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Impinj Reports Third Quarter 2020 Financial Results

·13 min read

Impinj, Inc. (NASDAQ: PI), a leading provider and pioneer of RAIN RFID solutions, today released its financial results for the third quarter ended September 30, 2020.

"Third-quarter revenue improved sequentially, driven primarily by rebounding retail-apparel volumes that drove endpoint IC sales," said Chris Diorio, Impinj co-founder and CEO. "With game-changing new products and a platform and vision that sit squarely in the center of our end users’ digital transformation, the opportunity in front of us is more compelling than ever."

Third Quarter 2020 Financial Summary

  • Revenue of $28.2 million

  • GAAP gross margin of 47.4%; non-GAAP gross margin of 50.1%

  • GAAP net loss of $14.3 million, or loss of $0.63 per diluted share using 22.9 million shares

  • Adjusted EBITDA loss of $6.2 million

  • Non-GAAP net loss of $6.7 million, or loss of $0.29 per diluted share using 22.9 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 2020 Financial Considerations

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 2020 (in millions, except per share data):

Three Months Ending

December 31, 2020

Revenue

$26.5 to $28.5

GAAP Net loss

($17.2) to ($16.2)

Adjusted EBITDA loss

($8.9) to ($7.4)

Non-GAAP net loss

($9.3) to ($7.8)

GAAP Weighted-average shares — basic and diluted

23.00 to 23.10

GAAP Net loss per share — basic and diluted

($0.75) to ($0.70)

Non-GAAP Weighted-average shares — basic and diluted

23.00 to 23.10

Non-GAAP Net loss per share — basic and diluted

($0.40) to ($0.34)

A reconciliation between GAAP and non-GAAP is provided in the "Non-GAAP Financial Measures" section below.

Conference Call Information

Impinj will host a conference call today, Oct. 28, 2020 at 5:00 p.m. ET / 2:00 p.m. PT for analysts and investors to ask questions on its third quarter 2020 results. Open to the public, investors may access the call by dialing +1-412-317-5196. A live webcast of the conference call will also be accessible on our website at investor.impinj.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 10148757.

Management’s prepared written remarks, along with quarterly financial data, will be made available on our website at investor.impinj.com commensurate 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 the market for RAIN RFID, our strategy, prospects, the impact of Covid-19, and financial considerations for fourth quarter of 2020 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, 2020

December 31, 2019 (1)

Assets:

Current assets:

Cash and cash equivalents

$

40,063

$

66,898

Short-term investments

65,057

49,597

Accounts receivable, net

17,730

23,735

Inventory

37,982

34,153

Prepaid expenses and other current assets

3,339

2,386

Total current assets

164,171

176,769

Property and equipment, net

16,365

17,442

Operating lease right-of-use assets

14,472

16,501

Other non-current assets

1,193

453

Goodwill

3,881

3,881

Total assets

$

200,082

$

215,046

Liabilities and stockholders' equity:

Current liabilities:

Accounts payable

$

8,597

$

5,600

Accrued compensation and employee related benefits

4,062

5,859

Accrued liabilities

2,334

3,755

Current portion of operating lease liabilities

3,618

3,380

Current portion of deferred revenue

953

551

Other current liabilities

19

352

Total current liabilities

19,583

19,497

Long-term debt, net of current portion

53,595

50,876

Operating lease liabilities, net of current portion

16,160

18,907

Deferred revenue, net of current portion

260

213

Long-term liabilities — other

1,056

314

Total liabilities

90,654

89,807

Stockholders' equity:

Common stock, $0.001 par value

23

22

Additional paid-in capital

408,342

387,926

Accumulated other comprehensive income

12

34

Accumulated deficit

(298,949

)

(262,743

)

Total stockholders' equity

109,428

125,239

Total liabilities and stockholders' equity

$

200,082

$

215,046

(1) Certain immaterial amounts on our condensed consolidated balance sheets in prior periods have been reclassified to conform with current period presentation.

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenue

$

28,196

$

40,762

$

102,475

$

112,015

Cost of revenue

14,824

20,981

54,749

57,945

Gross profit

13,372

19,781

47,726

54,070

Operating expenses:

Research and development

11,901

10,344

33,619

27,678

Sales and marketing

6,964

7,842

20,577

24,579

General and administrative

7,527

5,503

26,215

16,653

Total operating expenses

26,392

23,689

80,411

68,910

Loss from operations

(13,020

)

(3,908

)

(32,685

)

(14,840

)

Other income, net

49

317

584

947

Interest expense

(1,360

)

(413

)

(4,021

)

(1,263

)

Loss before income taxes

(14,331

)

(4,004

)

(36,122

)

(15,156

)

Income tax expense

(15

)

(77

)

(84

)

(151

)

Net loss

$

(14,346

)

$

(4,081

)

$

(36,206

)

$

(15,307

)

Net loss per share — basic and diluted

$

(0.63

)

$

(0.19

)

$

(1.60

)

$

(0.70

)

Weighted-average shares — basic and diluted

22,931

21,961

22,686

21,738

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

Nine Months Ended

September 30,

2020

2019

Operating activities:

Net loss

$

(36,206

)

$

(15,307

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation

3,402

3,637

Stock-based compensation

15,501

11,813

Accretion of discount or amortization of premium on short-term investments

85

(464

)

Amortization of debt issuance costs and debt discount

2,719

51

Changes in operating assets and liabilities:

Accounts receivable

6,005

(6,341

)

Inventory

(3,829

)

8,451

Prepaid expenses and other assets

(1,637

)

(222

)

Deferred revenue

449

114

Accounts payable

2,608

1,508

Accrued compensation and employee related benefits

(1,797

)

(2,440

)

Operating lease right-of-use assets

2,029

1,505

Operating lease liabilities

(2,509

)

(2,255

)

Accrued liabilities and other liabilities

(372

)

164

Net cash provided by (used in) operating activities

(13,552

)

214

Investing activities:

Purchases of investments

(57,298

)

(59,036

)

Proceeds from maturities of investments

41,675

51,794

Purchases of property and equipment

(2,336

)

(971

)

Net cash used in investing activities

(17,959

)

(8,213

)

Financing activities:

Principal payments on finance lease obligations

(240

)

(410

)

Payments on term and equipment loans

(4,222

)

Proceeds from term loans, net of debt issuance costs

3,991

Proceeds from exercise of stock options and employee stock purchase plan

4,916

8,041

Net cash provided by financing activities

4,676

7,400

Net decrease in cash and cash equivalents

(26,835

)

(599

)

Cash and cash equivalents

Beginning of period

66,898

17,530

End of period

$

40,063

$

16,931

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; investigation costs; restructuring costs; settlement and related costs; other income, net; interest expense; loss on debt extinguishment; and income tax benefit (expense). In fourth-quarter 2019, we revised our definition of adjusted EBITDA to exclude loss on debt extinguishment incurred in connection with the December 2019 repayment of our senior credit facility. In second-quarter 2020, we revised our definition of adjusted EBITDA to exclude litigation settlement costs for the class-action and derivative lawsuits, including related costs. 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. Neither revision to the definition of adjusted EBITDA impacted adjusted EBITDA previously reported for prior periods preceding the revisions.

Non-GAAP Net Income (Loss)

We define non-GAAP net income (loss) as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation; investigation costs; restructuring costs; settlement and related costs; amortization of debt discount related to the equity component of our convertible notes; and prepayment penalty on debt extinguishment. In fourth-quarter 2019, we revised our definition of non-GAAP net income (loss) to exclude the prepayment penalty on debt extinguishment incurred in connection with the December 2019 repayment of our senior credit facility and amortization of debt discount related to the equity component of the 2019 Notes. We have revised the prior period non-GAAP net income (loss) to conform to our current period presentation. In second-quarter 2020, we revised our definition of non-GAAP net income (loss) to exclude litigation settlement costs for the class-action and derivative lawsuits, including related costs. Excluding settlement and related costs did not impact non-GAAP net income (loss) previously reported for prior periods preceding the revision.

GAAP requires that certain convertible debt instruments that may be settled in cash on conversion be accounted for as separate liability and equity components in a manner that reflects our non-convertible debt borrowing rate. This accounting results in the debt component being treated as though it was issued at a discount, with the debt discount being amortized as additional non-cash interest expense over the debt instrument term using the effective interest method. As a result, we believe that excluding this non-cash interest expense attributable to the debt discount in calculating our non-GAAP net income (loss) is useful because this interest expense is not indicative of our ongoing operational performance.

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,

2020

2019

2020

2019

GAAP Gross margin

47.4

%

48.5

%

46.6

%

48.3

%

Adjustments:

Depreciation

1.9

%

1.2

%

1.3

%

1.4

%

Stock-based compensation

0.8

%

0.5

%

0.6

%

0.4

%

Non-GAAP Gross margin

50.1

%

50.2

%

48.5

%

50.1

%

GAAP Net loss

$

(14,346

)

$

(4,081

)

$

(36,206

)

$

(15,307

)

Adjustments:

Depreciation

1,108

1,220

3,402

3,637

Stock-based compensation

5,683

4,793

15,501

11,813

Other income, net

(49

)

(317

)

(584

)

(947

)

Interest expense

1,360

413

4,021

1,263

Income tax expense

15

77

84

151

Settlement and related costs

5,359

Adjusted EBITDA

$

(6,229

)

$

2,105

$

(8,423

)

$

610

GAAP Net loss

$

(14,346

)

$

(4,081

)

$

(36,206

)

$

(15,307

)

Adjustments:

Depreciation

1,108

1,220

3,402

3,637

Stock-based compensation

5,683

4,793

15,501

11,813

Amortization of debt discount

897

2,637

Settlement and related costs

5,359

Non-GAAP Net income (loss)

$

(6,658

)

$

1,932

$

(9,307

)

$

143

Non-GAAP Net income (loss) per share:

Basic

$

(0.29

)

$

0.09

$

(0.41

)

$

0.01

Diluted

$

(0.29

)

$

0.08

$

(0.41

)

$

0.01

GAAP and non-GAAP Weighted-average shares — basic

22,931

21,961

22,686

21,738

GAAP Weighted-average shares — diluted

22,931

21,961

22,686

21,738

Dilutive shares from stock plans

894

658

Non-GAAP Weighted-average shares — diluted

22,931

22,855

22,686

22,396

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,

2020

GAAP Net loss

$

(16,700

)

Adjustments:

Forecasted Depreciation

1,200

Forecasted Stock-based compensation

6,000

Forecasted Interest expense

1,400

Forecasted Other income, net

(50

)

Forecasted Income tax expense

Adjusted EBITDA loss

$

(8,150

)

GAAP Net loss

$

(16,700

)

Adjustments:

Forecasted Depreciation

1,200

Forecasted Stock-based compensation

6,000

Forecasted Accretion of debt discount

950

Non-GAAP Net loss

$

(8,550

)

GAAP Net loss per share — basic and diluted

$

(0.72

)

Non-GAAP Net loss per share — basic and diluted

$

(0.37

)

GAAP weighted-average shares — basic and diluted

23,050

Non-GAAP weighted-average shares — basic and diluted

23,050

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028006017/en/

Contacts

Investor Relations
+1-206-315-4470
ir@impinj.com

Media Relations
Jill West
Sr. Director, Marketing & Communications
+1 206-834-1110
jwest@impinj.com