Impinj Q4 2024 Earnings Call Transcript

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February 5, 2025

Key Takeaways

  • Impinj delivered 34% endpoint IC unit volume growth in 2024, achieving its fourth consecutive year of double-digit revenue expansion and record adjusted EBITDA and free cash flow.
  • The January launch of Gen2X and the start of item-level food tagging were cited as major market catalysts, with top reader partners deploying Gen2X and multiple enterprises piloting the platform.
  • Impinj expects Q1 revenue declines driven by excess channel inventory, geopolitical uncertainties, tariffs, aggressive price shopping, and no large program ramps in H1 2025, with endpoint IC and systems revenue forecast to fall.
  • Management highlights a robust enterprise pipeline, including two large grocery chain engagements in perishables and self-checkout that could ramp in 2026, alongside ongoing expansions in apparel, general merchandise, and logistics.
  • For Q1 2025, Impinj guides to $70–73 million revenue, adjusted EBITDA of $1.1–2.6 million, and non-GAAP EPS of $0.06–0.11, reflecting a prudent assumption of zero endpoint IC channel “turns.”
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Earnings Conference Call
Impinj Q4 2024
00:00 / 00:00

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Operator

Please note that this event is being recorded. Due to Mr. Andy Cobb's laryngitis, I would now like to turn the conference over to Ms. Tracy Moran, Senior Investor Relations Manager. Please go ahead.

Tracy Moran
Tracy Moran
Senior Manager of Investor Relations at Impinj

Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's fourth quarter and full year 2024 results. On today's call, Chris Diorio, Impinj's Co-founder and CEO, will provide a brief overview of our market opportunity and performance. Cary Baker, Impinj's CFO, will follow with a detailed review of our fourth quarter and full year 2024 financial results and first quarter 2025 outlook. We will then open the call for questions. Andy Cobb, Impinj's Vice President of Strategic Finance, will join us for the Q&A. Hussein Mecklai, who normally joins us, unfortunately has the flu, so cannot be here today. You can find management's prepared remarks, plus trended financial data on the Investor Relations section of the company's website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today.

Tracy Moran
Tracy Moran
Senior Manager of Investor Relations at Impinj

Any such statements are forward-looking under the Private Securities Litigation Reform Act of 1995. Whereas we believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties. We describe these risks and uncertainties in the annual and quarterly reports we file with the SEC. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements except as required by law. On today's call, all financial metrics except for revenue, or where we explicitly state otherwise, are non-GAAP. All balance sheet and cash flow metrics except for free cash flow are GAAP. Please refer to our earnings release for a reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics.

Tracy Moran
Tracy Moran
Senior Manager of Investor Relations at Impinj

Before turning to our results and outlook, note that we will participate in Susquehanna's 14th Annual Technology Conference on February 27 in New York, the Cantor Global Technology Conference on March 11 in New York, and the 37th Annual Roth Conference on March 18 in Dana Point. We look forward to connecting with many of you at those events. I will now turn the call over to Chris.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Thank you, Tracy, and thank you all for joining the call. 2024 marked our fourth consecutive year of double-digit revenue growth and another yearly revenue record. Underlying that growth was market strength in retail apparel, general merchandise, and supply chain and logistics. Our Endpoint IC unit volumes grew 34% over 2023. Our top-line growth, combined with strong operating leverage and our favorable litigation settlement, drove record annual adjusted EBITDA and free cash flow. 2024 also ushered in two major market catalysts. First, the start of item-level food tech. Second, Impinj Gen2X, which dramatically expands the landscape of enterprise solutions we and our partners can deliver. The long-term secular tailwinds underlying our industry remain strong, and our leadership position in it is as strong as ever. That said, we faced headwinds at the end of the fourth quarter that will spill into the first.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Geopolitical uncertainty and tariffs, end users changing label partner share allocations, aggressive label price shopping, and shorter ordering cycles disrupted partner bookings. First quarter impact includes some partners having extra Endpoint IC inventory and asking us to reschedule orders. Compounded by no large new programs ramping in H1 2025, we cannot sustain our prior 34% Endpoint IC unit volume growth pace in the first quarter, so our focus is helping our inlay partners clear a few weeks of inventory and together navigating the geopolitical and tariff landscape and through it all, using our best-in-class products, enterprise solutions leadership, and Gen2X to regain momentum and increase market share as we accelerate out of a disappointing first quarter. For 2025, we continue to anticipate solid industry-range label expansion driven by growth in retail apparel, general merchandise, and supply chain and logistics, buoyed by modest but growing food volumes.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Recent conversations with our enterprise and service bureau partners suggest that U.S. retail demand is solid, U.S. demand for range labels is healthy and growing in the EU, if not growing, is at least stable. Our E-Family Reader IC order book is strong across all large partners and geographies, buoying our belief that our first-quarter Endpoint IC headwinds are temporary. Turning to solutions, today we are directly engaged with two large grocery chains, one focused on perishables and the other on seamless self-checkout. Imagine grocery checkout as easy as today's apparel checkout at our visionary European retailer. In terms of potential Endpoint IC volumes, both are larger than any program that has come before, and in terms of the overall opportunity, food is huge. One, if not both, of these enterprises may ramp in 2026.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

In general merchandise, the large North American retailer's multi-category rollout continues, with compliance increasing quarterly and room to grow in 2025. In supply chain and logistics, the second large North American end user increased their label volumes in 2024, and we expect modest growth in 2025 as they continue their autonomous reading journey using our E-Family Reader ICs. The visionary European retailer's ongoing rollout of our self-checkout and loss prevention solution grew in the fourth quarter, driving strong gateway revenue, but will decline in the first quarter as that program completes successfully. That said, our opportunity in new range-based use cases with them is far from over, including their ongoing embedded tagging ramp. In addition to our direct engagements, we have partners using our E-Family Reader ICs and Gen2X to expand existing use cases like loss prevention and enable previously challenging use cases like always-on overhead reading in retail stores.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Those partner engagements further expand our platform's footprint and create multiple Endpoint IC share gain opportunities for us. Our December launch of Gen2X was a bellwether event for our industry. Gen2X dramatically enhances the performance and security of range systems. The response from our ecosystem has been overwhelming, with our top six reader partners already deploying Gen2X and others, including prior competitors, working with us to deliver clear benefits to end users. Gen2X is embedded natively in our M800, so unlocking it simply requires reader enablement. Gen2X enables smaller, more cost-effective M800 inlays for most use cases, but especially for cosmetics, accessories, and food, adding to our recurring Endpoint IC opportunity. We already have multiple enterprises piloting and using Gen2X, with more on the way. On the organizational front, Jeff Dossett, our Chief Revenue Officer, announced his retirement after eight years at Impinj.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Jeff, we will miss you, but know that we will continue your mission to build peerless solutions engineering and sales teams that leverage our platform to win and delight Fortune 100 enterprises. Gahan Richardson, a seven-year Impinj veteran, will lead the sales organization. In closing, 2024 was another year of strong revenue growth and free cash flow. We delivered record adjusted EBITDA and earnings per share, successfully resolved our patent litigation, and delivered market-leading products and innovations. Looking forward, we see first-quarter headwinds, but we have been through tough times before. Each time we press our competitive advantages to emerge a stronger company in a stronger market position. This time we are better positioned with a far more seasoned team than we have ever been to do so.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

As we continue driving our bold vision to connect every item in our everyday world, I remain confident in our market position and energized by the opportunities ahead. Before I turn the call over to Cary for our financial review and first-quarter outlook, I'd like to again thank every member of the Impinj team for your constant effort driving our bold vision. As always, I feel honored by my incredible good fortune to work with you. Cary?

Cary Baker
Cary Baker
CFO at Impinj

Thank you, Chris, and good afternoon, everyone. When I joined Impinj five years ago, I was drawn both to the massive opportunity and the leverage of recurring silicon revenue. 2024 offered a glimpse of what that future holds with exceptional operating margin expansion on the back of strong revenue growth. We delivered record annual Adjusted EBITDA and record Free Cash Flow while just scratching the surface of our market opportunity. Today, more than ever, I am energized by our secular demand and operating leverage potential. Fourth-quarter revenue was $91.6 million, down 4% sequentially compared with $95.2 million in third quarter 2024, and up 30% year-over-year from $70.7 million in fourth quarter 2023. Fourth-quarter Endpoint IC revenue was $74.1 million, down 9% sequentially compared with $81 million in third quarter 2024, and up 37% year-over-year from $53.9 million in fourth quarter 2023.

Cary Baker
Cary Baker
CFO at Impinj

Although we typically see fourth-quarter declines, this year was below our expectations as we accommodated partner push-out requests. Looking to the first quarter, we again expect a sequential Endpoint IC revenue decline. Fourth-quarter Systems revenue was $17.5 million, up 23% sequentially compared with $14.2 million in third quarter 2024, and up 4% year-over-year from $16.8 million in fourth quarter 2023. Systems revenue exceeded our expectations driven by strength in reader, gateway, and reader IC sales. Looking to the first quarter, we expect Systems revenue to decline more than seasonally as the self-checkout and loss prevention deployment at the visionary European retailer concludes successfully. Total 2024 revenue was $366.1 million, up 19% year-over-year compared with $307.5 million in 2023. Endpoint IC revenue grew 30% year-over-year driven by apparel, general merchandise, supply chain and logistics, the long tail of applications, and licensing revenue.

Cary Baker
Cary Baker
CFO at Impinj

Systems revenue declined 18% year-over-year with reader and gateway declines more than offsetting growth in both test and measurement and reader ICs. Fourth-quarter gross margin was 53.1% compared with 52.4% in third quarter 2024 and 50.9% in fourth quarter 2023. The year-over-year increase was driven by leverage on fixed cost. The quarter-over-quarter increase was driven by a higher Systems revenue mix and improved Endpoint IC direct margins. Full year 2024 gross margin was 54% compared with 51.9% in 2023, with the increase due primarily to licensing revenue. Looking to first quarter 2025, we expect gross margin to decline modestly sequentially. Total fourth-quarter operating expense was $33.6 million compared with $32.5 million in third quarter 2024 and $33 million in fourth quarter 2023. Research and development expense was $18 million. Sales and marketing expense was $7.8 million. General and administrative expense was $7.9 million.

Cary Baker
Cary Baker
CFO at Impinj

2024 operating expense totaled $131.9 million compared with $137.8 million in 2023. We expect total first quarter 2025 operating expense to increase sequentially driven by normal seasonal factors. Fourth quarter adjusted EBITDA was $15 million compared with $17.3 million in third quarter 2024 and $3 million in fourth quarter 2023. Fourth quarter adjusted EBITDA margin was 16.4%. 2024 adjusted EBITDA was $65.9 million compared with $21.8 million in 2023. 2024 adjusted EBITDA margin was 18%. Fourth quarter GAAP net loss was $2.7 million. Fourth quarter non-GAAP net income was $14.5 million or $0.48 per share on a fully diluted basis. 2024 GAAP net income was $40.8 million. 2024 non-GAAP net income was $62.9 million or $2.11 per share on a fully diluted basis. Turning to the balance sheet, we ended the fourth quarter with cash, cash equivalents, and investments of $239.6 million.

Cary Baker
Cary Baker
CFO at Impinj

Inventory totaled $99.3 million, up $11 million from the prior quarter, with the increase coming primarily from Endpoint ICs. Fourth-quarter net cash provided by operating activities was $12.6 million. Property and equipment purchases totaled $4.1 million. Free cash flow was $8.5 million. For the full year, net cash provided by operating activities was $128.3 million. Property and equipment purchases totaled $17.1 million. Excluding the $45 million income from the litigation settlement, free cash flow was $66.2 million driven by revenue growth and operating margin expansion. Before turning to our guidance, I want to highlight a few items unique to our results and outlook. First, Endpoint IC revenue will decline sequentially in the first quarter, primarily driven by volume as our channel burns through a few weeks of inventory. To a much lesser degree, yearly price reductions and product mix, specifically M800 ramping at lower ASPs, impact our first-quarter outlook.

Cary Baker
Cary Baker
CFO at Impinj

Second, we anticipate first-quarter gross margin to mark the low point for the year. Second quarter product gross margin will begin benefiting from higher M800 mix and lower cost wafers. Third, while our January bookings exceeded our fourth-quarter run rate, to be prudent, we are assuming fewer turns at the midpoint of our revenue guidance. Turning to our outlook, we expect first-quarter revenue between $70 and $73 million. We expect Adjusted EBITDA between $1.1 and $2.6 million. On the bottom line, we expect non-GAAP net income between $1.7 and $3.2 million, reflecting non-GAAP fully diluted earnings per share between $0.06 and $0.11. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session. Nick.

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please requeue and we will take as many questions as time allows. At this time, we will pause momentarily to assemble our roster. Your first question today will come from Blayne Curtis with Jefferies. Please go ahead.

Blayne Curtis
Blayne Curtis
Managing Director at Jefferies

Hey, good afternoon. Thanks for taking my question. I guess I just wanted to kind of understand the timing of which, because you did kind of have a flatter December, and you've been through these cycles before. Did you have any kind of thoughts that this might happen back then? I'm just trying to understand the timing when things kind of flattened out. Were you sensing some inventory? And then maybe can you talk about when did you see the bulk of these push-outs kind of come to you?

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. Cary, go ahead.

Cary Baker
Cary Baker
CFO at Impinj

Blayne, thanks for the question. As it relates to the channel inventory build, we built a few weeks of excess channel inventory, and we believe the cause of that was a mix between demand and timing, with demand being the larger factor. From a demand perspective, our channel inventory levels are a function of their expected demand and the buffer that they build ahead of that demand. Ninety days ago, we and our partners expected stronger demand entering 2025. For example, the pullback we've seen with our second-largest North American supply chain and logistics customers was unanticipated when we guided Q4. From a timing perspective, aggressive label price shopping and end customers adjusting their inlay supplier mix has resulted in pockets of inventory because not all of our partners run with the same amount of Endpoint IC inventory.

Cary Baker
Cary Baker
CFO at Impinj

Lastly, we're probably also seeing inlay partners order shorter and shorter lead times and bringing down their inventory levels to match.

Blayne Curtis
Blayne Curtis
Managing Director at Jefferies

Great. Thanks. And then maybe you can just relate this to some of the other corrections you've seen. Do you feel like you're ahead of this one anymore? Because in the past, it's taken a couple of quarters to kind of dig out. I know you said Q1 would be the bottom. I think the question's going to be, how fast do you recover this year? So I'm just kind of curious how you think about the shape of this correction versus other ones you've seen in the past?

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. Blayne, this is Chris. I'll say a few words, and then I'll see if Cary wants to jump in. When we saw the correction starting in the back half of the fourth quarter, we took swift action. And as I said in my prepared remarks, I've seen this play before. We're better seasoned or we're better positioned at the time with a more seasoned team than we've ever been. We're not calling the duration of the correction that we're going to go through, but we are actively working through it. And as I said, working with our partners to burn down their excess channel inventory and emerge in a stronger position on the other side. And I personally believe that we're in a far better position to emerge in that stronger position, given everything we've got going on in the market.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Gen2X, Enterprise Solutions, M800, we're in a strong position this time. So expect us to accelerate out, but we're not predicting the timing right now.

Cary Baker
Cary Baker
CFO at Impinj

Yeah. Blayne, I'll start by just highlighting we only guide one quarter at a time. We're not going to hazard a guess on Q2 at this point. What we see are customers ordering with very short lead times given the market uncertainty. We are prudently modeling fewer turns in our guide input. And specifically, we're modeling zero turns for our Endpoint IC business. Are there scenarios where second quarter Endpoint IC product revenue recovers on a smaller channel inventory headwind? Yes. But we understand that these problems are rarely a one-quarter issue. And while we see those scenarios of a potential snapback, we're going to prepare for a larger headwind and hope for a better outcome.

Blayne Curtis
Blayne Curtis
Managing Director at Jefferies

Appreciate it. Thanks.

Operator

Your next question today will come from Harsh Kumar with Piper Sandler. Please go ahead.

Harsh Kumar
Harsh Kumar
Senior Research Analyst at Piper Sandler

Yeah. Hey, guys. I wanted to ask on a similar note on this excess inventory. How many weeks of excess inventory do you think you have? And is it spread out over a bunch of different areas or mostly concentrated in one or two sort of inlay partners or industries, however you want to categorize it? But the main question is, how many weeks of excess do you think you have?

Cary Baker
Cary Baker
CFO at Impinj

Hey, Harsh. This is Cary. I think it's a few weeks. It's more concentrated than is typical. A lot of it relates to logistics given the change in demand we see from our second-largest logistics provider.

Harsh Kumar
Harsh Kumar
Senior Research Analyst at Piper Sandler

Okay. Great. So my second question was on that. When you're talking about the change in demand, are you referring to the Amazon deal with UPS, which is now public, where the volumes will decline? Is that the large portion that you are referring to at your second-largest customer?

Cary Baker
Cary Baker
CFO at Impinj

Harsh, we don't name specific customers, but if you've been following the news, you know there's been changes in logistics demand.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. And Harsh, there's another element as well. There's been some share allocations as well. So our inlay partners built ahead assuming a certain portion of share. It was a share reallocation, which on top of that, a bit of a push-out has resulted in some channel inventory. That's the bulk of the channel inventory that we need to correct. Not all of it, but the bulk of it.

Harsh Kumar
Harsh Kumar
Senior Research Analyst at Piper Sandler

Got it. Okay. I'll get back in queue, guys. Thank you.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Sure. Thank you.

Operator

Again, if you have a question, please press star and then one. And your next question today will come from Jim Ricchiuti with Needham & Company. Please go ahead.

Jim Ricchiuti
Senior Analyst at Needham Group

Hi, thanks. So you alluded to the fact that you're not really seeing large program ramps, and obviously, that impacts the first half of the year. And I'm just wondering, and again, I know you can't give guidance beyond the quarter, but when would you, or maybe you could just characterize what you see in the pipeline in terms of program ramps that potentially could have some impact further out in the year?

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

So, Jim, we see a strong enterprise pipeline. I cited two food opportunities in our prepared remarks. There's other opportunities in our pipeline. From an overall enterprise perspective, we see good tailwinds for our industry. We saw strong label growth last year. And as we see those new opportunities layer in, we expect strong growth in the future. But we're in a bit of a lull right now with no new Fortune 100 companies really jumping into the market, at least in the H1. And if there is movement in the H2, it'll be just the beginnings of a ramp. So just to put it all in a nutshell, strong enterprise pipeline, a lot of interest, happens to be a low right now.

Jim Ricchiuti
Senior Analyst at Needham Group

Got it. And Chris, with respect to the customers that are working in the grocery vertical, obviously, it's been public, Kroger's doing something. Can you say whether the second grocer is a U.S.-based grocer or is it a European grocer?

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Jim, of course, we know, I think for competitive reasons, we prefer not to give an answer to that question right now. But it is a large opportunity, and it's one that we've decided to work directly with that enterprise end user because of the potential built into it.

Jim Ricchiuti
Senior Analyst at Needham Group

Thank you.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

I'm sorry I can't answer directly.

Jim Ricchiuti
Senior Analyst at Needham Group

Fair enough.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Okay. Thank you, Jim.

Operator

Your next question today will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Troy Jensen
Troy Jensen
Managing Director at Cantor Fitzgerald

Hey, gentlemen. Thanks for taking my question. Maybe a couple here for Cary. You guys talked about aggressive endpoint price shopping. Can you just kind of talk to us about what is the ASP reductions or just any more insight into that?

Cary Baker
Cary Baker
CFO at Impinj

Yeah. So when we think of Endpoint IC from kind of our pricing impact, which I think is where you're going on your question, Troy, I would say given the current market dynamics, the negotiations came in line largely with our expectation. Our focus in this year's negotiations was driving the M800 adoption. As you know, the M800 is a lower-priced SKU, so we can expect average ASPs to come down as the M800 ramps as a percentage of our mix. The trade-off, however, comes from the gross margin line where we expect accretion as the lower-cost M800 ramps into our volume-running SKU.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Troy, I'll say a little bit more. In terms of aggressive label price shopping, there's a bit of overcapacity out in the market right now. There's a fairly competitive market dynamic at the label level. We're seeing end users price shop aggressively. Service bureaus price shop aggressively. That aggressive price shopping has resulted in delayed orders to us.

Troy Jensen
Troy Jensen
Managing Director at Cantor Fitzgerald

Gotcha. All right. Understood. And then in conjunction with that, just Cary, you talked about gross margins being down modestly in Q1. Could you just frame what modestly means?

Cary Baker
Cary Baker
CFO at Impinj

Yeah. I think maybe let's talk about the impacts that we'll see to gross margins. I did say modestly. It'll mark the low point for the year, and we'll begin benefiting as we move forward from the M800 mix and lower-cost wafers flowing through. Now, when you deconstruct the guide, when you have the top and the bottom line, you can back into roughly what you might think that gross margin will be. But I think the key point is to understand that it'll build throughout the year as we ramp the M800 and as we get to those lower-cost wafers.

Troy Jensen
Troy Jensen
Managing Director at Cantor Fitzgerald

All right. Understood. Good luck, guys.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Thank you, Troy.

Operator

Your next question today will come from Christopher Rolland with Susquehanna. Please go ahead.

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at Susquehanna

Hey, thanks for the question. Yeah, just a follow-up. I guess, first of all, on the price shopping comment, just to understand that, is that pricing between you and your IC competitor? Help me understand that a little bit more. And then, Chris, I think you also mentioned an aggressive, is there a lower-margin inlay guy out there? Sorry. Help me understand the pricing dynamic here that you were talking about.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. Sure, Chris. Thanks for the question. So the label price shopping is twofold. It's from the enterprise end users to the service bureaus. And that's from the service bureaus to the bonders, people who actually take our ICs and put them on inlays. Because there's some excess bonding capacity in the market, and it's a pretty competitive market right now. There's a lot of price shopping around, which has resulted in the delayed orders to us. So when I was referring to the price shopping, it is from our customer. It is between our customer and our customer's customer and our customer's customer's customer, which is the enterprise end user. Does that help?

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at Susquehanna

That does help. Thank you. Thank you for that clarity. And then I know you guys only guide one quarter at a time, but any broad thoughts as to how this inventory dynamic may impact seasonality? Is there going to be any seasonality going forward? Do we flatline off this base? Just any broad thoughts. Nothing specific, I think, would be appreciated by all of us.

Cary Baker
Cary Baker
CFO at Impinj

Yeah. So we only guide one quarter at a time, and I really don't want to hazard a guess on the second quarter right now. Some of the factors that we're seeing going into our guide: first, our January bookings were strong. They exceeded our fourth-quarter run rate. And that January strength includes Endpoint IC turns orders. But to be prudent, we're assuming fewer turns at the midpoint of our guide, and specifically zero turns on our Endpoint IC business. We just want to give ourselves some time to get our arms around the situation. We are working hard to clear out the channel inventory, but we know that can take some time. So that's really how we're thinking about it right now. And we'll provide more update as we go.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

If there's one word I'd like you to take away, it's just prudent. That's the word that Cary used. And that's a word that we're all behind that word, and that's where we stand right now. Just, we're being prudent as we look forward.

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at Susquehanna

Okay. Thank you very much, guys.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Thank you.

Operator

Your next question today will come from Scott Searle with Roth Capital. Please go ahead.

Scott Searle
Scott Searle
Managing Director and Senior Research Analyst at Roth Capital

Hey, good afternoon. Thanks for taking the questions. Hey, Chris, maybe just given the near-term inventory headwinds, I'm wondering if you could talk about the dynamic of the longer-term growth in the marketplace, right? You've consistently talked about the historic Endpoint IC unit growth of 25%-30%. Is that demand profile changing at all when you're looking at 2025, or is that still tracking? We're just working through a near-term inventory issue.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

No, Scott, I wish I could answer that question for you. We'll have a better read on it a little bit through the year. What we see right now is essentially what I said in our prepared remarks. We see strength in North America kind of driven a little bit across the board: retail, apparel, retail general merchandise, and supply chain and logistics, as well as new opportunities, and then the growing food opportunities. So North America, we see is still solid and is still going forward. The EU is flattish, at least from our current perspective. And we don't usually call out Asia, and that's smaller anyway. So it's hard for me to project what those factors mean for 2025 overall. In the longer term, we see long-term secular tailwinds underlying our industry.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

The food opportunity layering on, at least if we see some ramps heading into 2026 on top of other things that are going on, suggests that the future is very bright, and we fundamentally believe it's very bright. I just can't hazard a guess right now on 2025, especially given the geopolitical dynamic, the tariff situation, all those other things, and I wish I could give you a better answer, but as of right now, I can't.

Scott Searle
Scott Searle
Managing Director and Senior Research Analyst at Roth Capital

Hey, and Chris, just clarification on the tariff issue. When you say geopolitical, is that because customers were pre-buying and pre-shipping ahead of any sort of a tariff situation, or is there some other dynamic going on there? And then if I could finally just wrap up with the pipeline, it sounds like the pipeline is still pretty active. I was wondering if you could expand beyond food. I think you've addressed that a couple of times. But with your large North American retailer general merchandise, I think they were moving to the phase three, how things like that are progressing on that front and leveraging that existing customer's supply channel or supply chain, right? I think you were talking about other big-box retailers starting to pull forward. Has that dynamic changed at all, or are some of those opportunities still existing in 2025? Thanks.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. Okay. I'll do my best on those questions. In terms of the geopolitical situation, it was less of a pull forward and less of a, I'm going to use the word sourcing uncertainty, and the sourcing uncertainty being primarily, if you're a supplier to an enterprise, you need to know where to source out of based on what the tariff situation is. So we're seeing some delayed orders just for sourcing decisions based on where the tariffs might hit. And that is resulting in shorter order cycles and essentially causing, at least from our perspective where we are right now, delayed orders to us as those decisions get made. In terms of the pipeline, we have ongoing efforts with our lead customers, our lead enterprise end users in the retail apparel space.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

We still see significant opportunities there, and we'll be expanding some of the engagements in the retail apparel space because, as I mentioned in the prepared remarks, some of the things our partners are doing around loss prevention and self-checkout around overhead reading could open up a new wave of opportunities in retail. On top of that, obviously, there's further expansion in retail general merchandise, second-largest North American supply chain and logistics end user with some spillover to other big-box retailers. We're taking advantage of some of the tag categories. And then the third big thing we're looking at is the enterprise mobile transitioning into consumer mobile. The enterprise mobile is not yet announced yet, but we're obviously talking about it. All of us are talking about it. The date for a transition to consumer mobile is further out in time.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

That's still a guarded expectation on our part, but we're going to do everything we can to drive that consumer opportunity, which will truly change the dynamics in the industry. So it's all of the things. It just basically paints a picture to a bright future. But right now, we got a little bit of a rough patch to go through.

Scott Searle
Scott Searle
Managing Director and Senior Research Analyst at Roth Capital

Great. Thanks so much.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Sure. Thank you.

Operator

Your next question today is a follow-up from Harsh Kumar of Piper Sandler. Please go ahead.

Harsh Kumar
Harsh Kumar
Senior Research Analyst at Piper Sandler

Yeah. Hey, guys. So I wanted to ask you about the new customer at the grocery level. Could you at least-I know you don't want to give us a name. Could you tell us if it's a large customer or a smaller boutique-type grocery chain? And then the other part, too, of the question is, if you're going to be having one of these guys ramp in a meaningful way in 2026, would you not start to see some volumes perhaps in 2025, maybe second half with your inlay partners?

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Yeah. So, Harsh, I'll take that one. The answer to the first part of the question is large customer, although anytime you talk food, it's large. So, we're actually, but to be specific, it's in grocery. It's not in fast food or other kind of things. So, it is grocery at the item level, and then the time frame. Because when you think about the size of the opportunities, these opportunities are so large. The larger an opportunity is, the more measured the pace. You just have to accept that. We anticipate some Endpoint IC volumes in the back half of the year. Obviously, a lot depends on the pace at which the customers go and things like that. We expect some volumes in the back half of the year, and ideally, one or both of those will ramp into 2026.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Now, that said, the one that we're not citing right now, since it is a self-checkout opportunity, we have a lot of work to do to get it fully up and running and working, so we're early days. And in the same way as it took us some time to do the self-checkout and loss prevention opportunity with the visionary European retailer, we really need to roll up our sleeves and get this one working for this particular grocer. It's not a loss prevention opportunity at self-checkout, but self-checkout at item-level grocery is going to take some work on our side. I believe we're the best company to do it. We're best positioned to do it, and if anybody can do it, we can. We're going to give it our best shot, and I believe we will make it go, but I can't give you the timing yet.

Harsh Kumar
Harsh Kumar
Senior Research Analyst at Piper Sandler

Understood. Thank you. Thank you, Chris, for that color.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Sure. Thank you, Harsh.

Operator

That concludes our question and answer session. I would like to turn the conference back over to Chris Diorio, Co-founder and CEO, for any closing remarks.

Chris Diorio
CEO, Vice Chair, and Co-founder at Impinj

Thank you, Nick. And I'd like to thank all of you for joining the call today. Thank you for your ongoing support. Bye-bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Executives
    • Cary Baker
      Cary Baker
      CFO
    • Tracy Moran
      Tracy Moran
      Senior Manager of Investor Relations
Analysts
    • Harsh Kumar
      Senior Research Analyst at Piper Sandler
    • Christopher Rolland
      Senior Equity Analyst at Susquehanna
    • Chris Diorio
      CEO, Vice Chair, and Co-founder at Impinj
    • Scott Searle
      Managing Director and Senior Research Analyst at Roth Capital
    • Blayne Curtis
      Managing Director at Jefferies
    • Jim Ricchiuti
      Senior Analyst at Needham Group
    • Troy Jensen
      Managing Director at Cantor Fitzgerald
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