Impinj, Inc. Q3 FY2025 earnings call

• Third quarter results were strong with revenue and adjusted EBITDA exceeding guide range. Record endpoint IC volumes and better reader volumes drove product revenue to new quarterly record, with Gen2X success behind growing product revenue.
• Silicon: Endpoint IC revenue exceeded expectations, supply chain/logistics and retail had volumes, with fourth quarter volumes expected to step down. Partner channel inventory healthy.
• Reader ICs: Third quarter revenue met expectations with rich E Family mix; fourth quarter revenue expected lower due to conservative ordering by Chinese partners, but long-term E Family growth seen.
• Solutions: Strong third-quarter revenue led by Lighthouse accounts, with reader revenue expected in fourth quarter but step down due to project timing. Aggressively hiring for software to win recurring revenue.
• Gen2X: Proven flexibility, used in various use cases, enhancing for food and e-commerce, with plans for differentiated endpoint ICs.
• Food: Large opportunity with pallet, case, and item level deployments, engineering and go-to-market innovating to unlock opportunity.
• Organizational: Welcomed Arthur Valdez to Board with supply chain expertise.

Third quarter revenue was $96.1 million. Endpoint IC revenue was $78.8 million, down 7% sequentially and 3% year-over-year; excluding $16 million licensing revenue in second quarter, endpoint IC revenue grew 15% sequentially. Systems revenue was $17.3 million, up 30% sequentially and 21% year-over-year. Third quarter gross margin was 53%, expected to increase in fourth quarter. Third quarter adjusted EBITDA was $19.1 million with a margin of 19.8%.

• Expect fourth quarter revenue between $90 million and $93 million, a quarter-over-quarter decrease of 5% at midpoint.
• Expect adjusted EBITDA between $15.4 million and $16.9 million.
• Expect non-GAAP net income between $14.7 million and $16.2 million, reflecting non-GAAP fully diluted earnings per share between $0.48 and $0.52.
• Expect fourth quarter gross margin to increase sequentially, with more than 100 basis points of sequential gross margin accretion embedded in guidance.

Q: About readers, Q3 was stronger, Q4 weaker. What does timing mean?

A: Q3 systems revenue stronger than anticipated, leading to natural step down in Q4, with some project timing shifting right.

Q: Walmart announcement with Avery, timing and sizing?

A: Excited about news, theme of improving product freshness, etc., expect modest food volumes through first half '26 and accelerating, pacing set by scale rollout complexity.

Q: Grocery tagging, e-commerce mention?

A: Perishable categories first, innovation on tagging and packaging; e-commerce due to interest in direct from DC/warehouse to consumer and 3PL opportunities.

Q: Gen2X and gross margin, software and recurring revenue?

A: Gen2X driving share hope, not yet specific on share; software investment part of building information economy on IoT.

Q: Competitor using Bluetooth as RFID alternative, take?

A: RAIN RFID ideal for large volumes, complementary tech as gap fillers, focus on big opportunities like food and e-commerce.

Q: Second large North American supply chain logistics vendor, deployment and tagging?

A: Fully deployed in domestic parcel delivery, but new use cases and growth opportunities in other areas; partnership view with continuous support.

Q: Enhancing Gen2X for food and e-commerce, details?

A: Need to customize endpoint IC, reader IC, and software, analogy to mobile phone innovation for information value.

Q: Endpoint IC pricing in first quarter?

A: Just getting into conversations, will provide insight next quarter.

Q: Walmart opportunity volumes and sole provider?

A: Multibillion-unit annual opportunity once ramped; well-positioned in pilots, driving innovations for continued share.