Impinj Reports Fourth Quarter and Full Year 2022 Financial Results

SEATTLE--(BUSINESS WIRE)--Impinj, Inc. (NASDAQ: PI), a leading provider and pioneer of RAIN RFID solutions, today released its financial results for the fourth quarter and year ended December 31, 2022.

“2022 was a very strong year for Impinj,” said Chris Diorio, Impinj co-founder and CEO. “We delivered record revenue and adjusted EBITDA, invested in our team, unlocked new opportunities heading into 2023 and advanced our vision of connecting every thing.”

Fourth Quarter 2022 Financial Summary

• Revenue of $76.6 million
• GAAP gross margin of 52.4%; non-GAAP gross margin of 53.8%
• GAAP net loss of $0.1 million, or loss of less than $0.01 per diluted share using 26.0 million shares
• Adjusted EBITDA of $11.8 million
• Non-GAAP net income of $11.6 million, or income of $0.41 per diluted share using 28.2 million shares

Full Year 2022 Financial Summary

• Revenue of $257.8 million
• GAAP gross margin of 53.5%; non-GAAP gross margin of 55.5%
• GAAP net loss of $24.3 million, or loss of $0.95 per diluted share using 25.5 million shares
• Adjusted EBITDA of $28.9 million
• Non-GAAP net income of $26.3 million, or income of $0.96 per diluted share using 27.5 million shares

A reconciliation between GAAP and non-GAAP information is contained in the tables below. Additionally, descriptions of these non-GAAP financial measures are provided in the “Non-GAAP Financial Measures” sections below.

First Quarter 2023 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. The following table presents Impinj’s financial outlook for the first quarter of 2023 (in millions, except per share data):

	Three Months Ending
	March 31, 2023
Revenue	$82.0 to $85.0
GAAP Net loss	($3.6) to ($2.1)
Adjusted EBITDA income	$9.2 to $10.7
GAAP Weighted-average shares — basic and diluted	26.20 to 26.40
GAAP Net loss per share — basic and diluted	($0.14) to ($0.08)
Non-GAAP Net income	$8.6 to $10.3
Non-GAAP Weighted-average shares — basic	26.20 to 26.40
Non-GAAP Weighted-average shares — diluted	28.30 to 28.50
Non-GAAP Net income per share — basic	$0.33 to $0.39
Non-GAAP Net income per share — diluted	$0.30 to $0.36

A reconciliation between GAAP and non-GAAP is provided in the "Non-GAAP Financial Measures" section below.

Conference Call Information

Impinj will host a conference call today, February 8, 2023 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its fourth-quarter and full-year 2022 results, as well as its outlook for its first quarter 2023. Interested parties may access the call by dialing [phone]. A live webcast and replay will also be available on the company’s website at investor.impinj.com. Following the call, a telephonic replay will be available for five business days and may be accessed by dialing [phone] and entering passcode 2251852.

Management’s prepared written remarks, along with quarterly financial data, will be made available on the company’s website at investor.impinj.com along with this release.

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 our strategy, investment plans and prospects, as well as financial considerations for the first quarter of 2023 and future periods.

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 annual report on Form 10-K and quarterly reports on Form 10-Q filed with the U.S. Securities and Exchange Commission. 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.

About Impinj

Impinj (NASDAQ: PI) helps businesses and people analyze, optimize, and innovate by wirelessly connecting billions of everyday things — such as apparel, automobile parts, luggage, and shipments — to the Internet. The Impinj platform uses RAIN RFID to deliver timely data about these everyday things to business and consumer applications, enabling a boundless Internet of Things. www.impinj.com

Impinj is a registered trademark of Impinj, Inc. All other trademarks are the property of their owners.

IMPINJ, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value, unaudited)
	December 31, 2022 ^(1)			December 31, 2021 ^(1)
Assets:
Current assets:
Cash and cash equivalents	$	19,597		$	123,903
Short-term investments		154,148			69,443
Accounts receivable, net		49,996			35,449
Inventory		46,397			21,958
Prepaid expenses and other current assets		5,032			5,049
Total current assets		275,170			255,802
Long-term investments		19,200			14,225
Property and equipment, net		39,027			27,500
Operating lease right-of-use assets		10,490			11,667
Other non-current assets		1,969			2,462
Goodwill		3,881			3,881
Total assets	$	349,737		$	315,537
Liabilities and stockholders' equity (deficit):
Current liabilities:
Accounts payable	$	25,024		$	11,732
Accrued compensation and employee related benefits		9,048			6,365
Accrued and other current liabilities		2,925			3,072
Current portion of operating lease liabilities		3,122			4,143
Current portion of long-term debt		—			9,633
Current portion of deferred revenue		2,250			558
Total current liabilities		42,369			35,503
Long-term debt, net of current portion		280,244			278,661
Operating lease liabilities, net of current portion		11,066			11,934
Other long-term liabilities		118			279
Deferred revenue, net of current portion		349			236
Total liabilities		334,146			326,613
Stockholders' equity (deficit):
Common stock, $0.001 par value		26			25
Additional paid-in capital		403,599			351,422
Accumulated other comprehensive loss		(1,249	)		(39	)
Accumulated deficit		(386,785	)		(362,484	)
Total stockholders' equity (deficit)		15,591			(11,076	)
Total liabilities and stockholders' equity (deficit)	$	349,737		$	315,537
(1) We adopted ASU 2020-06 on January 1, 2021 using modified retrospective transition method and accounted for our convertible notes due 2026, or the 2019 Notes, on a whole-instrument basis. Upon adoption, we no longer had unamortized debt discount related to the equity component of the 2019 Notes. The condensed consolidated financial statements under both periods are presented under ASU 2020-06.

IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited)
	Three Months Ended						Year Ended
	December 31,						December 31,
	2022			2021			2022			2021
Revenue	$	76,590		$	52,574		$	257,800		$	190,283
Cost of revenue		36,422			23,391			119,916			91,329
Gross profit		40,168			29,183			137,884			98,954
Operating expenses:
Research and development		18,982			17,578			74,106			64,058
Sales and marketing		9,655			9,710			37,894			34,287
General and administrative		11,577			9,125			45,465			36,137
Restructuring costs		(102	)		458			(102	)		1,721
Total operating expenses		40,112			36,871			157,363			136,203
Income (loss) from operations		56			(7,688	)		(19,479	)		(37,249	)
Other income, net		1,150			4			2,517			25
Induced conversion expense		—			(11,333	)		(2,232	)		(11,333	)
Interest expense		(1,207	)		(974	)		(4,923	)		(2,550	)
Loss before income taxes		(1	)		(19,991	)		(24,117	)		(51,107	)
Income tax expense		(117	)		(23	)		(184	)		(153	)
Net loss	$	(118	)	$	(20,014	)	$	(24,301	)	$	(51,260	)
Net loss per share — basic and diluted	$	(0.00	)	$	(0.81	)	$	(0.95	)	$	(2.12	)
Weighted-average shares — basic and diluted		26,005			24,581			25,539			24,176

IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited)
	Year Ended
	December 31,
	2022			2021
Operating activities:
Net loss	$	(24,301	)	$	(51,260	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		6,044			4,602
Stock-based compensation		42,443			40,498
Accretion of discount or amortization of premium on investments		(233	)		896
Amortization of debt issuance costs		1,601			568
Induced conversion expense related to convertible notes		2,232			11,333
Loss on fixed asset disposal		57			—
Settlement and related costs		—			(460	)
Changes in operating assets and liabilities:
Accounts receivable		(14,547	)		(10,446	)
Inventory		(24,439	)		14,371
Prepaid expenses and other assets		852			(770	)
Accounts payable		7,371			2,340
Accrued compensation and employee related benefits		2,683			836
Accrued and other liabilities		(215	)		987
Operating lease right-of-use assets		3,414			2,792
Operating lease liabilities		(4,126	)		(3,528	)
Deferred revenue		1,805			(6,294	)
Net cash provided by operating activities		641			6,465
Investing activities:
Purchases of investments		(205,749	)		(84,412	)
Proceeds from maturities of investments		114,750			82,000
Proceeds from sale of property and equipment		279			—
Purchases of property and equipment		(12,079	)		(16,230	)
Net cash used in investing activities		(102,799	)		(18,642	)
Financing activities:
Principal payments on finance lease obligations		—			(2	)
Proceeds from exercise of stock options and employee stock purchase plan		15,416			17,648
Proceeds from issuance of 2021 Notes, net of issuance costs		—			278,422
Payment of 2019 Notes		(17,564	)		(183,624	)
Net cash provided by (used in) financing activities		(2,148	)		112,444
Net increase (decrease) in cash and cash equivalents		(104,306	)		100,267
Cash and cash equivalents
Beginning of period		123,903			23,636
End of period	$	19,597		$	123,903

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, our key non-GAAP performance measures include adjusted EBITDA and non-GAAP net income (loss), as defined below. We use adjusted EBITDA and non-GAAP net income (loss) as key measures to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operating plans. We believe these measures provide useful information for period-to-period comparisons of our business to allow investors and others to understand and evaluate our operating results in the same manner as our management and board of directors. 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 similarly termed non-GAAP measures used by other companies.

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) determined in accordance with GAAP, excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation; restructuring costs; settlement and related costs; other income, net; interest expense; loss on debt extinguishment; and income tax benefit (expense). We have excluded these costs and expenses because we do not believe they reflect our core operations and us excluding them enables more consistent evaluation of our operating performance.

Non-GAAP Net Income (Loss)

We define non-GAAP net income (loss) as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation; restructuring costs; settlement and related costs; amortization of debt discount related to the equity component of our convertible notes; and prepayment penalty on debt extinguishment.

GAAP requires that certain convertible debt instruments that may be settled in cash on conversion be accounted for as separate liability and equity components in a manner that reflects our non-convertible debt borrowing rate. This accounting results in the debt component being treated as though it was issued at a discount, with the debt discount being amortized as additional non-cash interest expense over the debt instrument term using the effective interest method. As a result, we believe that excluding this non-cash interest expense attributable to the debt discount in calculating our non-GAAP net income (loss) is useful because this interest expense is not indicative of our ongoing operational performance.

IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages, unaudited)
	Three Months Ended						Year Ended
	December 31,						December 31,
	2022			2021			2022			2021
GAAP Gross margin		52.4	%		55.5	%		53.5	%		52.0	%
Adjustments:
Depreciation		1.2	%		1.6	%		1.4	%		1.2	%
Stock-based compensation		0.2	%		1.1	%		0.6	%		1.0	%
Non-GAAP Gross margin		53.8	%		58.2	%		55.5	%		54.2	%
GAAP Net loss	$	(118	)	$	(20,014	)	$	(24,301	)	$	(51,260	)
Adjustments:
Depreciation		1,588			1,431			6,044			4,602
Stock-based compensation		10,213			11,547			42,443			40,498
Other income, net		(1,150	)		(4	)		(2,517	)		(25	)
Interest expense		1,207			974			4,923			2,550
Income tax expense		117			23			184			153
Settlement and related costs		—			(460	)		—			(460	)
Restructuring costs		(102	)		458			(102	)		1,721
Induced conversion expense		—			11,333			2,232			11,333
Adjusted EBITDA	$	11,755		$	5,288		$	28,906		$	9,112
GAAP Net loss	$	(118	)	$	(20,014	)	$	(24,301	)	$	(51,260	)
Adjustments:
Depreciation		1,588			1,431			6,044			4,602
Stock-based compensation		10,213			11,547			42,443			40,498
Settlement and related costs		—			(460	)		—			(460	)
Restructuring costs		(102	)		458			(102	)		1,721
Induced conversion expense		—			11,333			2,232			11,333
Non-GAAP Net income	$	11,581		$	4,295		$	26,316		$	6,434
Non-GAAP Net income per share:
Basic	$	0.45		$	0.17		$	1.03		$	0.27
Diluted	$	0.41		$	0.16		$	0.96		$	0.25
GAAP and non-GAAP Weighted-average shares — basic		26,005			24,581			25,539			24,176
GAAP Weighted-average shares — diluted		26,005			24,581			25,539			24,176
Dilutive shares from stock plans		2,147			2,195			1,811			1,768
Dilutive shares from 2019 Notes		—			—			127			—
Non-GAAP Weighted-average shares — diluted		28,152			26,776			27,477			25,944

IMPINJ, INC. RECONCILIATIONS OF GAAP FINANCIAL OUTLOOK TO NON-GAAP FINANCIAL OUTLOOK (in thousands, except per share data, unaudited – calculated at the midpoint of the outlook range)
	Three Months Ending
	March 31,
	2023
GAAP Net loss	$	(2,850	)
Adjustments:
Forecasted Depreciation		1,730
Forecasted Stock-based compensation		10,500
Forecasted Interest expense		1,250
Forecasted Other income, net		(750	)
Forecasted Income tax expense		60
Adjusted EBITDA	$	9,940
GAAP Net loss	$	(2,850	)
Adjustments:
Forecasted Depreciation		1,730
Forecasted Stock-based compensation		10,500
Non-GAAP Net income	$	9,380
GAAP Net loss per share — basic and diluted	$	(0.11	)
Non-GAAP Net income per share
Basic	$	0.36
Diluted	$	0.33
GAAP weighted-average shares — basic and diluted		26,300
Non-GAAP weighted-average shares — basic		26,300
Dilutive shares from stock plans		2,100
Non-GAAP weighted-average shares — diluted		28,400