise during the tax exemption period will be subject to deferred corporate tax in respect of the gross amount of the dividend distributed (grossed-up to reflect the pre-tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which would have otherwise been applicable.
We plan to accomplish these goals by investing in our direct sales force, developing new applications for our systems, introducing new solutions, and growing our relationships with channel partners. A.
We plan to accomplish these goals by investing in our direct sales force, developing new applications for our systems, introducing new solutions, and growing our relationships with channel partners.
However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if subsequently distributed to individuals or a non-Israeli company, withholding of 20% or such lower rate as may be provided in an applicable tax treaty will apply). 46 The 2011 Amendment also provided transitional provisions to address companies already enjoying existing tax benefits under the Investment Law.
However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if subsequently distributed to individuals or a non-Israeli company, withholding of 20% or such lower rate as may be provided in an applicable tax treaty will apply). 51 The 2011 Amendment also provided transitional provisions to address companies already enjoying existing tax benefits under the Investment Law.
While our statements of cash flows in Item 18 of this annual report include cash flow data for each of the three years ended December 31, 2021, 2022, and 2023, the data and discussion contained in this Item 5.B is limited to a comparison of our liquidity and capital resources- including cash flows- for the years ended December 31, 2022 and 2023.
While our statements of cash flows in Item 18 of this annual report include cash flow data for each of the three years ended December 31, 2022, 2023, and 2024, the data and discussion contained in this Item 5.B is limited to a comparison of our liquidity and capital resources- including cash flows- for the years ended December 31, 2023 and 2024.
ITEM 5. Operating and Financial Review and Prospects . The information contained in this section should be read in conjunction with our financial statements for the year ended December 31, 2023 and related notes and the information contained elsewhere in this annual report. Our financial statements have been prepared in accordance with U.S. GAAP.
ITEM 5. Operating and Financial Review and Prospects . The information contained in this section should be read in conjunction with our financial statements for the year ended December 31, 2024 and related notes and the information contained elsewhere in this annual report. Our financial statements have been prepared in accordance with U.S. GAAP.
Our financial statements have been prepared in accordance with US GAAP . 38 Components of Statement of Operations Revenues Systems, Ink and Other Consumables, Value Added Services We generate revenues from the sale of our systems, ink and other consumables, and services, including software subscriptions and transaction-based revenues.
Our financial statements have been prepared in accordance with US GAAP . 43 Components of Statement of Operations Revenues Systems, Ink and Other Consumables, Value Added Services We generate revenues from the sale of our systems, ink and other consumables, and services, including software subscriptions and transaction-based revenues.
Finance Income, Net Finance income, net consists of interest income and foreign currency exchange gains or losses. Foreign currency exchange changes reflect gains or losses related to changes in the value of our non-U.S. dollar denominated financial assets, primarily cash and cash equivalents, and trade payables and receivables.
Finance Income, Net Finance income, net consists of interest income, foreign currency exchange gains or losses and bank fees. Foreign currency exchange changes reflect gains or losses related to changes in the value of our non-U.S. dollar denominated financial assets, primarily cash and cash equivalents, and trade payables and receivables.
Net Cash Provided by (Used in) Investing Activities Year Ended December 31, 2023 Net cash provided by investing activities in the year ended December 31, 2023, was $26.2 million.
Year Ended December 31, 2023 Net cash provided by investing activities in the year ended December 31, 2023, was $26.2 million.
Operating Results The information contained in this section should be read in conjunction with our audited financial statements for the years ended December 31, 2021, 2022 and 2023 and related notes and the information contained in “ITEM 18. Financial Statements”.
Operating Results The information contained in this section should be read in conjunction with our audited financial statements for the years ended December 31, 2022, 2023, and 2024 and related notes and the information contained in “ITEM 18. Financial Statements”.
As of December 31, 2023, we did not have any indebtedness for borrowed amounts. Interest income consists of interest earned on our cash, cash equivalents, short-term bank deposits and marketable securities, offset by amortization of premium on marketable securities. We expect interest income to vary depending on our average investment balances and market interest rates during each reporting period.
As of December 31, 2024, we did not have any indebtedness for borrowed amounts. Interest income consists of interest earned on our cash, cash equivalents, short-term bank deposits and marketable securities, offset by amortization of premium on marketable securities. We expect interest income to vary depending upon our average investment balances and market interest rates during each reporting period.
Our current research and development efforts are primarily focused on our next generation of DTF and DTG systems. We are also investing in the development of new ink formulas for our new systems, in order to expand the range of fabrics on which we can print and improve color quality and diversification of our high-resolution images and designs.
Our current research and development efforts are primarily focused on our next generation of Direct-to-Fabric and DTG systems. We are also investing in the development of new ink formulas for our new systems, in order to expand the range of fabrics on which we can print and improve color quality and diversification of our high-resolution images and designs.
For a discussion of our cash flows for the year ended December 31, 2021, and a comparison of those cash flows with those for the year ended December 31, 2022, please see “Item 5. Operating and Financial Review and Prospects-B.
For a discussion of our cash flows for the year ended December 31, 2022, and a comparison of those cash flows with those for the year ended December 31, 2023, please see “Item 5. Operating and Financial Review and Prospects-B.
Net cash provided by investing activities for the year ended December 31, 2023, was primarily attributable to proceeds from short-term bank deposits and marketable securities of $67.2 million, offset, by purchase of property, plant and equipment of $7.0 million and $34.0 million investments in marketable securities.
Net cash provided by investing activities for the year ended December 31, 2023, was primarily attributable to proceeds from short-term bank deposits and marketable securities of $67.2 million, partly offset by the purchase of property, plant and equipment of $7.0 million and the $34.0 million investment in marketable securities.
Our print heads, spare parts and upgrade kits revenues (collectively “Spare parts”) are recognized at the point in time when control has transferred, in accordance with the agreed-upon delivery terms. Service contracts and software subscriptions are recognized over time, on a straight-line basis, over the period of the service.
Our print heads, spare parts and upgrade kits revenues are recognized at the point in time when control has transferred, in accordance with the agreed-upon delivery terms. Service contracts and software subscriptions are recognized over time, on a straight-line basis, over the period of the service.
The increase in accounts receivables reflects a higher portion of receivables with extended payment terms, with DSO increasing to 155 days for the year ended December 31, 2023, compared with 91 days for the year ended December 31, 2022.
The increase in accounts receivables reflects a higher portion of receivables with extended payment terms, with days sales outstanding, or DSO, increasing to 155 days for the year ended December 31, 2023, compared with 91 days for the year ended December 31, 2022.
Operating Results- Comparison of Period to Period Results of Operations- Comparison of the Years Ended December 31, 2022 and 2023— Operating Expenses-— Research and Development, net” and the corresponding portions of our Annual Report on Form 20-F for the year ended December 31, 2022, which we filed with the SEC on March 30, 2023. D.
Operating Results- Comparison of Period to Period Results of Operations- Comparison of the Years Ended December 31, 2023 and 2024- Operating Expenses-- Research and Development, net” and the corresponding portions of our Annual Report on Form 20-F for the year ended December 31, 2023, which we filed with the SEC on March 28, 2024. D.
While our statements of operations in Item 18 of this annual report cover each of the three years ended December 31, 2021, 2022, and 2023, the data, and discussion and analysis, in this Item 5.A do not address the year ended December 31, 2021, or a comparison of our results for that year to our results for the year ended December 31, 2022.
While our statements of operations in Item 18 of this annual report cover each of the three years ended December 31, 2022, 2023, and 2024, the data, and discussion and analysis, in this Item 5.A do not address the year ended December 31, 2022, or a comparison of our results of operations for that year compared with our results of operations for the year ended December 31, 2023.
Sales by our distributors accounted for approximately 19% and 13% of our revenues during 2022 and 2023, respectively. We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers”.
Sales by our distributors accounted for approximately 13% and 9% of our revenues during 2023 and 2024, respectively. We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers”.
Our cash requirements have principally been for working capital, capital expenditures and acquisitions, and in 2023, our cash was used also for repurchasing of our shares.
Our cash requirements have principally been for working capital, capital expenditures and acquisitions, and in 2023 and 2024, our cash was also used for repurchasing our ordinary shares.
During the years 2010 to 2019, we were entitled to a tax exemption for undistributed income (“ Trapped Profits ”) and a reduced tax rate under the Benefited Enterprise programs under the Investment Law. Our company enjoyed these tax benefits until 2019.
During the years 2010 to 2019, we were entitled to a tax exemption for undistributed income (“Trapped Profits”) and a reduced tax rate under the Benefited Enterprise programs under the Investment Law. Our company enjoyed these tax benefits until 2019.
The decrease in accrued expenses and other liabilities, as well as in trade payables, and the increase in inventory, were due primarily to lower business activities, including reduced systems sales throughout the year. Year Ended December 31, 2022 Net cash used in operating activities in the year ended December 31, 2022 was $99.3 million.
The decrease in accrued expenses and other liabilities, as well as in trade payables, and the increase in inventory, were due primarily to lower business activities, including reduced systems sales throughout the year. Year Ended December 31, 2023 Net cash used in operating activities in the year ended December 31, 2023 was $34.7 million.
Since sales of ink and other consumables generate higher gross margins than systems sales, gross margin in the third or fourth quarter tends to be higher than gross margin in the first quarter, when our customers typically reduce their system utilization rates significantly, and therefore purchase less ink and other consumables. See “-Critical Accounting Policies-Revenue Recognition”.
Since sales of ink and other consumables generate higher gross margins than systems sales, gross margin in the third or fourth quarter tends to be higher than gross margin in the first quarter, when our customers typically reduce their system utilization rates significantly, and therefore purchase less ink and other consumables.
While the DTG market generally involves printing on finished garments, the DTF market is focused on printing on fabrics that are subsequently converted into finished garments, home or office décor, and other items. The Presto and Presto MAX, like our predecessor DTF product, the Allegro, utilize our proprietary wet-on-wet printing methodology and house an integrated drying and curing system.
While the DTG market generally involves printing on finished garments, the Direct-to-Fabric market is focused on printing on fabrics that are subsequently converted into finished garments, home décor, and other items. The Presto MAX, like our predecessor Direct-to-Fabric products, the Presto and the Allegro, utilize our proprietary wet-on-wet printing methodology and house an integrated drying and curing system.
For more information concerning our income tax expenses, please see the risk factor in Item 3.D above that begins “ We may be subject to additional tax liabilities in the future as a result of audits of our tax returns. ” Taxation and Israeli Government Programs Applicable to Our Company Israeli Tax Considerations and Government Programs The following is a brief summary of the material Israeli tax laws applicable to us, and certain Israeli Government programs that benefit us.
For more information, please see Note 14 to our consolidated financial statements that appear in Item 18 of this Annual Report. 48 For more information concerning our income tax expenses, please see the risk factor in Item 3.D above that begins “ We may be subject to additional tax liabilities in the future as a result of audits of our tax returns. ” Taxation and Israeli Government Programs Applicable to Our Company Israeli Tax Considerations and Government Programs The following is a brief summary of the material Israeli tax laws applicable to us, and certain Israeli Government programs that benefit us.
Inventory costs consist of material, direct labor and overhead. We periodically assess inventory for obsolescence and excess and reduce the carrying value by an amount equal to the difference between its cost and the estimated net realizable value based on assumptions about future demand and historical sales patterns.
We periodically assess inventory for obsolescence and excess and reduce the carrying value by an amount equal to the difference between its cost and the estimated net realizable value based on assumptions about future demand and historical sales patterns.
Historically, we have funded our working capital requirements, primarily for inventory and accounts receivable, and capital expenditures from cash flows provided by our operating activities, investments in our equity securities and cash and cash equivalents on hand. We have funded our acquisitions from the proceeds of our April 2015 initial public offering and cash on hand.
Historically, we have funded our working capital requirements, primarily for inventory, accounts receivable and capital expenditures, from cash flows provided by our operating activities, investments in our equity securities, and cash and cash equivalents on hand.
At the same time, we are pursuing new high-volume customers, including new customers in the screen replacement market, which should help drive an increase in the sale of ink and other consumables.
We also seek to increase our sales to existing customers, particularly sales of our ink and other consumables. At the same time, we are pursuing new high-volume customers, including new customers in the screen replacement market with the Apollo, which should help drive an increase in the sale of ink and other consumables.
Trend Information Our results of operations and financial condition may be affected by various trends and factors discussed in “ITEM 3.D Risk Factors,” including “ If the market for digital textile printing does not develop as we anticipate, our sales may not grow as quickly as expected and our share price could decline ”, and “ Macro-economic headwinds caused by inflation, rising interest rates and global supply problems have been adversely impacting our revenues, profitability and cash flows, and may continue to do so”, and in “ITEM 4.B Business Overview-Industry Overview.” Additional trends that could potentially impact our results of operations and financial condition include changes in political, military or economic conditions in Israel and in the Middle East, and any potential cyber attack on our IT systems, which we believe could have a material effect on our results of operations, liquidity, or financial condition or could cause our reported financial information not to be necessarily indicative of future operating results or financial condition.
Trend Information Our results of operations and financial condition may be affected by various trends and factors discussed in “ITEM 3.D Risk Factors,” including “ If the market for digital textile printing does not develop as we anticipate, our sales may not grow as quickly as expected and our share price could decline ”, and “ Macro-economic headwinds caused by inflation, relatively high interest rates and limited credit availability have been adversely impacting our revenues and profitability, and may continue to do so”, and in “ITEM 4.B Business Overview-Industry Overview.” Additional trends that could potentially impact our results of operations and financial condition include changes in political, military or economic conditions in Israel and in the Middle East, and (given the rising level of cyber-attacks globally and targeting of Israeli companies), any potential cyber-attack on our IT systems.
We began selling the Presto commercially in the second quarter of 2019, four years after having introduced our initial DTF digital textile printing solution, the Kornit Allegro in the second quarter of 2015. Our go-to-market strategy consists of a hybrid model of indirect and direct sales, with a trend towards adopting a direct sales model in certain key markets.
We began selling the Presto MAX commercially in 2021, two years after having introduced our Direct-to-Fabric digital textile printing solution, the Presto in 2019. 42 Our go-to-market strategy consists of a hybrid model of indirect and direct sales, with a trend towards adopting a direct sales model in certain key markets.
Geographic Breakdown of Revenues The following table sets forth the geographic breakdown of revenues from sales to customers located in the regions indicated below for the periods indicated: 2021 2022 2023 $ % $ % $ % (in thousands except percentages) U.S. $ 211,294 65.6 % $ 138,515 51.0 % $ 123,550 56.2 % EMEA 78,686 24.4 93,243 34.3 60,706 27.6 Asia Pacific 23,341 7.2 24,396 9.0 22,006 10.0 Other 8,685 2.8 15,364 5.7 13,524 6.2 Total revenues $ 322,006 100 % $ 271,518 100 % $ 219,786 100 % 39 The change in the revenues by geographic region set forth in the above table reflects the general trends for our revenues for 2023 compared to 2022, as described below under “C omparison of the Years Ended December 31, 2023 and 2022—Revenues”.
See “Critical Accounting Estimates-Revenue Recognition”. 44 Geographic Breakdown of Revenues The following table sets forth the geographic breakdown of revenues from sales to customers for the periods indicated: 2022 2023 2024 $ % $ % $ % (in thousands except percentages) U.S. $ 138,515 51.0 % 123,550 56.2 % $ 115,034 56.4 % EMEA 93,243 34.3 60,706 27.6 50,089 24.6 Asia Pacific 24,396 9.0 22,006 10.0 21,509 10.6 Other 15,364 5.7 13,524 6.2 17,193 8.4 Total revenues $ 271,518 100 % 219,786 100 % $ 203,825 100 % The change in the revenues by geographic region set forth in the above table reflects the general trends for our revenues for 2024 compared to 2023, as described below under “C omparison of the Years Ended December 31, 2024 and 2023-Revenues”.
It offers the sole single-step, eco-friendly, stand-alone industrial DTF digital textile printing solution available on the market, following its predecessor the Allegro.
It offers the sole single-step, eco-friendly, stand-alone industrial Direct-to-Fabric digital textile printing solution available on the market, following its predecessors the Presto and the Allegro.
Research and development, or R&D, expenses, net of government grants, decreased by 10.6% in 2023 compared with 2022. The decrease in net R&D expenses was due primarily to reduction in work force, as well as lower materials used in development processes, compared with 2022.
Research and development, or R&D, expenses, net of government grants, decreased by 16.9% in 2024 compared with 2023. The decrease in net R&D expenses was due primarily to the reduction in work force (as described in “Item 6.D. Employees” below), as well as a decrease in materials used as compared with 2023.
We will continue to actively seek strategic acquisitions that may require investments of cash. We believe that our current cash reserves will suffice for any such acquisitions, although there can be no assurance that we will not need to seek additional equity or debt financing in order to cover the cost of such potential acquisitions.
We believe that our current cash reserves will suffice for any such acquisitions, although there can be no assurance that we will not need to seek additional equity or debt financing in order to cover the cost of such potential acquisitions. We provide below a summary of our consolidated statement of cash flows for the last two years.
If such dividends are distributed to a foreign parent company holding, solely or together with another foreign company, at least 90% of the shares of the distributing company and other conditions are met, the withholding tax rate will be 4% (or a lower rate under a tax treaty, if applicable, subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate).
If such dividends are distributed to a foreign parent company holding, solely or together with another foreign company, at least 90% of the shares of the distributing company and other conditions are met, the withholding tax rate will be 4% (or a lower rate under a tax treaty, if applicable, subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate). 52 We believe that we and our Israeli subsidiary meet the conditions for “Preferred Technological Enterprises”, and accordingly are eligible for the tax rate of 12% on income that qualifies as “Preferred Technology Income”, as defined in the Law.
As of December 31, 2023, we had $67.7 million of inventory, of which $28.3 million consisted of raw materials and components and $39.4 million consisted of completed systems, ink and other consumables. We recorded inventory write-offs in total amounts of $4.9 million, $11.4 million, and $22.0 million for the years ended December 31, 2021, 2022, and 2023, respectively.
As of December 31, 2024, we had $60.3 million of inventory, of which $32.5 million consisted of raw materials and components and $27.8 million consisted of completed systems, ink and other consumables. We recorded inventory write-offs of $11.4 million, $22.0 million, and $4.6 million for the years ended December 31, 2022, 2023, and 2024, respectively.
Our solutions include our proprietary digital printing systems, ink, and other consumables, associated software and value-added services that allow for printing large scale short runs of complex images and designs directly on finished garments and fabrics.
We focus on the high throughput DTG, DTG Mass Production and Direct-to-Fabric segments of the printed textile industry. Our solutions include our proprietary digital printing systems, ink, and other consumables, associated software and value-added services that allow for printing large scale short and longer runs of complex images and designs directly on finished garments and fabrics.
From time to time, the Israeli Government has discussed reducing the benefits available to companies under the Investment Law. The termination or substantial reduction of any of the benefits available under the Investment Law could materially increase our tax liabilities. 47 B.
The tax rate for Preferred Technological Enterprises located in development zone A is 7.5%. From time to time, the Israeli Government has discussed reducing the benefits available to companies under the Investment Law. The termination or substantial reduction of any of the benefits available under the Investment Law could materially increase our tax liabilities. B.
Year Ended December 31, 2022 2023 (in thousands) Revenues Products $ 222,502 $ 161,045 Services 49,016 58,741 Total revenues 271,518 219,786 Cost of revenues Products 125,935 91,516 Services 49,083 61,313 Total cost of revenues 175,018 152,829 Gross profit 96,500 66,957 Operating expenses: Research and development, net 56,026 50,060 Sales and marketing 71,067 66,836 General and administrative 39,289 37,592 Total operating expenses 166,382 154,488 Operating loss (69,882 ) (87,531 ) Financial income, net 13,382 24,150 Loss before taxes on income (56,500 ) (63,381 ) Taxes on income 22,565 970 Net loss $ (79,065 ) $ (64,351 ) Year Ended December 31, 2022 2023 (as a % of revenues) Revenues Products 81.9 % 73.3 % Services 18.1 26.7 Total revenues 100 100 Cost of revenues Products 46.4 41.6 Services 18.1 27.9 Total cost of revenues 64.5 69.5 Gross profit 35.5 30.5 Operating expenses: Research and development, net 20.6 22.8 Sales and marketing 26.2 30.4 General and administrative 14.5 17.1 Total operating expenses 61.3 70.3 Operating loss (25.8 ) (39.8 ) Finance income, net 5.0 11.0 Loss before taxes on income (20.8 ) (28.8 ) Taxes on income 8.3 0.4 Net loss (29.1 )% (29.2 )% 42 Revenues Revenues decreased by $51.7 million, or 19.1%, to $219.8 million in 2023 from $271.5 million in 2022, which is net of $22.5 million and $13.8 million, in 2022 and 2023, respectively, in fair value of the warrants associated with revenues recognized from Amazon.
Year Ended December 31, 2023 2024 (in thousands) Revenues Products $ 161,045 $ 148,086 Services 58,741 55,739 Total revenues 219,786 203,825 Cost of revenues Products 91,516 61,697 Services 61,313 50,366 Total cost of revenues 152,829 112,063 Gross profit 66,957 91,762 Operating expenses: Research and development, net 50,060 41,578 Sales and marketing 66,836 58,413 General and administrative 37,592 29,086 Total operating expenses 154,488 129,077 Operating loss (87,531 ) (37,315 ) Financial income, net 24,150 22,350 Loss before taxes on income (63,381 ) (14,965 ) Taxes on income 970 1,835 Net loss $ (64,351 ) $ (16,800 ) Year Ended December 31, 2023 2024 (as a % of revenues) Revenues Products 73.3 % 72.7 % Services 26.7 27.3 Total revenues 100 100 Cost of revenues Products 41.6 30.3 Services 27.9 24.7 Total cost of revenues 69.5 55.0 Gross profit 30.5 45.0 Operating expenses: Research and development, net 22.8 20.4 Sales and marketing 30.4 28.7 General and administrative 17.1 14.3 Total operating expenses 70.3 63.3 Operating loss (39.8 ) (18.3 ) Finance income, net 11.0 11.0 Loss before taxes on income (28.8 ) (7.3 ) Taxes on income 0.4 0.9 Net loss (29.2 )% (8.2 )% 47 Revenues Revenues decreased by $16.0 million, or 7.3%, to $203.8 million in 2024 from $219.8 million in 2023, which is net of $13.8 million and $3.3 million, in 2023 and 2024, respectively, in fair value of the warrants associated with revenues recognized from Amazon.
This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. As a result of many factors, such as those set forth under “ITEM 3.D. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” our actual results may differ materially from those anticipated in these forward-looking statements.
This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. As a result of many factors, such as those set forth under “ITEM 3.D.
Liquidity and Capital Resources As of December 31, 2023, we had $39.6 million in cash and cash equivalents, $235.6 million in short term deposits and $280.5 million in marketable securities, which, in the aggregate, total $555.7 million.
Liquidity and Capital Resources As of December 31, 2024, we had $35 million in cash and cash equivalents, $206 million in short term deposits and $271 million in marketable securities, which, in the aggregate, total $512 million.
Liquidity and Capital Resources” in our Annual Report on Form 20-F for the year ended December 31, 2022, which we filed with the SEC on March 30, 2023.
Operating Results - Comparison of Period-to-Period Results of Operations - Comparison of the Years Ended December 31, 2022 and 2023” in our Annual Report on Form 20-F for the year ended December 31, 2023, which we filed with the SEC on March 28, 2024.
The decline in revenues was primarily driven by a 59% decrease in systems revenues to $49 in 2023 from $119.1 million in 2022, offset in part by (i) a 8% increase in ink and other consumables revenues to $112 million in 2023 from $103.4 million in 2022 and (ii) a 20% increase in service revenues to $58.7 million in 2023 from $49.0 million in 2022.
The decline in revenues was primarily driven by a 32.3% decrease in systems revenues to $33.2 in 2024 from $49 million in 2023 and a 5.1% decrease in service revenues to $55.7 million in 2024 from $58.7 million in 2023 offset in part by a 2.5% increase in ink and other consumables revenues to $114.9 million in 2024 from $112 million in 2023.
Comparison of Period-to-Period Results of Operations We provide in this section data, as well as discussion and analysis, with respect to our results of operations for the last two years.
In each of 2022, 2023, and 2024, our effective tax rate was the blended rate of our Israeli tax and those of our non-Israeli subsidiaries in their respective jurisdictions of organization. 46 Comparison of Period-to-Period Results of Operations In this section we provide data, as well as discussion and analysis, with respect to our results of operations for the last two years.
As a percentage of total revenues, our R&D expenses increased to 22.8% in 2023 from 20.6% in 2022. Sales and Marketing. Sales and marketing expenses decreased by 6.0% in 2023 compared with 2022.
As a percentage of total revenues, our R&D expenses decreased to 20.4% in 2024 from 22.8% in 2023. Sales and Marketing. Sales and marketing expenses decreased by 12.6% in 2024 compared with 2023. This decrease was due primarily to the reduction in the average number of employees (as described in “Item 6.D.
The following table presents the major components of net cash flows for our last two fiscal years: Year Ended December 31, 2022 2023 (in thousands) Net cash used in operating activities $ (99,347 ) $ (34,682 ) Net cash provided by (used in) investing activities (407,275 ) 26,212 Net cash used in financing activities (332 ) (56,522 ) 48 Net Cash Provided by (Used in) Operating Activities Year Ended December 31, 2023 Net cash used in operating activities in the year ended December 31, 2023 was $34.7 million.
Liquidity and Capital Resources” in our Annual Report on Form 20-F for the year ended December 31, 2023, which we filed with the SEC on March 28, 2024. 53 The following table presents the major components of net cash flows for our last two fiscal years: Year Ended December 31, 2023 2024 (in thousands) Net cash provided by (used in) operating activities $ (34,682 ) 48,725 Net cash provided by investing activities 26,212 31,488 Net cash used in financing activities (56,522 ) (84,815 ) Net Cash Provided by (Used in) Operating Activities Year Ended December 31, 2024 Net cash provided by operating activities in the year ended December 31, 2024 was $48.7 million.
Operating Results - Comparison of Period-to-Period Results of Operations - Comparison of the Years Ended December 31, 2021 and 2022” in our Annual Report on Form 20-F for the year ended December 31, 2022, which we filed with the SEC on March 30, 2023. 41 Comparison of the Years Ended December 31, 2022 and 2023 The following tables present a comparison of the various components of our results of operations for the years ended December 31, 2022 and 2023, both in absolute amounts and as a percentage of our revenues in those respective years.
Comparison of the Years Ended December 31, 2023 and 2024 The following tables present a comparison of the various components of our results of operations for the years ended December 31, 2023 and 2024, both in absolute amounts and as a percentage of our revenues in those respective years.
Our software solutions simplify workflows in the printing process, by offering a complete solution from web order intake through graphic job preparation and execution. 37 Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer an industrial digital printing solution, the Presto, which targets the on-demand DTF market.
Building on the expertise and capabilities that we have accumulated in developing and offering differentiated solutions for the industrial DTG market, we also offer an industrial digital printing solution, the Presto MAX, which targets the on-demand Direct-to-Fabric market.
Law for the Encouragement of Capital Investments, 5719-1959 The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets) by “Industrial Enterprises” (as defined under the Investment Law).
Law for the Encouragement of Capital Investments, 5719-1959 The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets) by “Industrial Enterprises” (as defined under the Investment Law). 49 The Investment Law has been amended several times over the recent years, with the three most significant changes effective as of April 1, 2005, or the 2005 Amendment, as of January 1, 2011, or the 2011 Amendment and as of January 1, 2017, or the 2017 Amendment.
Our inventory strategy includes maintaining inventory of systems and inks and other consumables at levels that we expect to sell during the successive three-month period based on anticipated customer demand. Our accounts receivable increased in 2023 primarily due to selectively extending payment terms to qualified customers.
We partially fund the procurement of the components of our systems that are assembled by our third-party manufacturers. Our inventory strategy includes maintaining inventory of systems and inks and other consumables at levels that we expect to sell during the successive three-month period based on anticipated customer demand.
General and administrative expenses decreased by 4.3% in 2023 compared with 2022. This was due primarily to the reduction in personnel and a decrease in information technology expenses due to the ERP implementation in 2022. As a percentage of total revenues, our general and administrative expenses increased to 17.1% in 2023 from 14.5% in 2022.
This was due primarily to the reduction in personnel (as described in “Item 6.D. Employees” below) . As a percentage of total revenues, our general and administrative expenses decreased to 14.3% in 2024 from 17.1% in 2023. Financial Income, Net Financial income, net, totaled $22.4 million in 2024 compared with $24.2 million in 2023.
Overview We develop, design and market innovative digital printing solutions for the global printed textile industry. Our vision is to revolutionize this industry by facilitating the transition from analog processes to digital methods of production that address contemporary supply, demand, and environmental dynamics.
Our vision is to revolutionize this industry by facilitating the transition from analog processes to digital methods of production that address contemporary supply, demand, and environmental dynamics. Our solutions are designed to enable our customers to remain relevant, reduce waste, and adapt to shifting supply chain dynamics.
Net cash used in operating activities in 2022 reflects a net loss of $79.1 million and the elimination of non-cash expense line items, such as share based compensation expenses of $22.6 million, the fair value of warrants deducted from revenues of $22.5 million, and depreciation and amortization of $13.6 million.
Net cash provided by operating activities in 2024 reflected a net loss of $16.8 million, the elimination of non-cash expense line items, such as share-based compensation expenses of $21.8 million, restructuring expenses of $1.2 million, depreciation and amortization of $13.0 million and the fair value of warrants deducted from revenues of $3.3 million, and a decrease of accounts receivable of $28.2 million, a decrease in inventory of $3.0 million, and an increase in trade payables of $2.2 million.
We intend to capitalize on the continued growth of the DTG market by expanding our diverse global customer base, focusing particularly on fast-growing web-to-print businesses. We also seek to increase our sales to existing customers, particularly sales of our ink and other consumables.
We constantly explore the possibility of adding new business models and concepts designed to grow our business and cater to our customers’ needs. We intend to capitalize on the continued growth of the DTG market by expanding our diverse global customer base, focusing particularly on fast-growing web-to-print businesses.
Based on our current business plans, we believe that our cash flows from operating activities and our existing cash resources will be sufficient to fund our projected cash requirements for at least the next 12 months without drawing on our lines of credit or using significant amounts of the net proceeds from our initial public offering or our follow-on offerings.
Our trade payables increased in 2024 due mainly to an increase in materials purchases. Based on our current business plans, we believe that our cash flows from operating activities and our existing cash resources will be sufficient to fund our projected cash requirements for at least the next 12 months.
These reductions to revenue are made based upon reasonable and reliable estimates that are determined according to historical experience and the specific terms and conditions of the incentive.
These reductions to revenue are made based upon reasonable and reliable estimates that are determined according to historical experience and the specific terms and conditions of the incentive. 56 In cases in which old systems are traded in as part of sales of new systems, the fair value of the old systems is recorded as inventory, provided that such value can be recoverable.
Operating Expenses Year Ended December 31, 2022 2023 Change Amount % of Revenues Amount % of Revenues Amount % ($ in thousands) Operating expenses: Research and development, net $ 56,026 20.6 % $ 50,060 22.8 % $ (5,966 ) (10.6 )% Sales and marketing 71,067 26.2 66,836 30.4 (4,231 ) (6.0 ) General and administrative 39,289 14.5 37,592 17.1 (1,697 ) (4.3 ) Total operating expenses $ 166,382 61.3 % $ 154,488 70.3 % $ (11,894 ) (7.1 )% Research and Development, net.
Operating Expenses Year Ended December 31, 2023 2024 % of % of Change Amount Revenues Amount Revenues Amount % ($ in thousands) Operating expenses: Research and development, net $ 50,060 22.8 % $ 41,578 20.4 % $ (8,482 ) (16.9 )% Sales and marketing 66,836 30.4 58,413 28.7 (8,423 ) (12.6 ) General and administrative 37,592 17.1 29,086 14.3 (8,506 ) (22.6 ) Total operating expenses $ 154,488 70.3 % $ 129,077 63.4 % $ (25,411 ) (16.4 )% Research and Development, net.
The $70.1 million decrease in systems revenues was attributable to macro-related headwinds and other pressures, which continue to impact customers’ systems purchasing decisions.
The decrease in systems revenues was attributable to macro-economic headwinds and other pressures, which continued to impact customers’ systems purchasing decisions and the decline in service revenues was due principally to lower sales of AtlasMAX upgrades in 2024.
Year Ended December 31, 2022 Net cash used in financing activities was $0.3 million for the year ended December 31, 2022, which was primarily attributable to payments related to shares withheld for taxes, offset, in part, by proceeds from exercise of employee stock options. C. Research and development, patents and licenses, etc.
Year Ended December 31, 2023 Net cash used in financing activities was $56.5 million for the year ended December 31, 2023 and was primarily attributable to the repurchase of ordinary shares in an amount of $55.8 million. C. Research and development, patents and licenses, etc.
This decrease was due primarily to reduction in the average number of employees, as well as lower spending on events and other marketing activities, partly offset by an increase in allowance for credit loss. As a percentage of total revenues, our sales and marketing expenses increased to 30.4% in 2023 from 26.2% in 2022. General and Administrative.
Employees” below), as well as lower spending on events and other marketing activities. As a percentage of total revenues, our sales and marketing expenses decreased to 28.7% in 2024 from 30.4% in 2023. General and Administrative. General and administrative expenses decreased by 22.6% in 2024 compared with 2023.
The change was due mainly to (i) the payment of approximately $11.5 million to the Israeli Tax Authority for trapped profits from prior years at a steeply discounted rate recorded in 2022, and (ii) the valuation allowance recorded in 2022 against deferred tax assets.
The change was due mainly to (i) the valuation allowance recorded in 2023 against deferred tax assets, and (ii) prior years’ taxes.
Finance Income, Net Finance income, net, totaled $24.2 million in 2023 compared with $13.4 million in 2022. The $10.8 million increase was due primarily to interest income on bank deposits and interest income on marketable securities. 43 Taxes on Income Taxes on income amounted to $1.0 million in 2023, compared with $22.6 million in 2022.
The $1.8 million decrease was due primarily to lower average balances and interest rates on our bank deposits and marketable securities. Financial expenses in 2024 declined to $1.7 million from $3.7 million in 2023 due mainly to lower exchange rate differences. Taxes on Income Taxes on income amounted to $1.8 million in 2024, compared with $1.0 million in 2023.
In cases in which old systems are traded in as part of sales of new systems, the fair value of the old systems is recorded as inventory, provided that such value can be recoverable. Inventories Inventories are measured at the lower of cost or net realizable value. Cost is first-in, first-out cost basis.
Inventories Inventories are measured at the lower of cost or net realizable value. Cost is first-in, first-out cost basis. Inventory costs consist of material, direct labor and overhead.
Gross profit decreased by $29.5 million, or 30.6%, to $67 million in 2023 from $96.5 million in 2022. Gross margin decreased to 30.5% in 2023 compared with 35.5% in 2022.
Cost of Revenues and Gross Profit Cost of revenues decreased by $40.7 million, or 26.7%, to $112.1 million in 2024 from $152.8 million in 2023. Gross profit increased by $24.8 million, or 37.0%, to $91.8 million in 2024 from $67 million in 2023. Gross margin increased to 45.0% in 2024 compared with 30.5% in 2023.
Removed
Our solutions are designed to enable our customers to remain relevant, reduce waste, and adapt to shifting supply chain dynamics. We focus on the rapidly growing high throughput DTG and DTF segments of the printed textile industry.
Added
Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” our actual results may differ materially from those anticipated in these forward-looking statements. 41 Overview We develop, design and market innovative digital printing solutions for the global printed textile industry.
Removed
We constantly explore the possibility of adding new business models and concepts designed to grow our business and cater to our customers’ needs. We have recently begun piloting with our Apollo system, a new model, based on a price per impression produced on our system, which includes use of the system, consumables and service.
Added
Our software solutions simplify workflows in the printing process, by offering a complete solution from web order intake through graphic job preparation and execution.
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In each of 2021, 2022, and 2023, our effective tax rate was the blended rate of our Israeli tax and those of our non-Israeli subsidiaries in their respective jurisdictions of organization.
Added
Recent Developments Share Repurchase Programs On September 10, 2024, we announced that our board of directors has authorized a new program for our repurchase of up to $100 million of our ordinary shares from time to time (our prior $75 million repurchase program that was initially approved in December 2022 and was extended in July 2023 and January 2024 had already expired prior to that time, in July 2024, and repurchases could no longer be made under it).

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeUnder the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder, if and to the extent provided in the company’s articles of association: ● a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; ● a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and 71 ● a financial liability imposed on the office holder in favor of a third party.
Biggest changeUnder the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder, if and to the extent provided in the company’s articles of association: ● a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; ● a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and ● a financial liability imposed on the office holder in favor of a third party. 74 Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following: ● a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; ● a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; ● an act or omission committed with intent to derive illegal personal benefit; or ● a fine or forfeit levied against the office holder.
Nigro retired in early 2019 after 37 years at Hewlett-Packard, or HP, most recently serving as President of HP’s 3D printing business, where he created and scaled a new technology and business, serving as a driving force towards HP’s leadership in both the plastic and metal 3D printing markets. Mr. Nigro currently is a director at Desktop Metals (DM:NYSE).
Nigro retired in early 2019 after 37 years at Hewlett-Packard, or HP, most recently serving as President of HP’s 3D printing business, where he created and scaled a new technology and business, serving as a driving force towards HP’s leadership in both the plastic and metal 3D printing markets. Mr. Nigro currently is a director at Desktop Metals (NYSE:DM).
Board Practices-Approval of Related Party Transactions under Israeli Law - Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions.” Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply, as described below under “Approval of Related Party Transactions under Israeli Law - Disclosure of Personal Interests of a Controlling Shareholder and Approval of Certain Transactions.” Our directors are entitled to cash compensation as follows: All of our non-employee directors receive annual fees and per-meeting fees for their service on our board and its committees as follows: ● annual fees in an amount of $45,000, and $95,000 for the chairman of the Board; ● annual committee chair retainer - Audit: $20,000; Compensation: $15,000; any other committee - up to $15,000; and ● annual committee member retainer - Audit: $10,000; Compensation: $7,500; Any other committee: up to a maximum of $7,500.
Board Practices-Approval of Related Party Transactions under Israeli Law - Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions.” Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply, as described below under “Approval of Related Party Transactions under Israeli Law - Disclosure of Personal Interests of a Controlling Shareholder and Approval of Certain Transactions.” 60 Our directors are entitled to cash compensation as follows: All of our non-employee directors receive annual fees and per-meeting fees for their service on our board and its committees as follows: ● annual fees in an amount of $45,000, and $95,000 for the chairman of the Board; ● annual committee chair retainer - Audit: $20,000; Compensation: $15,000; any other committee - up to $15,000; and ● annual committee member retainer - Audit: $10,000; Compensation: $7,500; Any other committee: up to a maximum of $7,500.
During his tenure at Kornit, he has managed and led R&D Chemistry, technology groups, transfer to production, Print heads and QA as well as lead Kornit’s Ink plant design. Prior to his executive position, Kobi held several managerial positions including Business Development of Consumables and Director of Global Application, an area he established in Kornit. Kobi holds a B.Sc.
During his tenure at Kornit, he has managed and led R&D Chemistry, technology groups, transfer to production, print heads and QA as well as led Kornit’s Ink plant design. Prior to his executive position, Kobi held several managerial positions including Business Development of Consumables and Director of Global Application, an area he established in Kornit. Kobi holds a B.Sc.
Chemistry and Executive MBA - both from Bar Ilan University in Israel. 54 Directors Yuval Cohen has served as the Chairman of our board of directors since August 2011. Mr. Cohen is the founding and managing partner of Fortissimo Capital, a private equity fund established in 2004 and our former controlling shareholder. From 1997 through 2002, Mr.
Chemistry and Executive MBA - both from Bar Ilan University in Israel. Directors Yuval Cohen has served as the Chairman of our board of directors since August 2011. Mr. Cohen is the founding and managing partner of Fortissimo Capital, a private equity fund established in 2004 and our former controlling shareholder. From 1997 through 2002, Mr.
A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager (chief executive officer). For further information concerning the Companies Law provisions related to external directors, please see “ITEM 6.
A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager (chief executive officer). 67 For further information concerning the Companies Law provisions related to external directors, please see “ITEM 6.
Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee, board of directors and shareholders by ordinary majority, in that order, and under certain circumstances, a Special Approval for Compensation. 69 Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit or compensation committees may not be present at such a meeting or vote on that matter unless the chairman of the relevant committee or board of directors (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval.
Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee, board of directors and shareholders by ordinary majority, in that order, and under certain circumstances, a Special Approval for Compensation. 72 Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit or compensation committees may not be present at such a meeting or vote on that matter unless the chairman of the relevant committee or board of directors (as applicable) determines that he or she should be present in order to present the transaction that is subject to approval.
Shareholder Duties Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters: ● an amendment to the company’s articles of association; ● an increase of the company’s authorized share capital; 70 ● a merger; or ● the approval of related party transactions and acts of office holders that require shareholder approval.
Shareholder Duties Pursuant to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to the following matters: ● an amendment to the company’s articles of association; ● an increase of the company’s authorized share capital; 73 ● a merger; or ● the approval of related party transactions and acts of office holders that require shareholder approval.
The reserved pool of shares under the 2015 Plan is the sum of (i) 661,745 shares; plus (ii) on January 1 of each calendar year during the term of the 2015 Plan, a number of shares equal to the least of: (x) 3% of the total number of shares outstanding on December 31 of the immediately preceding calendar year, (y) an amount determined by our board of directors, and (z) 1,965,930 shares.
The reserved pool of shares under the 2015 Plan was the sum of (i) 661,745 shares; plus (ii) on January 1 of each calendar year during the term of the 2015 Plan, a number of shares equal to the least of: (x) 3% of the total number of shares outstanding on December 31 of the immediately preceding calendar year, (y) an amount determined by our board of directors, and (z) 1,965,930 shares.
Financial Statements” of this annual report. 59 2012 Share Incentive Plan In October 2012, our board of directors adopted and our shareholders approved our 2012 Share Incentive Plan, or the 2012 Plan . The 2012 Plan replaced our 2004 Plan.
Financial Statements” of this annual report. 2012 Share Incentive Plan In October 2012, our board of directors adopted and our shareholders approved our 2012 Share Incentive Plan, or the 2012 Plan . The 2012 Plan replaced our 2004 Plan.
Executive Officer Compensation The table below outlines the compensation granted to our five most highly compensated office holders during or with respect to the year ended December 31, 2023, in the disclosure format of Regulation 21 of the Israeli Securities Regulations (Periodic and Immediate Reports), 1970.
Executive Officer Compensation The table below outlines the compensation granted to our five most highly compensated office holders during or with respect to the year ended December 31, 2024, in the disclosure format of Regulation 21 of the Israeli Securities Regulations (Periodic and Immediate Reports), 1970.
(2) Member of our compensation committee. (3) Independent director under the Nasdaq Stock Market rules. 53 Executive Officers Ronen Samuel has served as our Chief Executive Officer since August 2018 and as a director since August 2019. Prior to joining our company, Mr.
(2) Member of our compensation committee. (3) Independent director under the Nasdaq Stock Market rules. 57 Executive Officers Ronen Samuel has served as our Chief Executive Officer since August 2018 and as a director since August 2019. Prior to joining our company, Mr.
(4) Amounts reported in this column refer to incentive and variable compensation payments which were paid or accrued with respect to 2023. (5) Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2023 with respect to equity-based compensation.
(4) Amounts reported in this column refer to incentive and variable compensation payments which were paid or accrued with respect to 2024. (5) Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2024 with respect to equity-based compensation.
(2) All current executive officers listed in the table were our full-time employees during 2023. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for 2023. (3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law.
(2) All current executive officers listed in the table were our full-time employees during 2024. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for 2024. 61 (3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law.
Prior to joining Kornit, Daniel held the position of VP Professional Service and Delivery at TEOCO and served as the vice president of global services at Comverse. His prior experience includes various business, technical and operational leadership positions in global high-tech organizations. Daniel holds a BSc in industrial engineering and management from Tel-Aviv University.
Prior to joining Kornit, Daniel held the position of VP Professional Service and Delivery at TEOCO and served as the vice president of global services at Comverse. His prior experience includes various business, technical and operational leadership positions in global high-tech organizations. Daniel holds a B.Sc. in industrial engineering and management from Tel-Aviv University.
Shares delivered pursuant to “substitute awards” (awards granted in assumption or substitution of awards granted by a company acquired by us) shall not reduce the shares available for issuance under the 2015 Plan.
Shares delivered pursuant to “substitute awards” (awards granted in assumption or substitution of awards granted by a company acquired by us) shall not reduce the shares available for issuance under the 2025 Plan.
Our RSU grant agreements for non-employee directors are subject to the following additional terms: ● the RSUs are granted to each non-employee director as of the date of each annual shareholder meeting; 58 ● the RSUs vest in their entirety on the earlier of (x) the first anniversary of the grant or (y) the next annual general meeting of shareholders, provided the director continues to serve as a director of our company at such date; ● the RSUs, to the extent then unvested, become fully vested (a) immediately prior to the consummation of a Change of Control (as defined under our 2015 Plan (described below)) in which the director is required to resign from or is otherwise terminated from service as a director, or (b) upon termination of service of such director occurring immediately after the consummation of a Change of Control; and ● the RSUs are otherwise subject to the terms of the 2015 Plan.
Our RSU grant agreements for non-employee directors are subject to the following additional terms: ● the RSUs are granted to each non-employee director as of the date of each annual shareholder meeting; ● the RSUs vest in their entirety on the earlier of (x) the first anniversary of the grant or (y) the next annual general meeting of shareholders, provided the director continues to serve as a director of our company at such date; ● the RSUs, to the extent then unvested, become fully vested (a) immediately prior to the consummation of a Change of Control (as defined under our 2015 Plan or 2025 Plan, as applicable (as described below)) in which the director is required to resign from or is otherwise terminated from service as a director, or (b) upon termination of service of such director occurring immediately after the consummation of a Change of Control; and ● the RSUs are otherwise subject to the terms of the 2015 Plan (for grants through 2024) or the 2025 Plan (for grants during or after 2025).
Such benefits and perquisites may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up payments and other benefits and perquisites consistent with our guidelines.
Such benefits and perquisites may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurance and benefits, risk insurance (e.g., life, disability, accident), convalescence pay, payments for social security, housing and education, tax gross-up payments and other benefits and perquisites consistent with our guidelines.
The 2015 Israeli Sub Plan is effective with respect to awards granted as of 30 days from the date we submitted it to the ITA.
The 2015 Israeli Sub Plan was effective with respect to awards granted as of 30 days from the date we submitted it to the ITA.
Following that approval, the compensation policy (in updated form, if applicable) will need to be recommended by the compensation committee and presented for the approval of the board and shareholders, every three years, in accordance with the requirements of the Companies Law.
Following those approvals, the compensation policy (in updated form, if applicable) will need to be recommended by the compensation committee and presented for the approval of the board and shareholders, every three years, in accordance with the requirements of the Companies Law.
Prior to joining Scitex, Mr. Ofer held various managerial positions in the emerging Israeli high-tech sector and participated in different mergers and acquisitions within the industry. Currently, Mr. Ofer serves as chairman of Magen Eco-Energy RCA Ltd., Chairman of Scodix Ltd., Chairman of Stratasys Ltd. (Nasdaq: SSYS) and Director of Copprint.
Ofer held various managerial positions in the emerging Israeli high-tech sector and participated in different mergers and acquisitions within the industry. Currently, Mr. Ofer serves as chairman of Magen Eco-Energy RCA Ltd., Chairman of Scodix Ltd., Chairman of Stratasys Ltd. (Nasdaq: SSYS) and Director of Copprint.
Audit Committee Role Our board of directors has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent with the rules and regulations of the SEC and the listing requirements of the Nasdaq Stock Market, as well as the requirements for such committee under the Companies Law, including the following: ● oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor; and ● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors.
Audit Committee Role Our board of directors has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent with the rules and regulations of the SEC and the listing requirements of the Nasdaq Stock Market, as well as the requirements for such committee under the Companies Law, including the following: ● oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors and shareholders in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor; and ● Reviewing and pre-approving the terms of audit, audit-related and all permitted non-audit services provided by the independent registered public accounting firm.
As part of its capacity in overseeing risk management activities and monitoring management’s policies and procedures, our audit committee also plays a significant strategic role in coordinating our cyber risk initiatives and policies and confirming their efficacy. Compensation Committee and Compensation Policy Our compensation committee consists of three members: Yehoshua (Shuki) Nir (Chairman), Stephen Nigro and Dov Ofer.
As part of its capacity in overseeing risk management activities and monitoring management’s policies and procedures, our audit committee also plays a significant strategic role in coordinating our cyber risk initiatives and policies and confirming their efficacy. Compensation Committee and Compensation Policy Our compensation committee consists of three members: Dov Ofer (Chairman), Stephen Nigro and Gabi Seligsohn.
Cohen was a General Partner at Jerusalem Venture Partners (“JVP”), an Israeli-based venture capital fund. Prior to joining JVP, he held executive positions at various Silicon Valley companies, including DSP Group, Inc. (Nasdaq: DSPG), and Intel Corporation (Nasdaq: INTC). Currently, Mr. Cohen serves as a director of Radware Ltd. (Nasdaq: RDWR).
Cohen was a General Partner at Jerusalem Venture Partners (“JVP”), an Israeli-based venture capital fund. Prior to joining JVP, he held executive positions at various Silicon Valley companies, including DSP Group, Inc. (Nasdaq: DSPG), and Intel Corporation (Nasdaq: INTC). Currently, Mr. Cohen serves as chairman of the board of directors of each of Radware Ltd.
Board Committees Audit Committee Our audit committee consists of three members: Naama Halevi Davidov (Chairperson), Dov Ofer, and Yehoshua (Shuki) Nir. 64 Companies Law Requirements Under the Companies Law, we are required to appoint an audit committee. The audit committee must be comprised of at least three directors.
Board Committees Audit Committee Our audit committee consists of three members: Naama Halevi Davidov (Chairperson), Dov Ofer, and Stephen Nigro. Companies Law Requirements Under the Companies Law, we are required to appoint an audit committee. The audit committee must be comprised of at least three directors.
The compensation policy must include certain principles, such as: a link between variable compensation and long-term performance and measurable criteria; the relationship between variable and fixed compensation; and the minimum holding or vesting period for variable, equity-based compensation. 66 The compensation committee is responsible for (a) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by its shareholders) and (b) duties related to the compensation policy and to the compensation of a company’s office holders, as well as functions with respect to matters related to approval of the terms of engagement of office holders, including: ● recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); ● recommending to the board of directors periodic updates to the compensation policy and assessing implementation of the compensation policy; ● approving compensation terms of executive officers, directors and employees that require approval of the compensation committee; ● determining whether the compensation terms of a chief executive officer nominee, which were determined pursuant to the compensation policy, will be exempt from approval of the shareholders because such approval would harm the ability to engage with such nominee; and ● determining, subject to the approval of the board and under special circumstances, override a determination of the company’s shareholders regarding certain compensation related issues.
The compensation committee is responsible for (a) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by its shareholders) and (b) duties related to the compensation policy and to the compensation of a company’s office holders, as well as functions with respect to matters related to approval of the terms of engagement of office holders, including: ● recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); ● recommending to the board of directors periodic updates to the compensation policy and assessing implementation of the compensation policy; ● approving compensation terms of executive officers, directors and employees that require approval of the compensation committee; ● determining whether the compensation terms of a chief executive officer nominee, which were determined pursuant to the compensation policy, will be exempt from approval of the shareholders because such approval would harm the ability to engage with such nominee; and ● determining, subject to the approval of the board and under special circumstances, override a determination of the company’s shareholders regarding certain compensation related issues.
Stephen Nigro has served as a director of our company since August 2019, after having served as a strategic advisor to our company from April through August 2019. Mr.
Stephen Nigro has served as a member of our board of directors since August 2019, after having served as a strategic advisor to our company from April through August 2019. Mr.
Compensation The aggregate compensation recorded and equity-based compensation and other compensation expensed by us and our subsidiaries for our directors and executive officers with respect to the year ended December 31, 2023 was $4.8 million. The foregoing sum includes approximately $0.4 million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses.
Compensation The aggregate cash compensation recorded and equity-based compensation and other compensation expensed by us and our subsidiaries for our directors and executive officers with respect to the year ended December 31, 2024 was $6.1 million. The foregoing sum includes approximately $0.2 million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses.
Consistent with the foregoing requirements, following the recommendation of our compensation committee, our board and our shareholders approved our compensation policy in July 2020 and August 2020, respectively.
Consistent with the foregoing requirements, following the recommendation of our compensation committee, our board and our shareholders last approved our updated compensation policy in July 2023 and August 2023, respectively.
Ben-Zur served as our President and Chief Technology Officer. From 2002 to April 2014, Mr. Ben-Zur served as our Chief Executive Officer, as well as the manager of our department of research and development. Currently Mr. Ben-Zur serves as the CEO and founder of Tritone Technologies, an Israeli start up specializing in Additive Manufacturing of metals. Mr.
Ben-Zur served as our Chief Executive Officer, as well as the manager of our department of research and development. Currently Mr. Ben-Zur serves as the CEO and founder of Tritone Technologies, an Israeli start up specializing in Additive Manufacturing of metals. Mr.
(Nasdaq: LMNS), a medical laser device company. From 2005 to 2007, he served as Corporate Vice President and General Manager of HP Scitex (formerly a subsidiary of Scailex Corporation Ltd. (TASE: SCIX)), a producer of large format printing equipment. From 2002 to 2005, Mr. Ofer served as President and Chief Executive Officer of Scitex Vision Ltd.
From 2005 to 2007, he served as Corporate Vice President and General Manager of HP Scitex (formerly a subsidiary of Scailex Corporation Ltd. (TASE: SCIX)), a producer of large format printing equipment. From 2002 to 2005, Mr. Ofer served as President and Chief Executive Officer of Scitex Vision Ltd. Prior to joining Scitex, Mr.
As of December 31, 2023, we had options to purchase 60,536 ordinary shares that remained outstanding under the 2012 Plan. 2015 Incentive Compensation Plan In March 2015, we adopted our 2015 Incentive Compensation Plan, or the 2015 Plan.
As of December 31, 2024, we had options to purchase 20,727 ordinary shares that remained outstanding under the 2012 Plan. 2015 Incentive Compensation Plan In March 2015, we adopted our 2015 Incentive Compensation Plan, or the 2015 Plan.
From August 2006 until August 2013, Mr. Seligsohn served as the President and Chief Executive Officer of Nova Measuring Instruments Ltd., (“Nova”) (Nasdaq: NVMI), a designer, developer and producer of optical metrology solutions. From 1998 until 2006, Mr. Seligsohn served in several leadership positions in Nova. Mr. Seligsohn serves as a director of DSP Group Inc. (Nasdaq: DSPG).
From August 2006 until August 2013, Mr. Seligsohn served as the President and Chief Executive Officer of Nova Measuring Instruments Ltd., or Nova (Nasdaq: NVMI), a designer, developer and producer of optical metrology solutions. From 1998 until 2006, Mr. Seligsohn served in several leadership positions in Nova. Mr.
The 2015 Israeli Sub Plan also provides for the grant of awards under Section 3(i) of the Ordinance to our Israeli non-employee service providers and Controlling Shareholders, who are not eligible for such special tax treatment. 2015 U.S. Sub Plan The 2015 U.S. Sub Plan applies to grantees that are subject to U.S. federal income tax. The 2015 U.S.
The 2015 Israeli Sub Plan also provides for the grant of awards under Section 3(i) of the Ordinance to our Israeli non-employee service providers and Controlling Shareholders, who are not eligible for such special tax treatment.
Arrangements Concerning Election of Directors; Family Relationships Our board of directors consists of nine directors. We are not a party to, and are not aware of, any voting agreements among our shareholders. In addition, there are no family relationships among our executive officers or senior management members. B.
We are not a party to, and are not aware of, any voting agreements among our shareholders. In addition, there are no family relationships among our executive officers or senior management members. B.
Generally, any shares tendered or withheld to pay the exercise price, purchase price of an award, or any withholding taxes shall be available for issuance under new awards.
In addition, any shares tendered or withheld to pay the exercise price, purchase price of an award, or any withholding taxes shall be available for issuance pursuant to new awards under the 2025 Plan.
Generally, shares that are forfeited, cancelled, terminated or expire unexercised, settled in cash in lieu of issuance of shares under the 2015 Plan or the 2012 Plan shall be available for issuance under new awards under the 2015 Plan.
Nevertheless, outstanding awards under the 2015 Plan remain subject to the terms of the 2015 Plan. Generally, shares that are forfeited, cancelled, terminated or expire unexercised, settled in cash in lieu of issuance of shares under the 2015 Plan or the 2012 Plan shall be available for issuance pursuant to new awards under the 2025 Plan.
The applicable purchase price is to be based on a discount percentage of up to 15%, which percentage may be decreased by the board or the compensation committee, multiplied by the lesser of (1) the fair market value of an ordinary share on the exercise date, or (2) the fair market value of an ordinary share on the offering date.
The applicable purchase price is to be based on a discount percentage of up to 15%, which percentage may be decreased by the board or the compensation committee, multiplied by the lesser of (1) the fair market value of an ordinary share on the exercise date, or (2) the fair market value of an ordinary share on the offering date. 65 To date, we have not implemented or enabled purchases of ordinary shares by our employees under our ESPP.
In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations.
Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations.
The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances.
The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an office holder act in good faith and in the best interests of the company.
Directors and Senior Management The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this annual report: Name Age Position Executive Officers Ronen Samuel 55 Chief Executive Officer and Director Lauri Hanover 64 Chief Financial Officer Daniel Gazit 52 Chief Product Officer Kobi Mann 44 Chief Technology Officer Directors (who are not also executive officers) Yuval Cohen (3) 61 Chairman of the Board of Directors Ofer Ben-Zur (3) 59 Director Naama Halevi Davidov (1)(3) 53 Director Jae Hyun (Jay) Lee (3) 59 Director Stephen Nigro (2)(3) 64 Director Yehoshua (Shuki) Nir (1)(2)(3) 54 Director Dov Ofer (1)(2)(3) 70 Director Gabi Seligsohn (1)(3) 57 Director (1) Member of our audit committee.
Directors and Senior Management The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this annual report: Name Age Position Executive Officers Ronen Samuel 56 Chief Executive Officer and Director Lauri Hanover 65 Chief Financial Officer Daniel Gazit 53 Chief Product Officer Kobi Mann 45 Chief Technology Officer Directors (who are not also executive officers) Yuval Cohen (3) 62 Chairman of the Board of Directors Ofer Ben-Zur (3) 60 Director Naama Halevi Davidov (1)(3) 54 Director Stephen Nigro (1)(2)(3) 65 Director Dov Ofer (1)(2)(3) 71 Director Gabi Seligsohn (2)(3) 58 Director (1) Member of our audit committee.
As a result of our election to be exempt from the external director requirement under the Companies Law, each of our directors (including our two directors who formerly served as external directors) is now assigned to one of the three, staggered classes of our board of directors, as follows: (i) the Class I directors are Jae Hyun (Jay) Lee, Yehoshua (Shuki) Nir and Dov Ofer, whose terms will expire at our annual general meeting of shareholders to be held in 2025 and when their successors are elected and qualified;; (ii) the Class II directors are Ofer Ben-Zur, Naama Halevi Davidov and Gabi Seligsohn, and their terms expire at our annual general meeting of shareholders to be held in 2026 and when their successors are elected and qualified; and (iii) the Class III directors are Yuval Cohen, Stephen Nigro and Ronen Samuel, and their terms expire at our annual general meeting of shareholders to be held in 2024 and when their successors are elected and qualified.
As a result of our election to be exempt from the external director requirement under the Companies Law, each of our directors (including our two directors who formerly served as external directors) is now assigned to one of the three, staggered classes of our board of directors, as follows: (i) the Class I director is Dov Ofer, whose term will expire at our annual general meeting of shareholders to be held in 2025 and when his successor is elected and qualified; (ii) the Class II directors are Ofer Ben-Zur, Naama Halevi Davidov and Gabi Seligsohn, and their terms expire at our annual general meeting of shareholders to be held in 2026 and when their successors are elected and qualified; and (iii) the Class III directors are Yuval Cohen, Stephen Nigro and Ronen Samuel, and their terms expire at our annual general meeting of shareholders to be held in 2027 and when their successors are elected and qualified. 66 Our board of directors has determined that six of our directors, consisting of Yuval Cohen, Ofer Ben-Zur, Stephen Nigro, Dov Ofer, Gabi Seligsohn and Naama Halevi Davidov, constituting a majority of the members of the board, are independent under the rules of the Nasdaq Stock Market.
In addition to that our Kornit Digital Europe GmbH have a work council. The work council must be consulted about specific employee related issues and has the right to make proposals to management according to the German Works Constitution Act (BetrVG). We have never experienced any labor-related work stoppages or strikes and believe our relationships with our employees are good.
In addition to that our Kornit Digital Europe GmbH employees have a work council. The work council must be consulted about specific employee related issues and has the right to make proposals to management according to the German Works Constitution Act (BetrVG).
The duty of loyalty includes a duty to: ● refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs; ● refrain from any activity that is competitive with the business of the company; ● refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and ● disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.
The duty of care includes a duty to use reasonable means to obtain: ● information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and ● all other important information pertaining to any such action. 71 The duty of loyalty includes a duty to: ● refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs; ● refrain from any activity that is competitive with the business of the company; ● refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and ● disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.
Under the Companies Law, our audit committee is responsible for: ● determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices; ● determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is material or extraordinary under the Companies Law) (see “-Approval of Related Party Transactions under Israeli Law”); ● establishing the approval process (including, potentially, the approval of the audit committee and conducting a competitive procedure supervised by the audit committee) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; 65 ● where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto; ● examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to fulfill his or her responsibilities; ● examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and ● establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees.
Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management. 68 Under the Companies Law, our audit committee is responsible for: ● determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices; ● determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is material or extraordinary under the Companies Law) (see “-Approval of Related Party Transactions under Israeli Law”); ● establishing the approval process (including, potentially, the approval of the audit committee and conducting a competitive procedure supervised by the audit committee) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; ● reviewing and approving the yearly or periodic work plan proposed by the internal auditor; ● examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to fulfill his or her responsibilities; ● examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and ● establishing procedures for the receipt, retention and treatment of complaints received by our company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by company employees of concerns regarding questionable accounting or auditing matters, and the protection to be provided to such complaining employees.
Each class of directors consists, as nearly as possible, of one-third of the total number of directors constituting the entire board of directors (other than the external directors, to the extent applicable).
Our directors are divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the total number of directors constituting the entire board of directors (other than the external directors, to the extent applicable).
He also serves on the board of directors of several privately held portfolio companies of Fortissimo Capital. Mr. Cohen holds a B.Sc. in Industrial Engineering from Tel Aviv University in Israel and an M.B.A. from Harvard Business School. Ofer Ben-Zur is a co-founder of our company and has served as director since 2002. From April 2014 to July 2016, Mr.
Cohen holds a B.Sc. in Industrial Engineering from Tel Aviv University in Israel and an M.B.A. from Harvard Business School. 58 Ofer Ben-Zur is a co-founder of our company and has served as director since 2002. From April 2014 to July 2016, Mr. Ben-Zur served as our President and Chief Technology Officer. From 2002 to April 2014, Mr.
Under our articles, our board of directors must consist of at least five and not more than nine directors, including, to the extent applicable, at least two external directors who may be required to be appointed under the Companies Law. Our board of directors currently consists of nine directors. Our directors are divided into three classes with staggered three-year terms.
Under our articles, our board of directors must consist of at least five and not more than nine directors, including, to the extent applicable, at least two external directors who may be required to be appointed under the Companies Law. As of the date of this report, our board of directors consists of seven directors.
A Special Approval for Compensation requires shareholder approval by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (a) such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement; or (b) the total number of shares of non-controlling shareholders who do not have a personal interest in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company’s aggregate voting rights.
A Special Approval for Compensation requires shareholder approval by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (a) such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement; or (b) the total number of shares of non-controlling shareholders who do not have a personal interest in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company’s aggregate voting rights. 69 The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment, obligation of payment or other benefit in respect of employment or engagement.
External directors-when we are subject to, or choose to be bound by, the requirement to elect them-are elected for an initial term of three years and may be elected for additional three-year terms under the circumstances described below. 63 Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise.
When we are subject to, or choose to be bound by, the requirement to elect external directors, they are elected for an initial term of three years and may be elected for additional three-year terms under the circumstances described below.
Nir has a B.A. in Law and Accounting and an M.B.A. from Tel Aviv University. Dov Ofer has served as a member of our board of directors since March 2015 and is a member of our audit and compensation committees. From 2007 to 2013, Mr. Ofer served as Chief Executive Officer of Lumenis Ltd.
Dov Ofer has served as a member of our board of directors since March 2015 and is a member of our audit and compensation committees. From 2007 to 2013, Mr. Ofer served as Chief Executive Officer of Lumenis Ltd. (Nasdaq: LMNS), a medical laser device company.
Compensation Committee Role Our board of directors has adopted a compensation committee charter that sets forth the responsibilities of the compensation committee, which include: ● the responsibilities set forth in the compensation committee charter; ● reviewing and approving the grant of options and other incentive awards to the extent such authority is delegated by our board of directors; and ● reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.
Compensation Committee Role Our board of directors has adopted a compensation committee charter that sets forth the responsibilities of the compensation committee, which include: ● the responsibilities set forth in the compensation committee charter; ● administering our equity incentive plans, including the approval of the adoption of such plans, amending and interpreting such plans, and making awards to eligible persons under the plans; and ● reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.
Each director will hold office until the annual general meeting of our shareholders in which his or her term expires, unless he or she is removed by a vote of 65% of the total voting power of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our articles. 62 In August 2019, we elected to be governed by an exemption under the Companies Law regulations that exempts us from appointing external directors and from complying with the Companies Law requirements related to the composition of the audit committee and compensation committee of our board of directors.
Each director will hold office until the annual general meeting of our shareholders in which his or her term expires, unless he or she is removed by a vote of 65% of the total voting power of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and our articles.
D. Employees As of December 31, 2023, we had 873 employees, with 486 located in Israel, 124 in the United States, 214 in Europe and 49 in Asia Pacific.
D. Employees As of December 31, 2024, we had 715 employees, with 396 located in Israel, 120 in the United States, 158 in Europe and 41 in Asia Pacific.
As of December 31, 2023, we had options to purchase 631,675 ordinary shares, 1,674,902 unvested RSUs (a portion of which are subject to performance based vesting conditions), outstanding under the 2015 Plan. As of December 31, 2023, we had 2,561,000 ordinary shares reserved for additional grants.
As of December 31, 2024, we had options to purchase 593,921 ordinary shares and 2,158,723 unvested RSUs (a portion of which are subject to performance based vesting conditions), outstanding under the 2015 Plan.
We have implemented an employee culture of Diversity, Equity and Inclusion, or DEI, where we seek to create a gender-equitable, welcoming and comfortable work environment in which our employees can express themselves freely and feel supported to achieve their best. E. Share Ownership For information regarding the share ownership of our directors and executive officers, please refer to “ITEM 6.B.
We have never experienced any labor-related work stoppages or strikes and believe our relationships with our employees are good. We have implemented an employee culture of Diversity, Equity and Inclusion, or DEI, where we seek to create a gender-equitable, welcoming and comfortable work environment in which our employees can express themselves freely and feel supported to achieve their best. E.
Sub Plan provides that options granted to the U.S. grantees will either be incentive stock options pursuant to Section 422 of the Code, or nonqualified stock options. Options, other than certain incentive stock options described below, must have an exercise price not less than 100% of the fair market value of an underlying share on the date of grant.
Options, other than certain incentive stock options described below, must have an exercise price not less than 100% of the fair market value of an underlying share on the date of grant.
Compensation” and “ITEM 7.A. Major Shareholders.” F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None.
Share Ownership For information regarding the share ownership of our directors and executive officers, please refer to “ITEM 6.B. Compensation” and “ITEM 7.A. Major Shareholders.” F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None.
Certain of our officers receive a severance payment of up to four months of their base salary upon termination of their employment. 57 The following table presents the grant dates, number of options, RSUs and PSUs, and related exercise prices and expiration dates of options and RSUs granted to our directors and executive officers for the year ended December 31, 2023: Grant Date Number of Options Number of RSUs Number of PSUs Exercise Price (per Share) of Options Expiration Date of Options January 2, 2023 - 13,025 - - - March 9, 2023 - 19,747 - - - August 12, 2023 48,525 63,620 - 23 August 12, 2033 August 28, 2023 - 108,696 - - Director Compensation Under the Companies Law, the compensation of our directors (including reimbursement of expenses) requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the shareholders at a general meeting as described in “C.
The following table presents the grant dates, number of options, RSUs and PSUs, and related exercise prices and expiration dates of options and RSUs granted to our directors and executive officers for the year ended December 31, 2024: Grant Date Number of Options Number of RSUs Number of PSUs Exercise Price (per Share) of Options Expiration Date of Options March 14, 2024 - 39,466 - - - July 11, 2024 - 104,526 - - - August 12, 2024 65,036 39,967 151,700 $ 16.48 August 12, 2034 August 29, 2024 - 49,168 - - - Director Compensation Under the Companies Law, the compensation of our directors (including reimbursement of expenses) requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the shareholders at a general meeting as described in “C.
Mr. Nigro spent time at HP’s locations in San Diego, California; Corvallis, Oregon; Singapore; Palo Alto; and Vancouver, Washington. Mr.
Mr. Nigro spent time at HP’s locations in San Diego, California; Corvallis, Oregon; Singapore; Palo Alto; and Vancouver, Washington. Mr. Nigro holds a bachelor’s degree in mechanical engineering from the University of California at Santa Barbara and a master’s degree in electrical engineering from Stanford University.
Subject to applicable law, the 2015 Plan is administered by our compensation committee, which has full authority in all matters related to the discharge of its responsibilities and the exercise of its authority under the plan. Awards under the 2015 Plan may be granted until 10 years after the effective date of the 2015 Plan.
Subject to applicable law, the 2015 Plan is administered by our compensation committee, which has full authority in all matters related to the discharge of its responsibilities and the exercise of its authority under the plan. 62 2015 Israeli Sub Plan The 2015 Israeli Sub Plan provides for the grant by us of awards pursuant to Sections 102 and 3(i) of the Ordinance, and the rules and regulations promulgated thereunder.
From and after the effective date of the 2015 Plan, no further grants or awards have been made under the 2012 Plan.
From and after the effective date of the 2025 Plan (as described below), no further grants or awards will be made under the 2015 Plan, as all ordinary shares available for issuance under the 2015 Plan have been transferred to the initial pool of ordinary shares under the 2025 Plan.
The following table shows the breakdown of our workforce of employees and subcontractors by category of activity as of the dates indicated: As of December 31, Area of Activity 2021 2022 2023 Service 165 160 151 Sales and marketing 225 205 208 Manufacturing and operations 126 179 151 Research and development 223 239 223 General and administrative 143 151 140 Total 882 934 873 72 With respect to our Israeli employees, Israeli labor laws govern the length of the workday and workweek, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, payments to the National Insurance Institute, equal opportunity and anti-discrimination laws and other conditions of employment.
Consequently, we decreased the sizes of our sales and marketing and general and administrative departments significantly in 2024, while also steadily reducing our manufacturing and operations, and research and development departments in each of 2023 and 2024, to be proportionate with our needs. 75 With respect to our Israeli employees, Israeli labor laws govern the length of the workday and workweek, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, payments to the National Insurance Institute, equal opportunity and anti-discrimination laws and other conditions of employment.
Summary Compensation Table Information Regarding Covered Executives (1) Base Benefits and Variable Equity-Based Salary Perquisites compensation Compensation Total Name and Principal Position (2) ($) ($)(3) ($)(4) ($)(5) ($) (in thousands, US dollars) Ronen Samuel, Chief Executive Officer 393 103 - 1,254 1,750 Kobi Mann, Chief Technology Officer 227 69 - 662 958 Chris Govier, President EMEA 240 16 11 609 876 Ilan Elad, President KDAM 290 52 39 442 823 Amir Shaked-Mandel, EVP Corporate Development 210 55 17 478 760 (1) All amounts reported in the table are in terms of cost to us, as recorded in our financial statements.
Summary Compensation Table Information Regarding Covered Executives (1) Base Benefits and Variable Equity-Based Salary Perquisites compensation Compensation Total Name and Principal Position (2) ($) ($)(3) ($)(4) ($)(5) ($) (in thousands, US dollars) Ronen Samuel, Chief Executive Officer 407 38 - 2,090 2,535 Yaakov Mann, Chief Technology Officer 238 36 - 787 1,061 Ilan Elad, President KDAM 362 26 46 574 1,008 Tomer Artzi, President KDAP 203 294 - 311 808 Lauri Hanover, Chief Financial Officer 281 73 - 230 584 (1) All amounts reported in the table are in terms of cost to us, as recorded in our financial statements.
If the compensation committee determines an award will be subject to Section 409A of the Code such awards shall be intended to comply in all respects with Section 409A of the Code, and the 2015 Plan and the terms and conditions of such awards shall be interpreted and administered accordingly. 61 Employee Share Purchase Plan We have adopted an employee share purchase plan, or ESPP, pursuant to which our employees and employees of our subsidiaries may elect to have payroll deductions (or, when not allowed under local laws or regulations, another form of payment) made on each pay day during the offering period in an amount not exceeding 15% of the compensation which the employees receive on each pay day during the offering period.
If the compensation committee determines an award will be subject to Section 409A of the Code such awards shall be intended to comply in all respects with Section 409A of the Code, and the 2015 Plan and the terms and conditions of such awards shall be interpreted and administered accordingly.
Members of this committee include representatives of the middle and senior management levels from most departments of our company, including operations, technology, product, legal, finance, business, and HR. 67 With respect to oversight of ESG-related risks and opportunities, each board committee is assigned responsibility for oversight of matters most applicable to their responsibilities.
ESG Our board is responsible for formulating policy, devising strategy, and ensuring governed execution concerning all ESG matters. 70 With respect to oversight of ESG-related risks and opportunities, the board may assign responsibility for oversight of matters most applicable to representatives of middle and senior management to relevant departments of our company.
Removed
Jae Hyun (Jay) Lee has served as a director of our company since August 2022 and prior to that he served as a strategic advisor to the Company since November 2021. Mr. Lee has served as a Senior Vice President of EMEA at eBay Inc. since August 21, 2017. Prior to that, Mr.
Added
(Nasdaq: RDWR) and Cellcom Israel Ltd. (TASE: CEL), and is expected to be appointed to the board of directors of Stratasys Ltd. (Nasdaq: SSYS) on March 31, 2025. He also serves on the board of directors of several privately held portfolio companies of Fortissimo Capital. Mr.
Removed
Lee served as Senior Vice President of Asia Pacific at eBay Inc., which began in July 2015. Mr. Lee began his career at eBay in 2002 and from 2002 to 2004, served as the Chief Executive Officer of eBay’s Korean Internet Auction Company. Prior to joining eBay, Mr.
Added
Seligsohn currently serves as a senior advisor to PSG private equity and works as an advisor to several privately held technology companies. He holds an LL.B. from the University of Reading. 59 Arrangements Concerning Election of Directors; Family Relationships Our board of directors consists of seven directors.
Removed
Lee was the Chief Operating Officer and then Chief Executive Officer of Korea Thrunet, the first Korean company to list on the Nasdaq exchange, where he led the company to become the leading cable-based broadband access provider in Korea. Mr.
Added
The forgoing aggregate compensation includes cash fees recorded and equity compensation expensed for two of our former directors, Jae Hyun (Jay) Lee and Yehoshua (Shuki) Nir, who served during 2024, from the start of the year through October 10, 2024 and December 31, 2024, respectively.
Removed
Lee began his career at Boston Consulting Group, where he held various positions in Boston and Seoul, South Korea, before being promoted to Vice President. Mr. Lee holds an M.B.A from Harvard University Graduate School and a B.A in International Relations from Brown University.
Added
As of December 31, 2024, we had no additional ordinary shares reserved for additional grants under the 2015 Plan, since all ordinary shares available for issuance under the 2015 Plan had been transferred to the initial pool of ordinary shares under the 2025 Plan.
Removed
Nigro holds a bachelor’s degree in mechanical engineering from the University of California at Santa Barbara and a master’s degree in electrical engineering from Stanford University. 55 Y ehoshua (Shuki) Nir has served as a director of our Company since July 2018 (until August 2019, as an external director under the Companies Law), and serves as the chairman of our compensation committee and a member of our audit committee.
Added
Upon our adoption of the 2025 Plan in December 2024 (as described below), we will no longer make future grants under the 2015 Israeli Sub Plan, although outstanding awards under the 2015 Israel Sub Plan will continue to be governed by that plan. 2015 U.S. Sub Plan The 2015 U.S.
Removed
From June 2021 until its acquisition by Unity (NYSE: U) in November 2022, Mr. Nir served as a director, a member of the compensation committee and a member of the audit committee, at ironSource Ltd. (NYSE: IS), a global software company that focuses on developing technologies for app monetization. Since July 2021 Mr.
Added
Sub Plan applies to grantees that are subject to U.S. federal income tax. The 2015 U.S. Sub Plan provides that options granted to the U.S. grantees will either be incentive stock options pursuant to Section 422 of the Code, or nonqualified stock options.
Removed
Nir has served as a director of Cardo Systems Ltd., which develops, manufactures and markets communication systems for motorcycles. From December 2012 to May 2016, Mr. Nir served as Senior Vice President, Corporate Marketing, and General Manager, Retail of SanDisk Corp., or SanDisk. From March 2008 to November 2012, Mr.
Added
Upon our adoption of the 2025 Plan in December 2024 (as described below), we will no longer make future grants under the 2015 U.S. Sub Plan, although outstanding awards under the 2015 U.S.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

20 edited+6 added−2 removed29 unchanged
Biggest changeThe information in this row is provided as of December 31, 2023, based on Amendment No. 1 to a statement of beneficial ownership on Schedule 13G filed by Artisan Partners Limited Partnership and related persons with the SEC on February 12, 2024.
Biggest changeThe information in this row is provided as of December 31, 2024, based on a report of institutional investment manager on Form 13F filed by Artisan Partners Limited Partnership with the SEC on February 12, 2025. The shares reported for this shareholder have been acquired on behalf of discretionary clients of Artisan Partners Limited Partnership, or APLP.
B. Related Party Transactions Our policy is to enter into transactions with related parties on terms that, on the whole, are no more favorable, or no less favorable than those available from unaffiliated third parties.
Related Party Transactions Our policy is to enter into transactions with related parties on terms that, on the whole, are no more favorable, or no less favorable than those available from unaffiliated third parties.
Samuel’s continued employment as our CEO, the options vest over a four-year period, with 25% of the options vesting upon the first anniversary of the grant date and an additional 6.25% of the options vesting upon the conclusion of each of the next 12 quarters thereafter, subject to the CEO’s continuous employment; ● There is “double trigger” vesting and acceleration of vesting due to termination of the CEO in certain circumstances; and ● The options have a ten-year term, at the conclusion of which any unexercised options would expire. 77 “Clawback” Condition The compensation terms for our CEO are subject, in the case of annual bonus and long-term incentive/equity compensation, to a potential repayment obligation to our Company/ cancellation (as applicable), under certain circumstances, as described in our compensation policy.
Samuel’s continued employment as our CEO, the options vest over a four-year period, with 25% of the options vesting upon the first anniversary of the grant date and an additional 6.25% of the options vesting upon the conclusion of each of the next 12 quarters thereafter, subject to the CEO’s continuous employment; ● There is “double trigger” vesting and acceleration of vesting due to termination of the CEO in certain circumstances; and ● The options have a ten-year term, at the conclusion of which any unexercised options would expire. 80 “Clawback” Condition The compensation terms for our CEO are subject, in the case of annual bonus and long-term incentive/equity compensation, to a potential repayment obligation to our Company or cancellation (as applicable), under certain circumstances, as described in our compensation policy.
These numbers are not representative of the number of beneficial holders of our shares, nor is it representative of where such beneficial holders reside, since all of these shares held of record in the United States were held through CEDE & Co., the nominee company of the Depository Trust Company, on behalf of hundreds of firms of brokers and banks in the United States, who in turn held such shares on behalf of several thousand clients and customers.
These numbers are not representative of the number of beneficial holders of our shares, nor is it representative of where such beneficial holders reside, since all of these shares held of record in the United States were held through CEDE & Co., the nominee company of the Depository Trust Company, on behalf of hundreds of firms of brokers and banks in the United States, who in turn held such shares on behalf of several thousand clients and customers. 78 B.
We have provided below the updated compensation figures for the CEO, as adjusted based on that approval by our shareholders: Base Salary: NIS 1.46 million (approximately $392,520) Target Annual Bonus (% Base Salary): 100% Target Total Cash (Base + Bonus): $785,040 Long-Term Incentive/ Equity Target Value: $2,500,000 annually Target Total Direct Compensation: $3,285,040 76 The compensation package includes the following specific elements: (i) Total Shareholder Return (TSR) PSUs : PSUs valued at approximately $1,250,00 are granted to the CEO annually. ● The actual number of TSR PSUs to be granted each year with the foregoing $1,250,000 value are determined based on a valuation methodology generally used for such awards (e.g., Monte Carlo method) as of the date of the relevant annual shareholder meeting or as of the relevant anniversary of the date of the meeting. ● The vesting of the TSR PSUs is dependent upon the performance of our TSR, as measured by our Company’s share price, relative to the performance of the S&P 500 index, which determination is made for a two-year (30% weight) and three year (70% weight) period of time, upon the two-year and three-year anniversaries of each grant date, with the TSR PSUs either partially or fully vesting (if either/both performance conditions are met at or above the threshold level) or expiring (if the performance conditions are not met) on the three-year anniversary of each grant date; ● There is “double trigger” vesting and acceleration of vesting due to termination of the CEO in certain circumstances. ● The actual payout on the TSR PSUs (i.e., how many vest), will be determined based on our performance relative to a payout curve, with threshold and maximum performance levels, whereby the payout can be anywhere from zero to in excess of the payout target, as follows: Kornit TSR Percentile Rank Payout (% of Target)* th Percentile 0% 35 th Percentile 50% (Threshold) 55 th Percentile 100% (Target)** 75 th Percentile 150% > 75 th Percentile 200% (Maximum) * Subject to linear interpolation ** Target payout requires above median performance and the applicable payout will be capped at target if our company’s absolute TSR performance for the relevant measurement period is negative, irrespective of our company’s percentile ranking for such period.
We have provided below the updated compensation figures for the CEO, as adjusted, based on that approval by our shareholders: Base Salary: NIS 1.51 million (approximately $407,000) Target Annual Bonus (% Base Salary): 100% Target Total Cash (Base + Bonus): $814,000 Long-Term Incentive/ Equity Target Value: $2,500,000 annually Target Total Direct Compensation: $3,314,000 79 The compensation package includes the following specific elements: (i) Total Shareholder Return (TSR) PSUs : PSUs valued at approximately $1,250,000 are granted to the CEO annually. ● The actual number of TSR PSUs to be granted each year with the foregoing $1,250,000 value are determined based on a valuation methodology generally used for such awards (e.g., Monte Carlo method) as of the date of the relevant annual shareholder meeting or as of the relevant anniversary of the date of the meeting. ● The vesting of the TSR PSUs is dependent upon the performance of our TSR, as measured by our Company’s share price, relative to the performance of the S&P 500 index, which determination is made for a two-year (30% weight) and three year (70% weight) period of time, upon the two-year and three-year anniversaries of each grant date, with the TSR PSUs either partially or fully vesting (if either/both performance conditions are met at or above the threshold level) or expiring (if the performance conditions are not met) on the three-year anniversary of each grant date; ● There is “double trigger” vesting and acceleration of vesting due to termination of the CEO in certain circumstances. ● The actual payout on the TSR PSUs (i.e., how many vest), will be determined based on our performance relative to a payout curve, with threshold and maximum performance levels, whereby the payout can be anywhere from zero to in excess of the payout target, as follows: Kornit TSR Percentile Rank Payout (% of Target)* th Percentile 0% 35 th Percentile 50% (Threshold) 55 th Percentile 100% (Target)** 75 th Percentile 150% > 75 th Percentile 200% (Maximum) * Subject to linear interpolation ** Target payout requires above median performance and the applicable payout will be capped at target if our company’s absolute TSR performance for the relevant measurement period is negative, irrespective of our company’s percentile ranking for such period.
For purposes of the table below, we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days of February 14, 2024 to be outstanding and to be beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
For purposes of the table below, we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days of February 28, 2025 to be outstanding and to be beneficially owned by the person holding the options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
Major Shareholders The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 14, 2024 by: ● each person or entity known by us to own beneficially 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers individually; and ● all of our executive officers and directors as a group.
Major Shareholders The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 28, 2025 by: ● each person or entity known by us to own beneficially 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers individually; and ● all of our executive officers and directors as a group.
In addition, Artisan Partners Limited Partnership reported a decrease in its beneficial ownership over the course of 2023, now holding 7.8% of our outstanding shares as of February 2024, while Senvest Management, LLC reported an increase in in its beneficial ownership in 2023, with its holdings comprising 9.2% of our outstanding shares as of February 2024.
In addition, Artisan Partners Limited Partnership reported a decrease in its beneficial ownership over the course of 2023, whereby it held 7.8% of our outstanding shares as of February 2024, while Senvest Management, LLC reported an increase in its beneficial ownership in 2023, with its holdings comprising 9.2% of our outstanding shares as of February 2024.
(1) The address of this shareholder is 1585 Broadway New York, NY 10036 . The information in this row is provided as of December 31, 2023, based on a statement of beneficial ownership on Schedule 13G filed by Morgan Stanley with the SEC on February 8, 2024.
(1) The address of this shareholder is 1585 Broadway New York, NY 10036 . The information in this row is provided as of December 31, 2024, based on Amendment No. 2 to a statement of beneficial ownership on Schedule 13G, filed by Morgan Stanley with the SEC on February 4, 2025.
(4) Consists of ordinary shares, and additional ordinary shares underlying options, RSUs and PSUs that may be exercised or settled (as applicable) by our directors and executive officers within 60 days of February 14, 2024.
(5) Consists of ordinary shares, and additional ordinary shares underlying options, RSUs and PSUs that may be exercised or settled (as applicable) by our directors and executive officers within 60 days of February 28, 2025.
Record Holders Based upon a review of the information provided to us by our transfer agent, as of February 14, 2024, there were two holders of record of our ordinary shares, of which one record holder, holding approximately 99.93% of our outstanding ordinary shares, had a registered address in the United States.
Record Holders Based upon a review of the information provided to us by our transfer agent, as of February 14, 2025, there were three holders of record of our ordinary shares, of which one record holder, holding approximately 90.2% of our outstanding ordinary shares, had a registered address in the United States.
Each of Artisan Partners Limited Partnership, Granahan Investment Management, LLC (a former major shareholder) and Senvest Management, LLC became a new 5% shareholder over the course of 2022, reporting beneficial ownership that constituted 8.8%, 7.0% and 8.3%, respectively in February 2023.
Recent Significant Changes in the Percentage Ownership of Major Shareholders Each of Artisan Partners Limited Partnership, Granahan Investment Management, LLC (a former major shareholder of ours) and Senvest Management, LLC became a new 5% shareholder over the course of 2022, reporting beneficial ownership that constituted 8.8%, 7.0% and 8.3% of our outstanding ordinary shares, respectively, in February 2023.
Clal consequently ceased to be a 5% shareholder. In February 2023, Wasatch Advisors Inc. reported that it had increased its beneficial ownership percentage from 6.9% to 9.4%, reflecting an increase over the course of 2022.
Also, in February 2023, Wasatch Advisors Inc. (a former major shareholder of ours) reported that it had increased its beneficial ownership percentage from 6.9% to 9.4%, reflecting an increase over the course of 2022.
See “ITEM 10.B Articles of Association.” A description of any material relationship that our major shareholders have had with us or any of our predecessors or affiliates within the past year is included under “ITEM 7.B-Related Party Transactions.” Name Number of Shares Beneficially Held Percent 5% or Greater Shareholders Morgan Stanley (1) 3,141,172 6.6 % Artisan Partners Limited Partnership (2) 3,719,473 7.8 % Senvest Management, LLC (3) 4,396,160 9.2 % Directors and Executive Officers Yuval Cohen * * Naama Halevi Davidov Ofer Ben-Zur * * Lauri Hanover * * Jae Hyun (Jay) Lee * * Stephen Nigro * * Yehushua (Shuki) Nir * * Dov Ofer * * Gabi Seligsohn * * Ronen Samuel 91,110 * Daniel Gazit * * Kobi Mann * * All Directors and Executive Officers as a Group (12 persons) * (4) * * Represents beneficial ownership of less than 1% of our outstanding ordinary shares.
See “ITEM 10.B Articles of Association.” A description of any material relationship that our major shareholders have had with us or any of our predecessors or affiliates within the past year is included under “ITEM 7.B-Related Party Transactions.” Name Number of Shares Beneficially Held Percent 5% or Greater Shareholders Morgan Stanley (1) 3,557,137 7.9 % Artisan Partners Limited Partnership (2) 3,332,849 7.4 % Senvest Management, LLC (3) 4,233,349 9.3 % Chicago Capital LLC (4) 2,493,680 5.5 % Directors and Executive Officers Yuval Cohen * * Naama Halevi Davidov Ofer Ben-Zur * * Lauri Hanover * * Stephen Nigro Dov Ofer * * Gabi Seligsohn Ronen Samuel * * Daniel Gazit * * Kobi Mann * * All Directors and Executive Officers as a Group (10 persons) * (5) * * Represents beneficial ownership of less than 1% of our outstanding ordinary shares.
The following is a description of material transactions, or series of related material transactions, since January 1, 2023, to which we were or will be a party and in which the other parties included or will include our directors, executive officers, holders of more than 10% of our voting securities or any member of the immediate family of any of the foregoing persons. 75 Agreements and Arrangements with, and Compensation of, Directors and Executive Officers Employment Agreements We have entered into written employment agreements with each of our executive officers.
The following is a description of material transactions, or series of related material transactions, since January 1, 2024, to which we were or will be a party and in which the other parties included or will include our directors, executive officers, holders of more than 10% of our voting securities or any member of the immediate family of any of the foregoing persons.
Mashaal’s status as the managing member of Senvest Management, LLC. None of the foregoing should be construed in and of itself as an admission by any of the foregoing persons or entities as to beneficial ownership of those ordinary shares.
Mashaal’s status as the managing member of Senvest Management, LLC. None of the foregoing should be construed in and of itself as an admission by any of the foregoing persons or entities as to beneficial ownership of those ordinary shares. (4) The address of this shareholder is 135 South LaSalle Street, Suite 4200, Chicago, IL 60603.
The information in this row is provided as of December 31, 2023, based on Amendment No. 2 to a statement of beneficial ownership on Schedule 13G filed by Senvest Management, LLC with the SEC on February 9, 2024.
The information in this row is provided as of February 28, 2024, based on a statement of beneficial ownership on Schedule 13G filed by Chicago Capital LLC with the SEC on March 4, 2024.
The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held by brokers or other nominees.
The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held by brokers or other nominees. 76 Unless otherwise noted below, each shareholder’s address is c/o Kornit Digital Ltd., 12 Ha’Amal Street, Rosh -Ha’Ayin 4809246, Israel.
Unless otherwise noted below, each shareholder’s address is c/o Kornit Digital Ltd., 12 Ha’Amal Street, Rosh -Ha’Ayin 4809246, Israel. 73 A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three years is included under “Certain Relationships and Related Party Transactions.” The percentages set forth below are based on 47,735,256 ordinary shares outstanding as of February 14, 2024.
A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three years is included under “Certain Relationships and Related Party Transactions.” The percentages set forth below are based on 45,327,503 ordinary shares outstanding (which excludes 5,773,222 Treasury shares) as of February 28, 2025.
A new major shareholder, Morgan Stanley, acquired ordinary shares in 2023 that constitute 6.6% of our outstanding ordinary shares as of February 2024. Other than the foregoing, there have been no recent significant changes in the percentage ownership of major shareholders.
Other than the foregoing, there have been no recent significant changes in the percentage ownership of major shareholders.
Removed
The shares reported for this shareholder have been acquired on behalf of discretionary clients of Artisan Partners Limited Partnership, or APLP, which holds 3,719,473 shares, including 2,335,900 shares on behalf of Artisan Partners Funds, Inc. 74 (3) The address of this shareholder is 540 Madison Avenue, 32 nd Floor, New York, New York 10022.
Added
APLP possesses sole voting power with respect to 2,835,917 of such shares, while lacking voting power with respect to 496,932 of such shares. 77 (3) The address of this shareholder is 540 Madison Avenue, 32 nd Floor, New York, New York 10022.
Removed
Recent Significant Changes in the Percentage Ownership of Major Shareholders In February 2022, each of Wasatch Advisors Inc. and Clal Insurance Enterprises Holdings Ltd., or Clal (each, former major shareholders of ours) again reported changes in its beneficial ownership that had taken place over the course of 2021, as their beneficial ownership percentages had decreased from 9.8% to 6.9%, and from 5.1% to 3.2%, respectively, over the course of 2021.
Added
The information in this row is provided as of December 31, 2024, based on a report of institutional investment manager on Form 13F filed by Senvest Management, LLC with the SEC on February 13, 2025.
Added
A new major shareholder, Morgan Stanley, acquired ordinary shares in 2023 that constituted 6.6% of our outstanding ordinary shares as of February 2024. In March 2024, Chicago Capital LLC reported that its beneficial ownership had increased to 5.2% as of February 28, 2024, thereby causing it to become a new major shareholder of ours.
Added
In February 2025, each of Artisan Partners Limited Partnership, Senvest Management, LLC and Morgan Stanley reported changes to its beneficial ownership of our ordinary shares over the course of 2024.
Added
Based on those reports, Artisan Partners Limited Partnership’s beneficial ownership decreased to 7.4%, while the beneficial ownership of Senvest Management, LLC and Morgan Stanley increased slightly, to 9.3% and 7.9%, respectively, of our outstanding ordinary shares (each such percentage reflects ownership as of February 28, 2025).
Added
Agreements and Arrangements with, and Compensation of, Directors and Executive Officers Employment Agreements We have entered into written employment agreements with each of our executive officers.

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