Impinj, Inc.

Welcome to Impinja's fourth quarter and full year 2024 financial results conference call and webcast. All participants will be in a 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, and to withdraw your question, please press star, then two. Please note that this event is being recorded. Due to Mr. Andy Cobb's laryngitis, I would now like to turn the conference over to Ms. Tracy Moran, Senior Investor Relations Manager. Please go ahead.

Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's fourth quarter and full year 2024 results. On today's call, Chris DiOrio, Impinj's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Carrie Baker, Impinges CFO, will follow with a detailed review of our fourth quarter and full year 2024 financial results and first quarter 2025 outlook. We will then open the call for questions. Andy Cobb, Impinges Vice President of Strategic Finance, will join us for the Q&A. Hussein Meklai, who normally joins us, unfortunately has the flu so cannot be here today. 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. 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 for the most comparable GAAP metrics. Before turning to our results and outlook, Note that we will participate in Susquehanna's 14th Annual Technology Conference on February 27th in New York, the Cantor Global Technology Conference on March 11th in New York, and the 37th Annual Roth Conference on March 18th in Vanna Point. We look forward to connecting with many of you at those events. I will now turn the call over to Chris.

Thank you, Tracy, and thank you all for joining the call. 2024 marked our fourth consecutive year of double-digit revenue growth and another yearly revenue record. Underlying that growth was market strength in retail apparel, general merchandise, and supply chain and logistics. Our infinite unit volumes grew 34% over 2023. Our top-line growth, combined with strong operating leverage and our favorable litigation settlement, drove record annual adjusted EBITDA and free cash flow. 2024 also ushered in two major market catalysts. First, start of item level food tech. Second, impinge Gen 2X, which dramatically expands the landscape of enterprise solutions we and our partners can deliver. The long-term secular tailwinds underlying our industry remain strong, and our leadership position in it is as strong as ever. That said, we faced headwinds at the end of the fourth quarter, that will spill into first. Cued political uncertainty in Paris, end users changing label partner share allocations, aggressive label price shopping, and shorter ordering cycles disrupted partner bookings. First quarter impact includes some partners having extra M.IC inventory and asking us to reschedule orders. Compounded by no large new programs ramping in first half 2025, we cannot sustain our prior 34% end-point SE unit volume growth pace in the first quarter. So, our focus is helping our inlay partners clear a few weeks of inventory and together navigating the geopolitical and tariff landscape. And through it all, using our best-in-class products, enterprise solutions leadership, and Gen2x to regain momentum and increase market share as we accelerate out of a disappointing first quarter. For 2025, we continue to anticipate solid industry rain label expansion, driven by growth in retail apparel, general merchandise, and supply chain and logistics, buoyed by modest but growing food volumes. Recent conversations with our enterprise and service bureau partners suggest that U.S. retail demand is solid. U.S. demand for rain labels is healthy and growing, and the EU, if not growing, is at least stable. Our eFamily Reader IC order book is strong across all large partners and geographies, bullying our belief that our first quarter endpoint IC headwinds are temporary. Turning to solutions, today we are directly engaged with two large grocery chains, one focused on perishables and the other on seamless self-checkout. Imagine grocery checkout as easy as today's apparel checkout at our visionary European retailer. In terms of potential end point AC volumes, both are larger than any program that has come before. And in terms of the overall opportunity, food is huge. One, if not both, of these enterprises may ramp in 2026. In general merchandise, the large North American retailers multi-category rollout continues, with compliance increasing quarterly and room to grow in 2025. In supply chain and logistics, second-large North American end-user increased their label volumes in 2024, and we expect modest growth in 2025 as they continue their autonomous reading journey using our e-family reader ICs. The visionary European retailers' ongoing rollout of our self-checkout and loss-prevention solution grew in the fourth quarter, driving strong gateway revenue, but will decline in the first quarter if that program completes successfully. That said, our opportunity in new RAIN-based use cases with them is far from over, including their ongoing embedded tagging ramp. In addition to our direct engagements, we have partners using our eFamily reader ICs and Gen2x to expand existing use cases, like loss prevention, and enable previously challenging use cases, like always-on overhead reading in retail stores. Those partner engagements further expand our platform's footprint and create multiple NFWC share gain opportunities for us. Our December launch of Gen2x was a bellwether event for our industry. Gen2x dramatically enhances the performance and security of rain systems. The response from our ecosystem has been overwhelming, with our top six reader partners already deploying Gen2x and others, including prior competitors, working with us to deliver clear benefits to end users. Gen2x is embedded natively in our M800, so unlocking it simply requires reader enablement. Gen2x enables smaller, more cost-effective M800 inlays for most use cases, but especially for cosmetics, accessories, and food, adding to our recurring InfluenIC opportunity. We already have multiple enterprises piloting and using Gen2x, with more on the way. On the organizational front, Jeff Gossett, our Chief Revenue Officer, announced his retirement after eight years at Impinj. Jeff, we will miss you, but know that we will continue your mission to build peerless solutions engineering and sales teams that leverage our platform to win into life Fortune 100 enterprises. Kahan Richardson, a seven-year Impinj veteran, we lead the sales organization. In closing, 2024 was another year of strong revenue growth and free cash flow. We delivered record adjusted EBITDA and earnings per share, successfully resolved our patent litigation and delivered market leading products and innovations. Looking forward, we see first quarter headwinds. But we have been through tough times before. Each time we press our competitive advantages to emerge a stronger company in a stronger market position. This time we are better positioned with a far more seasoned team than we have ever been to do so. 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 Kerry for our financial review and first 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. Terry?

Thank you, Chris, and good afternoon, everyone. When I joined Impinj five years ago, I was drawn both to the massive opportunity and the leverage of recurring silicon revenue. 2024 offered a glimpse of what that future holds with exceptional operating margin expansion on the back of strong revenue growth. We delivered record annual adjusted EBITDA and record free cash flow, while just scratching the surface of our market opportunity. Today, more than ever, I am energized by our secular demand and operating leverage potential. Fourth quarter revenue was $91.6 million, down 4% sequentially compared with $95.2 million in third quarter 2024, and up 30% year over year from $70.7 million in fourth quarter 2023. Fourth quarter endpoint IC revenue was $74.1 million, down 9% sequentially compared with $81 million in third quarter 2024, and up 37% year-over-year from $53.9 million in fourth quarter 2023. Although we typically see fourth quarter declines, this year was below our expectations as we accommodated partner push-out requests. Looking to the first quarter, we again expect a sequential endpoint IC revenue decline. Fourth quarter systems revenue was $17.5 million, up 23% sequentially compared with $14.2 million in third quarter 2024, and up 4% year-over-year from $16.8 million in fourth quarter 2023. Systems revenue exceeded our expectations driven by strength in reader, gateway, and reader IC sales. Looking to the first quarter, we expect systems revenue to decline more than seasonally as the self-checkout and loss prevention deployment at the Visionary European Retailer concludes successfully. Total 2024 revenue was $366.1 million, up 19% year-over-year, compared with $307.5 million in 2023. Endpoint IC revenue grew 30% year-over-year, driven by apparel, general merchandise, supply chain and logistics, the long tail of applications, and licensing revenue. Systems revenue declined 18% year-over-year, with reader and gateway declines more than offsetting growth in both test and measurement and reader ICs. Fourth quarter gross margin was 53.1% compared with 52.4% in third quarter 2024 and 50.9% in fourth quarter 2023. The year-over-year increase was driven by leverage on fixed costs. The quarter-over-quarter increase was driven by a higher systems revenue mix and improved endpoint IC direct margins. Full year 2024 gross margin was 54% compared with 51.9% in 2023, with the increase due primarily to licensing revenue. Looking to first quarter 2025, we expect gross margin to decline modestly sequentially. Total fourth quarter operating expense was 33.6 million compared with 32.5 million in third quarter 2024 and $33 million in fourth quarter 2023. Research and development expense was $18 million. Sales and marketing expense was $7.8 million. General and administrative expense was $7.9 million. 2024 operating expense totaled $131.9 million compared with $137.8 million in 2023. We expect total first quarter 2025 operating expense to increase sequentially driven by normal seasonal factors. Fourth quarter adjusted EBITDA was 15 million compared with 17.3 million in third quarter 2024 and 3 million in fourth quarter 2023. Fourth quarter adjusted EBITDA margin was 16.4%. 2024 adjusted EBITDA was 65.9 million compared with 21.8 million in 2023. 2024 adjusted EBITDA margin was 18%. Fourth quarter GAAP net loss was 2.7 million Fourth quarter non-GAAP net income was $14.5 million, or $0.48 per share on a fully diluted basis. 2024 GAAP net income was $40.8 million. 2024 non-GAAP net income was $62.9 million, or $2.11 per share on a fully diluted basis. Turning to the balance sheet, we ended the fourth quarter with cash, cash equivalents, and investments of $239.6 million. Inventory totaled 99.3 million, up 11 million from the prior quarter, with the increase coming primarily from endpoint ICs. Fourth quarter net cash provided by operating activities was 12.6 million. Property and equipment purchases totaled 4.1 million. Free cash flow was 8.5 million. For the full year, net cash provided by operating activities was 128.3 million. Property and equipment purchases totaled 17.1 million. Excluding the $45 million income from the litigation settlement, free cash flow was $66.2 million, driven by revenue growth and operating margin expansion. Before turning to our guidance, I want to highlight a few items unique to our results and outlook. First, endpoint IEC revenue will decline sequentially in the first quarter, primarily driven by volume as our channel burns through a few weeks of inventory. For a much lesser degree, yearly price reductions and product mix specifically M800 ramping at lower ASPs, impact our first quarter outlook. Second, we anticipate first quarter gross margins to mark the low point for the year. Second quarter product gross margins will begin benefiting from higher M800 mix and lower cost wafers. Third, while our January bookings exceeded our fourth quarter run rate, to be prudent, we are assuming fewer turns at the midpoint of our revenue guidance. Turning to our outlook. We expect first quarter revenue between $70 and $73 million. We expect adjusted EBITDA between $1.1 and $2.6 million. On the bottom line, we expect non-GAAP net income between $1.7 and $3.2 million, reflecting non-GAAP fully diluted earnings per share between $0.06 and $0.11. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please re-queue and we will take as many questions as time allows. At this time, we'll pause momentarily to assemble our roster. And your first question today will come from Blaine Curtis with Jefferies. Please go ahead.

Hey, good afternoon. Thanks for taking my question. I guess a couple, I just wanted to kind of understand the timing of which, because you did kind of have a flatter December and you've been through these cycles before. Did you have any kind of thoughts that this might happen back then? I'm just trying to understand the timing when things kind of flattened out. Were you sensing some inventory and then And maybe you can talk about when did you see the bulk of these pushouts come to you? Yep. Karen, go ahead.

So, Brian, thanks for the question. So, as it relates to the channel inventory builds, we built a few weeks of access channel inventory, and we believe the cause of that was a mix between demand and timing, with demand being the larger factor. From a demand perspective, our channel inventory levels are a function of their expected demand and the bid that they build ahead of that demand. 90 years ago, we and our partners expected stronger demand entering 2025. And, you know, for example, the pullback we've seen with our second large North American supply chain logistics customers was unanticipated when we guided Q4. From a timing perspective, aggressive label price shopping and end customers adjusting their inlay supplier mix has resulted in pockets of inventory because not all of our partners run with the same amount of endpoint IC inventory. And then, lastly, you're probably also seeing inlay partners order shorter to shorter leading times, and bringing down their inventory levels to match.

Great, thanks. And then maybe if you just relate this to some of the other corrections you've seen, do you feel like you're ahead of this one anymore? Because in the past, it's taken a couple of quarters to kind of dig out. I know you said Q1 would be the bottom. I think the question is going to be how fast do you recover this year? So I'm just kind of curious how you think about the shape of this correction versus other ones you've seen in the past.

Yeah, Blaine, this is Chris. I'll say a few words, and I'll say if Kerry wants to jump in. When we saw the corrections starting in the back half of the quarter, we took swift action. And as I said in my prepared remarks, I've seen this play before. We're better positioned at the time with more season team than we've ever been. We're not calling the duration of the correction that we're going to go through, but we are actively working through it. And as I said, working with our partners, to burn down their excess channel inventory and emerge in a stronger position on the other side. And I personally believe that we're in a far better position to emerge in that stronger position, given everything we've got going on in the market. Gen 2X, Enterprise Solutions, M800, we're in a strong position this time. So expect us to accelerate out, but we're not predicting the timing right now.

Yeah. Blaine, you know, I'll start by just highlighting, we only guide one quarter at a time. We're not going to hazard a guess on 2Q at this point. What we see are customers ordering with very short lead times given the market uncertainty. We are prudently modeling fewer terms in our guide input, and specifically, we're modeling zero terms for our endpoint IC business. Are there scenarios where second quarter endpoint IC product revenue recovers on a smaller channel inventory headwind? Yes. But we understand that these problems are rarely a one-quarter issue. And while we see those scenarios of a potential snapback, we're going to prepare for a larger headwind and hope for a better outcome.

Appreciate it.

Thanks, Ed. And your next question today will come from Harsh Kumar with Piper Sandler. Please go ahead.

Yeah, hey, guys. I wanted to ask on a similar note on this success inventory. How many weeks of success inventory do you think you have? And is it spread out over a bunch of different areas or mostly concentrated in one or two sort of inlay partners or industries, however you want to categorize it? But the main question is, how many weeks do you think you have?

Hey, Harsh. This is Kerry. I think it's a few weeks. It's more concentrated than is typical. A lot of it relates to logistics, given the change in demand we see from our second large logistics provider.

Okay, great. So my second question was on that. When you're talking about the change in demand, are you referring to the Amazon deal with UPS, which is now public, where the volumes will decline? Is that the large function that you are referring to at your second largest customer?

Well, Harsh, we don't name specific customers, but if you've been following the news, you know there's been changes in logistics demand.

Yeah, and Harsh, there's another element as well. There's been some share allocations as well. So, our inlay partners built ahead, assuming a certain portion of share. It was a share reallocation, which on top of that, a bit of a push out has resulted in some channel inventory. And that's the bulk of the channel inventory that we need to correct, not all of it, but the bulk of it.

Got it. Okay. I'll get back in the queue, guys. Thank you.

Sure. Thank you.

Again, if you have a question, please press star and then one. And your next question today will come from Jim Ricciuti with Needham & Company. Please go ahead.

Thanks. You alluded to the fact that you're not really seeing large program reps, and obviously that impacts the first half of the year. And I'm just wondering – and, again, I know you can't give guidance beyond the quarter, but when would you – Maybe you could just characterize what you see in the pipeline in terms of program ramps that potentially could have some impact further out in the year.

So, Jim, we see a strong enterprise pipeline. I cited two food opportunities in our prepared remarks. There's other opportunities in our pipeline. From the overall enterprise perspective, we see good tailwinds for our industry. We saw strong rain label growth last year. And as we see those new opportunities layer in, we expect strong growth in the future. But they'll just, we're in a bit of a lull right now with no new Fortune 100 companies really jumping into the market, at least in the first half. And if there is movement in the second half, it'll be just the beginnings of a ramp. So just to put it all in a nutshell, strong enterprise pipeline, a lot of interest, happens to be a low right now.

And Chris, with respect to the customers that are working in the grocery vertical, obviously, it's been public Kroger's doing something. Can you say whether the second grocer is a US-based grocer or is it a European grocer?

Of course, we know, I think for competitive reasons, we prefer not to give an answer to that question right now. But it is a large opportunity, and it's one that we've decided to work directly with that enterprise end user because of the potential built into it. Thank you. I'm sorry, I can't answer directly.

Fair enough.

Okay, thank you, Jim.

Your next question today will come from Troy Jensen with Cantor Fitzgerald.

Please go ahead. Hey, gentlemen. Thanks for taking my question. Maybe a couple here for Kerry. You guys talked about aggressive endpoint price shopping. Can you just kind of talk to us about what is the ASP reductions or any more insight into that?

Yeah. So when we think of endpoint, I see from kind of our pricing impact, which I think is where you're going on any questions, Troy, I would say given the current market dynamics, the negotiations came in line largely with our expectation. Our focus in this year's negotiations was driving the M800 adoption. As you know, the M800 is a lower-priced SKU, so we can expect average ASPs to come down as the M800 ramps as a percentage of our mix. The tradeoff, however, comes from the gross margin line where we expect accretion as the lower-cost M800 ramps into our volume-running SKU.

And, Troy, I'll say a little bit more. In terms of aggressive label price shopping, there's a bit of bonding over capacity out in the market right now. And so there's a fairly competitive market dynamic at the label level. And so we're seeing end users price shop aggressively, service bearers price shop aggressively. And that aggressive price shopping has resulted in delayed orders costs.

Gotcha. All right, understood. And then in conjunction with that, just, Kerry, you talked about gross margins being down modestly. Thank you, Ron. Could you just frame what modestly means?

Yeah, I think let's talk about the impact that we'll see to gross margin. I did say modestly, you know, it'll mark the low point for the year and we'll begin benefiting as we move forward from the M800 mix and lower cost wafers flowing through. Now, when you deconstruct the guides and you have the top and the bottom line, you can back into roughly what you might think the gross margin will be. But I think the key point is to understand that it'll build throughout the year as we ramp the M800 and as we get to those lower cost wafers.

All right. Understood.

Good luck, guys. Thank you, Troy. Your next question today will come from Christopher Roland with Susquehanna. Please go ahead.

Hey, thanks for the question. Yeah, just a follow-up. I guess, first of all, on the price shopping comment, just to understand that, is that pricing between you and your IC competitor? Help me understand that a little bit more. And then, Chris, I think you also mentioned an aggressive – Is there a lower margin inlay guy out there? Sorry, help me understand the pricing dynamic here that you were talking about.

Sure, Chris. Thanks for the question. So the label price dropping is twofold. It's from the enterprise end users to the service bureaus, and it's from the service bureaus to the bonders, people who actually take our ICs and put them on inlets. Because there's some excess bonding capacity in the market, and it's a pretty competitive market right now. There's a lot of price shopping around, which is resulting in the delayed orders. So I was referring to the price shopping. It is from our customer. It is between our customer and our customer's customer and our customer's customer's customer, which is the enterprise end user. Does that help?

That does help. Thank you. Thank you for that clarity. And then I know you guys only guide one quarter at a time, but any any broad thoughts as to you know how this inventory dynamic may impact seasonality is there going to be any seasonality going forward or do we flatline off this base um just just any broad thoughts uh not nothing specific i think would be appreciated by all of us yeah it's so

You know, we only guide one quarter of the time, and I really don't want to hazard a guess on the second quarter right now. You know, some of the factors that we're seeing going into our guide, first, our January bookings were strong. They exceeded our fourth quarter run rate, and that January strength includes endpoint IT turns orders. But to be prudent, we're assuming fewer turns at the midpoint of our guide, and specifically zero turns on our endpoint IC business. We just want to give ourselves some time to get our arms around the situation. We are working hard to clear out the channel inventory, but we know that can take some time. So that's really how we're thinking about it right now, and we'll provide more update as we go.

If there's one word I'd like you to take away, it's just prudent. That's a word that's very used, and that's a word that we're all behind that word, and that's where we stand right now, just we're being prudent as we look forward. Okay. Thank you very much, guys.

Thank you. Your next question today will come from Scott Zero with Roth Capital. Please go ahead.

Hey, good afternoon. Thanks for taking the questions. Hey, Chris, just given the – near-term inventory headwinds. I'm wondering if you could talk about the dynamic of the longer-term growth in the marketplace, right? You consistently talked about the historic endpoint ICU unit growth of 25% to 30%. Is that demand profile changing at all when you're looking at 2025, or is that still tracking? We're just working through a near-term inventory issue.

No, Scott, I wish I could answer that question for you. We'll have a better read on it a little bit through the year. What we see right now is – It's essentially what I said in our prepared remarks. We see strength in North America, kind of driven a little bit across the board, retail, apparel, retail, general merchandise, and supply chain, and logistics, as well as new opportunities, and then the growing food opportunities. So, North America, we see, is still solid, and it's still going forward. The EU is flattish, at least from our current perspective, and we don't usually call out Asia, and that's smaller anyway. It's hard for me to project what those factors mean for 2025 overall. In the longer term, we see long-term secular tailwinds underlying our industry. Opportunity layering on, at least in, you know, if we see some ramps heading into 2026, on top of other things that are going on, suggest that, you know, that the future is very bright, and we fundamentally believe it's very bright. I just can't hazard a guess right now on 2025, especially given the geopolitical dynamic, the tariff situation, all those other things. I wish I could give you a better answer, but as of right now, I can't.

Hey, Chris, just clarification on the tariff issue. When you say geopolitical, is that because customers were pre-buying and pre-shipping ahead of any sort of a tariff situation, or is there some other dynamic going on there? And then, if I could finally just wrap up with the pipeline, It sounds like the pipeline is still pretty active. I was wondering if you could expand beyond food. I think you've addressed that a couple of times. But with your large North American retailer general merchandise, I think they were moving to the phase three, how things like that are progressing on that front and leveraging that existing customer's supply channel or supply chain, right? I think you were talking about other big box retailers starting to pull forward. Has that dynamic changed at all, or are some of those opportunities still existing in 25? Thanks.

Yeah, okay. I'll do my best on those questions. In terms of the geopolitical situation, it was less of a pull forward and less of a, I'm going to use the word sourcing uncertainty, and the sourcing uncertainty being primarily if you're a supplier to an enterprise, you need to know where to source out of. based on what the tariff situation is. So, we're seeing some delayed orders just resourcing decisions based on where the tariffs might hit. And that is resulting in shorter order cycles and essentially causing, at least from our perspective where we are right now, delayed orders to us as those decisions get made. In terms of the pipeline, we have ongoing efforts with our lead customers, our lead enterprise end users, in the retail apparel space. We still see significant opportunities there, and we'll be expanding some of the engagements in the retail apparel space, because as I mentioned in the prepared remarks, some of the things our partners are doing around loss prevention and self-checkout, around overhead reading, could open up a new wave of opportunities in retail. On top of that, obviously, there's further expansion in retail general merchandise, second-largest North American supply chain of logistics end-user, with some spillover to other big box retailers who are taking advantage of some of the tag categories. And then the third big thing we're looking at is the enterprise mobile transitioning into consumer mobile. The enterprise mobile is not yet announced yet, but, you know, we're obviously talking about it. All of us are talking about it. The date for a transition to consumer mobile is further out in time. That's still, you know, a guarded – expectation on our part, but we're going to do everything we can to drive that consumer opportunity, which will truly change the dynamics in the industry. So it's all of the things. It just basically points the picture to a bright future, but right now we've got a little bit of a rough patch to go through.

Great.

Thanks so much.

Sure. Thank you.

And your next question today is a follow-up from Harsh Kumar of Piper Sandler. Please go ahead.

Yeah, hey, guys. So I wanted to ask you about this, the new customer at the grocery level. Could you at least – I know you don't want to give us a name. Could you tell us if it's a large customer or a smaller boutique-type grocery chain? And then the other part, too, of the question is, if you're going to be having one of these guys ramp in a meaningful way in 2026, would you not start to see some volumes perhaps in 2025, maybe second half with your interlake partners?

Yeah, so harsh. I'll take that one. The answer to the first part of the question is large customer, although anytime you talk food, it's large. So, you know, so we're actually, but to be specific, it's in grocery. It's not in fast food or other stuff kind of thing. So, it is grocery at the item level. And then the timeframe. Because, you know, When you think about the size of the opportunities, these opportunities are so large. The larger an opportunity is, the more measured the pace. You just have to accept that. We anticipate some endpoint IC volumes in the back half of the year. Obviously, a lot depends on the pace at which the customers go and things like that. We expect some volumes in the back half of the year. And ideally, one or both of those will ramp into 2026. Now, that said, the one that We're not siting right now since it is a self-checkout opportunity. We have a lot of work to do to get it fully up and running and working. So we're early days. And in the same way as it took us some time to do the self-checkout and loss prevention opportunity with the Visionary European retailer, we really need to roll up our sleeves and get this one working for this particular grocer. It's not a loss prevention opportunity at self-checkout, but self-checkout at item-level grocery is going to take some work on our side. I believe we're the best company to do it. We're in the best position to do it, and if anybody can do it, we can. We're going to give it our best shot, and I believe we will make it go, but I can't keep it this time yet.

Understood. Thank you. Thank you, Chris, for that comment.

Sure. Thank you, Harsh.

That concludes our question and answer session. I would like to turn the conference back over to Chris DiIorio, co-founder and CEO, for any closing remarks.

Thank you, Nick, and I'd like to thank all of you for joining the call today. Thank you for your ongoing support. Bye bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.