Impinj Reports Third Quarter 2023 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 third quarter ended September 30, 2023 . “Third-quarter results were solid, with profitability exceeding our expectations,” said Chris Diorio , Impinj co-founder and CEO. “While macroeconomic pressures continue to impact our fourth-quarter outlook, we believe our long-term opportunity remains intact. We see early signs of retail demand improvement, strong ongoing endpoint IC unit-volume growth despite the downturn and remain optimistic for the future.” Third Quarter 2023 Financial Summary Revenue of $65.0 million GAAP gross margin of 47.3%; non-GAAP gross margin of 50.5% GAAP net loss of $15.8 million , or loss of $(0.59) per diluted share using 26.9 million shares Adjusted EBITDA of $0.3 million Non-GAAP net income of $0.1 million , or income of $0.00 per diluted share using 28.1 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. Fourth 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 fourth quarter of 2023 (in millions, except per share data): Three Months Ending December 31, 2023 Revenue $65.5 to $68.5 GAAP Net loss ( $17.0 ) to ( $15.5 ) Adjusted EBITDA income (loss) ( $0.9 ) to $0.7 GAAP Weighted-average shares — basic and diluted 27.00 to 27.20 GAAP Net loss per share — basic and diluted ( $0.63 ) to ( $0.57 ) Non-GAAP Net income (loss) ( $1.2 ) to $0.3 Non-GAAP Weighted-average shares — basic 27.00 to 27.20 Non-GAAP Weighted-average shares — diluted 27.00 to 28.10 Non-GAAP Net income (loss) per share — basic and diluted ( $0.04 ) to $0.01 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, October 25, 2023 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its third-quarter 2023 results, as well as its outlook for its fourth-quarter 2023. Interested parties may access the call by dialing +1-412-317-6789. 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 8377826. 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 fourth 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) September 30, 2023 December 31, 2022 Assets: Current assets: Cash and cash equivalents $ 78,100 $ 19,597 Short-term investments 35,129 154,148 Accounts receivable, net 48,482 49,996 Inventory 106,806 46,397 Prepaid expenses and other current assets 4,446 5,032 Total current assets 272,963 275,170 Long-term investments — 19,200 Property and equipment, net 44,923 39,027 Intangible assets, net 14,727 — Operating lease right-of-use assets 10,326 10,490 Other non-current assets 1,613 1,969 Goodwill 19,049 3,881 Total assets $ 363,601 $ 349,737 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 11,017 $ 25,024 Accrued compensation and employee related benefits 7,702 9,048 Accrued and other current liabilities 9,306 2,925 Current portion of operating lease liabilities 3,308 3,122 Current portion of deferred revenue 2,425 2,250 Total current liabilities 33,758 42,369 Long-term debt 281,449 280,244 Operating lease liabilities, net of current portion 10,205 11,066 Deferred tax liabilities, net 3,062 118 Deferred revenue, net of current portion 327 349 Total liabilities 328,801 334,146 Stockholders' equity: Common stock, $0.001 par value 27 26 Additional paid-in capital 450,746 403,599 Accumulated other comprehensive loss (1,002 ) (1,249 ) Accumulated deficit (414,971 ) (386,785 ) Total stockholders' equity 34,800 15,591 Total liabilities and stockholders' equity $ 363,601 $ 349,737 IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three Months Ended Nine Months Ended September 30 , September 30 , 2023 2022 2023 2022 Revenue $ 65,005 $ 68,270 $ 236,888 $ 181,210 Cost of revenue 34,237 30,835 118,776 83,494 Gross profit 30,768 37,435 118,112 97,716 Operating expenses: Research and development 21,588 18,766 67,426 55,124 Sales and marketing 10,073 9,326 30,678 28,239 General and administrative 13,532 11,087 45,098 33,888 Amortization of intangibles 1,409 — 3,555 — Total operating expenses 46,602 39,179 146,757 117,251 Loss from operations (15,834 ) (1,744 ) (28,645 ) (19,535 ) Other income, net 1,090 774 3,620 1,367 Induced conversion expense — — — (2,232 ) Interest expense (1,213 ) (1,205 ) (3,633 ) (3,716 ) Loss before income taxes (15,957 ) (2,175 ) (28,658 ) (24,116 ) Income tax benefit (expense) 195 (24 ) 472 (67 ) Net loss $ (15,762 ) $ (2,199 ) $ (28,186 ) $ (24,183 ) Net loss per share — basic and diluted $ (0.59 ) $ (0.09 ) $ (1.06 ) $ (0.95 ) Weighted-average shares — basic and diluted 26,920 25,743 26,639 25,384 IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Nine Months Ended September 30 , 2023 2022 Operating activities: Net loss $ (28,186 ) $ (24,183 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 9,733 4,456 Stock-based compensation 35,679 32,230 Accretion of discount or amortization of premium on investments (1,600 ) 301 Amortization of debt issuance costs 1,206 1,203 Induced conversion expense related to convertible notes — 2,232 Deferred tax expense (662 ) — Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 2,683 (5,218 ) Inventory (59,239 ) (9,967 ) Prepaid expenses and other assets 1,407 45 Accounts payable (10,054 ) 1,107 Accrued compensation and employee related benefits (1,904 ) 1,571 Accrued and other liabilities 1,677 1,252 Operating lease right-of-use assets 1,990 2,490 Operating lease liabilities (2,501 ) (3,064 ) Deferred revenue (1,038 ) 2,358 Net cash provided by (used in) operating activities (50,809 ) 6,813 Investing activities: Purchases of investments — (159,837 ) Proceeds from sales of investments 13,372 — Proceeds from maturities of investments 127,449 79,508 Purchases of intangible assets (250 ) — Proceeds from sale of property and equipment 234 — Purchases of property and equipment (15,968 ) (5,975 ) Business acquisitions, net of cash acquired (23,357 ) — Net cash provided by (used in) investing activities 124,837 (86,304 ) Financing activities: Proceeds from exercise of stock options and employee stock purchase plan 7,890 12,462 Payment of 2019 Notes — (17,564 ) Net cash provided by (used in) financing activities 7,890 (5,102 ) Effect of exchange rate changes on cash and cash equivalents (58 ) — Net increase (decrease) in cash and cash equivalents 81,860 (84,593 ) Cash and cash equivalents Beginning of period 19,597 123,903 End of period $ 101,457 $ 39,310 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; induced conversion expense; other income, net; interest expense; loss on debt extinguishment; income tax benefit (expense); and acquisition transaction expense and related purchase accounting adjustments. During the first quarter of 2023, we revised our definition of adjusted EBITDA to exclude acquisition transaction expenses and related purchase accounting adjustments in connection with our Voyantic Oy acquisition. 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. 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 (loss) as net income (loss), adjusted for, if applicable for the periods presented, the effects of stock-based compensation; depreciation; restructuring costs; settlement and related costs; induced conversion expense; amortization of debt discount related to the equity component of our convertible notes; prepayment penalty on debt extinguishment; acquisition transaction expense; and the corresponding income tax impacts of adjustments to net income (loss). During the first quarter of 2023, we revised our definition of non-GAAP net income (loss) to adjust for acquisition transaction expenses and related purchase accounting adjustments in connection with our Voyantic Oy acquisition. Excluding acquisition transaction expenses and related purchase accounting adjustments did not impact the non-GAAP net income (loss) previously reported for periods preceding the revision. During the second quarter of 2023, we further 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. IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages, unaudited) Three Months Ended Nine Months Ended September 30 , September 30 , 2023 2022 2023 2022 GAAP Gross margin 47.3 % 54.8 % 49.9 % 53.9 % Adjustments: Depreciation and amortization 2.2 % 1.4 % 1.5 % 1.5 % Purchase accounting adjustments 0.2 % 0.0 % 0.2 % 0.0 % Stock-based compensation 0.8 % 0.7 % 0.6 % 0.8 % Non-GAAP Gross margin 50.5 % 56.9 % 52.2 % 56.2 % GAAP Net loss $ (15,762 ) $ (2,199 ) $ (28,186 ) $ (24,183 ) Adjustments: Depreciation and amortization 3,668 1,483 9,734 4,456 Purchase accounting adjustments 112 — 388 — Stock-based compensation 12,307 10,057 35,679 32,230 Other income, net (1,090 ) (774 ) (3,620 ) (1,367 ) Interest expense 1,213 1,205 3,633 3,716 Income tax expense (benefit) (195 ) 24 (472 ) 67 Induced conversion expense — — — 2,232 Acquisition transaction expense 4 — 1,676 — Adjusted EBITDA $ 257 $ 9,796 $ 18,832 $ 17,151 GAAP Net loss $ (15,762 ) $ (2,199 ) $ (28,186 ) $ (24,183 ) Adjustments: Depreciation and amortization 3,668 1,483 9,734 4,456 Purchase accounting adjustments 112 — 388 — Stock-based compensation 12,307 10,057 35,679 32,230 Induced conversion expense — — — 2,232 Acquisition transaction expense 4 — 1,676 — Income tax effects of adjustments (1) (207 ) (878 ) (1,990 ) (1,385 ) Non-GAAP Net income $ 122 $ 8,463 $ 17,301 $ 13,350 Non-GAAP Net income per share: Basic $ 0.00 $ 0.33 $ 0.65 $ 0.53 Diluted $ 0.00 $ 0.31 $ 0.61 $ 0.49 GAAP Weighted-average shares — diluted 26,920 25,743 26,639 25,384 Dilutive shares from stock plans 1,196 1,930 1,758 1,699 Dilutive shares from 2021 Notes — — — — Non-GAAP Weighted-average shares — diluted 28,116 27,673 28,397 27,083 (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. 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 December 31 , 2023 GAAP Net loss $ (16,250 ) Adjustments: Forecasted Depreciation and amortization 3,607 Forecasted Stock-based compensation 12,355 Forecasted Interest expense 1,258 Forecasted Other income, net (850 ) Forecasted Income tax benefit (220 ) Adjusted EBITDA $ (100 ) GAAP Net loss $ (16,250 ) Adjustments: Forecasted Depreciation and amortization 3,607 Forecasted Stock-based compensation 12,355 Forecasted Income tax effects of adjustments (172 ) Non-GAAP Net loss $ (460 ) GAAP Net loss per share — basic and diluted $ (0.60 ) Non-GAAP Net loss per share — basic and diluted $ (0.02 ) GAAP weighted-average shares — basic and diluted 27,100 Non-GAAP weighted-average shares — basic and diluted 27,100 View source version on businesswire.com : https://www.businesswire.com/news/home/20231025595700/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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