IMPINJ INC

Previous wording

Our systems business, at least for readers and gateways, depends significantly on large-scale deployments at discrete end users, and deployment timing causes large yearly variability in our systems revenue. For example, we generated 14% of total 2019 revenue from a gateway deployment at a large North American SC&L provider. We did not have comparable project-based revenue in 2020. Similarly, in 2021, we generated 13% of our quarterly revenue from a project-based gateway deployment for RAIN-based self-checkout and loss prevention at a large Europe-based global retailer. We did not have comparable project-based revenue in 2022, 2023 or first-half 2024.

Current wording

Our systems business, at least for readers and gateways, depends significantly on large-scale deployments at discrete end users, and deployment timing causes large yearly variability in our systems revenue. For example, we generated 14% of total 2019 revenue from a gateway deployment at a large North American SC&L provider. We did not have comparable project-based revenue in 2020. Similarly, in second-quarter 2021, we generated 13% of our revenue from a project-based gateway deployment for RAIN-based self-checkout and loss prevention at a large Europe-based global retailer. We did not have comparable project-based revenue in 2022, 2023 or in the first three quarters of 2024.

Previous wording

We did not see these seasonal trends in 2023 and may not see them in 2024. Whether and when these trends will return is not clear. We do expect continued quarter-to-quarter revenue variability due to changing macroeconomic conditions.

Current wording

We did not see these seasonal trends in 2023. We do expect continued quarter-to-quarter revenue variability due to changing macroeconomic conditions and timing of program launches that could impact seasonal trends in the future.

Previous wording

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue. The endpoint IC revenue increase was driven primarily by licensing revenue as well as higher endpoint IC shipment volumes when compared to the prior-year period. Systems revenue decreased, due primarily to lower shipment volumes. Gross margin increased, due primarily to the high-margin licensing revenue contribution, slightly offset by a decrease in product margins due to revenue mix between endpoint ICs and systems. Income from operations increased, due primarily to increased gross profit and decreased operating expenses. The operating expense decrease was due to lower general and administrative costs, sales and marketing costs and amortization of intangibles, partially offset by higher research and development costs.

Current wording

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue. The endpoint IC revenue increase was driven primarily by higher endpoint IC shipment volumes when compared to the prior-year period. Systems revenue decreased, due primarily to lower shipment volumes. Gross margin increased, due primarily to lower excess and obsolescence charges in the current-year period compared to the prior-year period. Loss from operations decreased, due primarily to increased gross profit, partially offset by increased operating expenses. The operating expense increase was due to higher research and development costs, partially offset by lower general and administrative costs, sales and marketing costs and amortization of intangibles.

Previous wording

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue. The endpoint IC revenue increase was driven primarily by licensing revenue as well as higher endpoint IC shipment volumes when compared to the prior-year period. Systems revenue decreased, due primarily to lower shipment volumes. Gross margin increased, due primarily to the high-margin licensing revenue contribution. Loss from operations decreased, due primarily to increased gross profit and decreased operating expenses. The operating expense decrease was due primarily to lower general and administrative costs and sales and marketing costs, partially offset by higher research and development and restructuring costs.

Current wording

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue. The endpoint IC revenue increase was driven primarily by licensing revenue as well as higher endpoint IC shipment volumes when compared to the prior-year period. Systems revenue decreased, due primarily to lower shipment volumes. Gross margin increased, due primarily to the high-margin licensing revenue contribution. Loss from operations decreased, due primarily to increased gross profit and a slight decrease in operating expenses. The operating expense decrease was due primarily to lower general and administrative costs, sales and marketing costs, and amortization of intangibles, partially offset by higher research and development and restructuring costs.

Previous wording

Endpoint IC revenue increased $24.5 million, due to a $15.0 million increase in licensing revenue and a $17.7 million increase in shipment volumes, partially offset by a $8.2 million decrease from lower ASP due primarily to a product mix shift within the 300mm products, and to a lesser extent, short term special pricing incentives on legacy products. The product mix shift within the 300mm products was due primarily to higher contribution from authentication ICs in prior year.

Current wording

Endpoint IC revenue increased $32.4 million, due to a $38.2 million increase in shipment volumes, partially offset by a $5.8 million decrease from lower ASP due primarily to product mix, and to a lesser extent, short-term pricing incentives on legacy products.

Previous wording

Systems revenue decreased $8.0 million, due primarily to a decrease in shipment volumes. Reader and gateway revenues decreased $3.4 million and $3.9 million, respectively, and non-recurring engineering revenue decreased $0.5 million. These decreases were partially offset by an increase in reader IC revenue due to increased shipment volumes.

Current wording

Systems revenue decreased $2.2 million, due primarily to a decrease in shipment volumes. Reader and gateway revenues decreased $1.0 million and $2.9 million, respectively and nonrecurring engineering revenue decreased by $0.4 million. These decreases were partially offset by increases of $1.5 million and $0.6 million in reader IC and test and measurement solution revenue, respectively.

Previous wording

Endpoint IC revenue increased $18.9, million due to a $15.0 million increase in licensing revenue that did not occur in the prior-year period and a $15.2 million increase in shipment volumes, partially offset by a $11.3 million decrease from lower ASP due primarily to a product mix shift within the 300mm products, and to a lesser extent, short term special pricing incentives on legacy products. The product mix shift within the 300mm products was due primarily to higher contribution from authentication ICs in prior year.

Current wording

Endpoint IC revenue increased $51.3 million due to a $54.5 million increase in shipment volumes and a $15.0 million increase in licensing revenue that did not occur in the prior-year period, partially offset by a $18.2 million decrease in ASP due primarily to product mix shift, and to a lesser extent, short-term pricing incentives on legacy products.

Previous wording

Systems revenue decreased by $11.5 million due primarily to a decrease in shipment volumes. Reader revenue decreased $6.9 million, gateway revenue decreased $5.4 million, reader IC revenue decreased $1.6 million and nonrecurring engineering revenue decreased $0.5 million. The decrease was partially offset by an increase of $2.9 million from test and measurement solutions revenue.

Current wording

Systems revenue decreased by $13.7 million due primarily to a decrease in shipment volumes. Reader and gateway revenues decreased $7.9 million and $8.2 million, respectively, and nonrecurring engineering revenue decreased $0.8 million. These decreases were partially offset by an increase of $3.5 million from test and measurement solutions revenue.

Previous wording

Gross profit increased, due primarily to increased endpoint IC revenue, partially offset by decreased systems revenue. Gross margin increased, due primarily to high-margin licensing revenue recognized in the second quarter of 2024 that did not occur in the prior-year period, slightly offset by a decrease in product margins due to revenue mix between endpoint ICs and systems.

Current wording

Gross profit increased, due primarily to increased endpoint IC revenue, partially offset by decreased systems revenue. Gross margin increased, due primarily to lower excess and obsolescence charges compared to the prior-year period.

Previous wording

Research and development expense increased $1.5 million, due primarily to increases of $2.6 million in personnel expenses related to higher bonus achievement and higher taxes associated with equity vesting; $0.7 million in stock-based compensation expense primarily related to increased outstanding equity grants; and $0.4 million in infrastructure costs; partially offset by a $2.0 million decrease in product development costs due to timing.

Current wording

Research and development expense increased $3.9 million, due primarily to increases of $2.8 million in personnel expenses related to higher bonus achievement; $1.4 million in stock-based compensation expense primarily related to increased outstanding equity grants; and $0.3 million in infrastructure costs; partially offset by a decrease of $0.6 million in product development costs due to timing.

Previous wording

Research and development expense increased $1.6 million, due primarily to increases of $3.2 million in personnel expenses from higher bonus achievement, higher headcount primarily related to our acquisition of Voyantic and higher taxes associated with equity vesting; $1.4 million in stock-based compensation expense primarily related to increased outstanding equity grants; and $0.7 million in infrastructure costs; partially offset by a $3.5 million decrease in product development costs due to timing.

Current wording

Research and development expense increased $5.5 million, due primarily to increases of $6.1 million in personnel expenses from higher bonus achievement and higher headcount; $2.7 million in stock-based compensation expense primarily related to increased outstanding equity grants; and $1.0 million in infrastructure costs; partially offset by a decrease of $4.1 million in product development costs due to timing.

Previous wording

Sales and marketing expense decreased $0.8 million, due primarily to decreases in personnel expenses resulting from a decrease in headcount, partially offset by higher bonus achievement.

Current wording

Sales and marketing expense was comparable for the periods with offsetting fluctuations. Personnel expenses decreased resulting from a decrease in headcount, which was offset by higher bonus achievement and commissions.

Previous wording

Sales and marketing expense decreased $0.6 million, due primarily to decreases of $0.5 million in personnel expenses resulting from a decrease in headcount, partially offset by higher bonus achievement.

Current wording

Sales and marketing expense decreased $0.8 million, due primarily to decreases of $0.6 million in personnel expenses resulting from a decrease in headcount, partially offset by higher bonus achievement and commissions.

Previous wording

General and administrative expense decreased $2.8 million, due primarily to a decrease of $5.5 million in professional services related to decreased legal fees and transaction expenses in current year. This decrease was partially offset by increases of $1.7 million in personnel expenses primarily from higher bonus achievement and higher taxes associated with equity vesting and $0.8 million in stock compensation expense due primarily to increased outstanding equity grants.

Current wording

General and administrative expense decreased $1.1 million, due primarily to a decrease of $3.8 million in professional services related to legal fees. This decrease was partially offset by increases of $1.5 million in personnel expenses related to higher bonus achievement and $1.0 million in stock compensation expense related to increased outstanding equity grants.

Previous wording

General and administrative expense decreased $5.0 million, due primarily to a decrease of $8.5 million in professional services due primarily to decreased legal fees and transaction expenses in the current year. This decrease was offset by an increase of $2.0 million in personnel expenses from higher bonus achievement, higher headcount and higher taxes associated with equity vesting, as well as an increase of $1.4 million in stock-based compensation expense, due primarily to increased outstanding equity grants.

Current wording

General and administrative expense decreased $6.1 million, due primarily to a decrease of $12.3 million in professional services related to legal fees and transaction expenses in the current year. This decrease was offset by an increase of $3.5 million in personnel expenses from higher bonus achievement, higher headcount and higher taxes associated with equity vesting, and an increase of $2.4 million in stock-based compensation expense, from increased outstanding equity grants.

Previous wording

Amortization of intangibles decreased $1.7 million. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy. Certain intangible assets acquired had a useful life of less than 1 year, resulting in a higher amortization expense in the prior-year period.

Current wording

Amortization of intangibles decreased $0.9 million. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy. Certain intangible assets acquired had a useful life of less than 1 year, resulting in a higher amortization expense in the prior-year period.

Previous wording

Amortization of intangibles decreased $241,000. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy. Certain intangible assets acquired had a useful life of less than 1 year, resulting in a higher amortization expense in the prior-year period.

Current wording

Amortization of intangibles decreased $1.1 million. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy. Certain intangible assets acquired had a useful life of less than 1 year, resulting in a higher amortization expense in the prior-year period.

Previous wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax expense decreased $0.3 million for the three and six months ended June 30, 2024 compared to the prior-year periods due to changes in our estimated effective tax rate after we acquired Voyantic Oy.

Current wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax expense increased $0.4 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, compared to the prior-year periods due to changes in our estimated effective tax rate.

Previous wording

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $220.2 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S. government securities, treasury bills, corporate notes and bonds, commercial paper, asset-backed securities and money market funds. As of June 30, 2024, we had working capital of $39.4 million.

Current wording

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $170.3 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S. government securities, treasury bills, corporate notes and bonds, commercial paper, and money market funds. As of September 30, 2024, we had working capital of $(2.0) million, down from $39.4 million as of June 30, 2024. The decrease was driven by purchases of long-term investments in third-quarter 2024.

Previous wording

Historically, we have funded our operations primarily through cash generated from operations and by issuing equity securities, convertible-debt offerings and/or borrowing under our prior senior credit facility. In 2023, our principal uses of cash were increases in our inventory balance, our acquisition of Voyantic Oy and capital expenditures.

Current wording

Historically, we have funded our operations primarily through cash generated from operations and by issuing equity securities, convertible-debt offerings and/or borrowing under our prior senior credit facility.

Previous wording

For the six months ended June 30, 2024, we generated $105.6 million of net cash from operating activities. These net cash proceeds were due primarily to $78.4 million of net income adjusted for non-cash items and $27.2 million in working capital due primarily to lower inventory.

Current wording

For the nine months ended September 30, 2024, we generated $115.7 million of net cash from operating activities. These net cash proceeds were due primarily to $96.9 million of net income adjusted for non-cash items and $18.8 million in working capital due primarily to higher accounts payable, accrued compensation and lower inventory, partially offset by higher accounts receivable.

Previous wording

For the six months ended June 30, 2023, we used $49.1 million of net cash from operating activities. This net cash usage was due primarily to $65.2 million in working capital due primarily to higher inventory and accounts receivable offset by higher accounts payable and $16.1 million of net loss adjusted for non-cash items.

Current wording

For the nine months ended September 30, 2023, we used $50.8 million of net cash from operating activities. This net cash usage was due primarily to $67.0 million in working capital due primarily to higher inventory and lower accounts payable and $16.2 million of net loss adjusted for non-cash items.

Previous wording

For the six months ended June 30, 2024, we generated $5.5 million of net cash from investing activities. These net cash proceeds were due primarily to investment maturities of $13.0 million, partially offset by cash paid for equipment purchases of $7.6 million.

Current wording

For the nine months ended September 30, 2024, we used $148.7 million of net cash from investing activities. This net cash usage was due to purchases of investments of $154.3 million, cash paid for equipment purchases of $13.0 million, partially offset by cash generated by investment maturities of $18.6 million.

Previous wording

For the six months ended June 30, 2023, we generated $69.0 million of net cash from investing activities. These net cash proceeds were due primarily to investment maturities of $92.4 million and investment sales of $13.4 million, respectively, partially offset by cash paid for the Voyantic Oy acquisition of $23.4 million and net property and equipment purchases of $13.2 million.

Current wording

For the nine months ended September 30, 2023, we generated $101.5 million of net cash from investing activities. These net cash proceeds were due primarily to investment maturities of $127.5 million and investment sales of $13.4 million, partially offset by cash paid for the Voyantic Oy acquisition of $23.4 million and net property and equipment purchases of $16.0 million.

Previous wording

For the six months ended June 30, 2024, we generated $8.8 million of net cash from financing activities. These net cash proceeds were due to stock-option exercises and our employee stock purchase plan, offset by $4.6 million of cash paid for the earnout payment related to the Voyantic Oy acquisition.

Current wording

For the nine months ended September 30, 2024, we generated $11.9 million of net cash from financing activities. These net cash proceeds were due to stock-option exercises and our employee stock purchase plan, offset by $4.6 million of cash paid for the earnout payment related to the Voyantic Oy acquisition.

Previous wording

For the six months ended June 30, 2023, we generated $5.8 million of net cash from financing activities. These net cash proceeds were due primarily to $5.8 million from stock-option exercises and our employee stock purchase plan.

Current wording

For the nine months ended September 30, 2023, we generated $7.9 million of net cash from financing activities. These net cash proceeds were due primarily to $7.9 million from stock-option exercises and our employee stock purchase plan.

Previous wording

Our primary cash requirements are for operating expenses and capital expenditures. Our operating expenses have generally increased as we invest in sales and marketing and in developing products and technologies that we believe have the potential to drive long-term business growth.

Current wording

Our primary cash requirements are for operating expenses and capital expenditures. Our operating expenses have generally increased as we invest in developing products and technologies that we believe have the potential to drive long-term business growth.

Previous wording

Purchase Commitments – Purchase commitments as of June 30, 2024 total $27.8 million and comprise noncancelable commitments to purchase inventory.

Current wording

Purchase Commitments – Purchase commitments as of September 30, 2024 total $32.9 million and comprise noncancelable commitments to purchase inventory.