Shares of Kornit Digital (NASDAQ:KRNT) surged more than 24% by 10:30 a.m. EDT on Wednesday. Driving the rally in the printing solutions company's stock was its first-quarter results and outlook.
Like most companies, Kornit Digital pulled its first-quarter guidance amid the market turmoil in March caused by the COVID-19 outbreak. At the time, the company estimated that its revenue for the period would be 35% to 45% below the low end of its initial guidance range of $47 million to $51 million. That's precisely what happened during the quarter: It generated only $26.2 million of revenue, nearly 45% below its prior outlook. Further, the company reported a net loss of $0.22 per share, which was $0.13 per share worse than analysts anticipated.
However, while the first quarter was awful, the company's outlook is much brighter. CEO Ronen Samuel stated in the earnings release that we "see a clear path to reaccelerating top line growth." In his view, the company expects to "deliver year-over-year growth for the second half of 2020."
The COVID-19 outbreak significantly affected Kornit Digital's sales during the first quarter as customers spent less freely. However, with governments lifting restrictions on businesses, many are ramping back up. That leads Kornit to believe its sales growth will reaccelerate during the second half of the year. If that outlook comes to fruition, Kormit's stock could continue rallying. On the other hand, if sales don't rebound as anticipated, the stock could give back today's gains and then some.