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Impinj Reports Full Second Quarter 2018 Financial Results

Company Completes Independent Investigation and Files Form 10Q

SEATTLE--(BUSINESS WIRE)--Sep. 12, 2018-- Impinj, Inc. (NASDAQ: PI), a leading provider and pioneer of RAIN RFID solutions for identifying, locating and authenticating everyday items, today released its full financial results for the quarter ended June 30, 2018. The Company also disclosed that the Audit Committee completed the independent investigation the Company announced in its August 2nd press release related to a complaint filed by a former employee. The Committee concluded there was no credible evidence supporting the former employee’s claims. The Company had delayed filing its second-quarter Form 10Q and announcing full second-quarter results pending completion of the investigation.

“Our second quarter 2018 results are consistent with our August 2nd press release,” said Chris Diorio, Impinj co-Founder and CEO. “We are pleased that the Audit Committee was able to complete its independent investigation, and are proud that the outcome reaffirms that we operate our business according to the highest ethical principles. We continue to see momentum building as our team focuses on executing our vision of identifying, locating and authenticating every item in our everyday world.”

Second Quarter 2018 Financial Summary

  • Revenue was $28.5 million
  • GAAP gross margin of 47.9%; non-GAAP gross margin of 50.0%
  • GAAP net loss of $7.7 million, or loss of $0.36 per basic and diluted share using 21.3 million shares
  • Adjusted EBITDA loss of $4.0 million
  • Non-GAAP net loss of $4.1 million, or loss of $0.19 per diluted share using 21.3 million shares

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

Third Quarter 2018 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 third quarter of 2018 (in millions, except per share data):

 
Three Months Ended
September 30,
2018
Revenue $33.0 to $34.0
Net loss (1) $(10.3) to $(9.3)
Adjusted EBITDA $(3.4) to $(2.4)
Non-GAAP Net loss $(3.6) to $(2.6)
GAAP Weighted-average shares — basic and diluted 21.4 to 21.5
Net loss per share — basic and diluted $(0.48) to $(0.43)
Non-GAAP Weighted-average shares — basic and diluted 21.4 to 21.5
Non-GAAP Net loss per share — basic and diluted $(0.17) to $(0.12)
 

(1) The third quarter outlook for GAAP Net loss includes estimated expenses associated with the recently completed investigation. If actual investigation costs differ from our estimate, net loss may differ from the outlook provided.

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

Audit Committee Investigation Findings

The Audit Committee, assisted by independent counsel that the Committee retained to oversee a thorough and careful investigation, concluded that there was no credible evidence supporting the former employee’s complaint. Accordingly, the Audit Committee determined that no additional actions were necessary or warranted with respect to the complaint or the investigation, including that no adjustments to past financial statements were appropriate or required, and that, at this time, no further investigatory steps need to be taken. With the filing of the Company’s second-quarter Form 10Q today, the Company is in compliance with its SEC filing obligations.

Conference Call Information

Impinj will host a conference call tomorrow, September 13, 2018 at 8:00 a.m. ET / 5:00 a.m. PT for analysts and investors to ask questions on our second quarter 2018 results. 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 one hour after the call and will run for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 10121728.

Management’s prepared written remarks, along with quarterly financial data for the last eight quarters, 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, and financial outlook for the third quarter of 2018. 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, Inc. (NASDAQ: PI) wirelessly connects billions of everyday items such as apparel, medical supplies, automobile parts, luggage and food to consumer and business applications such as inventory management, patient safety, asset tracking and item authentication. The Impinj platform uses RAIN RFID to deliver timely information about these items to the digital world, thereby enabling the Internet of Things.

 

IMPINJ, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value, unaudited)

 
  June 30,   December 31,
2018 2017
Assets:
Current assets:
Cash and cash equivalents $ 15,500 $ 19,285
Short-term investments 37,307 38,831
Accounts receivable, net 20,016 22,244
Inventory 53,278 47,083
Prepaid expenses and other current assets   1,533   2,359
Total current assets   127,634   129,802
Property and equipment, net 16,918 18,110
Other non-current assets 214 241
Goodwill and other intangible assets, net   3,881   3,881
Total assets $ 148,647 $ 152,034
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 5,299 $ 4,666
Accrued compensation and employee related benefits 5,992 5,729
Accrued liabilities 3,140 3,162
Accrued restructuring costs 1,590
Current portion of long-term debt 1,593 4,088
Current portion of capital lease obligations 703 936
Current portion of deferred rent 374 628
Current portion of deferred revenue   509   714
Total current liabilities 19,200 19,923
Long-term debt, net of current portion 18,266 5,500
Capital lease obligations, net of current portion 495 745
Long-term liabilities — other 560 532
Long-term restructuring liabilities 685
Deferred rent, net of current portion 5,495 5,891
Deferred revenue, net of current portion   219   501
Total liabilities   44,920   33,092
Stockholders' equity:
Preferred stock, $0.001 par value — 5,000 shares authorized, no shares issued and outstanding at June 30, 2018 and December 31, 2017
Common stock, $0.001 par value — 495,000 shares authorized, 21,395 and 20,973 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively 21 21
Additional paid-in capital 330,441 323,482
Accumulated other comprehensive loss (36 ) (36 )
Accumulated deficit   (226,699 )   (204,525 )
Total stockholders' equity   103,727   118,942
Total liabilities and stockholders' equity $ 148,647 $ 152,034
 
 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

 
  Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenue $ 28,542 $ 34,111 $ 53,610 $ 65,838
Cost of revenue   14,882   15,940   28,188   30,899
Gross profit 13,660 18,171 25,422 34,939
Operating expenses:
Research and development 8,363 7,119 16,366 14,462
Sales and marketing 8,023 7,044 16,882 14,380
General and administrative 5,061 4,822 10,286 8,909
Restructuring costs   (178 )     3,749  
Total operating expenses   21,269   18,985   47,283   37,751
Loss from operations (7,609 ) (814 ) (21,861 ) (2,812 )
Other income (expense), net 267 189 357 458
Interest expense   (351 )   (307 )   (580 )   (681 )
Loss before income taxes (7,693 ) (932 ) (22,084 ) (3,035 )
Income tax expense   (39 )   (45 )   (90 )   (102 )
Net loss $ (7,732 ) $ (977 ) $ (22,174 ) $ (3,137 )
Net loss per share — basic and diluted $ (0.36 ) $ (0.05 ) $ (1.04 ) $ (0.15 )
Weighted-average shares outstanding — basic and diluted 21,333 20,636 21,229 20,491
 
 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)

 
  Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Net loss $ (7,732 ) $ (977 ) $ (22,174 ) $ (3,137 )
Other comprehensive loss, net of tax:
Unrealized gains / (losses) on investments   20   (4 )       (40 )
Total other comprehensive income / (loss)   20   (4 )       (40 )
Comprehensive loss $ (7,712 ) $ (981 ) $ (22,174 )   $ (3,177 )
 
 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 
  Six Months Ended
June 30,
2018   2017
Operating activities:
Net loss $ (22,174 ) $ (3,137 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 2,258 1,847
Stock-based compensation 4,678 2,623
Restructuring costs (454 )
Accretion of discount or amortization of premium on short-term investments (143 ) 105
Amortization of debt issuance costs 39 48
Changes in operating assets and liabilities:
Accounts receivable 2,228 (8,042 )
Inventory (6,195 ) (15,685 )
Prepaid expenses and other assets 864 724
Deferred revenue (487 ) 196
Deferred rent (87 ) 857
Accounts payable 579 (1,121 )
Accrued compensation and benefits 341 (1,886 )
Accrued liabilities (34 ) 691
Accrued restructuring costs   2,275  
Net cash used in operating activities   (16,312 )   (22,780 )
Investing activities:
Purchases of investments (19,154 ) (17,293 )
Proceeds from maturities of investments 20,800 24,362
Purchases of property and equipment   (1,071 )   (4,131 )
Net cash provided by investing activities   575   2,938
Financing activities:
Payments on capital lease financing obligations (483 ) (557 )
Payments on term loans (2,147 ) (688 )
Proceeds from term loans, net of debt issuance costs 12,379
Proceeds from exercise of stock options and employee stock purchase plan 2,203 2,933
Payments of deferred offering costs     (650 )
Net cash provided by financing activities   11,952   1,038
Net decrease in cash and cash equivalents (3,785 ) (18,804 )
Cash and cash equivalents
Beginning of period   19,285   33,636
End of period $ 15,500 $ 14,832
 

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, we use non-GAAP financial measures by financial statement line items that exclude the effects of stock-based compensation, depreciation, restructuring costs and other expenses that we believe do not reflect our core operating performance. Our key non-GAAP liquidity and performance measures include adjusted EBITDA and non-GAAP net income (loss), see definitions of such 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 excluding those expenses inherent in calculating adjusted EBITDA and non-GAAP net income (loss) can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that adjusted EBITDA and non-GAAP net income (loss) provide useful information to investors and others in understanding and evaluating our operating results in the same manner as it does for 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 non-GAAP measures used by other companies.

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation, restructuring costs, other income (expense), net, interest expense and income tax expense. Restructuring costs relate to an effort in the first quarter of 2018 to reduce headcount and sublease office space to match strategic and financial objectives and optimize resources for long term growth. We believe that adjusted EBITDA provides meaningful supplemental information regarding our performance and liquidity.

Non-GAAP Net Income (Loss)

We define non-GAAP net income (loss) to consist of net income (loss) determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation, restructuring costs (for more information about restructuring costs, please refer to description in adjusted EBITDA above), amortization of debt issuance costs and non-cash income tax expense. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of future income tax liabilities by utilizing our deferred tax assets, which primarily consist of federal net operating loss carryforwards and federal research and experimentation credit carryforwards. By better reflecting our future operating performance we believe this presentation will enhance comparability of our operating results.

 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(in thousands, except percentages, unaudited)

 
  Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017 2018   2017
GAAP Gross profit $ 13,660 $ 18,171 $ 25,422 $ 34,939
Adjustments:
Depreciation 503 438 1,003 823
Stock-based compensation   98   37   181   83
Non-GAAP Gross profit $ 14,261 $ 18,646 $ 26,606 $ 35,845
 
GAAP Gross margin 47.9 % 53.3 % 47.4 % 53.1 %
Adjustments:
Depreciation 1.8 % 1.3 % 1.9 % 1.3 %
Stock-based compensation   0.3 %   0.1 %   0.3 %   0.1 %
Non-GAAP Gross margin   50.0 %   54.7 %   49.6 %   54.3 %
 
GAAP Research and development expense $ 8,363 $ 7,119 $ 16,366 $ 14,462
Adjustments:
Depreciation (402 ) (311 ) (787 ) (617 )
Stock-based compensation   (822 )   (415 )   (1,581 )   (898 )
Non-GAAP Research and development expense $ 7,139 $ 6,393 $ 13,998 $ 12,947
 
GAAP Sales and marketing expense $ 8,023 $ 7,044 $ 16,882 $ 14,380
Adjustments:
Depreciation (131 ) (126 ) (260 ) (245 )
Stock-based compensation   (931 )   (572 )   (1,688 )   (1,179 )
Non-GAAP Sales and marketing expense $ 6,961 $ 6,346 $ 14,934 $ 12,956
 
GAAP General and administrative expense $ 5,061 $ 4,822 $ 10,286 $ 8,909
Adjustments:
Depreciation (102 ) (98 ) (208 ) (162 )
Stock-based compensation   (762 )   (229 )   (1,228 )   (463 )
Non-GAAP General and administrative expense $ 4,197 $ 4,495 $ 8,850 $ 8,284
 
GAAP Total operating expense $ 21,269 $ 18,985 $ 47,283 $ 37,751
Adjustments:
Depreciation (635 ) (535 ) (1,255 ) (1,024 )
Stock-based compensation (2,515 ) (1,216 ) (4,497 ) (2,540 )
Restructuring costs   178          
Non-GAAP Total operating expense $ 18,297 $ 17,234 $ 41,531 $ 34,187
 
 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data, unaudited)

 
 

For the Three Months Ended

 

For the Six Months Ended

June 30,

June 30,

2018   2017 2018   2017
 
Net loss $ (7,732 ) $ (977 ) $ (22,174 ) $ (3,137 )
Depreciation 1,138 973 2,258 1,847
Stock-based compensation 2,613 1,253 4,678 2,623
Other (income) expense, net (267 ) (189 ) (357 ) (458 )
Interest expense 351 307 580 681
Income tax expense 39 45 90 102
Restructuring costs   (178 )   -   3,749   -
Adjusted EBITDA $ (4,036 ) $ 1,412 $ (11,176 ) $ 1,658
 
   

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2018   2017 2018   2017
 
Net Loss $ (7,732 ) $ (977 ) $ (22,174 ) $ (3,137 )
Adjustments:
Depreciation 1,138 973 2,258 1,847
Stock-based compensation 2,613 1,253 4,678 2,623
Restructuring costs (178 ) - 3,749 -
Amortization of debt issuance costs 18 25 39 48
Non-cash income tax expense   12   23   28   45
Non-GAAP Net income (loss) $ (4,129 ) $ 1,297 $ (11,422 ) $ 1,426
Non-GAAP Net income (loss) per share:
Basic $ (0.19 ) $ 0.06 $ (0.54 ) $ 0.07
Diluted $ (0.19 ) $ 0.06 $ (0.54 ) $ 0.07
GAAP and non-GAAP Weighted-average shares — basic 21,333 20,636 21,229 20,490
Adjustments:
Effects of dilutive securities
Unvested shares of common stock subject to repurchase - 84 - 92
Stock options   -   1,194   -   1,219
Non-GAAP Weighted-average shares — diluted   21,333   21,914   21,229   21,801
 
 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL OUTLOOK TO NON-GAAP FINANCIAL OUTLOOK

(in thousands, except per share data, unaudited)

 
  Three Months Ended
September 30,
2018
Forecasted Net loss (1) $ (9,820 )
Adjustments:
Forecasted Depreciation 1,900
Forecasted Stock-based compensation 3,030
Forecasted Other (income) expense, net (180 )
Forecasted Interest expense 369
Forecasted Income tax expense 51
Forecasted Investigation expenses (1)   1,750
Adjusted EBITDA $ (2,900 )
 
Forecasted Net loss (1) $ (9,820 )
Adjustments:
Forecasted Depreciation 1,900
Forecasted Stock-based compensation 3,030
Forecasted Amortization of debt issuance costs 20
Forecasted Non-cash income tax expense 20
Forecasted Investigation costs (1)   1,750
Non-GAAP Net loss $ (3,100 )
Non-GAAP Net loss per share — basic and diluted $ (0.14 )
Weighted-average shares — basic and diluted 21,450
 

(1) The third quarter outlook for GAAP Net loss includes estimated expenses associated with the recently completed investigation. If actual investigation costs differ from our estimate, net loss may differ from the outlook provided.

Source: Impinj, Inc.

Impinj, Inc.
Investor Relations, +1-206-315-4470
ir@impinj.com

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Impinj is the leading provider of RAIN RFID solutions that provide Item Intelligence in the retail, pharmaceutical, healthcare, food and beverage, and many other industries.