Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Impinj Inc (PI, Financial) reported strong third-quarter results with revenue and profitability exceeding guidance.
- Third quarter endpoint IC product revenue set a new quarterly record, driven by strong demand from parcel shippers and retailers.
- The company is experiencing steady growth in retail general merchandise and continued secular growth in apparel and long-tail applications.
- Impinj Inc (PI) is seeing increased adoption of its M800 ICs, with shipments more than doubling for the third consecutive quarter.
- The company has a robust enterprise account pipeline, indicating potential for future growth in various sectors, including retail and perishable foods.
Negative Points
- Third quarter revenue was down 7% sequentially from the second quarter of 2024.
- Endpoint IC revenue is expected to decline modestly in the fourth quarter due to typical seasonal trends.
- Project timing at a large supply chain and logistics end user is expected to push E-Family IC revenue lower in the fourth quarter.
- Gross margin decreased sequentially from the second quarter of 2024, primarily due to the absence of licensing revenue.
- The pace of adoption for authentication solutions has been slower than anticipated, requiring renewed efforts to drive growth.
Q & A Highlights
Q: Are you anticipating a stronger systems quarter due to the European retailer's rollout and typical Q4 seasonality?
A: Cary Baker, CFO: Yes, we expect fourth quarter systems revenue to increase sequentially. Q4 is historically stronger for systems as customers deploy capital before fiscal year-end. Additionally, the European retailer's rollout will spike in Q4, and the Indy reader IC end-of-life process has extended, adding a tailwind to Q4 systems revenue.
Q: Can you discuss the opportunity in RFID adoption in grocery stores and quick-serve restaurants?
A: Chris Diorio, CEO: We're seeing opportunities in quick-serve restaurants, the food supply chain, and individual grocers. Although 2025 volumes will be just a start, we expect meaningful growth. The food opportunity is significant, and we're well-positioned to capitalize on it.
Q: What was the main driver of your strong September quarter results?
A: Chris Diorio, CEO: There wasn't a single driver; it was broad-based. We saw strength in supply chain and logistics, steady growth in retail general merchandise, secular growth in apparel, and long-tail applications. Our solutions efforts are also paying dividends, reflecting broad-based industry adoption.
Q: Could you elaborate on the Qualcomm partnership and its implications for RFID in mobile devices?
A: Chris Diorio, CEO: Qualcomm's public statement about RAIN in mobile devices has advanced RAIN's position as a data carrier for digital product passports. The first opportunities will be in enterprise mobile, with consumer mobile following. The readiness of the entire ecosystem will pace adoption, not just phone implementation.
Q: Are there any ways to monetize the reader IC in mobile devices, or is it mainly a driver for endpoint adoption?
A: Chris Diorio, CEO: Think of it primarily as a driver for broad-based industry adoption and differentiation in the market. The opportunity lies in endpoint ICs and the broader ecosystem, including cloud services and software, rather than the ICs in phones.
Q: Can you update us on the M800 certification and its ramp?
A: Hussein Mecklai, COO: Two major inlay partners have received M800 certification and are designing multiple inlays. More partners are nearing certification. The M800 ramp is promising, with customers pleased and certifications progressing.
Q: Could you discuss the authentication opportunity in Asia and its significance?
A: Chris Diorio, CEO: We've seen replenishments in our Asia authentication opportunity. Authentication is crucial for the market, especially with RAIN in consumer mobile devices. Adoption has been slower than hoped, but we'll intensify efforts to drive adoption and prepare for consumer opportunities.
Q: What does the piggybacking of other retailers on the large North American retailer mean for the design cycle?
A: Chris Diorio, CEO: Other retailers are placing RFQs for tagged products, leveraging existing processes for apparel and footwear. This piggybacking is fast, as they already have the infrastructure and processes in place, allowing quick expansion to additional categories.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
