Impinj, Inc.

Welcome to the MPIN's second quarter 2024 financial results 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 your telephone keypad. 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 of Strategic Finance. Please go ahead.

Thank you, Rocco. Good afternoon, and thank you all for joining us to discuss Impinja's second quarter 2024 results. On today's call, Chris DiOrio, Impinja's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Kerry Baker, Impinges 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. Jeff Dawson, Impinges CRO, will join us for the Q&A. 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 Security 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 in the Canaccord Genuity 44th Annual Growth Conference on August 13th in Boston, the 13th Annual Needham Virtual Industrial Tech Robotics and Clean Tech One-on-One Conference on August 19th, the Jeffrey Semiconductor IT Hardware and Communications Technology Summit on August 27th in Chicago, the 2024 Evercore ISI Semiconductor IT Hardware and Networking Conference on August 28th in Chicago, the Piper Sandler Growth Frontiers Conference on September 10th in Nashville, and the Goldman Sachs Communicopia and Technology Conference on September 11th in San Francisco. We look forward to connecting with many of you there. I will now turn the call over to Chris.

Thank you, Andy. And thank you all for joining the call. Our second quarter results were strong, setting several new records. Revenue topped $100 million and adjusted EBITDA topped $25 million, both well above our guidance. Free cash flow topped $40 million. Multiple trends drove that outperformance, including apparel and footwear strength, early signs of retail rebuying, steady growth in general merchandise, continued secular growth, including a long tail of specialty applications and strong demand for our products and platform. We expect these same trends to drive solid third quarter product revenue growth. Starting with silicon, second quarter endpoint IC product revenue exceeded our expectations as unit volumes set a new quarterly record, including M800 shipments more than doubling. The $15 million 2024 licensing payment added to the revenue strength. Looking to third quarter, we expect to again deliver sequential endpoint IC product revenue growth. We also expect M800 to continue ramping, albeit from a modest base, but growing sharply as M800 inlays past market qualification. Finally, our investments in post-processing capacity during the COVID downturn are paying dividends today. with our operations team well positioned to meet the rising demand. Turning to reader ICs, second quarter e-family volumes exceeded our expectations, driven by broad market demand for handhelds, printers, and fixed readers. Looking to third quarter, we see continued strong e-family shipment volumes, albeit masked by modestly lower overall reader IC revenue as we wind down our prior generation indie ICs. Turning to solutions, we expect the visionary European retailer's ongoing rollout of our self-checkout and loss prevention solution to continue driving growing demand for our protected mode-enabled endpoint ICs, as well as delivering modest gateway revenue. We expect IC buy-ins at the large North American retailer to continue growing, driven by general merchandise tagging and product rebuys. And we expect the second large North American supply chain and logistics end user to increase their label consumption and fixed reader footprint, driving demand for both our endpoint ICs and e-family reader ICs. Taken together, our enterprise solutions efforts continue paying dividends in silicon volumes. Touching now on growth opportunities, we see food tagging expanding. including in-store item level pilots where the volumes are really large. In apparel, we see increasing supply chain usage driving demanding readability expectations, benefiting our higher performing M800. In general merchandise, we see market expansion as retailers piggyback on the pioneering work of the large North American retailer. And we see growth in specialty applications, For example, one I had the opportunity to see in depth during a recent trip to Japan in which a consortium of four Japanese publishers are tagging books, magazines, and comic books to better match store inventory to consumer demand. On the organizational front, we promoted Gahan Richardson to executive vice president for our products and platform. We added Alberto Pesadento, a 23-year impinged veteran and CTO, to our executive team. And we promoted Christina Balaam to Senior Vice President of HR. Heartfelt congratulations and thank you, Gahan, Alberto, and Christina. In closing, we delivered a very strong second quarter and see steady product revenue growth looking into the third. On the solutions front, we believe our efforts are and will continue driving N20C volumes and share gains. Further out, we see continued secular growth opportunities in retail, supply chain and logistics, and specialty applications with food layering on top. As we continue driving our bold vision to connect every item in our everyday world, I remain confident in our market position and energized by the opportunities ahead. Before I turn the call over to Carrie for our financial review and third quarter outlook, I'd like to again thank every member of the Impinj team for your constant effort driving our bold vision. As always, I feel honored by my incredible good fortune to work with you.