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Impinj(PI) - 2024 Q3 - Earnings Call Transcript
PIImpinj(PI)2024-10-24 02:21
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Financial Data and Key Metrics Changes - Third quarter revenue was 95.2million,down795.2 million, down 7% sequentially from 102.5 million in Q2 2024, and up 46% year-over-year from 65millioninQ32023[9]−ThirdquarteradjustedEBITDAwas65 million in Q3 2023 [9] - Third quarter adjusted EBITDA was 17.3 million, compared to 26.8millioninQ22024and26.8 million in Q2 2024 and 300,000 in Q3 2023, with an adjusted EBITDA margin of 18.2% [12] - Third quarter GAAP net income was 200,000,whilenon−GAAPnetincomewas200,000, while non-GAAP net income was 16.9 million or 0.56pershareonafullydilutedbasis[12]BusinessLineDataandKeyMetricsChanges−ThirdquarterendpointICrevenuewas0.56 per share on a fully diluted basis [12] Business Line Data and Key Metrics Changes - Third quarter endpoint IC revenue was 81 million, down 9% sequentially from 89.4millioninQ22024,andup6789.4 million in Q2 2024, and up 67% year-over-year from 48.6 million in Q3 2023 [9] - Third quarter Systems revenue was 14.2million,up914.2 million, up 9% sequentially from 13.1 million in Q2 2024, but down 13% year-over-year from 16.4millioninQ32023[10]MarketDataandKeyMetricsChanges−EndpointICproductrevenueexceededexpectations,withunitvolumessettinganewquarterlyrecordasparcelshippersandretailerspreparedfortheholidayseason[5]−ThecompanyexpectsendpointICrevenuetodeclinemodestlyinQ4duetotypicalseasonaltrends,partiallyoffsetbymarketstrength[6]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedoninvestinginenterprisesolutions,includingsoftwareandcloudservices,whichareseenaskeytolong−termsuccess[7]−Thecompanyremainsoptimisticaboutthefoodtaggingmarket,viewingitasasignificantlylargeropportunitythancurrentmarkets[7][8]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedconfidenceincontinuedsecularendpointICgrowthandcategoryexpansion,withastrongpipelineofenterpriseaccounts[9]−Themanagementhighlightedtheimportanceofauthenticationandsecurityinthemarket,indicatinganeedforincreasedeffortsintheseareas[64]OtherImportantInformation−ThecompanyendedQ3withcash,cashequivalents,andinvestmentsof16.4 million in Q3 2023 [10] Market Data and Key Metrics Changes - Endpoint IC product revenue exceeded expectations, with unit volumes setting a new quarterly record as parcel shippers and retailers prepared for the holiday season [5] - The company expects endpoint IC revenue to decline modestly in Q4 due to typical seasonal trends, partially offset by market strength [6] Company Strategy and Development Direction - The company is focused on investing in enterprise solutions, including software and cloud services, which are seen as key to long-term success [7] - The company remains optimistic about the food tagging market, viewing it as a significantly larger opportunity than current markets [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued secular endpoint IC growth and category expansion, with a strong pipeline of enterprise accounts [9] - The management highlighted the importance of authentication and security in the market, indicating a need for increased efforts in these areas [64] Other Important Information - The company ended Q3 with cash, cash equivalents, and investments of 227.4 million, up from $220.2 million in Q2 2024 [12] - Third quarter gross margin was 52.4%, compared to 58.2% in Q2 2024, with expectations for sequential improvement in Q4 [10][11] Q&A Session Summary Question: Systems business outlook for Q4 - Management expects fourth quarter Systems revenue to increase sequentially due to seasonal strength and ongoing deployments from a visionary European retailer [16][17] Question: Food tagging opportunity - Management highlighted strong positioning in the food market, with significant opportunities in quick-serve restaurants and grocery stores [18][19] Question: Drivers of September quarter results - Management noted broad-based industry adoption across supply-chain, logistics, retail, and apparel sectors as key drivers of strong results [22][23] Question: Qualcomm partnership implications - Management discussed the positive impact of Qualcomm's public statement on RAIN technology, enhancing its position as a data carrier for digital product passports [28][29] Question: M800 certification update - Two major inlay partners have received certification for the M800, with expectations for more certifications soon, indicating a healthy ramp for the product [43][44] Question: Authentication opportunity in Asia - Management indicated that the authentication opportunity is critical for future growth, with ongoing replenishments expected in Q4 [63][64]