Impinj Reports Fourth Quarter and Full Year 2022 Financial Results

About this update from Impinj, Inc.

SEATTLE --(BUSINESS WIRE)-- Impinj, Inc. (NASDAQ: PI), a leading provider and pioneer of RAIN RFID solutions, today released its financial results for the fourth quarter and year ended December 31, 2022 . “2022 was a very strong year for Impinj,” said Chris Diorio , Impinj co-founder and CEO. “We delivered record revenue and adjusted EBITDA, invested in our team, unlocked new opportunities heading into 2023 and advanced our vision of connecting every thing.” Fourth Quarter 2022 Financial Summary Revenue of $76.6 million GAAP gross margin of 52.4%; non-GAAP gross margin of 53.8% GAAP net loss of $0.1 million , or loss of less than $0.01 per diluted share using 26.0 million shares Adjusted EBITDA of $11.8 million Non-GAAP net income of $11.6 million , or income of $0.41 per diluted share using 28.2 million shares Full Year 2022 Financial Summary Revenue of $257.8 million GAAP gross margin of 53.5%; non-GAAP gross margin of 55.5% GAAP net loss of $24.3 million , or loss of $0.95 per diluted share using 25.5 million shares Adjusted EBITDA of $28.9 million Non-GAAP net income of $26.3 million , or income of $0.96 per diluted share using 27.5 million shares A reconciliation between GAAP and non-GAAP information is contained in the tables below. Additionally, descriptions of these non-GAAP financial measures are provided in the “Non-GAAP Financial Measures” sections below. First Quarter 2023 Financial Outlook Impinj provides guidance based on current market conditions and expectations; actual results may differ materially. Please refer to the comments below regarding forward-looking statements. The following table presents Impinj’s financial outlook for the first quarter of 2023 (in millions, except per share data): Three Months Ending March 31, 2023 Revenue $82.0 to $85.0 GAAP Net loss ( $3.6 ) to ( $2.1 ) Adjusted EBITDA income $9.2 to $10.7 GAAP Weighted-average shares — basic and diluted 26.20 to 26.40 GAAP Net loss per share — basic and diluted ( $0.14 ) to ( $0.08 ) Non-GAAP Net income $8.6 to $10.3 Non-GAAP Weighted-average shares — basic 26.20 to 26.40 Non-GAAP Weighted-average shares — diluted 28.30 to 28.50 Non-GAAP Net income per share — basic $0.33 to $0.39 Non-GAAP Net income per share — diluted $0.30 to $0.36 A reconciliation between GAAP and non-GAAP is provided in the "Non-GAAP Financial Measures" section below. Conference Call Information Impinj will host a conference call today, February 8, 2023 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its fourth-quarter and full-year 2022 results, as well as its outlook for its first quarter 2023. Interested parties may access the call by dialing +1-412-317-5196. A live webcast and replay will also be available on the company’s website at investor.impinj.com . Following the call, a telephonic replay will be available for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 2251852. Management’s prepared written remarks, along with quarterly financial data, will be made available on the company’s website at investor.impinj.com along with this release. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our strategy, investment plans and prospects, as well as financial considerations for the first quarter of 2023 and future periods. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the U.S. Securities and Exchange Commission . All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law. About Impinj Impinj (NASDAQ: PI) helps businesses and people analyze, optimize, and innovate by wirelessly connecting billions of everyday things — such as apparel, automobile parts, luggage, and shipments — to the Internet. The Impinj platform uses RAIN RFID to deliver timely data about these everyday things to business and consumer applications, enabling a boundless Internet of Things. www.impinj.com Impinj is a registered trademark of Impinj, Inc. All other trademarks are the property of their owners. IMPINJ, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value, unaudited) December 31, 2022 (1) December 31, 2021 (1) Assets: Current assets: Cash and cash equivalents $ 19,597 $ 123,903 Short-term investments 154,148 69,443 Accounts receivable, net 49,996 35,449 Inventory 46,397 21,958 Prepaid expenses and other current assets 5,032 5,049 Total current assets 275,170 255,802 Long-term investments 19,200 14,225 Property and equipment, net 39,027 27,500 Operating lease right-of-use assets 10,490 11,667 Other non-current assets 1,969 2,462 Goodwill 3,881 3,881 Total assets $ 349,737 $ 315,537 Liabilities and stockholders' equity (deficit): Current liabilities: Accounts payable $ 25,024 $ 11,732 Accrued compensation and employee related benefits 9,048 6,365 Accrued and other current liabilities 2,925 3,072 Current portion of operating lease liabilities 3,122 4,143 Current portion of long-term debt — 9,633 Current portion of deferred revenue 2,250 558 Total current liabilities 42,369 35,503 Long-term debt, net of current portion 280,244 278,661 Operating lease liabilities, net of current portion 11,066 11,934 Other long-term liabilities 118 279 Deferred revenue, net of current portion 349 236 Total liabilities 334,146 326,613 Stockholders' equity (deficit): Common stock, $0.001 par value 26 25 Additional paid-in capital 403,599 351,422 Accumulated other comprehensive loss (1,249 ) (39 ) Accumulated deficit (386,785 ) (362,484 ) Total stockholders' equity (deficit) 15,591 (11,076 ) Total liabilities and stockholders' equity (deficit) $ 349,737 $ 315,537 (1) We adopted ASU 2020-06 on January 1, 2021 using modified retrospective transition method and accounted for our convertible notes due 2026, or the 2019 Notes, on a whole-instrument basis. Upon adoption, we no longer had unamortized debt discount related to the equity component of the 2019 Notes. The condensed consolidated financial statements under both periods are presented under ASU 2020-06. IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three Months Ended Year Ended December 31 , December 31 , 2022 2021 2022 2021 Revenue $ 76,590 $ 52,574 $ 257,800 $ 190,283 Cost of revenue 36,422 23,391 119,916 91,329 Gross profit 40,168 29,183 137,884 98,954 Operating expenses: Research and development 18,982 17,578 74,106 64,058 Sales and marketing 9,655 9,710 37,894 34,287 General and administrative 11,577 9,125 45,465 36,137 Restructuring costs (102 ) 458 (102 ) 1,721 Total operating expenses 40,112 36,871 157,363 136,203 Income (loss) from operations 56 (7,688 ) (19,479 ) (37,249 ) Other income, net 1,150 4 2,517 25 Induced conversion expense — (11,333 ) (2,232 ) (11,333 ) Interest expense (1,207 ) (974 ) (4,923 ) (2,550 ) Loss before income taxes (1 ) (19,991 ) (24,117 ) (51,107 ) Income tax expense (117 ) (23 ) (184 ) (153 ) Net loss $ (118 ) $ (20,014 ) $ (24,301 ) $ (51,260 ) Net loss per share — basic and diluted $ (0.00 ) $ (0.81 ) $ (0.95 ) $ (2.12 ) Weighted-average shares — basic and diluted 26,005 24,581 25,539 24,176 IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Year Ended December 31 , 2022 2021 Operating activities: Net loss $ (24,301 ) $ (51,260 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 6,044 4,602 Stock-based compensation 42,443 40,498 Accretion of discount or amortization of premium on investments (233 ) 896 Amortization of debt issuance costs 1,601 568 Induced conversion expense related to convertible notes 2,232 11,333 Loss on fixed asset disposal 57 — Settlement and related costs — (460 ) Changes in operating assets and liabilities: Accounts receivable (14,547 ) (10,446 ) Inventory (24,439 ) 14,371 Prepaid expenses and other assets 852 (770 ) Accounts payable 7,371 2,340 Accrued compensation and employee related benefits 2,683 836 Accrued and other liabilities (215 ) 987 Operating lease right-of-use assets 3,414 2,792 Operating lease liabilities (4,126 ) (3,528 ) Deferred revenue 1,805 (6,294 ) Net cash provided by operating activities 641 6,465 Investing activities: Purchases of investments (205,749 ) (84,412 ) Proceeds from maturities of investments 114,750 82,000 Proceeds from sale of property and equipment 279 — Purchases of property and equipment (12,079 ) (16,230 ) Net cash used in investing activities (102,799 ) (18,642 ) Financing activities: Principal payments on finance lease obligations — (2 ) Proceeds from exercise of stock options and employee stock purchase plan 15,416 17,648 Proceeds from issuance of 2021 Notes, net of issuance costs — 278,422 Payment of 2019 Notes (17,564 ) (183,624 ) Net cash provided by (used in) financing activities (2,148 ) 112,444 Net increase (decrease) in cash and cash equivalents (104,306 ) 100,267 Cash and cash equivalents Beginning of period 123,903 23,636 End of period $ 19,597 $ 123,903 Non-GAAP Financial Measures To supplement our condensed consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, our key non-GAAP performance measures include adjusted EBITDA and non-GAAP net income (loss), as defined below. We use adjusted EBITDA and non-GAAP net income (loss) as key measures to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operating plans. We believe these measures provide useful information for period-to-period comparisons of our business to allow investors and others to understand and evaluate our operating results in the same manner as our management and board of directors. Our presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from similarly termed non-GAAP measures used by other companies. Adjusted EBITDA We define adjusted EBITDA as net income (loss) determined in accordance with GAAP, excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation; restructuring costs; settlement and related costs; other income, net; interest expense; loss on debt extinguishment; and income tax benefit (expense). We have excluded these costs and expenses because we do not believe they reflect our core operations and us excluding them enables more consistent evaluation of our operating performance. Non-GAAP Net Income (Loss) We define non-GAAP net income (loss) as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation; restructuring costs; settlement and related costs; amortization of debt discount related to the equity component of our convertible notes; and prepayment penalty on debt extinguishment. GAAP requires that certain convertible debt instruments that may be settled in cash on conversion be accounted for as separate liability and equity components in a manner that reflects our non-convertible debt borrowing rate. This accounting results in the debt component being treated as though it was issued at a discount, with the debt discount being amortized as additional non-cash interest expense over the debt instrument term using the effective interest method. As a result, we believe that excluding this non-cash interest expense attributable to the debt discount in calculating our non-GAAP net income (loss) is useful because this interest expense is not indicative of our ongoing operational performance. IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages, unaudited) Three Months Ended Year Ended December 31 , December 31 , 2022 2021 2022 2021 GAAP Gross margin 52.4 % 55.5 % 53.5 % 52.0 % Adjustments: Depreciation 1.2 % 1.6 % 1.4 % 1.2 % Stock-based compensation 0.2 % 1.1 % 0.6 % 1.0 % Non-GAAP Gross margin 53.8 % 58.2 % 55.5 % 54.2 % GAAP Net loss $ (118 ) $ (20,014 ) $ (24,301 ) $ (51,260 ) Adjustments: Depreciation 1,588 1,431 6,044 4,602 Stock-based compensation 10,213 11,547 42,443 40,498 Other income, net (1,150 ) (4 ) (2,517 ) (25 ) Interest expense 1,207 974 4,923 2,550 Income tax expense 117 23 184 153 Settlement and related costs — (460 ) — (460 ) Restructuring costs (102 ) 458 (102 ) 1,721 Induced conversion expense — 11,333 2,232 11,333 Adjusted EBITDA $ 11,755 $ 5,288 $ 28,906 $ 9,112 GAAP Net loss $ (118 ) $ (20,014 ) $ (24,301 ) $ (51,260 ) Adjustments: Depreciation 1,588 1,431 6,044 4,602 Stock-based compensation 10,213 11,547 42,443 40,498 Settlement and related costs — (460 ) — (460 ) Restructuring costs (102 ) 458 (102 ) 1,721 Induced conversion expense — 11,333 2,232 11,333 Non-GAAP Net income $ 11,581 $ 4,295 $ 26,316 $ 6,434 Non-GAAP Net income per share: Basic $ 0.45 $ 0.17 $ 1.03 $ 0.27 Diluted $ 0.41 $ 0.16 $ 0.96 $ 0.25 GAAP and non-GAAP Weighted-average shares — basic 26,005 24,581 25,539 24,176 GAAP Weighted-average shares — diluted 26,005 24,581 25,539 24,176 Dilutive shares from stock plans 2,147 2,195 1,811 1,768 Dilutive shares from 2019 Notes — — 127 — Non-GAAP Weighted-average shares — diluted 28,152 26,776 27,477 25,944 IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL OUTLOOK TO NON-GAAP FINANCIAL OUTLOOK (in thousands, except per share data, unaudited – calculated at the midpoint of the outlook range) Three Months Ending March 31 , 2023 GAAP Net loss $ (2,850 ) Adjustments: Forecasted Depreciation 1,730 Forecasted Stock-based compensation 10,500 Forecasted Interest expense 1,250 Forecasted Other income, net (750 ) Forecasted Income tax expense 60 Adjusted EBITDA $ 9,940 GAAP Net loss $ (2,850 ) Adjustments: Forecasted Depreciation 1,730 Forecasted Stock-based compensation 10,500 Non-GAAP Net income $ 9,380 GAAP Net loss per share — basic and diluted $ (0.11 ) Non-GAAP Net income per share Basic $ 0.36 Diluted $ 0.33 GAAP weighted-average shares — basic and diluted 26,300 Non-GAAP weighted-average shares — basic 26,300 Dilutive shares from stock plans 2,100 Non-GAAP weighted-average shares — diluted 28,400 View source version on businesswire.com : https://www.businesswire.com/news/home/20230208005770/en/ Investor Relations Andy Cobb , CFA Vice President, Strategic Finance +1-206-315-4470 [email protected] Media Relations Jill West Vice President, Strategic Communications +1 206-834-1110 [email protected] Source: Impinj, Inc.

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