Impinj Q3 Earnings Call Highlights

Key Points

• Record Q3 performance: Impinj reported revenue of $112.1 million, up 17% year over year, driven by 24% growth in endpoint IC revenue to a record $97.3 million and strong demand for its M800 products.
• Capacity constraints persist: Demand and bookings remain strong, but bottlenecks in wafer post-processing are limiting supply. Impinj plans to accelerate back-end capacity investments over the next two quarters and expects higher capital expenditures in early 2027.
• Positive near-term outlook: The company forecast fourth-quarter revenue of $104 million to $107 million and expects gross margin to improve by roughly 100 basis points sequentially, supported by M800 and specialty IC sales. Software remains in beta with modest revenue expected initially, while food-related applications represent a longer-term growth opportunity.

Impinj NASDAQ: PI reported record third-quarter revenue as demand for its endpoint integrated circuits, particularly its M800 product family, remained strong across retail, supply chain and logistics, and emerging food-related applications.

Revenue for the third quarter of 2026 reached $112.1 million, up 3% sequentially and 17% from a year earlier, CFO Cary Baker said. The result surpassed the company’s prior quarterly record despite the absence of licensing revenue that contributed to the prior quarter.

Third-quarter endpoint IC revenue rose 24% year over year to a record $97.3 million. Systems revenue, which includes readers and gateways, increased 23% sequentially to $14.8 million, though it declined 15% from the year-ago period.

Endpoint Demand and Capacity Expansion

Co-founder and CEO Chris Diorio said M800 demand, resilient retail activity, lighthouse-account growth and momentum for Gen2X technology contributed to record results. The company also cited a custom ASIC conversion by a supply chain and logistics end user and strength from a European retailer.

However, Diorio said Impinj was unable to get ahead of market demand as it ramps back-end wafer post-processing capacity. The company has sufficient wafer supply and support from its wafer foundry partner, he said, but faces tight capacity in shared post-processing stages, including thinning, bumping, dicing and testing.

“We will continue ramping our back end at an elevated pace for at least the next two quarters to meet the growing demand,” Diorio said.

Baker said bookings remained strong in the third quarter, with a book-to-bill ratio above one. Some customers are placing orders into the first quarter of 2027, contributing to increased backlog. Impinj expects capital expenditures to rise in the first quarter of 2027 as it invests in throughput, site diversification and capacity. The company said its overall 2027 capital intensity is expected to return to its long-term model following lower spending in 2025 and 2026.

Margins, Earnings and Balance Sheet

Third-quarter gross margin was 54.9%, compared with 60.9% in the prior quarter and 53% a year earlier. The sequential decline primarily reflected second-quarter licensing revenue, while the year-over-year improvement was driven by a greater contribution from M800 products. Excluding licensing revenue, product gross margin rose 130 basis points sequentially.

Operating expenses were $37 million, including $21.5 million in research and development, $7.6 million in sales and marketing, and $7.9 million in general and administrative expense.

Adjusted EBITDA was $24.5 million, with an adjusted EBITDA margin of 21.9%. GAAP net income was $4.7 million, while non-GAAP net income totaled $22.1 million, or $0.69 per diluted share.

Impinj ended the quarter with $228.3 million in cash equivalents and investments, down from $263.7 million at the end of the second quarter. Inventory declined $8.1 million sequentially to $83.4 million. Free cash flow was $20.6 million, and capital expenditures were $5 million.

During September, the company repurchased $56.3 million in aggregate principal amount of its 1.125% convertible notes due in May 2027, using a combination of cash and shares. Baker said the transaction reduced potential dilution by roughly 300,000 shares. Impinj also elected cash settlement for its capped call maturing in the fourth quarter of 2026 and recorded the asset, valued at roughly $49 million, as a current asset.

Fourth-Quarter Outlook

For the fourth quarter, Impinj forecast revenue of $104 million to $107 million, representing 14% year-over-year growth at the midpoint compared with $92.8 million in the fourth quarter of 2025. The company expects adjusted EBITDA of $19.2 million to $20.7 million and non-GAAP earnings per share of $0.55 to $0.60.

The company expects a modest sequential decline in endpoint IC revenue, though Baker said the outlook is more favorable than typical seasonal patterns. The forecast includes a return of modest specialty endpoint IC revenue, which the company said is margin accretive after a multiyear period of limited revenue in that category.

Systems revenue is expected to decline sequentially in the fourth quarter because certain enterprise deployment schedules shifted later. Baker said the timing could reverse in early 2027, potentially making first-quarter systems revenue relatively flat rather than reflecting the company’s usual seasonal decline.

Impinj expects fourth-quarter gross margin to rise sequentially, driven by M800 mix and specialty IC revenue. Baker said the company anticipates a gross-margin increase of roughly 100 basis points from the third quarter.

Software and Food Opportunities

Impinj’s software remains in beta with lighthouse accounts and is not yet generating meaningful revenue. Diorio said the initial software deliveries are expected to reach general availability in months rather than quarters, though the company is not rushing enterprise-grade software before it is fully hardened.

Baker said software’s revenue contribution in 2027 is expected to be modest initially. Diorio said Impinj ultimately aims to monetize its full platform, including endpoint ICs, readers, gateways and software, rather than treating software as a standalone opportunity.

The company also reported adding a large new food replenishment logo and another food inventory logo during the quarter. Diorio said one direct engagement focuses on improving replenishment and food freshness, with potential use of Impinj’s entire platform. He said the company sees an expanding food opportunity for 2027 and beyond, while noting that deployments at large enterprises can take time to ramp.

Impinj announced that Aileen Ryan, outgoing president of the RAIN Alliance, will join the company Dec. 1 as chief commercial officer. Ryan will lead lighthouse-account success and the company’s solutions go-to-market efforts, including partnerships and solution delivery.

About Impinj (NASDAQ:PI)

Impinj, Inc NASDAQ: PI develops technology for the Internet of Things (IoT) based on RAIN RFID, a wireless technology used to identify, locate and authenticate individual items. Its platform is designed to connect physical products, packages and assets to digital systems, helping organizations collect real-time information throughout supply chains and business operations.

The company offers a portfolio of RAIN RFID endpoint integrated circuits, reader chips, RFID readers and gateways, antennas, and cloud and software solutions.

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