Impinj, Inc.

We grew year-over-year endpoint AC volumes by 9%, believe we gained endpoint AC market share, made M800 our volume runner, launched Gen2x and proved it to be a must-have for solution success, drove Gen2x-enabled solutions at multiple Lighthouse accounts, helped plant the seeds for accelerating food adoption, and exited the year with record-adjusted EBITDA and cash. I am very pleased with how our team rose to meet the challenge. Looking into 2026, we see, in the first quarter, a confluence of order timing, ongoing retailer inventory burndown, product transitions, and a super seasonal systems decline due to project timing, driving revenue lower. Looking just a bit further out, we see conditions improving as N.2C volumes rebound, and growth returning as our investments in feeding new opportunities and our solutions focus pay off. Starting with first quarter endpoint ICs, like last year, our second large North American supply chain and logistics end user significantly shifted their label supplier allocations. Partners that anticipated share gains ordered ahead in the fourth quarter, whereas those with share losses are reducing inventory in the first. Additionally, we are quickly pivoting to a custom-built endpoint IC for that end user, which I'll describe shortly, causing a further temporary dip in endpoint IC orders as partners reduce prior product inventory while we ramp volumes of the new IC. Second, we see apparel retailers reducing stock and underbuying demand, impacting our first quarter outlook. And finally, food volumes remain modest in the first quarter. Turning to our expectations as we exit the first quarter, I'll start with that custom endpoint IC. Think of it as an ASIC developed with the end user, tightly linked to their and our platforms, with added features like label authentication that solve key business needs while also eliminating unneeded features. They plan to fully switch to it this year. The IC also opens new opportunities for them to unlock and for us to participate in new outward-facing customer accounts. Second, we see end-point AC demand for apparel normalizing as soon as second quarter. Third, we see general merchandise growing as existing categories add SKUs and new categories get added. Fourth, we see food rollouts expanding to more stores. And finally, we see our solutions efforts opening major new account opportunities. To speed our pivot to solutions, we recently added Chris Hundley as an Executive Vice President for Enterprise Solutions. Chris adds significant software and solutions talent to our team. We are also doubling down on Gen2x as a solutions enabler, added EM Microelectronics as a Gen2x licensee, and are forging close Gen2x partnerships with leading ecosystem players. We not only see Gen2x increasing the performance and feature gap between M800 and its competition, but also see it as an essential toolkit for enterprise solutions. And we have a growing pipeline of solutions opportunities. We expect our solutions efforts to drive endpoint IC volumes and share, reader and reader IC revenue growth, and with time, meaningful software revenue. And perhaps most importantly, a selling model that focuses on solution value rather than individual components. Of course, even as we pursue solutions, we remain keenly focused on our current products. In retail apparel, multiple new end users are talking openly about rain adoption. We are pursuing wins with them as well as further share shifts with existing retailers. In general merchandise, we see 2026 is the year that unlocks key new logos and current use cases, adds significant new ones, and drives IC volume goals. On the competitive front, we see Gen2x driving additional opportunities to us. In food, we see a ramp through 2026 led by bakery with proteins to follow. And although food volumes remain modest, the opportunity is staggeringly large and we intend to lead and wing it. Overall, we see industry endpoint AC volumes rebounding from an uninspiring 2025 as these growth factors layer on, with our leading market share driving an outsized portion of those volumes to us. We see our solutions revenue expanding, notably as our Lighthouse end users outperform their peers and pull us into opportunities. And in all, We expect our focus on hitting solution price points where the ROI pencils out for the end user to pay off handsomely. 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. Kerry?

Thank you, Chris, and good afternoon, everyone. Fourth quarter revenue was $92.8 million, down 3% sequentially compared with $96.1 million in third quarter 2025, and up 1% year over year from $91.6 million in fourth quarter 2024. 2025 revenue was $361.1 million, down 1% year over year compared with $366.1 million in 2024. Fourth quarter endpoint IC revenue was $75.2 million, down 5% sequentially, compared with $78.8 million in third quarter 2025, and up 2% year over year from $74.1 million in fourth quarter 2024. Endpoint IC revenue slightly exceeded our expectations, driven by terms orders. M800 was the volume runner, with unit volumes increasing sequentially. 2025 endpoint IC revenue declined 2% year over year driven by the factors Chris already noted. Looking to first quarter, we expect endpoint IC revenue to decline sequentially at a high team's percentage rate, driven primarily by supply chain and logistics, channel inventory reductions, retail weakness, and to a lesser extent by annual endpoint IC price reductions. Fourth quarter systems revenue was $17.7 million, up 2% sequentially compared with $17.3 million in third quarter 2025, and up 1% year-over-year from $17.5 million in Q4 2024. Systems revenue exceeded our expectations driven by NRE revenue, while reader and gateway revenue and reader IC revenue declined as anticipated. 2025 systems revenue grew 2% year-over-year, with reader and gateway growth more than offsetting declines in both reader ICs and test and measurement solutions. Looking to first quarter, we expect systems revenue to decline more than seasonally, primarily due to project timing at our enterprise customers. Fourth quarter gross margin was 54.5%, compared with 53% in third quarter 2025 and 53.1% in fourth quarter 2024. The year-over-year increase was driven by higher endpoint IC direct margins, specifically from a richer mix of M800. The quarter-over-quarter increase was driven primarily by higher systems direct margins, specifically higher NRU revenue, and to a lesser extent, by higher endpoint IC direct margins. 2025 gross margin was 55.3% compared with 54% in 2024, with the increase due primarily to a richer mix of M800 endpoint ICs. Looking to first quarter, we expect gross margin to decline sequentially driven primarily by lower revenue on fixed costs and annual endpoint IC price reductions. Total fourth quarter operating expense was $34.2 million compared with $31.8 million in third quarter 2025 and $33.6 million in fourth quarter 2024. Research and development expense was $18.6 million. Sales and marketing expense was $8.2 million. General and administrative expense was $7.4 million. 2025 operating expense totaled $130.1 million compared with $131.9 million in 2024. We expect total first quarter 2025 operating expense to increase sequentially given primarily by normal seasonal factors. Fourth quarter adjusted EBITDA was $16.4 million compared with $19.1 million in third quarter 2025 and $15 million in fourth quarter 2024. Fourth quarter adjusted EBITDA margin was 17.7%. 2025 adjusted EBITDA was a record 69.6 million compared with 65.9 million in 2024. 2025 adjusted EBITDA margin was a record 19.3% in line with the long-term model we shared at our 2023 investor day. Fourth quarter GAAP net loss was 1.1 million. Fourth quarter non-GAAP net income was $15.6 million or $0.50 per share on a fully diluted basis. 2025 GAAP net loss was $10.8 million. 2025 non-GAAP net income was $64.2 million or $2.11 per share on a fully diluted basis. Turning to the balance sheet, we ended the fourth quarter with record cash, cash equivalents and investments of $279.1 million, compared with $265.1 million in third quarter 2025 and $239.6 million in fourth quarter 2024. Inventory totaled $85 million, down $7.7 million from the prior quarter. Fourth quarter capital expenditures totaled $1.5 million. Free cash flow was $13.6 million. 2025 capital expenditures totaled $12.9 million. Free cash flow was $45.9 million. Turning to our outlook. We expect first quarter revenue between 71 and 74 million compared with 74.3 million in first quarter 2025, a year-over-year decrease of 2% at the midpoint. We expect adjusted EBITDA between 1.2 and 2.7 million. On the bottom line, we expect non-GAAP net income between 2.5 and 4 million, reflecting non-GAAP fully diluted earnings per share between $0.08 and $0.13. 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. Nick?

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, 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 will pause momentarily to assemble our roster. And the first question will come from Harsh Kumar with Piper Sandler. Please go ahead.