Impinj, Inc. (NASDAQ:PI), a leading RAIN RFID provider and Internet of Things pioneer, today released its financial results for the third quarter ended September 30, 2021.

"Our third-quarter results were strong, with revenue and profitability exceeding our guidance," said Chris Diorio, Impinj co-founder and CEO. "We accelerated Impinj M700 endpoint IC production, navigated unprecedented supply challenges and see strong, long-term demand from enterprise digital transformation."

Third Quarter 2021 Financial Summary

Revenue of $45.2 million
GAAP gross margin of 50.9%; non-GAAP gross margin of 53.3%
GAAP net loss of $12.9 million, or loss of $(0.53) per diluted share using 24.3 million shares
Adjusted EBITDA loss of $0.4 million
Non-GAAP net loss of $0.9 million, or loss of $(0.04) per diluted share using 24.3 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.

Fourth Quarter 2021 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 fourth quarter 2021 (in millions, except per share data):

		Three Months Ending
		December 31, 2021
Revenue		$46.0 to $48.0
Adjusted EBITDA income (loss)		($0.5) to $1.0
GAAP Net loss		($13.8) to ($12.8)
GAAP Weighted-average shares — basic and diluted		24.33 to 25.00
GAAP Net loss per share — basic and diluted		($0.57) to ($0.51)
Non-GAAP net income (loss)		($1.1) to $0.4
Non-GAAP Weighted-average shares — basic		24.33 to 25.00
Non-GAAP Weighted-average shares — diluted		24.33 to 26.50
Non-GAAP Net income (loss) per share — basic		($0.04) to $0.02
Non-GAAP Net income (loss) per share — diluted		($0.04) to $0.02

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, Oct. 27, 2021 at 5:00 p.m. ET / 2:00 p.m. PT for analysts and investors to ask questions on its third quarter 2021 results, as well as its outlook for its fourth quarter 2021. Open to the public, investors may access the call by dialing +1-412-317-5196. A live webcast of the conference call will also be accessible on our 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 after the call and will run for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 10160731.

Management's prepared written remarks, along with quarterly financial data, will be made available on our website at investor.impinj.com commensurate 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 the market for RAIN RFID, our strategy, prospects, the impact of Covid-19, and financial considerations for fourth quarter of 2021 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)

	September 30, 2021 ⁽¹⁾			December 31, 2020
Assets:
Current assets:
Cash and cash equivalents	$	65,190		$	23,636
Short-term investments		48,153			82,453
Accounts receivable, net		27,045			25,003
Inventory		18,434			36,329
Prepaid expenses and other current assets		4,238			3,943
Total current assets		163,060			171,364
Property and equipment, net		28,638			16,531
Operating lease right-of-use assets		12,241			13,761
Other non-current assets		2,573			2,079
Goodwill		3,881			3,881
Total assets	$	210,393		$	207,616
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	8,439		$	10,144
Accrued compensation and employee related benefits		6,283			5,529
Accrued and other current liabilities		3,634			1,468
Current portion of operating lease liabilities		3,990			3,641
Current portion of long-term debt		84,140			—
Current portion of deferred revenue		729			6,811
Total current liabilities		107,215			27,593
Long-term debt, net of current portion		—			54,556
Operating lease liabilities, net of current portion		12,843			15,266
Other long-term liabilities		804			805
Deferred revenue, net of current portion		253			277
Total liabilities		121,115			98,497

Stockholders' equity:
Common stock, $0.001 par value		24			23
Additional paid-in capital		431,727			423,759
Accumulated other comprehensive income		(3	)		3
Accumulated deficit		(342,470	)		(314,666	)
Total stockholders' equity		89,278			109,119
Total liabilities and stockholders' equity	$	210,393		$	207,616

(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 as of March 31, 2021, June 30, 2021, and September 30, 2021 are presented under ASU 2020-06, while comparative prior reporting period presented is not adjusted and continue to be reported in accordance with our historical accounting policy.

IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenue	$	45,193		$	28,196		$	137,709		$	102,475
Cost of revenue		22,180			14,824			67,938			54,749
Gross profit		23,013			13,372			69,771			47,726
Operating expenses:
Research and development		16,789			11,901			46,480			33,619
Sales and marketing		8,736			6,964			24,577			20,577
General and administrative		9,860			7,527			27,012			26,215
Restructuring costs		—			—			1,263			-
Total operating expenses		35,385			26,392			99,332			80,411
Loss from operations		(12,372	)		(13,020	)		(29,561	)		(32,685	)
Other income, net		2			49			21			584
Interest expense		(526	)		(1,360	)		(1,576	)		(4,021	)
Loss before income taxes		(12,896	)		(14,331	)		(31,116	)		(36,122	)
Income tax expense		(28	)		(15	)		(130	)		(84	)
Net loss	$	(12,924	)	$	(14,346	)	$	(31,246	)	$	(36,206	)
Net loss per share — basic and diluted	$	(0.53	)	$	(0.63	)	$	(1.30	)	$	(1.60	)
Weighted-average shares — basic and diluted		24,330			22,931			24,040			22,686

IMPINJ, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited)

	Nine Months Ended
	September 30,
	2021			2020
Operating activities:
Net loss	$	(31,246	)	$	(36,206	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		3,171			3,402
Stock-based compensation		28,951			15,501
Accretion of discount or amortization of premium on short-term investments		694			85
Amortization of debt issuance costs and debt discount		283			2,719
Changes in operating assets and liabilities:
Accounts receivable		(2,042	)		6,005
Inventory		17,895			(3,829	)
Prepaid expenses and other assets		(758	)		(1,637	)
Deferred revenue		(6,106	)		449
Accounts payable		(1,831	)		2,608
Accrued compensation and employee related benefits		754			(1,797	)
Operating lease right-of-use assets		2,218			2,029
Operating lease liabilities		(2,772	)		(2,509	)
Accrued and other liabilities		1,196			(372	)
Net cash provided by (used in) operating activities		10,407			(13,552	)
Investing activities:
Purchases of investments		(36,431	)		(57,298	)
Proceeds from maturities of investments		70,000			41,675
Purchases of property and equipment		(14,181	)		(2,336	)
Net cash provided by (used in) investing activities		19,388			(17,959	)
Financing activities:
Principal payments on finance lease obligations		(2	)		(240	)
Proceeds from exercise of stock options and employee stock purchase plan		11,761			4,916
Net cash provided by financing activities		11,759			4,676
Net increase (decrease) in cash and cash equivalents		41,554			(26,835	)
Cash and cash equivalents
Beginning of period		23,636			66,898
End of period	$	65,190		$	40,063

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; investigation costs; restructuring costs; settlement and related costs; other income, net; interest expense; loss on debt extinguishment; and income tax benefit (expense).

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; investigation costs; restructuring costs; settlement and related costs; amortization of debt discount related to the equity component of our convertible notes prior to the adoption of ASU 2020-06; and prepayment penalty on debt extinguishment.

On January 1, 2021, we adopted ASU 2020-06 using the modified retrospective transition method, accounting for the 2019 Notes on a whole-instrument basis. Upon adoption, the condensed consolidated financial statements for the three and nine months ended September 30, 2021, are presented under the new standard and we no longer recorded amortization of debt discount, and comparative prior reporting period presented is not adjusted.

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,
	2021			2020			2021			2020
GAAP Gross margin		50.9	%		47.4	%		50.7	%		46.6	%
Adjustments:
Depreciation		1.3	%		1.9	%		1.1	%		1.3	%
Stock-based compensation		1.1	%		0.8	%		0.9	%		0.6	%
Non-GAAP Gross margin		53.3	%		50.1	%		52.7	%		48.5	%

GAAP Net loss	$	(12,924	)	$	(14,346	)	$	(31,246	)	$	(36,206	)
Adjustments:
Depreciation		1,095			1,108			3,171			3,402
Stock-based compensation		10,920			5,683			28,951			15,501
Other income, net		(2	)		(49	)		(21	)		(584	)
Interest expense		526			1,360			1,576			4,021
Income tax expense		28			15			130			84
Settlement and related costs		—			—			—			5,359
Adjusted EBITDA income (loss)	$	(357	)	$	(6,229	)	$	3,824		$	(8,423	)

GAAP Net loss	$	(12,924	)	$	(14,346	)	$	(31,246	)	$	(36,206	)
Adjustments:
Depreciation		1,095			1,108			3,171			3,402
Stock-based compensation		10,920			5,683			28,951			15,501
Amortization of debt discount		—			897			—			2,637
Settlement and related costs		—			—			—			5,359
Non-GAAP Net income (loss)	$	(909	)	$	(6,658	)	$	2,139		$	(9,307	)
Non-GAAP Net income (loss) per share:
Basic	$	(0.04	)	$	(0.29	)	$	0.09		$	(0.41	)
Diluted	$	(0.04	)	$	(0.29	)	$	0.08		$	(0.41	)
GAAP and non-GAAP Weighted-average shares — basic		24,330			22,931			24,040			22,686

GAAP Weighted-average shares — diluted		24,330			22,931			24,040			22,686
Dilutive shares from stock plans		—			—			1,626			—
Non-GAAP Weighted-average shares — diluted		24,330			22,931			25,666			22,686

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
	December 31,
	2021
GAAP Net loss	$	(13,300	)
Adjustments:
Forecasted Depreciation		1,800
Forecasted Stock-based compensation		11,150
Forecasted Interest expense		550
Forecasted Other income, net		0
Forecasted Income tax expense		50
Adjusted EBITDA income	$	250

GAAP Net loss	$	(13,300	)
Adjustments:
Forecasted Depreciation		1,800
Forecasted Stock-based compensation		11,150
Non-GAAP Net loss	$	(350	)

GAAP Net loss per share — basic and diluted
Basic	$	(0.54	)
Diluted	$	(0.54	)
Non-GAAP Net loss per share — basic and diluted
Basic	$	(0.01	)
Diluted	$	(0.01	)

GAAP and non-GAAP weighted-average shares — basic and diluted		24,500

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Impinj Reports Third Quarter 2021 Financial Results