Impinj(PI) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue reached $85.9 million, a 12$76.6 million in the fourth quarter of 2022 and a 62% year-over-year increase from $53.1 million in the first quarter of 2022 [31] - First quarter adjusted EBITDA was$8.6 million, down from $11.8 million in the fourth quarter of 2022 but up from$3.5 million in the first quarter of 2022 [8] - First quarter GAAP net loss was $4.4 million, while non-GAAP net income was$8.7 million, or $0.30 per share on a fully diluted basis [8] Business Line Data and Key Metrics Changes - First quarter systems revenue was$18.8 million, up 6% sequentially from $17.9 million in the fourth quarter of 2022 and up 31$14.3 million in the first quarter of 2022 [7] - First quarter endpoint IC revenue was $67 million, a 14$58.7 million in the fourth quarter of 2022 and a 73% year-over-year increase from $38.8 million in the first quarter of 2022 [100] - First quarter gross margin was 52.4$84 million and $87 million, reflecting a 43$59.8 million in the second quarter of 2022 [35] - The backlog remains strong, significantly exceeding current inventory levels, indicating robust demand for future growth [76] Company Strategy and Development Direction - The acquisition of Voyantic aims to enhance the quality, reliability, and readability of inlays used in enterprise deployments, expanding the company's solutions footprint [6][41] - The company is focused on driving growth through enterprise program expansions and new use cases, particularly in retail and supply chain logistics [28][85] - The company anticipates that the second half of 2023 will see improved supply and demand balance, leading to growth in endpoint IC revenue [99][63] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are delays in enterprise deployments, demand remains strong, and the backlog is healthy, suggesting a pause in growth rather than a decline [37][97] - The company expects to see significant endpoint IC growth for the full year, despite a flat second quarter due to timing issues with large deployments [13][63] - Management expressed confidence in overcoming past supply chain challenges and achieving a sustainable inventory level to support growth [70][124] Other Important Information - The company ended the first quarter with cash, cash equivalents, and investments totaling $164.7 million, down from$192.9 million in the fourth quarter of 2022 [109] - The company is building inventory to support growth expectations and to avoid past supply shortfalls [70][71] Q&A Session Summary Question: How would you characterize the end demand? - Management indicated that end user demand remains strong, with no significant pullbacks observed, although some deployments are delayed due to supply chain challenges [12][37] Question: Is the company still positioned for 25% to 30% growth? - Management affirmed that they see robust full-year endpoint IC growth and do not anticipate changes to the historical CAGR of 25% to 30% [13] Question: What is the impact of the Voyantic acquisition? - The acquisition is expected to enhance revenue and gross margin, contributing positively to the systems line [9][84] Question: What are the expectations for operating expenses in the second half of the year? - Management expects operating expenses to decline in the second quarter and remain below the first half run rate in the second half of the year [46][47] Question: How is the pipeline for systems opportunities? - The systems pipeline remains strong, with significant opportunities in retail and supply chain logistics, and management expects second half revenue to exceed the first half [60][85]