Kornit Digital Ltd. Q2 2026 earnings report shows revenue up 11.2% to $55.3M and ARR growth of 79%, driven by a strong shift to recurring revenue.
Kornit Digital Ltd. reported Q2 2026 revenue of $55.3 million (USD), an increase of 11.2% year-over-year and exceeding the upper end of management's guidance. The results underscore the company's transition to a recurring revenue model, with approximately 80% of its revenue now derived from annual recurring revenue (ARR), enhancing visibility into future earnings.
Key Takeaways
- Revenue rose to $55.3 million, up 11.2% YoY, surpassing guidance of $54-$55 million.
- Annual Recurring Revenue (ARR) reached $33.8 million, reflecting 79% growth YoY and 26% sequentially.
- Adjusted EBITDA improved to $0.3 million, compared to a loss of $1.2 million in Q2 2025, marking a significant turnaround.
- Gross Margin increased to 47.4%, up 110 basis points YoY, due to higher customer activity and improved revenue mix.
- Operating Cash Flow remained positive at approximately $8.5 million for the quarter, contributing to 11 consecutive quarters of positive cash flow.
Revenue Growth Driven by Recurring Model
Kornit Digital's transition to a recurring revenue model is evident, with 80% of revenue now classified as recurring or highly recurring. This shift provides a more resilient financial structure and stronger visibility into future earnings. The company's Q2 performance benefited from a 34.7% increase in services revenue and a 4.3% rise in product revenue, attributed to higher customer activity and increased utilization of its installed systems.
| Metric | Q2 2026 | YoY | QoQ |
|---|---|---|---|
| Revenue | $55.3 million | +11.2% | N/A |
| Annual Recurring Revenue | $33.8 million | +79% | +26% |
| Adjusted EBITDA | $0.3 million | N/A | N/A |
| Gross Margin | 47.4% | +110 bps | N/A |
| Operating Cash Flow | $8.5 million | N/A | N/A |
Improved Profitability Amidst Growth
Kornit Digital achieved a non-GAAP gross margin of 47.4%, an improvement driven by increased customer activity and a favorable revenue mix. The quarter included a net tariff-related benefit of approximately $830,000, resulting from a $2 million tariff refund. Despite operating expenses rising to $28.8 million, primarily due to the successful Connection Conference and foreign exchange headwinds, the company managed to improve its adjusted EBITDA margin to 0.6%, exceeding prior guidance.
Strong Guidance Signals Continued Momentum
Looking ahead, Kornit expects Q3 2026 revenue to range between $55 million and $60 million, with adjusted EBITDA margins projected to be between break-even and 3%. Management anticipates a 15% revenue increase in the second half of 2026 compared to the first half, supported by strong customer demand and a healthy commercial pipeline. This guidance reflects a shift towards higher-margin consumables and ongoing expansion in the AIC model, further solidifying Kornit's position in the digital printing market.
Analyst Q&A Reveals Competitive Dynamics
During the analyst Q&A, Ronen Samuel, CEO, emphasized the company's shift from capital equipment to a platform-centric model. Responding to a question from Greg Palm of Craig Hallum, he noted, >"The strategies that we implemented actually starting two and a half years ago are starting to deliver... we can see that as of today we reached $33.8 million of ARR, which represents 79% year-over-year growth." This transition is not just about financial metrics; it reflects a broader industry trend as customers move from analog to digital manufacturing, which Kornit is capitalizing on through its advanced technology and service agreements.
Frequently Asked Questions
Did Kornit Digital Ltd. beat earnings estimates in Q2 2026?
Yes, Kornit Digital reported an adjusted EBITDA of $0.3 million, surpassing expectations and marking a turnaround from a $1.2 million loss in Q2 2025.
What is Kornit Digital's guidance for Q3 2026?
Management expects Q3 2026 revenue between $55 million and $60 million, with adjusted EBITDA margins anticipated to be between break-even and 3%.
How much of Kornit Digital's revenue is recurring?
Approximately 80% of Kornit Digital's revenue is now classified as recurring or highly recurring, primarily from annual contracts for services and software.
What drove Kornit Digital's revenue growth in Q2 2026?
Revenue growth was driven by a 34.7% increase in services revenue and a 4.3% rise in product revenue, reflecting higher customer activity and utilization of installed systems.
How does Kornit Digital's gross margin compare to previous quarters?
Kornit Digital's gross margin improved to 47.4%, an increase of 110 basis points year-over-year, supported by higher customer activity and a favorable revenue mix.
The upcoming quarters will be critical for Kornit Digital as it continues to navigate the digital transformation in the printing industry and drive sustainable growth through its evolving business model.
This analysis is based on public earnings call materials and is not investment advice.
