Impinj Reports Third 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 third quarter ended September 30, 2024 . “Our third-quarter results were strong, with revenue and profitability well above our guidance,” said Chris Diorio , Impinj co-founder and CEO. “These results again demonstrate the leverage in our operating model. 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.” Third Quarter 2024 Financial Summary Revenue of $95.2 million GAAP gross margin of 50.0%; non-GAAP gross margin of 52.4% GAAP net income of $0.2 million , or income of $0.01 per diluted share using 29.7 million shares Adjusted EBITDA of $17.3 million Non-GAAP net income of $16.9 million , or income of $0.56 per diluted share using 32.3 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 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 fourth quarter of 2024 (in millions, except per share data): Three Months Ending December 31, 2024 Revenue $91.0 to $94.0 GAAP Net loss ( $3.8 ) to ( $2.3 ) Adjusted EBITDA income $13.6 to $15.1 GAAP Weighted-average shares — basic and diluted 28.4 to 28.6 GAAP Net loss per share — basic and diluted ( $0.14 ) to ( $0.08 ) Non-GAAP Net income $13.4 to $14.9 Non-GAAP Weighted-average shares — diluted(1) 32.6 to 32.8 Non-GAAP Net income per share — diluted(1) $0.45 to $0.49 (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, October 23, 2024 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its third-quarter 2024 results, as well as its outlook for its fourth-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 1320694. 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 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) September 30, 2024 December 31, 2023 Assets: Current assets: Cash and cash equivalents $ 73,704 $ 94,793 Short-term investments 96,551 18,440 Accounts receivable, net 64,378 54,919 Inventory 88,357 97,172 Prepaid expenses and other current assets 6,097 4,372 Total current assets 329,087 269,696 Long-term investments 57,122 — Property and equipment, net 49,908 44,891 Intangible assets, net 11,563 13,913 Operating lease right-of-use assets 7,817 9,735 Other non-current assets 1,117 1,478 Goodwill 19,833 19,696 Total assets $ 476,447 $ 359,409 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 20,504 $ 8,661 Accrued compensation and employee related benefits 18,043 8,519 Accrued and other current liabilities 3,702 8,614 Current portion of operating lease liabilities 3,534 3,373 Current portion of long-term debt 283,081 — Current portion of deferred revenue 2,231 1,713 Total current liabilities 331,095 30,880 Long-term debt — 281,855 Operating lease liabilities, net of current portion 6,660 9,360 Deferred tax liabilities, net 2,454 2,911 Deferred revenue, net of current portion 139 272 Total liabilities 340,348 325,278 Stockholders' equity: Common stock, $0.001 par value 28 27 Additional paid-in capital 522,100 463,900 Accumulated other comprehensive income 594 355 Accumulated deficit (386,623 ) (430,151 ) Total stockholders' equity 136,099 34,131 Total liabilities and stockholders' equity $ 476,447 $ 359,409 IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three Months Ended Nine Months Ended September 30 , September 30 , 2024 2023 2024 2023 Revenue $ 95,198 $ 65,005 $ 274,518 $ 236,888 Cost of revenue 47,629 34,237 131,885 118,776 Gross profit 47,569 30,768 142,633 118,112 Operating expenses: Research and development 25,492 21,588 72,935 67,426 Sales and marketing 9,888 10,073 29,891 30,678 General and administrative 12,452 13,532 39,040 45,098 Amortization of intangibles 506 1,409 2,411 3,555 Restructuring costs — — 1,812 — Total operating expenses 48,338 46,602 146,089 146,757 Income (loss) from operations (769 ) (15,834 ) (3,456 ) (28,645 ) Other income, net 2,416 1,090 5,830 3,620 Income from settlement of litigation — — 45,000 — Interest expense (1,219 ) (1,213 ) (3,652 ) (3,633 ) Income (loss) before income taxes 428 (15,957 ) 43,722 (28,658 ) Income tax benefit (expense) (207 ) 195 (194 ) 472 Net income (loss) per share attributable to common stockholders: $ 221 $ (15,762 ) $ 43,528 $ (28,186 ) Net income (loss) per share — basic $ 0.01 $ (0.59 ) $ 1.57 $ (1.06 ) Net income (loss) per share — diluted $ 0.01 $ (0.59 ) $ 1.48 (1) $ (1.06 ) Weighted-average shares outstanding — basic 28,168 26,920 27,805 26,639 Weighted-average shares outstanding — diluted 29,727 26,920 31,918 (1) 26,639 (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) Nine Months Ended September 30 , 2024 2023 Operating activities: Net income (loss) $ 43,528 $ (28,186 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,155 9,733 Stock-based compensation 41,336 35,679 Restructuring equity modification expense 366 — Accretion of discount or amortization of premium on investments (247 ) (1,600 ) Amortization of debt issuance costs 1,226 1,206 Deferred tax expense (471 ) (662 ) Revaluation of acquisition-related contingent consideration liability 986 — Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable (9,438 ) 2,683 Inventory 8,825 (59,239 ) Prepaid expenses and other assets (610 ) 1,407 Accounts payable 12,056 (10,054 ) Accrued compensation and employee related benefits 9,515 (1,904 ) Accrued and other liabilities 1,268 1,677 Acquisition-related contingent consideration liability (2,556 ) — Operating lease right-of-use assets 1,921 1,990 Operating lease liabilities (2,542 ) (2,501 ) Deferred revenue 369 (1,038 ) Net cash provided by (used in) operating activities 115,687 (50,809 ) Investing activities: Purchases of investments (154,331 ) — Proceeds from sales of investments — 13,372 Proceeds from maturities of investments 18,605 127,449 Business acquisitions, net of cash acquired — (23,357 ) Purchases of intangible assets — (250 ) Proceeds from sale of property and equipment — 234 Purchases of property and equipment (12,979 ) (15,968 ) Net cash provided by (used in) investing activities (148,705 ) 101,480 Financing activities: Proceeds from exercise of stock options and employee stock purchase plan 16,499 7,890 Payment of acquisition-related contingent consideration (4,602 ) — Net cash provided by financing activities 11,897 7,890 Effect of exchange rate changes on cash and cash equivalents 32 (58 ) Net increase (decrease) in cash and cash equivalents (21,089 ) 58,503 Cash and cash equivalents Beginning of period 94,793 19,597 End of period $ 73,704 $ 78,100 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 Nine Months Ended September 30 , September 30 , 2024 2023 2024 2023 GAAP Gross margin 50.0 % 47.3 % 52.0 % 49.9 % Adjustments: Depreciation and amortization 1.9 % 2.2 % 1.8 % 1.5 % Purchase accounting adjustments 0.0 % 0.2 % 0.0 % 0.2 % Stock-based compensation 0.5 % 0.8 % 0.5 % 0.6 % Non-GAAP Gross margin 52.4 % 50.5 % 54.3 % 52.2 % GAAP Net income (loss) $ 221 $ (15,762 ) $ 43,528 $ (28,186 ) Adjustments: Depreciation and amortization 3,247 3,668 10,155 9,734 Stock-based compensation 14,841 12,307 41,336 35,679 Restructuring costs — — 1,812 — Acquisition related expenses — 4 986 1,676 Purchase accounting adjustments — 112 — 388 Other income, net (2,416 ) (1,090 ) (5,830 ) (3,620 ) Income from settlement of litigation — — (45,000 ) — Interest expense 1,219 1,213 3,652 3,633 Income tax expense (benefit) 207 (195 ) 194 (472 ) Adjusted EBITDA $ 17,319 $ 257 $ 50,833 $ 18,832 GAAP Net income (loss) $ 221 $ (15,762 ) $ 43,528 $ (28,186 ) Adjustments: Depreciation and amortization 3,247 3,668 10,155 9,734 Stock-based compensation 14,841 12,307 41,336 35,679 Restructuring costs — — 1,812 — Acquisition transaction expenses — 4 986 1,676 Purchase accounting adjustments — 112 — 388 Income from settlement of litigation — — (45,000 ) — Income tax effects of adjustments (1) (1,410 ) (207 ) (4,434 ) (1,990 ) Non-GAAP Net income $ 16,899 $ 122 $ 48,383 $ 17,301 Non-GAAP Net income per share — diluted $ 0.56 (2) $ 0.00 $ 1.63 (2) $ 0.61 GAAP Weighted-average shares — diluted 29,727 26,920 31,918 (3) 26,639 Dilutive shares from stock plans — 1,196 — 1,758 Dilutive shares from convertible debt 2,589 — — — Non-GAAP Weighted-average shares — diluted 32,316 (2) 28,116 31,918 (2) 28,397 (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 Nine Months Ended September 30 , September 30 , 2024 2023 2024 2023 GAAP Net cash provided by (used in) operating activities $ 10,068 $ (1,705 ) $ 115,687 $ (50,809 ) Adjustments: Purchases of property and equipment (5,411 ) (2,770 ) (12,979 ) (15,968 ) Free cash flow $ 4,657 $ (4,475 ) $ 102,708 $ (66,777 ) Adjustments: Income from settlement of litigation — — (45,000 ) — Adjusted free cash flow $ 4,657 $ (4,475 ) $ 57,708 $ (66,777 ) 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 , 2024 GAAP Net loss $ (3,178 ) Adjustments: Forecasted Depreciation and amortization 3,388 Forecasted Stock-based compensation 15,175 Forecasted Interest expense 1,215 Forecasted Other income, net (2,400 ) Forecasted Income tax expense 100 Adjusted EBITDA $ 14,300 GAAP Net loss $ (3,178 ) Adjustments: Forecasted Depreciation and amortization 3,388 Forecasted Stock-based compensation 15,175 Forecasted Income tax effects of adjustments (1,252 ) Non-GAAP Net income $ 14,133 GAAP Net loss per share — basic and diluted $ (0.11 ) Non-GAAP Net income per share — diluted(1) $ 0.47 GAAP weighted-average shares — basic and diluted 28,500 Dilutive shares 4,200 Non-GAAP weighted-average shares — diluted(1) 32,700 (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/20241023862833/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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