Impinj's Q3 2025 Earnings Call: Contradictions Emerge on Walmart Volume, Gen2X Impact, Inventory, and Economic Uncertainty

Date of Call: October 29, 2025

Financials Results

• Revenue: $96.1M, down 2% sequentially from $97.9M in Q2 2025 and up 1% YOY from $95.2M in Q3 2024
• EPS: $0.58 per share, non-GAAP, fully diluted (non-GAAP net income $17.7M)
• Gross Margin: 53%, compared with 60.4% in Q2 2025 and 52.4% in Q3 2024

Guidance:

• Revenue for Q4 expected to be $90M–$93M (midpoint ~5% QoQ decline)
• Adjusted EBITDA expected $15.4M–$16.9M
• Non-GAAP net income $14.7M–$16.2M; non-GAAP diluted EPS $0.48–$0.52
• Endpoint IC revenue expected to decline sequentially but on the favorable side of normal seasonality; systems revenue expected to decline slightly due to project timing
• Gross margin expected to increase sequentially; guidance embeds >100 bps of sequential accretion
• Operating expense expected to increase sequentially
• Guidance assumes minimal endpoint IC turns for Q4 (<1 week)

Business Commentary:

* Record Revenue and Product Mix: - Impinj reported record product revenue for the third quarter, exceeding the upper end of their guidance range. - The growth was driven by strong endpoint IC volumes and better-than-anticipated reader volumes, particularly from the richest E Family mix to date.

• Endpoint IC and Systems Revenue Trends:
• Third-quarter endpoint IC revenue was $78.8 million, down 7% sequentially but up 15% excluding the prior quarter's licensing revenue.

• Systems revenue reached $17.3 million, up 30% sequentially and 21% year-over-year, driven by reader strength in supply chain and logistics.

• Financial Performance and Guidance:

• Third-quarter non-GAAP net income was $17.7 million or $0.58 per share on a fully diluted basis.
• The company expects fourth-quarter revenue between $90 million and $93 million, reflecting a 5% midpoint decrease quarter-over-quarter.

• Fourth-quarter adjusted EBITDA is forecast to be between $15.4 million and $16.9 million.

• Gen2X and Market Opportunities:

• Gen2X customizations have helped deliver retail loss prevention, supply chain sorting, and overhead reading solutions, contributing to product revenue growth.
• Impinj is focused on enhancing Gen2X for food and e-commerce applications to expand market opportunities, with significant potential in the food sector.

Sentiment Analysis:

Overall Tone: Positive

• Management called Q3 results "strong" with "record endpoint IC volumes" and product revenue "to a new quarterly record." Cary highlighted a new quarterly adjusted EBITDA record (19.8%) and embedded >100 bps of gross margin accretion in Q4 guidance; management repeatedly expressed confidence in market position and food/e‑commerce opportunities.

Q&A:

• Question from Ezra Weener (Jefferies): The first one would be about readers. Q3 is much stronger. You're talking about a little bit weaker Q4 versus seasonal up. Can you just talk a little bit about what that timing means? Was it pull into Q3? Is there a push out to Q4? And then assuming it is pull in, what does that mean for endpoint IC ramp timing?
  Response: Q3 systems revenue was stronger than expected, producing a natural sequential step down into Q4 driven by project phasing and end-user pacing; rollouts remain intact so this is timing, not pullback, and endpoint IC volumes should step down modestly into Q4.

• Question from Ezra Weener (Jefferies): I think we all saw the Walmart announcement with Avery. Can you talk a little bit about what that means in terms of timing and sizing for you guys?
  Response: Very large multi‑billion unit opportunity long term; expect modest food volumes through H1 2026 with acceleration thereafter as complex, multi‑category, multi‑thousand‑store rollouts scale.

• Question from Harsh Kumar (Piper Sandler & Co.): On grocery produce tagging: is there a fundamental problem tagging vegetables/leafy greens or is that the next step? And you're using 'e‑commerce' a lot—what is the significance and are you taking enterprise strategy to the next level?
  Response: No fundamental technical barrier to tagging produce—packaging and tagging methods must evolve—while 'e‑commerce' is an intentional strategic focus (direct DC‑to‑consumer and 3PL work) where Impinj will pursue differentiation across endpoint ICs, reader ICs, and software.

• Question from Harsh Kumar (Piper Sandler & Co.): Follow-up: you implied ~100 bps margin increase in Q4— is that all from M800 or other factors?
  Response: Mostly M800 mix plus recognition of 2025‑costed wafers improving product margin; M800 ramps to a volume runner in Q4 though terminal mix finalizes in 2026.

• Question from Christopher Rolland (Susquehanna Financial Group): A competitor claims traction with Bluetooth as a RAIN alternative—disruptive or drawbacks, and could Impinj offer Bluetooth?
  Response: View complementary technologies (Bluetooth, vision) as gap fillers; RAIN RFID remains the focus where volumes are, and if volumes shift materially they can consider alternatives, but today Bluetooth is not a disruptive threat to their main opportunities.

• Question from Christopher Rolland (Susquehanna Financial Group): You said the second large North American supply chain logistics vendor is now fully deployed in parcel delivery—does that mean full infrastructure and what about attach rates?
  Response: Domestic parcel infrastructure for that customer is fully deployed, but deployments continually expand to new use cases and geographies; tagging is fully deployed for domestic parcel but growth remains from other business areas and international expansion.

• Question from Scott Searle (ROTH Capital Partners): Is Gen2X delivering share now and does endpoint IC customization permanently move you into a different gross margin realm; and please flesh out software/recurring revenue evolution?
  Response: Too early to quantify share gains—Gen2X is native in M800 and aims to drive adoption of Impinj silicon rather than immediate margin uplift beyond M800’s economics; software/SaaS is a strategic priority to monetize data and build recurring services on top of the hardware platform over time.

• Question from Scott Searle (ROTH Capital Partners): Thoughts on endpoint IC pricing going into Q1 and seasonality?
  Response: Pricing discussions are just beginning; management had no definitive color and will provide more insight next quarter.

• Question from James Ricchiuti (Needham & Company): When you talk about enhancing Gen2X for food and e‑commerce, what might that entail and what challenges are you addressing?
  Response: Cannot disclose product plans, but the work entails customizing all three layers—endpoint IC, reader IC, and software—to unlock new use cases and information value; significant unseen opportunities exist but specifics remain confidential.

• Question from James Ricchiuti (Needham & Company): How should we think about operating expense given these opportunities—more R&D and investment?
  Response: OpEx will increase in Q4 and continue seasonal increases into Q1 and Q2 as investments accelerate, with R&D as the primary focus but management expects long‑term leverage across spend lines.

• Question from Guy Hardwick (Barclays): Are you comfortable with public volume estimates (e.g., Walmart ~5B labels ramped over 2–3 years) and how long might you remain the sole provider in pilots?
  Response: Company views these as multibillion‑unit annual opportunities when fully ramped and feels well‑positioned in current pilots; management intends to drive Gen2X and product innovations to maintain advantage and defend share as rollouts scale.

• Question from Ezra Weener (Jefferies): Quick follow-up—you previously said you weren't guiding turns; can you comment?
  Response: Given a dynamic environment, Q4 guidance assumes minimal endpoint IC turns (<1 week) and more normal turns for systems reflecting typical year‑end enterprise hardware buying patterns.

Contradiction Point 1

Walmart Opportunity Volume and Impact

It provides differing perspectives on the volume of the Walmart opportunity and the impact of the partnership on Impinj's growth, which could influence investor expectations.

Can you confirm the Walmart opportunity volume and elaborate on Impinj's long-term role? - Guy Hardwick (Barclays)

2025Q3: Walmart is a multibillion-unit opportunity annually. - Cary Baker(CFO)

Are you seeing the same trends as your North American partner in retail and logistics growth? - Harsh V. Kumar (Piper Sandler)

2025Q2: Walmart has a large number of private label products that they produce and then sell through their own stores. And I think that's a multibillion-unit potential opportunity for Impinj over time. - Chris Diorio(CEO)

Contradiction Point 2

Gen2X Impact on ASP and Gross Margin

It involves differing explanations of the impact of Gen2X on ASP and gross margin, which are critical financial metrics for investors.

Is Gen2X driving market share and affecting gross margins? Could you provide details on software and recurring revenue? - Scott Searle (ROTH Capital Partners, LLC, Research Division)

2025Q3: Gen2X is an evolution of our current RAIN RFID platform, which drives innovation in endpoint ICs, reader ICs, and software. - Chris Diorio(CEO)

What are the economics of Gen2X, specifically ASP and gross margin? - Christopher Adam Jackson Rolland (Susquehanna Financial Group, LLLP, Research Division)

2025Q2: Gen2X focuses on accelerating the transition to M800 and enabling solutions that couldn't be addressed previously. While it does not directly impact ASP or gross margin, it facilitates enterprise solutions, enhancing M800 adoption. - Chris Diorio(CEO)

Contradiction Point 3

Role in Large-Scale Deployments

This contradiction suggests differing expectations about the company's role in large-scale deployments, which could influence revenue projections and market positioning.

Can you confirm the Walmart opportunity size and outline Impinj's long-term role? - Guy Hardwick (Barclays)

2025Q3: Impinj is well-positioned in early pilots; innovations will maintain share through continuous improvement. - Chris Diorio(CEO)

When do you expect large program scaling to impact the year, given no impact in Q1? - Jim Ricchiuti (Needham & Company)

2024Q4: We see potential program ramps later in the year, with two food opportunities noted. Current enterprise pipeline is strong but faces a lull in Q1. - Chris Diorio(CEO)

Contradiction Point 4

Inventory Management and Market Conditions

It highlights differing perspectives on how the company is managing inventory and dealing with market conditions, which could impact operational efficiency and investor confidence.

Why did Q3 performance improve, and why is Q4 weaker despite seasonal trends? - Ezra Weener (Jefferies)

2025Q3: We have a few weeks of excess inventory, primarily concentrated in logistics due to demand changes. - Cary Baker(CFO)

How many weeks of excess inventory do you have, and is it concentrated in specific areas or partners? - Harsh Kumar (Piper Sandler)

2024Q4: We have a few weeks of excess inventory, primarily concentrated in logistics due to demand changes. - Cary Baker(CFO)

Contradiction Point 5

Impact of Economic Uncertainty on Demand

It suggests differing expectations regarding the impact of economic uncertainty on demand, which could influence revenue forecasts and investor confidence.

Have economic conditions negatively impacted your customers? Can you quantify the impact? - Jim Ricchiuti (Needham & Company)

2025Q3: The economic environment remains uncertain, but we see an opportunity across various industries. - Chris Diorio(CEO)

Have you observed changes in customer spending patterns or purchasing behavior in logistics and enterprise sectors? Is economic deterioration impacting your customers? - Christopher Rolland (Susquehanna Financial Group, LLLP)

2024Q4: With the exception of the logistics industry, which is experiencing a slowdown in demand due to economic uncertainty, we expect demand trends to remain relatively steady. - Chris Diorio(CEO)