pi-ex991_6.htm

SEATTLE, WA, Feb. 16, 2017 – Impinj, Inc. (NASDAQ: PI), a leading provider and pioneer of RAIN RFID solutions for identifying, locating and authenticating everyday items, today announced its financial results for the fourth quarter and full year ended Dec. 31, 2016.

“The fourth quarter was a strong close to a landmark and transformational year for Impinj. During the year, our continued execution of our strategy and the dedication of the entire Impinj team resulted in 43% revenue growth, approximately 70% endpoint IC volume growth and improved margin,” said Chris Diorio, Impinj co-founder and CEO. “We raised a total of approximately $107 million in net proceeds in two successful equity offerings, expanding our available capital to continue investing in the massive market opportunity and enhance our leading market position.”

A reconciliation between historical GAAP and non-GAAP information, including weighted average basic and diluted shares, is contained in the tables below. Additionally, descriptions of these non-GAAP financial measures are provided in the "Non-GAAP Financial Measures" section below.

Impinj provides guidance based on current market conditions and expectations; actual results may differ materially. Please refer to the comments below regarding forward-looking statements. For the first quarter of 2017, Impinj currently expects:

All forward-looking non-GAAP financial measures in this section titled "First Quarter 2017 Financial Outlook" exclude non-cash income and expenses. Impinj has not reconciled guidance for these non-GAAP measures to their most directly comparable GAAP measures because some items that impact these measures are either not within our control or not reasonably predictable, at least not without unreasonable effort.

Impinj will host a conference call and webcast today, Feb. 16, 2017 at 5:00 p.m. ET / 2:00 p.m. PT for analysts and investors to discuss the company’s fourth quarter and full year

2016 results as well as its outlook for its first quarter of 2017. Open to the public, investors may access the call by dialing +1-412-317-6060. A live webcast of the conference call will also be accessible on the company's website at investor.impinj.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 10098908.

Management’s prepared written remarks, along with quarterly financial data for the last eight quarters, will be made available on the company’s website at investor.impinj.com commensurate with this release. Management encourages interested parties to review the prepared remarks before the conference call and submit questions via email to ir@impinj.com. Questions received prior to the call will be considered for discussion on the live conference call.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the market for RAIN RFID, our strategy, prospects, and our financial outlook for the first quarter of 2017. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Form 10-Q filed with the SEC on November 15, 2016. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law.

To supplement our condensed consolidated financial statements, which we have prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we use the following non-GAAP financial measures: non-GAAP gross margin, net income and earnings per share and Adjusted EBITDA. In computing these non-GAAP financial measures, we exclude the effects of stock-based compensation expense, depreciation and amortization, non-cash interest and other income/expense, and non-cash income tax expense not considered to be indicative of our ongoing core business operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain income, expenses and expenditures that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance. Our presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures" included at the end of this release.

Impinj (NASDAQ: PI) is a leading provider of RAIN RFID solutions. The Impinj Platform connects billions of everyday items such as apparel, medical supplies, automobile parts, drivers’ licenses, food and luggage to applications such as inventory management, patient safety, asset tracking and item authentication, delivering real-time information to

businesses about items they create, manage, transport and sell. The Impinj Platform wirelessly delivers information about these items’ unique identity, location and authenticity, or Item Intelligence™, to the digital world, which Impinj believes is the essence of the Internet of Things.

	December 31,			December 31,
	2016			2015
Assets:
Current assets:
Cash and cash equivalents	$	33,636		$	10,121
Short-term investments		66,905			—
Accounts receivable, net		17,447			12,889
Inventory		27,734			11,837
Prepaid expenses and other current assets		3,004			1,095
Total current assets		148,726			35,942
Property and equipment, net		14,929			12,351
Other non-current assets		—			637
Goodwill		3,881			3,881
Other intangible assets, net		—			37
Total assets	$	167,536		$	52,848
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit):
Current liabilities:
Accounts payable	$	7,166		$	3,182
Accrued compensation and employee related benefits		7,647			4,038
Accrued liabilities		6,098			2,895
Current portion of long-term debt		2,589			5,227
Current portion of capital lease obligations		1,130			1,190
Current portion of deferred rent		306			258
Current portion of deferred revenue		445			684
Total current liabilities		25,381			17,474
Long-term debt, net of current portion		9,676			10,683
Capital lease obligations, net of current portion		1,698			2,526
Long-term liabilities—other		770			678
Warrant liability		—			2,865
Deferred rent, net of current portion		5,022			4,984
Deferred revenue, net of current portion		966			710
Total liabilities		43,513			39,920
Commitment and contingencies
Redeemable convertible preferred stock, $0.001 par value
Series 1: none authorized and issued at December 31, 2016; 5,334 shares authorized, issued and outstanding at December 31, 2015		—			60,184
Series 2: none authorized and issued at December 31, 2016; 2,979 shares authorized and 2,557 shares issued and outstanding at December 31, 2015		—			37,779
Total redeemable convertible preferred stock		—			97,963
Stockholders' equity (deficit):
Preferred stock, $0.001 par value — 5,000 shares authorized; no shares issued and outstanding at December 31, 2016; no shares authorized, issued and outstanding at December 31, 2015		—			—
Common stock, $0.001 par value, 495,000 shares authorized; 20,336 and 4,382 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively		20			4
Additional paid-in capital		311,216			100,276
Accumulated other comprehensive income (loss)		(10	)		—
Accumulated deficit		(187,203	)		(185,315	)
Total stockholders' equity (deficit)		124,023			(85,035	)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$	167,536		$	52,848

	Three Months Ended						Year Ended
	December 31,						December 31,
	2016			2015			2016			2015
Revenue:
Product revenue	$	33,467		$	22,224		$	111,769		$	77,389
Development, service and licensing revenue		188			403			518			1,090
Total revenue		33,655			22,627			112,287			78,479
Cost of revenue:
Cost of product revenue		15,206			10,471			52,614			37,360
Cost of development, service and licensing revenue		61			117			220			273
Total cost of revenue		15,267			10,588			52,834			37,633
Gross profit		18,388			12,039			59,453			40,846
Operating expenses:
Research and development		7,403			5,091			25,185			17,579
Sales and marketing		6,428			4,428			22,330			14,579
General and administrative		4,212			1,998			12,426			7,087
Total operating expenses		18,043			11,517			59,941			39,245
Income (loss) from operations		345			522			(488	)		1,601
Interest income (expense) and other income (expense), net
Interest expense		(311	)		(466	)		(1,633	)		(1,208	)
Interest income and other income (expense), net		139			850			616			673
Total interest income (expense) and other income (expense), net		(172	)		384			(1,017	)		(535	)
Income (loss) before tax expense		173			906			(1,505	)		1,066
Income tax expense		(70	)		(88	)		(168	)		(166	)
Net income (loss)	$	103		$	818		$	(1,673	)	$	900
Less: Accretion of preferred stock		—			(2,825	)		(6,258	)		(11,301	)
Net income (loss) attributable to common stockholders	$	103		$	(2,007	)	$	(7,931	)	$	(10,401	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.01		$	(0.49	)	$	(0.74	)	$	(2.67	)
Diluted	$	0.01		$	(0.49	)	$	(0.74	)	$	(2.67	)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		19,078			4,127			10,778			3,893
Diluted		20,667			4,127			10,778			3,893

	Year Ended
	December 31,
	2016			2015
Operating activities:
Net income (loss)	$	(1,673	)	$	900
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		2,869			1,972
Amortization and write-off of debt issuance costs		239			152
Amortization of premium on short-term investments		31			—
Revaluation of warrant liability		(559	)		(703	)
Stock-based compensation		2,765			1,178
Changes in operating assets and liabilities:
Accounts receivable		(4,515	)		(3,327	)
Inventory		(15,897	)		(2,783	)
Prepaid expenses and other assets		(1,759	)		(360	)
Deferred revenue		17			(466	)
Deferred rent		86			4,601
Accounts payable		3,883			754
Accrued compensation and benefits		3,462			1,356
Accrued liabilities		1,554			182
Net cash provided by (used in) operating activities		(9,497	)		3,456
Investing activities:
Purchases of investments		(67,103	)		—
Purchases of property and equipment		(3,530	)		(7,450	)
Net cash used in investing activities		(70,633	)		(7,450	)
Financing activities:
Proceeds from public offerings, net of offering costs		108,096			—
Payments on capital lease financing obligations		(1,229	)		(824	)
Payments on term loans		(65,320	)		(6,115	)
Proceeds from term loans		61,436			13,899
Proceeds from exercise of stock options		600			538
Proceeds from exercise of warrants		62			—
Payments of deferred offering costs		—			(322	)
Net cash provided by (used in) financing activities		103,645			7,176
Net increase (decrease) in cash and cash equivalents		23,515			3,182
Cash and cash equivalents
Beginning of period		10,121			6,939
End of period	$	33,636		$	10,121

	Three Months Ended						Year Ended
	December 31,						December 31,
	2016			2015			2016			2015
GAAP Gross profit	$	18,388		$	12,039		$	59,453		$	40,846
Adjustments:
Depreciation and amortization	281			265				1,059		952
Stock-based compensation	57			5			96			31
Non-GAAP Gross profit	$	18,726		$	12,309		$	60,608		$	41,829

GAAP Gross margin		54.6	%		53.2	%		52.9	%		52.0	%
Adjustments:
Depreciation and amortization		0.8	%		1.2	%		0.9	%		1.2	%
Stock-based compensation		0.2	%		0.0	%		0.1	%		0.0	%
Non-GAAP Gross margin		55.6	%		54.4	%		53.9	%		53.2	%

GAAP Research and development expense	$	7,403		$	5,091		$	25,185		$	17,579
Adjustments:
Depreciation and amortization		(285	)		(250	)		(1,126	)		(574	)
Stock-based compensation		(567	)		(64	)		(983	)		(305	)
Non-GAAP Research and development expense	$	6,551		$	4,777		$	23,076		$	16,700

GAAP Sales and marketing expense	$	6,428		$	4,428		$	22,330		$	14,579
Adjustments:
Depreciation and amortization		(108	)		(125	)		(475	)		(325	)
Stock-based compensation		(535	)		(185	)		(1,289	)		(692	)
Non-GAAP Sales and marketing expense	$	5,785		$	4,118		$	20,566		$	13,562

GAAP General and administrative expense	$	4,212		$	1,998		$	12,426		$	7,087
Adjustments:
Depreciation and amortization		(52	)		(49	)		(209	)		(121	)
Stock-based compensation		(189	)		(39	)		(397	)		(150	)
Non-GAAP General and administrative expense	$	3,971		$	1,910		$	11,820		$	6,816

GAAP Total operating expense	$	18,043		$	11,517		$	59,941		$	39,245
Adjustments:
Depreciation and amortization		(445	)		(424	)		(1,810	)		(1,020	)
Stock-based compensation		(1,291	)		(288	)		(2,669	)		(1,147	)
Non-GAAP Total operating expense	$	16,307		$	10,805		$	55,462		$	37,078

GAAP Interest expense	$	(311	)	$	(466	)	$	(1,633	)	$	(1,208	)
Adjustments:
Non-cash interest expense		19			56			130			152
Non-GAAP Interest expense	$	(292	)	$	(410	)	$	(1,503	)	$	(1,056	)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2016			2015			2016			2015
GAAP Interest income and other income (expense), net	$	139		$	850		$	616		$	673
Adjustments:
Change in the fair value of preferred stock warrant liability		—			(880	)		(559	)		(703	)
Write-off of unamortized debt issuance costs		—			—			109			—
Non-GAAP Interest income and other income (expense), net	$	139		$	(30	)	$	166		$	(30	)

GAAP Income tax expense	$	(70	)	$	(88	)	$	(168	)	$	(166	)
Adjustments:
Non-cash income tax expense		23			23			91			91
Non-GAAP Income tax expense	$	(47	)	$	(65	)	$	(77	)	$	(75	)

GAAP Net income (loss)	$	103		$	818		$	(1,673	)	$	900
Adjustments:
Depreciation and amortization		726			689			2,869			1,972
Stock-based compensation		1,348			293			2,765			1,178
Interest income (expense) and other, net		172			(384	)		1,017			535
Income tax expense		70			88			168			166
Adjusted EBITDA	$	2,419		$	1,504		$	5,146		$	4,751

GAAP Net income (loss)	$	103		$	818		$	(1,673	)	$	900
Adjustments:
Depreciation and amortization		726			689			2,869			1,972
Stock-based compensation		1,348			293			2,765			1,178
Non-cash interest expense		19			56			130			152
Change in the fair value of preferred stock warrant liability		—			(880	)		(559	)		(703	)
Write-off of unamortized debt issuance costs		—			—			109			—
Non-cash income tax expense		23			23			91			91
Non-GAAP Net income (loss)	$	2,219		$	999		$	3,732		$	3,590
Non-GAAP Net income (loss) per share:
Basic	$	0.12		$	0.08		$	0.24		$	0.29
Diluted	$	0.11		$	0.07		$	0.22		$	0.26

	Three Months Ended				Year Ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted-average shares used to compute GAAP net income (loss) per share attributable to common stockholders — basic		19,078		4,127		10,778		3,893
Adjustments:
Weighted-average shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock		—		8,522		4,685		8,522
Weighted-average shares used to compute non-GAAP net income (loss) per share — basic		19,078		12,649		15,463		12,415

Weighted-average shares used to compute GAAP net income (loss) per share attributable to common stockholders — diluted		20,667		4,127		10,778		3,893
Weighted-average shares of common stock issuable upon conversion of mandatorily redeemable convertible preferred stock		—		8,522		4,685		8,522
Adjustments:
Effects of dilutive securities
Warrants to purchase common stock		—		17		9		16
Warrants to purchase mandatorily redeemable convertible preferred stock		—		33		19		—
Weighted-average unvested shares of common stock subject to repurchase		—		136		118		136
Stock Options		—		911		1,150		1,083
Weighted-average shares used to compute non-GAAP net income (loss) per share — diluted		20,667		13,746		16,759		13,650