Impinj, Inc.

Welcome to the MPinge First Quarter 2023 Financial Results Earnings Conference Call and Webcast. All participants will be in listen-only mode. Did 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 a question. 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, Today's 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 Impinj's first quarter 2023 results. On today's call, Chris DiOrio, Impinj's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Terry Baker, Impinja's CFO, will follow with a detailed review of our first quarter 2023 financial results and second quarter outlook. We will then open the call for questions. Jeff Dossett, Impinja's CRO, will join us for the Q&A. 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 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. While 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 FCC. 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. balance sheet and cash flow metrics are GAAP. Please refer to our earnings release for a reconciliation of our non-GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in the UBS Global Industrials and Transportation Conference on June 6th in New York, Baird's Global Consumer Technology and Services Conference on June 7th in New York, and Roth's London Conference on June 21st. Also, we will host an Investor Day on June 13th in Seattle. 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 set a strong start to the year. revenue hit a new quarterly record. Our multi-quarter endpoint IC backlog, underpinned by our solutions engagements with enterprise end users, is very strong. And our wafer supply is finally improving, allowing us to use our balance sheet to begin building inventory to support that backlog, as well as anticipated future growth. Starting with endpoint ICs, first quarter revenue exceeded our expectations setting a record for the seventh consecutive quarter. That performance was driven by underlying demand, increasing IC supply, and our inlay partners rebuilding their safety stock. Coming off that strong first quarter, we see several cross-currents that should drive second quarter endpoint IC revenue to be flat sequentially. First, enterprise program expansions and new use cases the latter built significantly on our solutions efforts, are the main drivers of our endpoint IC growth. From today's vantage point, even though every meaningful enterprise deployment with which we are involved is progressing, each is also delayed relative to our expectations by several months, all for their own reasons, but most traceable back to prior supply disruptions and our inability to predict the precise timing and pace of large deployments. Second, product shortfall stalled many early opportunities, and restarting those opportunities will take time. And finally, as our IC supply recovers, we see our inlay partners slowing their safety stock growth. In summary, our demand remains healthy, our backlog remains very strong, and we expect robust, full-year endpoint IC growth but see a second quarter pause. Beginning with those enterprise deployments, we received a PO for the third phase of the loss prevention deployment at the visionary European retailer. This phase is roughly 75% the size of the prior phase, starts in second quarter, spans several quarters, and will drive incremental endpoint IC volumes. We continue to be excited by the self-checkout and loss prevention use case, and see expansion opportunities at this retailer and at others. In retail general merchandise, we expect strong second half 2023 endpoint IC demand growth from category expansion at the large North American retailer. And on the supply chain and logistics front, we see very strong partner demand for our reader ICs used in printer encoders for our second large North American end user. We expect that end user to drive large endpoint IC volumes in second half 2023 and beyond. Turning to the early opportunities, I am pleased by our progress with Intinge authenticity and expect meaningful second quarter Intinge M775 endpoint IC volumes for tax tracking as well as healthcare and specialty foods. I'm also excited about book and magazine tracking in Japan. a use case we pioneered years ago that we expect will consume several hundred million endpoint ITs in 2023. We are well positioned to capitalize on these early opportunities. On the supply front, wafer availability will finally catch up to demand in the second quarter. Between support from our foundry partner and our post-processing investments, we look to avoid a repeat of our painful 2021 and 2022 shortfalls by building appropriate inventory. For readers, we enter the second quarter with significant backlog, but stubborn tightness in a few components means we will likely carry significant reader backlog into third quarter. For reader ICs, demand for our legacy indie products was strong, Even as our partners began ramping 65 announced e-family based products to production, it's more than 75 new products in development. Turning to our organization, in April, we acquired Voyantic, the industry leader in solutions for inlay design, measurement, and test. With leading end users relying on our platform to transform their operations, this acquisition expands our solutions footprint to advance the quality, reliability, and readability of the partner inlays used in those enterprise deployments. Perhaps most important to a successful integration, the cultural fit between the two teams is very strong. I have worked closely with and trusted the Voyantic leadership for the better part of 15 years, and I'm thrilled to have them and the very experienced Voyantic team as part of the Impinj family. I am also thrilled to welcome Myron Washington to Impinja's board. Myron has 25 years experience in business to consumer and business to business e-commerce, global supply chain operations, digital transformation, and multi-billion dollar P&L ownership. His knowledge and experience in our target market verticals will pay dividends on our journey to connect every item in our everyday world. Myron, Welcome to the Impinj family. Before I close, I'd like to thank every member of the Impinj team for your unflagging effort on so many fronts, from new product development to scaling our operational capabilities to delighting our many customers. I feel honored by my incredible good fortune to work with you. In closing, from today's vantage point, I see first half 2023 as a transition from product shortfalls and project delays to timely shipments against growing opportunities. Looking to second half 2023, I see secular market growth, strong impinged backlog, and our platform solutions efforts paying dividends. As we continue driving our bold vision, I remain confident in our market position and energized by the opportunities ahead. I will now turn the call over to Kerry for our financial review and second quarter outlook. Terry?