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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-37824

 

IMPINJ, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

91-2041398

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

400 Fairview Avenue North, Suite 1200, Seattle, Washington

 

98109

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (206) 517-5300

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

PI

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of October 13, 2023, 27,055,862 shares of common stock were outstanding.

 


Table of Contents

IMPINJ, INC.

QUARTERLY REPORT ON FORM 10-Q

 

Table of Contents

 

 

 

Page

 

 

Risk Factor Summary

 

3

 

 

 

 

 

 

 

PART I. — FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements (Unaudited)

 

4

 

Condensed Consolidated Balance Sheets

 

4

 

 

Condensed Consolidated Statements of Operations

 

5

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

6

 

Condensed Consolidated Statements of Cash Flows

 

7

 

 

Condensed Consolidated Statements of Changes in Stockholders' Equity

 

8

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

31

Item 4.

 

Controls and Procedures

 

32

 

 

PART II. — OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

33

Item 1A.

 

Risk Factors

 

33

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

50

Item 3.

 

Defaults Upon Senior Securities

 

51

Item 4.

 

Mine Safety Disclosures

 

51

Item 5.

 

Other Information

 

51

Item 6.

 

Exhibits

 

52

 

 

Signatures

 

53

 

 

2


Table of Contents

 

Risk Factor Summary

 

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk

Factors.” These risks include, but are not limited to, the following:

 

we operate in a very competitive market;
RAIN RFID (“RAIN”) adoption is concentrated in key industries and the extent and pace of RAIN market adoption beyond those industries is uncertain;
our abilities to deliver platform solutions at scale are nascent;
poor product quality could result in significant costs to us and impair our ability to sell our products;
end users and partners must design our products into their products and business processes;
an inability or limited ability of end user systems to exploit RAIN information may adversely affect the market for our products;
alternative technologies may enable products and services that compete with ours;
we obtain the products we sell through a limited number of third parties with whom we do not have long-term supply contracts;
shortages of silicon wafers and components used in our readers and gateways may adversely affect our ability to meet demand for our products and adversely affect our revenue and/or gross margins;
we rely on a small number of customers for a large share of our revenue;
our ability to affect or determine end-user demand is limited in part because we sell and fulfill primarily through partners and rarely to end users;
our growth strategy depends in part on the success of strategic relationships with third parties and their continued performance and alignment;
if we are unable to protect our intellectual property, then our business could be adversely affected;
we may become party to intellectual property disputes which could be time consuming, costly to prosecute, defend or settle, result in the loss of significant rights, and adversely affect RAIN adoption or adoption of our products or platform;
we have a history of losses and have only achieved profitability intermittently and we cannot be certain that we will attain or sustain profitability in the future;
we have a history of significant fluctuations in our quarterly and annual operating results;
our executive officers, directors and principal stockholders, together with their affiliates, beneficially owned approximately 54.6% of our outstanding common stock as of September 30, 2023, and as a result are able to exercise significant influence over matters subject to stockholder approval; and
we may not have sufficient cash flow or access to cash necessary to satisfy our obligations under the $287.5 million aggregate principal amount 1.125% convertible senior notes due 2027, or the 2021 Notes, and our current and future indebtedness may restrict our business.

 

3


Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited).

IMPINJ, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value, unaudited)

 

 

September 30, 2023

 

 

December 31, 2022

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

78,100

 

 

$

19,597

 

Short-term investments

 

35,129

 

 

 

154,148

 

Accounts receivable, net

 

48,482

 

 

 

49,996

 

Inventory

 

106,806

 

 

 

46,397

 

Prepaid expenses and other current assets

 

4,446

 

 

 

5,032

 

Total current assets

 

272,963

 

 

 

275,170

 

Long-term investments

 

 

 

 

19,200

 

Property and equipment, net

 

44,923

 

 

 

39,027

 

Intangible assets, net

 

14,727

 

 

 

 

Operating lease right-of-use assets

 

10,326

 

 

 

10,490

 

Other non-current assets

 

1,613

 

 

 

1,969

 

Goodwill

 

19,049

 

 

 

3,881

 

Total assets

$

363,601

 

 

$

349,737

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

11,017

 

 

$

25,024

 

Accrued compensation and employee related benefits

 

7,702

 

 

 

9,048

 

Accrued and other current liabilities

 

9,306

 

 

 

2,925

 

Current portion of operating lease liabilities

 

3,308

 

 

 

3,122

 

Current portion of deferred revenue

 

2,425

 

 

 

2,250

 

Total current liabilities

 

33,758

 

 

 

42,369

 

Long-term debt

 

281,449

 

 

 

280,244

 

Operating lease liabilities, net of current portion

 

10,205

 

 

 

11,066

 

Deferred tax liabilities, net

 

3,062

 

 

 

118

 

Deferred revenue, net of current portion

 

327

 

 

 

349

 

Total liabilities

 

328,801

 

 

 

334,146

 

Commitments and contingencies (Note 6)

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Preferred stock, $0.001 par value — 5,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

 

 

 

Common stock, $0.001 par value — 495,000 shares authorized, 27,020 and 26,098 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

27

 

 

 

26

 

Additional paid-in capital

 

450,746

 

 

 

403,599

 

Accumulated other comprehensive loss

 

(1,002

)

 

 

(1,249

)

Accumulated deficit

 

(414,971

)

 

 

(386,785

)

Total stockholders' equity

 

34,800

 

 

 

15,591

 

Total liabilities and stockholders' equity

$

363,601

 

 

$

349,737

 

See accompanying notes to condensed consolidated financial statements.

 

4


Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

$

65,005

 

 

$

68,270

 

 

$

236,888

 

 

$

181,210

 

Cost of revenue

 

34,237

 

 

 

30,835

 

 

 

118,776

 

 

 

83,494

 

Gross profit

 

30,768

 

 

 

37,435

 

 

 

118,112

 

 

 

97,716

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

21,588

 

 

 

18,766

 

 

 

67,426

 

 

 

55,124

 

Sales and marketing

 

10,073

 

 

 

9,326

 

 

 

30,678

 

 

 

28,239

 

General and administrative

 

13,532

 

 

 

11,087

 

 

 

45,098

 

 

 

33,888

 

Amortization of intangibles

 

1,409

 

 

 

 

 

 

3,555

 

 

 

 

Total operating expenses

 

46,602

 

 

 

39,179

 

 

 

146,757

 

 

 

117,251

 

Loss from operations

 

(15,834

)

 

 

(1,744

)

 

 

(28,645

)

 

 

(19,535

)

Other income, net

 

1,090

 

 

 

774

 

 

 

3,620

 

 

 

1,367

 

Induced conversion expense

 

 

 

 

 

 

 

 

 

 

(2,232

)

Interest expense

 

(1,213

)

 

 

(1,205

)

 

 

(3,633

)

 

 

(3,716

)

Loss before income taxes

 

(15,957

)

 

 

(2,175

)

 

 

(28,658

)

 

 

(24,116

)

Income tax benefit (expense)

 

195

 

 

 

(24

)

 

 

472

 

 

 

(67

)

Net loss

$

(15,762

)

 

$

(2,199

)

 

$

(28,186

)

 

$

(24,183

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share — basic and diluted

$

(0.59

)

 

$

(0.09

)

 

$

(1.06

)

 

$

(0.95

)

Weighted-average shares outstanding — basic and diluted

 

26,920

 

 

 

25,743

 

 

 

26,639

 

 

 

25,384

 

See accompanying notes to condensed consolidated financial statements.

 

5


Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

$

(15,762

)

 

$

(2,199

)

 

$

(28,186

)

 

$

(24,183

)

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments

 

223

 

 

 

(504

)

 

 

1,060

 

 

 

(1,691

)

Foreign currency translation adjustments

 

(900

)

 

 

 

 

 

(813

)

 

 

 

Total other comprehensive gain (loss)

 

(677

)

 

 

(504

)

 

 

247

 

 

 

(1,691

)

Comprehensive loss

$

(16,439

)

 

$

(2,703

)

 

$

(27,939

)

 

$

(25,874

)

See accompanying notes to condensed consolidated financial statements.

 

6


Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

 

Net loss

 

 

$

(28,186

)

 

$

(24,183

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

9,733

 

 

 

4,456

 

Stock-based compensation

 

 

 

35,679

 

 

 

32,230

 

Accretion of discount or amortization of premium on investments

 

 

 

(1,600

)

 

 

301

 

Amortization of debt issuance costs

 

 

 

1,206

 

 

 

1,203

 

Induced conversion expense related to convertible notes

 

 

 

 

 

 

2,232

 

Deferred tax expense

 

 

 

(662

)

 

 

 

Changes in operating assets and liabilities, net of amounts acquired:

 

 

 

 

 

 

 

Accounts receivable

 

 

 

2,683

 

 

 

(5,218

)

Inventory

 

 

 

(59,239

)

 

 

(9,967

)

Prepaid expenses and other assets

 

 

 

1,407

 

 

 

45

 

Accounts payable

 

 

 

(10,054

)

 

 

1,107

 

Accrued compensation and employee related benefits

 

 

 

(1,904

)

 

 

1,571

 

Accrued and other liabilities

 

 

 

1,677

 

 

 

1,252

 

Operating lease right-of-use assets

 

 

 

1,990

 

 

 

2,490

 

Operating lease liabilities

 

 

 

(2,501

)

 

 

(3,064

)

Deferred revenue

 

 

 

(1,038

)

 

 

2,358

 

Net cash provided by (used in) operating activities

 

 

 

(50,809

)

 

 

6,813

 

Investing activities:

 

 

 

 

 

 

 

Purchases of investments

 

 

 

 

 

 

(159,837

)

Proceeds from sales of investments

 

 

 

13,372

 

 

 

 

Proceeds from maturities of investments

 

 

 

127,449

 

 

 

79,508

 

Proceeds from sale of property and equipment

 

 

 

234

 

 

 

 

Purchases of intangible assets

 

 

 

(250

)

 

 

 

Purchases of property and equipment

 

 

 

(15,968

)

 

 

(5,975

)

Business acquisitions, net of cash acquired

 

 

 

(23,357

)

 

 

 

Net cash provided by (used in) investing activities

 

 

 

101,480

 

 

 

(86,304

)

Financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

 

7,890

 

 

 

12,462

 

Payment of 2019 Notes

 

 

 

 

 

 

(17,564

)

Net cash provided by (used in) financing activities

 

 

 

7,890

 

 

 

(5,102

)

Effect of exchange rate changes on cash and cash equivalents

 

 

 

(58

)

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

 

58,503

 

 

 

(84,593

)

Cash and cash equivalents

 

 

 

 

 

 

 

Beginning of period

 

 

 

19,597

 

 

 

123,903

 

End of period

 

 

$

78,100

 

 

$

39,310

 

 

 

 

 

 

 

 

Supplemental disclosure of cashflow information:

 

 

 

 

 

 

 

Cash paid for interest

 

 

 

1,617

 

 

$

1,803

 

Purchases of property and equipment not yet paid

 

 

 

1,539

 

 

 

2,519

 

Operating lease liabilities arising from obtaining ROU assets

 

 

 

979

 

 

 

 

Lease liabilities arising from remeasurement of ROU assets

 

 

 

159

 

 

 

 

26,396 shares of common stock issued for Voyantic Oy acquisition

 

 

 

3,579

 

 

 

 

Acquisition-related contingent consideration liability

 

 

 

4,602

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

7


Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

Equity

 

Balance at December 31, 2022

 

 

26,098

 

 

 

26

 

 

 

403,599

 

 

 

(386,785

)

 

 

(1,249

)

 

$

15,591

 

Issuance of common stock

 

 

483

 

 

 

1

 

 

 

4,519

 

 

 

 

 

 

 

 

 

4,520

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,224

 

 

 

 

 

 

 

 

 

10,224

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,358

)

 

 

 

 

 

(4,358

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

644

 

 

 

644

 

Balance at March 31, 2023

 

 

26,581

 

 

$

27

 

 

$

418,342

 

 

$

(391,143

)

 

$

(605

)

 

$

26,621

 

Issuance of common stock

 

 

211

 

 

 

 

 

 

1,233

 

 

 

 

 

 

 

 

 

1,233

 

Stock-based compensation

 

 

 

 

 

 

 

 

13,148

 

 

 

 

 

 

 

 

 

13,148

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,066

)

 

 

 

 

 

(8,066

)

Common stock issued for Voyantic acquisition (Note 4)

 

 

27

 

 

 

 

 

 

3,579

 

 

 

 

 

 

 

 

 

3,579

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

280

 

 

 

280

 

Balance at June 30, 2023

 

 

26,819

 

 

$

27

 

 

$

436,302

 

 

$

(399,209

)

 

$

(325

)

 

$

36,795

 

Issuance of common stock

 

 

201

 

 

 

 

 

 

2,137

 

 

 

 

 

 

 

 

 

2,137

 

Stock-based compensation

 

 

 

 

 

 

 

 

12,307

 

 

 

 

 

 

 

 

 

12,307

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(15,762

)

 

 

 

 

 

(15,762

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(677

)

 

 

(677

)

Balance at September 30, 2023

 

 

27,020

 

 

$

27

 

 

$

450,746

 

 

$

(414,971

)

 

$

(1,002

)

 

$

34,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Stockholders'

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

(Deficit)

 

Balance at December 31, 2021

 

 

24,737

 

 

$

25

 

 

$

351,422

 

 

$

(362,484

)

 

$

(39

)

 

$

(11,076

)

Issuance of common stock

 

 

483

 

 

 

 

 

 

4,611

 

 

 

 

 

 

 

 

 

4,611

 

Stock-based compensation

 

 

 

 

 

 

 

 

11,314

 

 

 

 

 

 

 

 

 

11,314

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,461

)

 

 

 

 

 

(10,461

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(677

)

 

 

(677

)

Balance at March 31, 2022

 

 

25,220