Impinj, Inc.

Welcome to the IMPENCH first quarter 2022 earnings conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. 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.

Thank you, Operator. Good afternoon, and thank you all for joining us to discuss Impinja's first quarter 2022 results. On today's call, Chris DiIorio, Impinja's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Kerry Baker, Impinja's CFO, will follow with a detailed review of our first quarter 2022 financial results and second quarter 2022 outlook. We will then open the call for questions. Jeff Dossett, Impinja's CRO, will join us in the Q&A session. You can find management's prepared remarks plus trended financial data on the investor relations section of the company's website. We will make statements in this call about future expectations and financial performance based on our outlook as of today. Any such statements are forward looking under the Private Securities Litigation Reform Act of 1995. While we believe we have a reasonable basis for making these forward looking statements, our actual results could differ materially. because any statements we make today 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 applicable law. On today's call, all financial metrics except for revenue for where we explicitly state otherwise are non-GAAP. Balance sheet and cash flow metrics are on a GAAP basis. 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 in the Oppenheimer 7th Annual Emerging Growth Conference on May 10th. and Baird Global Consumer Technology and Services Conference in New York on June 7th. 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 all for joining the call. Our first quarter results were strong. Revenue and profitability exceeded our guidance, with revenue setting a new quarterly record. Bookings were also strong, further increasing our record backlog that now extends into 2023. Demand for our endpoint ICs, reader ICs, readers, and gateways all showed extraordinary strength. At the same time, we remained supply constrained, limiting both first quarter revenue and our ability to satisfy that extraordinary demand. As challenging as these constraints are today, Our industry's broad-based secular adoption, strong long-term unit volume CAGR, and sustained demand from enterprises' need for process digitization positions impinge to benefit significantly when upside wafers become available. First quarter end-point IC revenue exceeded our expectations, setting a new quarterly record. For retailers, the adoption drivers continue to be in-store inventory visibility and omni-channel fulfillment, and for both retailers and supply chain and logistics providers, supply chain visibility and process digitization. Retailers increase their apparel tagging while also expanding into new categories like home goods, driving growth in our end-point IC demand and backlog. For at least the next several quarters, we see retail expansion centered on apparel, home goods, and general merchandise, and supply chain expansion, centered on parcel shipment traceability as key business drivers. Overall, we see multi-year growth tailwinds for our endpoint ICs. First quarter endpoint IC unit volume demand exceeded shipments by more than 50%, like it has for the past three quarters. Yet again, we believe our inlay partners would have layered on additional bookings if we had more waivers. Although we did secure modest upside wafers from our foundry partner, allowing us to commit second and third quarter shipment volumes that equally exceed first quarter, our supply is still far short of demand. Until our foundry partner can deliver significant upside wafers in the process nodes we use, we will continue focusing on maturing our post-processing capacity to be ready to quickly turn those wafers when they do become available. First quarter systems revenue also exceeded our expectations. Reader revenue is a bright spot, with supply chain and logistics demand driving record shipments. Reader IC revenue fell short of expectations due to a COVID outbreak at the post-processing supplier for our prior generation Indy ICs and testing delays for our new E-family ICs. Total first quarter systems demand exceeded our supply. Like for the past two quarters, we entered second quarter with significant reader and reader IC backlog and strong demand. Looking to second quarter, we anticipate component shortfalls continuing to limit our reader supply. We also anticipate strong reader IC volumes and revenue growth as shipments begin catching up to demand. Looking further out, we expect overall system supply to mostly catch up to demand by year-end. On the project front, the second large North American supply chain and logistics customer advanced their reader deployment and contributed their largest quarterly revenue to date. Looking into 2023, we expect this customer to drive a large endpoint IC opportunity. We also secured an order from the visionary European retailer to deploy our rain-based loss prevention product broadly, starting second quarter 2022. This deployment will cover far more stores than last year's deployment, and we expect roughly three times as much revenue from it, recognized over several quarters. We began staging key components for this deployment in the first quarter. This loss prevention win is the result of focused and pinched engineering and close teamwork with our go-to-market partners. It also represents a defining opportunity for our platform, moving us one step closer to unlocking the range self-checkout opportunity that retailers identify as the most important after inventory visibility and is key to their vision of the store of the future. We continue focusing on inventing solutions to hard but compelling end-user problems, driving new platform-based growth vectors for the years to come. Looking to 2023, we expect secular trends to continue driving endpoint IC unit volume growth in a market that is still less than 1 percent penetrated. That expectation is built on the use case expansion we see at existing enterprise end users, healthy growth at new enterprises looking to deploy, and new verticals ramping. RAINN delivers visibility and insights that no other technology can directly match. On the organizational side, Christina Balaam joined our executive team as Vice President of Human Resources. Christina was most recently at NetMotion Software and brings deep HR strength and experience to impinge. I'm delighted to partner with Christina in enriching our team and culture. Welcome, Christina. We also formalized Impinj's sustainability commitments in partnership with our suppliers and customers, driving multiple initiatives focused on how our products can improve item recyclability. Impinj takes its responsibility to leave the world a better place for our children and grandchildren seriously, and we are investing to deliver on our sustainability commitments. Before I close, I want to say that all of us at Impinj are shocked and saddened by the Russian government's senseless war in Ukraine. Impinj's employees, matched by the company, donated $200,000 or roughly $600 per employee to humanitarian aid for the Ukrainian people. We also suspended all business in and with Russia and Belarus and expect our partners to comply with all sanctions and restrictions related to this unprovoked and brutal aggression. We pray for peace and for human rights and dignity and for Russia to halt this horror they have created. In closing, I'd like to thank every member of the impinge team for their incredible effort this quarter. We delivered record revenue and solid profitability while investing in our team, company, and platform. As we continue working side by side with our ecosystem partners to navigate the ongoing supply chain challenges, I remain confident in our market position and energized by our growing demand. I will now turn the call over to Kerry for our detailed financial review and second quarter outlook. Kerry?