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.

Yeah. Hey, guys. I wanted to hit upon the first quarter guidance a little bit. I think you're off something like $17, $18 million relative to the expectation on the suite. I know you've got a shift at EPA. I'm sorry, a shift at your second customer in logistics. And you've also got some sort of a custom chip that you're developing and also seems like some excess inventory. So I was hoping that you could break down for us this miss between the impact from orders from the custom chip and the timing associated with it versus how much excess you have. And I'll ask my second question at the same time. It seems like there's a lot of stuff moving around. You talked about food sort of moving around, apparel moving around, but then you seem pretty confident that all of this will fix itself fairly fast, like in second quarter. These are large end markets, and I'm curious what gives you the confidence that this will swing around towards a better situation as quickly as the second quarter.

Okay. Thank you, Harsh. This is Chris. There's a lot to unpack in this question. I think Karen will tag team it here. So I'm going to start by saying that despite the starting points looking the same, we see 2026 very differently from 2025. 2025, we took a competitive lead and held our own in what was an otherwise pretty tough year. In 2026, we're going to press that lead in what we believe is shaping up to be a growth year for the reasons that we cited in our prepared remarks. And relative to those prepared remarks, Cara and I will both go through some of the details on why we see things turning around and actually why I talked about exiting the quarter on an upward swing. But just before I hand over to Kerry to add a few points, I will say that that custom ship for our second large American supply chain and logistics end user, it's not just in design. We are currently shipping it. And so it is in production now. Kerry, why don't I turn it over to you for a bit, and then we can go back and forth.

Thanks, Chris. First, let me break down the Q1 revenue guide and how we built it. So as I noted, we're expecting endpoint IC revenue to decline sequentially at a high team's percentage. That's primarily on lower volume as our inlay partners supporting our logistics customers burn down a few weeks of inventory. Think of each week of burn down approximating about $5 million of impact. To a much lesser degree, yearly price reductions and product mix are also impacting our first quarter. We're modeling pricing at a couple million bucks and the mix impact is smaller than that. There's also some retail weakness that we're factoring through our guide. Now, as we built our guide, we wanted to be prudent in doing so. So there's a couple things to consider in our guidance. First, the January turn orders have been strong. They're already double what the fourth quarter was at the same point in the quarter and they're up more than 50% than they were last January. The second piece I would highlight is that the elevated rescheduling behavior that we saw all of last year has significantly moderated and is approaching a return to normal levels right now. And then finally, I would add, our endpoint IC business is nearly 100% booked to the midpoint of the guide, despite there being a few weeks left to turn business in the quarter.

D'Shane Barnett, Co-Founder, The Hartsville plus there, why don't you follow on and did we answer your question adequately or do we leave parts of it open.

D'Shane Barnett, Co-Founder, No no super helpful, I just wanted to follow up on the second question that I asked, which was you've got a lot of end markets moving around food. D'Shane Barnett, Co-Founder, Apparel all of us is getting hit seems like in one queue you mentioned, but then you're pretty confident that all of this will turn around, I was, I was curious are you just looking at your are you looking at your. orders and saying this will turn around for you or is there something happening within the end markets that is causing the orders to have come in into the one Q and you're expecting something to happen in the end market to drive that business up?

Yeah, so there's no easy answer to your question because the answer depends on the particular aspects of the end markets. In food, as I said in my prepared remarks, we see modest volumes but inexorable growth. And we remain incredibly excited about that food opportunity. We see stores, we see the number of stores expanding, especially in bakery. And we see opportunities in food space. In retail apparel, as we said, we see ongoing retailer inventory burned down. We saw some of it in the latter part of the fourth quarter now that we finally have the data. And we see it continuing in the first quarter. We expect that inventory burndown to normalize based on input from the retailers themselves, as well as from our partners. And we see new accounts coming online. For example, Abercrombie & Fitch, Aritzia, Old Navy, Academy Sports, and others. So we see new accounts coming online. And then in supply chain and logistics space, of course, as Kerry noted, we see the inventory burndown correcting, as well as the new IC adding volumes to us. So overall, we think we've got good visibility into the opportunities that you just raised here. And the reasons we feel positive about the situation exiting the corner is that we see positive news there. Thank you. Thank you, guys. Thank you.

The next question will come from Blaine Curtis with Jefferies. Please go ahead.

Hey, guys. Ezra, we're on for Blaine. Thanks for taking my questions. Just first, I want to make sure I understand this correctly. You said apparel is going to normalize in Q2. Do you also expect the logistics to normalize in Q2, or do you think that's going to take a little bit longer?

We said that we see apparel overall normalizing as early as second quarter. We're not going to actually project the actual date.

in the supply chain logistics basis carrie said just a minute ago and carrie i'll have you add again we see the inventory correction happening in the first quarter anything you'd add there yeah um ezra i would say you know we're we're entering the quarter with a few extra weeks of channel inventory related to supply chain and logistics we're going to work very hard to burn that down in q1 but We know from history that it's difficult to contain a correction to a single quarter, and it may spill over into the second quarter. So you'll have to wait for us to give an update as we exit Q1 on how successful we are at burning that inventory down.

Got it. And then my follow-up would be, in terms of ASIC, you talked a little bit about pricing and solutions. Can you talk a little bit about how you view that and that solution for the customer and how you think about pricing and value? going forward with that?

Yes. This is Chris. I'm happy to. We've been focused for a while on understanding end user problems, designing customizations through our platform that address the customer needs. We did protected mode for a visionary European retailer and brought that ship broadly to market, and it's being used by them and many others. You can think overall of Gen2X as the same idea, custom features that were released broadly to the market, and both of them have seen market success. In this case, you can think of the custom IC as being tailored to the specific needs of that end user, and it is an IC customized for them. And we see it as not only meeting their critical needs and helping their business go forward, but also giving them the opportunity to drive operational efficiencies across their organization and for them to expand their prowess in Raynor RFID to win new customer business, including with that IC. So we as a company are focused on working directly with those end users and truly enabling them to drive forward with their business and to expand it and then for us to basically partner with them along the way. So expect us to do more of those kinds of opportunities and as we build more and more whole solutions to tie that customized endpoint ac and the radio link that supports it and features in our reader ics into an overall solutions offering more and more and less just an ic offering so we're early in that stage where we focus on a solution sale rather than an individual ic sale but expect us to drive in that direction

As for this, Kerry, the only other thing I would add is we'll price that IC to market.

Yeah. At least currently, our current way of selling. Future, we'll be looking for new opportunities to do solution sales. Awesome. Thank you.

The next question will come from Jim Rashudi with Needham & Company. Please go ahead.

Thanks. Good afternoon. I just want to follow up on this new chip. Is this... for a subset of applications with this customer?

No, Jim, it's for all applications with the customer. They are going to switch to that chip. They plan to fully switch to that chip in 2026. Okay. Customized for them, for their needs.

Got it. Chris, will this, I don't recall you guys ever, going down this path with a customer. What kind of concerns could this customer have about second sourcing being able to source the chip from someone other than you just to protect themselves? I'm wondering, does this have anything to do with the relationship perhaps with EM microelectronics?

Good question, and good connecting the dots, Jim. We're not far enough along to speak to any possibilities about the relationship with EM, but you're thinking in the right direction. Right now, we're focused on delivering to the customer's needs, ensuring they have adequate supply, and giving them commitments of supply so they have confidence in this chip and their ability to rely on it. As the future evolves and we do more of these things, and I want to do more custom chips because we've got other enterprise customers with key needs that aren't addressed without customizations. We will be looking to ensure for them that they have adequate supply of chips, labels, reader ICs, and everything else so they can feel confident moving down this path.

Daddy, one final question, and I'll jump back in the queue. You suggested that in terms of game market share and endpoint ICs, your major competitor has introduced a new chip. You know, I'm wondering how you're thinking about market share, you know, particularly with this new chip that you're introducing. And in a related question, it sounds like this competitor is still talking about a license payment in the June quarter. So, Carrie, maybe you could help me out with is that something we should be thinking about as well for Q2? Jim, I'll take the first one.

You should expect the license payment in Q2, Jim. You should expect it.

We do. Yes, we'll get the license payment. To the other part of your question, Jim, we're focused on enabling solutions for enterprise end users. Those solutions are not just a chip. It's not just a chip and an antenna. It's a chip and an antenna. And the air link supporting it and the reader, I see supporting that and the firmware on the reader, I see supporting it and the readers and gateway supporting it and the partnership supporting it. And then, and then solution software we're focused on driving the entirety of those pieces to create an enterprise solution. And we firm, and you see Gen2X as a key, key, key part of that initiative. And we firmly believe that by delivering whole solutions and optimizing the solution for the end user. we can outperform mix and match efforts using competitor products. And that's our focus.

Thank you. Thank you. The next question will come from Scott Searle with Roth Capital. Please go ahead.

Hey, good afternoon. Thanks for taking my questions. Chris, I just wanted to get a couple of clarifications on some of your comments and some of the initial questions. For starters, on The logistics softness, I want to clarify, is the customer that you're designing a custom chip for, are they in part then working down inventory to zero from legacy M700, M800 chips, and that's part of the pressure as well? And then as it relates specifically to the custom ASIC, I think you've got to ask the market share question, but I'll ask it maybe a different way. I would imagine if they're moving in this direction, it should deliver higher share as opposed to splitting the business historically with NXP. Should we be assuming, though, that you're going to be gaining 100% share with these types of customers? And it sounds like there's more custom opportunities in the pipeline. So how is this going to transition then over the course of 26 and 27? And then I had a follow-up.

Yeah, Scott, I'll do my best to those questions. First, we're not just designing the chip. It's in production now. Second, it's dedicated to a single customer, which is our second large North American supply chain and logistics customer. It is targeted at addressing their specific needs, and it is a chip specific to them. We already have high share at that account. It will maintain that share. And we are exploring customizations other enterprises that aren't as far down the path as we are in this particular instance where we actually have the IC or the chip in production. But more importantly, I view this chip as us engaging closely enough with the enterprise where they can share their needs, we can share what we can do, and we can together build a chip. It's not just impinge chip, build a chip for them. is we work together on it. They came forward with what they needed, and we built it for them, and they're going to be using it, and we intend to keep doing so. You know, I have a mantra in the company, and I push it at every meeting we have, which is we support our end customers. We never let an end customer down. And you should expect us to do that here. Harry, what did I miss? Scott, let me unpack.

Let me unpack the inventory build just

Oh, sorry, before the inventory, Bill, just, Chris, to clarify then, do you retain the IP and the ability then to license it to additional customers within that same subvertical or no?

Yes, we do in this particular instance retain the IP. I can imagine other scenarios where there might be some shared IP. In this instance, we retain the IP. But our focus, first and foremost, is supporting that customer. They're a Lighthouse customer to us. I consider them a close partner. You should expect us to focus first on them. with this particular chip, and we built it for them specific to them.

And Scott, I'll just unpack the inventory build a little bit. Today, parcel tracking deployment uses the M800 exclusively. The M800 is our general purpose SKU, meaning it can also support virtually any retail, apparel, or general merchandise application. And that application fungibility gave some of our partners the confidence to lean in, build supply ahead of actually winning the award, knowing that they could move those ICs through other applications if necessary. So when we were looking at our fourth quarter and we were building our fourth quarter, it came together as we expected. But when we unpacked it, unpacked the quarter in mid-January and we matched that with our channel inventory reports from our inlay partners, we realized that the logistics-related build had masked the weakness in retail. Now, this will get better. With our logistics customer now ramping to the new custom IC that Chris just described, we will have better visibility into logistics-related inventory. We'll be able to match our shipments of that custom IC directly to that end customer's monthly consumption reports. We have to prove it to you, certainly, but we think this gets better going forward.

Okay. Very helpful. And if I could, just as a follow-up, another market share question, Chris, you've referenced it a couple of times in your opening remarks, but Gen2x provides significant benefits and advantages. It only works with your endpoint IC. So I'm wondering, as you look out over the next couple of quarters in 26 and 27, is this the primary driver of incremental share out there? And will you start to run the table a little bit more in terms of meaningful market share within your existing accounts. Thanks.

I'm going to. Yes, I'm going to answer the question. Yes, I believe that Gen2X will be the significant driver of our market share gains. But you should think of Gen2X as a toolbox that we can bring to bear for enterprise customers who have an unmet need and allow us to solve their problems. So to the extent that we have significant enterprise accounts, which we do, we need a way to solve them. Consider Gen2x to be the way we're going to be driving the solution and going forward, even adding more features and capabilities to Gen2x as we learn and do more. So essentially, you should think of Gen2x as a way to improve the readability, overall performance, and protection capabilities provided by RAIN RFID. to reduce labor costs to speed inventory, to provide readability where you wouldn't have it otherwise, to localize where items are, to identify exits and theft, and many protect consumer privacy and many other areas where you put that whole toolbox together. It's the driver of our differentiation in the market. It's kind of a manifestation of it, but it's also a manifestation of our overall solution strategy. So the two together, They're going to be the drivers of our success. Hey, great. Thanks so much.

I'll get back in the queue. Thank you.

The next question will come from Natalia Winkler with UBS. Please go ahead.

Hi. Thank you so much for taking my question. I just wanted to ask one more on the first quarter kind of outlook for you guys. So if I understood Cary correctly, Cary, you mentioned several weeks of inventory burn for retail, right? And it sounds like each week is 5 million, so if I'm thinking, you know, even of a sequential, you know, reduction of 20 million, it sounds like, you know, more than half of that is probably related to the retail inventory breakdown. Is that kind of a fair way to think about it, or is it more nuanced?

I think that's a fair way to think about it. It's a few weeks of inventory, not several. It's primarily related to supply chain logistics for the reasons I just described. You're correct in that the impact is about $5 million per week of burndown. And then the other factors, which are far less impactful, are pricing and mix, a size pricing at a couple million dollars and mix of less than that.

Awesome. Thank you so much. And then I guess a follow-up. Can you guys help us understand, you know, clearly it's a highly complex supply chain for retail, right, with kind of multiple, different steps and stages in it. Can you walk us through your, you know, forecasting process and maybe part of the reason like why we're seeing such a strong kind of corrections and burnouts that may be a little bit less predictable than for some of the other end markets you guys cover?

Yeah, so the inventory build was related to logistics. We had a similar logistics build last year at the same time, but for different reasons. It's nonetheless frustrating. This year's build is a result of our partners leaning in ahead of winning the supply awards or label awards following the label reallocation process. They were comfortable leaning in because up until the custom IC ships, The M800 goes into the package tracking deployment. The M800 is a fungible SKU across the industry in that its general purpose, it can support retail apparel, it can support general merchandise, it can support logistics. That fungibility gave our partners the confidence to lean in, build extra inventory in hopes of winning an award, because if they didn't win the award or didn't win as much of an award as they thought, they would be able to burn that inventory down through the rest of their market opportunities. We didn't realize that in the fourth quarter as it was happening because our fourth quarter from a unit volume perspective was coming in right as we expected. When we began unpacking the fourth quarter volumes in mid-January and we matched that with the channel inventory reports we received around that same time, we realized that the logistics build had masked some weakness in retail apparel that we didn't anticipate and wasn't obvious to us until that point. Now, I think next year this gets better, and I know we have to prove that first, given the last two years of channel inventory builds. But I think it gets better because we will only ship one SKU to that customer. It's only usable by that customer, and we will be able to match our shipments with their monthly consumption reports. And the difference between the two is the inventory that will be in the channel. So again, we have to prove it to you, but I think we get better next year at that.

Thank you.

The next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Hey, gentlemen. Thanks for taking my questions. Maybe for Chris, or I guess either one of you guys. You know, these customers that were leaning in, right, in hopes for the awards, it sounds like they went to a competitor. So I'm just curious, why do you think we had this share loss in the quarter?

No, they didn't go to a competitor, right? No, that wasn't part of it. There was none of that moving to a competitor. So just the awards weren't awarded? There's a new IC coming. They anticipated some wins. They started building to the new IC. At the same time, they know their existing inventory is going to need to get burned down. So they started buying ahead. The ones who, as we said in our prepared remarks, the ones who didn't win as much now need to burn down their inventory in the first quarter.

So, Troy, the only thing I'd add to Chris is that our logistics customer rebids their label suppliers each year. It's still the M800 for all labels, but the mix of inlay partners that support them each year can change based on that rebidding process. And that rebidding process this year, coupled with the fungibility of the M800 that I just described, gave them the confidence to lean in and buy more supplies so they could be more responsive if they won the award or to win a greater share of the award. And they knew that if they didn't win as much, they would be able to take that inventory out through virtually any other retail apparel or general merchandise application.

Yep. Okay. Understood. So several partners probably thought they're going to win the award and went to one.

Exactly. It was oversubscribed. The award was oversubscribed. Exactly. And then we compound it with a new chip entering the market and there needs to be a further burndown of the existing M800 product.

Yep. Okay. Understood. And then maybe just to follow up with the, you talked about retail skew growth you're seeing. I'm curious if that's broad-based, or is that just limited to a couple of your bigger customers?

It was SKU growth and general merchandise. You mean retail apparel growth? I think you mean SKU growth and general merchandise.

The comment on SKU growth, was that just based on a few large customers, or is it more broad-based?

The comment on SKU growth in existing categories as well as the potential for new categories was related to a small number, a pretty small number of customers in the general merchandise space. Gotcha. Okay. Good luck this year, guys. Thank you, Greg.

The next question will come from Guy Hardwick with Barclays. Please go ahead.

Hi, good evening. Hi, Guy. Hi, Guy. Just a couple of questions. So I think a year ago when you had a inventory overhang in the T&L space. You said some similar comments that it could take more than a quarter to clear the inventory, but I think you actually cleared the inventory in just one quarter. What's different this time? And as a follow-up, it looks like you have pretty good visibility on the endpoint IC business that you're pretty much already booked for Q1 within midpoint of your guidance, looking at your comments. So What does that tell you or tell us in terms of what's the underlying growth in the endpoint IC market of 2025 levels?

Yeah, Guy, this is Kerry. I'll try to take both of those questions. So yes, it is the same in that it's the supply chain logistics space. There are a variety of different reasons, which I've already covered. Last year, we were successful in burning all that channel inventory out in the first quarter. We are attempting to do the exact same thing this year. However, we know that inventory corrections are seldom contained to one quarter, and we just want to be cautious with our guidance so that if it does spill into the second quarter, we have room to do that. As it relates to our guidance, we are seeing strong signals from our bookings and our turns order in quarter to date. So think of January through the first week of February. That is turns at a higher rate than it was at the same time in fourth quarter, more than double, and 50% up from last year, January. That has put us in a position where we are 100% booked to the midpoint of our guide for our EndpointIC business, or nearly 100% booked. We're giving ourselves a little bit of room because we aren't done with the annual price negotiations. We still have a couple that are outstanding there. And also the Chinese New Year occurs later this year than it did last year. And we typically see a low in bookings during those three weeks.

Thank you.

The next question will come from Christopher Roland with Susquehanna. Please go ahead.

Hi there. This is Dylan Olivier on for Chris. Thanks for taking my question. Maybe pivoting away a bit from this inventory situation and sort of a bigger picture question, I wanted to ask about sort of the competitive landscape, particularly against non-RFID components. We've heard some news flow of some end users kind of pivoting away to some more BLE and other protocols. Is that something that you consider a risk, or do you remain confident in RFID as a long-term solution?

Dylan, this is Chris. The simple answer is we remain confident in RainRFID as a long-term solution. They're just two different technologies. And active BLE with batteries has a particular use case for tracking things like temperature and other kind of stuff that gets continuous data logging. And that's complementary. Passive BLE for beaconing operates in a narrow window of use cases. And again, with some different features and capabilities that I also view as mostly complementary. The volume differences between the two are gigantic. I mean, you know, our industry delivered 52.8 billion ICs less 2024, and volume differences are gigantic. The infrastructure is different. I view them as mostly complementary. Of course, with every complementary thing, there's a bit of overlap, but I don't really look at the competitiveness. I look at complementary things and try to enable the end customer with a solution that meets their needs.

Thanks. I appreciate the color here. And then maybe more of a housekeeping question for my follow-up. But yeah, you had that EM microelectronics license announcement in the quarter. Just wondering how we should think about that impacting the model, if there's going to be a recurring revenue, if that's going to be consistent through the year.

Yeah, there's an immaterial impact to revenue in 2026. We're still working on what that first chip might be, likely a dual frequency IC, likely not available this year.

Just view it as a strategic partnership. And then just think that the answers that we gave to Jim's question, you know, view the strategic partnership as a way for us to deliver confidence to our end users.

Great. Thank you.

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

Yeah. Hey, guys. So I was curious, how long do you think it would take for you to be fully penetrated at your second largest logistics customer with the custom chip? And am I correct in assuming that custom chips typically mean better pricing than a normal chip?

So I'll take the first answer. So the customer plans to fully switch over to that chip this year. That's what I said in my prepared remarks. And as Kerry said, we are pricing the chip to market. Kerry, do you want to? Nope. Did I answer your question, Hark?

Well, I guess there is no market for a custom chip, right? You're the standard in RFID, and you've got a custom product. I would suspect So are you saying that your pricing is similar to M800 or more than that?

I'm going to say that we're pricing it to, as I also said in some of the prepared remarks a little bit further down, to drive an ROI for the end customer and for us. Okay. Fair enough. Fair enough. Thank you. Thank you. Thank you.

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

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

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