Earnings call transcript Q4 2022

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Operator

Welcome to the Impinj Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Strategic President, Vice Cobb, Finance. Andy Please go ahead.

Andy Cobb

first-quarter fourth-quarter Co-Founder MJ. joining with detailed us you, XXXX of On Diorio, our our Good brief and review provide quarter Impinj's afternoon, for all results. CFO, Impinj's XXXX XXXX Chris financial call, Cary you market thank today's CEO, outlook. to overview a full-year results and full-year will a and and and Thank and performance. discuss Baker, opportunity fourth Impinj's follow will of

We Q&A. for CRO, will questions. Jeff will join open the then call Dossett, us Impinj's for the

You plus website. the on management's can company's investor-relations find prepared trended financial the remarks, section of data

make Private expectations such Act today. will performance Any in based Securities financial of are XXXX. as about and that under forward-looking Litigation of We statements future Reform the this on statements call are our outlook

reasonable uncertainties. have because differ making believe and risks statements a forward-looking we such could any basis While results our materially statements, for to actual subject we these are

and disclaim, While expressly reports except by we and we undertake, forward-looking describe these alter update do not our the law. uncertainties in file or required with we statements annual obligation SEC, to quarterly any as and the risks

metrics. where On metrics non-GAAP sheet financial metrics for today's for we of reconciliation refer to release non-GAAP. a GAAP. except call, to are metrics explicitly most Please and revenue, all otherwise, are or state flow GAAP comparable financial Balance cash our the earnings

March and the with We outlook, in XXth New an Technology the our you that Investor York those results many Annual Seattle. in on events. look Conference in will ROTH forward turning Dana Before in Please Xnd on Day host connecting XXth June Also, XXth Conference of Annual at to we will March XXth date. to save note Point. we participate on Susquehanna's and

I will to the call Chris. turn now over

Chris Diorio

in the all very We fourth fourth strong record and revenue fourth quarters. the XXXX year for both our record Thank thank our call. milestone quarters. delivered in delivered EBITDA the connect year. sequential for you, joining full IC, backlog Fourth-quarter Impinj. revenue third, XX entering for Andy. We you in second, we growth quarter And and another capped We a record adjusted on world. have and everyday delivered in item And We every our endpoint billionth journey XXXX. delivered the to third double-digit

to, Our enterprise component results, shipments end-users persistent those strong despite for, support wafer drove and shortfalls. and

As volume continued we dividends to for look those growth. XXXX, and IC opportunities our further into we strong opportunities pay endpoint end-user of form the see expect we significant platform, in

program bulk rooted reductions. expectations, Starting and tracking well demand ICs, programs a XXXX, strong, volume with retail revenue fifth The the growth crosscurrents inventory in anticipate IC ongoing chain despite XXXX held consecutive endpoint significant as in headwinds. focus quarter. We that and with setting platform retailers' self-checkout for endpoint growth is exceeded prevention. IC logistics on package endpoint as our more-than-offsetting expansions inventory loss record retail and supply Fourth-quarter our new macroeconomic of and

we improved On supply. the front, wafer seeing are

additional improved least bookings our teething our said, demand. and visibility record With volumes on can to to millimeter backlog. as year-end issues supply, production. remain shipment partners improved, XXX anticipated, As post-processing ramp constrained will that strong timing second-half That as our ramp layered will our inlay volume that into and at expanded wafer-delivery XXXX wafer shipments we creating into we

and and loss-prevention systems, exceeded European deployment retailer's to now fourth-quarter despite expectations, the revenue by constraining our gateway Turning shipments. to shortfalls self-checkout component reader deliveries led visionary and

expect with and components supply Like fourth entered we do Looking quarter abate, backlog. second-half for not we remain stubbornly until forward, less and normalize we the shortfalls although as anticipate first variability to schedule XXXX. quarter, few component tight, cost significant a reader

for quarter, record of E-family a driven their set launches. as by ahead partner's consecutive third strength built product Reader Impinj IC products our the revenue

those they typical volumes first E-family expect production partners follow lower subsequent the strength as ramp Looking product we market, volumes. cadence quarter, into as followed seeding by the

first-quarter ICs E-family the reader to strength more-than-offset in our expect We Indy decline.

into outpace expect we our Looking E-family XXXX, family. and further Indy replace rapidly significantly to our

MXXX, On front, extended significant line product the our Impinj MXXX in we announced user the November identifiers endpoint expand MXXX latest product and ICs. XXX millimeter memory. and with our They product

improving We item CoreXD portfolio that reading all MXXX Antenna also Impinj reference-design enables our readability. patent-pending introduced omnidirectional for ICs,

visionary On European contributing revenue. the retailer continued the strong fourth-quarter deploying, project front, gateway

And deployment volumes also and to American generated their we project with self-checkout chain strong expect future approaches IC revenue a retailer the North second deliver completion. geographies. supply retailer's to loss-prevention this fourth-quarter as other XXXX We beyond. both and phase in in We to global at The this new opportunities user this expect in and revenue. continue continue down anticipate deployment Asia deployment end drive first-quarter endpoint logistics, meaningful and and self-checkout large brands step and system large based

strategy our to Chief start Executive Cathal It innovation would organization, remain I is pleasure on a as Directors. our welcoming to and have Cathal as Officer. well our Cathal. Team. long-term Welcome, on you Turning on to as intellectual-property of by Phelan our Innovation focus will like Board

year, will our oversight Last people, our X and foundation program's we environment, commitments strengthened Code December, Scope our corporate culture published second governance. Board's ESG Citizenship In sustainability Supplier and environmental matters, culture, Conduct. our anticipate X both. and progress we meaningful to ESG XXXX, Corporate and we and of our measuring emissions, adopting formalizing and Scope outlining focus of new on on by Statement, In the reporting a

award. the I is Last, dear XXXX applied well-deserved in a This Congratulations. wonderful for it this Kyoto and also to addition contributions modern Co-Founder his award is a to one and a Impinj of of me computing, happy who on honor his Carver, IC engineering, very see physics, Mead want Prize to person of you and in win so design Dr. to science. many makes friend fathers and Carver not Technology. Advanced gem congratulate my least, certainly

close, every thank I'd of I showed of for team member the like you Impinj grit the to XXXX. every day Before

challenge pressure, challenge. built, of this like thank to facing heartfelt Our you. every grace results I'd have each are my of after a you to member company offer testament under To your you,

XXXX and record opportunities. launching was adjusted EBITDA year a closing, in delivered In new We products, revenue team while Impinj. unlocking banner investing new for our and

opportunities we demand vision As everyday by confident to our in and bold I energized our and our every driving continue remain item in the connect market world, ahead. position

now our turn review will Cary to the Cary? first-quarter outlook. over financial I and call for

Cary Baker

Thank you, Chris, everyone. good and afternoon

and and every those chain, our entering and challenges, energized quarter. and challenges, ever, had than will, Today, EPS. revenue and strong secular record enterprise supply four which year, from with with a Momentum XXXX, we and are Chris growth record-revenue adjusted our record us our many by growth deliver quarters, throughout driving the enable component logistics in XXXX. in Despite revenue, built adjusted said, team's capitalizing improved leverage. That more I Impinj deployments fully and execution meaningfully backlog operating As us EBITDA, wafer consecutive sequential led demand. supply that record demand to fourth-quarter culminating fantastic wrestled preventing consistent am on EBITDA to retail in noted, margin, also shortfalls and turn,

more offsetting $XX.X XXXX year-over-year fourth-quarter exceeded and IC than endpoint XXXX. million up XXXX. $XX.X our growth in $XX.X single-digit revenue compared up third-quarter to expectations, million, XX% in our million from outpaced XX% $XX.X XX% endpoint sequentially significantly with third-quarter and revenue XXXX was Fourth-quarter the $XX.X mid million original IC revenue sequentially million, in million fourth-quarter also up mix. was in high compared with up and year-over-year Quarter-over-quarter original Unit-volume Fourth-quarter XX% growth decline in specialty expected $XX.X expectations. industrial from

sequential revenue driven volumes to as wafer increasing continues forward to by Looking endpoint XXXX, supply expect first-quarter we improve. growth, IC low-double-digit

was and and to revenue and backlog, $XX.X in third both while revenue up with $XX.X revenue X% readers similar few XXXX sequentially to revenue in On fourth anticipated. IC million systems expect revenue contract stubbornly strong first-quarter systems than to Systems year-over-year delivering XXXX. a basis, to $XX.X increased the a due from compared exceeded components. our up gateway our reader Fourth-quarter fourth-quarter be we tight due decreased. XXXX, reader quarter Despite had XX% sequential more we million, quarter expectations, the manufacturer million year-over-year

with $XXX.X retailer, existing IC XX% deployments, at the demand. with grew in driven million $XXX.X Endpoint strong year-over-year, IC revenue deployments, European XXXX. loss a new year-over-year, reader up was reader XX% revenue prevention and compared expansion million, revenue from and by XX% visionary industrial grew year-over-year strength, the deployment E-family broad-based by and XXXX Systems specialty growing volumes mix. driven

specialty reserved an was annual reserved ICs XX.X%, mix less of due driven XX.X% both driven of year-over-year with mix, Fourth-quarter fourth-quarter set industrial endpoint by by and of from product partially sales decline of margins, with IC specifically The decline ICs. inventory. record IC lighter margin XXXX third-quarter specialty The XXXX, increase mix the and specialty margin IC endpoint offset product endpoint was inventory. and in product compared XX.X% at primarily and margins, the compared the in industrial less to XX.X% lighter was quarter-over-quarter the specifically in gross and XXXX. XXXX margins, with industrial fully gross Full-year sales by XX.X%, fully

XXXX expense $XX development Total million $XX.X administrative totaled expense operating million, was was with $XX million. expense $XXX.X expense compared third-quarter fourth-quarter and $X.X fourth-quarter operating million. and million XXXX. was compared in in marketing with $XX.X million. Research and was expense XXXX. $XX.X and in XXXX $X.X million, General million Sales

annual total first-quarter in fees as bonus-structure increase, expense changes, continued XXXX well by to payroll as operating driven investments legal We our platform. resets, expect tax

third-quarter XXXX with in adjusted million, XXXX. $X.X in Fourth-quarter with $X.X EBITDA EBITDA compared compared margin million $XX.X was Fourth-quarter was adjusted XXXX million, million XX.X%. was in margin adjusted XXXX EBITDA XXXX. EBITDA and $XX.X million $X.X XX.X%. adjusted was fourth-quarter

million, was $XXX,XXX. net per GAAP fully a XXXX income loss net was $X.XX or million, basis. a $XX.X per loss basis. diluted was on $XX.X Fourth-quarter XXXX non-GAAP share net $XX.X GAAP diluted million. $X.XX or share net fully profit non-GAAP on Fourth-quarter was

the XXXX up to with equivalents, XXXX. with fourth work-in-process. $XX.X Inventory $XXX.X we compared fourth-quarter the the increase quarter quarter, investments prior million from $XXX.X the and million $XXX.X third-quarter cash endpoint million sheet, $XX.X million, with Turning primarily in IC of balance cash, from million, totaled and ended coming in

was used and $X.X million. Property cash purchases was million. activities Fourth $X.X operating million. quarter in flow $XX.X equipment net Free cash negative totaled

by purchases was was equipment operating flow provided million. full $XX.X activities cash the $XXX,XXX. negative year, totaled cash $XX.X and Property million. net Free For

first-quarter to a our few turning I and our fourth-quarter results to items to guidance, unique Before highlight first-quarter outlook. want

a IC millimeter First, post-processing between in XX%, and of XXX margins both costs to we the with currently E-family unanticipated XXXX reduction due mix and lighter endpoint reader components. anticipate ICs first-quarter sequential gross reader XX% and

and these to XX% range to gross costs anticipate second-quarter We addressing elevated XX% margins targeted return to are in actively XXXX. our

in that until product accretion. to gross stabilizing margin further margin Looking gross XX% XX% ahead, opportunities for see we innovations create range

our step primarily business leverage. consume will demonstrated work-in-process, growth, margin generate significant operating flow. remain from EBITDA said, expect margin, endpoint consistent a we adjusted otherwise That planned cash comprising our will cash then down XXXX Second, in operations. goals expansion in model free and XXXX than operating XXXX And IC more first-half while inventory our we first-quarter

Finally, second-quarter increase, and that Despite upside to for IC another IC we anticipate XXXX wafers drive high on XXXX. noted. XXXX. hand-to-mouth endpoint expect inventory sequential shipment fourth-quarter single-digit endpoint growth increase began XXXX, reasons into sequential least IC already Chris endpoint until in Nonetheless, in to be and layering first-quarter we XXXX, volumes mid ICs our second-half at expect finished low-double-digit during the first-quarter endpoint growing revenue we to growth revenue

our increase expect year-over-year XX% million, we between compared and at in the $XX.X $XX million first-quarter XXXX, first-quarter $XX midpoint. revenue outlook, million Turning a to with

and million. million We expect $X.X adjusted $XX.X between EBITDA

we non-GAAP per-share On fully reflecting line, net $XX.X earnings between expect between $X.XX $X.XX. the and million bottom diluted and million, $X.X income non-GAAP

you, our your want our team, for ongoing support. and In closing, customers, I Impinj our to investors, suppliers, thank our

I turn to the to question-and-answer call MJ? the the now will open operator session.

Operator

much. you Thank very

Instructions] go will begin the session. Hari question-and-answer Please ahead. with We [Operator Sachs. question first Toshiya Today's now Goldman comes from

Toshiya Hari

how talk year, a a on is a full Chris. congratulations both was My results. bit perspective. hoping first about thinking you guys, from and perspective about the demand you're little as the afternoon, could I question Hi supply good well strong as for

of you're you But foundry this in your some as from of you're terms supply That growth On kind of and supply in across thinking through do seeing your demand on do IC what business. as super some a in constraints suppliers about would And business a have Thank the side side, your like full working system's I helpful. time, what about both and the be for kind component you What the you. and from it if little volume, bit can sounds point still of visibility logistics perspective you the at support year? have? how you're well your pricing partners talk the of chain, retail. guess particularly

Chris Diorio

you, Toshiya. at do of bit to question. assistance of Jeff items And my Cary there's for Okay. hit Thank unpack and best that because to will I'm there. I lot a little a looking

So to reductions, see Despite out, tailwinds industry crosscurrents in endpoint inventory we XXXX significant macroeconomic our start IC anticipate ongoing long-term overall. retailers' growth. volume for we and multi-year

We we course, a foundry partner. our XXXX. that out the demand seeing entering or couldn't backlog that There pent-up supply And have, in of were going delayed in strong year. either the fully very from programs we market increased get there from are is

up. I in increased prepared that ramping is my As noted remarks, supply

post-processing ramping as well as up. -- will we our So, is

looks on if hand-to-mouth supply the demand quarters the give be at to into -- an all. and our how the an least for half of at to of so, at heading our we'll give will look And that have update second based what like running what XXXX, catching two still likes up we're next to and time we much give idea and post-processing

programs RAIN overall started supply I'll market kind all of opportunities the weren't retail back I to collectively, from ago, the ready, including wasn't building areas. going just chain just of we're and anecdote And to growth -- that us Back good and supplies in very that logistics here, about frankly, first right add both along adoption. everything The to ready. quite and time, wasn't so feel far at and potentially lot seeing RFID we so remember ramp enough of years we now. pharmaceuticals, broad-based were time, market, XX that little for and that strength where more the many products that terms a broadly, when at the In RFID the at a of technology RAIN in magazines, is many

What for I pause beyond. I'll to right verticals, many is future the turn we're anybody gives like would demand in and follow-up a layer or from We're programs in positive to and back for Toshiya anything supply feeling to if you on addition logistics. and those now me chain seeing XXXX And question. on, I'll here just see else That market a it seeing to else to very starting strength the the retail return.

questions, think good. Toshiya? Did we're I your answer I

Toshiya Hari

Yeah.

-- Chris, on pricing. Just

I board. your that across think Cary. ask it's one my for well. just then supplier in well-telegraphed for follow-up guys, foundry And you I'll to customers ability key through your that is but fabless pricing increased the And Not just as this pass to customers, for XXXX? all

on what to So post-processing wasn't the the increased going things, on costs side sure QX. quite spoke of I exactly is there you in

you. you your or beyond? And if QX be So expand in kind around that reverting that and then can Thank super helpful. on conviction of elaborate that'll level

Chris Diorio

the hand thing to up I'm going Toshiya. entire Cary. Thanks, to

Cary. So,

Chris Diorio

right. All

couple foundry going those of previous customers that integrity Expect our in starting in the raised way price of first quarters your increases handle effect increases the right now. this to part into model. course cost will into those pass enables now maintain handled effect the year the our look our on that us prices, So, we've going question. to Those at to that are of Yes, are a first partner margin over the price to of increases, similar a point. Toshiya, of way with we us

and gross post-processing, your the And then is in a in for reasons. temporary will couple rebound on question QX to margin of dip

very one partners. back-end cost last-minute First, our of increased we a from had

production prioritizing and customer deliver costs, our the first quarter, commitments may scaling over volumes we on that so record are demand. those continue into For we

gross QX, flex delivering that For as may however, well. we percent we volumes chain, get will our targeted back so supply our on while to increased margin

just we to time So, flex little a need that. support bit to more

for component we to however, a visibility, cancellation had relates flat margin decided on the -- the And Based pay richer supplier. a in than alternative our deliver component from QX. get QX expect challenges ongoing an to systems premium to to second today's item at business. We revenue reader to and then a secure

XX% So, bounce range. the back for those into reasons, we expect to to QX XX%

And the be would range. to I with, margin to full-year gross in expect XX% I end XX%

So, back up will it we the in half make for more than the year. of

Toshiya Hari

Great. Thanks details. for the all

Chris Diorio

Yeah. Thank you, Toshiya.

Operator

The next with Piper question ahead. comes from Kumar Please Harsh Sandler. go

Harsh Kumar

Hey, Yeah. guys.

of First questions. of all, a in congratulations. couple had results Pretty this economy. I incredible

increase quarter healthy seeing point Cary, wanted And the my was just us that -- as see you coming say very I point second take a double-digit something of the you is just revenues turn I of IC. is, are did sort from. First, sort question you could to could and clarification? a to if teams end clarify in Toshiya's around, IC the you and of question endpoint will markets this endpoint growth curious it to

Cary Baker

Yeah. I'll hand one take the then over first to Jeff for for second. the Chris and

double-digit -- In quarter, So, endpoint revenue for to the Harsh, quarter-over-quarter growth. mid single-digit quarter-over-quarter revenue Q high IC. expect in for the first expect quarter, clarify, IC growth low endpoint to second

Chris Diorio

Speakers] [Multiple

Harsh Kumar

Yeah.

That was Thank are Sorry. from. clarification revs And coming it. you. on the then

Chris Diorio

and starting doing we're remarks, I question, said to -- Harsh, as in we're They will other is well don't I packaged kind and put Demand my some verticals on of programs significantly said, work from although return are buoyed buoyancy the right I not and in from kind now. instant the out prevention we side. logistics and it’s of that supply verticals. seeing materialize Toshiya's answered in from, loss some feel by prepared and supply thought behind tracking is logistics volumes and all were and also chain retail But my We chain those mind, a opportunities. out -- in the coming and as of target to opportunities our Retail and I broad-based call specifically. self-checkout So, into Yeah. those demand growth the market many us but other in

I said So, the the Jeff feel see has I and about same. nodding mark good

in we in think I So, our see unit for where of feel we tailwinds are terms industry overall for and endpoint particular. we about and us good long-term opportunities IC volume

Harsh Kumar

so for follow-up. then, color. that you And for Thank Great. Okay. my much, Cary, Chris,

bunch expecting I work you of OpEx sort step you for up are reasons of up Or forward? be this I quarter? was one-time the -- model, you us some Would as a the numbers a Because out think OpEx a and there to a the OpEx when think the things. move isn't March significantly revenues, we numbers. quite I of new for the us then a base of the variety whole you outside in gave [indiscernible] the gave lot margins laid

And about XX% you, Chris organically the in business. Dennison label Avery talks then growth for Intelligent

growing Your was biggest to than I much much so and growth you're understand faster is larger why your trying distributor.

Cary Baker

Harsh, Okay. Cary. this is

those. both can I think I take of

So, yes.

anticipating We of platform. It It to this is cash. the then investment our legal are step XXX% step our I prepared fees the change is in and reasons remember the effect resets. it's up our a payroll seasonal bonus, to changing remarks. to the structural mentioned It's OpEx in our tax ongoing in for the bonus second final is

I expect to with be first-half related weighted which legal So, this fees, forward, fluctuation the on depending second-half. as to you expect G&A more term where at approximately look than be we'll for level near I

in team engineering our And and sales step and investment into the expense that. our abates expect seasonal our marketing as to then

present XXXX. since will in they of XXXX dynamics to in the XXXX, in as are were match you many the similar trend what saw So, somewhat

Harsh Kumar

Understood.

Cary Baker

in second revenue differences with of enterprise-wide don't that growth labels are They And one we there to Dennison and rate, be Avery to taken always an intelligent up quarter. customers our relative our each question top but Avery growth report line account. then your into regarding mix need rates Dennison, ASP

that's in inflationary that encouraged XXXX I way. exactly exactly it's about would us high see a the we What and that, what now as well. the same market this and that acceleration impacting in incredibly it's add talking also are we're We in they unlikely is both right are environment

Chris Diorio

in market out general. [indiscernible] broader the of course, one of but key there. the there is, of of labels kind Denison serve others We are suppliers

And And market, many includes so, partners [indiscernible]. we going also. sorry. serve keep which I'm other the broader

Harsh Kumar

congratulations no, No, for again. just thank no. guys, you was the color and all I saying

Chris Diorio

you. Thank

Cary Baker

you, Thank Harsh.

Operator

with The question next Genuity. Walkley Canaccord Please ahead. from comes Mike go

Michael Walkley

Great. Thank you.

should congratulations. question business, guys been systems It's fun Let Impinj certainly the guess have just the the had the in you journey of early like first past flattish just be we year might and the first past too the the is about over very roll but year and decade new and out over some on all projects me is sounds it first half to projects year, business follow pipeline of add maybe into large to -- systems question it how it the the my should you've call half my once accomplished. think that hit. I the or my second

Jeff Dossett

going for Jeff. system's growth saying growing deployments which in chain well. are pipeline strong vectors is within those both that well large are the and do as other logistics success and enterprises Impinj. start This creates retail is as to that deployments some have And nicely. sectors, the initial opportunity accounts expand in supply those significant and I'd We enterprise by

it pass timing Cary impact and of it the to -- I'll to speak to to in As XXXX. relates revenue

Chris Diorio

question. for visionary QX, in loss European the systems their And thanks deployment. the retailer the the QX that in same expect to of second signaled similar of in have phase we Mike, dynamics we with We revenue we delivered QX. deploy Yeah. continuing that lot prevention a

timing the Now will with to not win opportunities largely already perfectly. in QX. up are up business that more but customer this as as the great that delivered may match what There's customer, wrap we've phase to

terms struggle to for prioritizing a get. finite to allocating components in our We deployment been continue that us that of have be

the other components down, So, to deliver some readers. that sidelines been as that have ramps waiting II us on to frees for up that Phase for customers unfortunately their

whereas we're bit able that component recall actually be we to signal worried QX last supply, QX, So, be down similar to will better we a now you and we have were we little just that little visibility bit. similar to into QX deliver wouldn't able XQ quarter, revenue a that guided

So, ability a situation a bit to for when But were systems shortfalls. of a better still supply these position where component in outstrips ago. demand in we're we're we little than quarter our because

Michael Walkley

color. Chris for my question, helpful follow-up That's maybe Jeff. or for And Right.

Just how that market is the that a the customer even see match competitive this that quarter authenticity solution? you out close for feedback Impinj now you've can vision and and do rolled had to on anything

Jeff Dossett

I'll take an that enterprise one, growing solution partners that our it's protects authentication Mike. customers brands consumers. And I'm guiding excited engine. delivers product very innovative an that number engine that and authenticity platform you interest who by differentiated encouraged asked among that Impinj and cryptographic solution of increasing the end Recall question. the I'm level of solution Impinj are

is pipeline The nicely. growing

time opportunity IC last Of regarding the this and term. we is today in pace conversation I optimistic had but challenging new only when the course, revenue of services more am -- endpoint longer those establish the quarter timing to and opportunity build to recurring the or opportunities not pacing than a But revenue, even to predict. also

Chris Diorio

there. like I to I'd Mike, one guess, add thing

needs that engine cryptographic launch first and some believe the cryptographic item which has is to the the And allows that Just the this, to matter it. early authenticate us future, any you how It’s security, and and here, design single successful at of as key that be a any [indiscernible] And adoption technology future hard-pressed think out to every will a goes. you it distant just broad-based IC there the ones attached. capability does to point truly will It hasn't we key about as that key we're the for in in now find essential better think you'd technology. endpoint and of about better for doing engine know, to technology the in be. at that IC rolled be be get think one. because IC, long-term, and We there

about I'm not well. and year out, today. pipeline, I excited excited a excited we So, where time about in we're personally our further as opportunities, the but about long-term We're or stand out just two

Michael Walkley

Thanks Great. questions. my for taking

Jeff Dossett

you. Thank

Operator

ahead. next ROTH. comes The from Searle with question Please Scott go

Scott Searle

nice taking Hey, thanks And and the for good on again quarter. afternoon, my congrats questions.

Chris Diorio

Scott. Thanks,

Cary Baker

Thanks, Scott.

Scott Searle

past IC time of in didn't about endpoint from Chris, think ballpark XX% a the plus. talked around. Hey, I in under-shipping quarters, an hear number you've demand I this

So, one to wondering willing us. there with share if I was is you're that

want the second off the clarify, like X of have with to visionary at rolling point now retail European a again, I'm wondering visibility And sounds in it then just this comfort first on deployment flat the quarter, I kind systems Phase quarter. think and second still this outlook, of sounds year we Phase be you you is second half If possibly the year. then it the progresses that does, like into that see how being that in it Because would half X of there. in could not into factored upside this or to XXXX.

Chris Diorio

question to for signaled first XX%. consecutive take as more same I'll So, for first that off and than exceeds demand I this quarters, quarter Cary. We then of say part the had the hand by Scott, that I the think -- six I'll well. current can supply

than So at demand is more XX%, for seven supply quarters, XX%.

going and instead forward, metric providing is again achieve to we we're But about, things, on metric that market, the for and rather and that going to detailed more try supply, the answer quarter? information going asking if about provide more one stop color we're did you're forward. However, demand, using The focus yes. single other number than going just seventh

Cary Baker

Scott, take Cary, And can second the Yes. is I question. this

flat. will revenue believe we customers to quarters and about will guide the I The have revenue just roll go other year. in first through flat will heard then to loss revenue systems two QX, the systems -- yet. now supply off You keeping of we be deployment that phase but don't correctly second-half want the limited

We component shortfalls. are still navigating these

we visibility So, But of kind better update that. have couple next I to as will feel comfortable we soon of beyond as components don't going the quarters.

Scott Searle

Great, helpful. I just And very the guess I on big could, items. if picture front, two

develop, Following starting how on there's terms if would revenue function that services some I'm that'll from door you think and Mike's actually in a question of when model opened you the on you're to standpoint, kind timeline, up and commentary we of wondering authenticity any see how there see contribution?

obscured And past been in start on rate. decade, a then, really chain per we IC growing the lot level If quarters. for by inflect growth look endpoint have being a the seeing that a of over annual ongoing Chris, from year supply by that we've compound of pulled last pandemic, high XX% issues the to XX% forward ballpark the We're several the had to

But market over a like take So, stab I'm would early constrained by easing. It's availability, to five We're XX% wafer years. market if you on wondering that? the the that's of you have what years, a next supply rate still to grow two, next for looks at three still but this Thanks. very three, it's any the days. growth going just guys and take that's five

Jeff Dossett

for there enterprise strong at first the partners. where go, really do Scott, of and in on authenticity. go Chris users as most So, to I [NRF] second part out take let I terms me might question I a could to I'll (ph) was this guesses end in very the to then hazard demand the market could is lot hand of over or market feel talking opposed

as about about good opportunity, well. growth in very the feel I only about core ones the adjacent our vertical So, in not market,

predictive of With forward. have the come case XX% XX% and best historical holding enough the to we're it the that will prediction any of have to to future and if good may make out just kind good been but suggest be you, said, market different don't historical now going in what XX%, feel forward tell to we'll I the and is, can that don't is trends that it the I I the are that's be enough trends XX% right turn from that powers

Cary Baker

This take is Scott. Hey, can question. sorry. Cary. I’m I the

Chris Diorio

Yeah, go ahead.

Scott Searle

Chris, sorry, figured give I'm shot. I'd just I a [indiscernible] it

Chris Diorio

My Yeah. not is ball that good. crystal quite

Sorry.

Cary Baker

early It's And XXXX. the be little authentication on Scott, roughly revenue too going model unfortunately, model to my answer to is in a authentication similar.

small IC we very units early will shipping at some ship authentic endpoint and or We are but IC QX, as as our extreme quantities this stage. endpoint on

it So radar. really hit won't the

And that. can of bit go ahead, we Jeff. So, provide time on give before us a clarity little

Jeff Dossett

Yeah.

of I creativity integrate the into in our things introduction encouraged value add leading right think product now will of which the revenue that engaging solution in overall and partners within important that their I end product enterprise we endpoint that certain how overall the revenue they by just forth they IC building and be product service And the these portfolios. is in value of value. building doing offerings. enterprises to in cryptographic and And authentication ways their creative I'm those would customers are see share through partners solutions to we're both the their and services who authentication discussions, that attributed recurring with bringing might how one very could

to as very this we're that contribution the how So, on making. Impinj we partnership I developing engine we're in think value, create ought they -- opportunity that emerging how the customers that create to solution value. it's to is and important listen enterprise And authenticity share therefore,

Scott Searle

quarter. Okay. Great. so much, Great Thanks guys.

Chris Diorio

Scott. you, Thank Okay.

Jeff Dossett

Thank you.

Operator

and Needham of from is Please Company. Jim Ricchiuti go ahead. question next The

Unidentified Participant

actually [indiscernible] Chris Hi, This is on quarter. Congrats the on Jim. good for afternoon.

Chris Diorio

Chris. Thanks,

Unidentified Participant

you that progress talk of over next about to a MXXX few expect mix percentage how and the you quarters? the Could as

Chris Diorio

MXXX represent we future building break is MXXX difference on around post-processing newest That's So, don't our down Impinj I investing capacity, that really is entire our our basis. our The where What -- percentage are our growing. volumes families. Impinj They will and say a we're that family product product family. products. and different

volumes you be our will as and So, you on that should family. the -- we should expect Impinj more forward focused expect and more go MXXX

Unidentified Participant

new with share you planning course and should food. And the we key of would with be pharma milestones? us respect new use two are to in over And for what few terms of automotive, be looking the What there next the cases to in targeting that Great. chips quarters? the

Chris Diorio

element think of to MXXX customer the as product opportunities that the I to family them. question come Otherwise, MXXX forward breadth those we treat core intend answer and particular and in is offering. the expanding kind new the that are of using MXXX highlight ICs of just we will the that have just Impinj

us. like for particular ICs about us particular win to we opportunities out just up excited it we up notable something it, a of that because separately, them the those but if with have introduction range won't we're broader be open So, gives come comes a breaking otherwise, expect forward

Unidentified Participant

Great. the much again on Thanks very and congrats results.

Chris Diorio

Thank you, Chris.

Operator

go with Our Lake Capital. is Street next ahead. from Troy Please question Jensen

Troy Jensen

my always length I'd this ask Chris? but be it waiting clients specifically also first forward. congratulations marquee you've we've the gentlemen, it or big just But and moving to has pipeline in the little customer I'm the know as about for can usual. apparent going here, big customers Jeff others one to talked and a chat got now that second and just question Hey, for quick marquee success be customer, logistics. like about to We bit the

customer Do curious just think XXXX? will you be if talking opportunities a talk there. logistics we about in big you So, third about could

Jeff Dossett

that This they're I they RAIN the speaking you But deployments that can't industry seeing in making those sector will already it, the speak -- any continues will. are nicely. have is including in no build and do chain their pipeline doubt others to sector-leading and publicly the And RFID to system's when I investments tracking specific the you Jeff. say in logistics are enterprises benefits supply customer. if about developments

evaluating always, see opportunity create the opportunities that reinforce and ultimately But is that to increasing pace in that want future. they how follow-on predict. the relevant deploying those are of value for hard enterprises I to for sector business As solutions planning and timing I in to

Chris Diorio

solutions opportunity the logistics in to think this it's that [indiscernible] bringing specifically, that for Tory, us we keep whether we're investing because market. about And to expect us, opportunity, truly given

Troy Jensen

Yeah. good Understood guys. Keep completely. work, up the

Chris Diorio

you. Thank

Cary Baker

Thank you.

Jeff Dossett

Thanks, Tory.

Operator

with go a Harsh Piper is The Please ahead. from Kumar follow-up Sandler. next question

Harsh Kumar

quick loss was model at had ones. give the tax Hey, carry-over to sense I of zero forward. modeling of guys. noticed kind going if taxes curious, two it's percent I taxes I future. Cary, have foreseeable that for us what Actually, zero if you could Yeah. a and we're you appropriate

Cary Baker

Yeah. It's zero. almost

in dollars hundred range. that We are I thousand have of some taxes foreign a think couple

NOLs. We of have million almost $XXX

bill the near anticipate in I term. tax a don't So,

Harsh Kumar

one costs and probably then going consortium. might come in us just convenience those of Japanese not if bit. I understand mean down interested what main Chris. there be a I sort could bit Fair enough, the talk, RFID penny. an could guys know how tax that's last curious -- down. pretty for little -- straightforward. maybe on cost the because brands fair if Chris, Japanese was you of I think the it's convenience was you very were the the And store then behind year come to guys a might mid-point help I that components are and update you're down that of total come it other on at a But for

Chris Diorio

Yeah.

a a COVID has key give would one First, was unpack down I'll kind that answer to inlay changed. the a cost do my of push cogent the to driver it. world to drive Post-COVID and there best as broad-based to adoption. that significant enable the Prior

on Of their overall themes their costs course, they important, their to the our efficiencies run post-COVID. now enables having customers how terms they has manufacture inlay changed more those sell, and but item cost we're transport dynamic teams them are the discussions how overall help drive we their increment business, organization labor track of and efficiency the in in much every transformation, and digital tag change optimize business, can end with change still a enterprises about

discussion the the So, we longer can biggest thing problem we end discussion the I'm a not but get saying on. A how cost for single that into no it's doesn't solve is matter, customer. lot more

gone settle have other be post-COVID still costs really go it Now depends it's will industries to gradually increased. essentially future what for what on time cost industry, we hard of costs things costs all to We, as single-digit IC But our those to out cost overall future across course, perspective. have declines holds determined, anticipate as the back predict the over from holds. discussions, decreasing a would long-term low up I ASP but costs, that's have

other is has food. to long-term opportunities. cost associated growth one on As specifically least And of fore some it. talking with aspect area. really is food transformation. gone hear actually about I opportunity food what are about prospects if food opportunity of to Japan, We and areas course, right be think cost now, speak the those really ahead digital and where opportunities at will ability We in very so that that will the about worldwide our But really companies come and is away, have in that come of food not there to we other on the from these have pushing sensitive calls. kind we don't other that And of so we're perspective gone slowly those see focused up about although

Jeff Dossett

that investigation scarcity would no and is that Japanese and Jeff, store than the less that the I things challenge labor challenge challenge. quick the of the enterprises to are of cost that. into it to Two seeking address This when recall helping add RAIN was is the that that convenience labor, is and that of RFID is they role their today started address

you does to costs a modeling, would scarcity say platform that to business has the which contribution will, the on I while impact Impinj to other address its labor the increase, same within So, continued platform advanced or matter shortage self-checkout if have cost has about investment timeframe. favorable making and and a well

in and though hard performance an et service continue term. within predict where in environment platform-based self-checkout mentioned to So costs timing, food sector solutions vector and scarcity quick opportunity the growth and in to worsen, well that over Chris an as Impinj to increase continues overall is increasingly Impinj increasing pace the it's to opportunity that as means longer and cetera, for restaurant, smartly the labor to invest to opportunity time labor that

Harsh Kumar

it. you Very much well the so color, thank for appreciate guys, all I

Chris Diorio

Harsh. you. Thank

Operator

to over I question-and-answer concludes CEO closing for This and turn now back the to remarks. like session. would Chris Co-Founder Diorio, conference our any

Chris Diorio

well. hope loved ones you, MJ. your to all and you. I'd and remain today. Thank you I call Thank like thank joining the safe you for are

Operator

has concluded. for attending Thank conference now The you today's presentation.

You disconnect. may now

Impinj (PI) 8 Feb 232022 Q4 Earnings call transcript