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Impinj (PI) Soars on Robust Q2 Results and Promising Outlook
Published on September 24, 2024 | Ticker: PI

Impinj, Inc. (NASDAQ: PI), a leading provider of RAIN RFID solutions, has reported impressive second-quarter 2024 financial results, setting several new records and showcasing the strength of its business. The company's revenue topped $100 million, and adjusted EBITDA exceeded $25 million, both well above the guidance. Free cash flow also reached a remarkable $44.1 million.

Business Overview

The strong performance was driven by multiple favorable trends, including robust demand in the apparel and footwear sectors, early signs of retail rebuying, steady growth in general merchandise, a long tail of specialty applications, and strong demand for Impinj's products and platform. These factors are expected to continue driving solid third-quarter product revenue growth.

Endpoint IC Performance

In the second quarter, Impinj's endpoint IC product revenue exceeded expectations, with unit volumes setting a new quarterly record, including a more than doubling of M800 shipments. The $15 million licensing payment received in 2024 also contributed to the revenue strength. Looking ahead to the third quarter, the company expects to deliver sequential endpoint IC product revenue growth, with the M800 continuing to ramp as its inlays pass market qualification.

Reader IC Business

Impinj's reader IC business also performed well in the second quarter, with E-family volumes exceeding expectations due to broad market demand for handhelds, printers, and fixed readers. While the company expects continued strong E-family shipment volumes in the third quarter, this will be partially offset by a modest decline in overall reader IC revenue as it winds down its prior-generation Indy ICs.

Enterprise Solutions

The company's enterprise solutions efforts continue to pay dividends, with the ongoing rollout of the self-checkout and loss prevention solution for a visionary European retailer driving growing demand for Impinj's protected-mode-enabled endpoint ICs and delivering modest gateway revenue. Additionally, the company expects increasing label consumption and fixed-reader footprint from a large North American supply chain and logistics end user, further boosting demand for its endpoint ICs and E-family reader ICs.

Outlook

Impinj sees numerous growth opportunities ahead, including the expansion of food tagging, increasing supply chain usage in apparel driving demand for its higher-performing M800, market expansion in general merchandise as retailers build on the pioneering work of a large North American retailer, and growth in specialty applications such as the tagging of books, magazines, and comic books by a consortium of Japanese publishers.

Recent Developments

On the organizational front, Impinj has promoted several key executives, including Gahan Richardson to Executive Vice President for Products and Platform, Alberto Pesavento to the executive team as CTO, and Christina Balam to Senior Vice President of HR.

Financials

Impinj's financial position remains strong, with the company ending the second quarter with $220.2 million in cash, cash equivalents, and investments, up from $114.9 million in the prior-year period. Inventory totaled $80.8 million, down $7 million from the previous quarter. The company's free cash flow of $44.1 million in the second quarter was boosted by favorable working capital trends, though it expects these to normalize in the second half of the year.

For the third quarter, Impinj expects revenue between $91 and $94 million, compared to $65 million in the prior-year period, representing a 42% increase at the midpoint. Adjusted EBITDA is expected to be between $13.8 and $15.3 million, and non-GAAP net income is projected to be between $13.5 and $15 million, or $0.46 to $0.50 per diluted share.

Conclusion

Overall, Impinj's robust second-quarter results and positive guidance highlight the company's ability to capitalize on the growing demand for RAIN RFID solutions across various industries, including retail, supply chain and logistics, and specialty applications. With its innovative product portfolio, strong customer relationships, and strategic initiatives, Impinj appears poised to maintain its leadership position in the RAIN RFID market and deliver long-term value for its shareholders.

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