Earnings call transcript: Impinj Q2 2025 beats EPS expectations, stock rises

Impinj Inc. reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.80, compared to the forecasted $0.71. This 12.68% surprise, along with a revenue of $97.9 million against a forecast of $93.75 million, led to an after-hours stock price increase of 1.69%, closing at $124.88. According to InvestingPro data, the stock has shown significant volatility, with analyst price targets ranging from $115 to $145, suggesting mixed views on its near-term potential.

Key Takeaways

• Impinj’s Q2 EPS of $0.80 exceeded forecasts by 12.68%.
• Revenue reached $97.9 million, outperforming expectations.
• Stock price increased by 1.69% in after-hours trading.
• Gross margin set a new quarterly record at 60.4%.
• The company anticipates sequential revenue growth in Q3.

Company Performance

Impinj demonstrated robust performance in Q2 2025, with a 32% sequential increase in revenue, despite a 4% year-over-year decline. The company set a new record for gross margin at 60.4%, and its adjusted EBITDA reached $27.6 million, marking a 28.2% margin. Impinj continues to lead in the RAIN RFID technology sector, expanding its market presence in retail, logistics, and the emerging food sector.

Financial Highlights

• Revenue: $97.9 million, up 32% sequentially, down 4% YoY.
• EPS: $0.80, beating the forecast of $0.71.
• Gross Margin: 60.4%, a new quarterly record.
• Adjusted EBITDA: $27.6 million, with a 28.2% margin.
• Cash and Investments: $260.5 million.

Earnings vs. Forecast

Impinj’s EPS exceeded expectations by 12.68%, with actual earnings of $0.80 against a forecast of $0.71. Revenue also surpassed forecasts, coming in at $97.9 million compared to the anticipated $93.75 million, marking a 4.43% surprise. This performance reflects the company’s ability to navigate macroeconomic challenges and leverage its technological advancements.

Market Reaction

Following the earnings announcement, Impinj’s stock rose by 1.69% in after-hours trading, reaching $124.88. This positive market reaction highlights investor confidence in the company’s strategic direction and financial health, despite the stock’s previous decline of 0.49% during regular trading hours.

Outlook & Guidance

For the third quarter of 2025, Impinj projects revenue between $91 million and $94 million, with an adjusted EBITDA ranging from $15.6 million to $17.1 million. The company expects continued growth in endpoint IC revenue and improvements in the M800 product mix, contributing to margin expansion.

Executive Commentary

"We expect these same demand drivers to deliver sequential revenue growth in the third quarter," said CEO Chris DiOrio, emphasizing the company’s optimistic outlook. CFO Carrie Baker added, "M800 continues to ramp. We expect it to do so again in Q3 and again in Q4," highlighting ongoing product development.

Risks and Challenges

• Supply chain challenges and tariff impacts could affect future operations.
• Macro headwinds may persist, influencing consumer demand and market conditions.
• Competition in the RFID technology sector remains intense, requiring continuous innovation.
• Dependency on key sectors such as retail and logistics may expose the company to sector-specific risks.

Q&A

During the earnings call, analysts inquired about the potential of the food sector, with CEO Chris DiOrio noting, "We see the food opportunity as being in early innings, but we’re as excited as we could be." Other questions focused on the benefits of the Gen2X technology and inventory dynamics, reflecting investor interest in the company’s strategic initiatives and market positioning.

Full transcript - Impinj Inc (PI) Q2 2025:

Conference Operator: Welcome to the Inpay Second Quarter twenty twenty five Financial Results Conference Call and Webcast. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr.

Andy Cobb, Vice President, Strategic Finance. Please go ahead.

Andy Cobb, Vice President, Strategic Finance, Impinj: Thank you, Ashia. Good afternoon, and thank you all for joining us to discuss Impinj’s second quarter twenty twenty five results. On today’s call, Chris DiOrio, Impinj’s Co Founder and CEO, will provide a brief overview of our market opportunity and performance. Carrie Baker, Impinj’s CFO, will follow with a detailed review of our second quarter financial results and third quarter outlook. We will then open the call for questions.

You can find management’s prepared remarks plus trended financial data on the company’s Investor Relations website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today. Any such statements are forward looking under the Private Securities Litigation Reform Act of 1995. Whereas we believe we have a reasonable basis for making these forward looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties. We describe these risks and uncertainties in the annual and quarterly reports we file with the SEC.

We do not undertake and expressly disclaim any obligation to update or alter our forward looking statements, except as required by law. On today’s call, all financial metrics, except for revenue or where we explicitly state otherwise, are non GAAP. All balance sheet and cash flow metrics, except for free cash flow, are GAAP. Please refer to our earnings release for a reconciliation of non GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate

Tracy Morant, Investor Relations, Impinj: go forward, Tracy. This is Tracy Morant with Investor Relations. Before turning to the results and outlook, note that we will participate in the fourteenth Annual Needham Virtual Industrial Tech, Robotics and Clean Tech one on one conference on August 19, the Jefferies Semiconductor, IT Hardware and Communications Technology Conference on August 26 in Chicago, Before the Evercore twenty twenty five Semiconductor, IT, Hardware and Networking Conference on August 27 in Chicago, the Goldman Sachs Communicopia and Technology Conference twenty twenty five on September 9 in San Francisco, and the Piper Sandler GrowthPrint Cheers Conference on September 11 in Nashville. We look forward to connecting with many of you at those events. I will now turn the call over to Chris.

Thank you, Andy, and thank you, Tracy.

Chris DiOrio, Co-Founder and CEO, Impinj: And thank you all for joining the call. Our second quarter results were strong with revenue exceeding the upper end of our guide range. Adjusted EBITDA also exceeded our guide range while setting a new quarterly record. Input ICs, reader ICs, readers and gateways all outperformed our expectations as category and use case expansion, M800 adoption and pull for Gen2X more than offset headwinds from tariffs, inflation and supply chain disruptions. We expect these same demand drivers to deliver sequential revenue growth in the third quarter.

Our solution strategy, focused on using our platform to solve enterprise challenges, is central to our strong results and outlook. The examples are many. In the second quarter, a leading apparel retailer began deploying overhead reading, delivering reader IC revenue and, looking forward, endpoint IC share gains. We won two new use cases at the Visionary European retailer that delivered meaningful reader revenue in the second quarter and will again in the third. We also won new use cases at the second large North American supply chain and logistics end user that will deliver meaningful reader revenue in the third and fourth quarters.

And retail loss analytics, derived from the loss prevention solution we developed for the visionary European retailer, drove second quarter demand for our readers and endpoint ICs and should again in the third quarter. At all these accounts, we either have or are focused on winning high endpoint IC share. M800 and Gen2X play a starring role in our strategy. In addition to the aforementioned wins, multiple item level food accounts today use M800 for its superior performance on hard to read items, and we are piloting Gen2X for further readability improvements. Apparel, accessories, jewelry and myriad other item categories see faster handheld inventory counting using M800 and Gen2X, including labor time and cost and increasing ROI.

I’ve mentioned Gen2X a few times, but I’d like to again highlight what it is and what it does. Gen2X is a compatible set of extensions to the industry radio protocol. It improves read range for small inlays, increasing the floor coverage of overhead readers. It speeds inventory and improves tag population management, benefiting loss prevention and loss analytics as well as decluttering tag environments and conveyors and truckloading. It speeds handheld inventory counting, reducing labor costs, and it does much more.

Today, Gen2X is driving demand for our products and platform. Longer term, we expect it to be a key component of our industry’s future. Turning specifically to endpoint ICs. Our second quarter book to bill ratio was strong. Turns orders exceeded our expectations despite the macro softness.

M800’s superior performance, growing inlay certifications and Gen2X support paid dividends in sequential endpoint IC unit volume growth even as partner channel inventory declined. Strong execution by our sales and operations teams, which helped our inlay partners navigate tariff related sourcing challenges, also contributed to our results. Looking to third quarter, we expect to again deliver sequential endpoint IC product revenue growth. In reader ICs, second quarter revenue declined sequentially due to significantly lower Indy shipment volumes. That product line concludes its end of life.

E family revenue met expectations, buoyed by a first order for that retail overhead reading deployment. More than 50 e family partner modules and readers now support Gen2X, creating a virtuous cycle of e family reader ICs driving demand for M800 endpoint ICs and vice versa. Looking to third quarter, we anticipate strong e family shipment volumes driving sequential reader IC revenue growth. Turning to readers and gateways. Second quarter revenue increased sequentially, led by the two new use cases at the Visionary European retailer as well as retail demand for loss analytics.

We will continue innovating our readers and gateways to solve enterprise challenges, especially using Gen2X, focused on creating a second virtuous M800 demand cycle. Looking to third quarter, we expect to again deliver sequential revenue growth, buoyed by the wins at the visionary European retailer and at the second large North American supply chain and logistics end user. In closing, our solutions focus continues to win dividends in revenue, adjusted EBITDA, recurring endpoint IC volumes and market leadership. It is a key component of our strong financial results in an otherwise challenging retail environment. And our enterprise customers remain actively engaged despite the macro headwinds, extending their RAIN deployments to drive efficiencies, grow sales and improve their supply chain flexibility and resiliency.

In addition, our market opportunity continues expanding with more opportunities for secular growth, especially in food, where product freshness, supply chain efficiencies and consumer self checkout are collectively driving pallet and case level deployments and item level pilots. Through it all, we continue managing our business with a steady hand, focused on extending our technology lead, market share, platform adoption and delighting our enterprise customers. As always, before I turn the call over to Cary for our financial review and third quarter outlook, I’d like to again thank every member of the Impinj team for your tireless effort. I feel honored by my incredible good fortune to work with you. Gary?

Carrie Baker, CFO, Impinj: Thank you, Chris, and good afternoon, everyone. Second quarter revenue was $97,900,000 up 32% sequentially from $74,300,000 in first quarter twenty twenty five and down 4% year over year from $102,500,000 in second quarter twenty twenty four. Second quarter endpoint IC revenue was $84,600,000 up 38% sequentially from $61,200,000 in first quarter twenty twenty five and down 5% year over year from $89,400,000 in second quarter twenty twenty four. Excluding licensing revenue, endpoint IC product revenue grew 12% sequentially and declined 8% year over year, exceeding our expectations, albeit still at the low end of typical seasonal growth. We expect third quarter endpoint IC product revenue to increase sequentially, in line with typical seasonality.

Second quarter systems revenue was $13,300,000 up 2% sequentially from $13,100,000 in first quarter twenty twenty five and up 1% year over year from $13,100,000 in second quarter twenty twenty four. Systems revenue exceeded our expectations driven by reader strength. Looking forward, we expect third quarter systems revenue to increase sequentially led by strong reader and gateway demand. Second quarter gross margin was 60.4% compared with 52.7% in first quarter twenty twenty five and fifty eight point two percent in second quarter twenty twenty four. The sequential increase was driven primarily by licensing revenue.

The year over year increase was driven primarily by endpoint IC product mix, specifically a richer mix of M800 and licensing revenue. Excluding licensing revenue, second quarter product gross margin was 52.6 compared with 51% in second quarter twenty twenty four. Looking forward, we expect third quarter product gross margin to increase sequentially. Total second quarter operating expense was $31,500,000 compared with $32,600,000 in first quarter twenty twenty five and $32,800,000 in second quarter twenty twenty four. Operating expense was below expectations as our team exercised good fiscal discipline.

Research and development expense was $17,500,000 Sales and marketing expense was $6,700,000 General and administrative expense was $7,300,000 Looking forward, we expect third quarter operating expense to increase sequentially. Second quarter adjusted EBITDA was $27,600,000 compared with $6,500,000 in first quarter twenty twenty five and $26,800,000 in second quarter twenty twenty four. Second quarter adjusted EBITDA margin was 28.2%, a new quarterly record. Excluding licensing revenue, adjusted EBITDA margin was 14.2%. Second quarter GAAP net income was $11,600,000 Second quarter non GAAP net income was 24,500,000.0 or $0.80 per share on a fully diluted basis.

Turning to the balance sheet. We ended the second quarter with cash, cash equivalents and investments of $260,500,000 compared with $232,500,000 in first quarter twenty twenty five and $220,200,000 in second quarter twenty twenty four. Inventory totaled $96,200,000 down $2,300,000 from the prior quarter. Second quarter capital expenditures totaled 6,500,000.0 Free cash flow was $27,300,000 Before turning to our guidance, I want to highlight a few items specific to our results and outlook. First, both gross margin and adjusted EBITDA margin set new quarterly records, an important milestone toward our long term financial targets.

More work remains, but I continue to be encouraged by our progress. Second, we anticipate product gross margin to increase in the third quarter driven by higher M800 mix and sell through of lower cost wafers. We anticipate further gross margin benefit from these factors in the fourth quarter. Finally, given the continuing tariff related uncertainty and volatility, we are again assuming minimal turns at the midpoint of our revenue guidance. Turning to our outlook.

We expect third quarter revenue between 91,000,000 and $94,000,000 compared with product revenue of $81,900,000 in second quarter twenty twenty five, a quarter over quarter increase of 13% at the midpoint. We expect adjusted EBITDA between 15,600,000.0 and $17,100,000 On the bottom line, we expect non GAAP net income between 14,000,000 and $15,500,000 reflecting non GAAP fully diluted earnings per share between $0.47 and $0.51 In closing, I want to thank the Impinj team, our customers, our suppliers and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session. Operator?

Conference Operator: Thank you. We will now begin the question and answer session. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please re queue and we will take as many questions as time allows. The first question comes from Harsh Kumar with Piper Sandler.

Please go ahead.

Harsh Kumar, Analyst, Piper Sandler: Yeah. Hey, first of all, Andy, we like working with you a lot. We hope you’re okay and you’re simply overcome with greatest overcome with emotions with the great results you’re putting up. So hope you’re well. Question for Carrie.

Carrie, question for Carrie. Carrie, as as you as you look at your results of the strong beat you put up in the June, you didn’t have turns in there before. So I guess my first question is I wanna understand how much of the beat in 2Q was turns related and how much of it was just tremendous strength that you saw? And then you’re saying that you have minimal amount of turns in the third quarter guidance for September. And I want to just understand how much you’re building in.

If you can give us a percentage or maybe just some color if you don’t want to give us a percentage. And then I’ve got a follow-up.

Carrie Baker, CFO, Impinj: Yes. Sure, Harshal. Thanks for the question. So we continue operating in a very dynamic and rapidly changing market. In the second quarter, we did see more turns than we expected, but we also saw adjustments to delivery timing and location as our partners continue to optimize their geographic production strategies.

This dynamic may continue into the third quarter, so we’re deploying a similar approach in building our guidance, and we’ve assumed no additional turns at the midpoint of our guide. Now given our stated lead times and our inventory position, we could fill up a few more weeks of turns order in the third quarter, So this approach should give us enough room to absorb any potential requests for order adjustments.

Harsh Kumar, Analyst, Piper Sandler: Great. And then you are talking about the margins being up quite substantially or they were already up and you’re saying you had the benefit of M800 proliferating to the revenue stream. And then you talked also about some kind of wafer cost. Could you maybe elaborate on what you mean by that? And then, I guess, maybe just give us a sense of which is a bigger factor, the wafer pricing better for you dramatically?

Or is it mostly M800 coming through for you? Or is it something else altogether?

Carrie Baker, CFO, Impinj: Yes, Harsh. So the M800 continues to ramp. It ramped nicely in the second quarter. We expect it to do so again in the third quarter and again in the fourth quarter. So we are starting to see the benefit of the M800 cost advantage in our gross margin.

We saw some of it in Q2. We’ll see more of it in Q3. The comment as it relates to wafers is we are in an environment where we are back to normal ASP declines, where those ASP declines go into effect in the first quarter of the year. And typically, we support those ASP declines with wafer cost downs. The wafer cost down pricing also goes into effect at the beginning of the year.

However, because we want to ensure supply to our customers, we carry approximately six months of forward looking inventory. So we have to sell through that inventory first before we get to the wafers that are costed in 2025 pricing terms. So that’s what we’re seeing now. We’re six months through the year. We’re starting to see the benefit of those cost downs on the wafer side that we achieved in the first quarter.

Conference Operator: The next question comes from Christopher Rolland with Susquehanna. Please go ahead.

Christopher Rolland, Analyst, Susquehanna: Hey, guys. Thanks for the question. So just as I look at some of your channel partners, so a large North American partner described kind of slower apparel and general retail growth, but faster or solid food and logistics growth. I guess, first of all, would you concur with those takes, agree with those takes? And then secondly, a partner out of Asia had softer 2Q sales.

Are you seeing anything there with that partner as well? Thank you.

Chris DiOrio, Co-Founder and CEO, Impinj: So Chris, the answer to your first question is a simple yes. We feel good about our market position and good about our partnership with that North American partner. And the things that they’re seeing in the market are basically what we’re seeing in the market. That said, we don’t always line up exactly with them. This year, for example, we saw first quarter supply chain and logistics correction and some mix shift changes separate from what saw.

But overall, in terms of the comments they’ve made, we’re seeing the same thing out in the market. In terms of the Asian partner, we obviously have very good relationship with them as well. They’re one of our also one of our top, partners. They deliver very well into the market, and we expect continued strength from them going forward. Every company has their corrections that they have to go through.

We went through one in the first quarter. They’re seeing a little bit of one right now. But in terms of their overall market position, in terms of we engage with them, we continue to engage with them as a very close partner. We feel good about where they’re headed or not all of them. Just at the highest level, we feel good about the market.

Despite the macro headwinds, despite the tariff related uncertainties, despite the things that are going on, you can see strength in the market. And the reason I highlighted our solution strategy is I feel good about our position in the market with that solution strategy driving strength for us overall.

Christopher Rolland, Analyst, Susquehanna: Thank you, Chris. We feel good about it, too. I wanted to ask you on the economics of Gen 2x. I think it’s just available on M800 ICs and then there’s like a software firmware update for readers. But is there any other kind of better economics associated with Gen 2x, like ASP or gross margin?

Or is this just really all about like a faster transition to M800?

Chris DiOrio, Co-Founder and CEO, Impinj: Right now, it’s focused on, a faster transition to m 800. But perhaps more importantly, it’s focused on enabling our enterprise customers with solutions that were that we couldn’t solve previously. We introduced Gen two x to improve for all the reasons I said in the prepared remarks. It improves readability and and lower footprint and other things. And we’re using Gen two x to enable enterprise solutions, which turns around and provides that virtuous cycle of pull for M800.

So that’s where you should focus. You should focus on us using Gen2X to enable enterprise solutions that we couldn’t do previously.

Christopher Rolland, Analyst, Susquehanna: Great. Thanks so much, Chris.

Chris DiOrio, Co-Founder and CEO, Impinj: Sure. Thank you.

Conference Operator: The next question comes from Blayne Curtis with Jefferies. Please go ahead.

Ezra Weiner, Analyst, Jefferies: Hi, Ezra Weiner on for Blayne. Thanks for taking my question. I guess two quick ones. One, in terms of your overhead reading and other solutions that you are talking about bringing to market, can you help size the impact of what that means from both a reader but also from an endpoint IC perspective? And then secondly, can you just talk about what you’re seeing from channel inventory?

I know you had talked about two extra weeks for supply chain optionality, but you also talked a little bit about inventory coming down in the quarter. So can you talk about the moving pieces there? Thank you.

Chris DiOrio, Co-Founder and CEO, Impinj: So thanks, Blaine. I’ll take the first question, and I’ll let Carrie take the second one. So in regards to the opportunity with these enterprise customers and really where our focus is. Let me just start by saying the overhead reading opportunity is primarily a reader IC opportunity. We’re supporting a partner there, not a direct reader engagement opportunity.

With that said, our ability to enhance the performance and then demonstrate further performance benefits with Gen2X, we’re using to drive our endpoint IC market share. In general, the enterprises that we engage directly with have high or very high Impinj endpoint IC market share. And that is our goal in engaging with these enterprises from our perspective. So we’re monetizing the relationships by selling readers and gateways, of course, but primarily in the recurring revenue stream from the endpoint ICs. At the same time, when we commit to an enterprise end user, we truly commit to them.

So what you’re seeing in these recurring engagements is us committing to them, them committing to us, and and us working in partnership with the enterprise to drive further use case. They become core partners for our learnings. They become reference customers for us, and they allow us to advance our position in the market, all while while maintaining high end point IC market share. So that is essentially our solutions focus, and you can see it in every account every enterprise account that we work directly with.

Carrie Baker, CFO, Impinj: Hi, Ezra. This is Carey. Regarding your channel inventory question, we anticipated a modest channel inventory build in Q2 as our partners continued building geographic production optionality. However, we actually saw channel inventory come down even as they built that optionality. Overall, we believe channel inventory is healthy compared to our inlay partner demand, and we expect the weeks of channel inventory to roughly stay in this range for the foreseeable future.

So we feel really good about where we are from a channel perspective.

Christopher Rolland, Analyst, Susquehanna: Awesome. Thank you

Ezra Weiner, Analyst, Jefferies: very much.

Chris DiOrio, Co-Founder and CEO, Impinj: Great. Thank you.

Conference Operator: The next question comes from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, gentlemen. Congrats on another great quarter here.

Chris DiOrio, Co-Founder and CEO, Impinj: Thanks, Troy.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, I want to talk maybe two verticals here. So specifically logistics, obviously you’ve done well, you kind of comment on two customers there. Can you just talk about the pipeline or the opportunity? Is there more big deals in the logistics vertical in coming quarters?

Chris DiOrio, Co-Founder and CEO, Impinj: So, Troy, yes, there are more opportunities in the logistics space. But what I’d like to do right now is kinda get you to think about broadening that aperture a bit because there are straight supply chain and logistics customers, and then there are a variety of retailers and others who manage their own supply chains. And right now, given the tariff situation, all of those enterprise end users or enterprise customers are looking to improve their resiliency and flexibility of their supply chains. So even when we talk about food opportunities and other things, we’re still talking, in many cases, about supply chain resiliency and flexibility. So you should expect us to continue talking about supply chain and logistics, but broadening the aperture beyond just pure, SCNL or e commerce companies to kind of just everybody who has a supply chain, which is essentially every one of our customers.

Troy Jensen, Analyst, Cantor Fitzgerald: Great. Okay. And then for Carey, are you allowed to give us what the license revenues were in Q2?

Carrie Baker, CFO, Impinj: Yes. You’ll see it in our October. It was $16,000,000

Troy Jensen, Analyst, Cantor Fitzgerald: Was it up from 15,000,000 or up from 15,500,000.0 Or where was it

Chris DiOrio, Co-Founder and CEO, Impinj: From $15,000,000 last year. The

Conference Operator: next question comes from Jim Ricchiuti Please go ahead.

Jim Ricchiuti, Analyst: Hi, thanks. Good afternoon. I joined a little bit late, just gone through the transcript. But, Carrie, I was hoping, if you didn’t give this, and I just haven’t gotten through it, The improvement you’re expecting in product gross margins in q three, I mean, sounds like you’re looking you’re more optimistic not only on the endpoint IC business, but also on the systems portion of the business. I mean, it sounds like these are multiple drivers that impact your Q3 gross margins?

And then presumably, as you look at Q4, you get a better mix of M800 and maybe more systems business. But I’m just wondering, is there any more color you can provide if you haven’t on gross margins?

Carrie Baker, CFO, Impinj: Yes, Jim. I think the biggest drivers of the gross margin increase on a quarter over quarter basis for Q3 that we’re signaling is, first, the M800 mix. It’s continuing to ramp. I expect the M800 to achieve volume running status at some point this year. I don’t think it blends for the full year, and I don’t think it reaches its terminal mix in 2025, but we’re starting to hit our stride on the M800.

And you’re seeing that benefit come through in Q3 gross margin, and we signaled it again in the fourth quarter gross margin. Then the second factor that’s helping us is we’re finally getting to the lower cost wafers. So this goes back to Harsh’s question earlier on, where, yes, we’re back in a normal pricing environment where we deliver ASP declines to our customers that go into effect at the beginning of the year. We support those with wafer cost downs. But because we carry six months of forward looking inventory to ensure supply to our customers, it takes us six months to get to those lower cost wafers.

We’re starting to see that benefit now.

Jim Ricchiuti, Analyst: Okay. And you also signaled sorry, go ahead.

Carrie Baker, CFO, Impinj: Yes. I just remembered the second part of your question you asked about OpEx. Expect OpEx to increase in the third quarter.

Jim Ricchiuti, Analyst: Okay. And maybe just a follow-up on that inlay partner in North America. Messaging also being more optimistic about food. They seem to call out proteins and as being another opportunity. And, Chris, I’m wondering as you think about the opportunity has been talked about has been bakery departments.

You’ve talked about some other areas.

Andy Cobb, Vice President, Strategic Finance, Impinj: But how quickly

Jim Ricchiuti, Analyst: could we see this adoption as it relates to proteins?

Chris DiOrio, Co-Founder and CEO, Impinj: Yeah. So, Jim, first, I’d look at bakery proteins and fresh. At the pellet and case level, there are active deployments ongoing. At the item level, I would still characterize what’s going out on in the market as pilots. Of course, they’re food sized pilots, which means they’re large.

But I would still call them pilots. Both our close partner and we are very excited about all of those opportunities. And we see and we’re guardedly optimistic that those pilots are really going to turn into full fledged deployments. Because, as you heard in some of the other prepared remarks from others, the ROI is positive. I will say that given the size of the food category and given it’s we’re in the early innings, don’t expect things to ramp just instantaneously.

It’s going to take time. As I’ve always said, the bigger the category, the longer it takes. But with that caveat, I’m about as excited as I could be about the food opportunity because the pace at which we see enterprises either piloting or being interested reminds me of what happened in the early days of retail apparel once we got over the hump of having the right level products that worked and everything like that. There was a rapid surge in interest and demand, which then turned into the market we have today. I’m seeing the same thing in food.

I’m excited. I’m bullish. That said, it takes time.

Ezra Weiner, Analyst, Jefferies: Okay. Thank you.

Chris DiOrio, Co-Founder and CEO, Impinj: Thanks, Jim. Thank you, Jim.

Conference Operator: The next question comes from Scott Searle with ROTH Capital. Please go ahead.

Andy Cobb, Vice President, Strategic Finance, Impinj0: Hey, good afternoon. Thanks for taking my questions. Great job on the quarter guys.

Chris DiOrio, Co-Founder and CEO, Impinj: Thank you, Scott.

Andy Cobb, Vice President, Strategic Finance, Impinj0: Chris, maybe to follow-up on Jim’s question to dive in a little bit deeper on the food front. You’ve talked about the two larger customers and pilots that have been ongoing in bakery fresh proteins and private label. I’m wondering if you could give us more of a 30,000 foot view in terms of the level of engagement across the industry. And then the timelines, maybe digging in a little bit more on that front. Next year, do we start to see more accelerated push into not just the categories you talked about, but getting a little bit broader, getting down to the item level?

And what does it take to get down to the item level? It sounds like Gen 2x is certainly a key component of that. But does it also require, the holy grail, the $01 tag to start to tag everything within the foodservice opportunity? And then I had a follow-up.

Chris DiOrio, Co-Founder and CEO, Impinj: Yeah. Okay. I’m going do my best on this question, but there’s a lot of pieces to it. So, the close partner that we’ve mentioned a couple of times so far on this call, already cited in their prepared remarks that one of their customers is seeing a positive a more positive ROI in bakery than they had expected. And I’m not surprised by that.

I think it really highlights the opportunity that RAIN RFID brings and the fact that enabling those enterprises to factor items using expiration dates, the value proposition that it brings in food freshness, reduced food waste, and increased sales to their consumers. Am like I said to Jim, I am very excited about the food opportunity. I am not overestimating how quickly it’s going to go. But I do believe that given the state of the pilots that are happening now, the positive results that we’ve seen and the readability on items, that food is going to go at the item level. We’re already seeing it at the palate and case level.

It will go at the item level. I believe that what we should do over the next couple of quarters is focus on those categories where expiration date matters. So bakery items, deli items, proteins, things that expire quickly, and they’re useless if you don’t sell them before they expire. I think that’s where the return is we’re going see over for a good while before food migrates to other categories. That could be proven wrong in the out years, but I suspect for right now, we’re on the right track, and that’s where you see the adoption happening.

So we’ll keep talking about food in upcoming calls, and I’m sure others will as well. And as you poke around a little bit more and try going to some stores and things like that, you might actually see items tagged in some of the stores where you buy things even today.

Carrie Baker, CFO, Impinj: Chris. I don’t know if

Chris DiOrio, Co-Founder and CEO, Impinj: I did answer your question. Keep going. You did.

Andy Cobb, Vice President, Strategic Finance, Impinj0: Was I apologize. It was very amorphous and wide open. But let me let me ask this. So in the second half of twenty six, is there is there a number of of commercial deployments you would expect at that period of time? Or is there a number of units that you would be willing to to believe that foodservice will be a part of 5% to 10% of units exiting next year?

Or is that too difficult to determine at the current time? And then just one other question from a systems level perspective. A lot of, I think, engagements or discussions going on with other big box retailers leveraging the Walmart supply chain. I’m wondering any updates on that front. It sounds like the systems outlook is pretty healthy.

I’m wondering if you could dive down a little bit into that in terms of where it’s coming in terms of new customers, what that opportunity pipeline looks like. Thanks.

Chris DiOrio, Co-Founder and CEO, Impinj: Okay. Thanks. I’ll do my best. On the food opportunity, item level food, I’d look to 2026 as driving meaningful volumes. It’s, like I said, we’re in the pilot phase now.

Anything on a food size is large. But in terms of really meaningful volumes and actually seeing those pilots turn into full fledged ramps, we’re looking at next year. That doesn’t take away at all from the excitement. In terms of big box expansion in general merchandise, we are seeing, the large North American retailer continue to push forward and continue adopting in the categories they’ve already announced. We also see them piloting and doing R and D on additional categories.

The pace and timing of which they continue to roll out is clearly going to be up to them, but, they continue moving forward, and we’re excited to be supporting them. We do see those general merchandise categories beginning to trickle down to other retailers and significantly big box suppliers. But there haven’t been any big announcements that I am aware of. And I can’t say when there will be one, but there are some trickle down effects that are going on. And then fixed reading versus handheld reading versus what we’re seeing out in the environment.

For the fresh stuff in retail I’m sorry. For food freshness, let me be clear. For food freshness, we’re seeing that predominantly being driven by handheld readers, employees going out in the store and finding they’re about to expire items. In other parts of the industry, including in food for item and I mean, for case and pallet level, we are seeing a resurgence of autonomous reading, which is where a lot of our demand for our readers and gateways is coming from. The autonomous reading, whether it’s overhead, stock doors, front store, back store, store exits, loss prevention, loss identification, It’s all driving demand for fixed reading.

And that’s where we’re seeing that resurgence in fixed reading, and we are putting a significant focus on it as a company.

Andy Cobb, Vice President, Strategic Finance, Impinj: Thanks so much. Congrats again.

Chris DiOrio, Co-Founder and CEO, Impinj: That was perfect. Okay. Did I get it all? Okay. Thanks.

Okay. Thanks Scott.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Chris DiOrio, Co Founder and CEO for closing remarks. Please go ahead.

Chris DiOrio, Co-Founder and CEO, Impinj: Thank you, operator. I’d like to thank you all for joining our call today, and thank you for your ongoing support. Take care. Bye bye.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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