Impinj(US:PI)2022-07-28 01:48Financial Data and Key Metrics Changes - Second quarter revenue was $59.8 million, up 13% sequentially from $53.1 million in Q1 2022 and up 27% year-over-year from $47.3 million in Q2 2021 [20] - Second quarter endpoint IC revenue was $42.9 million, up 10% sequentially from $38.8 million in Q1 2022 and up 39% year-over-year from $30.8 million in Q2 2021 [20] - Second quarter systems revenue was $16.9 million, up 18% sequentially from $14.3 million in Q1 2022 and up 3% year-over-year from $16.5 million in Q2 2021 [21] - Second quarter gross margin was 54.7%, compared to 57% in Q1 2022 and 54.5% in Q2 2021 [23] - Second quarter adjusted EBITDA was $3.8 million, with an adjusted EBITDA margin of 6.4% [25] Business Line Data and Key Metrics Changes - Endpoint IC demand exceeded supply by more than 50% for the fifth consecutive quarter, with expectations for this imbalance to persist into Q3 [9] - Systems revenue exceeded expectations, driven by strong reader and reader IC revenue, although a slight sequential decline in Q3 systems revenue is anticipated due to component shortfalls [22] - Reader IC revenue set a new quarterly record, recovering from previous post-processing challenges [14] Market Data and Key Metrics Changes - Strong demand for endpoint ICs driven by retailers adopting RAIN for inventory visibility and logistics providers for item traceability [11] - Retail expansion is focused on apparel, home goods, and supply chain expansion for parcel shipment traceability, providing multiyear growth tailwinds [12] Company Strategy and Development Direction - The company is focused on leveraging increased wafer supply to drive revenue growth in the second half of 2022 [30] - Continued investment in growing, diversifying, and streamlining endpoint IC post-processing to meet demand [13] - The launch of the new Impinj E910 Reader IC aims to enhance performance and accelerate market entry for partners [15] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism regarding supply improvements but acknowledged ongoing constraints impacting revenue growth [10][37] - The company expects third quarter revenue between $63.5 million and $65.5 million, reflecting a 43% year-over-year increase at the midpoint [31] - Management remains confident in the market position and strong demand despite supply challenges [19] Other Important Information - The company repurchased the remaining principal of its 2026 convertible notes, saving $1.1 million in non-GAAP interest expense [28] - Inventory totaled $32 million, with a slight increase from the prior quarter [27] Q&A Session Summary Question: Will component shortages ease in the second half of the year? - Management indicated that component shortfalls will continue to impact Q3, but there is hope for improvement in Q4 [35] Question: How is the foundry partner's supply situation trending? - Management noted incremental wafer upsides and a gradual increase in pace, but significant supply constraints remain [36] Question: What happens when larger customers return to the foundry? - Management expressed confidence in maintaining prioritization with the foundry partner despite larger customers potentially returning [44] Question: What are the prospects for the logistics customer program? - Management highlighted the importance of demonstrating operational efficiencies to ensure the program's success [49] Question: What is the outlook for operating expenses and margins? - Management clarified that flat operating expenses do not indicate a lack of investment, and they aim to generate adjusted EBITDA profitability [55]