Impinj Q2 Earnings Call Highlights

Impinj NASDAQ: PI reported record second-quarter revenue, adjusted EBITDA and earnings per share, supported by demand for its RAIN RFID Endpoint IC products across retail, supply chain and logistics markets. Management also projected strong sequential growth in the third quarter, citing bookings strength, an accelerating custom ASIC ramp and expected inventory rebuilding by inlay and label partners. Second-quarter revenue rose 46% sequentially and 11% year over year to a record $108.4 million. GAAP net income totaled $12.2 million, while non-GAAP net income reached a record $27 million, or $0.86 per diluted share. Adjusted EBITDA was a record $30.7 million, representing a 28.3% margin.

Endpoint IC revenue reached a record $96.4 million, up 53% from the first quarter and 14% from a year earlier. Excluding licensing revenue, Endpoint IC product revenue increased 26% sequentially and 16% year over year, exceeding the company’s expectations. Chris Diorio, Impinj’s co-founder and CEO, said Endpoint IC unit volume also set a quarterly record. He attributed the demand to retail apparel, general merchandise, supply chain and logistics, and food-related applications. Diorio said retail apparel remains in mainstream adoption and continues to add volume, while supply chain and logistics, general merchandise and food are growing more rapidly on a percentage basis.

“For the second consecutive quarter, Endpoint IC bookings also hit an all-time high,” Diorio said, adding that the company sees continued market expansion as well as demand from inlay partners rebuilding IC inventories toward normal levels. Systems revenue was $12 million, up 8% sequentially but down 10% from the prior-year period. The company said strength in Reader IC revenue offset weakness in label production systems. Diorio said enterprise demand lifted Reader IC performance above expectations and that Reader ICs are expected to be Impinj’s fastest-growing product line in the third quarter.

Impinj said a custom ASIC program for its second-largest North American supply chain and logistics end user is progressing ahead of schedule. Diorio said inlay partners are filling their supply chains and that full conversion to the custom IC is expected during the third quarter. CFO Cary Baker said the custom IC transition gives the company better visibility into channel inventory than it had when the customer used Impinj’s general-purpose M800 product. That general-purpose product could be used across several end markets, complicating efforts to distinguish inventory intended for supply chain customers...