Kornit Digital (KRNT) reports Q1 2026 revenues of $48.5M, 4% growth YoY, and strategic acquisition of Print Factory. Guidance for Q2 2026 shows continued momentum.

Key Takeaways

• Total revenue for Q1 2026 was $48.5 million, at the top end of guidance, reflecting a 4% year-over-year growth in products and 7% in services.
• Annual Recurring Revenue (ARR) surged approximately 103% year-over-year, reaching about $27 million.
• Gross margins declined to 41% due to a higher mix of systems and services relative to consumables, alongside foreign exchange impacts.
• The company announced the acquisition of Print Factory, enhancing its software and automation capabilities.
• Guidance for Q2 2026 suggests revenue between $51 million and $55 million, with expectations of adjusted EBITDA margins improving.

Financial Performance

Kornit Digital Ltd. reported total revenues of $48.5 million for the first quarter of 2026, positioning itself firmly at the top end of the company’s guidance range. This performance signifies a 4% increase in product revenue and a 7% rise in services revenue compared to the same quarter last year. The surge in Annual Recurring Revenue (ARR), which increased by approximately 103%, highlights the company’s growing traction in subscription-based models, now standing at about $27 million.

However, gross margins faced a downturn, recorded at 41%, down from 45.2% in Q1 2025. This decline was primarily due to a higher mix of systems and services relative to consumables, compounded by foreign exchange fluctuations and tariff-related costs, which reduced gross margins by approximately 190 basis points year-over-year.

Operating expenses were managed effectively at $25.5 million, reflecting a 7% year-over-year decrease, even amidst challenges posed by foreign exchange impacts. Kornit’s commitment to maintaining cost discipline while investing in growth initiatives is evident in this performance, contributing to a positive operating cash flow of $6.3 million for the quarter, marking the tenth consecutive quarter of positive cash flow.

Strategic Initiatives

Kornit’s strategic direction is underscored by its recent acquisition of Print Factory, a move that significantly enhances its software, workflow, and production automation capabilities. This acquisition aligns with the company’s goal to build a connected digital infrastructure for the textile and apparel industry, integrating demand generation, workflow, production, and fulfillment into a unified ecosystem.

The company also showcased its new Apollo and PrestoMax platforms during the earnings call. The Apollo system demonstrated its capability to automate production on cut pieces, expanding Kornit’s addressable market into applications that were previously challenging to automate. The response from customers has been overwhelmingly positive, highlighting strong interest from those looking to transition from analog to digital printing solutions.

Kornit has also reported a robust pipeline of opportunities across various sectors, including footwear, technical apparel, and home decor, indicating a promising expansion into new categories. The PrestoMax system, powered by a new duratec architecture, offers exceptional durability and print performance, which could open new revenue streams as brands look for sustainable and flexible production solutions.

Future Outlook

Looking ahead, Kornit Digital has expressed optimism about its future performance. Management anticipates revenue growth to continue into Q2, with guidance set between $51 million and $55 million. The adjusted EBITDA margin is expected to range between negative 5% and breakeven, reflecting confidence in the company’s strategic execution and operational efficiency.

The strengthening backlog and increasing customer activity provide Kornit with better visibility for the second half of 2026. With a disciplined approach to cost management and ongoing investments in strategic initiatives, Kornit is well-positioned to capture the ongoing shift towards on-demand production in the textile industry. The expected improvements in gross margins during Q2 are attributed to higher utilization rates and an increase in recurring revenues, suggesting a return to profitability in the latter half of the year.

Furthermore, Kornit’s focus on expanding its Annual Recurring Revenue model through innovative systems is gaining traction, with expectations for continued strong growth as customer adoption increases. Management noted that over 90% of new customers in the screen market are adopting the AIC (All-Inclusive Click) model, which is driving better predictability in revenue generation.

Conclusion

In conclusion, Kornit Digital Ltd. has demonstrated a strong financial performance in Q1 2026, with promising indicators for future growth. The strategic acquisitions and innovations in their product offerings position the company as a leader in the transition from analog to digital textile production. With a robust pipeline and increasing customer engagement, Kornit is set to capitalize on the growing demand for on-demand manufacturing solutions, ensuring a positive outlook for the remainder of the year.

This analysis is based on public earnings call materials and is not investment advice.