Impinj, Inc. (PI) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary shows mixed signals: strong financial metrics and cash flow improvements, but weak guidance and a GAAP net loss. The Q&A reveals concerns about inventory issues and cautious guidance, but management is optimistic about market opportunities and new products. The stock's market cap suggests moderate sensitivity to these factors, leading to a neutral prediction.
Key Financial Performance
Fourth Quarter Revenue $92.8 million, down 3% sequentially compared with $96.1 million in third quarter 2025 and up 1% year-over-year from $91.6 million in fourth quarter 2024. The year-over-year increase was driven by turns orders.
2025 Revenue $361.1 million, down 1% year-over-year compared with $366.1 million in 2024. The decline was driven by factors such as tariffs, supply chain issues, and inventory reductions.
Fourth Quarter Endpoint IC Revenue $75.2 million, down 5% sequentially compared with $78.8 million in third quarter 2025 and up 2% year-over-year from $74.1 million in fourth quarter 2024. The year-over-year increase was driven by turns orders, while the sequential decline was due to supply chain and logistics channel inventory reductions.
2025 Endpoint IC Revenue Declined 2% year-over-year, driven by tariffs, supply chain issues, and inventory reductions.
Fourth Quarter Systems Revenue $17.7 million, up 2% sequentially compared with $17.3 million in third quarter 2025 and up 1% year-over-year from $17.5 million in fourth quarter 2024. The year-over-year increase was driven by NRU revenue, while reader and gateway revenue and reader IC revenue declined.
2025 Systems Revenue Grew 2% year-over-year, with reader and gateway growth more than offsetting declines in both reader ICs and Test and Measurement solutions.
Fourth Quarter Gross Margin 54.5%, compared with 53% in third quarter 2025 and 53.1% in fourth quarter 2024. The year-over-year increase was driven by higher endpoint IC direct margins, specifically from a richer mix of M800.
2025 Gross Margin 55.3%, compared with 54% in 2024. The increase was due primarily to a richer mix of M800 endpoint ICs.
Fourth Quarter Operating Expense $34.2 million, compared with $31.8 million in third quarter 2025 and $33.6 million in fourth quarter 2024. The increase was driven by normal seasonal factors.
2025 Operating Expense $130.1 million, compared with $131.9 million in 2024. The slight decrease was due to cost management efforts.
Fourth Quarter Adjusted EBITDA $16.4 million, compared with $19.1 million in third quarter 2025 and $15 million in fourth quarter 2024. The year-over-year increase was driven by higher gross margins.
2025 Adjusted EBITDA A record $69.6 million, compared with $65.9 million in 2024. The increase was driven by higher gross margins and cost management efforts.
Fourth Quarter GAAP Net Loss $1.1 million.
Fourth Quarter Non-GAAP Net Income $15.6 million or $0.50 per share on a fully diluted basis.
2025 GAAP Net Loss $10.8 million.
2025 Non-GAAP Net Income $64.2 million or $2.11 per share on a fully diluted basis.
Fourth Quarter Cash, Cash Equivalents, and Investments $279.1 million, compared with $265.1 million in third quarter 2025 and $239.6 million in fourth quarter 2024. The increase was driven by strong free cash flow.
Fourth Quarter Inventory $85 million, down $7.7 million from the prior quarter.
Fourth Quarter Capital Expenditures $1.5 million.
2025 Capital Expenditures $12.9 million.
Fourth Quarter Free Cash Flow $13.6 million.
2025 Free Cash Flow $45.9 million.
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Operating Highlights
Endpoint IC volumes: Grew year-over-year by 9%, with the M800 becoming the volume runner. Launched Gen2X, which proved essential for solution success.
Custom endpoint IC: Developed a custom-built endpoint IC for a large North American supply chain and logistics end user, featuring label authentication and tailored features.
Gen2X: Doubled down on Gen2X as a solutions enabler, added EM Microelectronic as a licensee, and formed partnerships with leading ecosystem players.
Food adoption: Planted seeds for accelerating food adoption, with bakery leading the ramp and proteins to follow.
General merchandise: Growth expected as existing categories add SKUs and new categories are introduced.
Retail apparel: Multiple new end users are considering RAIN adoption, with normalization of endpoint IC demand expected by the second quarter of 2026.
Financial performance: Achieved record adjusted EBITDA and cash in 2025, with adjusted EBITDA reaching $69.6 million and a margin of 19.3%.
Gross margin: 2025 gross margin improved to 55.3%, driven by a richer mix of M800 endpoint ICs.
Cash and investments: Ended 2025 with record cash, cash equivalents, and investments of $279.1 million.
Solutions focus: Pivoted to a solutions-focused model, aiming to drive endpoint IC volumes, reader revenue, and software revenue.
Executive addition: Added Chris Hundley as EVP for Enterprise Solutions to enhance software and solutions capabilities.
Gen2X partnerships: Forged close partnerships with ecosystem players to enhance Gen2X adoption and solutions pipeline.
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Risk or Challenges
Tariffs and tariff-related supply chain disruptions: The company faced challenges due to tariffs and related supply chain disruptions, which negatively impacted the RAIN market and the company's operations.
Inventory reductions in retail markets: Retailers reduced inventory at every layer, leading to a decline in demand for the company's products.
Apparel imports and general merchandise adoption: A downward trend in apparel imports and slow adoption of general merchandise affected the company's market performance.
Order timing and inventory burn-down: In the first quarter of 2026, order timing issues and ongoing inventory burn-down by retailers are expected to drive revenue lower.
Product transitions: The company is transitioning to a custom-built endpoint IC for a major end user, causing a temporary dip in orders as partners reduce prior product inventory.
Retail weakness: Apparel retailers are under-buying demand, impacting the company's revenue outlook for the first quarter of 2026.
Seasonal systems decline: A super seasonal systems decline due to project timing is expected to negatively impact revenue in the first quarter of 2026.
Endpoint IC price reductions: Annual price reductions for endpoint ICs are expected to contribute to a decline in revenue.
Food volumes: Food volumes remain modest, limiting growth potential in this segment.
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Guidance & Outlook
First Quarter 2026 Revenue: Expected to be between $71 million and $74 million, representing a year-over-year decrease of 2% at the midpoint.
First Quarter 2026 Adjusted EBITDA: Expected to be between $1.2 million and $2.7 million.
First Quarter 2026 Non-GAAP Net Income: Expected to be between $2.5 million and $4 million, reflecting non-GAAP fully diluted earnings per share between $0.08 and $0.13.
Endpoint IC Revenue: Expected to decline sequentially at a high teens percentage rate in the first quarter of 2026, driven by supply chain and logistics channel inventory reductions, retail weakness, and annual endpoint IC price reductions.
Systems Revenue: Expected to decline more than seasonally in the first quarter of 2026, primarily due to project timing at enterprise customers.
Gross Margin: Expected to decline sequentially in the first quarter of 2026, driven by lower revenue on fixed costs and annual endpoint IC price reductions.
Endpoint IC Demand: Expected to normalize for apparel as soon as the second quarter of 2026, with general merchandise growing as existing categories add SKUs and new categories are introduced.
Food Rollouts: Expected to expand to more stores in 2026, with bakery leading and proteins to follow.
Solutions Revenue: Expected to expand notably as lighthouse end users outperform peers and pull the company into new opportunities.
Industry Endpoint IC Volumes: Expected to rebound from 2025 levels, with the company capturing an outsized portion of the growth due to its leading market share.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What caused the $17-$18 million miss in first-quarter guidance?
A:The miss was due to a combination of factors: lower volume as inlay partners supporting logistics customers burned down a few weeks of inventory (each week approximating $5 million of impact), yearly price reductions, product mix, and some retail weakness.
Q:Why is management confident that the situation will improve by the second quarter?
A:Management cited several reasons: strong January turn orders (double the fourth quarter at the same point and up more than 50% from last January), significantly moderated rescheduling behavior, and nearly 100% booking of endpoint IC business to the midpoint of the guide. Additionally, they see positive developments in food, retail apparel, and supply chain and logistics end markets.
Q:Will logistics normalize in Q2?
A:Management expects logistics inventory correction to happen in Q1 but acknowledges it may spill over into Q2. They will provide an update after Q1.
Q:What is the strategy behind the custom ASIC for the second logistics customer?
A:The custom ASIC is tailored to the specific needs of the customer, helping them drive operational efficiencies and expand their RAIN RFID capabilities. Management retains the IP for the chip and plans to use it to support the customer while exploring similar opportunities with other enterprises.
Q:What is the impact of the new chip on market share?
A:Management believes the new chip and Gen2X features will drive market share gains by enabling whole solutions for enterprise customers, optimizing performance, and addressing unmet needs.
Q:What caused the inventory build-up in logistics?
A:The inventory build-up was due to inlay partners leaning in and building supply ahead of winning awards, as the M800 chip is fungible and can support multiple applications. This masked retail weakness in Q4.
Q:How does management view the competitive landscape against non-RFID components?
A:Management views non-RFID components like BLE as complementary rather than competitive, as they serve different use cases. They remain confident in RAIN RFID as a long-term solution.
Q:What is the outlook for the first quarter endpoint IC business?
A:The endpoint IC business is nearly 100% booked to the midpoint of the guide, with strong January turn orders and moderated rescheduling behavior.
Q:What is the timeline for full penetration of the custom chip at the second logistics customer?
A:The customer plans to fully switch to the custom chip in 2026.
Q:What is the pricing strategy for the custom chip?
A:The custom chip is priced to market, aiming to drive ROI for both the customer and the company.
Q:Review of Unclear Management Responses
A:Management avoided directly answering questions about the exact timeline for logistics normalization in Q2, providing cautious guidance that it may spill over. They also used vague language when discussing the competitive landscape and pricing strategy for the custom chip, avoiding specifics on how it compares to the M800 chip.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ASIC end
Annual Industrial
CEO industry
Cobb Vice
Conference Miami
Conference New
EM Microelectronic
Executive Vice
Full result
GenX feature
GenX licensee
GenX partnership
GenX solution
Hundley Executive
IC ASIC
IC demand
ICs supply
IR sir
Impinj Full
Industrial Select
Miami Annual
New York
account
adoption
apparel
category
layer market
market share
merchandise
opportunity solution
software
solution effort
solution lighthouse
timing
transition
PI Transcript
Impinj, Inc. (PI) Q4 2025 Earnings Call Transcript
Unknown2-5
The earnings call summary shows mixed signals: strong financial metrics and cash flow improvements, but weak guidance and a GAAP net loss. The Q&A reveals concerns about inventory issues and cautious guidance, but management is optimistic about market opportunities and new products. The stock's market cap suggests moderate sensitivity to these factors, leading to a neutral prediction.
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The earnings call presents a mixed sentiment. While there is optimism in sequential revenue growth, market opportunity expansion, and Gen2X technology, concerns arise from unclear management responses, Q4 weakness, and challenges in deployment timing. The Q&A reveals potential growth in food sector partnerships but lacks precise guidance. The market cap suggests a moderate reaction, leading to a neutral prediction.
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PI Slides
PI Report
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