Impinj Announces Third Quarter 2016 Financial Results

SEATTLE, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Impinj, Inc. (NASDAQ:PI), a leading provider and pioneer of RAIN RFID solutions for identifying, locating and authenticating everyday items, today announced its financial results for the third quarter ended Sept. 30, 2016.

"We delivered a strong third quarter, exceeding our revenue and earnings guidance. Revenue in the quarter grew 50% year-over-year to reach a record $31.0 million, driven primarily by accelerating demand for our endpoint ICs, followed by growing demand for our connectivity products. We view endpoint IC volumes as an indicator of market adoption and are excited by the broad-based demand we saw this quarter," said Chris Diorio, Impinj co-founder and CEO. "We will continue investing in this massive market opportunity to enhance our leading market position and foster adoption of our platform."

Third Quarter Financial Summary
  • Revenue grew 50% year-over-year to $31.0 million
  • GAAP gross margin of 52.8%; non-GAAP gross margin of 53.6%
  • GAAP net income of $0.8 million; GAAP net income attributable to common shareholders of $0.2 million, or income of $0.01 per diluted share using 16.9 million shares
  • Adjusted EBITDA of $2.2 million
  • Non-GAAP net income of $1.9 million, or $0.10 per diluted share using 18.6 million shares

A reconciliation between historical GAAP and non-GAAP information, including weighted average basic and diluted shares, is contained in the tables below. Additionally, descriptions of these non-GAAP financial measures are provided in the "Non-GAAP Financial Measures" section below.

Fourth Quarter 2016 Financial Outlook

Impinj provides guidance based on current market conditions and expectations; actual results may differ materially. Please refer to the comments below regarding forward-looking statements. For the fourth quarter of 2016, Impinj currently expects:
  • Revenue in the range of $31.5 million to $33.0 million
  • Adjusted EBITDA in the range of $0.75 million to $2.25 million
  • Non-GAAP net income in the range of $0.75 million to $2.25 million, and non-GAAP diluted earnings per share in the range of $0.04 and $0.11 using approximately 20.2 million shares

All forward-looking non-GAAP financial measures in this section titled "Fourth Quarter 2016 Financial Outlook" exclude non-cash income and expenses. Impinj has not reconciled guidance for these non-GAAP measures to their most directly comparable GAAP measures because some items that impact these measures are either not within our control or not reasonably predictable, at least not without unreasonable effort.

Conference Call Information

Impinj will host a conference call and webcast today, Nov. 3, 2016 at 4:30 p.m. ET / 1:30 p.m. PT for analysts and investors to discuss the company's third quarter results and outlook for the fourth quarter of 2016. Open to the public, investors may access the call by dialing +1-412-317-6060. A live webcast of the conference call will also be accessible on the company's website at investor.impinj.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 10094192.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the market for RAIN RFID, our strategy, prospects, and our financial outlook for the fourth quarter of 2016. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Form 10-Q filed with the SEC on September 2, 2016. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which we have prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we use the following non-GAAP financial measures: non-GAAP gross margin, net income and earnings per share and Adjusted EBITDA. In computing these non-GAAP financial measures, we exclude the effects of stock-based compensation expense, depreciation and amortization, non-cash interest and other income/expense, and non-cash income tax expense not considered to be indicative of our ongoing core business operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain income, expenses and expenditures that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance. Our presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures" included at the end of this release.

About Impinj

Impinj (NASDAQ:PI) is a leading provider of RAIN RFID solutions. The Impinj Platform connects billions of everyday items such as apparel, medical supplies, automobile parts, drivers' licenses, food and luggage to applications such as inventory management, patient safety, asset tracking and item authentication, delivering real-time information to businesses about items they create, manage, transport and sell. The Impinj Platform wirelessly delivers information about these items' unique identity, location and authenticity, or Item Intelligence™, to the digital world, which Impinj believes is the essence of the Internet of Things.

IMPINJ, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value, unaudited)
 
      September   30,     December   31,  
    2016     2015  
Assets:                
Current assets:                
Cash and cash equivalents   $ 47,935     $ 10,121  
Short-term investments     14,063        
Accounts receivable, net     17,531       12,889  
Inventory     20,486       11,837  
Prepaid expenses and other current assets     1,628       1,095  
Total current assets     101,643       35,942  
Property and equipment, net     13,303       12,351  
Other non-current assets           637  
Goodwill     3,881       3,881  
Other intangible assets, net           37  
Total assets   $ 118,827     $ 52,848  
Liabilities, redeemable convertible preferred stock and stockholders' equity   (deficit):                
Current liabilities:                
Accounts payable   $ 3,540     $ 3,182  
Accrued compensation and employee related benefits     5,374       4,038  
Accrued liabilities     4,337       2,895  
Current portion of long-term debt     1,419       5,227  
Current portion of capital lease obligations     1,103       1,190  
Current portion of deferred rent     227       258  
Current portion of deferred revenue     413       684  
Total current liabilities     16,413       17,474  
Long-term debt, net of current portion     9,991       10,683  
Capital lease obligations, net of current portion     1,842       2,526  
Long-term liabilities—other     747       678  
Warrant liability           2,865  
Deferred rent, net of current portion     5,094       4,984  
Deferred revenue, net of current portion     954       710  
Total liabilities     35,041       39,920  
Commitment and contingencies                
Redeemable convertible preferred stock, $0.001 par value                
Series 1: none authorized and issued at September 30, 2016; 5,334 shares  authorized, issued and outstanding at December 31, 2015           60,184  
Series 2: none authorized and issued at September 30, 2016; 2,979 shares  authorized and 2,557 shares issued and outstanding at December 31, 2015           37,779  
Total redeemable convertible preferred stock           97,963  
Stockholders' equity (deficit):                
Common stock, $0.001 par value, 495,000 shares authorized; 18,780 and 4,382  shares issued and outstanding at September 30, 2016 and December 31, 2015,  respectively     18       4  
Additional paid-in capital     271,074       100,276  
Accumulated deficit     (187,306 )     (185,315 )
Total stockholders' equity (deficit)     83,786       (85,035 )
Total liabilities, redeemable convertible preferred stock and stockholders'  equity (deficit)   $ 118,827     $ 52,848  

IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
 
      Three Months Ended     Nine Months Ended  
    September   30,     September   30,  
    2016     2015     2016     2015  
Revenue:                                
Product revenue   $ 30,889     $ 20,299     $ 78,302     $ 55,165  
Development, service and licensing revenue     124       365       330       687  
Total revenue     31,013       20,664       78,632       55,852  
Cost of revenue:                                
Cost of product revenue     14,574       9,988       37,408       26,889  
Cost of development, service and licensing revenue     64       60       159       156  
Total cost of revenue     14,638       10,048       37,567       27,045  
Gross profit     16,375       10,616       41,065       28,807  
Operating expenses:                                
Research and development     6,622       4,304       17,782       12,488  
Sales and marketing     5,584       3,772       15,902       10,151  
General and administrative     3,356       1,938       8,214       5,089  
Total operating expenses     15,562       10,014       41,898       27,728  
Income (loss) from operations     813       602       (833 )     1,079  
Interest income (expense) and other income (expense), net                                
Interest expense     (345 )     (297 )     (1,322 )     (742 )
Interest income and other income (expense), net     383       (263 )     477       (177 )
Total interest income (expense) and other income  (expense), net     38       (560 )     (845 )     (919 )
Income (loss) before tax expense     851       42       (1,678 )     160  
Income tax expense     (43 )     (29 )     (98 )     (78 )
Net income (loss)   $ 808     $ 13     $ (1,776 )   $ 82  
Less: Accretion of preferred stock     (608 )     (2,826 )     (6,258 )     (8,476 )
Net income (loss) attributable to common stockholders —  basic and diluted   $ 200     $ (2,813 )   $ (8,034 )   $ (8,394 )
Net income (loss) per share attributable to common  stockholders — basic and diluted   $ 0.01     $ (0.72 )   $ (1.01 )   $ (2.20 )
Weighted-average shares used to compute net income  (loss) per share attributable to common stockholders:                                
Basic     15,318       3,904       7,991       3,813  
Diluted     16,859       3,904       7,991       3,813  

IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
      Nine Months Ended  
    September   30,  
    2016     2015  
Operating activities:                
Net income (loss)   $ (1,776 )   $ 82  
Adjustment to reconcile net income (loss) to net cash provided  by (used in) operating activities:                
Depreciation and amortization     2,143       1,282  
Amortization and write-off of debt issuance costs     220       96  
Revaluation of warrant liability     (559 )     177  
Stock-based compensation     1,417       885  
Changes in operating assets and liabilities:                
Accounts receivable     (4,617 )     (2,703 )
Inventory     (8,649 )     (4,254 )
Prepaid expenses and other assets     (479 )     (218 )
Deferred revenue     (27 )     (318 )
Deferred rent     79       (510 )
Accounts payable     377       217  
Accrued compensation and benefits     1,118       1,285  
Accrued liabilities     1,254       165  
Net cash provided by (used in) operating activities     (9,499 )     (3,814 )
Investing activities:                
Purchases of investments     (14,116 )      
Purchases of property and equipment     (2,327 )     (2,639 )
Net cash used in investing activities     (16,443 )     (2,639 )
Financing activities:                
Proceeds from initial public offering, net of offering costs     68,808        
Payments on capital lease financing obligations     (954 )     (550 )
Payments on term loans     (65,233 )     (2,040 )
Proceeds from term loans     60,517       12,021  
Proceeds from issuance of common stock upon exercise of stock options     556       344  
Proceeds from issuance of preferred stock upon exercise of warrants     62        
Payments of deferred offering costs           (59 )
Net cash provided by (used in) financing activities     63,756       9,716  
Net increase (decrease) in cash and cash equivalents     37,814       3,263  
Cash and cash equivalents                
Beginning of period     10,121       6,939  
End of period   $ 47,935     $ 10,202  

IMPINJ, INC.
RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in thousands, except percentages, unaudited)
 
    Three Months Ended     Nine Months Ended  
    September   30,     September   30,  
    2016     2015     2016     2015  
GAAP Gross Profit   $ 16,375     $ 10,616     $ 41,065     $ 28,807  
Adjustments:                                
Depreciation and amortization   225     232     778     687  
Stock-based compensation   28     5     39     26  
Non-GAAP Gross Profit   $ 16,628     $ 10,853     $ 41,882     $ 29,520  
                                 
GAAP Gross Margin     52.8 %     51.4 %     52.2 %     51.6 %
Adjustments:                                
Depreciation and amortization     0.7 %     1.1 %     1.0 %     1.2 %
Stock-based compensation     0.1 %     0.0 %     0.0 %     0.0 %
Non-GAAP Gross Margin     53.6 %     52.5 %     53.2 %     52.8 %
                                 
GAAP Research and development expense   $ 6,622     $ 4,304     $ 17,782     $ 12,488  
Adjustments:                                
Depreciation and amortization     (278 )     (116 )     (841 )     (324 )
Stock-based compensation     (282 )     (57 )     (416 )     (241 )
Non-GAAP Research and development expense   $ 6,062     $ 4,131     $ 16,525     $ 11,923  
                                 
GAAP Sales and marketing expense   $ 5,584     $ 3,772     $ 15,902     $ 10,151  
Adjustments:                                
Depreciation and amortization     (106 )     (70 )     (367 )     (199 )
Stock-based compensation     (343 )     (190 )     (754 )     (507 )
Non-GAAP Sales and marketing expense   $ 5,135     $ 3,512     $ 14,781     $ 9,445  
                                 
GAAP General and administrative expense   $ 3,356     $ 1,938     $ 8,214     $ 5,089  
Adjustments:                                
Depreciation and amortization     (50 )     (25 )     (157 )     (72 )
Stock-based compensation     (102 )     (33 )     (208 )     (111 )
Non-GAAP General and administrative expense   $ 3,204     $ 1,880     $ 7,849     $ 4,906  
                                 
GAAP Total operating expense   $ 15,562     $ 10,014     $ 41,898     $ 27,728  
Adjustments:                                
Depreciation and amortization     (434 )     (211 )     (1,365 )     (595 )
Stock-based compensation     (727 )     (280 )     (1,378 )     (859 )
Non-GAAP Total operating expense   $ 14,401     $ 9,523     $ 39,155     $ 26,274  
                                 
GAAP Interest expense   $ (345 )   $ (297 )   $ (1,322 )   $ (742 )
Adjustments:                                
Non-cash interest expense     27       32       111       96  
Non-GAAP Interest expense   $ (318 )   $ (265 )   $ (1,211 )   $ (646 )

IMPINJ, INC.
RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data, unaudited)
 
    Three Months Ended     Nine Months Ended  
    September   30,     September   30,  
    2016     2015     2016     2015  
GAAP Interest income and other income (expense), net   $ 383     $ (263 )   $ 477     $ (177 )
Adjustments:                                
Change in the fair value of preferred stock warrant  liability     (467 )     248       (559 )     177  
Write-off of unamortized debt issuance costs     109             109        
Non-GAAP Interest income and other income (expense),  net   $ 25     $ (15 )   $ 27     $  
                                 
GAAP Income tax expense   $ (43 )   $ (29 )   $ (98 )   $ (78 )
Adjustments:                                
Non-cash income tax expense     23       23       68       68  
Non-GAAP Income tax expense   $ (20 )   $ (6 )   $ (30 )   $ (10 )
                                 
GAAP Net Income   $ 808     $ 13     $ (1,776 )   $ 82  
Adjustments:                                
Depreciation and amortization     659       443       2,143       1,282  
Stock-based compensation     755       285       1,417       885  
Interest income (expense) and other, net     (38 )     560       845       919  
Income tax expense     43       29       98       78  
Adjusted EBITDA   $ 2,227     $ 1,330     $ 2,727     $ 3,246  
                                 
GAAP Net Income   $ 808     $ 13     $ (1,776 )   $ 82  
Adjustments:                                
Depreciation and amortization     659       443       2,143       1,282  
Stock-based compensation     755       285       1,417       885  
Non-cash interest expense     27       32       111       96  
Change in the fair value of preferred stock warrant  liability     (467 )     248       (559 )     177  
Write-off of unamortized debt issuance costs     109             109       -  
Non-cash income tax expense     23       23       68       68  
Non-GAAP Net income   $ 1,914     $ 1,044     $ 1,513     $ 2,590  
Non-GAAP Net income per share:                                
Basic   $ 0.11     $ 0.08     $ 0.11     $ 0.21  
Diluted   $ 0.10     $ 0.08     $ 0.10     $ 0.19  

IMPINJ, INC.
RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
 
    Three Months Ended     Nine Months Ended  
    September   30,     September   30,  
    2016     2015     2016     2015  
Weighted-average shares used to compute GAAP net   income (loss) per share attributable to common    stockholders — basic     15,318       3,904       7,991       3,813  
Adjustments:                                
Weighted-average shares of common stock issuable upon  conversion of mandatorily redeemable convertible    preferred stock     1,762       8,522       6,258       8,522  
Weighted-average shares used to compute non-GAAP net   income per share — basic     17,080       12,426       14,249       12,335  
                                 
Weighted-average shares used to compute GAAP net   income (loss) per share attributable to common   stockholders — diluted     16,859       3,904       7,991       3,813  
Weighted-average shares of common stock issuable upon  conversion of mandatorily redeemable convertible   preferred stock     1,762       8,522       6,258       8,522  
Effects of dilutive securities                                
Warrants to purchase common stock           17       12       16  
Warrants to purchase mandatorily redeemable convertible   preferred stock           33       26        
Weighted-average unvested shares of common stock   subject to repurchase           154       141       175  
Stock Options           1,218       795       1,140  
Weighted-average shares used to compute non-GAAP net   income per share — diluted     18,621       13,848       15,223       13,666  

 
Contacts:Investor RelationsMaria Riley & Chelsea LishThe Blueshirt Groupir@impinj.com+1-206-315-4470Media RelationsErika GoodmansonSr. Director, Marketing and Communications egoodmanson@impinj.com+1-206-812-9744

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