IMPINJ INC Q1 FY2025 earnings call

• Market Opportunity: Long-term secular growth in retail, supply chain, logistics, food, and other applications remains intact. Enterprises use Impinj's platform for digitization.
• First Quarter Execution: Solid execution despite uncertainty; revenue and profitability above guidance due to steady demand and higher endpoint IC volumes; strong book-to-bill ratio and pipeline activity.
• Second Quarter Outlook: Modest channel inventory increase as inlay partners build optionality; geographic shift in product shipments from China to other geographies, but exposure is less as products from new geographies also carry Impinj's endpoint ICs.
• Highlights: Gen2X showing prowess, direct engagements with grocery chains moving forward, strong E family demand, and a partner extending loss prevention solution to loss analytics.

Endpoint ICs: First quarter revenue was $61.2 million, down 17% sequentially from $74.1 million in Q4 2024 and slightly down year over year from $61.5 million in Q1 2024, driven by higher endpoint IC volumes. Systems: First quarter revenue was $13.1 million, down 25% sequentially from $17.5 million in Q4 2024 and 15% year over year from $15.3 million in Q1 2024, exceeded expectations due to strength in Reader and Reader IC sales.

• Second Quarter Revenue: Expected between $91 million and $96 million, a 26% midpoint increase quarter-over-quarter including licensee payment, and 4% excluding it.
• Adjusted EBITDA: Expected between $23.5 million and $26 million.
• Non-GAAP Net Income: Expected between $20.8 million, with fully diluted earnings per share between $0.68 and $0.76.

• Tariff and Political Uncertainty: Impact on channel inventory and shipment volumes due to partners adjusting inventory strategies for geographic optionality and tariff uncertainty.
• Macro Uncertainty: Potential material difference between forward-looking statements and actual results due to risks and uncertainties described in SEC filings.

Q: How are you thinking about tariffs and potential demand fall-off?

A: Bookings were strong, no material pull-aheads seen. Geographic shift in product sourcing from China to other geographies, but enterprise end users are under-shipping demand, with channel inventory build balancing out. Expect normalization and bookings return as demand catches up.

Q: Clarification on inventory equilibrium and product mix exposure?

A: Channel inventory not high vs evolving production strategies. Product mix includes staples and necessary products, with significant portion in supply chain logistics in US holding. M800 ramp continues, expecting gross margin benefit from M800 mix, yield, and wafer costs.

Q: M800 ramp and margin impact?

A: M800 ramping nicely, expected growth in Q2. At some point this year, M800 could be volume runner, expected 300 basis point gross margin benefit in second half.

Q: Update on large logistics customer and inventory?

A: Continuing to support the customer, seeing growth this year over last. Channel inventory dynamic changed, but end customer still has label growth expected.