Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Impinj Inc (PI, Financial) achieved higher than expected endpoint IC volumes, driving revenue and profitability above guidance.
- The company holds the #1 IC market share, capturing 85% of the industry's 2024 unit volume growth.
- Strong book-to-build ratio and solid pipeline activity indicate continued enterprise engagement.
- The M800 ramp is expected to provide a 300 basis point gross margin benefit as it becomes the volume runner.
- Impinj Inc (PI) has a strong balance sheet and operating margins, allowing for strategic investments alongside enterprise customers.
Negative Points
- First quarter revenue decreased by 19% sequentially and 3% year over year.
- Tariff and geopolitical uncertainties are causing market volatility and impacting inventory strategies.
- First quarter systems revenue declined by 25% sequentially and 15% year over year.
- Free cash flow was negative $13 million, primarily due to unfavorable working capital timing.
- The company anticipates a modest second quarter channel inventory increase due to partners building geographic optionality.
Q & A Highlights
Q: How is Impinj handling the potential impact of tariffs on demand, and have they experienced similar situations in the past?
A: Chris Diorio, CEO, explained that while the company has not faced a situation exactly like the current tariff environment, they are well-prepared with a strong team and financial position. They have not seen significant pull-aheads in demand and believe enterprises are under-shipping consumer demand due to geographic shifts in production. They expect normalization and bookings growth once these shifts stabilize.
Q: What is the current state of inventory levels, and how does Impinj view demand for 2025 compared to 2024?
A: Chris Diorio, CEO, noted that while there is a temporary increase in inventory due to geographic shifts, they do not see it as high relative to consumer demand. They expect inventory levels to normalize as demand stabilizes. Kerry Baker, CFO, added that partners are strategically holding more inventory to manage tariff risks, which is expected to continue.
Q: Can you provide an update on the M800 ramp and its impact on margins?
A: Kerry Baker, CFO, stated that the M800 is ramping well and is expected to become the volume runner at some point this year, potentially providing a 300 basis point gross margin benefit. Chris Diorio, CEO, added that the M800, with Gen 2 X technology, is a game-changer, enabling new enterprise solutions.
Q: How is Impinj's exposure to retail and apparel affecting their business, and what is the outlook for the second half of the year?
A: Chris Diorio, CEO, explained that their business has diversified beyond retail apparel into supply chain logistics and general merchandise. They believe most of their endpoints are on staple products, which are less discretionary. They expect continued engagement from enterprises and are investing prudently in opportunities.
Q: What are the key growth opportunities for Impinj in 2025 and beyond?
A: Chris Diorio, CEO, highlighted the expansion of fixed reading solutions in supply chains and logistics as a significant growth area. He also mentioned the potential for mobile phone integration and consumer opportunities in the longer term, while emphasizing the current focus on enterprise solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
