IMPINJ INC

Previous wording

Our mission is to connect every thing. We have enabled connectivity for more than 150 billion items to date, delivering item visibility, traceability and improved operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.

Current wording

Our mission is to connect every thing. We have enabled connectivity for more than 160 billion items to date, delivering item visibility, traceability and improved operational efficiencies for retailers, supply chain and logistics, or SC&L providers, grocers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.

Previous wording

We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon radios, reading systems, tag production systems and intellectual property. We also offer software and cloud services, and while nascent from a standalone revenue perspective, they enable our other product offerings and we intend to expand them as a part of our growth strategy. We sell two types of silicon radios. The first are endpoint ICs that store a serialized number to wirelessly identify an item. Our partners embed endpoint ICs into an item or its packaging. These ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in embedded or finished readers to wirelessly discover, inventory and engage the endpoint ICs. Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our reading systems comprise high-performance finished readers and gateways used primarily in autonomous reading solutions. Our tag production systems enable partner products and facilitate enterprise deployments. Our software and cloud service offerings focus on solutions enablement, particularly for key enterprise customers.

Current wording

We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon radios, reading systems, label production systems and intellectual property. We also offer software and cloud services, and while nascent from a standalone revenue perspective, they enable our other product offerings, and we intend to expand them as a part of our growth strategy. We sell two types of silicon radios. The first are endpoint ICs that store a serialized number to wirelessly identify an item. Our partners embed endpoint ICs into an item or its packaging. These ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in embedded or finished readers to wirelessly discover, inventory and engage the endpoint ICs. Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our reading systems comprise high-performance finished readers and gateways used primarily in autonomous reading solutions. Our label production systems enable partner products and facilitate enterprise deployments. Our software and cloud service offerings focus on solutions enablement, particularly for key enterprise customers.

Previous wording

We are subject to impacts from the evolving macroeconomic environment, including uncertainty and volatility in trade measures and tariffs, as well as military conflicts or blockades, inflation and geopolitical tensions. Because most of our revenue derives from endpoint ICs that our partners embed into or onto items, to the extent that those items are impacted, positively or negatively, by trade measures, tariffs and inflation, we are impacted as well. While the impact that recent trade measures, military conflicts or blockades, inflation and geopolitical tensions will have on our business and financial results is difficult to predict, they could negatively affect our business and financial results. We continue to monitor the broader impacts of these measures on our business, our supply chain and our results of operations. See risk factors “Changes in global trade policies could have a material adverse effect on us.” and “Instability or deterioration in the political, legal, social, business or economic conditions in the U.S. or in key jurisdictions could harm our business.” in Part II, Item 1A. of this report for further information.

Current wording

We are subject to impacts from the evolving macroeconomic environment, including uncertainty and volatility from trade measures and tariffs, military conflicts or blockades, inflation and geopolitical tensions. Because most of our revenue derives from endpoint ICs that our partners embed into or onto items, to the extent that those items are impacted, positively or negatively, by the macroeconomic environment, we are impacted as well. While the impact that the macroeconomic environment may have on our business and financial results is difficult to predict, any or all of these above factors could negatively affect our business and financial results. We continue to monitor the broader impacts of the macroeconomic situation on our business, our supply chain and our results of operations. See risk factors “Changes in global trade policies could have a material adverse effect on us.” and “Geopolitical disruptions could impact our product supply, ability to sell and/or customer or market demand.” in Part II, Item 1A. of this report for further information.

Previous wording

We sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to actual enterprise demand. Although we work closely with those partners and distributors to gain as accurate a view as possible, correctly forecasting demand for our products and identifying market shifts in a timely manner remains a challenge. This challenge can be exacerbated when major end users adjust the mix of inlay providers from which they procure inlays incorporating our endpoint ICs.

Current wording

We sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to actual enterprise demand. Although we work closely with those partners and distributors to gain as accurate a view of that demand as possible, correctly forecasting demand and identifying market shifts in a timely manner remains a challenge. This challenge can be exacerbated when major end users adjust the mix of label providers from which they procure labels incorporating our endpoint ICs.

Previous wording

In 2021 and 2022, demand for our endpoint ICs increased while worldwide wafer demand also increased, leading to wafer shortfalls for many semiconductor companies, including us. These wafer shortfalls prevented us from fully meeting customer demand and, in some cases, caused customers to cancel orders, qualify alternative suppliers or purchase from our competitors. In 2023, macroeconomic conditions led to softness in demand and inventory overages.

Current wording

We also sometimes experience inventory overages or shortages. Inventory overages can increase expenses, expose us to product obsolescence and/or increased reserves and negatively affect our business. Inventory shortages can cause long lead times, missed opportunities, market-share losses and/or damaged customer relationships, also negatively affecting our business. For example, in 2023, macroeconomic conditions led to softness in demand and inventory overages. As another example, in 2021 and 2022, demand for our endpoint ICs increased while worldwide wafer demand also increased, leading to wafer shortfalls for many semiconductor companies, including us. These wafer shortfalls prevented us from fully meeting customer demand and, in some cases, caused customers to cancel orders, qualify alternative suppliers or purchase from our competitors.

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 did not see it at a comparable percentage in 2022 to 2025, or in the first quarter of fiscal year 2026.

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. 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 comparable percentages for any annual or quarterly periods since the periods noted above.

Previous wording

We typically negotiate pricing with most of our endpoint IC OEMs with an effective date of the first quarter of the calendar year. In the past, this negotiation typically resulted in reduced revenue and gross margins in the first quarter compared to prior periods, which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products.

Current wording

We typically negotiate pricing with most of our endpoint IC OEMs with an effective date of the first quarter of the calendar year. In the past, this negotiation typically resulted in reduced revenue and gross margins in the first quarter compared to prior periods, which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products. Recently, and significantly due to increasing worldwide semiconductor demand, many of our vendors and subcontractors have either increased prices, signaled future price increases or both. In response, we have notified our customers of modest, impending product price increases. If we are unable to successfully increase our prices or if our customers choose competitors' products due to our higher prices, then our product margins, operating results or both may suffer.

Previous wording

Endpoint IC volumes tend to be lower in the fourth quarter than in the third quarter. System sales tend to be higher in the fourth quarter and lower in the first quarter, we believe due to the availability of residual funding for capital expenditures prior to the end of many end users’ fiscal years.

Current wording

Endpoint IC volumes tend to be lower in the fourth quarter than in the third quarter. System sales tend to be higher in the fourth quarter and lower in the first quarter, we believe due to the availability of residual funding for capital expenditures prior to the end of many end users’ fiscal years. We saw these seasonal trends in second-half 2024 and in 2025.

Previous wording

We saw these seasonal trends in second-half 2024 and in 2025. We expect continued 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. These factors, among others, may impact seasonal trends.

Current wording

We also see 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. These factors, among others, may impact the seasonal trends.

Previous wording

Revenue and gross profit decreased, due primarily to decreased systems revenue partially offset by higher endpoint IC revenue. The systems revenue decrease was driven primarily by decreased shipment volumes while the endpoint IC revenue increase was driven primarily by increased shipment volumes. Gross margin decreased due to high indirect costs in the period partially offset by higher endpoint IC gross margin due to product mix. Loss from operations increased, due primarily to decreased revenue and increased operating expenses. The operating expense increase was due primarily to higher research and development and sales and marketing costs.

Current wording

Revenue and gross profit increased, due primarily to increased endpoint IC revenue partially offset by decreased systems revenue. The endpoint IC revenue increase was driven primarily by increased shipment volumes while the systems revenue decrease was driven primarily by decreased gateway revenue. Gross margin increased from higher endpoint IC gross margin due to product mix. Income from operations decreased slightly, due primarily to increased operating expenses. The operating expense increase was due to higher research and development, sales and marketing and general and administrative costs.

Previous wording

We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, tag production systems and licensing. We sell our endpoint ICs and tag production systems primarily to inlay manufacturers; our reader ICs primarily to OEMs and ODMs through distributors; and our readers and gateways to solutions providers, VARs and SIs, also primarily through distributors. We expect endpoint IC sales to represent the majority of our revenue for the foreseeable future.

Current wording

We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, label production systems and licensing. We sell our endpoint ICs and label production systems primarily to inlay manufacturers; our reader ICs primarily to OEMs and ODMs through distributors; and our readers and gateways to solutions providers, VARs and SIs, also primarily through distributors. We expect endpoint IC sales to represent the majority of our revenue for the foreseeable future.

Previous wording

Endpoint IC revenue increased $2.0 million, due to a $7.9 million increase in shipment volumes offset by a $5.9 million decrease from lower ASP due to product mix and new customer pricing that went into effect at the beginning of the year.

Current wording

Endpoint IC revenue increased $11.8 million, due to a $16.0 million increase in shipment volumes and a $1.0 million increase in licensing revenue, partially offset by a $5.2 million decrease from lower ASP from product mix and new customer pricing that went into effect at the beginning of the year.

Previous wording

Systems revenue decreased $2.0 million due primarily to a decrease in shipment volumes. Reader IC revenue decreased $2.6 million and gateway revenue decreased $1.1 million. These decreases were partially offset by an increase of $0.8 million in reader revenue and $0.6 million in tag production systems revenue.

Current wording

Systems revenue decreased $1.3 million primarily due to a $1.2 million decrease in gateway revenue and a $0.8 million decrease in label production systems revenue. These decreases were partially offset by a $0.4 million increase in reader revenue.

Previous wording

Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and tag production systems, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as logistics, quality control, planning and procurement. Cost of revenue also includes charges for excess and obsolescence and warranty costs. Our gross margin varies from period to period based on the mix of endpoint IC and systems; underlying product margins driven by changes in mix, ASPs or costs; as well as from inventory excess and obsolescence charges.

Current wording

Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and label production systems, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as logistics, quality control, planning and procurement. Cost of revenue also includes charges for excess and obsolescence and warranty costs. Our gross margin varies from period to period based on the endpoint IC and systems revenue mix; underlying product margins driven by changes in product mix, ASPs or costs; as well as from inventory excess and obsolescence charges.

Previous wording

Sales and marketing expense increased $1.7 million, due primarily to an increase of $2.1 million in stock-based compensation expense related to lower expense in the prior-year period from the retirement of our Chief Revenue Officer. This increase is partially offset by a decrease of $0.4 million in personnel expenses.

Current wording

Sales and marketing expense increased $2.8 million, due to an increase of $2.8 million in stock-based compensation expense related to lower expense in the prior-year period from the retirement of our Chief Revenue Officer.

Previous wording

Research and development expense increased $3.4 million, due primarily to increases of $2.6 million in personnel expenses due to higher headcount, an increase of $0.6 million in infrastructure costs and an increase of $0.2 million in stock-based compensation expense, primarily related to increased outstanding equity grants.

Current wording

General and administrative expense increased $1.8 million, due primarily to an increase of $0.9 million in stock-based compensation expense, primarily related to increased outstanding equity grants, an increase of $0.6 million in professional service costs and an increase of $0.2 million in infrastructure costs.

Previous wording

Other income, net, increased $0.6 million, due to increased interest income given higher invested balances.

Current wording

Other income, net, increased $0.2 million, due to increased interest income given higher invested balances.

Previous wording

Interest expense decreased by $0.5 million, due primarily to decreased interest on our convertible debt, primarily from the 2021 Note Exchange transaction, which was completed in September 2025.

Current wording

Interest expense decreased by $0.6 million, due primarily to decreased interest on our convertible debt, primarily from the 2021 Note Exchange transaction, which was completed in September 2025 and the 2021 Note Repurchase, which was completed in March 2026.

Previous wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax expense increased $0.3 million for the three months ended March 31, 2026, compared to the prior-year period, due to changes in effective tax rates for each period.

Current wording

We are subject to federal and state income taxes in the United States and foreign jurisdictions. Income tax benefit increased $0.2 million for the three months ended June 30, 2026 and decreased $0.1 million for the six months ended June 30, 2026 compared to the prior-year periods, due to changes in effective tax rates for each period.

Previous wording

As of March 31, 2026, we had cash, cash equivalents and short-term investments of $131.8 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, 2026, we had working capital of $266.5 million.

Current wording

As of June 30, 2026, we had cash, cash equivalents and short-term investments of $133.0 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, 2026, we had working capital of $211.6 million.

Previous wording

For the three months ended March 31, 2026, we generated $4.0 million of net cash proceeds from operating activities. These net cash proceeds were due primarily to $5.4 million of net income adjusted for non-cash items, partially offset by a $1.5 million decrease in working capital due primarily to higher inventory and accounts receivable, partially offset by higher accounts payable.

Current wording

For the six months ended June 30, 2026, we generated $35.6 million of net cash proceeds from operating activities. These net cash proceeds were due primarily to $38.1 million of net income adjusted for non-cash items, partially offset by a $2.5 million decrease in working capital due primarily to higher inventory, partially offset by higher accounts payable and accrued compensation and employee related benefits.

Previous wording

For the three months ended March 31, 2026, we generated $25.7 million of net cash proceeds from investing activities. These net cash proceeds were due to investment maturities of $48.7 million, partially offset by investment purchases of $21.2 million and equipment purchases of $1.7 million.

Current wording

For the six months ended June 30, 2026, we generated $0.5 million of net cash proceeds from investing activities. These net cash proceeds were due to investment maturities of $90.6 million, partially offset by investment purchases of $85.9 million and equipment purchases of $4.2 million.

Previous wording

For the three months ended March 31, 2026, we used $45.6 million of net cash from financing activities to purchase a portion of our 2021 Notes for $47.0 million and pay $1.6 million in taxes to cover RSU vesting, partially offset by proceeds of $3.0 million from stock-option exercises and our employee stock purchase plan.

Current wording

For the six months ended June 30, 2026, we used $45.6 million of net cash from financing activities to purchase a portion of our 2021 Notes for $47.0 million and pay $1.8 million in taxes to cover RSU vesting, partially offset by proceeds of $3.2 million from stock-option exercises and our employee stock purchase plan.

Previous wording

Purchase Commitments – Purchase commitments as of March 31, 2026 total $41.7 million and consist primarily of noncancelable commitments to purchase inventory.

Current wording

Purchase Commitments – Purchase commitments as of June 30, 2026 total $35.8 million and consist primarily of noncancelable commitments to purchase inventory.