Impinj expects Q4 revenue of $90M–$93M as food and e-commerce drive new growth initiatives

Earnings Call Insights: Impinj (PI) Q3 2025

MANAGEMENT VIEW

* Chris Diorio, Co-Founder, Vice Chairman & CEO, reported "third quarter results were strong with revenue and adjusted EBITDA exceeding the upper end of our guide range." He noted that record endpoint IC volumes and better-than-anticipated reader volumes drove product revenue to a new quarterly record, highlighting Gen2X's success in solving challenging industry use cases.
* Diorio described continued technical and product leadership, stating the company delivered revenue outperformance despite weak retailer buying patterns and tariff headwinds. He explained, "supply chain and logistics led the way with our second large North American end user now fully deployed in domestic parcel delivery. Retail volumes grew modestly, buoyed by the upcoming holiday season, but with a cautious note as our partners and end users buy into demand rather than ahead of it."
* On strategic initiatives, Diorio stated, "we are aggressively hiring technical and business talent to develop that software and win the recurring revenue opportunity." He also highlighted the hiring of a new SVP of SaaS and Cloud Services and the appointment of Arthur Valdez to the Board, an executive with extensive supply chain expertise.
* Cary Baker, Chief Financial Officer, stated, "third quarter revenue was $96.1 million, down 2% sequentially from $97.9 million in second quarter 2025 and up 1% year-over-year from $95.2 million in third quarter 2024." Baker added, "third quarter endpoint IC revenue was $78.8 million, down 7% sequentially... Excluding the $16 million second-quarter licensing revenue, endpoint IC revenue grew 15% sequentially."

OUTLOOK

* Baker provided fourth quarter guidance: "We expect fourth quarter revenue between $90 million and $93 million compared with revenue of $96.1 million in third quarter 2025, a quarter-over-quarter decrease of 5% at the midpoint. We expect adjusted EBITDA between $15.4 million and $16.9 million. On the bottom line, we expect non-GAAP net income between $14.7 million and $16.2 million, reflecting non-GAAP fully diluted earnings per share between $0.48 and $0.52."
* Diorio cautioned that fourth quarter volumes of endpoint ICs are expected to "step down modestly" and systems revenue will "decline slightly sequentially, driven by project timing."
* Baker noted, "we expect fourth quarter gross margin to increase sequentially" and operating expense to increase as the company continues investing.

FINANCIAL RESULTS

* Third quarter systems revenue was $17.3 million, up 30% sequentially and up 21% year-over-year. Baker attributed this to "reader strength in supply chain and logistics."
* Third quarter gross margin was 53%. Baker noted, "excluding licensing revenue, third-quarter product gross margin increased 40 basis points sequentially, driven primarily by endpoint IC product margin, including M800."
* Total operating expense was $31.8 million. Research and development expense was $17.8 million, sales and marketing was $7 million, and general and administrative was $6.9 million.
* Adjusted EBITDA was $19.1 million, with a new quarterly record for adjusted EBITDA margin on a product revenue basis at 19.8%. GAAP net loss was ($12.8 million). Non-GAAP net income was $17.7 million or $0.58 per share.
* Cash, cash equivalents, and investments ended at $265.1 million; inventory totaled $92.6 million.
* Baker highlighted a convertible note transaction: "In September, we issued $190 million of 0% convertible notes while simultaneously repurchasing $190 million of our 1.125% convertible notes. This transaction reduces our interest expense, lowers our underlying share dilution, and breaks our maturity profile into smaller tranches."

Q&A

* Ezra Weener, Jefferies: Asked about the timing of reader revenue and the impact on endpoint IC ramp. Baker answered, "Q3 actually turned out stronger than we anticipated. So there's going to be a natural step down as we move from Q3 to Q4... instead of growing as we typically would, systems revenue in the fourth quarter, we're down slightly sequentially." Diorio added, "the size and scope of the rollouts remain intact. What we're seeing is some of the end users adapting in real time to the market environment... These are not pullbacks."
* Weener, Jefferies: Inquired about the Walmart food announcement's impact. Diorio said, "we expect modest food volumes through first half '26 and accelerating from there. The pacing really is set by the complexity of rolling out at scale." Baker added, "the volume estimates that are out there are not unreasonable. We view this as a multibillion-unit annual opportunity when it's fully ramped."
* Harsh Kumar, Piper Sandler: Asked about tagging for produce and e-commerce. Diorio responded, "there is no fundamental limit that prevents us from tagging those items... You will see innovation on the tagging front, but I think you're also going to see innovation on the packaging front to make that produce tagging possible." On e-commerce, "it's the first time I've meaningfully used that term, and it was intentional and expect us to push forward hard into that e-commerce and attempt to expand and grow there."
* Christopher Rolland, Susquehanna: Asked about Bluetooth alternatives. Diorio commented, "RAN RFID is ideal for item tagging with huge volumes and a huge opportunity... complementary technologies filling in the gaps is helpful for enterprise adoption. If the volumes become large, we can look at either that technology or using RAIN RFID to accomplish the same objective."
* Scott Searle, ROTH Capital: Asked about Gen2X driving share. Baker said, "it's too early to say and comment specifically on share, but this is exactly why we launched Gen2X... so that we can not only solve previously unsolvable opportunities for our end customers, but we can also drive endpoint IC share to Impinj."
* James Ricchiuti, Needham: Asked about OpEx trends. Baker stated, "Our OpEx is going to increase in the fourth quarter. We've held it fairly flat throughout most of the year. But it's going to increase in the fourth quarter."
* Guy Hardwick, Barclays: Asked about food label opportunity size and competitive position. Baker said, "this is a multibillion unit opportunity on an annual basis once it's ramped." Diorio explained, "we feel today we are very well positioned in many, if not all, of the ongoing pilots and deployments."

SENTIMENT ANALYSIS

* Analysts expressed a generally positive tone, with repeated questions about growth opportunities, food and e-commerce expansion, and competitive differentiation, but pressed for more detail on timing, share gains, and gross margin drivers.
* Management maintained a confident and measured tone during prepared remarks, emphasizing product, market, and innovation leadership. During Q&A, they remained constructive, providing clarification and reiterating long-term optimism, occasionally signaling caution with phrases like "it's too early to say" or "give us a little time to figure out what the pacing looks like."
* Compared to the previous quarter, analyst questions were more focused on the timing and scale of food and e-commerce opportunities, while management's tone remained confident but acknowledged the complexity and gradual nature of market adoption.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for Q4 revenue ($90M–$93M) is lower than Q3 actuals, while Q2 guidance had projected Q3 growth.
* Strategic focus has shifted more explicitly to software, SaaS, and recurring revenue, with new leadership hires and increased R&D.
* Analysts' questions have shifted from pilot progress to execution timelines and competitive positioning in food and e-commerce.
* Gen2X continues as a key differentiator; the management team highlighted its role in new use cases and customer retention.
* Operating expenses are set to rise in Q4 after being stable for most of the year.
* Management's confidence remains high, but they have provided more explicit caution about the duration and complexity of large-scale rollouts.

RISKS AND CONCERNS

* Management highlighted retailer buying patterns and tariff headwinds as ongoing challenges.
* Project timing shifts could cause short-term volatility in systems revenue.
* Analysts expressed concern about the pace of food category adoption and competitive technologies.
* Baker noted, “we expect fourth quarter endpoint IC revenue to decline sequentially, but on the favorable side of normal seasonality.”
* The company is increasing operating expenses as it pursues SaaS and software opportunities, which could pressure margins if revenue growth slows.

FINAL TAKEAWAY

Impinj delivered a quarter of new product records and margin progress, supported by Gen2X-driven use cases and new supply chain deployments, while signaling a modest sequential revenue step down for Q4. Management emphasized confidence in long-term opportunities in food, e-commerce, and software, and highlighted disciplined cost control alongside new investments in engineering and SaaS talent. The company sees its multibillion-unit food opportunity as gradually accelerating through 2026, with continued innovation in endpoint ICs and recurring revenue streams expected to sustain growth and market leadership.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/pi/earnings/transcripts]

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