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 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. While we continue generating project-based revenue, we have not seen it at a comparable scale in 2022 to 2024, or in first-quarter 2025.

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. While we continue generating project-based revenue, we have not seen it at a comparable scale in 2022 to 2024, or in the first half of 2025.

Previous wording

Quarter-to-quarter revenue variability due to macroeconomic conditions and program-launch timing may impact these seasonal trends in the future. In light of the 2025 macroeconomic environment, we are uncertain whether we will see these trends in 2025.

Current wording

Quarter-to-quarter revenue and gross margin variability due to macroeconomic conditions, program-launch timing and our ability to migrate OEMs and end users to newer, lower cost products may impact these seasonal trends in the future. In light of the 2025 macroeconomic environment, we are uncertain whether we will see these trends in 2025.

Previous wording

Revenue and gross profit decreased, due primarily to lower systems revenue on lower shipment volumes compared to the prior-year period. Gross margin increased, due primarily to lower indirect costs in the current-year period, partially offset by a decrease in direct product margin. Loss from operations decreased, due primarily to decreased operating expenses, partially offset by decreased gross profit. The operating expense decrease was due to lower sales and marketing costs, restructuring costs, general and administrative costs and amortization of intangibles, partially offset by increased research and development costs.

Current wording

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

Previous wording

Endpoint IC revenue decreased $0.3 million, due to a $9.3 million decrease from lower ASP due to product mix and new customer pricing that went into effect at the beginning of the year, offset by a $9.0 million increase in shipment volumes.

Current wording

Endpoint IC revenue decreased $4.8 million, due to a $8.1 million decrease from lower ASP due to product mix and new customer pricing that went into effect at the beginning of the year, offset by a $2.2 million increase in shipment volumes and a $1.0 million increase in licensing revenue.

Previous wording

Systems revenue decreased $2.3 million due primarily to a decrease in shipment volumes. Gateway revenue decreased $2.8 million and test and measurement solution revenue decreased by $1.0 million. These decreases were partially offset by increases of $1.1 million and $0.6 million in reader and reader IC revenue, respectively.

Current wording

Systems revenue decreased $2.1 million due primarily to a decrease in shipment volumes. Gateway revenue decreased $1.8 million, reader IC revenue decreased $1.6 million, and test and measurement solutions revenue decreased by $0.5 million. These decreases were partially offset by an increase of $2.0 million in reader revenue.

Previous wording

Gross profit decreased, due primarily to decreased systems revenue. Gross margin increased, due primarily to lower indirect costs in the current-year period, partially offset by a decrease in direct product margin, due to mix of endpoint IC and systems as well as product mix within endpoint IC.

Current wording

Gross profit decreased, due primarily to decreased endpoint IC and systems revenue. Gross margin increased, due primarily to endpoint IC product mix, specifically a higher contribution from M800, an increase in high-margin licensing revenue compared to the prior-year period, and lower indirect costs in the current year.

Previous wording

Research and development expense increased $2.8 million, due primarily to increases of $1.8 million in stock-based compensation expense, primarily related to increased outstanding equity grants; $0.6 million in product development costs due to timing; and $0.5 million in infrastructure costs.

Current wording

Research and development expense increased $2.5 million, due primarily to increases of $1.4 million in product development costs due to timing; $1.3 million in stock-based compensation expense, primarily related to increased outstanding equity grants; and $0.9 million in infrastructure costs. These increases were partially offset by a decrease of $1.2 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

Previous wording

Sales and marketing expense decreased $2.1 million, due primarily to a decrease of $2.1 million in stock-based compensation expense. This decrease is due primarily to forfeitures related to the company's Chief Revenue Officer retiring in the period.

Current wording

Sales and marketing expense decreased $3.2 million, due primarily to a decrease of $3.0 million in stock-based compensation expense, driven by forfeitures related to the company's Chief Revenue Officer retiring in the first quarter of fiscal year 2025 and the resulting lower ongoing expense, and a decrease of $0.4 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

Previous wording

General and administrative expense decreased $1.0 million, due primarily to a decrease of $2.2 million in professional services related to legal fees. This decrease was partially offset by increases of $1.0 million in stock compensation expense related to increased outstanding equity grants.

Current wording

General and administrative expense decreased $2.4 million, due primarily to a decrease of $2.2 million in professional services related to legal fees and a decrease of $1.0 million in personnel expenses related to lower bonus achievement compared to the prior-year period. This decrease was partially offset by an increase of $0.7 million in stock compensation expense related to increased outstanding equity grants.

Previous wording

The decrease in restructuring costs relates to the restructuring we initiated on February 7, 2024. There were no restructuring costs for the three months ended March 31, 2025. See note 11 Restructuring for further information.

Current wording

The decrease in restructuring costs relates to the restructuring we initiated on February 7, 2024. There were no restructuring costs for the six months ended June 30, 2025. See Note 11 Restructuring for further information.

Previous wording

The decrease in income from settlement of litigation is related to the litigation settlement we reached with NXP on March 13, 2024. There was no income from litigation for the three months ended March 31, 2025. See note 6 Commitments and Contingencies for further information.

Current wording

The decrease in income from settlement of litigation is related to the litigation settlement we reached with NXP on March 13, 2024. There was no income from litigation for the six months ended June 30, 2025. See Note 6 Commitments and Contingencies for further information.

Previous wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax benefit increased $0.3 million for the three months ended March 31, 2025, compared to the prior-year period due to changes in income (loss).

Current wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax expense increased $0.2 million for the three months ended June 30, 2025 and income tax benefit increased $0.1 million for the six months ended June 30, 2025, each compared to the prior-year periods, due to changes in income (loss).

Previous wording

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $147.9 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 March 31, 2025, we had working capital of $280.4 million.

Current wording

As of June 30, 2025, we had cash, cash equivalents and short-term investments of $193.2 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 and money market funds. As of June 30, 2025, we had working capital of $319.7 million.

Previous wording

For the three months ended March 31, 2025, we used $11.1 million of net cash in operating activities. This net cash usage was due primarily to $18.5 million in working capital due primarily to lower accrued compensation and accounts payable. The usage was partially offset by $7.3 million of net income adjusted for non-cash items.

Current wording

For the six months ended June 30, 2025, we generated $22.7 million of net cash proceeds from operating activities. These net cash proceeds were due primarily to $35.4 million of net income adjusted for non-cash items. partially offset by a $12.7 million decrease in working capital due primarily to higher accrued compensation and accounts payable.

Previous wording

For the three months ended March 31, 2025, we generated $5.1 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 $0.8 million taxes paid to cover RSU vesting.

Current wording

For the six months ended June 30, 2025, we generated $5.0 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 $1.8 million taxes paid to cover RSU vesting.

Previous wording

Purchase Commitments – Purchase commitments as of March 31, 2025 total $31.3 million and comprise noncancelable commitments to purchase inventory.

Current wording

Purchase Commitments – Purchase commitments as of June 30, 2025 total $29.9 million and comprise noncancelable commitments to purchase inventory.