KORNIT DEADLINE ALERT: Bragar Eagel & Squire, P.C. Reminds Investors that a Class Action Lawsuit Has Been Filed Against Kornit Digital Ltd. and Encourages Investors to Contact the Firm – Kornit Digital (NASDAQ:KRNT)

Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, reminds investors that a class action lawsuit has been filed against Kornit Digital Ltd. (“Kornit” or the “Company”) KRNT The lawsuit will be filed in the United States District Court for the District of New Jersey, on behalf of all individuals and entities that purchased or acquired Kornit Securities between February 17, 2020 and July 5, 2022 (inclusive) (the “Class Period”) Investors can apply to the Court until April 17, 2020 to be appointed lead plaintiff.

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This securities class-action is brought by all persons and entities who purchased or acquired Kornit ordinary share between February 17, 2020 and July 5, 2022 (inclusive) (the “Class period”). The claims asserted in this action are against Kornit, certain of its current and former senior executive officers (collectively “Defendants”) and arise out of Sections 10(b), 20(a) of Securities Exchange Act of 1933 (the “Exchange Act”), as well as Rule 10b-5 promulgated under it.

Kornit is a company that designs and manufactures industrial printing technologies for the textile, apparel and garment industries. Digital inkjet printers from the Company enable users to print direct-to garment (“DTG”) as well as direct-to fabric (“DTF”). In DTG, images and designs are printed directly on finished textiles like clothing and apparel. In DTF printing, large rolls of fabric pass through wide inkjet printers that print images and designs directly onto swaths of fabric that are then cut and sewn into a product, and can be used in the fashion and home décor industries. Kornit produces and sells textile dyes, inks, and other consumables that are used in digital printers. Kornit provides equipment and customer services such as technical support, maintenance and repair through its customer support contract.

During the class period, the company began to offer software services, such as a complete suite of fulfillment and production solutions called KornitX. Through this, the company provides automated production systems, workflow management, and inventory management.

Amazon.com, Inc., a multinational ecommerce company, is the Company’s biggest customer. Delta Apparel, Inc. (Delta Apparel), a leading provider activewear and lifestyle clothing products, and Fanatics, Inc. (Fanatics), a global digital platform and leading supplier of licensed sports merchandise, were among the largest Kornit customers during the class period. Kornit’s ten biggest customers generate more than 60 percent of its revenues. Kornit’s goal to “become a $1 billion revenue Company in 2026” was based on the ambitious goal to keep these major customers and continue to grow their customer base.

Throughout Class Period, Kornit emphasized the supposed competitive advantages of its technology. Kornit assured investors that there was virtually no significant competition in the market for “direct-to garment” printing. The Company stated that its digital print systems, consumables such as textile dyes, and services Kornit offered customers to manage and maintain its digital printers as well as its workflow were in high demand. Kornit also assured investors that a purportedly high demand for its products and services will enable the Company to retain its existing client base and attract new clients, limiting the risk of a large portion of revenues being concentrated in a few large customers.

These statements, and many others throughout the Class Period, were false. Kornit, and its senior executive knew, or at least recklessly ignored the fact, that Kornit’s digital print business was plagued with severe quality control and customer service problems. Kornit lost market share due to these issues and deficiencies, which led to the Company losing revenue. Customers began to go elsewhere to print their digital documents. Due to these false representations, Kornit ordinary share prices were artificially inflated throughout the Class period.

Investors began to learn the truth on March 28, 2022, when Delta Apparel and Fanatics—two of Kornit’s major customers—announced that for months they had collaborated with one of Kornit’s principal competitors to develop a new digital printing technology that directly competed with products and services Kornit offered. Delta Apparel announced that the new technology had been installed in four of their existing digital print shops and plans to expand. Delta Apparel, Fanatics, and other companies using this new, competitive technology reflect the dissatisfaction Kornit’s customers feel with its products and customer service. Kornit is likely to lose revenue from these two customers.

Kornit announced a net loss for the first quarter 2022 on May 11, 2022. This was despite exceeding expectations in terms of revenue. The Company’s revenue guidance for 2022’s second quarter was also significantly lower than analysts expected. Kornit blamed its disappointing guidance on a slowdown of orders from customers in the Company’s e-commerce sector. Kornit also acknowledged that for the past two quarters it had known that Delta Apparel was one of Kornit’s largest customers. They purchased digital printing equipment from a Kornit rival. The price of Kornit shares fell by $33.3% or $18.78 as a result.

Kornit then announced on July 5th, 2022 after the close of the stock market, that the company would have a substantial revenue shortfall for the second half of 2022. Kornit had forecast revenue in the second-quarter range of $56.4 to 59.4 million. This was far less than the $85 to 95 million previously provided by the Company in May of 2022. Kornit attributes the significant revenue miss to a “significantly slower pace” of direct-to -garment systems orders during the second quarter, compared to its previous expectations. These disclosures caused the price of Kornit’s ordinary shares to drop by $8.10 or 25.7%.

Plaintiff and other members of the Class have suffered substantial losses and damages as a result of the Defendants’ wrongful acts and/or omissions and the precipitous drop in the value of the Company’s shares.

If you purchased or otherwise acquired Kornit shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at [email protected], telephone at (212) 355-4648, or by filling out this contact form. No cost or obligation is imposed on you.

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. It is a national recognized law firm, with offices in New York City, California and South Carolina. The firm represents both individual and institutional investors across the nation in complex litigation involving commercial, securities and derivatives, as well as other complex issues. Please visit www.bespc.com to learn more about the firm. Attorney advertising. Previous results are not a guarantee of similar outcomes.

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