Impinj Reports Second Quarter 2024 Financial Results

About this update from Impinj, Inc.

SEATTLE --(BUSINESS WIRE)-- Impinj, Inc. (NASDAQ: PI), a leading RAIN RFID provider and Internet of Things pioneer, today released its financial results for the second quarter ended June 30, 2024 . “Our second-quarter results were strong, setting several new records,” said Chris Diorio , Impinj co-founder and CEO. “Revenue topped $100 million and adjusted EBITDA topped $25 million , both well above our guidance. Free cash flow topped $40 million . As we continue driving our bold vision to connect every item in our everyday world, I remain confident in our market position and energized by the opportunities ahead.” Second Quarter 2024 Financial Summary Revenue of $102.5 million GAAP gross margin of 56.1%; non-GAAP gross margin of 58.2% GAAP net income of $10.0 million , or income of $0.34 per diluted share using 29.4 million shares Adjusted EBITDA of $26.8 million Non-GAAP net income of $25.3 million , or income of $0.83 per diluted share using 32.0 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. Third Quarter 2024 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 third quarter of 2024 (in millions, except per share data): Three Months Ending September 30, 2024 Revenue $91.0 to $94.0 GAAP Net loss ( $3.5 ) to ( $2.0 ) Adjusted EBITDA income $13.8 to $15.3 GAAP Weighted-average shares — diluted 28.2 to 28.4 GAAP Net loss per share — diluted ( $0.12 ) to ( $0.07 ) Non-GAAP Net income $13.5 to $15.0 Non-GAAP Weighted-average shares — diluted(1) 32.1 to 32.3 Non-GAAP Net income per share — diluted(1) $0.46 to $0.50 (1) Non-GAAP diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million. A reconciliation between GAAP and non-GAAP financial measures is provided in the "Non-GAAP Financial Measures" section below. Conference Call Information Impinj will host a conference call today, July 24, 2024 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its second-quarter 2024 results, as well as its outlook for its third-quarter 2024. Interested parties may access the call by dialing +1-412-317-1863. 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 2945814. Management’s prepared written remarks, along with quarterly financial data, will be made available on Impinj’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, statements regarding conditions in the markets in which we compete as well as the broader economy, and our financial guidance and considerations for the third quarter of 2024 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) June 30, 2024 December 31, 2023 Assets: Current assets: Cash and cash equivalents $ 214,653 $ 94,793 Short-term investments 5,563 18,440 Accounts receivable, net 54,181 54,919 Inventory 80,773 97,172 Prepaid expenses and other current assets 3,148 4,372 Total current assets 358,318 269,696 Property and equipment, net 47,209 44,891 Intangible assets, net 11,645 13,913 Operating lease right-of-use assets 8,424 9,735 Other non-current assets 1,235 1,478 Goodwill 19,256 19,696 Total assets $ 446,087 $ 359,409 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 15,305 $ 8,661 Accrued compensation and employee related benefits 12,549 8,519 Accrued and other current liabilities 2,848 8,614 Current portion of operating lease liabilities 3,462 3,373 Current portion of long-term debt 282,671 — Current portion of deferred revenue 2,087 1,713 Total current liabilities 318,922 30,880 Long-term debt — 281,855 Operating lease liabilities, net of current portion 7,546 9,360 Deferred tax liabilities, net 2,466 2,911 Deferred revenue, net of current portion 181 272 Total liabilities 329,115 325,278 Stockholders' equity: Common stock, $0.001 par value 28 27 Additional paid-in capital 504,206 463,900 Accumulated other comprehensive income (loss) (418 ) 355 Accumulated deficit (386,844 ) (430,151 ) Total stockholders' equity 116,972 34,131 Total liabilities and stockholders' equity $ 446,087 $ 359,409 IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three Months Ended Six Months Ended June 30 , June 30 , 2024 2023 2024 2023 Revenue $ 102,495 $ 85,986 $ 179,320 $ 171,883 Cost of revenue 44,979 42,172 84,256 84,539 Gross profit 57,516 43,814 95,064 87,344 Operating expenses: Research and development 24,924 23,403 47,443 45,838 Sales and marketing 9,827 10,632 20,003 20,605 General and administrative 13,223 16,002 26,588 31,566 Amortization of intangibles 496 2,146 1,905 2,146 Restructuring costs — — 1,812 — Total operating expenses 48,470 52,183 97,751 100,155 Income (loss) from operations 9,046 (8,369 ) (2,687 ) (12,811 ) Other income, net 2,122 1,165 3,414 2,530 Income from settlement of litigation — — 45,000 — Interest expense (1,217 ) (1,211 ) (2,433 ) (2,420 ) Income (loss) before income taxes 9,951 (8,415 ) 43,294 (12,701 ) Income tax benefit 12 349 13 277 Net income (loss) per share attributable to common stockholders: $ 9,963 $ (8,066 ) $ 43,307 $ (12,424 ) Net income (loss) per share — basic $ 0.36 $ (0.30 ) $ 1.57 $ (0.47 ) Net income (loss) per share — diluted $ 0.34 $ (0.30 ) $ 1.44 (1 ) $ (0.47 ) Weighted-average shares outstanding — basic 27,889 26,713 27,623 26,499 Weighted-average shares outstanding — diluted 29,422 26,713 31,718 (1 ) 26,499 (1) Diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million. IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Six Months Ended June 30 , 2024 2023 Operating activities: Net income (loss) $ 43,307 $ (12,424 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 6,908 6,066 Stock-based compensation 26,495 23,372 Restructuring equity modification expense 366 — Accretion of discount or amortization of premium on investments (109 ) (1,285 ) Amortization of debt issuance costs 815 802 Deferred tax expense (372 ) (399 ) Revaluation of acquisition-related contingent consideration liability 986 — Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 699 (7,755 ) Inventory 16,378 (64,733 ) Prepaid expenses and other assets 1,461 2,277 Accounts payable 6,996 6,113 Accrued compensation and employee related benefits 4,056 (1,879 ) Accrued and other liabilities 290 2,043 Acquisition-related contingent consideration liability (2,556 ) — Operating lease right-of-use assets 1,293 1,331 Operating lease liabilities (1,706 ) (1,661 ) Deferred revenue 312 (972 ) Net cash provided by (used in) operating activities 105,619 (49,104 ) Investing activities: Proceeds from sales of investments — 13,372 Proceeds from maturities of investments 13,033 92,424 Business acquisitions, net of cash acquired — (23,357 ) Purchases of intangible assets — (250 ) Purchases of property and equipment (7,568 ) (13,198 ) Net cash provided by investing activities 5,465 68,991 Financing activities: Proceeds from exercise of stock options and employee stock purchase plan 13,446 5,753 Payment of acquisition-related contingent consideration (4,602 ) — Net cash provided by financing activities 8,844 5,753 Effect of exchange rate changes on cash and cash equivalents (68 ) 7 Net increase in cash and cash equivalents 119,860 25,647 Cash and cash equivalents Beginning of period 94,793 19,597 End of period $ 214,653 $ 45,244 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, non-GAAP net income (loss), free cash flow and adjusted free cash flow 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 use free cash flow and adjusted free cash flow as key measures when assessing our sources of liquidity, capital resources, and quality of earnings. 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 and amortization; restructuring costs; settlement income and related costs; induced conversion expense; other income, net; interest expense; acquisition related expense and related purchase accounting adjustments; and income tax benefit (expense). During the year ended December 31, 2023 , we revised our definition of adjusted EBITDA to exclude acquisition related expenses, related purchase accounting adjustments, and amortization of intangibles in connection with our Voyantic Oy acquisition. During the three months ended March 31, 2024 , we further revised our definition of adjusted EBITDA to exclude settlement income. We have excluded these items because we do not believe they reflect our core operations and us excluding them enables more consistent evaluation of our operating performance. The revision to our definition of adjusted EBITDA did not impact adjusted EBITDA for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability. Non-GAAP Net Income (Loss) We define non-GAAP net income as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation and amortization; restructuring costs; settlement income and related costs; induced conversion expense; acquisition related expense and related purchase accounting adjustments; and the corresponding income tax impacts of adjustments to net income (loss). During the year ended December 31, 2023 , we revised our definition of non-GAAP net income to adjust for acquisition related expenses, related purchase accounting adjustments, and amortization of intangibles in connection with our Voyantic Oy acquisition. During the three months ended March 31, 2024 , we further revised our definition of non-GAAP net income to exclude settlement income. The revisions to our definition of non-GAAP net income did not impact non-GAAP net income for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability. Additionally, during the year ended December 31, 2023 , we revised our definition of non-GAAP net income (loss) to adjust for income tax effects of adjustments to net income (loss), calculated at the statutory rate for current and historical periods. We have revised the prior period amounts to conform to our current period presentation. Free cash flow We define free cash flow as net cash provided by (used in) operating activities, determined in accordance with GAAP, less purchases of property and equipment. We define adjusted free cash flow as free cash flow less cash received from gain on litigation settlement. IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages, unaudited) Three Months Ended Six Months Ended June 30 , June 30 , 2024 2023 2024 2023 GAAP Gross margin 56.1 % 51.0 % 53.0 % 50.8 % Adjustments: Depreciation and amortization 1.6 % 1.5 % 1.7 % 1.3 % Purchase accounting adjustments 0.0 % 0.3 % 0.0 % 0.2 % Stock-based compensation 0.5 % 0.5 % 0.6 % 0.5 % Non-GAAP Gross margin 58.2 % 53.3 % 55.3 % 52.8 % GAAP Net income (loss) $ 9,963 $ (8,066 ) $ 43,307 $ (12,424 ) Adjustments: Depreciation and amortization 2,999 4,273 6,908 6,066 Stock-based compensation 14,705 13,148 26,495 23,372 Restructuring costs — — 1,812 — Acquisition related expenses 79 630 986 1,672 Purchase accounting adjustments — 276 — 276 Other income, net (2,122 ) (1,165 ) (3,414 ) (2,530 ) Income from settlement of litigation — — (45,000 ) — Interest expense 1,217 1,211 2,433 2,420 Income tax expense (benefit) (12 ) (349 ) (13 ) (277 ) Adjusted EBITDA $ 26,829 $ 9,958 $ 33,514 $ 18,575 GAAP Net income (loss) $ 9,963 $ (8,066 ) $ 43,307 $ (12,424 ) Adjustments: Depreciation and amortization 2,999 4,273 6,908 6,066 Stock-based compensation 14,705 13,148 26,495 23,372 Restructuring costs — — 1,812 — Acquisition transaction expenses 79 630 986 1,672 Purchase accounting adjustments — 276 — 276 Income from settlement of litigation — — (45,000 ) — Income tax effects of adjustments (1) (2,433 ) (965 ) (3,024 ) (1,783 ) Non-GAAP Net income $ 25,313 $ 9,296 $ 31,484 $ 17,179 Non-GAAP Net income per share — diluted $ 0.83 (2 ) $ 0.33 $ 1.07 (2 ) $ 0.60 GAAP Weighted-average shares — diluted 29,422 26,713 31,718 (3 ) 26,499 Dilutive shares from stock plans — 1,809 — 2,039 Dilutive shares from convertible debt 2,589 — — — Non-GAAP Weighted-average shares — diluted 32,011 (2 ) 28,522 31,718 (2 ) 28,538 (1) The tax effects of the adjustments are calculated using the statutory rate, taking into consideration the nature of the item and relevant taxing jurisdictions. (2) Diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million. (3) GAAP weighted average shares — diluted includes the dilutive effect of convertible debt. IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages, unaudited) Three Months Ended Six Months Ended June 30 , June 30 , 2024 2023 2024 2023 GAAP Net cash provided by (used in) operating activities $ 45,479 $ (22,544 ) $ 105,619 $ (49,104 ) Adjustments: Purchases of property and equipment (1,366 ) (5,616 ) (7,568 ) (13,198 ) Free cash flow $ 44,113 $ (28,160 ) $ 98,051 $ (62,302 ) Adjustments: Income from settlement of litigation — — (45,000 ) — Adjusted free cash flow $ 44,113 $ (28,160 ) $ 53,051 $ (62,302 ) 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 September 30 , 2024 GAAP Net loss $ (2,714 ) Adjustments: Forecasted Depreciation and amortization 3,250 Forecasted Stock-based compensation 15,049 Forecasted Interest expense 1,215 Forecasted Other income, net (2,300 ) Forecasted Income tax expense — Adjusted EBITDA $ 14,500 GAAP Net loss $ (2,714 ) Adjustments: Forecasted Depreciation and amortization 3,250 Forecasted Stock-based compensation 15,049 Forecasted Income tax effects of adjustments (1,361 ) Non-GAAP Net income $ 14,224 GAAP Net loss per share — diluted $ (0.10 ) Non-GAAP Net income per share — diluted(1) $ 0.48 GAAP weighted-average shares — diluted 28,300 Dilutive shares 3,900 Non-GAAP weighted-average shares — diluted(1) 32,200 (1) Non-GAAP diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million. View source version on businesswire.com : https://www.businesswire.com/news/home/20240724658547/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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