Impinj Reports Fastest Growth in 2 Years
Radio-frequency identification solutions provider Impinj (NASDAQ: PI) reported its first-quarter results after the market closed on April 29. The company produced another quarter of robust growth, with revenue up more than 30% from a very weak prior-year quarter. Impinj also guided for a solid second quarter, although growth will likely slow in the second half as the company fully laps a period of slumping revenue.
Impinj results: The raw numbers
Metric | Q1 2019 | Q1 2018 | Year-Over-Year Change |
|---|---|---|---|
Revenue | $33.1 million | $25.1 million | 31.9% |
Net income | ($7.1 million) | ($14.4 million) | N/A |
Non-GAAP earnings per share | ($0.11) | ($0.35) | N/A |
Data source: Impinj.
What happened with Impinj this quarter?
Following an inventory correction at partners that led to steep revenue declines in late 2017 and early 2018, Impinj has now reported three consecutive quarters of year-over-year revenue growth, and two consecutive quarters where the growth rate was around 30%.
Revenue from endpoint ICs, which are used to track individual items, was $21.9 million, up 13% year over year. Revenue from systems was $11.2 million, up 98% year over year.
GAAP gross margin was 48%, and non-GAAP gross margin was 50%. Those numbers are up from 47.1% and 49%, respectively, in the fourth quarter of 2018.
Adjusted earnings before interest, taxes, depreciation, and amortization was a loss of $2.3 million, up from a loss of $7.1 million in the prior-year period.
GAAP operating expenses were $22.8 million, down 12.3% year over year. Excluding restructuring charges in the prior-year period, operating expenses were up 3.3%.
Impinj announced its M700 endpoint IC family during the first quarter, which features smaller chip sizes and increased range, reliability, and speed. CEO Chris Diorio called it "our most exciting new-product introduction in a decade."
An Impinj RFID tag. Image source: Impinj.
What management had to say
Diorio talked more about the M700 family during the earnings call:
The Impinj M700 technology represents the pinnacle of our market and highlights Impinj's innovation, competitive advantages and yet again our industry leadership. We demonstrated the first ICs in the Impinj M700 family to key partners and customers in April. And their feedback was incredibly positive.
Jeff Dossett, EVP of sales and marketing, discussed the industry verticals where the company is seeing the most opportunity:
I would highlight the growth and opportunity and supply chain and logistics, as well as manufacturing across a variety of different types, but in particular, automotive and aviation. Of course, we're continuing to see growth in retail, both apparel and footwear. But also had a great expansion including new categories such as health and beauty, for example cosmetics.
Looking forward
Impinj expects to have a strong second quarter, with revenue growing sequentially and losses narrowing. The company provided the following second-quarter guidance:
Revenue between $34.0 million and $36.0 million. At the midpoint, this represents sequential revenue growth of 5.7% and year-over-year revenue growth of 22.8%.
GAAP net loss of $6.1 million to $7.1 million, or $0.28 per share to $0.33 per share.
Non-GAAP net loss of $0.8 million to $2.3 million, or $0.04 per share to $0.11 per share.
Adjusted EBITDA loss between $0.6 million and $2.1 million.
The second quarter is the last quarter where Impinj will have an easy comparison to the prior-year period. Revenue tumbled in late 2017 and early 2018 as partners worked through inventory. Impinj returned to growth in the third quarter of last year, so the company's growth rate will likely slow substantially in the second half.
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.
