Impinj, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Second Quarter Results: Revenue exceeded upper end of guide range, adjusted EBITDA exceeded guide range and set new quarterly record. Endpoint ICs, reader ICs, readers, and gateways all outperformed expectations.
• Solutions Strategy: Focused on using platform to solve enterprise challenges. Examples include a leading apparel retailer deploying overhead reading, a European retailer winning new use cases, and a North American supply chain/logistics end user winning new use cases.
• Gen2X Role: Gen2X improves read range, speeds inventory, and benefits loss prevention/loss analytics. Drives demand for products and platform, expected to be key to industry future.
• Endpoint IC Performance: Second quarter book-to-bill ratio strong, sequential unit volume growth despite partner channel inventory decline. Third quarter expected sequential revenue growth.
• Reader IC Performance: Second quarter revenue decline due to end of life of indie shipments, but E Family revenue met expectations with Gen2X support. Third quarter expected sequential growth from E Family shipments.
• Readers and Gateways Performance: Second quarter revenue increase led by new use cases, third quarter expected sequential growth from wins

Segment Performance

• Endpoint ICs: Second quarter book-to-bill ratio was strong. Turns orders exceeded expectations despite macro softness. M800's performance, growing inlay certifications, and Gen2X support led to sequential endpoint IC unit volume growth even with partner channel inventory decline. Third quarter expected sequential revenue growth. Revenue contribution: Not explicitly stated as a percentage but was a significant part of overall revenue.
• Reader ICs: Second quarter revenue declined sequentially due to end of life of indie shipment volumes. E Family revenue met expectations with a first order for retail overhead reading, and over 50 E Family partner modules/readers support Gen2X. Third quarter expected sequential growth from strong E Family shipments. Revenue contribution: Not explicitly stated as a percentage.
• Readers and Gateways: Second quarter revenue increased led by new use cases at a European retailer and retail loss analytics. Third quarter expected sequential growth buoyed by wins at the European retailer and a North American supply chain/logistics end user. Revenue contribution: Not explicitly stated as a percentage

Guidance

• Third quarter revenue expected between $91 million and $94 million, a quarter-over-quarter increase of 13% at midpoint.
• Adjusted EBITDA expected between $15.6 million and $17.1 million.
• Non-GAAP net income expected between $14 million and $15.5 million, reflecting non-GAAP fully diluted earnings per share between $0.47 and $0.51.
• Anticipate product gross margin to increase in third quarter driven by higher M800 mix and sell-through of lower-cost wafers, with further benefit in fourth quarter.
• Assuming minimal turns at midpoint of revenue guidance due to tariff-related uncertainty/volatility

Risks

• Tariff-Related Uncertainty/Volatility: Continuing uncertainty and volatility in tariffs, which is factored into minimal turns at midpoint of revenue guidance
• Supply Chain Disruptions: Macro softness, supply chain disruptions, and channel inventory dynamics that can impact performance

Q: Harsh Kumar asked about the beat in 2Q, how much was due to turns and 3Q guidance, and margins.

A: Cary Baker said 2Q beat had more turns than expected with partner adjustments, 3Q guidance assumes minimal turns, margins driven by M800 mix and wafer cost downs Q: Christopher Rolland asked about channel partners' takes and Asian partner.

A: Chris Diorio concurred with North American partner's takes, Asian partner has good relationship with continued strength expected Q: Ezra Weener asked about impact of overhead reading and channel inventory.

A: Chris Diorio said overhead reading is primarily reader IC opportunity driving endpoint IC market share; Cary Baker said channel inventory was anticipated to build but came down, healthy compared to demand Q: Troy Jensen asked about license revenue.

A: Cary Baker said license revenue was $16 million, up from $15 million last year Q: James Andrew Ricchiuti asked about Q3 gross margin improvement.

A: Cary Baker said drivers include M800 mix ramping and lower-cost wafers becoming available Q: Scott Searle asked about food opportunity timelines and systems level.

A: Chris Diorio said food item-level adoption expected in 2026, big box retailers continuing to push forward with category expansions